Notes to the Financial Statements (cont’d)
FINANCIAL INSTRUMENTS (cont’d)
Financial Risk Management (cont’d)
Foreign currency risk
During the financial year, the Group incurs foreign currency risk on transactions that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Renminbi (“RMB”), and Hongkong Dollar (“HKD”). Exposures to foreign currency risks are monitored on an ongoing basis.
The Group does not consider it necessary to enter into foreign exchange contracts in managing its foreign exchange risk resulting from cash flows from transactions denominated in foreign currencies, given the nature of the business for the time being.
(iv) Liquidity risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all financing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash equivalents to meet its working capital requirements.
Price fluctuation risk
The Group is exposed to the fluctuation of gold price risk arising from purchase of gold from suppliers. In managing the risk, the Group undertakes limited hedging of its requirements of gold through gold loan arrangements with financial institutions with the objective of managing its exposure to price volatility in gold. The unrealised hedging gain/loss was not recognised in the financial statements until such loan was settled in cash or through delivery of gold.
Recognised financial instruments
The fair values of financial assets and financial liabilities approximate their respective carrying values on the balance sheets of the Group and of the Company.
Unrecognised financial instruments
There were no unrecognised financial instruments as at 31st December 2009.
During the financial period 2008, the Company had changed its financial year end from 31st October to 31st December. The comparative figures have therefore been presented for a period of 14 months. The comparative figures have been audited by another firm of chartered accountants other than Baker Tilly Monteiro Heng.
Annual Report 2009