ANNUAL REPORT 2019 Signalling Door automation Passenger information WiFi Surveillance CITY 10.30 10.42 10.57 11.08 CITY TOWN CITY TOWN

The digital society…

Operations

This is beijer group 5
Key events and key figures 6
CEO's statement 8
The Beijer Electronics Group share 10

About our operations

Solutions in our everyday lives 12
What we do 14
Westermo business entity 16
Beijer Electronics business entity 24
Korenix business entity 30
In contact with our markets 34
Sustainability Report 2019–summary 36

Financial information

Financial information 41
Directors' Report 42
Consolidated Income Statement 46
Statement of Comprehensive Income 46
Consolidated Balance Sheet 47
Consolidated Statement of Changes in Equity 48
Consolidated Cash Flow Statement 49
Parent Company Income Statement 50
Parent Company Balance Sheet 50
Parent Company Statement of Changes in Equity 52
Parent Company Cash Flow Statement 53
Notes 54
Corporate Governance Report 2019 90
Board of Directors' certification 94
Board of Directors and Auditors 95
Audit Report96
Senior Executives 100

Investor and shareholder information

Five-year summary 102
Definitions 104
Invitation to the Annual General Meeting 106

We are becoming less dependent on specific locations, and can easily do work that used to need our physical presence from anywhere where we're connected. beijer group's solutions enable us to capture information, control and direct it to a process or machine in a completely different location while we're on the move. Human-machine interaction means faults and shortcomings in processes can be discovered quickly, analyzed, and also rectified.

…surrounds us wherever we are. beijer group is a growing powerhouse consisting of three independent and complementary business entities in industrial digital technology. The Group advanced its positioning further in 2019 through means including an acquisition in Switzerland, and initiatives in rail infrastructure. Through its Westermo business entity, the Group was already a global leader in the train segment.

Surveillance

Signalling

Door automation

Train management

WiFi

4 BEIJER ELECTRONICS GROUP 2019

Slutkund

THIS IS BEIJER GROUP

beijer group is an expansive, innovative high-technology Group offering the market digital solutions that help customers optimize processes at different levels of operations. Our solutions bridge the interface between human and machine. Data is captured, controlled, transported, presented and analyzed in interactive and seamless processes between human and machine.

The Group's offering consists of software, hardware, services and servicing, linking a variety of systems across wired and wireless digital networks, and interconnecting a raft of IIoT applications. These solutions are robust to support the customer's operations, with their emphasis on efficiency, reliability and cybersecurity.

A local presence…

Since incorporation in 1981, beijer group's head office has been in Malmö, Sweden. Over the years, the company has expanded internationally, and has a presence in Europe, Asia and the Americas through proprietary offices and carefully selected distributors. Its sales resources are in all three regions, and it has development resources in Europe and Asia. A long-term local presence is a key part of the Group's business model.

…with the right skills

beijer group professionals possess high skills levels in software and hardware development. Closeness to the market brings good awareness of customer needs and market demand. The combination of our people's skills and experience is one of the Group's most valuable assets.

beijer group consists of three independent and complementary business entities in industrial digital technology: Westermo, Beijer Electronics and Korenix. Beijer Electronics Group is referred to as beijer group throughout this Annual Report.

Key events in 2019

beijer group

Through its Westermo business unit, beijer group acquired Neratec of Switzerland and Virtual Access of Ireland. Pro forma, if the acquired companies had been consolidated, beijer group's sales would be some 1.7 billion SEK in 2019, annualized.

In March 2019, beijer group's Board of Directors decided to issue 150,066 class C shares with a quotient value of 0.33 SEK, in accordance with authorization from the Annual General Meeting (AGM) 2018. This issue was to a financial institution, and

repurchased immediately by the company. The intention of the repurchased class C shares is to convert them into ordinary shares on delivery to employees in 2021, in accordance with the terms & conditions of the LTI 2018/21 incentive program.

A share-based incentive program was implemented in accordance with a resolution by the AGM 2019. Its outcome means that consistent with the adopted program, the parent company issued 66,298 shares in the first quarter of 2020.

Westermo

Westermo reported its best year to date, setting order intake, sales and earnings records in 2019. The business entity made two strategic acquisitions—Neratec of Switzerland and Virtual Access of Ireland, with total yearly sales of some 170 MSEK. These acquisitions consolidate Westermo's offering to its markets, especially in wireless network products, and increase its software content.

2019

Beijer Electronics

Beijer Electronics reported continued growth, with increased sales and better EBIT in 2019. The business entity launched a new Internet of things (IoT) platform under its proprietary brand acirro+. The platform consists of software and hardware, and enables secure communication with the cloud. Beijer Electronics also signed a supply agreement worth over 150 MSEK and with a five-year term with a major global customer.

Korenix

Korenix took major steps towards realizing its strategic plan for growth and profitability, including the development of a new platform—the Korenix Switch OS platform—with new software and hardware, and automated testing. Korenix also took the initiative in an expanded and intensified partnership with the Beijer Electronics business entity on sales in Europe.

Key figures 2019

EBIT (MSEK)

Operating cash flow (MSEK)

EBIT margin (%)

Key figures

	2019	2018	2017
Sales, MSEK	1,558.7	1,417.2	1,205.9
EBITDA margin, %	14.6	10.6	7.5
EBIT, MSEK	103.5	73.9	18.0
EBIT margin, %	6.6	5.2	1.5
Profit after tax, MSEK	65.0	43.5	-6.2
Earnings per share, SEK a	2.27	1.52	-0.24
Dividend per share, SEK	0.00	0.50	0.00
Equity/assets ratio, %	33.7	43.3	41.7

a Board's proposed dividend.

Product development expenditure

In 2019, product development maintained its high tempo for future growth, but decreased somewhat as a share of sales.

Key figures, employees

	2019	2018	2017
Average number of employees	773	713	702
Sales per employee, MSEK	2.0	2.0	1.7
EBITDA per employee, SEK 000	294.0	211.2	128.7
EBITDA employee, SEK 000	133.9	103.7	25.7
Employees in R&D	165	149	144
Balance, men/women, %	68/32	66/34	66/34

CEO'S STATEMENT

Acquisitions and strategic agreements boost growth

L ast year, beijer group put several pieces of the strategic plan it staked out three years ago into place, and took more forward steps. We completed two acquisitions— Neratec of Switzerland and Virtual Access of Ireland. We also secured a major new global customer through a longterm, substantial supply agreement with US elevator manufacturer Otis. We launched a range of new strategic products, including the Lynx series, Westermo's new generation of Ethernet switches, and acciro+, Beijer Electronics' new IoT solution.

Notably, our operations continued their positive progress, with sales up by 10%, passing 1.5 billion SEK. Our EBIT was over 100 MSEK, and profit after tax increased by 50%.

Westermo convincing

First and foremost, the Group's sales and earnings growth were driven by Westermo in 2019. This business entity performed con-

vincingly, setting new order intake, sales and earnings records in 2019, thereby representing some 45% of the Group's sales, and 65% of our business entities' combined EBIT. Undeniably, Westermo's goal-oriented strategic initiative, which began in 2015, has really paid off, with aver-

age yearly organic growth of 18%, and an average yearly boost to EBIT of 43% over a three-year period.

The Beijer Electronics business entity is largely following its long-term plan, and was able to report increased sales and better earnings in 2019. The transition to the new X2 series and phaseouts of old products impacted order intake, sales and earnings for the full year. After a good first half-year, performance was slower in the second half-year.

The Korenix business entity did not achieve the sales volumes necessary for profitability in 2019, partly due to some customers deciding to defer their shipments till after year-end. Korenix has a fairly high share of products in projects, which means that financial performance is often irregular.

The Group's strategic orientation is a good fit with current market trends. Digitalization, urbanization, growing demand for IIoT

solutions, and energy transitions to solar and wind power are major factors, among many others, driving growth. beijer group is a focused technology Group at the cutting edge in this direction of market progress in industrial digital technology.

Our people create a stronger organization

In recent years, we've progressively built a stronger, more stable organization that delivers, actions and solves problems as they occur. Westermo's way of addressing high demand, which caused delivery problems in 2018 and the first half-year 2019, is evidence of this. The business entity expanded its capacity and overcame bottlenecks, enabling more consistent production, shorter leadtimes and more secure shipments with positive effects on sales and earnings.

Being at the leading edge of technology and addressing professional, global customers set specific requirements on organizations

The Group's sales and earnings growth were driven by Westermo in 2019.

and people. Beijer Electronics' collaborative and supply agreement with Otis demonstrates that our organization is capable of satisfying the stringent standards that major global corporations set.

In this context, I'd like to empha-

size the importance of our people's efforts and skills especially. Individual professional performances, backed by mutual support and access to the Group's resources, generate our results. Individual freedom offers room for creativity, but also requires individual responsibility for compliance with laws, regulations and our guidelines for managing a sustainable business.

Sustainability is an important component that should be integrated into beijer group's operations. In 2019, we achieved our targets of auditing key suppliers in sustainability. In 2020, we'll focus on training all our people in the environmental segment. Our complete Sustainability Report will be published separately, with a summary published in this Annual Report.

By mid-2020, some 65% of our sales will come from new products developed in the last 3-4 years. The group's strategy and focus on extensive product regeneration, more focus on customer-oriented marketing and sales resources, and streamlining production and

logistics, have been successful. But this could, and will, get even better. We're well prepared for this, with complete staffing and skilled people in place. As in any business, there are also a lot of challenges to face. Each business entity has its own key priorities for 2020.

Priorities for 2020

Westermo will continue to coordinate the operations of its acquired companies Neratec and Virtual Access. Primarily, this is about coordinating marketing & sales, so these companies can benefit

from Westermo's global sales resources. Product launches in the new segments of power distribution and rail infrastructure will also involve moving into a growing market. Westermo will also continue its work on continuing to streamline its supply chain,

Once this crisis is over, we will still be attractive to employees and customers.

with progressive improvements to procurement, inventory and production flows.

Beijer Electronics is facing the task of completing older product phase-outs, and realigning customer demand increasingly to deliveries of the new X2 series. This business entity will also start shipments to Otis, and ensure that acirro+, its new IoT platform, sets its stamp on sales.

Beijer Electronics will also be expanding its offering to the market through more coordination with the Korenix business entity. These two business entities are convergent, and customers increasingly want more complete solutions integrating Beijer Electronics' digital solutions and Korenix's network products. The business entities are also investigating coordination gains in segments including manufacturing and supply chain.

With more coordination, Korenix will gain access to Beijer Electronics' stronger European marketing organization. A successful outcome will mean more sales for Korenix, which can then reduce its dependency on projects. At the same time, the business entity is in an intensive development phase of a new platform—the Single Korenix Switch OS platform—whose software and hardware are based on a modular design. All products will be upgraded for this new platform in 2020 and 2021.

Long-term perspective

Since we set our strategic direction in 2016, beijer group has achieved yearly organic growth of 11%, and turned an operating loss into a positive EBIT of over 100 MSEK in 2019. We should also remember that we've raised our level of ambition, focusing more on development and marketing, to take the Group to the next level. This did cause increasing costs, which will slow our earnings gains for the short term. Nevertheless, we should be pleased with our cash flow improvement in the year, especially in the fourth quarter, thanks to more efficient management of capital.

From our perspective, the longer-term trend is most important in terms of creating shareholder value. Some of the Group's customers have project-related business, which is reflected in beijer group's order intake, sales and earnings, which can vary between individual quarters, and between different years. Technology transitions and new product generation launches can also cause blips in the curve, but if correctly managed, benefit us for the long term. In 2019, we launched several new products, completed two acquisitions and signed a five-year strategic supply agreement with our customer Otis. So we have good potential for high and stable growth for the long term.

Short-term uncertainty

In the short term, there are always uncertainties that figure in our view of the future. The rapid spread of the coronavirus early this year has been the dominant factor, overshadowing most other things at the time of publication of this Report. Border closures, heavy stock market falls, nations in quarantine, emergency measures etc. indicate a crisis. At present, how this will impact

on the global economy, and the effect it will have on the Group, is very hard to assess.

As always, beijer group will adapt its cost levels to prevailing market conditions, while the Group protects its long-term skills. Over

the past four years, we have realigned the Group. This process involved a skills succession and created a sharper organization, as well as significant investments in product development and rationalization end to end in our supply chain. This means our organization is well prepared to address a harsher business climate. Once this crisis is over, we will still be attractive to employees and customers.

Outlook for 2020

Per Samuelsson President & CEO

The Beijer Electronics Group AB share

Beijer Electronics Group AB has been listed on the Nasdaq OMX Nordic Stockholm Small Cap List since June 2000 with the ticker BELE. A trading lot is 300 shares.

Issue of class C shares

In March 2019, the Board of Directors decided to issue 150,066 class C shares with a quotient value of 0.33 SEK, in accordance with the authorization of the Annual General Meeting (AGM) 2018. The issue was to a financial institution, and was immediately repurchased by the company. The intention of the repurchased class C shares on delivery to employees in 2021 is to convert them to ordinary shares, pursuant to the terms and conditions of the LTI 2018/21 incentive program.

Share capital

The share capital is 9,595,367 SEK divided between 28,786,102 shares, of which 28,601,379 ordinary shares and 184,723 class C shares as of 31 December 2019. The minimum share capital is 5,000,000 SEK, and the maximum is 20,000,000 SEK. Each share has a quotient value of 0.33 SEK. All shares confer equal entitlement to the company's assets and profits. Ordinary shares carry one vote, and class C shares carry one-tenth of a vote. old template

Share price and turnover

In terms of bid price, the share price was 70.20 SEK at yearend 2019, against 36.20 SEK on the final trading day of 2018. This equates to an increase of 94% in the year. In the same period, the Stockholm Stock Exchange's broad-based index OMXS rose by 30%. The company's share traded at a high of 70.80 SEK and a low of 36.20 SEK in the year. Share turnover was 9.9 million shares, or 35% of the total number of shares. In value terms, share turnover was 520 MSEK.

Earnings per share

Earnings per share after tax were 2.27 SEK (1.52).

Dividend

The Board of Directors is proposing a dividend of 0 SEK per share (0.50) for the financial year 2019, as a precautionary measure in a time of great uncertainty with the worldwide spread of the coronavirus. The aim is to safeguard the Group's financial stability in the short and long term.

Market maker

To stimulate trading in its share, beijer group has an agreement with Pareto Fondkommission on liquidity guarantee, which means Pareto undertaking to continuously publish buy and sell prices in the company's share on its own account. This undertaking is within the Stockholm Stock Exchange's market maker system.

I'm pleased to see the number of our shareholders increasing by over a thousand.

JOAKIM LAURÉN, CFO BEIJER ELECTRONICS GROUP

Mutual fund companies Insurance companies and pension funds Other organizations Other legal entities Foreign shareholders Swedish private investors Other financial companies

Shareholder categories, share of equity Share data, three years

Source: Euroclear

Övriga nansiella företag Svenska fysiska personer Utländska ägare Övriga juridiska personer Övriga organisationer

Försäkringsbolag och pensionsinstitut

Fondbolag

	2019	2018	2017
Earnings per share, SEK	2.27	1.52	-0.24
Dividend, SEK a	0.00	0.50	0.00
Pay-out ratio, %	0	33	0
Equity per share, SEK	23.9	22.8	20.5
Return on equity, %	9.7	7.0	-1.2
Closing price, SEK	70.20	36.20	30.00
No. of shares, million	28.6	28.6	28.6
Market cap., MSEK	2,008	1,035	858

a The amount for 2019 is proposed dividend.

Ownership by shareholding as of 31 December 2019

Source: Euroclear
Holding	No. of shareholders	No. of ordinary shares	No. of class C shares	Equity holding, %	Votes, %	Market cap, SEK 000
1—500	3,274	453,848		1.58	1.59	31,860
501—1 000	513	409,942		1.42	1.43	28,778
1 001—5 000	561	1,272,850		4.42	4.45	89,354
5 001—10 000	99	727,903		2.53	2.54	51,099
10 001—15 000	31	391,1 83		1.36	1.37	27,461
15 001—20 000	20	346,820		1.20	1.21	24,347
20 001—	66	24,998,833	184,723	87.49	87.41	1,754,918
Total	4,564	28,601,379	184,723	100.00	100.00	2,007,817

Stock index

Shareholders as of 31 December 2019

Source: Euroclear

	Capital %	Votes %	No. of shares
Stena Adactum AB	28.90	29.07	8,320,174
Svolder Aktiebolag	12.08	12.15	3,476,715
Nordea Fonder	11.20	11.27	3,224,373
Fjärde AP-fonden	6.14	6.17	1,766,128
Humle Kapitalförvaltning AB	4.81	4.84	1,383,859
Cliens Fonder	3.88	3.90	1,1 1 6,510
SEB Fonder	3.58	3.60	1,030,373
T. Bjurman w. family and companies	2.03	2.05	585,652
Tredje AP-fonden	1.66	1.67	476,553
Stiftelsen för kunskap och kompetensutveckling	1.39	1.40	400,000
Total, 10 largest owners	75.66	76.10	21,780,337
Total, other shareholders, 4,554	24.34	23.90	7,005,765
Total, issued shares*	100.00	100.00	28,786,102

*Includes 184 723 class C shares held by the company.

