Financial Statements - Mewah Group

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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). 112
Building Capabilities Notes to the Financial Statements For the financial year ended 31 December 2011 32. Financial risk management (continued) (e) Fair value measurements (continued) The following table presents our financial assets and liabilities measured at fair value as at statement of financial position date. Level 1 Level 2 Level 3 Total US$’000 US$’000 US$’000 US$’000 Group 2011 Financial Assets Derivative financial instruments (Note 16) - Currency forward contracts - 2,582 - 2,582 - Commodities futures contracts 6,544 - - 6,544 - Commodities forward contracts - 29,806 - 29,806 As at 31 December 2011 6,544 32,388 - 38,932 Financial Liabilities Derivative financial instruments (Note 16) - Currency forward contracts - 8,700 - 8,700 - Commodities futures contracts 9,730 - - 9,730 - Commodities forward contracts - 23,887 - 23,887 - Put option - - 1,260 1,260 As at 31 December 2011 9,730 32,587 1,260 43,577 2010 Financial Assets Derivative financial instruments (Note 16) - Currency forward contracts - 29,113 - 29,113 - Commodities futures contracts 30,743 - - 30,743 - Commodities forward contracts - 31,626 - 31,626 As at 31 December 2010 30,743 60,739 - 91,482 Financial Liabilities Derivative financial instruments (Note 16) - Commodities forward contracts - 66,674 - 66,674 As at 31 December 2010 - 66,674 - 66,674 113
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Financial Statements - Mewah Group

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