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Wool Stocktake : AWI Annual Report 2007-08
notes to the FinAnciAl stAtements 2 financial Risk management The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange, other price risks and aging analysis for credit risk. Risk management is carried out by the finance department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity. The Group and the parent entity hold the following financial instruments: consoLidated 2008 $’000 financiaL assets cash and cash equivalents current assets available for sale trade and other receivables (excluding prepayments) financiaL LiaBiLities trade and other payables (a) Market risk (i) Foreign exchange risk Following the acquisition, the Group now operates internationally and are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency and net investments in foreign operations. The Group’s exposure to foreign currency risk at the reporting date was as follows: 30 June 2008 cny ’000 trade receivables Bank accounts trade payables – 12,081 – euR ’000 277 594 (262) usd ’000 2,389 827 (121) cny ’000 – – – 30 June 2007 euR ’000 – – – usd ’000 – – – 64,895 – 13,335 78,230 14,370 2007 $’000 37,400 45,000 6,071 88,471 11,320 2008 $’000 59,862 – 9,034 68,896 10,280 PaRent 2007 $’000 37,272 45,000 6,199 88,471 11,320 AWI 07/08 FINANCIALS 83
AWI Annual Report 2008-09
Annual Report 2006-07