Solutions in our everyday lives

People have learned to use technology to deliver the goods and services we need in our everyday lives. Take a look around you–wherever there are processes that need drive and control, or information to communicate and visualize, there's a need for smart hardware and software. This

interface between people and technology is where we are the bridge-builder. Here are some of the places beijer group has an impact on your everyday life.

Energy

– efficient solutions and smarter distribution

Increased efficiency in the extraction of fossil fuels, development of efficient, renewable energy production, and smarter energy distribution systems are some of the massive technological challenges that must be overcome to meet the world's ever-increasing demand for energy.

– securing access and the environment

A growing population expects and needs clean, accessible water. Increasing amounts of wastewater must be treated efficiently to protect the environment and to prevent disease. The harsh environment of water treatment plants creates high demands on the equipment used.

Marine and offshore

– the environment and safety first

Extreme conditions at sea, environmental regulation and long distances to port place high demands on equipment reliability and performance to ensure safety and reduce environmental impact.

Infrastructure

– safer and faster travel

Growing needs for transportation of people and freight are putting great pressure on roads, railways and other kinds of infrastructure. New systems for traffic management and tunnel ventilation, for example, increase traffic flow and safety.

Buildings

– lower energy consumption

Higher energy pricing and a growing awareness of environmental issues are driving efforts to minimize energy consumption in homes, offices and factories. Data control and connect with smart building automation reduce energy consumption.

Transportation

– smarter and safer connections

Today's complex transportation systems involve far more than just moving people and goods from A to B. Positioning services, cargo tracking, communication between vehicles, information systems and safety solutions are all vital parts of modern transportation.

Manufacturing

– increased productivity

Global price pressure, shorter technology life cycles, and consumers with ever-growing demands for affordable products, are putting manufacturers and OEMs under huge pressure to make production processes more efficient.

What we do

beijer group is a growing powerhouse consisting of three independent and complementary business entities in industrial digital technology. The Group offers the market digital solutions that help customers optimize processes at different levels of their business, emphasizing efficiency, reliability and cybersecurity. Information in the form of data is captured, controlled, transported, presented and analyzed in interactive processes. Our offering consists of software, hardware, services and servicing, with various systems linked in wired and wireless digital networks, interconnecting a raft of IIoT applications. beijer group addresses an array of market segments with varying needs, which apply differing standards on their solutions. A significant component in beijer group's offering targets sectors in demanding environments that need robust, secure and sustainable solutions.

Interaction between people and technology

Digitalization is creating new possibilities to interconnect data from machinery from different processes in increasingly complex systems, which are integrated in various cloud solutions. It should be easy for people to interact with the technology that underlies operational processes through connected networks and web services. This improves the knowledge of machinery and processes, their performance and insights for preventative servicing and maintenance. Beijer Electronics' solutions enhance customers' operations, with their emphasis on efficiency, reliability and cybersecurity. Solutions are brought together to reduce the complexity of digitalization and make things easy for users.

Cloud solution

Tunnel surveillance WiFi

Energy

Door automation Network

Digital in-Digital in+

NCStatus DC1

DC2FRNT

I/O POWER

+DC1 +DC2 COMCOM

24 - 48 VDC

RSTP/USR1USR2CONSOLE SD ¹ ² ON ³ ⁴ ⁵ ⁶ ⁷ ⁸⁹ ¹⁰ ¹¹ ¹² ¹³ ¹⁴ ¹⁵ ¹⁶¹⁷ ¹⁸ ¹⁹ ²⁰ ²¹ ²² ²³ ²⁴²⁵ ²⁶²⁷ ²⁸

M12 Torque 0.6±0,1 Nm / 0,45±0,1 lbft

X11 X17 X10 X16 X2 ON FRNT CON RSTPUSB DC X5 X1 X4 X7 X6 PoE X13 X19 X8 1000BASE-T 48-110 V DC X14 X20 X12 X18 X3 X9 X15

Communication

Machine control 4G

Ballast water Exhaust purication

⁷ ⁸ ON DI-DI+ NO

C +DC2 +D

C1DC2 DC1 12 - 48 VDC ¹⁰ ¹¹ ¹² ⁶ ⁵ FRNT CONSOLE SD RSTP/ USR1 ¹ ² ³ ⁴ ⁹ USR2 Max 3,2 Nm

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DC2 DC1 12 - 48 VDC ¹⁰ ¹¹ ¹² ⁶ ⁵ FRNT CONSOLE SD RSTP/ USR1 ¹ ² ³ ⁴ ⁹ USR2Max 3,2 Nm

With complementary strategies, the two business entities Westermo and Korenix operate in industrial data communication.

Westermo delivers industrial data communication solutions, enabling data to be transported across wired and wireless networks. These networks interconnect various systems at different levels of an operation. The core of Westermo's solutions is a selection of network products comprising software and hardware. Industrial networks are often mission critical, which is why they are robust and specifically developed to satisfy customer needs for exceptional reliability. Korenix is a leader in wireless and wired data communication solutions. Its main focus is on security and surveillance applications.

Westermo Business entity

Westermo consolidated its positive trend of recent years, delivering its best year to date, again setting order intake, sales and earnings records in 2019. Broad-based efforts on aligning supply chains and increasing capacity, coupled with robust sales performance, underpinned the successes.

Apart from the positive progress of operations, the strategic acquisitions of Neratec of Switzerland and Virtual Access of Ireland were the year's highlights. These acquisitions improve Westermo's offering to its markets, especially in wireless network products, while increasing its software content. More information on these companies is in the sections on pages 22-23.

At the end of the year, the business entity launched an all-new ethernet switch—the Lynx 5512—with superior performance and capacity.

The sales gains in the year were broad based, with basically all the markets Westermo addresses performing well. Demand from train networks remained brisk, although network products were also making positive progress. Westermo also secured a number of major orders from repeat customers like Bombardier and Alstom, and a breakthrough order on a subway project in Singapore.

To satisfy high demand, Westermo expanded capacity, streamlined production, overcame bottlenecks and fine-tuned supply chains. These different actions have paid off in the form of more consistent production, shorter lead-times and more secure deliveries. Overall, this had a positive impact on sales and earnings.

In the second quarter of 2019, Westermo launched a new generation of routers for train networks—Viper Backbone Node. This is the first in a series of launches based on Westermo's new hardware platform, with sharply improved performance in terms of bandwidth and speed. Shipments of a new generation of operating system—Westermo's proprietary WeOS—are underway. More products based on this new platform will be introduced progressively.

Targeted initiatives on network solutions for power distribution and rail infrastructure progressed as planned, but also resulted in increased expenses in the year. These efforts are based on Westermo's current product range. However, they do require adaptation, upgrade and certification etc. before market launch is possible. The first certified power distribution products will be launched in the first half-year 2020. Neratec's and Virtual Access's product ranges are a good fit and complement with Westermo's investments in these segments.

Westermo's order intake increased by 6% to 726 MSEK (688). Excluding acquisitions, order intake was 678 MSEK. Sales increased by 21% to 705 MSEK (584). Excluding acquisitions, sales were 670 MSEK. EBITDA was 134.3 MSEK (97.4). EBIT was up by 29% to 89.6 MSEK (69.7), equivalent to an EBIT margin of 12.7% (11.9).

Pro forma, Westermo's sales would had been some 816 MSEK in 2019 if the acquired companies had been consolidated into the business entity for the full year.

2019 was another record year for Westermo, with the acquisitions of Neratec and Virtual Access being some of the highlights. I'm pleased that we increased our delivery capacity and prepared for continued growth, with a strong team and customer base that likes our offering.

EBIT 89,576 69,679 EBIT margin, % 12.7 11.9 Share of Group sales, external, % 45.1 41.1

311

JENNY SJÖDAHL, CEO WESTERMO

17 BEIJER ELECTRONICS GROUP 2019
-------------------------------------

employees at year-end

Offering and market

Robust network solutions for industrial data communication

Westermo provides mission-critical industrial data communication solutions. In simple terms, these solutions enable data to be transmitted across wired and wireless networks. Reliable data communication is essential for digitalization where different systems are interconnected to enable applications and equipment to be controlled and monitored.

These solutions address the market for infrastructure and various industrial sectors. Digital networks are critical for managing the customer's operations, and are often installed in exposed, harsh environments with electromagnetic disruptions, dust, vibration and wide temperature fluctuations. This sets very stringent standards for environmental endurance, safety and reliability. Westermo's network solutions are robust and specifically developed to satisfy customer needs for mission-critical systems.

Various research reports estimate the global market value of industrial network products at some 15 billion SEK. Investment cycles vary, with lower growth in some years, although in the long term, the market has achieved yearly growth of over 10%.

Sales channels

Westermo markets and sells network solutions through a range of channels. Its in-house sales resources consist of own offices with sales and support functions in 12 countries. These offices serve end-customers directly, as well as system integrators. Westermo also sells directly to OEM customers, who bundle our products into their own solutions. OEM customers include companies that build various types of train. In-house sales resources are backed by a network of distributors in selected markets. In-house sales resources generated 65% of sales in 2019.

Market segments

Westermo's offering addresses the infrastructure market, including transportation systems, energy systems and water supply, as well as a range of industrial sectors. Westermo is one of the global leaders in the train segment. In 2019, the business entity started initiatives addressing network solutions for the power distribution and rail infrastructure segments. Westermo estimates its share of the global industrial network products market at 5%.

Customers

Westermo has a base of some 5,000 purchasing customers of differing sizes, including many major multinationals. The largest accounts are Bombardier, Stadler and Alstom. The 10 largest accounts represented 40% of sales in 2019. The Nordics provided 22% of sales, and the rest of Europe 52%. North America provided 11%, Asia 13%, and the rest of the world 2%.

Westermo providing the network solution for a new commuter train network signaling system in Melbourne

Westermo has a key role in a major rail infrastructure project in Melbourne, Australia, providing a new signaling system for the city's commuter train system, which will eliminate the most hazardous junctions and improve safety, while enhancing the traffic flow of commuter trains.

Main contractor Alstom Australia has appointed Westermo to provide a new, state-of-the-art, robust, IP-based network solution. Westermo is providing Ethernet switches from its Lynx and RedFox product ranges, which have very high performance and capacity. The solution is reliable, satisfying the most stringent cybersecurity standards.

Westermo is providing all aspects of data communication on this project, from network design to system configuration and support, as well as staff training. To date, the company has provided over 70 Ethernet switches in the first phase.

Experts in robust industrial data communication

Production

WeOS

Westermo's products are mainly manufactured at its plant in Stora Sundby, Sweden. Capacity was significantly expanded in 2019 to satisfy high demand. This plant operates according to the IPC A610 standard, and holds ISO 9001 certification. The business entity also has manufacturing in Bubikon, Switzerland and Dublin, Ireland, through its acquired companies, Neratec and Virtual Access.

Network solutions

A typical customer in the transportation sector, for example, has extensive infrastructure with a lot of equipment on multiple systems to be controlled and monitored. Digital networks interconnect all resources and ensure that data always arrives at the right node. Many control and monitoring processes are inherently mission critical, which makes robustness and redundant solutions vital for customers. Networks are built using Westermo solutions, which embed the customer's specific values in sophisticated hardware and software.

Leading-edge software and hardware

Westermo delivers a broad range of products and solutions, consisting of hardware and software. Software represents an increasingly significant portion of functionality, and thus, customer value. The product portfolio includes various types of Ethernet switches and routers for wired and wireless data communication. These robust products utilize Westermo's proprietary operating system WeOS. The fact that the same software, WeOS, is installed in basically all product ranges is a great advantage, facilitating customer configuration of robust networks with a high level of cybersecurity. Cybersecurity is a priority for Westermo and new cybersecurity functionality is being constantly added to WeOS. WeConfig software is a graphical tool that offers customers major savings on the configuration and implementation of complex industrial networks. WeConnect is a solution enabling simple and secure Internet connections to interconnect remote networks.

Solutions and concepts

Increasing demands to digitalize manufacturing are driving a continuing technology transition to IP-based network solutions. Ethernet is the simplest and most powerful way to interconnect industrial control and monitoring systems. It offers a wealth of advantages, but in simple terms, Ethernet technology can process massive data volumes with high precision. As networks are expected to connect more—and more complex systems, the demand for network capacity and reliability is rising. Westermo provides world-leading data communication to a raft of sectors. With its expanded product portfolio, more customers in the power distribution and rail infrastructure segments will be able to benefit from Westermo's concept for creating the most robust and reliable data communication solutions for industrial applications.

Experts in robust industrial data communication Strategy and future

Development initiatives retained their high tempo in 2019. Westermo launched a new network product for trains in the year—Viper Train Backbone Node. This is the first in a series of launches based on Westermo's new hardware platform, with sharply improved performance in terms of bandwidth and speed. Shipments of a new generation of operating system—Westermo's proprietary WeOS—are underway. More products based on this new platform will be introduced progressively.

The launch of the Lynx 5512 was a milestone in the next generation of Ethernet switches.

In late-2018, Westermo formulated and adopted a new strategic plan for 2019-21 called WeGrow, which builds on Westermo's successes in the train segment, and the business entity's current product range. Apart from a continued initiative in train networks, the plan involves targeted initiatives in network solutions for the rail infrastructure and power distribution segments.

Solar power

Wind power

Westermo already had a number of rail infrastructure and power distribution customers. To address the whole market, it needs to invest in a broader product portfolio, upgrades, additions to protocols and certifications. Westermo's strategic plan includes an ambition to increase the software and servicing content in its business model.

The launch of the first certified power distribution product is planned for the first half-year 2020. Westermo's existing product portfolio is a good fit for rail infrastructure, while development to improve the offering in this segment is ongoing. Neratec's and Virtual Access's product ranges are good fits and complement Westermo's investments in these segments.

Westermo expects the acquisitions of Neratec and Virtual Access in 2019, and its new strategic plan, to make a significant contribution to the business entity's growth, sales and profitability.

Acquisitions

Virtual Access

Virtual Access was founded in 1996 and its registered office is in Dublin, Ireland. Virtual Access has some 40 staff, and annualized sales are approximately 130 MSEK.

Virtual Access is a technology enterprise focused on wireless industrial routers and gateways, as well as managed connectivity services. Like the rest of Westermo, this enterprise is development intensive, with development expenditure of over 10% of sales. Its products are distinguished by their robustness to withstand exposed environments—mission critical and reliable with high cybersecurity.

Virtual Access consolidates Westermo's market offering

Virtual Access addresses different market segments, with customers mainly in power and water, telecom, as well as traffic and transport management. In total, Ireland and the UK represented 18% of sales in 2019, the rest of Europe 39%, and Asia 40%. The USA provided 2% of sales.

Virtual Access's strategy is to create close and long-term collaborations and partnerships with customers. Its customer base includes large, well-recognized multinationals like British Telecom, Telia and a number of power distribution companies.

The acquisition of Virtual Access adds a strong portfolio in wireless connections to Westermo's market offering. Virtual Access will also be able to benefit from Westermo's international sales resources, not least where it has little or no presence, including major markets like the USA, Germany and France.

Virtual Access has a number of large power distribution customers in countries including the Netherlands, Portugal and Malaysia. In 2019, Westermo embarked on a strategic initiative in the power distribution segment, with its first product launch in the first half-year 2020. These companies will jointly offer the market competitive, and even stronger, solutions. The companies have also identified a number of actual projects in the segment they are addressing.

Apart from marketing & sales synergies, Westermo and Virtual Access also see mutual benefits in areas like development, design and production. Virtual Access in Dublin is the business entity's technology center for mobile wireless solutions.

Virtual Access was consolidated into Westermo's and beijer group's accounts effective 1 November 2019.

Neratec

Neratec was founded in Switzerland in 1994, then as a subsidiary of Elektrobit Oy of Finland. The enterprise was bought out by its local management in 2008, changing corporate name to Neratec. The company's registered office is in Bubikon, 30 km outside Zürich, Switzerland. This enterprise has some 25 employees, and yearly sales of some 60 MSEK.

Neratec is a technology enterprise specializing in WLAN technology, delivering wireless network products focused on reliable and robust communication solutions for trains and rail infrastructure. Trains and rail represent some 80% of sales.

Neratec gains global reach

Like the rest of Westermo, this enterprise is an integrated business with product development, some own manufacturing and testing, marketing and sales. Software and hardware development is in-house, as are custom solutions, while components are sourced from well-recognized external vendors. Assembly is outsourced, while Neratec is responsible for testing, planning and support on installation.

