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Company       Group
2020 2019   (R’million) 2020 2019
      19 Trade and other receivables    
      19.1 Analysis of trade and other receivables    
        Trade receivables 3 519,7 3 564,3
        VAT receivable 65,9 73,1
79,3 76,8     Sundry receivables 172,5 192,5
        Prepayments 229,9 121,4
        Pension Fund contribution holiday (refer note 28) 75,9 75,7
2,1 2,5     Tax receivable 38,1 40,6
        Contract asset – rebates 3,8 3,6
81,4 79,3     Total gross receivables 4 105,8 4 071,2
(77,7) (61,5)     Expected credit loss (186,0) (83,4)
3,7 17,8     Total net receivables 3 919,8 3 987,8
        Trade receivables, which generally have 30 to 60‑day terms, are non-interest-bearing and are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Included within trade receivables are derivative assets of R3,0 million (2019: R27,0 million) which are carried at fair value, refer note 31.7 for further details.    
      19.2 Expected credit loss    
(61,5) (30,0)     Balance at the beginning of the year (83,4) (89,0)
        Utilised during the year 3,6 8,4
        Reversed during the year 21,1 9,1
(16,2) (31,5)     Raised during the year (127,6) (11,9)
        Transfer to assets held for sale (refer note 34) 0,3 –
(77,7) (61,5)     Balance at the end of the year* (186,0) (83,4)
* The expected credit loss “ECL” results in the recognition of a loss allowance before the credit loss is incurred. Factors that are considered must account for current conditions along with reasonable and supportable forward-looking information that is not time consuming or costly to obtain. The company has adopted the “Simplified Approach” in determining the ECL.
19.2

Considering that IFRS 9 does not provide an explicit guide or any specific requirements we have opted to use a provision matrix approach to calculate the ECL. This involves allocating individual trade debtors into groups that share similar credit risk characteristics.

Customer’s risk rating was determined by applying the following criteria

  • Historical data spanning three years which include payment history and behavioural trends
  • Economic environment that has a significant impact to each customer
  • Geographical location of the customer.

The percentage used to calculate the ECL for each risk segment was determined by:

  • Past three years specific impairment provisions
  • Past three years specific bad debts written off
  • Past three years trade credit insurance claims ratios
  • Management’s forward-looking analysis of the FMCG environment
  • An unbiased approach that involves evaluating a range of possible outcomes based on current economic trends.

The company makes use of selective trade credit insurance. For those debtors that are not insured, the full carrying value of the outstanding debt was included in the calculation of the ECL. For those debtors that are insured, only the uninsured portion of the debt was included in the calculation of the ECL.

A process of identifying specific impairments are included in the total impairment provision. Management will raise a specific impairment provision when all internal and or pre-legal efforts to collect overdue debt have been exhausted.

The impact of the global Covid-19 pandemic had a minimal impact to the overall group debt due to Tiger Brands and the majority of its customers being classified as essential services. Customers that were mostly impacted fell within the group’s Out of Home division. This has resulted in a revision of the risk ratings assigned to certain customers within this portfolio. The ECL model has accommodated for changes in the risk ratings assigned to these customers which has resulted in an increase in impairment provisions.

  Performing receivables    
(R’million) Low risk Medium risk
Level 1 		Medium risk
Level 2 		Medium risk
Level 3 		Defaulted
receivables		 Total
As at 30 September 2020 2 059,7 461,2 440,4 536,9 21,5 3 519,7
Allowance for doubtful debts* – (3,4) (4,9) (133,4) (21,5) (163,2)
Net amount 2 059,7 457,8 435,5 403,5 – 3 356,5
% risk mitigating factor – (0,7%) (1,1%) (24,8%) (100,0%) (4,6%)
As at 30 September 2019 2 092,2 826,9 478,1 152,7 14,4 3 564,3
Allowance for doubtful debts (0,8) (37,4) (4,2) (26,6) (14,4) (83,4)
Net amount 2 091,4 789,5 473,9 126,1 – 3 480,9
% risk mitigating factor – (4,5%) (0,9%) (17,4%) (100,0%) (2,3%)

* Excludes allowance for doubtful debts relating to sundry debtors of R22,8 million.
Company       Group
2020 2019   (R’million) 2020 2019
      19.3 Past due analysis    
        As at 30 September, the ageing of trade receivables was as follows:    
        Not past due* 2 596,2 2 558,5
        Past due:    
        Current to 60 days 580,8 871,3
        61 to 90 days 87,0 94,8
        91 to 180 days 251,9 26,9
        > 180 days 3,8 12,8
        Total 3 519,7 3 564,3
       
* Debtors that are neither past due nor impaired are made up of customers with high credit ratings with a sound payment history.
   
        As at 30 September, the ageing of all other receivables, excluding tax receivable and prepayments, was as follows:    
5,2 –     Not past due 25,0 161,1
        Past due:    
0,3 1,1     Current to 60 days 127,0 100,1
– –     61 to 90 days 131,0 0,6
– –     91 to 180 days 0,8 71,0
73,8 75,7     > 180 days 34,3 12,1
79,3 76,8     Total 318,1 344,9
      19.4 Trade receivable analysis    
        Industry spread of trade receivables:    
        Retail 1 752,6 1 743,5
        Wholesale/Distributors 857,5 1 123,5
        Export 624,8 478,0
        Other 284,8 219,3
        Total 3 519,7 3 564,3
        Geographical spread of trade receivables:    
        South Africa 2 844,9 2 988,0
        Rest of Africa 505,8 425,3
        Europe 62,7 50,0
        Rest of the World 106,3 101,0
        Total 3 519,7 3 564,3
      19.5 Collateral held    
        Fair value of collateral held 34,1 16,3
        Collateral held represents hawker deposits which may be applied against accounts which are in default.