UOBKH/AR09 [web] - ChartNexus

42
Notes To Financial Statements (continued)
31 December 2009
4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT
(a) Categories of financial instruments
The following table sets out the financial instruments as at the end of the reporting period:
The Group The Company
2009 2008 2009 2008
$ $ $ $
Financial assets
Financial assets, at fair value through profit or loss 26,234,003 1,843,735 – –
Derivative financial instruments 7,791 4,559 – –
Loan and receivables (including cash and cash equivalents) 2,408,065,638 1,804,489,999 83,470,151 59,528,732
Available-for-sale financial assets
Financial liabilities
17,967,035 18,405,506 – –
Financial liabilities, at fair value through profit or loss 5,600 – – –
Derivative financial instruments 8,363 1,593 – –
Amortised cost (including loans and finance leases) 1,490,276,070 891,897,918 89,314,297 75,701,154
(b) Financial risk management policies and objectives
The Group’s activities undertaken by its subsidiaries in each country of operations expose it to a range of financial risks. These include
market risk (including currency risk, interest rate risk and price risk), credit risk, liquidity risk and capital risk.
The Group has in place controls to manage these risks to an acceptable level without stifling its business. The management continually
monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group’s financial performance. The Group uses financial instruments such as intercompany and foreign currency borrowings and foreign
exchange contracts to manage certain risk exposures.
Financial risk management of the Group is carried out by the Credit Committee and finance department of the Company and its respective
subsidiaries. The Credit Committee approves the financial risk management policies of the Company and its subsidiaries. Internal audit
undertakes both regular and ad hoc reviews of risk management controls and procedures and these are reported to the Credit Committee.
There has been no change to the Group’s exposure to these financial risks or the manner in which the Group manages and measures the
risk. Market risks exposures are measured using sensitivity analysis indicated below.
(i) Currency risk
Exposures to foreign currencies are monitored closely to ensure that there are no significant adverse financial effects to the Group
from changes in the exchange rates. The Group manages significant net exposures in each of the foreign currencies through
foreign currency borrowings and foreign exchange contracts.
The Group as a policy hedges all trade receivables and trade payables denominated in foreign currencies although it may from time
to time have some short term exposures due to timing differences. The Group enters into forward foreign exchange contracts and
foreign currencies borrowings to hedge its foreign currency risk.
The Group’s exposure to currency risks arises from:
● dealing in securities denominated in foreign currencies;
● having assets and liabilities denominated in non-functional currencies;
● holding non-local currencies (primarily in United States dollar, Hong Kong dollar and Malaysian ringgit) for working capital
purposes; and
● investments in foreign subsidiaries primarily in Hong Kong dollar and Thai baht, whose net assets are exposed to currency
translation risk at the end of the reporting period.