Carphone Warehouse 2014 Annual Report Download - page 96

Download and view the complete annual report

Please find page 96 of the 2014 Carphone Warehouse annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

Carphone Warehouse Group plc
Annual Report 2014
94
FINANCIAL STATEMENTS
Notes to the Group financial statements continued
25 FINANCIAL RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS continued
b) FOREIGN EXCHANGE RISK continued
At  March , the total notional principal amount of outstanding currency contracts was £m (: £m). Currency loans and foreign
exchange contracts are sensitive to movements in foreign exchange rates. This sensitivity can be analysed in comparison to year-end rates
(assuming all other variables remain constant) as follows:
2014 2013
Income Income
statement statement
movement movement
£m £m
10% movement in the Sterling/Euro exchange rate 6—
10% movement in the Sterling/Swedish Krona exchange rate 1—
c) INTEREST RATE RISK
The Group’s interest rate risk arises primarily on cash, cash equivalents and loans and other borrowings, all of which are at floating rates
of interest and which therefore expose the Group to cash flow interest rate risk. These floating rates are linked to LIBOR and other interest
rate bases as appropriate to the instrument and currency. Future cash flows arising from these financial instruments depend on interest
rates and periods agreed at the time of rollover. Group policy permits the use of long-term interest rate derivatives in managing the risks
associated with movements in interest rates.
The effect on the income statement and equity of % movements in the interest rate for the currencies in which most Group cash, cash
equivalents, loans and other borrowings are denominated and on which the valuation of most derivative financial instruments is based
isasfollows, assuming that the year-end positions prevail throughout the year:
2014 2013
Income Income
statement statement
movement movement
£m £m
1% movement in the Sterling interest rate 41
1% movement in the Euro interest rate ——
d) LIQUIDITY RISK
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. The Group manages its exposure to liquidity risk by regularly reviewing the long-term
and short-term cash flow projections for the business against the resources available to it.
In order to ensure that sufficient funds are available for ongoing and future developments, the Group has committed bank facilities,
excluding overdrafts repayable on demand, totalling £m (: nil). In the prior year, CPW Europe had a committed £m revolving
credit facility which was due to expire in July  and which was replaced as part of the CPW Europe Acquisition by the £m term and
revolving credit facility described in note .
The table below analyses the Group’s financial assets and 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.
<1 year 1–2 years 2–3 years >3 years Total
2014 £m £m £m £m £m
Finance leases (1) — — — (1)
Derivative financial instruments – payable:
Forward foreign exchange contracts (68) — — — (68)
Interest rate swaps (1) — — — (1)
Derivative financial instruments – receivable:
Forward foreign exchange contracts 68 — — — 68
Interest rate swaps — 1 3 — 4
Loans and other borrowings (8) (32) (56) (215) (311)
Deferred consideration (25) (25) — — (50)
Trade and other payables (869) — — — (869)