II. NOTES TO THE FINANCIAL STATEMENTS 13
19. FINANCIAL ASSETS 45
19.1. FINANCIAL ASSETS AVAILABLE FOR SALE
For 12 months of 2009
For 12 months of 2008
Balance at the beginning of the period 17 150 64
Increases 3 757 65 507
Write down of financial assets available for sale 2 564 (45 838)
Decreases - (2 583)
Balance at the end of the period 23 471 17 150
Minus: short term part (23 471) (26)
Long term part - 17 124
Assets available for sale include:
As at 2009-12-31
As at 2008-12-31 Securities quoted on the stock exchange:
- including equity securities 23 445 17 124
Securities not quoted on the stock exchange:
- including equity securities 26 26 - debt securities traded on non active markets and issued by entities not
quoted on the stock exchange - - 23 471 17 150
Assets available for sale include the shares of VISTULA & WÓLCZANKA S.A. purchased in 2008 and 2009 (named: Vistula Group SA after merger with W. Kruk SA on 31 December 2008), which are quoted on the Warsaw Stock Exchange.
The Parent Company presents the said assets as long term financial assets due to the agreement signed 28 July 2009 which limits the sale of certain shares of Vistula Group S.A. (7 927 701 shares). The said agreement was concluded with Vistula Group SA and Fortis Bank Polska SA.
An agreement limiting the sale of shares was signed for the conditional period depending on – among others – concluding an agreement on acquisition of a new issue of Vistula Group SA shares amounting to 8 247 423. by Grupa Fortis. Moreover, afterwards Grupa Fortis will possess Vistula Group SA shares amounting to at least 5 577 568, not longer than to 29 February 2012. Alma Market SA agreed during the agreed period towards Bank and Vistula Group SA not to sell, charge, dispose in any way, put in a tender for sale or charge a ny shares of Vistula Group S.A. without prior consent of Fortis Bank Polska SA. Due to the said agreement limiting the sale of some shares, Vistula Group S.A. committed to paying for the benefit of Alma Market SA the remuneration during the period of the said limitation.
19.2. TRADE RECEIVABLES AND OTHER RECEIVABLES
As at 2009-12-31 As at 2008-12-31 Trade receivables 83 561 86 030 Minus: write-downs of trade receivables (3 475) (2 023)Trade receivables – net 80 086 84 007
Other receivables 6 753 6 024 Minus: write-downs of other receivables (399) (215)
Other receivables net 6 354 5 809
Prepayments 138 1 253
Suspended amounts (guarantee deposits) 754 757 Prepaid expenses 1 240 1 640 Receivables from related entities - 18
Total receivables 88 572 93 484
Minus: long term parts – prepaid expenses (137) (139) Minus: long term part - securities (754) (757)
Receivables – short-term part 87 681 92 588
As at 2009-12-31
As at 2008-12-31
Long-term part - securities 754 757 Long-term part – prepaid expenses 137 139
Receivables – long term part 891 896
Amounts displayed in the position “trade receivables” concern receivables due sales of merchandises with postponed payments (wholesale turnover) and services supplied (promotion, marketing and property lease services).
Presented balance sheet values of trade receivables and other receivables equal to their fair value.
Write downs of receivables:
Amounts of accomplished write – downs on receivables:
For 12 months of 2009
For 12 months of 2008
Balance at the beginning of the reporting period 2 238 1 878
- acquisition of the related entity - 95 - trade receivables 4 022 1 480 - other receivables 331 146
Total increases in write - downs 4 353 1 721
Decreases in write downs (2 717) (1 361)
Balance at the end of the reporting period 3 874 2 238
19.3. THE MATURITY STRUCTURE OF FINANCIAL ASSETS
The operations conducted by the Companies are exposed to the following financial risks:
- market risk, including the risk of fluctuations in the foreign exchange rates (above all EUR/PLN), fair value risk related to changes in interest rates and other market risk;
- credit risk; - liquidity risk;
The Companies are attempting to minimize the potential unfavorable impact of those risks on the financial results. The Management Boards of the Companies directly manage risk, analyzing the scale of the risk on a current basis and taking appropriate decisions. Below, the credit risk is described qualitatively and quantitatively.
The operations conducted by the Companies are exposed to the following financial risks:
- market risk, including the risk of fluctuations in the foreign exchange rates (above all EUR/PLN), fair value risk related to changes in interest rates and other market risk;
- credit risk; - liquidity risk;
The Companies are attempting to minimize the potential unfavorable impact of those risks on the financial results. The Management Boards of the Companies directly manage risk, analyzing the scale of the risk on a current basis and taking appropriate decisions. Below, the credit risk is described qualitatively and quantitatively.
Credit risk due to receivables
Due to the type of operations in which it engages, the Group is exposed to the slight risk of deferred payments in respect of its sales. Average balance of receivables due to the sale of goods and services in 2009 equaled to 8.3% of total revenues. The said risk mainly concerns wholesales with postponed payments (22.5% of total sales) and sale of services, which does not exceed 5% of total revenues in 2009. When it comes to wholesale trade, the Group insures its receivables. The said risk is however minimized due to the fact, that these receivables are spread – i.e. concern numerous suppliers.
