FGV Audited Financial Statements 2020

4 FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Capital risk management policies The Group’s primary objectives on capital management policies are to safeguard the Group’s ability to maintain healthy capital ratios 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. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial year ended 31 December 2020 and 31 December 2019. The Group considers its debts and total equity as capital and monitors capital using a gearing ratio, which is total debt divided by total equity. The Group includes borrowings, loans due to ultimate holding company and LLA liability within its total debt while loans due to subsidiaries are additionally included for the Company’s total debt. Total equity includes share capital, treasury shares, reserves, retained earnings and non-controlling interests. The gearing ratio analysis for the Group and the Company are as disclosed below: Group With LLA liability 2020 RM’000 2019 RM’000 Borrowings 3,406,764 4,020,558 Loans due to ultimate holding company 886,188 886,498 LLA liability 4,213,824 4,316,146 Total debt 8,506,776 9,223,202 Total equity 6,100,207 6,100,300 Total capital with LLA liability 14,606,983 15,323,502 Gearing ratio 139% 151% Without LLA liability 2020 RM’000 2019 RM’000 Borrowings 3,406,764 4,020,558 Loans due to ultimate holding company 886,188 886,498 Total debt 4,292,952 4,907,056 Total equity 6,100,207 6,100,300 Total capital without LLA liability 10,393,159 11,007,356 Gearing ratio 70% 80% 64 Notes to the Financial Statements For The Financial Year Ended 31 December 2020 FGV HOLDINGS BERHAD Audited Financial Statement 2020