Products

Solutions

Experts &

INDUSTRIAL IT, AUTOMATION CONNECTIVITY

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2010 UK & Irland

2000 Benelux & Finland

1990Norway & Denmark

1980 Sweden 1990

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TABLE OF CONTENTS A SUMMARY OF THE PAST YEAR

At the end of the third quarter in 2017, the largest acquisition in Novotek's history was achieved through the acquisition of Kerrco Automation Ltd, now renamed Novotek UK & Ireland Ltd. This is a major change for Novotek, as it added a market that is as large as the entire Nordic and Benelux market together and adds about 20 percent in operating income.

ESTABLISHMENTS THROUGH DECADES:

Establishment

Novotek has always helped its customers to store, structure and transfer information into knowledge. Today we have extremely effective tools which allow users to arrange and structure data for use at tremendous speed.

A summary of the past year

A SUMMARY OF THE PAST YEAR 3A WORD FROM THE CEO 4NOVOTEK IN BRIEF 6WELCOME TO CROWD-POWERED BUSINESS 8VERSIONDOG SWITCH INTEGRATION 10AR - A NEW BRIDGE BETWEEN MAN AND MACHINE 12REDEFINING THE EDGE 14

YOUR SUCCESS, OUR GOAL 16EMPLOYEES AND ORGANISATION 18CUSTOMERS, COMPETITORS AND HISTORY 20SHARE INFORMATION 22BOARD OF DIRECTORS 23SENIOR MANAGEMENT AND AUDITOR 24FIVE-YEAR SUMMARY 25OUR OFFICES 26

Table of contents

• Operating income was SEK 235.8 (212.1) million.

•TheoperatingprofitwasSEK26.6 (20.6) million.

•TheprofitaftertaxwasSEK20.7 (15.7) million.

•Earnings(attributabletoshareholdersoftheparent)persharewasSEK1.9 (1.5).

• The orders received was SEK 230.5 (203.8) million.

•CashflowfromcurrentoperationswasSEK21.0 (18.7) million, or SEK 2.0 (1.8) per share.

•TheBoardproposesadividendofSEK 1.25 (1.25) pershareforthefinancialyear2017.

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A WORD FROM THE CEO

OLD TRUTHS Certain thing tends to stay true over time; one of those things is that focus will give results. Today Novotek is more focused and more streamlined than ever before, working with the same business model in the whole Northern Europe. Novotek is known for connecting systems on the shop floor using practical, effective app-roaches; with that in focus will we con-tinue to build on our existing founda-tion of customers and their installed base of solutions. Another constant across industries is the attitude, “if it ain’t broke, don’t fix it”. Our compe-tence and product portfolio is more relevant today than ever before, becau-se most facilities have a mix of techno-logy generations ranging from the ‘60s to today. This makes our knowledge about communication and integration of different technologies the key com-petence that is the backbone of Novo-tek. This is one of the reasons I see a bright future for Novotek – we can help our customers be better with the equipment and systems they have to-day, and we have the knowhow to help them build a bridge to the new evol-ving technologies that unlock new op-portunities for them.

A word from the CEO

Last year is a story of a series of significant positive events. Good economic conditions across all our regions led to the best results in Novotek’s history. And we made the largest acquisition ever for Novotek when we stepped over the Nordic Sea to British Isles. Brin-ging Kerrco Automation into Novotek group doubled the market for Novotek and gave us a huge opportunity to grow all our lines of business. Business for our new solutions continue to develop positi-vely though not at the pace we anticipated a year ago. The Novotek group has never been better positioned and capable to take on the future, in whatever shape it comes, and we can help more customers with more innovative tools and approaches than ever.

"Never before have developments gone

faster than today

DIGITAL DISRUPTION (?) During this year have our largest part-ner GE had many challenges and made a number of changes, including a lot of changes in leadership. One thing though has not changed at all and that is GE’s commitment to digitization and how it creates sustainable competi-tive advantages for our customers. No-votek’s deep and unique cooperation with GE have made it possible for us to develop and use the full range of GE solutions to enable digital trans-formation at our customers and part-ners. GE has transformed from a +100 years company in Big Iron to a Digital solution house, where technical le-adership is combined with innovative new business models. Novotek is proud to be partnering with GE, to-gether helping customers with their di-gital journey.

ECOSYSTEM In recent years many markets - IT in particular – have developed into “eco-systems”. Ecosystems in nature in usu-ally described as a network of orga-nisms interconnected and dependent of each other and in the same way are many industries developing where all drives a high level of specialization and interconnect in order to complement one another. Novotek sees its natural position in this and that is part of our success. We will continue evolve our

own capabilities in new fields to be able to take on new roles. Just as im-portantly, we will also develop new kinds of partnerships to deliver the mix of guidance and services custo-mers need for their digital transforma-tions.

AI AND SYSTEMS OF SYSTEMS A fundamental shifts is in progress: the world is moving from closed applica-tions and systems to interconnected architectures where systems talk to other systems and exchange informa-tion almost constantly, to enable work processes to flow smoothly. This inter-connection creates new possibilities: functionality and data flows that were impossible to connect before is only a mouse click away. Playing its role in this is Artificial Intelligence (AI) tech-nology, which in fact is more than 30 years old, but can be applied to real-ti-me, industrial systems more easily than ever before. Amazon Alexa, Apple’s Siri and Microsoft Cortana have star-

ted to change the way we interact with systems, giving you the feeling that the world of Star Trek isn’t so far away! I see that this will also revolutionize how Novotek thinks about delivering indu-strial solutions - and in the end, a bet-ter user experience.

