Annual Report • Mar 28, 2018
Annual Report
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ANNUAL REPORT
2017
Addnode Group contributes to a digitalised society in which people, companies, authorities and organisations interact with the technology that surrounds us
Financial information and other relevant company information is published on www.addnodegroup.com. Information can also be ordered from Addnode Group, Hudiksvallsgatan 4B, SE-113 30 Stockholm, and www. addnodegroup.com
CFO Helena Nathhorst [email protected]
The 2017 Annual Report can be ordered prior to the AGM and is available as a downloadable PDF document from www.addnodegroup.com.
Interim report January–March 26 April 2018 Annual General Meeting 26 April 2018 Interim report January–June 20 July 2018 Interim report January–September 25 October 2018
Addnode Group is a listed group that acquires, operates and develops entrepreneur-driven IT companies that help digitalise society. For more than 25 years Addnode Group has actively contributed to a more sustainable society in which people, companies, authorities and organisations interact with the technology that surrounds us.
Addnode Group has 1,500 employees in 17 countries, and consolidated sales in 2017 amounted to approximately SEK 2.5 billion. The company's shares are listed on Nasdaq Stockholm.
Addnode Group's business is conducted via subsidiaries that are organised in three divisions:
management to customers primarily in the Nordic countries, Germany, the UK and the USA.
• Process Management develops and offers software and services for public administration, e-archives, information management and citizen dialogue to customers in Sweden and Norway.
Addnode Group has had average annual growth of 15 per cent since 2013. This has been achieved both organically and through acquisitions of complementary businesses. The business models entail a large share of recurring revenue, which in 2017 accounted for 53 per cent of net sales.
NET SALES 2017 2007–2017
EBITA 2017
212SEK m
AVERAGE GROWTH
This is a translated version of the original Swedish version. In the event of any discrepancies between the two versions, the original Swedish version shall take precedence.
Net sales grew 15 per cent to SEK 2,520 m. EBITA, totalling SEK 212 m, was the highest ever achieved by Addnode Group, and earnings per share increased by 8 per cent.
| KEY FINANCIAL DATA 2017 | 2017 | 2016 | 2015 |
|---|---|---|---|
| Net sales, SEK m | 2,519.8 | 2,195.0 | 1,900.8 |
| EBITA, SEK m | 211.8 | 170.6 | 168.0 |
| EBITA margin,% | 8.4 | 7.8 | 8.8 |
| Operating profit, SEK m | 129.9 | 113.7 | 126.0 |
| Operating margin,% | 5.2 | 5.2 | 6.6 |
| Profit after tax, SEK m | 89.6 | 82.3 | 95.5 |
| Earnings per share, SEK | 2.94 | 2.71 | 3.18 |
| Cash flow per share, SEK | 4.83 | 5.18 | 4.79 |
| Dividend per share, SEK | 2.25 1 | 2.25 | 2.25 |
| Net debt, SEK m | 447.6 | 65.8 | 23.2 |
| Equity/assets ratio,% | 37 | 49 | 48 |
| Debt/equity multiple | 0.46 | 0.07 | 0.03 |
| Average number of employees | 1,317 | 1,160 | 1,005 |
| Total number of employees at year-end | 1,511 | 1,277 | 1,202 |
1) Board of Directors' proposal to the Annual General Meeting.
During the last five-year period the average rate of growth was 15 per cent.
*Excluding revaluation of contingent consideration.
During 2017 Addnode Group continued to grow with new customers, new acquisitions, and with the UK as a new, important geographic market. The company can look back on an eventful year in which its offerings were strengthened and large steps were taken towards becoming a more international group.
The company had favourable growth from customers in 2017. During the year Addnode Group renewed and expanded contracts with existing customers such as the Swedish Prosecution Authority, Lantmäteriet, SCA, Statoil, Volvo, Husqvarna and London Taxi.
The company actively manages its software and is investing in new. Through recruitment and acquisitions, 300 of the Group's 1,500 employees in total work with development and management of software and SaaS solutions.
As the company's market capitalisation has reached a new threshold, Addnode Group's shares were moved from the Small Cap to the Mid Cap segment on Nasdaq Stockholm.
Addnode Group's former CFO Johan Andersson took office as new President and CEO at the 2017 Annual General Meeting. He succeeded Staffan Hanstorp, who was appointed as new Chairman of the Board. Helena Nathhorst is the company's new CFO as from September 2017.
During the year Addnode Group acquired ten new companies with combined annual sales of approximately SEK 450 m. The acquisitions strengthen the Group's offerings, broaden the software portfolio and have made the Group more international.
All three divisions posted favourable sales growth in 2017 with improved EBITA compared with the preceding year, entailing an increase in earnings per share.
In August Addnode Group announced the acquisition of Intrinsys, a British provider of PLM software and services. Intrinsys had net sales of SEK 164 m in 2016 and EBITDA of SEK 27 m. The company is the UK's largest provider of PLM software and support services.
ACQUISITION OF SERVICE WORKS GLOBAL
In August Service Works Global (SWG) was acquired, an international provider of software for facilities, property and workplace management. SWG was established in London and has operations in the UK, Australia and Canada. For its 2015/2016 financial year the company had net sales of SEK 68 m and EBITDA of SEK 14 m.
2017 was yet another good year for Addnode Group, with continued favourable growth, many new customers and several acquisitions that both strengthen our offerings and make us more international. Major business opportunities are emerging in pace with global trends such as urbanisation, digitalisation and automation. We are well-positioned to continue growing and improve our margins.
There are many reasons to be pleased with Addnode Group's performance in 2017. We had favourable performance in all of our divisions and are also growing geographically, mainly through acquisitions. I am extra happy to note that we also increased our organic growth, from 1 per cent in 2016 to 5 per cent in 2017. We have achieved this through close dialogue with our customers and through investments in new software and services. Net sales increased by 15 per cent to SEK 2,520 m, and EBITA grew 24 per cent to SEK 212 m.
In the Design Management division we made major, international software acquisitions that strengthen our offerings to the real estate sector. Favourable demand primarily from the construction and real estate sectors, but also from manufacturing industries, led to organic growth of 5 per cent and improved earnings. This growth and the division's profit for the year strengthened in tandem with a major shift that we carried out from licence-based sales of design software to a subscription-based model.
The Product Lifecycle Management (PLM) division also carried out a major international acquisition. The division's strong growth in recent years has affected its margins, and during 2017 we took steps to improve profitability. Parallel with this we have seen positive effects from the division's larger size and wider international reach. We have won several contracts in which our PLM expertise and global delivery organisation were decisive in customers' choices to work with us.
The Process Management division has a distinct position in Sweden's public sector. Successful investments in product development and a strong service offering resulted in organic growth of 6 per cent. During the year we carried out several complementary acquisitions and had strong growth especially for case management systems and e-archive services for government authorities and municipalities.
During 2017 we announced ten acquisitions with combined
annual sales of approximately SEK 450 m. The largest acquired companies, SWG and Intrinsys, are both based in the UK, but their operations span from Canada and South Africa to the Gulf states and Australia. For the Design Management and Product Lifecycle Management divisions we see great opportunities for continued acquisitions both in the Nordic region and the rest of Europe. In Process Management we are focusing on acquisitions in Sweden and the other Nordic countries, mainly software companies with customers in the public sector. We are engaged in an ongoing dialogue with complementary acquisition candidates as well as with larger companies that could expand the Group.
The drivers of customers' investments and our growth lie primarily in the major trends and challenges that we see in the world around us. These range from urbanisation – with the emergence of smart cities – to automation of industry and public administration. Demographic changes, including an ageing population and increased demands for sustainable development, are also important societal challenges where we are helping our customers find solutions through the opportunities afforded by digitalisation.
Our software and services are creating opportunities around the globe to create and manage products, properties and infrastructure in a digital world. Our systems are used in manufacturing industries, in the construction and real estate sectors, and in the public sector, where they contribute to automation of processes to the benefit of customers and citizens alike. Through innovation and continuous development in close collaboration with our customers we are innovating digital solutions that are creating opportunities to build a more sustainable society.
I took office as CEO in spring 2017 after three years as CFO and seven years in charge of the Group's acquisition processes and investor relations. We have grown from sales of SEK 795 m
in 2017 to SEK 2.5 billion in 2017. We have developed from being a local Swedish company with operations in the Nordic countries to a European group with global reach, and we have become a Mid Cap company on the Stockholm Stock Exchange. During the last ten years we have had average annual growth of 12 per cent. It has been a fantastic journey, and I look forward to continuing to lead the company in
accordance with our set strategy. We have laid a solid foundation to build further upon and are well-positioned to continue growing and improve our margins.
Johan Andersson President and CEO
Digitalisation is contributing to more far-reaching changes than ever before. With our software and services we can offer companies and organisations greater opportunities and efficiency in the way they create, share and use information. The service content is increasing in digital solutions, and the trend toward more multifunctional and intelligent systems is creating new business opportunities.
The world's population is growing by the minute. By 2025 the world's population will be 8 billion, and according to the UN it is expected to increase to 9.6 billion by 2050, which is increasing the need for sustainable, innovative and digital solutions for community building, nursing, healthcare and public administration, which Addnode Group can help customers with.
According to estimates, a billion people will become new urban dwellers by 2025. This means that roughly 60 per cent of the world's population will live in cities. This is fuelling the need for innovative solutions for design, production and management of properties, infrastructure and systems for local administration, which is something Addnode Group can deliver.
Demands for greater productivity in both the private and public sectors has led to a higher degree of automation of time- and labour-intensive tasks. The higher the degree of digitalisation and automation, the more intelligent machines and systems can learn, adapt, make decisions and act without human control. While industry has been at the forefront in this area, the public sector has taken large leaps in automating decision processes via decision making robots for various tasks.
Globalisation and outsourcing of production to low-cost countries are exposing companies to higher competition and price pressure, which is putting higher demands on productivity improvements. This is leading to more complex and geographically spread production for companies, which in turn is increasing the need for systems to assure quality and control. This is contributing to growth for Addnode Group. The company can deliver products and services that improve efficiency and link together internal and external units across a product's entire life cycle from research and development, to production and delivery, to maintenance and disposal.
Our products enable relevant digital data to be visualised in a format that is adapted to customers' processes and work flows. Visualisation in 3D models is giving rise to new opportunities as well as cost savings, as the entire picture of a product, property, project or operation can be analysed prior to production and project start.
Through access to digital data, the simulation opportunities created by our software are boundless. Examples of application areas include crash tests of cars, the strength of steel beams, and verification of regulatory requirements. Another example – in the public sector – is simulation of local school bus routes based on central requirements.
It is estimated that some 34 billion devices will be connected to the internet by 2020, of which IoT devices will account for 24 billion. Addnode Group has developed smart software that ensures that machine maintenance is performed in the right way and that developing problems can be discovered before they cause damage to equipment or buildings.
Digitalisation is creating opportunities to gain control over all product-related information throughout an entire life cycle. With such information gathered and made conveniently accessible in a system, production lead times can be shortened and resource handling can be optimised while contributing to more efficient administration and easier follow-up of environmental, quality and safety requirements.
At Addnode Group we help our industrial customers collaborate both internally and externally in the design process and production with the help of smart and effective PLM systems. We help our customers in the construction and real estate sectors to utilise all the potential that exists in BIM modelling. In addition, Addnode Group's cloud-based systems make it possible for all details surrounding a construction project to be compiled and made accessible in the parts that are relevant for each project participant. This allows the progress of construction work to be closely monitored and quick decisions to be made when necessary.
Addnode Group's strategies for value creation build upon leadership in our areas of operation, innovative product and service offerings, efficiency in everything we do, decentralised management and acquisitions.
Addnode Group's vision is to contribute to a digitalised society in which people, companies, authorities and organisations interact with the technology that surrounds us.
Addnode Group acquires, operates and develops entrepreneur driven IT companies that help digitalise society. The company has identified five strategic pillars for fulfilling its assignment to achieve long-term, profitable and sustainable growth: leadership in our areas of operation, innovative product and
Addnode Group provides software and services with a high level of recurring revenue from support, maintenance, subscription and SaaS solutions. We take long-term responsibility for the software and services we provide, which creates value and stability for our customers and profitability for the Group.
Addnode Group contributes through support to a society in which people, companies, authorities and organisations are interacting to an increasingly greater degree with the technology that surrounds us. The Group's core values are:
| GROWTH | EARNINGS | DIVIDEND | |
|---|---|---|---|
| TARGETS SET BY THE BOARD OF DIRECTORS |
10 % |
10 % |
50 % |
| Annual growth in net sales of at least 10 per cent. |
Operating margin before amortisation and impairment of intangible assets (EBITA margin) of at least 10 per cent. |
At least 50 per cent of consolidated profit after tax shall be distributed to the shareholders, provided that net cash is sufficient to operate and develop the business. |
|
| ACHIEVEMENT 2017 |
15 % |
8.4 % |
76 % |
| Growth in 2017 was 15 per cent. The increase is mainly attributable to acquisitions made in 2016 and 2017. Organic growth was 5 per cent. |
The EBITA margin was 8.4 per cent (7.8) of net sales. This represents an improvement in the EBITA margin by 0.6 percentage points compared with 2016. |
The Board of Directors has pro posed a dividend of SEK 2.25 per share for 2017, which corresponds to 76 per cent of consolidated profit after tax. |
|
| ACHIEVEMENT | SALES GROWTH | EBITA MARGIN* | DIVIDEND PAYOUT RATIO |
| OVER FIVE 20 |
20 | 10 10 |
120 120 |
| YEARS | 8 | 100 100 |
|
| 15 | 15 | 8 | 80 |
| 10 | 6 6 |
80 60 |
|
| 10 | 4 4 |
60 40 |
|
| 5 | 5 | 2 2 |
40 20 |
| 0 | 0 | 20 0 0 |
|
| 0 | 2013 2014 2015 2016 2017 | 0 2013 2014 2015 2016 2017 |
2013 2014 2015 2016 2017* |
| Growth,% Target 10% |
EBITA-margin,% Target 10% |
Dividend as% of Target 50% profit after tax. |
|
| * Excluding revaluation of contingent consideration. | * Proposed by the Board of Directors. |
* Excluding capital gains and revaluation of contingent consideration.
In Addnode Group's core businesses we focus on a few carefully selected areas in which we have, or can achieve, a leading position and thereby contribute both to our customers' and society's development.
For Addnode Group, being a leader entails being the company that customers and other stakeholders think of first and then also choose. This means that we must be the one with the highest sales or the most employees.
Addnode Group is an international provider of software and services to customers with a need for smart IT support to create products, properties and infrastructure, and to maintain related information during a product's entire life cycle. The company has a wide portfolio of products and services, and works in close collaboration with world-leading platform suppliers, which together with global delivery capacity gives the company key competitive advantages. The Group's operations in this area are conducted in the Design Management and Product Lifecycle Management (PLM) divisions, see pages 20–21.
Addnode Group is a leading provider in the Nordic countries
and the UK of products and services to customers in need of smart IT support for administration and maintenance of properties and facilities management. The company's product and service portfolio, together with the organisation's knowledge about design, production and administration of properties, are key competitive advantages. The Group's operations in this area are conducted in the Design Management division, see pages 22–23.
The company is a leading provider of software and services to public sector customers in Sweden and Norway in the areas of case management, e-archives, e-services and digital administrative support for municipalities' permitting departments and infrastructure administration. Customers include a wide range of Swedish state agencies and authorities, county councils, and most Swedish municipalities. The company's product portfolio, together with the organisation's knowledge about public sector work processes, are key competitive advantages. The Group's operations in this area are conducted by the Process Management division, see pages 26–27.
Leadership
DESIGN AND PRODUCT LIFECYCLE MANAGEMENT
PROPERTY MANAGEMENT AND MAINTENANCE
SYSTEMS AND DIGITAL ADMINISTRATIVE SUPPORT FOR PUBLIC ADMINISTRATION
Innovation and product development emanate from the customers' needs, a long-term development plan, active portfolio management and cost efficiency. Every new product and service should create as much customer value as possible through better functions, simpler interfaces and more efficient administration.
To meet customers' growing needs Addnode Group continues to invest in product development, both by developing new products and services, but also by acquiring product companies. Three hundred of our employees work with continuous development and administration of our products. By continuously investing in new products, services and business models – both organically and through acquisitions – the share of recurring revenue has grown from 30 per cent in 2007 to 53 per cent in 2017.
Addnode Group has solid history of collaborating with globally leading platform providers such as Autodesk and Dassault Systèmes. Collaboration will continue to be an important part of the product strategy and offering to the company's customers.
iipax one – A user-friendly system that makes daily work digital-smart for authorities in the modern age.
Interaxo – Cloud-based solutions tailor-made to streamline information and processes in construction projects.
QFM – Powerful, flexible facility management software for total control of assets, resources and service.
Ecos – Efficient digital case management for a better environment and society.
CAVA – Ensures conformity with international laws, norms and standards in vehicle design.
SOVELIA – Easy-to-use and efficient solution for product development and Product Lifecycle Management.
Addnode Group promotes decentralised responsibility and strives in every unit to continuously improve efficiency by using smarter processes and managing both human and financial capital.
Addnode Group's decentralised organisation enables transparency and operational follow-up with clear earnings responsibility. Where motivated from a business standpoint, cost-savings, synergies and collaborations are pursued within and between divisions. Examples of this are tendering processes for insurance, data- and telecommunications, premises and auditors. Addnode Group shares premises where possible and has centralised control of banking services and financing as well as of implementation of new laws and rules that affect the entire Group, such as the GDPR.
Addnode Group works relentlessly to streamline administrative processes and thereby enhance customer benefit. All recurring elements are to be automated. A key part of this is to automate support functions in areas such as sales, IT, HR and finance. By standardising flows and processes with the help
of digital technology we free up resources that can be used for value-creating activities for our customers.
As more resources become available when support functions are streamlined and coordinated, automation generates enhanced value-added in our relationships with customers. Overcapacity and inefficiencies shall always be called into question.
A key part of the company's activities to enhance customer benefit and lower costs is the introduction of processes and tools for conducting efficient product development and projects in virtual global teams. This enables us to serve our customers locally with global resources. As part of this the company has built up customer delivery and product development units in India, Serbia and Bosnia, with a total of 150 employees.
THE FIRST EMPLOYEE IN INDIA WAS HIRED IN 2012. TODAY WE ARE 114 PEOPLE WHO WORK WITH PROJECTS AND PRODUCT DEVELOPMENT WITH OUR SISTER COMPANIES IN THE ADDNODE GROUP.
The company's divisions and subsidiaries operate with freedom under responsibility. Every unit conducts and develops its business activities in accordance with Addnode Group's strategies, policies and joint-Group principles. This results in short decision paths in which business-critical decisions are made close to the customers and the market.
The decentralised governance model is a conscious, strategic choice as it provides the best outcome for an entrepreneurial group experiencing growth. The governance model entails delegated responsibility for earnings, and decisions are made as close to the customers and end users as possible.
Addnode Group's operations are managed and governed in three divisions: Design Management, Product Lifecycle Management, and Process Management. In accordance with set strategies and goals, the divisional heads are responsible for the subsidiaries in their respective divisions and report to Addnode Group's President and CEO. Central functions in Addnode Group's head offices are responsible for
coordination, financial follow-up and reporting, policies and guidelines at an overarching level, and contribute expertise surrounding business models, trademarks, acquisitions and communication. The three divisions comprise a number of subsidiaries that are organised in market and development units.
Addnode Group is a growth company, and new units are created or added through acquisitions on a regular basis. The Group's brand strategy, with Addnode Group as the supporting brand, entails that acquired companies can retain their names in a new brand structure while at the same time taking advantage of the benefits provided by a larger organisation.
Depth of industrial knowledge and a long record of experience with acquisitions and company integration make Addnode Group an attractive home for entrepreneurs interested in selling their companies.
Acquisition-driven growth is a central part of Addnode Group's strategy. The company actively searches for acquisition candidates and at the same time fields queries from entrepreneurs interested in becoming part of the Group. With a wealth of industry knowledge and well-established routines, Addnode Group has favourable conditions to integrate new companies in its operations in a secure and smooth manner.
Since its start in 2003 Addnode Group has carried out more than 60 acquisitions. The majority have been companies with annual sales of SEK 20–50 m, and the largest acquisition was of a company with sales of SEK 450 m. In 2017 alone we welcomed ten new companies into the Group.
The company's acquisition process attaches a premium to tried-and-tested business models, competent employees, recurring revenue and strong leaders. Acquisition candidates will preferably meet several of the following criteria:
Once they have become part of the Group, our acquired companies are enabled to achieve their full potential and pursue ventures that were previously beyond their reach. Through knowledge, business relationships and financial stability the company supports employees and managers who join the Group via acquisitions to stay on and develop with us. By working together with entrepreneurs we increase the value of our investment. Addnode Group secures favourable development for customers, employees and shareholders.
60 Acquisitions since 2004
Acquisitions in 2017
In July 2017 Addnode Group carried out yet another strategic acquisition when the British company Intrinsys became part of the Product Lifecycle Management (PLM) division. Together with its sister company Technia Transcat, Intrinsys is forming the first truly global systems integrator with specialist expertise in product data information.
Established somewhat by chance 18 years ago, Intrinsys has since then grown from only four employees to become the UK's leading expert in product data information. Backed by Addnode Group's resources, the company is now extending its reach to the rest of the world.
"Our challenge is to continue growing in the future, and this would be hard to do on our own as we already dominate our home market," says Darren Cairns, Intrinsys' Director. "We needed a larger global presence and wider knowledge base. We have now grown from 60 employees to being part of a division with 600 employees. This gives us a much better ability to support our customers around the world."
Intrinsys started out as a spin-off of the consulting firm Integral Powertrain, whose employees were experts at using Dassault Systèmes' product portfolio for product data and 3D design.
"We became so adept that Dassault Systèmes asked us to become a business partner. Since we used the same software ourselves in our engineering firm, we could understand other customers' needs better, and this gave us unique value," says Cairns.
Following a modest start, in 2006 business began to pick up steam for Intrinsys, which delivers mission-critical projects to companies in industrial sectors such as automotive, aerospace, oil and gas. In 2012 Intrinsys became the UK's largest provider of PLM services.
Darren Cairns, Director of Intrinsys, and Jonas Gejer, Head of the PLM division.
"Our growth just came on its own," says Cairns. "I don't think we understood how successful we were until we were invited to Dassault Systèmes' own awards ceremony. We won the first award, then the second, and by the end of the evening we had won 12 of the 15 awards."
According to the director himself, the key to the company's success was an ability to think differently than the already established giants in the field.
"We have always taken a different approach than the others," he says. "This is due, perhaps, to the fact that we were rather naïve in the beginning. We didn't try to cherry-pick employees from our competitors, as others were doing. Instead we recruited new graduates or people from other sectors who were motivated and showed great drive."
Together with Technia Transcat, Intrinsys is now part of Addnode Group's PLM division, which after the acquisition has more than 600 employees in Finland, India, Norway, Slovakia, the UK, Sweden, South Africa, Germany, the USA and Austria.
In 2017 Addnode Group carried out a number of acquisitions, thereby strengthening our offerings and making us more international through expansion in the UK, Australia, South Africa and Canada.
During the year all of the divisions were reinforced as we welcomed the following companies to the Group:
| COMPANY | DESCRIPTION | DIVISION | ANNUAL SALES |
|---|---|---|---|
| Service Works Global (SWG) |
International software company with base in the UK; delivers systems for facilities, property and workplace management. |
Design Management | SEK 68 m |
| Intrinsys | A partner to Dassault Systèmes and the UK's largest provider of PLM software and support services. |
Product Lifecycle Management |
SEK 164 m |
| Infostrait | Dutch PLM and BIM specialist that is now part of the subsidiary TechniaTranscat. |
Product Lifecycle Management |
SEK 25 m |
| Canella | Develops solutions for the Nordic pharmacy and social services market. |
Process Management | SEK 20 m |
| Forsler & Stjerna | Provides solutions in public administration and public transport planning. |
Process Management | SEK 20 m |
| Adtollo | Develops solutions that streamline construction processes for public service buildings. |
Process Management | SEK 24 m |
| Apricon | Cloud-based project communication and document manage ment tool for the construction and real estate sectors. |
Design Management | SEK 10 m |
| Kompanion | Planning tool that helps home care providers organise and monitor their work. |
Process Management | SEK 20 m |
| MCAD | Services and products for design and manufacturing processes. | Design Management | SEK 31 m |
| Inport | Logistics solutions for ports, terminals and shipping companies. | Process Management | SEK 25 m |
At SWG we are very happy we joined Addnode Group, which enables us to deliver a broader technology and service platform for property management. Together we will be able to deliver a more extensive and relevant offering to the global market and continue our strong growth." " " "
At Adtollo we have been working with several companies in the Addnode Group for some time, and this was a natural step for us to take. Together we can offer our customers even better and more comprehensive alternatives for building communities."
Stefan Andersson, CEO of Adtollo
We are very happy to be part of the leading PLM provider in Europe. This gives us an opportunity to offer our customers the full capacity of TechniaTranscat and continue our journey of growth in Benelux"
Jaap Holweg, founder of Infostrait
Gary Watkins, CEO of Service Works Global
In Addnode Group's three divisions – Design Management, Product Lifecycle Management and Process Management – the Group delivers software and services to industries such as construction, real estate, manufacturing, automotive and life sciences as well as to the public sector. Our solutions help companies and authorities improve their efficiency in everything from case management and citizen dialogues to design, construction and management of product data throughout a product's entire life cycle.
Design Management is one of the Nordic region's leading providers of software and services for simulation, design and product data management to engineers and architects in the infrastructure, construction and real estate sectors, and to the manufacturing and marine industries. The division also develops software and services for project collaboration, and administration and maintenance of property and assets to customers in the Nordic countries, the UK, Australia and Canada. The division had sales of SEK 906 m in 2017.
Product Lifecycle Management (PLM) is a leading European provider of software and services for developing products throughout their lifecycles – from idea, design, simulation and construction to sales, aftermarket and recycling. PLM systems enable companies to optimise processes in both global organisations and individual teams. Customers are in such industries as telecom, manufacturing, automotive, construction and civil engineering, energy production and medical technology, as well as in service and retail. The division had sales of SEK 920 m in 2017.
Process Management is a leading supplier of document and case management software and services to the public sector in Sweden, with growing business in Norway. The division offers reliable and secure software and services for public administration, e-archiving, information management and citizen dialogues. Customers consist of municipal administrations and authorities as well as a large number of private companies in the industrial and financial sectors. The division had sales of SEK 704 m in 2017.
Design Management is one of the Nordic region's leading providers of software and services for design and construction. The division also has a strong offering for project collaboration, property management and workplace service in the Nordic countries and the UK. The division's IT solutions digitalise companies' and authorities' processes, providing opportunities for better and more effective design.
Operations of the Design Management division are conducted by the subsidiaries Symetri, Symetri Collaboration and Service Works Global (SWG). Acquired in 2017 and based in the UK, SWG is an international software company that provides facilities, property and workplace management systems. SWG and Symetri will work together to provide software and services to a growing global market.
The division's home markets are the Nordic countries and the UK, and we are growing in Australia, Canada and the Gulf states.
Design Management is the Nordic region's largest supplier of Autodesk products and related services to construction and property companies, manufacturing industries and their suppliers. Customers use the division's software for product, infrastructure, plant and building simulations. We have also developed peripheral products for product data management and to be able to accommodate local standards and norms in digital models. The division also has a strong position in the Nordic countries and the UK as a supplier of products and
services to customers with a need for software and services for digitalisation, administration and maintenance of properties and workplace management. The division's cloud-based project communication and document management tools had more than 70,000 users in 2017.
The division has a broad customer base in the construction, real estate, manufacturing and marine industries as well as in the public sector. Examples of customer include Deep Ocean, EkoVent, Penny Hydraulics, Siemens, Storstockholms Lokaltrafik, Tengbom Arkitekter, Tema Arkitekter, Urbanium and Veidekke.
For the Autodesk-based offering, the main competitors are global software companies, such as PTC and Siemens, and other local Autodesk partners. For the real estate offering the competition is mainly local. Our proprietary software and related services combined with Nordic and UK organisations are key competitive advantages.
| SEK m | 2017 | 2016 | 2015 |
|---|---|---|---|
| Net sales | 905.9 | 828.9 | 827.7 |
| EBITA | 76.2 | 57.1 | 65.8 |
| EBITA margin,% | 8.4 | 6.9 | 7.9 |
| Operating profit | 45.0 | 32.8 | 47.0 |
| Operating margin,% | 5.0 | 4.0 | 5.7 |
| Average number of employees |
345 | 319 | 317 |
More efficient property management with highly organised blueprint archives
To keep better track of areas and space in a sprawling property portfolio, the City of Solna's public housing association Signalisten needed to modernise its support systems for everything from project management to operations and administration. After seeking help from Addnode Group's subsidiary Symetri, Signalisten has implemented more reliable routines and a uniform, digital blueprint archive that makes information easily accessible and searchable.
Solna is one of the Stockholm area's fastest growing municipalities. Extensive maintenance projects together with a mandate to build 1,000 residential units by 2025 are presenting major challenges for the municipal property owner Signalisten. The association currently has some 3,900 apartments and 200 premises in its portfolio – the blueprints and related building information of which it now has a firm command over as result of a systematic process that was begun a couple of years ago.
"With our growing property portfolio we needed a better overview of our areas and space, to know exactly how many square metres we have and how they are disposed," says Kennet Blixt, project leader in charge of purchasing at Signalisten.
As an example, he points to the documentation that is needed to renovate properties. Previously architects and consultants typically delivered blueprints in both paper and digital format.
"Once delivered, the paper blueprints were put in binders, and the thumb drives with the digital copies usually ended up in someone's desk drawer," says Blixt. "We wanted to make it easier to find the correct information and always know which was the most recent version."
In consultation with Symetri's specialists in blueprint IT solutions, a comprehensive process was begun to make the management of property data both more reliable and efficient. The first step involved transferring all blueprints to Symetri's digital archive, where they are not just filed, but are also searchable and accessible in a uniform manner. All paper blueprints were digitised via scanning and were improved in terms of quality before they were modelled and filed in the new archive. In addition, a manual was created for how, where and in which format architects and consultants are to deliver their blueprints and 3D models.
"Symetri also helped us objectify the information in the models, making it easier to produce relevant documentation for procurement of services," Blixt explains. "For example, prior to starting renovation work in a residential area we can gain a fast and clear overview of the number of bathrooms and their combined area. In the past we had to sit and measure this on paper – with a high level of inaccuracy. Now we just generate a report from the system."
Having convenient access to building information facilitates work for operations technicians as well as for property managers and tenant administrators. The system also benefits customers and prospective tenants, who can obtain a detailed graphic presentation of an apartment's floor plan and room layout before moving in.
Kennet Blixt sees great opportunities to continue developing Signalisten's operations by making smart use of property data – and through support from its systems vendor:
"We turned to Symetri to gain access to knowledge that we didn't have ourselves, both as an advisory and executive partner – and we're very happy we did."
The Product Lifecycle Management division is a leading European supplier of software and services for design and product data information. The division's system solutions help companies design products and streamline their processes by compiling and managing data throughout as product's entire life cycle, from development to recycling.
The division's operations are conducted via the subsidiaries TechniaTranscat and Intrinsys, which was acquired in 2017. Like TechniaTranscat, Intrinsys is a Dassault Systèmes partner and also the UK's largest supplier of PLM software and support services. The division's major markets are the Nordic countries, the German-speaking areas of Europe and the UK, with growth also in the rest of Europe and the USA.
The Product Lifecycle Management division is a global provider of software and services to customers with a need to innovate products and maintain related information throughout a product's entire lifecycle, from research, development and design to production, sales, training, aftermarket and recycling. With such information compiled and conveniently accessible in a PLM system, lead times can be shortened and resource management can be optimised at the same time that it is easier to follow up environmental, quality and safety requirements, for example.
The software provided by the division is based on its partner Dassault Systèmes' platform for design, simulation, production and product data management complemented by a wide range of proprietary peripheral products and services.
Customers are in industries such as telecom, manufacturing, automotive, construction, civil engineering, pharmaceuticals, medical technology and energy production. In pace with rising demands for rapid innovation and customer-unique product development, a growing number of apparel, retail and service companies have been turning to the PLM concept. Examples of customers include Dräxlmaier, EDAG, Edwards, European Spallation Source ESS, Geberit, Honeywell, Husqvarna, Jula, Kongsberg Defence & Aerospace, London Taxi, Parker Hannifin Corporation, Rail, Seco Tools and Stadler.
Competitors consist of other PLM software companies with own sales organisations, such as Siemens and PTC, as well as other Dassault Systèmes partners. In larger system integration projects, companies such as Tata and Accenture are competitors. The division's competitive advantages include world leading knowledge about Product Lifecycle Management and close collaboration with customers combined with a regional presence in several countries.
| SEK m | 2017 | 2016 | 2015 |
|---|---|---|---|
| Net sales | 919.8 | 779.0 | 512.6 |
| EBITA | 71.8 | 62.1 | 52.7 |
| EBITA marginal,% | 7.8 | 8.0 | 10.3 |
| Operating profit | 53.9 | 50.5 | 46.3 |
| Operating margin,% | 5.9 | 6.5 | 9.0 |
| Average number of employees |
508 | 428 | 281 |
World-leading train manufacturer Stadler is powering forward like a trains it makes. In 20 years' time the Swiss company has grown from 70 employees to more than 7,000, and its trains are now in use worldwide. To maintain this same tempo, Stadler has embraced a new PLM strategy designed to increase efficiency and the pace of work throughout the company.
Following a lengthy evaluation process, Stadler chose to work with Addnode Group's subsidiary TechniaTranscat to implement a PLM strategy based on Dassault Systèmes' 3DExperience platform.
