Elanders Annual Report 2020 Design:

March 09, 2021

FROM END TO END

AND BEYOND …

ELANDERS' ANNUAL REPORT 2020

Global solutions from end to end

AND BEYOND ...

Elanders is a global logistics company with a broad range of services of integrated solutions in supply chain management.

The business is mainly run through two business areas, Supply Chain Solutions and Print & Packaging Solutions. Sustainability aspects permeate the work on all levels. Essentially, Elanders' operations are all about optimizing the customers' flow of goods in the best possible way while minimizing costs and climate impact.

Elanders has more than 6,000 employees and operates in some 20 countries on four continents. The most important markets are China, Germany, Singapore, Sweden, the United Kingdom, and the USA. Major customers are active in the areas Automotive, Electronics, Fashion & Lifestyle, Health Care & Life Science and Industrial.

Contents

ELANDERS 2020

4 The Year in Summary
6 CEO Comment

OPERATIONS

9 Business Concept, Goals and Strategies
10 Our Value Creation
12 Our Oﬀer
13 Our Customers
14 Our Business Model
16 External Trends
18 Inside Elanders
18 - Interviews
28 - Cases
30 Five Years in Summary

SHARE INFORMATION

34 Share Information and Ownership Structure

AUDITED ANNUAL REPORT

37 Board of Directors' Report
41 - Risks and Uncertainty Factors
44 - Corporate Governance Report
49 - Sustainability Report
60 Group
60 - Financial Reports
64 - Notes
94 Parent Company
94 - Financial Reports
98 - Notes
107 Proposed Appropriation of Proﬁts
108 Auditor's Report

OTHER INFORMATION

112 Reconciliation Alternative Performance Measures
114 Financial Deﬁnitions
115 Speciﬁc Terms
116 Board of Directors
118 Group Management, Auditors and Nomination Committee
120 Contact Elanders
122 Annual General Meeting and Calendar

GERMANY 43 locations 3,058 employees

CHINA 12 locations 535 employees

SINGAPORE 3 locations 501 employees

HUNGARY 4 locations 331 employees

USA 5 locations 319 employees

CZECH REPUBLIC 5 locations 315 employees

POLAND 3 locations 305 employees

INDIA 2 locations 187 employees

UNITED KINGDOM 4 locations 172 employees

SWEDEN 5 locations 147 employees

NETHERLANDS 3 locations 47 employees

BRAZIL 1 location 44 employees

AUSTRIA 1 location 43 employees

ITALY 1 location 22 employeesMEXICO 1 location 20 employeesTAIWAN 1 location 5 employees

ROMANIA 1 location 4 employees

RUSSIA

1 location
2 employees

ELANDERS 2020

ELANDERS 2020 - THE YEAR IN SUMMARY

2020 IN SUMMARY

More than anything else, 2020 was marked by the COVID-19 pandemic. All our operations and regions were affected during different periods of lockdowns. Naturally, this impacted net sales and the result, but our business model is robust and has withstood the sharp fluctuations in demand. Despite the crisis, we succeeded in generating strong cash flows, improving the result, and reducing debt.

Although the pandemic has made it challenging to sell services to new customers, we renewed several important customer contracts during the year. We have also made several new interesting connections in the health sector. Moving forward, we will keep our focus on gradually improving profitability. We will

THREE YEAR OVERVIEW

select new business with care and discontinue existing business that does not meet our profitability requirements. The Group's strong financial position is an enabler to make more strategic acquisitions of companies, with a high degree of value-added services.

2.0

Thanks to strong cash ﬂow, the net debt/EBITDA ratio is now 2.0

2020	2019 2018
Net sales, MSEK	11,050	11,254 10,742
EBITDA, MSEK	1,431	1,285 725
EBITDA adjusted, MSEK	1,431	1,435 725
EBITA exl. IFRS 16, MSEK	737	573 725
EBITA, MSEK	598	413 523
EBITA adjusted, MSEK	598	563 523
Result after ﬁnancial items, MSEK	414	216 366
Result after tax, MSEK	292	153 259
Earnings per share, SEK 1)	8.12	4.19 7.18
Adjusted earnings per share, SEK 1)	8.12	7.16 7.18
Cash ﬂow from operating activities per share, SEK	48.80	37.81 12.88
Equity per share, SEK	81.65	78.54 76.28
Dividend per share, SEK	3.10 2)	- 2.90
EBITA-margin, %	5.4	3.7 4.9
EBITA-margin adjusted, %	5.4	5.0 4.9
Return on total assets, %	6.4	4.2 6.6
Return on equity, %	9.9	5.3 9.8
Return on capital employed, %	8.6	5.0 8.5
Net debt/EBITDA ratio, times	2.0	3.1 3.5
Net debt/EBITDA adjusted ratio, times	2.0	2.8 3.5
Net debt/EBITDA ratio excl. IFRS16, times	1.5	3.7 3.5
Debt/equity ratio, times	1.0	1.4 0.9
Equity ratio, %	33.6	30.2 35.0
Average number of outstanding shares, thousands	35,358	35,358 35,358

1) There is no dilution.
2) Proposed by the board.

For Reconciliation Alternative Performance Measures and Financial Deﬁnitions, see pages 112-114.

ELANDERS 2020 - THE YEAR IN SUMMARY

Print & Packaging Solutions

Supply Chain Solutions is Elanders' largest business area and makes up three-fourths of the Group. This is the area where we see big growth potential going forward. The market is expanding, driven by a growing global middle class. New regulations and changing behavior patterns will probably have a major impact on future logistic ﬂows, which puts high demands on players that want to operate on this market.

The business area was heavily aﬀected by the pandemic during the year. Sales ceased during periods when factories and stores closed due to problems with deliveries and/or restrictions by authorities to stop the spread of the infection. We also experienced major disturbances in air and sea freight. There was a quick and robust recovery in the autumn until the second pandemic wave rolled over Europe and North and South America.

The market for Print & Packaging Solutions was severely aﬀected by the pandemic. The industry was already suﬀering from tough price pressure, contracting volumes, and overcapacity and this led to even more bankruptcies. For Elanders, it creates opportunities to gain market shares while the shift to digital print and more customized products, instead of traditional oﬀset print with large editions, continues.

The most adversely aﬀected customer segments were Automotive and Fashion & Lifestyle, while Electronics and Health Care & Life Science experienced a stable, and in some areas, higher demand. With many people working from home the demand for laptops, computer accessories and network equipment increased dramatically. The pandemic also gave rise to new business in Personal protective equipment (PPE).

The business area was impacted negatively by long production shutdowns in the spring in customer segments Automotive and Industrial together with generally lower demand for products like marketing material. However, there was some recovery during the second half of the year, which ended with a strong fourth quarter. The business with subscription boxes in the USA continued to show good growth and more than compensated for the in general decreasing sales.

Print & Packaging Solutions is investing in development in order to gain new business in web-to-print, which is an area with future potential. This year, we have launched two new online platforms with unique 3D technology. We have also partnered up with several other major web-to-print players and do the production for them.

Altogether, we were able to maintain good margins in the business area by taking quick actions to control costs during the acute crisis and through the structural measures already taken during 2019.

We continue the work on adding supply chain management services to our printing providing our customers with greater value and improve proﬁtability at the same time.

Brands: LGI, Mentor Media and ITG

Brands: Elanders, d|o|m, fotokasten and myphotobook

NET SALES PER QUARTER

ADJUSTED EBITA AND ADJUSTED EBITA-MARGIN

OPERATING CASH FLOW EXCLUDING

ACQUISITIONS PER QUARTER

% % % % %

%QQQ

2019 Net sales, MSEK
2019 EBITA adjusted, MSEK
- 2019 Operating cash ﬂow, MSEK
2020 Net sales, MSEK

2020 EBITRAöaredlsjuesrteesdul,tMatSEMKkr

2020 Operating cash ﬂow, MSEK

2019 EBITA-margin adjusted, %

2020 EBITRAö-mrelasregreinsualdtajut sMtekdr,%

Rörelsemarginal

ELANDERS 2020 - CEO COMMENT

Record year

DESPITE COVID-19

2020 has been a year like no other. During the pandemic, our highest priority has been to protect our employees from the infection. We have resolutely taken on financial implications and succeeded

M in strengthening our financial position

Magnus Nilsson President and CEO

during the year. We can also present our best year ever.

The global spread of COVID-19 had a direct and dramatic impact on Elanders' operations. For us, protecting our employees from infection was an obvious priority. We adhered to all local regulations and quickly shifted to digital meetings and working from home for all the employees where it was possible to do so. We took measures in production increasing the distance between people, set up stations with hand disinfection and fever controls, etc.

We also helped authorities in North and South America with purchasing, certifying and delivering PPE made in Asia. Being able to rapidly get a concept in place for the delivery of quality-controlled equipment for over 60 million dollars exhibits the entrepreneurial spirit, expertise and flexibility in the Group.

ELANDERS 2020 - CEO COMMENT

FOCUS ON CASH FLOW

The pandemic and its financial consequences had a negative effect during the first half of the year on both net sales and the result, as different levels of lockdowns, were put into effect first in Asia and then in Europe and North and South America. Then came a normalization before many countries were once again hit hard by a second wave during the final months of the year.

Demand for our services dropped dramatically in most customer segments during the spring lockdowns. We took measures such as furloughs and reduced the use of temps. In parallel, we focused on defending our cash flow and strengthening our liquidity preparedness so that we were equipped for an uncertain future. Among other things, we limited investments, purchasing of external services were reduced, and we worked actively with our working capital. The outcome was a significantly strengthened financial position, improved profitability, lower net debt and reduced interest costs.

Due to the measures we took due to COVID-19, and the cost-saving package we implemented at the end of 2019, we achieved our best year ever in terms of results. Despite an ongoing pandemic, our net sales only declined by 0.1% organically. At the same time, we have strength-ened our financial position, and we will now have a much sharper competitive edge on the market when the global situation goes back to normal.

SUPPLY CHAIN SOLUTIONS

In the business area Supply Chain Solutions, operations in Europe were negatively affected the most due to the pandemic. Particularly sales in customer segments Automotive, Industrial and Fashion & Lifestyle dropped dramatically in the second quarter, followed by strong a recovery in the third and continued high demand in the fourth. The cost-cut measures we did in 2019 contributed to improved margins when demand returned. Operations in Asia were not hit nearly as hard and only suffered a minor downturn in demand during the first quarter with a quick recovery after that.

We continue to work on improving margins in the business area by optimizing processes and focusing on segments and services with good profitability. We are investing in value-added services and discontinuing businesses where margins are too low. During the year, we renewed several important contracts and won several new business deals. We renewed contracts in Electronics and Health Care & Life Science equal to net sales of some SEK 500-700 million on an annual basis. The most important contract was long term.

It is especially in the customer segments Electronics and Health Care & Life Science that we see significant organic growth opportunities. The potential to develop our offer within Life Cycle Management is considerable. We obtained several new businesses in this area in 2020, including one concerning recovery of servers. Another pertained to delivering, handing over, and collectingmedical equipment. We also acquired a Swedish company specialized in Renewed Tech services, that is a part of our offer in Life Cycle Management. The company buys used IT equipment, refurbish it, and safely erases all the data on it. The equipment is then sold to be reused.

We also see substantial opportunities for organic growth in the customer segment Fashion & Lifestyle. During the year, we have expanded with the new facility in Oberhausen in northwestern Germany. The plant is focused on e-commerce, offering a range of value-added services to new customers. The pandemic has led to even more consumers shopping online, and we see a great deal of customer activity in this segment.

Customer segment Automotive has had a challenging year due to both COVID-19 and the transition in the industry from traditional cars to hybrids and electric cars. Despite this, we have succeeded in maintaining our posi-tion as one of the leading subcontractors in Germany. We have renewed several important contracts and won new business deals, one regarding the storage and pre-assembly of battery cells, and another is for just-in-sequence deliveries of car parts.

We are continuing to work with medical technology in Asia, where we got an extra boost through the previously mentioned concept of purchasing, certifying and deliver-ing PPE. A "clean room" in Singapore, which enables handling sensitive components that require sterile condi-tions, is up and running. We have gained new customers during the year in this area, and we expect to further develop the concept in 2021.

PRINT & PACKAGING SOLUTIONS

Business area Print & Packaging Solutions was hit hard by the pandemic, particularly in the second quarter when most things came to a halt, leading to a negative result. There was less effect on net sales due to continued good growth in our subscription box business in the USA. There was a substantial recovery in the second half of the year, and the business area had a strong final quarter.

We continue to develop our business in Print & Packaging Solutions. During the year we launched two of our own web-to-print-platforms that with unique 3D technology allows customers to construct and order packaging and advanced market material directly online. Thanks to our unique digital printing plant in Germany, several large, established web-to-print and photo product companies have chosen us to be their production partners. We also continue to add supply chain management services to our printing sites and, during the year, our plant in Newcastle began to offer these kinds of services.

Despite an ongoing pandemic our net sales only contracted by 0.1% organically. At the same time, we have strengthened our financial position and we will now have a much sharper competitive edge on the market when the global situation goes back to normal.

ELANDERS 2020 - CEO COMMENT

All in all, we are very pleased with the business area, and we are clearly performing better than most of our competitors. The pandemic really impacted the industry and we have seen the number of bankruptcies rise, which creates opportunities for us to gain market shares. We have taken a good position in web-to-print by having developed several own platforms and being a sub-contractor to others.

COMPREHENSIVE RESPONSIBILITY AND SUSTAINABILITY

The development of our successful concept with end-to-end solutions has continued during the year. In it, we take responsibility for the customer's value chain from begin-ning to end. We have come the farthest in the Electronics segment, where we can offer everything from factory logistics to storage, configuration, and delivery of finished products, as well as guarantee management. When it comes time to replace equipment, we can also recondition it to be reused and get a new life.

It is becoming increasingly important for companies to have a sustainable supply chain to be competitive. At Elanders, we are continually working throughout the entire Group to be more efficient in our service produc-tion and lower our consumption of energy and water as well as reduce greenhouse gas emissions. Sustainable business includes ethical business, and during the year, we introduced e-learnings for our employees on compliance.

In addition, we are investing substantial resources into developing sustainable services for our customers within the concept Life Cycle Management. We contribute ensuring the right quality and extending the life of customers' products with extra services such as quality control, assembly, after-market, and recycling/reuse.

By recycling and refurbishing equipment for sales on the second-hand market, as we do for IT products in our service area Renewed Tech, we actively contribute to reducing our customers' climate impact. We will continue to invest in this area.

WE WILL CONTINUE TO DEVELOP THE GROUP

With our strong balance sheet, Elanders will going for-ward look for new acquisitions, primarily on small and mid-sized companies that can strategically complementour offer, improve our margins and provide customers with even better solutions. Companies with a high level of value-added services, for example, in Life Cycle Management are of particular interest.

During 2021 we will continue our efforts to gradually improve our margins by increasing the share of business with high value-added services and by further developing our offer in Life Cycle Management. We will also continue to focus on generating a good cash flow. This allows us to create a platform for geographic expansion and make acquisitions while maintaining a low level of debt.

This turbulent year has made it even more apparent to me that our employees are the key to continued success for Elanders. I would like to extend a heartfelt thank you to everyone who worked so well during this year's exceptional situation. I also want to thank our customers for their continued confidence in us and look forward to further developing Elanders with them in what will be the new normality after the pandemic. I am convinced that we can make Elanders a world leader in our field.

Magnus Nilsson President and CEO

OPERATIONS - BUSINESS CONCEPT, GOALS AND STRATEGIES

Global strategic partner

FOR A SHARPER COMPETITIVE EDGE

Elanders' overarching goal is to be a leader in global solutions within supply chain management.

Elanders has a focus on advanced logistic solutions with a large portion of value-added services. Together with them Elanders develops our customers' business and strengthens their competitiveness . Operations are primarily run in two business areas, Supply Chain Solutions and Print & Packaging Solutions.

to customers. With new and improved services, integrated total solutions and the implementa-tion of innovative technology we create a good platform for continued growth and development as well as greater value for shareholders.

DEVELOP LOCAL CUSTOMERS

INTO GLOBAL CUSTOMERS

being able to meet our customers' needs in the best possible way. The capacity utilization in Elanders' various units are optimized by regularly measuring available capacity in the Group. To ensure that the allocation of busi-ness and production is optimal, we continu-ously follow-up actual outcome and make organizational adjustments.

BUSINESS CONCEPT

Elanders is a global and strategic partner to our customers in their business-critical processes. We help our customers optimize business-critical processes, locally and globally, through integrated and customized solutions for managing all or parts of their supply chains. Our goal is to be a leader in global end-to end solutions in supply chain management and best at meeting customers' demands on efficiency and deliveries, but in the same main-taining a focus on sustainability. Our strategy is to operate within niches in each market area where Elanders can take a market-leading posi-tion. To achieve our long-range financial goals and sustainably deliver an increase in value and higher return to our shareholders year after year, Elanders continually develops our offer

Elanders expands and develops with our customers. Our global business often evolves through building up solid relationships when local needs are met and optimized through good solutions that are then implemented globally with our customers. To increase the sales of these solutions, Elanders works system-atically on developing our existing customer base in each segment and identifying local customers with global needs. In some cases, our customers may also have local needs in other countries that Elanders can fulfill, and this can broaden collaboration with our customer and deepen our relationship.

ACQUISITIONS THAT LEAD TO EXPANSION

In addition to developing our existing business, Elanders will continue to acquire new businesses that have the potential to increase sales, broaden our customer base, and complement our inte-grated offer. Acquisitions are particularly prioritized in areas where Elanders can broaden or complement our range and, if possible, provide further niche expertise such as in Life Cycle Management where we can actively contribute to a better and more sustainable society. We are also interested in acquisitions that provide access to new geographic markets or customer segments.

OPTIMIZING OPERATIONS

Elanders has operations in many parts of the world. It's an important success factor in

Financial goals

At year-end 2019/20, Elanders established new long-range financial goals because the implementation of IFRS 16 affected how the previous goals were calculated. The new financial goals are as follows:

EBITA MARGIN, % > 7 percent

Mål -

Goal achievedGoal not achieved

Omsättningstillväxt

Goal

NET DEBT/EBITDA	NET SALES GROWTH, %
The ratio should be under < 2.5	3-5 percent annually over
a business cycle
Mål -
The new goals shouOld mbe sabälettonrienacgh swtitihlilnvaäfxewt years.
Omsättningstillväxt

OPERATIONS - OUR VALUE CREATION

HOW WE CREATE VALUE

By continuously developing our offer to customers, streamlining supply chains and expanding into new markets and segments through organic growth and acquisitions, we create value for all our stakeholders.

Human capital

The Group has more than 6,000 employees and operates in some 20 countries on four continents. The most important markets are China, Germany, Singapore, Sweden, the United Kingdom, and the USA. Major customers are active in the areas Automotive, Electronics, Fashion & Lifestyle, Health Care & Life Science and Industrial.

• More than 6,000 employees in some 20 countries

We have identiﬁed a number of mega-trends we believe could potentially impact Elanders' business in the future. By understanding them we can develop our oﬀer and create a platform to keep and strengthen the leading position that Elanders has on selected markets and thereby generates long-term proﬁtable growth.

Strategies

Manufactured capital

Sustainability

Elanders should be a leader in global end-to-end solutions in supply chain management and be best at meeting customer demands on eﬃciency and deliveries focusing on sustainability.

• > 90 sites with more than 1,000,000 m2 production and warehouse space
• Existing machinery

The strategy is built on:

• continuously developing our oﬀer,
• integrated total solutions,
• implementation of innovative technology,
Globalization
• continuous growth, partly through organic growth, partly through acquisitions

Financial capital

• Equity of SEK 2.9 (2.8) bn
• Total assets of SEK 8.6 (9.2) bn

Automation

>6,000

Relational capital

• Thousands of customers with strong local and global brands
• Long-term investors / owners
employees in some 20 countries
• Multi-cultural operations

Outsourcing

ELANDERS

OUR RESOURCES

TRENDS

OPERATIONS - OUR VALUE CREATION

BUSINESS MODEL

Elanders manages and optimizes the ﬂow of raw materials, components, ﬁnal products, money, and information through every step of production - from suppliers and manufacturers to end consumers. We provide our customers with comprehensive solutions for the entire supply chain through a single contact.

VALUE CREATIONEmployees

• Paid salaries of SEK 2.0 (2.3) bn
• Safe and sustainable workplaces
• Ongoing training and education

Customers

• > 1 million deliveries to end customers
• Considerable savings through sustainable and eﬃcient material and component ﬂows
• Innovative supply chain management solutions

Investors and ﬁnanciers

• Operating result of MSEK 546 (359)
• Paid interest of MSEK 110 (135)
• Dividend policy of 30-50% of result after tax

Society and the environment

• Lower environmental impact through more eﬃcient logistical ﬂows
• Paid income tax and social security contributions of around MSEK 420 (520)

OPERATIONS - OUR OFFER

Global partner for

INTERNATIONAL BUSINESS

Elanders is a leading company in global total solutions for the entire supply chain and is currently established on four continents. Whether it's a matter of a single service or a customized total solution, Elanders contributes to increasing customers' productivity, profitability and sustainability.

Advanced solutions for the entire supply chain Efficient supply chain management creates a competitive edge and is critical to all producing companies, particu-larly for their survival in a global economy. Companies that handle their supply chains optimally consume less resources in transportation, production, and warehousing. Growing demands for a sustainable society create an increasing need for more efficient, external supply chain management solutions.

Elanders manages and optimizes the flow of raw materials, components, final products, money, and infor-mation on behalf of customers through every step of a product's lifecycle - from suppliers and manufacturers to end consumers, and in some cases further to the second-hand market through refurbishing and reuse.

We provide our customers with total solutions for the entire supply chain through a single point of contact. Our offer includes managing everything from order management, procurement, purchasing components, and warehousing to production logistics, manufacturing, configuration, quality control and delivery. The Group also handles payment flows, synchronizing purchasing and demand warehousing and after sales-service, as well as managing returned or worn-out products destined to be recycled or resold.

Value-added services

Elanders also offers value-added services tailored to individual customers' needs and desires. These can entail installations upon delivery, tests, repairs, and certifica-tion of electronical equipment, unloading, reloading and repacking products at cross-docking centrals or returning empties to the customer's supplier. In addition, Elanders provides total solutions in e-commerce where we develop and operate our customer's webshop , including content production and management, customer service, and financial services, in combination with the logistic services we normally deliver.

Multi-sites for greater ﬂexibility

A key factor in why Elanders' customers choose to out-source operations is to avoid tying up capital in plants, personnel and different kinds of service obligations along with converting fixed costs into variable costs for greaterflexibility and cost-efficiency. Elanders has invested in multi-sites in Europe, Asia, and the USA, where several customers' operations are collected under one roof to achieve synergies with greater capacity utilization and flexibility. When customers from diverse industries that have different volume patterns come together under one roof we can better manage seasonal variations and other peaks by moving employees and resources among them on a day-to-day basis depending on the workload. Elanders also invests in systems for wholly and partially automated warehouses to reduce manual labor and raise efficiency. Flexible solutions and smart investments make our facilities more efficient while allowing customers to focus on their core business.

Innovative printing services

An important part of our integrated offer consists of graphic services such as printing manuals, labels and packaging for customers' products and components. Elanders has over 100 years of experience in the graphic industry, and we currently offer cost-efficient and innova-tive solutions that fulfill customers' needs, locally and globally.

We have developed advanced, user-friendly, web-based ordering platforms that streamline the process from order to delivery and enable customized just-in-time or sequence deliveries of, for example, manual kits to customers. Elanders has modern machines that enable us to meet customers' needs for flexible print production in shorter or smaller series with high quality at competitive prices.

Elanders is also investing in developments web-to-print to meet market demands. Partly, we have our own order platforms online where customers can directly, supported by unique 3D technology, design, and order customized packaging and advanced marketing material. In addition to our own platforms we produce customized printed matter in this area for several well-established web-to-print and photo product companies.

Today, Elanders is one of the few companies that can offer global total solutions that include everything from printed matter and packaging to other related services such as kitting and packing for just-in-time or sequence deliveries.

Growing demands for a sustainable society create an increasing need for more efficient, external supply chain management solutions.

OPERATIONS - OUR CUSTOMERS

Prioritized customer segments

PROVIDE LONG-TERM GROWTH

Elanders is primarily focused on five prioritized customer segments that show long-term growth: Automotive, Electronics, Fashion & Lifestyle, Health Care & Life Science and Industrial.

The automotive industry is going through a period of signiﬁcant and challenging transitions. As deve-lopments shift to electric cars, self-driving technology and demand for climate neutral vehicles, customers want to focus on their core busi-ness without having to compromise on quality or safety in production logistics.

Automotive

25%

Consumption of electronics is on the rise because of a growing middle class and lower prices for home electronics. At the same time, the industry is facing more stringent demands on resource eﬀectiveness and sustain-ability. Managing returns, recycling and reuse of products are becoming increasingly important in supply chain management.

Growing demands on industrial manufacturers require them to have low manufacturing costs, high product quality, short lead times, and high delivery precision. Control and eﬃ-ciency at every stage is a prerequisite for businesses to be competitive and proﬁtable. From production to the after-sales market, logistics are a key factor.

The industry while subject to heavy regulation is growing due to factors such as an aging population, lifestyle diseases, and rapid technological developments. Demands on quality in processes and management are often extremely high. There is enormous po-tential in a quality-ensured and broad oﬀer that meets customers' needs.

15%

The industry includes some of the largest brands in the world and digital channels are trending over traditional sales in stores. Many customers are looking for a partner that can take a comprehensive responsibility and be deeply integrated into their e-com-merce and other business.

OPERATIONS - OUR BUSINESS MODEL

A robust

BUSINESS MODEL

Elanders has five prioritized customer segments; Automotive, Electronics, Fashion & Lifestyle, Health Care & Life Science and Industrial. Elanders offers services through every step of the product's lifecycle. We support our customers from the moment product components go into production until they have served their final purpose and are ready for recycling.

Procurement & Inbound Services

• Sourcing & Procurement
• Customs Services
• Freight Solutions
• Warehouse & Inventory Management

Production & Assembly

• Cross Docking
• Print
• Assembly & Testing
• Quality Control
• Repair

Order Management

• Global Order Management
• E-commerce
• JIS (Just-in-Sequence)

OPERATIONS - OUR BUSINESS MODEL

In the business area Supply Chain Solutions,

Elanders offers customers comprehensive

solutions throughout the entire supply chain. Our offer includes handling every-thing from order management, procurement, purchasing components, and warehousing to production logistics, manufacturing, configura-tion, quality control and delivery.

The Group also handles payment flows, synchronizing purchasing and demand with warehousing, and after-sales service, as well as managing returned or worn-out products destined to be recycled or resold.

Elanders also offers value-added services connected to supply chains tailored to indi-vidual customers' needs and desires.

In addition, Elanders has developed solutions in e-commerce where we develop and manage our customer's webshop, including content production and management, customer service and financial services, in combination with the logistic services we normally deliver.

The Group also provides global total solu-tions within print that include everything from the production of printed matter and packaging to other related services such as kitting and packing for just-in-time or sequence deliveries.

Life Cycle Management

• Reverse Logistics
• Quality Control
• Redistribution
• Maintenance & Installation
• Repair & Refurbishment
• Warranty Handling
• Distribution of Spare Parts
• Value Recovery

OPERATIONS - EXTERNAL TRENDS

An industry that must change and

DEVELOP IN RELATION TO

THE OUTSIDE WORLD

Sustainability

In the worldwide drive to create a sustain-able society, the challenges are enormous, particularly regarding the ever-growing global flow of goods. Current demands for reduced emissions, lower energy consumption, and recycling will push existing structures to their limits. Future supply flows will have to change fundamentally to be sustainable. This greatly increases the complexity in supply chain flow, putting even higher demands on intel-ligent IT solutions, automation, and control.

WHAT ELANDERS DOES

Sustainability aspects permeate our work on all levels and essentially Elanders' operations are all about optimizing customers' flows in the best possible way while minimizing costs and climate impact. A good example of this is Elanders' Renewed Tech that is part of the service area Life Cycle Management. Instead of scrapping cell phones, computers, computer monitors, and printers Elanders can, on behalf of the customers, refurbish and resell them on the second-hand market. This extends the life of the products considerably and contributes to a sustainable society.

Greater globalization causes new trends to spread quickly all over the world and increases the demand for international products. Growing cities become financially more important and commerce can be affected by transportation limiting laws, regulations and fees. At the same time, urbanization contributes to more efficient deliveries as more people are gathered in one location. These developments also increase the need for efficient freight forwarding. The trend in national and regional shipping is shifting towards network solutions with big logistics terminals and consolidated repacking warehouses with automated goods management.

WHAT ELANDERS DOES

Elanders' strong position in Europe, Asia and North and South America provides a good base for handling greater international commerce and competition as well as customers' needs for global solutions. Elanders follows custom-ers out into the world when they need help in a new location, and we continually increase our geographic presence through acquisitions, expanded networks, new forms of collabora-tion, and opening up new facilities. Through unique logistics solutions with networks and consolidation points for goods, Elanders is able to reduce heavy traffic in city centers and at the same time streamline and optimize distribution.

OPERATIONS - EXTERNAL TRENDS

In order to reduce environmental impact and costs, shorten delivery times, and improve quality, customers are putting increasingly higher demands on supply chain manage-ment solutions. They have to be sustain-able, automated and provide information in real-time. This puts high demands on third party suppliers when it comes to technology and development, which is often a collabora-tion with customers. Automation also requires deep integration into customers' systems and operations. New technical solutions, such as block-chain technology, make it easier to trace components, products and goods, which makes transactions safer while providing full trans-parency concerning sustainability aspects at every stage. The advent of the fourth industrial revolution has automatized production and

Automation and digitalization

warehousing, resulting in shorter set-up and lead times, fewer mistakes, greater flexibility and fewer monotone jobs.

WHAT ELANDERS DOES

In the past few years, Elanders has made major investments in automated flows and facilities, among them advanced automated warehous-ing systems. Virtual warehouses are created for customers' entire supply chains that manage products every step of the way - from subcon-tractors to both end customers and retailers. Elanders is continuously increasing integration into customers' business systems in order to be a stronger partner that takes total responsibility for streamlining flows and ensuring transac-tions and transparency throughout customers' entire supply chains.

Outsourcing and new buying patterns

By outsourcing parts of or the entire supply chain, companies enhance their delivery reliability while reducing over-head in plants, personnel, and systems. Shifting investments and risks over to their logistics partner gives them the strength to fully concen-trate on their core business. At the same time, consumers are changing their buying patterns4by purchasing more and more products online.

