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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
2.
Financial risks
continued
Market risk
Market risk is the risk that changes in market prices (interest rate and currency risk) will affect the Company’s income or
the value of its holding of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
The Company is exposed to risks from movements in foreign exchange rates and interest rates that affect its assets,
liabilities and anticipated future transactions.
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).
Contingent consideration, included in trade and other payables, are level 3 financial liabilities.
Changes in level 3 instruments are as follows:
2017
R’000
2016
R’000
Contingent consideration
Opening balance
68 232
93 280
Acquisition of Reware Proprietary Limited
1 150
—
Acquisition of Utilities World Proprietary Limited
4 516
—
Settlements
(45 331)
(1 931)
Gains and losses recognised in profit or loss
(1 179)
(23 117)
Closing balance
27 388
68 232
Total gains or losses for the period included in profit or loss for
liabilities held at the end of the reporting period, under:
Other income
4 698
30 924
Interest paid
(3 519)
(7 807)
Unrealised gains or losses recognised in profit or loss for liabilities held
at the end of the reporting period
894
7 222
Refer to note 3.2.1 of the Group financial statements.
Notes
to the Company annual financial statements
continued
For the year ended 31 May 2017