Creative 2011 Annual Report Download - page 57

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57
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
(c) Liquidity risk
To manage liquidity risk, the Group monitors its net operating cash ows and maintains an adequate level of cash and cash
equivalents and secured committed funding facilities from nancial institutions. In assessing the adequacy of these funding
facilities, management reviews its working capital requirements regularly.
As at 30 June 2011 and 30 June 2010, the Group’s nancial liabilities mature in less than 1 year’s time.
(d) Capital risk
The Group’s objectives when managing capital, which the Group denes as total equity, are to safeguard the Group’s ability
to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order
to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to
shareholders, issue new shares, buy back issued shares or obtain new borrowings.
As at 30 June 2011, the Group does not have any outstanding bank borrowings and the Group is not subject to any externally
imposed capital requirements.
(e) Fair value measurements
Effective 1 July 2009, the Group adopted the amendment to FRS 107 which requires disclosure of fair value measurements
by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie.
as prices) or indirectly (ie. derived from prices) (Level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
The following table presents the assets and liabilities measured at fair value at 30 June 2011:
US$’000
Level 1 Level 2 Level 3 Total
Group
Financial assets, available-for-sale
– Listed equity securities 23,200 – – 23,200
– Unlisted equity securities – – 13,276 13,276
23,200 – 13,276 36,476
Fair values for listed equity securities are determined using quoted market prices at the balance sheet date. These instruments
are included in Level 1.
Fair values for unlisted equity securities are determined by using valuation techniques. The Group uses a variety of methods,
such as asset values, and makes assumptions that are based on market conditions existing at each balance sheet date. These
instruments are included in Level 3.
The following table presents the changes in Level 3 instruments for the nancial year ended 30 June 2011:
US$’000
Group
Beginning of nancial year 11,365
Purchases of level 3 securities 1,763
Fair value losses recognised in
- other comprehensive income 148
End of nancial year 13,276