118 EXCEL FORCE MSC BERHAD Notes to the Financial Statements (Cont’d) 35. Financial Instruments (Cont’d) (d) Fair value of financial instruments (Cont’d) Group and Company Fair value of financial instruments carried at fair value Total fair value Carrying amount Level 1 Level 2 Level 3 RM RM RM RM RM 30.06.2023 Financial assets Quoted shares 10,765,275 - - 10,765,275 10,765,275 Short-term funds 2,639,206 - - 2,639,206 2,639,206 13,404,481 - - 13,404,481 13,404,481 31.12.2021 Financial assets Quoted shares 17,801,700 - - 17,801,700 17,801,700 Short-term funds 10,440,367 - - 10,440,367 10,440,367 28,242,067 - - 28,242,067 28,242,067 (i) 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. There were no transfer between levels during current and previous the financial period/years. (ii) Level 1 fair value Level 1 fair value is derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. (iii) Level 2 fair value Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). (iv) Level 3 fair value Level 3 fair value for the financial assets and liabilities are estimated using unobservable inputs. 36. Capital Management The Group’s and the Company’s objective when managing capital are to safeguard the Group’s and the Company’s ability to continue as a going concern in order to 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 may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group and the Company monitor capital using a gearing ratio, which is net debt divided by total equity. The Group includes within net debt, trade and other payables and lease liabilities less cash and cash equivalents. The Group’s and the Company’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants and regulatory requirements.
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