Administration Report
Risks and uncertainties
AddLife works with risk management on both a strategic and operational level. Risk management aims to identify and analyse the company's most significant risks and potential events that may affect AddLife's ability to implement the company's strategy and achieve its defined goals and vision. Identified risks are analysed, quantified and prioritised, after which plans are formulated to prevent and mitigate risks. In addition, continuous improvements are made to mitigate future risks. AddLife's risk management focuses on strategic risks, operational risks, financial risks, and other potentially significant risks such as financial reporting and regulatory risks. The AddLife Group has policies and guidelines that provide responsible managers with tools to identify deviations that could develop into risks. The level of risk in the operations is systematically monitored, in which negative deviations or risks are identified and remedied.
AddLife’s earnings and financial position, as well as its strategic position, are affected by various internal factors within AddLife’s control and various external factors over which AddLife has limited influence. General economic and political conditions, public procurement and healthcare reimbursement systems, technological developments, customers and suppliers are the external risk factors that have the greatest impact on AddLife.
In addition, AddLife is affected by financial risks such as transaction exposure, translation exposure, financing and interest rate risk, as well as credit and counterparty risk. See Note 4 for a more detailed description of how AddLife manages financial risks.
Risk/Description |
Management |
General economic and political conditions |
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Geopolitical instability (trade wars, protectionist policies, wars and conflicts) in various global, regional or national contexts may directly or indirectly affect AddLife's business or supply chain, with longer lead times, higher costs, or disruptions in delivery. |
AddLife's decentralised business model enables diversification regarding business areas, suppliers and supply chains that reduce exposure to local geopolitical instability. With more than 90 percent of sales in Europe and over 80 percent of purchased products sourced from European suppliers, less than 10 percent from North America, and less than 5 percent from China, AddLife is well-positioned. |
Public procurement and healthcare reimbursement systems |
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A significant portion of AddLife's revenue is derived from the sale of products to public sector entities. Political decisions in some countries have led to a reduction in the number of contracting customers by consolidating regions into larger units. This has resulted in larger procurements and often longer contractual periods, leading to increased price pressure and competition. |
The organisation and its subsidiaries have a strong focus on public procurement processes. Considerable effort is dedicated to preparing for and ensuring compliance with procurement requirements, as well as to internal training. In addition, the companies have a clearly differentiated offering that creates unique value for customers, which can lead to a less single-minded focus on price, while also improving competitiveness. This offering is based on extensive understanding of customer needs, often involving unique, high-quality products combined with a comprehensive service offer. |
Technological development |
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AddLife's future growth depends, among other things, on new innovative products and thus the Group's ability to influence, anticipate, identify and respond to changing customer preferences and needs. There is a risk that the subsidiaries within the AddLife Group are unable to implement new technology or adapt their product range and business model in time to be able to leverage the benefits of new or existing technology. The costs associated with keeping up with product and technology developments can be high. Moreover, the level and timing of future operating expenses and capital requirements could significantly differ from current estimates. |
There is a strong focus on proactive business development within AddLife´s subsidiaries, as well as a focus on future technological adaptation with new acquisitions. In subsidiaries with production, significant investments are made in research and development and, where necessary, they co-operate with business partners to ensure technological development. Regarding the distribution of third-party products, there is a strong ongoing collaboration with suppliers with respect to technological developments. There is also a structured effort to identify new suppliers with innovative products. The companies within AddLife are mainly distributors, which provides greater opportunities to adapt to technological developments by changing suppliers. |
Customers |
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AddLife has a large number of customers of varying sizes, some of whom are public and some private operators. Because of the number of customers and the Group structure, agreements with customers vary in character with regard to factors such as contract length, warranties, liability limitations and scope. Moreover, there is a risk that such variation could result in unforeseen liability exposure for AddLife, especially in cases where no specific limitations of liability have been incorporated into the agreements. There are also financial risks in some customer contracts that require the commitment of more working capital. Some long-term customer contracts that do not allow for price adjustments may also entail financial risks. |
Although there are contractual risks associated with the scattered customer base that AddLife subsidiaries have, there are also advantages. An individual subsidiary may be highly dependent on an individual customer, but AddLife as a Group is not dependent on any individual customer and no customer accounts for more than about four percent of sales. This is a strength of the AddLife business model. AddLife has implemented measures to reduce tied-up working capital and trains employees in pricing strategies and risk management. |
Suppliers |
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In order to deliver products, AddLife depends on external suppliers who must meet the terms of the agreements regarding matters such as volume, quality and delivery date. Incorrect, delayed or missed deliveries could have a negative impact on AddLife's financial position and results. AddLife has agreements with a large number of suppliers over which the company cannot exercise control nor can it have full insight into their operations. Consequently, AddLife is exposed to the risk that suppliers could act in a way that could harm AddLife. A further risk involves management of too many suppliers simultaneously, which is resource intensive and creates inefficiencies for the companies. |
In a longer perspective, AddLife is not dependent on any single supplier for the survival of the business. The company's largest supplier accounted for approximately four percent of net sales for 2024. AddLife works strategically with the larger suppliers and conducts regular supplier evaluations, with the aim that suppliers will live up to the AddLife Code of Conduct. Processes to regularly review the number of suppliers and focus on the most profitable ones are well integrated into AddLife's daily procedures. |
