FINANCIAL STATEMENTS - Mewah Group

ANNUAL REPORT 2012NOTES TOTHE FINANCIAL STATEMENTSFor the financial year ended 31 December 201232. FINANCIAL RISK MANAGEMENT (CONTINUED)(d) Capital risk (continued)Management manages capital based on tangible net worth of the Group and a number of key ratios including gross debt-equity ratioand net debt-equity ratio. The Group is required by the banks to maintain a certain amount of minimum tangible net worth and grossdebt-equity ratio. The gross debt-equity ratio is defined as total interest bearing debts (“gross debt”) to total equity. Net debt-equityratio 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 2012 and 31 December2011.Group2012 2011US$’000US$’000Tangible net worth 559,947 534,601Debt-equity ratioGross debt 383,672 386,130Less: Cash and cash equivalents (48,747) (136,799)Net debt 334,925 249,331Total equity 559,947 537,790Gross debt-equity ratio 0.69 0.72Net debt-equity ratio 0.60 0.46The Group and the Company were in compliance with all externally imposed capital requirements for the financial years ended31 December 2012 and 2011.(e) Fair value measurementsThe following table assets and liabilities measured at fair value and classified 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) orindirectly (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).103