Annual Report - JD Group

22. Financial risk management continued
22.2 Foreign currency management
Certain foreign currency transactions are covered by forward exchange contracts from the time such transactions are entered into until
settlement date. The writing of option contracts is prohibited. The amounts represent the net rand equivalents of commitments to
purchase foreign currencies and all of these commitments mature within three months of the year end.
Foreign Rand Market Fair
currency equivalent value value
000 R000 R000 R000
Covered forward commitments
US dollars 11 976 76 243 79 536 3 293
Uncovered forward commitments
US dollars – – – –
The fair values of the forward exchange contracts of R3,3 million are included in financial liabilities.
22.3 Embedded derivatives
Abra SA has entered into US dollar and Euro based property leases. A fair value asset of R3,6 million has been recognised for the
2004 financial year (2003: R4,7 million asset) resulting in a charge of R1,1 million to the income statement (2003: R13,1 million gain).
22.4 Credit risk management
Potential concentrations of credit risk consist principally of trade receivables and short term cash investments.
The Group only deposits short term cash surpluses with three major banks of high quality credit standing. Trade receivables comprise
a large, widespread customer base. The granting of credit is controlled by the application of behavioural scoring models, and the
assumptions therein are reviewed and updated on an ongoing basis. At 31 August 2004, the Group did not consider that any significant
concentration of credit risk existed which had not been adequately provided for.
22.5 Liquidity risk
The Group has limited risk of illiquidity as shown by its substantial banking facilities and reserve borrowing capacity.
2004 2003
Banking facilities Rm Rm
Total banking and loan facilities 1 578 1 960
Bank borrowings (note 18) 717 889
Unutilised banking facilities 861 1 071
In addition, the Group has cash on hand at year end of R1 328 million (2003: R443 million).
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