WHAT ELANDERS DOES

This development has accelerated with the COVID-19 pandemic. E-commerce changes the kind of logistic services needed and for many companies create a new, direct relationship to their end customer requiring, in addition to logistics, things like webshops, customer service and financial transactions to function optimally.

Demand for efficient supply chain services increases with more outsourcing. Using multi-sites where several customers and similar operations are combined, Elanders can even out fluctuations in volumes and create scale advantages. The Group also has expertise in contract logistics and offers advanced end-to-end solutions where we take care of the pro-duct directly from the customer's supplier and deliver it to the end customer. Elanders also offers special e-commerce solutions together with logistic services and several other value-added services that simplifies it for customers to manage consumers' new buying patterns. These can include creating the customer's webshop, and for example content production, customer service, and financial services.

An e-commerce offering

FAR BEYOND LOGISTICS

Elanders has a strong e-commerce offering including not only logistics, but also managed e-commerce services that help customers with the entire process of selling their products to consumers online. Patrick Lindig sees great potential for this business.

Patrick Lindig has been Managing Direc-tor for Contract Logistics at Elanders' subsidiary ITG for five years. Before that, he worked for five years in another manage-ment role in its parent company LGI.

"I like ITG a lot. With around 1,200 em-ployees, it's a comparatively small company and highly flexible. We have smart processes, can make fast decisions, and we have a great team working in an atmosphere of trust", he says.

Patrick Lindig is responsible for the division Fashion & Lifestyle. Within this division, an e-commerce strategy was created in 2015 and further on rolled out. A service portfolio and technology were built up and know-how was developed. Since then, ITG has transformed from pure business-to-business services forretail chains to business-to-consumer services for e-commerce customers.

"Already back then, we saw that we ought to shift to accommodate a changing market. Whereas 90 percent of our business was B2B five years ago, the proportion of B2C business has grown tremendously up to now. With the pandemic in 2020, the trend to buy things online has grown even further, and it is here to stay. Now, it is paying off to already have our e-commerce business established", says Patrick Lindig.

MANAGED E-COMMERCE SERVICES

Today ITG offers much more than just pure logistics services. With our managed e-com-merce services, we can develop and operate webshops that include financial services,customer care, and complete content such as pictures, texts, movies, etc. We can also handle international expansion of the shops, as well as the integration of marketplaces such as Amazon or Zalando. Moreover, in addition to developing B2C webshops we create plat-forms for B2B or closed communities such as employee shops.

"Having a good webshop with high quality content, presence on the important market-places, providing consumers the help they expect and crediting them quickly when a product is returned, are all crucial success factors in e-commerce. We can help our customers with all this in addition to logistics", explains Patrick Lindig and continues,

"A lot of companies have great brands, but no prior experience of selling their products

With our managed e-commerce services we can develop and operate web shops that include financial services, customer care, and complete content such as pictures, texts, movies, etc.

directly to the consumer. We have invested in the necessary IT systems and acquired the know-how to manage e-commerce. We're currently doing it for several customers", he explains.

READY TO SCALE UP

The aim now is to grow within e-commerce and scale up operations. ITG's biggest chal-lenge is perhaps customers' perception of the company as a pure logistics provider. Patrick Lindig explains that they are modernizing the brand to remediate this.

"Customers find it very interesting to dis-cover that we are a modern solutions provider in e-commerce. Good logistics always play a crucial role in e-commerce, so our cross-over to managed services is logical. Our businessconcept has only improved with the latest surge in online shopping. A lot of brands and chains need a quick, reliable solution in order to get online, including both modern front-end solutions with webshops as well as solid and stable back-end operations", he says.

NEW SITE IN IMPORTANT HUB

In 2020 ITG opened a new, large site in Oberhausen near Düsseldorf to enable further growth. It focuses on Fashion & Lifestyle products and e-commerce logistics, and replaces the old smaller site in Neuss. During the year we have won several new clients, for instance fashionette AG, an online platform for luxury products in fashion and beauty.

"Düsseldorf is both an important hub for fashion companies and centrally located fordistribution. Another strong point for the new site is its proximity to parcel centers, which allows for late cut-off times enabling quicker delivery of online orders", says Patrick Lindig.

Looking ahead, he predicts that e-commerce will continue to grow for a long time.

"Older people don't shop online very much, but middle-aged people are already doing it and will continue to do so as they grow older. So just simple demography will lead to sub-stantial growth, and because of this, logistics will become more and more important as consumers' expectations for fast and reliable delivery increase", he concludes.

Rapid set-up for supplying

PERSONAL PROTECTIVE EQUIPMENT

Faced with challenges due to lockdowns and freight disruptions, Elanders' subsidiary Mentor Media, headquartered in Singapore, could still seize new opportunities arising from the COVID-19 pandemic while helping US health authorities to cope with the crisis. Chin-Chye Lim explains how it happened.

Chin-Chye Lim is Senior Vice President of Mentor's overseas operations. This means he is in charge of operations, and sites in the four regions America,

Europe, China and India. He joined the company in 2015 and says that he appreciates its open-style management and believes in its core values which have a good balance between people and business.

"We believe in communicating openly with employees and our management style is based on providing a frame-work in which people can carry out their responsibilities. A lot of effort is put into employee engagement and each site is highly empowered. At the same time, we provide standardized systems and processes that enable a consistent service level everywhere", Chin-Chye Lim explains.

A spirit of innovation helps Mentor identify new possibilities in an ever-changing world. This has also been true in the midst of the pandemic in 2020. Despite all the negative consequences on public health and the world economy, the pandemic has given rise to new opportunities.

LICENSED AND READY

When the pandemic hit, Mentor had already diversified its core business from IT into other industries, including the health care sector.

"Our supply chain services include sourcing and purchasing products for our customers. Additionally, we have business licenses in China and the USA for trading in medical devices, including PPE (Personal Protection Equipment). So, one of our key American customers asked us for help in March when there was a sudden shortage in PPE items such as medical face masks, aprons and so on", says Chin-Chye Lim.

The customer had in turn been approached by a US government agency to see if they could assist in procuring and delivering quality-assured PPE products from China. Mentor accepted the sourcing task and immediately started working to qualify over 20 suppliers for different products.

"The market was suddenly flooded with demand for PPE products which made it crucial to ascertain quality. A pre-audit team started evaluating and certifying poten-tial suppliers. We also needed to provide an end-to-end

million units of PPE were supplied

service to our customer when transportation and logistics were disrupted due to the pandemic. We went to work on that immediately, as well as customs clearance, so that everything would be in place once we had the products", he explains.

STRONG RELATIONSHIPS AND MOTIVATED PEOPLE

Mentor went through product certifications and had factories audited. Once qualified producers were identi-fied, these suppliers also had to commit to working with Mentor and fulfilling the orders, an important detail in a market where everyone wanted the same products.

"When it comes to managing freight, we could leverage on our strong, established relationships with important freight operators. We achieved a very predictable delivery and a smooth customs clearance. Cash flow was also an issue. With bottomless demand, producers required a deposit of 50 percent before accepting orders and full payment upon delivery. We solved this thanks to our excellent relationship with our customer", says Chin-Chye Lim.

In a matter of weeks, Mentor started to supply PPE

products in April and continued through August. All in all, 80 million units of PPE were supplied. As part of Elanders' Corporate Social Responsibilities, Mentor con-tributed directly to the fight against COVID-19 through a donation of one million medical face masks for the frontline healthcare personnel in the Singapore National Health Group.

"That we could quickly and successfully set up this solution in such a challenging time is a testament in part to our good relationships with customers and suppliers, but in particular to the motivation and passion of ouremployees. We truly work as a team and collaborate efficiently across regions", he continues.

However, the story does not end here,. Right from the start, the objective was to establish a PPE business that would continue and could be expanded into other fields of medical supplies.

"In part, we want to offer added value to global customers in the healthcare sector through our supply chain services, and in part, we want to assist suppliers in growing on the global market through our supply chain capabilities", Chin-Chye Lim concludes.

When the pandemic hit,

Mentor had already diversified its core business from IT into other industries,including the health care sector.

The launch of ITG Air & Sea as a joint venture between Elanders and Dimerco came in a year when it was more challenging than usual to get goods to the right place, at the right time and at a reasonable cost. Vera Aurich explains that a combination of personal service and global networks enable us to help our customers.

Personal service with

GLOBAL STRENGTH

Vera Aurich is Head of Vertical Sales at Elanders' subsidiary ITG and responsi-ble for key account and sales activities.

She is also a member of the executive team of ITG Air & Sea GmbH, a joint venture started in January 2020, together with ITG's longtime Asian partner Dimerco. Having joined the company three years ago, Vera Aurich appreci-ates the organization's agility, flexibility, spirit and teamwork.

"We offer our customers a wide range of services, yet we manage to work closely together to find the ideal solutions for every customer. Our markets are volatile and move fast, so our success really depends on the right mindset and an openness to change. I think we benefit from being a diverse organization with a very good mix of genders, ages, and different experiences. This makes us more creative when dealing with challenges", she says.

AIR AND SEA A KEY COMPONENT

Many customers take advantage of Elanders' end-to-end supply chain solutions including freight, logistics, and many additional value-added services such as e-commerce. Worldwide air and sea freight are a key component in our offering. We also provide rail freight to and from China with connections to other Asian countries, cross-border trucking in Asia, and other combined freight services. ITG has of-fices in all the major cities of Germany and a global focus, especially on trade lanes to and from Asia-Pacific and the USA.

"Our customers can benefit from the very strong global networks with professional local teams we have built up over decades. Our new joint venture partnership allows us to focus even more on developing air and sea freight and strengthening partnerships with existingas well as potential customers. In addition to end-to-end solutions, we are very flexible and offer services on a modular basis to suit the customers' needs", explains Vera Aurich.

The joint venture enables Elanders to further diversify the customer base within interna-tional transportation services. With ITG Air & Sea focus continues to be on the fashion indus-try but it opens more doors to broadening the customer base, for example, in the electronics and automotive industries.

"A key point for us is that we still provide very personal service where our customers can turn to individuals who really know their business, not anonymous service centers. At the same time, we provide a strong global network."

ALTERNATIVE SOLUTIONS 2020 was a challenging year with a more volatile market than ever due to the COVID-19 pandemic. Air freight capacity decreased dramatically when the majority of passenger flights were cancelled, sometimes up to 90 percent. Market prices increased dramatically, and we often had to find alternative freight solutions for our customers.

"We increased our rail freight services with additional terminals all over China to be able to provide flexibility. For long periods this year it was a real challenge everywhere in the market to deliver goods to the right place at the right time, using economically and environ-mentally right solutions", says Vera Aurich.

The pandemic has also led to an additional push toward e-commerce. Elanders' strategy to focus on this area has paid off.

"We had already focused on e-commerce over the past few years and were offering great end-to-end solutions for brands going digital orfor fast-growing e-commerce companies look-ing to enter new markets. Such companies need a strong partner to scale up their business, for instance, when it comes to import customs and distribution in the USA. Here we can help", she continues.

E-COMMERCE AND DIVERSIFICATION

Looking ahead, Vera Aurich sees a continued strategic focus on the e-commerce business, along with efforts to make sure that the com-pany has a diversified customer base.

"If things suddenly change in the global economy, you need a wide base. If 2020 has taught us anything, it is that our flexibility and wide range of services are key factors for success in the face of volatility and disruption. No matter what happens, our customers can trust us to find the best ways to handle their business successfully", she concludes.

We offer our customers a wide range of services, yet we manage to work closely together to find the ideal solutions for every customer.

The future for printing is

SPEED AND FLEXIBILITY

The printing industry is turbulent and changing rapidly. Leaving cancelled events and closed shops in its wake, the pandemic further accelerated the rate of change in 2020. Thanks to the Group's financial strength, Elanders can evolve to meet new demands. Melanie Häußermann tells us how.

Melanie Häußermann is one of the Sales Team Leaders at Elanders in Waiblingen, close to Stuttgart in Baden-Württemberg. She has worked in the company since 2011, first as project man-ager a couple of years before moving into sales, where she gets to work closer to customers and potential customers.

Together with her five colleagues, she enjoys support-ing customers in developing new products and solutions. The financial strength of the Elanders Group is important since it allows investment in new technology and restruc-turing to meet new demands on the market.

"The printing industry is currently under pressure. Traditional, large offset print-runs are diminishing. The future lies in print-on-demand and being able to offer the speed, flexibility, and security that customers demand and expect when they order online. To be successful you need the right printing equipment, of course, but you also have to develop interesting add-on concepts and efficient sorting and logistic processes for faster and more directed deliveries", she says.

Elanders has a good framework in place for developing solutions to meet demands from the customers.

"I usually describe Elanders as a company that is down-to-earth and flat in its organization. This allows for fast communication and decision-making, which is important in our turbulent industry. It gives me the free-dom to be agile in dealing with our customers so that we can develop ideas together and find the right solutions", Melanie Häußermann explains.

WEB-TO-PRINT IS GROWING

Web-to-print is an area that is growing in importance. Elanders both acts as producing partner to other compa-nies in the field and has launched its own platforms. For instance, Elanders produces photobooks, calendars, bro-chures, and gift cards ordered online. On one of Elanders' own platforms, customers can use 3D technology online to design and order packaging and other marketing materials.

"Some of the clients I work with are start-ups with

The future lies in print-on-demand and being able to offer the speed, flexibility, and security that customers demand and expect when they order online.

The move to digital printing and print-on-demand has accelerated in the pandemic, and

I think it will be permanent.

interesting new ideas. One of them, offers customers the possibility to automatically create a photobook from chat histories on their social media. Other examples are clients offering individualized children's and football books that include the youngest fans. All of this comes in printed form as a memory to keep or share", says Melanie Häußermann.

"It's becoming more and more important to create added value for customers with various add-ons," she ex-plains. For example, not only can packaging be individu-alized, but it can also be designed for reuse as a picture frame or a game.

"We have creative packaging development and graphic design capabilities in-house and can support customers with this kind of upselling products. We help them stick out from the competition", she continues.

INCREASED SERVICE

In Germany, Elanders produces for both the consumer and the business market. The respective seasonal peaks complement each other. While volumes for photobooks have remained on an even keel despite the pandemic, as people still want to share memories with their loved ones, the volumes of items like catalogues, pricelists and marketing material has declined as events have been cancelled.

"The move to digital printing and print-on-demand has accelerated in the pandemic, and I think it will be permanent. I predict that we will continue seeing smaller volumes in the business market, but increased development of services. More advanced automation solutions will benefit our customers and allow for faster deliveries, more flexibility, and better service. Ordered volumes will be split into smaller and more direct deliveries. Only graphic companies that can achieve this for the right price will survive in the long run", Melanie Häußermann concludes.

Letting car manufacturers focus on

MAKING CARS

Elanders' customers are, among others, major German automotive manufacturers. Elanders supports them with supply chain services before, during, and after their line production. This lets the customers concentrate on what they are best at - making great cars. Andreas Lorenz was asked to explain what Elanders do and give some examples.

Andreas Lorenz joined Elanders' subsidiary LGI as Cluster Leader in June 2018. Within a year he became Automotive Division Manager and at the beginning 2020, the company's Industrial logistics opera-tions were added to his division. Due to the pandemic, the merged operations did not have a smooth first year.

"It was very challenging, but my team supported me a lot and helped me maneuver through foggy and stormy seas. In the end, we have succeeded in developing new services, winning new customers, and renewing important contracts", Andreas Lorenz says.

In LGI he sees an interesting combination of the hands-on mentality in freight forwarding and a more industrial mindset.

"It's a beautiful mix of two worlds. Both customers and employees are treated well. Our ability to develop and customize solutions together with the customer is a

true strength. Instead of long decision-making cycles, the company is permeated with flexibility and a willingness to change. Working with your team, you can develop and make your own decisions", he continues.

EFFICIENT SUPPLY OF PARTS

LGI offers the automotive industry almost every service in the supply chain, except for the delivery of finished vehicles and the recycling of old ones.

"A car manufacturer can rely on us to organize an efficient supply of what is needed, and they can instead concentrate on their core business, producing cars. We cover everything from the first idea about a car model, to pre-assembly, series production, and returning empty containers after use", explains Andreas Lorenz.

One example of a service LGI offers is being the con-trol tower, which entails managing orders for a customer

A car manufacturer can rely on us to organize an efficient supply of what is needed, and they can instead concentrate on their core business, producing cars.

to freight forwarders across Europe and operating the cross-dock center right before delivering parts to the production line site.

"We handle parts orders to around a dozen different freight forwarders. We check the status of consignments for any delays and take necessary action. We receive them at our cross-dock, split them into smaller consign-ments, and deliver the parts at the right timeslots to the factory. Given that there are thousands of consignments from many suppliers every day, it's tricky to manage correctly. That's why we are doing it for our customers", he explains.

SEQUENCING, KITTING AND HANDLING EMPTIES

LGI also helps with the sequencing of parts, so that they are sent in the exact order required by the car manufac-turer for as efficient assembly as possible, minimizing factory storage.

"We organize the sequencing and set up contracts with all the part suppliers to achieve optimal results. This pre-assembly is significant added value to the delivery of the part", says Andreas Lorenz.

"Kitting is a similar service we provide prior to the production line. Different parts are bundled in a way that makes it simple and efficient for the operator. When assembling, he or she always finds the same part at the same, optimal place in the kit."

At the other end of the production line, LGI helps handling the empty plastic boxes that parts were delivered in and returns them to the part suppliers for reuse.

"We get the empties back with paper, blister plastic, foil, and other stuff in them. Some of them are dirty and greasy. So, we sort out everything for recycling, clean the boxes and check that they aren't damaged. If they are, we repair or recycle them. Then we sort and stack them before sending them back to the right supplier", he explains.

Looking forward, the Automotive Division Manager underlines the importance of being reactive and flexible to changes in the automotive market, which is going through a huge transition from combustion engines to electrical power.

"However, this will just be a short-term solution given the limited resources used in batteries. Other technologies like hydrogen and synthetic fuels aren't ready yet and nobody knows what is around the corner. We have to be prepared for change and able to support different types of products in the supply chain", he says and concludes:

"One thing is certain - the automotive industry, just like all industries, will have to switch to a more circular supply chain. In the future, waste will just be production material in a different form."

In Huenxe, North Rhine-Westphalia, Elanders' subsidiary LGI has a mega-site servicing one of the biggest customers in the Electronics segment. The relationship goes back 20 years, and in 2020 the business expanded.

CASE: LGI

NEW INVESTMENTS FOR THE FUTURE

After a procurement process in 2019 where LGI faced tough competition, the major IT customer in question renewed the contract. Following this, the business was expanded to accommodate higher volumes. Investments for the future included the addition of a 10,000 m2 building to the logistics center, increasing it to a total of 75,000 m2, and a new high-end sorting machine for units being cross-docked in the facility. The addition was built to meet high sustainability demands, for instance, using recyclable building materials, and it has energy-efficient lighting and heating systems. The new infrastructure and related services are an enabler and a platform for LGI's customer to grow its e-commerce solutions.

LGI provides the customer with three main services. Firstly, Huenxe functions as the distribution center, including warehousing for printers covering all markets in Europe, the Middle East, and Africa. With an end-to-end service system, Elanders runs a high-volume operation with semi-automated storage. Printers arehandled and shipped, through partners, to thousands of companies. LGI also provides several value-added services in the warehouse such as, software flashing, reworks, and re-localization of products. LGI also supports the customer in maintaining good product availability to fulfill all shipments to the end-users.

Secondly, Huenxe is the cross-docking center for laptop and desktop computers. With the fully automated high-capacity sorter, up to 150,000 boxes can be processed per day. In a service running 24/7, products are sorted by country, region, and customer with same-day shipments for most of the volume. LGI also bundles the computers with printers from the distribution center into the same shipments in one transport. This supports optimum freight consolidation and reduces transporta-tion costs as well as CO2 emissions.

Thirdly, as part of its end-to-end service portfolios, LGI performs all related customs clearance services for a smooth cross-border process.

"There are substantial opportunities in

Electronics to develop and

customize the unique and full end-to-end solutions that our customers ask for",

says Martina Weihing, Division Manager, Supply Chain Solutions

(LGI).

CASE:

PRINT-EMOTION.DE AND

PACK-YOUR-FOOD.DE

DESIGN MADE SIMPLE ONLINE

In 2020, Elanders successfully launched two online print brands with their own websites in Germany:

Print-emotion.de is aimed at agencies and companies in the B2B sector. Standard products are presented on the landing page, and customers can either design freely using the online editor or upload a PDF with the design. Every modification is visualized live in a 3D animation, letting the customer immedi-ately determine what the printed product will look like and if anything needs to be changed.

Pack-your-food.de offers branded food packaging for restaurateurs, the hotel industry or companies at trade fairs. Printed food packaging made of cardboard can be ordered even in small quantities. With the online editor, customers without graphic training can do the design, aided by visualiza-tion and a 3D presentation. Many restaurants and food deliv-ery services used the site during the COVID-19 lockdown.

CASE:

PERSONALIZED WEB-TO-PRINT

YOUR CAR, YOUR BROCHURE

As sales processes are increasingly going digital, fewer catalogues and brochures are being produced. However, new opportunities are opening up for smart, personalized web-to-print solutions. For example, Elanders produces personalized, unique brochures on-demand that are sent home to customers who have visited a premium car dealership. The customer's name is printed on the cover, and all photos and information are tailored to his or her dream car.

If it's red with a black leather interior, and a hubcap design with narrow spokes, then that's the car featured in the brochure, along with all the customer-specific configuration details and the dealership's offer.

OPERATIONS - FIVE YEARS IN SUMMARY

Many

EVENTFUL YEARS

2020

2019

Elanders has experienced many eventful years during the last decade with several significant acquisitions made. These acquisitions have turned Elanders into what it is today - a global logistics multinational with a diversified portfolio of operations to rely on. This became particularly appar-ent with the pandemic that struck the world in 2020.

The COVID-19 pandemic had a consid-erable impact on our business during the ﬁrst half-year. It started in Asia when restrictions were implemented to reduce the spread of the virus. This created disruptions in the supply chain for companies dependent on goods from Asia. When the virus reached Europe, countries closed their borders, and the component shortage became more severe, causing factories to close. During this period, Elanders was en-trusted with procuring PPE from Asia. After a weak ﬁrst half-year there was a dramatic recovery during the second half of the year when factories were once again running at full speed. The year ended with a solid fourth quarter.

Print & Packaging Solutions and the Asiatic section of Supply Chain Solu-tions had one of their best years ever. This was overshadowed by the fact that a restructuring plan was needed in the European section of Supply Chain Solutions and accounting errors in trans-portation operations were discovered. After two years with strong cash ﬂow resulting in a robust ﬁnancial position Elanders is now seriously ready to make new acquisitions that can complement our existing oﬀer.

Excluding one-oﬀ items, Elanders presented its, up until then, best annual result ever with an adjusted EBITA of MSEK 563 (523).

Despite an ongoing pandemic, the Group had its best year ever. One important factor was the lower cost base resulting from the measures taken in 2019.

2017

2016

The year 2018 was also characterized by strong organic growth, nine percent, and Group net sales reached over 10 billion Swedish krona for the ﬁrst time. The customer projects that had created problems during the second half of 2017 continued to be a challenge in the beginning of 2018, but after measures to make them more eﬃcient and raising our prices to customers they were set right. During the year, the majority of shares in LOGworks, Elanders' staﬃng operations in Germany, were sold to Adecco. As part of the production consolidation process in Print & Packaging Solutions the operations in Beijing, China were divested while the oﬀset operations in Sweden were shut down and 70 employees were made redundant. The year ended with Elanders' best, until then, quarter ever.

The year was characterized by strong organic growth, mainly in business area Supply Chain Solutions where growth was generated in both Asia and Europe. Several new deals were signed during the year. Organic growth amounted to six percent for the Group as a whole, but increased to 12 percent in the fourth quarter. Net sales amounted to SEK 9.3 billion and there were close to 7,000 employees at year-end. The robust growth led to some growing pains for the organization, which was apparent in the result in the form of extra start-up costs for several of the new, large custo-mer projects in Supply Chain Solutions.

In the summer of 2016, Elanders made its greatest acquisition ever with the acquisition of the German contract logistics group LGI. At the beginning of the year, LGI had close to 4,000 employees, including permanently hired personnel, and net sales of MEUR 430 in 2015. Together LGI and Elanders have a much broader customer base and the union creates a stable platform for continued organic growth with both ex-isting and new customers. The Elanders Group was then larger than ever before with over 6,400 employees and annual net sales of more than SEK 8 billion.

Price pressure and overcapacity on the market for business area Print & Packaging Solutions continued and 50 employees were made redundant in the Swedish operations.

In 2016, Elanders presented an operating result of MSEK 383, excluding one-oﬀ items.

INCOME STATEMENTS - SUMMARY

MSEK	2020	2019 2018 2017 2016
Net sales	11,050	11,254 10,742 9,342 6,285
Operating expenses	-10,504	-10,895 -10,283 -9,034 -5,941
EBIT	546	359 459 308 344
Financial items	-132	-143 -93 -78 -44
Result after ﬁnancial items	414	216 366 230 300
Result for the year	292	153 259 165 217
EBITDA	1,431	1,285 725 563 516
EBITDA excl. IFRS 16	737	573 725 563 516
EBITDA adjusted	1,431	1,435 725 563 516
EBITA	598	413 523 371 384
EBITA adjusted	598	563 523 371 384

2016

CASH FLOW - SUMMARY

MSEK

Cash ﬂow from operating activities Paid taxes

Investments Operating cash ﬂow Change in net debt

MSEK	2020	2019 2018 2017 2016
Cash ﬂow from operating activities	1,725	1,337 455 -64 331
Paid taxes	-42	-114 -127 -134 -104
Investments	-116	-140 -137 -262 -1,907
Operating cash ﬂow	1,783	1,454 538 -115 -1,428
Change in net debt	-1,025	-714 -288 438 983

BALANCE SHEETS - SUMMARY

MSEK	2020	2019 2018 2017 2016
Goodwill	2,413	2,480 2,439 2,337 2,273
Other ﬁxed assets	3,224	3,546 1,835 1,874 1,855
Inventory	233	335 468 390 295
Accounts receivable	1,344	1,740 1,762 1,571 1,396
Other current assets	324	448 511 557 312
Cash and cash equivalents	1,101	655 722 679 651
Equity	2,908	2,777 2,707 2,453 2,411
Interest-bearing liabilities	3,955	4,616 3,261 3,344 2,875
Non-interest-bearing liabilities	1,776	1,811 1,768 1,612 1,496
Total assets	8,369	9,205 7,737 7,409 6,782

KEY RATIOS

2020	2019 2018 2017 2016
EBITA-margin, %	5.4	3.7 4.9 4.0 6.1
EBITA-margin adjusted, %	5.4	5.0 4.9 4.0 6.1
Operating margin, %	4.9	3.2 4.3 3.3 5.5
Proﬁt margin, %	3.7	1.9 3.4 2.5 4.8
Equity ratio, %	33.6	30.2 35.0 33.1 35.6
Risk capital ratio, %	35.6	32.2 37.5 35.7 38.7
Interest coverage ratio, times	5.0	2.7 5.3 4.1 7.8
Debt/equity ratio, times	1.0	1.4 0.9 1.1 0.9
Return on equity, %	9.9	5.3 9.8 6.8 12.4
Return on capital employed, %	8.6	5.0 8.5 6.2 10.0
Return on total assets, %	6.4	4.2 6.6 4.3 6.7
Average number of employees	6,260	6,696 7,153 6,658 4,536
Number of employees at the end of the year	6,058	6,664 6,652 6,997 6,444
Net debt/EBITDA, times	2.0	3.1 3.5 4.7 4.3
Net debt/EBITDA adjusted ratio, times	2.0	2.8 3.5 4.7 4.3
Net debt/EBITDA excl. IFRS 16 ratio, times	1.5	3.7 3.5 4.7 4.3
Enterprise Value, MSEK	7,083	7,044 5,633 5,570 5,981
Risk capital, MSEK	3,076	2,962 2,898 2,645 2,625
Capital employed, MSEK	5,762	6,738 5,246 5,118 4,635
Net debt, MSEK	2,854	3,961 2,539 2,665 2,224
Net debt excl. IFRS 16, MSEK	1,123	2,142 2,539 2,665 2,224

For Reconciliation Alternative Performance Measures and Financial Deﬁnitions, see pages 112-114.

EBITA

NET DEBT

CASH FLOW

Net sales, MSEK

Net debt, MSEK

EBITA margin adjusted, %

Net debt/EBITDA adjusted, times

RETURN ON EQUITY

RETURN ON CAPITAL EMPLOYED

EQUITY RATIO

Equity, MSEK

ROE, %

Capital employed, MSEKROCE, %

Equity, MSEKEquity ratio, %

Despite an ongoing pandemic the Group presented its best year ever.

One important factor was the lower cost of overhead resulting from the measures taken in 2019.

SHARE INFORMATION AND OWNERSHIP STRUCTURE

ON THE RISE

The share price had a negative development during the beginning of the year. The recovery gained momentum during the last months of the year and has continued during the beginning of 2021.

History

Elanders' B shares were first listed on the Stockholm Stock Exchange on 9 January 1989. On 31 December 2020 the company had 33,542,938 (33,542,938) B shares listed on NASDAQ OMX Stockholm, Mid Cap, under the ELAN B symbol.

Development during the year

The market value of B shares increased by 37 (0) percent during 2020 while the Stockholm Stock Exchange index OMX Stockholm PI rose by 11 (30) percent during the same period. During 2020 a total of 5,848,025 (5,823,964) Elanders shares were

DATA PER SHARE

traded, which is equivalent to an average trading rate of approximately 0.17 (0.16) times.

The lowest share price during 2020 was SEK 36.10 on 23 March and the highest was SEK 119.60 on 30 December. The final share price in 2020 was SEK 119.60 (87.20), which means that Elanders' stock market value at year-end was approximately MSEK 4,229 (3,083).

