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NOTES TO THE FINANCIAL STATEMENTS
– 31 December 2012
28. Fair value of financial instruments
Fair values
The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between
knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale.
Management has determined that the carrying amounts of cash and cash equivalents, trade and other receivables, trade
and other payables reasonably approximate their fair values because these are mostly short term nature.
The fair values of the non-current school lease deposits and staff housing deposits approximate their carrying value and
are estimated using the discounted estimated cash flow analysis. Where repayment terms are not fixed, future cash
flows are projected based on management’s best estimates. The discount rates used are the current market incremental
lending rates for similar types of lending and borrowing arrangements.
29. 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 31 December 2011 and 2012.
The Group is in net cash position. The Group will continue to be guided by prudent financial policies which is to finance
the operations mainly through cash generated from the operating activities.
Group
2012 2011
S$ S$
Total gross debt ^ – –
Equity attributable to owners of the company
Share capital 31,219,241 31,219,241
Revenue reserve 22,382,439 9,725,918
Other reserves 13,830,360 13,830,474
67,432,040 54,775,633
Gross debt equity ratio –% –%
Cash and bank balances, fixed deposits 94,456,168 79,628,861
Less: Total gross debt – –
Net cash position 94,456,168 79,628,861
^ Gross debt relates to loans and borrowings. The Group does not have loans and borrowings as at 31 December 2011 and 2012.
8 Overseas Education Limited AR 2012
Investing In Education
W130220-Overseas Education Limited AR 2012 Financial p25-92.indd 83 26/3/13