Integrated Reports Senwesbel Consolidated Financial Statements 2018 - Page 48

STRATIFICATION AND ARREARS GROUP 2018 Stratification of the client base to the extent of credit extended 2017 EXPOSURE OF BOOK ARREARS EXPOSURE OF BOOK ARREARS R1 – R500 000 1,1% 19,3% 1,5% 19,5% R500 000 – R1 250 000 2,0% 9,0% 2,7% 2,7% R1 250 000 – R3 000 000 8,2% 3,0% 7,7% 2,5% R3 000 000 – R5 000 000 14,8% 3,2% 16,4% 1,4% R5 000 000 – R12 500 000 23,4% 0,9% 26,0% 2,9% Above R12 500 000 50,0% 0,5% 44,7% 1,9% 0,5% 86,1% 1,0% 72,2% Legal clients Total 100,0% 100,0% The total arrears for 2018 amounted to 2,03% (2017: 3,14%). A fair distribution of client size and arrears is applicable and the size of the current book is in line with the risk appetite per segment of Senwes. CATEGORISATION GROUP 2018 TRADE DEBTORS 2017 TRADE DEBTORS Category 1 34,7% 38,1% Category 2 52,6% 47,2% Category 3 9,6% 12,4% Distribution of debtors by category Category 4 0,8% 0,3% Other 1,8% 1,2% Legal clients 0,5% 0,8% 100,0% 100,0% Total The different categories are defined as follows: Category 1 client: Top clients in the market with an excellent credit history, balance sheet, financial position and repayment ability. Category 2 client: Top quartile clients (with the exclusion of category 1 clients) in the market with a good credit history, sound financial position and excellent repayment ability. Category 3 & 4 client: Represents a broad client base varying from beginner farmers with relatively poor balance sheets to producers involved in a fight for survival. Senwes’ policy only provides for this category in circumstances which include a high security position, specific tailor-made low risk finance products and where Senwes is of the opinion that the client should be able to recover to a stronger position. Other: Accounts are evaluated on the basis on which the account is handled. Legal clients: Clients whose accounts are in arrears and handed over to the legal department. COUNTER-PARTY RISK The credit crunch raises generic questions regarding the ability and appetite of financiers for funding. Absa Bank and Nedbank as key financiers are regarded as excellent counter-parties and therefore fall within acceptable levels of counter-party risk. Counter-party risk relating to credit extension to clients is managed actively and is considered to be within acceptable levels. 47 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2018 Senwesbel Limited Reg no: 1996/017629/06