Note 31 – Financial risk management
In its operations, BE Group is exposed to a number of financial risks. The management of these risks is regulated through the Group’s finance policy. The finance policy is established by the Board and provides a framework for BE Group’s management of the financial risks in its operations. BE Group maintains a centralized finance function that is responsible for identifying and managing the financial risks in accordance with the established policy. The finance function reports to the President and CEO of BE Group.
BE Group’s ongoing operations cause a number of financial risks. These consist of market risk (currency and interest risk), refinancing risk (liquidity risk) and credit risk. The goals that have been established in the finance policy are stated under the respective heading below.
Market risk
Market risk is the risk that fluctuations in market rates, such as interest and exchange rates, will impact the Group’s profits or financial position.
Currency risk
By reason of its international operations, BE Group is exposed to currency risk through exchange rate fluctuations. BE Group’s currency exposure comprises both transaction exposure and translation exposure.
Transaction exposure
Transaction exposure arises when the Group conducts purchasing in one currency and sales in another, meaning that the transaction exposure is attributable to accounts receivable and payable. The Group’s purchases are denominated mainly in SEK and EUR, while sales are denominated in local currency. BE Group’s objective is to minimize the short-term and long-term impact of movements in foreign exchange rates on the company’s profit and equity. This is mainly achieved by matching revenues and expenses in business transactions with currencies other than SEK. When matching cannot be achieved, the Group sometimes utilizes forward contracts for currency hedging. All currency hedging is performed by the Group’s central finance function in the Parent Company.
During 2023, BE Group’s transaction exposure in EUR amounted to EUR 92 M (142), consisting of the difference between actual purchasing and sales in EUR. The Group mainly makes its purchases in EUR while sales are in local currency. The real effect of the transaction exposure affected operating profit/loss by SEK 1 M (-12). Based on income and expenses in foreign currency for 2023, it is estimated that a change of +/- 5 percent in the SEK against the EUR would give an effect of about +/- SEK 6 M in the operating result. On the balance sheet date, the Group had operating liabilities of EUR 10 M net and financial liabilities of EUR 14 M.
Translation exposure
As of the balance sheet date, net assets are allocated among the following currencies:
| Amount | SEK M | ||
| Belopp | MSEK | ||
| SEK | SEK | 1,038 | 73% |
| EUR | EUR | 390 | 27% |
| Others | Övriga | -4 | 0% |
| Total | Summa | 1,424 | 100% |
The Group’s earnings are affected by the currency rates used in the translation of the results of its foreign units. Based on conditions in 2023, it is estimated that a 5 percent strengthening of the SEK against the EUR would entail an effect of SEK +3 M on operating result in the translation of the earnings of foreign units.
Interest risk
Interest risk is attributable to fluctuations in market interest rates and their effect on the Group’s loan portfolio. Consolidated interest-bearing liabilities are mainly subject to variable interest or short terms of fixed interest.
At the end of the year, the total interest-bearing debt excl. IFRS 16 was SEK 334 M (407). Interest-bearing assets in the form of cash and bank balances amounted to SEK 74 M (50).
A change in interest rates of one percent would affect consolidated net financial items by approximately SEK +/- 3 M and consolidated equity by approximately SEK +/- 3 M. The sensitivity analysis has been conducted on the basis of current net debt at the end of the period.
The table below details the consolidated interest-bearing liabilities outstanding at December 31, 2022 and December 31, 2023.
