Annual report and accounts 2008

19Financial instruments

(a) Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Financial assets

Financial assets
	Loans and receivables £000	Assets at fair value through the income statement £000	Available- for-sale £000	Total £000
At 31 December 2008
Cash and cash equivalents	76,502	−	−	76,502
Short-term investments	−	471	−	471
Short-term marketable securities	−	1,816	−	1,816
Embedded derivatives	−	12,298	−	12,298
Trade receivables (gross of impairment provision)	60,732	−	−	60,732
Total current financial assets	137,234	14,585	−	151,819
Non-current available-for-sale investments – unlisted	−	−	1,167	1,167
Total financial assets	137,234	14,585	1,167	152,986
At 31 December 2007
Cash and cash equivalents	49,509	–	–	49,509
Short-term investments	–	232	–	232
Short-term marketable securities	–	1,582	–	1,582
Trade receivables (gross of impairment provision)	45,249	–	–	45,249
Available-for-sale investments – listed	–	–	1,180	1,180
Total current financial assets	94,758	1,814	1,180	97,752
Non-current available-for-sale investments – unlisted	–	–	3,701	3,701
Total financial assets	94,758	1,814	4,881	101,453

Financial liabilities

Financial liabilities
	2008 £000	2007 £000
Liabilities at fair value through the income statement at 31 December:
Trade and other payables, excluding embedded derivatives	6,953	2,230
Currency exchange contracts	18,457	496
Embedded derivatives	−	220
Total financial liabilities	25,410	2,946

(b) Credit quality of financial assets

Trade receivables

On a quarterly basis, all trade receivables more than three months overdue are considered for impairment on a line-by-line basis. Either a provision is made or the lack thereof is justified, with review by senior members of the Group’s finance team.

Trade receivables
	2008 £000	2007 £000
Trade receivables (gross of impairment provision):
Not yet due	42,899	31,752
Under 90 days overdue	13,074	10,402
Over 90 days overdue but not provided for	3,015	1,591
Fully provided for	1,744	1,504
Total	60,732	45,249

As shown above, at 31 December 2008 trade receivables less than 90 days overdue amounted to £13.1 million. Of those outstanding at 31 December 2008, £9.8 million had been collected by 26 March 2009 and £1.7 million were owed by large, established customers. Similarly, receivables more than 90 days overdue and not provided for amounted to £3.0 million of which £0.7 million had been collected by 26 March 2009 and £0.4 million was owed by large, established customers. For the remainder, discussions regarding repayment are ongoing and repayment schedules have been agreed with the customers concerned. These will be monitored on a quarterly basis per the control outlined above. No further analysis has been provided here on the quality of these debts as they are not felt to pose a material threat to the Group’s future results.

Highly liquid financial assets

As at 31 December 2008, 91% (2007: 91%) of the Group’s cash and cash equivalents, short-term bank deposits and short-term marketable securities were held with institutions that had either an AA rating or, in the case of UK building societies, had over £1 billion in assets.

Derivative financial assets

As at 31 December 2008 and 2007, the Group had no derivative financial assets.

<< Previous Next >>

Return to top of the page