Share capital, class of shares and liquidity guarantee

At the end of 2020 there were a total of 35,357,751 (35,357,751) issued shares in the

2020	2019 2018 2017 2016
Net result, SEK	8.12	4.19 7.18 4.65 7.35
Net result adjusted, SEK	8.12	7.16 7.18 4.65 7.35
Share price at year-end, SEK	119.6	87.20 87.20 82 106.25
P/E ratio	14.7	20.8 12.1 17.6 14.5
Adjusted P/E ratio	14.7	12.2 12.1 17.6 14.5
P/S ratio, times	0.4	0.3 0.3 0.3 0.5
Dividend, SEK 1)	3.10	- 2.90 2.60 2.60
Dividend yield, %	4.6	0.0 3.6 2.6 3.1
Share price/equity, times	1.5	1.1 1.1 1.2 1.6
Equity, SEK	81.65	78.54 76.28 69.21 68.19
Risk capital, SEK	86.41	83.78 81.96 74.80 74.24
EBITDA, SEK	40.46	36.35 20.50 15.92 17.47
EBITDA adjusted, SEK	40.46	40.58 20.50 15.92 17.47
EBITDA excl. IFRS 16	20.84	16.21 20.50 15.92 17.47
Operating cash ﬂow, SEK	50.44	41.14 15.22 -3.24 -48.32
Cash ﬂow from operating activities, SEK	48.80	37.81 12.88 -1.81 11.19
Average number of outstanding shares, in thousands	35,358	35,358 35,358 35,358 29,555
Turnover rate	0.17	0.16 0.11 0.24 0.44

company, of which 1,814,813 (1,814,813) were class-A shares and 33,542,938 (33,542,938) were class-B shares. Each class-A share is worth ten votes and each class-B share one. The shares' quota value is SEK 10 and all shares are entitled to the same dividend. See the tables on the following pages for share capital and voting disposition. The class-B share is covered by a liquidity guarantee and ABG Sundal Collier is the guarantor.

Share allocation

There were 3,684 (3,061) Elanders share-holders at year-end. The share of foreign shareholders amounted to 11 (7) percent of the

1) Proposed by the Board.

IFRS 16 is eﬀective from 1 January 2019 and has aﬀected the accounting of the Group's lease agreements. The transition to IFRS 16 has been based on the Modiﬁed retrospective approach, which means that the comparison periods have not been adjusted. Excluding IFRS 16 means that the same accounting principles as 2018 have been used. One-oﬀ items have been excluded in the adjusted measures. Historic number of shares and historic key ratios have been adjusted for the bonus issue element in the new share issue in 2016. For Reconciliation Alternative Performance Measures and Financial Deﬁnitions, see pages 112-114.

SHARE INFORMATION AND OWNERSHIP STRUCTURE

capital. The allocation between shareholder type and share of capital is 8 (8) percent private owners and 29 (33) percent institutional owners. At the end of the year Carl Bennet AB con-trolled 66 (66) percent of the votes and 50 (50) percent of the capital and was the only owner who controlled more than 10 percent of the capital or 10 percent of the votes.

DEVELOPMENT OF THE ELANDERS SHARE

SEK

1 000s/month

Dividend policy

Regarding the proposed dividend in years to come, the Board of Directors has taken into account the Group's development potential, its financial position and the adopted finan-cial goals relating to debt/equity ratio, equity ratio and profitability. The objective is to have dividends follow the long-term profit trend and, on the average, represent approximately 30-50 percent of profit after tax.

Other information

Elanders' financial information can be found at the Group websitewww.elanders.com, under the section Investors.

● OMX Stockholm PI ● ELAN B ● Number of traded shares

Questions can also be asked to Elanders directly via e-mail atinfo@elanders.com. Annual Reports, Quarterly Reports and other information can be requested from Group headquarters at telephone number +46 31 750 07 50, our website or through the above e-mail address.

SHAREHOLDER CATEGORIES 31 DECEMBER 2020

We are also happy to provide information about Elanders at events that are arranged by shareholder organizations, Swedish and foreign stockbrokers and banks.

PERCENT OF SHARE CAPITAL

PERCENT OF VOTES

11.4

7.8

ABG Sundal Collier, Aktiespararna, Erik Penser Bank and Nordea continuously monitor our development and publishes analyses of Elanders.

51.8 67.0

37%

● Swedish institutions and Investment companies

● Swedish private persons

● Foreign owners

● Swedish companies

The market value of B shares increased by 37 percent during 2020

Source: Euroclear Sweden AB.

SHARE INFORMATION AND OWNERSHIP STRUCTURE
SHARE CAPITAL DEVELOPMENT
Accumulated	Accumulated
Number of	Number of	number of	share capital,
A shares	B shares	shares	SEK
At Stock Exchange introduction in 1989	200,000	1,380,000	1,580,000	15,800,000
1991 Directed share issue to acquire Fabritius A/S in Norway	-	252,000	1,832,000	18,320,000
1993 Bonus issue 1:1	200,000	1,632,000	3,664,000	36,640,000
1997 Directed share issue to acquire the Graphic Systems Group	-	650,000	4,314,000	43,140,000
1997 Directed share issue to acquire Skandinaviska Lithorex	-	250,000	4,564,000	45,640,000
1997 Directed share issue to acquire Gummessons	-	350,000	4,914,000	49,140,000
1997 New share issue 1:4 in connection with the acquisition of the Minab Group	100,000	1,128,000	6,142,500	61,425,000
1998 Directed share issue to acquire the Skogs Group	-	1,287,500	7,430,000	74,300,000
2000 Directed share issue to acquire the shares in KåPe Group	-	450,000	7,880,000	78,800,000
2000 Directed share issue to acquire the shares in Novum Group	-	490,000	8,370,000	83,700,000
2007 New share issue 1:6 in connection with the acquisition
of Sommer Corporate Media	83,333	1,311,666	9,764,999	97,649,990
2010 New share issue 1:1	583,333	9,181,666	19,529,998	195,299,980
2012 Directed share issue to acquire d\|o\|m and fotokasten	-	3,200,000	22,729,998	227,299,980
2014 New share issue 1:6 in connection with the acquisition of Mentor Media	194,444	3,593,872	26,518,314	265,183,140
2016 New share issue 1:3 in connection with the acquisition of LGI	453,703	8,385,734	35,357,751	353,577,510
Outstanding shares and share capital on 31 December 2020	1,814,813	33,542,438	35,357,751	353,577,510
MAJOR SHAREHOLDERS 31 DECEMBER 2020
Number of	Number of	Percent	Percent of
A shares	B shares	of votes	share capital
Carl Bennet AB	15,903,596	65.9	50.1
Carnegie Funds	2,365,875	4.6	6.7
Didner & Gerge Funds	2,338,445	4.5	6.6
Protector Forsikring ASA	2,300,520	4.5	6.5
Svolder AB	2,069,332	4.0	5.9
Fourth Swedish National Pension Fund	1,880,425	3.6	5.3
Third Swedish National Pension Fund	503,358	1.0	1.4
The Bank of New York Mellon SA/NV	342,870	0.7	1.0
HSBC Bank PLC	307,365	0.6	0.9
Dan Olsson	297,352	0.6	0.8
Other Shareholders	5,233,800	10.1	14.8
Total	1,814,813	33,542,938	100.0	100.0
Source: Euroclear Sweden AB.
SHAREHOLDER STATISTICS 31 DECEMBER 2020
Number of	Number of	Percent of	Percent
A shares	B shares	share capital	of votes
-	364,419	1.0	0.7
-	1,064,856	3.0	2.1
-	1,540,772	4.4	3.0
-	3,211,340	9.1	6.2
1,814,813	27,361,551	82.5	88.0
1,814,813	33,542,938	100.0	100.0

Number of shareholders

Number of shares

1-500

501-5,000

5,001-50,000

50,001-500,000

500,001-

Total

Source: Euroclear Sweden AB.

2,818

724

112

7 3,684

BOARD OF DIRECTORS' REPORT

The Board of Directors and the President and Chief Executive Officer of Elanders AB (publ), corporate identity no 556008-1621, herewith present their annual report and the consolidated financial statements for 2020.

Elanders AB (publ) is the parent company of the Elanders Group and the company's B shares are listed on NASDAQ OMX Stockholm, Mid Cap. Elanders AB (publ) is a subsidiary to

Carl Bennet AB, corporate identity no 556379-0715, registered in Gothenburg. Carl Bennet AB prepares consolidated financial statements that include Elanders.

OUR BUSINESS

Elanders is a global logistics company with a broad range of services of integrated solutions in supply chain management. The business is mainly run through two business areas, Supply Chain Solutions and Print & Packaging Solutions. The Group has over 6,000 employees and operates in some 20 countries on four continents. Our most important markets are China, Singapore, the United Kingdom, Sweden, Germany, and the USA. Our major customers are active in the areas Automotive, Electronics, Fashion & Lifestyle, Health Care & Life Science and Industrial.

OUR OFFER

Elanders helps its customers to more efficiently manage their entire supply chain, everything from raw materials to the product itself. By optimizing customers' material and component flows, Elanders actively helps its customers to reduce their environmental impact and thus contributes to a more sustainable society. Elanders can take a global total responsibility for the entire supply chain, including procurement, warehousing, configuration, production and distribution. Our offer also includes order management, payment solutions and, after sales services for our customers.

Our services are provided by business-oriented employees. They use their expertise and our advanced IT solutions to develop our customers' offers which are often completely dependent on efficient product, com-ponent and service flows as well as traceability and information.

In addition to our offer to B2B markets, the Group also sells photo products directly to consumers through the own brands fotokasten and myphotobook.

NET SALES AND RESULT

Net sales decreased to MSEK 11,050 (11,254) compared to the same period last year. Cleared of exchange rate fluctuations, net sales declined by 0.1 percentage points.

Adjusted EBITA, i.e. the operating result adjusted for amortization on assets identified in conjunction with acquisitions along with one-off items, increased to MSEK 598 (563), which corresponded to an adjusted EBITA margin of 5.4 (5.0) percent. Adjusted EBITA corresponds to the reported EBITA for the full year 2020, but not for the year 2019.

The COVID-19 pandemic had a considerable impact on our business during the first half-year, but the different operations in the Group were affected to various degrees and at different points in time. Until the end of the first quarter, the negative effects were felt primarily in our business in Asia due to measures authorities implemented to stop the spread of the virus. One of the measures was extending the Chinese New Year, which severely reduced production capacity in Asia. The reduced pro-duction meant that customers in Europe, e.g. within Fashion & Lifestyle, at the end of March, began to have a shortage of components and goods. When the spread of the virus hit Europe on a greater scale the problems escalated. Countries started closing their borders, the lack of components got worse, and quarantine and isolation measures were implemented. It was at this moment that Automotive and Industrial began to be affected to a greater extent, and several of the Group's largest customers chose to shut down their production due to disruptions in their supply chain. For Fashion & Lifestyle, the problems continued after the first half-year since self-isolation in Europe and the USA meant fewer and fewer people bought clothes in brick-and-mortar stores. However, for some customers higher e-commerce volumes compensated for the loss in retail sales.

During the second and third quarters, the Group was entrusted to by our customers in North and South America to handle the procurement, quality control and transportation of personal protective equipment from Asia to North and South America. This business compensated for most of the decline in net sales in Europe during the same period.

After weak demand in nearly all our customer segments in the first half-year, there was a dramatic recovery during the second half of the year, which ended with a strong fourth quarter, despite an intense second wave of infection in late autumn.

Net sales amunted to MSEK

11,050

5.4%

EBITA-margin amounted to

Supply Chain Solutions

The business area Supply Chain Solutions had a very good year in terms of results and succeeded in improving its adjusted EBITA result by 18 percent. The COVID-19 pandemic created a difficult situation during the first half-year in both Asia and Europe. However, the new business with PPE compensated for the drop in net sales in other customer seg-ments. Demand increased in almost all customer segments during the second half of the year. Restrictions to reduce the spread of the infection reduced sales for the Group's customers in retail, but this was instead offset by increased volumes in e-commerce.

The customer segments that have withstood the pandemic the best this year are Electronics and Health Care & Life Science. Demand for laptops, computer accessories, network equipment, TVs, medical equipment and PPE has been high since the beginning of the pandemic.

An important factor behind the improved result was lower overhead costs due to the structural measures taken in 2019, and a favorable mix of products and services. Sales of PPE during the second and third quarters also contributed.

During the year, several major customer contracts have been renewed in for example, Electronics and Health Care & Life Science. The con-tracts equal net sales annually of around SEK 500-700 million. The two largest contracts are valid for five respectively ten years, where the first one contains an extension option for another two years.

Print & Packaging Solutions

The year 2020 was very challenging for the business area Print & Packaging Solutions and the coronavirus had a very negative impact on business during the second quarter when the infection spread dramatically in Europe. This happened at the same time as many of the customers experienced a component shortage in their supply chain, stores were closed and marketing activities ceased. However, there was a very strong recovery during the second half of the year. Combined with hard work, strict cost awareness, optimizing investments, and successful investments in new technology, enabled the business area to surpass last year's half-year result and ended up with a full-year result that was much better than expected.

Otherwise, the market overall continues to struggle with tough price pressure, contracting total volumes and overcapacity. This, in combina-tion with the ongoing pandemic, has led to financial problems for many competitors. Total print volumes continue to decrease on almost all markets and a clear trend towards digital print and more customized products, instead of traditional offset print with large editions continues as well.

Growth in the Group in 2020 has primarily been generated by the service area in USA that manages subscription boxes and combines printing, carriage and packing services in one complete service. It has only taken a few years for this area to grow from zero to nearly MUSD 80 in annual sales. Excluding this part of the business area, organic net sales fell by around seven percent during the year.

As a consequence of the decreasing total volumes and the resulting price pressure, the Group's consolidation of production capacity, mainly in traditional print, continues. Work is also underway to transform some of our existing print operations so that they can also offer supply chain management services, which has proven successful in Brazil, Sweden and the USA. The business area has also increased the portion of web-to-print for both consumers and companies, which raised the results and margins in the fourth quarter.

INVESTMENTS AND DEPRECIATION

During the year, net investments amounted to MSEK 116 (140), of which acquisitions and divestments amounted to MSEK 30 (5). Investments have mainly been made in production equipment. Depreciation, amorti-zation and write downs amounted to MSEK 885 (927).

FINANCIAL POSITION, CASH FLOW AND EQUITY RATIO

Operating cash flow for the period increased to MSEK 1,783 (1,454) and was partly helped by a reduced working capital and improved profit-ability.

The last year's strong cash flow combined with lower investments has resulted in a reduction in indebtedness. Net debt decreased to MSEK 2,854 compared to MSEK 3,961 at the beginning of the year. The change includes a decrease of MSEK 96 due to changes in exchange rates as the SEK has strengthened against both the euro and the US dollar. Leverage, i.e. net debt/adjusted EBITDA for a rolling 12-month period is now down under 2.0. Excluding effects from IFRS 16 net debt/adjusted EBITDA ratio is down to 1.5 (3.0).

The Group has a good liquidity buffer, both in the form of existing cash and unutilized credit facilities. Together, these amount to more than SEK 1.7 billion at the end of the year.

The Group's agreements with the main banks contain financial condi-tions that must be met to secure the financing. These consist, among other things, of investment levels and the net debt/EBITDA ratio. The calculations exclude IFRS 16 effects and certain one-off items. All finan-cial conditions were with a good margin met as of the balance sheet date.

SIGNIFICANT EVENTS DURING THE YEAR

The COVID-19 pandemic

The coronavirus, COVID-19, has quickly spread during 2020 and developed into a pandemic with many infected. The measures taken by different governments to limit the spread of the virus has impacted financial activities and the Group's business in different ways:

- Several of the Groups' customers have experienced major disruptions in their supply chains, which has affected their, and even our, business negatively. These disruptions led to several customers in Automotive and Industrial shutting down production from of the middle of March until May or June 2020.
- Demand dropped drastically in several of our customer segments and particularly in Europe, primarily in the second quarter.
- Because of the measures taken by authorities, the Group had to close down a couple of our smaller production units in India and Italy during certain periods.
- The Group has received government grants in several of the countries where it is operating, as a part of governments' measures to lessen the negative effects of the coronavirus outbreak. The design of these relief packages has been different from one country to the next, but they have mostly been centered around reducing costs for employees and premises. During 2020, Elanders has received MSEK 61 in various forms of support. In addition to this, in some countries, employees have personally received governmental aid connected to short term furloughs.

There is still a great deal of uncertainty about how long the coronavirus outbreak will continue, which makes it difficult to forecast its effect on Group business during the coming year.

Changes in Group Management

Eckhard Busch, one of the representatives in Group Management for our subsidiary LGI, decided to retire and leave the company during the third quarter. He has not been replaced. After the change, Group Management is as follows:

• Magnus Nilsson, President and CEO
• Andréas Wikner, CFO
• Bernd Schwenger, President, Supply Chain Solutions (LGI)
• Lim Kok Khoon, President, Supply Chain Solutions (Mentor Media)
• Sven Burkhard, President, Print & Packaging Solutions
• Kevin Rogers, President, Global Sales

RESEARCH AND DEVELOPMENT

The Group continuously develops different offers that are usually developed in connection with specific customer projects. Continuous development of order platforms takes place in our e-commerce business where costs for most of the work are recognized as they occur.

PERSONNEL

The average number of employees during the year was 6,260 (6,696), of which 143 (152) were in Sweden. At the end of the period the Group had 6,058 (6,664) employees, of which 147 (152) in Sweden. Further informa-tion concerning the number of employees, as well as salaries, remunera-tion, and terms of employment is given in note 5 to the consolidated financial statements.

PARENT COMPANY

During the year, the parent company provided joint group services. The average number of employees during the year was 10 (11), and the num-ber at year-end amounted to 10 (11). Other information concerning the number of employees, salaries, remuneration, and conditions of employ-ment is given in note 5 to the consolidated financial statements.

INFORMATION CONCERNING COMPANY SHARES

On 31 December 2020 there were 1,814,813 registered class-A shares and 33,542,938 registered class-B shares; in total 35,357,751 shares. The class-B shares are listed under the symbol ELAN B on NASDAQ OMX Stockholm, Mid Cap. Each class-A share represents ten votes, and each class-B share represents one vote. Shareholders may vote for all the shares they own or represent. All shares receive the same dividend. The Annual General Meeting has not given the Board any authority to purchase shares or issue shares. There are no bonus programs with dilution effects.

Transferability

There are no restrictions in class-B shares transferability according to the articles of association or current legislation. The articles of associa-tion do contain a pre-emption clause concerning the company's class-A shares.

The company knows of no other agreements between shareholders that limit the transferability of the shares.

Shareholdings

The only direct or indirect shareholding exceeding a tenth of the votes in the company per 31 December 2020 was Carl Bennet AB with 66 (66) percent. No shares are owned by personnel through pension foundations or similar.

Contracts with clauses regarding ownership changes

The company has certain customer contracts and bank agreements that can be terminated if there is a change in ownership.

There are no contracts between the company and Board members or employees that prescribe remuneration if they terminate their contract, are made redundant without reasonable grounds or if their employment or assignment ceases to exist because of a public purchase offer.

GUIDELINES FOR REMUNERATION TO SENIOR OFFICERS

The company's guidelines for remuneration to senior officers were adopted by the Annual General Meeting on 25 June 2020. The Board proposes that the Annual General Meeting 2021 adopt guidelines that to all extents and purposes correspond to the present guidelines. The new guidelines are:

Senior officers are persons who, together with the Chief Executive Officer, constitute Group Management. The guidelines are valid for employ-ment contracts signed after the Annual General Meeting has adopted the guidelines as well as those cases in which changes are made in existing agreements after the decision by the Annual General Meeting.

The guidelines' promotion of the company's business strategy, long-term interests and sustainability

Elanders shall be a global and strategic partner to the customers in their business-critical processes. By offering integrated and customized solutions for handling all or part of the customers' supply chain, the business-critical processes may be optimized. The overriding goal is to be a leader in global and sustainable overall solutions within supply chain management and to best serve the customers' requirements on efficiency and delivery, prioritizing sustainability. The strategy is to act within niche areas in each marketing area where the group may achieve a market-leading position. In order to fulfil the long-term financial goals, and to achieve value growth and increase shareholder return over time, Elanders continually develops its offer to the customers. With new and improved services, total integrated solutions, and implementation of innovative technology, a good platform for continuous growth and development, as well as greater value for shareholders is created.

A prerequisite for the successful implementation of the company's business strategy and safeguarding of its long-term interests, includ-ing its sustainability, is that the company is able to recruit and retain qualified personnel. To this end, it is necessary that the company offers competitive total remuneration, enabled by these guidelines. Variable cash remuneration covered by these guidelines shall aim at promoting the company's business strategy and long-term interests, including its sustainability.

Types of remuneration, etc.

The remuneration shall be on market terms and may consist of the following components: fixed cash salary (basic wage), variable cash remuneration, pension benefits, and other benefits. Additionally, the general meeting, may irrespective of these guidelines, resolve on, among other things, share-related or share price-related remuneration.

For the CEO and the CFO, variable cash remuneration may amount to, at most, 60 respectively 50 percent of the basic wage. For other executives, variable cash remuneration may amount to, at most, 40 percent of the basic wage. Additional variable cash remuneration, however not more than 100 percent of the basic wage, may exceptionally be awarded after resolution by the board of directors, for the purpose of recruiting or retaining executives in light of local market conditions.

For the CEO, pension benefits, including health insurance (Sw. sjuk-försäkring), shall be premium defined. Variable cash remuneration shall not qualify for pension benefits. The pension premiums for premium defined pension shall amount to, at most, 35 percent of the fixed annual cash salary.

For other executives, pension benefits, including health insurance, shall be premium defined unless the individual concerned is subject to defined benefit pension under mandatory collective agreement provi-sions. Variable cash remuneration shall qualify for pension benefits to the extent required by mandatory collective agreement provisions. The pension premiums for premium defined pension shall amount to, at most, 35 percent of the fixed annual cash salary.

Other benefits may include, for example, company cars and indus-trial health services (Sw. företagshälsovård). Such benefits may, in total, amount to a minor proportion of the total remuneration.

Termination of employment

The notice period may not exceed 18 months if notice of termination of employment is made by the company. Fixed cash salary during the period of notice and severance pay may together not exceed an amount equivalent to the cash salary for 18 months as regards the CEO and 12 months for other executives. The period of notice may not exceed six months, without any right to severance pay, when termination is made by the executive.

Criteria for awarding variable cash remuneration, etc.

The variable cash remuneration shall be linked to predetermined and measurable criteria, which can be financial or non-financial. They may also be individualized, quantitative or qualitative objectives. The criteria shall be designed to contribute to the company's business strategy and long-term interests, including its sustainability, by for example, being clearly linked to the business strategy or promote the executive's long-term development. To which extent the criteria for awarding variable cash remuneration has been satisfied shall be evaluated when the mea-surement period has ended (normally calendar year). The remuneration committee is responsible for the evaluation so far it concerns variable cash remuneration to the CEO. For variable cash remuneration to other executives, the CEO is responsible for the evaluation. For financial ob-jectives, the evaluation shall be based on the latest financial information made public by the company.

Salary and employment conditions for employees

In the preparation of the board of directors' proposal to these remunera-tion guidelines, salary and employment conditions for all employees of the company have been taken into account by including information on the employees' total income, the components of the remuneration as well as increase and growth rate over time. This information has then formed a basis for the remuneration committee's and the Board of Directors' evaluation of whether these guidelines and the limitations set out herein are reasonable.

The decision-making process to determine, review and implement the guidelines

The Board of Directors has established a remuneration committee. The committee's tasks include preparing the Board of Directors' decision to propose guidelines for executive remuneration. The Board of Directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the annual general meeting. The guidelines shall be in force until new guidelines are adopted by the general meeting. The remunera-tion committee shall also monitor and evaluate programs for variable remuneration to the executive management, the application of the guidelines for executive remuneration, as well as the current remunera-tion structures and compensation levels in the company. The members of the remuneration committee are independent of the company and its executive management. The CEO and other members of the executive management do not participate in the Board of Directors' processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.

Derogation from the guidelines

The Board of Directors may temporarily resolve to derogate from the guidelines, in whole or in part, if in a specific case there is a special cause for the derogation and a derogation is necessary to serve the company's long-term interests, including its sustainability, or to ensure the com-pany's financial viability. As set out above, the remuneration committee's tasks include preparing the Board of Directors' resolutions in remunera-tion-related matters. This includes any resolutions to derogate from the guidelines. In 2020, the Board of Directors approved that variable remu-neration to an executive resident abroad could exceed the stipulated 40 percent of the basic wage. The reason is that the Board of Directors has deemed such derogation to be necessary in order to offer the executive competitive total remuneration in light of local market conditions.

OUTLOOK

Elanders continues to have a strong position among the global customers, and this is where the greatest opportunities for both long and short-term expansion can be found. The undeniable trend is that a growing number of global companies are centralizing their purchasing processes while requesting local deliveries. This means that Elanders' market position and global presence are in tune with the times.

EVENTS AFTER THE BALANCE SHEET DATE

No major events have taken place between the balance sheet date and the date this report was signed.

APPROPRIATION OF PROFITS

The Board of Directors and Chief Executive Officer propose that the profit and other unreserved funds of SEK 1,176,162,655 in the parent company at the disposition of the Annual General Meeting should be dealt with accordingly:

• SEK 3.10 per share is distributed
to the shareholders
• the remaining balance is to be carried forward

SEK 109,609,028

SEK 1,066,553,627

The Board of Directors believes that the proposed dividends are justifi-able in relation to the demands that the business' nature, scope, and risks make on group equity and the Group's consolidation needs, liquidity, and its position in general.

Risks and

UNCERTAINTY FACTORS

Elanders divides risks into business risks (customer concentration, operational risk, risks in operating expenses, contracts and disputes), financial risks (currency, interest, financing/ liquidity and credit risk) as well as circumstantial risks (COVID-19 pandemic, business cycle sensitivity and the future of the services/products). For more detailed information than given below, as well as a sensitivity analysis, please see note 20 in the consolidated financial statements.

Business risk

Elanders encounters risks in operations daily and normally these are within the Group's control. Group Management's close collaboration with the different group operations is a key factor in controlling these risks.

RISKS AND UNCERTAINTY FACTORS

Customer concentration

The Group's major customers are primarily active in the manufacturing industry and agreements with these custom-ers normally run over two or three years. Elanders' ten largest customers represent 55 (58) percent of net sales in 2020. Sales to the Group's largest customer represent 14 (16) percent of the total net sales. Sales to this customer is made to several of its divisions, on three continents and is based on multiple stand-alone agreements.

Operational risk

The risk that the Group will suffer a major stop in production is relatively small. There are now critical interdependencies between the units within the respective business area or between the business areas. There are only a few cases where there are no alternative suppliers of critical input goods.

Risks in operating expenses

Elanders' main operating costs are cost for goods for resale and other production material MSEK 2,737 (2,893), personnel costs MSEK 2,600 (2,888) and freight costs MSEK 2,437 (2,114). These categories represent 74 (72) percent of total operating costs in 2020.

Contracts and disputes

In business daily operations can give rise to disputes.

WHAT ELANDERS DOES

Customer concentration

Elanders' strategy is not only to be a supplier to our larger cus-tomers but to be a strategic partner which builds the basis for long-term business relations. Elanders has worked together with several of the Group's largest customers for many years.

Operational risk

Elanders work to identify and prevent risks that can lead to disturbances in production. The work involves regular controls of the production sites where identified improvement areas are the basis for action plans. The Group also has business interrup-tion insurance that covers the loss of margins for up to twelve months.

Risks in operating expenses

The Group does not see any direct risk that any of these costs will rise in the near future to such a degree that it would have a material effect on group results. Elanders has also the possibil-ity within some agreements to pass on increased costs to the customers.

Contracts and disputes

Elanders is not aware of any dispute that may have any sig-nificant effect on the Group's financial position. The Group's insurance program contains global liability insurance that covers general liability, product liability, crime fidelity, business interruption and limited protection against environmental dam-age. The Group also has liability insurance for members of the Board and officers.

FAÖURDVITAELDTNAINNGUSABLE RÄETPTOERLTS-E BOARD OF DIRECTORS' REPORT

Financial risk

The greatest financial risks for Elanders are currency risk, interest risk and financing/ liquidity risk.

RISKS AND UNCERTAINTY FACTORS

Currency risk

The Group runs into currency risk through transactions in currencies other than the companies' local currency (transaction exposure) or when converting net result and net assets from foreign subsidiaries (translation exposure).

Interest risk

Exposure in the form of changes in the interest rate stems mainly from group interest-bearing liabilities with floating interest. Outstanding liabilities are primarily in EUR and USD.

Financing/liquidity risk

Elanders is dependent on obtaining financing from credit institutions. The Group's financing needs comprises current operations and preparedness for possible future investments. The availability of financing depends on factors such as the general availability of capital and Elanders' credit rating.

Credit risk

The Group is exposed to losses through the risk of a counter-party not meeting their obligations. Credit risk can be divided into financial credit risk and commercial credit risk where the financial risk primarily concerns investing surplus liquidity and trading exchange derivative instruments and the commercial risk concerns accounts receivable. Elanders' commercial credit risk is spread out over a large number of customers and at the same time a few customers represent a large part of the Group's accounts receivable.

WHAT ELANDERS DOES

Currency risk

Receivables and liabilities as well as in some cases purchase and sales orders are partly hedged by using forward exchange con-tracts. Exposure of net assets in foreign subsidiaries is mainly connected to EUR and USD and hedging has been made in part through loans in EUR and USD. Apart from this hedging no other hedging has been made to counter the translation risk.

Interest risk

Elanders strives to achieve a balance between cost-effective financing and the risk exposure of a negative influence in the result if interest levels suddenly changed significantly. In light of the low interest rates expected by the market, no hedging has been made regarding interest rates. Elanders is following deve-lopments closely and may enter into hedging arrangements.

Financing/liquidity risk

The Group currently has a three-year credit agreement with two Swedish banks regarding operational financing that expires in January 2022.

Credit risk

The financial credit risk is limited and controlled by the fact that financial transactions may only be carried out with finan-cial institutions that are approved of by Group Finance. The commercial credit risk is primarily handled by each subsidiary through external checks on credit ratings, regular communica-tion with customers, monitoring their ability to pay and follow-ing up their financial reports.

The external factors that have and may have the greatest impact on Elanders operations are the ongoing pandemic, the global economy and the future for the Group's services and products. Since these factors are outside of group control we continuously work to adjust operations to meet the new conditions.

RISKS AND UNCERTAINTY FACTORS

COVID-19 pandemic

The COVID-19 pandemic has resulted in many deaths and infections. It has also entailed widespread disturbances in many countries, among them many of Elanders' most important markets. The risk that the pandemic can continue to impact financial activities is high and the uncertainty around this is great. There is therefore a substantial risk that the Group's business will be negatively affected in the coming quarters since demand for the Group's services and products can contract. No one knows how long the pandemic will continue or how it will develop. Nor is it possible to predict how long the crisis mea-sures and infection control restrictions implemented in different countries will continue or what further steps might be taken.

