Risk and sensitivity

Risk factors

Equity investments are associated with risks, and different factors influence the value of a share and the liquidity of the investment. Before an investor decides to invest in ScandBook shares, he should therefore consider the risk factors described below, as well as make a general assessment of the business environment.

Production plants

The business is dependent on ScandBook’s production plants. If any of these plants is destroyed or closed or if the equipment in the plants is seriously damaged, production and distribution of ScandBook’s products will be hindered or stopped.


Since there are seasonal variations in the demand for ScandBook’s products, it is of great importance for ScandBook that the Company is able to adapt the size of the workforce in relation to consumer demand by means of fixed-term employment. If restrictions should be imposed on fixed-term employment by changes in the law or other means, this could have a negative impact on the Company’s operations, earnings and financial position.

Labour relations

Approximately 75 percent of ScandBook’s employees in Sweden are members of, and represented by, GS – the trade union for the forestry, woodworking and graphics industries. In addition, a smaller number of employees are members of Unionen (the confederation of white-collar unions), the Swedish Association of Graduate Engineers and the Swedish Association of Graduates in Business Administration and Economics. Although the company has good relations with its employees and their unions, the possibility cannot be ruled out that problems could arise in the future.

Taxes and fees

ScandBook conducts its business operations in accordance with current tax legislation and the Swedish National Tax Board’s rules and requirements. However, the possibility cannot be ruled out that the Swedish National Tax Board could make a different judgement in certain matters than that made by the Company and that additional tax, social security contributions or tax surcharges could be imposed on ScandBook in such cases, which could have an adverse impact on the Company’s earnings and financial position.

Borrowing and interest rate risk

The Company intends to continue financing a portion of its business activities by borrowing from credit institutions. Loan agreements contain terms that impose restrictions on the Company (covenants). Borrowing entails certain risks for the Company’s shareholders. Among other things the Company could, in the event of dramatically altered circumstances on the Company’s markets, encounter problems obtaining new credit facilities and thereby have to use a larger portion of the cash flow for interest and principal payments.

Currency risk

A transaction risk arises in connection with trade and transactions with suppliers if payment is made in foreign currencies. ScandBook’s international operations entail sales in different currencies and thereby currency risk exposure. The currency risk is mainly in relation to euros (EUR), Norwegian kroner (NOK) and Danish kroner (DKK).

Future capital needs

It may at some time be necessary to procure capital to finance ScandBook’s future operations and further expansion. This may happen in a market situation that is less favourable than today. If the Company obtains financing by issuing shares or equity-related instruments, the Company’s shareholders may be subject to dilution, while debt financing, if such is available to the Company, may contain restrictive terms that may constrain the Company’s flexibility.

Customer concentration and customer dependence

A large portion of ScandBook’s turnover stems from a limited number of customer groups among the large Scandinavian publishers. ScandBook has signed framework agreements with some of these customers, but they do not contain any volume guarantees or exclusivity provisions. ScandBook is therefore dependent on maintaining relations built up over a long time with these major customers.

Dominant position

The possibility cannot be ruled out that ScandBook may be considered by the competition authorities to have a dominant position on one or more markets. If ScandBook should be considered to have a dominant position on a market, the competition regulations would impose requirements and restrictions on ScandBook’s agreements and business arrangements with its customers.


ScandBook operates on an international market and has a number of competitors on its geographic submarkets today. Most competing book producers are owned by large media groups and often have considerably greater financial and industrial resources at their disposal via their owners than does ScandBook. The competition may even increase further as new companies are established.

Cyclical fluctuations

The production of books is mainly driven by the volumes that are sold to consumers. Book sales in Sweden have historically been correlated with household consumption, where book consumption has represented about 0.5 percent of total household consumption during the past five years. A negative economic trend, resulting in declining disposable incomes for households, could consequently have a negative impact on the book market.

Technological development and new behaviour patterns

ScandBook keeps careful track of the development of new media formats such as talking books and e-books and the associated development of carrier media such as electronic reading tablets. It is difficult to foresee to what extent new media formats and their carriers may compete with the printed fiction book in the future.