Strength & Stability - ECS Holdings Limited

29 Financial Risk Management (Cont’d)
Fair Values
The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the
Group and Company.
Derivatives
The fair value of forward exchange contracts is based on their quoted market price, if available. If a quoted market price is not
available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for
the residual period to maturity of the contract using a risk-free interest rate (based on government bonds).
The fair value of the hybrid swap is based on a broker quote. The quote is tested for reasonableness by discounting estimated
future cash flows based on the terms and maturity of the contract and using market interest rates for a similar instrument at the
measurement date.
Other financial assets
It is not practicable to estimate the fair value of the Group’s long-term unquoted equity investments because of the lack of quoted
market prices.
Other short term financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables,
cash and cash equivalents, and trade and other payables) approximate their fair values because of the short period to maturity. All
other financial assets and liabilities are discounted to determine their fair values.
Financial liabilities
2008 2007
Carrying
amount
Fair
value
Carrying
amount
Fair
value
$’000 $’000 $’000 $’000
Group
Unsecured bank overdrafts 1,016 1,016 - -
Unsecured trade financing 25,621 25,621 29,902 29,902
Unsecured bank loan 166,555 166,555 154,280 154,280
Finance lease liabilities 222 222 27 27
Derivative liabilities - - 6,329 6,329
193,414 193,414 190,538 190,538
Company
Unsecured bank loans 87,260 87,260 62,790 62,790
Notes to the
Financial Statements
These notes form an integral part of the financial statements.
Annual Report 2008
p.
93