UNSURE BUT IMMENSLY INTERESTING The future is something that many to-day see as uncertain and a little bit inti-midating. Never before have develop-ments gone faster than today - both private and professionally. Some of the shifts happening now are so transfor-mational that they will change the way we see the world. It is my view that progress is something to embraced, but there are also risks to consider. No-votek’s contribution in all of this will be to assist our clients to take the ad-vantage of changes in technology and to avoid most of the risks. As a Pione-er in Industrial IT and automation do we hold many of the keys to be suc-cessful in the shifts coming for many companies and we are ready to help out in more locations and within more areas than ever before. I have never seen so many opportunities to use new technologies to give the customers a better experience, and better business outcomes. Therefore, am I happy to be able to face new and existing custo-mers in the coming year and promise them a better future! ■

3 TECHNOLOGIES THAT WILL AFFECT

US ALLAI BECOMES A TOOL FOR ALLAlexa, Siri and Cortana are technologies that will change how we access our world,and the ways we do everything - not just how we phone home. AR, VR AND MR FOR TO THE MASSESIt is no longer just a game; it is here to give value to you at home and in your workSYSTEMS OF SYSTEMS IS THE WAY FORWARDNo one, no company, can do everything great alone; connect with the best and create your ecosystem.

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A WORD FROM THE CEO

OPERATIONS Novotek’s core expertise is in solutions for industrial IT and automation, which improve the efficiency of our customer’s information management and operation including all production processes.

With in-depth knowledge about how industrial information flows are created and controlled, Novotek is able, by combining products and related services such as consultation and training, to ensure that our customers maintain and strengthen their competitiveness.

We provide solutions covering the full spectrum of data management, from collection and storage to analysis, visualisation and control.

Key industries include energy, food, pharmaceuticals, iron & steel, chemicals & petrochemicals, paper & pulp, manufacturing and water & sewage.

MISSION Novotek’s overall mission is to be a leading distributor of products and solutions within industrial IT and automation in the Nordic, Benelux, UK and Ireland. Using Novotek’s own products, we are seeking to attain a global role in those niches where existing solutions can be supplemented to create additional advanta-ges for customer operations.

OFFICE NETWORK Novotek has ten offices, including two in Sweden, three in Denmark, one in Norway, one in the Netherlands, one in Belgium, one in Finland and one in the UK.

Our export business outside Novotek’s office network is mainly concentrated to Malmö. ■

Novotek in brief Novotek’s business delivering products and solutions to its custo-mers for industrial IT and automation. Our solutions are created from standard products which connect, collect, store, analyse and control the customer’s data flows. The idea is to give the customer the freedom to view, control, optimise and follow up their operation and production from anywhere.

6 Strategies to achieve our overall

mission

Key figures

BALANCED: PRODUCTS, SERVICES & SOLUTIONS

Solutions that make a difference are at the heart of our offering. All solutions are based on our pro-ducts, externally sourced as well as in-house, and are functionally assured through our services.

INNOVATIVE : FOR A NEW WORLD

Everyone should be able to see, manage, control and innovate with their production activities when, where and how they want - securely. Novotek’s solutions are designed to support this ambition and use the latest technology.

SCALABLE :SMALL TO BIG

Companies need to be able to start small and grow as required. That’s why Novotek’s solutions comes in all sizes.

LOCAL: ON THE CORNER

It is more efficient to be able to speak to somebody close at hand and in your own language. No-votek shall always be close to its customers and make communi-cation easy.

ONE: NOVOTEK - INTEGRATED & UNIFORM

Novotek aims to give its custo-mers better solutions, faster support and a wider product portfolio in all our areas.

FOCUS: OUR CUSTOMERS’ SUCCESS

Our solutions make our custo-mers more successful. Their abi-lity to grow and thrive due to better ways to connect, store, view and analyse their data is the mission of Novotek.

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NOVOTEK IN BRIEF NOVOTEK IN BRIEF

2017 2016

Operating revenue, SEKm 235,8 212,1

Profit after net financial income, SEKm 27,1 20,7

Earnings per share, SEK 1,9 1,5

Operating margin, % 11,3 9,7

Cash and cash equivalents, SEKm 41,7 60,1

Equity/assets ratio, % 51,6 54,9

Number of employees, 31 Dec 120 105

See page 25 for definitions of key performance indicators

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WELCOME TO CROWD-POWERED BUSINESS

A new era in sourcing talent and solutions has emerged - transfor-ming business performance. The gig economy is enabling organi-zations to challenge the boundaries of traditional resourcing methodology – helping them acquire talent and solutions much more quickly, with greater flexibility, and at a better cost. On the supply side of the gig economy - experts enjoy greater freedom to work on projects and with clients that are the best match for their interests and expertise. To access these projects and clients, these experts typically participate in one or more online talent market-places that publish client-sponsored challenges or curated project work from which the experts can choose.

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Until recently, organizations needed to would seek out different talent markets for different categories of experts – and rely upon the talent market vendors to provide an efficient matching pro-cess and drive the right outcome. The process to research and test which ta-lent markets and models were best for which types of business activities could be arduous, costly, and challenging to implement at scale. That is, until the onset of the hybrid solution providers like GE GENIUSLINK.

Borne out of the industrial giant’s ex-tensive consumption of talent market resources and solutions – GE GENI-USLINK has amassed an exhaustive repertoire of industry-leading experti-se and technique into one elegant fra-mework of people, process and plat-form. The GE GENIUSLINK Expert Operating System helps organizations understand how and where to leverage the talent and solutions offered by the-se markets, for which types of business problems, and how to do so for grea-test business impact. The Expert OS is equally powerful for novice or advan-

ced users of talent market resources, and configures high-impact programs for virtually every business function. The service provider believes in a bet-ter resourcing methodology—one that offers instant access to virtually limit-less talent and capacity—allowing or-ganizations to effectively put the world on their team to drive better business results.

WHERE TO ENGAGE GE GENIUSLINK EXPERT OPERATING SYSTEM Connecting talent with technology, and solution to need - the GENIUS-LINK Expert Operating System lever-ages tools like crowdsourcing, talent markets and open innovation to source talent, insights and solutions that ex-tend the reach and capacity of organi-zational resources.

A natural complement to any organi-zation’s core resource base, the GENI-USLINK Expert Operating System pairs easily with the needs of any busi-ness function - from data science, to marketing, product development, engi-neering, finance, and more.

