Credit risk
Credit risk is expressed as a loss which may be incurred by the Group and is caused by the counterparty if the latter fails to perform its contractual financial obligations. Credit risk arises from cash and bank, trade receivables, other short-term receivables and loans granted.
The payment discipline of clients is continuously monitored to reduce credit risk. A credit policy has been established to ensure the sale or services to clients with an adequate credit history and the application of prepayments to clients in a higher risk category. According to the credit policy, different client groups are subject to different payment terms and credit limits. Clients are classified on the basis of their size, reputation, and the results of credit background checks and history of payment behaviour. At the first level, the advertising clients are divided into two groups: advertising agencies and direct clients, they are further grouped according to the above principles. The Group applies the same credit policy in all Baltic States but is aware of different credit behaviour of clients.
In the case of new clients, their credit background is checked with the help of financial information databases such as Krediidiinfo and other similar databases. At the beginning clients’ payment behaviour will be monitored with heightened interest. Upon following the payment discipline, it is possible to receive more flexible credit terms, such as longer payment terms, higher credit limits, etc. Upon violation of the payment discipline, stricter credit terms are applied. In case of large transactions, in particular in the segment of printing services, clients are requested to make prepayment or provide a guarantee letter.
The Group is not aware of any substantial risks related to the concentration of its clients and partners. The management estimates that there is no substantial credit risk in the loans to related parties due to their solid financial position.
The maximum credit risk which arises from the trade and other receivables is provided below:
| 31.12.2024 (EUR thousand) | Due date | Overdue <= 7 days | Overdue >7=days and <=60 days | Overdue > 60 days | Total receivables |
|---|---|---|---|---|---|
| Trade receivables | 6 413 | 1 276 | 620 | 118 | 8 427 |
| Other short-term receivables | 589 | 0 | 0 | 0 | 589 |
| Other long-term receivables | 754 | 0 | 0 | 0 | 754 |
| TOTAL | 7 756 | 1 276 | 620 | 118 | 9 770 |
| 31.12.2023 (EUR thousand) | Due date | Overdue <= 7 days | Overdue >7 days and <=60 days | Overdue > 60 days | Total receivables |
|---|---|---|---|---|---|
| Trade receivables | 6 222 | 1 202 | 782 | 60 | 8 267 |
| Other short-term receivables | 23 | 0 | 0 | 0 | 23 |
| Other long-term receivables | 758 | 0 | 0 | 0 | 758 |
| TOTAL | 7 003 | 1 202 | 782 | 60 | 9 048 |
For all trade receivables, the Group applies the simplified approach to providing for expected credit losses (ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss provision. The expected credit losses of those financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other receivables (incl. loans granted), the Group measures the loss allowance at an amount equal to 12 months ECL, if the credit risk has not increased significantly since initial recognition. If there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL.