Senwes Annual Financial Statements 2022 | Page 59

SENWES ANNUAL FINANCIAL STATEMENTS 2022

Stages of debt

Distribution of debtors by category

Trade debtors

%

Gross carrying amount

R ' m

Net exposure Gross to credit risk exposure after net asset amount value

R ' m R ' m

Credit risk for company arises from intercompany loans receivable and has been assessed in note 7.1.2 .

The different stages are defined as follows :

Stage 1 : the loss allowance measured at an amount equal to 12-month expected credit losses Debtors where there has not been a significant increase in credit risk since initial recognition : Portfolio impairment ( non-legal clients ) – A group impairment assessment : debtors are not individually assessed but debtors with similar credit risks and characteristics are grouped . The group is then assessed for impairment .

Stage 2 : the loss allowance measured at an amount equal to lifetime expected credit losses Debtors whose credit risk has increased significantly since initial recognition : Portfolio impairment ( non-legal ) clients : A group impairment assessment , debtors are not individually considered , debtors with similar credit risks and characteristics are grouped together . The group is then assessed for impairment . These debtors have not been handed over to the legal department for collection as yet , but there is an indicator of impairment . The two most significant indicators of impairment in the current financial year are arrears ( non-compliance with debtor terms ) and consolidation of loans in arrears . During the year stage 2 trade debtors decreased to 45 % for 2022 , from 50 % in 2021 see note 24.1.2 . Allowances for life time expected losses were made specifically for loans .

Stage 3 : financial assets that are purchased or originated credit-impaired Debtors whose credit risk has increased significantly since initial recognition : Specifically impaired ( legal clients ): This will typically be the case where the debtor is already handed over to the legal department for recovery . The impairment represents the actual risk ( LGD ) for possible bad debt determined by the legal department , taking into account all securities and the client ’ s balance sheet . The factors that influence management ' s estimates and judgement include whether customers that have been handed over to the legal department for collection , are specifically provided for based on the exposure and the estimation of the quality and expected realisation of securities held for the specific customers .

Counter-party risk

24.1.3 Liquidity risk

The group monitors its liquidity risk by means of a cash flow planning and security model .

GROUP 2021

Although not required by IFRS 9 Financial Instruments , Senwes categorises trade and other receivables as well , in order to evaluate financing provided in a holistic manner . Trade and other receivables and loans ( collectively referred to as debtors ) with significant financing components are classified into the following categories , in accordance with IFRS 9 Financial instruments , for impairment purposes , taking into account factors mentioned in note 11.5 , that reflect changes in credit risk since initial recognition :

Absa and Nedbank as key financiers are regarded as excellent counter-parties and therefore fall within acceptable levels of counter-party risk . Counter-party risk relating to credit extension to clients is managed actively and is considered to be within acceptable levels .

The group takes into account the maturity dates of its various assets and funds its activities by obtaining a balance between the optimal financing mechanism and the different financing products , which include bank overdrafts , short-term loans , commodity finance and other creditors . These are the remaining undiscounted cash-flows . The different debt expiry dates are as follows :

Total R ' m

GROUP Financial liabilities - 2022

Due within 1 year

R ' m

Due within 1-5 years

R ' m

Due after 5 years

R ' m

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