Risks
Current situation
Train Alliance’s interim reports provide ongoing updates on the current position regarding “Risks, estimates and judgements”. See the Reports and presentations page for the Company’s latest interim report (only available in Swedish).
Risks and uncertainties
Train Alliance is running several major projects, both in the detailed development planning phase and in the execution phase. These projects involve operational risks in the form of cost increases, delays, regulatory decisions and customer-related demand. For construction contracts exceeding SEK 100 million, the main part of the execution risk is borne by the contractor, and the Group has to date not incurred any material losses on construction contracts.
The Company’s business depends on access to financing for major investments, such as SMARTCargo and Landskrona, and on long-term demand for rail-adjacent logistics and workshop facilities. Delays in national infrastructure plans, regulatory decisions, changes in regulations or unexpected changes in economic conditions may affect the timing of project execution and realisation.
Financial risks in the Group
Through its operations, the Company and the Group are exposed to various types of financial risk. Financial risks refer to undesired changes in the Company’s income statement and balance sheet resulting from fluctuations in the financial markets. The Group’s finance policy for managing financial risks provides a framework of guidelines and rules for financial operations with respect to the risks described below.
Liquidity risk
Liquidity risk is defined as the risk that the Group will not have access to cash and cash equivalents to meet anticipated and unanticipated commitments, or that financing can only be obtained at a significant cost.
Currency risk
The Company and the Group operate mainly in the Swedish market, but certain purchases are made in euro. Since the Company’s reporting currency is SEK, translation differences will arise when preparing financial reports. However, these will mainly consist of unrealised exchange differences, as components and services are to some extent purchased in euro. The Group therefore has some currency exposure.
Interest rate risk
Like other companies that raise financing in the capital markets, the Company is exposed to interest rate risk. Smaller companies can at times find it difficult to obtain external financing in the capital markets. For the Company and the Group, this means, among other things, that the Company primarily turns to Swedish banks and credit institutions. These lend mainly in Swedish kronor at Swedish interest rates and offer the possibility of fixing the interest cost over the term of the loan, which is preferable.
Financing risk
Borrowed capital is secured against real assets as underlying collateral. Swedish banks and credit institutions periodically reassess their principles for which assets they accept as collateral, which constitutes a refinancing risk when loans mature.
Counterparty risk
The Company and the Group are exposed to counterparty risk. This mainly consists of problems that may arise if the Company’s customers, suppliers or other stakeholders encounter financial or other difficulties that cause payment of the Company’s and the Group’s receivables to be delayed or not made at all. Monitoring of the business environment and close follow-up of counterparties’ financial position are therefore priority activities.