Notes for P&L
Note 23 Financial risks and risk management
Group and Parent Company
The Group’s activities expose it to a variety of financial risks.
Financial risks mean fluctuations in the company’s earnings and cash flow due to variations in exchange rates, interest rates and risks relating to refinancing and credit issuance. The Group’s financial policy for managing financial risks has been prepared by the Board and comprises a framework of guidelines and rules in the form of risk mandates and limits for financing activities. Financial transactions and risks are managed by the Parent Company’s Finance function.
The objectives are to:
- Manage and control financial risks.
- Minimize the negative earnings impact of market changes in currencies and interest rates.
- Plan and ensure adequate liquidity for operating activities.
- Optimize the use of capital and cash flows.
Financing risk
Financing risk is the risk of access to financing capital, and the price of financing capital varying, with the risk of unfavorable terms.
Liquidity risk
Liquidity risk is the risk that the Group encounters problems meeting its obligations associated with financial liabilities. The Group has rolling liquidity planning, which is updated monthly. The Group’s forecasts cover a minimum of six months of rolling liquidity planning over the medium term. Liquidity planning is used to manage liquidity risk and the cost of financing the Group.
The aim is that the Group should be able to meet its financial commitments and have the necessary contingency well in advance. It should be possible to offset upturns and downturns without incurring significant unforeseen costs. Available liquidity in the Group at year end amounted to SEK 12,1 M (109,9). In accordance with the Finance Policy, there should always be sufficient cash and cash equivalents and confirmed credit lines to cover short-term liquidity requirements.
The company’s accounts payable amounted to SEK 39,9 M (103,5).
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will vary due to changes in market prices. IFRS divides market risks into three types; currency risk, interest rate risk and other price risk. It is primarily currency risk that affects the Group, while the Group is not exposed to interest rate risk following the repayment of the convertible bonds during 2024.
The Group’s aim is to manage and control market risks within specific parameters and simultaneously optimize the results of risk-taking within specific parameters. These parameters are established with the aim of ensuring that market risks have only a marginal impact on the Group’s earnings and financial position in the short term (6-12 months). However, protracted changes in exchange rates will impact consolidated earnings in the longer term.
Currency risk
The risk that the fair value and cash flows of financial instruments will fluctuate when the value of foreign currencies changes. The main exposure is derived from the Group’s sales and purchases in USD. These currency risks comprise the risk of fluctuations in the value of financial instruments, accounts receivables and accounts payable and the currency risk inherent in expected and contractual payment flows. Such risks constitute transaction exposure.
According to the Finance Policy, currency exchange risks should not be hedged. USD-denominated net surpluses are exchanged to SEK on a continuous basis. Net profit/loss for the year includes exchange rate differences amounting to a positive SEK 35.4 M (pos: 5.9) in operating profit/loss and a positive SEK 0.2 M (0.0) in the financial net.
Transaction exposure
As per the balance sheet date, the Group’s transaction exposure with regard to sales and materials was in the following currencies.
| SEK M | Net flows |
|---|---|
| 2024 | |
| USD exposure expressed in SEK and total | 104.0 |
| 2023 | |
| USD exposure expressed in SEK and total | 124.2 |
The transaction exposure has not been hedged.
Sensitivity analysis
A 10 percent change in the value of the Swedish krona against other currencies as of 31 December 2024, would result in shareholders’ equity and net profit for the period changing by SEK 11 M (51). The sensitivity analysis is based on all other factors remaining unchanged.
Credit risk
The company insures most of its accounts receivable through a third party.
Capital management
The company aims to maintain a strong capital base to support the continued development of the business and to ensure financial stability. Our capital management policy aims to optimize the capital structure and ensure access to financing on competitive terms. To manage the capital, the company uses the following processes:
- Capital structure monitoring: Regularly reviewing and adjusting the capital structure to ensure that it is aligned with the company's strategic objectives and market conditions.
- Risk management: Identification and management of financial risks, including liquidity risks, to minimize potential adverse effects on the company's financial position.
- Financing strategy: Maintaining a diversified funding base through a combination of equity and other sources of funding to ensure long-term financial flexibility.