Annual Report 2003 - Nobel Biocare Corporate

NOBEL BIOCARE ANNUAL REPORT 200333earnings impact of estimated EUR0.9 million on an annual basis.Credit riskCredit risk is defined as the risk thatthe Group will make a loss whencounterparties are unable to performtheir undertakings. A credit risk arisesboth when liquid funds are investedand in the form of counterparty riskswhen derivatives are entered into.Credit risk is handled and assessedcentrally. To reduce the credit risk,Nobel Biocare only deals with counterpartieswith high credit ratings. Excesscash in local companies is placed intragroup,either through the usage ofcash pools or by implementing aninvestment with the Treasury Department.No external investments longerthan 12 months are permitted. Regardingthe commercial credit risk, noindividual customers represent a significantportion of the Group’s revenue.Liquidity riskLiquidity risk is defined as the risk thatthe Group will not have liquid fundsavailable to complete its undertakings.CurrencySEKIn order to have liquid funds onhand at all times, the Group shouldalways have funds corresponding toone month of total expenses available.The funding policy limits therefinancing risk by not permittingrefinancing of more than 50 percentof the debt portfolio during thefollowing 12 months.Risks related tooperationsThe risks related to operations in amedical technology company such asNobel Biocare include those associatedwith quality assurance, regulatoryaffairs, patient safety, employees,supply chain, legal issues and intellectualproperty rights.The development cycle for NobelBiocare’s operations is normally farshorter than that in the pharmaceuticalindustry. It often takes between oneand two years from concept to launch.This means that uncertainty relatingto clinical trials, for example, doesnot represent a decisive risk for thecompany.Hedged anticipated currency flowsSecuredaverage rateSecured (%) (to SEK) 31 Dec 03EUR 62% 9.14 9.09USD 64% 7.87 7.28JPY 56% 0.0692 0.0680CAD 52% 5.82 5.56CHF 49% 5.94 5.83GBP 59% 13.03 12.91AUD 66% 5.36 5.43HKD 60% 1.00 0.94DKK 66% 1.23 1.22NOK 63% 1.11 1.08Transaction effect (EUR K)Unsecured (%) 31 Dec 03 +/–10%EUR 38% 9.09 2 480USD 36% 7.28 536JPY 44% 0.0680 587CAD 48% 5.56 452CHF 51% 5.83 494GBP 41% 12.91 241AUD 34% 5.43 185HKD 40% 0.94 44DKK 34% 1.22 75NOK 37% 1.08 7210Translation effect (EUR M)86EUR/SEKUSD/SEK1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Source: SIX/Hallvarsson & HalvarssonThe table shows the effect on consolidated revenue,EBITA and EBIT as a result of one percent decrease inthe value of the respective currency.USD SEK OtherRevenue -1.1 -0.3 -0.8EBITA -0.4 0.4 -0.4EBIT -0.4 0.4 -0.4