Exposure to risk is a natural part of business activity, and because of this, IES has a risk management plan. It focuses on identifying risk, preventing risks arising and preparing action-plans that enable any damage these risks may cause to be limited.
Many risks can be eliminated through internal processes, while others that lie outside the company’s control to a greater extent can be minimized using various policies, action-plans and training.
There are a number of factors that affect, or could affect, IES’s operations, results of operations or financial position, which may result in the company’s share price falling significantly, and investors risk losing all or part of their investment.
The main risks related to IES and its operations are:
- IES’s turnover depends on demand for the schooling that IES provides. In turn, this demand depends on over-arching trends within schooling. If these trends do not sustain or if demand reduces, due to alternative education, changed levels of ambition in terms of education, a deteriorated labor market or fewer jobs, or an altered political climate, for example, this might have a negative impact on demand for the schooling IES provides;
- Any future changes or limitations in the potential to operate schools for profit may result in IES’s market share reducing, and could limit IES’s growth potential and profitability, or limit its potential for paying dividends to shareholders. This latter limitation would be especially tangible in a listed environment where regular dividend payments can be an important factor for shareholders. The aforementioned factors could have a material negative impact on IES’s operating activities, financial position or results of operations;
- IES operates in a highly regulated market, and accordingly, is affected by changes to laws, regulation and regulators’ interpretations and practices. Accordingly, legal reform or changes to ordinances and regulations or amendments of the related interpretations, may have a material negative impact on IES’s operating activities, results of operations and financial position;
- IES is dependent on school voucher funding, which is determined at nationwide and municipal level. Accordingly, there is a risk that limitations to compensation, as well as alterations to education and compensation systems, may have material negative impact on IES’s operating activities, financial position and results of operations;
- IES may be subject to scrutiny and adverse publicity relating to independent school operators, which may result in IES losing students, and growth potential, thus having a material negative impact on IES’s operating activities, financial position or results of operations;
- IES is dependent on being able to hire and retain competent staff and managers on competitive terms. If IES is unable to attract and retain competent staff on reasonable salary and other employment terms, there is a risk that IES will be unable to conduct its operations effectively, or achieve its operational and financial targets. In turn, this may have a material negative impact on IES’s operating activities, financial position and results of operations;
- IES is dependent on various approvals and permits in order to be able to conduct its operations, including permits for schooling operations from the Swedish Schools Inspectorate, permits for using school buildings and permits relating to the working environment and environmental regulations. It is by no means certain that these permits and approvals, which are necessary for operations, will be secured, retained or renewed (where applicable) on reasonable terms, or costs. If the receipt of permits and approvals is delayed, or they are not forthcoming, or if IES does not satisfy the terms applicable for any of the permits and approvals that IES has obtained, this may have a material negative impact on IES’s operating activities, financial position or results of operations; and
- IES is dependent on finding premises that are appropriate for its operations and maintaining lease contracts, it is also exposed to the risk of damage to leased premises and is restrained by long-term lease contracts. If, when necessary, IES is unable to cancel contracts or sub-let premises, these lease contracts may exert a negative impact on profitability, and obstruct, delay, or render expansion more costly. The occurrence of any of these circumstances could have a negative impact on IES’s operating activities, financial position and results of operations;
There may be risks that the company is currently unaware of that may be of material significance to the company’s operating activities, financial position and/or results of operations.