| FINANCIAL RISK MANAGEMENT |
NOTE
32 — FINANCIAL RISK MANAGEMENT
The
Company’s activities expose it to certain financial risks mainly related to:
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➢ |
market
risk (currency risk, interest rate risk and price risk); |
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|
|
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➢ |
credit
risk, and |
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|
|
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➢ |
liquidity
risk. |
The
board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The
board has established the risk committee, which is responsible for developing and monitoring the Company’s risk management policies.
The committee reports quarterly to the board of directors on its activities.
The
Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company’s activities.
The
Group’s board of directors oversees how management monitors compliance with the risk management policies and procedures and reviews
the adequacy of the risk management framework in relation to the risks faced by the Company.
Market
risk
Interest
rate risk
Fluctuations
in interest rates impact on the value of investments and financing activities, giving rise to interest rate risk.
The
debt of the Company is comprised of different instruments, which bear interest at either fixed or floating interest rates. The ratio
of fixed and floating rate instruments in the loan portfolio is monitored and managed, by incurring either variable rate bank loans or
fixed rate bonds as necessary.
The
Company policy with regards to financial assets, is to invest cash at floating rates of interest and to maintain cash reserves in short-term
investments in order to maintain liquidity, while also achieving a satisfactory return for shareholders.
Foreign
currency risk
The
Company is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign currencies.
The foreign currencies in which the Company deals primarily are US Dollars, Singapore Dollars, Indonesian Rupees and South African Rands.
Credit
risk
Credit risk is the risk that a customer or counterparty fail to fulfill its contractual obligations resulting in
financial loss to the Company. The Company’s main income generating activity is lending to customers and therefore credit risk is
a principal risk. Credit risk mainly arises from loans to customers. The Company considers all elements of credit risk exposure such as
counterparty default risk for risk management purposes.
Credit risk management
The Company’s credit committee is responsible for managing the Company’s credit risk by:
| ● |
Ensuring
that the Company has appropriate credit risk practices, including an effective system of internal control, to consistently determine
adequate allowances in accordance with the Company’s stated policies and procedures, IFRS and relevant supervisory guidance. |
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|
| ● |
Identifying,
assessing and measuring credit risk across the Company, from an individual loan to a portfolio level. |
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|
| ● |
Creating
credit policies to protect the Company against the identified risks including the requirements to obtain collateral from borrowers,
to perform robust ongoing credit assessment of borrowers and to continually monitor exposures against internal risk limits. |
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|
| ● |
Establishing
a robust control framework regarding the authorization structure for the approval and renewal of credit facilities. |
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| ● |
Developing
and maintaining the Company’s processes for measuring expected credit loss including monitoring of credit risk, incorporation
of forward-looking information and the method used to measure expected credit loss. |
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|
| ● |
Ensuring
that the Company has policies and procedures in place to appropriately maintain and validate methods used to assess and measure expected
credit loss. |
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| ● |
Establishing
a sound credit risk accounting assessment and measurement process that provides it with a strong basis for common systems, tools
and data to assess credit risk and to account for expected credit loss. Providing advice, guidance and specialist skills to business
units to promote best practice throughout the Company in the management of credit risk. |
Maximum
exposure to credit risk - financial instruments subject to impairment
The
following table contains an analysis of the credit risk exposure of financial instruments for which an expected credit loss allowance
is recognized. The gross carrying amount of financial assets below also represents the Company’s maximum exposure to credit risk
on these assets.
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● |
Stage
1: Expected credit losses are recognized at the time of initial recognition of a financial instrument and represent the lifetime
cash shortfalls arising from possible default events for the life of loan from the balance sheet date. Expected credit losses continue
to be determined on this basis until there is either a significant increase in the credit risk of an instrument or the instrument
becomes credit-impaired. |
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|
|
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● |
Stage
2: If a financial asset experiences a significant increase in credit risk since initial recognition, an expected credit loss provision
is recognized for default events that may occur over the lifetime of the asset. Significant increase in credit risk is assessed by
