Note 1 - Beerenberg

Financial risk management
This is due to higher/lower interest costs on variable rate
loans.
Credit risk
Credit risks are assessed at Group level. The Group’s financial
assets that are exposed to credit risks are predominantly
trade receivables. Trade receivables mostly concern multinational
oil companies and independent oil and gas companies,
including companies that are wholly or partially owned
by foreign governments. The Group has also taken out credit
insurance for all customers that are not oil companies. The
Group handles its exposure to credit risk by carrying out
continual credit checks of customers, and it makes provisions
for losses on doubtful accounts.
Routines are incorporated to ensure that sales are only made
to customers with satisfactory credit worthiness. The provisions
made for losses on doubtful accounts are based on the
management’s best estimate of probable losses on outstanding
balances from customers and take into account a number
of factors, primarily receivables aging reports, past experience,
customer concentration, the customer’s financial
strength and reputation.
If an independent credit rating of a customer is available,
it will be used when determining a credit limit. If no independent
assessment of the customer’s credit worthiness is
available, an assessment is carried out on the basis of the
customer’s financial position, history and other factors as
appropriate. Individual limits for risk exposure are set on
the basis of internal and external assessments of credit
worthiness and of guidelines provided by the board of directors.
Our customers are predominantly large international
oil companies or government-owned oil companies. Such
companies generally have very good credit ratings.
The Group has routines in place for applying credit limits,
and the routines are reviewed regularly.
No credit limit was exceeded during the period, and the
management does not expect to incur any losses in relation
to non-payment of accounts receivable.
The Group and Beerenberg Corp. AS have not provided any
warranties that pose a significant risk.
Beerenberg Corp. AS is jointly and severally liable for the
parent company Beerenberg Holding AS’ debts to Fokus
Bank.
Liquidity risk
The Group is exposed to liquidity risks relating to the repayment
of debts and payments to suppliers. Cash flow forecasts
are created for each operating unit within the Group and
aggregated at Group level. Rolling forecasts for the Group’s
liquidity requirements are monitored centrally to ensure
that the Group has sufficient cash equivalents to meet
operating-related liabilities at all times. Such forecasts take
into account the Group’s planned loans, compliance with
borrowing terms and compliance with internal targets for
reporting figures.
Excess cash at the Group entities beyond that which constitutes
necessary working capital is transferred to the Group’s
finance function. The Group’s finance function invests excess
cash in interest-bearing cash deposit accounts, choosing
instruments with appropriate maturity dates and liquidity
in order to obtain sufficient flexibility as determined by the
above-mentioned forecasts. On the reporting date, the Group
had bank deposits of NOK 26.5 million plus an unused overdraft
of NOK 90 million, designed to meet the liquidity risk.
Note 13 shows the Group’s interest-bearing financial liabilities
classed according to maturity structure. Classification is carried
out according to the due date stated in the contract. The
amounts in the table are undiscounted contractual cash flows.
Risk relating to capital management
The Group’s objectives for capital management are to sustain
the Group’s position as a going concern in order to generate
a return for its owners and other interested parties and
to maintain an optimal capital structure in order to reduce
the cost of capital.
In order to improve its capital structure, the Group can
adjust the level of dividends paid to shareholders, issue new
shares, or sell assets to repay loans.
Just like other Groups in this sector, the Group monitors its
management of capital on the basis of the level of gearing in
the Group. The level of gearing is calculated by dividing net
interest-bearing debts by 12 months’ rolling EBITDA (earnings
before tax, interest, depreciation and amortisation).
EBITDA is calculated on the basis of operating profit or loss
less depreciation and amortisation, while net interest-bearing
debts are calculated on the basis of total interest-bearing
debts less bank deposits and cash equivalents.
Beerenberg CORP. AS Group group accounts 2012
47