"Our trains are becoming more and more complex. We needed a tool to support our work processes in a smarter way and help us meet ever-growing requirements without putting a greater strain on us," says Roland Reichlin, project leader at Stadler.
With the new system, engineers from all departments can use one and the same platform for their creative work. This makes it possible to communicate more effectively than previously, such as when mechanical and electrical parts were produced in different systems and then combined in a timeconsuming process.
The overall goal of Stadler's PLM 2.0 strategy is to increase efficiency by 10 per cent throughout the company while at the same time making some processes up to 80 per cent faster.
"A modern train carriage has more than 50,000 parts and is like a giant puzzle," says Reichlin. "We wanted to have a joint database in which information about all parts is accessible whenever and for everyone. Otherwise it can happen that one part is changed without everyone involved finding out about it."
Stadler has worked with TechniaTranscat for several years as a previous user of CATIA, a 3D design program, and chose to broaden its partnership after inviting in several vendors for a final presentation in 2016.
"TechniaTranscat clearly had the best answers to all our questions and understood our needs. Their system also had technical advantages compared with other competitors," says Reichlin.
Stadler also uses the 3DExperience platform to integrate new employees in its geographically spread project groups, as the company continues to grow both organically and through acquisitions.
"When we acquire a company we have to be able to share our knowledge with their employees," Reichlin explains. "This is another area in which we save a lot by using a uniform platform that ensures that we do not do things individually in different ways at different locations."
The Process Management division is a leading provider of software and services to the public sector. With the help of automation and digital administrator support, the division's solutions contribute to smoother document management, simplified administration and quality-assured processes in contacts between authorities and citizens.
The division's solutions are used primarily in the public sector in Sweden, but the division has a growing base of business in Norway and also helps companies in private industry take advantage of the opportunities provided by digitalisation in their processes.
During the year several acquisitions were made within the division, and operations today are conducted via the subsidiaries Adtollo, Arkiva, Canella, Decerno, EssVision, Evitbe, Forsler & Stjerna, Ida Infront, InPort, Kompanion, Mittbygge, Sokigo, Stamford and Voice Provider.
Product Management's product portfolio is the answer to the demand we have seen in the market for quite some time. The division develops solutions that are focused on citizens' and customers' needs. Owing to good operational familiarity and knowledge about directives, laws and regulations, we can quickly and efficiently start up projects and develop software and systems in close collaboration with our customers.
The offering covers software and services in areas such as:
E-archives
Digitalised citizen services
Customers include a large number of Swedish and Norwegian government authorities and operations, covering 285 of Sweden's 290 municipalities and private companies in the financial sector as well as in the energy, engineering and forest products industries.
Examples of the division's customers include: Coop, the Swedish Export Credits Board, Fastighetsbyrån, the Swedish Social Insurance Agency, the City of Gothenburg, the City of Malmö, Norrköping Municipality, Norsk Reiselivsforum, Swedish Police and the Swedish National Heritage Board.
There is currently no main competitor to the division's total offering. Examples of competing companies with somewhat similar products and services include CGI, Tieto, Esri S-Group, Visma and Formpipe. Competitive advantages include a broad product offering combined with a long record of delivery experience with system solutions for the public sector.
| SEK m | 2017 | 2016 | 2015 |
|---|---|---|---|
| Net sales | 704.1 | 594.8 | 566.4 |
| EBITA | 101.0 | 78.3 | 78.6 |
| EBITA margin,% | 14.3 | 13.2 | 13.9 |
| Operating profit | 68.3 | 57.3 | 61.8 |
| Operating margin,% | 9.7 | 9.6 | 10.9 |
| Average number of employees |
457 | 405 | 400 |
With thousands of building permits to process every year, it is easy for applications to gather in a pile, forcing citizens to wait. Halmstad Municipality saw a need to streamline its building permit routines and turned to Addnode Group's subsidiary Sokigo for help in implementing automated services and digital administrative support.
The building permit process contains many steps, from registration of documents to reviews and departmental circulation to site visits and final decision. Well-working IT support is instrumental in quality assuring every step in the process.
"Here in Halmstad we have worked hard with digitalisation since 2012, when we began scanning all paper records and working with PDF files," says Ingegerd Persson, head of building permits for Halmstad Municipality. "We then continued by implementing an e-application process and direct filing, but we felt that we needed to take a step further in automation."
The system supplier Sokigo, an Addnode Group company, has been involved in this process for several years, lending support to Halmstad Municipality in its digital journey. In summer 2017 this collaboration was intensified when the new Atom solution began to be implemented as a complement to the existing ByggR building permit administrative system.
"This has revolutionised all our routines coupled to building projects," says Persson. "We are saving lots of time on strictly administrative matters since we are minimising the
number of steps we must perform manually. Atom keeps track of our caseload and where in the process they are. With the help of predefined process rules, which we feed in ourselves, the next step in the process flow is automatically generated."
She explains, for example, that Atom generates automatic reminders and messages when a municipal resident has applied for a building permit and a certain amount of time has passed without the necessary complementary documentation coming in.
"This frees up our administrators from time consuming routine tasks at the same time that citizens get better feedback on their projects. The time that is freed up when we automate certain processes can be used to provide more service to customers and improve our employees' competence," explains Persson, adding that the new system has attracted a positive response from users:
"It is saving them time, plus many are impressed that we as a municipality have been among the first to introduce this type of new technology that simplifies things both for us and for municipal inhabitants."
The collaboration with Sokigo has also been appreciated by the pertinent employees of Halmstad Municipality.
"We conducted thorough test runs together with Sokigo before the product was entirely ready," Persson says. "They listen carefully to our views and take our needs into consideration. In this way we can participate and influence how new functions are set up in the administrative system for building permits."
Through innovation and continuous development in close collaboration with the company's customers we are innovating digital solutions that create opportunities to build a more sustainable society. Addnode Group's systems help ensure that the houses we live in, the roads we drive on and the products we use every day can be designed, produced and maintained effectively.
Building a long-term sustainable society in a fast-changing world undergoing urbanisation puts great demands on responsible and efficient use of resources. Addnode Group's systems create opportunities in a digital world to create and manage products, properties and infrastructure. The company is also helping to digitalise administration and communication for Swedish authorities and municipal administrations.
For more than 20 years Addnode Group has actively contributed to more sustainable community development by providing customers software and services for sustainable design, management and maintenance of properties and facilities. Our systems are also used by municipalities for building permit administration and technical infrastructure.
In the real estate sector, for example, the benefit can entail extending the life of a property through effective administration that is made possible by smart software that keeps track of maintenance to ensure that it is performed correctly, at the right time and with the right material. Developments in this area are advancing rapidly, and with the help of modern sensor technology we are developing, for example, systems for predictive maintenance, where developing problems can be detected before they cause damage to equipment or buildings. For customers this leads both to cost savings and a lower use of resources.
In the municipal sector our systems are used to improve efficiency in everything from document and case management to administration of home care services and school bus route planning. Optimal route planning leads to fewer trips and thus lower costs and a lower environmental impact.
We are also a global supplier of software and services to companies that need to keep track of all their product-related information throughout a product's entire life cycle. With information gathered and made easily accessible in a Product Lifecycle Management system, lead times can be shortened and resource handling can be optimised at the same time that it is easier to follow up environmental, quality and safety requirements, for example. Through a
depth of operational knowledge and familiarity with directives, laws and regulations we make sure that systems are kept up to date and adapted to applicable regulatory standards.
Addnode Group's largest footprint is the positive impact we make through the systems we supply to our customers, which they use to drive community development forward in a more sustainable manner.
The Group's negative environmental impacts are made by the offices we work in, the electricity we use and the transports we take. In our decentralised organisation, each of the divisions draws up local policy documents that are adapted to the needs of their operations with the goal of reducing our negative environmental impacts.
The subsidiaries TechniaTranscat, Intrinsys and Service Works Group are ISO 9001 certified. The subsidiary Services Works Group is ISO 27001 certified, and parts of TechniaTranscat are ISO 14001 certified. The subsidiaries Sokigo and Decerno are FR 2000 certified.
Addnode Group's employees have roots in more than 30 countries on several continents, which is a major benefit in our interaction with customers. Our people are the foundation of our competitive strength, where a combination of qualities such as local presence, industry expertise and systems knowledge is instrumental in our ability to continue delivering products and services that meet our customers' needs.
Addnode Group's core values are:
Work on new employee surveys was begun in 2017. The goal is that all subsidiaries will regularly conduct such surveys as a way to take the pulse of their organisations. One challenge that we share with other companies in the industry entails achieving a more even balance between men and women among our employees. The share of women in Addnode Group is 24 per cent, and together with the IT sector and educational institutions we are working on making ourselves more accessible in order to achieve a better balance.
Employees 2017
Addnode Group is governed by short decision paths in a group of independent yet wholly owned subsidiaries driven by entrepreneurship. The companies' cultures and knowledge about their own markets are key to the Group's success, at the same time that strong leadership with high standards of ethics and respect for each individual are essential aspects of our values foundation. While the Group uses subcontractors on projects, most work is performed by employees of our subsidiaries, which ensures good insight into the work environment.
We engage ourselves in the countries in which we work and
support local aid projects. For example, in India our subsidiary TechniaTranscat supports the organisation Akansha, which provides grants to local orphanages. With the Group's growing reach across the globe we see a need to ensure a shared view of human rights and the countering of corruption. Several of our companies, such as TechniaTranscat, Symetri and Decerno, have formulated their own policy documents for this area, and in 2017 work was begun on drafting a Group Code of Conduct. At the Group level we also have a whistle blower policy, which allows employees to anonymously report any improprieties at the workplace. The Audit Committee chair is responsible for ensuring that this work is reported to the Board of Directors.
In our decentralised model it is common that employees vote on which organisation they want to donate money to instead of receiving a Christmas present, and their respective companies top this off with their own contributions. In 2017 Addnode Group's companies made donations to such organisations as the Swedish Cancer Fund, the Swedish Child Cancer Fund, Save the Children, Children's Rights in Society (BRIS), Doctors Without Borders, Musikhjälpen and Akansha.
GENDER BREAKDOWN
NUMBER OF EMPLOYEES
JOHAN EKELUND Applications consultant at Addnode Group's subsidiary EssVision
"I am responsible for making sure that projects are planned, have the necessary resources and are conducted on schedule. I monitor our customers' journey from initial tender to implementation and administration. The greatest challenge is striking a balance between IT and operations – understanding the need and implementing it in a user-friendly system solution. The best part of my job is seeing how our product makes a difference for customers and hearing how their everyday work is more fun and efficient."
NATANJA FRIEDRICH Global Digital Marketing Manager at Addnode Group's subsidiary TechniaTranscat
"My job is never boring. There are always new initiatives, new markets and new segments – and thus new ways to reach our target groups. As the person responsible for developing the company's digital communication and marketing, I put great focus on achieving a global consensus and a stronger inbound marketing culture by forging closer collaborations between marketing and sales. Using statistics and analysis we measure the results of what we have planned and carried out. This gives us a clear account of our success or potential for improvement."
FRIDA VESTMAN Business consultant at Addnode Group's subsidiary Ida Infront
"In my role as a business consultant I serve as the link between the customer's operations and our product. I come up with solution specifications that our developers then implement. Being able to communicate and make oneself understood among many different groups of people is a challenge and at the same time part of what is most rewarding with my job. It is enjoyable being a part and developing systems and solutions for important public sector operations that benefit society."
RICKARD ERLANDSSON Application developer at Addnode Group's subsidiary TechniaTranscat
"I program and configure technical solutions, where the goal is to meet customers' wishes to get the most out of their products. Sooner or later you always encounter problems. Solving them is part of the job's more enjoyable challenges. As a developer my goal is to deliver flexible code, since I know that what I do may be used in larger, complex systems. I enjoy customer contact and learn new things every day."
To the general meeting of shareholders of Addnode Group AB (publ), corporate identity number 556291-3185
It is the Board of Directors who are responsible for the statutory sustainability report for 2017 on pages 26–28 and for ensuring that it has been prepared in accordance with the Annual Accounts Act.
Our examination has been conducted in accordance with FAR's auditing standard RevR 12 – auditor's opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is substantially different and less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion.
A statutory sustainability report has been prepared.
Stockholm, 22 March 2018
PricewaterhouseCoopers AB
Magnus Brändström Authorised Public Accountant
All business activities involve risk-taking. Systematic and structured risk management combined with Addnode Group's strategy and business model contributes to good diversification of risk. Risks are managed at several levels within the Group, and the Board of Directors analyses what risks must be managed based on documentation provided by the President and Group Management. Evaluation is performed at least once a year.
The President and Group Management are responsible for adopting policies, rules and monitoring systems in the operations. Group Management is responsible for the continuing risk management activities in each area of responsibility. The divisional and subsidiary heads are responsible for managing the opportunities and risks in their respective operations, for ensuring that routines are in place in accordance with the Group's policies and rules, and for monitoring compliance with these policies and rules.
| Probability of occurrence (1–5) 1. Improbable • 2. Not likely • 3. Possible • 4. Likely • 5. Probable |
Impact on business of occurrence (1–5) 1. Improbable • 2. Not likely • 3. Possible • 4. Likely • 5. Probable |
||||
|---|---|---|---|---|---|
| Risk areas | Description of potential risks | ||||
| Operational risks | |||||
| A | Business cycle and macro risks |
The macro perspective and economic climate may affect customers' willingness to invest and demand. |
4 | 3 | Addnode Group manages these risks by conducting business in both the private and public sectors and in numerous dif ferent markets. We continuously adapt our offerings and organisation to the prevailing market conditions. |
| B | Products, technology and partners |
New ways of working, behaviours, and rapidly changing technologies may lead to changes in customers' requirements. Our partners may change business models and terms, which affects our earnings capacity. |
3 | 3 | Addnode Group manages this risk by working closely with customers in software development in order to gain an understanding of their needs and changes in the market. We have well established and strategic collaborations with numerous suppliers of IT platforms and software. Our earnings capacity is thereby not dependent on any single partnership. |
| C | Competition | Demand for and sales of our soft ware and services may decline as a result of tougher competition. |
3 | 3 | Addnode Group manages competition risk by being a lead ing player in selected markets. We have close relationships with our customers, and we are continuously developing our offerings together with them and with their needs in focus. |
| D | Customer structure |
Having a customer structure with one or a few sectors/customers could affect sales and earnings should an individual customer or sector encounter problems and dramatically reduce its investments. |
2 | 3 | Owing to its business model, Addnode Group's sales are not dependent on individual customers or sectors. The Group has approximately 5,000 customers, and the 20 largest cus tomers account for 15 per cent of net sales. While individual subsidiaries may be affected by the loss of a customer, by virtue of the Group's size we have resources to drive the business further and focus on sales to new customers. |
| E | Revenue structure |
A revenue structure with a large proportion of hourly-based sales and/or short durations of customer contracts offers few opportunities to compensate for sudden losses and changes. |
2 | 2 | The Group has a balanced portfolio of assignments that provides stable earnings over time. Addnode Group's recurring revenue in the form of support and maintenance contracts accounts for 53 per cent of net sales. |
| F | Organisation, competence succession and managing growth |
Not having the ability to attract and retain employees in key positions. |
2 | 3 | Every subsidiary within the Group is responsible for its own competence succession. The individual companies have a re cruiting advantage through their entrepreneur-driven brands at the same time that they belong to a financially stable group. Acquisitions are a central part of Addnode Group's strategy. Miscalculations of synergies and market potential in acquisitions may affect their outcome. |
| Financial risks | |||||
| G | Credit risk | The main credit risk is of customers failing to pay for provided products or services. |
1 | 4 | Overall, Addnode Group's credit risk associated with unpaid receivables is considered to be low. The Group has established guidelines for ensuring that sales are made to customers with solid credit backgrounds. Trade receivables are spread across a large number of industries, markets and types of customers. Historically, bad debt losses have been very low. In 2017 earn ings were negatively affected by SEK 2.4 m (0.1). |
| H | Exchange rate risk |
A negative financial impact on the Group's earnings and share holders' equity caused by changes in exchange rates. |
3 | 3 | The Group's exchange rate risk is generally low, since sub sidiaries operate primarily in their respective local markets and thereby have both revenues and expenses in the same currency. Translation exposure of net assets and foreign cur rency has been partly hedged. |
| I | Interest rate risk | Sharply higher interest rates lead ing to higher financial liabilities. |
2 | 3 | As a result of acquisitions carried out in 2017, Addnode Group has increased its level of debt, and thus the financial risk associated with higher interest rates has increased. As per 31 December 2017 the Group's net debt, i.e., the net sum of interest-bearing assets and liabilities, was SEK 448 m (66). |
| J | Liquidity and financing risk |
A shortage of available liquidity to pay obligations. |
1 | 4 | As per 31 December 2017 Addnode Group had SEK 173 m (111) in cash and cash equivalents, plus a bank overdraft facility of SEK 100 m. In 2017 the Group secured an acquisi tion credit facility of SEK 750 m. As per 31 December 2017 a total of SEK 583 m (156) of the acquisition credit facility was utilised. The Group is financed primarily through bank bor rowing, and the refinancing risk is limited through long-term credit promises and good relationships with banks that have good credit ratings. |
2017 was a year of strong growth highlighted by a series of acquisitions and international expansion. The Group has a good financial position with strong cash flow, and during the financial year the share of recurring revenue continued to grow.
Addnode Group has grown in recent years from a Nordic to an international group, where operations in the UK and Germany have become an increasingly important part. Consolidated net sales grew 15 per cent compared with 2016, and we thereby exceeded our 10 per cent growth target thanks to intensive work with acquisitions combined with organic growth of 5 per cent. During 2017 we welcomed ten new companies to the Group, and we have positive profitability development which is nearing our target of a 10 per cent EBITA margin.
During the year we increased our credit facilities to SEK 750 m to enable acquisitions in accordance with our set strategy.
We have a good financial position that is affected by seasonal variations, as a significant share of cash flow is generated early in the year, when a large share of maintenance agreements are renewed.
Over several years' time we have gradually increased our recurring revenue from support and maintenance contracts and subscription-based cloud services. During the 2017 financial year, recurring revenue grew to 53 per cent of net sales. The shift from licence-based sales to a subscription-based model in the Design Management division will contribute to greater predictability over time.
During the past year we experienced a positive trend in organic growth, with a higher share of sales of proprietary products. This shows that we have listened to our customers' needs and invested in development of products that are in demand in the market.
I took office as the new CFO of Addnode Group in September 2017 and am happy to be here and contribute to a professional and creative organisation which through innovative products creates great value in society.
With the fast pace of growth we have, it is important that the companies we acquire are quickly integrated into our decision-making structure at the same time that they are allowed to retain their entrepreneurial strength and energy.
Our business model is built upon entrepreneurship and longterm focus combined with coordination and efficiency.
As a result of our acquisitions, our focus on operating cash flow has also increased. To reduce tied-up working capital and administrative costs we are working continuously with capital efficiency and streamlining. We are looking at all opportunities to find new and smarter work processes by leveraging the potential provided by digitalisation.
Helena Nathhorst CFO
1 LEADING MARKET POSITIONS Addnode Group is an international provider of IT systems for construction, design, simulation and product data information. The company has a strong position in the Nordic countries and the UK in IT systems for administration and maintenance of properties and workplace management, and is a leader in administrative systems for the public sector in Sweden.
2.94SEK
EARNINGS PER SHARE 2017
2 HISTORICALLY FAVOURABLE TOTAL RETURN During the years 2013–2017 Addnode Group's Class B shares increased in value from SEK 36.50 to SEK 75.75 per share, corresponding to average annual growth in value of 16 per cent. In addition to this value growth, the shareholders have received yearly dividends of SEK 2.25 per share. The dividend policy is to distribute a minimum of 50 per cent of net profit to the shareholders, and for 2017 the Board of Directors has proposed a dividend of 2.25 per share.
3 ACQUISITION-DRIVEN GROWTH STRATEGY The Group has extensive experience with acquisitions. Since 2005 we carried out more than 60 acquisitions, contributing average annual growth of 12 per cent between the years 2007 and 2017. Through acquisitions we strengthen our positions while maintaining strong customer relationships. They give us access to new technological expertise and software, and enable us to enter into new markets.
DIVIDEND PER SHARE FOR 2017 PROPOSED BY THE BOARD OF DIRECTORS
34%
CHANGE IN PRICE FOR ADDNODE GROUP'S CLASS B SHARES 2017
4 DIVERSIFIED BUSINESS, SOFTWARE Addnode Group conducts business in both the private and public sectors in several geographic markets. The company has a diversified based of business and several different business models, entailing that sales performance is not dependent on individual customers, sectors or geographic markets. The company has a large share of recurring revenue and advance payments, which contributes to good cash generation.
Addnode Group's Class B shares are listed on Nasdaq Stockholm, where they are traded under the symbol ANOD B. On 30 December 2017 the company had 5,359 shareholders, and foreign ownership in the company was 18 per cent. The share of institutional ownership was 67 per cent.
At year-end 2017 Addnode Group's shares were quoted at a price of SEK 75.75 per share (56.50). The highest price paid in 2017 was SEK 83.00 (26 September), and the lowest price paid was SEK 57.75 (2 January). At year-end the company's market capitalisation was SEK 2,305 m (1,719). Trading volume in Addnode Group shares on Nasdaq Stockholm in 2017 was 12,336,859 shares, corresponding to average daily turnover of 49,151 shares (8,813) per trading day.
The number of registered shares in Addnode Group was 30,427,256 on 30 December 2017, including 987,174 Class A shares and 29,440,082 Class B shares. A-shares carry entitlement to ten votes each, and B- and C-shares carry entitlement to one vote each. Addnode Group's shares are denominated in Swedish kronor (SEK), and the share quota value is SEK 12. Class A and B shares carry entitlement to dividends. Class C shares do not carry entitlement to dividends. No Class C shares were in issue as per 30 December 2017.
The largest shareholders in Addnode Group AB as per 30 December 2017 are shown in the table on page 35. The number of shareholders as per 30 December 2017 was 5,359.
Addnode Group does not have any outstanding share-savings programmes, nor any option or convertible programmes.
Addnode Group's policy is to distribute a minimum of 50 per cent of consolidated net profit to the shareholders, provided that the company's net cash is sufficient to operate and develop the business.
The Board of Directors proposes that the Annual General Meeting vote in favour of an unchanged dividend of SEK 2.25 per share. The proposed dividend amounts to approximately SEK 68 m. Based on an average share price of SEK 72.00 in 2017, the proposed dividend represents a dividend yield of 3 per cent.
| Year | Transaction | Number of shares after transaction |
Total share capital after transaction, SEK |
|---|---|---|---|
| 2000 | New share issue – in connection with redemption of employee warrant programme | 2,752,184 | 1,376,092 |
| 2000 | Non-cash issue – for GCI Interactive Europe AB | 2,823,518 | 1,411,759 |
| 2000 | Split 5:1 | 14,117,590 | 1,411,759 |
| 2000 | New and non-cash issues for the companies acquired in 2000 | 18,766,817 | 1,876,681 |
| 2000 | New issue in connection with broadening of ownership | 21,266,817 | 2,126,681 |
| 2000 | Withdrawal of shares/reduction in share capital | 18,365,626 | 1,836,562 |
| 2002 | Bonus issue in connection with change of the share quota value | 18,365,626 | 2,203,875 |
| 2003 | Non-cash issue in connection with acquisition of 100% of Teknik i Media Sv AB | 477,029,244 | 57,243,509 |
| 2003 | Non-cash issue in connection with acquisition of 97% of Cartesia Info. Teknik AB |
757,023,700 | 90,842,844 |
| 2003 | Reverse split 1:100 | 7,570,237 | 90,842,844 |
| 2003 | Non-cash issue in connection with acquisition of 74.85% of Mogul Holding AB | 8,493,512 | 101,922,144 |
| 2003 | Non-cash issue in connection with acquisition of 15.3% of Mogul Holding AB and 1.9% of Cartesia Informationsteknik AB |
8,728,013 | 104,736,156 |
| 2004 | Non-cash issue in connection with acquisition of 100% of Technia Holding AB | 17,227,984 | 206,735,808 |
| 2005 | Non-cash issue in connection with acquisitions of 100% of CAD-Quality i Sverige AB and CAD-Quality AS |
21,227,984 | 254,735,808 |
| 2006 | Non-cash issue in connection with acquisition of 100% of Ida Infront AB | 22,427,984 | 269,135,808 |
| 2008 | Non-cash issue as partial payment for acquisition of Strand Interconnect AB | 23,550,698 | 282,608,376 |
| 2009 | Non-cash issue as partial payment for acquisition of Strand Interconnect AB | 23,645,408 | 283,744,896 |
| 2010 | Non-cash issue as partial payment for acquisitions of 100% of Decerno AB, Tekis AB and Mittbygge AB |
28,145,408 | 337,744,896 |
| 2011 | New issue for share-savings programme | 28,819,632 | 345,835,584 |
| 2013 | Non-cash issue as partial payment for acquisition of 100% of Abou AB | 28,916,740 | 347,000,880 |
| 2013 | Non-cash issue as partial payment for 100% of Joint Collaboration AS | 30,088,517 | 361,062,204 |
| 2015 | Non-cash issue as partial payment for acquisition of 100% of Transcat GmbH | 30,427,256 | 365,127,072 |
| Owners | Number of A-shares |
Number of B-shares |
Total number of shares |
Share of capital,% |
Number of votes |
Share of votes,% |
|---|---|---|---|---|---|---|
| Aretro Capital Group AB 1 | 625,332 | 1,654,624 | 2,279,956 | 7.5 | 7,907,944 | 20.1 |
| Vidinova AB 2 | 361,667 | 1,084,718 | 1,446,385 | 4.8 | 4,701,388 | 12.0 |
| Swedbank Robur funds | 0 | 2,922,807 | 2,922,807 | 9.6 | 2,922,807 | 7.4 |
| Odin funds | 0 | 2,900,000 | 2,900,000 | 9.5 | 2,900,000 | 7.4 |
| Lannebo Fonder | 0 | 2,490,279 | 2,490,279 | 8.2 | 2,490,279 | 6.3 |
| Försäkringsaktiebolaget | ||||||
| Avanza Pension | 0 | 1,940,738 | 1,940,738 | 6.4 | 1,940,738 | 4.9 |
| Handelsbanken Fonder AB | 0 | 1,417,385 | 1,417,385 | 4.7 | 1,417,385 | 3.6 |
| Fourth AP Fund | 0 | 1,491,865 | 1,491,865 | 4.9 | 1,491,865 | 3.8 |
| Didner & Gerge Fonder | 0 | 1,189,000 | 1,189,000 | 3.9 | 1,189,000 | 3.0 |
| Grenspecialisten Förvaltning AB | 0 | 911,554 | 911,554 | 3.0 | 911,554 | 2.3 |
| Other shareholders | 175 | 11,437,112 | 11,437,287 | 37.5 | 11,438,862 | 29.2 |
| Totalt | 987,174 | 29,440,082 | 30,427,256 | 100.0 | 39,311,822 | 100.0 |
1) Aretro Capital Group AB is 50 per cent owned via companies by Staffan Hanstorp, Chairman of the Board of Addnode Group, and 50 per cent owned via companies by Jonas Gejer, President of the Product Lifecycle Management division.
2) Vidinova AB is controlled by board member Dick Hasselström.
| Shareholding | No. of shareholders | Capital% | Votes% |
|---|---|---|---|
| 1–500 | 4,421 | 1.2 | 0.9 |
| 501–1 000 | 406 | 1.1 | 0.9 |
| 1 001–2 000 | 220 | 1.2 | 0.9 |
| 2 001–5 000 | 155 | 1.7 | 1.3 |
| 5 001–10 000 | 55 | 1.3 | 1.0 |
| 10 001–20 000 | 28 | 1.4 | 1.1 |
| 20 001–50 000 | 30 | 3.2 | 2.4 |
| 50 001–100 000 | 12 | 2.7 | 2.1 |
| 100 001–500 000 | 18 | 15.6 | 12.1 |
| 500 001–1 000 000 | 5 | 11.3 | 8.8 |
| 1 000 001–5 000 000 | 9 | 59.3 | 68.5 |
| Total, 29/12/2017 | 5,359 | 100.0 | 100.0 |
| 2017 | 2016 | 2015 | 2014 | 2013 | |
|---|---|---|---|---|---|
| Average number of shares outstanding after dilution, millions | 30.4 | 30.4 | 30.0 | 29.6 | 28.8 |
| Total number of shares outstanding, millions | 30.4 | 30.4 | 30.4 | 29.6 | 29.4 |
| Total number of registered shares, millions | 30.4 | 30.4 | 30.4 | 30.1 | 30.1 |
| Earnings per share after dilution, SEK | 2.94 | 2.71 | 3.18 | 3.38 | 2.19 |
| Cash flow per share, SEK | 4.83 | 5.18 | 4.79 | 5.15 | 4.13 |
| Equity per share, SEK | 32.29 | 31.7 | 30.12 | 29.47 | 28.36 |
| Dividend per share, SEK | 2.25 1 | 2.25 | 2.25 | 2.25 | 2.25 |
| Share price on closing date, SEK | 75.75 | 56.5 | 61.25 | 46.10 | 38.80 |
| P/E ratio | 26 | 21 | 19 | 14 | 18 |
1) Proposed by the Board of Directors.
6% Norway
2% USA
Among analysts who regularly monitor Addnode Group are Kristoffer Lindström (Redeye), Fredrik Nilsson (Remium), and Daniel Thorsson (ABG Sundal Collier).
Addnode Group conducts long-term communication work in the capital market. An important part of this work is to provide shareholders, institutional investors, analysts, the media and other interested parties with transparent, reliable and accurate information about Addnode Group's activities and financial performance.
Helena Nathhorst +46 (0)70 607 63 23 [email protected]
Net sales increased during the 5-year period from SEK 1,444 m to SEK 2,520 m, corresponding to average annual growth of 15 per cent. The Group's target is to achieve annual growth of at least 10 per cent.
EBITA grew during the 5-year period from SEK 124 m to SEK 212 m. Growth in earnings can be credited to higher demand for the Group's software and services, and to contributions from companies acquired during the period.
EBITA margin,%
* Excluding capital gains and revaluation of contingent consideration.
Addnode Group's business model, with a large share of prepaid support and maintenance contracts, entails that the business has a relatively small amount of tied-up capital. Historically, cash flow from operating activities has been on par with EBITA. During 2017, however, cash flow was affected by a temporary increase in working capital.
Return on capital employed was 10.0 per cent in 2017, which is lower than in the preceding year. This is due to a 22 per cent increase in average capital employed in 2017 compared with 2016.
The equity/assets ratio averaged 49 per cent during the 5-year period. Compared with earlier periods, the equity/assets ratio in 2017 was affected by an increase in interestbearing liabilities during the year as a result of acquisitions.
Addnode Group took on external interest-bearing loans, totalling SEK 62 m, for the first time in 2013 to finance acquisitions. During the 5-year period, additional loans were taken out to finance additional acquisitions. In 2017, loans of SEK 423 m were taken out to finance acquisitions carried out during the year.
Earnings per share in 2017 were SEK 2.94. The average number of shares in 2017 was unchanged from 2016. During the 5-year period earnings per share ranged from SEK 2.19 to SEK 3.38.
During the 5-year period, cash flow from operating activities per share ranged from SEK 4 to SEK 5. Cash flow per share is better than earnings per share, owing to depreciation and amortisation of identified assets in connection with acquisitions.
