Integrated Reports Senwes Financial Review 2018 - Page 42

42 FINANCIAL REVIEW 20. DIVIDEND INCOME 19.2 Finance costs GROUP Loans from commercial banks Commodity finance 2018 R’m 2017 R’m 2018 R’m 2017 R’m (187) (188) (187) (188) (7) (22) AgriRewards - (1) Other * Total finance costs paid GROUP COMPANY (9) (14) (11) (223) (204) (224) (206) 2018 R’m 2017 R’m - - 4 5 Total dividend income 21. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects thereof on the group’s financial performance. The methods and assumptions used for the year are consistent with the previous year. Major risks have been identified and are managed as set out below. 19.3 Finance income GROUP Loans and other receivables Trade receivables COMPANY 2018 R’m 2017 R’m 2018 R’m 2017 R’m 148 136 148 136 178 167 Other loans to related parties 14 28 164 61 164 64 AgriRewards allocation (3) - (3) - Total finance income 340 328 370 364 19.4 Employee costs (excluding directors’ costs) GROUP Note Total remuneration Remuneration and benefits Short term incentive bonus 2017 R’m 2018 R’m 2017 R’m 396 325 366 294 344 304 12 7 40 13.2 Total employee costs COMPANY 2018 R’m Pension costs – defined contribution plan 14 27 23 423 348 315 274 11 6 40 14 25 21 391 315 * Only senior managers qualify for equity-settled share-based scheme. Permanent employees Temporary employees Employees at the end of the year * * Includes employees of the company and its subsidiaries only. FINANCIAL REVIEW 2017 R’m - (13) * Other interest mainly includes interest paid on loans payable to joint ventures. Equity-settled share-based bonus * 2018 R’m (7) (22) (1) COMPANY Number Number Number Number 1 447 1 394 1 337 166 146 166 1 287 145 1 613 1 540 1 503 1 432 21.1 Financial risks 21.1.1 MARKET RISKS 21.1.1.1 Commodity price risk The value of the grain commodities and the fair value of pre-season forward purchase contracts on the statement of financial position are exposed to commodity price risk. The group uses derivative instruments to manage and hedge exposure to commodity price risk. In accordance with the group’s risk management policy, only minimal un- hedged market positions exist from time to time. The value of available commodities, the net value of futures contracts and option contracts and the value of the net position of the pre-season contracts indicate an effective hedge. The hedging instruments used consist of futures contracts and option contracts. The net revaluation difference of the instruments used for hedging was taken into account against the value of the grain commodities and the fair value of pre-season contracts. The value of commodities on the statement of financial position reflects the market value thereof at year-end and the fair value of the futures contracts, option contracts and pre-season contracts is also included in the statement of financial position. Positions that are not hedged on the Safex market leave Senwes with an exposure to price movements. This risk is exacerbated during low market liquidity and high market volatility. Senwes maintains a strict policy and limits are set at low levels with regard to open positions, whether speculative or operational in nature. The status of open positions are monitored daily and reported to appropriate senior management. The net open position as at 30 Apr