MKH Annual Report 2020

240 FINANCIAL STATEMENTS ANNUAL REPORT 2020 46. CAPITAL MANAGEMENT (CONT’D) The debt-to-equity ratio is calculated as total debts divided by total capital of the Group. Total debts comprise interest bearing loans and borrowings and lease liability whilst total capital is the total equity attributable to owners of the parent. The Group’s policy is to keep the debt-to-equity ratio of not exceeding 80%. The debt- to-equity ratio as at 30 September 2020 and 30 September 2019, which are within the Group’s objectives of capital management are as follows: The Group 2020 RM 2019 RM Total debts 652,514,453 684,764,261 Total equity attributable to owners of the parent 1,632,609,327 1,615,885,355 Debt-to-equity ratio (%) 40% 42% The Group is not subject to any externally imposed capital requirements other than PT Maju Kalimantan Hadapan and PT Sawit Prima Sakti which are required to maintain a debt-to-equity ratio of 75:25 and 65:35 respectively as well as loan-to-value ratio of not more than 75% and 65% respectively in respect of the term loan facilities. Based on the proforma financial information provided to the financial institutions, the Group has complied with this capital requirement.