## Risk 

## Liquidity levels 

As a high growth company, we need to balance the need for liquidity with the avoidance of short-term overdrafts and bank charges. 

## Currency fluctuations 

The majority of Dialog’s revenue, material costs and R&D expenses, to some extent are in US dollar currency. There are, however, foreign exchange risks associated with other expenses such as wages and building rent, recognised assets and liabilities in other currencies, primarily the euro, the pound sterling and Japanese yen. 

## Creditworthiness of customers 

Dialog trades with selected customers on credit terms and receivable balances, which could create a risk of bad debts. 

## Actions 

We structure the maturity of our current financial assets in the Group to meet 100% of the respective maturities and liabilities. We monitor our liquidity on a quarterly basis, with the objective of avoiding interest on short-term bank liabilities or overdrafts. 

Dialog has no long-term debts except for those associated with the US$201 million convertible bond launched in March 2012 with a five-year conversion. 

Over a short period in 2012, Dialog used US$10 million in credit facilities to temporary finance a peak in working capital. At the end of the year no overdraft was drawn. 

We use forward-currency contracts to hedge our exposure associated with the payment of non-US dollar wages, office rent and other expenses. We maximise the effectiveness of our currency hedges by matching the terms and conditions of the hedge to those of the underlying obligation. We typically use forward-currency contracts up to a maximum of 12 months out. 

During 2012, Dialog continued to effectively hedge the majority of its currency exposure. 

We view all our customers as having high creditworthiness. However, we have factoring agreements with two reputable financial institutions who assume all risks associated with the collection of receivables from selected customers. 

