Laing O'Rourke Annual Review 2009 Financial statements 27 Financial instruments ( continued) 27.3 Liquidity risk Prudent liquidity risk management involves maintaining sufficient cash and available funding to meet liabilities as they fall due. The Group has procedures in place to minimise liquidity risk such as maintaining sufficient cash and other highly liquid current assets and by having an adequate amount of committed credit facilities. Maturity of financial liabilities The maturity profile of the carrying amount of the Group's non- current liabilities is as follows: Trade and other Bank Finance payables loans leases Total At 31 March 2009 £ m £ m £ m £ m Between one and less than two years 21.4 37.2 32.4 91.0 Between two and less than five years 8.1 210.4 34.7 253.2 Five or more years 1.1 5.1 0.1 6.3 30.6 252.7 67.2 350.5 At 31 March 2008 Between one and less than two years 20.0 54.9 35.1 110.0 Between two and less than five years 12.5 140.8 45.9 199.2 Five or more years 7.5 0.3 0.4 8.2 4 0.0 196.0 81.4 317.4 Borrowing facilities The Group has the following undrawn committed borrowing facilities available at the year end in respect of which all conditions precedent had been met: 2009 2008 £ m £ m Expiring within one year 158.6 123.0 Expiring between one and two years 5.8 10.7 Expiring in more than two years 14.4 35.8 178.8 169.5 27.4 Credit risk Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date. The Group's credit risk is primarily attributable to its loan assets, trade and other receivables. The ageing of trade receivables at the year end was: Gross Gross receivables Impairment receivables Impairment 2009 2009 2008 2008 £ m £ m £ m £ m Not past due 58.7 - 55.1 - Past due 0- 30 days 33.5 - 21.7 - Past due 31- 120 days 10.0 - 12.7 - Past due 121- 365 days 15.3 ( 7.0) 3.4 - More than one year 8.8 ( 1.7) 15.0 ( 12.1) 126.3 ( 8.7) 107.9 ( 12.1) Receivables at 31 March 2009 that are more than one year past due date but not impaired amount to £ 7.1m ( 2008: £ 2.9m). The Group believes that there is no material exposure in respect of these balances. Based on prior experience and an assessment of the current economic environment, management believes there is no further credit risk provision required in excess of the normal provision for impairment of its loan assets, trade and other receivables. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuing basis the ageing profile of its receivables. Cash balances are held with high credit quality financial institutions. 82- 83
Notes to financial statements for the year ended 31 March 2009 27 Financial instruments ( continued) 27.5 Fair values The carrying and fair values of the Group's financial instruments at 31 March 2009 and 31 March 2008 are as follows: Carrying Carrying Fair value amount Fair value amount 2009 2009 2008 2008 £ m £ m £ m £ m Derivative financial instruments 4.9 4.9 0.6 0.6 Available- for- sale financial assets 9.0 9.0 10.5 10.5 Loans and receivables 693.2 693.2 524.6 524.6 Financial liabilities measured at amortised cost ( 1,693.8) ( 1,693.8) ( 1,383.1) ( 1,383.1) The carrying and fair values of the Group's financial instruments were not materially different at 31 March 2009. Fair values are determined as follows: - The fair value of derivative financial instruments is estimated to be the difference between the fixed forward price of the instrument and the current forward price for the residual maturity of the instrument at the balance sheet date. - The fair value of available- for- sale financial assets are recognised at quoted prices in active markets. - Loans, receivables and financial liabilities are valued at their amortised cost which is deemed to reflect fair value due to their short- term nature. 27.6 Capital risk management The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group regularly forecasts its cash position to management on both a short- term and long- term basis. Performance against forecasts are also reviewed and analysed to ensure the Group efficiently manages its net funds/ debt position. Net funds/ debt is calculated as cash and cash equivalents less total borrowings ( including ' current and non- current borrowings' as shown in the consolidated balance sheet). At 31 March 2009 the Group had net funds of £ 173.5m ( 2008: £ 136.3m), see note 32. The Group complied with all externally imposed capital requirements which it is subject to during the two years to 31 March 2009. 28 Assets charged as security for liabilities and collateral accepted as security for assets Financial assets pledged to secure liabilities are as follows: 2009 2008 £ m £ m Restricted financial assets 4.4 3.4 Financial assets pledged as short- term collateral and included within cash equivalents were £ 0.9m ( 2008: £ 0.8m). No financial assets have been provided to the Group as collateral ( 2008: £ nil).