Annual Report 2010 - Ophir Energy

Notes to the
Financial Statements
25 Borrowing facilities
The Company and the Group had no borrowing facilities as at 31 December 2010 (2009: Nil).
26 Financial risk management and financial instruments
Strategy and objectives
The Group’s principal financial assets and liabilities comprise cash and short-term deposits and various items, such
as receivables and trade and other payables, which arise directly from its operations. The main purpose of these
financial instruments is to manage short-term cash flow and provide finance for the Group’s operations.
The Group’s senior management oversees the management of financial instrument risk and the Board of Directors
has established an Audit Committee to assist in the identification and evaluation of significant financial risks. Where
appropriate, consultation is sought with an external advisor to determine the appropriate response to identified risks.
The Group does not trade in derivatives for speculative purposes.
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Ophir energy plc | 2010 ANNUAL REPORT
Group accounts | notes to the financial statements
The main risks that could adversely affect the Group’s financial assets, liabilities or future cash flows are foreign
currency, interest rate and credit risks.
(a) Significant accounting policies
Details of significant accounting policies and methods adopted in respect of each class of financial assets, financial
liability and equity instrument are disclosed in note 2 to the Financial Statements.
(b) Credit risk
Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the
Company or Group. The Company and Group’s maximum exposure to credit risk of third parties is the aggregate of
the carrying value of its security deposits, cash and short-term deposits, and trade and other receivables.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the
Group’s policy to securitise its trade and other receivables
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s experience of bad
debts has not been significant.
Credit quality of financial assets
EQUIVALENT S&P RATING*
A-1 AND
ABOVE
A-2 AND
BELOW
INTERNALLY RATED
NO DEFAULT
CUSTOMERS TOTAL
Year ended 31 December 2010
Current financial assets
Cash and cash equivalents 69,649 20,213 - 89,862
Trade and other receivables - - 3,070 3,070
69,649 20,213 3,070 92,932
Non-current financial assets
Security deposits - 700 - 700
- 700 - 700
*The equivalent S&P rating of the financial assets represents that rating of the counterparty with whom the financial asset is held rather
than the rating of the financial asset itself.