TYPICAL OUTCOMES

50% average project acceleration

5-20x the speed of idea & solution development

90+ average number of solutions received from an average project

Optimize core capacity by liberating FTE’s from lower value activity

GE GENIUSLINK

21+ million experts within GE GENIUSLINK’s meta network of experts

150-200 projects per year (run via GE GENIUSLINK)

$5B+ opportunities & saving(identified & realized across GE and GE customers in 2017)

3 Industry awards bestowed on GE GENIUSLINK & 32 articles (for thought leadership in innovation, Future of Work, and business transformation)

50%5-20x90+Optimize21+mil150-200$5B+3

Whether you’re looking to prioritize internal capacity, connect with incredible talent, expand your reach or increase speed, complementing your business objectives with GE GENIUSLINK’s operating system elicits exceptional results.

CROWD-POWER, BY THE NUMBERS

HOW DOES IT WORK?

GE ADDITIVE Aligning collaborative innovation with deployment strategy to drive great results.

The MissionThe newly formed Additive team recei-ved a target to achieve $5B in producti-vity by deploying Additive Manu-facturing across GE. They had two key goals: 1.) educate and engage a distribu-ted workforce; and 2.) identify and prio-ritize prospective projects to apply Addi-tive techniques.

The ApproachGE GENIUSLINK partnered with the Additive team to design an internal cam-paign to engage global GE employees around the cost out mission. They crea-ted a digital platform, promotional plan and evaluation strategy to: 1.) educate employees; and 2.) ask where additive might be deployed to drive cost out, in-ventory/logistics, performance impro-vements, and service benefits. By put-ting global GE employees “on” their

team, the Additive organization accele-rated additive adoption across GE.

The ResultsThe outcomes were impressive… the team identified $5B in ideas opportuni-ties -and were able to hit a 10 year tar-get… in 9 months. Through ideas sub-mitted through fellow employees, they committed 150+ projects; completed 200+ prototypes; filed 400+ patents, and completed over 50 component tests.

GLOBAL FIXED ASSET TEAM Automation and artificial intelligence optimize depreciation schedules.

The MissionThe Fixed Asset team needed a smart solution to suggest the most likely ac-counting code for its depreciation schedule, which could leverage proba-bilities from known asset attributes. The team needed to identify the right experts to help execute the project and improve (and automate) the accuracy of the accounting code selection.

The ApproachGE GENIUSLINK matched a selec-tion of its data scientists with the Fixed Asset team to develop logic to select high potential indicators from asset attributes, used text mining to identify key descriptors, and built descriptors to correct accounting code selection—improving accuracy through probability.

The ResultsThis automation exercise elicited the desired results. The simplified accoun-ting code selection process increase humanity capacity by 50%--and increa-sed accuracy of selection and informa-tion by 48%. By using process automa-tion, the team reduced working time from half an hour to a few seconds—allowing the team to prioritize core ca-pacity and liberate full time employees from lower value activity. ■

LEARN MORE Questions or curious about learning more? We’re happy to connect: ge.geniuslink@ge.com

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WELCOME TO CROWD-POWERED BUSINESS

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VERSIONDOG SWITCH INTEGRATIONVERSIONDOG SWITCH INTEGRATION

HOW DOES VERSIONDOG HELP YOU TO SAFEGUARD YOUR DATA?

√ versiondog allows you to cyclically and automatically verify authorised control program versions√ Perform multiple checks daily √ Get alarm notifications√ Quickly comprehend differences through text-based and/or graphical display √ Suitable for use with the vast majority of automation devices and systems √ versiondog detects changes to control programs and displays them√ versiondog monitors the system configuration of Windows and Linux based systems√ versiondog ensures that versions cannot be subsequently changed√ versiondog quickly finds and restores a previous, error-free version

versiondog switch integration - the honeypot scenario

Cybersecurity is one of the central topics in industrial automation. Although versiondog does not directly repel cyberattacks, it helps customers to detect them early on. And, very importantly, it can significantly re-duce the damage wrought by a cyberattack by quickly restoring the last unchanged, hence virus-free version. In order to detect cyberattacks early on, it is essential that you are able to track changes to all control pro-grams and production data. It is also imperative that you are able to identify any unauthorised program changes immediately. All of this is possible with AUVESY’s data management and software solution, version-dog. With versiondog, you can quickly see WHO changed WHAT, WHERE, WHEN and WHY (from the current version all the way back to the first version). What is more, a configurable alarm alerts you when discrepancies are found.

THE HONEYPOT SCENARIO Industrial networks are very complex. They are often structured into several hierarchical levels and have a clearly defined communication protocol so as to successfully facilitate the manage-ment of data streams and tasks. At the field or machine level, there are switches which are connected to termi-nal equipment (such as controllers, field devices and HMI panels) via an Industrial Ethernet protocol (e.g. PROFINET). Switches frequently ac-count for the earliest targets of a cybe-rattack due to their ability to access automation devices via ports. If a port is opened or closed as a direct result of a cyberattack, the connection to the

terminal device can be severed or unauthorised access to a device can be granted. Both of these outcomes can put enterprises, persons and the en-vironment at great risk. How does one go about preventing them?

One well-known example of a suc-cessful defence in depth strategy is the honeypot. Honeypots are used to de-tect (early threat detection and new th-reat detection), prevent, deflect and counteract malware. One way of doing this involves installing and configuring a switch in an industrial network. The honeypot (in the context of this scena-rio, a switch) has no real function, it only mimics the behaviour of a pro-duction resource as accurately as pos-

sible so as to appear attractive to unau-thorised entities. The honeypot administrator should not make any changes to the switch, but simply mo-nitor it for any unauthorised changes.

Enter versiondog. versiondog checks whether there were unauthorised changes made and sounds an alarm when discrepancies are found. This then allows for authorised personnel to react and prevent the potential conse-quences of a cyberattack. By using ver-siondog to schedule regular, automatic backups, you are able to monitor the configuration data of the switch and immediately detect unauthorised changes. ■

AS PART OF YOUR CYBERSECURITY STRATEGY

Data management

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AR - A NEW BRIDGE BETWEEN MAN & MACHINEAR - A NEW BRIDGE BETWEEN MAN & MACHINE

Augmented Reality (AR), has the po-tential to transform our private en-vironment and the world of work in the years and decades to come. For ex-ample, augmented reality will change the way we learn, how we make deci-sions, or interact with the physical en-vironment. It will, reinforced by the combination with intelligent, networ-ked systems - build a new bridge between the digital and the physical world, between man and machine.

