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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
3.
Financial instruments and financial risks
continued
3.1 Financial assets continued
3.1.1 Loans receivable continued
The Group considers its maximum exposure in respect of loans receivable, without taking into account any collateral
and financial guarantees, to be as follows:
2017
R’000
2016
R’000
Group 1
—
5 427
Group 2
224 861
98 340
Group 3
219
360
225 080
104 127
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.
3.1.2 Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. If collection is expected in the normal operating cycle of the business, they are classified as current assets.
If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due according to
the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount
of the provision is recognised in the income statement.
2017
R’000
2016
R’000
Trade receivables
2 470 705
2 440 111
Less:
Provision for impairment
(19 020)
(13 850)
2 451 685
2 426 261
Sundry debtors
98 521
75 244
Contingent consideration receivable
1
—
15 860
Prepayments
2
175 955
72 272
VAT
52 646
92 833
Receivables from related parties (refer to note 8)
22 702
25 719
2 801 509
2 708 189
Less:
Amounts included in current portion of trade and other receivables
3
(2 758 997)
(2 679 023)
42 512
29 166
1
Ukash was disposed of in April 2015. The proceeds included a contingent receivable of R17.5 million. The contingent consideration
arrangement required the acquirer to pay in cash to the Group an additional amount of R18.1 million if certain warranties were
achieved. The amounts were receivable in four six-month intervals commencing 30 September 2015. In the current year, the Group
received R12.8 million (2016: R5.8 million) relating to this.
2
Included in the amount above are prepayments to customers of R89 million (2016: R23 million).
3
Included in the amount above are starter pack debtors that have a normal operating cycle period which may be in excess of
12 months.
Fair value estimation
Fair value measurement hierarchy:
t
Level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
t
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
t
Level 3: fair value based on inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
Notes
to the group annual financial statements
continued
For the year ended 31 May 2017