| 14.1.1 |
Fair value estimation
Refer to note 7.1.3 of the group financial statements for the applicable accounting policy.
The following table presents the fair value measurement hierarchy of the company’s liabilities that are materially different from the carrying amount:
| |
Level 1
Rm |
|
Level 2
Rm |
|
Level 3
Rm |
|
Total
Rm |
|
| 2017 |
|
|
|
|
|
|
|
|
| Current financial liabilities |
|
|
|
|
|
|
|
|
| Financial guarantee contracts |
– |
|
– |
|
1 432 |
|
1 432 |
|
| 2016 |
|
|
|
|
|
|
|
|
| Current financial liabilities |
|
|
|
|
|
|
|
|
| Financial guarantee contracts |
– |
|
– |
|
3 194 |
|
3 194 |
|
Valuation methods and assumptions
The following methods and assumptions were used to estimate the fair values:
Citibank 1
The fair value of the financial guarantee contract is determined using the discounted cash flow method. The valuation requires management to make certain assumptions about the model inputs, which include the probability of default and the maximum recovery amount.
Citibank 2
The fair value of the financial guarantee contract is determined using the fixed exposure method. The valuation requires management to make certain assumptions about the model inputs, which include the probability of default, the maximum recovery and interest rate curve.
Eurobonds
The fair value of the financial guarantee contract is determined using the relative valuation method. The valuation requires management to make certain assumptions about the model inputs, which include the probability of default, the maximum recovery and interest rate curve. |
| 14.2 |
Credit risk
Refer to note 7.1.4 of the group financial statements for an explanation on credit risk and how it is managed.
The company considers its maximum exposure per class, without taking into account any collateral and financial guarantees, to be as follows:
| |
2017
Rm |
|
2016
Rm |
|
| Cash and cash equivalents |
380 |
|
1 367 |
|
| Trade and other receivables |
508 |
|
238 |
|
| Financial guarantee contracts |
34 713 |
|
34 328 |
|
| |
35 601 |
|
35 933 |
|
Credit risk is mitigated to the extent that the majority of trade receivables consist of related party receivables of R491 million (2016: R223 million).
The company holds its cash balances in financial institutions with a rating of AA-. Given this rating, management does not expect the counterparty to fail to meet its obligations.
Trade and other receivables
Ageing and impairment analysis
| |
2017 |
2016 |
Gross
Rm |
|
|
Impaired
Rm |
|
|
Net
Rm |
|
|
Gross
Rm |
|
|
Impaired
Rm |
|
|
Net
Rm |
|
| Fully performing other receivables |
96 |
|
|
– |
|
|
96 |
|
|
65 |
|
|
– |
|
|
65 |
|
| Sundry debtors and advances |
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
| Trade receivables due from related parties |
96 |
|
|
– |
|
|
96 |
|
|
65 |
|
|
– |
|
|
65 |
|
| Past due other receivables |
412 |
|
|
– |
|
|
412 |
|
|
173 |
|
|
– |
|
|
173 |
|
| Sundry debtors and advances |
17 |
|
|
– |
|
|
17 |
|
|
15 |
|
|
– |
|
|
15 |
|
| 0 to 3 months |
8 |
|
|
– |
|
|
8 |
|
|
8 |
|
|
– |
|
|
8 |
|
| 3 to 6 months |
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
| 6 to 9 months |
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
| 9 to 12 months |
9 |
|
|
– |
|
|
9 |
|
|
7 |
|
|
– |
|
|
7 |
|
| Trade receivables due from related parties |
395 |
|
|
– |
|
|
395 |
|
|
158 |
|
|
– |
|
|
158 |
|
| 0 to 3 months |
296 |
|
|
– |
|
|
296 |
|
|
1 |
|
|
– |
|
|
1 |
|
| 3 to 6 months |
5 |
|
|
– |
|
|
5 |
|
|
13 |
|
|
– |
|
|
13 |
|
| 6 to 9 months |
1 |
|
|
– |
|
|
1 |
|
|
40 |
|
|
– |
|
|
40 |
|
| 9 to 12 months |
93 |
|
|
– |
|
|
93 |
|
|
104 |
|
|
– |
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
508 |
|
|
– |
|
|
508 |
|
|
238 |
|
|
– |
|
|
238 |
|
|
| 14.3 |
Liquidity risk
Refer to note 7.1.5 of the group financial statements for an explanation on liquidity risk and how it is managed.
The following liquid resources are available:
| |
2017
Rm |
|
2016
Rm |
|
| Cash and cash equivalents |
380 |
|
1 367 |
|
| Trade and other receivables |
508 |
|
238 |
|
| |
888 |
|
1 605 |
|
The company and other subsidiaries in the group have undrawn borrowing facilities of R19 730 million (2016: R16 100 million) available for use.