Its customer base comprises system integrators and endcustomers. Neratec endeavors to secure close, long-term partnerships with its customers. Its customer base includes Alstom, Siemens, Casco, Sulzer and Teleste. Westermo was previously an OEM customer of Neratec.

Neratec has as small sales team in-house, but now has global reach with Westermo's multinational sales resources. In 2019, Westermo embarked on a strategic initiative in the rail infrastructure segment. Westermo's offering in this segment is enhanced by Neratec's wireless communication product range.

Neratec is the business entity's technology center for industrial WLAN products. The company is consolidated into Westermo's and beijer group's accounts effective 1 July 2019.

Beijer Electronics Business entity

Beijer Electronics reported continued growth, with increased sales and better EBIT in 2019. Combined with good cost control, this meant its EBIT margin increased by nearly 1 percentage point. The earnings improvement is due to higher sales volumes and a wider gross margin.

The positive trend also featured some variation between individual quarters of the year that primarily impacted order intake, which reduced in the year. At the end of 2018, the business entity's customers placed unusually large orders on products in phase-out from the product range in 2019. These orders would otherwise have been placed over the past year.

Meanwhile, sales of the new X2 series performed strongly, increasing their sales share progressively through the year. The X2 series represented a total of 47% of sales for the full year. Overall, the European market was in positive growth. The UK made good progress despite concerns over Brexit. The German market was hesitant, with lower demand than in the previous year, which then had a high share of products in phase-out. The Nordic market was mixed, with strong progress in Sweden, while Norway and Denmark were unchanged.

The American market slowed, due to factors including consolidation in the oil & gas sector. A new organizational structure was implemented in the USA in the second quarter, with a stronger, improved management appointed. These actions were taken to adapt operations more optimally to a broader-based, more solution-oriented approach to the market. The Asian markets had good growth, apart from Taiwan. A new organization was implemented in China in 2018, which had a positive impact on sales in 2019.

Beijer Electronics launched its new IIoT platform under its proprietary brand acirro+ in the fourth quarter. This platform consists of software and hardware and enables secure communication with the cloud. acirro+ will be sold under a new revenue model—Software as a Service (SaaS), with hardware invoiced on delivery and software on subscription.

At the end of 2019, Beijer Electronics signed a supply agreement with US group Otis, a world leader in elevators, escalators and moving walkways. Beijer Electronics will provide complete, tailored display solutions installed in Otis's Compass® elevator product line. Beijer Electronics has developed fully integrated and flexible display solutions for Otis, designed to satisfy electrical and mechanical reliability standards, combined with custom LCD panels. The Otis deal has a five-year term, with progressively increasing yearly deliveries.

Beijer Electronics' order intake was 732 MSEK (792). Sales increased by 3% to 756 MSEK (731). EBITDA was 104.9 MSEK (75.1). EBIT increased by 16% to 55.0 MSEK (47.4), equating to an EBIT margin of 7.3% (6.5).

Our agreement with American elevator manufacturer Otis is a milestone, confirming our capacity to satisfy the challenging demands set by major global corporations.

STEFAN LAGER, CEO BEIJER ELECTRONICS

SEK 000	2019	2018
Total sales	756,196	731,360
EBITDA b	104,899	75,056
EBIT	54,953	47,361
EBIT margin, %	7.3	6.5
Share of Group sales, external, %	48.5	51.6

employees at year-end

367

Offering and market

People & Technology. Connected.

Beijer Electronics' vision is people and technology going hand in hand. The business entity offers the market digital IIoT solutions integrating services, software and hardware. Robust solutions enhance our customers' operations with an emphasis on efficiency, reliability and cybersecurity. Solutions that are easy for people to integrate with the underlying operational processes by secure networks and web services. Beijer Electronics utilizes state-ofthe-art software and hardware technology to create secure and reliable solutions. Our guiding principle is to make complex things simple for the user.

External analysts value the global market Beijer Electronics addresses at 36 billion SEK, with estimated yearly growth of 6–7%. The main growth drivers are an increasing need for new software solutions, tracking digital progress. Beijer Electronics' estimated market share is some 3%.

Sales channels

Beijer Electronics reaches the end-users of digital solutions through a combination of channels. System integrators and OEMs utilize the solutions either for themselves, or bundled into their own solutions. Brand label customers sell Beijer Electronics products and solutions under their own branding. A network of distributors on selected markets complements in-house sales resources and direct sales. On local markets, Beijer Electronics provides support through consulting, servicing and support. The business entity also creates new sales channels to the market through partnerships, with vendors of ERP and IT systems for example.

Market segments

Digital solutions are used in a raft of sectors and applications. The largest segment is manufacturing, including packaging, textiles, paper, food and beverages. Other segments like energy, marine and offshore operate in exposed and harsh environments with highly specific and stringent standards on the flexibility, robustness, sustainability and reliability of solutions. Beijer Electronics is at the leading edge of robust digital solutions and provide specialized, tailored solutions for specific applications in segments like building automation, infrastructure and water & wastewater.

Manufacturing Energy Building automation Marine & Offshore Water & Wastewater

Customers and sales

Beijer Electronics sells its system solutions to a global base of over 3,000 customers of differing sizes. Its ten largest accounts represented 26% of sales in 2019. Europe represented 53% of sales, North America 25%, and Asia 20%.

Solutions that help improve the environment

Beijer Electronics delivers complete solutions to UK company Tidy Planet, which manufactures a range of equipment that processes food and organic waste. These processes turn food waste into nutritious compost, reducing the waste of biomass.

The systems include Beijer Electronics' iX software, and its X2 control 7 and 10 HMIs with integrated CODESYS control. Systems monitor and control parameters including temperatures and motors, while visualizing the process graphically. The solutions enable Tidy Planet to satisfy customer needs to capture data and monitor processes without revealing its complete technical design.

Digital solutions

Developing new digital solutions

Beijer Electronics is investing significant resources in developing software and hardware solutions. Its focus has progressively migrated to more development of software solutions to remain at the leading edge in the transition to new digital solutions. These new solutions include operator communication, advanced automation, connecting with wireless data communication and HMI systems. The solutions involve data control, communication, visualization and analysis for mission-critical applications that help optimize the customer's business processes.

Production

The manufacture of Beijer Electronics' hardware products is concentrated at its plant in Taipei, Taiwan. Production is based on the assembly of components from carefully selected external vendors. Manufacturing is ISO 9001 and ISO 14001 certified.

acirro+

In 2019, Beijer Electronics launched its new IIoT platform under the proprietary brand acirro+. This solution integrates software and hardware, and is a cloud solution that connects to both new and existing automation equipment. acirro+ enables machinery to transfer data to an external server such as the cloud. acirro+ enables the addition of further smart functionality. Mobile devices can access data that is present within, and generated by, machinery by transmitting from the cloud or other network. acirro+ is compatible with most control systems from all the major vendors. acirro+ will be sold under the SaaS revenue model, with hardware invoiced on delivery and software on subscription.

The X2 series expands with new X2 web HMIs

In 2019, the X2 series was extended with introduction of the X2 web HMIs, based on the latest browser technology. The X2 series has continuously expanded with new HMIs since the introduction in 2016. The X2 series comprises 5 individual product families with different characteristics, capacity and performance. The product families are named X2 base, X2 pro, X2 marine, X2 control and X2 extreme and address different customer needs and market segments. These HMIs use the upgraded version of iX software. The new solutions expand the business entity's market and application segments. The X2 series represented 47% of business areas sales in 2019.

Strategy and future

Beijer Electronics' origins lie within the operational technologies (OT) such as automation solutions and human machine interfaces, where it possesses unique skills in controlling and monitoring different technical systems. Digitalization, urbanization and the demand for greater efficiency are driving the market, creating new business opportunities at the border between OT and IT. In practical terms, data from different OT systems needs to be converted into data that IT systems understand. In the sector, the interface between OT and IT is called edge gateways.

The overarching trend is to interconnect processes, machinery and systems to cloud solutions via the Internet, as well as integrating different systems within an organization such as ERP systems. Making information available creates supporting data for analysis that can be used to further refine and optimize the customer's processes. The different types of process within a business generate enormous data volumes that are captured, controlled, connected and analyzed in various applications. This creates major customer benefits in alarm systems, the ability to plan maintenance and prevent disruptions and downtime. Increased capacity utilization and efficiency cut the customer's costs.

More software and increased collaboration

Meanwhile, digitalization is moving the focus progressively towards developing more software solutions. Through close collaboration with customers and better understanding of their needs, solutions can be simplified, made more user friendly, and time to market reduced. Development and sales processes are being oriented more to services with customer value than product sales. Relationships with customers are getting closer, and different revenue models can be applied.

Beijer Electronics has a strong partnership with the group's Korenix business entity, which will be developed and intensified. Korenix's network solutions product range will enable Beijer Electronics to offer the market more complete solutions. One

example is the ability to supplement edge gateways with wireless communication. Korenix can also benefit from Beijer Electronics' marketing organization, with proprietary sales offices and a distributor network, especially on the European market.

This strategy means Beijer Electronics expanding its market to more sectors and different, tailored applications. This also means vertical integration to cover more platforms and levels within an organization such as ERP systems and cloud platforms. There is also a growing demand for complete solutions, addressed with more complete project deliveries, comprising solutions from the Group's other business entities.

Korenix Business entity

In 2019, Korenix took major steps in implementing its strategic plan to generate growth and profitability. The business entity did not fully achieve its short-term goals for the year, mainly due to a slower market in parts of Asia. The business entity reported unchanged sales and a modest loss.

Sales in Europe increased by 13%, but decreased by 16% in Asia, and by 4% in the USA. Shipments to major projects such as network equipment to Tai Power and a surveillance system to an airport in Shanghai, as well as subway stations in Hamburg, continued as planned.

The core of the new product plan is a new platform—Korenix Switch OS platform—integrating software and hardware. An automated test schedule has also been developed and implemented. The test schedule means significant time-savings in product testing. All products are expected to upgrade to the new platform in 2020 and 2021.

Korenix also laid the foundation for more efficient operations. Work on capital management reduced inventories by 20%.

Collaboration with the Beijer Electronics business entity will be extended and intensified. By combining Korenix's network products with its own, Beijer Electronics will be able to offer the market more complete solutions. Korenix will also benefit from Beijer Electronics' stronger marketing organization, especially in Europe. In this context, Beijer Electronics will be a sales channel for Korenix products in addition to Korenix's own distributor network.

Korenix's order intake was 122 MSEK (129) in 2019. Sales were 120 MSEK (118). EBITDA was 9.9 MSEK (6.3). EBIT was -4.3 MSEK (-6.4).

The new platform—Korenix Switch OS Platform—is the core of our new product plan. All products are scheduled to be upgraded to the new platform in 2020 and 2021.

150

WESLEY CHEN, CEO KORENIX

Sales 2019
b 120	MSEK			6 %

SEK 000		2019	2018
Total sales		119,880	117,754

Total sales	119,880	117,754
EBITDA	9,918	6,331
EBIT	-4,330	-6,362
EBIT margin, %	-3.6	-5.4
Share of Group sales, external, %	6.4	7.3

employees at year-end

Offering and market

Communication solutions

Korenix provides the market with high-end data communication solutions wirelessly and over Ethernet, in an offering consisting of software and hardware. Korenix primarily focuses on communication solutions for surveillance, security, information and communication systems. The company addresses a number of selected market segments: Transportation, with its need for information systems and communication solutions for buses, trains, metros, tunnels, roads and airports, is one major segment. Energy and power distribution are a second priority segment. IIoT (Industrial Internet of Things) solutions linked to automation in the manufacturing and semiconductor industries is a third.

Sales channels

Korenix markets and sells communication solutions through various channels–an in-house sales force, sales through OEM customers, system integrators and distributors. In Taiwan, sales are through Korenix's own sales force. In China, the organization consists of eight distributors and ten key accounts. Sales globally outside Taiwan and China are through a distributor network.

Market segments

The largest segments are surveillance, transportation, infrastructure, the power sector and manufacturing.

Surveillance Transportation and Infrastructure Power sector Manufacturing

Sales and customers

Korenix's sales are global. Europe represented 49% of sales in 2019. Asia provided 41% and the USA 9%. OEM customers comprised 16% of sales, and distributors, 28%.

Products and technology

Production

Korenix's products are manufactured at its plant in Taipei, Taiwan. Its manufacturing process is ISO 9001 certified.

Solutions and concepts

Korenix's communication solutions integrate software and hardware. The hardware includes Ethernet switches, wireless switches, 3G and 4G routers, and combinations of switches and routers, as well as IIoT solutions. Antennas are essential for reach and security. Korenix has a sharp focus on the secure IT solutions. Korenix Network Manager software is the core solution, which configures complete networks. Korenix holds several patents. Products are marketed under the JetWave, JetNet and JetPort brands with differing capacity and performance.

Strategy and future

Korenix is in an intensive phase developing a new platform—the Single Korenix Switch OS platform. Its software and hardware are based on a modular design, which shortens development lead- -times and is easier to implement and service, as well as being compatible with more—and more varied—products. An automated test format has been implemented, saving significant time on new product testing. All products will be upgraded to the new platform in 2020 and 2021.

Wireless control of Automated Guided Vehicles

Korenix delivered a wireless solution to control and monitor the movement of engines through one of Chinese automaker Dongfeng's assembly plants. Transitions to each assembly point are automated. One of the main challenges of a wireless solution is the high volume of metallic products at the plant, which interfere with radio waves. This causes delays in signal transmission, reducing reliability.

Korenix was able to produce a reliable WiFi solution enabling engine movement to be monitored and controlled from a control room without interference. A surveillance app installed on a smartphone enables operators to monitor operational status of the actual WiFi installation easily. The surveillance app was also one of the reasons Korenix won the order. Another key factor was that Korenix's solution only needs five WiFi access points against twice that for competitors. The installation was completed in mid-2019.

Korenix's current product range covers speeds from 10 megabit to 1 gigabit with differing capacity and functionality. The new plan targets speeds up to 10 gigabit with still higher capacity and more functionality. Rapid digitalization means more demand for higher data speeds and more broadband capacity.

In contact with our markets

Since 1981, beijer group has grown from being a localized technology enterprise in Sweden into a multinational group with operations on major markets worldwide. Our ambition is to be a flexible partner for the Group's customers on any market, providing the local support and services they need.

Distributors

beijer group's in-house sales resources are supplemented by a network of carefully selected distributors in some 60 countries. These distributors are skilled technology companies that sell the Group's solutions and broad product range on each market. Over and above sales, distributors offer local servicing and support.

... @

Sales offices

beijer group has its own sales and support business spanning 18 countries. Operations are supplemented by sector-specific sales teams

that operate across the whole international arena. Local support, servicing and closeness to customers are key cornerstones of the business model.

Production and development

The Group's development centers are in Malmö and Västerås, Sweden, as well as Nürtingen in Germany, Taipei in Taiwan, Bubikon in Switzerland and Dublin

in Ireland. Its manufacturing facilities are located in Stora Sundby in Sweden, Taipei in Taiwan, Bubikon in Switzerland and Dublin in Ireland.

Sustainability Report 2019–summary

In 2019, beijer group expanded its sustainability work, and the Group is publishing its third Sustainability Report. The complete report is published separately on beijer group's website, www.beijergroup.com. The report is summarized in the following sections.

beijer group continued to develop its sustainability work in 2019. At an overarching level, the Group manages operations consistent with the UN global sustainable development goals (SDGs). Accordingly, its business model and strategy should have a clear link to the global SDGs. Of these goals, beijer group has identified a number that are especially relevant to its business. These are Decent Work and Economic Growth, Industry, Innovation and Infrastructure, Responsible Consumption and Production, as well as Peace and Justice Strong Institutions. The mission in 2020 is to identify different ways to measure and monitor these goals, combined with the reporting framework relating to GRI Standards.

Work on reducing the Group's own negative environmental impact in terms of product lifecycles was initiated in 2019, and will continue in 2020. The number of audits of key suppliers was expanded in the year. Employee well-being is the focus of sustainability work. In its employee satisfaction survey in 2019, beijer group secured very high ratings in several key segments.

Vision

beijer group's sustainability work should be an integrated and natural part of its operations, and its efforts should be towards sustainable development.

Strategy

Conducting sustainability work responsibly is critical to the company's short and long-term success, while focusing on profitability and long-term shareholder value. Its action should feature high skills levels, good business morals and being aware of its responsibilities.

Commitment

beijer group's Group Management has made a number of over-arching strategic commitments that create a framework for managing operations in accordance with its sustainability strategy. These commitments impact on overall guidelines, ecological sustainability, economic sustainability and social sustainability. They are reviewed in more detail in the complete Sustainability Report.

