Registration No. 200301030845 (633265-K) - 147 - 38. Financial Instruments (Cont’d) (c) Fair values of financial instruments (Cont’d) The carrying amount of long-term floating rate loans approximate their fair value as the loans will be re-priced to market interest rate on or near reporting date. The fair value of lease liability is estimated based on future contractual cash flows discounted at incremental borrowing rate for similar type of borrowing at the end of the reporting period. The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. There were no transfers between levels during current and previous financial years. 39. Capital Management The Group’s management manage its capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern and maintains an optimal capital structure, so as to maximise shareholders value. The management reviews the capital structure by considering the cost of capital and the risks associated with the capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital using a gearing ratio. The Group’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants and regulatory requirements. The gearing ratios at end of the reporting period are as follows 2022 2021 RM RM Total loans and borrowings 18,859,375 106,620,599 Less: Deposits, bank and cash balances (27,575,181) (50,410,305) Net debt (8,715,806) 56,210,294 Total equity 126,078,204 161,101,920 Gearing ratio # 35% # Gearing ratio may not provide a meaningful indicator of the risk of borrowings. There were no changes in the Group’s approach to capital management during the financial year. The Group is not subject to any externally imposed capital requirements. 225 ANNUAL REPORT 2022 DESTINI BERHAD
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