Integrated Reports Senwesbel Consolidated Financial Statements 2018 - Page 52

21.2.4 System risks The group relies heavily on technology. The main risks relate to archiving, capacity, data integrity, relevance, integration and adaptability. An IT-strategy and Management Committee is in place and formal change, project and integration man- agement is applied. 21.3 ENVIRONMENTAL RISKS 21.3.1 Weather and climate risks Senwes is indirectly subjected to income volatility as a result of adverse weather and climate events. These events influence the volume of grain produced in the Senwes area of operation, subsequently reducing storage income and producer pro- fitability. The income volatility of a catastrophic climate event is mitigated by using weather derivative products. 21.3.2 Political risks Senwes utilises agricultural land owned by producers to secure credit extension to these clients. In the event of agricultural land being nationalised, the value thereof will diminish and nullify the value of the security that Senwes holds against outstanding funds. This risk can only be accepted and cannot be mitigated. 21.4 SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE Senwes follows an Enterprise Wide Risk Management (ERM) framework, and as such very stringent reporting standards are placed on its subsidiaries, joint ventures and associate to comply with the ERM-methodology. The risk appetite levels of these entities differ and are governed by the group risk appetite level established for these types of investments. 21.5 FAIR VALUE The following table summarises fair value measurements recognised in the statement of financial position or disclosed in the group’s financial statements by class of asset or liability and categorised by level according to the significance of inputs used in making the measurements. FAIR VALUE AS AT 30 APRIL 2018 CARRYING QUOTED PRICES IN AMOUNT AS ACTIVE MARKETS AT 30 APRIL FOR IDENTICAL 2018 INSTRUMENTS OTHER SIGNIFICANT OBSERVABLE INPUTS SIGNIFICANT UNOBSERVABLE INPUTS NOTES TOTAL R’m LEVEL 1 R’m LEVEL 2 R’m LEVEL 3 R’m Grain commodities 7 253 253 - - Inventory held to satisfy firm sales 9 144 144 - - 4.1.1 4 - - 4 5.2 27 - 27 - 17.1 53 53 - - 3.1 1 045 1 045 - - 1 526 1 495 27 4 Recurring measurements Assets Investment in Suidwes Holdings Investment in Nautilus Hedge Fund Forward purchase contracts Investment in Senwes (company) Total assets Liabilities Commodity finance 4.2.2 149 149 - - Forward purchase contracts 17.2 56 56 - - Safex futures 17.2 10 10 - - 215 215 - - Total liabilities Accounts receivable, loans receivable and loans payable at amortised cost approximate the fair value. 51 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2018 Senwesbel Limited Reg no: 1996/017629/06