Creative 2009 Annual Report Download - page 51

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51
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES
(c) Operating lease commitments – where the Group is a lessor
The Group leases out office space to non-related parties under non-cancellable operating leases.
The future minimum lease receivables under non-cancellable operating leases contracted for at the balance sheet date but
not recognised as receivables, are as follows:
฀ Group
฀ ฀ 2009฀ 2008฀
฀ US$’000฀ US$’000
฀
฀ Not฀later฀than฀one฀year฀ 145฀ 12
฀ Between฀one฀and฀five฀years฀ 537฀ 363
฀ Later฀than฀five฀years฀ –฀ –
฀ ฀ 682฀ 375
30. FINANCIAL RISK MANAGEMENT
The Group is exposed to financial risks arising from its operations and the use of financial instruments. The Group’s
principal financial instruments, other than foreign exchange contracts, comprise bank loans, investments, cash at bank and
short-term bank deposits. All financial transactions with the banks are governed by banking facilities duly accepted with
Board of Directors’ resolutions, with banking mandates, which define the permitted financial instruments and facility limits,
approved by the Board of Directors. The Group has various other financial assets and liabilities such as trade receivables
and trade payables, which arise directly from its operations.
It is the Group’s policy not to engage in foreign exchange and/or derivatives speculation or trading or enters into any
complex foreign exchange or derivatives transactions. It is not in the interest of the Group to speculate or trade in treasury
instruments. From time to time, the Group enters into forward exchange contracts to reduce its exposure to foreign exchange
translation gains and losses.
The main financial risks arising from the Group’s operations and the use of financial instruments are market risk (including
price risk, interest rate risk and currency risk), credit risk and liquidity risk. Management does not view the Company on a
standalone basis and therefore all risks relevant to the Group are considered and managed at the Group level. The policies
for managing each of these risks at the Group level are summarised below.
(a) Market risk
(i) Price risk
As part of its long-term business strategy, from time to time, the Group makes strategic equity investments in companies
that can provide the Group with technologies or products that management believes will give the Group a competitive
advantage in the markets in which the Group competes. The Group has strategic investments in quoted equity shares. The
Group manages the risk of unfavourable changes by cautious review of the investments before investing and continuous
monitoring of the performance of investments held and assessing market risk relevant to which the investments operate.
The market value of these investments will fluctuate with market conditions. The table below summarises the impact to
the Group’s fair value reserve in equity arising as a result of a 10% increase/decrease in prices of quoted equity securities.
This analysis assumes that all other variables remain constant.
AR09 pg1-64_Final.indd 51 10/2/2009 10:38:10 AM