Financial Statements - Chemring Group PLC

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C H E M R I N GG R O U P P L CNotes to the Financial Statements- continued20. CREDITORS DUE AFTER MORE THAN ONE YEAR2003£000Group2002£0002003£000Parent2002£000Medium term loan - UK- overseasObligations under finance leasesOther creditors14,8503,2152,1061,31821,48920,4914,3602,5242,00029,37514,241--1,31815,55920,491--2,00022,491The average interest rate applicable to the UK medium term loan is 4.7% (2002: 6.5%) and the average rate for the overseasmedium term loan is 4.9% (2002: 5.1%) per annum. The overseas medium term loan is secured on the assets of certain of theoverseas businesses. Finance lease obligations attract interest rates of between 2% and 3% above base rate. Obligations underfinance leases falling due within one to two years included above total £1,345,000.An analysis of the Group’s borrowings and the maturity profile of these borrowings is as follows:Group2003£0002002£000Bank overdraftUK medium term loansOverseas medium term loansObligations under finance leasesUnsecured loan stock- sterling denominated- US dollar denominated- US dollar denominated- Australian dollar denominated- sterling denominated- US dollar denominated16,76611,6447,8414,1886121,6931,7184044,50217,34514,00210,8544,8035551,0872,3654051,051Creditors falling due within:One yearOne to two yearsTwo to five yearsAfter five years24,3317,07712,11897644,50223,6766,17619,3621,83751,051P 46
2 0 0 3 F I N A N C I A L S T A T E M E N T S21. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTSThe Group’s financial instruments comprise borrowings, cash and various non-derivative financial instruments such as tradedebtors and trade creditors. As permitted by FRS13 Derivatives and other financial instruments: Disclosures, short term debtors andcreditors have been excluded from all FRS13 disclosures.The Group uses financial instruments to manage financial and commercial risk wherever it is appropriate to do so.The main risks arising from the financial instruments of the Group are interest risk, foreign exchange risk and liquidity risk. TheGroup’s policies in respect of the management of these risks, which remained unchanged throughout the year, were as follows :-Interest risk:The Group finances its operations through a mixture of retained profits, bank borrowings andleasing lines of credit. The UK borrowings are denominated in sterling and US dollars and aresubject to fixed rates of interest through an amortising LIBOR swap and floating rates ofinterest linked to Bank of Scotland base rate to provide flexibility. The overseas borrowings aredenominated in local currency and are predominantly subject to fixed rates of interest.Foreign exchange risk:Foreign exchange risk can be subdivided into two components, transactional risk and profittranslation risk:Transactional risk - The Group policy is for subsidiaries to maximise the use of hedging againsttransactional currency exposures against the currency in which their results are measured. Themeasurement and control of this risk is closely monitored on a Group-wide basis.Profit translation risk -The Group translates overseas profits and net assets in accordance withthe accounting policy in Note 1. The translation risk on net assets is controlled by the transferof currencies between Group companies. Any remaining translation differences are dealt withthrough the Group’s statement of total recognised gains and losses.Liquidity risk: Details of the maturity profiles of the Group’s funding can be found in Note 20.The total undrawn committed borrowing facilities at the financial year end amounted to £8,291,000 (2002: £5,273,000).P 47
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Financial Statements - Chemring Group PLC

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