continued - The Lion Group

42. FINANCIAL INSTRUMENTS
Financial Risk Management Objectives and Policies
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for
the development of the Group’s businesses whilst managing its risks. The Group operates within clearly defined
guidelines on financial risk management and it is not the Group’s policy to engage in speculative transactions.
The main areas of financial risks faced by the Group and the policy in respect of the major areas of treasury activity
are set out as follows:
Foreign Currency Risk
The Group is principally exposed to transactional currency risks through the purchase of materials and consumables,
sales of finished goods, and in its financing activities that are denominated in a currency other than the functional
currency. The currency giving rise to this risk is primarily the United States Dollar (“USD”). The Group monitors
developments in government policies and market conditions to take necessary actions should there be any
indication of unfavourable foreign exchange movement.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which
the property or investment is located or by borrowing in currencies that match the future revenue stream to be
generated from its investments.
The financial assets and liabilities of the Group that are not denominated in its functional currencies are as follows:
Group
2010
Singapore
USD Euro Dollar Others Total
RM’000 RM’000 RM’000 RM’000 RM’000
Trade and other receivables 18,485 – 553 – 19,038
Trade and other payables 573,631 34,908 523 – 609,062
Bonds and debts 45,400 – – – 45,400
Borrowings 454,951 – – – 454,951
Group
2009
Trade and other receivables 4,704 – 226 – 4,930
Trade and other payables 587,408 72,440 20,590 210 680,648
Bonds and debts 84,123 – – – 84,123
Borrowings 547,819 – – – 547,819
Interest Rate Risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates.
Interest rate exposure arises from the Group’s borrowings and deposits. Interest rates of the Group’s borrowings
are managed through fixed and floating rates. Investments in financial assets are short term in nature and are
mostly placed as short term deposits with licensed financial institutions.
The information on maturity dates and effective interest rates of financial assets and liabilities is disclosed in their
respective notes.
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