117
ANNUAL REPORT 2015/2016
Notes to Financial Statements
32
FINANCIAL RISK MANAGEMENT
The main purpose for holding or issuing financial instruments is to raise and manage the capital
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foreign currency and price risks. The management of financial risks are as follows:
1.
Minimise interest rate, currency, credit and market risk for all kinds of transactions.
2.
Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting
of income and costs and payables and receivables denominated in the same currency and
therefore put in place hedging strategies only for the excess balance. The same strategy is
pursued with regard to interest rate risk.
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4.
All financial risk management activities are carried out and monitored by senior management staff.
5.
All financial risk management activities are carried out following good market practices.
(a)
Foreign currency risk
The Group has exposure to changes in foreign exchange rates arising from foreign currency
transactions and balances. These exposures and changes in fair values from time to time are
monitored and any gains and losses are included in profit or loss unless otherwise stated in the
accounting policies. The Group holds derivative financial instruments to manage exposures to
foreign exchange risk. These derivative financial instruments serve as economic hedges and
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