Acquisitions |
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AddLife acquires companies on an ongoing basis and in 2024 one company was acquired. However, there is a risk that AddLife will not be able to identify acquisition targets or to carry out acquisitions because of, for example, competition with other acquirers or lack of financing. |
AddLife conducts a structured process to identify acquisition candidates to ensure that there is an inflow of interesting objects for the Group. In many cases, an acquisition process is based on a long-term relationship, making AddLife the preferred buyer. |
Organisational risk |
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AddLife applies a decentralised organisational model, which means that subsidiaries in the Group are largely responsible for and conduct business independently. Corporate governance in a decentralised organisation places high demands on financial reporting and monitoring and deficiencies in reporting and monitoring entail a risk of inadequate operational control. The decentralised organisational model has historically been an advantage for the Group. |
Group Management controls, checks and monitors the business in the subsidiaries through active board work, group-wide policies, financial targets and instructions regarding financial reporting. In addition, AddLife works with weekly follow-up of order intake as well as monthly reporting and follow-up of the financial development of all subsidiaries. This means that the parent company always has good insight and understanding of current and upcoming challenges and opportunities. |
Ability to recruit and retain staff |
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AddLife’s continued success depends on experienced employees with specific skills. There are key employees among senior executives in the companies, in Group management and among the Group's employees in general. There is a risk that one or several senior executives or other key personnel could leave the AddLife Group at short notice. If AddLife fails to retain key employees or recruit new competent key personnel in the future, this could have a negative impact on AddLife's financial position and results. |
AddLife invests time and effort in the internal skills development and refinement of the corporate culture through the work with AddLife Academy. In the case of acquisitions, the aim is for key employees to remain in the companies and continue to develop the companies' operations and also be given the opportunity for further education as well as career and personal development within the Group's framework. |
Product liability |
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AddLife’s business entails risk associated with product liability. AddLife could be subject to product liability claims if the products that are produced or purchased cause personal injury or property damage. There is a risk that such product liability claims are not fully covered by AddLife’s insurance policy. If a product is defective, AddLife may be forced to recall it. In such a situation there is a risk that AddLife cannot make corresponding claims against its own suppliers to receive compensation for the costs incurred by AddLife due to the defective product. |
AddLife works continually with suppliers to increase product safety and ensure that products meet the quality requirements that are in place. AddLife regularly reviews its insurance coverage to reduce the risk of unforeseen expenses. AddLife’s own products are subjected to ongoing quality assessment and follow-up. |
Environmental risk |
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Climate change presents both physical and transition-related risks for AddLife. Extreme weather events can disrupt the supply chain, leading to delays, higher transportation costs, and damage to warehouses and infrastructure. Stricter climate legislation, increased carbon pricing, and higher environmental requirements may result in rising operational costs and investment demands over time. Changing customer preferences and sustainability requirements may also negatively impact demand and competitiveness. |
To manage these risks, AddLife has adopted a climate action plan with measures to reduce greenhouse gas emissions and strengthen resilience throughout the value chain. Within its own operations, the company focuses on refrigerant management, transitioning to biofuels, and using renewable energy. Upstream and downstream, the product portfolio is analysed to identify lower-emission alternatives, while collaboration with suppliers is intensified to reduce emissions in the supply chain. |
IT-incidents |
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An IT incident refers to the risk that critical data or one or more of the IT systems used in any way become unusable, locked, fail, or destroyed, such as if AddLife is exposed to cybercrime. AddLife's operations are dependent on the IT systems working and, especially in the event of long-term or extensive interruptions or other IT incidents, there is a risk that certain operations will not be able to be conducted for some time – or in the worst case at all – or will only be able to be conducted with difficulty or at increased costs. |
AddLife works with risk assessments regarding IT infrastructure and sensitive data, and has defined processes and controls to protect the company. |
Regulatory |
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The healthcare market is highly regulated in all countries where AddLife operates. The company's product range is subject to legislation, such as EU directives and related quality system requirements. |
AddLife puts significant effort and resources into implementing and applying policies to ensure compliance. Annual audits are conducted by designated accredited bodies to ensure compliance. In 2024, the company continued its efforts to comply with the EU MDR, which entered into force in May 2021, and the EU IVDR, which entered into force in May 2022. All of the Group's production facilities are also certified according to the medical device quality standard ISO 13485 and/or the general quality standard ISO 9001. |
Supplier responsibility and Due Diligence |
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With operations in approximately 85 companies across 30 countries, there are risks related to lack of traceability and supplier responsibility in AddLife's global supply chain. As a distribution company, we rely on many suppliers, which poses a risk of human rights violations and poor working conditions within the supply chain. Regulations within the EU and Norway are strengthening Due Diligence requirements, which may lead to increased operational costs and impact procurement strategy. In the long term, changing supplier relationships and adjusted procurement costs could affect competitiveness. |
To manage these risks, AddLife is strengthening its due diligence process and updating the Supplier Code of Conduct in 2025 with clearer requirements on working conditions and sustainability. Policies and guidelines are being revised to integrate sustainability analyses into procurement decisions, and compliance is monitored through audits and third-party tools such as EcoVadis. AddLife also plans to introduce systematic reporting of deviations and further develop its whistleblowing channel into a complaints mechanism. These measures enhance our ability to identify and manage risks while ensuring sustainable supplier responsibility. |