Annual Report and Accounts - Hemscott IR

NOTES TO THE FINANCIAL STATEMENTS
18. Trade and other receivables
THE GROUP
THE COMPANY
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2012 2011 2012 2011
£m £m £m £m
Trade receivables 578.3 585.7 - -
Allowance for doubtful debts (48.3) (54.5) - -
530.0 531.2 - -
Amounts owed by subsidiaries - - 174.6 208.1
Other receivables, prepayments and accrued income 203.7 211.8 6.1 6.0
Trade and other receivables 733.7 743.0 180.7 214.1
The Group’s trade and other receivables at the balance sheet date comprise principally of amounts receivable from the sale of goods, together with amounts
due in respect of rebates and sundry prepayments. The Directors consider the only class of asset containing significant credit risk is trade receivables. The
average credit term taken for sales of goods is 59 days (2011: 55 days). The allowance for doubtful debts is estimated by the Group’s management based
on prior experience and their assessment of the current economic environment. The Directors consider the carrying amount of trade and other receivables
approximates their fair values. The business has provided fully for all receivables outstanding for more than 90 days beyond agreed terms. Trade receivables
not receivable for up to 90 days are specifically provided for based on estimated irrecoverable amounts. No interest is charged on the trade receivable from
the date of the invoice until the date the invoice is classified as overdue according to the trading terms agreed between the Group and the customer.
Thereafter, the Group retains the right to charge interest at between 2% to 4% above the clearing bank base rate per annum on the outstanding balance.
Movement in the allowance for doubtful debts
THE GROUP
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2012 2011
£m £m
At 1 January 54.5 44.4
Amounts written off during the year (21.7) (10.2)
Increase in allowance recognised in the income statement 15.5 20.3
At 31 December 48.3 54.5
In determining the recoverability of the trade receivables, the Group considers any change in the credit quality of the trade receivable that may have
occurred between the date credit was initially granted and the reporting date. The concentration of credit risk is limited due to the customer base being
large. Accordingly, the Directors believe that no further credit provision is required in excess of the allowance for doubtful debts.
Included in the Group’s trade receivable balance are debtors unprovided against with a carrying amount of £57.4m (2011: £65.9m) which are past due at
the reporting date for which the Group has not identified a significant change in credit quality and as such, the Group considers that the amounts are still
recoverable and therefore there is no allowance for doubtful debts. Except for some instances of personal guarantees the Group does not hold any collateral
over these balances.
Ageing of past due but not impaired receivables
THE GROUP
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Days overdue 2012 2011
£m £m
0 – 30 days 44.5 53.0
31 – 60 days 8.6 9.2
61 – 90 days 4.3 3.7
57.4 65.9
Included in the allowance for doubtful debts are specific trade receivables with a balance of £27.2m (2011: £30.7m) which have been placed into liquidation.
The impairment represents the difference between the carrying amount of the specific trade receivable and the amount it is anticipated will be recovered.
None of the Company’s debts are overdue. The directors do not consider there to be any significant credit risk, as the majority of the debt is due from
subsidiaries.
19. Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and Company net of overdrafts. The carrying amount of these assets approximates their fair
value.
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