203 / 248
NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
201
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
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 2015. 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 a guarantee in the amount of R80.7 million in favour
of third parties, for normal trade obligations of group companies.
Maturity of financial liabilities
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
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
—
2014
Loans from subsidiaries
474 949
—
—
—
—
Trade and other payables*
2 512
11 557
—
—
—
Total
477 461
11 557
—
—
—
* Trade and other payables exclude non-financial instruments being VAT and certain amounts within
accruals and sundry creditors.
More than
five years
R’000