Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. In this process, the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. The probability of default is determined based on characteristics of the debtors including number of months of rental in arrears and the ratio of turnover to rental expense. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the statement of profit or loss and other comprehensive income. On confirmation that the trade receivable will not be collectible, the gross carrying value of the asset is written off against the associated provision.
Management has also included a specific overlay with regards to certain debtors who have been the most impacted by COVID-19. These were calculated based on one-on-one discussions and took into account credit characteristics and the tenant’s ability to repay their dues and the circumstances leading to their financial difficulty.
The Group applies the IFRS 9 simplified approach to measuring expected credit loss which uses a lifetime expected loss allowance for all trade receivables.
The expected loss rates are based on the default profiles of balances pertaining to different aged buckets. Management also applies specific provisions on balances where it is aware that the tenant is in financial difficulty. In this respect, management made a specific provision on all unpaid rentals where the tenants faced difficulties in meeting their rentals due to the COVID-19 lockdown. Management also considers macro-economic factors on the historical loss rates and believes that GDP is the variable that may have the most significant impact on expected credit losses. As at 30 June 2021, the outlook for GDP is positive. However, management is of the view that any adjustment to reflect changes in macro-economic variables would not be material given the short-term nature of the Group's trade receivables and the fact that many of the unimpaired balances are covered by security deposits.
On that basis, the loss allowance as at 30 June 2021 and 30 June 2020 was determined as follows.
Financial assets at amortised costs include those assets held with a view of collecting contractual cash flows which are solely payments of principal and interest. They are initially recognised at fair value plus transactions costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method less any provision from impairment.
Other receivables, including loans receivable, generally arise from transactions outside the usual operating activities of the Group. Interest may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained. Other receivables are current and repayable within the next financial year.
The Group has recorded an impairment by considering the previous repayment behaviours and assessing the future cash flow forecasts covering the contractual period of the loan. The Group does not expect any default from them and is certain of their ability to pay their debts as they become due in the normal course of business and/or in any adverse economic and business conditions. Consequently, the probability of default is considered negligible, and the Group has not accounted for any impairment loss.
The short-term deposit with the intermediate holding company is unsecured, interest-bearing and repayable at call.
The short-term loans to the joint venture and subsidiary are unsecured, interest-bearing and repayable at call.
The carrying amount of financial assets at amortised cost approximate their fair values.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax from proceeds.
Ordinary shares carry one vote per share, carry a right to dividends and have no par value.
Financial liabilities are initially recognised at fair value plus/minus transaction costs for financial liabilities not subsequently measured at fair value through profit or loss. Interest-bearing bank loans and overdrafts are subsequently measured at amortised cost and finance costs are calculated using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.
The bank loans are secured by floating charges over assets of the Group. The rates of interest on these loans vary between 3.85% and 4.25% (2020:
between 4.1% and 5.75%).
In the financial year 2016, the Company issued 17,556,676 redeemable debentures at an issue price of Rs 12.00 each, totalling Rs 210,680,112.
Salient features of the debentures are as follows:
During the year, the Company has issued 1,500 bonds at a nominal issue price of Rs 1m per bond, amounting to Rs 1.5bn (2020: Nil) out of an approved bond programme of Rs 2.5bn.
Salient features of the bonds are as follows:
The maturity of non-current borrowings is as follows:
The carrying amounts of borrowings are not materially different from their fair values.
Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when the Group has become a party to the contractual provisions of the instrument.