Telkom AR front.qxp

Notes to the annual financial statements (continued)
for the three years ended March 31, 2009
12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Risk management
Telkom Annual Report 2009 275
Exposure to continuously changing market conditions has made management of financial risk critical for the Company. Treasury policies,
risk limits and control procedures are continuously monitored by the Board of Directors through its audit and risk committee.
The Company holds or issues financial instruments to finance its operations, for the temporary investment of short-term funds and to manage
currency and interest rate risks. In addition, financial instruments such as trade receivables and payables arise directly from the Company’s
operations.
The Company finances its operations primarily by a mixture of issued share capital, retained earnings, long-term and short-term loans. The
Company uses derivative financial instruments to manage its exposure to market risks from changes in interest and foreign exchange rates.
The derivatives used for this purpose are principally interest rate swaps and forward exchange contracts. The Company does not speculate
in derivative instruments.
The table below sets out the classification of financial assets and liabilities:
At fair
value
through Financial
profit liabilities
or loss at Loans Available Total
held for amortised Held-to- and for carrying Fair
trading cost maturity receivables sale value value
Notes Rm Rm Rm Rm Rm Rm Rm
Classes of financial instruments
per balance sheet
2009
Assets 154 – 1,044 15,062 34 16,294 16,460
Trade and other receivables* 17 – – – 6,153 – 6,153 6,153
Investments 11 – – – 7,693 – 7,693 7,693
Finance lease receivable
Assets held for sale and
13 – – – 275 – 275 275
discontinued operations 16 – – – – 34 34 200
Other financial assets 154 – 1,044 – – 1,198 1,198
Repurchase agreements 18 – – 1,044 – – 1,044 1,044
Interest rate swaps 18 4 – – – – 4 4
Forward exchange contracts 18 150 – – – – 150 150
Cash and cash equivalents 19 – – – 941 – 941 941
Liabilities (225) (23,257) – – – (23,482) (24,555)
Interest-bearing debt 23 – (17,704) – – – (17,704) (18,777)
Trade and other payables 27 – (5,424) – – – (5,424) (5,424)
Shareholders for dividend 32 – (23) – – – (23) (23)
Credit facilities utilised 19 – (106) – – – (106) (106)
Other financial liabilities (225) – – – – (225) (225)
Interest rate swaps 18 (72) – – – – (72) (72)
Forward exchange contracts 18 (153) – – – – (153) (153)
(71) (23,257) 1,044 15,062 34 (7,188) (8,095)