Annual Report 2012 - Dialog

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74 l Dialog Axiata PLC l Annual Report 2012 Notes to the Financial Statements 3 Financial risk management contd. 3.1 Foreign exchange risk The Company and the Group operate internationally and are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. As at 31 December 2012, if LKR has weakened by 1% against USD with all other variables held constant, this will result in net foreign exchange losses of Rs 176 million in the Group, on translation of USD balances. 3.2 Cash flow and fair value interest rate risk The Company and the Group has cash and bank balances including deposits placed with creditworthy licensed banks and financial institutions. The Company and the Group manage its interest rate risk by actively monitoring the yield curve trend and interest rate movement for the various cash and bank balances. The Company’s and the Group’s borrowings comprise borrowings from financial and non-financial institutions and Preference Shares. The Company’s and the Group’s interest rate risk objective is to manage an acceptable level of rate fluctuation on the interest expense. In order to achieve this objective, the Company and the Group target a composition of fixed and floating borrowings based on assessment of its existing exposure and desirable interest rate profile. The Company and the Group analyses its interest rate exposure on a dynamic basis. 3.3 Credit risk Credit risk is managed on Company and the Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables (net of deposits held). Individual risk limits are set, based on internal or external ratings. The utilisation of credit limits is regularly monitored. The Company and the Group place its cash and cash equivalents with a number of creditworthy financial institutions. The Company’s and the Group’s policy limits the concentration of financial exposure to any single financial institution. The maximum credit risk exposure of the financial assets of the Company and the Group are approximately their carrying amounts as at statement of financial position date. 3.4 Liquidity risk Prudent liquidity risk management implies maintaining sufficient liquid funds to meet its financial obligations. In the management of liquidity risk, the Company and the Group monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance the Company’s and the Group’s operations and to mitigate the effects of fluctuations in cash flows. Due to the dynamic nature of the underlying business, the Company and the Group aim at maintaining flexibility in funding by keeping both committed and uncommitted credit lines available. The table below analyses the Group’s and the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date.
Group Annual Report 2012 l Dialog Axiata PLC l 75 Between 3 Between Between Less than months and year 1 and year 2 and Over 3 months Year 1 Year 2 Year 5 Year 5 At 31 December 2012 Borrowings 4,037,135 8,795,440 11,066,514 1,027,807 Nil Trade and other payables 13,115,395 13,048,215 Nil Nil Nil At 31 December 2011 Borrowings 1,981,038 4,073,636 15,886,181 1,131,775 Nil Trade and other payables 2,373,829 13,463,097 Nil Nil Nil Company Between 3 Between Between Less than months and year 1 and year 2 and Over 3 months Year 1 Year 2 Year 5 Year 5 At 31 December 2012 Borrowings 3,743,848 8,795,439 11,066,514 1,027,807 Nil Trade and other payables 9,969,590 8,218,282 Nil Nil Nil At 31 December 2011 Borrowings 1,905,761 4,073,636 15,886,181 1,131,775 Nil Trade and other payables 3,655,452 10,624,630 Nil Nil Nil Capital expenditure and working capital expenditure requirements of the Group are financed through internally generated cash flows as well as external financing arrangements. Management has arranged financial facilities with several financial institutions to support future financial requirements. Further, the Board has duly approved a proposed establishment of a Malaysian Ringgit denominated Islamic medium term note programme up to Malaysian Ringgit 1.2 billion in nominal value with a tenure of 15 years in Malaysia. 4 Capital management risk The primary objective of the Company’s and the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Company and the Group manage its capital structure and make adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company and the Group may or may not make dividend payments to shareholders, return capital to shareholders or issue new shares or other instruments. Consistent with others in the industry, the Company and the Group monitor capital on the basis of the gearing ratio. This ratio is calculated as total borrowings by total equity. Total borrowings including non-current and current borrowings as shown in the statements of financial position. Total equity is calculated as ‘Total equity’ in the statements of financial position.
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Dialog Axiata PLC l Annual Report 2
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Introduction to the Company Dialog
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Annual Report 2012 l Dialog Axiata
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Mr. Moksevi Prelis Independent, Non
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Mr. James Maclaurin Non-Independent
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Group NPAT Rs. Mn +23% 7,000 6,000
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Gross Debt to Equity 2.0 1.5 1.0 0.
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Dialog Axiata PLC - Financial Revie
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