161 / 198
For the year ended 31 May 2016
159
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS
continued
2.
Financial risks
continued
Liquidity risk
Liquidity risk arises when a company encounters difficulties to meet commitments associated with liabilities and other
payment obligations. The Company’s objective is to maintain prudent liquidity risk management by maintaining
sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit
facilities and the ability to close out market positions. Company finance monitors rolling forecasts of the Company’s
liquidity requirements to ensure it has sufficient cash to meet operational needs. Due to the dynamic nature of the
underlying businesses, the Company aims to maintain flexibility in funding by keeping committed credit lines
available.
Management is satisfied as to the liquidity of the Company since the majority of the current liabilities relate to the
loans from subsidiaries. These subsidiaries are 100% held by the Company and therefore the Company has control
of their assets including cash resources.
The Company and a subsidiary company have issued a cross surety in respect of a guarantee for an overdraft facility in
the amount of R19.85 million in favour of FNB, a division of FirstRand Bank Limited. This facility was unutilised as at
31 May 2016. In addition, the Company and four of its subsidiaries have issued a cross surety in the amount of
R1.3 million.
The Company has issued a surety in respect of guarantees in the amount of R98.8 million in favour of third parties,
for normal trade obligations of Group companies.
Maturity of financial liabilities
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on
the remaining period at the statement of financial position date to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than
one month
or on
demand
R’000
More than
one month
but not
exceeding
one year
R’000
Payable in:
More than
one year
but not
exceeding
two years
R’000
More than
two years
but not
exceeding
five years
R’000
More than
five years
R’000
2016
Loans from subsidiaries
— 1 183 399
—
—
—
Trade and other payables*
3 537
54 282
24 790
—
—
Total
3 537
1 237 681
24 790
—
—
2015
Loans from subsidiaries
754 891
—
—
—
—
Trade and other payables*
2 785
10 946
48 425
55 300
—
Total
757 676
10 946
48 425
55 300
—
* Trade and other payables exclude non-financial instruments being VAT and certain amounts within accruals and sundry creditors.