Annual Report and Accounts 2012 - Scapa

More documents

Recommendations

Info

Notes on the Accounts continued 23. Derivative financial instruments The Group’s activities expose it to a variety of financial risks: foreign exchange risk, interest-rate risk, credit risk, liquidity risk and capital risk. The Group’s overall risk management procedures focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by the Group finance department (in close co-operation with the operating units) under policies approved by the Board of Directors. – Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar, Canadian Dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. As the Group has certain investments in foreign operations, these net assets are exposed to foreign currency translation risk. To manage its foreign exchange risk the Group uses foreign currency bank balances, and makes some use of foreign currency forward contracts to avoid short-term fluctuations in currencies. In addition, purchases of large items of capital in foreign currency are covered by forward contracts at the point of authorisation. At the year end the Group had forward contracts to sell Canadian Dollars into US Dollars and to sell Euros into Sterling. These contracts are valued based on year end exchange rate. An analysis of the sensitivity of the year end position relative to these forward contracts is provided below. At 31 March 2012, if the Canadian Dollar had closed 10% weaker/stronger against the US Dollar (with all other variables held constant), pre-tax profit would have been unaffected because of the low value of forward contracts in place at the year end. At 31 March 2012, if Sterling had closed 10% weaker/stronger against the Euro (with all other variables held constant), pre-tax profit would have been reduced/increased by £0.2m owing to the effects of forward contracts in place at the year end. – Forward foreign exchange contracts It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts. The contracts are primarily denominated in the currencies of the Group’s principal markets. Fair value is determined using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. 60 Scapa Group plc Annual Report and Accounts 2012 Notional amount 2012 £m Fair value 2012 £m Notional amount 2011 £m Fair value 2011 £m Current Forward foreign exchange contracts 2.9 – 4.0 0.1 Hedge accounting has not been applied to these derivative financial instruments. – Interest-rate risk The Group is exposed to interest rate risk as it has borrowings at floating rates. Interest rate risk is evaluated periodically to consider interest rate views and defined risk appetite; to seek to ensure reasonable economic strategies are applied, by either positioning the Balance Sheet or protecting interest expense through different interest rate cycles. Deposit risk is managed by spreading deposits across high credit rated institutions, and capping the maximum deposit with an institution at one time. The Group entered into an interest rate swap instrument during the year. This instrument enabled the Group to mitigate interest rate fluctuation risk. Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing the cash flow exposures on the issued variable rate debt held. The fair value of the interest rate swaps at the reporting date is determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contracts. The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding at the reporting date: Trade date Effective date Termination date Currency Notional amount 2012 £m Fair value 2012 £m Fixed rate % Outstanding receive fixed pay floating contracts 25 January 2012 8 March 2012 8 March 2015 USD 18.8 – 0.78% The fair value of the interest rate swaps at 31 March 2012 was determined by discounting the future cash flows using yield curve data at the reporting date. The interest rate swaps settle on a quarterly basis. The Group will settle the difference between the fixed and floating interest rate on a net basis. Hedge accounting has not been applied to these derivative instruments.
23. Derivative financial instruments continued – Liquidity risk The Group maintains a mixture of committed long-term and short-term facilities designed to ensure that the Group has sufficient cash funds available for operations and planned investment. Liquidity Tables The following tables detail the Group’s contractual maturity for financial instruments. The tables are drawn up on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables exclude asbestosrelated assets and liabilities. Due within one year £m One to two years £m Two to five years £m 2012 Trade payables 23.1 – – Other taxes and social security 4.3 – – Other creditors 6.6 0.7 – Finance lease 0.2 0.3 – Deferred consideration 6.3 2.9 – Bank loans and overdrafts 0.2 – 9.4 Due within one year £m 40.7 3.9 9.4 One to two years £m Two to five years £m 2011 Trade payables 22.3 – – Other taxes and social security 3.9 – – Other creditors 5.8 1.2 – Finance lease 0.2 0.5 – Bank loans and overdrafts 1.5 – – 33.7 1.7 – There are no items with a maturity greater than five years. The bank loans in the above tables are stated before any unamortised arrangement costs. The following tables detail the Group’s contractual maturity for financial assets. The tables are drawn up based on the undiscounted contracted maturities of those financial assets. Due within one year £m One to two years £m Two to five years £m 2012 Receivables 35.8 0.2 – Cash and cash equivalents 16.9 – – Due within one year £m 52.7 0.2 – One to two years £m Two to five years £m 2011 Receivables 33.8 0.3 – Cash and cash equivalents 14.7 – – 48.5 0.3 – Scapa Group plc Annual Report and Accounts 2012 61 Overview Business Review Governance Financial Statements
Page 1 and 2:
Annual Report and Accounts 2012 Gro
Page 3 and 4:
Sector split Electronics Healthcare
Page 5 and 6:
Chairman’s Statement A focus on s
Page 7 and 8:
“Our goal is to deliver sustainab
Page 9 and 10:
Revenue £145.9m +0.2% 74.6% of Gro
Page 11 and 12:
Revenue £39.5m +16.9% 20.2%of Grou
Page 13 and 14: Revenue £10.2m -20.9% 5.2% of Grou
Page 15 and 16: KPIs Return on sales (*1) 5.5% Trad
Page 17 and 18: Lost Time Accidents (LTAs) FY12 FY1
Page 19 and 20: We take the view that the policies
Page 21 and 22: Introduction At the heart of how Sc
Page 23 and 24: Leadership Team L-R: Ian Marchant,
Page 25 and 26: Scapa has a combination of unionise
Page 27 and 28: Directors’ Remuneration Report Th
Page 29 and 30: Other benefits Purpose Policy for e
Page 31 and 32: Directors’ interests As of 31 Mar
Page 33 and 34: Corporate Governance “ Good gover
Page 35 and 36: Internal control system In accordan
Page 37 and 38: Under its terms of reference, the A
Page 39 and 40: Independent Auditor’s Report to t
Page 41 and 42: Consolidated Balance Sheet As at 31
Page 43 and 44: Consolidated Cash Flow Statement Fo
Page 45 and 46: Consolidation The consolidated fina
Page 47 and 48: Property, plant and equipment (incl
Page 49 and 50: The liability recognised in the Bal
Page 51 and 52: Notes on the Accounts 1. Segmental
Page 53 and 54: 2. Segment assets and liabilities c
Page 55 and 56: 6. Key management compensation and
Page 57 and 58: 9. Taxation continued Movement in u
Page 59 and 60: 13. Goodwill Cost 1 April 34.2 45.8
Page 61 and 62: 16. Assets held for sale During the
Page 63: 22. Borrowings Amounts due within o
Page 67 and 68: 24. Provisions continued During the
Page 69 and 70: 25. Retirement benefit liabilities
Page 75 and 76: 27. Share options continued US Stoc
Page 77 and 78: 29. Commitments Capital commitments
Page 79 and 80: Scapa Group plc Parent Company Fina
Page 81 and 82: Company Balance Sheet As at 31 Marc
Page 83 and 84: Foreign currencies Transactions in
Page 85 and 86: 4. Investments Shares in Group unde
Page 87 and 88: 10. Share capital Allotted, issued
Page 89 and 90: 12. Pension schemes continued Five
Page 91 and 92: Designed by luminous.co.uk
show all

Annual Report and Accounts 2012 - Scapa

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?