MKH BERHAD | ANNUAL REPORT 2023 273 46. FAIR VALUE HIERARCHY (CONT’D) Valuation processes applied by the Group (Cont’d) Fair value reconciliation of biological assets measured at Level 2 are as follows: The Group 2023 2022 RM RM Biological assets At beginning of year 5,917,360 6,177,026 Changes in fair value 288,344 (577,142) Effect of movements in exchange rate 25,688 317,476 At end of year 6,231,392 5,917,360 Policy on transfer between levels 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. Transfer between Level 1 and 2 fair values There is no transfer between Level 1 and 2 fair values during the financial year. 47. CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratio in order to sustain future development of the businesses so that it can continue to maximise returns for shareholders and benefits for other stakeholders. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or to adjust capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares, obtain new borrowings or repay existing borrowings. No changes were made in the objectives, policies and processes during the financial years ended 30 September 2023 and 30 September 2022. 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 2023 and 30 September 2022, which are within the Group’s objectives of capital management are as follows: The Group 2023 2022 RM RM Total debts 379,293,330 420,682,681 Total equity attributable to owners of the parent 1,860,685,828 1,807,541,410 Debt-to-equity ratio (%) 20% 23% The Group is not subject to any externally imposed capital requirements other than PT Maju Kalimantan Hadapan which are required to maintain a debt-to-equity ratio of 75:25 as well as loan-to-value ratio of not more than 75% in respect of the term loan facilities. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
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