Business cycle sensitivity

The most tangible business cycle sensitivity is in group opera-tions that supply our customers in the manufacturing industry, particularly in automotive and consumer electronics. Sales to customers in food stuffs, cosmetics, pharmaceuticals and the public sector as well as to consumers are less affected by the general economic situation.

The future of the services/products

Increased outsourcing generates a demand for effective supply chain solutions. The automotive industry and global compa-nies in consumer electronics have long outsourced a large part of their operations in order to focus on product development, production and marketing and other industries are following. Printed matter is going through a transition from traditional demand for large editions in offset print to shorter series in digital print and from printed to digital media.

WHAT ELANDERS DOES

COVID-19 pandemic

Elanders' first priority is to protect our employees and their surroundings as much as possible against the spread of the infection. Measures have been taken to protect our employees and the guidelines and recommendations of the respective authorities are followed. In order to soften any effects from lower demand from customers we are keeping in close touch and working together with our customers and other partners. To a certain extent Elanders can adapt operations to changes in demand through furloughs, fewer temps and by making adjust-ments in costs.

Business cycle sensitivity

We work consciously to reduce the influence of business cycles by increasing sales to customers in less sensitive trades and customer groups as well as by increasing the geographic spread of sales. In most cases the expansions in supply chain do not involve significant investments in fixed assets and lease agree-ments are signed to match the customer contracts. A large part of the running costs in new projects are variable and can be adjusted in case of volumes changes.

The future of the services/products

Elanders' position as a supplier of global solutions in supply chain management and print & packaging balances the chal-lenges that occur in certain sections of the Group's markets, both geographically as well as for some Group services and products.

CORPORATE GOVERNANCE REPORT

This Corporate Governance Report, a part of the Board of Directors'

Report in the Annual Report, describes Elanders' corporate governance, which comprise the management and the administration of the company operations as well as internal control over financial reporting.

The role of corporate governance in Elanders is to create a good foundation for active and responsible ownership, a suitable distri-bution of responsibility between the different company bodies as well as good communication with all of the company's interested parties.

ELANDERS' CORPORATE GOVERNANCE

SWEDISH CODE OF CORPORATE GOVERNANCE

Elanders follows the Swedish Code of Corporate Governance ("the Code"). The Code is based on the principle "follow or explain", mean-ing that a company following the Code can deviate from certain rules, but then needs to explain why. The following deviations from the Code at Elanders are:

• The Chairman of the Board is the Chairman of the nomination committee.

This deviation is further explained in the section on the nomination committee. More information about the Code can be found atwww.corporategovernanceboard.se.

CORPORATE GOVERNANCE IN ELANDERS - A BRIEF OVERVIEW

Corporate governance in Elanders is based on legal requirements (primarily the Companies Act), accounting regulations, the articles of association, NASDAQ OMX Stockholm's issuer rules, internal regula-tions, policies, and the Code.

The Elanders Group's corporate governance, management and control are shared by the shareholders at the Annual General Meeting, the Board of Directors, and the Chief Executive Officer in accordance with the Companies Act, the articles of association as well as the Group Manage-ment. Shareholders appoint the company's nomination committee, Board and external auditors at the Annual General Meeting.

SHAREHOLDERS

On 31 December 2020, there were 3,684 (3,061) shareholders. The foreign ownership in Elanders was 11 (7) percent of shares and 8 (5) percent of votes.

ANNUAL GENERAL MEETING

Shareholders execute their influence at the Annual General Meeting, the company's highest decision-making body. All shareholders in the share register that have declared their intention to participate in the Annual General Meeting within the stated time limit have the right to participate in the Meeting. Shareholders that cannot participate in person can elect a representative. At the Annual General Meeting a class-A share repre-sents ten votes and a class-B share represents one vote. Class-A shares and class-B shares have the same right to a share of company assets and profit. At the Annual General Meeting each person with voting rights is

entitled to vote for their entire holding or represented holding without restrictions. Elanders' class-A shares are included in pre-emption as stated in the articles of association.

The Annual General Meeting decides on changes in the articles of association, chooses a Chairman, the Board and external auditors, adopts the annual accounts, decides on dividends if any and any other disposition of the result as well as discharges the Board from liability. Furthermore, the Annual General Meeting decides on guidelines for salaries and other remuneration for leading senior officers, any new share issue, and the manner in which the nomination committee is to be elected. Any shareholder with a matter they would like the Annual General Meeting to deal with should present their proposal to the Chair-man of the Board or present any nomination proposal to the nomination committee. Minutes from Elanders' Annual General Meetings can be downloaded fromwww.elanders.comunder Corporate Governance.

ANNUAL GENERAL MEETING 2021

The next Annual General Meeting for shareholders in Elanders will be held on Wednesday 28 April, 2021. The Annual General Meeting will be held digitally. More information will be published in connection with the notice convening of the Annual General Meeting and will also be published onwww.elanders.com.

NOMINATION COMMITTEE

The nomination committee prepares proposals for the Annual General Meeting concerning the election of, and remuneration to, the Chair-man of the Board, Board members, committee members, and external auditors, the latter having been proposed by the audit committee. The nomination committee meets as needed and at least once a year. The nomination committee met twice last year and discussed the work of the Board, the independence of Board members, Board members' evaluation of the work of the Board, the work of the committees, the audit and the composition of the nomination committee. This year the committee has consisted of Carl Bennet, Chairman (Carl Bennet AB), Hans Hedström (Carnegie Funds), Fredrik Carlsson (Svolder) and Carl Gustafsson (Didner & Gerge Funds). No remuneration has been paid to the nomina-tion committee. The members' contact information is found on page 119 in the Annual Report and onwww.elanders.comunder Corporate Governance.

The Chairman of the Board is also the chairman of the nomination committee, which is a deviation from the Code. Elanders believes it is reasonable that the shareholder with the largest number of votes be the chairman of the nomination committee since he ought to have a decisive influence on the composition of the nomination committee, because he has a majority of the votes at the Annual General Meeting.

THE BOARD OF DIRECTORS AND ITS WORK IN 2020

The Board is elected by the Annual General Meeting and proposed by the nomination committee. The Board is ultimately responsible for the management of the company, monitoring the work of the Chief Execu-tive Officer, and continuously following developments in operations as well as the reliability of the company's internal control. The Board also decides on significant changes in the organization, investments and divestitures, adopts the budget, and approves the annual accounts. The Board is ultimately responsible for ensuring that the Group has adequate systems for internal control, that the accounts are prepared, and that they are reliable when published. The Group and its management have several methods to control the risks connected to operations. The Board supports Group Management by continually monitoring and identifying business risks in a structured manner as well as steering the work in the Group in how it handles the most significant risks. In conclusion this

The Annual General Meeting on 25 June 2020 decided:

ANNUAL GENERAL MEETING 2020

• to distribute no dividend for the ﬁnancial year 2019,
• to adopt the Annual Report for 2019,
• to grant according to a proposal in the summons the Board and committee remuneration for a total of SEK 4,322,000 to be divided within the Board,
• to discharge the members of the Board of Directors and the Chief Executive Oﬃcer from liability for 2019,
• to appoint the following Board Members:
- - Pam Fredman (re-elected)
- - Carl Bennet (re-elected)
- - Erik Gabrielson (re-elected)
- - Dan Frohm (re-elected)
- - Cecilia Lager (re-elected)
- - Linus Karlsson (re-elected)
- - Magnus Nilsson (CEO) (re-elected)
- - Anne Lenerius (re-elected)
- - Caroline Sundewall (re-elected)
- - Johan Stern (re-elected)
• to elect PricewaterhouseCoopers as company auditors until the Annual General Meeting 2021,
• to appoint Carl Bennet Chairman of the Board,
• to adopt regulations for the nomination committee work etc. as stated in the summons to the Annual General Meeting,
• to authorize the Chairman of the Board to summon the nomination committee before the Annual General Meeting 2021,
• to approve the Board's suggestion in the summons for remuneration t leading senior oﬃcers.

• to approve the amendments to the articles of association regarding the company's registered oﬃce and location for General Meeting,
constitutes the Board's responsibility for corporate governance.
Elanders Board members are evaluated and appointed based on the company's business, development phase and other relevant circumstances. The diversity of education, knowledge, and experience as well as age and gender represented in the Board is also taken into account. When considering the election and re-election of Board members these factors have been used to make the Board as diverse and efficient as possible.
In accordance with Elanders' articles of association the Board of Directors should consist of at least three and no more than ten members with a maximum of two deputies. During the year the Board consisted of ten members without deputies: Carl Bennet (Chairman), Johan Stern (Vice Chairman), Pam Fredman, Dan Frohm, Erik Gabrielson, Linus Karlsson, Cecilia Lager, Anne Lenerius, Magnus Nilsson, and Caroline Sundewall. In addition, employees were represented by Martin Schubach and Martin Afzelius with Johan Lidbrink as deputy. All the members of the Board elected by the Annual General Meeting have an independent relationship to the company except Magnus Nilsson. Pam Fredman, Linus Karlsson, Cecilia Lager, Anne Lenerius, and Caroline Sundewall are independent in relationship to the company's largest owner. Carl Bennet is dependent with regards to the shareholder Carl Bennet AB where he is Chairman of the Board and owner. Dan Frohm, Erik Gabrielson, and Johan Stern are also dependent in relation to Carl Bennet AB where Dan Frohm, Erik Gabrielson, and Johan Stern are members of the Board.
The Board has produced and adopted a work plan that regulates the

division of responsibility between the Board, its Chairman and the Chief Executive Officer. It also includes a general meeting plan and instructions on financial reports as well as the other matters that must be put before the Board. The work plan is revised once a year or as needed.

The Board has seven ordinary meetings per year; four of them in conjunction with the year-end report and quarterly reports, one meeting dedicated to strategic matters, one meeting to adopt the coming year's budget and one constitutional meeting following the Annual General Meeting. In addition, the Board is called to further meetings as needed. The Group's external auditors participate in the meeting that deals with the report for the first nine months of the year as well as the meeting regarding the year-end report to inform the Board in its entirety about the result of their audit.

The Board followed the meeting plan for the year. The Board also met on five occasions relating to matters and decisions in connection with the pandemic as well as decisions regarding business opportunities and financing.

At the constitutional meeting of the Board, the work plan and instruc-tions for the Chief Executive Officer are reviewed and the customary decisions concerning authorized signatories are taken. In addition, the work plans for the remuneration and audit committees are adopted and their members appointed. At the constitutional meeting of the Board after the Annual General Meeting 2020, Johan Stern was made Vice Chairman. The Board in its entirety was authorized to sign for the company as well as two of the following persons together: the Chair-man of the Board, the Chief Executive Officer, and the Chief Financial Officer. At the meeting concerning the year-end report, the Board met the auditors without the presence of the Chief Executive Officer or any other member from Group Management.

MEMBERS OF THE BOARD, REMUNERATION, ATTENDANCE, ETC.

Member

Members chosen by the AGM

Carl Bennet, Chairman

Johan Stern, Vice Chairman Pam Fredman

Dan Frohm Erik Gabrielson Linus Karlsson Cecilia Lager Anne Lenerius Magnus Nilsson, CEO Caroline Sundewall

Employee representatives Martin Afzelius

Martin Schubach Total

Board, attendance (number of meetings)

1) Shareholding as of December 31, 2020.

Remuneration

Committee, attendance (number of meetings)

12 (12)

2 (2)

12 (12)

2 (2)

12 (12)

2 (2) Not member

12 (12)

2 (2)

11 (12)

2 (2)

12 (12) 12 (12)

11 (12)

12 (12)

Not member Not member Not member

Not member

12 (12) 12 (12)Not member Not member

The Board travels as often as possible to visit and hold its meetings in one of the Group's subsidiaries. The Board members' remuneration and presence are presented in detail in the table below.

Further information about the Board and the members can be found on pages 116-117.

THE CHAIRMAN OF THE BOARD

The Chairman leads and organizes the Board and is responsible for making sure the Board meets its responsibilities and that the members receive the information necessary to ensure the work done by the Board is of high quality and performed according to legal stipulations and the contract with the stock exchange. The Chairman of the Board must also make sure that during the year an evaluation of the Board's work is car-ried out and that the nomination committee is informed of the results. The evaluation is carried out annually in the form of a questionnaire and encompasses the Board's composition, remuneration, materials, admin-istration, work methods, meeting content, reports from the committees, and education. In addition, the Chairman of the Board represents the company in ownership matters and communicates viewpoints from the owners to the Board. The Chairman of the Board is elected by the An-nual General Meeting. Carl Bennet has been the Chairman of the Board since 1997.

REMUNERATION COMMITTEE

The remuneration committee is composed of Board members with the highest competence in this field. It deals with matters concerning remuneration to the Chief Executive Officer and officers that report directly to him. Decisions concerning remuneration to other employees in management positions in the Group are made by each individual's closest superior in consultation with their closest superior, also known as

Audit

Committee, attendance (number of

Total atten-meetings) dance, %

Not member

3 (3) Not member 3 (3) Not member Not member 3 (3)

3 (3) Not member

3 (3)

Not member Not member

Remuneration

Board + Committee work, SEK '000s

100

730 + 76

365 + 148

100

+ 38

100

365 + 38

100

365 + 74

100

365 + 38

365 + 74

100

365 + 74

100

Employee

100

365 + 74

100 100 99

Employee Employee 4,322

Share-holding 1)

1,814,813 A 15,903,596 B

110,000 B

1,609 B

23,676 B - -

37,521 B

6,892 B

82,577 B

8,000 B

- 267 B

Independent

No, owner

Yes No, owner No, owner

Yes

Yes No, company

YesNo, company No, company

the "grandfather principle". During the year, the remuneration commit-tee held two meetings during which they adopted their work plan and prepared a proposal for remuneration. During the year the remuneration committee consisted of Carl Bennet, Chairman, Pam Fredman, Erik Gabrielson, Linus Karlsson, and Johan Stern. The guidelines for remu-neration to senior officers adopted at the Annual General Meeting 2020 can be found in note 5 in the consolidated financial statements and on the company's website,www.elanders.comunder Corporate Gover-nance. The guidelines for remuneration to senior officers for 2020 and the Board of Director's proposal for guidelines for 2021 can be found on pages 39-40 in the Annual Report 2020. The company has not issued, and will not issue, any share-based payment obligation, or any similar incitement programs.

AUDIT COMMITTEE

The audit committee is appointed from within the Board based on members' experience of, and expertise in financial reporting, accounting, and internal control. The committee follows a work plan adopted by the Board. Its primary task is monitoring internal control, procedures for financial reporting, compliance of related laws and regulations as well as the external audit in the Group. The committee also evaluates the external auditors' qualifications and independence. The audit committee reports their observations on a regular basis to the Board and provides, as needed, external auditor candidates to the nomination committee.

The committee meets at least three times a year and as needed. The external auditors normally participate in committee meetings. The com-mittee met three times in 2020. The auditors reported on the audit of the nine-month report, and the year-end report, the company's situation with the Code of Corporate Governance and internal control were discussed. The members of the audit committee were Johan Stern, Chairman, Dan Frohm, Cecilia Lager, Anne Lenerius, and Caroline Sundewall.

CHIEF EXECUTIVE OFFICER

The Chief Executive Officer is the President of the Group, a member of the Board, and leads the Group's operations. The Chief Executive Officer's work is steered by the Companies Act, other laws and regula-tions, current laws for listed companies including the Code, the articles of association, and the framework established by the Board in, among other things, the CEO instruction. The Chief Executive Officer is autho-rized to sign for the company in daily management in accordance with the Companies Act as well as sign for all subsidiaries. The Chief Executive Officer is responsible for providing the Board with continual reports on group results and financial position as well as the information the Board needs to make qualified decisions. The Chief Executive Officer also keeps the Chairman of the Board apprised of developments in operations. All the managing directors in the Group's subsidiaries receive written instructions. These instructions contain guidelines the managing director must observe in the running of operations.

GROUP MANAGEMENT

The President and Chief Executive Officer lead the work performed by Group Management and make decisions in consultation with members of Group Management. Group Management is responsible for day-to-day financial and commercial management and follow-up in the Group. It also strives to continually achieve synergies, identify acquisi-tions and structural opportunities as well as to adapt group operations to market demands and short and long-term developments. Group Management makes sure that the competence and capacity of the Group is coordinated and adjusted to be as useful and profitable as possible in the short and long term. Group Management meets on a quarterly basis, often in conjunction with a visit to a unit within the Group. Elanders' Group Management consists since September 2020 of:

• Magnus Nilsson, President and CEO
• Andréas Wikner, CFO
• Bernd Schwenger, responsible for Supply Chain Solutions (LGI)

• Kok Khoon Lim, responsible for Supply Chain Solutions (Mentor Media)
• Sven Burkhard, responsible for Print & Packaging Solutions
• Kevin Rogers, responsible for Global Sales

Further information about Group Management and the members can be found on pages 118-119.

THE BOARD'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The purpose of internal control over financial reporting is to ensure that it is reliable and that the financial reports follow generally accepted accounting principles and otherwise follow applicable laws and regulations concerning listed companies. According to the Swedish Companies Act and the Code of Corporate Governance the Board is ultimately responsible for an effective, functioning internal control in the Group. Internal control is based on the framework for internal control published by COSO (Com-mittee of Sponsoring Organizations of the Treadway

Commission) and which comprises the control environment, risk assess-ment, control activities, information, communication as well as follow-up. The Chief Executive Officer is responsible for an organization and processes that ensure the quality of financial reports to the Board and the market.

Control environment

The control environment at Elanders is characterized by the proximity between Group Management and the operating units. The majority of the members in Group Management, except the Chief Executive Officer and the Chief Financial Officer are also MDs in one or more of the larger operative units in the Group. The framework for internal control

Number of shareholders

3,684

Members of the Board, attendance 2020

99%

over financial reporting in Elanders consists of routines and distribu-tion of responsibility that are clearly communicated in internal policies and different kinds of manuals. The Board has adopted a work plan that regulates the Board's responsibility and the manner in which work is done in committees. The Board also has an audit committee that is responsible for ensuring that established principles in financial reporting and internal control are complied with and developed. It also maintains regular contact with the external auditors. In order to maintain an effective control environment and good internal control the Board has delegated the practical responsibility to the Chief Executive Officer and established a CEO instruction which defines the division of responsibi-lity between the Board and the Chief Executive Officer. Elanders has an internal control function which reports to the CEO and the CFO. The in-ternal control function performs audits of the entities within the Group. The procedures and processes in the entities are evaluated and testing performed regarding the entities' internal controls.

Risk assessment

It is the responsibility of the Board to identify and handle any major financial risks and the risk of mistakes in financial reporting. This includes identifying areas in financial reporting where the risk of making a crucial mistake is higher as well as developing control systems to prevent and discover these faults. This is primarily done by identifying situations in operations and events in the outside world that could have an impact on financial reporting.

Control procedures

The aim of the control procedures is to ensure that financial reporting is correct and complete and that it is based on the Group's requirements for internal control over financial reporting. Control procedures consist of general and detailed controls and can be both preventive and detec-tive. For instance, the Board continuously follows developments in the operations through monthly reports containing detailed financial infor-mation as well as the Chief Executive Officer's comments on operations and result and financial position. Representatives from Group Financeor Group Internal Control regularly visit the entities within the Group and evaluate internal control and financial reporting. The MD in each subsidiary is responsible for making sure group governance regulations are implemented and followed and that any deviations are reported. Companies in the Elanders Group also make an annual self-assessment of how internal control functions in relation to the Group's goals.

Information and communication

In order to make Elanders employees aware of the Group's policies and manuals, the information is communicated yearly, and when changes are made, to all affected employees within the Group. To ensure that infor-mation communicated externally is correct and complete, the Board has adopted an Information Policy that dictates what should be communi-cated, by whom and how the information should be released.

Follow-up

The Board follow-up of the internal control over financial reporting is first and foremost handled by the audit committee. The observations and potential areas of improvement in internal control that have been identified in the external audit are processed by the audit committee together with the external auditors and the Chief Financial Officer. The results from the audits performed by Group Internal Control and the an-nual self-assessment of internal control in the entities within the Group is reported to the audit committee and the external auditors.

EXTERNAL AUDIT

The Annual General Meeting 2020 chose the authorized public account-ing company PricewaterhouseCoopers AB until the next Annual General Meeting. Head auditor is the authorized public accountant Magnus Willfors with the authorized public accountant Tomas Hilmarsson as co-auditor. Once a year, the auditors meet the Board in its entirety without the Chief Executive Officer or any other member of Group Management present, normally at the meeting that deals with the year-end report. The auditors also participate in the Board meeting dealing with the report for the first nine months of the year.

SUSTAINABILITY REPORT

Elanders' sustainability work is based on the UN global goals and focus areas Environment and climate, Employees, Social conditions and human rights and Ethics and anticorruption.

Sustainability is an integrated part of Elanders' business and strategy and Elanders considers it a responsibility and a business opportunity that provides great opportunities to create value and improve profitability. In 2020 our work was particularly focused on the health and safety of our employees due to the ongoing pandemic, and central guidelines were issued to reduce the spread of COVID-19. At the same time, Elanders invested in Life Cycle Management, including the acquisition of Azalea Global IT AB and collaboration with Universeum.

SUSTAINABILITY AND OPPORTUNITIES

Since Elanders' listing on the stock market in 1989, the Group has been slowly transforming from a purely graphic company with operations primarily in Sweden into a global service supplier with operations on four continents. Elanders has always strived to follow current trends like digitalization and globalization, current issues like climate change and shrinking natural resources as well as structural changes in the graphic industry. Along the way, acquisitions have contributed to the company's ability to expand into new markets, customer segments and services.

Elanders believes the success of a company should be measured in more than just numbers and are truly engaged in creating a good balance between building up a successful company and taking responsibility for social, ethical and environmental issues. Elanders is convinced that the best way to reach targeted goals is by having clearly formulated social, ethical and environmental principles, and then making sure they are being fol-lowed. Elanders sees opportunities in working actively with sustainability to create value for the company and stakeholders and at the same time improve profitability through, for instance, greater resource efficiency and reducing costs like those for raw materials, energy and transportation.

The demands regarding CSR made on major, multi-national companies are just as high for their partners. Elanders' sustainability work is largely governed by the very high demands made by customers who in their own environmental and quality documentation stipulate requirements that suppliers must meet as well.

Every employee at Elanders is responsible for contri-buting to positive effects on the environment, improving the work environment, increasing equality, and counter-acting corruption. Elanders works according to guidelines concerning CSR and is intent on contributing to develop-ing society in the countries where the Group operates.

INTEGRATED SUSTAINABILITY

Elanders' sustainability work covers the Group's entire business model and permeates the company at every level. Sustainability matters are an integrated part of our operations and decision-making with the intent that the Group's impact on the environment is in a positive direc-tion, contribute to positive social development and be a responsible and respectful employer.

ABOUT THE SUSTAINABILITY REPORT

This Sustainability Report refers to the financial year 2020 and Elanders as the Group appeared at the end of 2020. No acquisitions have occurred during the year that affect the scope of the Sustainability Report.

The report covers the sustainability areas considered material to Elanders and its stakeholders within financial, environmental, and social aspects. The objective of the Sustainability Report is to present a fair image of the sus-tainability work being done in the Group. The Sustain-ability Report is published once a year and is integrated into the Annual Report.

Elanders believes the success of a company should be measured in more than just numbers and we are truly engaged in creating a good balance between building up a successful company and taking responsibility for social, ethical and environmental issues.

Stakeholder dialogue and

MATERIALITY ANALYSIS

STAKEHOLDER DIALOGUE

Elanders maintains a continuous dialogue with stakeholders in order to ensure that prioritizations in the business are relevant over time. The five overriding stakeholder groups shown below have been identi-fied as valuable for continuous development and improving Elanders' sustainability work. The continuous dialogue is also a basis for the Sustainability Report.

ENVIRONMENT AND CLIMATE

MATERIALITY ANALYSIS

Elanders has performed a materiality analysis based on financial, environmental, social, and ethical aspects. The analysis is based on continuous dialogues with stakeholders as well as information from the Board, Group Management, and other leading officers. The materiality analysis resulted in four material areas that Elanders' sustainability work is mainly focused on. Underlying aspects and key ratios linked to these four areas were also identified for Elanders' sustainability work. The main material areas will be reviewed continuously to ensure that Elanders is working with issues relevant to its business and stakeholders, and which contribute to development over time.

Historically Elanders' operations have primarily had a direct impact on the environment through noise and solvent emissions into the air, but also lesser emissions into water. As of the acquisition of LGI in 2016 Elanders now has a ﬂeet of around 280 trucks with trailers. This ﬂeet of trucks has a direct impact on the environment through transportation on behalf of customers but how much these trucks are used is largely out of Elanders' control since customers' volumes decide how much the ﬂeet of trucks is used. Transportation adds to noise levels, air pollution, acidiﬁcation, over-fertilization and higher greenhouse eﬀects. Another aspect of Elanders' climate impact is energy consump-tion. Energy in facilities is mainly used in manufacturing, heating, lighting and chilling.

WHAT ELANDERS DOES

Elanders' work to reduce our negative impact on the environment and climate and the Group places great importance on strictly following legal requirements concerning the environment.

Elanders also strives for driving as environmentally conscious as possible, ensuring transportation solutions that are as cost and energy eﬃcient as possible, and to optimize custom-ers transportation. Together with a customer, Elanders also evaluate electric trucks as a potential transport solution.

The following areas are considered material for Elanders' environmental work:

• Materials
• Energy consumption
• Emissions

The following key ratios have been identiﬁed in the area:

• Percent of renewable electricity
• Carbon dioxide emissions from transportation

SOCIAL CONDITIONS AND HUMAN RIGHTSETHICS AND ANTI-CORRUPTION

The Elanders Group has 6,058 employees in some 20 countries. To actively work with human resources is essential since employees that are healthy and motivated contributes to Group development and success on every level.

WHAT ELANDERS DOES

Because Elanders is a global business with operations on several continents, it is imperative to work with social conditions and human rights. Although ensuring fair working conditions on every level is a given, constant focus and follow-up is a necessity. As a globally active and inﬂuential group, Elanders intends to be one of the best regarding CSR and engagement in every area the company is involved in.

An ethical and transparent approach is fundamental to Elanders reducing the risk for conﬂicts of interest, and having a proﬁtable and sustainable business with a strong brand.

WHAT ELANDERS DOES

Work concerning employees is governed by the Group's Code of Conduct. Employees receive training continuously to ensure awareness of the Group's common values. Central monitoring takes place every other year and continually by each company to ensure that the Code of Conduct and Anti-Corruption Policy have been communicated to all employees. Each company is responsible for creating their own procedures and guidelines to ensure conformance with the code.

WHAT ELANDERS DOES

Elanders follows all applicable laws and regulations, locally and internationally. Elanders has an Anti-Corruption Policy that comprises all employees, the Board and other persons that act in Elanders' name.

Elanders' work regarding social condi-tions and human rights is based on the Group's Code of Conduct. Elanders intends to be one of the best regard-ing CSR and engagement and all our companies are encouraged to support and get involved in both global as well as regional/local projects where they believe their contributions can make a diﬀerence.

The following areas are considered material for Elanders' work concerning ethics and anti-corruption:

• Policies and education

The following areas are considered material for Elanders' work concern-ing employees:

• Common values
The following areas are considered material for Elanders' work concerning social conditions and human rights:
Elanders has zero-tolerance for any type of corruption or bribe, which means the number of incidents concerning corruption is an important key ratio to monitor and the target number is 0.
• Health and safety
- • CSR
• Equality, equal opportunity and diversity

• Equal rights

The following key ratios have been identiﬁed in the area:

• Personnel turnover
• Absence due to illness
• Gender distribution

ELANDERS' CODE OF CONDUCT

Last year Elanders' updated the Code of Conduct and Anti-Corruption Policy. Elanders' Code of Conduct stipulates that both Elanders and our employees' actions and behavior must be characterized by honesty, integrity, personal responsibility, sincerity, loyalty and respect for others and the environment. The Code of Conduct comprises all employees, the Board and other persons that act on Elanders' behalf. Elanders' Code of Conduct also comprises suppliers and business partners to ensure that the code has an impact throughout the entire value chain.

At the end of 2019, the Code of Conduct and Anti-Corruption Policy was communicated to every company in the Group. Employees have received training during, the year and this will continue in 2021 when classroom training, which was postponed due to COVID-19, will become available. Central monitoring takes place every other year and continuously by each company to ensure that the Code of Conduct and Anti-Corruption Policy have been communicated to all employees.

ENVIRONMENT AND CLIMATE

Elanders works systematically to reduce its environmental impact and develop products, services, and processes to achieve optimal quality. The overriding environmental goal is to reduce the Group's environmental impact in every company without lowering quality. Almost all companies are certified according to established quality and environmental stan-dards like ISO 9001 and ISO 14001. The Group places great importance on strictly following legal requirements and compliance with other requirements in the regular environmental reviews performed according to ISO 14001 and in the investigations involved in acquisitions.

During the year we continued to work on reducing our environmental impact, everything from measures to reduce energy consumption and greenhouse gas emissions to generating less hazardous waste. Each company in the Group is responsible for its own environmental and quality work to meet local regulations and the quality and environ-mental reviews initiated by Elanders' customers. A previous example that demonstrates good results from this work, and which is still being evaluated, comes from LGI. Together with our customer Porsche, Elanders invested in a completely new electrical truck that daily transports components from our warehouse in Freiberg, Germany to Porsche's production plant. Changing to an electrical truck reduces emissions by more than 30 tons annually and is a milestone on the road to more environmentally friendly logistics at Elanders.

Material

The connection between quality-assured production and manufacturing with a lower environmental impact is becoming evident to more and more companies. Environmental demands from customers and authorities can vary greatly from one geographic market Elanders operates into another, but the general trend is clear. Offering sustainable production on every level is becoming a prerequisite for being able to compete, particularly for global business.

Paper is a comprehensive part of the material used in production in the business area Print & Packaging Solutions and the Group works on monitoring, analyzing, reducing, and actively dealing with paper waste. When possible Elanders produces print-on-demand, which reduces the risk of unused editions that will be scrapped at a later date. Elanders has a number of ecolabels in different operations such as the Swan, FSC® Forest Stewardship Council, Carbon Footprint and Climate Neutral Company.

