Carphone Warehouse 2008 Annual Report Download - page 80

Notes to the Financial Statements continued
68 The Carphone Warehouse Group PLC Annual Report 2008
21 Financial risk management and derivative financial instruments (continued)
2008 2007
Income Income
statement Equity statement Equity
movement movement movement movement
£m £m £m £m
1% movement in the Sterling interest rate 0.4 – 1.4 –
1% movement in the Euro interest rate 4.1 – 3.4 –
1% movement in the Swiss Franc interest rate 4.4 – 3.8 –
Liquidity risk:
The Group manages its exposure to liquidity risk by regularly reviewing the long- and short-term cash flow projections for the business against facilities
and other resources available to it. Regular reports are made to the Audit Committee assessing current facilities and debt and, in the shorter term,
weekly reports are circulated showing variances against the Group’s cash flow budget. Headroom is assessed based on historical experience as well as
by assessing current business risks, including foreign exchange movements. Maturity dates of existing facilities are spread over five years and therefore
some refinancing risk is also mitigated; it is the Group’s policy to refinance debt maturities significantly ahead of maturity dates.
The table below analyses the Group’s financial liabilities into relevant maturity groupings. The amounts disclosed in the table are the contractual
undiscounted cash flows assuming that interest rates remain constant and that borrowings are paid in full in the year of maturity.
Less than More
1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years than 5 years Total
At 29 March 2008 £m £m £m £m £m £m £m
Borrowings (79.2) (40.7) (317.5) (27.4) (261.8) (387.5) (1,114.1)
Derivative financial instruments – payable 301.7 –––––301.7
Derivative financial instruments – receivable (301.7) –––––(301.7)
Trade and other payables (1,086.9) (1.0) ––––(1,087.9)
Less than More
1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years than 5 years Total
At 31 March 2007 £m £m £m £m £m £m £m
Borrowings (62.9) (40.7) (93.7) (298.7) (13.3) (393.9) (903.2)
Derivative financial instruments – payable 162.7 –––––162.7
Derivative financial instruments – receivable (162.7) –––––(162.7)
Trade and other payables (922.1) (71.6) ––––(993.7)
Credit risk:
The Group’s exposure to credit risk is regularly monitored and the Group’s policy updated as appropriate. Debt, investments, foreign exchange and
derivative transactions are all spread amongst a number of banks all of which have short- or long-term credit ratings appropriate to the Group’s policies
and exposures. The investments made by the insurance companies, which hold the bulk of the Group’s cash investments, are reviewed regularly by the
appropriate boards and judged against existing investment policies and counterparty credit risk policies. Trade receivables primarily comprise balances
due from individual fixed line and mobile customers and balances due from network operators. Network operators are generally major multi-national
enterprises with whom the Group has well established relationships and are consequently not considered to add significantly to the Group’s credit risk
exposure. Provision is made for any receivables that are considered to be irrecoverable.