PDF 25 MB - Sun International | Investor Centre

for the year ended 30 June
NOTES TO THE GROUP FINANCIAL STATEMENTS continued
29. FINANCIAL INSTRUMENTS (continued)
Effective 1 July 2009, the group adopted amendments to IFRS 7 for financial instruments that are measured in the statement of financial
position at fair value. This requires disclosure of the fair value measurements by level of the fair value measurements hierarchy.
All derivative financial instruments are classified as level 2 financial instruments.
Credit risk
Credit risk arises from loans and receivables, accounts receivable (excluding prepayments and VAT), and cash and cash equivalents. Trade
debtors consist mainly of large tour operators. The granting of credit is controlled by application and account limits. Cash investments are only
placed with high quality financial institutions.
The maximum exposure to credit risk is represented by the carrying amount of all financial assets determined to be exposed to credit risk, with
the exception of financial guarantees granted by the group for which the maximum exposure to credit risk is the maximum amount the group
could have to pay if the guarantees are called on (refer note 30).
The group has no significant concentrations of credit risk with respect to trade receivables due to a widely dispersed customer base. Credit risk
with respect to loans and receivables is disclosed in note 17.
Market risk
Market risk includes foreign currency risk, interest rate risk and other price risk. The group’s exposure to other price risk is limited as the group
does not have material investments which are subject to changes in equity prices.
(a) Foreign currency risk
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect
to US Dollar, Sterling, Botswana Pula, Chilean Peso and Nigerian Naira.
The group manages its foreign currency risk by ensuring that the net foreign currency exposure remains within acceptable levels.
Companies in the group use foreign exchange contracts (FECs) and interest rate cross currency swaps to hedge certain of their exposures
to foreign currency risk. The group had three material FECs outstanding at 30 June 2010 (2009: one) with a fair value of R8 million
(2009: R9 million). The notional amount of the outstanding FECs at 30 June 2010 was R475 million (2009: R37 million). Refer to paragraph
(b) for the interest rate cross currency swaps.
Included in the statements of financial position are the following amounts denominated in currencies other than the functional currency
of the group (Rand):
Financial assets
US Dollar 297 250
Sterling 27 41
Botswana Pula 46 34
Chilean Peso 85 77
Nigerian Naira 30 –
Euro 8 –
Financial liabilities
US Dollar 256 29
Sterling 7 4
Botswana Pula 12 9
Chilean Peso 738 1 006
Nigerian Naira 55 –
Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate in Rand due to changes in foreign
exchange rates.
Foreign currency sensitivity
The foreign currency sensitivity is performed on financial instruments that are denominated in a currency other than the functional
currency of the related entity and would impact profit before tax due to the spot exchange rate strengthening/weakening at 30 June.
A sensitivity is not performed between the Chilean Peso and the Rand because all financial assets and liabilities in Chilean Peso are
denominated in the functional currency, therefore a change in the exchange rate between these two currencies at 30 June will only impact
the statement of financial position and not profit before tax.
2010
Rm
2009
Rm
181