Mobile Credit Baltic Plc
30
Notes to the consolidated financial statements (continued)
20 FINANCIAL INSTRUMENTS
Liquidity risk
The Group maintains sufficient liquid resources in its operating currencies to meet its immediate
working capital needs. Liquid resources are deposited with mainstream authorised banks or
institutions with an equivalent level of prudential supervision. Cash deposits generally have a
maturity of three months or less.
Credit risk
The Group is exposed to credit risk through its customer loans. The Group manages this risk by
the verification of customer's identity, other personal and financial information, and confirmation of
an acceptable credit history, and regular reviews of the outstanding loan portfolio supported by
procedures to monitor and manage the repayment process which include the use of reputable
and well-established credit collection agencies. If the Group's provision against its outstanding
customer receivables at 31 December 2007 had been 3% higher or lower, and all other variables
were held constant, then the Group's loss for the year ended 31 December 2007 would have
decreased or increased by €279,000.
Currency risk
The Group currently operates within countries which either use its functional currency or whose
currency is currently pegged to that currency. Foreign exchange risk is managed by ensuring any
non-Euro cash receipts or payments are converted to Euros promptly.
Interest rate risk
The Group is exposed to interest rate risk primarily from its cash deposits which, because of their
short maturities, earn interest on what is effectively a floating rate basis. Short-term borrowings
are also arranged on a floating rate basis when required. If interest rates had been 0.5% higher or
lower, and all other variables were held constant, then the Group's loss for the year ended 31
December 2007 would have increased or decreased by €2,000, due to the Group's exposure to
variable interest rates on its cash deposits. The Group's sensitivity to interest rates is mitigated
by its current use of fixed-rate short-term borrowings.
21 SUBSEQUENT EVENTS
On 14 January 2008 the Company held an EGM to increase the authorised share capital to
£3,000,000.
On 19 February 2008 the Company placed 3,330,432 new ordinary shares ("Placing Shares") of
10 pence each at 115p per share to raise gross proceeds of £3.8 million (€5.1 million). The
Placing Shares have been allotted from the Company's existing share allotment authorities. The
placing secured the equity financing required to support the Company's expected further growth
for 2008 in the Fenno-Baltic markets. Investors included both current shareholders and new
investors, which further expanded the Company's shareholder base.
Following the issue of the Placing Shares, the Company's issued share capital consists of
17,394,247 Ordinary Shares with a nominal value of 10 pence each.
