Cloudberry Annual report 2022 Financial statements 116 Currency risk The Group presents its financial statements in NOK. However, Norwegian power companies sell the power through Nord Pool where EUR is the official trading currency. Electricity Certificates are traded in SEK. Several of the Groups development projects in Sweden also have costs which are denominated in SEK. Further, the Group’s investment in Odal Vind AS and Forte Energy Norway AS is exposed to EUR in its entirety. Consequently, the Group is exposed to currency risk. Any fluctuations in exchange rates between NOK, SEK and EUR could materially and adversely affect the Group’s business, results of operations, cash flows, financial condition and/or prospects. The Group is also exposed to currency risk by having employees and operations in Sweden. Any fluctuations in exchange rates between NOK and SEK could materially and adversely affect the Group’s business, results of operations, cash flows, financial condition and/or prospects. The Group may want to do business in other countries in the future, exposing the Group to additional currency risk, as shown in the signed share purchase agreement with the Odin portfolio as described in note 29 Subsequent events. Should it choose to do so, any fluctuations in exchange rates between NOK and the relevant foreign currency could materially and adversely affect the Group’s business, results of operations, cash flows, financial condition and/or prospects. The Group has significant contractual cash flow obligations in other currencies, especially related to investments or capital expenditures on power plants under construction, these are either in EUR (turbine suppliers) or in the local currency where the investment or construction project is located. The Group seeks to minimize the risk related to these cash flows by entering currency forward contracts that match the contractual cash out flows or buying/swapping the necessary amount to the relevant currency so that the risk of change in FX rate have limited impacts of the investment/project profitability. The Group holds deposits in local currency (NOK, SEK and EUR) in order to match future obligations and has entered future currency swap contracts for the larger obligations to limit the exposure to future exchange rate fluctuations. The Group has not currently applied hedge accounting for these arrangements. Sensitivity analysis Currency gains and losses on monetary items in foreign currency are recognised in the income statement of the Group. The table below shows the sensitivity to a reasonable change in SEK and EUR exchange rate to the Groups consolidated financial assets and liabilities: (only significant exposures are included in the table): NOK million 2022 2021 Change in SEK (5%) (5%) Effect on cash and cash equivalents (4) - Effect on group receivables and liabilities (14) (2) Change in EUR (5%) (5%) Effect on cash and cash equivalents (1) (8) Effect on group receivables and liabilities - (5)
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