77
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December, 2012
(Expressed in Thousands of Trinidad and Tobago Dollars, except where otherwise stated)
24. Financial risk management
(continued)
Credit risk related to receivables
Customer credit risk is managed in accordance with the Group’s established policy, procedures and control relating to
customer credit risk management. Credit limits are established for all credit customers based on internal rating criteria.
Outstanding customer receivables are regularly monitored. At 31 December, 2012, the Group had thirteen customers
(2011: thirteen customers) that owed the Group more than $2 million each and which accounted for 41% (2011: 40%) of
all trade receivables owing.
Credit risk related to cash at bank
Credit risks frombalanceswithbanks andfinancial institutions aremanaged inaccordancewithGrouppolicy.Investments
of surplus funds are made only with approved counterparties and within limits assigned to each counterparty.
Counterparty limits are reviewed by the Group’s Board of Directors on an annual basis. The limits are set to minimise the
concentration of risks and therefore mitigate financial loss through potential counterparty failure.
Liquidity risk
The Group monitors its risk to a shortage of funds by considering planned and probable expenditures against projected
cash inflows fromoperations, from the settlement of financial assets such as accounts receivable and levels of cash sales.
The Group’s objective is to fund its operations and activities within the framework of the terms of the debt restructuring
agreedwith lenders.Working credit lines have been withdrawn and access to longer termcredit funding has been severely
restricted. Accordingly, the Group is dependent on internally generated funds to cover most of its funding needs.
The table below summarises the maturity profile of the Group’s financial liabilities at 31 December:
2012
On
demand
1 year
2 to 5 years
> 5 years
Total
$
$
$
$
$
Bank overdraft and
short-term advances
–
31,902
–
–
31,902
Borrowings
16,675
83,882
824,308
1,121,261
2,046,126
Interest and finance charges
–
1,779
–
–
1,779
Trade payables
–
180,146
–
–
180,146
16,675
297,709
824,308
1,121,261
2,259,953
2011
Bank overdraft and
short-term advances
447
–
–
–
447
Borrowings
1,672,690
2,750
2,906
17
1,678,363
Interest and finance charges
231,840
–
–
–
231,840
Trade payables
–
184,399
–
–
184,399
1,904,977
187,149
2,906
17
2,095,049
Capital management
The primary objective of theGroup’s capital management is to ensure that itmaintains a healthy financial position in order
to support its business activities and maximise shareholder value. The Group is required to comply with several financial
ratios and other quantitative targets in accordance with loan agreements. The Group will be required to achieve Leverage,
Debt Service and Net Worth financial ratio targets in accordance with the revised terms of the debt restructuring agreed
with lenders.
Foreign currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
Such exposure arises fromsales or purchases by an operating unit in currencies other than the unit’s functional currency.
Management monitors its exposure to foreign currency fluctuations and employs appropriate strategies to mitigate
any potential losses. Risk management in this area is active to the extent that hedging strategies are available and cost
effective.
