Glanbia plcAnnual Report 2011Financial statementswww.glanbia.combetween fixed interest rate amountsand floating rate interest amountscalculated by reference to the agreednotional amounts.Occasionally the Group enters into fixedto floating interest rate swaps to hedgethe fair value interest rate risk arisingwhere it has borrowed at fixed rates.(c) Price riskThe Group is exposed to equitysecurities price risk becauseof investments held by the Group inlisted and unlisted securities andclassified on the Group statement offinancial position as available for salefinancial assets. Certain securities arecarried at cost and therefore are notexposed to price risk.To manage its price risk arising frominvestments in listed equity securities,the Group does not maintain asignificant balance with any one entity.Diversification of the portfolio must bedone in accordance with the limits setby the Group. The impact of a 5%increase or decrease in equity indexesacross the eurozone countries wouldnot have any impact on Groupoperating profit.To manage its exposure to certaincommodity markets the Group enterscommodity futures contracts.For further details regarding theGroup's price risk see note 32 -derivative financial instruments.(d) Liquidity and cash flow riskThe Group's objective is to maintain abalance between the continuity offunding and flexibility through the use ofborrowings with a range of maturities.In order to preserve continuity offunding, the Group's policy is that, at aminimum, committed facilities shouldbe available at all times to meet the fullextent of its anticipated financerequirements, arising in the ordinarycourse of business, during thesucceeding 12-month period. Thismeans that at any time the lendersproviding facilities in respect of thisfinance requirement are required to giveat least 12-months notice of theirintention to seek repayment of suchfacilities. At the year end, the Grouphad multi-currency committed termfacilities of ?987.7 million (2010: ?734.2million) of which ?279.2 million (2010:?101.2 million) was undrawn. Theweighted average maturity of thesefacilities was 3.4 years (2010: 2.2years).For further details regarding theGroup's borrowing facilities see note 26- borrowings.(e) Credit riskCredit risk is managed on a Groupbasis. Credit risk arises from cash andcash equivalents, derivative financialinstruments and deposits with banksand financial institutions, as well ascredit exposures to customers,including outstanding receivables andcommitted transactions. For banks andfinancial institutions, only independentlyrated parties with a minimum creditrating of A- are accepted. The minimumcredit rating applicable to acounterparty used for derivativefinancial instruments is A-. Exception tothis policy is currently being permittedfor credit risk to relationship banks thatdo not meet the designated creditrating but are covered by an Irishsovereign guarantee.The Group's credit risk managementpolicy in relation to trade receivablesinvolves periodically assessing thefinancial reliability of customers, takinginto account their financial position,past experience and other factors. Theutilisation of credit limits is regularlymonitored and where appropriate,credit risk is covered by creditinsurance and by holding appropriatesecurity or liens.The Group enters into debt purchaseagreements with certain financialinstitutions for part of its trade receivablebalances. Where this is done the creditrisk is transferred but in some caseslimited late payment risk is retained.For further details regarding theGroup's credit risk see note 19 -trade and other receivables.
Glanbia plcAnnual Report 2011Financial statementswww.glanbia.comThe table below analyses the Group's financial liabilities, which will be settled on a net basis into relevant maturity groupingsbased on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the tableare the contractual undiscounted cash flows. Balances due within one year equal their carrying value balances as the impactof discounting is not significant.Financial liabilitiesLess than1 year?'000Between 1and 2 years?'000Between 2and 5 years?'000More than 5years?'000Total?'000At 31 December 2011Borrowings 52,808 343,108 62,971 251,179 710,066Future finance costs 34,052 25,618 43,239 60,495 163,404Derivative financial instruments 5,657 1,339-- 6,996Trade and other payables1 223,458--- 223,458 315,975 370,065 106,210 311,674 1,103,924Less future finance costs(34,052)(25,618)(43,239)(60,495)(163,404) 281,923 344,447 62,971 251,179 940,520Financial liabilitiesLess than1 year?'000Between 1and 2 years?'000Between 2and 5 years?'000More than 5years?'000Total?'000At 1 January 2011Borrowings 972 205,853 426,423-633,248Future finance costs 25,307 20,107 10,328-55,742Derivative financial instruments 6,487 2,221 1,155-9,863Trade and other payables1 186,612---186,612 219,378 228,181 437,906- 885,465Less future finance costs(25,307)(20,107)(10,328)-(55,742) 194,071 208,074 427,578- 829,723The Company has cash at bank of ?5.3 million at year end (2010: ?8.2 million). The contractual undiscounted cash flowsequal the balance as at 31 December 2011 and 1 January 2011.1Excludes accrued expenses and social security costs.