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noteS TO THE CONSolidated FINANCIAL StatementS
conSolidated FINANCIAL StatementS FOR THE Year ENDED 31 DECEMBER 2011
2. CREDit Risk
Credit risk is the risk of loss due to a contracting party’s default in payment or non-payment. The Group counters
this risk by establishing internal limits for contracting parties – determined through internal solvency analyses –
and taking out adequate insurance. Credit risk is limited to the amounts reported in their balance sheets.
A standardized specific bad-debt allowance was recognized for all receivables overdue.
The following is a breakdown of trade receivables overdue:
EUR thousand 31 Dec 2011 31 Dec 2010
Receivables not yet due 88,680 83,951
Receivables impaired
Overdue for less than 30 days 20,485 15,602
Overdue for more than 30 days but less than 60 days 5,701 5,035
Overdue for more than 60 days but less than 90 days 2,681 1,210
Overdue for more than 90 days but less than 120 days 630 651
Overdue for more than 120 days 2,698 4,062
32,195 26,560
Total 120,875 110,511
Other receivables do not include any receivables overdue. In the case of receivables not yet due there is no
indication of bad-debt losses.
When investing funds, only banks with investment grade ratings are chosen. Credit risk is limited to the amounts
reported in the balance sheet.
3. FOReign EXCHange Risk
Foreign exchange risk is a form of risk that arises from the change in price of one currency against another.
The value of a financial instrument may be affected by changes in the currency exchange rate.
The Group’s international activities account for payment transactions in different currencies. Through local value
creation, excessive amounts of foreign exchange items are minimized by way of natural hedges. The resulting
foreign exchange exposure is hedged using adequate hedging instruments. Foreign exchange cash flows from
operations are hedged by means of foreign exchange forwards (cash flow hedges).
The supply of finished products and components from Europe to North America creates a risk position in
US dollars that is not covered by natural hedges. The ongoing analyses of this position are the basis for
establishing a hedging strategy that is evaluated in regular meetings.
Financial transactions may only be concluded on the basis of a relevant hedged item. Speculative transactions
(i.e. transactions without an underlying operating item) are prohibited.
The Group’s foreign exchange positions and hedges are constantly monitored, analyzed with regard to the risk
sensitivity of the Group and subjected to stress testing. In accordance with the requirements of IFRS 7, PALFINGER
calculated the effects of changes in the main foreign exchange rates relevant for the Group on PALFINGER’s equity.
The effects calculated primarily result from changes in the fair values of PALFINGER’s hedging instruments. A 10-per cent
increase in value of the US dollar as at 31 December 2011 would have decreased equity (presentation of the cash
flow hedge) by an additional EUR 1,458 thousand (previous year: EUR 730 thousand); a 10-per cent decrease in
value would have increased equity by EUR 1,193 thousand (previous year: EUR 629 thousand).
Foreign exchange differences in the individual financial statements are reported in earnings before interest and
taxes (EBIT) and/or the net financial result, depending on their cause.
palfinger Annual Report 2011
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