Final Sameer Annual Report 2010 - Sameer Africa Limited
Final Sameer Annual Report 2010 - Sameer Africa Limited Final Sameer Annual Report 2010 - Sameer Africa Limited
Notes to the consolidated financial statements for the year ended 31 december 2010 • IFRS 9 Financial Instruments retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortised costs and fair value. The basis for classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in IAS 39 on impairment of financial assets and hedge accounting continues to apply. • IFRS 9 will become mandatory for the Group’s 2014 financial statements and is not expected to have a significant effect on the financial statements. 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POICIES Overview The Group has exposure to the following risks from its use of financial instruments: (a) Credit risk; (b) Liquidity risk; and (c) Market risk. This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight the Group’s risk management framework. The finance department identifies, evaluates and hedges financial risks. The Board provides written principles for overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and investing excess liquidity. The Board of Directors oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. (a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities. Trade and other receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis. The Company has a stringent debt provisioning policy that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main component of this allowance of specific loss component that relates to individually significant exposures. The Group also manages the level of credit risk by focusing on customer satisfaction as a key performance indicator. It also maintains a short credit period. Due to the nature of the Group’s activities, credit risk concentrations are high and as such close monitoring of credit relationships is carried out. X 30 SAMEER Annual Report 2010 2009
Notes to the consolidated financial statements for the year ended 31 december 2010 (a) Credit risk (continued) The carrying amount of financial assets represents the maximum exposure to credit risk. The maximum exposure to credit risk at the reporting date was: Group Company 2010 2009 2010 2009 KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000 Cash equivalents 158,284 213,141 94,377 155,485 Trade receivables (Including amounts due from related parties) 468,952 532,522 286,266 312,735 Less: Collateral held - (22,657 ) - (22,657 ) Net exposure on trade receivables 468,952 509,865 286,266 290,078 Other receivables (Including amounts due from related parties) 388,087 185,091 373,926 120,704 857,039 694,956 660,192 410,782 1,015,323 908,097 754,569 566,267 Guarantees The Group obtains financial guarantees in the form of customer refundable deposits and bank guarantees in the ordinary course of business for the supply of goods from certain suppliers. Impairment losses The aging of trade receivables at the reporting date was: Group Company 2010 2009 2010 2009 KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000 Not past due 115,419 95,806 82,078 88,825 Past due but not impaired: - by up to 30 days 32,682 190,091 22,151 86,317 - by 31 to 60 days 132,025 103,765 85,265 48,493 - by 61 to 90 days 63,854 32,648 38,530 12,833 - by 91 to 180 days 71,392 40,649 31,463 17,437 - over 181 days 53,580 69,563 26,779 58,830 Total past due but not impaired 353,533 436,716 204,188 223,910 Total unimpaired 468,952 532,522 286,266 312,735 Impaired 161,104 152,320 99,865 92,601 Total trade receivables 630,056 684,842 386,131 405,336 (b) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. SAMEER Annual Report 2010 31
- Page 3 and 4: Table of Contents Page Corporate In
- Page 5 and 6: Notice to the annual general meetin
- Page 7 and 8: Chairman’s Statement Following my
- Page 9 and 10: Managing Director’s Remarks 2010
- Page 11 and 12: Report of the Directors The directo
- Page 13 and 14: Board of Directors Seated from left
- Page 15 and 16: Corporate Governance The aggregate
- Page 17 and 18: Management Team Mr. M. M. Karanja M
- Page 19 and 20: Report of the independent auditors
- Page 21 and 22: Consolidated statement of financial
- Page 23 and 24: Company statement of changes in equ
- Page 25 and 26: Notes to the consolidated financial
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Notes to the consolidated financial statements<br />
for the year ended 31 december <strong>2010</strong><br />
(a) Credit risk (continued)<br />
The carrying amount of financial assets represents the maximum exposure to credit risk. The maximum exposure to credit<br />
risk at the reporting date was:<br />
Group Company<br />
<strong>2010</strong> 2009 <strong>2010</strong> 2009<br />
KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000<br />
Cash equivalents 158,284 213,141 94,377 155,485<br />
Trade receivables<br />
(Including amounts due from related parties) 468,952 532,522 286,266 312,735<br />
Less: Collateral held - (22,657 ) - (22,657 )<br />
Net exposure on trade receivables 468,952 509,865 286,266 290,078<br />
Other receivables<br />
(Including amounts due from related parties) 388,087 185,091 373,926 120,704<br />
857,039 694,956 660,192 410,782<br />
1,015,323 908,097 754,569 566,267<br />
Guarantees<br />
The Group obtains financial guarantees in the form of customer refundable deposits and bank guarantees in the ordinary<br />
course of business for the supply of goods from certain suppliers.<br />
Impairment losses<br />
The aging of trade receivables at the reporting date was:<br />
Group Company<br />
<strong>2010</strong> 2009 <strong>2010</strong> 2009<br />
KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000<br />
Not past due 115,419 95,806 82,078 88,825<br />
Past due but not impaired:<br />
- by up to 30 days 32,682 190,091 22,151 86,317<br />
- by 31 to 60 days 132,025 103,765 85,265 48,493<br />
- by 61 to 90 days 63,854 32,648 38,530 12,833<br />
- by 91 to 180 days 71,392 40,649 31,463 17,437<br />
- over 181 days 53,580 69,563 26,779 58,830<br />
Total past due but not impaired 353,533 436,716 204,188 223,910<br />
Total unimpaired 468,952 532,522 286,266 312,735<br />
Impaired 161,104 152,320 99,865 92,601<br />
Total trade receivables 630,056 684,842 386,131 405,336<br />
(b) Liquidity risk<br />
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s<br />
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its<br />
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage<br />
to the Group’s reputation.<br />
SAMEER <strong>Annual</strong> <strong>Report</strong> <strong>2010</strong> 31
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