UN Global Compact

beijer group joined the UN Global Compact in June 2018. Prior to joining, the Group was already using the Global Compact as a benchmark for systematic sustainability work. beijer group was utilizing the UN Global Compact Self-Assessment Tool to analyze the company's efforts in sustainability, and to identify priority aspects. The Group's Code of Conduct for suppliers is already based on the Ten Principles of the Global Compact, which all suppliers must sign before a business relationship can begin.

The UN Global Compact is a voluntary initiative designed to promote sustainable development and responsible business. By joining, companies demonstrate that they support ten universal principles in the segments of human

rights, labor, the environment and anti-corruption. With several thousand participants in 130 countries, the UN Global Compact has become a global initiative with a strong presence worldwide.

Intensifying and evaluating priority segments

Suppliers

beijer group has several hundred suppliers. The Group's processes include visiting and assessing key suppliers each year. Other major suppliers not audited annually are visited every second year. Other suppliers are not covered by regular inspections. The Beijer Electronics business entity has taken leadership in the Group in evaluating its suppliers.

The company continued to evaluate its key suppliers in 2019, and conducted another 12 audits of 12 suppliers. The Korenix and Westermo business entities also audited key suppliers in 2019. In total, the Group conducted 26 audits on a total of 18 suppliers in the year.

Long-term profitability

Profitability is critical to long-term survival in a global and competitive world. Being able to offer the market solutions, products and services that customers really want and need is fundamental. A high-technology company like beijer group applies high standards to its priorities. Profitable companies can also attract more skilled people. The Group has progressively improved profitability in recent years, and its EBIT exceeded 100 MSEK in 2019.

Psychosocial working environment

Creating a workplace that is a healthy environment mentally and physically is not only desirable from an individual perspective, but also critical to a successful business operation. beijer group asks its staff to participate anonymously in yearly surveys. In 2019, 700 employees participated in the yearly employee satisfaction survey, which was Group wide. The results from 2019 revealed that generally, people have a positive perception of their working situation and workplaces, with zero tolerance of discrimination and harassment, and encouragement to maintain a healthy worklife balance receiving especially high ratings. But there is room for improvement. Management has particularly identified a need for actions to improve effective leadership, highlighting people's developmental potential more clearly, and raising general awareness about mutual respect and support.

Anti-corruption

beijer group aworks preventatively on countering corruption. The Group's in-house Management program involves education in anti-corruption, ethics and morals. All Management staff will take this training program. Another 12 individuals took the training program in 2019, including several from the acquired companies Neratec and Virtual Access. All staff should have read, understood and accepted the Code of Conduct. This training program is a strong preventative measure against the risk of corruption. Each manager is responsible for monitoring compliance with policies and guidelines.

Climate impact of the Group's products

beijer group agrees that global warming must be kept well below 2 degrees above pre-industrial levels in accordance with the UN Paris Agreement. To be part of the global transition to a low-CO2 economy, in future, the Group will ensure that its products and services are designed and delivered more energy efficiently. To deepen understanding of the climate impact of its products, the Group has conducted a life cycle analysis of one of the business entity's three biggest-selling products. This analysis indicates that the usage phase and production of raw materials generate most of the product's climate impact. Transportation also has some climate impact. Assembly and manufacture, as well as disposal on obsolescence, have negligible climate impact.

Materials selection in products

The Group's products are designed and manufactured to main good quality and long useful lives, often in harsh environments. Normally, products consist of several hundred components, which may combine thousands of different natural and synthetic materials.

The Beijer Electronics business entity publishes Environmental Product Declarations (EPDs) of all items developed in-house. Ten of its product families have EPDs at present. EPDs specify items including materials content, packaging materials, recycling instructions, as well as instructions on reducing environmental impact during the usage phase. Westermo conducted and environmental survey in 2019, a process that will continue in 2020. A situation assessment was produced according to ISO14001 to map the environmental aspect and impact of operations. The survey will be evaluated and analyzed in an environmental management system. The Korenix business entity does not publish EPDs at present, but has the ambition to do so in 2020.

Innovation and new ideas

beijer group continuously develops innovative solutions and products to maintain its competitiveness in a sector where the progress in software and hardware is rapid. Innovation and development resources are not only decisive investments in terms of the Group's long-term survival, but they also enable the discovery of new ways to reduce products' climate impact. The Group spent some 181 MSEK on product development in 2019, or 11.6% of sales.

Financial information

beijer group is an innovative, high-technology Group that provides the market with digital solutions that help customers optimize processes at different levels of their business. Our solutions bridge the interface between human and machine. Data is captured, controlled, transported, presented and analyzed in interactive and seamless processes.

Our offering consists of software, hardware, services and servicing, linking a variety of systems across wired and wireless digital networks, interconnecting a raft of IIoT applications. Our solutions are robust to enhance our customers' operations, with their focus on efficiency, reliability and cybersecurity.

Products and solutions are sold through proprietary sales units in 18 countries, and via a network of independent distributors in about 60 countries.

The Group is organized into three business entities: Westermo, Beijer Electronics and Korenix. These entities have proprietary product development and manufacture, and global sales responsibility.

Directors' Report

The Board of Directors and Chief Executive Officer of Beijer Electronics Group AB (publ), corporate identity number 556025- 1851, hereby present the Annual Accounts and Consolidated Accounts for the financial year 2019. The information in brackets is for the previous year. The Group is referred to as beijer group below.

Group operations

beijer group provides the market with digital solutions that help customers optimize processes at different levels of their business. Data is captured, controlled, transported, presented and analyzed in interactive and seamless processes. Its offering consists of software, hardware, services and servicing, linking a variety of systems across wired and wireless digital networks, interconnecting a raft of IIoT (Industrial Internet of Things) applications. Solutions are robust to enhance customers' operations, with their focus on efficiency, reliability and IT security. The Group addresses a number of market segments with varying needs that apply differing standards to their solutions.

Proprietary technology and product development is a critical precondition for beijer group's competitiveness on the market. The company has development centers in Sweden, Germany, Taiwan, Switzerland and Ireland. The company's products and solutions feature high technology content, quality and user-friendliness.

The Group's vision is to be a leading global supplier of user-friendly and robust digital solutions. Products and solutions from beijer group are sold through proprietary sales units in 18 countries, and via a network of independent distributors in a further total of some 60 countries. See also Note 14 for more information on beijer group's subsidiaries. Parent company Beijer Electronics Group AB is a holding company with central functions like strategic development, accounting and Finance, IT, human resources, quality and environment, as well as communications.

The Group is divided into three business entities: Westermo, Beijer Electronics, and Korenix. These business entities have proprietary product development and manufacture, and global sales responsibility.

Operations in the year

Growth on the global market is driven by investment in new products, digitalization, and the trend towards more connected systems, urbanization, investment in infrastructure, ongoing rationalization of production controls and logistics, the rationalization of industrial processes and the need for more efficient energy consumption. Infrastructure like railways, highways, tunnels and energy distribution are growing market segments for digital solutions.

The trend on the industrial data communication market is high growth of around 9-10% annually. The market for solutions that process data and information is returning long-term growth of around 6-7% annually. The global market achieved growth in 2019.

Order intake, sales and profit

The Group's order intake amounted to 1,557 MSEK (1,593) in 2019. Sales rose by 10% to 1,559 MSEK (1,417). Sales in the Nordics increased by 11% to 379 MSEK (342), or 24% of Group sales. In the rest of Europe, sales rose by 20% to 590 MSEK (493), or 38% of total sales. In the USA, sales decreased by 5% to 263 MSEK (277), corresponding to 17% of sales. In Asia, sales increased by 12% to 292 MSEK (261) or 19% of Group sales. The rest of the world represented 2% of sales.

Proprietary products represented approximately 96% of the Group's total sales.

EBITDA was 227.2 MSEK (150.6). Earnings were positively impacted by 41.7 MSEK from the adoption of IFRS 16 Leases, and IFRS 16 also impacted depreciation and amortization negatively by 39.5 MSEK. Depreciation and amortization was 123.7 MSEK (76.6). EBIT increased by 40% to 103.5 MSEK (73.9), with IFRS 16 impacting earnings positively by 2.2 MSEK net. Earnings were negatively affected by acquisition expenses of 3.9 MSEK, and positively by 4.6 MSEK of capital gain from a real estate sale.

Profit before tax increased to 91.8 MSEK (63.0). Net financial income/expense was -11.7 MSEK (-10.9). Profit after estimated tax was 65.0 MSEK (43.5). The tax expense includes 2.9 MSEK of stamp duty for the acquisition of Virtual Access. Earnings per share after estimated tax were 2.27 SEK (1.52).

Significant events

beijer group acquired Swiss company Neratec Solutions AG through the Westermo business entity in early-July 2019. Neratec specializes in wireless network products that focus on reliable and robust communication solutions for train and rail infrastructure. Neratec complements and enhances Westermo's offering to these segments. Neratec has annualized sales of some 60 MSEK and about 25 employees. The purchase price amounts to 5 million Swiss francs on a debt-free basis and is payable in cash. A minor contingent consideration will be paid on the satisfaction of specific criteria. Neratec is part of the Group and was consolidated into Westermo's accounts on 1 July 2019. The acquisition had a limited impact on beijer group's earnings in 2019.

Through its Westermo business entity, beijer group acquired Irish company Virtual Access at the end of October 2019. Virtual Access is a technology enterprise specializing in wireless industrial routers and gateways, as well as managed connectivity services. The company has annualized sales of some 130 MSEK and around 40 employees. The purchase consideration was 18 MEUR on a debtfree basis. A performance-based contingent consideration becomes due after 2021 on the satisfaction of specific criteria. Virtual Access is part of the Group and was consolidated into Westermo's accounts on 1 November 2019. This acquisition had a limited impact on the Group's earnings in 2019, but is expected to make a contribution in 2020 consistent with Westermo's profitability level.

Through its Beijer Electronics business entity, beijer group entered an agreement worth over 150 MSEK with US elevator manufacturer Otis at the end of December 2019. This deal, which has a five-year term, involves Beijer Electronics supplying display solutions to Otis elevators. The first shipments to Otis commence in spring 2020, and will make a gradual contribution to the Group's and business entity's sales and earnings. Otis is part of US listed group United Technologies. Otis provides its products, services and servicing from companies in some 200 countries and territories.

In March 2019, the Board of Directors decided to issue 150,066 class C shares with a quotient value of SEK 0.33, in accordance with the authorization of the Annual General Meeting (AGM) 2018. The issue was to a financial institution and was immediately repurchased by the company. The intention of the repurchased class C shares on delivery to employees in 2021 is to convert them to ordinary shares, pursuant to the terms and conditions of the LTI 2018/2021 incentive program. After the completed repurchase of class C shares, the number of class C treasury shares was 184,723. Class C shares are not entitled to dividends.

Pursuant to a resolution by the AGM 2019, beijer group has implemented a new share-based incentive program. Its outcome meant the parent company issuing 66,298 class C shares in the first quarter of 2020, in line with the adopted program.

Westermo business entity

The sales gains in the year were broad based, with basically all the markets Westermo addresses performing well. Demand from train networks remained brisk, although network products are also making positive progress. Westermo also secured a number of major orders from repeat customers like Bombardier and Alston, and a breakthrough order on a subway project in Singapore.

In the second quarter of 2019, Westermo launched a new generation of routers for train networks—Viper Backbone Node. This is the first in a series of launches based on Westermo's new hardware platform, with sharply improved performance in terms of bandwidth and speed. Shipments of a new generation of operating system— Westermo's proprietary WeOS—are underway. More products based on this new platform will be introduced progressively.

The business entity launched an all-new switch in the fourth quarter—the Lynx 5512—with superior capacity and performance in the Edge Network segment. This launch is a milestone in the rollout of next-generation Ethernet switches for applications with high performance, extensive functionality and cybersecurity.

Targeted initiatives on network solutions for power distribution and rail infrastructure progressed as planned, but also resulted in increased expenses in the year. These efforts are based on Westermo's current product range. However, they do require adaptation, upgrade and certification etc. before market launch is possible. The first certified power distribution products will be presented in the first quarter of 2020. The first solutions in rail infrastructure are scheduled for launch in summer 2020. Neratec's and Virtual Access's product ranges are a good fit and complement Westermo's investments in these segments.

Order intake, sales and earnings

Westermo's order intake increased by 6% to 726 MSEK (688). Sales increased by 21% to 705 MSEK (584). EBITDA was 134.3 MSEK (97.4). EBIT was up by 29% to 89.6 MSEK (69.7), equivalent to an EBIT margin of 12.7% (11.9).

Beijer Electronics business entity

Beijer Electronics provides the market with digital solutions that help customers optimize processes at different levels of their business. Information in the form of data is captured, controlled, presented and analyzed in interactive processes. Its offering consists of software, hardware, services and servicing, linking systems with a raft of IIoT applications. Its solutions are robust to enhance customers' operations, with their focus on efficiency, reliability and cybersecurity.

Beijer Electronics reported continued growth, with increased sales and better EBIT in 2019. This also meant its EBIT margin increased by nearly 1 percentage point. The earnings improvement is due to higher sales volumes and a wider gross margin.

The positive trend also featured some variation between individual quarters of the year that primarily impacted order intake, which reduced in the year.

At the end of 2018, the business entity's customers placed unusually large orders on products in phase-out from the product range in 2019. These orders would otherwise have been placed over the past year. Meanwhile, sales of the new X2 series performed strongly, increasing their sales share progressively through the year. The X2 series represented a total of 47% of sales for the full year.

Overall, the European market was in positive growth. The UK made good progress despite concerns over Brexit. The German market was hesitant, with lower demand than in the previous year, which then had a high share of products in phase-out. The Nordic market was mixed, with strong progress in Sweden, while Norway and Denmark were unchanged. The American market slowed, due to factors including consolidation in the oil & gas sector. A new organizational structure was implemented in the USA in the second quarter, with a stronger, improved management appointed. These actions were taken to adapt operations more optimally to a broader-based, more solution-oriented approach to the market. The Asian markets had good growth, apart from Taiwan. A new organization was implemented in China in 2018, which had a positive impact on sales in 2019.

At the end of 2019, Beijer Electronics signed a supply agreement worth over 150 MSEK for an initial three-year period with US group Otis, a world leader in elevators, escalators and moving walks. Beijer Electronics will provide complete, tailored HMI solutions installed in Otis elevators. Beijer Electronics has developed fully integrated and flexible HMI solutions for Otis, designed to satisfy electrical and mechanical reliability standards, combined with custom LCD panels. The Otis deal has a five-year term, with progressively increasing yearly deliveries.

A collaboration with the Group's Korenix business entity will be expanded and intensified. By combining Beijer Electronics' digital solutions with Korenix's network products, Beijer Electronics will be able to offer the market more complete solutions.

Order intake, sales and earnings

Beijer Electronics' order intake was 732 MSEK (792) in 2019. Sales increased by 3% to 756 MSEK (731). EBITDA increased to 104.9 MSEK (75.1). EBIT increased by 16% to 55.0 MSEK (47.4) equivalent to an EBIT margin of 7.3% (6.5).

Korenix business entity

The strategic plan maintained its focus on product development. Regeneration of the product portfolio is oriented on upgraded performance and capacity of software and hardware. Increased product development expenses also impacted earnings. The core of the new product plan is a new platform—Korenix Switch OS platform—integrating software and hardware. An automated test schedule has also been developed and implemented. The test schedule means significant time-savings in product testing. All products are expected to upgrade to the new platform in 2020 and 2021. Korenix also laid the foundation for more efficient operations. Work on capital management reduced inventories by 20%.

Order intake, sales and earnings

Korenix's order intake was 122 MSEK (129) in 2019. Sales were 120 MSEK (118). EBITDA was 9.9 MSEK (6.3). EBIT was -4.3 MSEK (-6.4).

Investments, cash flow and financial position

The Group's investments including capitalized development expenditure and acquisitions amounted to 333.7 MSEK (93.7) in 2019. Cash flow from operating activities was 183.3 MSEK (109.1). Equity amounted to 684.4 MSEK (652.9). The equity/assets ratio was 33.7% (43.3). Cash and cash equivalents amounted to 121.9 MSEK (94.5). Net debt was 757.0 MSEK (418.0).

Profitability

Return on equity was 9.7% (7.0). Return on capital employed and net operating assets were 7.8% (6.7) and 10.6% (8.5) respectively.

Human resources

The average number of employees was 773 (713). The increase is due mainly to acquisitions.

Product development

The Group's product development is conducted in the Westermo, Beijer Electronics, and Korenix business entities. Development projects are regularly executed to extend the range of new products and solutions, and enhance the existing offering.

