Annual Report 2011 - Kongsberg Maritime - Kongsberg Gruppen

2 INTRODUCTION
7 DIRECTORS’ REPORT AND
18 FINANCIAL STATEMENTS
64 CORPORATE GOVERNANCE
76 FINANCIAL CALENDAR AND ADDRESSES
14
KONGSBERG Annual Report 2011
consists of operating profit before depreciation and
amortization (EBITDA) of MNOK 2,394 net of taxes and
adjusted for changes in net current assets and accruals.
MNOK 799 of the cash flow from operations was in
investing activities, of which MNOK 438 is related to the
purchase of property, plant and equipment. In 2011, a
dividend of MNOK 450 was paid to the shareholders. Net
receipts of MNOK 25 are related to financing activities.
This provides a net cash flow in 2011 of MNOK 419.
Capital management
The Group’s equity at 31 December 2011 was MNOK 5,484
or 35.1 per cent of total assets. Book equity increased by
MNOK 603 during 2011.
The Group’s cash balance (cash less interest bearing
debt) at 31 December 2011 was MNOK 2,191 (MNOK 1,813).
Gross interest-bearing debt mainly consists of two bond
issues totaling MNOK 800. The Group has an undrawn
syndicated loan facility of MNOK 1,000, which expires in
July 2015. The loan facility requires that net debt does not
exceed three times EBITDA, but can be up to 3.5 times
EBITDA for a maximum of three quarters.
KONGSBERG’s operations reflect a long-term perspective
on performance and strategy. This calls for predictable
access to capital over time. Accordingly, one of the Group’s
goals is to maintain a good credit rating with its lenders and
investors.
Currency
KONGSBERG’s currency policy is that the contractual
currency flows are mainly hedged using forward contracts
(project hedges). Additionally, a portion of expected new
orders is hedged in line with the currency policy (forecast
hedges).
At the end of 2011 the balance of forward contracts
related to the project hedges was MNOK 8,063 measured
at hedged rates. At 31 December 2011 these forward
contracts had a net value of MNOK 32. In addition, the
Group had MNOK 3,561 in forecast hedges measured at
hedged rates, consisting of forward contracts. At 31
December 2011 the forecast hedges had a total net value
of MNOK 24.
Risk factors and risk management
The Group is exposed to different types of risks, and the
Board monitors closely trends in the various risk areas. The
Board has an Audit Committee to help deal with accounting
and relevant discretionary items, and to follow up internal
control, compliance and risk management. The Audit
Committee will meet as a minimum, in connection with the
issue of annual and interim financial statements.
The Board reviews operations reports on a monthly
basis, and the administration prepares quarterly risk reports.
The Board is of the opinion that there is a good balance
between the overall risk and the Group’s capacity to deal
with risk. In addition to routine day-to-day risk management,
the Board and the administration perform risk
analysis when considering major investments, tenders,
initiatives and acquisitions.
Financial risk
KONGSBERG has a centralized financial risk management.
The Board has adopted guidelines for financial risk management,
which is included in the Group’s financial policy.
KONGSBERG aims to balance the financial risk and to
establish predictability. KONGSBERG is exposed to financial
risks such as credit, liquidity and refinancing, foreign
exchange, interest rate and market risk associated with
financial investments.
Credit risk is the risk of loss if a contract partner is not
fulfilling its obligations. The customer base is diversified and
consists primarily of governmental institutions and large
private companies. Historically, the Group has had modest
losses on receivables. The development in the global
economy in general and shipbuilding and shipping industry
in particular, has to some extent increased the credit risk in
recent years. As a result, measures are taken to limit the
risk exposure.
Liquidity and refinancing risk is the risk that KONGS-
BERG will be unable to meet its financial obligations as they
fall due. At 31 December 2011 the Group has an undrawn
syndicated loan facility of MNOK 1,000, which runs until
July 2015. The Group also has two bond loans respectively
MNOK 300 and MNOK 500, with maturities of 30 March
2012 and 14 April 2014. At 31 December 2011 KONGSBERG
had a net cash balance of MNOK 2,191.
A large proportion of the customers of the Group are
foreign, and a large portion of the revenue is in foreign
currency. As a result, the Group’s revenues are affected by
fluctuations in the exchange ratio between the Norwegian
kroner (NOK) and other currencies. The Group reduces the
foreign currency risk through a firm currency policy. The
currency policy of KONGSBERG means that the contractual
currency cash flows are mainly hedged using forward
contracts (project hedges). Additionally, the Group hedges
a portion of the expected new orders according to the
established policy (project hedges). The policy regulates
how much of the expected order income to be hedged,
depending on the timing of the expected order income and
currency levels. In this way, the Group seeks to mitigate the