159 / 198
For the year ended 31 May 2016
157
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS
1.
Accounting policies and critical accounting estimates and assumptions
The accounting policies and critical accounting estimates and assumptions applied to the Company annual financial
statements are consistent with the Group accounting policies.
2.
Financial risks
In the course of its business, the Company is exposed to a number of financial risks: credit risk, liquidity risk and
market risk (including foreign currency and other price risk). This note presents the Company’s objectives, policies
and processes for managing its financial risk and capital.
Credit risk
Credit risk arises because a counterparty may fail to meet its obligations to the Company. The Company is exposed
to credit risks on financial instruments such as receivables, loans receivable and cash.
Trade and other receivables
Trade and other receivables consist primarily of invoiced amounts owing from related parties. The recoverability of
these amounts are regularly monitored with reference to the counterparties’ financial performance. Where necessary,
a provision for impairment is made.
Cash and cash equivalents
The Company places cash and cash equivalents with major banking groups and quality institutions that have high
credit ratings.
Loans receivable
Loans are only granted to holders with an appropriate credit history, taking into account the holder’s financial position
and past experience.
The Company’s maximum credit risk exposure is the carrying amount of all financial assets on the statement of
financial position and sureties provided with the maximum amount the Company could have to pay if the sureties
are called on amounting to R1.5 billion (2015: R1.5 billion).