comparing the risk of default of an exposure at the reporting date to the risk of default at origination (after taking into account
the passage of time). Significant does not mean statistically significant nor is it assessed in the context of changes in expected
credit loss. Whether a change in the risk of default is significant or not is assessed using a number of quantitative and qualitative
factors, the weight of which depends on the type of product and counterparty. Financial assets that are 30 or more days past due
and not credit-impaired will always be considered to have experienced a significant increase in credit risk. |
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|
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● |
Stage
3: Financial assets that are credit-impaired (or in default) represent those that are past due more than the historical average collection
period for past due loans, but not to exceed the original contractual loan terms. Financial assets are also considered to be credit-impaired
where the obligors are unlikely to pay on the occurrence of one or more observable events that have a detrimental impact on the estimated
future cash flows of the financial asset. It may not be possible to identify a single discrete event but instead the combined effect
of several events may cause financial assets to become credit-impaired. |
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● |
Loss
provisions against credit-impaired financial assets are determined based on an assessment of the recoverable cash flows under a range
of scenarios, including the realization of any collateral held where appropriate. The loss provisions held represent the difference
between the present value of the cash flows expected to be recovered, discounted at the instrument’s original effective interest
rate, and the gross carrying value of the instrument prior to any credit impairment. |
Disclosure
of maturity analysis for non-derivative financial liabilities
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|
Stage 1 |
|
|
Stage 2 |
|
|
Stage 3 |
|
|
|
|
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|
2023 |
|
| |
|
ECL staging |
|
| |
|
Stage 1 |
|
|
Stage 2 |
|
|
Stage 3 |
|
|
|
|
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|
Lifetime ECL
|
|
|
Lifetime ECL
|
|
|
Lifetime ECL
|
|
|
Total |
|
| |
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
| Accounts receivable |
|
|
-
|
|
|
|
-
|
|
|
|
8,411,825 |
|
|
|
8,411,825 |
|
| Other receivable |
|
|
- |
|
|
|
- |
|
|
|
50,465 |
|
|
|
50,465 |
|
| Gross receivable |
|
|
- |
|
|
|
- |
|
|
|
8,462,290 |
|
|
|
8,462,290 |
|
| Credit impairment losses |
|
|
- |
|
|
|
- |
|
|
|
(6,542,904 |
) |
|
|
(6,542,904 |
) |
| Carrying amount |
|
|
- |
|
|
|
- |
|
|
|
1,919,396 |
|
|
|
1,919,396 |
|
| |
|
Stage 1 |
|
|
Stage 2 |
|
|
Stage 3 |
|
|
|
|
| |
|
2022 |
|
| |
|
ECL staging |
|
| |
|
Stage 1 |
|
|
Stage 2 |
|
|
Stage 3 |
|
|
|
|
| |
|
Lifetime ECL
|
|
|
Lifetime ECL
|
|
|
Lifetime ECL
|
|
|
Total |
|
| |
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
| Accounts receivable |
|
|
-
|
|
|
|
-
|
|
|
|
8,577,930 |
|
|
|
8,577,930 |
|
| Other receivable |
|
|
- |
|
|
|
- |
|
|
|
120,304 |
|
|
|
120,304 |
|
| Gross receivable |
|
|
- |
|
|
|
- |
|
|
|
8,698,234 |
|
|
|
8,698,234 |
|
| Credit impairment losses |
|
|
- |
|
|
|
- |
|
|
|
(3,721,293 |
) |
|
|
(3,721,293 |
) |
| Carrying amount |
|
|
- |
|
|
|
- |
|
|
|
4,976,941 |
|
|
|
4,976,941 |
|
Liquidity
risk
The
Company is exposed to liquidity risk, which is the risk that the Company will encounter difficulties in meeting its obligations as they
become due.
The
Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard
to these matters are also described in Note 2.
Prudent liquidity risk management implies
maintaining sufficient cash and term deposits, the availability of funding through an adequate amount of committed credit facilities and
the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities.
The following tables detail the Group’s remaining contractual maturity
for its non-derivative financial liabilities based on the agreed repayment terms or the earliest date on which the Group can be required
to pay. The table has been drawn up based on the undiscounted cash flows of financial liabilities and include both interest and principal
cash flows.
2023
SCHEDULE
OF CONTRACTUAL MATURITY
| |
|
Carrying amount |
|
|
Total contractual undiscounted cash flow |
|
|
0-365 days |
|
|
Over 1 year |
|
| Accounts payable |
|
$ |
4,406,850 |
|
|
$ |
4,406,850 |
|
|
$ |
4,406,850 |
|
|
$ |
- |
|
| Due to related parties |
|
|
2,148,148 |
|
|
|
2,148,148 |
|
|
|
2,148,148 |
|
|
|
- |
|
| Loans payable |
|
|
2,722,111 |
|
|
|
2,722,111 |
|
|
|
2,467,656 |
|
|
|
254,455 |
|
| Short term debt |
|
|
122,415 |
|
|
|
122,415 |
|
|
|
122,415 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
9,399,524 |
|
|
$ |
9,399,524 |
|
|
$ |
9,145,069 |
|
|
$ |
254,455 |
|
2022
| |
|
Carrying amount |
|
|
Total contractual undiscounted cash flow |
|
|
0-365 days |
|
|
Over 1 year |
|
| Accounts payable |
|
$ |
1,672,306 |
|
|
$ |
1,672,306 |
|
|
$ |
1,672,306 |
|
|
$ |
- |
|
| Due to related parties |
|
|
2,299,231 |
|
|
|
2,299,231 |
|
|
|
2,299,231 |
|
|
|
- |
|
| Operating lease liabilities |
|
|
12,984,875 |
|
|
|
12,984,875 |
|
|
|
1,590,538 |
|
|
|
11,394,337 |
|
| Loans payable |
|
|
762,416 |
|
|
|
762,416 |
|
|
|
334,391 |
|
|
|
428,025 |
|
| Convertible debt obligations |
|
|
7,975,851 |
|
|
|
7,975,851 |
|
|
|
5,752,328 |
|
|
|
2,223,523 |
|
| Short term debt |
|
|
539,245 |
|
|
|
539,245 |
|
|
|
539,245 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
26,233,924 |
|
|
$ |
26,233,924 |
|
|
$ |
12,188,039 |
|
|
$ |
14,045,885 |
|
|