AAK Annual Report 2020

AAK Annual Report 2020 80 The Group’s cash and cash equivalents of SEK 1,200 million, available credit facilities of SEK 6,809 million and future cash generated by the business are together deemed sufficient for the Group to meet its financial commitments. Credit risk The Company is exposed to credit risk primarily in relation to accounts receivables and customer contracts. Risk in the latter case is represented by customers’ failure to meet their commitments due to changes in market prices. Generally, AAK’s credit risks are significantly limited due to the stable, long-term business relationships we have with our customers and suppliers. The customer structure for the Group is such that its single-largest customer is responsible for less than 5 percent of its total sales, and the average customer corresponds to less than 1 percent. Nearly a quarter of the Group’s sales occur in countries where the political and commercial risks are deemed to be higher than in Western economies. However, we experience only a limited need for impairments even in these countries. This is largely due to the fact that a significant portion of AAK’s business in these countries is with large multinational companies that also do business worldwide. The partners with whom AAK do business are also primarily companies with which we have stable, long-term relationships. Each business segment is responsible for managing its customer credit risks, while our large production facilities are responsible for managing their counterparty risk in relation to raw material procurement. Provisions for doubtful accounts receivables 2020 2019 Provisions at January 1 73 48 Provisions for potential losses 12 24 Reversed amount that is not recoverable -8 -2 Unused amount reversed -2 1 Exchange differences -3 2 Provisions at December 31 72 73 Provisions for impairments are entirely related to accounts receivables. Total accounts receivables excluding provisions were SEK 3,408 million (3,456). Past due assets not considered impaired SEK million 2020 2019 1–30 days 262 383 31–120 days 38 43 121–360 days 6 26 Over 360 days 28 36 334 488 Derivatives classified as financial instruments The Group had three classes of financial instruments (hedging instruments): raw material hedge contracts, currency hedge contracts and interest swaps, all measured at fair value. The fair value of the derivative financial instruments is measured using valuation methods and observable market data (methodology: level 2). The valuation methods applied are described in the accounting policy. Note 3 | Financial risk management and hedge accounting