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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2011
39 FINANCIAL RISK MANAGEMENT (cont’d)
(g) Capital Management (cont’d)
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the various core businesses. The Group allocates the
amount of capital in proportion to risk, manages the capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristic of the underlying assets. 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, sell assets or increase borrowings. The Group monitors the return
of capital, which is defined as total shareholders’ equity (excluding non-controlling interests), gearing ratio,
which is defined as borrowings net of cash over total equity and the level of dividends to shareholders. No
changes were made in the objectives, policies or processes during the years ended 31 December 2011 and
31 December 2010.
The Group seeks to maintain a balance between the higher returns that might be possible with higher level
of borrowings and the advantages and security afforded by a sound capital position.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirement.
Group
2011 2010
$’000 $’000
Share capital 265,928 265,928
Retained earnings 783,370 746,405
Other reserves 113,126 135,253
Reserve of disposal group classified as held for sale – (1,173)
Equity attributable to owners of the Company 1,162,424 1,146,413
Non-controlling interests 97,723 47,190
Total equity 1,260,147 1,193,603
Borrowings net of cash 421,617 506,210
Gearing ratio 33.5% 42.4%