Directors' Report and Financial Statements 31 March ... - Precision Air

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PRECISION AIR SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2012 30 EARNINGS PER SHARE a. Basic earnings per share is calculated on the profit or loss after tax attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. This is calculated by dividing (loss)/ profit for the year (after tax) by the number of issued and fully paid ordinary shares i.e. 160,469,800 (2011: 135,015,000) b. Diluted earnings per share is calculated on the profit or loss after tax attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding after adjustment of dilutive potential ordinary shares. c. The basic and diluted earnings per share are the same as there are no convertible instruments. 31 FINANCIAL RISK MANAGEMENT The Group’s principal financial instruments comprise treasury loans and trade payables. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit risk. The board reviews and agrees policies for managing each of these risks which are summarised below. a Liquidity risk Liquidity risk is the risk that suitable sources of funding for the Group’s business activities may not be available and thus the Group being unable to fulfil its existing and future cash flow obligations. The Group’s liquidity is managed by forecasting the cash and currency requirements. In managing its liquidity risk, the Group has access to a wide range of funding at competitive rates through banks. The amounts disclosed in the table below are the contractual undisclosed cash flows. On demand TZS’ Million Less than 1 year TZS’ Million Between 1 year and five years TZS’ Million After five years TZS’ Million At 31 March 2012 Interest bearing borrowings 10,166 34,711 83,898 68,389 Trade and other payables - 38,668 - - 10,166 73,379 83,521 68,389 At 31 March 2011 Interest bearing borrowings 8,719 29,437 114,471 102,566 Trade and other payables - 36,078 - - 8,719 65,515 114,471 102,566 62 DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 31 MARCH 2012
PRECISION AIR SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2012 31 FINANCIAL RISK MANAGEMENT (Management) b Treasury risk management The Group operates a treasury function to provide competitive funding costs, invest and monitor financial risk. The Group does not use derivative financial instruments for speculative purposes. c Foreign currency risk The Group can experience adverse or beneficial effects arising from foreign exchange rate movements. The Group seeks to reduce foreign exchange exposures arising from transactions in various currencies through a policy of matching, as far as possible, receipts and payments in each individual currency. Surpluses of convertible currencies are sold, either spot or forward, for US dollars or Tanzanian Shillings. As at the reporting date the Group held significant foreign currency exposure resulting mainly from loans denominated in United States dollars. Foreign currency risk is managed at an operational level and monitored by the Finance Department. The Group utilises its US dollar debt repayments as a hedge of future US dollar revenues. The following table demonstrates the sensitivity of financial instruments to a reasonably possible change in the US dollar exchange rates, with all other variables held constant, on equity. Exposure to other foreign currencies is not material. Net effect based on statement of financial position as at 31 March 2012 Net effect based on statement of financial position as at 31 March 2011 Increase/decrease in the value of TZS vs. US Dollar Effect on profit TZS’000 Effect on equity TZS’000 +10% -18,472,000 -13,854,000 -10% +18,472,000 +13,854,000 +10% -18,432,000 -12,902,400 -10% +18,432,000 +12,902,400 DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 31 MARCH 2012 63
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Directors' Report and Financial Statements 31 March ... - Precision Air

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