WHAT CAN AUGMENTED REALITY DO? AR applications, based on the principle of visualization, show with X-ray vi-sion the inner, hidden functionality. The medical device manufacturer Ac-cuVein takes a picture of the heat pat-tern of the veins and puts it on the skin. The likelihood of the needle hit-ting the vein when taking blood is th-ree times as high. Bosch Rexroth visu-alizes the inner workings of the hydraulic power pack CytroPac. In the 3D representation, which opens when looking at a certain point of the outer skin, the interweaving of the subsys-tems and the cooling capabilities of the internal pump in different configu-rations becomes visible.

A key application of the AR will be the remote support feature. Using AR

devices, the image that the technician sees on site is sent to an expert at head-quarters, who can then give them work instructions by voice or show them in the field of view. Lee Company, a com-pany that sells and maintains building systems, saves $ 500 per month in per-sonnel and travel expenses. On a dollar AR investment, a 20 dollar return ge-nerated.

The previous control and interaction with products or machines via buttons, handles or meanwhile also integrated touchscreens will be raised to a new le-vel of quality by AR. Via smart glasses, e.g. the factory employees use virtual gestures and gestures to navigate through the factory floor and check and adjust machine parameters without physically touching them. Although this application feature promises huge potential, it is still in its early stages, es-pecially for commercial products. The required technologies have in many ca-ses not yet left the research laboratori-es. But voice control in harsh environ-ments is making progress, as well as the capture of gestures and looks.

TWO WAYS IN WHICH AR CREATES ADDED ECONOMIC VALUE Augmented reality can in principle be used in two application directions: first

as a value-adding part of a product and secondly as it helps to further streamli-ne the processes in all areas of the company, from product development through production to sales or service, for products, e.g. the AR-supported display of operational or security in-formation may be a unique selling pro-position. Head-up displays have also been around for some time in cars, in airplanes for years. Where such ads are too expensive, an app for smartphones or smart glasses can also be included, through which a personalized virtual display can be used to set and operate.

Some examples of support in the value chain, others in the original article. In product development, the two-dimen-sional representation of the 3D design models, which have been available for many years, has hitherto made holistic engineering difficult. With AR techno-logy, the 3D models can be projected into the physical environment as an original sized hologram. For example, the 3D hologram of a construction machine can be put on the ground in the later operational environment and the designers can walk around the 1: 1 model, etc., to test visual axes or ergo-nomics. And where once the quality of prototypes at Volkswagen was painsta-

kingly checked based on the 2D drawings, now in an AR application, the prototype is blended with the 3D model and controlled ten times faster.

In production, the worker at the workstations is provided with exactly the right information at the right time for the many production steps, including e.g. also monitoring or diagnostic data of the equipment to perform proactive maintenance. That's why AR can also be used very well for trai-ning purposes in production and assembly. In lo-gistics, 65% of the storage costs are attributed to removing the article from the shelf using the paper list. AR applications at DHL have improved order picking by 25% by guiding the worker through the warehouse the shortest route possible. Such solu-tions can also highlight the required storage cell and the specific storage location in colour.

In marketing and sales, the application possibilities of AR are also manifold. Showrooms and product demonstrations will provide fasci-nating (individual) customer experiences. Products can also be viewed in the real target environment, which also supports online trading. Ikea offers product images and apps that help to place the furniture or decoration in the room at home. The after sales service can also benefit significantly from AR technology through step-by-step repair instructions and remote support. This can go so far that the customer is involved in maintenance and does a lot of work on his own. This can result in large savings in the service area. ■

& AR - a new

bridge between man machine

AR EXTRACTS FROM HBR HEPPELMANN AND PORTER ARTICLE

AR

EXPANDING TO A MORE DEMOCRATIZED AUTOMATION PLATFORM In other words, we are expanding our Edge capabilities from only optimizing via GE’s Predix™ platform to a more democratized automation platform. For example, GE’s Automation & Controls business is introducing a new outcome optimizing controller - the CPL400, with PACEdge technology with open Linux. Augmenting real-ti-me deterministic control with Edge technology, the CPL400 allows custo-mers to optimize their automation so-lution in real-time. More importantly, the CPL400 gives them an option to use either their existing cloud infra-structure or to run edge analytics without any connection to the cloud.

COMPREHENSIVE MONITORING AND ANALYTICS SOLUTION While the CPL400 allows the customer to create their own Edge applications in contemporary languages such as Python or C/C++, for OEMs with geographically distributed assets we are introducing a GE Predix-based Edge Insight application. Edge Insight is a comprehensive monitoring and analy-tics solution that leverages data from your distributed industrial equipment and turns it into actionable insights. The robust solution provides data that can help drive cost reductions, increase customer value, create new revenue opportunities, and much more. We of-fer various choices such as a stand-alo-

ne ruggedized Mini Field Agent, or Field Agent software embedded inside our CPE400 outcome optimizing con-troller to provide secure connectivity to the GE Predix hosting the Edge In-sight application.

TOGETHER WE CAN REALIZE OUR INDU-STRIAL INTERNET AMBITIONS GE is defining industry-wide accepted standards and practices for scalable in-teroperability and is implementing Edge capabilities into all of our pro-ducts. From a powerplant to a fleet of wind turbines, the redefined Edge ma-kes the user experience seamlessly in-terconnected to build a full range of system capabilities – and easily adapted no matter where you’re at on your digi-tal journey. By utilizing the total Indu-strial Internet Control System archi-tecture with Edge migration, customers can now more easily take advantage of continuous data-driven feedback to optimize industrial processes and con-nect their controls to their business objectives. We’re redefining Edge capa-bilities with the next-generation of control systems, so that together we can realize our Industrial Internet am-bitions and unleash a new wave of pro-ductivity and innovation for the indu-stry and the next generation. ■

LEARN MORE To learn more about GE Automation and Con-trols solutions, visit us here: http://www.geau-tomation.com/

BY: VIBHOOSH GUPTA, PRODUCT MANAGEMENT LEADER, GE POWER’S AUTOMATION & CONTROLS BUSINESS

UAt times, sending massive volumes of data to the cloud even if technically doable is both cost prohibitive as well as impractical. And with more compu-te, storage and analytical power being packed into smaller devices, research firm IDC estimates that “by 2019, 40% of IoT data will be stored, processed, analyzed and acted upon close to or at the edge of the network.”

