• Articles of association
• General meeting of shareholders
• Election committee
• Board of Directors
• Committees of the board of directors
• Management
• Auditors
• Internal control
• Review by auditors
• Ethical guidelines
• Risk analysis
  • Strategic risks associated with market and industry
  • Operational risks
  • Financial risks

Operational risks

Dependent on strong global brands

An increasingly common phenomenon is that foreign manufacturers use several distributors in a local market. This so-called multi-distribution often leads to pricing pressures and declining profitability among distributors. It is therefore critical for a distributor to gain control over the brands in demand by end customers in different product niches and to foster close cooperation with manufacturers with strong, well-established brand names. B&B TOOLS’ presence in the entire value chain gives strength, both in terms of capturing the actual needs of customers and as an interesting partner for global brand names attempting to break into the Nordic market.

Subsuppliers

B&B TOOLS has as its strategy not to own its own manufacturing capacity, but works actively to evaluate and select subsuppliers, primarily in Asia, that can offer the most cost-effective manufacturing. This minimises the Group’s risk of being hit by costs for over-capacity in the event market demand for a specific product were to diminish. At the same time the risk increases that B&B TOOLS’ Code of Conduct is not observed with respect to such areas as work environment. Therefore, the Group strives to work exclusively with manufacturers that accept the Group’s Code of Conduct and successfully pass the regular follow-up reviews that the Group companies conduct on location.

Raw material prices

Steel is an important component in many of the products sold by the Group. Rapid and sharp raw material price fluctuations can thus impact the Group’s earnings in the short term. Longer term, the Group’s companies are subject to the same premises for adaptation as other players in the market, which limits the risk for raw materials price changes.

Disasters at logistics centres

B&B TOOLS’ logistics and IT function are primarily located at two major units in Alingsås and Ulricehamn. A fire at one of these locations would have serious repercussions on the capacity to make deliveries to customers. Preventive actions are being taken to avoid disasters in the form of fire and destruction. Insurance coverage has been obtained for property damage and loss of income due to interruption (consequential losses).

Product liability risk

The Group conducts business that gives rise to normal product liability exposure. Product liability risk for B&B TOOLS is limited by the fact that the largest risks are believed to be in the US market, where the Group conducts extremely limited sales. The Group has insurance coverage for product liability.

Environmental risks

The Group’s business is mainly in commerce and distribution. Environmental impact is therefore related mainly to transportation and packaging. Constantly working to streamline the flow of goods through the value chain, thereby minimising the environmental impact is natural since it is a part of the core business. Several of the companies in the Group are certified in accordance with the ISO 14000 standard.

Credit risks

The Group is subjected to normal credit risks in its customer relationships. To minimise the risk of credit losses, the Group companies apply credit policies that limit outstanding amounts and credit periods for each individual customer. The fact that none of the Group’s customers account for more than 3 percent of the Group’s sales limits the extent of the risk.

Competency risks

As the Group evolves in the direction of the vision – First in MRO – the customers’ demands will grow ever higher for a partner with the ability – creatively and with high competence – to develop comprehensive solutions that meet their defined needs. Therefore, it is highly important for B&B TOOLS to be able to recruit and develop the most competent employees. Responsibility for this rests with the operative management. A common leadership programme is being developed at the Group level and the first pilot programme was launched in 2007/2008.

Corporate acquisitions

Part of B&B TOOLS’ strategy is to grow through acquisitions and 28 businesses were added to the Group during the operating year. The risks involved in acquisitions include the risk that the Group will not successfully achieve the anticipated gains associated with an acquisition and the risk that the desired guarantees and liabilities/ obligations will not be identified during due diligence. The Group’s acquisition organisation works specifically in the areas of the due diligence process and agreement regulation concerning responsibility issues. Responsibility for the integration of new companies lies within the acquiring operating area.