29.
COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Contingent liabilities
Guarantees
Intra-group financial guarantees comprise corporate guarantees granted by the Company to banks in
respect of banking facilities amounting to $5,630,000 (2014: $7,434,200) to secure banking facilities
provided to certain subsidiaries. The financial guarantees will expire when the loans have been paid
and discharged and/or when the banking facilities are no longer available to the subsidiaries.
The principal risk to which the Company is exposed is credit risk in connection with the guarantee
contracts it has issued. The credit risk represents the loss that would be recognised upon a default
by the subsidiaries for which, the guarantees were given on behalf of.
There are no terms and conditions attached to the guarantee contracts that would have a material
effect on the amount, timing and uncertainty of the Company’s future cash flows.
In the opinion of the directors, no loss is anticipated from these guarantees.
The fair values of the financial guarantee contracts have not been recognised on the balance sheet
at 31 December 2015 of the Company as the Company is of the view that the fair values of the
corporate guarantees are not significant and that no material losses will arise in respect of the
guarantees provided at the date of these financial statements.
30.
SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their products and
services, and has two reportable operating segments as follows:
(i)
The trading segment is a supplier of steel products and includes the holding of investments
in subsidiaries in the business of steel distribution and provision of industrial steel services.
(ii)
The manufacturing segment produces construction steel products and provides related
engineering services.
Except as indicated above, no operating segments have been aggregated to form the above reportable
operating segments.
Management monitors the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated
based on operating profit or loss.
Transactions between operating segments are generally based on terms determined on commercial
basis.
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NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2015