The following are the contractual maturities of financial liabilities:
| |
Carrying
amount
Rm |
|
Total
Rm |
|
Payable
within
1 month or
on demand
Rm |
|
More than
1 month but
not
exceeding
3 months
Rm |
|
More than
3 months
but not
exceeding
1 year
Rm |
|
| 2017 |
|
|
|
|
|
|
|
|
|
|
| Trade and other payables |
279 |
|
279 |
|
279 |
|
– |
|
– |
|
| Financial guarantee contracts |
34 713 |
|
34 713 |
|
34 713 |
|
– |
|
– |
|
| |
34 992 |
|
34 992 |
|
34 992 |
|
– |
|
– |
|
| 2016 |
|
|
|
|
|
|
|
|
|
|
| Trade and other payables |
750 |
|
750 |
|
750 |
|
– |
|
– |
|
| Financial guarantee contracts |
34 328 |
|
34 328 |
|
34 328 |
|
– |
|
– |
|
| |
35 078 |
|
35 078 |
|
35 078 |
|
– |
|
– |
|
Further details of financial guarantee contracts are provided in note 13. |
| 14.4.1 |
Interest rate risk
Refer to note 7.1.6 of the group financial statements for an explanation on interest rate risk and how it is managed.
At the reporting date, the interest rate profile of the company’s interest-bearing financial instruments was:
| |
Variable
rate instruments
Rm |
|
| 2017 |
|
|
| Financial assets |
|
|
| Cash and cash equivalents |
380 |
|
| Trade and other receivables |
196 |
|
| |
576 |
|
| Financial liabilities |
|
|
| Trade and other payables |
99 |
|
| 2016 |
|
|
| Financial assets |
|
|
| Cash and cash equivalents |
1 367 |
|
| Trade and other receivables |
223 |
|
| |
1 590 |
|
| Financial liabilities |
|
|
| Trade and other payables |
560 |
|
Sensitivity analysis
The company has used a sensitivity analysis technique that measures the estimated change to profit or loss of an instantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at 31 December, for each class of financial instrument with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation.
The company is mainly exposed to fluctuations in the following market interest rates: JIBAR, prime and LIBOR rates. Changes in market interest rates affect the interest income or expense of floating rate financial instruments. Changes in market interest rates only affect profit or loss in relation to financial instruments with fixed interest rates if these financial instruments are subsequently measured at their fair value
A change in the above market interest rates at the reporting date would have increased/(decreased) profit before tax by the amounts shown below.
The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular foreign exchange rates, remain constant. The analysis is performed on the same basis as was used for 2016.
| |
2017
Increase/(decrease) in profit
before tax |
2016
Increase/(decrease) in profit
before tax |
| |
Change in
interest
rate
% |
|
Upward
change in
interest
rate
% |
|
Downward
change in
interest
rate
Rm |
|
Change in
interest
rate
% |
|
Upward
change in
interest
rate
% |
|
Downward
change in
interest
rate
Rm |
|
| JIBAR |
1 |
|
1,3 |
|
(1,3) |
|
1 |
|
(3,6) |
|
3,6 |
|
| Prime |
1 |
|
3,8 |
|
(3,8) |
|
1 |
|
13,6 |
|
(13,6) |
|
| LIBOR |
1 |
|
(0,3) |
|
0,3 |
|
1 |
|
– |
|
– |
|
|
| 14.4.2 |
Currency risk
Refer to note 7.1.6.3 of the group financial statements for an explanation on currency risk and how it is managed.
Included in the company statement of financial position are the following amounts denominated in currencies other than the functional currency of the company.
| |
2017
Rm |
|
2016
Rm |
|
| Current assets |
|
|
|
|
| United States dollar |
* |
|
33 |
|
| Current liabilities |
|
|
|
|
| United States dollar |
2 662 |
|
3 507 |
|
| * |
Amounts less than R1 million. |
A change in the foreign exchange rates to which the company is exposed at the reporting date would have (decreased)/increased profit before tax by the amounts shown below:
| Denominated:functional currency |
Change in
exchange
rate
% |
|
Weakening
in
functional
currency
Rm |
|
Strengthening
in functional
currency
Rm |
|
| 2017 |
|
|
|
|
|
|
| US$:ZAR |
10 |
|
(266) |
|
266 |
|
| 2016 |
|
|
|
|
|
|
| US$:ZAR |
10 |
|
(347) |
|
347 |
|
|
