notes to the financial statements
for the financial year ended 31 December 2014 (Continued)
52 FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Fair value hierarchy
The table below summarises all financial instruments carried at fair value as at 31 December 2014, based on a hierarchy that reflects the significance of the inputs
used in measuring its respective fair values. The levels are defined as follows:
Level 1:Quoted prices (unadjusted) in active markets for identical financial assets or liabilities.
Level 2:Inputs other than quoted prices included within Level 1 that are observable for the financial asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3:Inputs for the financial asset or liability that are not based on observable market data (unobservable inputs).
Group
Level 1
Level 2
Level 3
Total
RM'000
RM'000
RM'000
RM'000
2014
Financial assets/(liabilities)
Available-for-sale financial assets
13
-
1,050
1,063
Long term deposit
-
33,093
-
33,093
Derivative financial assets
-
1
-
1
Derivative financial liabilities
-
(4,135)
-
(4,135)
13
28,959
1,050
30,022
2013
Financial assets/(liabilities)
Available-for-sale financial assets
22
-
1,050
1,072
Derivative financial assets
-
105
-
105
Derivative financial liabilities
-
(938)
-
(938)
22
(833)
1,050
239
53 CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital structure in order to continue support its
businesses, maximise shareholders’ value and sustain future development of businesses within the Group. The Group monitors and maintains an optimal gearing ratio
that complies with debt covenants and regulatory requirements. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as interest
bearing liabilities less cash and cash equivalents. Total capital includes paid-up share capital and reserves attributable to owners of the Company. The Group’s overall
strategy remains unchanged from 2013.
The Group and Company manage its capital structure in order to ensure that the net gearing ratio of the Group does not exceed 1.0 time, which is well within the
requirements of the Group’s banking facilities. The Group and the Company are in compliance with all externally imposed capital requirements.
170
Wah Seong Corporation Berhad • Annual Report 2014
