ANNUAL REPORT Board of Directors ’ report
RISKS AND UNCERTAINTIES In general , Addnode Group ’ s earnings capacity and financial position are affected by customer demand , the ability to retain and recruit competent employees , the integration of newly acquired companies , and risks associated with individual customers and current assignments . The Group ’ s financial risks are primarily related to changes in customers ’ ability to pay , exchange rates and interest rates . The presentation below does not purport to be comprehensive , and the risks and uncertainties are not listed in any order of significance .
Earnings capacity Business cycle and external risks Demand from customers is largely connected to their confidence in the future and their willingness to invest and may therefore change on short notice . A decline in economic growth could have a negative impact on revenue and profitability . Addnode Group addresses these risks by conducting operations in several business areas with various customer groups and technologies , which creates a diversified risk spread and security . Operations are conducted in both the private and public sectors in several countries . The Group works actively to adapt its offering and operations to prevailing demand . With several business areas , the Group ’ s resources can be steered towards businesses and market segments with favourable conditions for long-term growth and profitability and where we see opportunities to build and retain leading market positions .
Customer structure , and revenue and cost structure There is always the risk that one of Addnode Group ’ s major customers may be affected by developments in the market and will reduce its purchasing , resulting in a short-term drop in revenue . Addnode Group has a broad customer base of approximately 4,500 customers and is not dependent on individual customers . The 20 largest customers in 2015 accounted for 17 per cent of net sales . The Group ’ s customers are primarily in Sweden , Norway , Finland , Denmark , Germany and the UK , and work in a large number of industries including engineering , medical technology , telecom , the public sector , construction and real estate , technical consulting and media .
In recent years , the proportion of recurring revenue from software with associated support and maintenance agreements has increased , generating more stable earnings capacity . The largest expense items for Addnode Group are purchases of goods and services , and staff costs . Historically , we have largely been able to meet changed costs with more efficient deliveries and adjusted end-customer prices .
Competition There are no individual competitors to Addnode Group ’ s total offering . In the various sub-markets , Addnode Group encounters a large number of local players and a small number of national or multinational companies . Addnode Group ’ s strategy is to be a market leader in niche areas to secure good competitiveness and a strong market position .
Employees and organisation To be able to continue expanding , Addnode Group is dependent on its ability to attract , recruit and develop new employees , as well as retain existing employees and key individuals . Each company within the Group is responsible for its own competence succession . Managers are largely recruited internally or through acquisitions .
Products and technology Addnode Group has a large proportion of proprietary software , SaaS services and systems in the solutions that we provide . To be able to meet evolving customer needs over time , proximity to customers and strategic collaborations with developers of IT platforms and software are an essential part of Addnode Group ’ s growth strategy . Several of the software suppliers we work with , for example , Autodesk , Dassault Systèmes and Microsoft , are market-leading global companies in their respective niches , and there are no indications that they will not remain competitive suppliers also in the future .
Integration of acquired companies Acquisitions are a natural part of Addnode Group ’ s operations and contribute to the Group ’ s development and growth . To increase growth as well as recruit talented employees and managers , we continuously acquire new operations . Several company acquisitions have been carried out in recent years , and more will be made in the future . Company acquisitions are always associated with risks . Inaccurate estimations of synergies and market potential could have both positive and negative impacts on earnings .
Financial risks The Group ’ s exposure to various financial risks , including market risks ( currency risks , interest rate risks and other price risks ), credit risks and liquidity risks , is deemed to be relatively limited . Responsibility for the Group ’ s financial transactions and risks is managed centrally by the Parent Company . The overall objective is to provide cost-efficient financing and to minimise negative effects on the Group ’ s earnings and financial position arising out of market fluctuations or credit losses . See also Note 37 on pages 67 – 69 for a description of the financial risks identified by Addnode Group and how these are managed .
Other Addnode Group is party to certain agreements containing stipulations that the agreement may be discontinued if control of Addnode Group changes as a result of a public takeover bid . However , the Board of Addnode Group has deemed that none of these agreements individually have significant bearing on Addnode Group ’ s operations .
ANTICIPATED FUTURE DEVELOPMENT The Board has not changed its assessment of the future outlook compared with the publication of the 2015 year-end report . The Board provided the following future outlook in the year-end report :
In the long term , the areas in which Addnode Group is active are deemed to have a strong underlying potential . Addnode Group ’ s growth strategy is to grow both organically and through the acquisition of new operations in order to add new , complementary offerings and additional competence . The policy of not issuing a forecast stands firm .
ADDNODE GROUP SHARES AND OWNERSHIP STRUCTURE Addnode Group ’ s Class B shares have been listed on Nasdaq Stockholm since 1999 . Class A shares carry ten votes each , Class B and C shares carry one vote each , and only Class B shares are listed . Class C shares do not carry entitlement to dividends . On 31 December 2015 the number of Class A shares was 1,053,247 , the number of Class B shares was 29,374,009 and the number of Class C shares was 0 .
The largest shareholder is Vidinova AB , with 26.8 per cent of the votes and 24.4 per cent of the share capital . The principal owner of Vidinova AB is Dick Hasselström , who is also a director of Addnode Group . The second-largest shareholder is Aretro Capital Group AB , with 23.6 per cent of the votes and 12.4 per cent of the share capital . Aretro Capital Group AB is jointly owned by Staffan Hanstorp and Jonas Gejer . Staffan Hanstorp is President and CEO of Addnode Group AB . Jonas Gejer is CEO of TechniaTranscat AB och President of Product Lifecycle Management business area .
As far as the Board of Addnode Group AB is aware , there are no agreements between major shareholders that restrict the transferability of shares . Neither are there any restrictions on the transferability of shares posed by stipulations in law or the Articles of Association . There is no limitation on the number of votes each shareholder is entitled to vote for at general meetings of shareholders . According to the Articles of Association , the Board of Directors shall comprise three to eight
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