Energy consumption

Reducing energy consumption and improved energy efficiency is an important focus area at Elanders and part of our continuous improve-ment work to save energy in our operations. Elanders' goal is to reduce energy consumption and use as much renewable electricity as possible on the markets where it is available. Energy consumption and energy costs are regularly monitored to ensure the goal is met and that measures are always being taken to save energy.

Elanders primarily uses electricity and natural gas. When making new investments, Elanders selects the best possible technique from an energy efficiency perspective. For instance, a large number of forklifts in the Group's warehouses and printing plants are electric.

All operations

Percentage of renewable electricity

2020

2019

2018

All operations

46.2

40.3

41.1

The percentage of electricity consumed by the Group that comes from renewable sources have increased compared to last year. During the year the work to save energy has continued, among other things, through the installation of LED lighting in production space and oﬃces, less energy used in relation to machine hours as well as the implementation of energy eﬃcient electronic equipment and systems for monitoring and controlling energy consumption.

Elanders' Code of Conduct and anti-corruption policy com-prises all our employees and contains guidelines and regula-tions for the way Elanders' employees should relate to custom-ers, suppliers, and society in general. All business in Elanders is conducted with social responsibility and ethics. Taking social responsibility includes promoting human rights and fair work-ing conditions as well as counteracting corruption. It is the responsibility of each company's management that these rules are followed by formulating and communicating guidelines and policies adapted to their specific company.

Elanders' Code of Conduct also comprises suppliers and business partners to ensure the Code of Conduct permeates every part of the value chain.

The Code of Conduct is based on international principles such as the UN Universal Declaration of Human Rights, the UN Global Compact, ILO Declaration on Fundamental Principles and Rights in Working Life and the OECD guidelines for multinational companies.

Emissions

Transportation is currently an indisputable necessity to our current financial and social development. At the same time transportation has a negative effect on people's health and the environment. Elanders' emissions into the air primarily consist of carbon dioxide and are largely generated by transportation.

Progress is continually being made in different areas to reduce the negative effects of transportation in Elanders, particularly in business area Supply Chain Solutions with its fleet of around 280 trucks. Utiliza-tion of this fleet is to a large extent steered by customer volumes and the kind of transportation a customer need. However, we strive for driving as environmentally friendly as possible, transportation solutions that are as cost and energy-efficient as possible, and to optimize our customers' transportation. As a result of continuously upgrading the fleet, Elanders has drastically lowered carbon dioxide emissions. In 2020, 99 percent (99 percent) of our trucks complied with the Euro 6 norm of a maximum of 80 mg/km NOx emissions. A consequence of this high standard has been a dramatic reduction in fuel consumption in the past few years. Elanders also works continuously to streamline transportation, thereby reducing environmental impact. Efficient motors, well-developed GPS systems, driver training, and awarding the most fuel-efficient drivers are all activities that contribute to reducing fuel consumption.

Elanders uses different types of solvent in producing printed matter - mostly vegetable solvents, aliphatic solvents, and isopropanol. Elanders' goal is to eliminate the use of aromatic solvents since they have a severe negative effect on both health and the environment. The kind of solvents in use is routinely monitored.

According to the Environmental Code in Sweden and correspond-ing legislation in other countries, several printing plants are required to have permits or submit reports depending on their total consumption of solvents. Local companies are responsible for making sure they comply with the laws, regulations, and standards valid for their operations and that the necessary measures are taken to meet all requirements.

Using solvents also causes emissions of VOC (Volatile Organic Compounds). Elanders continually looks for ways to reduce the environmental impact of these emissions without affecting product quality negatively, for example through more efficient methods that reduce consumption or by switching to less volatile alternatives. An example during 2021, is the investment in a new digital press with new technology that means lower emissions of VOC and ozone as well as significantly lower energy consumption.

Elanders' long-term goal is to reduce direct and indirect emissions of greenhouse gases. The Group's greatest impact comes from carbon dioxide emissions from our transportation fleet.

Average carbon dioxide emissions per 100 km, tons

Average fuel consumption per 100 km, liters

Emissions

2020

2019

2018

Average carbon dioxide emissions per 100 km, tons

0.073

0.075

0.073

Average fuel consumption per 100 km, liters

32.70

32.55

33.91

Average carbon dioxide emissions per 100 km, tons is a new key ratio compared to last year when average carbon dioxide emissions per truck, tons was presented. This key ratio is believed to provide a better view of average carbon dioxide emissions from operations over time since it is not linked to the number of trucks in use.

Fuel consumption per 100 km has increased slightly compared to 2019 due to factors such as that new trucks were not been run in yet, more traﬃc with more stops and fewer trucks were replaced than planned due to COVID-19. Measures to reduce fuel consumption were taken in 2019 such as gradual replacement of batteries, individual follow-up and driver training as well as implementing bonus programs connected to fuel consumption. This work is continuous.

LIFE CYCLE MANAGEMENT

In Life Cycle Management Elanders has taken the initiative to create more climate friendly services. There is a huge sustainability factor in extending the life of, and reusing, equipment before it is finally recycled since most of a product's environmental impact comes from producing it. In the service area Renewed Tech for IT equipment Elanders annually handles around 70,000 obsolete units like computers, monitors, servers and other computer accessories. IT equipment is picked up from our cus-tomers and each unit is inspected, refurbished and all data, for example, company information and personal data are wiped. Then the products are sold on the second-hand market. Equipment and parts that cannot be reused are properly recycled. Refurbishing equipment can double the product's lifetime, generating considerable carbon dioxide savings.

By using Elanders' services customers can take a global responsibility for their IT units and reduce their climate impact and thereby contribute to a more circular economy. At the same time, they receive a correct valuation of their equipment which can often be very valuable on the second-hand market today. Customers are also offered full transparency throughout the entire process, which is greatly appreciated.

During the year Elanders acquired the Swedish company Azalea Global IT AB which is specialized in recovering IT equipment. They manage the entire chain from purchasing used IT equipment and refurbishing and resetting it, to then selling it to a network of custom-ers. The acquisition of Azalea is a part of Elanders' investments within sustainable services that contribute to a circular economy.

As a further step in Elanders' sustainability work and to actively contri-bute to a more circular economy, a partnership with Universeum was initiated at the end of 2020. Universeum is Sweden's national science center and a powerful arena for academic and popular education in science, technology, and sustainable development. The partnership is focused on reusing electronics, thereby increasing the lifetime of these products, which leads to considerable environmental gains.

found in the Group's Code of Conduct, where guidelines concerning the identification, management, and prevention of potential safety risks and emergencies are described in order to promote a good working environ-ment and reduce the risk of injuries and illness. It is the responsibility of each company's management that these rules are followed by formulat-ing and communicating guidelines and policies adapted to their specific work environment.

EMPLOYEES

Through a number of acquisitions around the world, the number of employees has more than quadrupled in recent years. The majority of the increase in employees came through the acquisitions of Mentor Media in 2014 and LGI in 2016. Elanders' companies are to a large degree autonomous and follow the valid laws and regulations in their respective countries and regions. Nonetheless, it is important to have a set of common values within the Group in order to achieve a stable value foun-dation. These values are communicated to the employees through our Code of Conduct, which was updated in 2019. At the end of the year, 6,058 people were employed in some 20 countries on four continents.

An important indication of how the work environment functions is absence due to illness and Elanders continuously strives to create conditions for as little absence due to illness as possible. In addition to following the guidelines in the Code of Conduct, Elanders continuously identifies improvement measures for personnel in the work environment, such as automation in production and ergonomic workplaces. Most injuries occur in production and the most common workplace injuries at Elanders are minor cuts or wounds from falling.

All employees

The rate of personnel turnover has decreased compared to the previous year due to fewer temporary and seasonal staﬀ. However, temporary and seasonal staﬀ continue to contribute to a relatively high rate of turnover. The ﬁgures for personnel turnover in 2018 also include the staﬃng operations in our previous subsidiary LOGworks GmbH, which was divested at the end of 2018 and contributed to higher personnel turnover.

There are many good examples in Elanders of how the work environ-ment has been prioritized. Midland Information Resources in the USA, which is part of Print & Packaging Solutions, received an award 19 times in the "Best Workplace in the Americas (BWA)" awards competi-tion which was held until 2019. The jury judges companies based on criteria such as the work environment, health programs, safety instruc-tions, and how well employees can create a good balance between work and leisure. In Germany, where most of Elanders' employees are, the majority of employees have a common company employee policy and all employees are offered risk insurance, Benefit Card with a tax subsidy and annual health checks, among other things.

Health and safety

Employees are Elanders' greatest asset and health and safety have the highest priority. A healthy and secure work environment leads to healthy employees that work safely, are more productive, and contribute to society at large. Elanders has a zero vision concerning injuries at the workplace and we work continuously on reducing risks that can lead to serious injuries. Elanders' policy concerning the work environment is

In 2020, our work was particularly focused on the health and safety of our employees due to the ongoing pandemic, and central guidelines were issued to reduce the spread of COVID-19. Preventative measures include working from home when possible, measuring temperatures before allowing entrance to offices and plants for both employees and guests, minimizing trips and holding digitalized meetings. In 2020, Elanders, via the subsidiary Mentor Media, has donated one million surgical masks, and 100,000 face shields and isolation gowns to different hospitals in Singapore. It was part of a joint initiative, SG United Initiative, where Mentor Medias' role was to provide personal protection equipment to the hospitals and other companies provided the logistics around it.

LOWER CARBON DIOXIDE EMISSIONS

NUMBER OF EMPLOYEES PER REGION

Lorem ipsum

As a result of continuously upgrading the ﬂeet, Elanders has drastically lowered carbon dioxide emissions during the last years.

● North- and South America

Americas

● Europe

● Asia

EUAsien

Personnel turnover %

2020

2019

2018

All employees

18.5

24.1

39.8

All employees Short-term absence Long-term absence

Absence due to illness %	2020	2019 2018
All employees	5.5	6.2 5.6
Short-term absence	4.0	5.2 4.9
Long-term absence	1.5	1.0 0.7

Absence due to illness has dropped compared to last year, primarily due to COVID-19 since short-term work meant decreased number of absence days due to lower presence at the workplaces. The increase in long-term absence is primarily related to COVID-19.

Equality, equal opportunity, and diversity

Because of the development Elanders has gone through in the past few years, partly through major acquisitions, the Group's composition of employees has changed and it is now significantly more spread out geographically. This has not, however, changed Elanders' basic premise that long-lasting profitability can only be reached if there is equality, equal opportunity and diversity in the workplace. Among other things, this means that all employees should have the same opportunities to advance their careers. During the end of the year, the work in this area continued as well as the development of a formal Equal Opportunity Plan for the Group that will be regularly evaluated by Elanders' Board and Group Management. In addition, each company works continuously with matters concerning equality, equal opportunity, and diversity in their respective organizations.

All employees Middle management Group Management Board of Directors

Gender division, %	2020 Men/ women	2019 2018 Men/ women Men/ women
All employees	65/35	66/34 66/34
Middle management	74/26	74/26 71/29
Group Management	100/0	100/0 100/0
Board of Directors	60/40	60/40 60/40

SOCIAL CONDITIONS AND HUMAN RIGHTS

CSR

66/34

As an active global group, Elanders wants to be among the best regarding CSR and corporate commitment everywhere the company is involved. There are several different projects concerning social responsibility and aid going on in the Group. Each company decides themselves which projects they want to be involved in and support through, for instance, donations and support to regional and local organizations such as schools and orphanages.

One example is how Elanders in the USA has supported The United Way of the Quad Cities for many years. The organization helps city residents through activities that improve their health and increase their financial stability, and by providing education. In 2020, as in previous years, we sponsored a campaign where for a week Elanders employees focused on contributing as much as possible to the organization through diverse activities, events and collections. Another example is support for the program Rede Cultural Beija-Flor for vulnerable children in Brazil through financial aid, printed material and internships to give children a better start and reduce the number of street kids in the area.

Pratham for better education

Together with around ten other Swedish companies, Elanders initiated a collaboration with the organization Pratham Education Foundation in 2017. The innovative education organization was started in 1995 to improve the quality of education in India. Pratham has become one of the largest charitable organizations in the world today. Its founding prin-ciple is to help as many children as possible to achieve higher levels of knowledge through education programs that take into consideration the gaps in the Indian educational system. Pratham's educational methods, which are based on the student's actual level of knowledge, have been formed and developed together with researchers Esther Duflo, Ahijit Banerjee, and Michael Kremer who have carried out several field studies on Pratham's work. They were awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 for their work in this area.

The project was severely affected in 2020 by the Coronavirus pandemic, which has affected India hard. Pratham has worked intensively to keep in touch with the children and villages to ensure that the students continued to receive an education. The work has largely been online, where children have had homework sent to their parents' or siblings' cell phones and later submitted it, or presented it in a video conversation. During the period July to September, around 3,000 volunteers were recruited in Assam and West Bengal who enabled more than 400 villages to continue participating in Pratham's activities.

Fair conditions

Elanders' values regarding fair conditions are established in the Code of Conduct which stipulates that Elanders works to protect international human rights. The Code of Conduct strictly prohibits any kind of forced labor, human trafficking, and child labor. It is self-evident for Elanders to work for childrens' right to education and to protect children from economic exploitation and dangerous or harmful jobs. Elanders' work is based on the UN Universal Declaration of Human Rights and the UN Convention on the Rights of the Child.

Elanders' Code of Conduct also contains prohibition of any kind of harassment or discrimination. Everyone is offered the same opportunities and is treated with respect. Elanders actively supports freedom of speech, freedom of movement, and religious freedom within the framework of applicable legislation, and the Group does not tolerate human rights violations. In addition to this, Elanders provides fair working conditions at the same time as national and local laws are respected in the countries where operations are run. All Elanders employees have the right to a written employment contract.

Elanders' Code of Conduct also comprises suppliers and business part-ners to ensure the Code of Conduct permeates every part of the value chain. Elanders has therefore produced a "Suppliers Code of Conduct", which is communicated to suppliers and business partners. Each com-pany is currently responsible for making sure that suppliers also comply with the Code of Conduct where considered relevant. In the same way, Elanders controls its suppliers, Elanders is often reviewed by customers to make sure fair conditions are used in production.

Elanders has not found a relevant, quantitative key ratio for its work on fair conditions. For the time being, Elanders will continue to focus on making sure the Code of Conduct is communicated to all employees as well as suppliers and business partners.

Sustainability initiative

One acclaimed initiative in Sweden is Win Win Gothenburg Sustainability Award (previously The Gothenburg Award for Sustainable Development) where Elanders is one of thirteen organizations that contribute to the prize sum. Some of the more well-known laureates are Gro Harlem Brundtland (2002), Al Gore (2008), and Kofi Annan (2011). In 2020 it was awarded to IPBES - The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. IPBES is an independent organ that works globally to promote the preservation and sustainable usage of nature, plants, and animals. IPBES has played an important role in identifying, communicating, and driving the work on threats against biodiversity.

ETHICS AND ANTI-CORRUPTION

Elanders' reputation, ethical behavior, and trustworthiness are highly valued by the Group and its customers and any kind of corruption could impact the Group's image very negatively. Elanders follows applicable laws and regulations locally and internationally regarding both ethical rules and corruption. The Group's Anti-Corruption Policy "Anti-Cor-ruption, Anti-Fraud and Anti-Money Laundering Policy", was updated in 2019. The policy, which contains guidelines for handling corruption, fraud and money laundering, describes the way Group employees should relate to customers, suppliers, other stakeholders, and society in general. It clearly states that Elanders has absolutely zero tolerance for any kind of fraud, bribes, or other actions that create unfair advantages, and which transgress against Elanders' policy, local laws and regulations, industry standards, and ethics codes in the countries the Group is active in. Employees may not accept, be promised, demand, or swindle any kind of advantages in connection with their position in the company. The policy also states that all employees are obliged to comport them-selves with integrity and ensure that they understand and follow Group guidelines. The policy also contains instructions on how to report any irregularities or deviations from the policy.

The updated Anti-Corruption Policy was communicated at the end of 2019 together with a course via e-learning for Group employees. In 2020, a total of 77 percent of all white-collar workers at Elanders completed the course. Employees will continue the courses during 2021, when classroom training will also be evaluated. This was postponed due to COVID-19. There will be annual follow-ups to ensure that all employees in the Group have completed the anti-corruption course.

No incidents of fraud, corruption, bribes, or money laundering have been reported in 2020.

THE EU GENERAL DATA PROTECTION REGULATION (GDPR)

GDPR became law in 2018 and is intended to protect individuals' basic rights, which is a human right. At the end of 2019, Elanders therefore produced a course to ensure that employees are knowledgeable about, and act in accordance with, the stipulations of GDPR. In 2020, a total of 75 percent of all white-collar workers at Elanders completed the course. Employees will continue the courses during 2021, when classroom training will also be evaluated. This was postponed due to COVID-19. Courses will continue in 2021 and there will be annual follow-ups to ensure that all employees have been trained in GDPR.

In the beginning of 2021, Elanders' Binding Corporate Rules were ap-proved by the Swedish Authority for Privacy Protection (IMY), making it only the third company in Sweden. These rules regulate how Eland-ers handles personal data to ensure that data protection regulations are followed when transferring personal data to Group companies outside the EU/EES. Approval was received after an exhaustive review by IMY and other co-reviewer European data protection authorities as well as an opinion from the European Data Protection Board, EDPB.

UN's sustainable

DEVELOPMENT GOALS

Agenda 2030, the UN's 17 Sustainable Development Goals were adopted by most of the world leaders in 2015 to promote socially, economically and environmentally sustainable development. Elanders contributes to the goals in varying degrees. Our ambition is that our sustainability work creates value for all our stakeholders and thereby also contributes to these goals. The following seven goals have been identified as the most material for Elanders' sustainability work:

Ensureinclusive andequitablequality education andpromotelifelonglearningopportunitiesfor all.

Elanders supports several projects that promote raising knowledge levels through education. For example, Elanders works together with aroundtenotherSwedishcompanies with the organiza-tionPratham EducationFoundation that strivesto improve the qualityof education inIndia.

Promotesustained, inclusive andsustainable economicgrowth, fullandproductive employmentanddecent work for all.

Fair working conditions for all employeesthrough a clear Code of Conduct and continu-ouslymonitoringthe work environmentandworkers' rights.

Achievegender equality and empower all womenand girls.

Reduce income inequality within and among countries.

Elandersbelieves all people are equal indepen-dentofage,gender,ethnicity, sexual orienta-tion,religious beliefs,etc.The Code of Conduct contains the strict prohibition of any kind of harassment or discrimination.

Buildresilient infrastructure, promoteinclusiveand sustainableindustrialization,and foster innovation.

Ensure sustainable consumption and production patterns.

Solutions for streamliningand consolidating materialﬂows and deliveries contribute signiﬁ- cantly to reducing our customers' environmental impact. An important part of our oﬀer isLife Cycle Management where we help our custom- ers in every phase of a product's life cycle.

For instance, we handle returns of worn-out IT-equipment when delivering new products to the customer, recycling computers, monitors andprinters and restoringproducts forreuse on behalfof our customers in asustainableway.

Constant appraisals to reduce our environ- mental impact from emissions of volatile organic compounds (VOC) in print operations without negatively aﬀecting quality, e.g., more eﬃcient methods that reduce consumption or switching to less volatile solvents.

Takeurgent action to combat climatechange and its impacts.

Reducing energy consumption is fundamental when Elanders makesnew investments.

As far as possible, the company uses renew-able energy in the markets where it is available. Continuously upgrading the transportation ﬂeet, eﬃcient motors, well-developed GPS systems, continuously training drivers and awarding the most fuel-eﬃcient drivers contribute to reducing fuel consumption.

Elanders creates value through the

SUSTAINABLE VALUE CHAIN

Sustainability is an integrated part of Elanders' offer and Elanders aims to create value by being a resource-efficient and sustainable company.

ORGANIZATION

Sustainability aspects:

• Health and safety
Elanders works together with our partners on a strategic, tactical, and operational level in order to provide a combined pur-chasing and procurement process which means that redundant or unnecessary costs are minimized by delivering products and services eﬃciently at the right time.
• Equality, equal opportunity, and diversity
• Social conditions, human rights, ethics, and anti-corruption

How Elanders creates value:

• Elanders' Code of Conduct and Anti-corruption Policy comprises all employees, suppliers and business partners. All business in Elanders is conducted with social responsibility and ethically.

Elanders' power tohave an impact:

HIGH

Employees are Elanders' greatest asset and their health and safety have the highest priority. A healthy and safe work environment leads to healthier employees that work safely, are more productive and contribute to society at large.

LIFE CYCLE MANAGEMENT

Sustainability aspects:

• Waste, recycling and reuse
• Carbon dioxide emissions

How Elanders creates value:

• Extending the life of products and less waste from IT equipment means greater resource eﬃciency and lower carbon dioxide emissions.
• Substantial environmental gains can be achieved by investing in and developing unique solutions in companies within Renewed Tech. With Elanders' global infrastructure these companies can scale up their operations more quickly.

Elanders' power to have an impact: HIGH

Electronics' greatest environmental impact comes from producing them, which is why extending the life of a product as long as possible is so important. Creating solutions for reusing electronics generates environ-mental gains since the electronic compo-nents come to good use instead of being recycled or discarded.

PROCUREMENT & INBOUND SERVICES

Sustainability aspects:

• Sustainable resource solutions
• Warehousing eﬃciency

How Elanders creates value:

• Resource eﬃciency - products and services delivered eﬃciently at the right time.
• Elanders helps customers optimize their product ﬂows, warehouse levels and storage space.

Elanders' power to have an impact: MEDIUM

PRODUCTION & ASSEMBLY

Sustainability aspects:

• Materials and chemicals in products
• Energy consumption and energy use
• Social conditions, human rights, ethics, and anti-corruption

How Elanders creates value:

• Our goal is to eliminate the use of aromatic solvents and reduce paper waste through print-on-demand.
• Lower energy consumption and using as much renewable electricity as possible.
• Elanders' Code of Conduct and Anti-corruption Policy comprise all employees, suppliers, and business partners. All business in Elanders is conducted with social responsibility and ethics.

Elanders' power to have an impact: MEDIUM

Elanders works systematically to reduce our environmental impact and develop products, services, and processes in order to achieve optimal quality without compro-mising on sustainability aspects.

ORDER MANAGEMENTAND DISTRIBUTION & OUTBOUND SERVICES

Sustainability aspects:

• Carbon dioxide emissions
• Transportation eﬃciency

How Elanders creates value:

• Lower fuel consumption through eﬃcient motors, well-developed GPS systems and continuous driver training. Using trucks that comply with the Euro 6 norm of a maximum of 80 mg/km NOx emissions.
• Cost-eﬀective transport solutions that optimize customers' transportation.

Elanders' power to have an impact: MEDIUM

Transportation on behalf of customers is out of Elanders' hands since the utilization of our ﬂeet of trucks is steered by customer volumes and the kind of transportation customers need. However, we strive to ensure driving as environmentally friendly as possible, realize the most cost and energy eﬀective transportation solutions possible and optimize our customers' transportation. For example, we already help customers with transport by rail instead of by boat from Asia.

AUDITED ANNUAL REPORT - GROUP

INCOME STATEMENTS

MSEK	Note	2020	2019
Net sales	2, 3	11,050.1	11,254.1
Cost of products and services sold	-9,478.5	-9,779.9
Gross proﬁt	1,571.6	1,474.2
Selling expenses	-317.4	-350.4
Administrative expenses	-733.0	-794.3
Other operating income	4	68.6	63.2
Other operating expenses	4	-43.9	-34.1
Operating result	5, 6, 7, 27	545.9	358.7
Financial income	8	27.2	31.3
Financial expenses	8	-159.1	-174.4
Result after ﬁnancial items	414.0	215.6
Taxes	9	-122.2	-62.7
Result for the year	291.9	152.9
Result for the year attributable to
- parent company shareholders	287.1	148.2
- non-controlling interests	4.8	4.7
Earning per share, SEK 1)	10	8.12	4.19
1) There have been no dilution effects.
STATEMENTS OF COMPREHENSIVE INCOME
MSEK	2020	2019
Result for the year	291.9	152.9
Items that not will be reclassiﬁed to the income statement
Actuarial gains/losses on deﬁned beneﬁt pensions plans	-8.9	-14.5
Tax eﬀect on actuarial gains/losses on deﬁned beneﬁt pensions plans	2.6	4.4
Items that will be reclassiﬁed to the income statement
Translation diﬀerences	-224.9	66.7
Change in fair value of the hedge of the net investment abroad	15.7	-13.7
Tax eﬀect on the change in fair value of the hedge of net investments abroad	-3.2	2.8
Other comprehensive income	-218.7	45.7
Total comprehensive income for the year	73.2	198.6
Total comprehensive income attributable to
- parent company shareholders	69.5	194.1
- non-controlling interests	3.7	4.5

STATEMENTS OF CASH FLOW

MSEK	Note	2020	2019
Operating activities
Result after ﬁnancial items	414.0	215.6
Adjustments for items not included in cash ﬂow	12	892.3	1,131.0
Paid taxes	9	-41.8	-114.2
Cash ﬂow from operating activities before changes in working capital	1,264.5	1,232.5
Cash ﬂow from changes in working capital
Increase (-)/decrease (+) in inventory	76.8	150.7
Increase (-)/decrease (+) in operating receivables	326.3	116.5
Increase (+)/decrease (-) in operating payables	57.7	-163.0
Cash ﬂow from operating activities	1,725.3	1,336.7
Investing activities
Investments in intangible and tangible assets	13, 14	-92.7	-142.8
Divestment of tangible assets	14	5.7	9.9
Acquired and divested operations	28	-29.5	-5.0
Change in long-term receivables	0.8	-1.6
Cash ﬂow from investing activities	-115.7	-139.5
Financing activities
Amortization of borrowing debts	22	-166.8	-139.0
Amortization of lease liabilities	22	-657.9	-680.6
Other changes in interest-bearing liabilities	12, 22	-292.7	-332.9
Dividend to shareholders	-	-104.0
Transactions with shareholders with non-controlling interest	57.6	-25.0
Cash ﬂow from ﬁnancing activities	-1,059.8	-1,281.5
Cash ﬂow for the year	549.9	-84.4
Cash and cash equivalents at the beginning of the year	655.2	722.4
Translation diﬀerence in cash and cash equivalents	-103.7	17.2
Cash and cash equivalents at year-end	19	1,101.4	655.2
Change in net debt
Net debt at the beginning of the year	3,960.5	2,538.7
Eﬀect of applying IFRS 16 at the beginning of the period	-	2,043.0
Translation diﬀerence	-98.4	93.0
Acquired and divested operations	16.9	-
Changes with cash eﬀect	-1,556.4	-1,062.0
Changes with no cash eﬀect	531.5	347.8
Net debt at year-end	2,854.0	3,960.5
Operating cash ﬂow
Cash ﬂow from operating activities excl. ﬁnancial items and paid tax	1,899.0	1,594.0
Net investments	-115.7	-139.6
Operating cash ﬂow	11	1,783.3	1,454.4

STATEMENTS OF FINANCIAL POSITION

MSEK

Total short-term liabilities Total equity and liabilities

Accrued expenses and deferred income Other provisions

ASSETS Fixed assets Intangible assets Tangible assets Right-of-use assets

Investments in associated companies Deferred tax assets

Other ﬁnancial assets Total ﬁxed assets Current assets Inventory

Accounts receivable Current tax receivables Other receivables

Prepaid expenses and accrued income Cash and cash equivalents

Total current assets

Total assets

EQUITY AND LIABILITIES

EQUITY

Equity attributable to parent company shareholders Equity attributable to non-controlling interests Total equity

LIABILITIES Long-term liabilities Lease liabilities

Other interest-bearing liabilities Provisions for post-employment beneﬁts Other provisions

Deferred tax liabilities Total long-term liabilities Short-term liabilities Lease liabilities

Other interest-bearing liabilities Accounts payable

Current tax liabilities Other liabilities


20, 22, 26
20
9

25
24

20, 22, 26

Note	2020	2019
13	3,084.9	3,229.0
518.7	621.1
1,736.8	1,864.7
-	3.9
286.5	294.9
10.5	12.5
5,637.3	6,026.1
232.9	335.3
1,343.5	1,740.4
22.0	88.4
101.2	111.2
200.8	248.8
1,101.4	655.2
3,001.8	3,179.3
8,639.1	9,205.4
2,887.0	2,777.0
20.9	-
2,907.8	2,777.0
1,180.0	1,258.8
1,980.7	2,214.2
107.7	105.8
19.4	29.3
168.4	185.3
3,456.2	3,793.4
608.7	639.3
78.3	397.7
641.7	677.5
71.4	51.1
118.8	121.3
595.4	591.1
160.8	157.0
2,275.1	2,635.0
8,639.1	9,205.4

STATEMENTS OF CHANGES IN EQUITY

Equity attributable to parent company shareholders

Other

Equity of non-

controlling	Total
MSEK	capital	capital	earnings	Total	interest	equity
Opening balance on 1 Jan. 2019	353.6	1,275.6	1,067.8	2,697.0	10.4	2,707.4
Dividend to shareholders	-	-	-102.5	-102.5	-1.4	-104.0
Transactions with shareholders with
non-controlling interest	-	-	-11.9	-11.9	-13.0	-25.0
Result for the year	-	-	148.2	148.2	4.7	152.9
Other comprehensive income	-	-	46.0	46.0	-0.2	45.7
Closing balance on 31 Dec. 2019	353.6	1,275.6	1,147.7	2,777.0	-	2,777.0
Transactions with shareholders with
non-controlling interest	-	-	40.5	40.5	17.2	57.5
Result for the year	-	-	287.1	287.1	4.8	291.9
Other comprehensive income	-	-	-217.6	-217.6	-1.1	-218.7
Closing balance on 31 Dec. 2020	353.6	1,275.6	1,257.7	2,887.0	20.9	2,907.8

Share contributed Retained

Retained earnings include other reserves amounting to MSEK 56.6 (267.9).

NOTE 1 - ACCOUNTING PRINCIPLES

General information

Elanders AB (publ.), corporate identity number 556008-1621, is a limited company registered in Sweden. The parent company is registered in Mölndal. Elanders is listed on NASDAQ OMX Stockholm, Mid Cap. The company's primary business and its subsidiaries are described in the Board of Directors' Report in this Annual Report. The annual accounts for the ﬁnancial year ending on 31 December 2020 were approved by the Board and will be presented to the Annual General Meeting on 28 April 2021 for adoption.