EDGE AND CLOUD COMPUTING MUST WORK TOGETHER For industrial companies to fully reali-ze the value of IIoT, edge and cloud computing must ultimately work to-gether. And to do this effectively at scale, a connected technology stack is essential. In this new “connected eve-rything” world, technology is a natural and embedded part of products. This in turn is enabling new business mo-

dels for ecosystem partners that deliver revenue benefits and added value to end customers. For any technology to achieve widespread adoption it requi-res interoperability and integration. This is particularly true of edge sys-tems with other operational technolo-gy, traditional database systems, enter-prise applications, corporate data and third-party information. To that point, we’ve been working on building on the success of GE’s Indu-strial Internet Control System to ex-tend the reach of our Edge capabilities by activating software-defined control systems that seamlessly integrate not only on industrial applications that can be activated through GE platforms, but also can work independently at the Edge itself or interoperate with other cloud platforms.

Until recently, using the data generated by intelligent machi-nes has been limited to collec-ting, aggregating and forwar-ding data to the cloud for processing. But now, edge com-puting – pushing computing apps, data and services to the logical extremes of the network and close to the machine – is emerging as an indispensable element of the Industrial Inter-net of Things (IIoT) value pro-position.

Redefining the Edge

REDEFINING THE EDGEREDEFINING THE EDGE

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YOUR SUCCESS, OUR GOAL

Your success, our goal

Novotek operates primarily in the areas of industrial IT, auto-mation and connectivity. In the-se areas Novotek has solution architects and application speci-alists with long experience of all stages of the lifecycle of opera-tional technology.

Novotek also has application knowled-ge in practically all industries, as well as a wide network of global and local partners in all industries. This combi-nation of experience, knowledge and business partners and a portfolio of the best products in the market enables Novotek to offer the right solution to each customer. A solution which offers openness, scalability and flexibility without compromising on quality or price. At a time when outsourcing and streamlined organisations have made businesses overly-dependent on indivi-dual players, Novotek’s open and scala-ble solutions offer an alternative to the rigid solutions provided by many of our competitors. By focusing on the

outcomes and improvements our customers seek, rather than on any single product we offer, we can often find ways to supplement existing in-vestments with new elements that fit the need, which is better for customers both in terms of cost and in terms of speed to having a solution.

MARKETS AND TRENDS The market was positive in 2017 with exception of the oil and gas market that was stable on a low level. The mar-ket in 2018 is expected to remain un-changed with regards to investments in systems and products. The work conti-nues to introduce offers from both GE and PTC within IoT and Cyber Securi-

ty, which will create growth opportuni-ties for Novotek. In addition to that will effort be put on the continuation of growth in the UK and Ireland, as a result of the acquisition of Kerrco in 2017.

Novotek’s offer to the market is uni-que and gives customers an assurance that Novotek will deliver solutions, products and services which ensure their success. ■

The requirements on industrial IT, automation and connectivity solutions today are different from yesterday by the demands to be able to adapt faster, integrate with more systems seam-lessly and do all this securely. This development is accelerated by a global trend of digitisation in all industries where new customers offerings and business models have to be supported as well as deliving on the usual demands for pro-ductivity increases. Novotek’s solutions have always been based on an open approach, facili-tating change and innovation and being able to incorporate new technology like AI and Additi-ve production.

Innovative:for a new world

Local: on the corner

The key to effective collaboration between No-votek and its customers is to be close to each other. Close enough to be able to offer support and service our products and solutions in your language, and to be able to help with small things without big costs. Novotek also continu-ally looks for new partners, or support expansi-on of existing to ensure that we can secure full implementation services locally to our custo-mers.

One: Novotek-

Integrated & uniform

The Novotek Group has the same ambition in all countries in which it operates with the same production and solution offerings. Novotek continuously aims to give its customers better solutions, faster support and a wider product portfolio in our territory. Cross-border collabo-ration also makes our organisation more effi-cient and uniform, which cuts costs and impro-ves the efficiency of our sales and marketing activities that results in better profitability and customer satisfaction.

Today the ability to start in small scale and grow with your solution is something that everyone expects from any system. The prime manifesta-tion of this view is the trend towards SaaS (cloud computing), where scalability is integrated from the outset. All solutions marketed by Novotek are adapted so as to enable users to start small, so customers can “test the waters” - and then ex-pand and add to the solution as requirements grow, without having to start from scratch. With that comes also the right support services for managing this process of rapid development with continues change and pivoting. Novotek supports and collaborates with our customers in their efforts to become more agile in their work with industrial IT.

Scalable: small to big

The key to success for Novotek lies in choosing an optimal solution. A solution which does not maximise the number of engineer hours or add unnecessary products, but offers a good balance between services and products. A mix which has such a balance in its content meets the custo-mers’ needs today as well as tomorrow. This re-quires scalability, openness, mobility and, not le-ast, responsibility. Novotek therefore takes responsibility for the included products in its delivered, so our customers can feel secure. No-votek supplements the products with services which are required to meet its customers’ needs and ensures, together with its partners, that the solution is implemented in the best way.

Balanced: products, services

& solutions

Success for Novotek’s customers is a success for Novotek. Industrial IT, automation and connectivity are today the main means of com-petition in the fight to maintain production in northern Europe and to stay ahead in the global race of digitalization. We continuously monito-ring our markets to be able to support the most efficient way to operate our clients’ systems, whether that is in the cloud, on premises or in any hybrid form. Being side-by-side with custo-mers, experiencing there challenges, is key and therefore it is Novotek’s ambition that as many as possible of our employees shall have direct customer contact.

Focus: our customers’

success

17//

&Novotek’s success is largely dependent on its ability to attract and retain employees with the right skills. In this context skills refers to product knowledge as well as social skills and the ability to focus on the customer. Novotek therefore seeks to ensure that it offers attractive employment terms, in terms of opportunities for personal develop-ment as well as remuneration.

