Financial Statements - Mewah Group

MEWAH INTERNATIONAL INC.
ANNUAL REPORT 2011
Notes to the Financial Statements
For the financial year ended 31 December 2011
32. Financial risk management (continued)
(d)
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and
to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal
capital structure over business cycles, the Group may adjust the amount of dividend payment, obtain new borrowings or
sell assets to reduce borrowings.
Management manages capital based on tangible net worth of the Group and a number of key ratios including gross
debt-equity ratio and net debt-equity ratio. The Group is required by the banks to maintain a certain amount of minimum
tangible net worth and gross debt-equity ratio. The gross debt-equity ratio is defined as total interest bearing debts (“gross
debt”) to total equity. Net debt-equity ratio is defined as total interest bearing debts less cash and cash equivalents (“net
debt”) to total equity.
No changes were made in the objectives, policies or processes during the financial years ended 31 December 2011 and
31 December 2010.
Group
2011 2010
US$’000 US$’000
Tangible net worth 534,601 502,730
Debt-equity ratio
Gross debt 386,130 326,156
Less: Cash and cash equivalents (136,799) (215,322)
Net debt 249,331 110,834
Total equity 537,790 508,576
Gross debt-equity ratio 0.72 0.64
Net debt-equity ratio 0.46 0.22
The Group and the Company were in compliance with all externally imposed capital requirements for the financial years
ended 31 December 2011 and 2010.
(e)
Fair value measurements
Fair value measurements by level of the following fair value measurement hierarchy:
(i) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(ii)
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 2); and
(iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
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