Loan terms, maturity structure/fixed rate terms and fair value
| Nominal amount in original currency | Carrying amount (SEK M) | Fixed interest rate No of days | Interest rate on the balance sheet day | Maturity | |||||||||||
| (SEK M) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||
| Nominellt belopp i originalvaluta | Redovisat värde (MSEK) | Räntebindning Antal dagar | Räntesats på balansdagen | Förfall | |||||||||||
| (MSEK) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||
| Factoring | Factoring | EUR M | MEUR | 14 | 14 | 152 | 155 | rörlig | rörlig | floating | floating | 5.05% | 3.10% | 2026 | 2024 |
| Factoring | Factoring | SEK M | MSEK | 182 | 252 | 182 | 252 | rörlig | rörlig | floating | floating | 5.05% | 3.60% | 2026 | 2024 |
| accrued interest | upplupen ränta | – | – | ||||||||||||
| Total financial liability | Total finansiell skuld | 334 | 407 | ||||||||||||
| Of which, current liability | Varav kortfristig skuld | – | 1 | ||||||||||||
| Parent Company 1) | Moderbolag 1) | ||||||||||||||
| Bank loan, SEK | Banklån SEK | SEK M | MSEK | – | – | – | – | – | – | – | – | – | – | – | – |
| Bank loan, EUR | Banklån EUR | EUR M | MEUR | – | – | – | – | – | – | – | – | – | – | – | – |
| accrued interest | upplupen ränta | – | – | ||||||||||||
| Total interest-bearing liabilities, Parent Company | Räntebärande skulder totalt, moderbolag | – | – | ||||||||||||
| Of which, current liability | Varav kortfristig skuld | – | – | ||||||||||||
| Total interest-bearing liabilities, Group | Räntebärande skulder totalt, koncern | 334 | 407 | ||||||||||||
| Of which, current liability | Varav kortfristig skuld | – | 1 | ||||||||||||
The recognized amount for interest-bearing liabilities constitutes a good approximation of the fair value.
Refinancing risk (liquidity risk)
BE Group is a net borrower and a refinancing risk arises in connection with the extension of existing loans and the raising of new loans. Access to external financing, which is affected by factors such as the general trend in the capital and credit markets, as well as the borrower’s creditworthiness and credit capacity, may be limited and there may be unforeseen events and costs associated with this. The borrowing strategy focuses on securing the Group’s borrowing needs, both with regard to long-term financing needs and day-to-day payment commitments. BE Group works to maintain satisfactory payment capacity by means of unutilized credit facilities and through active control of its working capital, which is the main item affecting the Group’s liquidity.
Maturity structure, financial liabilities
| Financial liabilities | |||
| 2023 | 2022 | ||
| Finansiella skulder | |||
| 2023 | 2022 | ||
| Maturity within 90 Days | Förfaller inom 90 dagar | 566 | 536 |
| Maturity within 91–180 Days | Förfaller inom 91-180 dagar | 4 | 3 |
| Maturity within 181–365 Days | Förfaller inom 181-365 dagar | 8 | 9 |
| Maturity within 1–5 years | Förfaller inom 1-5 år | 354 | 423 |
| Maturity later than 5 years | Förfaller efter 5 år | 0 | 0 |
| Total | Total | 932 | 971 |
Credit agreement
In June 2023, a new credit agreement was signed with Skandinaviska Enskilda Banken. The total credit facility is SEK 775 M and it has a maturity of three years with an option for extension of another 1+1 years. The majority of the facility refers to factoring.
The performance measures measured are net debt/equity ratio and interest coverage ratio. The performance measures are measured quarterly, and the interest coverage ratio is based on the trend over the past 12-month period. On the balance sheet date, the Group has unutilized credit facilities in an amount of SEK 421 M (including overdraft facilities).
Credit risk
When entering into new business relations and extending existing ones, BE Group makes a commercial assessment.
The risk that payment will not be received on accounts receivable represents a customer credit risk. BE Group applies credit policies to manage this risk by limiting the outstanding credit extended and terms for various customers as well as a Group wide credit insurance. Short credit terms and the absence of risk concentrations towards individual customers and specific sectors contribute to reducing credit risk in Sweden and Finland.
The spread of risk among the customer base is satisfactory as no individual customer accounted for more than 7 percent (6) of sales in 2023. The ten largest customers combined accounted for about 19 percent (16) of sales.
Credit exposure arises in conjunction with placements of cash and cash equivalents but also in connection with trading in derivative instruments. BE Group manages the risk that a counterparty will default by selecting creditworthy counterparties and limiting the commitment per counterparty.
In all material respects, the Group’s credit exposure coincides with the carrying amount of each class of financial instrument.
