144 / 280
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
142
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
2014
R’000
2013
R’000
3.
FINANCIAL RISKS (continued)
Cash at bank and short-term bank deposits
Credit rating based on latest Fitch local currency long-term
issuer default ratings
AAA
1
6
A+
363
434
A-
82 287
55 642
BBB
—
221 357
BBB-
1 100 758
663 464
B
—
15
Other
655
298
1 184 064
941 216
Liquidity risk
Liquidity risk arises when a company encounters difficulties in meeting commitments associated with
liabilities and other payment obligations. The Group’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. Due to the
dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping
committed credit lines available.
Cash flow forecasting is performed in the operating entities of the Group to ensure sufficient cash to meet
operational needs while maintaining sufficient headroom to ensure that borrowing limits (where applicable)
are not breached.
Surplus cash held by the operating entities over and above the balance required for working capital
management is transferred to the Group treasury. Group treasury invests surplus cash in interest-bearing
accounts, identifying instruments with sufficient liquidity to provide adequate headroom as determined by
the above-mentioned forecasts.
The Group has a short-term loan facility with Investec Bank Limited of R1 billion (2013: R900 million).
At year-end, the facility was unutilised.