Annual report 2007 - Torotrak

Financial Review - continuedCash and TreasuryYear ended Year ended Restated Restated31.03.07 31.03.07 Year ended Year ended31.03.06 31.03.06Group Excluding JV Group Excluding JV£000 £000 £000 £000Cash flows from operating activities (3,515) (3,250) (4,269) (3,715)Net cash used in investing activities (422) (128) 3,314 3,314Cash flows from financing activities 805 - 1,110 550Foreign exchange loss (34) (16) - -Cash and cash equivalents at start of year 7,473 7,467 7,318 7,318Cash and cash equivalents at end of year 4,307 4,073 7,473 7,467Year end Group cash balances include our 50% share ofamounts held in the Infinitrak joint venture. Excludingthe impact of Infinitrak, cash balances reduced by£3,394k during the year to a closing cash position of£4,073k. The net cash outflow was slightly higher thanplanned due to the impact of an £895k receivable forengineering services being delayed until after the yearend.We do not currently actively hedge against these currencyexposures although this policy will be kept under review.Exposure to interest rate risk is low and the Companycurrently does not undertake any form of interest ratehedging. The Company deposits and invests cash with acombination of both fixed and floating rates. The cashbalances at year–end were invested in a combination ofmarket-managed funds and bank deposits.The Group cash resources at the year end provide theGroup, in the directors’ opinion, with an acceptable levelof working capital in terms of our 18 month forwardworking capital review from 31 March 2007. Beyond thatperiod, our target is to achieve positive operating cashflow to fund future working capital requirements.However, we continue to monitor the future fundingrequirement of the business very carefully, keeping alloptions under consideration and maintaining a carefulreview of cash headroom and resilience. In particular, anymaterial investment opportunities within the next threeyears to secure greater value from the commercialisationof Torotrak IP, or significant further product developmentvia an existing or future joint venture, would requirefurther funding.The treasury function does not operate as a profit centre.Credit risk is managed by limiting exposures to authorisedbanks with credit ratings that are approved by the Board.The Company’s exposure to foreign exchange rate riskmainly arises from non-UK sterling denominated receiptsin relation to licence and engineering service agreementsas well as the impact of foreign exchange translation ofour share of Infinitrak’s US dollar denominated results.14Annual Report and Financial Statement 2007