Additional risk disclosures

as at 31 August 2020

There have been no material changes to the Group's concentration of credit risk or the maturity analysis of its financial liabilities since the year end.

As at 31 August 2020, there are no customers which represent more than 5% of the total balance of trade receivables (FY20: one customer with gross value of US$72.6 million).

Collections from customers during the first six months of FY21 have remained in line with historic norms. As intermediaries in the supply chain, both Logicalis and Westcon International are working with vendors to provide support to their supply chains during the pandemic. Management has concluded that the likelihood of material expected credit losses is low.

The following table details the credit risk profile of trade receivables based on the Group's provision matrix:

Days past due 
US$'000  North 
America 
  Latin 
America 
  Europe    Asia- 
Pacific 
  MEA    Total   
UNAUDITED 
Six months to 31 August 2020  
Current  64 619    87 884    545 807    115 933    54 630    868 873   
1 – 30 days past due  19 739    3 549    41 615    37 360    14 165    116 428   
31 – 60 days past due  2 991    959    14 507    12 744    9 706    40 907   
61 – 90 days past due  1 302    2 165    4 271    3 766    2 170    13 674   
91 – 120 days past due  686    769    2 938    1 351    3 307    9 051   
Over 120 days past due  936    2 368    13 471    10 666    29 346    56 787   
Gross trade accounts receivable  90 273    97 694    622 609    181 820    113 324    1 105 720   
Expected credit loss allowance  (182)   (974)   (9 721)   (4 997)   (13 764)   (29 638)  
Net trade receivables  90 091    96 720    612 888    176 823    99 560    1 076 082   
AUDITED 
Year ended 29 February 2020 
Current  57 829    160 795    478 075    102 133    81 299    880 131   
1 – 30 days past due  18 807    8 381    42 451    39 197    15 080    123 916   
31 – 60 days past due  522    2 591    7 237    14 492    4 922    29 764   
61 – 90 days past due  1 229    2 752    5 507    3 859    2 133    15 480   
91 – 120 days past due  235    463    5 464    2 948    3 857    12 967   
Over 120 days past due  1 652    7 246    27 144    11 041    30 671    77 754   
Gross trade accounts receivable  80 274    182 228    565 878    173 670    137 962    1 140 012   
Expected credit loss allowance  (59)   (833)   (10 017)   (4 658)   (13 935)   (29 502)  
Net trade receivables  80 215    181 395    555 861    169 012    124 027    1 110 510   

 

In light of the Covid-19 crisis, particular attention has been given to assessing the outlook for liquidity across the Group and ensuring that sufficient cash will continue to be generated to settle liabilities as they fall due.

In January 2020, Logicalis completed a new three-year US$155 million banking facility for its subsidiaries. This senior facility covers Logicalis' operations throughout the world, excluding Latin America, which has its own separate credit facilities. The facility is used to fund working capital requirements and also includes a new acquisition credit line. Subsequent to H1 FY21, Logicalis successfully renegotiated the covenants under this facility, to ensure greater covenant headroom. In addition, the Latin American credit facilities are considered adequate in the current environment.

In August 2020, Westcon International Limited's European subsidiaries ("Westcon Europe") entered into a EUR275 million new banking facility with a European banking syndicate, led by Crédit Agricole Leasing & Factoring. This invoice assignment facility replaced Westcon Europe's previous invoice financing facility of US$224 million with effect from 1 October 2020. The new committed facility will be for an initial period of three years. It will be used to fund Westcon Europe's working capital requirements and will bear interest at a reduced rate compared to the previous facility.

Westcon International Limited's Asia-Pacific subsidiaries also entered into a two-year US$80 million new receivables securitisation facility, with Westpac Banking Corporation, replacing Westcon Asia-Pacific's previous financing facilities in Australia, New Zealand and Singapore. This will provide an incremental US$25 million working capital facility for Westcon Asia-Pacific, compared to its previous uncommitted facilities and will be at improved interest rates. This became effective on 25 September 2020.

The Group performed covenant projections for the next 12 months to confirm that banking covenants are likely to be met.

The new financing facilities, as well as the very strong operating cash flow generated during H1 FY21, significantly improved the Group's liquidity position.



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