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NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2021 (continued)19 Financial Risk Management and Financial Instruments (continued)An increase or decrease of 100 basis points in each of the applicable rates and interest rate curves would impact reported after tax profitby €nil (2020: €1.8m) and equity by €nil (2020: €1.8m).Credit riskCredit risk encompasses the risk of financial loss to the Group of counterparty default in relation to any of its financial assets. The Group’smaximum exposure to credit risk is represented by the carrying value of each financial asset:Cash & cash equivalentsTrade receivablesDerivative financial assetsFinancial asset2021€m2020€m641.41,110.30.313.21,329.7767.319.88.2Trade receivables arise from a wide and varied customer base spread across various activities, end users and geographies, and as suchthere is no significant concentration of credit risk. The Group’s credit risk management policy in relation to trade receivables involvesperiodically assessing the financial reliability of customers, taking into account their financial position, past experience and other factors.The utilisation of credit limits is regularly monitored and a significant element of credit risk is covered by credit insurance or other forms ofcollateral such as letters of credit or bank guarantees.At the year-end, the Group was carrying a receivables book of €1,022.9m (2020: €770.2m) expressed net of provision for default inpayment. This represents a net risk of 16% (2020: 15%) of sales. Of these net receivables, approximately 61% (2020: 60%) were coveredby credit insurance or other forms of collateral such as letter of credit and bank guarantees.At 31 December, the exposure to credit risk for trade receivables by geographic region was as follows:Western & Southern Europe*Central & Northern EuropeAmericasRest of World2021€m2020€m669.1155.7221.663.91,110.3488.992.8127.957.7767.32021€m2020€m692.5207.1210.71,110.3478.5136.5152.3767.3*Prior year figures have been represented to include Britain in Western & Southern Europe.At 31 December, the exposure to credit risk for trade receivables by customer type was as follows:Insulated Panels customersInsulation customersOther customersThe Group uses an allowance matrix to measure Expected Credit Loss (ECL) of trade receivables from customers. The ECL simplifiedapproach has been adopted.Loss rates are calculated using a roll rate method based on the probability of a receivable progressing through successive chains of nonpayment to write-off. The rates are calculated at a business unit level which reflects the risks associated with geographic region, age, mixof customer relationship and type of product purchased. The identifiable loss pertaining to cash positions is immaterial.158 - 159
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