Westermo develops and manufactures robust network products for secure data communication. Development consists of hardware and software. There are development units in Stora Sundby, Sweden, Dublin, Ireland and Bubikon, Switzerland. Beijer Electronics develops hard and software solutions for digitalized management, surveillance and control, and connection to the cloud for gathering and analyzing data. There are development units in Malmö in Sweden, Nürtingen in Germany and Taipei in Taiwan. Korenix develops hardware and software for wireless and wired data communication focusing on security and surveillance applications. Development is conducted in Taipei, Taiwan.

The Group's total expenditure for development was 181.3 MSEK (162.7), corresponding to 11.6% (11.5) of Group sales.

Currencies

The Group's sales are conducted globally in different currencies. Euro-denominated sales were the equivalent of 612 MSEK, or 39% of total sales. Sales denominated in US dollars were 395 MSEK, 154 MSEK denominated in Swedish kronor, 114 MSEK in UK sterling, 85 MSEK in Chinese yuan, and 199 MSEK in other currencies.

Environmental impact

Primarily, the Group's environmental activities focus on the environmental impact of its products. Close collaboration with suppliers is a key driver of environmental work. The company's standard products satisfy the RoHS directive, which prohibits the usage of lead in electrical and electronic products. Operations of several of the units in Sweden are ISO 14001 certified to ensure compliance with applicable standards, and work on environmental issues is structured and contributes to continuous improvement.

IFRS

The Group has been reporting in accordance with International Financial Reporting Standards (IFRS) since 1 January 2005.

Risks

The Group's business is affected by a number of exogenous factors, whose effects on the Group's results of operations and financial position can be controlled to varying degrees.

Business risks like market risks, collaborative agreements, product liability, technological progress and dependency on staff are subject to continual analysis, and where necessary, measures are taken to reduce the Group's risk exposure. The Group has sales and purchasing in foreign currencies and is thus exposed to currency risks. Normally, the Group does not hedge its currency flows. The Group also has some financial risks such as interest risk, liquidity risk and refinancing risk. The Board of Directors sets the rules for risk levels and managing financial risks at various levels in the Group. The goal is to minimize these risks, and clarify responsibility and authority. Following up on rules and their compliance is verified by the individuals responsible and reported to the Board of Directors. Interest-bearing liabilities were 878.9 MSEK (512.5) at year-end. Net debt amounted to 757.0 MSEK (418.0).

Shares and ownership structure

As of 31 December 2019, the parent company's share capital was 9,595,367 SEK, divided between 28,786,102 shares, of which 28,601,379 ordinary shares and 184,723 class C shares. The minimum share capital is 5,000,000 SEK, and the maximum is 20,000,000 SEK. Each share has a quotient value of 0.33 SEK. Ordinary shares carry one vote, and class C shares carry one-tenth of a vote. Class C shares are not entitled to dividends.

The parent company's largest shareholder at year-end 2019 was Stena Adactum AB with 29.1% of the votes. Svolder held 12.2% and Nordea Fonder 11.3% of the votes.

In March 2019, the Board of Directors decided to issue 150.066 class C shares with a quotient value of SEK 0.33, in accordance with the authorization of the AGM 2018. The issue was to a financial institution, and was immediately repurchased by the company. The repurchased class C shares are intended for conversion into ordinary shares on delivery to employees in 2021, pursuant to the terms and conditions of the LTI 2018/2021 incentive program.

The AGM 2019 resolved to authorize the Board of Directors to decide on the new issue of a maximum of 2,860,137 ordinary shares on one or more occasions in the period until the next AGM.

The Board of Directors' proposed guidelines for 2020

The Board of Directors is proposing that the AGM adopts guidelines for remunerating senior executives, to apply until the AGM 2024 at the latest. Senior executives means Group Management including the CEO.

Successful implementation of the company's business strategy and protecting its long-term interests, including sustainability, requires the company being able to hire and retain qualified members of Group Management, by offering competitive compensation.

Total compensation includes basic salary and variable remuneration linked to the satisfaction of financial criteria that can be measured for a period of one year. These criteria relate to, for example, the company's earnings performance, sales level and other important change targets, to promote the company's business strategy and long-term interests, including sustainability. The yearly variable portion may be a maximum of 50% of basic yearly cash salary for the measurement period. The salary and employment terms of the company's employees have been considered in terms of duties and employees' total compensation, the components of compensation, and the increase, and rate of increase of compensation over time, which have been part of the decision-support data when evaluating the reasonableness of the guidelines. Moreover, pension and other benefits of limited scale for the CEO and other senior executives are additional.

If Beijer Electronics Group AB terminates the CEO, the CEO is entitled to an 18-month notice period. No other compensation on termination has been agreed. If the company terminates other senior executives, and termination is not due to gross negligence, maximum notice periods of 12 months have been agreed.

Apart from the above criteria, the Board of Directors is proposing the implementation of a share-based incentive program for the CEO, other senior executives and a number of other key individuals within the Group. This program will measure performance in 2020, but has a term of three years, with participants in the program undertaking to hold shares in the company themselves, to then receive what are termed performance shares on satisfying or exceeding performance targets in 2020.

Subsequent events

In March, the Group decided to implement a program of measures involving staff downsizing by some 40 employees in the Korenix and Beijer Electronics business entities. Most of these layoffs will be in Taiwan, and some in Sweden. Expenses for this program amounted to 15 MSEK, charged to earnings for the first quarter 2020. Estimated savings are 25-30 MSEK for 2020, and then 40-45 MSEK annualized.

In March, the Board of Directors decided on a new dividend proposal, which means proposing a dividend for the financial year 2019 of 0 SEK per share to the AGM 2020. The previous proposal was 0.50 SEK per share. The Board of Directors' new proposal is a precautionary measure intended to safeguard the Group's financial stability for the short and long term. The Board of Directors also decided to reschedule the AGM from 7 May 2020 to 26 June 2020.

In March, the Group's Westermo business entity signed a new customer agreement with an estimated value of 80 MSEK for the provision of network equipment to a major North American train operator.

The spread of the coronavirus, which at the time of writing, has affected many parts of the world, has caused the Group to increase its contingency for the expected consequences. Measures under consideration include those enabled by the programs various authorities are implementing for business communities in a number of countries. Readers should note that year to date, the Group has not noted any significant decrease in demand. The supply chain disruptions that occurred in tandem with China's actions against the spread of the coronavirus in the early months of the year have progressively improved.

Outlook for 2020

At present, it is impossible to assess the effects of the spread of the coronavirus on society and the global economy. This means that beijer group is not making any estimates regarding underlying financial performance for the full year 2020. The previous assessment as communicated in the Financial Statement for 2019 was that the Group expected to be able to increase sales and earnings for the full year 2020.

Proposed appropriation of profit

The following funds are at the disposal of the Annual General Meeting:

Total	286,261
Net profit	25,003
Retained profit	261,258
SEK 000

The Board of Directors and Chief Executive Officer propose that these funds are appropriated as follows: Dividends of 0 SEK per share to shareholders.

SEK 000
Total dividend	0
Carried forward	286,261
Total	286,261

If the AGM adopts this proposal, no dividend will be paid for the financial year 2019. The proposal on non-payment of dividends is a precautionary measure in a time of great uncertainty with the worldwide spread of the coronavirus.

The Group's equity/assets ratio was 33.7% at year-and 2019, and the parent company's equity/assets ratio was 28.5%. Liquidity is judged as being sustainable at a satisfactory level.

The Income Statement and Balance Sheet will be presented to the AGM on 26 June 2020 for adoption.

Consolidated Income Statement

SEK 000	2019	2018	Note
Revenues	1,558,699	1,417,240	2
Cost of goods sold	-748,494	-706,461	3
Gross profit	810,205	710,779
Sales overheads	-297,465	-269,392	3
Administration overheads	-251,809	-233,663	3, 5
Research and development expenses	-160,823	-135,538	3
Other operating revenue and operating expenses	3,388	1,760	4
Earnings before interest and taxes	103,496	73,946	6, 7
Financial income	2,331	2,188
Financial expenses	-13,986	-13,096
Net financial income/expense	-11,655	-10,908	8
Profit before tax	91,841	63,038
Tax	-26,869	-19,501	10
Net profit	64,972	43,537
Attributable to equity holders of the parent	64,954	43,518
Attributable to non-controlling interests	18	19
Basic earnings per share, SEK	2.27	1.52	31
Diluted earnings per share, SEK	2.25	1.51

Statement of Comprehensive Income

SEK 000	2019	2018
Net profit	64,972	43,537
Other comprehensive income: Items not reclassifiable to profit or loss
Restatement of net pension obligations	-42,099	-15,710
Tax related to above items	8,666	2,617
Items potentially reclassifiable to profit or loss
Translation differences	15,076	40,178
Net investment hedge effects	3,577	0
Tax related to above items	-1,949	-2,564
Comprehensive income for the year	48,243	68,058
Attributable to equity holders of the parent	47,827	67,760
Attributable to non-controlling interests	416	298

Consolidated Balance Sheet

SEK 000	31 Dec. 2019	31 Dec. 2018	Note
ASSETS
Fixed assets
Property, plant and equipment	99,706	90,832	11
Right-of-use assets	104,209	0	12
Intangible assets	1,088,490	789,153	13
Participations in associated companies	0	1,000	15
Long-term receivables	3,262	2,631	16
Deferred tax assets	49,867	50,207	22
Total fixed assets	1,345,534	933,823
Current assets
Inventories	214,810	177,679	18
Accounts receivable	303,954	250,651	19
Income taxes recoverable	12,177	11,263
Other receivables	26,448	27,502	19
Prepaid expenses and accrued income	17,441	19,904	19
Cash and cash equivalents	121,903	94,488
Total current assets	696,733	581,487
Total assets	2,042,267	1,515,310

EQUITY AND LIABILITIES
Equity
Share capital	9,595	9,545
Other paid-up capital	239,084	239,163
Reserves	141,685	122,977
Accumulated profit or loss	294,070	281,203
Equity attributable to equity holders of the parent	684,434	652,888
Equity attributable to non-controlling interests	4,249	3,847
Total equity	688,683	656,735
Long-term liabilities
Borrowings	416,109	304,604	20
Lease liabilities	69,598		12
Other long-term liabilities	97,732		29
Pension provisions	169,711	131,216	21
Deferred tax liabilities	56,478	50,338	22
Other provisions	6,776	4,346	23
Total long-term liabilities	816,404	490,504
Current liabilities
Borrowings	187,353	76,721	20
Lease liabilities	36,084		12
Customer advances	2,171	4,295
Accounts payable–trade	126,088	111,407
Tax liabilities	6,854	7,095
Other liabilities	25,842	23,428
Accrued expenses and deferred income	152,788	145,125	24
Total current liabilities	537,180	368,071
Total liabilities	1,353,584	858,575
Total equity and liabilities	2,042,267	1,515,310

Information on the Group's pledged assets and contingent liabilities is in Note 26.

Consolidated Statement of Changes in Equity

		Attributable to equity holders of the parent			Non controlling
SEK 000	Share capitala	Other paid-up capital	Reserves	Accumulated profit or lossb	Total	interests	Total equity
Opening equity, 1 Jan. 2018	9,534	239,252	84,657	251,572	585,015	6,221	591,236
Net profit				43,518	43,518	19	43,537
Restatement of net pension obligations				-13,093	-13,093		-13,093
Translation differences			37,335		37,335	279	37,614
Comprehensive income	9,534	239,252	121,992	281,997	652,775	6,519	659,294
Transactions with shareholders
Paid-up capital after deducting for transaction expenses	11	-89			-78		-78
Re-purchase of treasury shares				-11	-11		-11
Dividends						-1,412	-1,412
Acquisitions				-783	-783	-1,260	-2,043
Share-based payment			985		985		985
Closing equity, 31 Dec. 2018	9,545	239,163	122,977	281,203	652,888	3,847	656,735

	Attributable to equity holders of the parent				Non controlling interests
SEK 000	Share capitala	Other paid-up capital	Reserves	Accumulated profit or lossb	Total		Total equity
Opening equity, 1 Jan. 2019	9,545	239,163	122,977	281,203	652,888	3,847	656,735
Adjustment on adoption of IFRS 16				-4,303	-4,303	-14	-4,317
Net profit				64,954	64,954	18	64,972
Restatement of net pension obligations				-33,433	-33,433		-33,433
Hedging of net investment			2,811		2,811		2,811
Translation differences			13,495		13,495	398	13,893
Comprehensive income	9,545	239,163	139,283	308,421	696,412	4,249	700,661
Transactions with shareholders
Paid-up capital after deducting for transaction expenses	50	-79			-29		-29
Re-purchase of treasury shares				-50	-50		-50
Dividends				-14,301	-14,301		-14,301
Share-based payment			2,402		2,402		2,402
Closing equity, 31 Dec. 2019	9,595	239,084	141,685	294,070	684,434	4,249	688,683

a 28,786,102 shares (2,636,036) with a quotient value of 0.33 SEK (0.33).

No. of shares, 1 Jan. 2018	28,601,379
New class C shares issued	34,657
No. of shares, 31 Dec. 2018	28,636,036
New class C shares issued	150,066
No. of shares, 31 Dec. 2019	28,786,102
Ordinary shares	28,601,379
Class C shares, 1/10 vote	184,723
Total	28,786,102

bIncluding net profit.

Consolidated Cash Flow Statement

SEK 000	2019	2018	Note
Operating activities
Profit before tax	91,841	63,038
Adjustments for non-cash items, etc.	130,161	85,142	28
Tax paid	-17,337	-13,447
Cash flow from operating activities before changes in working capital	204,665	134,733
Cash flow from changes in working capital
Increase (-)/decrease (+) in inventories	-18,329	-4,466
Increase (-)/decrease (+) in trade receivables	49	-36,976
Increase (+)/decrease (-) in trade liabilities	-3,125	15,883
Cash flow from operating activities	183,260	109,174
Investing activities
Investments in intangible assets	-64,481	-69,165
Investments in property, plant and equipment	-32,951	-23,462
Investments in financial assets	0	-84
Acquisition of subsidiary	-245,794	-2,043
Sale of property, plant and equipment	8,268	0
Sale of subsidiary	0	1,081
Sale of other financial assets	1,213	0
Cash flow from investing activities	-333,745	-93,673
Financing activities
Proceeds from issue of shares	50	12
Transaction expenses for new share issues and share re-purchase	-79	-89
Re-purchase of treasury shares	-50	-12
Change of overdraft facility	112,652	27,326
Borrowings	156,159	0
Loan amortization	-40,000	-40,000
Amortization of lease liability	-39,046	0
Dividend paid to equity holders of the parent	-14,301	0
Dividends paid to non-controlling interests	0	-1,412
Cash flow from financing activities	175,385	-14,175
Cash flow for the year	24,900	1,326
Cash and cash equivalents at beginning of year	94,488	89,281
Exchange difference in cash and cash equivalents	2,515	3,881
Cash and cash equivalents at end of year	121,903	94,488	28

Parent Company Income Statement

SEK 000	2019	2018	Note
Revenues	33,931	33,464	27
	33,931	33,464
Operating expenses
Sales and administration overheads	-69,036	-71,843	5, 6, 7, 27
Earnings before interest and taxes	-35,105	-38,379
Profit from financial items
Profit from participations in Group companies	0	1,417	8
Profit from participations in associated companies	213	0	8
Profit from other securities and receivables classified as fixed assets	4,004	9,305	8
Interest income, etc.	6,454	6,575	8
Interest expenses, etc.	-10,762	-9,489	8
Profit after financial items	-35,196	-30,571
Appropriations	68,400	23,000	9
Profit before tax	33,204	-7,571
Tax on profit for the year	-8,201	-113	10
Net profit and comprehensive income for the year	25,003	-7,684

Parent Company Balance Sheet

SEK 000	31 Dec. 2019	31 Dec. 2018	Note
ASSETS
Fixed assets
Intangible assets	19,066	27,121	13
Property, plant and equipment	548	465	11
Financial assets
Participations in Group companies	555,149	553,557	14
Receivables from Group companies	402,051	156,700	17
Participations in associated companies	0	1,000	15
Deferred tax assets	3,633	10,840
Total financial assets	960,833	722,097
Total fixed assets	980,447	749,683
Current assets
Current receivables
Receivables from Group companies	72,882	27,827
Income taxes recoverable	958	953
Other receivables	185	177
Prepaid expenses and accrued income	7,451	7,598	19
Total current receivables	81,476	36,555
Cash and bank balances	1,166	1,166
Total current assets	82,642	37,721
Total assets	1,063,089	787,404

SEK 000	31 Dec. 2019	31 Dec. 2018	Note
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capitala	9,595	9,545
Statutory reserve	1,244	1,244
Reserve for development expenditure	5,720	7,572
Total restricted equity	16,559	18,361

Non-restricted equity
Retained earnings	261,258	279,121
Net profit	25,003	-7,684
Total non-restricted equity	286,261	271,437	32
Total equity	302,820	289,798
Provisions
Pension provisions	10,425	8,878
Total provisions	10,425	8,878
Long-term liabilities
Borrowing	416,109	300,000	20
Liabilities to Group companies	120,722	83,393
Total long-term liabilities	536,831	383,393
Current liabilities
Borrowing	184,890	74,649	20
Accounts payable	4,169	5,314
Liabilities to Group companies	11,576	12,335
Other liabilities	495	122
Accrued expenses and deferred income	11,883	12,915	24
Total current liabilities	213,013	105,335
Total equity and liabilities	1,063,089	787,404

Information on the parent company's pledged assets and contingent liabilities is in Note 26.

a The number of shares in the company is 28,786,102 (28,636,036), of which 184,723 (34,657) are class C shares, each with 1/10 vote and the remainder are ordinary shares, each with 1 vote.

