NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 97

NWG // FINANCIAL INFORMATION //
THE GROUP
Credit risks
Credit risk is defined as the Group’s exposure to losses in the
event that one party to a financial instrument fails to discharge
an obligation. The Group is exposed to credit risk from its
operating activities, primarily from accounts receivable, and from
financing activities which includes deposits at banks and financial
institutions, currency futures and other financial instruments.
The Group's total exposure to credit risk amounted, at year-end,
to SEK 1,627.6 (1,493.6) million which was based on the carrying
value of all financial assets.
Accounts receivable
The risk that the Group’s customers will fail to meet their obli-
gations, i.e. that New Wave Group’s accounts receivable will not
be paid, constitutes a credit risk. New Wave Group has centrally
adopted a financial risk policy and directives, based on which
each company has drawn up a set of written procedures for credit
control. Information from external credit reference agencies is one
stage of the process. Furthermore, companies in the Group, based
on the financial risk policy, have the option, when needed, to insure
accounts receivable which means that if the customer fails to meet
its payment the company will be reimbursed by the insurance
company. The credit risk in the Corporate operating segment is
lower, as the resellers, which are New Wave Group’s customers,
make purchases based on orders that have already been placed by
the end customers. The resellers are relatively small and large in
number. In 2019 confirmed credit losses in Corporate represented
0.06 (0.09) % of sales. In the Gifts & Home Furnishings and Sports
& Leisure operating segments sales are made to selected resellers,
and credit losses are small, although there is a higher concen-
tration to a smaller number of customers compared to the promo
market. In 2019 confirmed credit losses in these two operating
segments represented 0.48 (0.31) % and 0.09 (0.09) % of net sales.
SEK million
Accounts receivable
Exposure
Credit risk reserve
Book value
2019
1 253.5
2018
1 137.4
-60.6 -53.3
1 192.8 1 084.1
The table below shows the aging distribution of accounts recei-
vable and the credit risk reserve.
SEK million
2019
The reserve for expected credit risk in accounts receivable has
been changed as follows:
SEK million
Credit risk reserve for accounts receivable
Credit risk reserve at the beginning of the year
Recovered reserves during the year
Reserve for expected credit risks
Confirmed losses
Translation difference
Credit risk reserve at year-end
2019
-53.3
1.9
-17.7
9.3
-1.0
-60.6
2018
-49.4
3.5
-14.0
7.9
-1.2
-53.3
A description of credit risk exposures is given in the table below:
As of 31 December
2019
Exposure < 1 SEK million
Exposure 1 - 5 SEK million
Exposure > 5 SEK million
Total
As of 31 December
2018
Exposure < 1 SEK million
Exposure 1 - 5 SEK million
Exposure > 5 SEK million
Total
Number of
customers Percentage of
total customers Percentage of
portfolio
33 321
117 99.6
0.4 64.3
21.1
13 0.0 14.6
33 451 100.0 100.0
Number of
customers
Percentage of Percentage of
total customers
portfolio
31 279 99.6 70.3
120 0.4 23.5
7 0.0 6.2
31 406 100.0 100.0
Other financial assets
Other financial assets include derivatives, other receivables and
liquid assets. Credit risk related to balances at banks and other
financial institutions is managed by the Group's treasury center
in accordance with the Group's financial risk policy. The Group
deals only with well-established financial institutions. Other
receivables, which represents 5.0 (6.0) % of the total credit risk,
are managed locally on an ongoing basis in accordance with the
Group's financial risk policy and with support from the central
finance function. No credit risk reserve has been recorded for
other financial assets.
2018
Age analysis Accounts
receivable Credit risk
reserve Accounts
receivable Credit risk
reserve
< 30 days
30 - 90 days
> 90 days
Total 1 087.9
94.9
70.7
1 253.5 -2.9
-6.9
-50.8
-60.6 1 004.5
69.1
63.8
1 137.4 -2.3
-2.5
-48.6
-53.3
ANNUAL REPORT // 097