23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group’s principal financial instruments as at 31 December 2008 comprise cash and cash
equivalents. The main purpose of these financial instruments is to finance the Group’s operations. The
Group has other financial instruments which mainly comprise receivables and payables which arise
directly from its operations. Cash and cash equivalents and trade and other receivables have been
classified as loans and receivables and trade and other payables as financial liabilities measured at
During the year the Group did not use derivative financial instruments to hedge its exposure to foreign
exchange or interest rate risks arising from operational, financing and investment activities. The Group
does not hold or issue derivative financial instruments for trading purposes.
23.1 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
will affect the Group’s income or value of its holdings of financial instruments. Exposure to market risk
(which includes currency and interest rate risk) arises in the normal course of the Group’s business.
23.2 Foreign exchange risk
Foreign exchange risk arises from transactions, recognised assets and liabilities and net investments in
foreign operations. The Group does not use foreign exchange contracts to hedge its currency risk. The
Group dividend is declared in the Euro as a Luxembourg company. Two weeks before the dividend is
due to be paid, the Company will sell the Euro and buy British Pounds for an amount equal to the
dividend net of withholding tax.
The Group considers its net exposure to currency risk to be low and that the potential savings from
managing this exposure to be minimal.
The Group has investments in foreign operations which are all denominated in Euros minimising the
Group’s exposure to currency translation risk.