24. FINANCIAl RISk mANAgEmENT ObjECTIVES AND POlICIES  The Company’s principal financial liabilities, other than derivatives, comprise bank loans and overdrafts, letters of credit, notes  payable, finance leases, and trade payables. The only purpose of these financial liabilities is to finance the Company’s operations. The Company has various financial assets such as trade receivables, other accounts receivable, cash and cash equivalents, which  arise directly from its operations. The Company also enters into derivative transactions, primarily interest rate swap and forward  currency contracts. The purpose is to manage the interest rate and currency risks arising from the Company’s operations and its  sources of financing. The Company’s policy is and has been throughout 2011 and 2010 that no speculative trading in derivatives shall be undertaken except  as noted below. The main risks arising from the Company’s financial instruments are cash flow interest rate risk, liquidity risk, foreign  currency risk and credit risk. The Audit Committee of the Board of Directors reviews and approves policies for managing each of these  risks, which are summarized below. The following table demonstrates the sensitivity of the Company’s profit before tax to a change in interest rates, with all other  variables held constant (through the impact on floating rate borrowings). There is no impact on the Company’s equity except through  changes in income. 98 HIGH lIneR FooDS InCoRpoRAteD intereSt rate riSk (Amounts in $000s) December 31, 2011 January 1, 2011  January 3, 2010 Current bank loans  $  121,975 $  43,027 $  23,113  Current portion of long-term debt and finance leases obligations  3,607   5,398  5,446  Long-term debt and finance leases obligations  254,306   47,260  53,052  Cross currency swap mark-to-market  –  207  928  Less: cash and cash equivalents   (3,260)  (598)   (1,953) Total funded debt   376,628   95,294  80,586  Shareholders’ equity   161,527   147,311  163,200  Unrealized losses on derivative financial instruments included  in accumulated other comprehensive loss   110   1,720  2,138  Total capitalization  $  538,265 $  244,325  $  245,924  Debt as % of capitalization  70%  39%  33% The Company’s exposure to the risk of changes in market interest rates arises out of the Company’s short-term debt obligations with  floating interest rates. For both of fiscal 2011 and 2010 the Company’s policy is to manage its interest cost using a mix of fixed and  variable rate debts. The Company’s objective is to keep between 35% and 55% of its borrowings at fixed rates of interest. To manage  this, the Company enters into fixed rate debt facilities or interest rate swaps, in which the Company agrees to exchange, at specified  intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed upon notional  principal amount. These swaps are designated to hedge underlying debt obligations. Interest rate Options that effectively fix the  maximum rate of interest that the Company will pay may also be used to manage this exposure. Under the terms of the long-term  debt the Company is committed to hedge 50% of its long-term debt for a period of 2 years. At December 31, 2011: 1% (January 1, 2011:  50%; January 3, 2010: 65%) of the Company’s borrowings are at a fixed rate of interest, which will increase by March 16, 2012, as 50%  must be fixed according to the terms of the long-term debt.