gold reef resorts annual report 2009 analysis of the year - Tsogo Sun

PAGE 80 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 DECEMBER 2009lESS THAN BETWEEN BETWEEN OVER1 YEAR 1 & 2 YEARS 2 & 5 YEARS 5 YEARSR’000 R’000 R’000 R’000GROUP31 December 2009Borrowings (excluding finance lease liabilities) 310 100 298 800 1 113 601 363 002Finance lease liabilities 417 208 – –Derivative financial instruments 19 878 9 468 – –Related party payables 558 – – –Trade and other payables 117 304 – – –31 December 2008Borrowings (excluding finance lease liabilities) 356 136 335 322 865 108 1 069 796Finance lease liabilities 992 660 – –Derivative financial instruments 1 740 15 263 7 187 –Related party payables 462 – – –Trade and other payables 6 919 – – –COMPANY31 December 2009Related party payables 254 183 – – –Trade and other payables 651 – – –31 December 2008Related party payables 538 507 – – –Trade and other payables 636 – – –As the amounts included in the table are contractual undiscounted cashflows, these amounts will not necessarily reconcile to the amountsdisclosed on the balance sheet for borrowings, derivative financial instruments and trade and other payables.The maturity analysis applies to financial instruments only and therefore statutory liabilities are not included. A maturity analysis for financialguarantee contracts issued by the company in respect of other group companies (refer Note 16 of the company annual financial statements) has notbeen disclosed as these financial guarantees are not expected to mature and as a result, there will be no cash outflow for the company.2.1.4 Capital risk managementFor the purposes of capital management, capital includes share capital; share premium; retained earnings; share-based payment reserve; otherreserves and interest-bearing borrowings. The capital mix is reviewed by the group when substantial changes occur in the capital requirements ofthe group. These requirements could be for substantial additions to property, plant and equipment or the payment of dividends to shareholders.The directors will regularly review the liquidity risk of the group and ensure sufficient information is available to alter the capital mix if required.This review will include a review of operations, cash balances, Quantity Surveyor and project reports and variances to cash and operating budgets.Directors of the group will consider the availability of capital, the cost of debt and equity and performance when making a decision that influencessubstantially the capital make-up of the company. The group monitors indicators of breach of contract or debt covenant and/or default with itsbankers and none have been noted at year-end.2.2 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIESDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value.The method of recognising the resultant gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the natureof the item being hedged. The group designates certain derivatives as hedges of highly probable forecast transactions (cash flow hedges).The group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its riskmanagement objective and strategy for undertaking various hedge transactions. The group also documents its assessment, both at hedge inceptionand on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values orcash flows of hedged items.The fair values of various derivative instruments used for hedging purposes are disclosed in Note 15 of the group annual financial statements.