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22. FINANCIAl INSTRumENTS (CONT’D) 22.7 Interest rate risk (Cont’d) Exposure to interest rate risk (Cont’d) Masterskill Education Group Berhad / Annual Report 2012 103 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) Group Company 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 Rm’000 Rm’000 Rm’000 Rm’000 Rm’000 Rm’000 Floating rate instruments Financial liabilities Term loan (Islamic) (53,008) (43,319) (29,615) – – – Revolving credit (Islamic) (11,213) (3,302) (5,440) – – – Cash flow sensitivity analysis for variable rate instruments (64,221) (46,621) (35,055) – – – A change of 100 basis points (bp) in interest rates at the end of the reporting period would have increased (decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables remained constant. Equity Profit or loss 100 bp 100 bp 100 bp 100 bp increase decrease increase decrease Rm’000 Rm’000 Rm’000 Rm’000 2012 Floating rate instruments (482) 482 (482) 482 2011 Floating rate instruments (350) 350 (350) 350 22.8 Fair value of financial instruments The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables approximate their fair values due to the relatively short term nature of these financial instruments. It was not practicable to estimate the fair value of the Company’s investment in unquoted shares due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs. The fair values of financial assets that are quoted in an active market are determined by reference to their quoted closing bid price at the end of the reporting period. In respect of the long-term borrowings with variable interest rates, the carrying amounts approximate fair values as they reprice to market interest rates for liabilities with similar risk profiles.
Masterskill Education Group Berhad / Annual Report 2012 104 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 22. FINANCIAl INSTRumENTS (Cont’d) 22.9 Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). level 1 level 2 level 3 Total Group and Company Rm’000 Rm’000 Rm’000 Rm’000 31 December 2012 Financial assets Investment in quoted shares 10,102 – – 10,102 31 December 2011 Financial assets Investment in quoted shares 10,210 – – 10,210 1 January 2011 Financial assets Investment in quoted shares – – – – 23. CApITAl mANAGEmENT The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements. During 2012, the Group’s strategy, which was unchanged from 2011, was to maintain the debt-to-equity ratio at a manageable level. The debt-to-equity ratios were as follows: Group 31.12.2012 31.12.2011 1.1.2011 Rm’000 Rm’000 Rm’000 Total borrowings (Note 10) 68,265 54,176 45,488 Total equity 422,405 516,304 520,521 Debt-to-equity ratios 0.16 0.10 0.09 There were no changes in the Group’s approach to capital management during the financial year.
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