Employees organisation

EMPLOYEES AND ORGANISATION

18 \\

Novotek A/S Denmark

15 employees

Novotek B.V. Netherlands

25 employees

Novotek Sverige AB Sweden

21 employees

Novotek AB Sweden

4 employees

Novotek OY Finland

13 employees

Novotek Planning Systems A/S Denmark

13 employees

Novotek AS Norway

12 employees

Novotek UK & Ireland LTD UK and Irland

13 employees

Novotek BVBA Belgium

4 employees

Novotek is a decentralised organisation with a focus on ensuring that everyone has direct contact with customers, the market and the solutions we deliver. Flat, efficient and trust are the guiding principles for Novotek’s organisation. Everyone should feel that they have a stake in Novotek’s successes and everyone should know what their role in the organisation is, and that they enjoy the trust of manage-ment. Novotek wants to ensure that everyone is secure, disciplined and curious. ■

Novotek’s Organisation

Approximately 68 per cent of our employees have an acade-mic degree. While demand for the relevant professional cate-gories has been significant, from customers as well as com-petitors, Novotek’s position and reputation in the industry has enabled us to recruit staff with the right skills profile.

Novotek has an explicit stra-tegy of promoting diversity and equality, and is keen to recruit people with a different back-

ground than the traditional one in our industry. Each year No-votek evaluates all terms and conditions to ensure that our goals for personal development and salary setting are complied with. A key factor for attracting and retaining staff is the ability to offer interesting work at the forefront of technology.

Novotek strives to establish long-term relations with custo-mers as well as employees and aims to keep staff turnover at a

low level. In 2017 have there been new-hires in many areas and of course the acquisition of Kerrco in Q3 added 12 pe-ople. Staff turnover for 2017 was therefore 11% (13%). The average number of employees was 113 (110) in 2017. At year-end 2017 the Group had 120 employ-ees. The average age was 44. The chart below shows the age structu-re for Novotek’s employees.

Novotek’s Employees

50-5421 %

55-599 %

25-298 %

35-3914 %

40-4415 %

45-4916 %

30-34 9 %

>605 %

0-243 %

University or university college degree 68 %

Secondary school 32 %

EMPLOYEES AND ORGANISATION

19//

20 \\ 21//

CUSTOMERS, COMPETITORS AND HISTORY

Customers, competitors & history

Novotek’s customers cover a broad spectrum in terms of industry and size. Our customers include IT consultants, systems integrators, end users of Novotek’s solutions and producers of products which incorporate Novotek’s solutions – Original Equipment Manufacturers (OEM). The end users include large enterprises as well as local authorities and SMEs.

" no other company in the market is currently

competing with the same business concept

CUSTOMERS, COMPETITORS AND HISTORY

HISTORY Novotek was established in April 1986 by Göran Andersson, who is still the majority shareholder in the company. The first office was placed in Malmö. Today we serve customers from ten of-fices. The company initiated a close partnership with USA based GE around monitoring software based on personal computers and has expanded the portfolio of products and services offered over time. The solutions that Novotek provides today were introdu-ced gradually and are being developed continuously, often in collaboration with a major customer.

As part of preparations for an IPO, the current Group structure was esta-blished in December 1998. In June 1999 Novotek was listed on the O list of the Stockholm Stock Exchange. In 2002 and 2003 the company’s part-nership with GE was expanded signifi-cantly, giving Novotek access to a com-prehensive product program covering process interface control systems and other automation hardware. In 2006 the company acquired what is now Novotek Planning Systems A/S and added another dimension to its offe-ring that has since continued to be de-veloped in all countries as well as glo-bally through GE.

Novotek has continued to evaluate and take up new offerings. Novotek have, for example, been appointed Pre-ferred Distributor for Kepware Inc, the leading vendor of communication software within the automation space during 2014. Kepware’s position was acknowledged as one of the leading IoT vendors when PTC, a market le-ading company within IoT, bought them in late 2015. Distributor agre-ements with PTC were signed in 2016 and Novotek will invest in marketing Thingworx, which together with Pre-dix from GE are the two leading Indu-strial IoT platforms.

During 2015 Novotek started to distribute software from Auvesy GmbH in Germany. Auvesy GmbH is with its software Versiondog one of

the leading vendors of versioning and configuration management in the auto-mation space. This addition will bring new opportunities to Novotek.

CUSTOMERS Novotek serves over 2 500 customers a year, from small manufacturers to glo-bal groups but also many communities, regions and governmental authorities. The deliveries are done in many forms but in general partners are used to de-liver the work - this independently of Novotek managing the project or not. The partners used includes all the ma-jor consultants like Accenture and Cap Gemini, as well as technical consultants like ÅF and Actemium - even small one man companies if specialist knowledge is required.

COMPETITORS Novotek has a number of different competitors and competing solutions. However, no other company in the market is currently competing with the same business concept. Siemens, Sch-neider and ABB compete with Novo-tek on pure automation products. The-re is also has smaller competitors that have specialised in partial solutions to the customers’ problems. The big consulting firms, such as ÅF, Cap Ge-mini and Accenture, are more often customers than competitors, as they frequently use Novotek’s products and solutions for their customers. Lately the IoT trend and cloudification of many different kind of offerings have increased the number of competitors but the key competences of Novotek, connectivity and local knowledge, is very much in demand and we retain ad-vantages in terms of the breadth of our knowledge, the accumulated expe-rience in different sectors and the reach we have across our regions. ■

22 \\ 23//

SHARE INFORMATION

The number of shares in Novotek AB is 10,600,000, of which 1,500,000 are of series A and 9,100,000 of series B. Series A shares carry 10 votes each and se-ries B shares one vote each. All shares carry equal rights to the company’s assets and profits. Shares of series A can be conver-ted into shares of series B.

