Page 90 - Restamax Plc Annual Report 2017

Credit risk

The Group’s course of action defines the creditworthiness requirements for the customers’ counterparties. The primary
method of payment within the Group is cash. The business operations of the labour hire segment are based on invoice
sales. The credit risk management and credit control have been centralised to be handled by the Group’s financial
management.

As regards the receivables of the restaurant segment, the Group does not have any material credit risk accumulation, since
the receivables consist of several items. Risks related to trade receivables and other receivables of the restaurant segment
are minimised using short payment terms, customer-specific monitoring of trade receivables, and effective collection.

As concerns trade receivables, the labour hire segment has a credit loss risk typical of the nature of its business and the
field. In addition, certain big customers of the labour hire segment have been paid marketing support, the earning of
which is based on customers’ future purchases and the payment of the trade receivables generated from them. In the
labour hire segment, the trade receivables and marketing supports of certain big customers together form significant
credit risk concentrations. The risks linked with the trade receivables and other receivables of the labour hire segment
are minimised by means of terms of payment of the receivables, customer-specific monitoring of trade receivables,
effective collecting and checking of customers’ creditworthiness requirements, and in part also through various collat-
eral arrangements.

The labour hire business may increase the Group’s credit losses or the need for making credit loss reservations.

The maturity distribution of the receivables is presented in note 13, Receivables.

During the financial period, the Group had TEUR 423.2 in credit losses recorded through profit or loss (TEUR 72.1 in 2016).
Capital management

The aim of the Group’s capital management (equity vs. liabilities) is to create an optimal capital structure that can support
business operations by ensuring normal operational prerequisites, and to increase shareholder value in the long term.
The capital structure can be mainly affected by means of dividend distribution, subordinated loans and equity issues. The
Group can also decide to sell its asset items in order to reduce its liabilities. The managed capital is the equity indicated in
the consolidated balance sheet. An optimal capital structure also reduces capital costs.

The Group’s gearing ratios were as follows:

EUR thousand 2017 2016
Interest-bearing liabilities 46,344.8 32,562.9
Interest-bearing receivables -125.3 -125.3
Cash and cash equivalents -2,570.0 -1,871.1
Net liabilities 43,649.5 30,566.5
Equity, total 46,892.9 43,961.8
Gearing ratio 93.1,% 69.5,%

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