Annual Report 2007 - Hmdatalink.com hm datalink

Notes to the consolidated financial statementsfor the year ended 31 December 200730. CAPITAL RISK MANAGEMENT (Continued)Gearing ratio (Continued)The gearing ratio at the balance sheet date was as follows:2007 2006HK$’000HK$’000Debt (i) 329,790 716,308Equity (ii) 2,441,440 1,030,157Debt to equity ratio 14% 70%(i)Debt comprising borrowings, convertible bonds and amount due to immediate holding company as detailed innotes 17(b), 19 and 22 respectively.(ii)Equity includes all capital and reserves attributable to equity holders of the Company.The significant improvement in the gearing ratio is mainly due to issue of ordinary shares for cash andconversion of convertible bonds to ordinary shares during the year.31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESExposure to market risk (including interest rate risk and currency risk), credit and liquidity risks arises inthe normal course of the Group’s business. Market risk exposures are measured using sensitivity analysis.There has been no change to the Group’s exposure to market risks or the manner in which it manages andmeasures the risk.These risks are limited by the Group’s financial management policies and practices described below.Credit riskThe Group’s credit risk is primarily attributable to trade receivables. Management has a credit policy in placeand the exposures to these credit risks are monitored on an ongoing basis.In respect of trade and other receivables, credit evaluations are performed on customers requiring credit overa certain amount. These evaluations focus on the customer’s past history of making payments when due andcurrent ability to pay, and take into account information specific to the customer as well as pertaining to theeconomic and business environment in which the customer operates. Normally, the Group does not obtaincollateral from customers.At the balance sheet date, all the trade receivables were due from the Group’s associate.GEELY AUTOMOBILE HOLDINGS LIMITED103ANNUAL REPORT 2 0 0 7