Share information

SHARE CAPITAL HISTORY Since 1990 Novotek’s share capital has changed as follows:

Year Transaction Increase in Increase in Share Number of share capital, number of capital, shares SEK shares SEK 1990 50,000 5001996 Fondemission 50,000 500 100,000 10001998 Split 100:1 99,000 100,000 100,0001998 Fondemission 1,900,000 1,900,000 2,000,000 2,000,0001998 Nyemission 100,000 100,000 2,100,000 2,100,0001999 Split 4:1 6,300,000 2,100,000 8,400,0001999 Nyemission 550,000 2,200,000 2,650,000 10,600,000

OWNERSHIP STRUCTURE, 31 DEC 2017

Shareholder No. of No. of Share of Share of shares of shares of votes capital series A series B % %NovekoSydAB 1,350,000 0 56.0 12.7ArvidSvenssonInvestAB 0 2,635,000 10.9 24.9NovoplanAB 150,000 398,260 7.9 5.2Försäkringsbolaget,AvanzaPension 0 929,566 3.9 8.8 JPMEL-StockholmBranch 0 600,000 2.5 5.7Larsson,Bernt 0 322,306 1.3 3.0 VästsvenskaSystembyggenAB 0 320,000 1.3 3.0 PersanticAB 0 250,000 1.0 2.4 NordnetPensionsförsäkringAB 0 170,791 0.7 1.6Andersson,Willmar 0 121,110 0.5 1.1Övriga 0 3,352,967 13.9 31.6 SUMMA 1,500,000 9,100,000 100.00 100.00

0

200

400

600

800

1 000

1 200

Antal omsatta aktier i 1000-tal per månad

201720162015201420130

5

10

15

20

25

30

SIX GeneralindexNovotek B

Källa:

Source: SIX Financial Information

DIVIDEND POLICY Novotek’s dividend policy is to dist-ribute at least 50 per cent of its af-ter-tax profit while taking account of the Group’s financial position and acquisition plans. For the finan-cial year 2017 it is proposed that a dividend of SEK 1.25 per share be paid. A dividend of SEK 1.25 repre-sents a yield of 4,9% based on the share price at 31 December 2017, SEK 25.70.

NOVOTEK’S B SHARES Novotek’s B shares have been traded on the Nordic Small Cap list of the NASDAQ OMX exchange since 30 June 1999 under the ticker NTEK-B. The share price on 31 De-cember 2017 was SEK 25.70, giving a total market capitalisation of SEK 273 million. The average weekly sha-re turnover was 41,360 in 2016 and 66,550 in 2017. At year-end the com-pany had 2,734 shareholders.

BOARD OF DIRECTORS

THE INDICATED SHAREHOLDINGS INCLUDE SHARES HELD THROUGH COMPANIES.

Bjärred, born 1944.Chairman.

Board member since 1986, Chairman since 2006.

Shareholding in Novotek AB: 1,500,000 A shares and

449,160 B shares.

Lund, born 1970.Vice Dean at LTH.

Board member since 2018.Shareholding in Novotek AB:

No shares.

Helsingborg, born 1966.MD at DIAB AB

Board member since 2017.Shareholding in Novotek AB:

No shares.

Göran AnderssonChairman

Charlotta JohnssonBoard member

Anna BjelmBoard member

FUNCTIONING OF THE BOARD In May 2017 the Board of Directors discussed and adopted rules of procedure for the Board and instructions for the CEO. The rules of procedure set forth the duties of the Board and matters to be addressed during the year, and include instructions for the holding of Board meetings. Under the rules of procedure, the Chairman of the Board, Göran Andersson, is tasked with working on general strategic matters. Claes Lindqvist is tasked with examining and approving information material to be sent to NASDAQ OMX and the media prior to publication while Anna Bjelm has responsibility for monitoring the perfor-mance and precision of the finance function. In 2017 the Board held six minuted meetings.

THE NOMINATING COMMITTEE The Nominating Committee consists of Ingvar Unnerstam, the main owner Göran Andersson and Annette Larsson repre-senting Noveko Syd AB. The Nominating Committee is tasked with submitting proposals relating to the Board of Directors and fees to the Annual General Meeting.

Bo

ard

of

dire

cto

rs

Viken, born 1950.Formerly CEO of Höganäs AB. Board member since 2006.

Other directorships: Svenska Handelsbanken Södra

Regionen, Dunkerska stiftelserna et al.Shareholding in Novotek AB:

10,000 B shares.

Claes LindqvistBoard member

Staffanstorp, born 1972.Executive Vice Precident Idus AB

Board member since 2014.Shareholding in Novotek AB:

500 B shares.

Fredrik LarssonBoard member

24 \\ 25//

SENIOR MANAGEMENT AND AUDITOR

Senior management

AuditorMARTIN GUSTAFSSON Born 1972.Authorised Public Accountant.Mazars SET Revisionsbyrå AB.Main auditor of Novotek since 2017.

Born 1974.CFO

Employed since 2010.Direct shareholding in Novotek AB:

No shares.

Born 1972. CEO

Employed since 2005.Direct shareholding in Novotek AB:

2,000 B shares.Indirect shareholding in

Novotek AB:250,000 B shares.

Born 1970.CEO of Novotek AS, Norway.

Employed since 1995.Direct shareholding in Novotek AB:

30,000 B shares.

Born 1968.CEO of Novotek Sverige AB.

Employed since 2013.Direct shareholding in Novotek AB:

No shares.

Born 1956.CEO of Novotek A/S, Denmark.

Employed since 1991.Direct shareholding in Novotek AB:

53,500 B shares.

Born 1964.CEO of Novotek B.V., the Netherlands and

Novotek BVBA, Belgium.Employed since 2002.

Direct shareholding in Novotek AB:No shares.

Born 1971.CEO of Novotek UK & Ireland LTD,

UK och Irland.Employed since 2004.

Direct shareholding in Novotek AB:No shares.

Born 1978.CEO of Novotek OY, Finland.

Employed since 2006.Direct shareholding in Novotek AB:

No shares.

