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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
120
3.
Financial instruments and financial risks
continued
3.2 Financial liabilities
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its
liabilities. Refer to accounting policies on borrowings and trade and other payables for financial liabilities (which
exclude employee-related liabilities and VAT), and share capital for equity instruments issued by the Group.
Critical accounting estimates and assumptions
Management has assessed the probabilities on the contingent purchase arrangements.
3.2.1 Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are classified as current liabilities if payment is due within the normal
operating cycle of the business. If not, they are presented as non-current liabilities.
2016
R’000
2015
R’000
Trade payables
2 322 408
2 671 779
Accruals
116 240
70 103
Employee benefits
70 142
61 740
Sundry creditors
16 031
20 974
Deferred revenue
2 044
1 221
Contingent consideration
83 563
123 902
VAT
9 048
16 675
Payables to related parties (refer to note 8)
23 144
7 828
2 642 620
2 974 222
Less:
Amounts included in current portion of trade and other payables
(2 601 807)
(2 831 000)
40 813
143 222
Trade payables are discounted at a discount rate of 10.5% per annum (2015: 9.25% per annum) based on average
creditors’ days outstanding. The effect of discounting of the trade payables balance amounts to R13.648 million
(2015: R18.513 million).
Fair value estimation
Fair value measurement hierarchy:
•
Level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2: fair value based on inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or
•
Level 3: fair value based on inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).