Provision for accounts receivable
In order to calculate anticipated credit losses, accounts receivable have been grouped based on credit risk characteristics and the number of days of delay. The anticipated credit loss levels are based on the customers’ loss history. Historical losses are then adjusted to take into consideration current and prospective information about macroeconomic factors that can affect the customers’ possibilities of paying the receivable. The historical loss level is adjusted based on the anticipated changes in these factors. Accounts receivable are written off when there is no reasonable expectation of repayment. Indicators that there is no reasonable expectation of repayment include that the debtor fails with the repayment plan or that contractual payments are more than 90 days delayed. Credit losses on accounts receivable are recognized as credit losses – net within the operating result. Reversals of amounts previously written off are recognized in the same line in the income statement.
| Not overdue | Overdues 1-30 days | Overdues 31-90 days | Overdues more then 90 days | Total | |||||||
| Ej förfallna | Förfallet 1-30 dagar | Förfallet 31-90 dagar | Förfallet mer än 90 dagar | Summa | |||||||
| Group | Koncern | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Accounts receivable – gross | Kundfordringar – brutto | 480 | 621 | 46 | 48 | 6 | 6 | 5 | 8 | 537 | 683 |
| Loss | Förlustreserv | 0 | 0 | 0 | -1 | 0 | 0 | -5 | -7 | -5 | -8 |
| Expected loss % | Förväntad förlustnivå % | 0% | 0% | 0% | 2% | 0% | 0% | 100% | 88% | 1% | 1% |
Loss reserve
The changes in the loss reserve are specified below.
| 2023 | 2022 | ||
| Provision at January 1 | Avsättning vid årets början | 8 | 4 |
| Increase of loss reserve, change accounted for in income statement | Ökning av förlustreserven, förändring redovisad i resultaträkningen | 3 | 4 |
| Reversals of reserves | Återföring av reserv | -4 | 0 |
| Realized losses | Konstaterade förluster | -2 | 0 |
| Exchange rate differences | Valutakursdifferenser | 0 | 0 |
| Provision at December 31 | Avsättning vid årets slut | 5 | 8 |
Impairments
The Group has two kinds of financial assets that are in the application area for the model for anticipated credit losses:
– Accounts receivable attributable to sales of goods
– Cash and equivalents
Cash and equivalents are within the application area for impairments according to IFRS 9, the impairment that would come into question has been deemed immaterial. See above for information on anticipated credit losses regarding accounts receivable.
Valuation of financial assets and liabilities
In all material respects, fair value coincides with the carrying amount in the Balance Sheet for financial assets and liabilities. The total carrying amounts and fair value as per asset class are shown in the table below:
| Group | Measurement category |
| A | Financial assets and liabilities valued at fair value via profit and loss for the period |
| B | Amortized cost |
| C | Financial assets available for sale |
| D | Financial liabilities measured at amortized cost |
| Carrying value according to balance sheet | Of which, financial instruments covered by disclosure requirements in IFRS 7 | Group | Total carrying value | Fair value | ||||||
| 2023 | A | B | C | D | ||||||
| Assets | ||||||||||
| Redovisat värde enligt balansräkning | Varav finansiella instrument som omfattas av upplysningskraven i IFRS 7 | Grupp | Summa redovisat värde | Verkligt värde | ||||||
| 2023 | A | B | C | D | ||||||
| Tillgångar | ||||||||||
| Other securities held as non-current assets | Andra långfristiga värdepappersinnehav | 0 | 0 | – | – | 0 | – | 0 | E/T | |
| Non-current receivables | Långfristiga fordringar | 0 | 0 | 0 | – | – | – | 0 | 0 | |
| Accounts receivable | Kundfordringar | 532 | 532 | – | 532 | – | – | 532 | 532 | |
