Debt Restructuring
In 2012 we shall continue to implement projects focused on the diversification of sources of financing. More attention will be devoted to alternative sources, which are particularly suitable in times of crisis. In searching for sources of financing, we shall therefore make more use of factoring and support suppliers in searching of sources of financing in order to shorten the terms of payment to Gorenje. We shall also continue to improve free cash flow through measures for optimising inventories and receivables, and disinvestment activities.
In 2011 we successfully restructured part of the borrowing portfolio in line with the plan. Non-current borrowings therefore increased and current borrowings decreased by 8.6 percentage points, which is highly important for attaining financial stability.
This also led to the improvement of liquidity ratios. Current assets exceeded current liabilities by as much as 48.4 percent. In other words, 32.6 percent of current assets are financed by long-term sources of financing.
| in MEUR | 2011 | 2010 |
|---|---|---|
| Current financial liabilities | 181,6 | 223 |
| Non-current financial liabilities | 302,5 | 260,9 |
| Total financial liabilities | 484,1 | 483,9 |
| Cash and cash equivalents | 101,6 | 82,7 |
| Net financial debt | 382,5 | 401,2 |
| Source: Data from Gorenje Group | ||
| 2010 | 2011 | |
|---|---|---|
| Non-current financial liabilities | 53,9 % | 62,5 % |
| Current financial liabilities | 46,1 % | 37,5 % |
| Source: Data from Gorenje Group | ||
| 2010 | 2011 | |
|---|---|---|
| Non-current financial liabilities | 260,9 | 302,5 |
| Current financial liabilities | 223,0 | 181,6 |
| Cash and cash equivalents | -83 | -102 |
| Total | 483,9 | 484,1 |
| Source: Data from Gorenje Group | ||
The restructuring of financial liabilities was carried out in agreement with all banks with which the Company cooperates. The strongest impact on the attained result was due to long-term borrowings in the form of notes granted from German Deutsche Bank in the amount of EUR 100 mio, and the utilisation of borrowings in the amount of EUR 41.7 granted to the Company in 2010 by IFC, together with a syndicate of banks.
The liquid assets available at the end of 2011 amounted to EUR 206.3 mio. Slightly more than half of this amount is represented by unutilised borrowings, and the remainder by cash and cash equivalents. Available liquid assets decreased in the past year, primarily on account of the conversion of short-term borrowings into long-term borrowings. In our opinion, we have thus minimised the short-term liquidity risk of the Gorenje Group.
| in MEUR | 2011 | 2010 |
|---|---|---|
| Unutilised loans | 104,7 | 149,1 |
| Cash and cash equivalents | 101,6 | 82,7 |
| Available liquid assets | 206,3 | 231,8 |
| Source: Data from Gorenje Group | ||
Variability of Interest Rates
At the beginning of 2011, we increased the share of borrowings with fixed interest rates due to the macroeconomic situation and anticipated changes in variable interest rates.
| 2011 | ||
|---|---|---|
| Fixed interest rate | 45,9% | |
| Variable interest rate | 54,1% | |
| Source: Data from Gorenje Group | ||
| 2011 | ||
|---|---|---|
| Fixed interest rate | 15,0% | |
| Variable interest rate | 85,0% | |
| Source: Data from Gorenje Group | ||
In 2012 we shall devote more attention to managing liquidity at the level of the Group as a whole. In addition to reducing the joint debt, an important goal will also be to optimise the ratios between current and non-current financial liabilities and available cash, which will reduce the financing costs of the Group.
In 2012 we shall additionally improve the maturity structure of financial liabilities in the following ways:
- by replacing overdue non-current financial liabilities with long-term sources,
- by further disinvestment,
- by placing greater emphasis on the project financing of long-term investments in research and development,
- by optimisation of production locations, and
- by further optimisation of investments in net current assets and similar measures.