Page 210 - Sigmaroc Annual-Report 2023

SIGMAROC ANNUAL REPORT 2023 FINANCIAL REPORT
Notes to the financial statements
Impairment
At the reporting date the ageing of the trade receivables that were not impaired, were as follows.
Items hedged against are CO2 emission rights, forecast energy consumption, loans in foreign currency and forecast earnings.
c) Currency Risk
Following the Nordkalk acquisition, the Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily the Pound, the Euro, the Polish Zlothy (PLN) and the Swedish Krona (SEK). The currencies in which these transactions are primarily denominated are GBP, EUR, PLN, and SEK. Additional exposures may arise from purchase of fuel in USD.
At any point in time, the Group hedges on average 60 to 100 per cent of its estimated foreign currency exposure in respect of forecast sales and purchases over the following 12-18 months. The Group uses forward exchange contracts to hedge its currency risk, with a maturity of up to 12 months from the reporting date.
Borrowings are, with a few exceptions, denominated in the subsidiaries domestic currencies.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group’s policy is to ensure that its net exposure remains at an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
Exposure to currency risk
Currency risk sensitivity to a +/- 10 per cent change in the exchange rate is shown for the net currency position per currency. The summary of quantitative data relating to the Group’s exposure to currency risk as reported to the Group management is as follows.
2023
GBP thousand
Gross exposure
Hedged
Net
exposure
Sensitivity analysis (+/- 10%)
d) Liquidity Risk
The Group’s continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations owing to the continued support of the lenders and a history of successful capital raises. Controls over expenditure are carefully managed.
31 December 2023 £’000
Total trade receivables
Not overdue
Overdue 1 – 30 days
Overdue 31 – 60 days
Overdue 61 – 90 days
More than 90 days
Impairment loss recognised
79,261
68,051 8,913 1,491
437
554 (185)
85,033
66,536
15,286
1,646
495
Provisions for impairment of trade and other receivables are calculated on a lifetime expected loss model in line with the simplified approach available under IFRS 9 for Trade Receivables. The key inputs in determining the level of provision are the historical level of bad debts experienced by the Group and ageing of outstanding amounts. Movements during the year were as follows:
USD
SEK
NOK
PLN
EUR
(5,660)
24,942
(3,353)
(3,177)
74,408
11,441
(26,905)
2,646
3,187
(48,758)
5,781
(1,963)
(707)
10
25,650
578
(196)
(71)
1
2,565
At January 1
Amounts arising from business combinations
Charged to the Consolidated income statement during the year
Movement in provision
Derivatives
1,060 36
132 (846)
382
Subsidiary currency risks are hedged by the parent or ultimate parent acting as counterparty in currency forward deals. External currency hedging is performed by finance and treasury functions as appropriate. In such deals, the counterparty is a bank or financial institution with a rating at least Baa3 from Moody’s rating agency. A comparable credit rating from a reputable credit rating agency is acceptable. Exceptions may be granted on an individual basis in rare cases where a bank is chosen for geographical reasons, but does not fulfil the stipulated rating criteria.
31 December 2022 £’000
1,573
(503)
31 December 2023 £’000
31 December 2022 £’000
382
-
177
154
713