Annual Report 2011 - QuamIR

Notes to the Consolidated Financial StatementsFor the year ended 31 March 201136. Financial Instruments (continued)36.2 Financial risk management objectives and policiesThe Group’s major financial instruments include trade and other receivables, amount due from anon-controlling interest of a subsidiary, bank balances and cash, trade and other payables, amountdue to a non-controlling interest of a subsidiary, amounts due to related companies, convertiblebonds and promissory note. Details of these financial instruments are disclosed in the respectivenotes. The risks associated with these financial instruments include market risk (foreign currencyrisk, interest rate risk and other price risk), credit risk and liquidity risk. The policies on how tomitigate these risks are set out below. The management manages and monitors these exposuresto ensure appropriate measures are implemented on a timely and effective manner.There has been no change to the types of the Group’s exposure in respect of financial instrumentsor the manner in which it manages and measures the risks.36.2.1 Market riskForeign currency risk managementThe Group’s exposure to currency exchange rates is minimal as the group companies usuallyhold most of their financial assets/liabilities in their own functional currencies.Transactional currency exposures arise from revenue or cost of sales by operating units incurrencies other than the unit’s functional currency. Substantially all the Group’s revenueand cost of sales are denominated in the functional currency of the operating units makingthe revenue, and substantially all the cost of sales are denominated in the operating unit’sfunctional currency. Accordingly, the directors consider that the Group is not exposed tosignificant foreign currency risk.The Group currently does not have a foreign currency hedging policy. However, themanagement monitors foreign exchange exposure and will consider hedging significantforeign currency exposure should the need arise.Interest rate risk managementThe Group is not exposed to significant fair value interest rate risk and cash flow interestrate risk. The Group currently does not have an interest rate hedging policy. However, themanagement monitors interest rate exposure and will consider hedging significant interestrate exposure should the need arise.Price riskAs the Group has no significant investments in financial assets at FVTPL or AFS financialassets, the Group is not exposed to significant price risk.Annual Report 2011107