Risk management

Risk description
Demand for Bilia’s products and services are influenced by fluctuations in the business cycle and the Car Business is the part of the operations that are influenced most by changes in the business cycle. In a recession, customers can postpone or refrain the car purchase. Factors that are significant include, among others, interest rate levels, labor market, stock market, financial option and fuel prices. Reduced demand for cars may also affect the value of cars in inventory and cars sold with guaranteed residual values. Also events such as ongoing wars in Ukraine and the Middle East, pandemics and natural disasters can have significant direct or indirect consequences for Bilia’s market and turnover, such as government lock down and product shortage. 

Opportunities and management
The Service and Fuel Businesses are less impacted by changes in the business cycle since cars require service, repairs and fuel regardless of the state of the economy. Sales of used cars are less affected by changes in the business cycle as customers choose a used car over a new car in these situations. However, a deep recession could also affect the Service Business and sales of used cars. Events such as ongoing wars, pandemics and natural disasters are managed in line with government rules and recommendations, the aim being to continue with business as usual as far as possible. 

Risk description 
Bilia’s core business consists of distribution and servicing of cars, transport vehicles and trucks in four countries. For new car sales, Bilia needs the approval from the respective general agent, as there are no special rules governing competition for new car sales in the EU. A car manufacturer and/or general agent can unilaterally recall a sales authorisation and terminate the sales agreements with Bilia. BMW, Volvo, Toyota, Mercedes-Benz and Volkswagen are now the largest car manufacturers/ general agents for Bilia. A recall or termination, a changed content and/or balance between
the manufacturer/general agent and Bilia in the authorisation agreement could have significant negative impact on Bilia’s operations.

Opportunities and management
Bilia is not dependent on one single manufacturer/general agent, but has several business partners, which reduces the risk compared to being dependent on just one manufacturer/ general agent. Sales of used cars and the Service Business are not subject to the approval from the general agents for establishment and expansion of business. Bilia is working on finding new business partners and growth opportunities, in line with the prevailing growth strategy. Good relations with car manufacturers/general agents are a focus area to enable expansion and reduce the risk of sales authorisation for new cars being recalled. Bilia is constantly working to enhance and develop its customer relations with the aim of maintaining a strong position on the market.

Risk description 
Regulatory decisions that lead to changes in taxes, charges, subsidies and restrictions on the products Bilia sells can influence both demand for and the valuation of cars in inventory and cars sold with guaranteed residual values.
Tax rules regarding green cars have changed frequently in recent years for our countries and are expected to do so in the coming years as well. Bilia’s operations can be effected by public opinion and government decisions mainly relating to climate and environmental issues. Government decisions that restrict the freedom of movement of individuals, may affect Bilia’s ability to conduct business in both the Car Business and the Service Business.

Opportunities and management
New regulatory decisions and changes in opinion can result in higher or lower demand for Bilia’s products and services. Favourable tax rules regarding green cars can lead to increased demand for the cars that meet the set requirements. Adapting operations to changes in laws and regulations is an ongoing process, and is achieved by monitoring relevant regulatory changes and analysing possible measures. Products and services are adapted continuously based on public opinion.

Risk description 
Bilia currently sells cars and services from facilities, but also has digital sales channels for used cars and accessories. Change initiatives are underway regarding digital business channels and business models for sale of new cars. If all the car manufacturers/general agents that Bilia works with should move, fully or partly, to their own sales channels, this could have an adverse impact on Bilia’s business. New players, mainly for car sharing and fossil-free cars, are interested in establishing operations in our countries.

Opportunities and management
Bilia's sales currently take place via various business models, such as traditional retailer and agent model. Bilia follows the development of new business models and new sales channels and will adapt its business to market conditions as necessary. New business models can make a positive contribution to Bilia’s financial position regarding risk and capital tied up. Bilia continuously works on strengthening and developing its customer relationship to maintain a strong position on the market. Bilia follows the development of new players in our operating countries and continuously
evaluates future possible partners. 

Risk description
Bilia is dependent on the ability of the Group’s business partners to develop competitive products that incorporate the technological advances. One example is development of fossilfree car models to meet the UN’s 17 global SDGs. The tax systems on green cars, especially in Sweden and Norway, impact the demand on car models that fulfills these requirements. Chargeable cars can have a negative effect on Bilia’s Service Business, as the need for service for fossil-free cars is believed to be lower than for cars powered by fossil fuels.

Opportunities and management
Through a broad brand portfolio, Bilia has business partners who are well- stablished with the financial resources to ensure the products' competitiveness and technological development. Bilia’s business partners currently offer several fossil-free cars and assesses to be well equipped to follow the technological development to meet the UN’s 17 global SDGs by 2030 as well as the current tax systems from the governments. The launch of new fossil-free car models is planned by our business partners. Investments in equipment in our workshops are made as well as training for our mechanics. New services are developed to meet the needs of fossil-free cars in the Service Business.

Risk description
Bilia is dependent on the ability of the Group’s business partners to develop competitive products that incorporate the technological advances. One example is development of fossilfree car models to meet the UN’s 17 global SDGs. The tax systems on green cars, especially in Sweden and Norway, impact the demand on car models that fulfills these requirements. Chargeable cars can have a negative effect on Bilia’s Service Business, as the need for service for fossil-free cars is believed to be lower than for cars powered by fossil fuels.

Opportunities and management
Through a broad brand portfolio, Bilia has business partners who are well- stablished with the financial resources to ensure the products' competitiveness and technological development. Bilia’s business partners currently offer several fossil-free cars and assesses to be well equipped to follow the technological development to meet the UN’s 17 global SDGs by 2030 as well as the current tax systems from the governments. The launch of new fossil-free car models is planned by our business partners. Investments in equipment in our workshops are made as well as training for our mechanics. New services are developed to meet the needs of fossil-free cars in the Service Business.

Risk description
There is a future risk that Bilia will not be successful in recruiting or keeping competent people to the extent that is requested. Both management and employees contribute with knowledge about the business and the operation and actively participate in developing own concepts and services. People with a vehicle technical competence is a scarce resource, which may influence future growth within the Service Business negatively

Opportunities and management
Bilia has strong results in the annual employeew survey compared to other companies. Bilia focus on keeping and further improve the environment for our key persons and employees to keep being an attractive employer. Bilia works actively together with schools to contribute to make the vehicle technician profession more attractive and to contribute to a good quality on the education that is offered.

Risk description
Bilia leases most of the facilities for the operations. As a tenant, Bilia may become dismissed from the lease at the end of the rental period, which would mean that Bilia would lose strategic business locations. Bilia can be negatively affected by climate-related risks, such as floods and landslides, when climate change occurs. If contamination should be confirmed at any
of Bilia’s facilities, there is a risk that Bilia may be held responsible for decontamination of the facility. Such decontamination may be associated with considerable costs.

Opportunities and management
To lease facilities give Bilia flexibility to adjust the number of facilities. Bilia works to future proof the business for climate change and assesses that the current risk is limited. Bilia works, as an integrated part of its operations, to
minimise the negative effect on the environment. Most of our facilities in Sweden and Norway are certified according to ISO 14001 and are yearly reviewed by external certification body. Bilia has routines and processes to ensure that laws and regulations are followed.

Risk description
As part of realising Bilia’s strategic growth target, businesses are acquired. If the status of the acquired operations were to differ significantly from what was known before the acquisition, or if the integration of the operations would fail,
it could influence Bilia negatively. 

Opportunities and management
Through acquisitions, Bilia improves its operations from a strategic and financial perspective. New operations are continuously integrated and follow-up versus expected performance is made during the integration period to early identify and act on any deviations.