Page 21 - Kitron Annual Report 2011

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Notes to the consolidated financial statements
and because the company’s goods and services
are subject to price pressures. Routines have been
established for procurement by the company’s own
sourcing organisation, which negotiates group con-
tracts. The sourcing function allows Kitron to achieve
improved material prices.
The company is exposed to price risk on share prices
in Available-for-sale financial assets. However, these
investments are insignificant and the company has not
established specific measures in order to reduce this
risk.
Credit risk
Credit risk arises from cash and cash equivalents,
deposits with bank and receivables. The bulk of the
group’s accounts receivable are credit insured as part
of the company’s factoring agreement. Kitron accord-
ingly bears credit risk only for accounts receivable
which are not insured. The company has routines to
ensure that uninsured sales on credit are made only to
creditworthy customers.
Liquidity risk
Cash flow forecasting is performed in the operat-
ing entities of the group and aggregated by group
finance. Group finance monitors rolling forecasts of
the group’s liquidity requirements to ensure it has
sufficient cash to meet operational needs while main-
taining sufficient headroom on its undrawn committed
borrowing facilities at all times so that the group does
not breach borrowing limits or covenants on any of its
borrowing facilities.
Kitron’s financing is primarily short-term and based on
factoring finance for accounts receivable. This means
that fluctuations in turnover affect the company’s
liquidity. In addition, drawing facilities have been es-
tablished in banks which counteract the liquidity fluc-
tuations related to turnover.
The table below shows the group’s financial loans in-
cluding interest into relevant maturity groupings based
on the remaining period at the balance sheet date to
contractual maturity date.
Liquidity risk
Periods to maturity of financial liabilities including interest:
Less than Between one
Between two
More than
(Amounts in NOK 1000)
one year and two years and five years
five years
At 31 December 2011
Bank overdraft
37 007
-
-
-
Leasing
14 980
16 117
43 102
-
Factoring debt
209 973
-
-
-
Other financial loans
-
-
16 442
-
Trade and other payables
285 314
-
-
-
Other provisions
29 677
-
-
-
At 31 December 2010
Bank overdraft
15 850
-
-
-
Leasing
12 358
20 611
22 093
-
Factoring debt
210 916
-
-
-
Trade and other payables
294 174
-
-
-
Other provisions
23 481
-
-
-