Other explanatory notes
The use of financial instruments in its normal business exposes the Company to market, currency, interest rate, credit and liquidity risks. To manage these risks, the Company has a policy, including established a system of credit limits and procedures to reduce the risks of unpredictable adverse developments in financial markets and thus the financial performance of the Company.
The Company incurs credit risk on loans and receivables under financial fixed assets has been disclosed, trade and other receivables and cash. The maximum credit risk facing the Company amounted to 32 million euros. Exposure to credit risk of the Company is primarily determined by the individual characteristics of each customer. In addition, management also considers the demographics of the customer base, including the default risk of the country in which customers operate, as these factors, particularly in the current deteriorating economic conditions, have an influence on the credit risk.
Due to the unrest in the Middle East, the credit risk in this region high. The receivables from customers from this region are mostly covered. The Company view has taken the following measures to limit credit risk:
- Regularly using safeguard measures such as advance payments, letters of credit and bank guarantees;
- Credit limits are actively monitored throughout the season;
- New supplies are not allowed until all debts have been paid from the previous season.
As a result of international activities the Company holds net investments in foreign companies and is engaged in foreign currency transactions in particular US Dollars / Pounds Sterling / Polish Zloty and Canadian Dollars.
On June 30 2015 the net exposure is converted into EUR at the spot rate at the balance sheet date as follows:
The Company monitors its liquidity position through successive liquidity budgets. The management will ensure that sufficient liquidity is available to meet the obligations. In 2015, a centralized cash management system has been introduced to manage cash flows within the European companies. The Company is partly funded by grower deposits which are repayable on demand by growers. If a large number of growers collect its credit claims this will have a negative impact on the liquidity of the Company. For this, the Company has an overdraft facility of EUR 15 million.
The Company incurs interest on interest bearing assets and liabilities, including the grower deposits. Both of these receivables and payables have agreed on a floating rate interest rate agreements, thereby running the risk of doing business in respect of future cash flows. The interest rate risk on interest-bearing receivables and payables is very limited and therefore the management has taken no additional mitigating measures.