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Wool Stocktake : AWI Annual Report 2009-10
Notes to the financial statements The Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate 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: 2009 2009 $'000 $'000 Cash and cash equivalents 9,493 5,546 Trade and other receivables (excluding prepayments) 8,350 5,748 Held-to-maturity investments 43,749 43,000 61,592 54,294 Trade and other payables 10,313 6,257 (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the CNY, EUR and USD currencies. 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 foreign exchange management policies includes wherever possible creating natural hedges with the collection of licence income in the same currencies as the expenditure being incurred. The Group also purchased foreign exchange contracts during the year to minimise the exposure to fluctuations in the currency markets based on a proportion of budgeted cash flows. The Group had no outstanding foreign exchange hedges at 30 June 2010 or 30 June 2009. The Group's exposure to foreign currency risk at the reporting date, expressed in Australian dollars, was as follows: 30 June 2009 CNY EUR USD $'000 $'000 $'000 Bank accounts 2,706 1,199 1,392 Trade receivables 60 1,662 752 Trade payables - (133) (83) Group sensitivity Based on the financial instruments held at the 30 June 2010, had the Australian dollar weakened/strengthened by 10% against the main trading currencies with all other variables held constant, the Group's income statement exposure expressed in Australian dollars, would have been affected as follows: 30 June 2009 CNY EUR USD $'000 $'000 $'000 10% Higher 251 248 187 10% Lower (307) (303) (229) FINANCIAL REPORT
AWI Annual Report 2008-09
AWI Annual Report 2010-11