Notes to the Financial Statements
(Cont’d)
For the financial year ended 30 April 2016
(In Singapore Dollar)
STAMFORD TYRES CORPORATION LIMITED
108 |
DRIVING IT UP
37.
Fair value of financial instruments (cont’d)
(b)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are reasonable approximation of fair value
The management has determined that the carrying amounts of cash and short-term deposits,
current trade and other receivables, current trade and other payables and current bank loans based
on their notional amounts, reasonably approximate their fair values because these are mostly short-
term in nature or are re-priced frequently within a year.
The estimated fair values of the Group’s and Company’s borrowings approximates their carrying
amounts, based on borrowing rates which would be available to the Company at the end of each
reporting period.
(c)
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
The Company has non-current interest-free receivables extended to subsidiary companies, which
either form part of the Company’s net investment in subsidiary companies or are not expected to
be repaid until the cash flows of the subsidiary companies permit. It is impractical to determine the
fair value of these receivables as the timing of the future cash flow repatriation cannot be estimated
reliably. Therefore, such loans are carried at cost.
38.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit
rating and healthy capital 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. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives,
policies or processes during the years ended 30 April 2016 and 30 April 2015.
The Group monitors capital using a gearing ratio, which is bank borrowings divided by distributable net
assets. The Group’s policy is to keep the gearing ratio at less than 3 times. Bank borrowings include trust
receipts, short-term and long-term loans.