4
| Group | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|
| Income statement (SEK m) | |||||
| Net sales | 2,519.8 | 2,195.0 | 1,900.8 | 1,598.6 | 1,443.5 |
| of which, outside Sweden | 1,336.9 | 1,132.9 | 893.7 | 646.7 | 538.1 |
| Operating profit before depreciation/amortisation | 227.6 | 185.4 | 181.7 | 205.7 | 123.6 |
| EBITA | 211.8 | 170.6 | 168.0 | 193.3 | 110.7 |
| Operating profit | 129.9 | 113.7 | 126.0 | 128.5 | 85.9 |
| Net financial items | -11.0 | -4.9 | -1.4 | 1.3 | -0.2 |
| Profit before tax | 118.9 | 108.8 | 124.6 | 129.8 | 85.7 |
| Tax | -29.3 | -26.5 | -29.1 | -29.6 | -22.8 |
| Profit for the year | 89.6 | 82.3 | 95.5 | 100.2 | 62.9 |
| Balance sheet (SEK m) | |||||
| Intangible non-current assets | 1,654.4 | 1,165.9 | 1,061.2 | 874.9 | 865.8 |
| Property, plant and equipment | 39.8 | 36.8 | 34.6 | 27.2 | 26.3 |
| Financial assets | 28.0 | 23.8 | 29.6 | 34.9 | 45.5 |
| Inventories | 1.1 | 1.3 | 1.2 | 1.0 | 1.2 |
| Other receivables | 728.9 | 646.2 | 661.6 | 546.5 | 489.5 |
| Cash and cash equivalents | 173.2 | 111.5 | 102.9 | 72.4 | 114.8 |
| Total assets | 2,625.4 | 1,985.5 | 1,891.1 | 1,556.9 | 1,543.1 |
| Shareholders' equity | 982.5 | 964.7 | 916.6 | 872.7 | 834.5 |
| Provisions | 109.8 | 52.2 | 53.7 | 5.4 | 63.2 |
| Loan liabilities, interest-bearing | 620.8 | 177.3 | 126.6 | 40.4 | 65.3 |
| Other liabilities, noninterest-bearing | 912.3 | 791.3 | 794.1 | 638.4 | 580.1 |
| Total shareholders' equity and liabilities | 2,625.4 | 1,985.5 | 1,891.1 | 1,556.9 | 1,543.1 |
| Cash flow | |||||
| Cash flow per share, SEK | 4.83 | 5.18 | 4.79 | 5.15 | 4.13 |
| Cash flow from operating activities, SEK m | 147.1 | 157.7 | 143.8 | 152.5 | 118.8 |
| Cash flow from investing activities, SEK m | -438.9 | -135.7 | -115.1 | -109.8 | -126.1 |
| Cash flow from financing activities, SEK m | 351.7 | -18.8 | 6.7 | -86.8 | -6.7 |
| – of which, shareholder dividend and share repurchases, SEK m | -68.5 | -68.5 | -66.6 | -66.2 | -63.5 |
| Return metrics | |||||
| Change in net sales,% | 15 | 15 | 19 | 11 | 6 |
| Return on capital employed,% | 10.0 | 10.7 | 13.5 | 14.7 | 10.5 |
| Return on equity,% | 9.4 | 8.9 | 10.8 | 11.9 | 7.9 |
| EBITA margin,% | 8.4 | 7.8 | 8.8 | 12.1 | 7.7 |
| Operating margin,% | 5.2 | 5.2 | 6.6 | 8.0 | 6.0 |
| Profit margin,% | 4.7 | 5.0 | 6.6 | 8.1 | 5.9 |
| Financial metrics | |||||
| Interest coverage multiple | 11 | 17 | 33 | 46 | 44 |
| Equity/assets ratio,% | 37 | 49 | 48 | 56 | 54 |
| Debt/equity multiple | 0.46 | 0.07 | 0.03 | E/T | E/T |
| Net debt, SEK m | 447.6 | 65.8 | 23.2 | -33.2 | -51.3 |
| Acid test ratio,% | 62 | 79 | 88 | 98 | 102 |
| Shareholders' equity, SEK m | 982.5 | 964.7 | 916.6 | 872.7 | 834.5 |
| Shareholders' equity per share, SEK | 32.29 | 31.70 | 30.12 | 29.47 | 28.36 |
| Employees | |||||
| Number of employees at 31 December | 1,511 | 1,277 | 1,202 | 934 | 951 |
| Average number of employees | 1,317 | 1,160 | 1,005 | 890 | 859 |
| Net sales per employee, SEK thousands | 1,913 | 1,892 | 1,891 | 1,796 | 1,680 |
The Board of Directors and President of Addnode Group AB (publ), with registered office in Stockholm and corporate identity number 556291-3185, hereby submit the Annual Report for the 2017 financial year for the Parent Company and the Group. The Annual Report and Auditors' Report cover pages 40–87. The Corporate Governance Report and the Auditors' Report on their review of the Corporate Governance Report cover pages 89–98. The results of the year's operations as well as the Parent Company's and the Group's financial position are presented in the Board of Directors' report along with the accompanying income statements and balance sheets, statements of comprehensive income, statements of cash flows, specifications of changes in shareholders' equity and supplementary disclosures and notes, which comprise the comprehensive Annual Report.
Addnode Group acquires, operates and develops entrepreneur-driven companies that help digitalise society. We are a leading European provider of software and services for design, construction, product data information, project collaboration and property management. Addnode Group is also a leading supplier of document and case management systems to Swedish and Norwegian public administrations. Operations are organised in three divisions:
Consolidated net sales in 2017 amounted to SEK 2,519.8 m (2,195.0), an increase of 15 per cent. The increase is mainly attributable to the acquisitions carried out in 2016 and 2017. Organic growth was 5 per cent compared with the preceding year. The Group's recurring revenue increased by 21 per cent from 2016 to 2017. EBITA amounted to SEK 211.8 m (170.6), corresponding to an EBITA margin of 8.4 per cent (7.8). Scheduled amortisation of intangible non-current assets amounted to SEK 81.9 m (56.9). Operating profit was SEK 129.9 m (113.7), corresponding to an operating margin of 5.2 per cent (5.2). Through business development and acquisitions, the share of proprietary software and applications increased in the IT solutions that the Group offers its customers. In 2017, investments of SEK 45.7 m (42.7) in proprietary software and applications were capitalised.
Design Management had higher net sales and EBITA than a year ago, owing to a strong market and acquisitions made during the year. Product Lifecycle Management posted higher net sales and EBITA than a year ago, mainly owing to acquisitions in 2017. The Process Management division also showed higher net sales and EBITA, mainly owing to acquisitions.
Net financial items for the Group totalled SEK -11.0 m (-4.9). Tax on profit for the year was SEK -29.3 (-26.5). Profit after tax was SEK 89.6 m (82.3).
| Net sales | EBITA | Operating profit | Average number of employees |
|||||
|---|---|---|---|---|---|---|---|---|
| SEK m | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Design Management | 905.9 | 828.9 | 76.2 | 57.1 | 45.0 | 32.8 | 345 | 319 |
| Product Lifecycle Mgt | 919.8 | 779.0 | 71.8 | 62.1 | 53.9 | 50.5 | 508 | 428 |
| Process Management | 704.1 | 594.8 | 101.0 | 78.3 | 68.3 | 57.3 | 457 | 405 |
| Central functions 1 | 12.7 | 12.6 | -37.2 | -26.9 | -37.3 | -26.9 | 7 | 8 |
| Eliminations | -22.7 | -20.3 | — | — | — | — | — | — |
| Addnode Group | 2,519.8 | 2,195.0 | 211.8 | 170.6 | 129.9 | 113.7 | 1,317 | 1,160 |
1 EBITA and operating profit for central functions in 2017 were charged with SEK 6.6 m (0.1) in acquisition costs.
Addnode Group's operations are organised in three divisions: Design Management, Product Lifecycle Management and Process Management.
The Design Management division is one of northern Europe's leading providers of software and services for design, product data, project collaboration and property management. Through close customer relationships we deliver IT solutions that shorten lead times, lower costs and support operations. The division's IT solutions for property management and project collaboration are based on proprietary software and SaaS applications. The division is the Nordic region's largest supplier of Autodesk software and proprietary products and applications to the construction and real estate sectors, and to manufacturing industries. The division's operations are conducted via the companies Symetri, Symetri Collaboration, and Service Works Global, acquired in 2017.
Net sales for Design Management amounted to SEK 905.9 m (828.9). EBITA was SEK 76.2 m (57.1), corresponding to an EBITA margin of 8.4 per cent (6.9). Demand for Autodesk products remained strong from the construction and real estate sectors in Sweden, and was favourable from manufacturing industries. SaaS solutions for information and processes in construction projects had favourable performance during the year, with a greater number of users. This, combined with completed acquisitions, countered the effects of the changed business model for Autodesk, entailing a shift from a licence-based to a subscription-based business model.
The Product Lifecycle Management division is one of Europe's leading suppliers of customised PLM systems, with operations in the Nordic countries, Germany, the UK, Austria, South Africa and the USA. Solutions are based primarily on Dassault Systèmes software and proprietary products. The division's operations are conducted via the subsidiaries TechniaTranscat and Intrinsys, the latter acquired in 2017.
Net sales for Product Lifecycle Management amounted to SEK 919.8 m (779.0). EBITA was SEK 71.8 m (62.1), corresponding to an EBITA margin of 7.8 per cent (8.0). The strong growth and improved earnings are largely attributable to acquisitions made during the year and strong sales of software during the fourth quarter. Our ability to deliver and implement global change projects is having a greater impact in the market, and we are winning new deals. During the year, operations in Germany were affected by lower sales and impairment losses for projects.
The Process Management division offers systems and software for document and case management, business planning and decision support, e-archives, digital solutions for citizen services and geographic IT systems. Solutions are based on proprietary systems and applications, and complementary products. The division's operations are conducted in Sweden and Norway via the subsidiaries Adtollo, Arkiva, Canella, Decerno, EssVision, Evitbe, Forsler & Stjerna, Ida Infront, Kompanion, Mittbygge, Sokigo, Stamford and Voice Provider, and starting in January 2018 also via InPort.
Net sales for Process Management amounted to SEK 704.1 m (594.8). EBITA was SEK 101.0 m (78.3), corresponding to an EBITA margin of 14.3 per cent (13.2). The division had continued favourable demand for information and case management systems and won several tenders in the Swedish public sector. Organic growth was 6 per cent. Acquisitions carried out in 2017 and earlier years developed well. High capacity utilisation primarily in case management and larger system development projects contributed to good growth and profitability.
In December 2016 an agreement was signed to acquire all of the shares outstanding in Projektstyrning Prima AB (name subsequently changed to Svenska ITKompanion AB), which is the legal entity behind the Kompanion planning tool, and possession was transferred on 2 January 2017. Prior to this Addnode Group owned 37 per cent of the shares in the company; the acquisition was carried out in accordance with a previously signed shareholder agreement. The business is focused on IT-based planning and follow-up systems that are used by a large number of municipalities and private companies for business support processes in the social services sector, such as home care. The acquisition strengthens the Group's offering in this area. The company has annual net sales of approximately SEK 20 m and is consolidated as from 2017 in the Process Management division.
On 24 March 2017 an agreement was signed to acquire all of the shares in the company Infostrait, with transfer of possession on 3 April 2017. The company is a Dutch PLM and BIM specialist with annual net sales of approximately SEK 25 m. Infostrait has 18 employees and is included from the date of possession in the Product Lifecycle Management division, which since previously has a strong offering to customers in the PLM division. The acquisition also entails establishment of operations for the Group in the Benelux area.
On 1 June 2017 all of the shares outstanding were acquired in the Swedish software company Canella, which develops IT solutions for the Nordic pharmacy and healthcare market. Operations are based on the company's proprietary Candos software, which is used by pharmacy operators and county councils. The acquisition strengthens the Group's offering in the social services sector. Canella has annual net sales of approximately SEK 20 m and is included in the Process Management division since the date of possession.
On 29 June 2017 an agreement was signed to acquire all of the shares in the Swedish software company Forsler & Stjerna, with transfer of possession on 1 July 2017. The company has annual net sales of approximately SEK 20 m and 13 employees. Forsler & Stjerna is a leading provider of IT solutions for public administrations and public transport planning, and is included in the Process Management division from the date of possession. The acquisition complements and strengthens the Group's offering in this area.
On 31 July 2017 an agreement was signed to acquire all of the shares in the international company Service Works Group Ltd (name subsequently changed to Service Works Global Ltd – SWG), with transfer of possession on the same day. The company designs, develops and delivers support for its proprietary QFM software, which is used for property maintenance and management, and P3rform software, which is used in operations, maintenance and services in Public Private Partnership (PPP) contracts. The company had sales of approximately SEK 68 m and EBITDA of SEK 14 m for the financial year ended in October 2016. SWG has 71 employees and operations in the UK, Australia, Canada and the Gulf states. SWG is part of the Design Management division since the date of possession, adding to the division's already strong offering of systems for the construction and real estate sectors. The acquisition has also enabled the expansion of operations to new markets in which SWG has a strong position.
On 1 August 2017 an agreement was signed to acquire all of the shares in the British company Intrinsys Ltd, with transfer of possession the same day. The company is the UK's largest provider of PLM software from Dassault Systèmes and related support services. Intrinsys delivers projects to leading companies in the automotive, aerospace, marine, oil and gas industries. Net sales in 2016 amounted to SEK 164 m, with EBITDA of SEK 27 m. Intrinsys has 60 employees and operations in the UK and South Africa. The company is part of Addnode Group's Product Lifecycle Management division, which is a leader in the European PLM market. The acquisition further strengthens this position.
On 22 September 2017 an agreement was signed to acquire all of the shares in the Swedish software company Adtollo, with transfer of possession on 2 October 2017. Adtollo provides systems for the map and construction industries based on its proprietary Topocad and Chaos Desktop software, among other things. The CAD system Topocad is provided to more than 10 Swedish municipalities and several of the Nordic region's leading construction companies. The company had sales of SEK 24 m in 2016 and is part of the Process Management division from the date of possession.
On 2 October 2017 an agreement was signed to acquire all of the shares in the Swedish software company Apricon, with transfer of possession the same day. Apricon has developed a cloud-based tool for project communication and document management that is used by leading construction and property companies. The company had sales of approximately SEK 10 m in 2016, with nine employees and is part of the Addnode Group's Process Management division from the date of possession.
At the end of November 2017 an agreement was signed to acquire all of the shares in MCAD Sverige AB, with transfer of possession on 2 January 2018. The business is focused on CAD and PDM solutions for medium-sized and larger companies in the manufacturing and process industries. The acquisition strengthens the Group's offering in these areas. The company has annual net sales of approximately SEK 30 m and is consolidated in the Design Management division as from 2018.
In December 2017 an agreement was signed to acquire all of the shares in InPort Intelligent Port Systems AB, with transfer of possession on 2 January 2018. The company develops logistics solutions for ports, terminals and shipping companies, and is the Nordic region's leading supplier in its market segment. Annual net sales amount to approximately SEK 25 m, and the company is consolidated in the Process Management division as from 2018.
In January 2018 an additional SEK 42.5 m in bank loans were drawn from the credit facility of up to SEK 750 m that was secured in June 2017.
In other respects, no significant events have taken place after the balance sheet date.
The Group's cash and cash equivalents totalled SEK 173.2 m (111.5) on 31 December 2017. Cash flow from operating activities amounted to SEK 147.1 m (157.7) in 2017. Cash flow from investing activities in 2017 included SEK 52.9 m in payments for contracted and previously expensed consideration for company acquisitions carried out in previous years, and SEK 45.7 m (42.7) in payments for proprietary software. During the second quarter, a share dividend of SEK 68.5 m was paid out.
In June 2017 the Parent Company expanded its acquisition credit facility with Nordea by SEK 350 m from SEK 400 m previously, to SEK 750 m, to finance acquisitions. The facility has a term of four years and can be drawn successively. Up until the publication date of this Annual Report, a total of SEK 626 m had been drawn. The respective bank loans have terms of either one, three, six or twelve months, however, the debt amount can thereafter be re-borrowed in its entirety within the framework of the credit facility's total amount. In addition, the Parent Company has an existing bank overdraft facility of SEK 100 m, of which SEK 41.6 m had been utilised by 31 December 2017. The Group's interest bearing liabilities as per 31 December 2016 amounted to SEK 620.8 m (177.3), and the net amount of interest-bearing assets and liabilities was SEK -447.6 m (-65.8). The equity/assets ratio was 37 per cent (49) as per 31 December 2017.
Investments in intangible non-current assets and in property, plant and equipment amounted to SEK 65.0 m (67.9), of which SEK 45.7 m (42.7) pertains to proprietary software and SEK 16.2 m (16.6) to equipment.
Through business development and acquisitions, the share of proprietary software and applications has increased in the IT solutions that the Group offers its customers. In 2017, capital expenditures of SEK 45.7 m (42.7) in proprietary software and applications were capitalised. Expenditures for customer-financed development and certain other development work that do not meet the criteria for capitalisation were expensed in the income statement.
The Group's carrying amount of goodwill on 31 December 2017 was SEK 1,357.7 m (972.0). Goodwill increased by SEK 374.5 m in 2017 in connection with company acquisitions. Other intangible assets amounted to SEK 296.7 m (193.9) and pertain primarily to customer contracts and software.
Total reported deferred tax assets amounted to SEK 13.0 m on 31 December 2017, of which SEK 9.5 m pertains to tax loss carryforwards. On 31 December 2017 the Group's accumulated tax loss carryforwards amounted to approximately SEK 80 m. Deferred tax assets attributable to loss carryforwards are reported as an asset to the extent it is likely that the loss carryforwards can be offset against surpluses in future taxation.
Shareholders' equity amounted to SEK 982.5 m (964.7) on 31 December 2017. During the second quarter share dividends of SEK 68.5 m were paid out. Changes in the Group's equity are shown on page 49. No sharesavings, option or convertible programmes were outstanding as per 31 December 2017.
Provisions, which are reported among non-current and current liabilities on the consolidated balance sheet, amounted to SEK 109.8 m on 31 December 2017, of which SEK 93.8 m pertain to estimated contingent consideration for completed company acquisitions. During 2017, payments for previously expensed contingent consideration totalled SEK 42.6 m.
The average number of employees in the Group in 2017 was 1,317 (1,160). At year-end the number of employees was 1,511 (1,277).
Addnode Group had no holdings of treasury shares on 31 December 2016 nor 31 December 2017. During 2017 no shares were repurchased or transferred. The number of registered shares and shares outstanding on both 31 December 2016 and 31 December 2017 was 30,427,256.
The Parent Company's operations consist of joint-group functions for market communication, financial reporting and control, financing, tax issues, business development and company acquisitions. Net sales in 2017 amounted to SEK 10.4 m (9.1) and pertained mainly to invoicing to subsidiaries for performed services. Profit after financial items was SEK 106.1 m (71.3), including dividends of SEK 40.1 m (47.0) from subsidiaries, Group contributions of SEK 119.8 m (68.2) from subsidiaries, and impairment of shares in subsidiaries of SEK 19.0 m (18.0).
Cash and cash equivalents on 31 December 2017 amounted to SEK 0.0 m (96.6), and the utilised part of the bank overdraft facility was SEK 41.6 m (0.0). Investments in shares in subsidiaries amounted to SEK 630.5 m, and transfers of shares in subsidiaries to other Group companies amounted to SEK 9.0 m. No significant investments were made in intangible non-current assets or in property, plant and equipment. During the second quarter share dividends of SEK 68.5 m were paid out. During 2017 payments of SEK 52.9 m were made for contracted and previously expensed earn-out payments for company acquisitions. On 31 December 2017 the Parent Company's provisions for estimated contingent consideration amounted to SEK 90.4 m, which is expected to be paid out in 2019. Within the framework of existing credit facilities, new bank loans of SEK 422.9 m were drawn in 2017, and an additional SEK 42.5 m was drawn in January 2018. The Parent Company has an existing bank overdraft facility of SEK 100 m. In addition, on 30 June 2017 the Parent Company expanded its acquisition credit by SEK 350 m from SEK 400 m previously, to SEK 750 m, to finance acquisitions. The facility has a term of four years, and a total of SEK 626 m has been drawn as of the publication date of this Annual Report.
The Group does not conduct any operations requiring permits according to applicable environmental regulations.
The table below shows the impact that various factors have on earnings.
| Impact | Change | Impact on earnings* |
|---|---|---|
| Net sales | +/– 1% | 0.51 SEK |
| Gross margin | +/– 1% | 0.83 SEK |
| Payroll costs | +/– 1% | 0.33 SEK |
| Other operating expenses | +/– 1% | 0.15 SEK |
* All else equal, earnings per share before tax for the 2017 financial year.
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 is not represented as being comprehensive, and the risks and uncertainties are not listed in any order of significance.
Demand from customers is largely coupled 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 divisions with various customer categories and technologies, which creates a diversified spread of risk 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 divisions, 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.
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 potential short-term drop in revenue. Addnode Group has a broad customer base of approximately 5,000 customers and is not dependent on individual customers. The 20 largest customers in 2017 accounted for 15 per cent of net sales. The Group's customers are primarily in Sweden, Germany, the UK, Norway, Finland and the USA, 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 share 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.
There are no individual competitors for Addnode Group's total offering. In the various sub-markets, Addnode Group encounters a large number of local players and a smaller 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.
To be able to continue growing, Addnode Group is dependent on its ability to attract, recruit and develop new employees, as well as retain existing employees and key persons. Each company within the Group is responsible for its own competence succession. Managers are largely recruited internally or through acquisitions.
Addnode Group has a large proportion of proprietary software, SaaS business 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, such as 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.
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.
The Group's exposure to various financial risks, including currency risks, interest rate risks and other price risks, credit risks and liquidity risks, is considered to be 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 39 on pages 78–80 for a description of the financial risks identified by Addnode Group and how these are managed.
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.
The Board has not changed its assessment of the future outlook compared with the publication of the 2017 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 strong underlying potential. Addnode Group's growth strategy is to grow organically and through acquisitions of new businesses in the aim of adding new, complementary offerings and additional expertise. The policy of not issuing a forecast stands firm.
Addnode Group's Class B shares have been listed on Nasdaq Stockholm since 1999. Class A shares carry ten votes each, and Class B and C shares carry one vote each; only Class B shares are listed. Class C shares do not carry entitlement to dividends. On 31 December 2017 the number of Class A shares was 987,174 the number of Class B shares was 29,440,082 and the number of Class C shares was 0.
The largest shareholder in terms of voting rights is Aretro Capital Group AB, which at 31 December 2017 held 20.1 per cent of the votes and 7.5 per cent of the share capital. Aretro Capital Group AB is jointly owned via companies by Staffan Hanstorp and Jonas Gejer. Staffan Hanstorp is Chairman of the Board of Addnode Group AB. Jonas Gejer is President of TechniaTranscat AB and Head of the Product Lifecycle Management division. The second largest owner in terms of voting rights is Vidinova AB, which at 31 December 2017 held 12.0 per cent of the votes and 4.8 per cent of the share capital. Vidinova AB is owned via companies by Dick Hasselström, who is also a director on Addnode Group's Board.
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 members, with a maximum of two deputy members. Election of Board members and any deputy members is to take place at the Annual General Meeting. The Articles of Association do not contain any general stipulations concerning the appointment or dismissal of Board members or amendments to the Articles of Association.
No share-savings, option or convertible programmes are currently in effect.
A separate Corporate Governance Report, which includes a description of the work of the Board of Directors and Nomination Committee, among other things, has been prepared and is presented on pages 89–97 in the printed version of this document. Disclosures about the most important elements of the Group's systems of internal control and risk management in connection with the preparation of the consolidated financial statements are provided on pages 94–95 of the Corporate Governance Report.
The 2017 AGM authorised the Board, on one or more occasions during the period until the next AGM, to decide on purchases of a maximum number of Class B treasury shares so that the Company's holding following such purchase does not exceed 10 per cent of all the shares in the Company at any given time. The aim of any share repurchases is primarily to enable share transfers in connection with the financing of company acquisitions and other types of strategic investments. Up until the date of publication of this Annual Report, no shares were purchased with the support of this authorisation. The 2017 AGM also authorised the Board, on one or more occasions prior to the next AGM, to decide on the transfer of Class B shares in the Company to a third party. The number of shares transferred may not exceed the total number of treasury shares held by the Company at any given time. Transfers may take place on or outside of Nasdaq Stockholm, entailing a right to deviate from shareholders' preferential rights. The reason for permitting the Board to deviate from shareholders' preferential rights is to enable financing of potential company acquisitions and other types of strategic investments in a cost-efficient manner. Up until the date of publication of this Annual Report, no treasury shares were transferred pursuant to this authorisation.
To finance potential company acquisitions using treasury shares, the Board received a mandate at the AGM in May 2017 for the period until the next AGM to make decisions about new share issues. Through decisions pursuant to this authorisation, the share capital may increase by a maximum of SEK 36 m through the issuance of a maximum of 3,000,000 new shares upon full subscription. Up until the date of publication of this Annual Report, no new shares were issued pursuant to this authorisation.
Guidelines for remuneration and other terms of employment for senior executives, which were adopted by the 2017 AGM, are described in Note 5 on pages 61–62.
The 2018 Annual General Meeting will decide on guidelines for remuneration of senior executives. By senior executives pertain is meant the President of the Parent Company and other members of Group Management as described in the Corporate Governance Report on page 97. The Board of Directors' proposed guidelines ahead of the 2018 AGM are as follows:
Remuneration of the President of the Parent Company and other members of Group Management shall normally consist of a fixed salary, variable remuneration, share-based incentive programmes and other customary benefits and pensions. Fixed salary shall be competitive and ensure that Addnode Group is able to recruit competent executives. As a general rule, the fixed salary is reviewed once a year and is to take into account the individual's qualitative performance. In addition to the fixed salary, variable remuneration may be payable. Variable remuneration shall be based on results achieved and/or individually set specific targets. For the President of the Parent Company, the variable cash remuneration shall be based on earnings achieved by the Group. Variable cash remuneration is capped at nine months' salary. For other members of Group Management, variable cash remuneration is capped at six months' salary and shall be based primarily on the operation for which the individual is responsible. Share-based incentive programmes shall ensure long-term commitment to the Group's development and promote personal shareholdings in the Company.
Pensions shall always be defined-contribution solutions in order to generate predictability with respect to the Company's future obligations. Pension premiums are payable at a maximum amount of 30 per cent of the individual's current fixed annual salary.
Other remuneration and benefits are to be on market terms and shall support the executive's ability to perform his/her duties. Other benefits pertain primarily to company cars or mileage allowance.
Senior executives' employment contracts include stipulations on notice periods. The policy is that employment may be terminated at the request of one party with a notice period of a minimum of six and a maximum of 12 months. During the notice period, unchanged salary, remuneration and benefits shall be payable.
These guidelines shall apply for employment contracts entered into after the AGM and for any amendments to existing conditions. The Board is entitled to depart from these guidelines only if specific reasons exist in individual cases.
Profit for the year of SEK 70,971,847 and other unrestricted shareholders' equity, totalling SEK 328,741,815, together totalling SEK 399,713,662, are at the disposal of the Annual General Meeting. The Board of Directors proposes that these earnings be disposed of as follows:
| Total | 399,713,662 |
|---|---|
| To be carried forward | 331,252,336 |
| Dividend to the shareholders of SEK 2.25 per share | 68,461,326 |
The Board's reasoned statement regarding the proposed distribution of earnings is available on the Company's website: www.addnodegroup. com. It is also available from the Company upon request.
| SEK thousands 1 January–31 December | Note | 2017 | 2016 |
|---|---|---|---|
| Net sales | 2, 3, 41 | 2,519,801 | 2,195,016 |
| Operating expenses | |||
| Purchases of goods and services | 41 | -968,327 | -863,340 |
| Other external costs | 6, 9 | -311,845 | -257,975 |
| Personnel costs | 4, 5 | -1,057,633 | -930,966 |
| Capitalised work performed by the company for its own use | 16 | 45,715 | 42,703 |
| Revaluation of contingent consideration | 59 | — | |
| Depreciation/amortisation and impairment of intangible non-current | |||
| assets and property, plant and equipment | 16, 17 | -97,915 | -71,745 |
| Operating profit | 129,855 | 113,693 | |
| Financial income | 10 | 1,489 | 1,807 |
| Financial expenses | 11 | -12,491 | -6,686 |
| Profit after financial items | 118,853 | 108,814 | |
| Tax | 12, 13 | -29,302 | -26,481 |
| Profit for the year | 89,551 | 82,333 | |
| Attributable to: | |||
| Owners of the Parent Company | 89,551 | 82,333 | |
| Non-controlling interests | 0 | 0 | |
| Share data | |||
| Earnings per share before and after dilution, SEK | 14 | 2.94 | 2.71 |
| Shareholders' equity per share outstanding, SEK | 32.29 | 31.70 | |
| Average number of shares outstanding before and after dilution, thousands | 30,427 | 30,427 | |
| Number of shares outstanding at year-end, thousands | 30,427 | 30,427 | |
| Number of registered shares at year-end, thousands | 30,427 | 30,427 |
| SEK thousands 1 January–31 December | 2017 | 2016 |
|---|---|---|
| Net profit for the year | 89,551 | 82,333 |
| Other comprehensive income, items that will not be reclassified to profit or loss: | ||
| Actuarial gains and losses on pension obligations | 31 | -251 |
| Other comprehensive income, items that may be reclassified to profit or loss: | ||
| Exchange rate difference upon translation of foreign operations | 12,818 | 36,566 |
| Hedge of net investments in foreign operations | -16,052 | -2,172 |
| Total comprehensive income for the year, net after tax 12 |
-3,203 | 34,143 |
| Comprehensive income for the year | 86,348 | 116,476 |
| Attributable to: | ||
| Owners of the Parent Company | 86,348 | 116,476 |
| Non-controlling interests | 0 | 0 |
| SEK thousands per 31 December | Note | 2017 | 2016 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible non-current assets | 16 | 1,654,412 | 1,165,928 |
| Property, plant and equipment | 17, 18 | 39,825 | 36,742 |
| Deferred tax assets | 13 | 12,950 | 5,229 |
| Long-term securities holdings | 21 | 7,553 | 11,110 |
| Non-current receivables | 22 | 7,501 | 7,455 |
| Total non-current assets | 1,722,241 | 1,226,464 | |
| Current assets | |||
| Inventories | 1,062 | 1,331 | |
| Trade receivables | 538,204 | 430,947 | |
| Tax assets | 16,937 | 15,956 | |
| Other receivables | 8,869 | 8,040 | |
| Prepaid expenses and accrued income | 23 | 164,866 | 191,251 |
| Cash and cash equivalents | 37 | 173,195 | 111,473 |
| Total non-current assets | 903,133 | 758,998 | |
| TOTAL ASSETS | 2,625,374 | 1,985,462 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | 25 | ||
| Share capital | 25 | 365,127 | 365,127 |
| Other capital contributions | 214,394 | 214,394 | |
| Reserves | -13,041 | -9,807 | |
| Profit brought forward | 416,027 | 394,939 | |
| Shareholders' equity attributable to owners of the Parent Company | 982,507 | 964,653 | |
| Non-controlling interests | – | 7 | |
| Total shareholders' equity | 982,507 | 964,660 | |
| Non-current liabilities | |||
| Non-current interest-bearing liabilities | 27 | 14,679 | 9,100 |
| Deferred tax liabilities | 13 | 76,217 | 51,178 |
| Provisions | 29 | 101,091 | 7,198 |
| Total non-current liabilities | 191,987 | 67,476 | |
| Current liabilities | |||
| Current interest-bearing liabilities | 27 | 606,073 | 168,197 |
| Trade payables | 133,339 | 108,624 | |
| Taxes payable | 22,672 | 15,866 | |
| Advances from customers | 17,539 | 17,973 | |
| Other liabilities | 118,673 | 92,474 | |
| Accrued expenses and deferred income | 31 | 543,843 | 505,173 |
| Provisions | 29 | 8,741 | 45,019 |
| Total current liabilities | 1,450,880 | 953,326 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 2,625,374 | 1,985,462 |
Pledged assets and contingent liabilities are reported in Note 31 and Note 32, respectively.
| SEK thousands 1 January–31 December | Note | 2017 | 2016 |
|---|---|---|---|
| Operating activities | |||
| Profit after financial items | 34 | 118,853 | 108,814 |
| Adjustments for non-cash items | 35 | 105,323 | 79,066 |
| Income tax paid | -28,827 | -16,377 | |
| Cash flow from operating activities before changes in working capital | 195,349 | 171,503 | |
| Changes in working capital | |||
| Decrease/increase in inventories | 270 | -82 | |
| Decrease in receivables | 15,838 | 43,047 | |
| Decrease in current liabilities | -64,312 | -56,714 | |
| Total changes in working capital | -48,204 | -13,749 | |
| Cash flow from operating activities | 147,145 | 157,754 | |
| Investing activities | |||
| Acquisition of: | |||
| Intangible non-current assets | -48,853 | -51,334 | |
| Property, plant and equipment | -16,140 | -16,600 | |
| Financial assets | -1,913 | -1,855 | |
| Subsidiaries and operations | 36 | -375,122 | -67,537 |
| Sales of property, plant and equipment | 3,043 | 1,542 | |
| Repayment of receivables | 32 | 76 | |
| Cash flow from investing activities | -438,953 | -135,708 | |
| Financing activities | |||
| Dividend paid | -68,461 | -68,461 | |
| Loans raised | 38 | 422,875 | 67,500 |
| Repayment of loans | 38 | -2,686 | -17,849 |
| Cash flow from financing activities | 351,728 | -18,810 | |
| Change in cash and cash equivalents | 59,920 | 3,236 | |
| Cash and cash equivalents at start of year | 111,473 | 102,855 | |
| Exchange rate difference in cash and cash equivalents | 1,802 | 5,382 | |
| Cash and cash equivalents at year-end | 37 | 173,195 | 111,473 |
| Attributable to owners of the Parent Company | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other capital contribu tions |
Reserves 1 | Profit brought forward |
Non-con trolling interests |
Total share holders' equity |
| Shareholders' equity 1/1/2016 | 365,127 | 214,394 | -44,201 | 381,318 | 7 | 916,645 |
| Comprehensive income | ||||||
| Net profit for the year | — | — | — | 82,333 | — | 82,333 |
| Other comprehensive income, items that will not be reclassified to profit or loss: |
||||||
| Actuarial gains and losses on pension obligations | — | — | — | -251 | — | -251 |
| Other comprehensive income, items that may be reclassified to profit or loss: |
||||||
| Exchange rate differences upon translation of foreign operations | — | — | 36,566 | — | — | 36,566 |
| Hedge of net investments in foreign operations | — | — | -2,172 | — | — | -2,172 |
| Total other comprehensive income | — | — | 34,394 | -251 | — | 34,143 |
| Total comprehensive income | — | — | 34,394 | 82,082 | — | 116,476 |
| Transactions with shareholders | ||||||
| Dividend | — | — | — | -68,461 | — | -68,461 |
| Total transactions with shareholders | — | — | — | -68,461 | — | -68,461 |
| Shareholders' equity, 31/12/2016 | 365,127 | 214,394 | -9,807 | 394,939 | 7 | 964,660 |
| Comprehensive income | ||||||
| Net profit for the year | — | — | — | 89,551 | — | 89,551 |
| Other comprehensive income, items that will not be reclassified to profit or loss: |
||||||
| Actuarial gains and losses on pension obligations | — | — | — | 31 | — | 31 |
| Other comprehensive income, items that may be reclassified to profit or loss: |
||||||
| Exchange rate differences upon translation of foreign operations | — | — | 12,818 | — | — | 12,818 |
| Hedge of net investments in foreign operations | — | — | -16,052 | — | — | -16,052 |
| Total other comprehensive income | — | — | -3,234 | 31 | — | -3,203 |
| Total comprehensive income | — | — | -3,234 | 89,582 | — | 86,348 |
| Transactions with shareholders | ||||||
| Dividend | — | — | — | -68,461 | — | -68,461 |
| Acquisitions from non-controlling interests | — | — | — | -33 | -7 | -40 |
| Total transactions with shareholders | — | — | — | -68,494 | -7 | -68,501 |
| Shareholders' equity, 3/12/2017 | 365,127 | 214,394 | -13,041 | 416,027 | — | 982,507 |
1 Pertains to exchange rate differences upon translation of foreign operations, and gains and
losses attributable to hedging of net investments in foreign operations (see also Note 25).
