Annual Report for the year ended 31 December 2008

2. FinanCial instRUments and RisK manaGement (CONTINuED)
Foreign exchange risk
The following table summarises the company’s currency exposure arising
from unmatched monetary assets or liabilities not denominated in the
functional currency of the company:
2008 2007
£’000 £’000
NET ASSETS
euros – 1
us dollar – 66
– 67
The company’s activities are primarily denominated in sterling and it
therefore has minimal foreign exchange risk. The majority of transactions
denominated in a foreign currency that would expose the company to
currency risk are hedged immediately, normally in the spot market. The
company does not enter into forward exchange contracts for hedging
anticipated transactions.
Interest rate risk
The company has interest bearing assets in mainly cash and cash
equivalents. The company has a policy of maintaining excess funds in cash
and short-term deposits and is exposed to short-term interest rate risk.
At the year end, all of the company’s excess funds were invested in cash
and short-term deposits. The company does not use any derivatives to
hedge interest rate risk.
At 31 December 2008 if liBor market interest rates had been 100 basis
points higher/lower with all other variables held constant, profit for the year
(after tax) would have been £824,000 (2007: £561,000) (higher) and
£824,000 (2007: £561,000) (lower).
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
86 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
(b) Management of Credit Risk
The company has no exposure to any third party credit risk and all
receivables are with other Group companies.
Credit Quality of Financial Assets Control
The quality of our financial assets in terms of their credit rating is AAA-A
rated 95% (2007: 88%) and un-rated 5% (2007: 12%).
The ratings noted above have been derived using source information from
standard & poors and Moody’s. All financial assets over an “A” rating are
consolidated under the “AAA-A” category and represent assets such as
cash, and trade debtors. All un-rated assets have undergone a thorough
credit review and have been allocated internal ratings based on this review.
All items classified as neither past due nor impaired, following the credit
reviews described above, are considered to be recoverable and therefore
of a credit quality that do not require impairment.
The following table of financial assets analyses amounts due by ageing:
Neither past Carrying
due nor impaired value
31 December 2008 £'000 £'000
other receivables 1,193 1,193
Amounts owed by Group undertakings 2,767 2,767
cash and cash equivalents 75,542 75,542
Available-for-sale investments 11,652 11,652
91,154 91,154
Neither past Carrying
due nor impaired value
31 December 2007 £'000 £'000
other receivables 798 798
Amounts owed by Group undertakings 1,563 1,563
cash and cash equivalents 55,476 55,476
Available-for-sale investments 10,432 10,432
68,269 68,269