b"< NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2019NOTE 28. FINANCIAL INSTRUMENTS Market riskMarket risk is the risk that changes in market prices, suchFINANCIAL RISK MANAGEMENT OBJECTIVES as changes to interest rates and foreign exchange rate will The consolidated entitys activities expose it to a varietyaffect the consolidated entitys income.of financial risks: market risk (including foreign currencyForeign currency riskrisk and interest rate risk), credit risk and liquidity risk. The consolidated entitys overall risk management programThe consolidated entity is exposed to foreign exchange focuses on the unpredictability of financial markets andfluctuations in relation to cash generated for working seeks to minimise potential adverse effects on the financialcapital purposes, denominated in foreign currencies and net performance of the consolidated entity. The consolidatedinvestments in foreign operations, in which the functional entity uses different methods to measure different types ofcurrencies are Vietnamese dong and Thai baht.risk to which it is exposed. These methods include sensitivityForeign exchange risk arises from future commercial transactions analysis in the case of interest rate, foreign exchange andand recognised financial assets and financial liabilities denominated other price risks and ageing analysis for credit risk. in a currency that is not the entitys functional currency. The risk is Risk management is carried out by senior finance executivesmeasured using sensitivity analysis and cash flow forecasting. (finance) under policies approved by the Board of DirectorsAn assessment of thesensitivity of the consolidated entitys (the Board). These policies include identification and analysisexposure to interest rate movements was performed and was of the risk exposure of the consolidated entity and appropriatefound to be immaterial for the purposes of this disclosure.procedures, controls and risk limits. Finance identifies,Exchange rate exposures are managed within approved policy evaluates and hedges financial risks within the consolidatedparameters and material movements are not expected. The entitys operating units. Finance reports to the Board on consolidated entity does not enter into any forward exchange a monthly basis. contracts to buy or sell specified foreign currencies.The average exchange rates and reporting date exchange rates applied are shown below.AVERAGE EXCHANGE RATE REPORTING DATE EXCHANGE RATE2019 2018 2019 2018AUD AUD AUD AUDUSD1.3975 1.2897 1.4259 1.3530 THB0.0433 0.0397 0.0464 0.0409 VND0.0001 0.0001 0.0001 0.0001 CNY0.2048 0.1982 0.2076 0.2045 MYR0.3387 0.3163 0.3443 0.3352 SGD1.0235 0.9608 1.0535 0.9923 HKD0.1782 0.1648 0.1826 0.1724 The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the reporting date are as shown below.ASSETS LIABILITIESConsolidated 2019 2018 2019 2018USD21,146,435 13,044,387 (32,219,506)(61,506,058)VND2,118,289 5,299,495 (7,084,087)(9,690,246)CNY11,381,283 12,133,109 (7,295,175)(6,175,459)MYR179,733 800,324 (100,428)(72,731)THB12,458,113 27,070,484 (34,500,634)(26,610,202)SGD141,515 132,179 (18,029)(16,382)EUR3,238 HKD45,174 257,378(69,290) (67,324) 47,473,780 58,737,356 (81,287,149)(104,138,402)DONACO INTERNATIONAL LIMITED 2019 ANNUAL REPORT 71"