NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, andmakes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Estimation of useful lives of assets
The Company determines the estimated useful lives and related depreciation and amortisation charges for its Property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Going concern
In preparing the financial statements, management is responsible for assessing the Group’s and the Company’s abil - ity to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it either intends to liquidate the Group and the Company or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for applying judgement, estimates and assumptions as part of the Group and the Company’s financial reporting process. As at 31 December 2020, management’s assessment concluded that the Group and Company is a going concern.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group and Company based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Company operates. Other than as addressed in specific notes, there does not currently appear to be either any other significant impacts upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group and Company unfavourably as at the reporting date as a result of the Coronavirus (COVID-19) pandemic. The subsequent extent of the impact of COVID-19 on the Group’s and Company’s operational and financial performance, however remains uncertain as this will depend on unforeseeable developments, including the duration and spread of the current outbreak or other COVID-19 variants.
4. FINANCIAL RISK MANAGEMENT
Risk management objectives and policies
The Group/Company’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk.
The Group/Company’s risk management is carried out under policies approved by the Board of Directors and focuses on securing the Group/Company’s short tomedium term cash flows by minimising the exposure to financial risks. The Group/ Company’s investments are managed to generate lasting returns.
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