Page 163 - ar2011

THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2011
42 FAIR VALUE OF FINANCIAL INSTRUMENTS (cont’d)
A. Fair value of financial instruments that are carried at fair value (cont’d)
Impact of changes to key assumptions on fair value of Level 3 financial instruments
The following table shows the impact on fair value of Level 3 financial instruments by using reasonably possible
alternative assumptions:
Effect of reasonably possible alternative assumptions
Carrying
amount
Effect of change
in tin price
Effect of change in
discount rate
Group +1% -1% +0.5% -0.5%
$’000 $’000 $’000 $’000 $’000
Available-for-sale financial asset
- Equity instrument
(unquoted) 7,242 234 (230) (116) 123
For unquoted equity instruments, the fair value had been determined using a valuation technique based on
assumptions of future tin price and discount rate. The valuation requires management to make estimates
about expected future cash flows of the shares which are discounted at current market rates. The Group
adjusted the future tin price and discount rate by 1% and 0.5% respectively from management’s estimates,
which are considered by the Group to be within a range of reasonably possible alternatives.
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
Current trade and other receivables and payables, Non-current other receivables and payables (notes 19 and
33), Current borrowings and Non-current borrowings at floating rate (note 31).
The carrying amounts of these financial assets and liabilities are reasonable approximations of fair values,
either due to their short-term nature or that they are floating rate instruments that are re-priced to market
interest rates on or near the end of the reporting period.
Included in the other receivables is an unsecured loan which is amortised at fixed rate cost. Its carrying amount
is a reasonable approximation of its fair value at the end of the reporting period.