Chemical Company of Malaysia Berhad Annual Report 2018

25. FINANCIAL INSTRUMENTS (CONTINUED) 25.7 Fair value information (continued) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. Transfers between Level 1 and Level 2 fair values There has been no transfer between Level 1 and 2 fair values during the financial year (2017: no transfer in either direction). 26. CAPITAL MANAGEMENT The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements. The debt-to-equity ratio at 31 December 2018 and 31 December 2017 were as follows: Group Note 2018 2017 Total loans and borrowings 15 193,802 468,138 Total equity 318,974 280,904 Debt-to-equity ratios 0.61:1 1.67:1 27. OPERATING LEASES Leases as lessee Non-cancellable operating lease rentals are payable as follows: Group and Company 2018 2017 Less than one year 72 1,421 Between one and five years 1,202 3,000 1,274 4,421 The Group leases a number of office premises and equipment under operating leases. The leases typically run for a period of 3 to 5 years with an option to renew the lease after that date. Lease payments are revised to reflect market rentals. None of the leases includes contingent rentals. 187 CHEMICAL COMPANY OF MALAYSIA BERHAD