
At the end of the nancial year 2021, the Company’s liquidity reserve
consisted of liquid funds. At the end of the nancial year, liquid funds
amounted to EUR 20,917 (43,099) thousand. The funds were distributed
among various bank accounts and were immediately available for
withdrawal.
Verkkokauppa.com announced on 1 July 2019 that it had agreed on
revolving credit facilities (RCF) totaling EUR 20 million. Of these, EUR
15 million are for three years and EUR 5 million for ve years. Ordinary
covenants are applied to the conditions of committed revolving credit
facilities (among others, equity ratio and interest-bearing net liabilities in
relation to the EBITDA). The equity ratio is always above 25% and the
ratio of net liabilities to operating prot does not exceed 3.3. According
to the agreement, nancial covenants are calculated in accordance
with the accounting principles applied by the Company in preparing
its nancial statements for 2017 (Finnish Accounting Standards, FAS).
The company has changed its accounting principles by adopting IFRS
accounting standards. The Company undertakes to provide the lender
with a statement of the differences between the accounting principles
used in the calculation of the financial covenants (FAS) and the
Company’s ofcial or half-yearly nancial statements (IFRS).
At the balance sheet date, the company has unused committed
revolving credit totaling EUR 20 million. The Company has been able
to meet the conditions of the covenants.
Credit and counterparty risk
Credit risks arise when a counterparty is unable to meet its contractual
obligations, causing the Company to suffer a nancial loss. Trade
receivables and other receivables expose the Company to credit risk.
The most signicant credit risk relates to the company-funded Apuraha
consumer nancing service.
The Company’s main credit risk consists of trade receivables from
company-funded Apuraha consumer financing and ordinary trade
receivables from companies. The open position is larger and longer
for company-financed Apuraha receivables than for conventional
corporate trade receivables. As a result, the credit risk of a company-
nanced Apuraha is greater than that of a conventional corporate
trade receivable. The rotation of trade receivables is also faster for
corporate trade receivables. The Company has dened a credit policy
for customer receivables with the aim of increasing protable sales
in advance, identifying and managing credit risks. The credit policy
dictates the minimum principles of Verkkokauppa.com Oyj’s credit
sales and debt recovery. The credit risk is determined by the Credit
Committee of the Company.
The Company has credit policies in place for its own customer
financing, which describe the principles of risk-taking and risk
management. Furthermore, the Company has credit rules that dene,
among other things, the principles of making credit-granting decisions,
the amount of credit limits and the measurement principles of trade
receivables. The Board of Directors regularly monitors the development
of customer financing. The Credit Committee is responsible for
reporting on the nancial risks to the Board. The risk of customer-
nancing receivables is not concentrated but consists of a large amount
of receivables with a maximum capital of EUR 3,000. To minimize
the credit risk, the customer’s credit report and any credit history are
checked before a credit-granting decision is made.
Verkkokauppa.com sells all its overdue receivables on a “continuous
trade” basis, where all receivables overdue for more than 60 days are
sold to third parties. This reduces the risk of company receivables. The
credit loss allowance related to trade receivables decreased to EUR 0.8
(1.1) million.
The counterparty risk involved with cash and cash equivalents is
managed through depositing the cash and cash equivalents in accounts
with large Nordic banks with solid ratings. The Company’s cash and
cash equivalents are fully available. The counterparty risk arising from
purchasing activities is managed through using, when necessary,
letters of credit as payment method, thus ensuring contractual delivery.
The Company’s letters of credit are documentary credits.
Impairment
The most signicant nancial assets of the Company subject to the
expected credit loss model required by IFRS 9 are cash and cash
equivalents, traditional trade receivables from companies and the
receivables from the company-nanced Apuraha consumer nancing
service. In addition, it is necessary to apply the impairment model
to the nancial guarantee contracts. The Company’s cash and cash
equivalents are deposited in accounts with solid Nordic banks and
are consequently not recognized for impairment. In addition to the
aforementioned financial assets, the contract assets are subject
to impairment. The management of the Company monitors the
development of counterparty risk.
The Company recognizes a lifetime expected credit loss on trade
receivables using a simplied method (matrix model). The model based
on expected credit losses is anticipative, and the expected portion of
credit losses is based on the amounts of historical credit losses. The
historical credit loss percentage is adjusted when necessary, taking
into account the macroeconomic impact on customers’ ability to pay.
The expected credit losses over the entire life of the receivable are
calculated by multiplying the gross value of the trade receivables
with the expected loss portion in all maturity classes. In addition, at
each reporting date, the Company assesses whether there is further
evidence of impairment of an asset, for instance due to insolvency.
In these cases, the Company recognizes the impairment immediately.
Impairment losses are recognized in other operating expenses in the
income statement. Recoverable credit losses are recognized in other
operating expenses in the income statement.
The Company has dened different matrix models for standard
trade receivables from corporates and for company-nanced Apuraha
consumer financing service receivables due to their different risk
characteristics. The clients of the company-nanced Apuraha consumer
nancing service are individuals.
To determine the credit default rates for individual customers in
the company-financed Apuraha consumer financing service, the
customers’ historical payment behavior, the aging of receivables and
2021
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Verkkokauppa.com · Financial Statements 2021