Parent Company Statement of Changes in Equity

		Restricted equity		Non-restricted equity
SEK 000	Share capitala	Statutory reserve	Reserve for development expenditure	Accumulated profit or loss	Net profit	Total equity
Opening equity, 1 Jan. 2018	9,534	1,244	5,790	280,018		296,586
Change in reserve for development expenditure			1,782	-1,782
Net profit					-7,684	-7,684
Total changes to net worth, exc. transactions with company's shareholders	9,534	1,244	7,572	278,236	-7,684	288,902
Paid-up capital with deduction for transaction expenses	11			-89		-78
Repurchase of treasury shares				-11		-11
Share-based payment				985		985
Closing equity, 31 Dec. 2018	9,545	1,244	7,572	279,121	-7,684	289,798

		Restricted equity		Non-restricted equity
SEK 000	Share capitala	Statutory reserve	Reserve for development expenditure	Accumulated profit or loss	Net profit	Total equity
Opening equity, 1 Jan. 2019	9,545	1,244	7,572	271,437		289,798
Change in reserve for development expenditure			-1,852	1,852
Net profit					25,003	25,003
Total changes to net worth, exc. transactions with company's shareholders	9,545	1,244	5,720	273,289	25,003	314,801
Paid-up capital with deduction for transaction expenses	50			-79		-29
Re-purchase of treasury shares				-50		-50
Dividends				-14,301		-14,301
Share-based payment				2,399		2,399
Closing equity, 31 Dec. 2019	9,595	1,244	5,720	261,258	25,003	302,820
a	2019	2018
No. of ordinary shares	28,601,379	28,601,379
Quotient value (SEK)	0.33	0.33

Votes per share	1	1

No. of class C shares	184,723	34,657
Quotient value (SEK)	0.33	0.33
Votes per share	0.1	0.1

Parent Company Cash Flow Statement

SEK 000	2019	2018	Note
Operating activities
Profit after financial items	-35,196	-30,571
Adjustments for non-cash items, etc.	6,214	1,078	28
Tax paid	-1,000	-1,420
Cash flow from operating activities before changes in working capital	-29,982	-30,913
Cash flow from changes in working capital
Increase (-)/decrease (+) in trade receivables	23,484	11,329
Increase (+/decrease (-) in trade liabilities	-2,978	3,143
Cash flow from operating activities	-9,476	-16,441
Investing activities
Investments in intangible assets	-8	-3,035
Investments in property, plant and equipment	-281	-135
Acquisition of subsidiary	0	-2,043
Sale of subsidiary	0	1,081
Investments/amortization of financial assets	-239,584	9,312
Cash flow from investing activities	-239,873	5,180
Financing activities
Proceeds from issue of shares	50	12
Transaction expenses for new share issues and share re-purchase	-79	-89
Purchase of treasury shares	-50	-12
Change in overdraft facility	110,241	27,327
Borrowings	156,159	0
Increase of financial liabilities	37,329	24,023
Loan amortization	-40,000	-40,000
Dividend paid	-14,301	0
Cash flow from financing activities	249,349	11,261
Cash flow for the year	0	0
Cash and cash equivalents at beginning of year	1,166	1,166
Cash and cash equivalents at end of year	1,166	1,166	28

Accounting policies

(A) General information

Beijer Electronics Group AB and its subsidiaries form a multinational group that develops, markets and sells products and solutions in mission-critical industrial digital technology and the IIoT. Beijer Electronics Group AB is registered in Sweden and has its registered office in Malmö. The address of the head office is Box 426, Stora Varvsgatan 13 A, 201 24 Malmö, Sweden. The company is listed on the Nasdaq OMX Nordic Stockholm Small Cap List.

The most important accounting policies applied when preparing these Consolidated Accounts are stated below. These policies have been applied consistently for all years presented, unless otherwise stated.

Basis of preparation of financial statements

The Consolidated Accounts have been prepared in accordance with the Swedish Annual Accounts Act, RFR 1 Supplementary Accounting Regulations for Groups and IFRS (International Financial Reporting Standards), as well as IFRIC interpretations as endorsed by the EU and to the extent they came into effect before 1 January 2019. Standards that came into effect from 1 January 2020 or later, for which earlier adoption has been encouraged, did not affect Beijer Electronics Group's accounting for 2019. The Consolidated Accounts have been prepared in accordance with the cost method with the exception of financial assets and liabilities measured at fair value through profit or loss.

Introduction of new and revised accounting policies (i) New and amended standards applied by the Group

The Group adopted IFRS 16 Leases effective one January 2019. The Group has decided to apply this new Standard retroactively, but has accounted the accumulated effect in opening balances as of 1 January 2019 without restating comparative figures. See the section on Leases below. Information on the transition is collated in note 35.

(ii) New and amended standards not yet applied by the Group

A number of new standards and interpretations come into effect for financial years beginning after 1 January 2019, and have not been applied in the preparation of these financial statements. These new standards and interpretations are not expected to have any material impact on the consolidated financial statements in current or future periods, nor on future transactions.

(B) Basis of preparation of the parent company and consolidated accounts

The parent company's functional currency is Swedish krona (SEK), which is also the presentation currency of the parent company and the Group. This implies that the financial statements are presented in SEK. All amounts, unless otherwise indicated, have been rounded to the nearest SEK 000.

The Group's accounting policies outlined below have been applied consistently to all periods presented in the Consolidated Accounts, unless otherwise indicated below. The Group's accounting policies have been applied consistently to reporting and the consolidation of the parent company, subsidiaries and associated companies. The Annual Accounts and Consolidated Accounts were approved for issuance by the Board of Directors on 30 March 2020. The Consolidated Income Statement and Balance Sheet and the Parent Company Income Statement and Balance Sheet will be subject to adoption at the Annual General Meeting (AGM) on 26 June 2020.

(C) Estimates and judgements

Preparing the financial statements in accordance with IFRS requires that the company management makes judgments and estimates as well as assumptions that influence the application of the accounting policies and the reported amounts of assets, liabilities, revenue and expenses. The estimates and assumptions are based on historical experiences and a number of other factors that appear reasonable in the prevailing circumstances. The result of these estimates and assumptions are then used to assess the carrying amounts of assets and liabilities that would otherwise not be clearly apparent from other sources. Actual outcomes may differ from these estimates and judgments.

The estimates and assumptions are reviewed regularly. Changes to estimates are reported in the period the change was made if the change affects this period only, or in the period the change is made and future periods if the change affects both the relevant period and future periods.

The estimates and assumptions that imply a material risk of material restatements of carrying amounts of assets and liabilities in the following financial year are summarized below.

(i) Impairment tests of goodwill

The Group tests annually whether goodwill is impaired in accordance with the accounting policy reviewed in the section (L) Intangible assets (i) Goodwill. The recoverable amount of cash-generating units has been measured by computing value in use. These calculations require the use of estimates. (Note 13).

(ii) Taxes

The Group is subject to income and other taxes in several jurisdictions. Significant judgment is required in measuring the worldwide provision for income taxes. There are many transactions and computations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts initially recorded, such differences impact the current and deferred tax assets and liabilities in the period in which such measurement is conducted.

(iii) Pension obligations

The present value of pension obligations is dependent on a number of factors that are measured on an actuarial basis with the aid of a number of assumptions. The assumptions used when determining the net cost (revenue) of pensions include the discount rate. Any changes in these assumptions will impact the carrying amounts of pension obligations.

The Group determines the applicable discount rate at the end of each reporting period. This is the interest rate applied to determine the present value of estimated future payments that are expected to be required to settle the Group's pension obligations. When determining an appropriate discount rate for the Group's Swedish pension obligations, the Group obtains a yield curve based on average mortgage bonds on Nasdaq and the duration of obligations from PRI Pensionsgaranti. The Group computes the discount rate from this information. For defined benefit plans in Taiwan, the yield on an investment grade corporate bond has been applied. For more information and a sensitivity analysis, see note 21 provisions for pensions and similar obligations.

(D) Segment reporting

Operating segments are reported in a manner that is consistent with internal reporting as submitted to the chief operating decision-maker. The chief operating decision-maker is the function that is responsible for allocating resources and assessing the results of operating segments. In the Group, this function has been identified as Management.

(E) Classification etc.

Essentially, parent company and consolidated fixed assets and longterm liabilities are amounts expected to be recovered or paid after more than 12 months from the reporting date only. Essentially, parent company and consolidated current assets and current liabilities are amounts expected to be recovered or paid within 12 months of the reporting date only.

(F) Principles of consolidation

(i) Subsidiaries

Subsidiaries are companies that Beijer Electronics Group AB exerts a controlling influence over. The Group has a controlling influence over a company when it is exposed, or entitled, to variable returns on its holdings in the company and can influence these returns through its controlling influence over the company.

Subsidiaries are reported in accordance with acquisition accounting, which means that the acquisition of a subsidiary is treated as a transaction whereby the Group indirectly acquires a subsidiary's assets and takes over its liabilities and contingent liabilities. The consolidated cost is determined through an acquisition analysis related to the acquisition. This analysis partly determines the cost of the shares or operation, partly the fair value of the acquired identifiable assets at the acquisition date, and liabilities and contingent liabilities taken over. Non-controlling interests in the acquired company are recognized at fair value.

The cost of the subsidiary shares and operations is the fair value at the transfer date of assets, liabilities that have arisen or have been taken over, and issued equity instruments submitted as payment in exchange for the acquired net assets, and for acquisitions executed prior to 1 January 2010, transaction expenses directly related to the acquisition. For business combinations executed after 1 January 2010, transaction expenses are recognized in profit or loss. For business combinations where the cost exceeds the net value of the acquired assets and liabilities taken over and contingent liabilities, the difference is reported as goodwill. The Group applies the full goodwill valuation method for the reporting of goodwill. When negative, the difference is reported directly in the Income Statement.

In step acquisitions, the previous equity participations in the acquired entity are restated at fair value on acquisition. Any profit or loss resulting from the restatement is recognized in profit or loss.

Each conditional purchase price to be transferred by the Group is recognized at fair value on acquisition. Subsequent changes to fair value of a conditional purchase price classified as an asset or liability are recognized in accordance with IAS 39, either in the Income Statement or other comprehensive income. Conditional purchase price classified as equity is not restated, and subsequent settlement is recognized in equity.

Subsidiary financial statements are included in the Consolidated Accounts from acquisition date to the date the controlling influence ceases.

The accounting policies for subsidiaries have, where applicable, been amended to guarantee the consistent application of the Group's policies.

(ii) Changes in participating interest in a subsidiary without change of control

Transactions with non-controlling interests that do not result in loss of control are recognized as equity transactions—i.e. as transactions with shareholders in their capacity as owners. In acquisitions from non-controlling interests, the difference between fair value of the purchase price paid and the actual acquired share of the carrying amount of subsidiary net assets is recognized in equity. Gains and losses on sales to non-controlling interests are also recognized in equity.

(iii) Sale of subsidiaries

When the Group no longer has a controlling influence, each remaining holding is stated at fair value at the time when control is lost. The amendment in carrying amount is recognized in the Income Statement. The fair value is used as the first-time carrying amount and is the basis for continued recognition of the remaining holding as an associated company, joint venture or financial asset. All amounts relating to the disposed entity previously recognized in other comprehensive income are reported as if the Group had directly disposed of the related assets or liabilities. This may result in amounts previously recognized in other comprehensive income being reclassified to profit or loss.

(iv) Associated companies

Associated companies are all companies where the Group exerts a significant, but not controlling, influence, which generally applies to share holdings of between 20 and 50% of the votes. Holdings in associated companies are reported according to the equity method. When applying the equity method, the investment is initially measured at cost and the carrying amount is increased or decreased subsequently to consider the company's share of the associated company's profit or loss after acquisition. The Group's carrying amount of holdings in the associated company includes goodwill identified at acquisition.

If the participating interest in an associated company decreases but the investment remains an associated company, only a proportional amount of that gain or loss previously recognized in other comprehensive income is reclassified to profit or loss.

The Group's share of profit or loss occurring after the acquisition is recognized in the Income Statement and its share of changes in

Note 1 cont. Accounting policies

other comprehensive income after the acquisition is recognized in other comprehensive income with the corresponding change of the holding's carrying amounts. When the Group's share of an associated company's losses amount to, or exceed, its holding in the associated company, including any unsecured receivables, the Group no longer reports additional losses, unless the Group has undertaken legally enforceable or constructive obligations, or made payments on the associated company's behalf.

At the end of each reporting period, the Group judges whether there is objective evidence of impairment of its investment in the associated company. If so, the Group measures the impairment loss as the difference between the associated company's recoverable amount and the carrying amount and reports this amount under the relevant heading in its Income Statement.

Gains and losses from "upstream" and "downstream" transactions between the Group and its associated companies are recognized in the consolidated financial statements only to the extent they correspond to non-affiliated companies' holdings in the associated company. Unrealized losses are eliminated unless the transaction constitutes evidence that the asset taken over is impaired.

The accounting policies applied in associated companies have been amended where applicable to guarantee consistent application of the Group's policies. Dilution gains and losses on participations in associated companies are recognized in the Income Statement.

(v) Transactions eliminated on consolidation

Intra-group receivables and liabilities, revenues or expenses and unrealized profits or losses that arise from intra-group transactions between Group companies are wholly eliminated when preparing the Consolidated Accounts.

Unrealized profits that occur from transactions with associated companies and jointly controlled companies are eliminated to the extent corresponding to the Group's participating interest in the company. Unrealized losses are eliminated in the same way as unrealized profits, but only to the extent that there is no indication of value impairment.

(G) Foreign currency

(i) Transactions and Balance Sheet items

Foreign currency transactions are translated to functional currency at the rate of exchange ruling on the transaction date. The functional currency is the currency in the primary economic environments where the company conducts business. Foreign currency monetary assets and liabilities are translated to functional currency at the closing day rate. The exchange rate differences occurring from translation of trade assets and liabilities, such as accounts receivable and accounts payable, are recognized in EBIT. Other exchange rate differences are recognized as a financial income or financial expense in the Income Statement.

(ii) Financial statements of foreign operations

Assets and liabilities of foreign operations, including goodwill and other consolidated surplus values and deficits, are translated from the functional currency of the foreign operations to the Group's presentation currency, Swedish kronor, at the closing day rate. Income and expenses of foreign operations are translated to Swedish kronor at an average rate of exchange, which is an approximation of the rates of exchange at each transaction date. Translation differences occurring coincident with translation of foreign operations are reported directly against other comprehensive income as a translation reserve.

(H) Revenues

(i) Goods sales and service assignments

Consolidated revenue consists of sales of goods and services. Revenues measured at the fair value of what has been received or will be received, correspond to those amounts received for sold goods and services after deducting discounts, returns and value-added tax. Revenues are recognized in the Income Statement when control over the goods and services has transferred to the buyer. Revenue is not recognized if it is likely that the economic rewards will not flow to the Group. If there is significant uncertainty regarding payment, associated expenses or the risk of returns, and if the seller retains its commitment to ongoing management, usually associated with ownership, no revenue is recognized.

(I) Operating expenses, financial income and expenses (i) Costs relating to operating and finance leases

Leased property, plant and equipment was either classified as operating or finance leases until the end of the financial year 2018. Payments for operating lease arrangements are reported on a straightline basis in the Income Statement over the lease term. Benefits received coincident with signing leases were reported as a portion of the total lease expense in the Income Statement.

Costs relating to finance leases are divided between interest expense and amortization of the outstanding liability. The interest expense was allocated over the lease term so each accounting period was charged with an amount corresponding to a fixed interest rate for the liability reported for the relevant period. Variable expenses were expensed in the periods they occurred.

For information on reporting rent contracts and lease arrangements from 1 January 2019 pursuant to IFRS 16 Leases, see separate section.

(ii) Financial income and expenses

Financial income and expenses are interest income on bank balances, receivables and interest-bearing securities, interest expenses on loans, dividend income and realized and unrealized exchange rate differences on finance or investments in foreign currency. Interest income is recognized as revenue allocated over the term by applying the effective interest method.

