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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
ANNEXURE E – FINANCIAL INSTRUMENTS
CONTINUED
Foreign operations
In translating the foreign operations, the following exchange rates were used:
2016
Income/Expenses
Average (Rand)
2016
Assets/Liabilities
Spot (Rand)
2015
Income/Expenses
Average (Rand)
2015
Assets/Liabilities
Spot (Rand)
Kenyan Shilling
0.1409
0.1456
0.1250
0.1225
Ghanaian Cedi*
3.7135
3.7230
3.2046
2.7910
United States Dollar
14.5184
14.7168
11.4565
12.1699
Indian Rupee**
0.2188
0.2179
0.1846
0.1913
* Discontinued operation
** Discontinued operation and continuing operation
Foreign assets/liabilities
In converting foreign denominated assets and liabilities, the following exchange rates were used:
Assets
Liabilities
Rand
Rand
2016
US Dollar
14.71
14.72
Euro
16.35
16.37
2015
US Dollar
12.16
12.17
Euro
13.55
13.56
CASH FLOW HEDGES
The Group’s current policy for the management of foreign exchange is to cover 100% of foreign currency commitments with forward exchange
contracts when a firm commitment for the order of inventory is in place. As a result, all material foreign liabilities were covered by forward
exchange contracts at year-end.
The forward currency contracts must be in the same currency as the hedged item. It is the Group’s policy to fix the terms of the hedge
derivatives to match the terms of the hedged item to maximise hedge effectiveness. Forward exchange contracts are entered into to cover
import exposures. The fair value is determined using the applicable foreign exchange spot rates at reporting dates.
At 30 June 2016, the Group held no foreign exchange contracts designated as hedges of expected future sales to customers outside South
Africa for which the Group has firm commitments. The Group had foreign exchange contracts outstanding at 30 June 2016 designated as
hedges of expected future purchases from suppliers outside South Africa for which the Group has firm commitments. All foreign exchange
contracts will mature within 12 months. The cash flow hedges of expected future purchases were assessed to be effective.
A summary of the material contracts, comprising at least 98% of the total contracts outstanding at:
Foreign
currency
Average
forward
‘000
rate
R’000
2016
US Dollar
14 845
15.62
231 904
Euro
11 302
17.70
200 100
2015
US Dollar
11 443
12.34
141 177
Euro
14 926
13.63
203 479