Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

162
Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
43. Financial risk management objectives and policies (contd.)
(e) Market price risk
Market price risk is the risk that the fair value or future cash fl ows of the Group’s fi nancial instruments
will fl uctuate because of changes in market prices (other than interest or exchange rates).
The Group is exposed to market price risk and the risk of impairment in the value of investments held.
The Company manages the risk of impairment by evaluation of investment opportunities, continuously
monitoring the performance of investments held and assessing market risk relevant to which the
investments operate.
At the reporting date, 60% (2010: 56%) of the Group’s and the Company’s investment securities consist
of fi xed income securities, 9% (2010: 14%) in equity portfolio quoted on Bursa Malaysia, while the
remaining portion of the investment securities comprises unit trusts which invest in short term money
market instruments.
Sensitivity analysis for equity price risk
At the reporting date, if prices for equity securities increase by 10% with all other variables being held
constant, the profi t net of tax will be RM368,910 (2010: RM747,742) higher as a result of higher fair
value gain on fair value through profi t or loss investments in equity instruments. A 10% decrease in the
underlying equity prices would have had the equal but opposite effect to the amounts shown above.
44. Capital management
The primary objective of the Group’s and the Company’s capital management is to ensure that it maintains
healthy capital ratios to support its business and maximise shareholder value. No changes were made in the
objective, policies and processes during the years ended 31 December 2011 and 2010.
The Group reviews its capital structure and makes adjustments to refl ect economic conditions, business
strategies and future commitments on a continuous basis.
The Group monitors capital using a gearing ratio. The gearing ratio is calculated as loans and borrowings
divided by equity attributable to owners of the Company.
The Group and the Company are in compliance with all externally imposed capital requirements in respect of
their external borrowings for the fi nancial years ended 31 December 2011 and 2010.
Cahya Mata Sarawak Berhad
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Loans and borrowings (Note 29) 215,747 394,586 85,507 170,786
Equity attributable to the owners of the Company 1,414,815 1,312,667 1,116,303 990,694
Gearing ratio 15% 30% 8% 17%