| SEK thousands 1 January–31 December | Note | 2017 | 2016 |
|---|---|---|---|
| Net sales | 41 | 10,411 | 9,141 |
| Operating expenses | |||
| Other external costs | 6, 41 | -15,166 | -10,978 |
| Personnel costs | 4 | -22,213 | -20,878 |
| Depreciation of property, plant and equipment | 16, 17 | -140 | -5 |
| Operating profit | -27,108 | -22,720 | |
| Net financial items | |||
| Profit from participations in Group companies | 10 | 140,886 | 97,246 |
| Profit from other securities that are non-current assets | 10 | 788 | 910 |
| Interest income and similar profit/loss items | 10 | 1,617 | 1,617 |
| Interest expense and similar profit/loss items | 11 | -10,061 | -5,722 |
| Profit after financial items | 106,122 | 71,331 | |
| Appropriations | |||
| Provision to tax allocation reserve | -21,174 | -9,539 | |
| Profit before tax | 84,948 | 61,792 | |
| Tax | 12, 13 | -13,976 | -7,117 |
| Net profit for the year | 70,972 | 54,675 |
| SEK thousands 1 January–31 December | Note | 2017 | 2016 |
|---|---|---|---|
| Net profit for the year | 70,972 | 54,675 | |
| Total other comprehensive income for the year, net after tax | 0 | 0 | |
| Comprehensive income for the year | 70,972 | 54,675 |
| SEK thousands per 31 December Note |
2017 | 2016 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | ||
| Software 16 |
763 | 898 |
| Property, plant and equipment | ||
| Equipment and installations 17 |
1 | 6 |
| Financial assets | ||
| Participations in Group companies 19 |
1,769,134 | 1,180,437 |
| Other long-term securities holdings 21 |
1,550 | 7,050 |
| Deferred tax assets 13 |
44 | 44 |
| Receivables from Group companies | 1,001 | 1,054 |
| Other non-current receivables 22 |
309 | 341 |
| Total financial assets | 1,772,038 | 1,188,926 |
| Total non-current assets | 1,772,802 | 1,189,830 |
| Current assets | ||
| Current receivables | ||
| Receivables from Group companies 24 |
123,762 | 108,656 |
| Other receivables | 1 | — |
| Prepaid expenses and accrued income 23 |
4,266 | 1,239 |
| Total current receivables | 128,029 | 109,895 |
| Cash and bank balances 24 |
— | 96,585 |
| Total current assets | 128,029 | 206,480 |
| TOTAL ASSETS | 1,900,831 | 1,396,310 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Shareholders' equity 25 |
||
| Restricted shareholders' equity | ||
| Share capital 25 |
365,127 | 365,127 |
| Statutory reserve | 88,965 | 88,965 |
| Unrestricted shareholders' equity 15 |
||
| Share premium reserve | 125,428 | 125,428 |
| Profit brought forward | 203,314 | 217,100 |
| Net profit for the year | 70,972 | 54,675 |
| Total shareholders' equity | 853,806 | 851,295 |
| Untaxed reserves 26 |
30,713 | 9,539 |
| Provisions | ||
| Other provisions 29 |
90,749 | 41,413 |
| Non-current liabilities | ||
| Other long-term liabilities 28 |
10,970 | 4,000 |
| Current liabilities | ||
| Liabilities to credit institutions 27, 30 |
619,809 | 155,551 |
| Trade payables | 673 | 1,000 |
| Liabilities to Group companies 24 |
262,812 | 306,526 |
| Taxes payable Other liabilities |
7,306 11,879 |
5,823 11,398 |
| Accrued expenses and deferred income 31 |
12,114 | 9,765 |
| Total current liabilities | 914,593 | 490,063 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 1,900,831 | 1,396,310 |
Pledged assets and contingent liabilities are reported in Note 32 and Note 33, respectively.
| SEK thousands 1 January–31 December Note |
2017 | 2016 |
|---|---|---|
| Operating activities | ||
| Profit after financial items 34 |
106,122 | 71,331 |
| Adjustments for non-cash items 35 |
-99,083 | -48,120 |
| Income tax paid | -12,493 | — |
| Cash flow from operating activities before changes in working capital | -5,454 | 23,211 |
| Changes in working capital | ||
| Change in current receivables | -3,028 | -787 |
| Change in current liabilities | 1,630 | 2,137 |
| Total changes in working capital | -1,398 | 1,350 |
| Cash flow from operating activities | -6,852 | 24,561 |
| Investing activities | ||
| Acquisitions of intangible assets | — | -898 |
| Acquisitions of and investments in participations in Group companies | -566,918 | -86,249 |
| Sale of participations in Group companies | 9,000 | 21,250 |
| Repayment of capital from Group companies | 19,099 | — |
| Cash flow from investing activities | -538,819 | -65,897 |
| Financing activities | ||
| Paid dividend | -68,461 | -68,461 |
| Loans raised | 422,875 | 67,500 |
| Utilisation of bank overdraft | 41,632 | — |
| Repayment of loans | — | -15,501 |
| Change in intra-Group receivables and liabilities | -14,081 | 5,051 |
| Group contributions received | 68,197 | 70,975 |
| Cash flow from financing activities | 450,162 | 59,564 |
| Change in cash and cash equivalents | -95,509 | 18,228 |
| Cash and cash equivalents at start of year | 96,585 | 80,339 |
| Exchange rate differences in cash and cash equivalents | -1,076 | -1,982 |
| Cash and cash equivalents at year-end 24 |
0 | 96,585 |
| SEK thousands | Share capital | Statutory reserve |
Unrestricted shareholders' equity |
Total shareholders' equity |
|---|---|---|---|---|
| Shareholders' equity, 1/1/2016 | 365,127 | 88,965 | 410,989 | 865,081 |
| Comprehensive income | ||||
| Net profit for the year | — | — | 54,675 | 54,675 |
| Total other comprehensive income | — | — | — | — |
| Total comprehensive income | — | — | 54,675 | 54,675 |
| Transactions with shareholders Dividend |
— | — | -68,461 | -68,461 |
| Total transactions with shareholders | — | — | -68,461 | -68,461 |
| Shareholders' equity, 31/12/2016 | 365,127 | 88,965 | 397,203 | 851,295 |
| Comprehensive income | ||||
| Net profit for the year | — | — | 70,972 | 70,972 |
| Total other comprehensive income | — | — | — | — |
| Total comprehensive income | — | — | 70,972 | 70,972 |
| Transactions with shareholders | ||||
| Dividend | — | — | -68,461 | -68,461 |
| Total transactions with shareholders | — | — | -68,461 | -68,461 |
| Shareholders' equity, 31/12/2017 | 365,127 | 88,965 | 399,714 | 853,806 |
The most important accounting policies applied when preparing these consolidated financial statements are stated below. These policies have been applied consistently for all years presented, unless otherwise indicated.
The consolidated financial statements have been prepared in accordance with the Swedish Annual Accounts Act, Swedish Financial Reporting Board (RFR) recommendation RFR 1 Supplementary Accounting Rules for Groups, and International Financial Reporting Standards (IFRS) as endorsed by the EU. The consolidated financial statements have been prepared in accordance with the cost method, except for remeasurement of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) measured at fair value through profit or loss.
Preparing financial statements in conformity with IFRS requires the use of certain important accounting estimates. It also requires management to make certain assessments in applying the Group's accounting policies. The areas involving a high degree of assessment or complexity, or areas where assumptions and estimates are of significant importance for the consolidated financial statements, are addressed in Note 40.
The new standards, amendments and interpretations of existing standards that took effect in 2017 have not had any impact on the Group's financial position or financial statements.
The following standards and amendments of existing standards have been published, but had not yet begun to be applied in 2017.
IFRS 9 Financial Instruments (effective as from 1 January 2018, endorsed by the EU) addresses classification, measurement and recognition of financial assets and liabilities. The complete version of IFRS 9 was issued in July 2014 and replaces the parts of IAS 39 that pertain to classification and measurement of financial instruments. The standard retains, but simplifies, the measurement models and specifies three measurement categories for financial assets: amortised cost, fair value through other comprehensive income, and fair value through profit or loss. Classification depends on the company's business model and the characteristics of the instrument. Investments in equity instruments are to be measured at fair value through profit or loss, but there is the option to recognise the instrument's changes in value in other comprehensive income on initial recognition. No reclassification to profit or loss will then take place when the instrument is divested. IFRS 9 also introduces a new model for the calculation of a credit loss reserve based on expected credit losses.
The classification and measurement of financial liabilities is not changed, except for liabilities measured at fair value through profit or loss based on the fair value option. Changes in value attributable to changes in own credit risk are to be recognised in other comprehensive income.
IFRS 9 reduces the requirements for the application of hedge accounting by replacing the 80-125 criterion with a requirement for the economic relationship between the hedge instrument and the hedged item, and for the hedge ratio to be the same as that actually used in risk management. Hedge disclosures have also been changed slightly compared with those provided under IAS 39.
IFRS 9 will be applied as from 2018, but its implementation will not have any significant effect on the Group's classification and measurement of financial instruments or on the Group's hedge accounting. The new model for calculating the credit loss reserve is based on expected credit losses instead of confirmed losses, which entails earlier recognition of credit losses, but the effect is expected to be minimal, since the Group has historically had an insignificant level of credit losses. The new standard does not give rise to any recalculation effects in connection with its adoption, and there is this no need to adjust shareholders' equity in connection with adoption of the new standard.
IFRS 15 (effective as from 1 January 2018, endorsed by the EU) is the new standard for revenue recognition and replaces IAS 18 Revenue and IAS 11 Construction Contracts and all associated interpretations (IFRIC and SIC). Revenue is to be recognised when control of the sold goods or service is transferred to the customer; this replaces the previous policy of recognising revenue when the risks and benefits have been transferred to the buyer. A customer has control of a good or service when it can direct the use of the asset and obtain benefits from it. The core principle of IFRS 15 is that a company recognises revenue that best depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. A five-step model framework provides guidance for recognition:
IFRS 15 contains expanded disclosure requirements, which aim to provide useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
IFRS 15 will be applied starting in 2018, however, its implementation will not have any material effect on the Group's earnings and financial position. Sales of licences for proprietary software are included in some cases as a part of major implementation projects. After the adoption of IFRS 15, such licence revenue will be recognised gradually in pace with the implementation, since these performance obligations have been determined to be so integrated that they do not constitute distinct obligations. This entails that licence revenues for proprietary software will in certain cases be recognised at another point in time – usually somewhat later – compared with the current reporting. The Group will apply this standard retrospectively, which entails that comparison amounts for 2017 will be recalculated and that periods before 2017 will be recalculated through an adjustment of the opening balance as per 1 January 2017. The changeover to IFRS 15 will affect previously presented financial statements in the following ways:
IFRS 16 Leases (effective as from 1 January 2019, endorsed by the EU) was published in January 2016 and replaces IAS 17 Leases and related inter-
pretations. The greatest effect for lessees is that there will no longer be any difference between operating and finance leases. All lease contracts, including rents of premises, are to be recognised on the balance sheet with the exception of short-term leases and leases of low value. Recognition is based on the view that the lessee has a right to use an asset during a specific period of time and at the same time has an obligation to pay for this right. A lessee shall therefore recognise a leasing asset and a financial liability on the balance sheet. In the income statement, the linear, operating lease cost is replaced by a cost for depreciating the leased assets and an interest expense for the financial liability. At present, lessees do not recognise operating leases on the balance sheet.
IFRS 16 will be applied as from 2019. Application of this standard will not have any effects on the Group's financial statements, and the Group is currently evaluating the effects of introduction of the standard.
Other published new and amended standards and interpretations of existing standards that have not yet come into effect in 2017 are not expected to have any material effect on the consolidated financial statements.
The consolidated financial statements cover the Parent Company and the companies over which the Parent Company, directly or indirectly, has control. The Parent Company has control of an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its influence over the entity.
The consolidated financial statements have been prepared in accordance with the acquisition method, which entails that the shareholders' equity of subsidiaries on acquisition, determined as the difference between the fair value of the assets and the liabilities, is eliminated in its entirety. Only the part of the subsidiaries' shareholders' equity that accrued after the acquisition is included in the Group's shareholders' equity.
The purchase price for the acquisition of a subsidiary consists of the fair value of the assets transferred to the former owners of the acquired company, the liabilities incurred to the former owners, and the new shares issued by the Group. The purchase price also includes the fair value of assets or liabilities resulting from a contingent consideration arrangement. Subsequent changes in the fair value of contingent consideration are recognised through profit or loss. Transaction costs in conjunction with acquisitions are expensed in the consolidated income statement when they arise.
Companies acquired during the year are included in the consolidated financial statements in amounts pertaining to the period after the acquisition. Profit from companies sold during the year is included in the consolidated income statement for the period until the divestment date.
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). Swedish kronor (SEK), which is the Parent Company's functional currency and presentation currency, is used in the consolidated financial statements. All foreign subsidiaries are translated to SEK by applying the current method. This means that all of the assets and liabilities of foreign subsidiaries are translated at the exchange rate in effect on the balance sheet date. All items in the income statements are translated at the average rate for the year. Translation differences are recognised in the consolidated statement of comprehensive income.
Intra-Group transactions and balance sheet items, as well as unrealised gains on transactions between Group companies, are eliminated in their entirety. Unrealised losses are also eliminated, unless the
transaction provides evidence of impairment of the transferred asset. Where necessary, the accounting policies for subsidiaries have been adjusted to guarantee consistent application of the Group's policies.
The consolidated income statement includes non-controlling interests (previously termed "minority shares") under net profit for the year. In the consolidated balance sheet, non-controlling interests are reported as a separate item under the Group's shareholders' equity.
In connection with each individual company acquisition, the Group determines whether all non-controlling interests are to be measured at either fair value or at the proportionate share of net assets of the acquired company. Transactions with non-controlling interests that do not result in a change in control are reported in shareholders' equity. When the Group no longer has control, each remaining holding is measured at fair value at the date on which control ceased. Changes in carrying amounts are then recognised in the consolidated income statement. The fair value subsequently comprises the basis of future reporting of the remaining holding as an associated company, joint venture or financial asset.
Service assignments performed on a current account basis are recognised in revenue at the same rate as the services are performed, i.e., both revenue and expenses are recognised in the period in which they are earned and consumed, respectively. Fees earned as per the balance sheet date, that have not been invoiced, are recognised as accrued income. When the outcome of a fixed-price assignment can be reliably calculated, income and expenses attributable to the assignment are recognised as revenue and expenses in proportion to the degree of completion on the balance sheet date (percentage of completion). The degree of completion is primarily determined based on the number of hours as per the balance sheet date in proportion to the estimated total number of hours for the assignment. If it is difficult to calculate the earnings of an assignment, yet nevertheless probable that costs incurred will be covered by the customer, revenue is recognised on the balance sheet date at an amount corresponding to the costs incurred for the assignment. Accordingly, no profit is recognised.
When the outcome of an assignment cannot be reliably calculated, only the costs that the client is expected to pay are recognised as revenue. No revenue is recognised if it is probable that expenses incurred will not be paid by the client. An expected loss is immediately recognised as an expense to the extent that it can be calculated.
Fixed-price assignments currently make up a small portion of the Group's net sales. Invoiced fees for fixed-price service assignments that have not been performed are recognised as advances from customers.
Revenue for sales of goods is recognised on complete delivery to the customer, and revenue for data operation services is recognised in pace with the services being performed. Licence fees for software and software service agreements for which companies in the Group do not have any commitments to customers are recognised as revenue on the delivery date. Revenue from support and maintenance agreements for which the companies in the Group have a commitment to customers are allocated over the period of agreement.
Reported income taxes include tax to be paid or received for the current year, adjustments of current tax for previous years and changes in deferred tax.
Measurement of all tax liabilities/assets is done at nominal amounts in accordance with the tax regulations and tax rates that have been decided on or announced, and which are likely to be adopted.
Tax is recognised through profit or loss, except when the tax pertains to items recognised in other comprehensive income or directly in shareholders' equity. In such cases, tax is also recognised in other comprehensive income or shareholders' equity.
Deferred tax is calculated using the balance sheet method on all temporary differences arising between the recognised and tax values of assets and liabilities. Deferred tax assets pertaining to tax loss carryforwards or other future tax deductions are recognised to the extent that it is likely that the deductions can be offset against surpluses in connection with future taxation.
Loan receivables and trade receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. These items are distinguished by the fact that they arise when the Group provides funds, goods or services directly to a customer without intending to trade in the receivable. These amounts are included under current assets, with the exception of items falling due more than 12 months after the balance sheet date, which are classified as non-current assets. Loan receivables and trade receivables are initially measured at fair value and subsequently at amortised cost by applying the effective interest method, less any provisions for impairment. A reserve is established for impairment when the amount that is expected to be paid following an individual assessment is less than the carrying amount of the asset.
Receivables and liabilities in foreign currency are measured at the exchange rate in effect on the balance sheet date. In cases where currency hedges have been applied, for example forward cover, both the hedged item and the hedging instrument are measured at fair value. Transactions in foreign currency are translated at the spot rate on the transaction date. Exchange rate differences pertaining to operating receivables and liabilities are recognised in operating profit, while exchange rate differences pertaining to cash and cash equivalents and loans are recognised as financial income and expenses in the income statement. Restatement of liabilities at the exchange rate in effect on the balance sheet date for consideration paid and provisions for estimated contingent consideration in foreign currency is recognised in the consolidated statement of comprehensive income if the requirements for hedge accounting of net investments in foreign operations are met.
Non-current assets are measured at cost less accumulated depreciation and any impairment.
If there is an indication that an asset has declined in value, the recoverable amount of the asset is calculated. If the asset's carrying amount exceeds the recoverable amount, the asset is immediately written down to its recoverable amount.
Software development is conducted mainly within the framework of customer assignments.
Costs that are directly related to identifiable and unique software that is controlled by the Group are reported as intangible non-current assets if there is a clearly defined development project with specific plans for how and when the asset is to be used in the operations, the cost can be calculated reliably, and the asset is expected to generate future financial benefits. In addition, it should also be technically possible to carry out the project, and the resources required to complete
development must be available. Other development costs that do not meet these criteria are expensed as incurred. Development costs that were previously expensed are not reported as an asset in subsequent periods.
The cost of the intangible asset includes direct costs for, for example, consultants and personnel developing proprietary software, and a reasonable share of relevant indirect costs. Scheduled amortisation is done on straight line over the estimated useful life, which is either three or five years. A three-year amortisation schedule is used for software that is developed as an additional component to an external vendor's software or platform. A five-year amortisation schedule is used for entirely proprietary software that is not based on an external vendor's software or platform. Amortisation is recognised from the date on which the software becomes operational.
Goodwill consists of the amount by which the cost for acquisition of companies or operations exceeds the fair value of the acquired identifiable net assets on the acquisition date. In the purchase price allocation analysis, acquired intangible assets, such as customer relationships, software and certain trademarks, are stated at market value before the remainder is attributed to goodwill.
Goodwill and other intangible assets with indefinite useful life are measured at cost less any impairment. Scheduled amortisation is not conducted; instead, an impairment test is conducted tested yearly or more often if there is an indication of a decline in value.
Other intangible assets pertain mainly to customer agreements, acquired software and certain trademarks. These assets are recognised at cost less scheduled amortisation. Amortisation is done on a straightline basis over the estimated useful life. Customer contracts and acquired software are amortised over a period of either five or seven years, and trademarks are amortised over a period of five years.
Property, plant and equipment are reported at cost less depreciation. Costs for repairs and maintenance are expensed.
Property, plant and equipment are depreciated on straight-line basis over the estimated useful life of the assets. The asset's residual value is taken into account when determining the depreciable amount of the asset. Equipment and installations are depreciation over a period of three to five years. Depreciation of buildings is done at 4 per cent per year.
When a lease entails that the Group, in its capacity as lessee, essentially enjoys the economic benefits and bears the financial risks attributable to the leased asset, then the asset is reported as a non-current asset on the consolidated balance sheet. A corresponding obligation to pay future leasing fees is reported as a liability. Each lease payment is divided into amortisation of the liability and financial expenses to determine a fixed interest rate for the liability recognised in each respective period.
Leases under which a significant portion of the risks and benefits associated with ownership are retained by the lessor are classified as operating leases. Leasing fees for operating leases are expensed in the income statement on a straight-line basis over the term of the lease.
Not 1 cont.
Financial instruments include cash and cash equivalents, securities holdings, receivables, operating liabilities, liabilities under finance leases, borrowings and any derivative instruments. Purchases and sales of securities and derivative instruments are recognised on the trade date, i.e., the date on which a binding purchase or sale contract was signed.
Securities intended to held in the long term are attributed to the measurement categories of either available-for-sale financial assets, which are measured at fair value, or financial assets at fair value through profit or loss. Holdings of short-term investments are attributed to the measurement categories of either held-to-maturity investments, which are measured at amortised cost, or financial assets at fair value through profit or loss. The measurement category is determined separately for each holding of securities based on nature and the purpose of the holding.
For the financial assets at fair value through profit or loss category, changes in fair value are recognised as financial income and financial expenses, respectively, in profit or loss. However, changes in value regarding forward exchange contracts are recognised in operating profit (see below). For the financial liabilities at fair value through profit or loss category (primarily provisions for estimated contingent consideration), changes in value are recognised in operating profit. Changes in fair value for the available-for-sale financial assets category are recognised in the consolidated statement of comprehensive income over the holding period, and accumulated changes in value in conjunction with sales are recognised as financial income and financial expenses, respectively, in profit or loss. For the latter category, if objective evidence exists to recognise impairment, such as a significant or prolonged decline in fair value, the impairment is recognised as a financial expense in profit or loss. The fair value of market-listed securities is based on the buying price on the balance sheet date.
Outstanding forward exchange contracts are measured at fair value. Forward exchange contracts pertain to hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedges). Hedge accounting according to IAS 39 is applied for certain forward exchange contracts. This means that unrealised changes in value are recognised in the consolidated statement of comprehensive income until the hedged item is to be recognised in the consolidated income statement, at which point the profit or loss for the corresponding foreign exchange forward contract is recognised in the consolidated income statement. When the formal conditions for hedge accounting are not met, outstanding forward exchange contracts are measured as independent financial instruments on their respective balance sheet dates, for which both realised and unrealised changes in value are recognised in operating profit. There were no outstanding forward exchange contracts as per 31/12/2017 or 31/12/2016.
Other financial liabilities are reported at amortised cost. However, liabilities attributable to future minimum leasing fees under finance leases are stated at present value.
Inventories are measured at the lower of cost or net realisable value. Cost is calculated through application of the first-in, first-out (FIFO) principle. Net realisable value consists of the sales price in the operating activities less the estimated selling costs.
Common shares are classified as shareholders' equity. Transaction costs directly attributable to the issuance of new shares are recognised, net after tax, in shareholders' equity as a deduction from the issue proceeds. When any Group company purchases Parent Company shares (a share repurchase), the purchase price paid, including any directly attributable transaction costs (net after tax), reduces the profit brought forward until the shares are cancelled or sold. If these shares are subsequently sold, the amount received for them (net after any transaction costs and tax effects) is recognised in profit brought forward.
Provisions are defined as obligations that are attributable to the financial year or previous financial years and that are certain or likely to arise as per the balance sheet date, but for which the amount and the date on which the obligations are to be realised are uncertain. Provisions for estimated contingent consideration for acquisitions of operations and for restructuring measures that have been decided on are recognised on the balance sheet. A provision for restructuring costs is reported when a detailed plan for the implementation of the measures exists and when this plan has been communicated to those affected.
The Group's pension plans are administered almost exclusively by various insurance institutions. The Group primarily has defined contribution pension plans, although defined benefit pension plans also exist to a certain extent. The Group's payments toward defined contribution plans are recognised as personnel costs in the income statement during the period in which the employee performed the services and that the contributions pertain to.
The defined benefit plans pertain in all essential respects to obligations for retirement pensions and family pensions for salaried employees in Sweden, which are secured through insurance with Alecta. According to a statement from the Swedish Financial Reporting Board, UFR 10, this is classified a defined benefit multiemployer plan. For the 2017 financial year, the Group did not have access to the type of information required for recognising these plans as defined benefit plans. As a result, the ITP (individual supplementary pension) plans that are secured through insurance with Alecta are reported as defined contribution plans. Contributions are recognised as personnel costs in profit or loss when they fall due for payment. Fees for pension insurance taken out with Alecta amounted to SEK 5,747 thousand (5,343) in 2017 and are expected to be roughly the same in 2018. Alecta's surplus can be distributed to the policyholders and/or insureds. At year-end 2017 Alecta's surplus in the form of its collective funding ratio was 154 per cent (149). The collective funding ratio is defined as the market value of Alecta's assets as a percentage of its insurance obligations calculated using Alecta's actuarial assumptions, which are not compatible with IAS 19.
The German subsidiary TechniaTranscat GmbH has defined benefit pension obligations for five employees. The provision reported on the balance sheet for these pension obligations corresponds to the present value of the obligations on the balance sheet date and has been calculated in accordance with IAS 19 by an independent actuary. The provision as per 31/12/2017 amounted to SEK 7,255 thousand (6,857) (see Note 29). Actuarial gains and losses are recognised in the consolidated statement of comprehensive income in the periods in which they arise.
Borrowings are initially measured at fair value, net after transaction costs. Borrowings are subsequently measured at amortised cost, and any difference between the amount received (net after transaction costs) and the repayment amount is recognised through profit or loss, distributed over the term of the loan, using the effective interest method. Borrowings are classified as current liabilities, unless the Group has
an unconditional right to defer payment of the liability for at least 12 months after the balance sheet date.
Trade payables are commitments to pay for goods or services acquired in operating activities from suppliers. Trade payables are classified as current liabilities if they fall due within one year after the balance sheet date; otherwise they are classified as non-current liabilities. Trade payables are initially measured at fair value and thereafter at amortised cost by applying the effective interest method.
Assets with indefinite useful life, such as goodwill, are not amortised but are tested at least yearly for impairment. When impairment tests are performed, goodwill is distributed between the cash-generating units or groups of cash-generating units, determined in accordance with the Group's operating divisions that are expected to benefit from the business combination in which the goodwill item arose.
Depreciated/amortised assets are assessed with regard to any decrease in value whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less selling costs and its value in use.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the function that is responsible for allocating resources and assessing the performance of the operating segments. For the Group, this function has been identified as the President of the Parent Company.
The statement of cash flows is prepared in accordance with the indirect method. The reported cash flows include only transactions that involve cash inflows and outflows.
Cash and cash equivalents include cash, bank balances and shortterm investments with a remaining term of less than three months from the acquisition date.
The Parent Company's accounts are prepared in accordance with the Swedish Annual Accounts Act and recommendation RFR 2 Accounting for Legal Entities from the Swedish Financial Reporting Board (RFR). The recommendation entails that legal entities whose securities are listed on a Swedish stock exchange on the balance sheet date are, as a main rule, to apply the IFRSs used in the consolidated financial statements along with certain exemptions and additions stated in the recommendation.
The accounting policies and calculation methods for the Parent Company are unchanged compared with the preceding year.
Financial instruments, such as long-term securities holdings, are measured at fair value. Changes in fair value are recognised in accordance with the same principles as for the Group (see the description above). Participations in Group companies are reported at cost less any impairment. The cost of participations in Group companies includes transaction costs that arose in conjunction with the acquisition. Contingent consideration is recognised as a part of cost if it is probable that such consideration will be paid. Any remeasurement of estimated contingent consideration in subsequent periods is recognised as a change in the cost of participations in Group companies. Liabilities for consideration in foreign currency and provisions for estimated contingent consideration in foreign currency may in certain cases be treated in the accounts as a hedge of net investments in foreign operations. In such case the Parent Company recognises the liabilities and provisions at the exchange rate in effect on the acquisition date until they are settled, at which point realised exchange rate differences are recognised as a change in the cost of participations in Group companies. Certain bank loans in foreign currency are also treated for accounting purposes as hedges of net investments in foreign currency, entailing that such bank loans are stated at cost. Other assets and liabilities are stated at historical cost less depreciation/amortisation and any impairment. Dividends received and Group contributions received are reported as financial income.
All leases, irrespective of whether they are operating or finance leases, are recognised in the Parent Company as rental agreements (operating leases).
The Group's operations are organised and governed based on the Design Management, Product Lifecycle Management (PLM) and Process Management divisions, which make up the Group's operating segments. No changes have been made in the segment breakdown or in the calculation of the various segments' earnings in 2017. The segment breakdown is based on the Group's products and services.
Company management uses revenue, EBITA and operating profit to make decisions on the allocation of resources, performance analyses and assessments of the performance of the segments. Financial income, financial expenses and income tax are handled at the Group level.
Segments are reported according to the same accounting policies as the Group. The difference between the amount of the segment's operating profit and consolidated profit before tax pertains to financial income SEK 1.5 m (1.8) and financial expenses of SEK -12.5 m (-6.7).
Design Management sells IT solutions for design, project manage-
ment and property management. Product Lifecycle Management offers IT solutions for design and product data management. The operations of Process Management are focused on IT solutions for document and case management. Central work pertains to market communication, financial reporting and control, financing, tax issues, business development and company acquisitions.
A breakdown of the Group's net sales by the various types of revenue is provided in Note 3. All of the divisions receive revenue from consulting services, licences, software, and support and maintenance services (recurring revenue), although the share of revenue from each type of revenue varies between the divisions. Design Management and Product Lifecycle Management receive revenue primarily from support and maintenance services. For Process Management, consulting services for proprietary software are the primary revenue stream. Revenue for central units primarily pertains to invoicing to subsidiaries for services performed. Transactions between the divisions are normally conducted in accordance with normal commercial terms, which also apply for external parties.
| Design Mgt | PLM | Process Mgt | Central | Eliminations | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK m | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Revenue and earnings | ||||||||||||
| Revenue from external customers | 902.8 | 826.2 | 917.4 | 778.6 | 699.0 | 589.7 | 0.6 | 0.5 | — | — | 2,519.8 | 2,195.0 |
| Transactions between segments | 3.1 | 2.7 | 2.4 | 0.4 | 5.1 | 5.1 | 12.1 | 12.1 | -22.7 | -20.3 | 0.0 | 0.0 |
| Total revenue | 905.9 | 828.9 | 919.8 | 779.0 | 704.1 | 594.8 | 12.7 | 12.6 | -22.7 | -20.3 | 2,519.8 | 2,195.0 |
| EBITA | 76.2 | 57.1 | 71.8 | 62.1 | 101.0 | 78.3 | -37.2 | -26.9 | — | — | 211.8 | 170.6 |
| Operating profit/loss | 45.0 | 32.8 | 53.9 | 50.5 | 68.3 | 57.3 | -37.3 | -26.9 | — | — | 129.9 | 113.7 |
| Other disclosures | ||||||||||||
| Total assets | 1,017.8 | 825.2 | 949.0 | 519.2 | 1,019.0 | 850.1 | 183.5 | 301.6 | -543.9 | -510.6 | 2,625.4 | 1,985.5 |
| Investments in intangible assets and in property, plant and equipment |
23.0 | 24.0 | 16.3 | 16.6 | 25.7 | 26.4 | — | 0.9 | — | — | 65.0 | 67.9 |
| Depreciation/amortisation and impairment of intangible assets and of property, plant and equipment |
-35.7 | -28.8 | -24.4 | -17.3 | -37.7 | -25.6 | -0.1 | — | — | — | -97.9 | -71.7 |
| Average number of employees | 345 | 319 | 508 | 428 | 457 | 405 | 7 | 8 | — | — | 1,317 | 1,160 |
Note 2 cont.
The Group conducts business primarily in the Nordic countries, Germany, the UK and the USA. Most of the Group's business is in Sweden, where all of the divisions conduct business. Business in Norway is mainly conducted by Design Management, but also Product Lifecycle Management and Process Management. Business in Finland and the UK is conducted by Design Management and Product Lifecycle Management. Business in Germany and the UK is conducted by Product Lifecycle Management.
