Maxis Berhad
Annual Report 2014
180
Notes to the
Financial Statements
31 December 2014
33 FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Capital risk management
The Group’s and the Company’s objective when managing capital is to safeguard the Group’s and the Company’s abilities to
continue as a going concern while at the same time provide returns for shareholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividends paid to
shareholders, issue new shares or return capital to shareholders.
Under the requirement of Bursa Malaysia Securities Berhad Practice Note No. 17/2005, the Company is required to maintain a
consolidated shareholders’ equity of more than 25% of the issued and paid-up capital (excluding treasury shares) and maintain
such shareholders’ equity of not less than RM40 million. The Company has complied with this requirement.
The Company is also required by the external lenders to maintain financial covenant ratios on Group net debt to Group EBITDA
and Group EBITDA to Group interest expense. These financial covenant ratios have been fully complied with by the Company
for the financial years ended 31 December 2014 and 31 December 2013.
The Group also monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity.
Net debt is calculated as total interest bearing financial liabilities (include loan from a related party, current and non-current
borrowings and derivative financial instruments on a net basis as shown in the statements of financial position but exclude
deferred payment scheme as disclosed in Note 29 to the financial statements) less cash and cash equivalents. Total equity
is calculated as ‘equity’ as shown in the statements of financial position. The gearing ratios at 31 December 2014 and 31
December 2013 were as follows:
Group
Note
2014
RM’000
2013
RM’000
Total interest bearing financial liabilities
8,798,355
7,524,528
Less: Cash and cash equivalents
27
(1,530,519)
(807,946)
Net debt
7,267,836
6,716,582
Total equity
4,737,767
6,016,816
Gearing ratio
1.5
1.1
The increase in the gearing ratio as at 31 December 2014 is primarily due to the additional borrowings drawn down during the
financial year and reduction in total equity.
(e) Fair value estimation
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
