Annual Report 2011 - Food Junction

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88 Notes to the Financial Statements (cont’d) 31 December 2011 24. Financial risk management objectives and policies (cont’d) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s exposure to market risk for changes in interest rates relates mainly to its surplus funds placed with banks. Surplus funds are placed as fixed deposits with reputable banks which yield better returns compared to cash at bank. The deposits provide the Group and the Company with the flexibility to meet its working capital and capital investment needs. Information relating to the Group’s and the Company’s interest rate exposure is disclosed in Note 10. At the end of the reporting period, it is estimated that a general increase of 5 basis point in interest rates would increase the Group’s profit after tax by $1,070 (2010: $1,008), whereas a 5 basis point decrease would have an equal but opposite effect. This analysis assumes that all other variables remain constant. 25. Fair value of financial instruments Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value Trade receivables, deposits and other receivables (current), fixed deposit pledged, cash and cash equivalents, trade payables, other payables, deposits received and accruals, and amount due from subsidiary companies The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature. Deposits and other receivables (non-current) Management believes that the carrying amount recorded at the balance sheet date approximate its fair value as the interest rates used to amortise the non-current deposits and other receivables closely approximate the market interest rates on or near the end of the reporting period. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value Company Annual Report 2011 2010 Carrying Carrying amount Fair value amount Fair value $’000 $’000 $’000 $’000 Financial assets: Loan to subsidiary companies 9,860 * 3,250 * * Loan to subsidiary companies Fair value information has not been disclosed for the loan to subsidiary companies that are carried at cost because fair value cannot be measured reliably. These loans have no repayment terms and are repayable only when the cash flows of the borrower permit.
Notes to the Financial Statements (cont’d) 31 December 2011 26. Segment information For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows: The food courts segment is the management of food courts. The food and beverages (F&B) segment is in the sales of food and beverages. The corporate segment is involved in Group-level corporate services. Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Allocation basis and transfer pricing Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly cash and bank balances, fixed deposits, provision for income tax and deferred tax liabilities. Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation. (a) Operating Segments 2011 Food courts F&B Corporate Eliminations Group $’000 $’000 $’000 $’000 $’000 Revenue: Turnover - external sales 22,920 32,792 – – 55,712 - inter-segment sales 5,877 – 1,860 (7,737) – Other operating income 883 391 1,000 (1,000) 1,274 Total revenue 29,680 33,183 2,860 (8,737) 56,986 Results: Interest income 384 (16) – – 368 Depreciation 2,105 909 – – 3,014 Other non-cash expenses (Note i) 957 580 221 – 1,758 Taxation 725 388 (25) (18) 1,070 Segment profit/(loss) 4,209 (2,135) – (1,158) 916 Assets: Segment assets (Note ii) 28,637 12,130 10,683 – 51,450 Liabilities: Segment liabilities (Note iii) (16,063) (4,004) (678) – (20,745) Capital expenditure (Note iv) 3,002 1,336 – – 4,338 Annual Report 89
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Annual Report 2011 - Food Junction

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