ENRICHING LIVES EXPANDING HORIZONS - Maxis

MAXIS BERHAD
ANNUAL REPORT 2011
189
33 FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern while
at the same time 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, issue
new shares or return capital to shareholders.
The Group is also required by the external lenders to maintain financial covenant ratios on net debt to EBITDA and EBITDA to
interest expense. These financial covenant ratios have been fully complied with by the Group for the financial year ended 31
December 2011 and 31 December 2010.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity. Net
debt is calculated as total interest bearing financial liabilities (including loan from a related party, current and non-current
borrowings and derivative financial instruments on a net basis and non-current trade payables as shown in the statement of
financial position and Note 31 to the financial statements respectively) less cash and cash equivalents. Total equity is
calculated as ‘equity’ as shown in the statement of financial position. The gearing ratios at 31 December 2011 and 2010 were
as follows:
GROUP
NOTE 2011 2010
RM’000
RM’000
Total interest bearing financial liabilities 6,331,063 5,497,409
Less: Cash and cash equivalents 27 (838,125) (897,621)
Net debt 5,492,938 4,599,788
Total equity 8,088,384 8,666,699
Gearing ratios 0.68 0.53
The increase in the gearing ratio as at 31 December 2011 is primarily due to the additional borrowings drawn down during
the financial year.