Accounting principles

Financial reporting

The Group has prepared the annual accounts according to the Annual Accounts Act, the EU approved International Financial Reporting Standards (IFRSs) and the interpretations of the Inter-national Financial Reporting Interpretations Committee (IFRIC) endorsed by the European Union as of 31 December 2020. In ad-dition, the Group follows the Swedish Financial Reporting Board Recommendation RFR 1 Supplemental Accounting Regulations for Groups, which speciﬁes the additions to IFRSs information that are required according to the provisions in the Annual Accounts Act. In group accounting all items are valued at acquisition value, unless otherwise speciﬁed. The Group reports in Swedish krona. All amounts are given in millions of Swedish krona, unless other-wise speciﬁed. The following is a description of the accounting principles considered elemental.

Consolidation

Group accounting comprises the parent company, Elanders AB, and companies in which Elanders AB directly or indirectly holds a controlling interest. Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group 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 power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. Equity in the Group is comprised of equity in the parent company and the part of the equity in subsidiaries generated after acquisition. All transactions and balances between group companies are eliminated in the consolidated accounts.

Associated companies

Associated companies are companies in which the group has a signiﬁcant inﬂuence, normally when the holding equal at least 20 percent but less than 50 percent of the votes. Holdings in asso-ciated companies are recognized in accordance with the equity method.

Business combinations

Subsidiaries are reported in accordance with the acquisition method. Acquired identiﬁable assets, liabilities and contingent liabilities are recorded at fair value based on the date of acquisition. The surplus arising from the diﬀerence between the cost of the shares in subsidiaries and the fair value of the acquired identiﬁable assets and liabilities is recorded as goodwill. Acquisition value is the fair value of the assets left as reimbursement to the seller as well as the liabilities taken over on the acquisition date. If the acquisition price is lower than the fair value of the acquired subsidiary's net assets, the diﬀerence is recorded directly in the income statement. Additional purchase sums are recorded as ﬁnancial liabilities until they are settled. All acquisition costs are expensed. Companies acquired in the current year are included in group accounting from the acquisition date. Divested companies are included in group accounting up until the divestiture date.

Revenue recognition

Revenue is reported on delivery if ownership has been trans-ferred to the buyer. Net sales represent the sales value less VAT, returns and discounts. Service contracts are normally recognized when ﬁnal delivery is made, or when contractual partial deliver-ies are made. Net sales include product and service sales. Since all products are essentially integrated parts of service deliveries to customer, a split of revenues into products and services is not meaningful. Furthermore, there are no signiﬁcant revenues from interests, royalties, rents or dividends.

Lease agreements

Lease agreements are recognized as right-of-use assets with a corresponding lease liability in the balance sheet when the lease asset is available to use by Elanders.

Lease liabilities are recognized as the present value of future lease payments. Each payment is divided between amortization of the lease liability and a ﬁnancial cost. The ﬁnancial cost is allo-cated over the lease term so that each reporting period is charged with an amount corresponding to a ﬁxed interest rate for the liabil-ity recognized during each period. Lease payments are discounted with the interest rate implicit in the lease, if this rate can easily be determined. Otherwise, the Group's incremental borrowing rate is applied based on currency and maturity of lease contracts.

The right-of-use assets are recognized at cost and include initial present value of the lease liability. Restoration costs are included in the asset if a corresponding provision for restoration costs ex-ists. The right-of-use asset is depreciated on a straight-line basis over the assets useful life and the lease term, whichever is the shortest.

The lease term is determined as the non-cancellable period of the lease, together with periods covered by an option to extend or terminate the lease if it is reasonably certain that the option will be exercised. Evaluation of the certainty that the option will be exercised is made by management who consider all available information such as costs for termination and the importance of the asset for the business.

Elanders leases mainly comprise of right-of-use assets for prem-ises, machinery and equipment and vehicles. Short-term leases and leases for which the underlying asses is of low value are exempted and is expensed on a straight-line basis in the income statement. Leases of low value mainly include IT-equipment and oﬃce equipment.

Foreign currency

Items that are included in the ﬁnancial reports from the various units in the Group are originally recognized in the currency used in the primary economic environment where the respective unit chieﬂy operates (functional currency). In the consolidated ﬁnan-cial statements all amounts are translated to Swedish krona, which is the parent company's functional and reporting currency.

Transactions and balance sheet items

Transactions in foreign currency are reported in each unit based on the unit's functional currency according to the transaction day exchange rate. Monetary assets and liabilities in foreign currency are translated to balance sheet date rates and translation diﬀer-ences are reported under the result for the period. Translation dif-ferences in operating receivables and payables are recorded under operating results while diﬀerences in ﬁnancial assets and liabilities are reported under ﬁnancial items.

Translation of foreign subsidiaries

When preparing the consolidated ﬁnancial statements the balance sheets of foreign operations are translated to Swedish krona with balance sheet date rates while income statements are translated

NOTE 1 - ACCOUNTING PRINCIPLES (CONT.)

to the average exchange rates for the period. Translation diﬀer-ences are recognized as translation reserves under equity. The accumulated translation diﬀerences are redistributed and reported as part of capital gains/losses in the event of a divestiture of a foreign operation. Goodwill and adjustments to fair value at-tributable to acquisitions with another functional currency than Swedish krona are reported as assets and liabilities in the acquired unit's currency and translated to balance sheet date rates.

Remuneration to employees

Remuneration to employees in the form of wages, paid vacation and sick leave, bonus, pensions and so forth is reported as it is earned. Pensions and other post-employment contributions are classiﬁed as deﬁned contribution plans or deﬁned beneﬁt plans.

Deﬁned contribution plans

In the case of deﬁned contribution plans the company pays a ﬁxed fee to a separate, independent legal entity and is not obligated to pay further fees. Group payments for deﬁned contribution plans are recorded as an expense as they are earned, which is normally the same period the premium is paid.

Deﬁned beneﬁt plans

The liability reported in the balance sheet referring to deﬁned beneﬁt plans is equivalent to the deﬁned beneﬁt plan obligation on the balance sheet date less the fair value of plan assets. Actu-arial changes are recorded within other comprehensive income. In the Elanders Group there are a number of employees that have deﬁned beneﬁt ITP plans in Alecta, which are classiﬁed as deﬁned beneﬁt multi-employer pension plan. This means that a company must report their proportional share of the deﬁned beneﬁt pen-sion obligation and the plan assets and expenses that are connect-ed to this pension plan. Since Alecta cannot provide the necessary information, these pension obligations are recognized as deﬁned contribution pension plans according to point 34 in IAS 19.

Government grants

Government grants are recognized in the balance sheet as prepaid income when there is reasonable assurance that grants will be received and that Elanders will meet the conditions associated with the grants. Grants are reported as a cost reduction and ac-crued over the same periods as the related costs that the grant is intended to compensate.

Taxes

The period's tax expense or income consists of current tax and deferred tax. Current tax is based on the ﬁscal result for the year. The annual ﬁscal result diﬀers from the result reported for the year due to adjustments for non-taxable and non-deductible items. Deferred tax is tax relating to taxable or tax deductible temporary diﬀerences that cause or reduce tax in the future. Deferred tax is calculated according to the balance sheet method based on temporary diﬀerences between recorded and ﬁscal values of as-sets and liabilities. Calculation of the amounts is based on how the temporary diﬀerences are expected to reverse using enacted tax rates or tax rates announced on the balance sheet date. Deferred tax liabilities that refer to tax deﬁcits and deductible temporary diﬀerences are only reported in cases where it is probable that tax deﬁcits can be recognized against tax surpluses in the future. Deferred tax is reported as an income or an expense in the income statement except in cases where it refers to a transaction that is recorded in other comprehensive income. Then the tax eﬀect is recorded directly in other comprehensive income. Deferred tax assets and liabilities are oﬀset against each other if they refer to income tax that is charged by the same tax authority and where the Group intends to pay the net amount in tax.

Earnings per share

Earnings per share is calculated by dividing the result for the year attributable to parent company shareholders with the average number of outstanding shares during the period. The average number of outstanding shares during the period is adjusted for all potential dilution of ordinary shares when calculating earnings per share after dilution.

Tangible assets

Tangible assets are reported at their acquisition value less accumulated depreciation and write-downs. Tangible assets are straight-line depreciated over the estimated useful life of the asset. No depreciation on land is made. Costs for repairs and maintenance are recorded as expenses. The following useful lives are used to calculate depreciation:

• Buildings	25-30 years
• Service facilities in buildings	5-15 years
• Land improvements	20 years
• Printing presses, oﬀset	7-10 years
• Printing presses, digital	3-5 years
• Other mechanical equipment	7-10 years
• Computer equipment
and systems	3-5 years
• Vehicles	5 years
• Other equipment	5-10 years

The residual value and useful life of assets are tested on every closing day. Capital gains/losses from the sale of tangible assets are recorded as Other operating income respectively Other oper-ating expenses.

Intangible assets Goodwill

Goodwill is the diﬀerence between the acquisition value and the Group's share of the fair value of the acquired subsidiary's, associ-ated company's or jointly controlled entity's identiﬁable assets, liabilities or obligations on the date of acquisition. If at acquisi-tion the fair value of the acquired assets, liabilities or obligations exceed the acquisition price the diﬀerence is recorded directly as income in the income statement. Goodwill has an indeﬁnite useful life and is recorded at acquisition value less accumulated write-downs. When a company is sold the portion of goodwill attributable to that company which has not been written-down is calculated in capital gains/losses.

Other intangible assets

Other intangible assets are customer relations, brands, favorable contracts identiﬁed at the time of an acquisition as well as the cost of purchasing and developing software. Internally created intangible assets are reported as an asset only in cases where an identiﬁable asset has been created, it is fairly certain that the asset will lead to ﬁnancial gains and invested expenses for developments can be calculated reliably. If it is not possible to report an internally created intangible asset the costs for development are recorded as expenses in the period in which they occur. Other intangible assets from acquisitions are reported at fair value on acquisition date and in subsequent periods other intangible assets are reported with a determined useful life at acquisition value less accumulated amortization and write-downs. Trademarks with indeﬁnite useful life are recorded at acquisition value less accumulated write-downs. Useful life for other intangible assets, besides trademarks with indeﬁnite useful life, is normally 5-10 years.

NOTE 1 - ACCOUNTING PRINCIPLES (CONT.)

Impairment losses

Group assets are assessed at every reporting date to determine whether or not there are a potential need for a write-down. Poten-tial impairment losses relating to goodwill and intangible assets with indeﬁnite useful life is, however, tested at least once a year. When this is made the recoverable amount of the asset is calcu-lated. Goodwill and Intangible assets with indeﬁnite useful life are allocated to the smallest cash generating unit, which corresponds to group operating segments. The recoverable amount is the highest of the value in use or the net realizable value of the asset. The value in use is the current value of all in and out payments attributable to the asset during its estimated useful life together with the current net realizable value at the end of the assets useful life. If the calculated recoverable amount is lower than the book value a write-down is made equivalent to the asset's recoverable amount. Prior write-downs are recovered when a change occurs in the premises that were the basis for deciding the assets' recover-able amount when it was written-down and which entails that the write-down is no longer considered necessary. Recoveries of prior write-downs are tested individually and are recorded in the income statement. Impairment losses relating to goodwill and intangible assets with indeﬁnite useful life are not recovered in a following period.

Inventory

Inventory is valued at the lower of cost and net realizable value. Cost is calculated in accordance with the First-in, First-out method (FIFO) or weighted average prices. Acquisition value includes the cost of materials, direct labor costs and overhead charges involved in production of the goods. Net realizable value is the calculated sales value less sales expenses.

Financial instruments

A ﬁnancial asset or liability is recorded in the balance sheet when Elanders becomes a party in the instrument's contractual condi-tions. A ﬁnancial asset is derecognized from the balance sheet when the rights in the contract are realized, have matured or the company loses control over them. A ﬁnancial liability is derecog-nized from the balance sheet when the obligation in the contract is met or resolved in some other way. Financial instruments are valued the ﬁrst time at fair value plus transaction costs, which applies to all ﬁnancial assets and liabilities not recognized at fair value through the result. Financial assets and liabilities recog-nized at fair value through the result are valued the ﬁrst time at fair value, while attributable transaction costs are valued through the result. Acquisitions and divestitures of ﬁnancial assets are recorded on the date of business, which is the date the company pledges to acquire or sell the asset, except in cases where the company acquires or sells listed securities, in which case settle-ment date accounting is applied. Financial assets are controlled at every external reporting instance to determine whether or not there are objective indications that one or a group of ﬁnancial as-sets should be written-down. Financial instruments are recorded at their amortized cost or fair value depending on the initial clas-siﬁcation.

Calculation of fair value for ﬁnancial instruments

Oﬃcial quotations at year-end are used to determine the fair value of long-term derivative instruments. The market value of other ﬁnancial assets and liabilities is determined by generally accepted methods such as discounting of future cash ﬂows with the quoted interest rate corresponding to the period of the contract.

Amortized cost

Amortized cost is calculated with the help of the compound inter-est method, which means that premiums or discounts together with directly related expenses or income is recorded over the period the contract is valid with the help of the calculated com-pound interest. The amortized cost is the value generated from a present value calculation with the compound interest rate as the discount factor.

Oﬀsetting ﬁnancial assets and liabilities

Financial assets and liabilities are set oﬀ against each other and presented as net amount in the balance sheet where there exists a legal right to set oﬀ and where the intention is to settle the items with a net amount or realize the asset and liability at the same time.

Cash and cash equivalents

Cash and cash equivalents are cash in ﬁnancial institutions and short-term liquid placements with a term of less than three months.

Accounts receivable

Accounts receivable are categorized as Loans and receivables are initially recognized at the amount of consideration that is uncon-ditional. Accounts receivable are amounts due from customers for services performed in the ordinary course of business or goods sold. They are generally due for settlement within 30-120 days and therefore are all classiﬁed as current. The group holds the trade receivables with the objective to collect the contractual cash ﬂows and therefore measures them subsequently at amortized cost. The group applies the simpliﬁed approach to measuring expected credit losses which uses a lifetime expected loss allow-ance. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment proﬁles and historical credit losses experienced within this period. Trade receivables are written oﬀ when there is no reasonable expectation of recovery. Impairment losses are presented as net impairment losses within operating proﬁt. Subsequent recoveries of amounts previously written oﬀ are credited against the same line item. The Group uses factoring, which means that certain accounts receivable are transferred to a factoring company in exchange for cash. With the transfer to the factoring company, the credit risk also transitions and the Group is therefore not reporting the transferred assets in the balance sheet.

Long-term receivables, current receivables and other receivables The receivables above are categorized as Loans and receivables, which means they are recorded at amortized cost. In the case the term of a receivable is short it is recorded at its nominal value without a discount according to the method for amortized cost.

Derivative instruments

Derivative instruments are recorded at their fair value in the bal-ance sheet. Changes in the value of cash ﬂow hedges are reported in particular categories under other comprehensive results until the hedged item is recorded in the income statement. Any result on hedge instruments attributable to the eﬀective part of the hedge are recorded as equity under hedge provisions. Any result on hedge instruments attributable to the ineﬀective part of the hedge are recorded in the income statement. Hedges of net investments in foreign subsidiaries are recorded in the same way as cash ﬂow hedges, with the exception that any eﬀects from the hedge is recorded in the translation reserve.

NOTE 1 - ACCOUNTING PRINCIPLES (CONT.)

Accounts payable

Accounts payable are categorized as Other ﬁnancial liabilities which means they are reported at amortized cost. Accounts pay-able are recorded at their nominal value without a discount due to their expected short-term.

Other ﬁnancial liabilities

Liabilities to credit institutions are categorized as Other ﬁnancial liabilities which means they are reported at amortized cost and directly related expenses such as arrangement fees are distributed throughout the period of the loan with the help of the compound interest method. Financial liabilities are classiﬁed as short-term unless the Group has an unconditional right to postpone the payment of the debt for at least 12 months after the end of the reporting period.

Provisions

Provisions are recorded in the balance sheet when a company has a formal or informal obligation as a result of a past event and it is likely that an outﬂow of resources will be necessary to resolve the obligation and a reliable estimation of the amount can be made. Provisions for restructuring costs are reported when the Group has an established, detailed restructuring plan that has been an-nounced to the parties concerned and there is a clear expectation that the plan will be implemented. Provisions are reconsidered every time an external report is made.

Reporting on segments

The two business areas are reported as reportable segments, since this is how the Group is governed. The President has been identiﬁed as the highest executive decision-maker and follows the development of the segments based on sales and operating proﬁt, but not assets or liabilities per reportable segment. The operations within each reportable segment have similar economic charac-teristics and resemble each other regarding the nature of their products and services, production processes and customer types. Sales between segments are made on markets terms.

When presenting geographical sales the customer's location has determined which geographic area sales are allocated to.

Alternative performance measures

The Annual report includes alternative performance measures for monitoring the Group's operations. Alternative performance measures are performance measures that not have been deﬁned by IFRS. For reconciliation of the primary alternative performance measures and ﬁnancial deﬁnitions, see pages 112-114.

Important estimations and assessments

When preparing the ﬁnancial reports estimations and assumptions are made about the future that eﬀect balance sheet and income statement items in the annual accounts. These assessments are based on historic experience and the various assumptions that Group Management and the Board of Directors consider plausible under existing circumstances. In cases where it is not possible to ascertain the book value of assets and liabilities through informa-tion from other sources these estimations and assumptions form the basis of the valuation. If other assumptions are made or other circumstances inﬂuence the matter the actual outcome can diﬀer from these assessments. Individual assessments can have a par-ticularly signiﬁcant eﬀect on Elanders' result and position in the areas of goodwill impairment testing, valuation of tax loss carry forwards and provisions.

Goodwill and trademarks

Goodwill and trademarks that has an indeﬁnite useful life is sub-ject to impairment tests annually or when there is an indication that a write-down may be needed. Testing is performed on the lowest identiﬁed cash generating level, which for Elanders is the operating segment level. The impairment test contains a number of assumptions that can, according to diﬀerent assessments, have a signiﬁcant impact on the calculation of recoverable values such as:

• operating margins/results
• discount interest
• growth/inﬂation

Essential assumptions when testing the need for write-downs and a description of the eﬀect of plausible, possible changes in these assumptions that are basis of the calculations are found in note 13.

Valuation of tax loss carry forwards

Deferred tax assets concerning tax loss carry forwards reported by the Group amount to MSEK 160 (171) per 31 December 2020. The recorded value of these tax assets have been tested at year-end and it is deemed probable that these can be set oﬀ against taxable gains. The tax assets primarily refer to Swedish tax loss carry forwards that can be utilized for an unlimited amount of time. The Group's Swedish operations have historically been prof-itable and are expected to generate a substantial surplus in the future. Elanders therefore believes it is safe to say that it will be possible to set oﬀ the deﬁcit deduction which the tax assets stem from, against future taxable surpluses.

New standards, amendments and interpretations of existing standards

Standards, amendments and interpretations of existing standards that came into eﬀect during 2020

During the year no interpretations or amendments of existing standards have come into eﬀect and had a signiﬁcant eﬀect on Elanders' ﬁnancial reports

Standards, amendments and interpretations of existing standards that have not yet come into eﬀect

No new or amended standards that have not yet come into eﬀect are expected to have a material impact on Elanders' ﬁnancial reports.

NOTE 2 - SEGMENT REPORTING

The two business areas are reported as reportable operating seg-ments, since this is how the Group is governed and the President has been identiﬁed as the highest executive decision-maker. The operations within each reportable operating segment have similar

REPORTING BY SEGMENT

economic characteristics and resemble each other regarding the nature of their products and services, production processes and customer types. Sales between segments are made on market terms.

MSEK	2020	2020	2019
Net sales	8,408.4	8,774.8	2,727.3	2,563.9
Operating expenses	-7,974.1	-8,555.9	-2,579.9	-2,390.1
Operating result Net ﬁnancial items	434.3 -	218.8 -	147.4 -	173.8 -
Result before tax Investments	434.3 570.7	218.8 449.2	147.4 69.8	173.8 119.5
Depreciation and amortization	-738.4	-770.1	-143.9	-154.9
Goodwill	1,437.3	1,450.2	975.9	1,030.0
Trademarks with indeﬁnite useful life	384.2	399.3	-	-

Group functions

Supply Chain	Print & Packaging
Solutions	Solutions
Eliminations	The Group

MSEK	2020	2019	2020	2019
Net sales	40.4	37.7	-126.0	-122.4	11,050.1	11,254.1
Operating expenses	-76.2	-71.6	126.0	122.4	-10,504.2	-10,895.3
Operating result Net ﬁnancial items	-35.8 -131.9	-33.9 -143.1	- -	- -	545.9 -131.9	358.7 -143.1
Result before tax Investments	-167.7 1.0	-177.1 3.0	- -	- -	414.0 641.4	215.6 571.7
Depreciation and amortization	-2.4	-1.6	-	-	-884.7	-926.6
Goodwill	-	-	-	-	2,413.3	2,480.2
Trademarks with indeﬁnite useful life	-	-	-	-	384.2	399.3

Financial income and expenses are not allocated to the respective business areas since the ﬁnancing of the Group is managed by Group Finance.

NOTE 2 - SEGMENT REPORTING (CONT.)

SALES BY GEOGRAPHIC AREA

Sweden

United Kingdom Hungary Switzerland Poland Netherlands Other countries Total

MSEK	2020	2019
Germany	4,565.4	4,947.0
USA	2,172.7	1,213.8
Singapore	1,586.6	1,849.9
China	665.5	682.7
Sweden	333.2	371.2
United Kingdom	314.6	396.2
Hungary	230.4	280.1
Switzerland	207.6	241.7
Poland	162.2	169.0
Netherlands	101.2	182.6
Other countries	710.7	919.9
Total	11,050.1	11,254.1

FIXED ASSETS BY GEOGRAPHIC AREA

MSEK

Germany Sweden

Czech Republic USA Singapore

MSEK	2020	2019
Germany	2.025.4	2.093.7
Sweden	204.8	217.3
Czech Republic	106.5	133.8
USA	94.6	151.2
Singapore	81.9	161.9
Poland	77.2	94.5
United Kingdom	65.1	89.5
Hungary	44.9	39.2
China	41.9	48.0
India	28.1	37.8
Other countries	59.1	63.1
Total	2.829.4	3.130.1

Fixed assets above include other intangible assets, tangible ﬁxed assets, right-of-use assets as well as deferred tax assets. Goodwill and trademarks with indeﬁnite useful life of MSEK 2,797 (2,880) have not been divided geographically since they are based on segments.

Information concerning the Group's largest customers

In 2020 sales to the Group's largest customer represent 14 (16) percent of the total net sales. Sales to this customer is made to several of its divisions, on three continents and is based on multiple stand-alone agreements. One other customer exceeded

10 percent of total net sales. The three largest customers are mainly attributable to the segment Supply Chain Solutions. The Group's ten largest customers together represents 55 (58) percent of total net sales.

NOTE 3 - DISAGGREGATION OF REVENUE

Revenue has been divided into geographic markets, main revenue streams and customer segments since these are the categories the Group uses to present and analyze revenue in other contexts. Income for each category is presented per reportable segment. The Group's customer contracts are easy to identify and products and services in a contract are largely connected and dependent on each other, and therefore part of an integrated oﬀer.

Main revenue streams are presented based on the internal names used in the Group. Sourcing & Procurement services refer to the purchase and procurement of products for custom-

Supply Chain Solutions

ers as well as handling the ﬂows connected to these products. Freight and transportation services refer to revenue from freight and transportation with our own trucks as well as pure freight forwarding. Other supply chain services such as fulﬁllment, kitting, warehousing, assembly and after sales services are presented under Other contract logistics services. Other work/services refer to pure print services and other services that do not ﬁt into any of the ﬁrst three categories.

Print &Packaging Solutions

Total

MSEK	2020	2020	2020	2019
Total net sales	8,408.4	8,774.8	2,727.3	2,563.9	11,135.7	11,338.7
Less: net sales to group companies	-28.2	-26.0	-57.4	-58.6	-85.6	-84.7
Net sales	8,380.2	8,748.8	2,669.9	2,505.3	11,050.1	11,254.1

Supply Chain SolutionsPrint & Packaging SolutionsGroup

MSEK	2020	2020	2020	2019
Customer segments Automotive	1,706.4	2,080.9	318.7	395.6	2,025.1	2,476.5
Electronics	3,183.6	3,715.0	57.2	49.6	3,240.7	3,764.6
Fashion & Lifestyle	1,295.9	1,261.3	1,063.3	750.7	2,359.2	2,012.0
Health Care & Life Science	863.3	244.0	59.6	54.7	922.9	298.7
Industrial	944.9	995.4	620.9	681.5	1,565.8	1,677.0
Other	386.1	452.1	550.2	573.2	936.3	1,025.3
Net sales	8,380.2	8,748.8	2,669.9	2,505.3	11,050.1	11,254.1
Main revenue streams Sourcing and procurement services	2,757.3	2,679.3	-	-	2,757.3	2,679.3
Freight and transportation services	2,116.4	2,388.4	735.9	419.6	2,852.3	2,808.0
Other contract logistics services	3,249.0	3,400.7	351.0	360.6	3,600.0	3,761.3
Other work/services	257.4	280.4	1,583.0	1,725.1	1,840.4	2,005.5
Net sales	8,380.2	8,748.8	2,669.9	2,505.3	11,050.1	11,254.1

NOTE 3 - DISAGGREGATION OF REVENUE (CONT.)

Supply Chain SolutionsPrint & Packaging Solutions

MSEK	2020	2020	2020	2019
Geographic markets Europe Germany	3,772.7	4,104.1	792.7	842.9	4,565.4	4,947.0
Sweden	324.4	360.8	8.9	10.4	333.2	371.2
United Kingdom	60.1	86.1	254.5	310.1	314.6	396.2
Hungary	188.8	249.5	41.6	30.6	230.4	280.1
Switzerland	160.2	172.1	47.4	69.6	207.6	241.7
Poland	40.0	30.1	122.2	138.9	162.2	169.0
Netherlands	80.3	163.5	20.9	19.1	101.2	182.6
Other countries	228.4	249.3	193.7	220.4	422.0	469.7
Europe total Asia Singapore	4,854.7 1,586.3	5,415.4 1,849.3	1,481.9 0.3	1,642.1 0.6	6,336.6 1,586.6	7,057.4 1,849.9
China	662.8	679.6	2.7	3.1	665.5	682.7
India	74.6	113.0	0.4	0.6	74.9	113.7
Other countries	101.2	244.3	21.1	7.4	122.3	251.8
Asia total North and South America USA	2,424.9 1,022.2	2,886.3 377.7	24.4 1,150.6	11.8 836.1	2,449.3 2,172.7	2,898.0 1,213.8
Other countries	71.0	60.8	8.0	8.8	78.9	69.6
North and South America total Other	1,093.1 7.5	438.5 8.6	1 158.5 5.0	844.9 6.6	2,251.6 12.5	1,283.4 15.2
Net sales	8,380.2	8,748.8	2,669.9	2,505.3	11,050.1	11,254.1

NOTE 4 - OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES

OTHER OPERATING INCOME

MSEK	2020	2019
Exchange rate gains	15.6	12.3
Gains from the sales of ﬁxed assets	4.1	1.9
Insurance compensations	8.0	12.3
Income from sales of coupons	0.0	3.6
Other	40.8	33.2
Total	68.6	63.2

OTHER OPERATING EXPENSESGroup

MSEK	2020	2019
Result from investments in associated companies	-3.8	-3.0
Exchange rate losses	-30.1	-9.8
Losses from the sales of ﬁxed assets	-5.3	-8.1
Other	-4.7	-13.1
Total	-43.9	-34.1

11,254.1

NOTE 5 - PERSONNEL

AVERAGE NUMBER OF EMPLOYEES

Women

Men

Total

United Kingdom Sweden Netherlands Brazil Austria Italy Mexico Taiwan Romania Russia France Total

Parent company Sweden

Subsidiaries Germany China Singapore Hungary Czech Republic Poland

USA India

2020	2020	2020	2019
Parent company Sweden	4	5	6	6	10	11
Subsidiaries Germany	842	887	2,309	2,532	3,151	3,419
China	435	481	153	181	588	661
Singapore	237	254	298	329	536	583
Hungary	129	123	203	204	332	327
Czech Republic	143	138	179	188	322	326
Poland	64	60	246	272	310	332
USA	162	155	146	148	308	303
India	23	25	170	183	193	208
United Kingdom	46	48	140	152	186	199
Sweden	36	42	96	99	133	141
Netherlands	6	5	45	42	50	46
Brazil	21	24	25	25	46	49
Austria	10	12	34	32	43	44
Italy	14	11	8	9	22	20
Mexico	10	10	9	9	19	19
Taiwan	4	4	1	1	5	5
Romania	3	1	1	-	4	1
Russia	-	-	2	2	2	2
France	-	-	1	-	1	-
Total	2,189	2,284	4,072	4,412	6,260	6,696

SALARIES AND OTHER REMUNERATION

Board and CEOBasic wage incl. other beneﬁts

Variable remuneration

Other employees

Parent company Subsidiaries Total

MSEK	2020	2020	2020	2019
Parent company	13.9	13.3	5.6	1.5	13.6	11.3
Subsidiaries	25.5	32.2	9.6	14.9	1,988.1	2,253.6
Total	39.3	45.5	15.2	16.4	2,001.7	2,264.8

Salaries and remunerationSocial security contributions

Pension contributions

Parent company Subsidiaries Total

MSEK

MSEK	2020	2020	2020	2019
Parent company	33.0	26.1	12.1	9.8	5.5	6.7
Subsidiaries	2,023.2	2,300.6	379.2	404.3	29.3	32.8
Total	2,056.2	2,326.7	391.3	414.1	34.8	39.5

NOTE 5 - PERSONNEL (CONT.)

GENDER DISTRIBUTION IN MANAGEMENT

Women

Men

Total

Board members Group Management Supervisors

2020	2020	2020	2019
Board members	4	4	6	6	10	10
Group Management	-	-	7	7	7	7
Supervisors	88	77	253	219	341	296

The Board also includes two employee representatives.

REMUNERATION TO THE BOARD, CHIEF EXECUTIVE OFFICER AND OTHER SENIOR OFFICERS 2020

SEK '000s

Chairman of the Board Board members (8 persons)

Chief Executive Oﬃcer

Other senior oﬃcers (6 persons)

Total remuneration to the Board, CEO and senior oﬃcers

Basic wage/

Board remunerationVariable remunerationOther beneﬁtsPension contributionsTotal

Chairman of the Board	806 - - - 806
Board members (8 persons)	3,516 - - - 3,516
Chief Executive Oﬃcer	9,446 5,557 121 3,294 18,417
Other senior oﬃcers (6 persons)	26,633 10,536 644 1,629 39,441
Total remuneration to the Board, CEO and senior oﬃcers	40,401 16,092 765 4,922 62,181

For allocation of the remuneration to the board members see page 46. In the amount for Other senior oﬃcers the remuneration to one of the persons refers to 9 months.

