27. Financial Instruments Foreign currency risk The Group undertakes certain transactions in foreign currencies, hence exposures to exchange rate fluctuations arise. The Group does not enter into forward foreign exchange contracts to buy and sell amounts of various currencies at predetermined exchange rates, as foreign currency amounts are not significant in relation to Mintek's income. As a matter of principle, the Group does not enter into currency exchange contracts for speculative reasons. Credit risk management Financial assets that could subject the group to credit risk consist principally of bank balances and cash, deposits, trade and other receivables, and short-term investments. The Group bank balances and short-term investments are placed with several financial institutions with at least BBB credit ratings as rated in terms of the Fitch Global Rating system. The Group reviews its trade and other receivables at each balance sheet date to ensure adequate allowances for doubtful receivables or loan write-offs are made, the level of this provision is disclosed in note 6. Credit risk with respect to trade receivables is limited to the large number of customers comprising the Group's customer base and their dispersion across different industries and geographical areas. Accordingly the Group does not have significant concentration of credit risk. The Group considers its short-term investments to be secured and readily available as cash should the need arise for the conversion of the investments. The carrying amounts of financial assets included in the balance sheet represent the Group's exposure to credit risk in relation to these assets. The Group does not have any significant exposure to any customer or counter party. Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash resources to meet cash flow requirements. Management monitors forecasts of liquidity reserve on the basis of expected cash flow. Analysis of the various requirements is disclosed in note 7 of the financial statements. Fair values As at 31 March 2012 the carrying amount of bank balances and cash, deposits, trade and other receivables, trade and other payables, contracts in progress, advances received and short-term borrowings approximated their fair values due to the short-term nature of these assets and liabilities. The group does not hedge foreign exchange fluctuations. Interest rate risk The valuation of interest rate exposure and investment strategies is done on a regular basis. The risk arises from substantial interest-bearing assets at variable interest rates. To minimise exposure to this risk, the Group uses a mixture of variable and fixed interest rates. 28. Fruitless, wasteful and irregular expenditure No fruitless, wasteful and irregular expenditure was identified during the current financial year. NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2012 annual financial statements and notes Mintek Group Mintek Figures in rand(s) 2012 2011 2012 2011 69 mintek annual report 2012

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................................................................................................................................................................................................................................................................... 70 mintek annual report 2012