| Notes to the consolidated annual financial statements l Note 30 |
|
| 30. |
Insurance contracts |
| |
Certain transactions are entered into by the group as insurer which falls within the definition of insurance contracts per IFRS 4 Insurance Contracts.
| • |
The following are included as part of equipment’s maintenance contracts, provision of parts and components, on-site labour, support staff and assets (eg vehicles, computers, tooling) to the customer combined with expertise, in order to maintain the customers fleet. |
| • |
All full maintenance lease contracts are included in automotive’s insurance contracts and all upfront maintenance contracts Avis Fleet Services administers on behalf of OEM are excluded. |
| |
|
|
2014
Rm |
2013
Rm |
|
| Income |
|
|
2 112 |
|
|
2 029 |
2 260 |
|
| Expenses |
|
|
1 537 |
|
|
1 285 |
1 547 |
|
| Cash inflow |
|
|
345 |
|
|
344 |
358 |
|
| Liabilities: |
|
|
|
|
|
|
|
|
| At the beginning of the year |
|
|
854 |
|
|
737 |
589 |
|
| Amounts added |
|
|
581 |
|
|
625 |
1 272 |
|
| Amounts used |
|
|
(342) |
|
|
(355) |
(1 041) |
|
| Amounts reversed unused |
|
|
(140) |
|
|
(136) |
(128) |
|
| Fair value adjustment on discount effect |
|
|
(9) |
|
|
(24) |
(11) |
|
| Acquisition of subsidiaries |
|
|
|
|
|
|
33 |
|
| Disposal of subsidiaries |
|
|
|
|
|
(13) |
(9) |
|
| Translation difference |
|
|
16 |
|
|
20 |
32 |
|
| At the end of the year |
|
|
959 |
|
|
854 |
737 |
|
| Maturity profile: |
|
|
|
|
|
|
|
|
| Within one year |
|
|
627 |
|
|
574 |
453 |
|
| Two to five years |
|
|
290 |
|
|
262 |
273 |
|
| More than five years |
|
|
42 |
|
|
18 |
11 |
|
| |
|
|
959 |
|
|
854 |
737 |
|
| Assets: |
|
|
|
|
|
|
|
|
| At the beginning of the year |
|
|
324 |
|
|
224 |
284 |
|
| Amounts added |
|
|
1 484 |
|
|
1 578 |
1 562 |
|
| Amounts used |
|
|
(1 535) |
|
|
(1 480) |
(1 640) |
|
| Acquisition of subsidiaries |
|
|
|
|
|
|
7 |
|
| Translation difference |
|
|
9 |
|
|
2 |
10 |
|
| At the end of the year |
|
|
282 |
|
|
324 |
224 |
|
| Age analysis of items overdue but not impaired: |
|
|
|
|
|
|
|
|
| Overdue 30 to 60 days |
|
|
|
|
|
3 |
2 |
|
| Overdue 60 to 90 days |
|
|
1 |
|
|
1 |
8 |
|
| Overdue 90+ days |
|
|
(2) |
|
|
(1) |
|
|
| |
|
|
(1) |
|
|
3 |
10 |
|
Significant assumptions and risks arising from insurance contracts
Maintenance contracts
Maintenance contracts are offered to customers in the equipment and automotive segments. The contracts are managed internally through ongoing contract performance reviews, review of costs and regular fleet inspections. Risks arising from maintenance contracts includes component lives, component failure and cost of labour. The contracts consist of a variety of forms but generally include cover for regular maintenance as well as for repairs due to breakdowns and component failure which is not covered by manufacturer’s warranties or other external maintenance plans. The amounts above include the estimated portion of contracts that meet the definition of an insurance contract. Revenue is recognised on the percentage of completion method based on the anticipated cost of repairs over the life cycle of the equipment/vehicles. If the costs incurred exceed the revenue over the expected life of the policy, the future losses are accounted for immediately in profit and loss based on the present value of the contract loss.
In automotive the assets and liabilities are measured based on actuarial valuations done and in equipment they are based on cash flow projections.
Financial risk mainly relates to credit risk but credit quality of customers is generally considered to be good and similar to the rest of the group’s operations. Risks are spread over a large diversity of customers, fleets of equipment and vehicles and geographically in southern Africa and Europe. |
| Notes to the consolidated annual financial statements l Note 30 |
|
|