1086 AnnRep-Investment S04-3 - Pumpkin Patch investor relations

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 12 MONTHS ENDED 31 JULY 2004 (CONTINUED)21. Financial Instruments(a) Currency and Interest Rate RiskNature of activities and management policies with respect to financial instruments:1. CurrencyThe Group undertakes transactions denominated in foreign currencies from time to time and resultingfrom these activities, exposures in foreign currency arise. It is the Group’s policy to hedge foreigncurrency risks as they arise except for foreign currency risks authorised by the Board. To manage theseexposures, the Group uses forward foreign exchange contracts and foreign currency options.The notional principal or contract amounts of foreign exchange instruments outstanding at balancedate are:2004 2003$000 $000Forward Foreign Exchange Contracts 89,860 22,627Forward Options 4,839 11,009Total 94,699 33,636The cash settlement requirements of the forward foreign exchange contracts and optionsapproximates the notional amount shown above.2. Interest RateThe Group utilises as required long-term fixed rate borrowings which are used to fund on-goingactivities. Management monitors the levels of interest rates on an on-going basis and periodically willlock in fixed rates on the next floating reset, when they are of the view that interest rates may increase.51