Investor Presentation
Risk factors (cont'd)
Risks relating to the use of sub-contractors
The Group's ability to service its customers depends to some extent on the availability of local sub-contractors as the subsidiaries of the Company frequently uses local sub-contractors across the markets to conduct the property
damage restoration services. If the Group cannot secure an appropriate sub-contractor for a specific job, it may have an adverse effect on services provided to the customer. Further, the use of sub-contractors requires the Group to
monitor its so called "back-to-back"-protection, i.e. to make sure that any claim from a customer against the Group that relates to work carried out by the sub-contractor, can be passed on to the sub-contractor. The back-to-back-
protection is also necessary when it comes to handling of personal data to avoid responsibility towards customers, in case the Group's sub-contractors are not in compliance with relevant personal data legislation. Should the Group be
unable to secure appropriate sub-contractors to conduct its services, this would adversely affect the Group's ability to conduct its services in a satisfactory manner, and if the Group is unable to receive compensation from the sub-
contractor and/or should the sub-contractor not be in compliance with relevant personal data legislation, this would result in additional costs for the Group and adversely affect the earnings and financial position of the Group.
Agreement risk
The Group generally does not accept larger projects for a fixed fee, but should the Group's internal procedures not be followed when quoting for an assignment and such assignment is accepted at a fixed fee, there is a risk that the
relevant project becomes more expensive for the Group than expected, resulting in an adverse effect on the Group's margins and consequently its earnings.
Risks relating to liability for damages incurred by the performance of the services
The Group is generally liable for damages that is incurred by the performance of the services, or performed by a sub-contractor to the Group, and sometimes without a monetary cap. Should the Group not have sufficient and/or
adequate insurance coverage in place, or should the back-to-back protection as mentioned above have gaps, the liability for damages incurred by the performance of the services and the subsequent increase in costs as a consequence
of any such obligation to pay damages, could result in an adverse effect on the earnings and financial position of the Group.
The Group depends on the financial health of its customers
The Group's customers may face financial or other difficulties which may affect their operations and cause them to cancel or reduce their level of purchases from the Group, which could adversely affect the Group's business and
earnings. Customers may also respond to any price increase that the Group may implement by reducing, or even terminating, their purchases from the Group, which could result in reduced sales for the Group. If sales of the Group's
services to one or more of its largest customers are reduced, this reduction may have an adverse effect on the Group's earnings. Any bankruptcy or other business disruption involving one of the Group's significant customers could also
adversely affect the Group's earnings or financial position.
Risks relating to inadequate insurance coverage and procedures
The Group mainly holds insurance policies covering general liability and product liability. If the Group is unable to maintain adequate insurance policies this may result in certain claims, e.g. from customers relating to property restoration
projects, not being covered by an insurance policy. Further, inability to implement adequate procedures regarding filing and notifying the relevant insurance company may lead to claims, although covered by the insurance, being barred
and the Group thus not receiving any compensation. If the Group is unable to maintain adequate insurance coverage or adequate filing procedures, this could have an adverse effect on the Group's business, earnings or financial
position.
Legal and regulatory risks
Medium level risks
Risks relating to bribes, corruption and anti-competition behaviour
The Group is required to comply with anti-corruption, anti-bribery laws and competition laws in the countries in which the Group operates its business. Furthermore, the Group and the sub-contractors used by the Group, operate in
different kind of fields relating to the construction industry. The construction industry in general is considered a high-risk industry when it comes to different kinds of anti-competitive behaviours, and has historically been exposed to legal
disputes relating to bribery and cartels. The Group's operations could be adversely affected if the Group would, whether or not it is justifiable, become associated with illegal activities or otherwise unacceptable business methods,
become the subject of investigations by competition authorities, find itself subject to an enforcement action or is found to be in violation of such laws or regulations. Such enforcement actions, associations or investigations could result in,
inter alia, significant penalties, fines and/or sanctions being imposed on the Group, a negative perception of the Group among its current and future customers, problems in relationships with important contracting parties, e.g. insurance
companies, or an adverse effect on the Group's ability to conduct major acquisitions, all which could have an adverse effect on the Group's business, earnings or financial position.
SUPPORTING MATERIALS | POLYGON 49View entire presentation