The Group’s and the Company’s held-for-trading investments at December 31, 2010 and 2009 are carried at fair value using the market bid prices on the closing date method.

Held-for-trading investments include:

The Group and the Company hold more than 20 per cent of the voting power in the equity securities of a company listed in the US but it has no significant influence over the investee. In making their assessment, the directors considered the definition of significant influence in HKAS 28 Investment in Associates and, in particular, whether the Group has the power to participate in the financial and operating policy decisions of the investee. Considering that the Group has no representative on the investee’s board of directors and no right to appoint or remove a director to the board of directors, no exchange of management personnel with the investee nor any participation in the investee’s policy-making process, the directors of the Company concluded that the Group and the Company have no significant influence over the investee.

Bank balances carry interest at market rates which range from 0.11% to 0.23% (2009: 0.11% to 0.44%). Bank overdrafts carry interest at market rates which range from 3.25% to 5.00% (2009: 3.25% to 5.00%).

The aged analysis of trade payables presented based on the invoice date at the end of the reporting period is as follows:

The credit period on the purchase of goods is ranging from 30 days to 120 days (2009: 30 days to 120 days). The Group has financial risk management policies in place to ensure that all payables are settled within the credit time frame.

All the Group’s and Company’s bills payable at December 31, 2010 and 2009 are due within 120 days.

The warranty provision represents management’s best estimate of the Group’s outstanding liabilities on products sold, based on prior experience and industry averages for defective products. It is expected that the majority of this expenditure will be incurred in the next financial year.

The trade payable to an associate is aged of less than 120 days and payable within one year.

The provision relates to the restructuring of the Group’s manufacturing facilities in Germany. The balance of the provision is expected to be utilised in 2011 and there are no significant uncertainties regarding the amounts or timing of these cash flows.

The management of the Group expects that after the completion of the restructuring plan, there will be substantial savings in 2011 and afterwards.

It is the Group’s policy to lease certain of its plant and machinery, fixtures and equipment and motor vehicles under finance leases, with lease terms ranging from 3 years to 20 years. Interest rates underlying all obligations under finance leases are fixed at the respective contract dates. No arrangements have been entered into for contingent rental payments.

The maturity of obligations under finance leases is as follows:

The Group’s obligations under finance leases are secured by charges over the leased assets.

Bills discounted with a bank at an effective interest rate of 1.78% per annum (2009: 2.40% per annum) have a maturity profile of less than 120 days.

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from prior years.

The capital structure of the Group consists of net debt (which includes borrowings, discounted bills with recourse, convertible bonds and obligations under finance leases), net of cash and cash equivalents and equity attributable to owners of the Company, comprising issued share capital, reserves and retained profits.

Gearing ratio

The Group’s management reviews the capital structure on a semi-annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Group has a target gearing ratio of 35% determined as the proportion of net debt to equity. Based on the management’s recommendations, the Group expects to decrease its gearing ratio comparable to that of the 2009 level within the next 18 months through the continued generation of cash inflows by growth of the business.

The gearing ratio at the year end was as follows:

In addition, based on management recommendations, the Group will balance its overall capital structure through the payment of dividends, new share issues and share repurchases as well as the issue of new debt or the redemption of existing debt.