Annual Report - QuamIR

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Notes to the Consolidated Financial Statements (Continued) 2 Summary of significant accounting policies (Continued) 2.29 Leases (Continued) (b) Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease. 2.30 Contingent liabilities A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. 2 2.29 (b) 2.30 A contingent liability is not recognised but is disclosed in the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. 2.31 Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s and the Company’s financial statements in the period in which the dividends are approved. 2.31 108 HKC (Holdings) Limited • <strong>Annual</strong> <strong>Report</strong> 2011
Notes to the Consolidated Financial Statements (Continued) 3 Financial risk management 3.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, commodity price risk and interest rate risk), credit risk and liquidity risk. The Group’s major financial instruments include trade and other receivables, cash and bank balances, derivative financial instrument, financial assets at fair value through profit or loss, available-for-sale financial assets, trade and other payables and bank loans. Details of these financial instruments are disclosed in the respective notes. It is the policy of the Group not to enter into derivative transactions for speculative purposes. The derivatives held are not for speculative purpose and cannot be traded in the market. They are part of an embedded investment rights to investment assets and are not exposed to market risk (including commodity price risk) since the gains and losses on the derivatives are offset by the losses and gains on the underlying assets. The Group’s Board of Directors focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Board of Directors reviews and agrees policies for managing each of these risks and they are summarised below. 3 3.1 (a) Market risk (i) Foreign exchange risk The Group operates mainly in Hong Kong and the Mainland China. Entities within the Group are exposed to foreign exchange risk arising from future commercial transactions and monetary assets and liabilities that are denominated in a currency that is not the entity’s functional currency. (a) (i) The Group currently does not have any foreign currency hedging activities. However, the management of the Group monitors the foreign exchange exposure closely and will consider hedging significant foreign currency exposure should the need arise. If Renminbi had strengthened/weakened by 5% against the Hong Kong dollars as at 31 December 2011 with all other variables held constant, the Group’s profit before income tax would have been HK$45.9 million lower/higher (2010: the Group’s loss before income tax would have been HK$23.0 million higher/lower). 5% 45,900,000 23,000,000 • 109
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HKC (HOLDINGS) LIMITED (incorporat
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Contents 2 Corporate Information
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Corporate Information (Continued)
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Chairman’s Statement (Continued)
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Chairman’s Statement (Continued)
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Management Discussion and Analysis
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Corporate Governance Report (Contin
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Directors and Senior Management (Co
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Report of the Directors (Continued)
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Notes to the Consolidated Financial
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Principal Subsidiaries, Associated
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Five-Year Financial Summary 2011 2
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Schedule of Principal Properties (C
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HKC (HOLDINGS) LIMITED 9/F., Tower
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Annual Report - QuamIR

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