content_image/227693.jpg
## SECTION 1.6 Trade receivables and on-trade loans 

## DEVELOPMENT IN IMPAIRMENT LOSSES ON RECEIVABLES 

<img src='content_image/227693.jpg'>

No significant impairment losses were incurred in respect of individual trade receivables or on-trade loans in 2013 and 2012. The impairment losses at 31 December 2013 relate to several minor customers that have – in different ways – indicated that they do not expect to be able to pay their 

outstanding balances, mainly due to adverse economic developments. Relying on historic payment behaviour and extensive analysis of the underlying customers’ credit ratings, the Group believes that the unimpaired amounts that are past due by more than 30 days are still collectable. 

## 1.6.1  SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS 

In assessing credit risk, management analy- ses the need for write-downs for bad debt losses due to customers’ inability to pay. 

Impairment losses are based on an individu- al review for impairment based on custom- ers’ creditworthiness and expected ability to pay, customer insolvency or anticipated insolvency, and past due amounts as well as collateral received. Management also uses mathematically computed impairment losses based on customer segments, histori- cal information on payment patterns, terms of payment and concentration maturity, as well as information about the general eco- nomic situation in the markets/countries. 

## 1.6.1 ACCOUNTING POLICIES 

Receivables are measured at amortised cost less impairment losses. 

Regarding loans to the on-trade, any difference between present value and the nominal amount at the loan date is treated as a prepaid discount to the customer, which is recognised in the income statement in accordance with the terms of the agreement. The market interest rate is used as the discount rate, corresponding to the money market rate based on the maturity of the loan with the addition of a risk premium. The effective interest rate on these loans is recognised in other operating activities, net. The amortisation of the difference between the discount rate and the effective inter- est rate is included as a discount in revenue. 

The financial uncertainty associated with write-downs for bad debt losses is usually considered to be limited. However, if the ability to pay deteriorates in the future, further write-downs may be necessary. 

With regard to loans to the on-trade, the individual Group companies manage and control these loans as well as standard trade credits in accordance with Group guidelines. 

Derecognition of groups of receivables, e.g. in business combinations or other structured transactions, is based on management’s judgement of contractual terms and other factors related to the transaction. 

Objective indication of impairment is assessed for a portfolio of receivables when no objective indication of individual impairment losses exists. The portfolios are based on on-trade and off-trade customers, and on-trade receivables and loans. The objective indications used for portfolios are based on historical experiences and actual market developments. 

Impairment losses are calculated as the difference between carrying amount and net realisable value, including the expected net realisable value of any collateral provided. 