REMUNERATION TO THE BOARD, CHIEF EXECUTIVE OFFICER AND OTHER SENIOR OFFICERS 2019

Basic wage/

Board	Variable	Other	Pension
SEK '000s	remuneration	remuneration	beneﬁts	contributions	Total
Chairman of the Board	784	-	-	-	784
Board members (8 persons)	3,420	-	-	-	3,420
Chief Executive Oﬃcer	8,996	1,470	117	3,120	13,703
Other senior oﬃcers (6 persons)	32,670	12,333	1,047	1,342	47,392
Total remuneration to the Board,	45,870	13,803	1,164	4,462	65,299
CEO and senior oﬃcers

NOTE 5 - PERSONNEL (CONT.)

Basic wage/Board remuneration

The Chairman of the Board and Board members receive compen-sation for their participation on the Board and committee work from the total remuneration sum for the Board determined by the Annual General Meeting. Board members and deputies employed in the Group did not receive any fees or beneﬁts in addition to those pertaining to their employment. The Chairman of the Board has not received any compensation other than Board and commit-tee remuneration. Remuneration to the Chief Executive Oﬃcer, the former Chief Executive Oﬃcer and other senior oﬃcers consists of a basic salary, variable remuneration, other beneﬁts and pen-sion. Senior oﬃcers are the persons who, together with the Chief Executive Oﬃcer, comprised Group Management in 2020.

Variable remuneration

The proportion between basic salary and variable remuneration corresponds to the oﬃcer's responsibility and authority. For the Chief Executive Oﬃcer and the Chief Financial Oﬃcer variable remuneration should not exceed 60 and 50 percent respectively of their annual salary. For the other senior oﬃcers variable remunera-tion may not exceed 40 percent of their annual salary. Variable re-muneration is based on results in relation to individually targeted goals.

Pension beneﬁts as well as other beneﬁts to the Chief Executive Oﬃcer and senior oﬃcers are part of the total remuneration. Vari-able remuneration is carried as an expense for the ﬁnancial year 2020 and is normally paid out in 2021.

Bonus for the Chief Executive Oﬃcer is based on goals estab-lished by the Board. For other senior oﬃcers variable remunera-tion is based on goals established by the President together with the remuneration committee. No variable remuneration or any other kind of remuneration had a dilution eﬀect.

Other beneﬁts

Other beneﬁts refers to housing, company cars etc.

Pensions

The Group has both deﬁned beneﬁt and deﬁned contribution pen-sion plans. Pension cost is the cost that aﬀects the result for the year. One former employee and member of Group Management had deﬁned beneﬁt and deﬁned contribution pension plans. The present value of the deﬁned beneﬁt obligation under those plans 31 December 2020 was MSEK 2.2 (2.2) on the balance sheet date. All pensions are fully vested, i.e. there is no dependency on future employment.

The current Chief Executive Oﬃcer only has a deﬁned contribu-tion pension corresponding to 35 percent of the salary pension. The salary pension is based on the basic wage. The retirement age is 65 years.

For the other senior oﬃcers the retirement age is 65 years. Pension provisions are no more than 35 percent of the basic wage or, if applicable, no more than the ITP cost and the legal general pension, or the equivalent.

Financial instruments

There is no compensation or beneﬁts in the form of ﬁnancial instruments.

Other remuneration

No other remunerations have been distributed.

Severance pay

The period of notice for termination of the Chief Executive Oﬃcer by the company is 18 months. The period of notice from the Chief Executive Oﬃcer is 6 months. The period of notice for termina-tion of other senior oﬃcers is normally 12 months. Usually no severance pay is paid no matter which party gives notice. Normal wages are paid during the period of notice.

Deviations from the guidelines

The Board is entitled to deviate from the above guidelines if the Board determines that there is special reasons that in speciﬁc cases can justify this. The Board has during the year deviated from the guidelines for one of the senior oﬃcers regarding the variable remuneration and the limitation at 40 percent of the basic wage.

Preparation and decision process

The remuneration committee has during the year presented the Board with recommendations concerning principles for the remu-neration of senior oﬃcers. The recommendations have included proportions between ﬁxed and variable remuneration as well as the size of possible raises. In addition, the remuneration commit-tee has proposed criteria for deciding on variable remuneration as well as pension terms and severance pay. The Board has discussed the remuneration committee's proposals and made its decisions guided by their recommendations.

The Board has determined the remuneration for the Chief Executive Oﬃcer for the ﬁnancial year of 2020 based on the remu-neration committee's proposals. The Chief Executive Oﬃcer has determined the remuneration for other senior oﬃcers after consul-tation with the chairman of the remuneration committee.

Members of the remuneration committee during the year were Carl Bennet, Chairman, Pam Fredman, Erik Gabrielson, Linus Karlsson and Johan Stern. The remuneration committee meets when necessary but at least once a year to prepare proposals for the remuneration of the Chief Executive Oﬃcer and agree or dis-agree to his proposal for remuneration and conditions for senior oﬃcers who report directly to him. In addition, the remuneration committee draws up principles for salary levels and employment terms for Group Management. The remuneration committee pro-poses remuneration, terms and principles to the Board that then decides on these matters. The remuneration committee has met twice in 2020. The committee has been supported by external ex-pertise in matters concerning compensation levels and structures.

NOTE 6 - FEES TO THE AUDITORS

MSEK	2020	2019
PwC
Audit assignment	5.5	5.4
Audit-related services	-	0.4
Tax advisory services	-	0.1
Other services	-	-
Other
Audit assignment	0.8	1.1
Audit-related services	0.0	0.0
Tax advisory services	0.6	0.7
Other services	0.3	0.4
Total	7.2	8.1

Audit assignment is deﬁned as the statutory audit, i.e. the work necessary to produce the auditors' report as well as so called audit consultation given in connection with the audit. The total fee to PwC and its network is MSEK 5.5 (5.9). During the ﬁnancial year 2020 MSEK 1.3 (1.9) was paid in remuneration to the audit ﬁrm PricewaterhouseCoopers AB for the audit assignment and MSEK 0.0 (0.0) for other services.

NOTE 7 - COSTS CLASSIFIED BY NATURE

MSEK	2020	2019
Costs for goods for resale and other production material	2,736.8	2,893.0
Personnel costs	2,600.1	2,888.3
Freight costs	2,437.5	2,113.6
Other production costs	1,549.5	1,736.0
Costs for depreciation and write-downs	884.7	926.6
Cost for advertising and other selling expenses	74.7	82.9
Other costs	245.4	284.2
Total	10,528.9	10,924.6

The table shows the total cost for sold products and services, sales costs and administrative costs allocated per type of cost.

NOTE 8 - FINANCIAL INCOME AND EXPENSES

FINANCIAL INCOME

Total

Interest income Exchange rate gains Other

MSEK	2020	2019
Interest income	1.6	4.6
Exchange rate gains	25.4	26.4
Other	0.2	0.3
Total	27.2	31.3

FINANCIAL EXPENSES

NOTE 9 - TAXES

RECORDED TAX

Interest expenses leasing liabilities Interest expenses other liabilities Exchange rate losses

Other

Total

MSEK	2020	2019
Interest expenses leasing liabilities	-56.1	-66.7
Interest expenses other liabilities	-53.4	-68.6
Exchange rate losses	-38.5	-30.6
Other	-11.1	-8.5
Total	-159.1	-174.4

Current tax on the result for the year Withholding tax on dividends and other taxes Correction of previous years' current tax expense Deferred tax

Recorded tax

MSEK	2020	2019
Current tax on the result for the year	-115.8	-96.7
Withholding tax on dividends and other taxes	-10.5	-11.9
Correction of previous years' current tax expense	-6.6	-2.7
Deferred tax	10.7	48.6
Recorded tax	-122.2	-62.7

RECONCILIATION OF RECORDED TAX

Tax according to Swedish tax rate of 21.4 (22.0)% Tax eﬀect of:

Result before taxes

Diﬀerences in tax rates for foreign subsidiaries Non-deductible costs

Revaluation of deferred taxes

Correction of previous years' tax expense Withholding tax on dividends and other taxes Other

Recorded tax

MSEK	2020	2019
Result before taxes	414.0	215.6
Tax according to Swedish tax rate of 21.4 (22.0)% Tax eﬀect of: Diﬀerences in tax rates for foreign subsidiaries	-88.6 -0.4	-46.1 8.1
Non-deductible costs	-10.3	-7.0
Revaluation of deferred taxes	-3.5	-1.3
Correction of previous years' tax expense	-6.6	-2.7
Withholding tax on dividends and other taxes	-10.5	-11.9
Other	-2.2	-1.6
Recorded tax	-122.2	-62.7

NOTE 9 - TAXES (CONT.)

DEFERRED TAX ASSETS AND LIABILITIES BY NATURE, NET

Fixed assetsLess:

Tax losses carried forward not valued

Closing value, net

MSEK	2020	2019
Tax loss carryforwards	184.8	198.7
Fixed assets	-143.1	-161.6
Other items	101.2	100.0
Less: Tax losses carried forward not valued	142.9 -24.9	137.1 -27.5
Closing value, net	118.1	109.6

Unrecorded deferred tax assets refer to not valued tax loss carry-forwards. For information concerning the valuation of the tax loss carryforwards please see note 1, section Important estimations and assessments on page 67.

ALLOCATION OF DEFERRED TAX ASSETS AND LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION

Deferred tax liabilities

MSEK	2020	2019
Deferred tax assets	286.5	294.9
Deferred tax liabilities	-168.4	-185.3
Closing value, net	118.1	109.6

CHANGE IN DEFERRED TAX

Closing value, net

Translation diﬀerences

MSEK	2020	2019
Opening value, net	109.6	59.6
Acquisition of operations	-2.4	-
Recorded deferred tax on the result for the year	10.7	48.6
Tax items charged directly against other comprehensive income	-0.6	7.2
Translation diﬀerences	0.8	-5.8
Closing value, net	118.1	109.6

Tax items charged directly against other comprehensive income refer to the Group's hedge reserve and hedging of net investments abroad.

DUE DATE STRUCTURE - DEFERRED TAX ASSETS RELATING TO TAX LOSS CARRYFORWARDS

Due after 10 years

MSEK	2020	2019
Due within one year	0.4	0.3
Due after 10 years	3.5	13.3
No due date	156.0	157.6
Closing value	159.9	171.2

NOTE 10 - EARNINGS PER SHARE

NOTE 11 - OPERATING CASH FLOW

Result for the year attributable to parent company shareholders, MSEK

Average number of outstanding shares, in thousands

Earnings per share, SEK

2020 2019

287.1 148.1

35,358 35,358

8.12 4.19

Earnings per share is calculated by dividing the result attributable to the parent company's shareholders with the average number of outstanding shares during the year. There is no dilution.

MSEK

Cash ﬂow from operating activities Financial items

Paid taxes

Acquired and divested operations

Other items included in cash ﬂow from investing activities

Operating cash ﬂow

Operating cash ﬂow is deﬁned as cash ﬂow from operating activi-ties, excluding ﬁnancial items and paid taxes, and cash ﬂow from investing activities.

NOTE 12 - SUPPLEMENTARY INFORMATION TO CASH FLOW STATEMENTS

ADJUSTMENT FOR ITEMS NOT INCLUDED IN CASH FLOW

Depreciation, amortization and write-downs of intangible and tangible assets Changes in provisions that aﬀect cash ﬂow

Historical errors in customer projects Result from disposal of tangible assets Unrealized exchange rate gains and losses Other changes

Total

MSEK	2020	2019
Depreciation, amortization and write-downs of intangible and tangible assets	884.7	926.6
Changes in provisions that aﬀect cash ﬂow	1.3	104.5
Historical errors in customer projects	-	86.9
Result from disposal of tangible assets	1.2	6.3
Unrealized exchange rate gains and losses	-6.9	-8.2
Other changes	12.0	14.9
Total	892.3	1,131.0

PAID AND RECEIVED INTEREST

Paid interest Received interest Total

MSEK

MSEK	2020	2019
Paid interest	-109.6	-135.8
Received interest	1.6	4.6
Total	-108.0	-131.2

Cash and cash equivalents

Cash and cash equivalents consist primarily of cash and bank balances. Short-term placements are classiﬁed as cash and cash equivalents when:

- the risk of changes in their fair value is insigniﬁcant.
- they are easily converted.
- they mature in less than three months from the date they were acquired.

Other changes in interest-bearing liabilities

The item Other changes in interest-bearing liabilities mainly refers to changes stemming from utilization of revolving credits.

NOTE 13 - INTANGIBLE ASSETS

Opening accumulated amortization and write-downs Acquired and divested operations

Opening acquisition value Investments

Acquired and divested operations Disposals

Reclassiﬁcation Translation diﬀerence Closing acquisition value

Goodwill

Amortization for the year Disposals

Translation diﬀerence

Closing accumulated amortization and write-downs Net residual value

MSEK	2020	2020	2019
Opening acquisition value	2,480.9	2,439.3	399.4	393.3
Investments	-	-	-	-
Acquired and divested operations	41.0	-	-	-
Disposals	-	-	-	-
Reclassiﬁcation	-	-	-	-
Translation diﬀerence	-108.0	41.6	-15.2	6.1
Closing acquisition value Opening accumulated amortization and write-downs	2,413.9 -0.7	2,480.9 -0.7	384.2 -	399.4 -
Acquired and divested operations	-	-	-	-
Amortization for the year	-	-	-	-
Disposals	-	-	-	-
Translation diﬀerence	-	-	-	-
Closing accumulated amortization and write-downs Net residual value	-0.7 2,413.3	-0.7 2,480.2	- 384.2	- 399.4

Trademarks 1)Other intangible assets 2)

Total

MSEK	2020	2020	2019
Opening acquisition value	804.2	769.6	3,684.5	3,602.2
Investments	7.9	21.5	7.9	21.5
Acquired and divested operations	11.7	-	52.7	-
Disposals	-3.1	-6.4	-3.1	-6.4
Reclassiﬁcation	0.1	5.0	0.1	5.0
Translation diﬀerence	-39.8	14.5	-163.1	62.2
Closing acquisition value Opening accumulated amortization and write-downs	781.0 -454.9	804.2 -383.4	3,579.1 -455.5	3,684.5 -384.0
Acquired and divested operations	-	-	-	-
Amortization for the year	-69.7	-70.2	-69.7	-70.2
Disposals	2.9	5.6	2.9	5.6
Translation diﬀerence	28.1	-6.9	28.1	-6.9
Closing accumulated amortization and write-downs Net residual value	-493.6 287.4	-454.9 349.4	-494.2 3,084.9	-455.5 3,229.0

1) Trademarks with indeﬁnite useful life.
2) Customer relations, trademarks with deﬁned useful life, software and leasehold.

NOTE 13 - INTANGIBLE ASSETS (CONT.)

AMORTIZATION SPECIFIED BY FUNCTION IN THE INCOME STATEMENT

Cost of products and services sold Selling expenses

Administrative expenses Total

MSEK	2020	2019
Cost of products and services sold	-54.9	-54.8
Selling expenses	-8.2	-10.2
Administrative expenses	-6.6	-5.2
Total	-69.7	-70.2

Impairment test

Goodwill and trademarks with indeﬁnite useful life are subjected to impairment tests annually and when there are indications that a write-down may be necessary. Normally tests are made on the cash generating unit connected to the asset.

The recoverable amount for each cash generating unit is based on a calculation of the value in use. Impairment tests are per-formed on the lowest identiﬁed cash generating level, which for Elanders corresponds to its segments.

The value in use attributable to diﬀerent cash generating units is based on discounted endless cash ﬂows. Cash ﬂows for the ﬁrst three years are based on budgets and strategic plans. Signiﬁcantvariables in the tests are for example growth rate, operating mar-gin and investment level. In the following period an inﬂation of 2.0 (2.0) percent is assumed and business area Supply Chain Solutions is assumed to have a growth rate of 2.0 (2.0) percent and for the business area Print & Packaging Solutions zero growth has been assumed for the period after the initial three years, which is below the company's expectations. For the impairment test a discount rate after tax has been calculated based on the weighted average cost of capital (WACC) and was during the year 8.3 (8.3) percent. Based on the assumptions given above the useful value exceeds the recorded value for all cash generating units.

INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE DIVIDED BY CASH GENERATING UNIT

Supply Chain Solutions Print & Packaging Solutions Total

MSEK	2020	2019
Supply Chain Solutions	1,821.5	1,849.5
Print & Packaging Solutions	975.9	1,030.0
Total	2,797.4	2,879.5

Sensitivity analysis

A number of sensitivity analyses have been made to evaluate whether or not feasible unfavorable changes could lead to need for write-downs. The analyses have focused on if the average growth rate or operating margin was reduced with one percentage unit or the discount rate was increased with one percentage unit.

The analyses have not shown any need for impairment and the recoverable value exceeds the book value for both business area Print & Packaging Solutions and Supply Chain Solutions.

NOTE 14 - TANGIBLE ASSETS

MSEK

Opening acquisition value Reclassiﬁcation to right-of-use assets Investments

Acquired and divested operations Disposals

Reclassiﬁcation Translation diﬀerence Closing acquisition value

Opening accumulated depreciation and write-downs Reclassiﬁcation to right-of-use assets

Depreciation for the year

Disposals Reclassiﬁcation Translation diﬀerence

Closing accumulated depreciation and write-downs Net residual value

Buildings and land 1)Plant and machineryEquipment, tools, ﬁxtures and ﬁttings

MSEK	2020	2020	2020	2019
Opening acquisition value	363.2	349.0	946.7	924.8	758.9	1,025.8
Reclassiﬁcation to right-of-use assets 3)	-	-	-	-11.9	-	-260.2
Investments	1.4	7.9	18.3	24.2	53.2	55.0
Acquired and divested operations	-	-	-	-	0.2	-
Disposals	-0.2	-3.2	-16.0	-76.3	-47.5	-87.3
Reclassiﬁcation	0.0	1.3	9.9	59.8	1.7	10.3
Translation diﬀerence	-27.3	8.2	-74.8	26.1	-43.7	15.2
Closing acquisition value Opening accumulated depreciation and write-downs	337.2 -200.3	363.2 -182.0	884.0 -696.5	946.7 -701.6	722.9 -561.5	758.8 -678.2
Reclassiﬁcation to right-of-use assets 3)	-	-	-	8.8	-	121.6
Depreciation for the year	-15.0	-16.4	-57.1	-57.4	-69.6	-70.3
Disposals	0.0	2.2	15.4	73.3	42.1	76.1
Reclassiﬁcation	-	0.0	0.0	-0.2	0.0	0.1
Translation diﬀerence	14.6	-4.1	58.4	-19.3	34.2	-10.8
Closing accumulated depreciation and write-downs	-200.6	-200.3	-679.8	-696.5	-554.9	-561.5
Net residual value	136.5	162.9	204.2	250.1	168.0	197.3

Fixed assets under construction 2)Total

Closing accumulated depreciation and write-downs Net residual value

Disposals Reclassiﬁcation Translation diﬀerenceInvestments

Acquired and divested operations Disposals

Reclassiﬁcation Translation diﬀerence Closing acquisition value

Opening accumulated depreciation and write-downs Reclassiﬁcation to right-of-use assets

Depreciation for the year

MSEK	2020	2020	2019
Opening acquisition value	10.6	51.4	2,079.4	2,351.0
Reclassiﬁcation to right-of-use assets 3)	-	-	0.0	-272.1
Investments	11.9	34.2	84.8	121.3
Acquired and divested operations	-	-	0.2	-
Disposals	-0.4	-	-64.1	-166.8
Reclassiﬁcation	-11.8	-76.4	-0.1	-5.0
Translation diﬀerence	-0.5	1.4	-146.3	51.0
Closing acquisition value Opening accumulated depreciation and write-downs	9.9 -	10.6 -	1,953.9 -1,458.3	2,079.3 -1,561.8
Reclassiﬁcation to right-of-use assets 3)	-	-	0.0	130.4
Depreciation for the year	-	-	-141.6	-144.1
Disposals	-	-	57.5	151.6
Reclassiﬁcation	-	-	-	-0.1
Translation diﬀerence	-	-	107.2	-34.2
Closing accumulated depreciation and write-downs	-	-	-1,435.2	-1,458.2
Net residual value	9.9	10.6	518.7	621.1

1) Buildings and land include land with a book value of MSEK 16.2 (18.1).
2) Fixed assets under construction include advances related to tangible assets of MSEK 9.9 (10.4).
3) Lease agreements are reported as rights of use in the balance sheet from 2019 when IFRS 16 came into force, see note 15.

There were no signiﬁcant investment obligations per 31 December 2020 or 2019.

NOTE 14 - TANGIBLE ASSETS (CONT.)

DEPRECIATION SPECIFIED BY FUNCTION IN THE INCOME STATEMENT

Cost of products and services sold Selling expenses

Administrative expenses Total

MSEK	2020	2019
Cost of products and services sold	-119.4	-116.6
Selling expenses	-1.2	-1.5
Administrative expenses	-21.0	-26.0
Total	-141.6	-144.1

NOTE 15 - RIGHT-OF-USE ASSETS

Buildings
and land
MSEK	2020	2019	2019
Opening acquisition value	2,021.2	1,740.1	196.6	151.8
whereof reclassiﬁcation from tangible assets 1)	-	-	-	11.9
Investments	540.0	301.7	40.4	45.7
Disposals	-119.7	-50.0	-35.4	-7.6
Translation diﬀerence	-121.0	29.4	-10.9	6.7
Closing acquisition value	2,320.6	2,021.2	190.6	196.6
Opening accumulated depreciation and write-downs	-526.3	-	-64.7	-8.8
whereof reclassiﬁcation from tangible assets 1)	-	-	-	-8.8
Depreciation for the year	-523.4	-545.2	-51.0	-63.8
Disposals	119.7	11.0	27.8	7.6
Translation diﬀerence	48.5	7.9	4.8	0.3
Closing accumulated depreciations and write-downs	-881.4	-526.3	-83.0	-64.7
Net residual value	1,439.1	1,494.9	107.6	131.9

Plant and machinery 2020

1) Leases previously classiﬁed as ﬁnance leases have been reclassiﬁed to right-of-use asset from 1 January 2019 when IFRS 16 became eﬀective.

NOTE 15 - RIGHT-OF-USE ASSETS (CONT.)

MSEK	2019
Opening acquisition value	423.2
whereof reclassiﬁcation from tangible assets 1)	260.2
Investments	72.9
Disposals	-46.6	-102.3
Translation diﬀerence	-17.0	3.3
Closing acquisition value	394.7	397.0
Opening accumulated depreciation and write-downs	-159.1	-121.6
whereof reclassiﬁcation from tangible assets 1)	-	-121.6
Depreciation for the year	-99.1	-103.3
Disposals	44.4	67.0
Translation diﬀerence	9.2	-1.2
Closing accumulated depreciations and write-downs	-204.6	-159.1
Net residual value	190.1	237.9

Equipment, tools,
ﬁxtures and ﬁttings
2020	2020	2019
397.0	2,614.8	2,315.1
-	-	272.1
61.4	641.8	420.3
-201.7	-160.0
-148.9	39.4
2,905.9	2,614.8
-750.1	-130.4
-	-130.4
-673.5	-712.3
191.9	85.6
62.6	7.0
-1,169.1	-750.1
1,736.8	1,864.7

Total

1) Leases previously classiﬁed as ﬁnance leases have been reclassiﬁed to right-of-use asset from 1 January 2019 when IFRS 16 became eﬀective.

DEPRECIATION SPECIFIED BY FUNCTION IN THE INCOME STATEMENT

Cost of products and services sold Selling expenses

Administrative expenses Total

EXPENSES RECOGNIZED IN THE INCOME STATEMENT

The total cash ﬂow for leasing contracts amounted to MSEK 833 (859).

MSEK	2020	2019
Cost of products and services sold	-655.7	-694.0
Selling expenses	-6.3	-6.0
Administrative expenses	-11.6	-12.3
Total	-673.5	-712.3

MSEK	2020	2019
Depreciation right-of-use assets	-673.5	-712.3
Interest expenses lease liability	-56.1	-66.7
Expenses related to short-term leases and leases with low value	-93.8	-93.4
Expenses related to variable leasing fees that is not included in the valuation of the lease liability	-24.8	-18.2
Total	-848.2	-890.6

NOTE 16 - SHARES IN ASSOCIATED COMPANIES

Shares in associated companies LOGworks GmbH

Percentageholding value, MSEKCarrying

The table below shows summarized income statement and balance sheet for the Group's associated companies.

MSEK Net sales Operating result Result for the year

1.1 -5.6

NOTE 17 - INVENTORY

2020 2019

112.6 124.4

1.2 -5.7

MSEK Fixed assets Current assets Total assets Equity

Short-term liabilities Total equity and liabilities

36.7 18.7

MSEK

Raw materials and consumables Work in process

Finished goods Total

2020 2019

0.1 0.1

36.6 18.6

36.7 18.7

0.0 -5.0

36.7 23.7

2020 2019

Costs relating to obsolescence expensed during the year amounted to MSEK 7.9 (8.4) and at year-end the obsolescence reserve was MSEK 13.5 (11.8).

NOTE 18 - PREPAID EXPENSES AND ACCRUED INCOME

MSEK

Machine rent paid in advance Premise rent paid in advance Other prepaid expenses Services performed, not invoiced Other accrued income

Total

2020 2019

NOTE 19 - CASH AND CASH EQUIVALENTS

MSEK

Cash and bank

Cash and cash equivalents

1,101.4 655.2

Translation diﬀerences in cash and cash equivalents for the year were MSEK -103.7 (17.2).

NOTE 20 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Financial goals regarding capital structure

The major ﬁnancial goal of Elanders is to create value for the owners of the company. The purpose of the goals regarding group capital structure are to ensure the company's ability to continue operations and generate returns to its shareholders as well as be useful to other interested parties. Achieving a good balance be-tween equity and loan ﬁnancing ensures the ﬂexibility the Group needs in order to be able to invest in operations while maintain-ing control over the cost of capital. Dividends to shareholders, redemption of shares, issuing new shares or divesting assets are examples of measures the Group can use to adjust its capital structure.

Elanders has the goal of net debt in relation to EBITDA as a maximum of 2.5 times. In 2020 this quota was 2.0 (3.1) times.

Financial risk management

The major purpose of group ﬁnancial risk management is to iden-tify, control and minimize the Group's ﬁnancial risks. Risk manage-ment is centralized to Group Finance. Financial risks in the Group's subsidiaries are managed by Group Finance that also acts as an internal bank. The exception is commercial credit risks, which are handled by each subsidiary. The ﬁnancial policy adopted by the Board steers which currency risks are hedged as well as how interest, ﬁnancing and liquidity risks are handled. The greatest ﬁnancial risks the Group is exposed to are currency risk, interest risk, ﬁnancing risk and credit risk.

Currency risk

Elanders runs into a currency risk primarily through transactions in another currency than that of the companies local currency (trans-action exposure) and when converting net proﬁt and net assets from foreign subsidiaries (translation exposure).

Transaction exposure

Actual receivables and payables along with contracted purchase and sales orders with payment ﬂows within a twelve month period are hedged to some extent. Anticipated or budgeted ﬂows are not hedged.

The Group uses forward exchange contracts to handle exchange risk exposure and hedge accounting for contracted future pay-ment ﬂows as well as translation of ﬁnancial assets and liabilities. The hedge reserve for forward exchange contracts per 31 Decem-ber 2020 amounted to MSEK -0.1 (0.2) and will be returned to the income statements in 2021.

Translation diﬀerences on operating receivables and payables as well as forward exchange contracts that are held for hedging pur-poses are reported as other operating income or expenses. Trans-lation diﬀerences on ﬁnancial liabilities and assets and the associ-ated hedging instruments are reported under ﬁnancial items.

Translation exposure

2020 2019

1,101.4 655.2

Elanders' results from foreign subsidiaries in foreign currency con-sist primarily of USD and EUR and the Group result is sensitive to ﬂuctuation in these currencies. Below is an analysis of how a posi-tive or negative change of 10 percent of the average exchanges rates on these currencies should have aﬀected the Group net sales and operating result in 2020:

Estimated eﬀect from changes in exchange rates by 10%

MSEK EUR USDEUR & USD

EUR

+/- 610

+/- 24

-/+ 18

USD

+/- 430

+/- 32

+/- 30

EUR & USD

+/- 1,040

+/- 56

+/- 23

Net salesOperating resultResult before tax

In regards to net assets in foreign subsidiaries the exposure is primarily in EUR and USD. Hedging of the net investments made in foreign subsidiaries has partly been made regarding the opera-tions in Germany and Singapore through loans in EUR and USD. If the exchange rates in EUR and USD changed by 10 percent it would aﬀect equity by MSEK 181 (173), including the above de-scribed hedging.

Currency hedges

The table below shows a compilation over the Group's outstanding forward exchange contracts per 31 December 2020. All the con-tracts are due within a year. The nominal amount refers to hedged currency translated to SEK.

CurrenciesNominal amountAverageMSEK hedging rate

SEK/EUR	174.7 10.04
EUR/PLN	2.8 4.52
SEK/GBP	29.6 12.24
USD/EUR	5.1 0.81

NOTE 20 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONT.)

Interest risk

Interest risk is deﬁned as the risk of lower proﬁts caused by a change in interest rates. The Group strives to achieve a balance between cost eﬃcient borrowing and the risk exposure if a sudden, substantial interest rate change should occur and negatively inﬂuence proﬁts and cash ﬂow. A change in market interest rates by one percentage unit aﬀects group proﬁt after tax by MSEK 23 (21). The following table presents the allocation of interest-bearing and noninterest-bearing ﬁnancial assets and liabilities. Reserves for pensions have been included in interest-bearing liabilities. In the table regarding dividing ﬁnancial instru-ments into categories further down in this note they are included in non-ﬁnancial liabilities.

