NOTES TO FINANCIAL STATEMENTS
30 June 2015
Karin Technology Holdings Limited
Annual Report 2015
112
33. FINANCIAL INSTRUMENTS BY CATEGORY
(continued)
AT 30 JUNE 2014
(continued)
Group
Company
Financial
Financial
liabilities at
liabilities at
amortised cost amortised cost
HK$’000
HK$’000
Financial liabilities
Trade payables
–
Financial liabilities included in other payables and accruals
2,163
Interest-bearing bank and other borrowings
other than finance lease payables
170,325
–
Finance lease payables
–
356,371
2,163
Since the carrying amounts of the Group’s financial instruments approximate to their fair values, no separate
disclosure of the fair values of the Group’s financial instruments is made in these financial statements.
34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments mainly comprise interest-bearing bank and other borrowings and
cash and cash equivalents. The main purpose of these financial instruments is to raise finance for the Group’s
operations. The Group has various other financial assets and liabilities such as trade, bills and other receivables,
factored trade receivables and trade and other payables, which arise directly from its operations.
It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments
shall be undertaken.
The main risks arising from the Group’s financial instruments are (a) interest rate risk, (b) foreign currency risk,
(c) credit risk and (d) liquidity risk. The board of directors reviews and agrees policies for managing each of these
risks and they are summarised below.
(a)
INTEREST RATE RISK
Since the majority of the interest-bearing bank and other borrowings of the Group are with fixed interest
rates, the Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s
bank balances with floating interest rates. The Group monitors the movements in interest rates on an
ongoing basis and evaluates the exposure for its bank balances.
(b)
FOREIGN CURRENCY RISK
The Group’s exposure to market risk for changes in foreign currency exchange rate relates primarily to
certain trade receivables and payables and certain bank balances denominated in currencies other than
the units’ functional currencies. The Group uses foreign currency forward contracts to reduce its foreign
currency risk, but the transactions do not qualify for hedge accounting in accordance with IAS 39. Further
details of the foreign currency contracts are set out in note 20 to the financial statements.
