WindarPhotonics AnnualReport 2018 All - Flipbook - Page 56
Notes to the Financial Statements
continued
7. Financial instruments - Risk Management (continued)
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.
This note describes the Group’s objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
The principal financial instruments used by the Group, from which financial instrument risk arises, include Trade
and other receivables, Cash and cash equivalents, loans, the invoice discounting facility and Trade and other
payables.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance function.
The Board receive monthly reports from the finance function through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails
to meet its contractual obligations. In 2016 the Group restricted its policy in respect of credit risks related to
customers. Prior to any major sales of products or services the Group seeks to either
• receive prepayments
• obtain full credit risk insurance on the risk amount
• sell the outstanding amount/invoice to external parties
or a combination of the above, hence the Group’s exposure to credit risk from trade and other receivables is
considered insignificant.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions.
For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
The Group does not enter into derivatives to manage credit risk.
Fair value and cash flow interest rate risk
The Group obtained a loan from Vækstfonden during the period ended 31 December 2012 in the amount of
€0,6 million at a fixed interest rate of 12 per cent p.a. The loan is a bullet loan with maturity in June 2020.
This is a fixed rate and therefore the Group has no exposure to any change in interest rates.
An invoice discounting facility is available at a rate of 4.5 per cent above the inter banking interest rate in DKK,
EUR and USD. As per 31 December 2018 the total debts under the facility amounted to EUR 10,735 and the
exposure to any change in interest rate therefore minimal.
Currency amount
Euro amount
DKK
50,004
6,696
4.5%
+2.0%
USD
2,668
2,344
7.0%
+2.0%
EUR
1,695
Interest
1,695
Change in interest rate
4.5%
Euro effect
+2.0%
10,735
Foreign exchange risk
134
34
47
215
Foreign exchange risk also arises when the Group enters into transactions denominated in a currency other than
their functional currency (€). Given the volume and magnitude of such transactions it is not considered sufficient
to warrant hedging the risk exposure.
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Windar Photonics - Annual Report and Accounts 2018