Cosalt plc Annual report & financial statements 2008

Financial statements Notes to the financial statements
Notes to the financial statements
continued
20. Interest bearing loans and borrowings continued
Financial risk management
(a) Credit Risk
The groups exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date which
are set out below:
2008 2007
£000 £000
Cash and cash equivalents 2,171 2,476
Trade receivables 24,557 34,063
26,728 36,539
Potential customers are credit checked prior to an account being created for them and before any orders for product are accepted
and processed. All debts are closely controlled and monitored by management. The group continuously monitors defaults of
customers and other counterparties and incorporates this information into its credit risk controls. The group policy is to deal only
with credit worthy companies.
Management considers that all the above financial assets that are not impaired for each of the reporting dates under review are
of good credit quality, including those that are past due.
£nil (2007: £5,946,000) of the groups financial assets are subject to a debt factoring arrangement.
None of the Group’s financial assets are secured by collateral or other credit enhancements at the year end date of 26 October 2008.
In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty
or any group of counterparties having similar characteristics.
The credit risk for liquid funds is not considered significant, since the counterparty is a reputable bank with a high quality external
credit rating.
(b) Liquidity Risk
The Group manages it’s liquidity needs by carefully monitoring all scheduled cash outflows, through a process of cash flow
forecasting, daily and weekly monitoring and monthly review the group monitors working capital and capital expenditure
requirements. Liquidity risk is further managed by the agreement of term loans and working capital facilities, when necessary.
The Group’s financial liabilities are detailed as follows:
2008 2007
£000 £000
Trade payables (21,324) (23,718)
Short term debt and current portion of long term debt (1,373) (15,625)
Long term debt (27,616) (1,205)
(50,313) (40,548)
Trade payables mature within 6 months of the date shown.
The Group has recently renegotiated its banking facilities, the maturity profile of the groups external borrowings at 26 October 2008
are shown in note 20 – Interest bearing loans and borrowings.
The Group had undrawn committed borrowing facilities, under its three-year facilities agreement at 26 October 2008 of £6,339,000.
The Group has complied with its banking covenants throughout the year and at its year end.
62 Cosalt plc Annual report & financial statements 2008