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Overview Business Review Governance Financial statements
ITE Group plc Annual Report and Accounts 2012 91
21 Financial instruments continued
The Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. The
Board has established policies to identify and analyse risks faced by the Group, to set appropriate risk limits and controls
and to monitor risks and adherence to limits.
Market risk
Market risk is the risk that changes in foreign exchange rates and interest rates will affect the Group’s income or the value
of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates. The Group enters into derivative financial instruments to manage its exposure to foreign currency risk. Market risk
exposures are measured using sensitivity analysis.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence, exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward-plus or
forward foreign exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date are as follows:
Financial assets
2012
£000
2011
£000
EUR 35,094 31,616
GBP 11,163 7,359
USD 5,182 4,707
RUB 16,801 17,163
Other 19,936 13,954
88,176 74,799
Financial liabilities
2012
£000
2011
£000
EUR 13,427 12,934
GBP 15,137 2,660
USD 2,068 3,511
RUB 1,242 1,427
Other 10,636 15,157
42,510 35,689
Foreign currency sensitivity analysis
The sensitivity analysis below details the impact of a 10% strengthening in the Group’s significant currencies against
Sterling, applied to the net monetary assets or liabilities of the Group.
USD EUR RUB Other
2012 (£000)
Monetary assets 5,182 35,094 16,801 19,936
Monetary liabilities (2,068) (13,427) (1,242) (10,636)
Net monetary assets 3,114 21,667 15,559 9,300
Currency Impact
Profit before tax gain/(loss) 4 251 1,498 787
Equity gain/(loss) 308 1,916 58 143
2011 (£000)
Monetary assets 4,707 31,616 17,163 13,954
Monetary liabilities (3,511) (12,934) (1,427) (15,157)
Net monetary assets 1,196 18,682 15,736 (1,203)
Currency Impact
Profit before tax gain/(loss) 4 234 1,476 (105)
Equity gain/(loss) 116 1,634 98 (15)