Annual Report 2010 - Leeden Limited

Notes to the Financial Statementsfor the Financial Year ended 31 December 2010Leeden Limited Annual Report 201038. Financial instruments (cont’d)A. Fair value of financial instruments that are carried at fair value (cont’d)Derivatives (Note 23): Forward currency contracts and interest rate swap contracts are valued using a valuationtechnique with market observable inputs. The most frequently applied valuation techniques include forward pricingand swap models, using present value calculations. The models incorporate various inputs including the creditquality of counterparties, foreign exchange spot and forward rates and interest rate curves.B. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts arereasonable approximation of fair valueAmounts due from/(to) related parties (Note 19), Trade debtors (Note 21), Other debtors (Note 22), Amounts due tobankers (Note 25),Trade creditors, Other creditors and accruals (Note 26), Hire purchase creditors (Note 27) andLong-term loans (Note 28).The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, eitherdue to their short-term nature or that they are floating rate instruments that are re-priced to market interest rateson or near the balance sheet date.C. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are notreasonable approximation of fair valueUnquoted investments (Note 14): Fair value information has not been disclosed for the Group’s investments inequity instruments that are carried at cost because fair value cannot be measured reliably. These equity instrumentsrepresent ordinary shares in a company that is not quoted on any market and does not have any comparableindustry peer that is listed. The Group does not intend to dispose of this investment in the foreseeable future.39. Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthycapital ratios in order to support its business and maximise shareholder value.The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. Tomaintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, return capital toshareholders or issue new shares.The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Groupincludes within net debt, loans and borrowings, trade and other creditors, less cash and cash equivalents. Capital includesequity attributable to the equity holders of the parent.GroupNote 2010 2009$’000 $’000Loans and borrowings 64,242 66,085Trade and other creditors 22,703 23,879Amounts due to related parties 3,682 3,347Less: Cash and cash equivalents 24 (21,513) (20,510)Net debt 69,114 72,801Equity attributable to owners of the parent 75,536 70,296Capital and net debt 144,650 143,097Gearing ratio 48% 51%103