psc - Kufpec
psc - Kufpec
psc - Kufpec
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KUWAIT FOREIGN PETROLEUM EXPLORATION COMPANY K.S.C. (CLOSED)<br />
AND SUBSIDIARIES<br />
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<br />
For the year ended 31 December 2010<br />
24. FINANCIAL INSTRUMENTS (CONTINUED)<br />
Capital risk management (Continued)<br />
Gearing ratio<br />
The gearing ratio at year end was as follows:<br />
2010 2009<br />
KD 000’s KD 000’s<br />
Debt (i) 64,137 91,792<br />
Cash and bank balances (14,679) (20,386)<br />
Funds held by Parent Company (7,015) -<br />
Net debt 42,443 71,406<br />
Equity 328,378 309,980<br />
Net debt to equity ratio 13% 23%<br />
(i) Debt is defined as long-term loan as detailed in note 22.<br />
Significant accounting policies<br />
Details of the significant accounting policies and methods adopted, including the criteria for recognition,<br />
the basis of measurement and the basis on which income and expenses are recognised, in respect of each<br />
class of financial asset and financial liability are disclosed in note 3 to these consolidated financial<br />
statements.<br />
Categories of financial instruments<br />
Financial assets<br />
2010 2009<br />
KD 000’s KD 000’s<br />
Cash and bank balances 14,679 20,386<br />
Funds held by Parent Company 7,015 -<br />
Trade and other receivables 114,735 67,319<br />
Due from Parent Company and affiliates 8 129<br />
Financial liabilities<br />
Trade and other payables 120,665 49,498<br />
Due to Parent Company 2,840 29,188<br />
Dividends payable 95,651 72,332<br />
Long-term loan 64,137 91,792<br />
Financial risk management objectives<br />
The Group’s management monitors and manages the financial risks relating to the operations of the Group<br />
through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include<br />
market risk (including commodity price risk, interest rate risk and foreign currency risk), credit risk and<br />
liquidity risk.<br />
Market risk<br />
Market risk is the risk that changes in market prices, such as commodity prices, interest rates and foreign<br />
exchange rates will affect the Group’s income or the value of its holdings of financial instruments. The<br />
objective of market risk management is to manage and control market risk exposures within acceptable<br />
parameters, while optimising the return.<br />
27<br />
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