The information below regarding revenue from external customers is based on where the customers are domiciled.
| Revenue from external customers |
Intangible assets and property, plant and equipment |
|||
|---|---|---|---|---|
| SEK m | 2017 | 2016 | 2017 | 2016 |
| Sweden | 1,182.9 | 1,062.1 | 780.6 | 677.1 |
| Norway | 269.3 | 251.8 | 189.9 | 205.2 |
| Finland | 182.8 | 161.0 | 47.9 | 46.7 |
| Denmark | 52.9 | 49.0 | 20.2 | 19.7 |
| Germany | 436.5 | 419.6 | 219.9 | 219.6 |
| UK | 154.7 | 65.4 | 408.9 | 25.6 |
| USA | 72.1 | 74.3 | 0.2 | — |
| Other countries | 168.6 | 111.8 | 26.6 | 8.8 |
| Group | 2,519.8 | 2,195.0 | 1,694.2 | 1,202.7 |
Net sales consist of:
| Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Consulting services | 803,023 | 708,466 | — | — |
| Licences and software | 315,538 | 310,933 | — | — |
| Support and maintenance | 1,341,515 | 1,108,424 | — | — |
| Other | 59,725 | 67,193 | 10,411 | 9,141 |
| Total | 2,519,801 | 2,195,016 | 10,411 | 9,141 |
By recurring revenue is meant revenue of a yearly recurring character, such as revenue from support and maintenance contracts, and revenue from subscription and rental contracts and SaaS solutions.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | ||
| Salaries and other remuneration for: |
|||||
| Boards of Directors, Presidents and Senior executives |
99,319 | 92,199 | 10,122 | 10,742 | |
| Other employees | 664,478 | 577,024 | 5,795 | 3,886 | |
| Pension costs for: Boards of Directors, Presidents and Senior executives |
13,685 | 12,049 | 1,493 | 1,652 | |
| Other employees | 52,420 | 48,766 | 843 | 712 | |
| Other social security costs | 187,985 | 165,360 | 5,410 | 5,063 | |
| Total | 1,017,887 | 895,398 | 23,663 | 22,055 | |
| Salaries and other remu neration for Boards of directors, Presidents and Senior executives above include bonuses and similar, totalling |
15,537 | 14,254 | 2,657 | 2,749 | |
| Number of persons included in the category of Boards of Directors, |
|||||
| Presidents and Senior executives above |
96 | 83 | 10 | 10 |
| Base salary/fee | Variable remuneration |
Other benefits | Pension costs | Total 2017 | |
|---|---|---|---|---|---|
| Staffan Hanstorp, Chairman of the Board | 257 | — | — | — | 257 1 |
| Sigrun Hjelmquist, former Chairman of the Board | 137 | — | — | — | 137 |
| Jan Andersson, Director | 238 | — | — | — | 238 |
| Kristofer Arwin, Director | 219 | — | — | — | 219 |
| Johanna Frelin, Director | 123 | — | — | — | 123 |
| Dick Hasselström, Director | 198 | — | — | — | 198 |
| Sigrun Hjelmquist, Director | 147 | — | — | — | 147 |
| Thord Wilkne, Director | 183 | — | — | — | 183 |
| Annika Viklund, former Director | 60 | — | — | — | 60 |
| Johan Andersson, President | 1,713 | 1,039 | 75 | 514 | 3,341 |
| Staffan Hanstorp, former President | 750 | 680 | 37 | 225 | 1,692 |
| Other senior executives (4 persons) | 6,824 | 2,331 | 173 | 1,312 | 10,640 |
| Total | 10,849 | 4,050 | 285 | 2,051 | 17,235 |
1 The Chairman of the Board, Staffan Hanstorp, has via companies invoiced the Parent Company SEK 1,674 thousand in fees for consulting services related to the Group's acquisition opportunities, financing matters, strategic
partnerships and overarching strategic matters during the period May-December 2017. This amount is not included in the table above.
| Base salary/fee | Variable remuneration |
Other benefits | Pension costs | Total 2016 | |
|---|---|---|---|---|---|
| Sigrun Hjelmquist, former Chairman of the Board | 407 | — | — | — | 407 |
| Jan Andersson, Director | 234 | — | — | — | 234 |
| Kristofer Arwin, Director | 213 | — | — | — | 213 |
| Dick Hasselström, Director | 193 | — | — | — | 193 |
| Annika Viklund, former Director | 178 | — | — | — | 178 |
| Thord Wilkne, Director | 178 | — | — | — | 178 |
| Staffan Hanstorp, former President | 2,122 | 1,400 | 111 | 612 | 4,245 |
| Other senior executives (5 persons) | 7,637 | 2,644 | 227 | 1,527 | 12,035 |
| Total | 11,162 | 4,044 | 338 | 2,139 | 17,683 |
By senior executives is meant the President of the Parent Company and other members of Group Management according to the description in the Corporate Governance Report on page 97. The following guidelines for remuneration and other terms of employment for senior executives were approved by the AGM in May 2017:
Remuneration of the President of the Parent Company, other members of Group Management, and other senior executives shall normally consist of a fixed salary, variable remuneration, share-based incentive programmes and other customary benefits and pensions. The fixed salary shall be competitive and ensure that Addnode Group is able to recruit competent executives. As a general rule, the fixed salary is reviewed once per year and is to take into account the individual's qualitative performance. In addition to the fixed salary, variable remuneration may be payable. Variable remuneration shall be based on results achieved and/or individually set specific targets. For the President of the Parent Company, the variable cash remuneration shall
be based on the earnings achieved by the Group. Variable cash remuneration is capped at 12 months' salary. For other members of Group Management and other senior executives, variable cash remuneration is capped at six months' salary and shall be based primarily on the operation for which the individual is responsible. Share-based incentive programmes shall ensure long-term commitment to the Group's development and promote personal shareholdings in the company.
Pensions shall always be defined contribution solutions in order to generate predictability with respect to the company's future obligations. Pension premiums are payable at a maximum amount of 30 per cent of the individual's current fixed annual salary.
Other remuneration and benefits are to be on market terms and shall support the executive's ability to perform his or her duties. Other benefits pertain primarily to company cars or mileage allowance.
Senior executives' employment contracts include stipulations on notice periods. The policy is that employment may be terminated at the request of a party with a notice period of a minimum of six and a maximum of 12 months. During the notice period, unchanged salary, remuneration and benefits shall be payable.
Note 5 cont.
These guidelines shall apply for employment contracts entered into after the AGM and for any amendments to existing conditions. The Board may deviate from these guidelines only if specific reasons exist in individual cases.
For the time between the 2017 and 2018 AGMs, a fixed fee of SEK 370 thousand is payable to the Chairman of the Board and SEK 185 thousand to each of the other Board members. A fee of SEK 55 thousand is payable to the Audit Committee chair, and a fee of SEK 35 thousand is payable to each of the two other members of the Audit Committee. A fee of SEK 15 thousand is payable to each of the two members of the Board's Remuneration Committee.
After the AGM in May 2017 the Chairman of the Board, Staffan Hanstorp, was contracted on a consulting basis for work with the Group's acquisition opportunities, financing matters, strategic partnerships and overarching strategic matters. Fees invoiced for the consulting services performed by Staffan Hanstorp amounted to a maximum of SEK 250 thousand per month (based on an invoiced amount including social security charges). No other fees were paid in 2017 for work in addition to Board assignments or work on the Audit or Remuneration Committees. No agreements exist regarding pensions, severance pay or other benefits for Board members.
No separate fee is generally paid to Board members of the Group's subsidiaries, nor any pension benefits or other benefits.
The former President, Staffan Hanstorp, was employed by the Parent Company through the AGM on 4 May 2017. Under his employment contract, remuneration was paid in the form of base salary of SEK 170 thousand per month, variable remuneration, other benefits and occupational pension premiums. Variable remuneration pertained to the expensed bonus for the period January–April 2017, which was paid out in May 2017. Variable remuneration was based on the Group's earnings after amortisation of intangible assets and was capped at 12 months' fixed salary. Other benefits consisted primarily of a car mileage allowance. Pension costs pertained to the cost that affected net profit for the year. Occupational pension premiums were paid in an amount corresponding to 30 per cent of fixed salary.
The current President, Johan Andersson, is employed by the Parent Company. Under his employment contract, remuneration is paid in the form of base salary of SEK 220 thousand per month, variable remuneration, other benefits and occupational pension premiums. Variable remuneration pertains to the expensed bonus for the period May– December 2017, which will be paid out in 2018. Variable remuneration is based on the Group's earnings after amortisation of intangible assets and is capped at 9 months' fixed salary. Other benefits consist primarily of a car mileage allowance. Pension costs pertain to the cost that affects net profit for the year. Occupational pension premiums are paid in an amount corresponding to 30 per cent of fixed salary.
The President's employment contract has a mutual notice period of six months with a continued obligation to work. In the event the company serves notice, severance pay equivalent to six months' fixed salary and other benefits will be payable for the same period.
Remuneration of the President of the Parent Company is addressed and set by the Board's Remuneration Committee.
The category "other senior executives" in the table above for 2017 includes Group Management, in addition to the President of the Parent Company, according to the description in the Corporate Governance Report on page 97. Remuneration of other senior executives consists of a base salary, variable remuneration, other benefits and occupational pension premiums. Variable remuneration for the 2017 financial year pertains to expensed bonuses that will be paid out in 2018. For the divisional heads, variable remuneration is largely based on operating profit for the year for the division before amortisation of intangible assets. For the CFO, variable remuneration is based on consolidated operating profit after amortisation of intangible assets. Variable remuneration is capped at an amount that corresponds to six months' fixed salary. The level of other benefits in the table above mainly pertains to company cars or a car mileage allowance. Pension costs pertain to the costs that affected net profit for the year. Occupational pension premiums are paid in an amount corresponding to a maximum of approximately 30 per cent of fixed salary.
The employment contracts have a mutual notice period of six months with a continued obligation to work.
Remuneration of other senior executives in the Group is addressed and set by the President of the Parent Company following consultation with the Board's Remuneration Committee.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Audit assignment | ||||
| PricewaterhouseCoopers | 1,989 | 1,951 | 452 | 440 |
| of which, Pricewater houseCoopers AB 1 |
1,618 | |||
| Other auditors Auditing activities in addition to the audit assignment |
1,208 | 992 | — | — |
| PricewaterhouseCoopers | 242 | 153 | 100 | 100 |
| of which, Pricewater houseCoopers AB 1 |
242 | |||
| Other auditors | 306 | 39 | — | — |
| Tax consulting | ||||
| PricewaterhouseCoopers | 298 | 10 | 5 | — |
| of which, Pricewater houseCoopers AB 1 |
298 | |||
| Other auditors | 431 | 145 | — | — |
| Other services | ||||
| PricewaterhouseCoopers | 37 | 33 | 30 | 10 |
| of which, Pricewater houseCoopers 1 |
30 | |||
| Other auditors | 197 | 177 | — | — |
| Total | 4,708 | 3,500 | 587 | 550 |
1 Starting with the 2017 financial year, disclosure is provided of how much of the Group's total fees paid to auditors pertain to the AGM-elected accounting firm in Sweden.
Fees for auditing activities in addition to the audit assignment include reviews of the interim reports for both 2017 and 2016.
Consolidated operating profit includes exchange rate differences attributable to operating receivables and operating liabilities in a net amount of SEK -2,984 thousand (-1,643). Forward exchange contracts are used to a certain extent to secure amounts for future payment flows in foreign currencies. Outstanding forward exchange contracts are measured at fair value. Forward exchange contracts pertain to hedges of a particular risk associated with a reported asset or liability or a highly probable forecast transaction (cash flow hedges). Hedge accounting according to IAS 39 is applied for certain forward exchange contracts. This means that unrealised changes in value are recognised in the consolidated statement of comprehensive income until the hedged item is to be recognised in the consolidated income statement, at which point the gain or loss for the corresponding forward exchange contract is recognised in the consolidated income statement. The purpose of hedge accounting is thus for the gain or loss for the hedged item and the corresponding forward exchange contract to be recognised through profit or loss during the same period. Both realised and unrealised changes in value of forward exchange contracts, for which the formal conditions for hedge accounting are not met, are recognised in operating profit. No forward exchange contracts were outstanding as per 31/12/2017 or 31/12/2016.
Further information on the company's currency hedging policy is provided in Note 39, Financial risks and risk management.
Research and development costs for the year amounted to SEK 29,460 thousand (22,166). Cost for investments in proprietary software and applications were capitalised in 2017 in the amount of SEK 45,715 thousand (42,703) (see Note 16). Amortisation in 2017 of capitalised amounts for proprietary software and applications for the year and previous years amounted to SEK 40,353 thousand (29,307).
The nominal value of future, minimum lease payments for noncancellable leases is broken down by maturities as follows:
| Group | ||
|---|---|---|
| 2017 | 2016 | |
| Due for payment within one year | 58,974 | 53,002 |
| Due for payment after more than one year but within five years |
78,170 | 58,873 |
| Due for payment after more than five years | 104 | 1,199 |
| Total | 137,248 | 113,074 |
Leasing costs for operating leases amounted to the following during the year:
| Group | ||
|---|---|---|
| 2017 | 2016 | |
| Rental and leasing costs | 59,725 | 56,747 |
| Total | 59,725 | 56,747 |
The operating leases pertain primarily to rents of premises.
| Group | ||
|---|---|---|
| 2017 | 2016 | |
| Interest income | 670 | 636 |
| Share dividends | 788 | 910 |
| Other financial income | 31 | 261 |
| Total | 1,489 | 1,807 |
| Parent Company | ||
| 2017 | 2016 | |
| Result from participations in Group companies | ||
| Share dividends | 40,063 | 47,049 |
| Group contributions received | 119,823 | 68,197 |
| Impairment losses | -19,000 | -18,000 |
| Total | 140,886 | 97,246 |
| Profit from other securities that are non-current assets |
||
| Share dividends | 788 | 910 |
| Total | 788 | 910 |
| Interest income and similar profit/loss items | ||
| External interest income | 199 | 258 |
| Interest income from Group companies | 1,418 | 1,359 |
| Total | 1,617 | 1,617 |
| Group | ||
|---|---|---|
| 2017 | 2016 | |
| Interest expense | -6,943 | -3,253 |
| Exchange rate differences | -3,524 | -2,311 |
| Other financial expenses | -2,024 | -1,122 |
| Total | -12,491 | -6,686 |
| Parent Company | ||
| 2017 | 2016 | |
| Interest expense and similar profit/loss items | ||
| External interest expense | -6,302 | -2,374 |
| Interest expense to Group companies | -153 | -180 |
| Exchange rate differences | -1,600 | -2,071 |
| Other financial expenses | -2,006 | -1,097 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Current tax on profit for the year |
-31,486 | -22,119 | -13,976 | -6,296 |
| Adjustments pertaining to previous years |
929 | 1,074 | — | — |
| Deferred tax (see Note 13) |
1,255 | -5,436 | — | -821 |
| Total | -29,302 | -26,481 | -13,976 | -7,117 |
Tax attributable to the subcomponents of other comprehensive income for the Group in 2017 totalled SEK -42 thousand (96) and pertained solely to actuarial gains and losses on pension obligations.
The difference between tax calculated at the nominal Swedish tax rate on profit after tax and effective tax according to the income statement is as follows:
| Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Profit before financial items/profit before tax |
118,853 | 108,814 | 84,948 | 61,792 |
| Tax calculated according to nominal Swedish tax rate of 22% (22) |
-26,148 | -23,939 | -18,689 | -13,594 |
| Non-deductible expenses | -3,573 | -1,535 | -4,274 | -4,074 |
| Dividends from Group companies |
— | — | 8,814 | 10,351 |
| Other tax-exempt income | 1,143 | 688 | 173 | 200 |
| Utilisation of loss carry forwards and temporary differences for which deferred tax assets were previously capitalised |
740 | 613 | — | — |
| Increase in deferred tax assets for loss carryfor wards and temporary differences |
52 | 245 | — | — |
| Increase in loss carry forwards and temporary differences for which no deferred tax assets were capitalised |
-1,997 | -1,423 | — | — |
| Revaluation of deferred tax assets and deferred tax liabilities due to changes in foreign tax rates |
419 | 626 | — | — |
| Effect of foreign tax rates | -867 | -2,830 | — | — |
| Adjustments pertaining to previous years |
929 | 1 074 | — | — |
| Tax according to income statement |
-29,302 | -26,481 | -13,976 | -7,117 |
Deferred tax assets and deferred tax liabilities pertain to temporary differences and tax loss carryforwards. Temporary differences exist for cases in which the carrying amount and tax values of the assets and liabilities are different. Deferred tax assets pertaining to tax loss carryforwards or other tax deductions are recognised only to the extent that it is likely that the deductions can be offset against surpluses in conjunction with future taxation.
Deferred tax assets and deferred tax liabilities pertain to temporary differences and tax loss carryforwards on the respective balance sheet dates as follows:
| Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Deferred tax assets | ||||
| Intangible non-current assets |
564 | 1,049 | — | — |
| Property, plant and equipment |
1,066 | 862 | — | — |
| Temporary differences in receivables and liabilities |
1,776 | 1,535 | 44 | 44 |
| Loss carryforwards | 9,544 | 1,783 | — | — |
| Total deferred tax assets | 12,950 | 5,229 | 44 | 44 |
| Deferred tax liabilities | ||||
| Capitalised costs for development work |
7,643 | 8,515 | — | — |
| Customer agreements, software and similar rights |
52,150 | 32,782 | — | — |
| Untaxed reserves | 16,424 | 9,881 | — | — |
| Total deferred tax liabilities | 76,217 | 51,178 | — | — |
| Deferred tax assets and deferred tax liabilities, net |
-63,267 | -45,949 | 44 | 44 |
The net amount of deferred tax assets and deferred tax liabilities changed during the year as follows:
| Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Opening balance | -45,949 | -34 | 44 | 865 |
| Acquired Group companies |
-18,199 | -5,268 | — | — |
| Recognised in income statement (see Note 12) |
1,255 | -5,436 | — | -821 |
| Recognised in other comprehensive income (see Note 12) |
-42 | 96 | — | — |
| Translation difference | -332 | -748 | — | — |
| Closing balance | -63,267 | -45,949 | 44 | 44 |
The amounts reported on the balance sheet include the following:
| Group | ||
|---|---|---|
| 2017 | 2016 | |
| Deferred tax assets that can be utilised after 12 months at the earliest |
2,905 | 3,588 |
| Deferred tax liability that must be paid after 12 months at the earliest |
-54,314 | -43,261 |
The Group's total tax loss carryforwards amounted to approximately SEK 80 m on 31/12/2017. Deferred tax assets are reported in the amount of SEK 9.5 m on the consolidated balance sheet as the value of these loss carryforwards. The deferred tax assets attributable to loss carryforwards are reported as assets to the extent it is likely that the loss carryforwards may be deducted against surpluses in future taxation. The Group's total tax loss carryforwards are partly attributable to foreign companies, where the opportunities for utilisation may be limited since the Group does not currently conduct any operations in the countries in which these loss carryforwards exist. Deferred tax assets that have not been reported as assets amounted to approximately SEK 7 m (6) on 31/12/2017. There are no established maturity dates for the tax loss carryforwards that the Group had on 31/12/2017.
| Group | ||
|---|---|---|
| 2017 | 2016 | |
| Earnings per share before and after dilution | ||
| Reported profit attributable to owners of the Parent Company |
89,551 | 82,333 |
| Profit for calculation of earnings per share | 89,551 | 82,333 |
| Average number of shares outstanding before and after dilution, thousands |
30,427 | 30,427 |
| Earnings per share before and after dilution, SEK | 2.94 | 2.71 |
Profit for the year, totalling SEK 70,972 thousand, and other unrestricted shareholders' equity, totalling SEK 328,742 thousand, for a total of SEK 399,714 thousand, are at the disposal of the AGM. The Board of Directors proposes that these earnings be disposed of as follows:
| Total | 399,714 |
|---|---|
| To be carried forward | 331,253 |
| Dividend to the shareholders of SEK 2.25 per share | 68,461 |
During 2017 a dividend of SEK 2.25 per share was paid, for a total dividend payout of SEK 68,461 thousand.
| Goodwill | Trademarks | Customer agreements and similar rights |
Costs for software development |
Group | |
|---|---|---|---|---|---|
| As per 1 January 2016 | |||||
| Cost | 919,179 | 166,304 | 82,267 | 124,019 | 1,291,769 |
| Accumulated amortisation and impairment losses | -30,000 | -101,431 | -50,034 | -49,134 | -230,599 |
| Carrying amount | 889,179 | 64,873 | 32,233 | 74,885 | 1,061,170 |
| 1 January—31 December 2016 | |||||
| Opening carrying amount | 889,179 | 64,873 | 32,233 | 74,885 | 1,061,170 |
| Acquisitions for the year1 | 59,026 | 9,678 | 21,132 | 42,703 | 132,539 |
| Amortisation during the year | — | -16,494 | -11,110 | -29,307 | -56,911 |
| Reclassification | — | — | -644 | 644 | — |
| Translation difference | 23,802 | 1,542 | 2,539 | 1,247 | 29,130 |
| Closing carrying amount | 972,007 | 59,599 | 44,150 | 90,172 | 1,165,928 |
| As per 31 December 2016 | |||||
| Cost | 1,002,007 | 177,524 | 105,294 | 168,613 | 1,453,438 |
| Accumulated amortisation and impairment losses | -30,000 | -117,925 | -61,144 | -78,441 | -287,510 |
| Carrying amount | 972,007 | 59,599 | 44,150 | 90,172 | 1,165,928 |
| 1 January—31 December 2017 | |||||
| Opening carrying amount | 972,007 | 59,599 | 44,150 | 90,172 | 1,165,928 |
| Additions from acquired companies | 1,540 | 172 | 4,503 | — | 6,215 |
| Acquisitions for the year 1 | 374,488 | 68,585 | 62,915 | 45,715 | 551,703 |
| Amortisation during the year | — | -22,074 | -19,515 | -40,354 | -81,943 |
| Translation difference | 9,705 | 2,925 | 382 | -503 | 12,509 |
| Closing carrying amount | 1,357,740 | 109,207 | 92,435 | 95,030 | 1,654,412 |
| As per 31 December 2017 | |||||
| Cost | 1,387,740 | 249,206 | 173,094 | 213,825 | 2,023,865 |
| Accumulated amortisation and impairment losses | -30,000 | -139,999 | -80,659 | -118,795 | -369,453 |
| Carrying amount | 1,357,740 | 109,207 | 92,435 | 95,030 | 1,654,412 |
1 Through business development and acquisitions, the proportion of proprietary software and applications has increased in the IT solutions that the Group offers to customers. In 2017, costs for investments in proprietary software and applications that meet the criteria for capitalisation amounted to SEK 45,715 thousand (42,703).
Goodwill is distributed among the Group's cash-generating units identified by operating segments. A summary of the distribution of goodwill at the operating segment level is provided in the following tables:
| Design Mgt | PLM Mgt Process Mgt | Group | ||
|---|---|---|---|---|
| As per 31 December 2017 | ||||
| Sweden | 118,074 | 70,146 | 436,950 | 625,170 |
| Norway | 154,928 | — | — | 154,928 |
| Finland | 20,374 | 25,614 | — | 45,988 |
| Denmark | 20,150 | — | — | 20,150 |
| Germany | — | 180,082 | — | 180,082 |
| UK | 155,280 | 159,387 | — | 314,667 |
| Netherlands | — | 11,859 | — | 11,859 |
| Serbia | — | — | 4,896 | 4,896 |
| Total | 468,806 | 447,088 | 441,846 | 1,357,740 |
| Design Mgt | PLM Mgt Process Mgt | Group | ||
| As per 31 December 2016 | ||||
| Sweden | 108,934 | 70,146 | 363,554 | 542,634 |
| Norway | 163,115 | — | — | 163,115 |
| Finland | 19,788 | 24,874 | — | 44,662 |
| Denmark | 19,604 | — | — | 19,604 |
| Germany | — | 174,911 | — | 174,911 |
| UK | 22,516 | — | — | 22,516 |
| Serbia | — | — | 4,565 | 4,565 |
Impairment testing of goodwill and other intangible assets with indefinite useful life is conducted yearly or more often if there is an indication of a decline in value.
The recoverable amount for a cash-generating unit is determined based on calculations of value in use. These calculations use pre-tax cash flow projections based on financial budgets and forecasts approved by company management and covering a four-year period. The cash flow forecasts are based on an assessment of the anticipated growth rate and development of the EBITA margin (operating margin before amortisation and impairment of intangible assets), starting from the budget for the next year, forecasts for the next three years, management's long-term expectations on the operations, and the historical trend. The calculated value in use is most sensitive to changes in the assumption about the growth rate, EBITA margin and discount rates. Applied assumptions are based on previous experience and the market trend. The cash flow forecasts for years two to four are based on an annual growth rate of 4 per cent (4) for Product Lifecycle Management and Process Management. For Design Management, the cash flow forecasts for years two to four are based on an annual growth rate of 4 per cent. In the preceding years, the cash flow forecasts for Design Management, against the background of the changed business model for Autodesk products, were based on annual growth rates of 3 per cent, 9 per cent and 9 per cent, respectively. Cash flow beyond the four-year period is extrapolated using an estimated long-term growth rate of 2 per cent (2) for all cash-generating units. The growth rate does not exceed the long-term average growth rate according to industrial reports for the markets in which each cash-generating unit operates. The discount rate used in calculating the recoverable amount is 9.7 per cent (9.7) before tax. The required rate of return has been established based on the Group's current capital structure and reflects the risks that apply for the various operating segments.
Based on the impairment testing carried out to date, there is no need to recognise impairment for goodwill or other intangible assets with indefinite useful life at 31/12/2017. A sensitivity analysis has been prepared separately for each cash-generating unit. An increase of the discount rate by 2 percentage points, a decrease in the operating margin before amortisation and impairment of intangible assets (the EBITA margin) by 2 percentage points, or a reduction in the assumed long-term growth rate by 2 percentage points would each not result in any need to recognise impairment for any of the cash-generating units as per 31/12/2017.
| Parent Company | |||
|---|---|---|---|
| 31/12/2017 31/12/2016 | |||
| Computer software | |||
| Opening cost | 898 | — | |
| Purchases during the year | — | 898 | |
| Closing accumulated cost | 898 | 898 | |
| Opening amortisation | — | — | |
| Amortisation for the year | -135 | — | |
| Closing planned residual value | 763 898 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | |||||
| Equipment and installations |
|||||
| Opening cost | 101,408 | 90,412 | 202 | 202 | |
| Addition from acquired companies |
4,726 | 719 | — | — | |
| Purchases during the year | 16,181 | 16,614 | — | — | |
| Sales/disposals | -15,605 | -9,543 | — | — | |
| Translation difference | 821 | 3,206 | — | — | |
| Closing accumulated cost | 107,531 | 101,408 | 202 | 202 | |
| Opening depreciation | -64,720 | -55,982 | -196 | -191 | |
| Sales/disposals | 13,361 | 8,246 | — | — | |
| Translation difference | -429 | -2,275 | — | — | |
| Depreciation for the year | -15,918 | -14,709 | -5 | -5 | |
| Closing accumulated depreciation |
-67,706 | -64,720 | -201 | -196 | |
| Closing planned residual value |
39,825 | 36,688 | 1 | 6 |
Property, plant and equipment in the Group include assets leased under finance leases with a consolidated cost of SEK 2,193 thousand (0), accumulated depreciation of SEK 140 thousand (0), and a carrying amount of SEK 2,053 thousand (0). Liabilities pertaining to future minimum lease payments amount the following:
| Group | ||||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 | ||||
| Due for payment within one year | 660 | — | ||
| Due for payment later than one year but within five years |
1,412 | — | ||
| Closing accumulated cost | 2,072 | — | ||
| Future financial expenses for finance leases | -70 | — | ||
| Present value of future minimum lease payments | 2,002 | — |
The present value of future, minimum lease payments is broken down into the following due dates:
| Total | 2,002 | 0 |
|---|---|---|
| Due for payment later than one year but within five years |
1,350 | — |
| Due for payment within one year | 652 | — |
The present value of future, minimum lease payments is reported among non-current and current interest-bearing liabilities, respectively.
| Parent Company | |||
|---|---|---|---|
| 31/12/2017 31/12/2016 | |||
| Opening cost | 1,318,067 | 1,253,515 | |
| Investments in subsidiaries during the year 1 | 613,824 | 84,802 | |
| Capital contributions to subsidiaries | 16,646 | 1,000 | |
| Sales of subsidiaries 2 | -24,000 | -21,250 | |
| Reduction of contingent consideration | -174 | — | |
| Repayment of capital from subsidiaries | -19,099 | — | |
| Reclassification from long-term securities holdings | 5,500 | — | |
| Closing accumulated cost | 1,910,764 | 1,318,067 | |
| Opening impairment | -137,630 | -119,630 | |
| Impairment losses recognised during the year | -19,000 | -18,000 | |
| Sales of subsidiaries 2 | 15,000 | — | |
| Closing accumulated impairment losses | -141,630 | -137,630 | |
| Closing carrying amount | 1,769,134 | 1,180,437 |
1 The year's investments in subsidiaries include estimated contingent conside ration totalling SEK 90,440 thousand. The outcome is dependent on the revenue and earnings performance of the acquired companies.
2 The sales in 2017 and 2016 were made to other Group companies.
| Group | |||||
|---|---|---|---|---|---|
| 31/12/2017 31/12/2016 | |||||
| Land and buildings | |||||
| Opening cost | 814 | 814 | |||
| Closing accumulated cost | 814 | 814 | |||
| Opening depreciation | -760 | -635 | |||
| Depreciation for the year | -54 | -125 | |||
| Closing accumulated depreciation | -814 | -760 | |||
| Closing planned residual value | — | 54 |
Land and buildings pertain to assets in Sweden.
Note 19 cont.
| Company | Corporate Identity number | Registered office | No. shares | Share of capital/ votes, % |
Carrying amount 31/12/2017 |
Carrying amount 31/12/2016 |
|---|---|---|---|---|---|---|
| Mogul Holding AB | 556300-0073 | Stockholm | 10,275,103 | 100 | 52,140 | 62,140 |
| Mogul AB | 556531-1890 | Stockholm | 20,000 | 100 | — | — |
| Evitbe AB | 556557-7599 | Stockholm | 20,000 | 100 | — | — |
| Decerno Gothenburg AB | 556633-3877 | Gothenburg | 100,000 | 100 | — | — |
| Symetri Collaboration AB | 556565-2590 | Stockholm | 500,000 | 100 | — | — |
| Symetri Ltd | 3239798 | Newcastle, UK | 500,000 | 100 | — | — |
| Mogul Balkan d.o.o | 17598732 | Belgrade, Serbia | 1 | 100 | — | — |
| Optosof GmbH | HRB 27754 | Wiesbaden, Germany | 3 | 100 | — | — |
| Kartena AB | 556751-4749 | Stockholm | 1,320 | 100 | — | — |
| Clockwork Group AB | 556535-3918 | Stockholm | 4,586,000 | 100 | — | — |
| Technia Holding AB | 556516-7367 | Stockholm | 4,533,500 | 100 | 136,624 | 136,624 |
| TechniaTranscat AB | 556481-3193 | Stockholm | 5,000 | 100 | — | — |
| Addnode India Private Limited 3 | U72200MH2012FTC229607 | Thane, India | 100 | 100 | — | — |
| TechniaTranscat AS | 880 823 582 | Moss, Norway | 250 | 100 | — | — |
| TechniaTranscat Oy | 0755401-4 | Espoo, Finland | 77 | 100 | — | — |
| Symetri Europe AB | 556524-6989 | Borlänge | 1,000 | 100 | — | — |
| Mogul Sweden AB | 556511-2975 | Stockholm | 1,000 | 100 | — | — |
| Addnode Inc | 75-3269017 | Naperville, IL, USA | 100 | 100 | — | — |
| Addnode Germany GmbH Transcat GmbH |
HRB 27745 HRB 110416 |
Wiesbaden, Germany Karlsruhe, Germany |
1 25,000 |
100 100 |
177,020 — |
194,408 — |
| TechniaTranscat GmbH | HRB 109117 | Karlsruhe, Germany | 1 | 100 | — | — |
| TechniaTranscat s.r.o | 34196/B | Bratislava, Slovakia | 1 | 100 | — | — |
| TechniaTranscat GmbH | FN 399981 h | Linz, Austria | 1 | 100 | — | — |
| TechniaTranscat B.V. | 08095732 | Loenen, Apeldoorn, | ||||
| Netherlands | 10,136 | 100 | 17,531 | — | ||
| Intrinsys Ltd | 04286171 | Milton Keynes, UK | 101 | 100 | 247,633 | — |
| Symetri AB | 556359-5429 | Borlänge | 10,000 | 100 | 127,687 | 94,399 |
| Symetri AS | 957 168 868 | Oslo, Norway | 200 | 100 | 70,896 | 70,896 |
| Symetri Oy | 1058681-8 | Helsinki, Finland | 3,000 | 100 | 36,986 | 36,986 |
| Symetri A/S | 13 737 436 | Copenhagen, Denmark | 60 | 100 | 539 | 893 |
| Symetri Collaboration AS | 983 443 117 | Oslo, Norway | 3,644 | 100 | 155,359 | 155,359 |
| Apricon AB | 556657-7176 | Stockholm | 1,001 | 100 | 13,666 | — |
| Service Works Global Ltd | 04915250 | London, UK | 33,094,051 | 100 | 222,848 | — |
| Service Works International Ltd | 04915227 | London, UK | 1 | 100 | — | — |
| Service Works Global Pty. Ltd Service Works Global |
11 108 665 818 | Camberwell, VIC, Australia | 200,001 | 100 | — | — |
| (Asia Pacific) Pty. Ltd | 49 144 482 995 | Melbourne, VIC, Australia | 10 | 100 | — | — |
| Service Works Global Ltd Service Works Global (North America) Inc |
3222235 3268696 |
Halifax, Canada Halifax, Canada |
30,000 100 |
100 100 |
— — |
— — |
| Ida Infront AB | 556316-2469 | Linköping | 5,894,650 | 100 | 119,577 | 119,577 |
| Ida Infront AS | 988 393 568 | Oslo, Norway | 100 | 100 | 692 | 692 |
| Stamford AB | 556413-4939 | Karlstad | 1,000,000 | 100 | 24,758 | 18,244 |
| Stamford Stockholm AB | 556325-7913 | Stockholm | 1,000 | 100 | 19,417 | 19,417 |
| Decerno AB | 556498-5025 | Täby | 10,000 | 100 | 43,352 | 43,352 |
| Decerno Väst AB | 556564-9885 | Gothenburg | 28,000,000 | 100 | 16,528 | 16,489 |
| Sokigo AB | 556550-6309 | Köping | 5,000 | 100 | 120,330 | 100,874 |
| Arkiva AB | 556313-5952 | Västerås | 1,000 | 100 | — | — |
| EssVision AB | 556373-9225 | Stockholm | 1,000 | 100 | 25,561 | 25,735 |
| Adtollo AB | 556476-6813 | Stockholm | 2,400 | 100 | 31,059 | — |
| Forsler & Stjerna Konsult AB | 556412-4849 | Lund | 1,000 | 100 | 27,870 | — |
| Svenska ITKompanion AB | 556710-4244 | Gothenburg | 185,795 | 100 | 18,400 | — |
| Canella IT Solutions AB | 556784-8071 | Stockholm | 1,204 | 100 | 39,567 | — |
| Canella IT Products AB | 556818-6927 | Stockholm | 500 | 100 | — | — |
| Voice Provider Sweden AB | 556598-3276 | Stockholm | 215,960 | 100 | 18,903 | 18,903 |
| Mittbygge AB | 556586-1555 | Växjö | 1,000 | 100 | 4,000 | 4,000 |
| Canella AS | 998 653 886 | Oslo, Norway | 100 | 100 | 137 | 137 |
| Cartesia Oy | 1617126-9 | Helsinki, Finland | 500 | 100 | 54 | 54 |
| Merged direct holdings in 2017: | ||||||
| 5 D Systemkonsult AB 4 | 556247-6662 | Stockholm | 1,000 | 100 | — | 32,288 |
| Abou AB 5 | 556786-8046 | Stockholm | 1,000 | 100 | — | 20,456 |
| Stamford Hero i Karlstad AB 6 | 559005-5884 | Karlstad | 50,000 | 100 | — | 8,514 |
| Total carrying amount | 1,769,134 | 1,180,437 |
3 The company is 99 per cent-owned by TechniaTranscat AB and 1 per cent-owned by Technia Transcat Oy.
4 5 D Systemkonsult AB was merged with Symetri AB during the year.
