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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
continued
For the year ended 31 May 2016
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
118
3.
Financial instruments and financial risks
continued
3.1 Financial assets continued
3.1.2 Trade and other receivables continued
Trade receivables are discounted at a discount rate of 10.5% per annum (2015: 9.25% per annum) over average
debtors’ days outstanding. The effect of discounting of the trade receivables balance which amounts to
R9.514 million (2015: R8.227 million) is not taken into account in the previous table.
The Group holds guarantees to the value of R50 million (2015: R50 million) as security over specific customers
included in trade receivables. The Group has further insurance cover to the value of R375 million (2015: R225 million)
over trade receivable balances with certain material customers. All insured values exclude VAT.
The trade receivables that are neither past due nor impaired relate to independent customers for whom there is no
recent history of default.
Sundry debtors are considered to be fully performing.
2016
R’000
2015
R’000
Provision for impairment of receivables
Balance at the beginning of the year
10 927
15 665
Allowances made during the year
8 891
6 994
Disposal of subsidiary
(5 814)
—
Amounts utilised and reversal of unutilised amounts
(154)
(11 732)
At 31 May
13 850
10 927
There is a cession of trade receivables of R2.289 billion (2015: R2.485 billion) in
favour of Investec Bank Limited as security for facilities referred to in note 3.
The Group considers its maximum exposure in respect of trade receivables which
have not been impaired, without taking into account any collateral and financial
guarantees, to be as follows:
Group 1
30 525
10 699
Group 2
2 453 930
2 619 334
Group 3
11 603
18 504
Total unimpaired trade receivables
2 496 058
2 648 537
The effect of discounting of the trade receivables is not taken into account in the table above.
The rating groups for counterparties are categorised as follows:
Group 1 – New customers/related parties (less than six months).
Group 2 – Existing customers/related parties (more than six months) with no defaults in the past.
Group 3 – Existing customers/related parties (more than six months) with some defaults in the past.
All defaults were fully recovered or are in the process of being recovered.