THE COMPANY » INVESTOR RELATIONS » CORPORATE GOVERNANCE » GROUP STATUS REPORT » CONSOLIDATED FINANCIAL STATEMENTS » INFORMATION
In the KTM Group, default risks are hedged to a great extent by bad debt insurance on the one hand and bank securities on the other (guarantees, letters of credit). Internal guidelines define the default risks and give procedures for controlling them. When derivative financial instruments have a positive market value, the default risk is limited to the costs of replacing them. Given that the contract parties are solely banks with high credit ratings, the risk involved can be classed as low. On the asset side, the amounts shown represent the maximum default risk. Apart from the agreement described in item (21) of the notes to the consolidated financial statements, there are no other general offsetting agreements. The book values of the receivables can be broken down as follows:
TEUR
Book value
Thereof:
Therof: not reduced in value on balance sheet date
neither
and overdue in the following time periods
Thereof: reduced
reduced in
Up to
30 to
60 to
Over
value nor
30 days
60 days
90 days
90 days
1,746
2,342
4,898
4,396
in value
in overdue on balance sheet date December 31, 2011 Trade accounts receivable
53,594
36,898
3,315
Other financial receivables (short-term and long-term) Total
8,464
8,169
267
0
0
28
0
62,058
45,067
2,013
2,342
4,898
4,424
3,315
57,257
39,158
5,912
2,774
5,918
460
3,034
December 31, 2010 Trade accounts receivable Other financial receivables (short-term and long-term) Total
5,714
5,567
2
0
0
146
0
62,971
44,725
5,914
2,774
5,918
606
3,034
Regarding the recognized financial trade and other receivables that are neither reduced in value nor in arrears, there are no signs on the balance sheet date that the debtors will not honor their payment obligations.
Liquidity Risks A major aim of financial risk management in the KTM Group is to ensure liquidity and financial flexibility at all times. For this purpose, a liquidity reserve in the form of unused credit lines (cash and guaranteed credit) – and if required in the form of cash in hand – is held at banks with a high credit ranking. In view of the global financial crisis, which has also had an immediate effect on the commercial banks used by the KTM Group, securing short and medium-term liquidity is top priority. Moreover, an important regulating factor is the maximization of free cash flow through cost-cutting measures, proactive working capital management as well as reduced investment expenditures. From today’s perspective, there are adequate assurances regarding the credit ratings of the group’s strategic financial partners and therefore for securing short-term liquidity reserves.
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