Billabong International Ltd

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Risk Management Policy
Billabongs’ activities are exposed to a variety of financial risks, these include; market risk (including foreign exchange risk and cash flowinterest rate risk), credit risk and liquidity risk. To minimize potential adverse effects on the financial performance of Billabong, the overall risk management program focuses on theunpredictability of financial markets (Billabong Annual Report, 2011).

The framework is based around the following risk activities: * Risk Identification: Identify all significant foreseeable risks associated with business activities in a timely andconsistent manner; * Risk Evaluation: Evaluate risks using an agreed risk assessment criteria; * Risk Treatment/Mitigation: Develop
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The analysis of this information determines that the company may predict the share value to increase.
The reinstatement of the DRP may be considered for future dividends beyond the final dividend for theyear ended 30 June 2011.Directors have recommended the payment of an unfranked interim dividend of 3.0 cents per fully paid ordinary share(Billabong, 2012). Billabongs’ dividend history is shown in Appendix 1.

The table below shows Billabongs’historical DPS (A$) and the payout ratio over the last 6 years. Due to Billabongs’ high payout ratio, we can determine that the firm is returning cash to the shareholder in the form of dividends, rather than re-investing the profits in the company.
Y/ E 30 June 05/ 06 06/ 07 07/ 08
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