Jonas HanssonTobias Antius

Björn-Inge Olsen

Stefan Wikenhed Per Eiland

Mart Scheepers George WalkerAntti Kaikkonen

FIVE-YEAR SUMMARY

DEFINITIONS OF KEY PERFORMANCE INDICATORS

MkrConsolidated income statement 2017 2016 2015 2014 2013Operating income 235.8 212.1 218.7 221.5 195.9

Operating expenses -207.3 -189.2 -197.8 -202.5 -179.8

Depreciation and amortisation -1.9 -2.3 -2.1 -2.2 -2.3

Operating profit 26.6 20.6 18.8 16.8 13.8Net financial income 0.5 0.1 0.7 1.1 0.7

Profit after net financial items 27.1 20.7 19.5 17.9 14.5

Consolidated balance sheetNon-current assets excluding goodwill 16.8 6.5 7.8 8.9 10.1

Goodwill 50.1 26.3 25.6 26.2 25.3

Other current assets 4.4 5.0 9.5 7.4 10.6

Trade receivables 73.2 61.8 53.0 50.0 46.6

Cash and cash equivalents 41.7 60.1 50.8 52.0 42.5

Total assets 186.2 159.7 146.7 144.5 135.1

Equity including non-controlling interests 96.1 87.6 79.8 78.5 73.0

Interest-bearing liabilities 0.0 0.0 0.0 0.0 0.0

Non-interest-bearing liabilities 90.1 72.1 66.9 66.0 62.1

Total equity and liabilities 186.2 159.7 146.7 144.5 135.1

Consolidated key figuresOrders received, SEKm 230.5 203.8 227.0 211.9 203.8

Operating income, SEKm 235.8 212.1 218.7 221.5 195.9

Operating profit, SEKm 26.6 20.6 18.8 16.8 13.8

Sales growth, % 11.2 -3.0 -1.1 13.1 1.2

Margins

Gross Margin, % 12.1 10.8 9.6 8.6 8.2

Operating margin, % 11.3 9.7 8.6 7.6 7.0

Profit margin, % 11.5 9.8 8.9 8.1 7.4

Capital structure

Capital employed, SEKm 96.1 87.6 79.8 78.5 73.0

Equity, SEKm 96.1 87.6 79.8 78.5 73.0

Return on equity, % 22.5 18.8 18.2 18.2 13.9

Equity/assets ratio, % 51.6 54.9 54.4 54.3 54.0

Liquidity

Quick ratio, % 52.3 83.5 76.5 78.9 68.8

Net cash, SEKm 41.7 60.1 50.8 52.0 42.5

Employees

Average number of employees 113 110 120 120 111

Operating income per employee, SEKm 2.09 1.93 1.82 1.85 1.76

Value added per employee, SEKm 1.05 0.98 0.93 0.91 0.86

Data per share

Number of shares at end of period 10,600,000 10,600,000 10,600,000 10,600,000 10,600,000

Earnings per share, SEK 1.90 1.48 1.38 1.33 0.93

Equity per share, SEK 9.07 8.26 7.53 7.41 6.89

Share price 31 Dec, SEK 25.70 18.60 17.10 16.40 11.60

Dividend per share (proposed 2017), SEK 1.25 1.25 1.00 1.00 1.00

SALES GROWTHChange in total operating revenue excluding work performed by the company for its own use and capitalised.

GROSS MARGINProfit before depreciation, amortisation and exceptional items, as a percentage of operating revenue.

OPERATING MARGINProfit after depreciation, amortisation and exceptional items, as a percentage of operating revenue.

PROFIT MARGINProfit after financial items, as a percentage of operating revenue.

CAPITAL EMPLOYEDTotal assets less non-interest-bearing liabilities.

RETURN ON EQUITYProfit after tax as a percentage of average equity.

EQUITY/ASSETS RATIOAdjusted equity as a percentage of total assets.

QUICK RATIOQuick assets as a percentage of current liabilities.

NET CASHCash and cash equivalents

AVERAGE NUMBER OF EMPLOYEESAnnual average full-time equivalents.

VALUE ADDED PER EMPLOYEEOperating profit plus staff costs, divided by average number of employees.

EARNINGS PER SHAREProfit after tax divided by average number of shares.

EQUITY PER SHAREEquity 2017-12-31 compared with total number of shares.

Five-year summary

26 \\

OUR OFFICES

27//

OUR OFFICES

Novotek Sverige AB

Höjdrodergatan 18Box 16014

200 25 MalmöPhone +46 40 31 69 00

Fax +46 40 94 76 17www.novotek.seinfo@novotek.se

Nystrandsgatan 23633 46 Eskilstuna

Phone +46 16 18 32 38Fax +46 16 18 32 39

Novotek AB

Höjdrodergatan 18Box 16014

200 25 MalmöPhone +46 40 31 69 00

Fax +46 40 94 76 17www.novotek.cominfo@novotek.com

Novotek A/S

Naverland 2DK-2600 Glostrup

Phone +45 434 337 17Fax +45 434 352 25

www.novotek.dkinfo@novotek.dk

Skolebakken 20DK-8700 Horsens

Phone +45 702 766 88Fax +45 702 766 89

Novotek Planning Systems A/S

Stærmosegårdsvej 8DK-5230 Odense M

Phone +45 7022 01 70Fax +45 7022 01 71

www.rob-ex.complanning@novotek.com

Novotek OY

Äyritie 24FI-01510 Vantaa

Phone +358 20 79 59 450Fax +358 20 79 59 451

www.novotek.fiinfo@novotek.fi

SWEDENHEAD OFFICE DENMARK FINLAND

Our offices

Novotek B.V.

Paardeweide 2 NL-4824 EH Breda

Phone +31 765 871 010Fax +31 765 810 111

www.novotek.nlinfo@novotek.nl

Novotek BVBA

Mechelsesteenweg 277BE-1800 Vilvoorde

Phone +32 225 485 50Fax +32 225 387 67

www.novotek.beinfo@novotek.be

Novotek UK & Ireland LTD

60 High Craighall RoadPort Dundas

Glasgow G4 9UDPhone +44 141 332 1551Fax +44 141 626 1492

www.novotek.ukinfo@novotek.uk

Novotek AS

Torsvang Industriområde

Boks 2036NO-3255 Larvik

Phone +47 331 658 00Fax +47 331 658 01

www.novotek.noinfo@novotek.no

NETHERLANDS BELGIUM UK & IRLANDNORWAY

www.novotek.com

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facebook.com/NovotekAB/

linkedin.com/company/novotek

www.novotek.com