Risks Related to Geographic Markets and Market Sectors Apart from periods of severe economic crisis, the risks associated with the company’s business activity are naturally hedged by the international reach of the company’s sales and services, and by their range over a number of market sectors (chieﬂy fashion and apparel, and automotive, which respectively accounted for 47% and 39% of revenues from new systems sales in 2014, for a combined total of 86%) with different business cycles and growth rates, serving to offset these risks. The far-reaching changes being brought about by globalization, such as relocation and repatriation of production, are resulting in revenue loss in one country and gains in another, albeit with a possible time lag. Thanks to its strong presence in the major emerging countries, forecast to generate half of total global growth in the present decade, the Group is well placed to turn this into a vehicle for dynamic growth. The other half of global growth is expected to take place in developed countries where the Group has a historical presence and a large market share. In 2014, almost 50% of total revenues were generated in 5 countries: United States (12%), China (11%), Italy (11%), France (8%), and Mexico (7%). The other two European countries that have suffered severely from the downturn in their economies, Portugal and Spain, accounted for 4% and 3% respectively. While revenues were stable in France, Italy, Portugal and Spain registered revenue growth of 10%, 13% and 2%, respectively. Greece’s share of revenue is immaterial. The same applies to Russia.
interiors, airbags), furniture and a wide variety of other industries, such as aeronautical, marine industries and wind power. Innovation Risks This activity demands continuous creativity and a steadfast search for innovation. The Group needs to retain its technological leadership in its historical business of CAD/CAM software and equipment and related services, which now account for the vast bulk of its revenues. The Group is the world number one in this sector, with an estimated market share of around 25-30%. In addition, it faces competition from the global software leaders in the new area of Product Lifecycle Management (PLM) for the fashion and apparel sector, which is expected to be a growth driver in the medium term. The company invests heavily in research and development, which accounts for more than 10% of revenues in 2014, before deduction of the research tax credit and the share of the competitiveness and employment tax credit applicable in France and possible subsidies linked to certain R&D programs. Despite the quality of its engineers and of the project development process, some programs may carry a risk of technical or commercial failure, or may be delayed. In this event, the Group could lose its technological leadership and thus become more exposed to competition. As a corollary of this policy, the company must ensure both that its innovations are not copied and that its products do not infringe third parties’ intellectual property. Moreover, it needs to protect itself against software piracy, which could curb its growth in certain countries. It has a dedicated team of intellectual property specialists that takes both offensive and defensive measures with regard to patents. Working with the Legal Affairs department, this team tracks down pirated copies of its software and takes the necessary legal action to protect the company’s rights. R&D expenditures are fully expensed in the year. Consequently, the Group’s technology assets are valued at zero in the statement of ﬁnancial position, and there is therefore no risk of impairment.
4.2. Economic and Operational Risks Speciﬁc to the Company’s Business