Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 46 FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) The carrying amount of financial liabilities measured at amortised cost approximates their respective fair values. Fair value hierarchy The table below summarises all financial instruments carried at fair value as at 31 December 2023 and 31 December 2022, based on a hierarchy that reflects the significance of the inputs used in measuring its respective fair values. The levels are defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical financial assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the financial asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the financial asset or liability that are not based on observable market data (unobservable inputs). Group Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 2023 Financial assets/(liabilities) Derivative financial assets - 154 - 154 Derivative financial liabilities - (4,100) - (4,100) - (3,946) - (3,946) 2022 Financial assets/(liabilities) Derivative financial assets - 82 - 82 Derivative financial liabilities - (2,627) - (2,627) - (2,545) - (2,545) 47 CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital structure in order to continue supporting its businesses, maximise shareholders’ value and sustain future development of businesses within the Group. The Group strives to monitor and maintain an optimal gearing ratio. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as loans and borrowings less time deposits, cash and bank balances. Total capital includes paid-up share capital and reserves attributable to owners of the Company. The Group’s net gearing ratio is 0.48 times (2022: 0.79 times). Integrated Annual Report 2023 286
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