Blue Label Telecoms Integrated Annual Report 2014

BUSINESS MODEL

AND STRATEGIC

OBJECTIVES

LEADERSHIP

GOVERNANCE

OPERATING

PERFORMANCE

SHAREHOLDERS’

INFORMATION AND

ADMINISTRATION

FINANCIAL

PERFORMANCE

BLUE LABEL INTEGRATED ANNUAL REPORT 2014

231

NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS

CONTINUED

For the year ended 31 May 2014

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 2014. In addition, the Company and four of its subsidiaries have issued a cross

surety in the amount of R1.7 million.

Maturity of financial liabilities

Payable in:

More than More than More than

Less than one month one year two years

one month but not

but not

or on exceeding exceeding exceeding More than

demand one year two years five years five years

R’000

2014

Loans from subsidiaries

474 949

—

Trade and other payables*

2 512

11 557

—

Total

477 461

11 557

—

2013

Loans from subsidiaries

150 858

—

Trade and other payables*

1 642

7 596

—

Total

152 500

7 596

—

* Trade and other payables exclude non-financial instruments being VAT and certain amounts within accruals and sundry

creditors.