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NOTES TO THEFINANCIAL STATEMENTSFor the year ended 30 June 2009Note 2 Financial risk managementThis note presents information about each of the financial risks that the Company and Group is exposed to, the policiesand processes for measuring and managing financial risk, and the management of capital. Further quantitative disclosuresare included throughout this financial report.The Group’s activities expose it to a variety of financial risk, market risk (especially gold price and exchange rate risk),credit risk, liquidity risk and cash flow interest rate risk. The Group’s overall risk management program focuses on theunpredictability of commodity markets and seeks to minimise potential adverse effects on the financial performance ofthe Group. The Group uses derivative instruments as appropriate to manage certain risk exposures.Risk management is carried out by a centralised treasury function in accordance with policies approved by the Board of Directors.(a) Market riskMarket risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates, interest rates andequity prices will affect the Group’s income or the value of its holdings of financial instruments. The Group may enter intoderivatives, and also incur financial liabilities, in order to manage market risks. All such transactions are carried out withinguidelines set by the Board.(i) Commodity price riskThe Group is exposed to United States dollar gold price risk. This risk arises through the sale of gold.The table below shows the effect of the 5 year average annual Australian dollar gold price movement on the incomestatement and trade receivables balance at year end:5 year averageannual pricemovementChange in tradereceivables2009 2008$’000 $’000Commodity: gold (AUD) 16% 676 806The Group may, from time to time, use gold derivatives to manage commodity price risk. The Group generally seeks to applyhedge accounting in order to manage volatility in profit and loss. During the year, the Company closed out its gold putoptions, which were predominantly taken out to underpin the investment return on the Gwalia development. As aconsequence of the substantial increase in the Australian dollar gold price, and significant increase in the mark-to-marketvalue of those options, together with the commencement of production at Gwalia, the Company decided that the optionswere no longer required, and that the proceeds from a close out could be more effectively deployed.At 30 June 2009, the Group did not hold any derivative instruments to hedge against movements in the gold price,however this is reviewed by the Board as part of the risk management framework.(ii) Currency riskThe Group is exposed to Australian dollar currency risk on gold sales, denominated in US dollars. The Group may from timeto time use Australian dollar derivatives to manage the commodity and currency rates.(iii) Equity securities price riskThe Group and the Parent Entity are exposed to equity securities price risk. This arises from investments held by the Groupand Parent Entity and classified on the balance sheet either as available-for-sale or at fair value through profit or loss.All of the Group’s equity investments are in resource companies listed on the Australian Securities Exchange.The table below summarises the impact of increases/decreases of the All Ordinaries and Resources indices on the Group’spost-tax result for the year, and on equity for equity investments held at 30 June 2009. The analysis is based on theassumption that the equity indices had increased/decreased by the percentages shown, with all other variables heldconstant, and all the Group’s equity instruments moved in line with changes in indices.index movement Impact on post-tax result Impact on equity2009 2008 2009 2008 2009 2008% % $’000 $’000 $’000 $’000All Ordinaries (25) (15) (1,151) (832) (2,687) –S&P/ASX 300 Metals & Mining (35) 22 (1,552) (7,263) (3,623) –60