Powering growth - Aztech Group Ltd - Investor Relations

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72a 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 s8 TRADE RECEIVABLES (cont’d)Movements in the allowance for doubtful debts:GROUP2009 2008$’000 $’000Balance at beginning of the year 539 541Exchange difference (14) (2)Increase in allowance recognised in profit or loss 27 -Balance at end of the year 552 539The Group’s and the Company’s trade receivables that are not denominated in the functional currencies of the respective entities are as follows:GROUPCOMPANY2009 2008 2009 2008$’000 $’000 $’000 $’000United States dollars 24,390 31,069 101 5,741Euro - 240 - -9 OTHER RECEIVABLES AND PREPAYMENTSGROUPCOMPANY2009 2008 2009 2008$’000 $’000 $’000 $’000CurrentOther receivables and prepayments 2,430 2,123 249 343Insurance receivable 3,812 - - -Subsidiaries (Notes 5 and 12) - - 46,094 29,594Allowance for doubtful other receivables - - (3,805) (3,805)6,242 2,123 42,538 26,132Non-currentDeposit for vessel payment 2,691 8,822 - -Total 8,933 10,945 42,538 26,132The insurance receivable was for two insurance claims submitted for the damage sustained to two of the Group’s vessels. As at the date of thisreport, one of the insurance claims amounting to $1,817,000 denominated in US$1,296,000 has already been received.The Company’s other receivables due from subsidiaries are repayable on demand and interest-free except for balance with a subsidiary amountingto $31,665,000 (2008 : $20,743,000) which is subject to interest at 1.85% (2008 : 1.85%) per annum above USD SIBOR. The average age ofthese receivables is less than 60 days (2008 : 60 days). The Company has not made any further allowance in 2009 as the management are ofthe view that receivables are recoverable.
F i n a n c i a l S t a t e m e n t sa z t e c h a n n u a l r e p o r t 2 0 0 9739 OTHER RECEIVABLES AND PREPAYMENTS (cont’d)The Group’s and the Company’s other receivables and prepayments that are not denominated in the functional currencies of the respectiveentities are as follows:GROUPCOMPANY2009 2008 2009 2008$’000 $’000 $’000 $’000Renminbi 1,105 1,123 - -United States dollars 2,698 205 108 -10 DERIVATIVE FINANCIAL INSTRUMENTSAssetsLiabilities2009 2008 2009 2008$’000 $’000 $’000 $’000GROUPForward foreign exchange contracts - 205 (16) (85)Interest rate swap contracts - - (18) -- 205 (34) (85)The derivative financial instruments outstanding as at end of the reporting period are as follows:(i)Forward foreign exchange contractIn the current financial year, the Group has entered into a non-deliverable forward contract for US$ and RMB in which the Group isentitled/obliged to receive/pay the difference between the contracted rate of 6.885 and the prevailing spot price on the nominal amountof US$800,000 per month for a period of 15 months. There is no downsize risk for the first 6 months tenure and the knock-out rate is6.800. As at December 31, 2009, the remaining tenure of the contract was 12 months.In 2008, the Group entered into a US$ versus HK$ structured forward contract which gives the Group opportunities to sell US$1 million/buy HK$ at a more favourable exchange rate than the market exchange rate. The contract had matured during the year.(ii)Interest rate swap contractThe Group has entered into an interest rate swap contract at a fixed rate of 2.175% per annum with the effective date on May 10, 2010on the notional amount of US$3,000,000 which will be amortised over 10 quarters according to the vessel loan repayment schedule.The swap was structured to hedge the USD SIBOR interest rate of the vessel loan by converting from a variable-rate instrument to afixed-rate instrument. As at December 31, 2009, the remaining tenure of the contract was 10 quarters.The Group uses widely recognised valuation models for determining the fair value of forward foreign exchange contracts and interest rateswaps. The models incorporate various inputs including foreign exchange spot and forward rates and interest rate curves. For these financialinstruments, inputs into models are market observable and are therefore included within Level 2 of the fair value hierarchy of FRS 107.
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