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32.
FINANCIAL INSTRUMENTS
(continued)
32.2 Credit risk
(continued)
32.2.1 Trade receivables
(continued)
Collateral held on past due amounts
2016
2015
Fair value of
collateral
held
R’000
Trade
receivables
net of
impairment
allowance
R’000
Fair value of
collateral
held
R’000
Trade
receivables
net of
impairment
allowance
R’000
Cover by credit insurance
Foodservice
Australasia
79 397
79 397
52 685
52 685
United Kingdom
44 919
44 919
27 223
30 248
Europe
82 781
140 153
49 085
49 085
Emerging Markets
117 353
38 604
24 389
24 389
Total
324 450
303 073
153 382
156 407
In certain instances, the group’s operations reserve the right to collect inventory sold when the outstanding debt is not settled by the
customer. Where it is the business of the operation to finance assets, the assets are held as collateral in respect of the outstanding debt.
The collateral detailed above is in addition to these aforementioned measures taken to reduce credit risk in respect of trade receivables.
32.2.2 Investments
The classes for investments are listed held-for-trading, unlisted held-for-trading and unlisted available-for-sale, refer to note 18 for the
carrying amounts for each of these categories. The group manages its credit risk for investments by investing in reputable instruments.
There was an impairment loss of R119,1 million (2015: Rnil) that was recognised in respect of investments which related to Icelandic Water
Holdings ehf. Management’s best estimate of the fair value of the Icelandic Water investment was based on an offer to the holders of
convertible loan notes and warrants which are convertible into common company stock.
32.2.3 Cash and cash equivalents
The credit risk on cash and cash equivalents is addressed by utilising financial institutions of good standing for investment and cash
management purposes.
32.3 Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation.
The group manages its borrowings centrally for each segment. The divisions within each segment are therefore not responsible for the
management of liquidity risk but rather senior management for each of these segments are responsible for implementing procedures to
manage the regional liquidity risk.
Bidcorp Limited Annual integrated report 2016 |
Page 107
Financial overview