Page 96 - Stellar IAR2015

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)31. RISK MANAGEMENT (Continued)Loan investmentsThe Group assesses the credit worthiness of any party that a loan or advance is granted to and all amounts advanced are secured. Interest and capital repayments are monitored by management on a monthly basis. Participation loans have been advanced to the respective borrowers by ASOF as primary lender. Stellar Capital participates in the loan investments as a syndication party. ASOF is responsible for monitoring the performance of the loan investments and that of the related borrowers. ASOF is also responsible for monitoring agreed-upon covenants, including key performance ratios. Where considered appropriate, an impairment allowance is made against the loan receivable to the extent that it is not considered to be recoverable.Loans to portfolio companiesThe Group assesses the credit worthiness of any party that a loan or advance is granted to and all amounts advanced are secured. Interest and capital repayments are monitored by management on a monthly basis. Management of the Company monitors the operations and cash generating capabilities of the portfolio companies to which loans have been advanced on a monthly basis. Where considered appropriate an impairment allowance is made against the loan receivable to the extent that it is not considered to be recoverable.Other nancial assetsOther nancial assets exposed to credit risk excludes the refundable deposit and the receivable in respect of shares issued but not allotted as at year end.Prior to the loan being advanced to Lavender Sky Investments 40 (Pty) Ltd, management was satis ed as to the credit worthiness of the entity. The loan to Lavender Sky Investments 40 (Pty) Ltd is fully secured .During the current year the receivable from Sizwe Africa IT Group (Pty) Ltd was fully impaired as it was long-outstanding and not considered to be recoverable.The receivable recognised in respect of the deferred proceeds on the disposal of Goliath Gold Ltd is supported by a bank guarantee from Rand Merchant Bank.Loans to Consolidated SubsidiariesThe Company advances loans to Consolidated Subsidiaries as and when these subsidiaries require funds for the purposes of providing services to the Company or other portfolio companies. The loan owing to the Company by CMS is considered to be fully recoverable as it is cash collateralised.Trade receivablesTrade receivables comprise primarily of invoiced amounts from historic trading activities prior to the conversion of the Company from an operating entity to an investment holding company, which are immaterial to the Group as a whole. Where necessary, a provision for impairment is made.Cash and cash equivalentsThe Company only deposits cash with major banks with high quality credit standing and limits exposure to any one counterparty . Cash balances are held with Rand Merchant Bank of South Africa Limited which carries a Standard and Poor’s rating of BBB-.92 | STELLAR CAPITAL PARTNERS