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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
229
NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS
For the year ended 31 May 2014
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The accounting policies and critical accounting estimates and assumptions applied to the Company annual
financial statements are consistent with the Group accounting policies as detailed on pages 117 to 136.
2.
FINANCIAL RISKS
In the course of its business, the Company is exposed to a number of financial risks: credit risk, liquidity risk
and market risk (including foreign currency and other price risk). This note presents the Company’s
objectives, policies and processes for managing its financial risk and capital.
Credit risk
Credit risk arises because a counterparty may fail to meet its obligations to the Company. The Company is
exposed to credit risks on financial instruments such as receivables, loans receivable and cash.
Trade and other receivables consist primarily of invoiced amounts owing from related parties. The
recoverability of these amounts are regularly monitored with reference to the counterparties’ financial
performance. Where necessary, a provision for impairment is made.
The Company places cash and cash equivalents with major banking groups and quality institutions that have
high credit ratings.
Loans are only granted to holders with an appropriate credit history, taking into account the holder’s financial
position and past experience.
The Company’s maximum credit risk exposure is the carrying amount of all financial assets on the statement
of financial position and sureties provided with the maximum amount the Company could have to pay if the
sureties are called on amounting to R1 billion (2013: R900 million).