Annual Report 2012, PDF - Axiata Group Berhad - Investor Relations

NOTES TO THEFINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 (CONTINUED)40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)(d) Capital risk managementThe primary objective of the Group’s capital risk management is to ensure that it maintains a strong creditrating and healthy capital ratios in order to support its business and maximise shareholder’s value.The Group manages its capital structure and makes adjustments to it, in light of changes in economicconditions. To maintain or adjust the capital structure, the Group may or may not make dividend paymentsto shareholders, return capital to shareholders or issue new shares or other instruments.Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratios. Thisratio is calculated as total borrowings by total equity. Total borrowings including non-current and currentborrowings as shown in the consolidated statement of financial position. Total equity is calculated as ‘equity’in the consolidated statement of financial position.The gearing ratios as at reporting date were as follows:Group31.12.2012 31.12.2011 1.1.2011RM’000 RM’000 RM’000RestatedBorrowings (Note 16) 12,658,062 11,459,363 10,683,574Total equity 22,007,222 21,675,497 20,278,648Gearing ratio 0.58 0.53 0.53The Group’s capital management strategy was to obtain and maintain an investment grade credit rating.(e) Fair value estimationThe table below analyses financial instruments carried at fair value, by valuation method. The different levelshave been defined as follows:• Quoted prices (unadjusted) in active markets for identified assets or liabilities (level 1)• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, eitherdirectly (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 unobservableinputs, level 3)290