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Escher Group Holdings plc
Annual report 2011
33
Financial statements
Corporate governance
Business review
Overview
3. Financial risk management
continued
Financial risk factors continued
(a) Market rate risk continued
Price risk
The Group is not significantly exposed to commodity price risk as a result of its operations. The Group has no exposure
to equity securities price risk as it holds no listed or other equity investments.
(b) Credit risk
Credit risk is managed on Group basis. The Group has implemented policies that require appropriate credit checks on potential
customers before sales are made.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial
institutions, as well as credit exposures to trade receivables. The Group banks with Irish Bank Resolution Corporation Limited,
Bank of Ireland and Allied Irish Bank (AIB). Deposits held in Irish Bank Resolution Corporation Limited, Bank of Ireland and AIB
are guaranteed by the Irish Government. The utilisation of credit limits is regularly monitored. As both the Irish Bank Resolution
Corporation Limited and AIB are owned by the Irish state, the sovereign Irish ratings are also regularly monitored.
With respect to the credit quality of trade receivables that are neither past due not impaired, there are no indicators at the date
of the statement of financial position, that the customers will not meet their payment obligations.
(c) Liquidity risk
The Group actively maintains a mix of long-term and short-term debt finance that is designed to ensure the Group has
sufficient available funds for operations and planned expansions.
The Board monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational
needs. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance and compliance with
internal balance sheet ratio targets.
The table below analyses the Group’s non-derivative financial liabilities and net-settled derivative financial liabilities into relevant
maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. Derivative financial
liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows.
Group
Less than
1 year
US$’000
Between
1 and 2
years
US$’000
Between
2 and 5
years
US$’000
31 December 2011
Borrowings
8,424
—
—
Debentures and accrued interest
3,392
—
—
Derivative financial instruments
56
—
—
Trade payables
746
—
—
31 December 2010
Borrowings
19,936
10,624
—
Debentures and accrued interest
—
8,177
—
Derivative financial instruments
178
—
—
Trade payables
527
—
—
Company
Less than
1 year
US$’000
Between
1 and 2
years
US$’000
Between
2 and 5
years
US$’000
31 December 2011
Amounts owed to subsidiaries
3,786
—
—
31 December 2010
Amounts owed to subsidiaries
1,115
— 5,000
On 5 January 2012, the Group undertook a refinancing with Bank of Ireland where existing bank loans and debentures were repaid
and new debt was raised with Bank of Ireland. This new financing put in place a US$9.7 million term loan facility and a revolving
twelve‑month facility for US$1.8 million. The term loan is amortising being fully repayable by 2015. On 31 January 2012, the first
capital repayment of US$1.4 million was paid. The interest rate applying to this new term loan is 4.31%.