In case of overdue receivables due to services, when the contracting party does not agree on the compensation of mutual receivables and liabilities, the Group introduced detailed rules on debt recovery. In order to collect the debts, the designated Departmental and external Legal Offices undertake certain actions aimed at full debt recovery – i.e. sending dunning letters and taking legal actions. All financial assets overdue more than one year are subject to write-downs and are put under court debt recovery procedures.
In practice, 70% of sales are retail sales, where receivables do not incur due to cash sales.
Structure of receivables and borrowings classified under the length of maturity period is displayed below.
Receivables overdue As at 2008-12-31 in days
YEAR 2008 0-120 121-360 >360 Total
Trade receivables gross 82 953 1 853 1 224 86 030 Minus: receivables write downs settled through
the financial result (819) (200) (1 004) (2 023)
Trade receivables - net 82 134 1 653 220 84 007
Other receivables 5 796 19 209 6 024 Minus: write downs of other receivables (129) (19) (67) (215)
Other receivables net 5 667 - 142 5 809
Advance payments* 1 253 - - 1 253 Suspended amounts (guarantee deposits) 757 - - 757 Receivables from related entities 18 - - 18
89 829 1 653 362 91 844
Prepaid expenses 1 640 - - 1 640 Minus: long term part – prepaid expenses (139) - - (139) Minus: long term part – securities (757) - - (757)
Balance sheet position of short term
receivables 90 573 1 653 362 92 588
Fair value of short term receivables 90 573 1 653 362 92 588
* In the position "other receivables" are presented prepayments concerning in majority the investment tasks and result from the concluded contracts, so that are presented within short-term receivables.
Receivables overdue As at 2008-12-31 in days YEAR 2008
0-120 121-360 >360 Total Long – term part: trade receivables
long term part – prepaid expenses 139 - - 139
long term part – securities 757 - - 757
Balance sheet position of long term
receivables 896 - - 896
Deposits and prepayments are not presented in the long-term receivables. Due to the rapid execution of investments planned to be concluded within several months, various receivables due to advance payments and deposits expire, the next resulting from the following agreement appear.
Receivables overdue As at 2009-12-31 in days YEAR 2009
0-120 121-360 >360 Total
Trade receivables gross 75 248 3 296 5 017 83 561 Minus: trade receivables write downs settled
through the financial result (1 035) (847) (1 593) (3 475)
Trade receivables - net 74 213 2 449 3 424 80 086
Other receivables 6 311 247 195 6 753 Minus: write down of other receivables (213) (119) (67) (399)
Other receivables net 6 098 128 128 6 354
Prepayments* 138 - - 138 Retain amounts (securities) 267 164 323 754
80 716 2 741 3 875 87 332
Accruals and deferrals 1 234 - 6 1 240 Minus: long term part: securities (267) (164) (323) (754) Minus: long term part – prepaid expenses (137) - - (137)
Balance sheet position of short term
receivables 81 546 2 577 3 558 87 681
Fair value of short term receivables 81 546 2 577 3 558 87 681
*Prepayments concern in majority the investment tasks and result from the concluded contracts, so that are presented within short-term receivables.
Long term receivables As at 2009-12-31 in days YEAR 2009
0-120 121-360 >360 Total Long term part
Long term part - securities 267 164 323 754 Accruals and deferrals 137 - - 137
Balance sheet position of long-term
19.4.
REGISTER OF FINANCIAL ASSETS EXPOSED AT CREDIT RISKAs at 2009-12-31
As at 2008-12-31
Financial assets available for sale 23 471 17 150 Loans and receivables 88 572 93 484 Cash in hand and at bank 4 698 3 648 Short term bank deposits 8 224 8 445 Cash in transit 4 543 3 577 Foreign currency forwards (51) 221
Total 129 457 126 525
In the above table there is displayed in the numeral form the maximum amount exposed at credit risk, due to granted loans, not obtained receivables, as well as the owned financial assets available for sale, cash and cash equivalents.
In order to decrease the said risk the Companies have intensified debt recovery actions and shortened the payment period for the services delivered to counterparties. Moreover, mutual settlements (compensations) are gradually being introduced.
19.5. CASH AND CASH EQUIVALENTS
As at 2009-12-31
As at 2008-12-31
Cash in hand and at bank 4 698 3 648 Short term bank deposits 8 224 8 445 Including interest calculated on deposits 15 17 Cash in transit 4 543 3 577
TOTAL CASH AND CASH EQUIVALENTS 17 465 15 670
* In the position „Short-term bank deposits" interest calculated on short term bank deposits are treated as cash and cash equivalents.
For the purpose of the cash flow statement, cash and cash equivalents cover bank overdraft on the current account – the table below has been adjusted by the interest calculated on short-term bank deposits.
As at 2009-12-31
As at 2008-12-31
Cash and cash equivalents 17 450 15 653 Overdraft in the current account (36 033) (37 299)
Cash and cash equivalents adjusted by the overdraft on the current account
(18 583) (21 646)