Annual Report 2011 - Goodbaby International Holdings Limited

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NOTES TO FINANCIAL STATEMENTS 31 December 2011 39. FAIR VALUE AND FAIR VALUE HIERARCHY The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: fair values measured based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: fair values measured based on valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; Level 3: fair values measured based on valuation techniques for which any inputs which have a significant effect on the recorded fair value are not based on observable market data (unobservable inputs). Assets measured at fair value gb international 31 December 2011 Level 1 Level 2 Level 3 (HK$’000) (HK$’000) (HK$’000) (HK$’000) Foreign exchange forward contracts 13,947 – 13,947 – Liabilities measured at fair value 31 December 2010 Level 1 Level 2 Level 3 (HK$’000) (HK$’000) (HK$’000) (HK$’000) Foreign exchange forward contracts 2,885 – 2,885 – During the year, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements (2010: none).
NOTES TO FINANCIAL STATEMENTS 31 December 2011 40.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s principal financial liabilities, other than derivatives, comprise interest-bearing bank borrowings, trade payables, other payables and amounts due to related parties. The main purpose of these financial liabilities is to raise finance for the Group’s operations. The Group has various financial investments such as trade and other receivables, cash and cash equivalents and amounts due from related parties, which arise directly from its operations. The Group also enters into derivative transactions, primarily forward currency contracts. The purpose is to manage the currency risks arising from the Group’s operations. It is, and has been throughout the year, the Group’s policy that no trading in derivatives for speculative purposes shall be undertaken. The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks which are summarised below. Interest rate risk Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s bank borrowings with floating interest rates. The interest rate and terms of repayment of borrowings are disclosed in note 28. The Group has not used any interest swaps to hedge its exposure to interest rate risk. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings as follows: / 151 (Decrease)/ Increase/decrease increase in in interest rate profit before tax (HK$’000) Year ended 31 December 2011 +5%/-5% (581)/581 Year ended 31 December 2010 +5%/-5% (917)/917 A reasonably possible change of 5% points in the interest rate with all other variables held constant has no impact on the Group’s equity other than retained earnings.
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gbinternational.com.hk
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CORPORATE INFORMATION gb internatio
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CORPORATE INFORMATION DIRECTORS Exe
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7 Chairman’s Statement
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Dear Shareholders, I wish to presen
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Looking forward, the Group will con
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OVERVIEW For the financial year end
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) Our OBM model was systematically
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FINANCIAL REVIEW — CONTINUING OPE
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Cost of Sales, Gross Profit and Gro
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Income Tax Expense Our income tax e
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Pledge of Assets As at 31 December
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gb international
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The Board is pleased to present thi
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development efforts of the Company
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Specific enquiry has been made of a
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The key elements of the Group’s i
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gb international
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The Directors are pleased to presen
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pursuant to which each of the Coven
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Directors’ Interest in the Shares
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During the year under review, the t
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DISCLOSURE UNDER RULE 13.20 OF THE
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INDEPENDENT AUDITORS’ REPORT We b
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CONSOLIDATED STATEMENT OF COMPREHEN
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CONSOLIDATED STATEMENT OF FINANCIAL
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CONSOLIDATED STATEMENT OF CASH FLOW
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STATEMENT OF FINANCIAL POSITION 31
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NOTES TO FINANCIAL STATEMENTS 31 De
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Annual Report 2011 - Goodbaby International Holdings Limited

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