Group 40: Financial Instruments

Credit risk

The carrying amount of financial assets represents the maximum credit risk exposure. The maximum credit risk exposure at the reporting date:

In TEUR	2011	2010
Available-for-sale financial assets	16.692	11.940
Loans	23.306	36.229
Trade and other receivables	285.799	350.452
Deposits	2.990	1.185
Other receivables from financing activities	1.302	3.961
Cash and cash equivalents	101.620	82.728
Total	431.709	486.495

The maximum credit risk exposure of trade receivables at the reporting date by geographic region:

In TEUR	2011	2010
West	93.889	95.553
East	158.947	205.116
Other	3.075	5.615
Total	255.911	306.284

The maximum credit risk exposure of trade receivables at the reporting date by type of customer:

In TEUR	2011	2010
Wholesale customers	191.163	220.572
Retail customers	56.170	78.626
Other customers	8.578	7.086
Total	255.911	306.284

Maturity of trade receivables at the reporting date:

In TEUR	Gross amount	Allowance	Gross amount	Allowance
	2011	2011	2010	2010
Not past due	201.056		237.229
Past due 1 to 45 days	21.609		33.647
Past due 46 to 90 days	7.997		8.063
Past due 91 to 180 days	6.024		8.407
Past due over 180 days	42.206	22.981	42.080	23.142
Total	278.892	22.981	329.426	23.142

Movements in allowances for trade receivables:

In TEUR	2011	2010
Opening balance at 1 January	23.142	20.406
Exchange differences	-185	-57
Impairment loss	6.794	8.317
Recovered bad debts	-2.786	-1.868
Write-offs of receivables	-3.540	-3.836
Changes in the Group	-444	180
Closing balance at 31 December	22.981	23.142

Liquidity risk

Financial liabilities by maturity:

31 December 2011

In TEUR	Carrying amount	Contractual cash flow	1 year or less	1–2 years	2–5 years	More than 5 years
Non-derivative financial liabilities
Bank borrowings	366.342	404.296	165.466	72.757	165.627	446
Borrowings from other entities	104.223	119.172	27.150	24.710	66.230	1.082
Other financial liabilities	8.016	8.379	6.829	416	619	515
Trade and other payables	245.689	245.689	245.689
Total	724.270	777.536	445.134	97.883	232.476	2.043

Derivative financial liabilities
In TEUR	Carrying amount	Contractual cash flow	1 year or less	1–2 years	2–5 years	More than 5 years
Interest rate swaps	-5.134	-4.508	-1.896	-1.196	-1.416
Forward exchange contracts used for hedging	-393	-393	-393
Outflow	-393	-393	-393
Inflow
Other forward exchange contracts
Outflow
Inflow
Total	-5.527	-4.901	-2.289	-1.196	-1.416

31 December 2010

In TEUR	Carrying amount	Contractual cash flow	1 year or less	1–2 years	2–5 years	More than 5 years
Non-derivative financial liabilities
Bank borrowings	459.513	496.294	225.736	105.381	158.796	6.382
Borrowings from other entities	1.946	2.102	2.102
Other financial liabilities	8.303	10.448	2.434	2.434	4.090	1.490
Trade and other payables	302.846	302.846	302.846
Total	772.608	811.690	533.118	107.815	162.886	7.872

Derivative financial liabilities
In TEUR	Carrying amount	Contractual cash flow	1 year or less	1–2 years	2–5 years	More than 5 years
Interest rate swaps	-58	-68	-51	-17
Forward exchange contracts used for hedging	-20	-20	-20
Outflow	-20	-20	-20
Inflow
Other forward exchange contracts	-14.107	-14.107	-14.107
Outflow	-14.107	-14.107	-14.107
Inflow
Total	-14.185	-14.195	-14.178	-17

Currency risk

Group's exposure to currency risk:

31 December 2011
In TEUR	EUR	HRK	DKK	PLN	RSD	CZK	Other
Trade receivables	142.638	28.698	8.074	6.212	13.724	8.529	48.036
Financial liabilities (borrowings)	-454.555		-3.651		-64	-8.345	-3.950
Trade payables	-164.447	-1.665	-2.036	-1.565	-5.009	-4.597	-14.929
Financial position exposure	-476.364	27.033	2.387	4.647	8.651	-4.413	29.157
Forward exchange contracts							7.600
Net exposure	-476.364	27.033	2.387	4.647	8.651	-4.413	36.757

31 December 2010
In TEUR	EUR	HRK	DKK	PLN	RSD	CZK	Other
Trade receivables	189.874	31.762	4.490	6.682	13.919	7.446	52.111
Financial liabilities (borrowings)	-423.861	-601	-684	-101	-939	-14.506	-18.821
Trade payables	-201.795	-1.850	-1.491	-1.638	-6.799	-5.354	-18.093
Financial position exposure	-435.782	29.311	2.315	4.943	6.181	-12.414	15.197
Forward exchange contracts							-8.295
Net exposure	-435.782	29.311	2.315	4.943	6.181	-12.414	6.902

The following significant exchange rates were applied during the year:

	Average rate		Reporting date spot rate
	2011	2010	2011	2010
HRK	7,438	7,289	7,537	7,383
CZK	24,589	25,294	25,787	25,061
DKK	7,451	7,447	7,434	7,454
RSD	101,910	102,762	103,630	107,470
PLN	4,119	3,995	4,458	3,975

Sensitivity analysis

A 5 percent increase in the euro's value against the above stated currencies as at 31 December would have resulted in an increase (decrease) in profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain unchanged. The analysis has been performed on the same basis as for 2010.

31 December 2011
In TEUR	Profit or loss for the period
HRK	-1.352
DKK	-119
PLN	-232
RSD	-433
CZK	221
Other currencies	-779

31 December 2010
In TEUR	Profit or loss for the period
HRK	-1.466
DKK	-116
PLN	-247
RSD	-309
CZK	621
Other currencies	-345

A 5 percent decrease in the euro's value against the above stated currencies as at 31 December would have had equal yet opposite effect, provided that all other variables remain unchanged.

Interest rate risk

Group's exposure to interest rate risk:

In TEUR	2011	2010
Fixed rate financial instruments
Financial assets	6.472	11.271
Financial liabilities	64.892	96.273
Variable rate financial instruments
Financial assets	16.833	24.959
Financial liabilities	405.673	363.240

Fair value sensitivity analysis for fixed rate instruments

No fixed rate financial instruments at fair value through profit or loss and no derivatives designated as fair value hedge are recorded by the Group. Therefore a change in the interest rate at the reporting date would not have any impact on profit or loss for the period.

Fair value sensitivity analysis for variable rate instruments

A change in the interest rate by 50 basis points (bp) at the reporting date would have increased (decreased) profit or loss for the period by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates, remain unchanged. The analysis has been performed on the same basis as for 2010.


In TEUR	Profit or loss		Other comprehensive income
	Increase by 50 bp	Decrease by 50 bp	Increase by 50 bp	Decrease by 50 bp
31 December 2011
Variable rate instruments	-4.707	4.707
Interest rate swap contracts	526	-526	1.499	-1.499
Cash flow variability (net)	-4.181	4.181	1.499	-1.499
31 December 2010
Variable rate instruments	-4.122	4.122
Interest rate swap contracts
Cash flow variability (net)	-4.122	4.122

Gorenje