The interest component of finance lease payments was reported in the Income Statement until 31 December 2018 by applying the effective interest method.

Dividend income is reported when the right to receive the payment is determined.

(J) Financial instruments

(i) Classification

Pursuant to IFRS 9, the Group classifies financial assets into the following categories:

financial assets measured at fair value through profit or loss
financial assets measured at amortized cost

(ii) Measurement

Financial assets are initially measured at fair value, plus in those cases where the asset is not recognized at fair value through profit or loss, transaction expenses directly related to purchase. Transaction expenses related to financial assets recognized at fair value through profit or loss are expensed directly in the Income Statement.

Subsequent measurement of investments in debt instruments is due to the Group's business model for treatment of the asset and the class of cash flow the asset gives rise to. The Group classifies its investments in debt instruments in two measurement categories:

Amortized cost: assets held with the aim of collecting contractual cash flows and where these cash flows only consist of principals and interest, are measured at amortized cost. Interest income from such financial assets is recognized as financial income by applying the effective interest method. Gains and losses occurring on derecognition from the Balance Sheet are recognized directly in profit or loss within other gains and losses jointly with exchange gains and losses. Impairment losses are recognized on a separate line of the Income Statement.
Fair value through profit or loss: assets not satisfying the requirements for recognition at amortized cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss for a debt instrument recognized at fair value through profit or loss, and that is not part of the hedging relationship, is recognized in the Income Statement in the period the gain or loss occurs.

(iii) Impairment

Effective 1 January 2018, the Group measures expected future credit losses related to investments in debt instruments recognized at amortized cost based on future-oriented information. The Group designates its reserve method based on whether a material increase in credit risk has occurred or not.

Pursuant to the provisions of IFRS 9, the Group applies a practical expedient for impairment tests of accounts receivable. This practical expedient means that the reserve for expected credit losses is computed based on the loss risk for the whole receivable's term and recognized on first-time recognition of the receivable.

(iv) Cash and cash equivalents

Cash and cash equivalents are cash and immediately available receivables with banks and similar institutions plus short-term liquid investments with a term from the time of acquisition not exceeding three months that are subject to only a negligible risk of value fluctuations.

(v) Accounts receivable

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost by applying the effective interest method, less any provision for impairment.

(K) Property, plant and equipment (i) Owned assets

Property, plant and equipment are reported as assets in the Balance Sheet if it is likely that future economic rewards will flow to the company, and the cost of the asset can be reliably measured.

Property, plant and equipment are reported at cost in the Group less accumulated depreciation and any impairment. The purchase price and costs directly attributable to the asset to bring it to the place and condition to be utilized in accordance with the purpose of the acquisition are included in the cost. Examples of directly attributable expenses included in costs are expenses for delivery and processing, installation, registration, consulting and legal services. The accounting policies for impairment are stated below.

Property, plant and equipment that consist of components with differing useful lives are treated as separate components of property, plant and equipment.

The carrying amount of property, plant and equipment is derecognized from the Balance Sheet on obsolescence or disposal, or when no future economic rewards are expected from usage or obsolescence/ disposal of the asset. Gains or losses occurring from the disposal or obsolescence of an asset are the difference between the sales price and the asset's carrying amount less deductions for direct selling expenses. Gains and losses are reported as other operating revenue/expenses.

(ii) Leased assets

Leased property, plant and equipment was classified either as finance or operating leases until the end of the financial year 2018. Finance leases occurred when essentially, the economic risks and rewards associated with ownership transferred to the lessee, and if not, the arrangement was an operating lease.

Assets held through finance lease arrangements were reported as an asset in the Consolidated Balance Sheet. The obligation to pay future lease charges was reported as long-term and current liabilities. The leased assets were subject to planned depreciation while lease payments were reported as interest and amortization of the liabilities. In operating leases, lease charges were expensed during the term, proceeding from usage, which could differ from what was actually paid in lease charges de facto in the period.

(iii) Additional expenditure

Additional expenditure is added to cost only if it is likely that the future economic rewards associated with the asset will flow to the company, and the cost can be reliably measured. All other additional expenditure is reported as an expense in the period it occurs.

When additional expenditure is added to cost, it is decisive whether this expenditure relates to the exchange of identifiable components, or parts of components, whereupon such expenditure is capitalized. In those cases when new components are created, expenditure is also added to cost. Any un-depreciated carrying amounts of exchanged components, or parts of components, are subject to obsolescence and expensed at exchange. Repairs are expensed continuously.

(iv) Depreciation principles

Depreciation is on a straight-line basis over the estimated useful life of an asset; land is not depreciated. The Group utilizes component

Note 1 cont. Accounting policies

depreciation, which means that the assessed useful lives of components are the basis for depreciation. Estimated useful lives:

Buildings, real estate used in business operations	5–60 years
Machinery and other plant	3–12 years
Equipment, tools fixtures and fittings	2–8 years

Real estate used in business operations has a number of components with differing useful lives. The main division is between buildings and land. No depreciation is affected on the land component, whose useful life is considered indefinite. However, buildings have several components whose useful lives vary.

The useful lives of these components have been assessed to vary between 5 and 60 years.

The following main groups of components have been identified and form the basis for depreciation on buildings:

Building decorations, China	5 years
Other real estate components	25–60 years

The residual value and useful life of an asset is estimated yearly.

(L) Leases

This note provides information on arrangements where the Group is a tenant or lessee. The term leases also applies to rental contracts below.

Effective 1 January 2019, lease arrangements are recognized as rights of use and a corresponding liability, on the date the leased asset is available for use by the Group. Leased property, plant and equipment was classified either as financial or operating leases until the end of the financial year 2018 inclusive, see section M point ii for more information.

The Group leases various offices, storage premises, machinery and vehicles. Leases are normally signed for predetermined periods of between 6 months and 20 years, although there may be extension options, as described below.

Assets and liabilities that arise from lease arrangements are initially recognized at present value. Lease liabilities include the present value of the following lease payments:

Fixed payments (including in-substance fixed), after deducting for any benefits that will be received on signing the lease
Variable lease payments due to indexation or pricing, initially measured using indexation or a price on the start date
Amounts expected to be paid by the lessee according to residual value guarantees
The exercise price of an option to purchase if the Group is reasonably certain of exercising such option
Penalties payable on cancelling the lease, if the lease term reflects the Group exercising an option to cancel the lease

Lease payments that will be made for reasonably certain extension options are also included in measurement of the liability.

Lease payments are discounted by the implicit interest rate of the lease. If this interest rate cannot be determined simply, as is normally the case for the Group's leases, the lessee's incremental borrowing rate should be applied, which is the interest rate that the individual lessee would pay to borrow the necessary funds to purchase an asset of similar value as the right of use in a similar economic environment with similar terms and security.

The Group determines the incremental borrowing rate by applying the Group's current borrowing rate, pursuant to applicable credit agreements, for the currency in which the lease has been arranged.

The Group is exposed to any future increases of variable lease payments based on indexation or an interest rate that are not included in the lease liability prior to the lease coming into effect. When adjustments of lease payments based on an index or interest rate come into effect, the lease liability is remeasured and restated against the right of use.

Lease payments are allocated between amortization of the principal and interest. Interest is recognized in profit or loss over the lease term in a manner that corresponds to a fixed interest rate for the recognized lease liability during the relevant period.

Assets with right of use are measured at cost and include the following:

the amount the lease liability was initially measured at
lease payments made at or prior to the start date, after deducting for any benefits received in tandem with signing the lease
nitial direct expenditure
expenditure to restore the asset to the condition prescribed by the terms of the lease.

Rights of use are usually amortized on a straight-line basis over the shorter of the useful life and the lease term. If the Group is reasonably certain of exercising a purchase option, the right of use is amortized over the useful life of the underlying asset.

Payments for shorter contracts on equipment and vehicles and all leases of low value are expensed on a straight-line basis in the Income Statement. Short leases have terms of 12 months or less. Leases of low value include IT equipment and various items of office furniture, as well as the short-term lease on a number of premises.

(M) Intangible assets

(i) Goodwill

Goodwill is the difference between the cost of a business combination and the fair value of the acquired assets, liabilities taken over and contingent liabilities.

Goodwill is measured at cost less any accumulated impairment. Goodwill is allocated to cash-generating units, and is subject to yearly impairment tests. Impairment tests compare carrying amounts with estimated recoverable amounts. If the carrying amount exceeds the recoverable amount, the item is impaired. Impairment of goodwill is not reversed. Goodwill occurring from acquisitions of associated companies is included in the carrying amount of participations in associated companies.

In business combinations, where cost is less than the net value of the acquired assets and liabilities taken over, and contingent liabilities, the difference is reported directly to the Income Statement.

(ii) Development

Expenditure for development, where research results or other knowledge are used to achieve new products, is reported as an asset in the Balance Sheet, if the product is technically and commercially usable and the company has sufficient resources to complete development, and use or sell the intangible asset later. The carrying amount includes expenditure for materials, direct expenditure for salaries and indirect expenditure that can be attributed to the asset in a reasonable and consistent way. Other expenditure for development is reported in the Income Statement as an expense when it occurs. Development expenditure is reported in the Balance Sheet at cost less accumulated depreciation and any impairment.

(iii) Other intangible assets

Other intangible assets acquired by the Group are reported at cost less accumulated amortization and impairment (see below).

Disbursed expenses for internally generated goodwill and internally generated brands are reported in the Income Statement when the expense occurs.

(iv) Additional expenditure

Additional expenditure for capitalized intangible assets is reported as an asset in the Balance Sheet only when it increases the future economic rewards for the specific asset to which it is attributable. All other expenditure is expensed as it occurs.

(v) Depreciation and amortization

Depreciation and amortization is reported in the Income Statement on a straight-line basis over the estimated useful lives of intangible assets, providing such useful lives are not indefinite. Goodwill and intangible assets with indefinite useful lives are subject to impairment tests yearly, or as soon as there is any indication of impairment. Intangible assets with determinable useful lives are amortized from the date they become available for use.

The estimated useful lives are:

Trademarks and brands	10–20 years
Patents	3-5 years
Customer contracts	6–10 years
Capitalized development expenditure	5 years
Capitalized IT expenditure	3–10 years
Technology platforms	8–10 years

(N) Inventories

Inventories are measured at the lower of cost and net realizable value. Cost is estimated using the FIFO method. The net realizable value is the estimated sales price in operating activities, less estimated expenses for completing and achieving a sale.

The cost of produced goods and work in progress includes a reasonable proportion of indirect expenses based on normal capacity.

(O) Impairment

The carrying amounts of the Group's assets are subject to impairment tests at each reporting date. An exemption is made for inventories and deferred tax assets. If there is an indication of value impairment, the assets' recoverable amount is calculated. For assets subject to the above exemption, valuations are tested according to the relevant standard.

Recoverable amounts of goodwill and other intangible assets with indefinite useful lives and intangible assets not yet ready for use are calculated yearly.

If it is impossible to determine significant independent cash flows of an individual asset, when conducting impairment tests, assets should be grouped at the lowest level it is possible to identify significant independent cash flows (cash-generating unit). Impairment is recognized when an asset's or cash-generating unit's carrying amount exceeds recoverable amount. Impairment is recognized in the Income Statement.

Impairment of assets attributable to a cash-generating unit (group of units) is primarily assigned to goodwill. Later, proportional impairment of other assets included in the unit is effected (group of units).

Goodwill and other intangible assets with indefinite lives are subject to impairment tests yearly.

(i) Measuring recoverable amount

The recoverable amount of assets in the loan receivables and accounts receivable categories should be reported at amortized cost, calculated as the present value of future cash flows, discounted by the effective interest prevailing when the asset was reported for the first time. Assets with short maturities are not discounted.

The recoverable amount of other assets is the greater of fair value less selling expenses and value in use. When calculating the value in use, future cash flows are discounted by a discount factor that considers risk-free interest, and the risk associated with the specific asset. For an asset that does not generate cash flows, which is significantly independent from other assets, the recoverable amount of the cash-generating unit to which the asset belongs is measured.

(ii) Reversal of impairment

Impairment of loan receivables and accounts receivable reported at amortized cost are reversed if a subsequent increase in recoverable amount can be objectively attributed to an event that has occurred after the impairment was effected.

Goodwill impairment is not reversed.

Impairment of other assets is reversed if a change in the assumptions that served as the basis for measuring the recoverable amount has occurred.

Impairment is only reversed to the extent the asset's carrying amount after reversal does not exceed the carrying amount the asset would have had if no impairment had been effected, considering the depreciation and amortization that would then have been effected.

(P) Share capital

(i) Re-purchase of treasury shares

Holdings of treasury shares and other equity instruments are reported as a reduction in equity. Acquisitions of such instruments are reported as a deduction from equity. Payment from the sale of equity instruments is reported as an increase in equity. Any transaction expenses are reported directly against equity.

(ii) Dividends

Dividends are reported as a liability after AGM approval.

(Q) Employee benefits

(i) Defined-contribution plans

A defined-contribution plan is a pension plan where the Group pays fixed contributions to a separate legal entity. The Group is under no legally enforceable or constructive obligation to make any further contributions if such legal entity does not hold sufficient assets to pay all employee benefits that are associated with the employee's service in present or previous periods. Commitments relating to fees for defined-contribution plans are reported as an expense in the Income Statement as they occur.

(ii) Defined-benefit plans

A defined-benefit plan is a pension plan that is not defined contribution. The distinguishing feature of defined-benefit plans is that they designate an amount for the pension benefit an employee will receive after retirement, usually based on one or several factors like age, length of service and salary. The Group has defined-benefit plans in the parent company, one subsidiary in Sweden and two of the subsidiaries in Taiwan.

The Group's net commitments regarding defined-benefit plans are calculated separately for each plan by estimating the future benefits the employee would have accrued through his/her service in present and previous periods; these benefits are discounted to present value, and the fair value of any plan assets is deducted. When determining an appropriate discount rate for the Group's Swedish pension obligations, the Group obtains a yield curve based on all mortgage bonds on Nasdaq and the duration of obligations from PRI Pensionsgaranti. The Group computes the discount rate from this information. For defined-benefit plans in Taiwan, the yield on an investment grade corporate bond has been applied. The computation is conducted by a qualified actuary using the projected credit method.

When the benefits of a plan improve, the proportion of the increased benefit attributable to employee service in previous periods is reported as an expense on a straight-line basis in the Income Statement allocated over the average period until the benefits are fully vested. If the benefits are fully vested, an expense is reported in the Income Statement directly.

Actuarial gains and losses resulting from judgments based on experience and changes to actuarial assumptions are recognized in other comprehensive income in the period they occur.

Expenses regarding services rendered in previous periods are recognized immediately in profit or loss.

(iii) Termination benefits

A provision is reported coincident with notices of redundancy issued to staff, only if the Group has a proven obligation to conclude employment before the normal time, or when benefits are paid as an offering to encourage voluntary redundancy. In those cases where the company issues redundancy notices, a detailed plan is prepared, which as a minimum, includes workplaces, positions and approximate number of affected staff, and benefits for each job category or position and the time of the plan's execution.

(iv) Bonus plans

There are bonus plans in the Group. The bonus plans are based on operational and financial targets and are payable if a predetermined target is achieved or exceeded. The expenses for bonus plans are charged in the year when there is a legally enforceable obligation.

(v) Share-based payment

Expenses for share-based payments are reported allocated over the period employees render services. In the current share-based incentive plans, within the terms of the plans, participants will be able to receive shares based on the achievement of performance targets. This assumes that at the time of disbursement, the participant remains an employee of the Group and has not resigned employment, and has undertaken to hold shares of the company him/herself. The expense for this including social security contributions is allocated evenly over the period until the time when the shares are received.

(R) Provisions

A provision is reported in the Balance Sheet when the Group has an existing legally enforceable or constructive obligation ensuing from an event that has occurred, and it is likely that an outflow of economic resources will be necessary to settle the commitment, and the amount can be reliably estimated. When the impact of the timing of the payment is significant, the provisions are calculated by discounting the expected future cash flow by an interest rate before tax that reflects the relevant market valuation of the time value of money and, if applicable, the risks associated with the liability.

(S) Tax

Income tax consists of current tax and deferred tax. Income tax is reported in the Income Statement apart from when the underlying transaction is reported directly against other comprehensive income and equity respectively, whereupon the associated tax impact is reported in against other comprehensive income and equity respectively.

Current tax is tax paid or received for the present year, applying the tax rates that are enacted or substantively enacted as of the reporting date, which also include adjustments of current tax attributable to previous periods.