MSEK

Cash and bank Long-term liabilities Current liabilities

Total

Current receivables	- 1,784.7
Cash and bank	655.2 -
Long-term liabilities	-3,578.8 -
Current liabilities	-1,037.0 -719.8
Total	-3,960.6 1,064.9

Floating interestNon-interest-bearing

Financing/liquidity risk

Financing/liquidity risk is deﬁned as the risk of not being able to meet payment obligations as a result of insuﬃcient liquid funds or diﬃculties in ﬁnding ﬁnancing. Currently the Group has a credit agreement with two Swedish banks that cover operational ﬁnanc-ing and runs until January 2022. Related to the Group's interest bearing liabilities there are covenants from the credit institutions regarding debt/equity ratio and net debt in relation to EBITDA. As of 31 December 2020 all covenants were fulﬁlled with a good margin. See page 87 concerning due date structure regarding ﬁnancial liabilities.

Credit risk

Credit risk is deﬁned as the risk of a counterparty not meeting their obligations. Credit risk can be divided into ﬁnancial credit risk and commercial credit risk.

Financial credit risk

The most crucial ﬁnancial credit risk for the Group arises when trading exchange derivative instruments and investing surplus liquidity. Hence, in order to reduce the risk, the ﬁnancial policy stipulates that only counterparts that have been approved by Group Finance should be used. On 31 December 2020 total exposure regarding ﬁnancial credit risks was MSEK 1,154 (700). The exposure is based on the recorded value of all ﬁnancial assets except shareholdings and accounts receivable.

Commercial credit risk

The commercial credit risk consists of the payment ability of cus-tomers and is handled by the subsidiaries through careful monitor-ing of payment ability, follow up of customers' ﬁnancial reports and good communication. The Group's total credit risk is spread out over many diﬀerent companies. However, in actuality a few customers represent a large part of the Group's accounts receiv-able. These customers are for the most part large, listed compa-nies that have been thoroughly investigated. The total commercial credit exposure is equivalent to the book value of accounts receiv-able and amounted to MSEK 1,344 (1,740) per 31 December 2020.

In 2020 credit losses amounted to MSEK 2 (2), of which MSEK 1 (1) were previously reserved.

Operational risks

In addition to the ﬁnancial risks above Elanders is exposed to risks tied to daily operations. Handling operational risks is part of the day-to-day work in our subsidiaries and in Group Management. In terms of responsibility all group operations are represented in Group Management which meets and communicates on a regular basis.

Sensitivity analysis

The table below presents how group results after tax would have been aﬀected by a change of one percentage in the variables connected to Elanders various operational risks. Each variable has been treated individually under the condition that the others remain constant. It is assumed that a change in net sales will aﬀect the value added on the margin which thereafter will pre-sumably fall straight through the income statement. A change in personnel costs is multiplied with total personnel costs. A change in transportation costs is multiplied with costs for transportations and is not assumed to be able to be charged from the customer. The analysis does not pretend to be exact. It is merely indicative and aims to show the most relevant, measurable factors in this connection. The ﬁgures are presented in MSEK.

• Net sales	+/- 44
• Personnel cost	+/- 21
• Cost of material	+/- 19

NOTE 20 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONT.)

DUE DATE STRUCTURE REGARDING FINANCIAL LIABILITIES

Due date structure regarding ﬁnancial liabilities including interest expenses, excluding utilized bank overdrafts, is presented in the table below. The amounts are future undiscounted cash ﬂows. The credit agreement with the Group's main banks expires in January 2022.

MSEK Borrowing debts Finance lease liabilities Accounts payable Other ﬁnancial liabilities Interest

Total

Jan.-Mar.	Apr.-Dec.
2021	2021	2022-2025	2026-
19.3	59.0	1,980.7	-
175.1	456.2	1,065.6	92.0
641.7	-	-	-
41.9	-	-	-
21.8	59.2	64.9	4.6
899.8	574.4	3,111.2	96.6

Financial instruments - initial assessment

Financial instruments are valued the ﬁrst time at fair value plus transaction costs, which applies to all ﬁnancial assets and liabili-ties not recognized at fair value through proﬁt or loss. Financial assets and liabilities recognized at fair value through proﬁt or loss are valued the ﬁrst time at fair value, while attributable transac-tion costs are valued through proﬁt or loss.

RECEIVABLES OVERDUE BUT NOT WRITTEN-DOWN

31-60 days overdue

Total

MSEK	2020	2019
1-30 days overdue	111.7	253.7
31-60 days overdue	28.5	32.7
61-90 days overdue	17.2	22.3
91-120 days overdue	5.4	17.3
More than 120 days overdue	4.3	27.4
Total	167.1	353.4

Only accounts receivables are included in the table above. No other overdue receivables existed as of 31 December 2020 or 2019. Accounts receivable amounting to MSEK 10 (45) are overdue with more than 90 days without any identiﬁed need for write-down. The receivables refers to customers without any history of payment diﬃculties.

CHANGE IN PROVISION FOR DOUBTFUL RECEIVABLES

Translation diﬀerence

Closing provision for doubtful receivables

MSEK	2020	2019
Opening provision for doubtful receivables	-24.2	-11.9
Reversal of provision from previous year	12.5	7.9
Utilized provisions for conﬁrmed losses	0.6	0.2
Provisions during the year	-18.1	-9.8
Reclassiﬁcation	-	-10.6
Translation diﬀerence	1.2	0.0
Closing provision for doubtful receivables	-28.0	-24.2

INTEREST INCOME AND EXPENSES STEMMING FROM FINANCIAL ASSETS AND FINANCIAL LIABILITIES

MSEK

Interest income from ﬁnancial assets

Interest expenses due to ﬁnancial liabilities

Total

MSEK	2020	2019
Interest income from ﬁnancial assets	1.6	4.6
Interest expenses due to ﬁnancial liabilities	-108.4	-133.5
Total	-106.8	-128.9

The reason the result is not the same as the interest result re-corded under ﬁnancial items is mainly due to the fact that ﬁnancial items stemming from pensions have been excluded.

Net proﬁt/loss for ﬁnancial instruments recorded in the income statement

The table below contains the following items that have been recorded in the income statement:

- Proﬁts and losses stemming from exchange rate diﬀerences, including proﬁts and losses attributable to hedge accounting.
- Proﬁts and losses stemming from ﬁnancial instruments where hedge accounting is applied.
- Proﬁts and losses stemming from derivatives where hedge accounting is not applied.

MSEK	2020	2019
Loans and receivables	-111.5	64.2
Other ﬁnancial liabilities	88.0	-65.5
Total	-23.5	-1.3

NOTE 20 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONT.)

Financial assets and liabilities measured at fair value

The ﬁnancial instruments recognized at fair value in the Group's report on ﬁnancial position are derivatives identiﬁed as hedging instruments. The derivatives consist of forward exchange contracts and are used for hedging purposes. Valuation at fair value of for-ward exchange contracts is based on published forward rates on an active market. All derivatives are included in level 2 in the fair value hierarchy. Since all the ﬁnancial instruments recognized at fair value are included in level 2 there have been no transfers between valuation levels. The table below presents fair value respective booked value per class of ﬁnancial assets and liabilities, which are recorded gross.

Short-term non-interest-bearing liabilities - Derivative instruments in hedge accounting relationships

Other current assets - Derivative instruments in hedge accounting relationships

MSEK	2020	2019
Other current assets - Derivative instruments in hedge accounting relationships	-	0.2
Short-term non-interest-bearing liabilities - Derivative instruments in hedge accounting relationships	0.1	-

The fair value of other ﬁnancial assets and liabilities valued at their amortized purchase price is estimated to be equivalent to their book value.

Hedge accounting

Financial instruments used to hedge currency risks in contracted cash ﬂows as well as net investments abroad have been recorded at market value in the balance sheet. Hedge eﬀectiveness is deter-mined at the inception of the hedge relationship, and through pe-riodic assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. For hedges of foreign currency, the group enters into hedge relationships where the critical terms of the hedging instrument match with the terms of the hedged item. The group therefore performs a qualitative assessment of eﬀectiveness.

CATEGORIZATION OF FINANCIAL INSTRUMENTS

The categorization of ﬁnancial assets and liabilities and their book value in the balance sheets for 2020 and 2019 are presented in the tables below. For information regarding ﬁnancial assets and liabi-lities valued at fair value see previous page. For other assets and liabilities shown below the fair value is estimated to be equivalent to their book value.

FINANCIAL ASSETS AT AMORTIZED COST

Accounts receivable Other ﬁnancial assets Cash and cash equivalents

MSEK

Total

MSEK	2020	2019
Accounts receivable	1,343.5	1,740.2
Other ﬁnancial assets	52.3	44.5
Cash and cash equivalents	1,101.4	655.2
Total	2,497.2	2,439.9

LIABILITIES AT AMORTIZED COST

Trade payables and other ﬁnancial liabilities

MSEK

Borrowings

Total

MSEK	2020	2019
Trade payables and other ﬁnancial liabilities	683.6	719.8
Borrowings	3,847.7	4,510.0
Total	4,531.3	5,229.8

NOTE 21 - SHARE CAPITAL

Number of registered shares in the parent company	2020	2019
Issued per 1 January	35,357,751	35,357,751
Issued per 31 December	35,357,751	35,357,751
Number	Number	Share
2020	of shares	of votes	capital, SEK

A shares

1,814,813

18,148,130

B shares

33,542,938

335,429,380

Total

35,357,751

51,691,068

353,577,510

All shares are completely paid for. No shares are reserved for transfer according to option agreements or other contracts. The shares' quota value is SEK 10.

NOTE 22 - INTEREST-BEARING LIABILITIES

The Group had a total of MSEK 3,201 (3,508) per 31 December 2020 in credit facilities including factoring of which MSEK 976 (692) were unutilized.

CHANGES IN INTEREST-BEARING LIABILITIES

The ﬁnancing cost is priced according to a ﬁxed interest term and an agreed margin. The Group's average eﬀective interest rate during the year was 3.1 (3.0) percent. A fee is charged for granted credit facilities, this is recognized within other ﬁnancial expenses.

Closing liabilities

Pledged assets

See note 26 for information on pledged assets.

MSEK	2020	2019
Opening liabilities	4,510.0	3,168.5
Eﬀect of applying IFRS 16 at the beginning of the period	-	2,043.0
Reported liabilities relating to lease agreements entered into during the year	550.6	423.8
Amortization of lease liabilities	-657.9	-680.6
Other changes in lease liabilities	83.2	-82.0
Amortization of borrowing debts	-166.8	-139.0
Other changes in borrowing debts	-273.4	-332.9
Translation diﬀerence	-198.0	109.2
Closing liabilities	3,847.7	4,510.0

NOTE 23 - PROVISIONS FOR POST-EMPLOYMENT BENEFITS

Deﬁned beneﬁt pension plans

Deﬁned beneﬁt pension plans mainly cover retirement pensions and widow pensions where the employer has an obligation to pay a lifelong pension corresponding to a certain guaranteed percent-age of wages or a certain annual sum. Retirement pensions are based on the number of years a person is employed. The em-ployee must be registered in the plan for a certain number of years in order to receive full retirement pension. For each year at work the employee earns an increasing right to pension, which is recorded as pension earned during the period as well as an increase in pension obligations. These plans are ﬁnanced through payments made regularly by the employer.

The fair value of the plan assets in the Elanders' deﬁned beneﬁt pension plans amounted to MSEK 23.0 (24.4) as of 31 December 2020 and the present value of the pension obligations amounted to MSEK 130.7 (130.2). The deﬁned contribution plans are mainly attributable to the operations in Germany.

The actuarial measurement of pension obligations and costs for deﬁned beneﬁt plans are based on the following actuarial signiﬁcant assumptions:

Percent Discount rate 1)

Expected return on plan assets

0.45 0.95

1) The discount rate is based on the anticipated returns from a typical high-quality company euro bond with AA rating.

PROVISION FOR POST-EMPLOYMENT OBLIGATIONS

2020 2019

0.45 0.95

MSEK

Fundedplans

Present value of post-employment obligations

114.8

15.9

130.7

The fair value of plan assets

-23.0

Total

91.8

15.9

107.7

CHANGE IN CURRENT VALUE OF THE POST-EMPLOYMENT OBLIGATIONS

Opening balance Interest expense

Unfunded plans

Actuarial gains(-)/losses(+), net Current year service cost Pensions paid out Translation diﬀerence Closing balance

MSEK	2020	2019
Opening balance	130.2	115.9
Interest expense	1.0	1.7
Actuarial gains(-)/losses(+), net	6.5	13.8
Current year service cost	0.3	0.3
Pensions paid out	-2.8	-2.7
Translation diﬀerence	-4.7	1.2
Closing balance	130.7	130.2

CHANGE IN PLAN ASSETS FAIR VALUE

Actuarial gains(-)/losses(+), net Translation diﬀerence

Opening balance Interest income

Closing balance

MSEK	2020	2019
Opening balance	24.4	23.4
Interest income	0.2	0.4
Actuarial gains(-)/losses(+), net	-0.9	0.4
Translation diﬀerence	-0.8	0.2
Closing balance	23.0	24.4

Total

NOTE 23 - PROVISIONS FOR POST-EMPLOYMENT BENEFITS (CONT.)

NET EXPENSE RECOGNIZED IN THE INCOME STATEMENT REGARDING DEFINED BENEFIT PLANS

Deﬁned contribution pension plans

These plans mainly cover retirement, sick and family pensions. The premiums are paid regularly during the year by individual group companies to diﬀerent insurance companies. The size of the premiums is based on wages. Pension costs for the period are in-cluded in the income statement and amount to MSEK 34.8 (40.8).

The obligations for retirement and sick pensions for white-collar workers for several of the Swedish companies have been safe-guarded through insurance in Alecta. According to an opinion from the Swedish Financial Reporting Board, UFR 10, this is a

NOTE 24 - OTHER PROVISIONS

MSEK	2020	2019
Current year service cost	0.3	0.3
Interest expense	1.0	1.7
Interest income	-0.2	-0.4
Pension costs for deﬁned beneﬁt plans	1.2	1.6

deﬁned beneﬁt multi-employer plan. The Group has not had access to the information necessary to report these plans as deﬁned beneﬁt pension plans for the ﬁnancial year 2020 since at the moment Alecta cannot provide speciﬁc deﬁned beneﬁt pen-sion for those insured. Pension plans that are safeguarded through insurance in Alecta are therefore reported as a deﬁned contribu-tion plan. Fees for 2019 for pension insurance from Alecta totaled MSEK 1.8 (2,2). For 2020 no signiﬁcant changes are expected regarding the total costs for pension insurance from Alecta.

Provided	Utilized	Reversal of
Translation	for during	during	unutilized
MSEK	2020	diﬀerence	the year	the year	amounts	2019
Restructuring measures	32.7	-1.1	17.8	-69.5	-0.3	85.8
Guarantee commitments	65.8	-2.5	33.8	-12.7	-4.6	51.8
Restoration costs	47.1	-2.4	34.4	-13.6	-0.6	29.3
Other	34.6	-2.4	30.5	-12.7	-0.2	19.4
Total	180.2	-8.4	116.5	-108.5	-5.7	186.3
Of which current	160.8	157.0

NOTE 25 - ACCRUED EXPENSES AND DEFERRED INCOME

Accrued expenses for services and goods received Other accrued expenses and deferred income Total

MSEK

Holiday pay liability

Social security contributions Accrued salaries and remuneration

2020 2019

51.1 54.0

37.0 38.2

124.4 111.3

287.1 275.3

95.8 112.3

595.4 591.1

NOTE 26 - PLEDGED ASSETS AND CONTINGENT LIABILITIES

PLEDGED ASSETS

Floating charges Other pledged assets Total

Pledged to: Credit institutions

MSEK

2020

2019

Floating charges Other pledged assets

119.3 239.9

119.3 254.3

Total Pledged to: Credit institutions

359.2

373.6

Other pledged assets refer primarily to collateral in the form of shares in subsidiaries. The item also includes leased assets held under a retention of title clause.

NOTE 27 - TRANSACTIONS WITH RELATED PARTIES

The transactions between subsidiaries have taken place with normal business terms and at market prices. During the year intra-group sales of products and services amounted to MSEK 4,751 (4,773). Intra-group transactions and balances have been elimi-nated and are therefore not included in the ﬁgures below concern-ing the Group.

Sales of products and services

During 2020 and 2019 there have not been any sales of products and services to related parties.

CONTINGENT LIABILITIES

Other contingent liabilities Total

MSEK	2020	2019
Other contingent liabilities	0.1	0.1
Total	0.1	0.1

Purchase of products and Services

Related parties to Peter Sommer, previously a member of Group Management and MD of Elanders GmbH, own the property where Elanders GmbH runs most of its operations. During the year Elanders GmbH has paid MSEK 14.4 (14.5) in rent for this prop-erty, which is on par with the market.

Erik Gabrielson, who is member of the Board, is partner in Vinge Law Firm that during the year has provided legal counsel and invoiced fees amounting to MSEK 1.0 (1.2).

No Board member or senior oﬃcer has or has had direct or indirect participation in any business transactions, between them-selves or the Group that are or were of an unusual nature concern-ing the terms.

Remuneration to Board members and management is reported in note 5.

NOTE 28 - ACQUIRED AND DIVESTED OPERATIONS

Acquisition of operations in 2020

In October 2020 Elanders signed a contract to acquire 70 percent of the shares in Azalea Global IT AB. Azalea has net sales of around MSEK 30 annually, good proﬁtability and is specialized in Value Recovery Services. They manage the entire chain from purchasing used IT equipment and restoring and resetting it to then selling it to a network of customers. The acquisition of Azalea is a part of Elanders' investments within sustainable services that contribute to a circular economy. The acquisition did not have any material eﬀect on net sales or proﬁt during the period. In connection with the acquisition, intangible assets in the form of customer relationships amounting to MSEK 12 and goodwill amounting to MSEK 41 were identiﬁed. The agreement contains a mandatory call & put option that gives Elanders the right to acquire the remaining shares in the company in 2024. The option also gives the sellers the right to sell the remaining shares at a deﬁned purchase price. The acquisition costs, i.e. the costs for advisors in connection with the acquisition, amounted to MSEK 0.4.

NOTE 29 - EVENTS AFTER THE BALANCE SHEET DATE

Acquisition of operations in 2019

In January 2019, the acquisition of Spreckley Ltd was ﬁnalized, with an additional purchase price of MSEK 5 being paid. The purchase price was previously reserved for.

In December 2019, the remaining 20 percent of the shares in Asiapack Ltd. were acquired. The purchase price amounted to MSEK 25 and has been reported as a transaction with shareholders non-controlling interests.

No signiﬁcant events have taken place between the balance sheet date and the date this report was signed.

INCOME STATEMENTS

MSEK	Note	2020	2019
Net sales	40.4	37.7
Selling expenses	-14.9	-11.6
Administrative expenses	2	-66.9	-66.8
Other operating income	3	5.4	5.2
Operating result	4, 7	-36.0	-35.5
Result from shares in subsidiaries	108.6	162.1
Interest income	119.7	132.7
Other ﬁnancial income	127.0	59.0
Interest expenses	-49.0	-64.0
Other ﬁnancial expenses	-117.8	-78.3
Result after ﬁnancial items	5	152.6	176.0
Taxes	6	-7.6	-5.0
Result for the year	145.0	171.0
STATEMENTS OF COMPREHENSIVE INCOME
MSEK	2020	2019
Result for the year	145.0	171.0
Other comprehensive income	-	-
Total comprehensive income for the year	145.0	171.0

CASH FLOW STATEMENTS

MSEK	Note	2020	2019
Operating activities
Result after ﬁnancial items	152.6	175.9
Adjustments for items not included in cash ﬂow from operating activitites	15	-261.3	-175.1
Paid taxes	-0.1	-1.5
Cash ﬂow from operating activities before changes in working capital	-108.8	-0.7
Cash ﬂow from changes in working capital
Increase (-)/decrease (+) in operating receivables	15.5	14.0
Increase (+)/decrease (-) in operating liabilities	7.6	-3.9
Cash ﬂow from operating activities	-85.6	9.3
Investing activities
Acquisition of tangible assets and intangible assets	10, 11	0.0	-2.8
Aquisition of subsidiaries	9	-34.3	-
Received dividends from subsidiaries	15	117.6	162.1
Lending to and from subsidiaries	506.4	98.1
Cash ﬂow from investing activities	589.8	257.5
Financing activities
Amortization of loans	13	-166.8	-133.5
Other changes in interest-bearing liabilities	13	-294.5	-177.6
Dividend to parent company shareholders	-	-102.5
Cash ﬂow from ﬁnancing activities	-461.3	-413.6
Cash ﬂow for the year	42.9	-146.8
Cash and cash equivalents at the beginning of the year	72.3	219.0
Cash and cash equivalents at year-end	115.2	72.3

BALANCE SHEETS

MSEK	Note	2020	2019
ASSETS
Fixed assets
Intangible assets	10	2.4	3.6
Tangible ﬁxed assets	11	0.8	1.0
Shares in subsidiaries	9	1,433.5	1,377.6
Receivables from group companies	2,459.7	2,954.2
Deferred tax assets	6	106.1	113.5
Total ﬁxed assets	4,002.2	4,449.9
Current assets
Receivables from group companies	103.8	111.2
Other receivables	1.2	0.6
Prepaid expenses and accrued income	6.9	13.7
Cash and bank balances	115.1	72.3
Total current assets	227.1	197.8
Total assets	4,229.2	4,647.8
EQUITY, PROVISIONS AND LIABILITIES
EQUITY
Restricted equity	686.0	686.0
Unrestricted equity	8	1,176.1	1,031.1
Total equity	1,862.1	1,717.1
PROVISIONS
Provisions for pensions and similar obligations	-	1.4
Other provisions	7.0	7.0
Total provisions	7.0	8.4
LIABILITIES
Long-term liabilities
Liabilities to credit institutions	13, 14	1,959.5	2,213.6
Liabilities to group companies	6.1	6.7
Other liabilities	20.7	0.1
Total long-term liabilities	1,986.2	2,220.3
Current liabilities
Liabilities to credit institutions	13, 14	77.3	397.6
Accounts payable	1.7	2.3
Liabilities to group companies	259.7	275.8
Other liabilities	2.6	1.8
Accrued expenses and deferred income	12	32.8	24.4
Total current liabilities	374.2	701.9
Equity, provisions and liabilities	4,229.2	4,647.8

STATEMENTS OF CHANGES IN EQUITY

Statutory	Unrestricted
MSEK	Share capital	reserve	equity	Total
Opening balance on 1 Jan. 2019	353.6	332.4	962.7	1,648.6
Dividend	-	-	-102.5	-102.5
Result for the year	-	-	171.0	171.0
Other comprehensive income	-	-	-	-
Closing balance on 31 Dec. 2019	353.6	332.4	1,031.1	1,717.1
Result for the year	-	-	145,0	145.0
Other comprehensive income	-	-	-	-
Closing balance on 31 Dec. 2020	353.6	332.4	1,176.1	1,862.1

NOTE 1 - ACCOUNTING PRINCIPLES

A presentation of Elanders' accounting principles can be found in note 1 to Elanders' consolidated ﬁnancial statements. The par-ent company has prepared its annual accounts according to the Annual Accounts Act and the Swedish Financial Reporting Board Recommendation RFR 2 Accounting for legal entities and where applicable statements made by the Swedish Financial Reporting Board. RFR 2 requires the parent company to, in the annual accounts for the legal entity, use all the EU approved IFRSs and interpretations as far as possible within the framework of the Annual Accounts Act and the Security Law, taking into consid-eration the connection between accounting and taxation. The parent company generally follows the same previously described principles as the Group. Diﬀerences between group and parent company accounting principles are presented below.

Taxes

Tax laws allow provisions for special reserves and funds that are reported separately in the parent company. This allows companies within limits to allocate and retain recorded results in operations without them being immediately taxed. The untaxed reserves are not subject to taxation until they are dissolved. If companies lose money the untaxed reserves can be used to cover the losses with-out being taxed.

Intangible assets

The parent company amortizes goodwill according to plan, which is not permitted for the Group. Goodwill is amortized on a straight-line basis over a twenty-year period since it relates to acquisitions of a strategic nature.

Shares in associated companies and jointly controlled entities

Shares in associated companies, jointly controlled entities and subsidiaries are reported in the parent company according to the acquisition method. Acquisition-related costs for subsidiaries, which are expensed in group accounting, are included as part of the acquisition value for participation in subsidiaries. Reported values are tested on every balance sheet date in order to deter-mine if the need for write-downs is indicated.

Pensions

The parent company's pension obligations have been calculated and reported based on the Swedish Security Law. Application of the Swedish Security Law is a prerequisite for ﬁscal deductions.

Financial guarantee contracts

The parent company's ﬁnancial guarantee contracts consist pri-marily of guarantees on behalf of subsidiaries. A ﬁnancial guaran-tee contract is a contract in which the company has a commitment to reimburse the holder of a debt instrument for loss it incurs because a speciﬁed debtor fails to make payment when due according to the contract terms. The parent company applies RFR 2 p. 71 to account for ﬁnancial guarantees, which is a relief compared to the rules in IAS 39 connected to reporting and taxa-tion. The parent company recognizes ﬁnancial guarantee contracts as a provision on the balance sheet when the company has a com-mitment.

Group and shareholder contributions

Group and shareholder contributions are recognized according to the alternative rule in the Swedish Financial Reporting Board Recommendation RFR 2. This means that received and paid group contributions are reported as appropriations. Shareholder contributions are activated in shares and participations, as long as write-downs are not required.

Financial instruments and hedge accounting

In view of the connection between accounting and taxation, the rules on ﬁnancial instruments and hedge accounting are not applied by the parent company as a legal entity.

In the parent company, ﬁnancial assets are valued at cost, less any impairment and ﬁnancial current assets at the lower value of cost or net realizable value.

Lease agreements

IFRS 16 Leases are not applied in the parent company as exemp-tion is allowed for application in legal entities. This means that the leasing fees are expensed on a straight-line basis in the income statement.

Standards, amendments and interpretations of existing standards that have taken eﬀect in 2020

No new standards, amendments or interpretations that have had signiﬁcant eﬀect on the company's ﬁnancial reports have come into eﬀect during 2020.

NOTE 2 - FEES TO THE AUDITORS

NOTE 3 - OTHER OPERATING INCOME

Total

MSEK

PwC

Audit assignment Audit-related services Tax advisory services Other services

2020	2019
1.2	1.4
-	-
-	-
-	-
1.2	1.4

2019

No fees were paid to other auditing ﬁrms.

Audit assignment is deﬁned as the statutory audit, i.e. the work necessary to produce the auditors' report as well as so called audit consultation given in connection with the audit.

NOTE 5 - RESULT FROM FINANCIAL ITEMS

RESULT FROM SHARES IN SUBSIDIARIES

Dividends from subsidiaries Total

INTEREST INCOME

MSEK

Total

OTHER FINANCIAL INCOME

MSEK

MSEK	2020	2019
Write-downs of shares in subsidiaries	-8.9	-
Dividends from subsidiaries	117.6	162.1
Total	108.6	162.1

MSEK	2020	2019
Interest income, external	0.1	0.8
Interest income, subsidiaries	119.6	131.9
Total	119.7	132.7

MSEK	2020	2019
Exchange rate gains	127.0	59.0
Total	127.0	59.0

MSEK

Exchange rate gains Other

Total

NOTE 4 - PERSONNEL

Please see note 5 to the consolidated ﬁnancial statements for personnel related information.

INTEREST EXPENSESOTHER FINANCIAL EXPENSES

MSEK	2020	2019
Interest expenses, external	-47.9	-63.7
Interest expenses, subsidiaries	-1.1	-0.3
Total	-49.0	-64.0

MSEK	2020	2019
Exchange rate losses	-107.2	-70.3
Other ﬁnancial expenses	-10.6	-8.0
Total	-117.8	-78.3

NOTE 6 - TAXES

TAX ON THE RESULT FOR THE YEAR

Total

Deferred tax

Withholding tax on income from foreign subsidiaries

MSEK	2020	2019
Withholding tax on income from foreign subsidiaries	-0.1	-1.5
Deferred tax	-7.4	-3.5
Total	-7.6	-5.0

DEFERRED TAX RECEIVABLES

Tax loss carry forwards

Total

MSEK	2020	2019
Tax loss carry forwards	96.5	104.5
Other	9.6	9.0
Total	106.1	113.5

NOTE 7 - TRANSACTIONS WITH RELATED PARTIES

Sales of products and services

The parent company reimburse its subsidiaries for services mainly relating to marketing, IT, auditing, insurance, etc. Besides this there have been no sales of products or services to related parties.

NOTE 8 - PROPOSED APPROPRIATION OF PROFITS

Proﬁt and other non-restricted equity at the disposition of the Annual General Meeting:

Retained earnings Net result for the year Total

MSEK	2020	2019
Retained earnings	1,031.1	860.1
Net result for the year	145.0	171.0
Total	1,176.1	1,031.1

100 ELANDERS' ANNUAL REPORT 2020

RECONCILIATION OF RECORDED TAX

Withholding tax on income from foreign subsidiaries

MSEK

Result before taxes

Tax according to Swedish tax rate of 21.4 (21,4)%

Tax eﬀect of:

Non-taxable dividends from subsidiaries

Write-downs of shares in subsidiaries

Eﬀect from change in tax rate

Contribution, representation and association costs

Other

Total

MSEK	2020	2019
Result before taxes	152.6	175.9
Tax according to Swedish tax rate of 21.4 (21,4)% Tax eﬀect of: Non-taxable dividends from subsidiaries	-32.7 25.2	-37.7 34.7
Write-downs of shares in subsidiaries	-1.9	-
Eﬀect from change in tax rate	0.3	0.1
Withholding tax on income from foreign subsidiaries	-0.1	-1.5
Contribution, representation and association costs	-0.2	-0.2
Other	1.9	-0.4
Total	-7.6	-5.0

Purchase of products and services

During the year, the Parent Company purchased services from subsidiaries for MSEK 5.5 (4.5).

Erik Gabrielson, who is member of the Board, is partner in Vinge Law Firm that during the year has provided legal counsel and invoiced fees amounting to MSEK 1.0 (1.2).

No Board member or senior oﬃcer has or has had direct or in-direct participation in any business transactions, between them-selves or the company that are or were of an unusual nature concerning the terms.

Remuneration to Board members and Group Management is reported in note 5 to the consolidated ﬁnancial statements.

The Board of Directors and the Chief Executive Oﬃcer propose that the proﬁt and other non-restricted equity will be dealt with accordingly:

MSEK	2020	2019
SEK 3.10 (0) per share is distributed to the shareholders	109.6	-
Remaining balance to be carried forward	1,066.5	1,031.1
Total	1,176.1	1,031.1

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Elanders AB published this content on 10 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 March 2021 10:24:07 UTC.

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