Risks and risk management

For a more comprehensive description of the Company’s risks and risk management, please see the Annual Report 2018, Note 5. “Risks and risk management”.

Significant risks and factors of uncertainty

Nilar is affected by several external and internal factors, which may result in an outcome different from forecasts, previous development and expectations. The following list includes a selection of the risks which the Company considers significant; however, it is not an exhaustive description of all risks that may arise.


  • Currency risk
  • Interest rate risk
  • Credit risk
  • Liquidity risk
  • Capital risk management


  • Global market and macroeconomic risks
  • Legal and political risks


  • Customer dependence
  • Production
  • Global supply chain
  • IT-related risks
  • Product liability, warranty and recall
  • Environmental risks
  • Forecasting


  • Environmental principles
  • Social responsibility
  • Organization and competence increase
  • Corporate governance


Through its operations the Group is exposed to various kinds of financial risks; currency risk, interest rate risk, credit risk and liquidity risks that may impact the Group’s result and financial position. The Group Management of Nilar has decided not to actively manage its risks e.g. through the use of derivatives. The significant risks for Nilar are described below.

Currency risk

(i) Transaction risk

Transaction risk is the risk that the Group’s net income and cash flow are impacted by changes in value of commercial flows due to changes in exchange rates. Nilar is mainly exposed to currency risk against SEK through purchases and sales in EUR and USD.

(ii) Translation risk

The Group is exposed to a risk from the translation of net assets of foreign subsidiaries to the consolidation currency, Swedish krona (SEK). The Group has foreign subsidiaries in the United States (USD). The Group is exposed to translation risk when these subsidiaries are translated into SEK.

Interest rate risk

Nilar has interest-bearing financial liabilities whose changes linked to market interest rates affect earnings and cash flow from operating activities. Interest rate risk refers to the risk that changes in the general interest rate situation negatively affect the Group’s net profit. Nilar’s interest rate risk arises from long-term borrowing. Borrowing at variable interest rates exposes the Group to interest rate risk regarding cash flow, which is partly neutralized by cash funds with variable interest rates.

Credit risk

Credit risk or counterparty risk is the possibility that the counterparty in a financial transaction fails to fulfil its obligations on the due date. Nilar’s credit risk includes bank balances and accounts receivable.

Liquidity risk

Liquidity risk is the risk that Nilar lacks liquid funds for the payment of its commitments regarding financial liabilities. To ensure a good liquidity for the operations the Group analyzes liquidity needs every week through liquidity forecasts covering the coming twelve weeks. In addition to the rolling liquidity forecasts the Group also establishes rolling twelve-month forecasts and annual financial plans.

Nilar is expected to grow significantly and the funding of the investments and the working capital required in the future have been forecasted based on historical KPIs and other known factors. The Company’s current growth plan requires that Nilar raises new capital. The conditions for such a possible transaction are, inter alia, affected by the current situation in the financial market. Nilar’s sources of capital to secure going concern includes e.g.; bank loans, shareholder loans and capital contributions by shareholders. Given these sources of capital, the Board believes that necessary capital will be available.

Capital risk management

Nilar’s objective of capital management is to ensure the Group’s ability to continue its operations, generate returns to the shareholders, create value to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Follow-up regarding capital requirements is continuous. Further, Nilar does not work actively with any explicit qualitative measures.


Global market and macroeconomic risks

Nilar operates in a global market – energy storage – characterized by strong growth as a result of growth in intermittent electricity production (wind and solar) and conversion to electric drive in the transport sector (e.g. electric and hybrid cars), where customers are driven by macroeconomic factors, which may affect demand for the Group’s products. By operating in several segments, this risk exposure is reduced. Nilar operates in the energy storage market and with special focus on three segments: home and small-scale storage, smart grid infrastructure, and commercial and industrial support. The Group’s sales are also distributed over several customers, product-wise and geographically. The use of production forecasts and close relationships with customers keeps the Group well informed about customer plans.

The financial performance of the business depends on the Group’s ability to react quickly to changes in demand for the Group’s products and to adjust production levels and operating costs accordingly. Entering new markets requires well-developed plans, processes and local knowledge where cultural and political aspects are important to take into account. Nilar has experience in entering new markets as well as geographical areas, which preferably takes place through partners with good knowledge of the local market.

Legal and political risks

Legislation, regulation and compliance

Nilar operates within different jurisdictions and is subject to local rules and laws within respective jurisdiction as well as comprehensive international rules. Changes in local and international rules and laws as well as policy decisions may affect the Group’s operations including demand for the Group’s products. Nilar meets these risks through continuous work with risk assessments and, if necessary, consult with external expertise.

