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116 KPJ Healthcare Berhad

(Company No. 247079 M)

Annual Report 2010

notes to the

financial statements

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 (cont’d)

2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Financial risk management (continued) 2.1 Financial risk factors (continued) c) Liquidity risk (continued)

The table below analyses the fnancial liabilities into relevant maturity groupings based on the remaining period at the reporting

date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash fows:

Between Between

Less than 1 1 and 2 2 and 5 Over 5 year years years years RM’000 RM’000 RM’000 RM’000

At 31 December 2010 Group

Payables 308,107 0 0 0

Borrowings 362,676 15,075 21,666 6

Company

Payables 67,432 38,663 123,326 42,395

Borrowings 299,000 0 0 0

2.2 Capital Risk Management

The Group’s objectives when managing capital is to safeguard the Group’s ability continue as a going concern in order to provide returns

for shareholders and benefts 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, return

capital to shareholders, issue new shares or sell assets to reduce debt.

One of the conditions for CPMTN is to have Group’s gearing ratio lower than 1.5:1. Hence, the group has monitors gearing ratio

on a timely basis. This ratio is calculated as total borrowings divided by shareholders’ funds. Various steps are taken to reduce borrowings, including disposal of hospital buildings to Al-‘Aqar KPJ REIT and managing cash and bank balances centrally.

The Group’s gearing ratio as at 31 December 2010 and 2009 were as follows:

2010 2009 RM’000 RM’000

Group

Current borrowings 362,676 65,977 Non-current borrowings 36,747 302,819

Total 399,423 368,796

Shareholders’ funds 768,647 632,011

Gearing ratio 0.52:1 0.58:1