5 Abou AB was merged with Sokigo AB during the year.
6 Stamfor Hero i Karlstad AB was merged with Stamford AB during the year.
Subsidiaries acquired during the year are described in Note 36 Acquisitions of subsidiaries and operations. All Group companies are consolidated in the consolidated financial statements. The operations of Group companies are conducted primarily in the countries in which they are domiciled. There are no significant restrictions to gaining access to the assets of the Group companies and settling the Group's liabilities.
The carrying amount of the Group's financial instruments, distributed among measurement categories according to IAS 39, is summarised in the table below. No financial assets or liabilities are recognised at a value that considerably deviates from the fair value. A more detailed description of certain items is provided in separate notes according to the instructions below. Financial risks and risk management are described in Note 39.
| Group | ||||
|---|---|---|---|---|
| Assets | Note 31/12/2017 31/12/2016 | |||
| Loans receivable and trade receivables | ||||
| Non-current receivables | 22 | 7,501 | 7,455 | |
| Trade receivables | 538,204 | 430,947 | ||
| Other receivables | 8,869 | 8,040 | ||
| Available-for-sale financial assets | ||||
| Long-term securities holdings 1 | 21 | 7,553 | 11,110 | |
| Cash and cash equivalents | 37 | 173,195 | 111,473 |
Liabilities
| Financial assets at fair value through profit or loss |
|||
|---|---|---|---|
| Provisions for estimated contingent consideration 2 |
29 | 93,836 | 42,269 |
| Other financial liabilities | |||
| Non-current and current interest-bearing liabilities |
27 | 620,752 | 177,297 |
| Trade payables | 133,339 | 108,624 |
1 Long-term securities holdings pertain to unlisted shares and participations and are attributable to level 3 in the fair value hierarchy according to IFRS 13. Level 3 entails that the fair value measurement is not based on observable market data. The opening carrying amount for the year of unlisted shares and participations was SEK 11,110 thousand (9,255), the year's investments amounted to SEK 1,943 thousand (1,855), the year's reclassifications amounted to SEK -5,500 thousand (—), and the year's closing carrying amount amounted to SEK 7,553 thousand (11,110) (see Note 21). Dividends received from unlisted shares and participations, totalling SEK 788 thousand (910) have been reported as financial income in the income statement. Other than that, no result has been recognised in the income statements for 2017 or 2016 from unlisted shares and participations. For shareholdings and participations remaining at 31/12/2017, no gains or losses have been recognised in the income statement or in other comprehensive income for 2017 or prior years. The carrying amounts of the unlisted shareholdings and participations as per 31/12/2017 correspond to the cost for the respective holdings. Reasonable possible alternative assumptions in the measurement of the fair value would not result in any significant impact on the Group's accounting.
2 Provisions for estimated contingent consideration for acquisitions are attributable to level 3 in the fair value hierarchy according to IFRS 13. The provisions have been measured at fair value based on an assessment of future earnings and to a certain extent on future revenue of the acquired companies or businesses. The opening carrying amount of provisions for contingent consideration for the year was SEK 42,269 thousand (45,675), additional provisions during the year for acquisitions amounted to SEK 90,440 thousand (4,000), contingent consideration paid during the year amounted to SEK -42,609 thousand (-9,289), revaluations during the year amounted to SEK -174 thousand (—), exchange rate differences for the year amounted to SEK 3,910 thousand (1,883), and the closing carrying amount for the year was SEK 93,836 thousand (42,269). The result of revaluation of contingent consideration in 2017, totalling SEK 59 thousand (–), is recognised in the income statement. An exchange rate loss of SEK -1,711 thousand (-22) was recognised in the income statement, of which no portion was unrealised. An unrealised exchange rate loss of SEK -2,200 thousand (-1,861) pertaining to contingent consideration, which constitutes a hedge of a net investment in foreign operations, was recognised in other comprehensive income. Further information about contingent consideration and its measurement is provided in Notes 29 and 36.
During 2017 and 2016 no transfers were made between the levels in the fair value hierarchy according to IFRS 13. The tables below show revenue, expenses, gains and losses attributable to financial instruments, broken down by measurement categories according to IAS 39.
| Group 2017 | Group 2016 | |||||
|---|---|---|---|---|---|---|
| Gain/loss | Interest income | Interest expense | Gain/loss | Interest income | Interest expense | |
| Loans receivable and trade receivables | ||||||
| Non-current receivables and other current receivables |
— | 344 | — | — | 362 | — |
| Available-for-sale financial assets | ||||||
| Long-term securities holdings 3 | 788 | — | — | 910 | — | — |
| Cash and cash equivalents | — | 326 | — | — | 274 | — |
| Other financial liabilities | ||||||
| Interest expense on liabilities to credit institutions |
— | — | -6,322 | — | — | -2,569 |
| Interest expense on finance leases | — | — | -11 | — | — | — |
| Other interest expense | — | — | -610 | — | — | -684 |
| Earnings effect | 788 | 670 | -6,943 | 910 | 636 | -3,253 |
3 The gain/loss amount for 2017 pertains to a dividend of SEK 788 thousand (910).
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2017 | 31/12/2016 | ||
| Opening cost | 11,110 | 9,255 | 7,050 | 7,050 | |
| Investments during the year | 1,943 | 1,855 | — | — | |
| Reclassification to participations in Group companies | -5,500 | — | -5,500 | — | |
| Closing accumulated cost | 7,553 | 11,110 | 1,550 | 7,050 | |
| Closing carrying amount | 7,553 | 11,110 | 1,550 | 7,050 |
| Company | Corporate identity number |
Registered office | Number of shares | Share of capital/votes, % |
Carrying amount at 31/12/2017 |
Carrying amount at 31/12/2016 |
|---|---|---|---|---|---|---|
| Svenska ITKompanion AB 1 | 556710-4244 | Gothenburg | — | — | — | 5,500 |
| Walter d.o.o | 65-01-0103-11 | Sarajevo, Bosnia Herzegovina |
30.00 | 1,550 | 1,550 | |
| Total holding in Parent Company | 1,550 | 7,050 | ||||
| Additions in the Group | ||||||
| HSB's Ingeborg tenant-owner association in Borlänge |
716456-4408 | Borlänge | 330 | 330 | ||
| Optimdata SAS | 809 999 188 | Bois-Colombes, | 480,000 | 37.13 | 5,642 | 3,730 |
| Other | France | 31 | — | |||
| Closing carrying amount | 7,553 | 11,110 |
Svenska ITKompanion AB (formerly Projektstyrning Prima AB) has been a wholly owned subsidiary since 2 January 2017.
The Group's securities holdings are stated at the cost of the respective holdings. The equity method is not applied for these holdings, since the effects on the Group's accounting would be insignificant. Information about the companies' and tenant-owner association's earnings and shareholders' equity is of minor significance taking into account the
requirement for a true and fair view.
All the Group's securities holdings as per 31/12/2017 and 31/12/2016 are attributable to the measurement category "available-for-sale financial assets" according to IAS 39 (see also Note 20).
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Opening cost | 7,455 | 7,427 | 341 | 369 |
| Additions from acquired companies |
— | 116 | — | — |
| Loans provided | 264 | 260 | — | — |
| Endowment insurance | -32 | -28 | -32 | -28 |
| Amortisation and repayments |
-34 | -826 | — | — |
| Exchange rate difference | -152 | 506 | — | — |
| Closing accumulated cost | 7,501 | 7,455 | 309 | 341 |
| Closing carrying amount | 7,501 | 7,455 | 309 | 341 |
The non-current receivables fall due for payment within five years from the respective balance sheet dates. Interest-bearing receivables amounted to SEK 8 thousand (40) as per 31/12/2017.
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Prepaid rents and leasing fees |
10,079 | 7,911 | 1,882 | — |
| Prepaid licences and service agreements |
73,278 | 108,689 | 362 | — |
| Other prepaid expenses | 43,646 | 44,595 | 2,022 | 1,239 |
| Accrued income | 37,863 | 30,056 | — | — |
| Closing balance | 164,866 | 191,251 | 4,266 | 1,239 |
| Parent Company | ||||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 | ||||
| Cash and cash equivalents in Group account | — | 96,585 |
Cash and cash equivalents in the Group account consist of cash and cash equivalents invested through the Parent Company in a bank account for a joint-Group joint central account system. The funds are available on demand. As per 31/12/2017, utilised credit in the Group account system amounted to SEK 41,632 thousand, which is reported as a current liability to credit institutions on the Parent Company's balance sheet (see also Note 30).
Current receivables in Group companies include SEK 59,605 thousand (64,219) attributable to the Group account, of which SEK 43 thousand (7,694) has been offset against the Parent Company's liabilities to the same Group companies. Current liabilities to Group companies include SEK 339,458 thousand (357,894) attributable to the Group account, of which CEO 86,062 thousand (52,778) has been offset against the Parent Company's receivables from the same Group companies.
A specification of changes in shareholders' equity is provided in the consolidated and Parent Company statements of changes in shareholders' equity (see pages 49 and 53). Changes in the number of registered shares are shown in the following table:
| A-shares | B-shares | C-shares | Total no. of registered shares |
|
|---|---|---|---|---|
| Number on 31/12/2015 | 1,053,247 | 29,374,009 | — | 30,427,256 |
| Number on 31/12/2016 | 1,053,247 | 29,374,009 | — | 30,427,256 |
| Conversion of A-shares to B-shares |
-66,073 | 66,073 | — | — |
| Number on 31/12/2017 | 987,174 | 29,440,082 | — | 30,427,256 |
The share quota value is SEK 12. Class A shares carry ten votes each, and Class B and C shares carry one vote each. Class C shares do not carry entitlement to dividends. All shares have been fully paid for.
| Group | ||
|---|---|---|
| Exchange rate differences in shareholders' equity | 31/12/2017 31/12/2016 | |
| Opening balance | -8,446 | -45,012 |
| Change in the year's translation of foreign subsidiaries |
12,818 | 36,566 |
| Closing balance | 4,372 | -8,446 |
| Hedge of net investments in foreign operations | Group | |
| recognised in shareholders' equity | 31/12/2017 31/12/2016 | |
| Opening balance | -1,361 | 811 |
| Remeasurement at fair value | -16,052 | -2,172 |
Total equity is calculated as shareholders' equity on the consolidated balance sheet. The Group's equity/assets ratio, defined as total shareholders' equity in relation to the balance sheet total, was 37 per cent (49) on 31/12/2017. The Group's dividend policy is described on page 34.
Closing balance -17,413 -1,361
Acquisitions, transfers and holdings of treasury shares
Addnode Group had no holdings of treasury shares on 31/12/2016 or 31/12/2017. No Addnode Group shares were acquired or transferred in 2016 or 2017. The number of shares outstanding was 30,427,256 on 31/12/2016 and 31/12/2017.
The carrying amount for non-controlling interests at 31/12/2016 pertained to the subsidiary Decerno Väst AB (formerly Kartena AB). In 2017 the Parent Company acquired an additional 9,566 shares, after which the company is a wholly owned subsidiary of Addnode Group AB (publ).
| Parent Company | 31/12/2017 31/12/2016 | |
|---|---|---|
| Tax allocation reserve, 2017 tax year | 9,539 | 9,539 |
| Tax allocation reserve, 2018 tax year | 21,174 | — |
| Total | 30,713 | 9,539 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Non-current interest bearing liabilities |
31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Due to credit institutions | 2,359 | 5,100 | — | — | |
| Liabilities pertaining to finance leases |
1,350 | — | — | — | |
| Other non-current interest-bearing liabilities |
10,970 | 4,000 | 10,970 | 4,000 | |
| Total non-current interest-bearing liabilities |
14,679 | 9,100 | 10,970 | 4,000 | |
| Current interest bearing liabilities |
|||||
| Due to credit institutions | 594,451 | 157,935 | 578,177 | 155,551 | |
| Liabilities pertaining to finance leases |
652 | — | — | — | |
| Bank overdraft facility (see Note 30) |
— | — | 41,632 | — | |
| Other current interest bearing liabilities |
10,970 | 10,262 | 10,970 | 10,097 | |
| Total current interest bearing liabilities |
606,073 | 168,197 | 630,779 | 165,648 | |
| Total interest-bearing liabilities |
620,752 | 177,297 | 641,749 | 169,648 |
On 30 June 2017 the Parent Company signed an agreement with Nordea for a credit facility of up to CEO 750 m (previously CEO 400 m) to finance acquisitions. The agreement has a term of four years, and the credit can be drawn successively. During the period 2015-2017 a total of CEO 583.3 m was drawn from the facility, and in January 2018 an additional CEO 42.5 m was drawn. The respective bank loans have terms of either one, three, six or twelve months, however, the debt amount can thereafter be re-borrowed in its entirety within the framework of the credit facility's total amount.
Of the Group's amounts due to credit institutions on 31/12/2017, CEO 189,212 thousand (118,102) was denominated in CEO; CEO 402,983 thousand (37,449) was denominated in GBP; and CEO 4,615 thousand (7,484) was denominated in USD. The loans in CEO carry fixed interest that is currently 1.75 per cent, with a quarterly interest rate adjustment in connection with the reset dates of the respective loans. The loan in GBP carries fixed interest that is currently 2.3 per cent with an interest rate adjustment that is conducted monthly, half-yearly or yearly in connection with the reset dates of the respective loans. The loan in USD carries fixed interest at a rate of 4.5 per cent.
The other non-current and current interest-bearing liabilities pertain to liabilities for consideration for company acquisitions. Of the Group's liabilities as per 31/12/2017, SEK 5,000 thousand carries 2 per cent interest, SEK 3,950 thousand carries 1.5 per cent interest, and SEK 13,000 thousand carries 1 per cent interest. Of the total liability of SEK 21,940 thousand, SEK 18,000 thousand is denominated in SEK and SEK 3,940 thousand is denominated in EUR. Of the liabilities as per 31/12/2016, SEK 13,262 thousand carried 2 per cent interest and SEK 1,000 thousand carried 1.5 per cent interest, and of this liability amount, SEK 9,000 thousand was denominated in SEK and SEK 5,262 thousand was denominated in EUR.
The non-current liabilities fall due for payment as follows:
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Between 1 and 2 years after the balance sheet date |
14,145 | 7,196 | 10,970 | 4,000 |
| Between 2 and 5 years after the balance sheet date |
534 | 1,904 | — | — |
| Total | 14,679 | 9,100 | 10,970 | 4,000 |
The carrying amount of interest-bearing liabilities represents a good approximation of the fair value of the liabilities.
Other non-current liabilities pertain to liabilities for consideration for company acquisitions. The liability as per 31/12/2017 is payable in 2019 and carries 1.0 to 2.0 per cent interest. Of the total liability of SEK 10,970 thousand, SEK 9,000 thousand is denominated in SEK and SEK 1,970 thousand is denominated in EUR. The liability of SEK 4,000 thousand as per 31/12/2016 is payable in 2018 and has therefore been reclassified to current liabilities as per 31/12/2017. This liability carries 2 per cent interest and is denominated in SEK. The carrying amount represents a good approximation of the fair value of the liabilities.
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Estimated contingent con sideration for acquisitions |
93,836 | 42,269 | 90,440 | 41,072 |
| Decided restructuring measures |
8,432 | 2,750 | — | — |
| Pension obligations (see below) |
7,564 | 7,198 | 309 | 341 |
| Total | 109,832 | 52,217 | 90,749 | 41,413 |
| Of which, to be settled within 12 months |
8,741 | 45,019 | 309 | 41,072 |
| Of which, expected to be settled after more than 12 months |
101,091 | 7,198 | 90,440 | 341 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Opening provisions | 52,217 | 53,749 | 41,413 | 46,709 |
| Provisions during the period for restructuring measures |
10,240 | 2,751 | — | — |
| Utilised during the period | -4,662 | -1,839 | — | — |
| Estimated contingent con sideration for acquisitions |
90,440 | 4,000 | 90,440 | 4,000 |
| Remeasurement of contingent consideration |
-174 | — | -174 | — |
| Contingent consideration paid |
-42,609 | -9,289 | -42,609 | -9,289 |
| Change in provisions for pension obligations |
165 | 689 | -32 | -28 |
| Exchange rate differences | 4,215 | 2,156 | 1,711 | 21 |
| Total | 109,832 | 52,217 | 90,749 | 41,413 |
The increase in estimated contingent consideration in 2017 pertains mainly to the acquisitions of Service Works Group Ltd and Intrinsys Ltd (see Note 36). The final contingent consideration that corresponds to the provisions as per 31/12/2017 is mainly dependent on the earnings performance of the acquired companies. The payments are expected to be made in 2019.
Contingent consideration paid out in 2017 pertained mainly to Transcat GmbH, which was acquired in 2015.
The amount of provisions during the period and the amount utilised during the period pertains to costs for personnel.
The acquired German company TechniaTranscat GmbH has pension obligations under defined benefit pension plans for five employees. The provision for these pension obligations amounted to SEK 7,255 thousand (6,857) as per 31/12/2017 and was calculated in accordance with IAS 19 by an independent actuary through application of the Projected Unit Credit Method and using a discount rate of 1.75 per cent (1.75).
At 31/12/2017 the Group's companies had committed overdraft facilities worth a total of SEK 100,000 thousand (100,000), of which SEK 100,000 thousand (100,000) pertains to the Parent Company. The Parent Company has a contracted overdraft facility from previous years of SEK 100,000 thousand with Nordea. As per 31/12/2017, SEK 41,632 thousand (0) of this overdraft facility was utilised.
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Personnel-related costs | 141,707 | 125,428 | 4,985 | 5,566 |
| Other accrued expenses | 47,493 | 42,429 | 7,129 | 4,199 |
| Deferred income | 354,643 | 337,316 | — | — |
| Closing balance | 543,843 | 505,173 | 12,114 | 9,765 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| For rental contracts | ||||
| Non-current receivables | 5,015 | 5,170 | — | — |
| Current receivables | 878 | 801 | — | — |
| For fulfilment of obliga tions under agreements |
||||
| Long-term securities holdings |
— | 5,500 | — | 5,500 |
| For pension liabilities | ||||
| Non-current receivables | — | 341 | — | 341 |
| Total | 5,893 | 11,812 | — | 5,841 |
According to the credit facility agreements with Nordea, the Parent Company has undertaken to ensure that certain financial key ratios are maintained for the Group. These obligations entail essentially that the following conditions shall be met at the end of each calendar quarter:
The earnings measures shall pertain to the last moving 12-month period and be calculated on a pro forma basis as if the acquisitions and divestments in question had taken place on the first day of the current 12-month period.
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Payment guarantees for leases |
685 | 298 | 685 | 298 |
| Sureties for bank guarantees |
277 | 292 | 277 | 292 |
| Total | 962 | 590 | 962 | 590 |
| Company/operation | Business | Acquisition date |
Share of capital/ votes, % |
|---|---|---|---|
| Adtollo AB | IT systems for the map and contracting industries |
2/10/2017 | 100 |
| Apricon AB | IT solutions for project communication and document handling |
2/10/2017 | 100 |
The following tables provide information on purchase prices, identifiable net assets and goodwill.
Other
Total
Service
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Interest received | 670 | 636 | 1,617 | 1,617 |
| Dividends received | 788 | 910 | 40,851 | 47,959 |
| Interest paid | -4,522 | -2,861 | -4,002 | -2,145 |
| Total | -3,064 | -1,315 | 38,466 | 47,431 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 31/12/2017 31/12/2016 31/12/2017 31/12/2016 | ||||
| Depreciation/amortisation and impairment |
98,265 | 71,745 | 19,140 | 18,005 |
| Capital gains/losses | -763 | -532 | — | — |
| Unrealised exchange rate differences |
2,037 | 6,582 | 1,600 | 2,072 |
| Remeasurement of contingent consideration |
-59 | — | — | — |
| Changes in provisions | 5,843 | 1,271 | ||
| Recognised Group contributions |
— | — | -119,823 | -68,197 |
| Total | 105,323 | 79,066 | -99,083 | -48,120 |
| Company/operation | Business | Acquisition date |
capital/ votes, % |
|---|---|---|---|
| Projektstyrning Prima AB |
IT-based planning and monitoring systems |
2/1/2017 | 100 |
| Infostrait Holding B.V. with subsidiaries |
IT solutions for product information (PLM solutions) |
3/4/2017 | 100 |
| Canella IT Solutions AB with subsidiaries |
IT solutions for the pharmacy and care markets |
1/6/2017 | 100 |
| Forsler & Stjerna Konsult AB |
IT solutions primarily for public transport planning |
1/6/2017 | 100 |
| Service Works Group Ltd with subsidiaries |
IT solutions for operation, maintenance and manage ment of properties |
31/7/2017 | 100 |
| Intrinsys Ltd | IT systems for design and PLM solutions |
1/8/2017 | 100 |
| Works Group |
Intrinsys | acquisi tions |
acquisitions in 2017 |
|
|---|---|---|---|---|
| Purchase price | ||||
| - cash paid in 2017 | 176,975 | 202,210 | 118,250 | 497,435 |
| - cash paid in earlier years | — | — | 5,500 | 5,500 |
| - non-current and current liabilities to sellers |
— | — | 17,818 | 17,818 |
| - estimated contingent consideration 1 |
42,775 | 42,665 | 5,000 | 90,440 |
| Total purchase price | 219,750 | 244,875 | 146,568 | 611,193 |
| Identifiable net assets (see below) |
-93,146 | -91,038 | -52,521 | -236,705 |
| Goodwill | 126,604 | 153,837 | 94,047 | 374,488 |
1 Provisions for contingent consideration that is expected to be paid in cash in 2019. The outcome is dependent on the sales performance of the acquired companies.
The acquired companies are knowledge companies, and goodwill is therefore attributable to the developed expertise of the staff and the employees' aggregate knowledge about the respective software and IT systems, as well as synergy effects to a certain extent.
The fair value of the identifiable assets and liabilities included in the acquisition was as follows:
| Service Works Group |
Intrinsys | Other acquisi tions |
Total acquisitions in 2017 |
|
|---|---|---|---|---|
| Customer agreements and software |
52,399 | 36,265 | 39,709 | 128,373 |
| Total intangible non-current assets |
2,321 | 449 | 3,445 | 6,215 |
| Property, plant and equipment |
1,072 | 448 | 3,206 | 4,726 |
| Receivables 2 | 26,349 | 50,507 | 22,388 | 99,244 |
| Cash and cash equivalents | 51,099 | 94,657 | 29,641 | 175,397 |
| Non-current liabilities | — | — | -1,512 | -1,512 |
| Current liabilities | -36,402 | -84,398 | -36,739 | -157,539 |
| Deferred tax, net | -3,692 | -6,890 | -7,617 | -18,199 |
| Identifiable net assets | 93,146 | 91,038 | 52,521 | 236,705 |
2 Contractual gross amounts correspond, in all material respects, to the above-stated fair values of the acquired receivables.
Share of
In December an agreement was signed to acquire all of the shares outstanding in Projektstyrning Prima AB (name subsequently changed to Svenska ITKompanion AB), which is the legal entity behind the planning tool Kompanion, with transfer of possession on 2 January 2017. Prior to this Addnode Group owned 37 per cent of the shares in this company, and the acquisition was carried out in accordance with an existing shareholder agreement. The business is focused on IT-based planning and monitoring systems that are used by a large number of municipalities and private companies for business support processes in the social services sector, such as home care. The acquisition strengthens the Group's offerings in this area. The company has annual net sales of approximately SEK 20 m and is consolidated as from 2017 in the Process Management segment. According to the purchase price acquisition analysis, goodwill and other acquisition related intangible assets arising in connection with the acquisition amount to SEK 24 m, giving rise to a deferred tax liability of SEK 1 m. Other acquired assets and liabilities pertain primarily to software and deferred income.
On 24 March 2017 an agreement was signed to acquire all of the shares in the company Infostrait (name subsequently changed to TechniaTranscat B.V.), with transfer of possession on 3 April 2017. The company is a Dutch PLM and BIM specialist with annual net sales of approximately SEK 25 m. Infostrait has 18 employees and is included from the date of possession in the Product Lifecycle Management division, which since previously has a strong offering to customers in the PLM segment. The acquisition also entails establishment of operations for the Group in the Benelux area. According to the purchase price acquisition analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to SEK 15 m, giving rise to a deferred tax liability of SEK 1 m. Other acquired assets and liabilities pertain primarily to accrued income, cash and cash equivalents, and deferred income.
On 1 June 2017 all of the shares outstanding were acquired in the Swedish software company Canella IT Solutions AB, which develops IT solutions for the Nordic pharmacy and care market. The business is based on the company's proprietary Candos software, which is used by pharmacy operators and county councils. The acquisition strengthens the Group's offering in the social services sector. The company has annual net sales of approximately SEK 20 m and is included in the Process Management division since the date of possession. According to the purchase price acquisition analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to SEK 29 m, giving rise to a deferred tax liability of SEK 3 m. Other acquired assets and liabilities pertain primarily to trade receivables and cash and cash equivalents. Depending on the actual outcome of the acquired company's operating profit for the period 2016–2018, a contingent cash earn-out payment ranging from zero to a maximum, undiscounted amount of SEK 21 m may be payable, for which no provision has been reported on the consolidated balance sheet as per 31/12/2017.
On 29 June 2017 an agreement was signed to acquire all of the shares in the Swedish software company Forsler & Stjerna, with transfer of possession on 1 July 2017. The company has annual net sales of approximately SEK 20 m and 13 employees. Forsler & Stjerna is a leading provider of IT solutions for public administrations and public transport planning, and is included in the Process Management division from the date of possession. The acquisition complements and strengthens the Group's offering in this area. According to the purchase price acquisition analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to SEK 26 m, giving rise to a deferred tax liability of SEK 2 m. Other acquired assets and liabilities pertain primarily to trade receivables, cash and cash equivalents, and deferred income.
On 31 July 2017 an agreement was signed to acquire all of the shares in the international company Service Works Group Ltd (name subsequently changed to Service Works Global Ltd), with subsidiaries in
Australia and Canada. Possession was transferred on the same day. The company designs, develops and delivers support for its proprietary QFM software, which is used for property maintenance and management, and P3rform software, which is used in operations, maintenance and services in Public Private Partnership (PPP) contracts. The company had sales of approximately SEK 68 m and EBITDA of SEK 14 m for the financial year ended in October 2016. The company has 71 employees and operations in the UK, Australia, Canada and the Gulf states. The company is part of the Design Management division since the date of possession, adding to the division's already strong offerings of systems for the construction and real estate sectors. The acquisition further complements and strengthens these offerings. In addition, the acquisition enables the expansion of operations to new markets in which the company has a strong position.
Cash consideration paid amounted to SEK 177 m, of which SEK 51 m pertains to net cash paid on the date of possession. Depending on the actual outcome for the acquired companies' earnings during the period 1 November 2016–31 October 2018, a contingent cash earn-out payment ranging from zero up to a maximum, undiscounted amount of GBP 5.7 m may be payable, corresponding to approximately SEK 61 m based on the exchange rate on the date of possession. According to the purchase price acquisition analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to SEK 52 m, giving rise to a deferred tax liability of SEK 10 m. Goodwill amounts to SEK 127 m, and a provision of GBP 4.0 m has been made for estimated, contingent consideration, corresponding to approximately SEK 43 m based on the exchange rate on the date of possession. Other acquired assets and liabilities pertain primarily to trade receivables, accrued income, cash and cash equivalents, and deferred income.
On 1 August 2017 an agreement was signed to acquire all of the shares in the British company Intrinsys Ltd, with transfer of possession the same day. The company is the UK's largest provider of PLM software from Dassault Systèmes and related support services. Intrinsys delivers projects to leading companies in the automotive, aerospace, marine, oil and gas industries. Net sales in 2016 amounted to SEK 164 m, with EBITDA of SEK 27 m. The company has 60 employees and operations in the UK and South Africa. From the date of possession the company is part of Addnode Group's Product Lifecycle Management division, which even prior to the acquisition has been a leading supplier in the European PLM market. The acquisition further strengthens this position.
Cash consideration paid amounted to SEK 202 m, of which SEK 95 m pertains to net cash paid on the date of possession. Depending on the actual outcome for the acquired company's earnings during the period 2017-2018, a contingent cash earn-out payment ranging from zero up to a maximum, undiscounted amount of GBP 4.0 m may be payable, corresponding to approximately SEK 43 m based on the exchange rate on the date of possession. According to the purchase price acquisition analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to SEK 36 m, giving rise to a deferred tax liability of SEK 7 m. Goodwill amounts to SEK 154 m, and a provision of the maximum amount of GBP 4.0 m has been made for estimated, contingent consideration, which is reported on the consolidated balance sheet as per 31/12/2017. Other acquired assets and liabilities pertain primarily to trade receivables, prepaid expenses, cash and cash equivalents, and deferred income.
On 22 September 2017 an agreement was signed to acquire all of the shares in the Swedish software company Adtollo AB, with transfer of possession on 2 October 2017. Adtollo provides systems for the map and construction industries based on its proprietary Topocad and Chaos Desktop software, among other things. The CAD system Topocad is provided to more than 10 Swedish municipalities and several of the Nordic region's leading construction companies.
The company had sales of SEK 24 m in 2016 and is part of the
Process Management division from the date of possession. The acquisition entails a complementing and strengthening of the Group's offering of solutions for public service buildings. According to the purchase price acquisition analysis, goodwill and other acquisitionrelated intangible assets arising in connection with the acquisition amount to SEK 28 m, giving rise to a deferred tax liability of SEK 2 m. Other acquired assets and liabilities pertain primarily to trade receivables and deferred income. Depending on the actual outcome for the acquired company's earnings during the period 2017-2018, a contingent cash earn-out payment ranging from zero up to a maximum, undiscounted amount of SEK 10 m may be payable, of which SEK 5 m has been reported as a provision on the consolidated balance sheet as per 31/12/2017.
On 2 October 2017 an agreement was signed to acquire all of the shares in the Swedish software company Apricon AB, with transfer of possession the same day. Apricon has developed a cloud-based tool for project communication and document management that is used by leading construction and property companies. The company had sales of approximately SEK 10 m in 2016, with nine employees and is part of the Addnode Group's Process Management division from the date of possession. The acquisition represents a continued strengthening of Addnode Group's offering to construction and property companies. According to the purchase price acquisition analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to SEK 11 m. Other acquired assets and liabilities pertain primarily to trade receivables, cash and cash equivalents, and deferred income.
In 2017 the acquisitions contributed approximately SEK 184 m to consolidated net sales and had a positive effect on consolidated profit after tax of approximately SEK 20 m. If the acquisitions had been carried out as per 1 January 2017, consolidated net sales in 2017 would have amounted to approximately SEK 2,720 m, and profit after tax would have been approximately SEK 112 m. Costs of SEK 6.6 m for carrying out the acquisitions are included in the Group's other external expenses in 2017.
At the end of November 2017 an agreement was signed to acquire all of the shares in MCAD Sverige AB, with transfer of possession on 2 January 2018. The business is focused on CAD and PDM solutions for medium-sized and larger companies in the manufacturing and process industries. The acquisition strengthens the Group's offering in these areas. The company has annual net sales of approximately SEK 30 m and is consolidated in the Design Management division as from 2018.
In December 2017 an agreement was signed to acquire all of the shares in inPort Intelligent Port Systems AB, with transfer of possession on 2 January 2018. The company develops logistics solutions for ports, terminals and shipping companies, and is the Nordic region's leading supplier in its market segment. Annual net sales amount to approximately SEK 25 m, and the company is consolidated in the Process Management division as from 2018.
| Company/operation | Business | Acquisi tion date |
capital/ votes, % |
|---|---|---|---|
| 5D Systemkonsult AB | IT solutions with systems for the construction and real estate sectors |
1/2/2016 | 100 |
| EssVision AB | IT solutions for document and case management |
1/7/2016 | 100 |
| Stamford AB and Stamford Hero i Karlstad AB |
IT solutions for the retail sector, specialty retail sector and property companies |
1/9/2016 | 100 |
The following tables provide information on purchase prices, identifiable net assets and goodwill.
| - estimated contingent consideration | 4,000 |
|---|---|
| - non-current and current liabilities to sellers | 9,000 |
| - cash paid in 2016 | 71,707 |
| Purchase price |
Acquisitions in 2016
The acquired companies are knowledge companies, and goodwill is therefore attributable to the developed expertise of the staff and the employees' aggregate knowledge about the respective software and IT systems, as well as synergy effects to a certain extent.
