Today, Wavin - Jaarverslag.com

Wavin Annual Report 2010 | page 94ALLOWANCE FOR IMPAIRMENTThe credit risk from trade receivables is measured and analysed on a local level, mainly by aging analyses. Credit insurancecovers are taken into account when establishing the allowance for impairment. The aging of the trade receivables and (theallocation of the) allowance for impairment at the reporting date were as follows:(€ x 1,000) 2010 2009GROSS IMPAIRMENT GROSS IMPAIRMENTNot past due 190,524 833 163,473 444Past due 0-30 days 27,572 831 29,685 195Past due 31-90 days 12,249 987 14,553 746Past due 91-180 days 6,471 641 7,327 1,171Past due 180-360 days 5,537 1,774 4,361 1,329More than 1 year 9,959 7,562 8,682 7,349Total trade receivables 252,312 12,628 228,081 11,234The share of overdue trade receivables decreased compared to last year. At balance sheet date 24% of trade receivableswas overdue against 28% last year. Impairment charges for doubtful debts amounted to € 3.3 million which is comparable tolast year.The movement in the allowance for impairment in respect of trade receivables during the year was as follows:(€ x 1,000) 2010 2009Balance at 1 January 11,234 9,604Acquisitions/divestments – 14Charged to income statement 4,333 4,228Released to income statement (1,020) (797)Utilisation (2,095) (1,715)Effect of movements in exchange rates 176 (100)Book value at 31 December 12,628 11,234INVESTMENTSThe Group limits its exposure to credit risk by only investing in liquid securities. Transactions involving derivative fi nancialinstruments are with counterparties that have high credit ratings (minimum at investment grade) and with whom we have asigned netting agreement. Given their high credit ratings, management does not expect any counterparty to fail to meet itsobligations.Liquidity risksLiquidity risk is the risk that the Group will not be able to meet its fi nancial obligations as they fall due.Cash fl ow generation and suffi cient access to capital markets is secured to fi nance long term growth, capital expenditures,seasonal working capital requirements, expected operational expenses and to service fi nancial obligations. Wavin’s mainsource of fi nancing is a € 500 million Syndicated Loan Facility that expires in October 2011 and a Forward Start Facility of€ 475 million starting in October 2011 and expiring in April 2013. The facilities consist of a term loan and revolving facilities.In November 2010 the interest margin of the Syndicated Loan Facility and Forward Start Facility was amended. Theamendment was realised with full consent of the syndicate of lending banks. The margins of both facilities were renegotiatedresulting in an annual saving of € 3.5 million starting on 24 November 2010. The € 500 million Syndicated Loan Facility andthe € 475 million Forward Start Facility remain in place. With the current fi nancing facilities in place, Wavin is adequatlyfunded, even if trading conditions remain challenging, and will have suffi cient liquidity when markets recover further. Wavinexpects even in continuing challenging trading conditions to be compliant with the covenants. In case Wavin cannot meet thetarget ratios defi ned for the leverage ratio and interest coverage ratio the facility might, if so requested by the majority of thelenders, be cancelled at once and borrowings under the facility may become due and payable immediately. The covenantcalculations per year end and per half year are assessed by our external auditor. Per year end the external auditor used theaudited fi gures as basis for their assessment.