TRADE AND OTHER RECEIVABLES

Trade receivables

Trade receivables comprise a widespread customer base mostly in respect of the hotel, banqueting, conferencing provided in the ordinary course of business at the group’s properties. Credit sales mostly have negotiated credit terms of 30 days and are therefore all classified as current. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable as shown above. The group does not hold any collateral as security. The carrying value less impairment provision of trade and other receivables is assumed to approximate their fair values due to the short-term nature of trade and other receivables.

Credit risk

Trade receivables

The group performs ongoing credit evaluations of the financial condition of its customers for both new credit applications and existing customers having credit facilities. These reviews include evaluating previous relations the customer has had with the group, taking into account the length of time and amount of business. New customers are given credit only after meeting strict minimum requirements. The utilisation of credit limits are regularly monitored by reviewing the ageing analysis of these debtors on an ongoing basis. At 31 March 2020, no single customer was in debt in excess of 10% of the total trade receivables balance. The trade receivables are of a strong credit standing.

Credit limits exceeded during the year under review were closely monitored, and management does not expect any losses from non-performance by these counterparties that have not been provided for.

The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

Debtor loss allowance calculated under the provision matrix

The expected loss rate is based on the payment profiles of sales over a period of 12 months before 31 March 2019 and the corresponding historical credit losses experienced with the period. The 12-month period used to assess the payment profiles is mainly due to the volatility of the current economic environment prone to more significant changes over the short term. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customer to settle the receivables.

The customer accounts separately identified and risk weighted differently to the general customer listing are those that the group has determined are affected by the following factors used to determine forward-looking information of which the impact is not material:

• Vulnerability of state-owned enterprises at present in South Africa;
• Ongoing energy crisis facing South Africa;
• GDP in South Africa;
• COVID-19; and
• Large Travel Management Companies (‘TMCs’) operating against the backdrop of the above factors along with their burgeoning cost base, driven by increasing salary costs along with cash flow issues emanating from the slow payments from government departments and parastatals. This combined with their low levels of commission earned leaves them as highly risky, yet they comprise the largest proportion of our business. These entities, typically when reaching business failure, have a very small/no asset base to try and recoup losses from.

On this basis the loss allowance as at 31 March 2020 was determined as follows for trade receivables:

On this basis the loss allowance as at 31 March 2019 (on adoption of IFRS 9) was determined as follows for trade receivables:

* Less than R1 million.

Specific South African debtors:

Specific debtors that are long outstanding and generally have slower payment terms. These are considered to have a higher risk profile due to their customer base. These are credit impaired (stage 3).

The loss allowance has been established as follows:

• specific debtors provided for completely amounted to R8 million;
• 2019: other specific debtors were provided for at a range between 30% and 40% of the carrying value.

Hospitality Property Fund debtors have a carrying value of R27 million and are considered to be lower risk as they are related to rental income which are all current. Rentals are due in advance and are current, 30 days or less. Based on past history, there are immaterial write-offs. Customers comprise lessees paying rental for the hotel buildings.

* Less than R1 million.

The closing loss allowance for trade receivables as at 31 March reconciled to the opening loss allowance is as follows:

Other receivables and deposits

Other receivables and deposits do not contain significant credit risk and have a low probability of default and there are no significant receivables past due, that have been impaired. No further disclosure is provided in this regard.

The carrying amounts of the group’s trade and other receivables are denominated in the following currencies: