For banks and financial institutions, only independently rated parties with a minimum rating of investment grade or higher are accepted by the Group. The Group’s maximum exposure to credit risk for the components of the balance sheet is shown in the table below: Years ended (In thousands of USD)
31-Dec-10
31-Dec-09
Financial assets Non-Current restricted cash Cash and short-term deposits
-
1,362
197,804
150,560
Accounts receivable
18,357
-
Vessel prepayments
28,060
-
244,221
151,922
Total
3.1.5 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and having availability of funding through an adequate amount of committed credit facilities. Management constantly manages the forecast of the group’s liquidity reserve on the basis of expected cash flows. The Group will have to secure additional funding in order to finance the construction of POLARCUS AMANI and POLARCUS ADIRA. The table below analyses the Group’s financial liabilities broken into different maturity groups based on the remaining period from 31 December 2010 to the date of contractual maturity. The amounts disclosed in the table are the contractual undiscounted cash flows.
(In thousands of USD) Bond loan borrowings (refer to Note 17 and 18)
Less than 1 Year
Between
Between
1 - 2 Years
2 - 5 Years
Over 5 Years
Total
-
-
170,000
-
170,000
Interest payment on bond loan borrowings
20,125
36,031
18,333
-
74,489
Finance lease liabilities (refer to Note 20)
22,388
34,141
21,672
138,594
216,796
Interest payment on finance lease liabilities
23,798
41,714
55,048
42,701
163,261
Other long term liabilities (refer to Note 21)
4,686
2,911
25,000
-
32,596
Interest payments on other long term liabilities
5,388
8,750
8,766
5,558
28,463
88,217
-
-
-
88,217
164,603
123,547
298,819
186,853
773,822
Trade and Other payables Total
As of 31 December 2010 the Group had three vessels under operation. Two additional vessels, POLARCUS SAMUR and POLARCUS ALIMA were delivered in Q1 2011. The vessels are expected to generate revenues to support the Group’s operations and service the debts.
3.2 Capital management Capital includes equity attributable to the equity holders of the parent company. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to maximize shareholder value and maintain an optimal capital structure in order to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may (i) adjust the amount of dividends paid to shareholders, (ii) return capital to shareholders, (iii) issue new shares or (iv) sell assets to reduce debt. The Company is subject to dividend restrictions under certain of its financing arrangements. Due to these dividend restrictions and the current phase of the Company, Polarcus will not propose any dividends to the shareholders for the fiscal year 2010. The Group aims to have equity capital of a level appropriate to its objectives, strategy and risk profile. The Group monitors its capital
structure on the basis of total equity to total assets ratio. As of 31 December 2010 the Group has a book equity ratio of 40%. It is the Group’s policy that the said ratio shall be approximately 40% during its current early growth stage.
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