(n) Financial risk factors

The group is exposed to financial risk from the interest bearing assets and an overseas associate. These expose the group to financial risks including foreign currency risk, interest rate risk, credit risk and liquidity risk.

Foreign exchange risk

The group has an investment in Churchill Cup LP which is registered in the USA and operates in the UK, USA and Canada. The group is therefore subject to foreign exchange movements of sterling with the US dollar and the Canadian dollar. Due to the size of investment, no foreign currency derivatives are used by the group.

Interest rate risk

The group has interest bearing assets which are invested at differing interest rates. Interest rates on interest bearing assets are fixed for the term of the investment. Interest rates on operating accounts are variable at 0.5% lower than the fixed term rate as the cash is at call. The group also has an interest bearing liability for which interest is payable at the variable rate applicable to the borrowed amount. Interest rate risk on the interest bearing liability is mitigated by the implementation of an interest rate swap which has fixed the interest rate payable for two years.

 

Credit risk

The group has no significant concentration of credit risk. The group has implemented policies that require appropriate credit checks on potential customers before sales commence. Interest bearing assets are only invested with financial institutions that have excellent credit ratings.

Liquidity risk

The group invests surplus cash into interest bearing assets for various terms. Generally no more than 80% of cash is invested in fixed term interest bearing assets at any one time. Interest bearing assets are not invested for any term greater than three months.

(o) Turnover

Turnover represents amounts invoiced, excluding value added tax, in respect of the sale of goods and services. Ticket income and the sale of hospitality packages, the latter included within hospitality and catering, are recognised as revenue when the related event is staged. Revenue determined by commercial contracts, which makes up the majority of broadcasting revenue, sponsorship revenue and lease of hospitality boxes, the latter included within hospitality and catering, is recognised in accordance with the