Annual Report 2011 - Food Junction

84
Notes to the Financial Statements (cont’d)
31 December 2011
23. Contingent liabilities and commitments (cont’d)
(d) Capital commitments
Annual Report
Capital expenditure contracted for as at the balance sheet date but not recognised in the
financial statements is as follows:
Group
2011 2010
$’000 $’000
Capital commitments in respect of leasehold improvements 205 –
24. Financial risk management objectives and policies
The Group and Company is exposed to financial risks arising from its operations and the use of
financial instruments. The key financial risks include liquidity risk, foreign currency risk, credit risk
and interest rate risk. The Board reviews and agrees policies for the management of these risks. The
audit committee provides independent oversight to the effectiveness of the risk management process.
The Group and Company do not apply hedge accounting.
The following sections provide details regarding the Group’s and the Company’s exposure to the abovementioned
financial risks and the objectives, policies and processes for the management of these risks.
There has been no change to the Group’s exposure to these financial risks or the manner in which it
manages and measures the risks.
Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial
obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises
primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the
Company’s objective is to maintain flexibility through the use of liquid financial assets.
The Group’s and the Company’s liquidity risk management policy is to monitor and maintain a level of
cash and cash equivalents deemed adequate by the management to finance the Group’s operations
and mitigate the effects of fluctuations in cash flows.