Identifiable net assets (see below) -25,681 Goodwill 59,026
The fair value of the identifiable assets and liabilities included in the acquisition was as follows:
| Acquisitions in 2016 | |
|---|---|
| Customer agreements and software | 22,179 |
| Property, plant and equipment | 719 |
| Financial assets | 797 |
| Receivables 3 | 13,060 |
| Cash and cash equivalents | 18,638 |
| Non-current liabilities | -681 |
| Current liabilities | -23,763 |
| Deferred tax, net | -5,268 |
| Identifiable net assets | 25,681 |
3 Contractual gross amounts correspond, in all material respects, to the above-stated fair values of the acquired receivables.
On 1 February 2016 an agreement was signed to acquire all of the shares 5D Systemkonsult AB, with transfer of possession the same day. During the financial year May 2014–April 2015 the company had net sales of SEK 22 m and an operating profit of SEK 4 m. 5D Systemkonsult is a Swedish software company that offers property management systems to customers in both the public and private sectors. The company has 20 employees and from the date of possession is part of the Design Management division, which since previously has strong offerings with systems for the construction and real estate sectors. The acquisition complements and further strengthens these offerings. According to the purchase price allocation analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to approximately SEK 31 m, giving rise to a deferred tax liability of approximately SEK 2 m. Other acquired assets and liabilities pertain mainly to trade receivables, cash and cash equivalents, and deferred income.
On 1 July 2016 an agreement was signed to acquire all of the shares in EssVision AB, with transfer of possession the same day. In 2015 the company had net sales of SEK 13 m and an operating profit of SEK 2 m. EssVision is a Swedish software company that offers document and case management systems to municipalities, authorities and companies. EssVision has 11 employees and from the date of possession is part of the Process Management division, which since previously is one of Sweden's leading suppliers of IT solutions for document and case management. The acquisition complements and further strengthens these offerings. According to the purchase price allocation analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to approximately SEK 25 m, giving rise to
Share of
a deferred tax liability of approximately SEK 2 m. Other acquired assets and liabilities pertain mainly to trade receivables, cash and cash equivalents, and deferred income.
On 19 August 2016 an agreement was signed to acquire all of the shares in Stamford AB and Stamford Hero i Karlstad AB, with transfer of possession on 1 September 2016. In 2015 the companies had net sales of SEK 31 m and an operating profit of SEK 6 m. The business is focused on development of IT systems for the retail sector, specialty retail sector and property companies. The companies have 36 employees and are part of the Process Management division from the date of possession. Operations are coordinated with Addnode Group's subsidiary Prosilia, which works in the same system environment. The combined operations are conducted under the Stamford name. The acquisition strengthens the offering to existing customers and has opened up new business opportunities. According to the purchase price allocation analysis, goodwill and other acquisition-related intangible assets arising in connection with the acquisition amount to approximately SEK 25 m, giving rise to a deferred tax liability of approximately SEK 1 m. Other acquired assets and liabilities pertain mainly to trade receivables, cash and cash equivalents, and deferred income.
In 2016 the acquisitions contributed approximately SEK 40 m to consolidated net sales and had a positive effect on consolidated profit after tax of approximately SEK 4 m. If the acquisitions had been carried out as per 1 January 2016, consolidated net sales in 2016 would have amounted to approximately SEK 2,223 m, and profit after tax would have been approximately SEK 83 m. Costs of SEK 0.1 m for carrying out the acquisitions are included in the Group's other external expenses in 2016.
| Group | ||
|---|---|---|
| 31/12/2017 31/12/2016 | ||
| Cash consideration paid | -550,519 | -86,175 |
| Cash and cash equivalents in acquired subsidiaries | 175,397 | 18,638 |
| Change in the Group's cash and cash equivalents upon acquisition |
-375,122 | -67,537 |
Cash consideration paid in 2017 included payments of contracted and previously expensed contingent consideration totalling SEK 53,044 thousand (14,468) for company acquisitions carried out in previous years, and payment of SEK 40 m (–) in connection with the acquisition of additional shares in Decerno Väst AB (formerly Kartena AB).
Cash and cash equivalents in the Group and Parent Company included no holdings of short-term investments at 31/12/2017 or 31/12/2016. Neither the Group nor the Parent Company had any cash and cash
equivalents in blocked bank accounts at 31/12/2017 or 31/12/2016.
| Due to credit insti tutions |
Liabilities pertaining to finance leases |
Group | |
|---|---|---|---|
| Opening balance, 1 January 2017 | 163,035 | — | 163,035 |
| Cash flow for the year | |||
| Loans raised | 422,875 | — | 422,875 |
| Amortisation of debt | -2,570 | -116 | -2,686 |
| Non-cash items | |||
| Acquisitions of subsidiaries | — | 2,118 | 2,118 |
| Exchange rate differences | 13,470 | — | 13,470 |
| Closing balance, 31 December 2017 | 596,810 | 2,002 | 598,812 |
In the course of its operations Addnode Group is exposed to various types of financial risk that can affect earnings, cash flow and shareholders' equity. These risks consist mainly of:
Management of these risks is regulated in the finance policy adopted by the Board of Directors.
In the Group's decentralised organisation, the finance operations are centralised in the Parent Company, which has overarching responsibility for the Group's financial risk management in order to be able to monitor the Group's combined risk positions and to be able to achieve cost efficiency, economies of scale, build up expertise and take advantage of joint-Group interests.
Overall, the Group's total exposure to various financial risks is deemed to have increased during the year, but still be limited. No significant changes have been made in the Group's targets, policies or methods for managing financial risks. The Board assesses the Group's targets, policies and methods for managing financial risks on a regular basis, as well as of its targets, policies and methods for risk management.
Interest rate risk pertains to the risk that changes in market interest rates will have a negative effect on the Group's net interest income and cash flow. The Group's interest income and interest expense are mainly affected by changes in market interest rates in Sweden and the UK. One of the largest risk factors is the choice of fixed interest terms fro the Group's debt portfolio. The average term of fixed interest at 31 December 2017 was 0.8 years. According to the Group's finance policy, derivative instruments may not be used to manage interest rate risk.
The table below shows the Group's interest-bearing net debt on the respective balance sheet dates. A change in the market level of interest rates by 1 per cent would have an earnings impact of SEK 4.0 m.
Note 39 cont.
| Group | ||
|---|---|---|
| Interest-bearing net debt (SEK m) | 31/12/2017 31/12/2016 | |
| Cash and cash equivalents | -173.2 | -111.5 |
| Interest-bearing receivables | 0.0 | 0.0 |
| Interest-bearing liabilities | 620.8 | 177.3 |
| Net debt (+)/receivable (—) | 447.6 | 65.8 |
Liquidity risk pertains to the risk of the Group being unable to meet regular payment obligations as a result of a lack of liquidity. Liquidity risk is managed by the Group having sufficient cash and cash equivalents and short-term investments to cover forthcoming payments. For most of the Group operations, a joint Group account is available for optimal management of the Group's liquidity. Since earlier years the Parent Company has an agreement with Nordea for a bank overdraft facility of SEK 100 m. Of this amount, SEK 41.6 m had been utilised as per 31 December 2017.
| Group | ||
|---|---|---|
| 31/12/2017 31/12/2016 | ||
| Cash and cash equivalents | 173.2 | 111.5 |
| Committed bank overdraft facility | 100.0 | 100.0 |
| Utilised portion of bank overdraft facility | -41.6 | 0.0 |
| Available liquidity | 231.6 | 211.5 |
By financing risk is meant the risk that loans and refinancing of loans will become more difficult at a given point in time. Financing risk is managed through the use of long-term credit facilities. The currently contracted revolving credit facilities with Nordea for up to SEK 750 m fall due for payment in 2021. The contracted credit facilities include covenants for financial key ratios and can be used to finance future acquisitions as well as to pay contingent earn-out payments. Of these credit facilities, SEK 626 m were utilised as of the date of publication of this Annual Report (see Note 27).
The following table shows undiscounted future cash flows (differences compared with amounts of interest-bearing liabilities carried on the consolidated balance sheet pertain to future interest payments).
| Falls due for payment | ||||
|---|---|---|---|---|
| Provisions and financial liabilities at 31/12/2017 (SEK m) |
Within 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
After more than 5 years |
| Provisions for contingent consideration |
— | 93.8 | — | — |
| Provisions for decided restructuring measures |
8.4 | — | — | — |
| Other provisions | 0.3 | — | — | 7.3 |
| Interest-bearing liabilities | 615.0 | 14.2 | 0.5 | — |
| Trade payables and other financial liabilities |
133.4 | 0.6 | — | — |
| Total | 757.1 | 108.6 | 0.5 | 7.3 |
| Falls due for payment | ||||
|---|---|---|---|---|
| Provisions and financial liabilities at 31/12/2017 (SEK m) |
Within 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
After more than 5 years |
| Provisions for contingent consideration |
42.3 | — | — | — |
| Provisions for decided restructuring measures |
2.8 | — | — | — |
| Other provisions | — | 0.3 | — | 6.9 |
| Interest-bearing liabilities | 170.3 | 6.8 | 2.7 | — |
| Trade payables and other financial liabilities |
108.6 | — | — | — |
| Total | 324.0 | 7.1 | 2.7 | 6.9 |
By currency risk is meant the risk of changes in exchange rates having a negative impact on the Group's earnings and position. The Group is exposed to currency risks through continuing business transactions in various currencies and by virtue of the fact that the Group conducts business in various currencies. Currency risks can thus be broken down into transaction risks and translation risks.
By transaction exposure is meant the risk associated with continuing business transactions in foreign currency. The Group's transaction exposure is managed by Group companies operating mainly in their respective, local markets, and thereby having both income and expenses in the same currency. The Group's finance policy stipulates when the respective subsidiaries must report to the Parent Company flows in another currency than their respective, local currencies and provides the opportunity to hedge net currency flows through external financial contracts if this can be done at a reasonable cost.
Net exposure in currencies (by net exposure is meant income less expenses):
| Group | |||
|---|---|---|---|
| Amounts in SEK m | 31/12/2017 31/12/2016 | ||
| EUR | 103.4 | 69.9 | |
| USD | 23.5 | 29.6 | |
| GBP | 8.5 | 0.2 |
The most significant currencies in terms of transaction exposure are EUR, USD and GBP. If the average exchange rate for EUR/USD/GBP vs. CEO had been 10 per cent higher/lower compared with the average exchange rate in 2017, with all other variables constant, consolidated profit after tax for 2017 would have been positively/negatively impacted by approximately SEK 7.8 m, SEK 1.2 m and SEK 0.9 m, respectively. The effects of changed exchange rates were largely offset by adjusted end-customer prices. This means that the sensitivity to currency movements has been historically lower than these stated amount levels.
During 2017 and 2016, no transaction flows in foreign currency were hedged through forward exchange contracts.
By translation exposure is meant risks for exchange rate losses upon translation of foreign subsidiaries' income statements and balance sheet to the Group's reporting currency, i.e., Swedish kronor (SEK). To limit translation
exposure, assets can be financed in the same currency (pursuant to a decision by the Board of Directors), entailing that changes in exchange rates on these loans would be reported in other comprehensive income.
Of net assets denominated in foreign currencies on the balance sheet date of 31/12/2017, SEK 467 m were attributable pounds sterling (GBP), SEK 293 m were attributable to euros (EUR), and SEK 236 m were attributable to Norwegian kronor (NOK). If GBP were to strengthen/weaken by 10 per cent against SEK, the Group's total shareholders' equity would increase/decrease by approximately SEK 47 m; if EUR were to strengthen/ weaken by 10 per cent against SEK, the Group's total shareholders' equity would increase/decrease by approximately SEK 29 m; and if NOK were to strengthen/weaken by 10 per cent against SEK, the Group's total shareholders' equity would increase/decrease by approximately SEK 24 m.
At present, net assets in the foreign subsidiaries Intrinsys and Service Works Group, which were acquired during the year, are hedged through loans.
| Currency | Net assets | Currency hedges |
2017 |
|---|---|---|---|
| DKK | 20.2 | — | 20.2 |
| EUR | 293.3 | — | 293.3 |
| GBP | 467.4 | -389.0 | 78.4 |
| NOK | 235.5 | — | 235.5 |
| USD | 10.1 | — | 10.1 |
| Other currencies | 25.7 | — | 25.7 |
| Total | 1,052.2 | -389.0 | 663.2 |
| Currency | Net assets | Currency hedges |
2016 |
|---|---|---|---|
| DKK | 19.8 | — | 19.8 |
| EUR | 279.0 | -5.3 | 273.7 |
| GBP | -1.0 | — | -1.0 |
| NOK | 241.8 | — | 241.8 |
| USD | 9.3 | — | 9.3 |
| Other currencies | 16.0 | — | 16.0 |
| Total | 564.9 | -5.3 | 559.6 |
As per 31/12/2017 there were no significant assets or liabilities with exposure to other price risks.
Credit risks in the form of counterparty risks arise in connection with investments of cash and cash equivalents and trading in derivative instruments. Investment of surplus liquidity may only be made with banks or the Swedish government. The maximum credit risk is associated with the carrying amount of financial assets on the consolidated balance sheet.
Addnode Group's credit risk is primarily attributable to trade receivables, which are distributed among a large number of counterparties. Of total trade receivables at 31/12/2017, 57 per cent (63) were for amounts of less than SEK 1 m per customer. The Group has established guidelines to ensure that sales are made to customers with satisfactory credit backgrounds. Historically the Group has had very low costs for bad debts. The provision for bad debts amounted to SEK 2.5 m (2.2) on the balance sheet date of 31/12/2017, corresponding to 0.5 per cent (0.5) of total trade receivables. Earnings for 2017 were negatively affected by SEK 2.4 m (positively by 0.1) through provisions for bad debts.
| Group | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||||
| Concentration of trade receivables (SEK m) |
Amount | Share, % | Amount | Share, % | |
| Trade receivables < SEK 1 m per customer |
309.1 | 57 | 270.8 | 63 | |
| Trade receivables SEK 1—5 m per customer |
148.0 | 28 | 94.3 | 22 | |
| Trade receivables > SEK 5 m per customer |
81.1 | 15 | 65.8 | 15 | |
| Total | 538.2 | 100 | 430.9 | 100 |
The following table shows the age structure of the trade receivables that were past due on the balance sheet date, but for which no need to recognise impairment was identified:
| Group | ||
|---|---|---|
| Past due trade receivables (SEK m) | 31/12/2017 31/12/2016 | |
| Trade receivables past due 1—29 days | 96.3 | 53.0 |
| Trade receivables past due 30—59 days | 16.4 | 10.6 |
| Trade receivables past due 60—89 days | 2.4 | 1.7 |
| Trade receivables past due 90 days or more | 3.4 | 1.9 |
| Total | 118.5 | 67.2 |
The Group had no outstanding forward exchange contracts or other held or issued derivative instruments on 31/12/2017 or 31/12/2016.
No financial assets or liabilities are stated at a value that considerably deviates from their fair value.
Carrying amounts are based partly on assessments and estimates. This applies mainly to the regular impairment testing of goodwill and other acquisition-related intangible assets (see Note 16). The carrying amounts of these assets are affected by changes in applied discount rates as well as by assessments of future trends in prices, costs and demand for the products and services that form the basis of the cash flow prognostications.
For certain company acquisitions, contingent consideration (earn-out payments) may account for a large portion of the total consideration for the acquired company and may also amount to considerable sums. Contingent consideration is normally dependent on the future earnings performance and/or the revenue performance for the acquired company. At the time of acquisition, provisions for estimated contingent consideration are reported based on forecasts on the future revenue and earnings performance of the acquired companies (see Notes 29 and 36). According to IFRS 3, subsequent revaluations of provisions for contingent consideration and the differences between the reported provision and the actual outcome are to be recognised in the consolidated income statement. This means that future revaluations of reported provisions may significantly affect consolidated earnings, both positively and negatively, in coming years.
On 31 December 2017, Aretro Capital Group AB's ownership amounted to 7.5 per cent (12.4) of the share capital and 20.1 per cent (23.6) of the votes in Addnode Group AB (publ). Aretro Capital Group AB is owned jointly via companies by Staffan Hanstorp and Jonas Gejer. Staffan Hanstorp has been Chairman of the Board of Addnode Group since 4 May 2017, and prior to this he was President and CEO. Jonas Gejer is President of TechniaTranscat AB and head of the Product Lifecycle Management division. No transactions have been made between Aretro Capital Group AB and companies in the Group in which Addnode Group AB (publ) is the Parent Company.
On 31 December 2017 Vidinova AB's ownership amounted to 4.5 per cent (preceding year: 24.4) of the share capital and 12.0 per cent (26.8) of the votes in Addnode Group AB (publ). Vidinova AB is owned via companies by Dick Hasselström, who is a director on Addnode Group's Board. In 2017 and 2016 Vidinova AB leased a workplace at a subsidiary of Addnode Group AB and paid rent of SEK 48 thousand (48) per year. Other than this, no transactions were made between companies in the Group in which Vidinova AB is the Parent Company and the companies in the Group in which Addnode Group AB (publ) is the Parent Company.
| Group | |||
|---|---|---|---|
| Remuneration of the Board of Directors and senior executives |
2017 | 2016 | |
| Salaries and other short-term employment benefits (see also description in Note 5) |
17,235 | 17,683 | |
| Total | 17,235 | 17,683 |
The Chairman of the Board, Staffan Hanstorp, has via companies invoiced the Parent Company SEK 1,674 thousand in fees for consulting services related to the Group's acquisition opportunities, financing matters, strategic partnerships and overarching strategic matters during the period May-December 2017. This amount is not included in the table above.
For the Parent Company Addnode Group AB (publ), 100 per cent (100) of net sales for the year and 18 per cent (19) of purchases for the year pertained to own subsidiaries. For sales and purchases between Group companies, the same policies apply for pricing as in transactions with external parties.
| Average number of employees |
2017 Average number of employees |
2017 Of whom, men |
2016 Average number of employees |
2016 Of whom, men |
|---|---|---|---|---|
| Parent Company | 7 | 5 | 8 | 6 |
| Subsidiaries | ||||
| Sweden | 672 | 512 | 615 | 464 |
| Denmark | 17 | 14 | 18 | 14 |
| Finland | 66 | 56 | 69 | 60 |
| Norway | 97 | 73 | 97 | 74 |
| UK | 58 | 41 | 19 | 15 |
| Germany | 224 | 168 | 212 | 159 |
| Netherlands | 12 | 12 | — | — |
| Serbia | 21 | 13 | 19 | 14 |
| Slovakia | 24 | 23 | 22 | 20 |
| Austria | 4 | 4 | 4 | 4 |
| USA | 15 | 11 | 10 | 7 |
| Australia | 6 | 3 | — | — |
| Canada | 1 | 1 | — | — |
| South Africa | 4 | 2 | — | — |
| India | 89 | 68 | 67 | 50 |
| Total, subsidiaries | 1,310 | 1,001 | 1,152 | 881 |
| Group total | 1,317 | 1,006 | 1,160 | 887 |
| Board members and senior executives |
2017 Number on balance sheet date |
2017 Of whom, men |
2016 Number on balance sheet date |
2016 Of whom, men |
|---|---|---|---|---|
| Group | ||||
| Board members | 152 | 130 | 128 | 115 |
| Presidents and other senior executives |
126 | 104 | 108 | 92 |
| Parent Company | ||||
| Board members | 7 | 5 | 6 | 4 |
| Presidents and other senior executives |
2 | 1 | 3 | 3 |
At the end of November 2017 an agreement was signed to acquire all of the shares in MCAD Sverige AB, with transfer of possession on 2 January 2018. The business is focused on CAD and PDM solutions for medium-sized and larger companies in the manufacturing and process industries. The acquisition strengthens the Group's offering in these areas. The company has annual net sales of approximately SEK 30 m and is consolidated in the Design Management division as from 2018.
In December 2017 an agreement was signed to acquire all of the shares in InPort Intelligent Port Systems AB, with transfer of possession on 2 January 2018. The company develops logistics solutions for ports, terminals and shipping companies, and is the Nordic region's leading supplier in its market segment. Annual net sales amount to approximately SEK 25 m, and the company is consolidated in the Process Management division as from 2018.
In January 2018 an additional SEK 42.5 m in bank loans were drawn from the credit facility of up to SEK 750 m that was secured in June 2017 (see Note 27).
In other respects, no significant events have taken place after the balance sheet date.
Addnode Group AB (publ) has its registered office in Stockholm, Sweden, and the address of the Company's head office is Hudiksvallsgatan 4B, SE-113 30 Stockholm. The Parent Company's Class B shares are listed on Nasdaq Stockholm.
This Annual Report and consolidated financial statements were approved for publication by the Board of Directors on 20 March 2018.
The income statements and balance sheets for the Parent Company and the Group will be presented for adoption at the AGM on 26 April 2018.
The Board of Directors and President affirm that the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU, and that they provide a true and fair view of the Group's financial position and results of operations. The Annual Report was prepared in accordance with generally accepted accounting practice and provides a fair and accurate view of the financial position and earnings of the Parent Company.
The Board of Directors' report for both the Group and the Parent Company accurately reflects the Group's and the Parent Company's operations, financial position and earnings, and describes the significant risks and uncertainties facing the Parent Company and the companies included in the Group.
Stockholm, 20 March 2018
Staffan Hanstorp Chairman
Jan Andersson Director
Kristofer Arwin Director
Johanna Frelin Director
Dick Hasselström Director
Sigrun Hjelmquist Director
Thord Wilkne Director
Johan Andersson President
Our audit report was submitted on 22 March 2018 PricewaterhouseCoopers AB
Magnus Brändström Authorised Public Accountant Auditor-in-charge
To the general meeting of the shareholders of Addnode Group AB (publ), corporate identity 556291-3185
We have audited the annual accounts and consolidated accounts of Addnode Group AB (publ) for the year 2017 except for the corporate governance statement on pages 89-97. The annual accounts and consolidated accounts of the company are included on pages 40-83 in this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of Parent Company as of 31 December 2017 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Group as of 31 December 2017 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 89-97. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the Parent Company and the Group.
Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the Parent Company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and have otherwise fulfiled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of my (our) knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its Parent Company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
Addnode Group acquires, operates and develops enterprise-driven IT companies that provide software and services to markets in which they have, or can take, market-leading positions. The Group's revenue streams come primarily from consulting, service and licensed products. The company's development has been both organic and acquisition driven, and its revenue is relatively contractual and recurring.
An extensive part of the Addnode Group audit takes place in Sweden, where the main part of the Group's operations are located. In addition, significant operations are carried out on subsidiaries in Norway, Finland, Germany and England, which are also included in the Group Audit scope. For entities in Group Audit scope, we in the Group audit team have issued instructions to component auditors, obtained reporting and followed up specific matters in discussions and meetings to determine that sufficient audit evidence has been obtained for our statement in the Auditors' Report for Addnode Group.
We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Key audit matters of the audit are those matters that, in our professional
Addnode Group discloses impairment testing of goodwill in Note 16 to
Addnode Group's balance sheet contains SEK 1,358 million of goodwill following acquisitions. This amount represents some 71 per cent of the Group's total assets. Goodwill is therefore a significant balance sheet item. In addition, valuation of goodwill is associated with management's assessments and judgements. This is why we considered this a Key Audit
Management conducts an impairment test of goodwill annually to determine whether or not there is a need for impairment. Assumptions and assessments include forecasts of growth and operating margin, investment needs and applied discount rate. If future performance deviates negatively from applied assumptions and assessments, an impairment need may arise. Addnode Group's impairment test indicates no need for
judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
Valuation of goodwill
the Annual Report.
Matter in our audit.
write-down on the closing date.
How our audit addressed the Key audit matter
In our audit, we have evaluated and assessed management's process for establishing impairment tests, including evaluating previous years' accuracy in forecasts and assumptions. We have involved valuation specialists in our audit to examine the company's model and method for conducting impairment tests. We have evaluated the company's sensitivity analyses and conducted our own sensitivity analyses of significant assumptions and possible impact factors. With support from our valuation specialists, we have also examined the reasonableness of assumptions about discount rates and long-term growth. We have verified that data included in the impairment test complies with the Board's long-term business strategy per cash-generating unit. We have focused on revenue growth rates and forecasts of operating margin.
We have also conducted sensitivity analyses to analyse the effects of changes in significant assumptions and assessments.
Finally, we have examined that disclosure requirements have been provided in the Annual Report in accordance with IAS 36 Impairment.
Based on our audit, we have not identified any significant observations to be reported by the audit team to the company's Audit Committee regarding Addnode Group AB's valuation of goodwill.
During the year, the Group acquired eight companies at a total book value of 618 SEK m with a purchase price on the date of admission amounting to 611 SEK m.
Accounting for acquisitions involves making significant assessments and estimates of the value of acquired assets and liabilities assumed. Several acquisitions are subject to additional purchase prices determined on the basis of future results. These are therefore surrounded by a level of uncertainty. As of December 31, 2017, total debt related to additional purchase price for business combinations amounted to 90 SEK m. As part of the acquisition analysis, the company has allocated the purchase price to acquired assets, which largely relates to goodwill. This has been done by identifying acquired assets and valuing them at fair value based on valuation models applicable to the asset. Since the uncertainty normally found in the assessment of the fair value of the acquisition price of acquisitions containing additional purchase discrepancies and the fair value of the acquired identifiable assets, as well as the material financial impact of the assessment, we assess the valuations of additional purchase price and acquisition analysis as a key audit matter in our audit.
Based on our audit, we have not identified any significant observations to be reported by the audit team to the company's Audit Committee regarding Addnode Group AB's accounting for acquired companies.
This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-39,88 and 99-102. The Board of Directors and the Managing Director are responsible for this other information.
Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the Group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.
A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on Revisorsinspektionen's website www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor´s report.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Addnode Group AB (publ) for the year 2017 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and have otherwise fulfiled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the Group's type of operations, size and risks place on the size of the Parent Company's and the Group's equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the Group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfil the company's accounting in accordance with law and handle the management of assets in a reassuring manner.
Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:
Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.
A further description of our responsibility for the audit of the administration is available on Revisorsinspektionen's website: www. revisorsinspektionen.se/revisornsansvar. This description is part of the auditor´s report.
PricewaterhouseCoopers AB, Stockholm, was appointed auditor of Addnode Group AB (publ) by the general meeting of the shareholders on the 4th May 2017 and has been the company's auditor since the 9th of April 2003.
Stockholm March 22, 2018
PricewaterhouseCoopers AB
Magnus Brändström Authorized Public Accountant Auditor-in-charge
When I stepped down as CEO in spring 2017 after ten years and took office as Chairman of the Board, I commented that we had gone from being a Swedish company to an international group. During the past year, our internationalisation continued. Addnode Group carried out a large number of acquisitions, where we on the Board engaged ourselves in gaining an understanding of every company's potential and how they fit in to our existing business and our strategy going forward. Through our geographic expansion we now have substantial operations in Europe and a good jumping-off point to a number of new countries, such as Australia and Canada.
Managing our growth with good control permeates everything we do. With the many acquisitions comes ever-greater demands on the Board to follow up that we have a suitable organisation and leadership. We must have management capacity to both carry out acquisitions and take care of our companies in the best way possible for continued value-creating development.
A key success factor is our decentralised Group structure, where the management teams of our divisions and subsidiaries are assuming a large share of the responsibility, with the Parent Company and Board supporting them with expertise and experience from previous acquisitions.
Apart from investments in new products and services, and acquisitions, compliance is an area that is increasingly engaging the Board. With changed rules and regulations come a greater responsibility above all for the Audit Committee to quality assure the entire report flow and information that serves as the documentation for the Board's decisions. This is important work that has taken on greater importance over the years in pace with higher demands for transparency and full disclosure of public companies.
As in previous years, the agenda for 2018 will include continued growth with good risk control supported by an engaged Board.
Staffan Hanstorp Chairman of the Board
The Parent Company of the Group is the Swedish public limited liability company Addnode Group AB, corporate identity number 556291-3185, with registered office in Stockholm. The Company's Class B shares are listed on Nasdaq Stockholm, Mid Cap list.
The Group's governance is regulated by both external and internal governance documents. The external governance systems include, among other things, the Swedish Companies Act, the Swedish Annual Accounts Act, Nasdaq Stockholm's Rule Book for Issuers, and other applicable laws and regulations. Internal governance systems include the Articles of Association adopted by the Annual General Meeting, the Board's Rules of Procedure, and the Board's instructions for the CEO. In addition, the Board has adopted Group-wide guidelines and policies, Rules of Procedure, and the Board's instructions for the CEO.
Addnode Group applies the Swedish Corporate Governance Code (also referred to as "the Code"). The Code is based on the "comply or explain" principle, which means that a company that applies the Code may depart from individual rules, but must in such case provide an explanation for the departure. In 2017 Addnode Group departed from point 2.4, which pertains to Board members serving on the nomination committee. The Code prescribes that the Chairman of the Board shall not serve as chair of the nomination committee and that members of the executive management shall not serve on the nomination committee. Addnode Group does not adhere to this rule, as Staffan Hanstorp, Chairman of the Board, is chair of the Nomination Committee. Addnode Group's auditors have reviewed the statutory information in the Corporate Governance Report to ensure that it is consistent with the other parts of the Annual Report and consolidated accounts.
The Annual General Meeting (AGM) is Addnode Group's highest decision making body and resolves on adoption of the income statement and balance sheet, discharge the members of the Board of Directors and the President and CEO from liability, election of Board members and auditors', directors' and auditors' fees, guidelines for remuneration of Group Management and other senior executives, adoption of the Annual Report and dividends, and other important matters, such as the principles for appointing the Nomination Committee.
The auditor is appointed by the AGM and reports via an audit report on its review of the Annual Report, the bookkeeping and the consolidated financial statements, and for the Board of Directors' and President's administration of Addnode Group AB. The auditor also reviews the nine-month interim report.
The Nomination Committee is tasked with safeguarding the interests of all shareholders and makes recommendations to the Annual General Meeting for: appointment of a chairman to preside over the AGM, Board members, the Chairman of the Board, and the auditor. The Nomination Committee is also tasked with making recommendations for directors' fees, fees for Board members' work on committees, and auditors' fees.
The Board of Directors' main duty is to administer the Group's operations in a long-term and value-creating way and thereby promote the shareholders' interests in the best possible way. This work includes adopting written Rules of Procedure for its own work and for the Company's conduct in society, overarching goals and strategies, and conducting a yearly evaluation of the President's performance.
The Audit Committee is tasked primarily with monitoring the processes surrounding Addnode Group's financial reporting and internal control in order to ensure the quality of external reporting.
The Remuneration Committee is tasked primarily with representing the Board on matters pertaining to remuneration and terms of employment for the President and other senior executives.
The President and CEO is responsible for the day-to-day administration of the Group's operations in accordance with the Board's guidelines and instructions. The President provides the Board with the necessary documentation for its work both ahead of and between Board meetings. The President has appointed a Group Management team to assist him in this work.
Group functions. Addnode Group AB has Group functions for accounting, communication and business development.
The divisions' Boards. The divisional head are responsible for the operations of their respective divisions and report to Addnode Group's President and CEO. Overall governance of the segments is conducted by the divisions' Boards of directors.
Addnode Group's shares are serviced by Euroclear Sweden AB. This means that no share certificates are issued and that Euroclear Sweden maintains a shareholder register of owners and administrators in the Company. Addnode Group's share capital is made up of Class A, Class B and Class C shares. A-shares carry entitlement to ten votes each, and B- and C-shares carry entitlement to one vote each. Class A and B shares carry entitlement to dividends. Class C shares do not carry entitlement to dividends.
All shares carry equal entitlement to the Company's assets. However, Class C shares are limited and are not entitled to a larger share of the Company's assets than what corresponds to the share quota value calculated as per the date of distribution, with an interest-rate factor of one month STIBOR plus 4 percentage points calculated from the date of payment of subscription settlement. Class C shares are redeemable upon demand by the Company. At the request of a shareholder, Class A shares can be converted to Class B shares, and Class C shares can be converted to Class B shares by the Board of Directors.
On 31 December 2017 the number of shareholders was 5,359, and the proportion of foreign-owned shares was 18 per cent. The proportion of institutional owners including mutual funds was 67 per cent.
Aretro Capital Group AB is the largest owner, with 7.5 per cent of the share capital and 20.1 per cent of the votes. Vidinova AB is the second largest owner, with 4.8 per cent of the share capital and 12.0 per cent of the votes. Aretro Capital Group AB is jointly owned via companies by Staffan Hanstorp, Chairman of Addnode Group, and Jonas Gejer, head of the Product Lifecycle Management division. Jonas Gejer is also President of Addnode Group's subsidiary TechniaTranscat. Vidinova AB is controlled via companies by Dick Hasselström.
The 2017 Annual General Committee resolved to assign the Chairman of the Board with the task of contacting the three largest owner-registered shareholders (in terms of votes) in Euroclear Sweden's shareholder register as at 31 August 2017, to each appoint a representative who is not a member of the Company's Board, to form the Nomination Committee along with the Chairman of the Board ahead of the 2018 Annual General Meeting. In addition, the Chairman of the Board was assigned with the task of appointing a representative on the Nomination Committee for the smaller shareholders and a representative for the institutional owners. The representative of the largest shareholder in terms of votes is to serve as chair of the Nomination Committee.
The Nomination Committee is tasked with submitting recommendations to the next year's Annual General Meeting on the following:
Fees for committee work
Nomination Committee for the following year
The Board's audit committee assists the Nomination Committee in the work on submitting recommendations for the election of auditors and the auditors' fees. The Audit Committee evaluates the work of the auditors and informs the Nomination Committee about the results of its evaluation.
