Annual Report - QuamIR

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Notes to the Consolidated Financial Statements (Continued) 3 Financial risk management (Continued) 3.1 Financial risk factors (Continued) (a) Market risk (Continued) (ii) Interest rate risk The Group’s interest-rate risk arises from bank borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk due to fluctuation of the prevailing market interest rate. The Group’s income and operating cash flows are substantially dependent of changes in market interest rates. The Group does not use any derivative contracts to hedge its exposure to interest rate risk. However, management will consider hedging significant interest rate exposures should the need arise. As at 31 December 2011, if the interest rate had increased/decreased 100 basis points with all other variables held constant, the Group’s profit before income tax would have decreased by HK$28.0 million or increased by HK$27.9 million (2010: the Group’s loss before income tax would have increased/decreased by HK$33.1 million). 3 3.1 (a) (ii) 100 28,000,000 27,900,000 33,100,000 (iii) Price risk The Group has minimal exposure to price risk in 2010 and 2011. (iii) (b) Credit risk The Group is exposed to credit risk in its restricted cash, cash and cash equivalents and trade and other receivables. (b) The carrying amount of restricted cash, cash and cash equivalents and trade and other receivables, represent the Group’s maximum exposure to credit risk in relation to its financial assets. To manage the credit risk associated with restricted cash and cash and cash equivalents, most of the deposits are mainly placed with certain state-owned banks in the PRC which are high-credit quality financial institutions and banks with high credit rankings in Hong Kong. 110 HKC (Holdings) Limited • <strong>Annual</strong> <strong>Report</strong> 2011
Notes to the Consolidated Financial Statements (Continued) 3 Financial risk management (Continued) 3.1 Financial risk factors (Continued) (b) Credit risk (Continued) To manage the credit risk associated with trade and other receivables and deposits paid for a property development project, the Group adopts risk control to assess the credit quality of the customers and debtors, taking into account their financial positions and past experience. 3 3.1 (b) There is no concentration of credit risk with respect to trade receivables from third party customers as the customer bases are widely dispersed in different sectors and industries. In addition, the Group and the Company monitor the exposure to credit risk in respect of the financial assistance provided to subsidiaries, associated companies and jointly controlled entities through exercising control and significant influence over their financial and operating policy decisions and reviewing their financial positions on a regular basis. (c) Liquidity risk Liquidity risk is the risk that the Group is unable to meet its current obligations when they fall due. The Group measures and monitors its liquidity through the maintenance of prudent ratios regarding the liquidity structure of the overall assets, liabilities, loans and commitments of the Group. The Group also maintains a conservative level of liquid assets to ensure the availability of sufficient cash flows to meet any unexpected and material cash requirements in the course of ordinary business. (c) The table below analyses the Group’s and the Company’s contractual maturity for their financial liabilities. The amounts disclosed in the table have been drawn up with reference to the undiscounted cash flows of the financial liabilities based on the earliest date on which the Group and the Company can be required to pay. • 111
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HKC (HOLDINGS) LIMITED (incorporat
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Contents 2 Corporate Information
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Corporate Information (Continued)
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Chairman’s Statement (Continued)
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Chairman’s Statement (Continued)
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Management Discussion and Analysis
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Corporate Governance Report (Contin
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Directors and Senior Management (Co
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Report of the Directors (Continued)
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Notes to the Consolidated Financial
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Principal Subsidiaries, Associated
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Five-Year Financial Summary 2011 2
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Schedule of Principal Properties (C
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HKC (HOLDINGS) LIMITED 9/F., Tower
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Annual Report - QuamIR

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