0175 Geely Automobile Holdings Limited Annual Report 2011

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Annual Report 2011Geely Automobile Holdings LimitedNOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSFor the year ended 31 December 201137. Financial Risk Management Objectives and Policies (Continued)Currency riskMajority of the Group’s sales and purchases are conducted with currencies that are denominated in a currencywhich is also the functional currency of the operations to which they relate.The following table details the Group’s exposure at the balance sheet date to currency risk arising from recognisedassets or liabilities denominated in a currency other than the functional currency of the entity to which theyrelate.2011 2010Hong United Hong UnitedKong States British Kong States Britishdollars dollars pounds dollars dollars poundsRMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000Bank balances and cash 29,034 80,221 93 257,491 65,321 104Trade and other receivables 1,627 709,501 – – 580,093 –Borrowings (127,600) (25,319) – (17,600) – –Trade and other payables – (36,132) (691) – (52,266) –As the Group is mainly exposed to the effects of fluctuation in United States dollars/Hong Kong dollars, thefollowing table indicates the approximate change in the Group’s profit after tax and retained earnings. The sensitivityanalysis includes outstanding foreign currency denominated monetary items and adjusts their translation at theperiod end for a 5% change in foreign currency rate. The stated changes represent management’s assessment ofreasonably possible changes in foreign exchange rates over the period until the next annual balance sheet date.Results of the analysis as presented in the below table represent an aggregation of the effects on each of theGroup entities’ profit after tax and retained earnings measured in the respective functional currencies, translatedinto Renminbi at the exchange rate ruling at the balance sheet date for presentation purposes.Impact ofImpact ofUnited States dollarsHong Kong dollars2011 2010 2011 2010RMB’000 RMB’000 RMB’000 RMB’000Profit after tax/Retained earnings 27,310 22,243 (4,848 ) 11,994Fair value of financial instrumentsThe fair value of financial assets and financial liabilities are determined as follows:• the carrying amounts of the Group’s current financial assets, including trade and other receivables andbank balances and cash, and the Group’s current financial liabilities, including bank borrowings, trade andother payables approximate their fair values due to their short maturities;• the fair value of financial assets and financial liabilities with standard terms and conditions and traded onactive liquid markets are determined with reference to quoted market bid prices and ask prices respectively;and• the fair value of other financial assets and financial liabilities (including convertible bonds) are determined inaccordance with generally accepted pricing models based on discounted cash flow analysis using prices orrates from observable current market transactions as input. For an option-based derivative, the fair valueis estimated using option pricing model (for example, the binomial model).121
Annual Report 2011Geely Automobile Holdings LimitedNOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSFor the year ended 31 December 201137. Financial Risk Management Objectives and Policies (Continued)Fair value of financial instruments (Continued)Except as detailed in the following table, the directors consider that the carrying amounts of financial assets andfinancial liabilities recorded in the consolidated financial statements approximate their fair values:2011 2010CarryingCarryingamount Fair value amount Fair valueRMB’000 RMB’000 RMB’000 RMB’000Convertible bonds 1,526,760 1,542,567 1,483,012 1,454,873The following table presents the carrying value of the Group’s financial instruments measured at fair value at thebalance sheet date across the three levels of the fair value hierarchy defined in HKFRS 7, Financial Instruments:Disclosures, with the fair value of each financial instrument categorised in its entirety based on the lowest levelof input that is significant to that fair value measurement. The levels are defined as follows:Level 1 (highest level):Level 2:Level 3 (lowest level):fair values measured using quoted prices (unadjusted) in active markets for identicalfinancial instrumentsfair values measured using quoted prices in active markets for similar financialinstruments, or using valuation techniques in which all significant inputs are directlyor indirectly based on observable market datafair values measured using valuation techniques in which any significant input is notbased on observable market dataLevel 1 Level 2 Level 3 Total2011 RMB’000 RMB’000 RMB’000 RMB’000AssetsFinancial assets at fair valuethrough profit or loss 12,225 – – 12,225Available-for-sale financial assets – 2,286 – 2,28612,225 2,286 – 14,511Level 1 Level 2 Level 3 Total2010 RMB’000 RMB’000 RMB’000 RMB’000AssetsFinancial assets at fair valuethrough profit or loss 12,947 – – 12,947Available-for-sale financial assets – 100,000 – 100,00012,947 100,000 – 112,947There was no transfer between instruments in Level 1 and Level 2 for the year ended 31 December 2011 and2010.122
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CONSOLIDATEDSTATEMENT OF COMPREHENS
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0175 Geely Automobile Holdings Limited Annual Report 2011

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