106\u00a0Macfarlane Group PLC Annual Report and Accounts 2022
Notes to the financial statements\u00a0(continued)
For the year ended 31\u00a0December\u00a02022
15. Financial instruments\u00a0(continued)
A sensitivity analysis has been prepared based on bank interest rate exposures at the year-end date and the stipulated change taking place at the beginning of the financial year and held constant throughout the year. If interest rates had been 50 basis points higher and all other variables held constant, the Group\u2019s profit before tax would have decreased by \u00a361,000 (2021: \u00a366,000).
Currency risk
The Group had three overseas subsidiaries in 2022, one operating in Ireland, one operating in Holland and one operating in Germany. Revenues and expenses are denominated exclusively in Euros. Movements in the Euro to sterling exchange rates could affect the Group\u2019s sterling balance sheet. The Group\u2019s policy during 2022 has been to review the need to hedge currency exposures on a regular basis and it was not considered necessary to cover existing currency exposures by the use of financial instruments. The Group continues to review the need to hedge exposures on a regular basis.
The Sterling value of foreign currency denominated assets and liabilities at the year-end is as follows:
Assets
2022
\u00a3000
Assets
2021
\u00a3000
Liabilities
2022
\u00a3000
Liabilities
2021
\u00a3000
Euros
8,071
2,326
3,520
814
The Sterling value of the Group\u2019s foreign currency denominated profit before tax from continuing operations is as follows:
2022
\u00a3000
2021
\u00a3000
Euros
1,015
185
The following table details the sensitivity to a 5% reduction in Sterling against the respective foreign currencies. The sensitivity of the Group\u2019s exposure to foreign currency risk is determined based on the exposure at the year-end and on the change taking place at the beginning of the financial year and held constant throughout the year.
Result
2022
\u00a3000
Result
2021
\u00a3000
Other equity
2022
\u00a3000
Other equity
2021
\u00a3000
Euros
38
9
70
76
2022
\u00a3000
2021
\u00a3000
Cash and cash equivalents
Currency\t\u2013 Sterling
5,232
11,777
\u00a0\u2013 Euros
413
519
\u00a0\u2013 US Dollars
61
19
Cash and cash equivalents
5,706
12,315
Bank borrowings
Currency\t\u2013 Sterling
8,245
9,840
\u00a0\u2013 Euros
898
\u2013
Bank borrowings
9,143
9,840
Net bank debt/(funds)
3,437
(2,475)
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with an original maturity of three months or less.\u00a0\u00a3360,000 included with cash and cash equivalents has a right of offset against the Sterling bank borrowings.
The Group bank borrowing facility with Lloyds Banking Group PLC (\u2018Lloyds\u2019) of \u00a330m is available until December 2025. Under the facility, trade receivables of the Group\u2019s largest trading subsidiary, Macfarlane Group UK Limited are assigned to Lloyds who then fund the Group in advance of the collection of these transferred receivables. The Invoice Discounting facility bears interest at normal commercial rates and carries standard financial covenants in relation to interest cover and levels of headroom over trade receivables\u2019 balances.