External Capital

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Kitron’s debt strategy is to support the overall financial flexibility of the group, and ensuring competitive terms and conditions on the group’s debt.

Kitron’s debt is largely short-term and related to factored accounts receivable (DnB Finans). The group has overdraft facilities with its main banking partner DnB that cover expected liquidity fluctuations during the year. A small share of the external capital is long-term.

The group’s interest-bearing debt attracts interest cost at the market based rate. Kitron has no financial instruments related to interest rates. The group does not hold any significant interest-bearing assets.

The gearing ratios at 31 December 2016 were as follows (amounts in NOK 1000):

Total borrowings

350 264

Cash and cash equivalents    

(134 413)

Net debt

  215 851

Total equity

  584 799

Total capital

  800 650

Gearing ratio

27%

As of 31 December 2016 the total outstanding debt was NOK 350.3 million and split as follows (amounts in NOK 1000):

Long-term loans    

 

Leasing debt

18 466

Bank loans

42 996

Current loans

  

Debt to credit institutions

57 040

Factoring debt 

207 336

Leasing debt

9 954

Other   14 456

Outstanding debt split per currency (amounts in NOK 1000):

NOK                       

169 072

SEK   

 46 032

EUR  

 9 647

USD

64 257

CNY  

61 256

Total   

650 264


Effective interest rates at 31 December 2016 in NOK

 
0.9% – 6.0%

Debt secured by mortgages at 31 December 2015

350 264

Carrying amount of assets provided as security (amounts in NOK 1000):

Buildings and land

57 093

Machinery and equipment    

52 707

Cash   14 310

Receivables   

374 862

Inventory

334 023

Total

832 994

The company's financing agreements include covenants relating to such factors as the company's equity, earnings and borrowing base.