The group’s financial business is managed based on a financial policy elaborated by the board of directors and is in general subject to only low levels of risk. Financial business and financial risk management is coordinated via the parent company Betsson AB, which is also responsible for placing excess liquidity. Subsidiaries are mainly financed via the parent company. The wholly owned operational subsidiaries are themselves responsible for managing their financial risks within a framework set by the board of directors after coordination with the parent company.
Betsson is an international company with operations that are constantly exposed to different currencies. Exchange rate changes affect the consolidated income. The company endeavours to reduce currency exposure through effective cash management and currency hedging. The group will continue, however, to be exposed to exchange rate differences to a greater or lesser degree.
Consolidated income is exposed to foreign exchange risks, as some sales are made in different currencies to expenses (transaction exposure). Income is also affected by changes in exchange rates when income from foreign subsidiaries is translated to SEK (translation exposure). In addition, the company’s equity is affected by changes in exchange rates when assets and liabilities in foreign subsidiaries are translated to SEK (translation exposure). The foreign companies are mainly financed by equity and, where required, intragroup loans in the currency of the parent company. The equity of foreign subsidiaries is not hedged at the moment. Exchange rate differences from the translation of foreign net assets are recognized directly in consolidated equity.
Refinancing risk, liquidity risk and capital management
Group operations are self financed. Betsson’s goal has traditionally been to restrict borrowing, with an equity ratio of at least 40 per cent. The group’s tangible fixed assets mainly consist of IT hardware and inventories. It is assessed that future investment in tangible fixed assets can be financed by internally generated funds or through leasing. It has been assessed that the need for external financing may arise when expanding Betsson’s operations and in conjunction with major company acquisitions. Our aim is to mainly make acquisitions through cash payments and/or issues of own stock.
Interest rate risks
The group’s income and cash flow from operations are in all essentials independent of changes in market interest rate levels. The group’s excess liquidity is placed on short-term deposit with banks, and at present the group has no external loans. Changes in interest rate have little impact on group income.
Counterpart risk and credit risks
The group’s financial transactions give rise to credit risks with financial counter parties. Betsson is not exposed to any material credit risk concentrations. Gaming activities on the internet involve a credit risk for the operator. However, the credit risk associated with eCommerce is distinct from the credit risk associated with other credit card transactions. For its own protection, Betsson has implemented internal systems which are a significant impediment to fraud. Betsson assesses that its present measures are adequate to give reasonable protection against fraud and credit risks.