The composition of the Nomination Committee was announced on Addnode Group's website and via a press release published on 30 October 2017. The Nomination Committee was composed of the following members:
The Nomination Committee held five meetings ahead of the 2018 AGM. The Nomination Committee represented approximately 46 per cent of the shareholders' votes as per 31 December 2017. As the basis for the Nomination Committee's work, company management presented information about the Company's operations and strategic direction. In addition, the Chairman of the Board presented the annual evaluation of the Board members' performance. The Chairman of the Board also provided information about the Board's work during the year. All Board members, in addition to Staffan Hanstorp, are independent in relation to the Company, company management and the Company's largest shareholders.
The shareholders' right to make decisions on Addnode Group's affairs is exercised at Annual General Meetings or, where applicable, at extraordinary general meetings, which are Addnode Group's highest decisionmaking body. The AGM is normally held in April or May. The AGM passes resolutions regarding the following:
An extraordinary general meeting may be held if the Board deems it necessary or if requested by Addnode Group's auditors or owners with at least 10 per cent of the shares.
The 2017 AGM was held on 4 May 2017. The Chairman of the Board, Sigrun Hjelmquist, was elected as Chairman of the Annual General Meeting, in accordance with the Nomination Committee's recommendation. The minutes from the AGM are available on Addnode Group's website. The AGM resolved in favour of the Board's proposal to pay a dividend of SEK 2.25 per share for the 2016 financial year. Staffan Hanstorp was elected as Chairman of the Board. Jan Andersson, Kristofer Arwin, Dick Hasselström, Sigrun Hjelmquist and Thord Wilkne were re-elected as Board members, and Johanna Frelin was elected as a new Board member, in accordance with the Nomination Committee's proposal. Annika Viklund declined re-election. The AGM approved the Nomination Committee's proposal for directors' fees as well as the Board's proposed guidelines for remuneration and terms of employment for the President and other senior executives.
The 2017 AGM authorised the Board, on one or more occasions during the period until the next AGM, to decide on purchases of a maximum number of own Class B shares so that the Company's holding following such purchases amounts to a combined maximum of 10 per cent of the total number of shares in the Company at any given time. Furthermore, the 2017 AGM also authorised the Board, on one or more occasions prior to the next AGM, to decide on the transfer of Class B shares in the Company to a third party. The number of shares transferred may not exceed the total number of treasury shares held by the Company at any given time. The reason for permitting the Board to deviate from shareholders' preferential rights is to enable financing of potential company acquisitions and other types of strategic investments in a cost-efficient manner.
To finance potential company acquisitions using treasury shares, the Board received a mandate at the AGM in April 2017 for the period until the next AGM to make decisions about new share issues. Through decisions supported by this authorisation, the share capital may increase by a maximum of SEK 36 m through the issuance of a maximum of 3,000,000 shares upon full subscription.
The Board of Directors has overarching responsibility for Addnode Group's organisation and administration.
According to the Articles of Association, Addnode Group AB's Board of directors shall consist of three to eight members elected by the AGM for a term through the end of the next AGM. The Articles of Association allow the election of deputy Board members, however, there are currently no deputy members elected by the AGM. The Articles of Association contain no general stipulations about the appointment or dismissal of Board members. The Board of Directors consists of seven members. For further information about the Board members, see page 96.
According to the Code, a majority of Board members elected by a general meeting shall be independent in relation to the Company and company management, and at least two shall also be independent in relation to the Company's major shareholders. The Board of Directors of Addnode Group is considered to meet the requirement for directors' independence in relation to Group Management. Chairman of the Board Staffan Hanstorp was formerly President and CEO of Addnode Group AB, and through his part-ownership in Aretro Capital Group AB he is the largest owner of Addnode Group in terms of votes, and has thereby not been judged as being independent in relation to the Company's major owners. Board member Dick Hasselström was formerly Chairman of the Board of Decernogruppen, and through his ownership in Vidinova AB he is the second largest owner of Addnode Group, and has not been judged as being independent in relation to the Company's major owners.
The Board of Directors' main duty is to administer the Group's operations on behalf of the owners in a way that safeguards in the best possible way the owners' interests in obtaining a favourable long-term return on their investment. The Board reports each year to the shareholders on how corporate governance in Addnode Group is exercised through the Corporate Governance Report. The Board's work is regulated by – among other things – the Swedish Companies Act, applicable rules for listed companies, including the Swedish Corporate Governance Code, the Articles of Association, other laws and regulations, and the Board's and its committees' internal Rules of Procedure.
Strategic direction
Significant matters such as funding, investments, acquisitions and divestments
Each year the Board adopts written Rules of Procedure that lay out the Board's responsibilities and regulate the Board's and its committees' internal delegation of duties, including the Chairman's role, the Board's decision-making processes, summonses to Board meetings, agendas and minutes, and the Board's work with accounting and audit issues and the financial reporting. Decisions on changes to the instructions may be made at Board meetings during the course of the financial year if the Board deems it necessary.
According to the Rules of Procedure, that Chairman shall:
The Rules of Procedure also include detailed instructions for the President and other company functions concerning issues that require the Board's approval. The instructions stipulate the maximum amount that the various decision-making bodies in the Group are authorised to approve in terms of agreements, credits, investments and other expenditures. According to the Rules of Procedure, a statutory Board meeting is to be held immediately after the AGM. At this meeting, decisions are made about who is authorised to sign for Addnode Group and which Board members are to serve on the Board's two drafting committees, the Remuneration Committee and the Audit Committee. The committees' work is mainly of a preparatory and advisory nature, however, the Board can in special cases delegate decision-making authority to the committees. According to the Rules of Procedure, the Board shall meet at least four times per year and additionally when necessary.
During the year, the Board held twelve meetings, of which one was the statutory meeting held directly in conjunction with the Annual General Meeting. All Board meetings during the year followed an approved agenda, which together with documentation for each item on the agenda was provided to the Board members prior to the respective meetings. Meetings normally take half a day, while the Board's annual strategic meeting is held over a full day to allow time for more in-depth discussions. The President and CEO participates in Board meetings in a reporting role. The CFO serves as company secretary. The divisional presidents are invited to Board meetings on a regular basis to present reviews of their respective operations.
Other Group employees attend Board meetings to present reports on specific issues when the Board deems it necessary. Set items of business at Board meetings include an information report by the President and monthly financial reporting as well as an outlook for the coming quarter.
In addition, the Board dealt with a number of other matters at its meetings in 2017, which special attention dedicated to the following:
The Rules of Procedure adopted each year by the Board include detailed instructions about which financial reports and financial information is to be provided to the Board. In addition to the year-end report, interim reports and the Annual Report, the Board reviews and evaluates extensive financial information pertaining to the Group as a whole and the various units included in the Group. The Board also addresses information about risk assessments, disputes and any improprieties that may impact the Addnode Group's financial position. The Board also reviews, primarily through the Audit Committee, the most significant accounting policies applied in the Group pertaining to the financial reporting, as well as significant changes in the policies. The task of the Audit Committee includes reviewing reports about internal control and the processes for financial reporting.
The Group's auditors report to the Board at least twice per year and whenever necessary. At least one of these reports is presented without the President or any other member of Group Management being present. The Group's auditors also participate in Audit Committee meetings when necessary. The Audit Committee submits a report to the Board after each meeting. All Audit Committee meetings are documented by minutes, which are available for all Board members and the auditors.
The Board performs an annual evaluation of its own work. The evaluation pertains to work methods and work climate, the focus of the Board's work, as well as access to and the need for specific expertise on the Board, in accordance with the requirements for diversity and breadth laid out by the Swedish Corporate Governance Code. The evaluation is used as a tool to develop the Board's work and is also used as documentation for nomination work by the Nomination Committee.
Fees paid to the AGM-elected Board members are set by the AGM based on the recommendation by the Nomination Committee. For the period between the 2017 and 2018 Annual General Meetings, a set fee of SEK 370 thousand (360) is payable to the Chairman of the Board, and SEK 185 thousand (180) is payable to each of the other Board members. In addition, a fee may be payable on account for special initiatives (consulting services, etc.) by Board members within their respective competency areas, provided that such initiatives are approved in advance by the Chairman of the Board or by two Board members. A fee of SEK 35 thousand (35) is payable to each of the two regular members of the Board's Audit Committee, and a fee of SEK 55 thousand (55) is payable to the Audit Committee chair. A fee of SEK 15 thousand (15) is payable to each of the members of the Remuneration Committee. A Board member may be given the opportunity to invoice the director's fee provided that it is cost-neutral for the Company and in accordance with applicable legal rules and recommendations.
Following the Annual General Meeting in May 2017 the Chairman of the Board, Staffan Hanstorp, was contracted on a consulting basis for work with the Group's acquisition opportunities, financing matters, strategic partnership and overarching strategic issues. Fees invoiced to the Parent Company for the consulting services performed by Staffan
Hanstorp amounted to SEK 1,674 thousand for the period May–December 2017. No other fees for work other than Board assignments and work on the Audit and Remuneration Committees were paid in 2017.
There are no agreements concerning pensions, severance pay or other benefits for Board members.
The Board has established a remuneration committee and an audit committee. The work of the committees is mainly of a preparatory and advisory nature, but the Board may delegate decision-making authority to the committees in special cases. Committee members and the committee chairs are appointed at each year's statutory Board meeting.
The Remuneration Committee's main task is to represent the Board on matters pertaining to remuneration and terms of employment for the President and other senior executives based on the guidelines for remuneration and terms of employment for the President and other senior executives adopted by the AGM. The Committee reports on its work to the Board on a regular basis. The Remuneration Committee's members are, since 4 May 2017, Chairman of the Board Staffan Hanstorp and Board member Dick Hasselström.
The Audit Committee's main task is to monitor the processes for Addnode Group's financial reporting and internal control in order to ensure the quality of external reporting. The Audit Committee's members are, since 4 May 2017, Jan Andersson (committee chair), Sigrun Hjelmquist and Kristofer Arwin.
The Audit Committee's work includes:
At the 2017 Annual General Meeting the chartered accounting firm PricewaterhouseCoopers AB (PwC) was re-elected, with Authorised Public Accountant Magnus Brändström as auditor-in-charge. Magnus Brändström has been an Authorised Public Accountant since 1995. To ensure fulfilment of the information and control requirements placed on the Board, the auditors report to the Audit Committee on a regular basis about all material accounting issues, as well as about any errors or irregularities. In addition, the auditors are invited at least once per year, and when necessary, to participate and report at Board meetings. PwC submits an audit report for Addnode Group AB, for the consolidated financial statements and for the Board of Directors' and President's administration of Addnode Group AB. The auditors also review Addnode Group's nine-month interim report. The fees paid by Addnode Group to the auditors, for both audit-related and other non-audit-related assignments, are specified in Note 6 of the Annual Report, Auditors' fees.
The President is responsible for the day-to-day administration of the Group's operations in accordance with the Board's guidelines and instructions.
Canella.
The President has appointed a Group Management team as assistance, which in addition to the President comprises the CFO and the heads of the three divisions, Design Management, Product Lifecycle Management and Process Management. The members of Group Management are responsible for implementing the Group's strategy in their respective areas and also have overarching responsibility for Addnode Group with respect to long-term and strategic matters, such as the Group's organisation, acquisitions, trademarks, investments and financing. Every other month a full-day meeting is held in which the agenda consists of discussions and decisions about the month's results, Groupwide projects and updates of forecasts and the business situation, development projects, acquisition candidates and other Group-wide strategic matters. In addition to these regular meetings, Group Management also regularly reviews matters as necessary. The President and other members of Group Management are presented on page 87.
The three divisions – Design Management, Product Lifecycle Management and Process Management – make up Addnode Group's operational structure. In accordance with adopted strategies, the divisional heads are responsible for the operations of their respective divisions and report to Addnode Group's President and CEO. The Boards of the respective divisions constitute the overarching management of the Design Management, Product Lifecycle Management and Process Management divisions, and meet each quarter. The divisions' Boards are made up of Addnode Group's President and CEO, who serves as Chairman, the CFO, and the respective divisions' heads. The respective divisions' controllers are permanently co-opted to the respective divisions Boards at Board meetings, and other members of the division's management participate when necessary.
Guidelines for remuneration of Group Management and other senior executives are decided by the AGM based on a recommendation by the Board of Directors. Remuneration of the President and CEO is addressed and set by the Board's Remuneration Committee. Remuneration of other senior executives in the Group is addressed and set by the President and CEO after consultation with the Board's Remuneration Committee. Remuneration of the President and other senior executives is detailed in Note 5 of the 2017 Annual Report.
| Name | Function | Committee assignment | Year elected | Independent in relation to the company and company management/ owners |
Attendance at Board meetings |
Class A shares |
Class B shares |
|---|---|---|---|---|---|---|---|
| Staffan Hanstorp 1 | Chairman of the Board |
Remuneration Committee chair |
2017 | Yes/No | 10/10 | 625,332 | 1,658,598 |
| Jan Andersson | Director | Audit Committee chair | 2012 | Yes/Yes | 14/14 | — | 15,000 |
| Kristofer Arwin | Director | Member of Audit Committee | 2012 | Yes/Yes | 14/14 | — | 2,180 |
| Johanna Frelin 2 | Director | — | 2017 | Yes/Yes | 9/10 | — | — |
| Dick Hasselström 3 | Director | Member of Remuneration Committee |
2010 | Yes/No | 14/14 | 361,667 | 1,084,718 |
| Sigrun Hjelmquist 4 | Director | Member of Audit Committee | 2009 | Yes/Yes | 14/14 | — | 2,000 |
| Annika Viklund 5 | Director | — | 2014 | Yes/Yes | 4/4 | — | — |
| Thord Wilkne 6 | Director | — | 2008 | Yes/Yes | 14/14 | — | 435,000 |
Via the company Aretro Capital Group AB. Elected by the Annual General Meeting on 4 May 2017.
2 Elected by the Annual General Meeting on 4 May 2017.
3 Via the company Vidinova AB.
4 Including spouse's holding of 1,000 shares.
5 Resigned at the Annual General Meeting on 4 May 2017.
6 Including spouse's holding of 35,000 shares.
The Board of Directors has overarching responsibility for internal control over financial reporting. The Board has established an audit committee tasked with conducting preparatory work for the Board's work with control over the Company's financial reporting. The following description has been prepared in accordance with the Swedish Corporate Governance Code (the Code) and constitutes the Board's description of the Company's system for internal control and risk management with respect to financial reporting.
Addnode Group's control environment includes the values and ethics that the Board, the President and Group Management communicate and work according to, as well as the Group's organisational structure, leadership, decision-making channels, authorisations and responsibilities, and the employees' expertise. The Board works continuously with risk assessment and risk management. Addnode Group's Board has chosen to not establish a designated audit function for internal control. The Board is of the opinion that the existing organisation and existing
control structures in Addnode Group enable effective operations, identify risks in the financial reporting and ensure compliance with applicable laws and regulations. The divisional presidents and controllers regularly monitor compliance with the governance and control systems established by the Company.
All Board members' shareholdings are reported as per 31 December 2017. Fees paid to the Chairman of the Board and Board members are
shown in Note 5 of the Annual Report.
Responsibilities and authorisations are defined in instructions for authorisation rights, manuals, policies, routines and codes. A few examples include the Articles of Association, the Board's Rules of Procedure, the instructions for the division of duties between the President and the Board, the instructions for financial reporting, the finance policy, the insider policy, the financial manual including its accompanying accounting manual.
These guidelines, together with laws and external rules and regulations, make up the control environment. All employees are required to follow these guidelines. The Board tests the relevance and pertinence of these instructions on a regular basis. Responsibility for continuously maintaining an effective control environment and the day-to-day work with internal control over financial reporting is delegated to the President. The Group's corporate governance is described on pages 89 – 95. Group Management and other senior executives have responsibility for internal control within their respective areas of responsibility.
The Audit Committee continuously assesses the Group's risks and reports to the Board when necessary. The aim is to identify events in the market or in the Group's operations that could result in changes in the value of assets and liabilities. Another important part of risk assessment involves staying abreast of changes in accounting rules and ensuring that any changes are correctly reflected in the financial reporting. The CFO is responsible for the preparatory work behind the Audit Committee's assessments and for operational monitoring of identified risks. A key aspect of risk assessment is the Company's monthly financial reporting and the management reports that are submitted each month by the divisional presidents and their directly subordinate managers.
The Company's control structures have been designed to manage the risks that the Board and management deem as being the most significant for the operations and the financial reporting. Addnode Group's control structures consist in part of an organisation with clear roles that facilitate an effective and suitable division of duties and responsibilities, and in part of instructions and specific control activities aimed at detecting or preventing risks for errors in the reporting in a timely fashion.
Examples of control activities include:
Monitoring and testing of control activities are performed on a continuous basis to ensure that risks have been identified and addressed in a satisfactory manner. Monitoring is conducted both informally and formally, and involves reconciliation of monthly financial reports against budgets, forecasts and other set targets. Monitoring to ensure the effectiveness of internal control over financial reporting is conducted by the Board, the President, Group Management, and individuals in the Group's divisions and companies who are responsible for operations. The Audit Committee reviews reports on internal control as well as the financial reporting processes and analyses by the CFO. The auditors report to the Audit Committee in connection with their review of the nine-month interim report, the year-end report, and the Annual Report. In addition, the Audit Committee and the auditors maintain regular contact.
Guidelines for the financial reporting are communicated to employees through targeted communication initiatives, regular information meetings with the Group's controllers and financial managers, and manuals, Group-wide policies and codes that are published via Group-wide systems. Such information includes methodologies, instructions and practical checklists, descriptions of roles and responsibilities, and overarching timetables for e.g., budgets, forecasts, monthly reports, quarterly book-closings and work with the Annual Report. The CFO is responsible for ensuring that information and training activities are conducted on an ongoing basis with the heads of finance/accounting and administration in the various divisions. The effectiveness of this communication is followed up on a regular basis to ensure receipt of information. In addition, formal and informal channels are in place for employees to communicate important information with relevant recipients – ultimately the Board of Directors where necessary. For communication with external parties, an information policy lays out guidelines for how this communication may take place. The aim of the policy is to ensure correct and thorough compliance with all information obligations.
Addnode Group's routines and systems for the issuance of information aim to provide the market on a regular basis with relevant, reliable and correct information about the Group's performance and financial position in accordance with applicable regulations and laws. Via Addnode Group's intranet the employees receive updates about Group-wide policies, governance documents and manuals.
Financial reporting and business information are provided on a regular basis in the following ways:
The Board monitors and ensures the quality of the financial reporting through instructions governing the division of duties between the President and the Board, instructions for financial reporting to the Board, and through the information policy. The Audit Committee is responsible for conducting preparatory work for the Board's work with control over the Company's financial reporting. In addition, the Board ensures the quality of the financial reporting by thoroughly reviewing interim reports, the year-end report and the Annual Report at Board meetings. The Board also reviews information about risk assessment, disputes and any irregularities. The Board has delegated responsibility to the executive management for ensuring the quality of press releases with financial content as well as presentation material in connection with meetings the media, owners and financial institutions.
Jan Andersson Director
Staffan Hanstorp Chairman of the Board
Johanna Frelin Director
Dick Hasselström Director
Sigrun Hjelmquist Director
Director
Kristofer Arwin
Thord Wilkne Director
Staffan Hanstorp Born 1957. Chairman of the Board, Remuneration Committee chair.
30 years of experience as sales manager, marketing manager and CEO in IT sector. Founded Technia in 1994, which was acquired by Addnode Group in 2004. President and CEO of Addnode Group 2007–2017.
Chairman of Byggnadsfirman Viktor Hansson AB, director of IT & telecom companies in Almega.
Group: Staffan Hanstorp owns, via companies, 50 per cent of Aretro Capital Group AB, which owns 625,332 A-shares and 1,654,624 B-shares in Addnode Group. Personal holding of 3,973 B-shares. Aretro Capital Group AB has issued call options on 70,000 B-shares.
Jan Andersson Born 1959. Director, Audit Committee chair.
Civil engineer with specialisation in computer technology. Co-founder of Readsoft and President of Readsoft 1991–2011.
and Fast2 AB, director of Olivetree AB and TimeZynk AB, among other companies.
Shareholding in Addnode Group: 15,000 B-shares.
Kristofer Arwin Born 1970. Director, member of Audit Committee.
Current assignments: Director of Alertsec AB, Kindred Group plc, Chairman of the Board of TestFreaks AB.
Shareholding in Addnode Group: 2,180 B-shares.
Johanna Frelin Born 1969. Director.
Journalist, B.A. Luther College, USA. MBA Stockholm School of Economics. 20 years of experience in management, of which 12 years in group management with SVT, Hyper Island and Tengbom. CEO since 2011, first for Hyper Island and later for Tengbom.
Current assignments: CEO of Tengbom, director of SNS and Springtime AB.
Shareholding in Addnode Group: –
Dick Hasselström Born 1949. Director and member of Remuneration Committee.
Civil engineer, KTH Royal Institute of Technology, B.Sc. Econ. Stockholm School of Economics, D. Econ. Gothenburg University. Co-founder of Decerno and President 1984–2003. CEO of Decernogruppen 2004–2010.
Current assignments:
Director of Vidinova AB and Verg AB.
Group: 361,667 A-shares and 1,084,718 B-shares via the company Vidinova AB. Vidinova AB has issued call options for 70,000 B-shares.
Sigrun Hjelmquist Born 1956. Director, member of Audit Committee.
Physics from KTH Royal Institute of Technology. Active in the Ericsson Group 1979–2000, most recently as President of Ericsson Components AB. Investment manager at BrainHeart Capital 2000–2005. Currently executive partner at Facesso AB.
Director of Eolus Vind AB, Edgeware AB, Ragnsellsbolagen AB and Clavister Holding AB.
Education and experience: Secondary school economics degree. Co-founder of WM-data and CEO 1970–1997, Chairman
Thord Wilkne Born 1943. Director.
1998–2004.
Director of Rejlers AB and Silver Life AB, among other companies.
Shareholding in Addnode Group: 400,000 B-shares, plus 35,000 B-shares owned by spouse.
Born 1974, President of Process Management division.
Degree in Public Health Science, Karolinska Institutet. Numerous continuing education course in company management, economics and business development. Active in the Group since 2015, with 20 years of experience from the IT industry in roles such as divisional manager, CEO, and other executive positions.
Current assignments outside the Group: None.
20,000 B-shares, and call options on 40,000 B-shares.
Born 1958. President of Design Management division.
Civil engineer, Norwegian Institute of Technology. Active in the Group since 2005, more than 30 years of experience as head of R&D and as CEO in the IT industry.
Director of WK Entreprenør AS. Shareholding in
companies, and call options on 40,000 B-shares.
Johan Andersson
M.Sc. Econ., Uppsala University. Executive Management Programme, IFL/Stockholm School of Economics. Active in the Group since 2006 as head of IR and M&As, and as CFO. Previous experience as adviser at Investment Bank for tech companies in connection with acquisitions and IPOs.
outside the Group: Chairman of Teknik i Media Datacenter Stockholm AB.
Secondary school degree in engineering, Market Economics IHM Business School. 30 years of experience in product development and related digital tools, such as PLM, simulation and CAD. One of three co-founders of the company Technia in 1994, which was acquired by Addnode Group in 2004.
Current assignments outside the Group: None.
Jonas Gejer owns, via companies, 50% of Aretro Capital Group AB, which owns 625,332 A-shares and 1,654,624 B-shares in Addnode Group. Personal holding of 3,973 B-shares.
Born 1967. CFO of Addnode Group AB.
M.Sc. Econ., Uppsala University. Active in the Group since 2017. Previous experience as transaction adviser for company acquisitions, auditor, CFO in media and telecom industry, and in the banking industry.
Current assignments outside the Group: None.
Shareholding in Addnode Group: No shareholding.
At the 2017 Annual General Meeting, the chartered accounting firm PricewaterhouseCoopers AB (PwC) was re-elected, with Authorised Public Accountant Magnus Brändström as Auditor-in-Charge.
To the Annual General Meeting of Addnode Group AB (publ), corporate identity number 556291-3185
It is the Board of Directors who is responsible for the corporate governance statement on pages 89–97 and that it has been prepared in accordance with the Annual Accounts Act.
Our examination has been conducted in accordance with FAR's auditing standard RevU 16 – The auditor's examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.
A corporate governance statement has been prepared. Disclosures provided in accordance with Ch. 6 § 6 second paragraph, points 2–6 of the Annual Accounts Act and Ch. 7 § 31 second paragraph of the same Act are consistent with the annual accounts and the consolidated accounts, and are in accordance with the Annual Accounts Act.
Stockholm, 22 March 2018
PricewaterhouseCoopers AB
Magnus Brändström Authorised Public Accountant Auditor-in-charge
Guidelines for information about Alternative Performance Measures (APMs) for companies with securities listed on a regulated market within EU have been issued by the European Securities and Markets Authority (ESMA) and shall be applied for Alternative Performance Measures in published compulsory information. Alternative Performance Measures refer to financial measures of historical or future development of earnings, financial position, financial results or cash flows that are not defined or stated in applicable rules for financial reporting. Certain performance measures are used in the Annual Report which are not defined in IFRS, with the purpose to give investors, analysts and other interested parties clear and relevant information about the Company's business and performance. The use of these performance measures and reconciliation to the financial statements are presented below. Definitions are provide on page 100.
EBITA is a measure that the Group considers to be relevant for investors, analysts and other interested parties in order to understand profit generation before investments in intangible non-current assets. The measure is an expression of operating profit before amortisation and impairment of intangible non-current assets.
The Group considers this key ratio to be useful for the users of the financial statements as a complement in evaluating the capacity to pay dividends, to execute strategic investments and to evaluate the Group's ability to meet its financial obligations. The key ratio expresses the level of financial borrowing in absolute amounts after deducting cash and cash equivalents.
| Reconciliation of EBITA, SEK m | 2017 | 2016 |
|---|---|---|
| Operating profit | 129.9 | 113.7 |
| Depreciation, amortisation and impairment of intangible non-current assets |
81.9 | 56.9 |
| EBITA | 211.8 | 170.6 |
| Reconciliation of net debt, SEK m | 31/12/2017 31/12/2016 | |
|---|---|---|
| Non-current liabilities | 192.3 | 67.5 |
| Current liabilities | 1,450.6 | 953.3 |
| Noninterest-bearing non-current and current liabilities |
-1,022.1 | -843.5 |
| Total interest-bearing liabilities | 620.8 | 177.3 |
| Cash and cash equivalents | -173.2 | -111.5 |
| Other interest-bearing receivables | 0.0 | 0.0 |
| Net debt (+)/receivable (—) | 447.6 | 65.8 |
Current assets excluding inventories as a percentage of current liabilities.
Average number of full-time employees during the period.
Total assets less noninterest-bearing liabilities and noninterest-bearing provisions including deferred tax liabilities.
Cash flow from operating activities divided by the average number of shares outstanding.
Net debt in relation to shareholders' equity (including equity attributable to non-controlling interests).
Net profit for the period attributable to owners of the Parent Company divided by the average number of shares outstanding.
Earnings before amortisation and impairment of intangible non-current assets.
EBITA as a percentage of net sales.
Shareholders' equity (including shareholders' equity attributable to non-controlling interests) as a percentage of total assets.
Profit before tax plus financial expenses divided by financial expenses.
Interest-bearing liabilities less cash and cash equivalents and other interest-bearing receivables. According to this definition, a negative level of net debt means that cash and cash equivalents and other interest-bearing financial assets exceed interest-bearing liabilities.
Net sales divided by the average number of employees (full-time equivalents).
Operating profit as a percentage of net sales.
Organic growth
Change in net sales excluding acquired units during the last 12-month period.
Share price in relation to earnings per share.
Profit before tax as a percentage of net sales.
Revenue of an annually recurring character, such as revenue from support and maintenance contracts and revenue from subscriptions, rental contracts and SaaS solutions.
Profit before tax plus financial expenses as a percentage of the average capital employed.
Net profit for the period attributable to owners of the Parent Company as a percentage of average shareholders' equity attributable to owners of the Parent Company.
Reported shareholders' equity plus untaxed reserves less deferred tax at the current tax rate.
Shareholders' equity attributable to owners of the Parent Company divided by the total number of shares outstanding.
Share price in relation to shareholders' equity per share
IT-system for 3D digital representation and information processing in e.g., buildings and facilities.
IT systems for design and construction of products, buildings and facilities. Using a CAD system, designers can visualise their designs, ensure defectfree construction and improve documentation for all aspects of the manufacturing process.
One of our divisions. Provides software and services for design, construction and management of products, properties and infrastructure.
A collective name for spaces, infrastructure and people within an organisation, and often associated with administration of properties, office buildings and hotels.
IT systems for geographical information that analyse and present the results with map data as a foundation. The term GIS is not to be interchanged with "geographical information", such as a map symbol or line representing a road. GISs are used to create, edit and research land area.
A collective term for development entailing that machines, vehicles, buildings and household appliances with built-in electronics and internet connection can be controlled or share data over the internet.
Open source, or open software, is a computer program in which the source code is freely accessible for anyone to use, read, modify or further distribute.
A tool for tracing and controlling components and data about a given product. Used mainly to ensure that the technical specifications during an entire development and manufacturing process are the same for all people working with the project. PDM is commonly used in conjunction with PLM systems.
One of our divisions. Provider of software and services for product data information. One of Europe's leading providers.
The PLM market can be divided into three different divisions:
One of our divisions. Provider of software and services for product data information. One of Europe's leading providers.
One of our divisions. Provider of IT systems for document and case management, websites and collaboration tools. One of Sweden's and Norway's leading providers to municipal administrations, authorities and companies.
A model for offering software as a service, where users gain access to the applications via the internet, i.e., without themselves having the system, service or program installed on their own computers or servers.
Hudiksvallsgatan 4 B SE-113 30 Stockholm Tel: +46 8 630 70 70 www.addnodegroup.com
SWG House 4 Keswick Road London SW15 2JN UK Tel: +44 020 8877 4080 www.swg.com
Korta Gatan 7 SE-171 54 Solna Tel: +46 8 704 22 00 www.symetri.se
Robert Jacobsens Vej 70 DK-2300 Köpenhamn Denmark Tel: +45 5577 8383 www.symetri.dk
Äyritie 8 B FI-01510 Vantaa Finland Tel: +358 9 5422 6500 www.symetri.fi
Forskningsparken Hus 5 Gaustadalléen 21 NO-0349 Oslo Norway Tel: +47 22 02 07 00 www.symetri.no
Hoffsveien 1 C NO-0275 Oslo Norway Tel: +47 22 50 45 50 www.interaxo.no
Symetri Collaboration AB Västgötagränd 15 SE-118 28 Stockholm Tel: +46 8 455 53 30 www.interaxo.se
Horsley House North Regent Centre Gosforth Newcastle Upon Tyne NE3 3TZ UK Tel: +44 191 223 3400 www.symetri.co.uk
Isafjordsgatan 15 Box 1141 SE-164 40 Kista Tel: +46 8 599 204 00 www.techniatranscat.com
TechniaTranscat AS Hoffsveien 1 C NO-0275 Oslo Norway Tel: +47 22 02 07 07 www.techniatranscat.com
FI-02600 Espoo Finland Tel: +358 424 722 201 www.techniatranscat.com
33304, USA www.techniatranscat.com
Tel: +49 72197043-0 www.techniatranscat.com TechniaTranscat BV Hoofdweg 78-B 7371 AK Loenen (Gld) The Netherlands
Brunleys Kiln Farm Milton Keynes MK 11 3EW UK Tel: +44 1908 278606 www.intrinsys.com
Tel: +31 55 534 85 91 www.techniatranscat.com
Evitbe AB Vasagatan 45 SE-411 37 Gothenburg Tel: +46 771 213 213 www.evitbe.com Forsler & Stjerna Konsult AB S:t Gertrudsgatan 3 SE-211 25 Malmö Tel: +46 40 20 44 80 www.forslerostjerna.se
S:t Larsgatan 18 Box 576 SE-581 07 Linköping Tel: +46 13 37 37 00 www.idainfront.se
Process Management
division
Adtollo AB Östgötagatan 12 SE-116 25 Stockholm Tel: +46 8 410 415 00 www.adtollo.se
Arkiva AB
Box 217
Brandthovdagatan 9
SE-721 06 Västerås Tel: +46 21 18 70 10 www.arkiva.se
Canella IT Products AB Hudiksvallsgatan 4B SE-113 30 Stockholm www.canellait.se Decerno AB Electrum 234 SE-164 40 Kista Tel: +46 8 630 75 00 www.decerno.se Decerno Väst AB Vasagatan 45 SE-411 37 Gothenburg Tel: +46 31 777 77 90 www.decerno.se EssVision AB Hudiksvallsgatan 4B SE-113 30 Stockholm Tel: +46 8 595 13 400 www.essvision.se
InPort AB Tynäsgatan 10 SE-651 14 Karlstad Tel: +46 54 22 27 70 www.inport.com
Vasagatan 45 SE-411 37 Gothenburg Tel: +46 31 750 62 00 www.kompanion.se
Box 315 SE-731 27 Köping www.mittbygge.se
Box 315 SE-731 27 Köping Tel: +46 221 168 70 www.sokigo.se
Löfbergskajen 3 SE-652 24 Karlstad Tel: +46 54 13 79 90 www.stamford.se
Hudiksvallsgatan 4 B SE-113 30 Stockholm Tel: +46 8 20 29 50 www.stamford.se
Hudiksvallsgatan 4 B SE-113 30 Stockholm Tel: +46 8 525 080 00 www.voiceprovider.com
For other local addresses, please refer to the respective companies' websites.
Production: Addnode Group in cooperation with Sthlm Kommunikation & IR AB.
Copyright: This material is copyright-protected pursuant to the Act on Copyright in Literary and Artistic Works (1960:729). Photographers: Sara Arnald (p. 7), Signalisten (p. 21), Johan Töpel (pp. 10-11, 32-33, 35-37, 51, 103-105)
ADDNODE GROUP AB (publ.) Hudiksvallsgatan 4B, SE-113 30 Stockholm
+46 (0)8 630 70 70 [email protected] www.addnodegroup.com
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