Annual report 2012 - Comrod

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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
Annual report 2012 11/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesat the end of 2011. This represents a reduction invalue of 38.2 % during 2012, while the Oslo StockExchange’s benchmark index (OSEBX) increasedby 15.4 % in the same period.In 2012, Comrod’s shares were traded on 74 of the251 trading days. Average daily transactions werelow. A total of 1.2 million shares were traded in2012 (2011: 4.2 million), which corresponds to 5.5% (2011: 21.0 %) of the total number of shares.The Group’s market capitalization was NOK 79.5million at the end of 2012, compared to NOK 117.1million at the end of 2011.As a Group with a relatively low market value, it ischallenging to gain sufficient attention from stockanalysts and the media. The market cap and lowliquidity are also factors impacting on institutionalinvestors’ appetite for investing in Comrod.Compensation of Senior ExecutivesAs a leading player in its field, ComrodCommunication ASA aim to offer salariesattracting top-grade managers. The Board’spolicy is to offer salaries being competitive inan international market in order to secure amotivated and well qualified management.The basic principle is that management salariesmust be at a competitive level in a nationalcontext (this may mean that salary levels formanagers based abroad may sometimes exceedlevels for corresponding positions in Norway, andvice versa).The Group’s policy is that the salary of seniorexecutives shall be almost entirely in the formof a fixed monthly salary that reflects a levelappropriate for the position held by the personconcerned and normal business practice.The Remuneration Committee sets the salaryand other remuneration of the CEO. TheRemuneration Committee also sets the salary andother remuneration of key members of the Groupmanagement team in consultation with the CEO.Pursuant to Norwegian company legislation, theBoard of Directors has also prepared guidelines forthe remuneration of the executive management tobe presented and discussed at this year’s generalmeeting. Details of remuneration and contractualarrangements may be found in note 25 of thefinancial statements of Comrod Communication Group.Statement related to the Annual AccountsThe consolidated financial statements for 2012have been prepared and presented in accordancewith IFRS. The financial statements for the parentcompany have been prepared in accordance withthe Norwegian Accounting Act (NGAAP).The Board of Directors confirms that, to thebest of its knowledge, the financial statementsfor 2012 provide a true and fair view of ComrodCommunication Group’s consolidated assets,liabilities, financial position and results ofoperations. The Board also confirms, to the bestof its knowledge, that the annual report includes afair review of important events that have occurredduring the year and their impact on the annualfinancial statements.No significant events have occurred after the yearendbalance sheet date.11
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