TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
95
Notes to the financial statements
For the financial year ended 31 March 2016
34.
Capital risk management policies and objectives
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 25, and equity
attributable to owners of the Company, comprising issued capital, reserves net of accumulated losses.
The management does not set a target level of gearing but uses capital opportunistically to support its business and to
add value for shareholders. The key discipline adopted is to widen the margin between the return on capital employed
and the cost of that capital.
The management monitors the capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net
debt/adjusted capital (as shown below). Net debt is calculated as total borrowings less cash and cash equivalents.
Adjusted capital comprises all components of equity (i.e. share capital and retained earnings):
Group
2016
2015
$
$
Net debt:
All current and non-current borrowings including finance leases
3,922,341 5,829,178
Less: cash and cash equivalents
(14,024,952)
(15,254,490)
Net cash
(10,102,611)
(9,425,312)
Adjusted capital:
Total equity
15,316,757 14,154,919
Adjusted capital
15,316,757 14,154,919
Debt-to-adjusted capital ratio
N.M
N.M
N.M – The Group’s cash and cash equivalents exceeded its total borrowings. Therefore, the debt-to-adjusted capital ratio does not
provide a meaningful indicator of the risk from borrowings.
35.
Authorisation of financial statements
The financial statements for the year ended 31 March 2016 were authorised for issue in accordance with a resolution of
the directors on 17 June 2016.
