AJ Lucas Group annual report 2007-08

25. FINANCIAL INSTRUMENTs (cont)
Impairment allowance: Based on historic default rates, the Group believe that no impairment allowance is required for trade receivables not
past due.
The impairment allowance related to specific customers, identified as being in trading difficulties, or where specific debts are in dispute. The
impairment allowance does not include debts past due relating to customers with a good credit history, or where payments of amounts due under a
contract for such customers are delayed due to works in dispute and previous experience indicated that the amount will be paid in due course.
When the Group is satisfied that no recovery of the amount owing is possible, the amounts considered irrecoverable are written off against the
financial asset directly. At 30 June 2008, the Group has collective impairments on its trade receivables of $7,196,000 (2007: $7,196,000).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity is managed to ensure, as far as
possible, that sufficient funds are available to meet liabilities when they fall due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations, by
maintaining excess committed credit facilities of at least $5 million. The Group aims at maintaining flexibility in funding by keeping committed credit
lines available with a variety of counterparties, with a weighted average duration of at least three years. Refer Note 19 for details of lines of credit
available.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting
arrangements:
Carrying
amount
Total
6 months
or less
Contractual cash flows
6-12
months
1-2
years
2-5
years
More than
5 years
2008 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Consolidated
Trade and other payables—unsecured 83,074 (83,074) (83,074) — — — —
Bank overdraft—secured 867 (867) (867) — — — —
Other borrowings—unsecured 716 (716) (716) — — — —
Other borrowings—secured 4,361 (4,736) (2,013) (691) (1,383) (648) —
Deferred subsidiary acquisition consideration 8,726 (9,250) (3,250) — (3,500) (2,500) —
Bank loans—secured 37,692 (43,295) (2,376) (9,523) (21,725) (9,671) —
Lease liabilities—secured 17,944 (21,027) (2,873) (2,645) (6,377) (9,132) —
Convertible notes—unsecured 726 (892) (37) (37) (818) — —
154,106 (163,857) (95,206) (12,896) (33,803) (21,951) —
2008
Company
Trade and other payables—unsecured 632 (632) (632) — — — —
Bank loans—secured 22,000 (24,609) (732) (5,327) (18,550) — —
Loans from subsidiaries—unsecured 29,361 (29,361) — — — — (29,361)
Convertible notes—unsecured 726 (892) (37) (37) (818) — —
52,719 (55,494) (1,401) (5,364) (19,368) — (29,361)
Carrying
amount
Total
6 months
or less
Contractual cash flows
6-12
months
1-2
years
2-5
years
More than
5 years
2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Consolidated
Trade and other payables—unsecured 66,319 (66,319) (66,319) — — — —
Bank overdraft—secured 5,663 (5,663) (5,663) — — — —
Other borrowings—unsecured 277 (277) (277) — — — —
Other borrowings—secured 4,352 (5,876) (1,027) (941) (1,165) (2,743) —
Deferred subsidiary acquisition consideration 4,000 (4,000) (1,250) — (1,250) (1,500) —
Lease liabilities—secured 9,407 (10,577) (1,751) (1,553) (3,091) (4,182) —
Convertible notes—unsecured 24,188 (32,589) (1,288) (1,260) (2,527) (27,514) —
114,206 (125,301) (77,575) (3,754) (8,033) (35,939) —
2007
Company
Trade and other payables—unsecured 84 (84) (84) — — — —
Convertible notes—unsecured 24,188 (32,589) (1,288) (1,260) (2,527) (27,514) —
Loans from subsidiaries—unsecured 16,217 (16,217) — — — — (16,217)
40,489 (48,890) (1,372) (1,260) (2,527) (27,514) (16,217)
56 LUCAS group