2021 Annual Report

Notes to the consolidated financial statements 30 June 2021 (continued) 22 Financial risk management (continued) (b) Credit risk (continued) Other receivables and financial assets (continued) Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired, or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. In respect of cash and cash equivalents, financial assets at fair value through profit or loss and derivative financial instruments, the Group's exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Group does not hold any credit derivatives to offset its credit exposure. Derivative counterparties and cash transactions are restricted to high credit quality financial institutions. (ii) Significant estimates and judgements Impairment of financial assets The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. (c) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Management and the Board monitors liquidity levels on an ongoing basis. Maturities of financial liabilities The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables are based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Contractual maturities of financial liabilities Less than 6 months 6 - 12 months Between 1 and 5 years Over 5 years Total contractual cash flows Carrying amount $'000 $'000 $'000 $'000 $'000 $'000 At 30 June 2021 Trade and other payables 47,286 - - - 47,286 47,286 Lease liabilities 2,652 2,657 21,506 833 27,648 25,048 49,938 2,657 21,506 833 74,934 72,334 At 30 June 2020 Trade and other payables 53,013 - - - 53,013 53,013 Lease liabilities 3,931 3,775 27,862 9,485 45,053 39,785 Bank loans* 57,388 - - - 57,388 56,937 114,332 3,775 27,862 9,485 155,454 149,735 * Includes estimated interest payments. IGO Limited 47 Notes to The Consolidated Financial Statements 30 June 2021 116 — IGO ANNUAL REPORT 2021