133 I N T E G R A T E D R E P O R T 2 0 2 1 Explanatory Notes 30 SEPTEMBER 2021 E x p l a n a t o r y N o t e s 4. FINANCIAL RISK MANAGEMENT (CONT’D) 4.2 Capital risk management The primary objective of the Group’s and the Company’s capital management is to maximise shareholders’ value. The Company aims at distributing an adequate dividend whilst ensuring that sufficient resources are maintained to continue as a going concern and for expansion. The Group and the Company manage their capital structure and make adjustments in the light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The ratio of net debt to equity is used to monitor capital and the ratio is kept at a reasonable level. For the purpose of capital management, net debt includes other borrowed funds net of cash and bank balances. Equity consists of stated capital, retained earnings and other reserves. The Group monitors its Capital Adequacy Ratio (CAR) on a regular basis and uses the latter as a key metric to assess its robustness to sustain economic shocks in the period under review, despite this significant increase in the impairment charges, the Capital Adequacy Ratio remained at a very reasonable level. GROUP COMPANY Sep-21 MUR m Sep-20 MUR m Sep-21 MUR m Sep-20 MUR m Debt (note 23 and 27) 10,051.5 10,045.9 10,149.3 5,487.2 Less: Cash & bank balances (note 13) (341.8) (460.7) (280.7) (18.1) 9,709.7 9,585.2 9,868.6 5,469.1 Equity 4,587.5 4,199.5 4,754.0 3,100.6 Net debt/equity ratio 2.1 2.3 2.1 1.8 The net debt to equity ratio changed from 2.3 in 2020 to 2.1 in 2021. Both net debt and gross assets increased following the recognition of right-of-use assets and lease liabilities on 1 October 2019.
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