REPORTING CONTEXT ABOUT US OUR OPERATING CONTEXT OUR PERFORMANCE OUR LEADERSHIP GOVERNANCE OUR FINANCIAL STATEMENTS SHAREHOLDERS' CORNER (b) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group had adopted a policy of only dealing with credit worthy counter parties as a means of mitigating the risk of financial loss from defaults. Credit exposure is controlled by counterparty limits that are approved and reviewed by key management on a regular basis. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties, except for the Group’s largest customer which represents 11% (2021:14%) of the trade receivables of the Group. These counterparties are unrelated and have different characteristics. The Group’s credit risk is primarily attributable to its trade receivables and cash deposited in financial institutions. The amount presented in the statements of financial position are net of allowances for expected credit losses, estimated by management based on prior experience and represents the Company’s maximum exposure to credit risk and an on going credit evaluation is performed on the financial conditions of trade receivable, insurance cover is taken for some customers in order to minimise credit risk. Management considers these trade receivables of having a low credit risk as the risk of default from these financial institutions are low. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The maximum exposure to credit risk at the reporting date and the measurement basis used to determine expected credit losses are disclosed in note 12. The Group does not hold collateral as security. The letters of credit and other forms of credit insurance are considered integral part of trade receivables and considered in the calculation of impairment. When the trade receivables are referred to attorneys and there is no reasonable expectation of recovery, the debtors are written off. Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with the Group’s policy. Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Group’s Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to make payments. Bank balances are assessed to have low credit risk at reporting date since these are held in reputable banking institutions. The identified impairment loss on these balances was immaterial. For long-term receivables, the Company manages the long-term receivables from related parties through considering the purpose of advances and their financial position and forecasted cash flows. (c) Liquidity risk management Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities. The Group aims at maintaining flexibility in funding by keeping committed credit lines available. Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow. The Group’s financial liabilities analysed into relevant maturity groupings based on the remaining period at the end of the reporting date to the contractual maturity date has been disclosed in note 15(b). All trade and other payables are due within one year. The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. 3. FINANCIAL RISK MANAGEMENT (continued) 3.1 Financial risk factors and risk management policies (continued) THE GROUP Weighted average effective interest Less than 1 month MUR '000 1–3 months MUR '000 3 months to 1 year MUR '000 1–5 years MUR '000 Over 5 years MUR '000 Total MUR '000 2022 Variable interest rate 2.78% 4 043 11 129 39 180 186 345 – 240 697 Fixed interest rate 3.97% 3 446 10 337 27 564 139 854 – 181 201 Lease liabilities 5.31% 9 193 32 789 85 208 116 922 76 881 320 993 Non-interest bearing: Trade and other payables 586 548 207 907 95 865 18 518 1 249 910 087 603 230 262 162 247 817 461 639 78 130 1 652 978 2021 Variable interest rate 3.21% 23 779 1 079 39 839 151 541 – 216 238 Fixed interest rate 2.34% 1 986 3 972 58 501 277 646 15 483 357 588 Lease liabilities 5.31% 5 957 11 913 92 361 215 207 82 462 407 900 Non-interest bearing: Trade and other payables 711 675 115 974 180 674 – 11 119 1 019 442 743 397 132 938 371 375 644 394 109 064 2 001 168 Variable interest rate and Fixed interest rate pertain to items in Borrowings. THE COMPANY Weighted average effective interest Less than 1 month MUR '000 1–3 months MUR '000 3 months to 1 year MUR '000 1–5 years MUR '000 Over 5 years MUR '000 Total MUR '000 2022 Variable interest rate 4.10% 3 036 9 109 24 290 109 305 – 145 740 Fixed interest rate 3.65% 3 446 10 337 27 564 124 040 – 165 387 Lease liabilities 7.57% 6 311 24 309 65 188 69 569 76 881 242 258 Non-interest bearing: Trade and other payables 183 923 137 994 32 097 – – 354 014 196 716 181 749 149 139 302 914 76 881 907 399 2021 Variable interest rate 4.10% 540 1 079 39 839 151 541 – 192 999 Fixed interest rate 3.65% 579 1 159 47 545 188 013 – 237 296 Lease liabilities 7.57% 5 800 11 600 52 198 129 152 82 462 281 212 Non-interest bearing: Trade and other payables 333 267 93 435 177 337 – 11 119 615 158 340 186 107 273 316 919 468 706 93 581 1 326 665 NOTES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 151 150 Phoenix Beverages Limited Integrated Report 2022 Phoenix Beverages Limited Integrated Report 2022
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