Fraser & Neave Holdings Bhd Annual Report 2019

WWW . F N . C O M . M Y 204 F R A S E R & N E A V E H O L D I N G S B H D NOTES TO THE FINANCIAL STATEMENTS 29. FINANCIAL INSTRUMENTS (CONTINUED) (G) FAIR VALUE INFORMATION (CONTINUED) Level 3 fair value The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key unobservable inputs used in the valuation models. Financial instruments not carried at fair value Type Description of valuation technique and inputs used Loans and borrowings Discounted cash flows method using a rate based on the current market rate of borrowing of the respective Group entities at the reporting date. Financial guarantees Discounted cash flows method based on the interest differential between what the bank would have charged without guarantee and the actual interest charged with the guarantee. Valuation processes applied by the Group for Level 3 fair value The Group has an established control framework with respect to the measurement of fair values of financial instruments. This includes a finance team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the management. The finance team regularly reviews significant unobservable inputs and valuation adjustments. 30. CAPITAL MANAGEMENT The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements. Under the requirement of Bursa Malaysia Practice Note No.17/2005, the Company is required to maintain consolidated shareholders’ equity equal to or not less than 25% of the issued and paid up capital (excluding treasury shares) and such shareholders’ equity is not less than minimum issued and paid-up capital. The Group has complied with this requirement. The Group and the Company monitor and maintain a prudent level of total debt to total equity attributable to owners of the Company ratio to optimise shareholders’ value and to ensure compliance with covenants under debt agreements. The debt to equity ratio of the Group is as follows: Group Note 2019 RM’000 2018 RM’000 Restated Total loans and borrowings 16 123,311 335,524 Equity attributable to owners of the Company 2,529,324 2,305,416 Debt to equity ratio 5% 15%