Amadeus IT Holding, S.A. and Subsidiaries - Investor relations at ...

AMADEUS IT HOLDING, S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED
DECEMBER 31, 2011, AND 2010
(EXPRESSED IN THOUSANDS OF EUROS - KEUR)
The Group’s foreign currency forward contracts are measured using quoted forward
exchange rates. Interest rate swaps are measured discounting the cash flows
estimated based on the applicable interest rate curves derived from quoted interest
rates. As such, the financial assets or liabilities on our statement of financial position
resulting from these derivative financial instruments that are measured at fair value
(see note 21), would fall within the level 2 category of the fair value hierarchy.
The financial assets on our statement of financial position that are classified as
available for sale, are mainly cash and cash equivalents, and other investments in
equity instruments that do not have a quoted market price in an active market, and
are measured at cost because their fair value can not be measured reliably .
The Group estimates that the carrying amount of its financial assets and liabilities is
a reasonable approximation of their fair value, except for the bonds issue financial
liability which has carrying amount of KEUR 744,167 (note 17) and a fair value of
KEUR 762,008 (101.6% of its face value).
b) Doubtful debt provision, factoring and cancellation provision
The Group’s doubtful debts provision at December 31, 2011, amounted to KEUR
75,048, and for financial year ended at December 31, 2010 this provision amounted
to KEUR 79,346. The movement in the doubtful debts provision is as follows:
45
31/12/2011 31/12/2010
Carrying amount at the beginning of the year 79,346 78,708
Additional amounts through income statement 31,377 24,471
Write-off amounts (9,108) (1,757)
Unused reversed amounts through income statement (26,688) (21,062)
Acquisition / Disposal of subsidiaries - (1,118)
Transfer to assets held for sale - (694)
Translation changes 121 798
Carrying amount at the end of the year 75,048 79,346
Trade receivables of the Group include amounts which were past their due date at
2011 year-end, but against which the Group has not recognised doubtful debt
provision because there has not been a significant change in credit quality and the
amounts are still considered recoverable. Among other factors, that credit risk is
mitigated by the fact that the majority of our customers’ accounts receivables and
payables are settled through the clearing houses operated by the International Air
Transport Association (“IATA”) and Airlines Clearing House, Inc. (“ACH”). Through this
system we guarantee that cash inflows from our customers will be settled at a certain
fixed date, and we mitigate the credit risk partially by the fact that the members of the
clearing house are required to make deposits that would be used in the event of
default.