L.V. TECHNOLOGY Public Company Limited Annual Report 2011
Notes to the financial statements For the years ended 31 December 2011 and 2010
30 Dividends At the Annual General Meeting of shareholders of the Company held on 23 April 2010, the shareholders approved the appropriation of dividend of Baht 0.22 per share, amounting to Baht 82,332,724. The dividend was paid to shareholders on 21 May 2010.
31 Financial instruments Financial risk management policies The group is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Capital management The Board of Directors’ policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding non-controlling interests and also monitors the level of dividends to ordinary shareholders. Interest rate risk Interest rate risk is the risk that future movements in market interest rates affecting the results of the Group’s operations and its cash flows. The Group is primarily exposed to interest rate risk from its short-term loans from financial institutions (Note 17). Foreign currency risk The Group’s contracts are typically denominated in major international currencies, principally US Dollar and Euro. The Group endeavours to secure a natural hedge against the foreign currency risk by ensuring that, as far as practicable, contract revenues and contract costs are denominated in the same currency. If natural hedges cannot be secured, the Group enters into forward currency exchange contracts to hedge any significant remaining foreign currency risk. Forward currency exchange contracts are not entered for trading purposes. Execution of forward currency exchange contracts requires prior approval by at least two directors. Management has reviewed foreign currency exposures as at 31 December 2011 and determined that the Group and the Company had no material non-hedged exposure to foreign currency risk. As at 31 December 2011, the Company had outstanding forward foreign exchange contracts to buy EURO 7 million and sell JPY 795 million (2010: USD 2.3 million and EURO 0.38 million). Credit risk The Group has no significant concentration of credit risk from customers. The Group has policies in place to ensure that services are provided to customers with an appropriated credit history and as a policy, all major services are supported by sight letters of credit issued by reputable banks.
Annual Report 2011