Annual Report 2009
- CEO comments
- Events during the year
- This is Precise Biometrics
- History
- Technology and solutions
- Geographical markets
- Market segments
- Customers
- Voices from the industry
- Employees
- Sustainability
- The share and shareholders
- Risks
- Five-year review
- Key ratios
- Administration report
- Financial Reports
- Assurance
- Audit report
- Corporate governance report
- Board of Directors
- Management
- Auditors
- FInancial glossary
- Shareholder information
- Contact
Risks
Precise Biometrics is facing risks from both external and internal condition, which to a large extent lie outside the reach and influence of the company. These risks are described below. See Note 31 for a detailed report on risks.
Technological development
The market on which the Company operates is subject to rapid change. New technology and new players are constantly emerging. The Company’s technology must therefore to a large extent be accepted by the leading players on the market, both by suppliers and customers. The market must be mature enough to understand and accept the new technology supplied by the Company.
Market development
As the market in which the Company operates grows and the number of players increases, there is a risk that alternative technologies will be developed and that the price of comparable products will thereby be reduced. This can mean that major investments in marketing and sales may be required to achieve the expected sales volumes.
Production capacity
The Company depends on external production capacity. If the demand for components and production capacity should increase, the manufacturing costs for the Company’s products will also increase. An increase in the demand for components could also lead to delayed deliveries, which could result in income displacement.
Employees
There are a number of key persons in the Company who are important for operations, and who possess unique competence. If one or more of these key persons should leave the Company it could, in the short term, have a negative impact on operations. There is also the risk that the recruitment of new employees for these positions can take time and result is additional costs for the Company.
Partners
Today the Company cooperates with several different partners. They include systems integrators, smart card manufacturers, chip manufacturers and suppliers of applications. The Company relies on this cooperation in order to be able to offer end-users complete security solutions. There is a risk that one or more of these partners could end their cooperation or fail to achieve the expected results, which would result in a loss of expected future earnings.
Patents and industrial and intellectual property rights
It is important for the Company to protect its technology through patents or other industrial and intellectual property rights, and thereby retain its technological lead and create the opportunity for license earnings in the future. The company therefore pursues an active patent strategy, which involves applying for patents for strategically important inventions in the countries where this is considered to be appropriate.
Competitors
The company operates on the biometrics market where competition is intense. The competing companies can have substantially larger financial and industrial resources at their disposal than the Company, and it cannot be excluded that competition from this type of player can lead to diminished market shares and/or a reduction in profitability for Precise Biometrics.
Forecasting reliability
The Company operates on a market that is in an early stage of growth and is characterized by long sales promotion periods, which leads to a certain degree of inaccurate forecasts. Earlier or later submissions of orders can have a significant effect on annual sales and earnings.
Cash flow
The Company endeavors to minimize the time capital is tied up, for example in stocks and accounts receivable. To reduce the risks of tied-up capital the Company works actively to improve the internal process for forecasting and production planning. The Company also endeavors to ensure that the long ID card projects are not an excessive burden in terms of the cash flow.
In the financial climate that has existed during the last 18 months, focus has been on liquidity and current payment conditions. Due to this Precise Biometrics has sharpened payment conditions for customers.
Currency exposure risks
A large part of the Company’s expenses is in Swedish kronor (SEK), while a significant part of earnings and production costs are generated in foreign currency (mainly USD), which increases the Company’s currency exposure risks. The Company has adopted a currency exposure risk policy for the purpose of minimizing the risks in operations.
Credit risk
The Company has guidelines for awarding credit to its clients. The Company believes that there is no significant concentration of credit risks in relation to any individual client or other party.
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