AFRICAN DAWN ANNUAL REPORT 2018 Notes to the Financial Statements continued Annual Financial Statements For the year ended 28 February 2018 89 Interest rate risk The sensitivity analyses below has been determined based on the exposure to interest rates for non-derivative instruments at the statement of financial position date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the statement of financial position date was outstanding for the whole year. A 100 basis points increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group’s loss for the period would change by R 169,210 (2017: R216,035) (company: Rnil (2017: Rnil). A 100 basis points increase would increase revenue on unsecured lending by an estimated R252,110 (2017: R373,945). A 100 basis points increase would increase finance costs on borrowings linked to prime by an estimated R 82,900 (2017: R157,910). 37. Change in estimate Debtors allowance The debtors allowances is based on categories and aging as described in Note 36. The credit committee undertook to review the allowance estimates applied to the trade receivables in light of changing economic circumstances and updated collection trends. In light of the changes the committee decided to change the following estimates in the allowance calculation: Current receivables No changes were implemented to the current receivables allowance. Collection receivables - The collections brackets have been reduced to 20% from (2017: 45%) - Collections brackets are determined by payments received (2017: communication status) Legal receivables - Debtors are only treated us current when a payment is received. (2017: based on status refer to Note 36) - Debtors in pre-legal status increased allowance percentage starting from 15% (2017: starting from 30%) - Debtors in the legal process have an allowance starting from 70% (2017: 70%) Elite has specific percentages that are used to calculate the allowance based on the ageing of the debtors. These are outlined below: Current receivables – 0% progressing to 30% and then, if required, transferred to the collections book; Collections receivables - 20% (2017: 45%) progressing to 90% and then, if required, either written off or transferred to the legal book; Legal receivables - 15% progressing to 90% and then written off if required (2017: 30% to 90%) The effect of the changes on the financial statements has increased the allowance using the original estimates to the new estimates as below: Statement of financial position 2018 2017 Debtors allowance as calculated using the new estimates 9,127 - Debtors allowance as calculated using the old estimates (7,375) - 1,752 -
AFRICAN DAWN 2018 Annual Report
To see the actual publication please follow the link above