Powering growth - Aztech Group Ltd - Investor Relations

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68a z t e c h a n n u a l r e p o r t 2 0 0 9F i n a n c i a l S t a t e m e n t s4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)(b)Financial risk management policies and objectives (cont’d)(v)Fair value of financial assets and financial liabilitiesThe carrying amounts of cash and cash equivalents, trade and other current receivables and payables and other liabilities approximatetheir respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classesof financial assets and liabilities are disclosed in the respective notes to financial statements.The fair values of financial assets and financial liabilities are determined as follows:• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquidmarkets are determined with reference to quoted market prices;• the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordancewith generally accepted pricing models based on discounted cash flow analysis using prices from observable current marketstransactions and dealer quotes for similar instruments; and• the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, discountedcash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives,and option pricing models for optional derivatives.The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets aredetermined with reference to quoted market prices.Except as detailed in the following table, management considers that the carrying amounts of financial assets and financial liabilitiesrecorded at amortised cost in the financial statements approximate their fair values:GROUP2009 2008Carrying Fair Carrying Fairamount value amount value$’000 $’000 $’000 $’000Financial liabilitiesFinance lease obligations 1,181 1,181 3,150 3,141Bank loans 48,219 48,432 66,484 66,874COMPANYFinancial liabilitiesBank loans 4,205 4,205 7,575 7,587
F i n a n c i a l S t a t e m e n t sa z t e c h a n n u a l r e p o r t 2 0 0 9694 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)(c)Capital risk management policies and objectivesThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain anoptimal capital structure to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjustthe amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sellassets to reduce borrowings. The Group’s overall strategy remains unchanged from 2008.Management monitors capital based on the Group’s return on shareholders’ fund and net gearing. The return on shareholders’ funds was13.7% for the current financial year ended December 31, 2009 (2008 : 12.9%). Net gearing was 11.8% for the current financial yearended December 31, 2009 (2008 : 33.7%).The return on shareholders’ funds is calculated as net profit attributable to owners of the parent divided by shareholders’ funds as at endof the reporting period.The net gearing (times) is calculated as net borrowings divided by shareholders’ funds. Net borrowings are calculated as total interestbearing loans and borrowings (Note 18) less cash and cash equivalents (Note 7).The Group and the Company are in compliance with all externally imposed financial covenant requirements on long term bank loans forthe financial years ended December 31, 2009 and 2008.5 RELATED COMPANY BALANCESRelated companies in these financial statements refer to members of the Group of companies. The intercompany balances are unsecured,interest-free and are repayable within the next twelve months unless stated otherwise.6 RELATED PARTY TRANSACTIONS(a)(b)Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one partyhas the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.By virtue of Section 7 of the Singapore Companies Act, Michael Mun Hong Yew is deemed to have an interest in the Company and in allthe subsidiaries of the Company.In accordance with FRS 24 - Related Party Disclosures, the close members of the family of Michael Mun Hong Yew are considered to berelated parties.(c)Some of the Group’s transactions and arrangements are with related parties and the effect of these on the basis determined between theparties are reflected in these financial statements. Such related party transactions are reviewed by the Audit Committee. The balanceswith related parties are unsecured, interest-free and repayable within the next twelve months unless otherwise stated.
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Powering GrowthAnnual Report 09
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AztecH’S GLOBAL REACHAztech at a
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F i n a n c i a l H i g h l i g h t
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V a l u e - a d d e d s t a t e m e
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L e t t e r t o s h a r e h o l d e
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B o a r d o f D i r e c t o r sa z
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Operations ReviewAztech Electronics
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o p e r a t i o n s r e v i e wa z
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Operations ReviewAz Marine / AZ Uni
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F i n a n c i a l S t a t e m e n t
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HEAD OFFICEAZTECH GROUP LTD31 Ubi R
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