Financial Risks


Financial risks affect the business’s ability to provide the business with sufficient funding and liquidity to operate and develop the business according to the business plan.

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Risk

1. Re-financing risks
Risk regarding ability to provide the Group with sufficient funding
With respect to growth plans and access to capital markets/bank institutions.
Rating: Unchanged compared to last year

2. Liquidity Reserve Risk
Risk that the Group does not have a sufficient liquidity reserve
Due to inefficient cash management planning or un-expected events with heavy cash-flow implications.
Rating: Increased probability compared to last year

3. Accounts receivable risk
Risk that acquiring banks/institutions stop cash in-flow
Credit-rating of the Group can affect decision to release accounts receivables.
Rating: Unchanged compared to last year

4. Currency risk
Currency risk – operational transactions
Due to operational cashflow in different exchange rates (selling of goods and purchase of goods)
Rating: Increased probability compared to last year

Mitigation of risk

1. Re-financing risks
The risk is mitigated by adopted policies regarding target debt ratios, maturity date spreads for funding of the group and a risk diversification policy regarding financial counterparties (e.g. minimum number of banks).

2. Liquidity risk
The Group faces two seasonality low points in liquidity per fiscal year. The Group shall strive to have a sufficient liquidity reserve. During low-points the Group has access to a revolving credit facility to ensure a sufficient
liquidity reserve. The reserve also serves to mitigate the impact of general macroeconomic uncertainty and operational disturbances.

3. Liquidity risk
The Group’s current cash position is strong, and the Group has access to a revolving credit facility. Prices for inventories are set when putting orders, but paid when received which gives sufficient time to plan cash
management.

4. Currency risk
The transactional exposure is managed primarily through natural hedges, meaning that procurement is carried out in the same currency as inflow from revenue. The Group constantly evaluates if currency hedges shall be enforced.

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