2021 Annual Report

Notes to the consolidated financial statements 30 June 2021 (continued) 7 Cash and cash equivalents (continued) (c) Recognition and measurement Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet. 8 Trade and other receivables 2021 $'000 2020 $'000 Trade receivables at amortised cost: Trade receivables (subject to provisional pricing) - fair value 78,513 46,595 Other receivables 859 19,315 Prepayments 3,003 3,159 82,375 69,069 (a) Recognition and measurement (i) Trade receivables Trade receivables are generally received in the current month, or up to three months after the shipment date. The receivables are initially recognised at fair value, less any allowance for expected credit losses. The Group has applied the simplified approach to measuring expected credit losses, which applies a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Trade receivables are subsequently revalued by the mark-to-market of open sales. The Group determines mark-to-market prices using forward prices at each period end for nickel, copper and cobalt sales. (ii) Other receivables Other receivables in the prior year included amounts outstanding on the sale of the Jaguar Operation in May 2018. The discounted value of $15,519,000 (using a discount rate of 3.5%) of the outstanding cash proceeds was shown in current receivables. There are no amounts relating to the sale of the Jaguar Operation shown in receivables at 30 June 2021. (iii) Impairment and risk exposure Note 22(b)(i) sets out information about the impairment of financial assets and the Group's exposure to credit risk. Given the Group's credit risk management processes, the resulting level of expected credit losses are insignificant. (b) Key estimates and judgements 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, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the COVID-19 pandemic and forward-looking information that is available. The allowance for expected credit losses is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower. IGO Limited 22 Notes to The Consolidated Financial Statements 30 June 2021 92 — IGO ANNUAL REPORT 2021