ANNUAL REPORT 2008 - Gorenje Group

98
2008
hedging of currency risk and the adaptation of business operations to ensure long-term decrease
in currency fluctuation exposure by matching or netting sales and purchases. Additional short-term
hedging is carried out by currency future contracts and short-term borrowings in national currencies.
Irrespective of the implemented hedging measures against currency risk, the management of the
Gorenje Group estimates that, in the light of significant macroeconomic changes and fluctuations,
in particular of the East-European currencies, the currency risk exposure is high.
In the last few years, a great attention was also paid to interest rate risk, which is the risk that the
economic benefits of the Company may be decreased due to changes in interest rates in the market.
In 2008 the volume of hedging against interest rate risk was decreased over the previous year’s
figure, so that the share of fixed interest rates and derivatives hedging against interest rate risk was
equal to 37.6 percent of the loans portfolio of the Gorenje Group at the year end 2008. The management
of the Gorenje Group estimates that the interest rate risk exposure is high.
Liquidity risk is the risk that the Company will fail to meet commitments in stipulated period of time
due to the lack of available funds.
The financial liabilities of the Gorenje Group in the amount of EUR 278 million mature in 2009. For
this reason the Gorenje Group started, in the last quarter of 2008, to negotiate with the banks the
rescheduling of the existing financial liabilities and thus to decrease the risk of debt rescheduling.
The liquidity reserve at 31.12.2008 in the amount of EUR 76.6 million, consisting of unused revolving
lines of credit and cash in banks of the Gorenje Group, is used to ensure adequate short-term
control of cash flows and to decrease short-term liquidity risk.
Short-term liquidity risk of the Gorenje Group is estimated as increased due to efficient cash management,
adequate available lines of credit for short-term control of cash flows, a high degree of financial
flexibility, and a good access to financial markets and funds. The reason for an increase in
short-term liquidity risk is a decrease in availability of sources of finance from business partners,
both buyers and sellers.
Long-term liquidity risk of the Gorenje Group is estimated as moderate due to efficient operations,
effective cash management, sustainable ability to generate cash flows from operating activities,
and an adequate capital structure.
The management of the Gorenje Group estimates that the liquidity risk exposure of the Gorenje
Group is moderate.
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the Gorenje Group. The Group monitors the
return on capital, which the Group defines, as one of the strategic ratios, as net profit for the period
attributable to equity holders of the Group divided by average shareholders’ equity, excluding
minority interests. The Group seeks to maintain a balance between the higher returns that might
be possible with higher levels of borrowings and the advantages and security afforded by a sound
capital position.
The dividend policy is based on the investment plans, optimum capital structure policy, and shareholders’
expectations and interests. The amount of dividend per share is proposed by the Management
Board and the Supervisory Board of the controlling company. Dividends are paid from the
accumulated profit of the controlling company determined in accordance with the relevant regulations
in Slovenia. The resolution on the appropriation of accumulated profit is adopted by the
Shareholders’ Meeting.
Pursuant to the resolution of the Shareholders’ Meeting, an own share fund has been formed by the
controlling company of the Gorenje Group amounting up to 10 % of the share capital. At 31 December
2008, the Company recorded 121,311 own shares, which is 0.8647 % of share capital.