The Group is exposed to various operational and financial risks in its operation. Operational risks include market changes and sensitivity to economic trends. Financial risks include effects from changes in currency exchange rates and interest rates. In 2006, a new business system for managing and following up risks was implemented. It improves control over Cybercom's financial risks.
Operational risks
Market changes
A few companies dominate the telecom market. This trend led to signing frame agreements with a few consultants and suppliers. Cybercom now has frame agreements for all large business relationships. Together these amount to 78% of net sales.
Sensitivity to economic downturn
Customers adapt their businesses and IT investments to market conditions. Cybercom positioned itself so that market swings have a limited effect on business and revenue. Cybercom offers turnkey solutions in close co-operation with customers.
Acquisitions
Company acquisitions constitute part of Cybercom's growth strategy. Cybercom has developed a strategic method to insure that integration occurs as quickly and efficiently as possible
Customers
Cybercom's 10 largest customers account for 78% of its income. Cybercom has maintained long-term relationships with many of its customers.
Competitors
Market fluidity means that the players, customer propositions, and pricing models constantly change. Establishing a niche and positioning itself in relationship to other players enables a company to create its own market sphere. Cybercom has a clear, niched offering.
Recruitment and skills
Skilled consultants are a prerequisite for successfully implementing customer projects and satisfying customers. When hiring personnel, Cybercom strongly emphasises skills and experience, and it actively works to ensure that it has access to the right skills and expertise.
Sensitivity analysis
This summary shows effects on operating profit from a 1% change in certain factors, calculated on the 2006 outcome. Recognised effects should be seen independently of each other and presume that other factors have not changed.
| +/-1% |
SEK million |
| Price to customer |
3.7 |
| Debiting/charging level |
2.2 |
| Number of consultants |
0.5 |
| HR costs |
3.0 |
Financial risks
Currency
In 2006, sales in the foreign subsidiaries in Denmark, Norway, Singapore, the UK, and Cybercom's joint venture in India accounted for 16% of the Group's total sales. The Group's net assets are exposed to currency conversion risks in Danish and Norwegian krona, British pound, Singapore dollar, and Indian rupee.
Receivables and cash and cash equivalents can be partly in Swedish currency and partly in foreign. Foreign currency is valued at the closing day rate as per stated accounting policies. Receivables are valued individually and requisite allowances are made. Derivative instruments are used to manage large exposures to fluctuation risks in foreign currency exchange rates.
Interest
Group income and cash flow from operations do not depend on changes in the market's interest rate. The Group has interest-bearing assets in the form of a bank balance.
Credits
The Group had no liabilities to credit institutions at the end of the accounting period.
Cash and cash equivalents
Caution is exercised when handling liquidity risks, which involves maintaining sufficient cash and cash equivalents and saleable securities. Any excess liquidity is placed in low-risk, interest-bearing funds
Expenses
HR cost is the largest cost item, representing 63% of total expenses.
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