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THONG GUAN INDUSTRIES BERHAD

Fair values

Recognised financial instruments

The carrying amounts approximate fair values due to the relatively short-term nature of these financial instruments in respect of cash and bank balances, receivables, payables and short term borrowings.

The Company provides financial guarantees to banks for credit facilities extended to certain subsidiaries. The fair value of such financial guarantees is not expected to be material as the probability of the subsidiaries defaulting on the credit lines is remote.

It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of The aggregate fair values of other financial liabilities carried on the balance sheet as at 31 December are shown below :

Group

Financial liabilities

Secured term loans Unsecured term loans

Carrying

Fair

amount

value

RM’000

RM’000

2007

320

* 320

7,902

* 7,902

Carrying

Fair

amount

value

RM’000

RM’000

2006

493

* 493

15,705

* 15,705

  • *

    The fair values of these fixed financial instruments are determined by discounting the relevant cash flows using current interest rates for similar financial instruments at the balance sheet date. Since the current interest rates do not significantly differ from the intrinsic rate of these financial instruments, the fair values of these financial instruments therefore, closely approximate their carrying values as at the balance sheet date.

Unrecognised financial instruments The contracted amount and fair value of financial instruments not recognised in the balance sheet as at 31 December are :

Contracted

Fair

Contracted

Fair

amount

value

amount

value

RM’000

RM’000

RM’000

RM’000

8,728

9,045

22,201

21,730

6,085

6,018

2,134

2,085

Forward foreign exchange contracts

  • -

    Sales

  • -

    Purchases

2007 2006

Forward exchange contracts are either marked to market using listed market prices or by discounting the contractual forward price and deducting the current spot rate.

29.

Subsequent events

Group

Subsequent to balance sheet date, the Customs Department of Wujiang District, Jiangsu Province,The People’s Republic of China, commenced a detailed inquiry into the customs’duties paid by one of the subsidiaries in China. As at to-date, the additional customs’ duties payable, if any, has yet to be determined by the Customs Authority.

Group and Company

Subsequent to balance sheet date, the Group and the Company incorporated a wholly-owned subsidiary in Viet- nam,TG Plaspack (Vietnam) Co.,Ltd..The proposed charter capital is VND80,000,000,000 (equivalent to approximately RM15,900,000).The charter capital will be increased as and when necessary.

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