Page 65 - Hardide-Annual-Report-2021
P. 65

On 19 January 2022, Hardide Coatings Inc entered into a $438,000 (£325,000) asset finance agreement with The American National Bank and Trust Company, Hardide Coatings Inc’s US bankers. The term is over 60 months at an interest rate of 4%, with the first loan repayment instalment commencing in February 2022.
There were no related party transactions to report with either directors or key management other than those disclosed in note 6.
At the Statement of Financial Position date Hardide Coatings Inc had a capital commitment of $6,000 (£4,000) for the purchase of equipment (2020: £45,000). Hardide Coatings Ltd had capital commitments of £35,000 for the purchase of equipment (2020: £124,000) and £Nil for leasehold improvements (2020: £11,000).
There are no contingent liabilities to be disclosed.
In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. The Group’s principal financial instruments are financial assets comprising trade and other receivables (excluding prepayments) and cash balances; and financial liabilities comprising trade payables as disclosed in notes 13 and 14. These are all measured at fair value with changes in carrying amount charged or credited to the Income Statement, with the exception of borrowings which are measured at amortised cost.
Exposure to credit, liquidity, currency and interest rate risks arises in the normal course of the Group’s business. The Group does not enter into derivative financial instruments.
Credit risk
The Group’s credit risk is primarily attributable to its credit sales. The Group has significant concentration of sales to
a few key customers, however, since the ultimate customers for the Group’s products are predominantly blue-chip multinational companies, the board believes that this is not a significant risk. Credit risk also arises from cash and deposits with banks. These risks are reviewed regularly by the board, in particular the ageing of trade receivables and the amount of cash on deposit with various institutions. As at 30 September 2021 the Group had trade receivables and other receivables of £583,000 (2020: £486,000) and cash deposits of £1,543,000 (2020: £2,715,000).
The Group does not consider the effect of expected credit losses to be material.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and
to invest cash assets safely and profitably. The interest rate exposure of the Group as at 30 September 2021 and the maturity profile of the carrying value of the Group’s financial liabilities are shown in note 14. All financial liabilities will be settled within six months unless stated in notes 15 and 16. The Group’s policy is to ensure that it has sufficient cash to allow it to meet its liabilities. This risk is monitored by the board which receives forecast cash flows on a monthly basis, an annual budget and quarterly revenue and cost forecasts. The Group currently has no bank credit facility.
Currency risk
The Group is exposed to translation and transaction foreign exchange risk arising because the Group has operations in more than one country. As such, the Group’s net assets arising from such overseas operations are exposed to currency risk resulting in gains or losses on retranslation into sterling.
Foreign exchange risks arise when Group companies enter into transactions denominated in a currency other than their functional currency. Movements in exchange rates also affect the value of the Group’s foreign currency cash balances in the UK. Exchange rate movements during the year resulted in a loss of £23,000 (2020: £28,000).
Interest rate risk
Interest rate risk arises on borrowings and cash balances which are at floating interest rates. Changes in rates could have the effect of either increasing or decreasing the Group's net profit. The major risk is to UK rates and there is no exposure to rates in the USA or Europe.
As at 30 September 2021, the Group had no floating rate borrowings, and all its cash deposits were in floating rate accounts.
Notes to the Group Financial Statements 65

   63   64   65   66   67