Annual Report 2011 - Watercare

Watercare Services Limited
2011 ANNUAL REPORT
Notes to the financial statements (continued)
for the year ended 30 June 2011
21. Financial Assets and Liabilities (continued)
Liquidity risk
Liquidity risk is the risk arising from the group not being able to meet its financial obligations.
Ultimate responsibility for liquidity risk management rests with the board of directors, which has an appropriate liquidity risk management
framework for the management of the group’s short, medium and long-term funding and liquidity management requirements. The group manages
liquidity risk by maintaining adequate reserves and banking facilities, monitoring forecast and actual cash flows and by matching this with the
maturity profiles of financial liabilities.
The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of the medium-term notes, term
loans, overdraft, revolving credit facility and commercial paper. The liquidity risk associated with the short-term commercial paper debt is
mitigated by a standby facility of $200 million.
The tables below detail the gross undiscounted cash flows of the financial liabilities on the basis of their earliest possible contractual maturity
(including interest payments where applicable). Cash flows for financial liabilities without fixed amount or timing restrictions are based on the
conditions existing at balance date.
Gross contractual maturity analysis
Group and Company 2011
Current
Non-current
gross nominal
carrying
0-6 months 7-12 months 1-2 years 2-3 years More than 3 years cash outflow amount
$000 $000 $000 $000 $000 $000 $000
Financial liabilities
Bank overdraft 558 - - - - 558 558
Trade and other payables 16,157 - - - - 16,157 16,157
Accrued expenses* 63,031 - - - - 63,031 63,031
Forward exchange contracts 494 212 158 - - 864 864
Interest rate swaps 10,009 7,948 10,550 9,379 29,347 67,233 61,420
Borrowings 246,618 53,542 157,902 351,628 649,018 1,458,708 1,228,899
Total 336,867 61,702 168,610 361,007 678,365 1,606,551 1,370,929
* Excludes income received in advance of $13,995,878 (2010: nil) as it is not categorised as a financial liability.
Current
Non-current
gross nominal
carrying
0-6 months 7-12 months 1-2 years 2-3 years More than 3 years cash outflow amount
$000 $000 $000 $000 $000 $000 $000
Company 2010
Financial liabilities
Bank overdraft 446 - - - - 446 446
Trade and other payables 8,299 - - - - 8,299 8,299
Accrued expenses 33,017 - - - - 33,017 33,017
Forward exchange contracts 51 - - - - 51 51
Interest rate swaps 4,021 3,614 7,963 7,473 17,310 40,381 41,273
Borrowings 17,526 17,468 286,324 18,119 270,220 609,657 526,171
Total 63,360 21,082 294,287 25,592 287,530 691,851 609,257
The group monitors rolling forecasts of liquidity reserves on the basis of expected cash flow. At balance date the group had $318 million of
unused credit facilities (commercial paper, overdraft facility and revolving credit facility) available for its immediate use (2010: $158.3 million).
2011 Financial Report
PAGE 102
Capital management
The capital structure of the group consists of equity attributable to the owners of the parent, comprising issued capital, reserves and retained
earnings as disclosed on page 71 and debt including borrowings and covenants compliance as disclosed in note 20, page 95.
The group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The objective of the group is to maintain an optimal capital structure to reduce the cost of capital. In ensuring that
the group has sufficient solvency to satisfy all its operational needs, it closely monitors the ratio between the funds that it receives from operation
and its finance costs.
The group continues to focus on the maintenance of the long-term integrity of its assets whilst keeping the overall costs at minimum levels.
There has been no change in the group’s overall strategy for capital management during the years ended 30 June 2011 and 30 June 2010.
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