Annual Report Gorenje Group 2009

Credit, currency and interest rate risks as well as risks of financial solvency are key kinds of financial
risks for the Gorenje Group. Due to the increasingly difficult macro-economic situation in 2009 the
special attention was paid to credit risks to which the Group was exposed in compliance with the
assessment of the management board. They include all risks where economic benefits of the Group
are reduced due to unsettled contractual obligations of business partners. The following measures
have been taken for their control:
• security of the major part of operating receivables with the Slovene Export Company (SID) -
Prva kreditna zavarovalnica d.d. and other insurance companies,
• risks receivables due from customers have been additionally secured by bank guarantees and
other security instruments,
• the financial position of new and existing business partners has been regularly controlled and
limits on maximum exposure have been set,
• joint and chain offset with customers have been carried out,
• credit limits and collection of receivables have been controlled.
Due to geographic diversification of operation the Gorenje Group has been greatly exposed to
currency risks where the economic benefits of the company may decrease due to changes in the
exchange rate of an individual currency. The exposure of cash flows and balance sheet has been
considered in the valuation of risks. These risks are high in the markets of Serbia, Great Britain, Czech
Republic, Slovakia, Poland, Hungary, Croatia, Turkey, and in all US dollar markets. Special attention
has been paid to the control of currency risk by regulation of sales and purchasing in a separate
currency. Futures contracts and short-term borrowings in local currency have been used as protection
against short-term currency fluctuations.
In recent years great attention has been paid to interest rate risks that may reduce economic benefits
of the company due to a change in interest rates in the market. In the financial year 2009 the share of
loans with a fixed interest rate or those secured by derived financial instruments grew. At the end of
2009 their share accounted for 47.5 % of the credit portfolio of the Gorenje Group.
Liquidity risk includes risks associated with the lack of financial resources available and consequently
the inability of the company to settle its liabilities within the time limits agreed. The financial liabilities of
the Gorenje Group amounting to 192.0 million EUR mature in the year 2010 and therefore discussions
with banks relating to the re-financing of the existing financial liabilities started. The liquidity reserve as
at 31 December 2009 amounting to 162.7 million EUR consisting of unutilised revolving lines, shortterm
time deposits at banks and cash on accounts of the Gorenje Group have provided appropriate
short-term regulation of cash flows and liquidity of the Group.
The risk of short-term liquidity of the Gorenje Group has increased due to the reduction in availability of
financing sources of our business partners who sell or purchase the goods. The risk of long-term
liquidity is moderate and a consequence of successful operation, efficient asset management,
sustained ability of generating cash flows from operating activities and suitable equity structure.
OPERATING RISKS
Operating risks include a reduction in economic benefits of the Group arising from the ability of
unsuitable planning, performance and control of business processes and activities.
When controlling production risks the emphasis has been placed on the operation of key
equipment (machines, tools, production lines) and infrastructure involving undisturbed supply with
energy products and appropriate management of hazardous substances. The production risk is greater
in line production and it is controlled by qualifications of employees and regular maintenance of
production lines.
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Annual Report Gorenje Group 2009