MISC Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS HIGHLIGHTS OF THE YEAR OUR BUSINESS OUR LEADERSHIP OUR PERFORMANCE OUR COMMITMENT TO SUSTAINABILITY OUR GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 50 TH ANNUAL GENERAL MEETING 343 MISC BERHAD ANNUAL REPORT 2018 342 39. CAPITAL MANAGEMENT Capital management is defined as the process of managing the composition of the Group's debt and equity to ensure it maintains a strong credit rating and healthy capital ratios that support its businesses and maximise its shareholder value. The Group's approach in managing capital is set out in the Group Corporate Financial Policy. The Group and the Corporation monitor and maintain a prudent level of total debt to total equity ratio to optimise shareholder value and to ensure compliance with covenants under debt agreements. The debt to equity ratios of the Group and of the Corporation as at 31 December 2018 and 31 December 2017 are as follows: Group Corporation Note 2018 RM'000 2017 RM'000 2018 RM'000 2017 RM'000 Short term borrowings 19(c) 5,778,493 7,717,608 2,048,630 2,275,362 Long term borrowings 19(c) 7,271,413 3,946,285 4,248,740 4,949,205 Gross debts 13,049,906 11,663,893 6,297,370 7,224,567 Cash, deposits and bank balances 24 5,755,604 5,900,724 1,957,819 2,577,773 Net debts 7,294,302 5,763,169 4,339,551 4,646,794 Total equity 36,364,131 35,904,764 23,657,050 21,649,955 Gross debt equity ratio 0.36 0.32 0.27 0.33 Net debt equity ratio 0.20 0.16 0.18 0.21 The gearing ratio is not governed by MFRS and its definition and calculation may vary from one group/company to another. 40. SUBSIDIARIES AND ACTIVITIES Name of company Country of incorporation Principal activities Ownership interest and voting interest (%) 2018 2017 MISC Tankers Sdn. Bhd. Malaysia Investment holding and provision of management services 100 100 Puteri Intan Sdn. Bhd. Malaysia Shipping 100 100 Puteri Delima Sdn. Bhd. Malaysia Shipping 100 100 Puteri Nilam Sdn. Bhd. Malaysia Shipping 100 100 Puteri Zamrud Sdn. Bhd. Malaysia Shipping 100 100 Puteri Firus Sdn. Bhd. Malaysia Shipping 100 100 Seri Camellia (L) Private Limited Malaysia Shipping 100 100 Seri Cempaka (L) Private Limited Malaysia Shipping 100 100 Seri Cenderawasih (L) Private Limited Malaysia Shipping 100 100 Seri Cemara (L) Private Limited Malaysia Shipping 100 100 Seri Camar (L) Private Limited Malaysia Shipping 100 100 MISC Ship Management Sdn. Bhd. Malaysia Investment holding 100 100 MISC Enterprises Holdings Sdn. Bhd. Malaysia In liquidation 100 100