Operational Risks

Personnel

Morphic has existed since 1999. Access to skilled person­nel constitutes a risk factor, since Morphic competes for personnel in professional categories that are of limited size. Moreover, access to qualified technical personnel in Örebro and the county of Värmland is relatively limited. This puts strong pressure on management to create a workplace that is able to attract skilled personnel. To limit the risk of defections in the long term while attracting new personnel, Morphic strives to offer, in addition to competi­tive salaries, a stimulating and inspiring work environ­ment, and to regularly introduce incentive schemes for employees.

Suppliers

The largest single supplier to Morphic is WinWinD, which delivers the core technology for DynaWind’s wind tur­bines. In the event that WinWinD were to be unable to pro­vide the required capacity, Morphic would be free to choose other external suppliers if required. There is a risk, however, that strong general demand will lead to a short­age of components.

Contractual Risks

Morphic has concluded agreements with several parties and will in all likelihood conclude further agreements in future. Although considerable resources are devoted to ensuring that the Company signs agreements of high legal quality, there is always a risk that it may fail to conclude agreements of sufficient quality or fail to protect itself against breaches of contract in a way that is acceptable for the Company.

Intellectual Property Rights and Disputes

As a rule, Morphic applies for protection of intellectual property rights for inventions, company names, brands and other intellectual property rights. However, there is always a risk that competitors will, intentionally or unin­tentionally, encroach upon Morphic’s rights. If this should happen, there is a risk that the Company will be unable to fully assert its rights in a court process, which could have a negative impact on earnings.

Customer Dependence

Morphic’s turnover currently derives from a limited num­ber of customers. The Company’s turnover and earnings would be hit relatively hard in the event that a major cus­tomer becomes insolvent or chooses another supplier.

Technological Development and Production Risks

Extensive research and technological development is being conducted in all areas. If the Company should fail to develop and launch products and/or services based on the R&D work it has conducted so far, there is a risk that the value of the Company’s production facilities would have to be written down further. In its business the Company is dependent on a functioning production chain. If this chain should break, there is a risk that this would affect the Com­pany’s opportunities to retain and attract customers.

Product Liability

Any errors in Morphic’s products could entail a liability to pay damages.

Market-specific Risks

The subsidiaries in the Morphic Group operate in different markets with different customer segments and often dif­ferent underlying driving forces. This means that market-specific risks differ from one segment to another.