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BAKKAVOR ANNUAL REPORT AND ACCOUNTS 2012
notes to the consolidated financial statements
continued
29
FINANCIAL INSTRUMENTS CONTINUED
Commodity risk management
The Group acquires substantial amounts of raw materials for its operations, including dairy, wheat and rapeseed oil. The Group is exposed to
commodity price and supply risks for these raw materials. The Group takes actions to reduce overall material costs and exposure to price fluctuations.
This is done in a number of ways. For example, the Group buys raw materials from suppliers all over the world, thereby decreasing geographic risk
and frequently tenders to benchmark market prices. In general our requirements are managed using contracts for periods of between three to twelve
months forward. The Group also manage any local currency exposure in line with agreed contracts.
Liquidity risk management
Liquidity risk refers to the risk that the Group may not be able to fund the day to day running of the Group. Liquidity risk is reviewed by the Board of
Directors on a monthly basis. The Group manages liquidity risk by monitoring actual and forecast cash flows and matching the maturity profiles of
financial assets and liabilities. The Group also monitors the drawdown of borrowings against the available banking facilities and reviews the level of
reserves. Liquidity risk management ensures sufficient borrowings funding is available for the Group’s day to day needs. Board policy is to maintain
reasonable headroom of unused committed bank facilities in a range of maturities at least 12 months beyond the period end.
Maturity profile of financial liabilities
The following table illustrates the Group’s remaining contractual maturity for its financial liabilities when they fall due.
29 December 31 December
£m 2012 2011
Due within one year:
Trade payables 190.6 197.1
Deferred consideration 0.1 0.2
Other payables 30.5 31.2
Derivative financial instruments 10.1 17.9
Borrowings 21.0 19.5
Finance leases 0.1 0.9
Interest on borrowings 57.7 65.6
Total due within one year 310.1 332.4
In the second to fifth years inclusive:
Other payables 0.1 0.2
Deferred consideration – 0.1
Borrowings 220.9 247.6
Finance leases 0.3 2.3
Interest on borrowings 126.0 136.2
Total due in the second to fifth years 347.3 386.4
Due after five years:
Borrowings 350.0 350.0
Interest on borrowings 13.8 43.2
Total due after five years 363.8 393.2
The weighted average interest rates for the Group’s borrowings are found in note 23 and in note 26 for Finance leases.
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