Annual report 2012 - Comrod

Annual report 2012 10/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesThe current trends towards greater mobility andtechnologically more advanced communicationsolutions are drivers for the Group’s products.These trends are considered to be persisting forthe foreseeable near future.The Group is exposed to fluctuations in exchangerates, particularly in EUR and USD, as a largeproportion of the Group’s revenue is in foreigncurrency .The currency risk is reduced by meansof foreign forward exchange contracts, foreigncurrency loans and by purchasing products inforeign currency. This also reduces operationalmarket risk. The Group is also exposed to currencyrisk related to the investment in Comrod France.This is partly offset by a long-term currency loanin the same currency (EUR).The Group has no netting agreements in place orother financial instruments to minimize credit risk.Liquidity RiskNo short term measures to change the liquidityrisk is likely to be introduced. On the balancesheet date, short-term interest-bearing liabilitiesamounted to NOK 26.2 million including NOK 1.6million of next year’s instalments of long-termliabilities. The Group will seek to keep the totallevel of short-term credit from lending institutions,excluding next year’s instalments on long-termliabilities, below NOK 50 million. There aresignificant variations in net working capital andutilization of credit facilities between quarters dueto seasonality.The Group is exposed to interest rate changesregarding loans in both NOK and EUR.Credit RiskThe risk of a counterpart not having the financialcapacity to fulfil its obligations is consideredlow. The Group’s gross credit risk was NOK 45million on the balance sheet date, The amountin 2011 was NOK 66 million. NOK 15 millionof the accounts receivable at end of 2012 wasfrom Comrod France, which has credit insurancecovering 100% of the outstanding amount. Thisfurther reduces the total credit risk of the Group.In 2012, one of the Group’s customers accountedfor 21 % of revenues (see note 4 and note 24 ofthe consolidated accounts). This customer is amajor corporation with a strong balance sheet.Credit risk insurance, LOC or other receivablesinsurance, is used for customer portfolios consideredto represent a substantial counterpart risk.Raw Materials RiskAgreements relating to the purchase of rawmaterials represent a large part of the Group’sfinished products. These are normally signedon an annual basis, with an agreed price andquantity for the term of the agreement. TheGroup endeavours to have the same commitmentperiods in its raw materials purchasingagreements as in its agreements for the sale offinished products. Access to raw materials hasnot been constraining. Apart from fixed-pricecontracts with suppliers, no alternative ways arebeing considered for hedging the Group’s mostimportant raw materials using derivatives orfinancial contracts.Share Price DevelopmentComrod Communication ASA has a nominal sharecapital of NOK 21.5 million and each share has anominal value of NOK 1.00. At the end of 2012the share price was NOK 3.70, while it was 5.9910