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107
Glorious Property
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
3 Financial Risk Management
(a) FINANCIAL RISK FACTORS
The Group’s major financial instruments include cash and bank deposits, trade and other receivables, trade and
other payables and borrowings. Details of these financial instruments are disclosed in the respective notes. The risks
associated with these financial instruments and the policies on how to mitigate these risks are set out below. The
Company manages and monitors these exposures to ensure appropriate measures are implemented on a timely and
effective manner. The Group has not used any kind of derivative financial instruments to hedge its risk exposures
as the Group’s exposure to market risks (including currency risk, interest rate risk and price risk) is regarded to be
insignificant.
(i) Foreign currency exchange risk
The Group’s property development projects are all located in the PRC and substantially all of the related
transactions are settled in RMB. The Company and certain of the investment holding companies within the Group
operate in Hong Kong which have recognised assets and liabilities in currencies other than RMB, including the
Senior Notes due 2015 and the US$295,000,000 bank loan obtained in November 2011. Apart from the Senior
Notes due 2015 and the US$295,000,000 bank loan that may cause the Group being exposed to a higher level of
foreign currency exchange risk, the directors consider the exposures to foreign currency exchange risk in relation
to other assets and liabilities to be insignificant. As at 31 December 2011, the Group has cash and bank balances,
borrowings and trade and other payables that are denominated in foreign currencies as follows:
RMB’000
2011
2010
Cash and bank balances:
US$
21,018
46,681
HK$
6,236
4,483
27,254
51,164
RMB’000
2011
2010
Borrowings:
US$
3,762,474
1,969,617
3,762,474
1,969,617
RMB’000
2011
2010
Trade and other payables:
US$
1,575
1,987
HK$
8,012
8,652
9,587
10,639
The Group does not have a foreign currency hedging policy. However, management of the Group monitors foreign
exchange exposure and will consider hedging significant foreign currency exposure should the need arise.
As at 31 December 2011, if RMB had strengthened/weakened by 5% against other currencies, with all other
variables held constant, pre-tax profit for the year ended 31 December 2011 would have been approximately
RMB187.2 million higher/lower (2010: RMB96.5 million higher/lower).