Intellectual property rights

Nilar is working to protect trademarks and domain names in the countries in which the Company is, or may consider becoming, active. In addition to qualified personnel, the Company takes assistance from qualified external patent attorneys. It cannot, however, be guaranteed that the measures taken are sufficient. Nor is it guaranteed that Nilar, in the future, could not infringe, or be accused of infringing, a third party’s intellectual property right.

Fiscal risks

Nilar conducts operations in various countries and it cannot be guaranteed that Nilar’s interpretation and application of the prevailing laws, regulations or rules based on legal practice have been, or will be, correct in the future or that such laws, regulations, rules or practice will not be altered, potentially with a retroactive effect. The Company may be affected by alterations in other countries’ fiscal legislation and may be required to pay additional taxes, interest or possibly penalty charges in conjunction with a future tax assessment. The Company does not have any deferred tax assets.


Customer dependence

Nilar meets a broad interest from the market but remains dependent on a smaller number of customers and market segments. Nilar strives to broaden the customer base, also geographically, as well as to develop the product portfolio.


Nilar’s business plan includes a significant capacity expansion, and Nilar is systematically working on securing alternative suppliers to limit the risks in this part.

Global supply chain

In the global supply chain there are various risks related to dependence on specific suppliers, raw materials and inputs, logistics and quality. Among raw materials and inputs, Nilar is most exposed to nickel, where changes in prices can affect the Group’s performance. However, the dependency is limited to about 5% of the customer price and is handled in the customer agreements. The prices of raw materials are periodically adjusted to current market levels based on price developments during the period. Nilar’s supply chain is global, which places great demands on purchasing processes, quality assurance and follow-up. Nilar meets these risks through active purchasing, quality and logistical work, where the global purchasing strategy is under continuous review and update aimed at optimizing the Group’s sourcing, ensuring compliance with codes of conduct and requested volume at the right time and at the right price and quality.

IT-related risks

Nilar’s business is dependent on IT systems as well as hardware that supports the Group’s production, logistics and order management. An interruption in a system that supports these can have a negative impact on the Company’s production and the ability to fulfil its delivery obligations. Nilar manages IT-related risks on a continuous basis through the Group’s central IT department. Nilar has established routines regarding information security and processes for follow-up and control. Nilar seeks to ensure an IT environment that can be quickly replicated at a possible outage.

Product liability, warranty and recall

Nilar has a product liability and a warranty liability for delivered products. To limit the risk of claims, Nilar implements extensive testing in the development phase of the products and quality and control measures in the production phase. Nilar has signed insurance covering a certain amount against damages regarding product liability and recall.

Environmental risks

Nilar’s business is licensed and notifiable. Nilar holds permission under the environmental code to manufacture batteries that do not contain cadmium, lead or mercury in the factory in Gävle. The Company is authorized to produce a maximum of two million batteries per year.


Nilar operates on the rapidly growing market for industrial batteries. The business has to date not had any substantial sales but is expected to show significant growth in the coming years. To make forecasts in such an environment is difficult even for a short time ahead and the actual outcome can mean major deviations for e.g. sales, gross margins, inventory volumes and liquidity.


Environmental principles

In the context of Nilar’s operations, renewable and finite natural resources are used, which can have a negative impact on the environment in the future. Resources such as fossil fuels, coal and metals are considered to be finite, where, however, metals can be reused. Examples of renewable resources include water, wind and solar energy.

Nilar is engaged in active environmental work to ensure that the operations are conducted with minimal impact on the environment that is practically possible and financially justifiable. The main environmental impact of resource consumption is in the area of energy, where the Group strives to use renewable electricity, recycling and energy-efficient production processes.

To minimize the use of fossil fuels, the logistics function works to ensure efficient logistics and transport solutions.

Social responsibility

Nilar operates in a global market parallel to various interest groups, where consideration of human health, well-being and rights are fundamental values. When imbalances arise in these circumstances, there are risks of concern and conflict both for the individual and for society as a whole. Nilar’s ambition is to meet all interest groups with respect and good ethics.

Organization and competence increase

Nilar is dependent on being able to attract and retain the right employees. To ensure that Nilar is perceived as an attractive employer, Nilar conducts employee surveys and provides internal development and career opportunities. Nilar also strives for clear internal communication on goals and strategy. The supply of personnel with deeper battery competence is a challenge. The Company has so far successfully managed to find qualified personnel in the battery area.

Corporate governance

Risks exist when businesses directly or indirectly fail to comply with applicable laws, regulations, policies and the accepted norms of society. Nilar conducts its business in a responsible and efficient manner, with high business ethics, good risk control and healthy corporate culture. Governing policies and policies are the basis for sustainable and long-term entrepreneurship, where the Group’s code of conduct is indicative of all decisions made in the business.