39. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D.) The policies in respect of the major areas of treasury activities are as follows: (cont’d.) (d) Capital risk management (cont’d.) The net gearing ratio as at 31 December 2021 and 31 December 2020 are as follows: Group Company 2021 RM’million 2020 RM’million 2021 RM’million 2020 RM’million Total borrowings (Note 28) 2,310 1,289 – – Lease liabilities (Note 29) 14,295 12,435 – – Less: Deposit, cash and bank balances (Note 25) (1,257) (534) (562) (1) Net debts 15,348 13,190 (562) (1) Total equity (6,423) (3,570) 9,299 8,547 Net Gearing Ratio (times) N/A N/A N/A N/A During the financial year, the Group’s operations were significantly affected by the COVID-19 pandemic which led to operating losses. The Group has been relying on debt compared to its equity to finance the Group’s operations which resulted in a negative net gearing ratio. The Group is in compliance with all externally imposed capital requirements for the financial years ended 31 December 2021 and 31 December 2020. (e) Fair value measurement The carrying amounts of cash and cash equivalents, trade and other current assets, and trade and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements. Determination of fair value and fair value hierarchy The Group’s financial instruments are measured in the statement of financial position at fair value. Disclosure of fair value measurements are by level of the following fair value measurement hierarchy: – Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). F I N A N C I A L S T A T E M E N T S A N N U A L R E P O R T 2 0 2 1 3 0 7
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