Investors

Risk and Risk Management

Transtema’s business activities are exposed to various types of risk that may lead to incidents or have a material financial impact on the Group and its ability to achieve its objectives. At the same time, effective risk management can create opportunities. Transtema conducts ongoing risk assessments to build knowledge and awareness throughout the organisation, enabling it to develop strategies to mitigate and manage these risks.

The Board of Directors has overall responsibility for the company’s risk management. The chief executive officer is responsible for day-to-day risk management in accordance with the guidelines issued by the Board. The company applies a structured risk management process in which each risk area is addressed through various risk-mitigation measures. The most significant risks are described below within the following areas: external risks, operational risks and financial risks.

External risks

Economic conditions and inflation

A weak economy or economic downturn in Transtema’s markets may result in lower market growth and profitability. Inflation may make it more difficult for Transtema to obtain compensation for higher costs. Geopolitical developments may also have an adverse effect on both economic conditions and inflation.

Politics and regulations

New European Union directives, national laws and regulations may affect the markets in which Transtema operates.

Competitors

The markets in which Transtema operates include many local competitors, several national competitors and a small number of Nordic competitors. If Transtema is unable to develop and offer competitive products and services, the company may be adversely affected.

Operational risks

Acquisitions

There is a risk that Transtema’s acquisitions will not deliver the anticipated results in terms of synergies, economies of scale and profitability. If this occurs, Transtema’s growth and profitability may be adversely affected.

Organisational changes

In a changing market, Transtema will continuously need to review potential and necessary organisational changes. There is a risk that these changes will not deliver the anticipated results in terms of synergies, efficiency improvements and profitability. This could impair both Transtema’s competitiveness and its ability to deliver.

Dependence on individual customers and/or contracts

A small number of Transtema’s customers account for a relatively large share of total revenue. Contract renegotiations and/or a reduction in business from these customers may have an adverse effect on revenue and profitability.

Employees and key personnel

Employees are Transtema’s largest and most important asset. The company depends on its employees in general and certain key personnel in particular. If Transtema is unable to provide the right personnel, with the right expertise, in the right place and at the right time, the company may be adversely affected.

Contract fulfilment and monitoring

Transtema manages a large number of different projects. Any shortcomings in ongoing project management may result in a risk of non-payment for work performed. In addition, inadequate monitoring may result in projects failing to generate the expected return.

Financial risks

Liquidity

Transtema finances its operations through cash flow from its ongoing operations, equity and external borrowing. Adequate liquidity is essential for continued investment and growth. If Transtema does not have access to liquidity on market terms, the company may be adversely affected, as its ability to participate in larger tenders or make investments in the business would be reduced.

Interest rates

Transtema has interest-bearing debt. Interest rates and margins may vary significantly over time due to macroeconomic and competitive factors affecting the financial markets. A material increase in base rates or margins could have an adverse effect on Transtema.

Foreign exchange

Transtema is exposed to a degree of foreign exchange risk arising from transaction exposure or translation exposure. Changes in exchange rates may have an adverse effect on the Group’s profitability.

Value of tangible and intangible assets

A significant proportion of Transtema’s assets consists of intangible assets, primarily goodwill and other identifiable intangible assets. If future impairment tests indicate a reduction in the value of intangible assets, this may have an adverse effect on the Group’s profitability and financial position.