| Other receivables | Övriga fordringar | 58 | 5 | – | 5 | – | – | 5 | 5 | |
| Prepaid expenses and accrued income | Förutbetalda kostnader och upplupna intäkter | 30 | 12 | – | 12 | – | – | 12 | 12 | |
| Cash and equivalents | Kassa och bank | 74 | 74 | – | 74 | – | – | 74 | 74 | |
| Liabilities | Skulder | |||||||||
| Non-current interest-bearing liabilities | Långfristiga räntebärande skulder | 334 | 334 | – | – | – | 334 | 334 | 334 | |
| Current interest-bearing liabilities | Kortfristiga räntebärande skulder | – | – | – | – | – | – | – | – | |
| Non-current leasing liabilities 1) | Långfristiga leasingskulder 1) | 376 | 376 | – | – | – | 376 | 376 | – | |
| Current leasing liabilities 1) | Kortfristiga leasingskulder 1) | 103 | 103 | – | – | – | 103 | 103 | – | |
| Accounts payable | Leverantörsskulder | 528 | 528 | – | – | – | 528 | 528 | 528 | |
| Derivative 2) | Derivat 2) | 14 | 14 | 14 | – | – | – | 14 | 14 | |
| Other liabilities | Övriga skulder | 72 | – | – | – | – | – | – | – | |
| Accrued expenses and deferred income | Upplupna kostnader och förutbetalda intäkter | 99 | 33 | – | – | – | 33 | 33 | 33 | |
| Carrying value according to balance sheet | Of which, financial instruments covered by disclosure requirements in IFRS 7 | Group | Total carrying value | Fair value | ||||||
| 2022 | A | B | C | D | ||||||
| Assets | ||||||||||
| Redovisat värde enligt balansräkning | Varav finansiella instrument som omfattas av upplysningskraven i IFRS 7 | Grupp | Summa redovisat värde | Verkligt värde | ||||||
| 2022 | A | B | C | D | ||||||
| Tillgångar | ||||||||||
| Other securities held as non-current assets | Andra långfristiga värdepappersinnehav | 0 | 0 | – | – | 0 | – | 0 | E/T | |
| Non-current receivables | Långfristiga fordringar | 0 | 0 | 0 | – | – | – | 0 | 0 | |
| Accounts receivable | Kundfordringar | 675 | 675 | – | 675 | – | – | 675 | 675 | |
| Other receivables | Övriga fordringar | 37 | 6 | – | 6 | – | – | 6 | 6 | |
| Prepaid expenses and accrued income | Förutbetalda kostnader och upplupna intäkter | 27 | 6 | – | 6 | – | – | 6 | 6 | |
| Cash and equivalents | Kassa och bank | 50 | 50 | – | 50 | – | – | 50 | 50 | |
| Liabilities | Skulder | |||||||||
| Non-current interest-bearing liabilities | Långfristiga räntebärande skulder | 406 | 406 | – | – | – | 406 | 406 | 406 | |
| Current interest-bearing liabilities | Kortfristiga räntebärande skulder | 1 | 1 | – | – | – | 1 | 1 | 1 | |
| Non-current leasing liabilities 1) | Långfristiga leasingskulder 1) | 405 | 405 | – | – | – | 405 | 405 | – | |
| Current leasing liabilities 1) | Kortfristiga leasingskulder 1) | 94 | 94 | – | – | – | 94 | 94 | – | |
| Accounts payable | Leverantörsskulder | 480 | 480 | – | – | – | 480 | 480 | 480 | |
| Other liabilities | Övriga skulder | 101 | 0 | – | – | – | 0 | 0 | 0 | |
| Accrued expenses and deferred income | Upplupna kostnader och förutbetalda intäkter | 112 | 53 | – | – | – | 53 | 53 | 53 | |
1) Lease liabilities are reported at accrued acquisition value and no fair value is assigned.
2) Derivative instruments used for hedging purposes.
Fair value for long-term borrowing corresponds in all material respects with reported value as the borrowing runs at a variable interest rate and the own credit risk has not changed significantly. For other financial assets and liabilities, fair value corresponds in all material respects to reported value as they are short-term and the discounting effect is not considered to be significant.
Risk management and insurance
The responsibility for risk management within BE Group lies with the Group’s central finance function. The objective of these efforts is to minimize the total cost of the Group’s loss risks. This is accomplished by continually improving loss prevention and loss limitation in operations and through a Group-wide insurance solution.