Deferred tax is computed in accordance with the balance sheet method, proceeding from temporary differences between carrying amounts and taxable values of assets and liabilities. The following temporary differences are not considered: for temporary differences occurring on first-time accounting of goodwill, first-time accounting of assets and liabilities that are not business combinations and neither influence reported nor taxable earnings at the time of the transaction. Nor are temporary differences attributable to shares in subsidiaries and associated companies that are not expected to be reversed in the foreseeable future considered. The valuation of deferred tax is based on how the carrying amounts of assets or liabilities are expected to be realized or settled. Deferred tax is calculated by applying those tax rates and tax regulations that are enacted or substantively enacted as of the reporting date.

Deferred tax assets regarding deductible temporary differences and loss carry-forwards are only reported to the extent that it is likely that they will be utilized. The value of deferred tax assets reduces when it is no longer considered likely that they can be utilized.

Deferred tax assets and liabilities are offset when there is a legal right of offset for current tax assets and tax liabilities and when the deferred tax assets and tax liabilities relate to tax debited by one and the same tax authority and either relate to the same taxpayer or different taxpayer, where there is an intent to settle the balances through net payments.

Any additional income tax occurring on dividends from foreign subsidiaries is reported as a liability.

(T) Contingent liabilities

A contingent liability is reported when there is a possible commitment arising from events that have occurred, and whose incidence is confirmed only by one or more uncertain future events, or when there is a commitment that is not reported as a liability or a provision because it is unlikely that an outflow of resources will be necessary.

(U) Cash Flow Statement

The Cash Flow Statement has been prepared in accordance with the indirect method. Cash and cash equivalents are made up of cash funds and immediately available balances with banks and corresponding institutions, and short-term, liquid investments with a term of less than three months from the time of acquisition, exposed to only insignificant risk of value fluctuations.

(V) Hedge accounting

(i) Hedging of net investment

The Group hedges net investments in selected foreign operations. The share of profit or loss on a hedging instrument classified as an effective hedge is recognized in other comprehensive income and accumulated in equity. The profit or loss relating to the ineffective portion is recognized directly in profit or loss as other income or other expenses.

(W) Parent company accounting policies

The parent company has prepared its Annual Accounts in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. RFR 2 means that in its Annual Accounts for the legal entity, the parent company applies all the IFRS and statements endorsed by the EU, if this is possible within the framework of the Swedish Annual Accounts Act, and considering the relationship between accounting and taxation. The recommendation states the exemptions from, and supplements to, IFRS.

Differences between the Group's and parent company's accounting policies

Differences between the Group's and parent company's accounting policies are stated below. The following accounting policies of the parent company have been applied consistently for all periods published in the parent company's financial statements.

Subsidiaries and associated companies

In the parent company, shares in subsidiaries and associated companies are reported in accordance with the cost method. Dividends from subsidiaries are reported as revenue.

Financial instruments

The parent company does not apply the measurement provisions of IFRS 9. In the parent company, financial assets are measured at cost less any impairment, and financial current assets at the lower of cost or market.

Property, plant and equipment

Owned assets

In the parent company, property, plant and equipment are reported at cost less deductions for accumulated depreciation and any impairment in the same way as the Group but with a supplement for any write-ups.

Leased assets

In the parent company, all lease arrangements are reported in accordance with the provisions for operating leases.

Employee benefits

Defined-benefit plans

The parent company uses a different basis for calculating defined-benefit plans than stipulated by IAS 19. The parent company follows the stipulations of the Swedish Pension Obligations Vesting Act and the Swedish Financial Supervisory Authority's instructions, because this is a pre-requisite for tax deductions. The most significant differences compared to IAS 19 are determining the discount rate, calculating the defined-benefit obligation on the basis of present salary levels excluding assumptions of future salary increases, and that all actuarial gains and losses are reported in the Income Statement when they arise.

Tax

In the parent company, untaxed provisions are reported including deferred tax liabilities. However, in the Consolidated Accounts, untaxed reserves are divided between deferred tax liabilities and equity.

Group contributions and shareholders' contributions for legal entities

In accordance with the alternative rule of RFR 2, Group contributions received and paid are recognized as appropriations. The tax impact of Group contributions received and paid is recognized in the Income Statement in accordance with IAS 12. Shareholders' contributions are reported directly against the recipient's equity and increase the value of shares and participations of the issuer, to the extent no impairment is necessary.

Segment reporting

Management has decided that operating segments are used to reach strategic decisions. Management judges operations from a product perspective, where operating segments are divided into the Westermo, Beijer Electronics and Korenix business entities.

Beijer Electronics develops, manufactures and sells hard and software solutions to OEMs for digitalized data control, connect and present, as well as capture and analysis.

Westermo develops, manufactures and sells robust network products for mission-critical data communication across a raft of demanding market segments like trains and subways.

Korenix develops and sells solutions for wireless and wired data communication for applications including surveillance and safety in tunnels.

Management judges operating segments based on EBIT.

Management also judges sales from a geographical perspective divided between the Nordic region, rest of Europe, North America, Asia and rest of world. The information presented for operating segment revenue is for the geographical regions grouped according to the location of customers.

2018

SEK 000	Westermo	Beijer Electronics	Korenix	Parent company	Group adjustments	Total
Revenues
External sales	582,739	731,150	103,351			1,417,240
Internal sales	1,442	210	14,403		-16,055	0
Total sales	584,181	731,360	117,754	0	-16,055	1,417,240
EBITDA	97,435	75,056	6,331	-28,558	328	150,592
Depreciation of property, plant and equipment	-9,583	-5,766	-2,740	-233	-31	-18,353
Amortization and impairment of intangible assets	-18,173	-21,929	-9,953	-8,238		-58,293
EBIT	69,679	47,361	-6,362	-37,029	297	73,946
Number of employees	209	348	143	13		713

2019

SEK 000	Westermo	Beijer Electronics	Korenix	Parent company	Group adjustments	Total
Revenues
External sales	702,898	755,983	99,818			1,558,699
Internal sales	2,335	213	20,062		-22,610	0
Total sales	705,233	756,196	119,880	0	-22,610	1,558,699
EBITDA	134,322	104,899	9,918	-26,844	4,950	227,245
Depreciation of property, plant and equipment	-21,989	-21,380	-7,677	-198	-6,547	-57,790
Amortization and impairment of intangible assets	-22,757	-28,566	-6,571	-8,063		-65,959
EBIT	89,576	54,953	-4,330	-35,105	-1,597	103,496
Number of employees	252	359	149	13		773

Internal pricing between the Group's segments is determined on the basis of the arm's length principle, i.e. between parties that are mutually independent, well-informed and with an interest in the transactions.

The operating segments' profit or loss includes directly related items and items that can be allocated by segment in a reasonable and reliable way.

The Group is not dependent on large customers, and no individual customer represents more than 10% of the group's revenues. The Beijer Electronics and Korenix business entities do not have any single customer comprising more than 10% of these business entities' individual revenues. The Westermo business entity has a number of customers in the same group, which together represent some 14% (14) of the business entity's revenues.

Essentially, the timing of revenue recognition of the group and segments is at the date of sale. There are no significant contract assets or liabilities to report.

Geographical division of sales

SEK 000	2019	2018
Sweden	227,624	202,037
Norway	72,678	72,994
Denmark	35,937	33,991
Finland	42,462	32,695
Nordics	378,701	341,717
Germany	108,563	110,174
UK	116,617	94,238
France	84,522	52,767
Turkey	28,924	31,809
Rest of Europe	250,975	204,179
Total Europe incl. Nordics	968,302	834,884
US	262,620	277,401
China	124,321	97,166
Taiwan	58,614	74,143
Rest of Asia	108,648	90,099
Rest of world	36,194	43,547
Total	1,558,699	1,417,240

Total	1,558,699	1,417,240
Third-party products	57,755	60,753
Servicing and other services	15,435	13,044
Software	10,928	8,605
Network equipment	809,547	689,901
HMIs and accessories	665,034	644,937
SEK 000	2019	2018
Sales by category

Geographical division of fixed assets

SEK 000	2019	2018
Sweden	577,567	501,933
Ireland	254,540
Rest of Europe	118,410	64,163
US	160,288	153,155
Taiwan	175,729	160,193
Rest of world	5,871	541
Total	1,292,405	879,985

Statement on the effect of adoption of IFRS 16 Leases

In 2019, the Group and segments were affected by the adoption of IFRS 16 Leases. A summary of the effects follow. For more information on the effects of transition, see Note 35.

SEK 000	Westermo	Beijer Electronics	Korenix	Parent Group company adjustments	Total
Income Statement
EBITDA	11,169	17,874	5,412	7,264	41,719
Depreciation of property, plant and equipment	-12,047	-15,935	-4,985	-6,546	-39,513
EBIT	-878	1,939	427	718	2,206

Geographical allocation of non-current assets

SEK 000	2019
Sweden	55,697
Ireland	6,141
Rest of Europe	12,694
USA	10,111
Taiwan	8,580
Rest of world	5,284
Total	98,507

Note 3

Nature of expenses

The Consolidated Income Statement classifies expenses by function. Information on the significant cost types follows.

SEK 000	2019	2018
Cost of materials	587,559	547,182
Salaries, benefits and social security expenses	557,041	511,409
Depreciation, amortization and impairment of intangible assets and property, plant and equipment	123,749	76,646
Other expenses	190,242	209,817
	1,458,591	1,345,054

Other operating revenue and operating expenses

SEK 000	2019	2018
Group
Exchange gains on trade receivables/liabilities	27,488	30,337
Exchange losses on trade receivables/liabilities	-29,437	-28,998
Capital gain, sale of real estate	4,599	0
Other	738	421
	3,388	1,760

Note 6

Employees and personnel expenses

Average number of employees

	2019	of which men, %	2018	of which men, %
Parent company
Sweden	13	85	13	85
Total in parent company	13	85	13	85
Subsidiaries
Australia	5	72	4	56
China	36	66	35	63
Denmark	5	67	5	60
France	12	82	11	80
Ireland	6	100	0	0
Germany	30	76	29	76
Norway	13	100	12	100
Singapore	5	78	5	80
South Korea	3	90	3	100
Sweden	278	82	251	81
Switzerland	12	86	0	0
Taiwan	273	45	262	43
Turkey	16	63	16	63
UK	20	86	18	88
USA	46	78	49	80
Total in subsidiaries	760	67	700	65
Group total	773	68	713	66

Gender division, management

	31 Dec. 2019	31 Dec. 2018
	Prop. women	Prop. women
Parent company
Board	40%	40%
Other senior executives	0%	0%
Group total
Board	40%	40%
Other senior executives	17%	17%

Salary, other remuneration and social security expenses

SEK 000	2019		2018
	Salary and remuneration	Social security expenses	Salary and remuneration	Social security expenses
Parent company	18,479	11,039	18,171	10,733
(of which pension expense)		(4,027)		(3,697)
Subsidiaries	400,618	126,902	364,889	113,960
(of which pension expense)		(36,204)		(30,561)
Group total	419,097	137,941	383,060	124,693
(of which pension expense)		(40,231)		(34,258)

Note 5

Fees and reimbursement to Auditors

SEK 000	2019	2018
Group
PricewaterhouseCoopers
Auditing	1,729	1,558
Auditing in addition to audit assignment
Tax consultancy	314	553
Other	412	266
Total PwC	2,455	2,377
Other auditors
Auditing	271	185
Tax consultancy	90	45
Other
Total other auditors	361	230
Parent company
PricewaterhouseCoopers
Auditing	880	803
Auditing in addition to audit assignment
Tax consultancy	81	266
Other	26	240
Total PwC	987	1,309

Remuneration to the Board of Directors in the Year

Directors' fees were 1,560,000 SEK (1,560,000), allocated as follows:

SEK	2019	2018
Board of Directors
Bo Elisson, Chairman of the Board	550,000	550,000
Ulrika Hagdahl	275,000	225,000
Johan Wester	255,000	255,000
Karin Gunnarsson	255,000	0
Lars Eklöf	225,000	0
Maria Khorsand	0	255,000
Christer Öjdemark	0	275,000
Total	1,560,000	1,560,000

Bo Elisson and Maria Khorsand Ulrika Hagdahl received 50,000 SEK each for committee work, included in the above table.

Johan Wester and Karin Gunnarsson received 30,000 SEK each for committee work, included in the above table.

Remuneration and Other Benefits to the CEO and other senior executives in the year

The cost of remuneration and benefits to the CEO and senior xecutives amounted to the following:

SEK 000		2019		2018
	CEO	Other senior executivesa	CEO	Other senior executivesa
Basic salary	4,173	9,655	3,957	9,668
Variable remuneration	620	1,358	1,353	3,168
Other benefits	21	427	15	380
Pension expenses	1,519	2,282	1,413	2,262
Total salary and remuneration	6,333	13,722	6,738	15,478

a There are 5 (5) other senior executives, who are the members of Beijer Electronics Group AB's management.

Chief Executive Officer

Apart from contracted basic salary, the Chief Executive Officer is also entitled to variable compensation. Variable compensation is based on operational and financial performance, and is a maximum of six months' salary. Pension and other customary benefits are additional. Each year, 35% of gross salary including bonus is provisioned as pension assurance for the CEO. This pension is defined contribution and becomes payable at age 65. According to agreement, the CEO has a notice period from the company's side of 18 months, that cannot be claimed for termination initiated by the CEO. The notice period from the Chief Executive Officer's side is six months. No other remuneration upon termination has been agreed.

Other senior executives

Other senior executives receive basic salary with a variable component. The variable component is based partly on the Group's, and partly on each business area's, sales and profitability performance. Yearly variable remuneration is a maximum of six months' salary. Other senior executives have defined contribution pension agreements on market terms. Other customary benefits are additional. Maximum notice periods of 12 months for termination from the company's side have been agreed for other senior executives.

Incentive plans

The AGM 2019 resolved on the introduction of a share-based incentive plan, "LTI 2019/2022" for the CEO, other senior executives and a further number of key individuals within the Group. For entitlement in the plan, participants have undertaken to acquire shares of the company themselves. This plan measures performance in 2019, and providing employment continues, the participants will receive shares in 2022 based on the outcome of performance targets in 2019. The performance targets for 2019 were (i) EBIT, (ii) earnings per share, (iii) order intake, and (iv) free cash flow. The computed outcome for 2019 is for the granting of 53,590 shares, or 33% of the maximum outcome.

Guidelines for remuneration of senior executives

The Remuneration Committee is appointed by the Board of Directors each year. The Remuneration Committee consults on the Board of Directors' decisions on remuneration of the Chief executive Officer, and decides on remuneration of the rest of management. The Remuneration Committee also consults on proposals for any incentive programs. The principles governing the work of the Remuneration Committee are reviewed in more detail in the Corporate Governance Report on page 91.

Basic salary, variable remuneration and customary employment benefits, with pension benefits being additional, are payable to management. The guidelines for setting compensation and other employment terms of senior executives for the financial year 2019 were adopted by the AGM in May 2019. Compensation to the Board of Directors and management in 2019, as well as a review of incentive programs, is provided above.

Decision-making process

The Remuneration Committee consults on the Board of Directors' decisions on remuneration to the Chief Executive Officer and decides on remuneration to other senior executives. Directors' fees are resolved by the AGM.

Depreciation, amortization and impairment of property, plant and equipment and intangible assets

SEK 000	2019	2018
Group
Capitalized development expenditure	-41,411	-32,738
Capitalized expenditure for software	-9,830	-10,197
Customer contracts, brands and similar rights	-14,718	-15,358
Buildings and land	-2,229	-2,154
Machinery and other plant	-6,789	-4,007
Equipment, tools, fixtures and fittings	-9,259	-12,192
Right-of-use assets	-39,513
	-123,749	-76,646
Parent company
Capitalized expenditure for software	-8,063	-8,238
Equipment, tools, fixtures and fittings	-198	-233
	-8,261	-8,471

Note 8

Net financial income/expense

SEK 000	2019	2018
Group
Interest income	515	721
Sale of participations in associated companies	213	0
Exchange difference	905	1,386
Other financial income	698	81
Financial income	2,331	2,188
Interest expenses	-12,039	-9,121
Exchange difference	0	-2,341
Other financial expenses	-1,947	-1,634
Financial expenses	-13,986	-13,096
Net financial income/expense	-11,655	-10,908

SEK 000	2019	2018
Parent company
Dividend	0	1,417
Profit or loss from participations in Group companies	0	1,417
Sale of participations in associated companies	213	0
Profit or loss from participations in associated companies	213	0

Exchange difference	4,004	9,305
Profit or loss from other securities and receivables that are fixed assets	4,004	9,305

Interest Income, Group companies	6,454	6,575
Interest income and profit/loss items	6,454	6,575

Interest expenses, Group companies	-1,836	-1,680
Interest expenses, other	-6,762	-5,875
Other financial expenses	-2,164	-1,934
Interest expenses and profit/loss items	-10,762	-9,489

Appropriations

SEK 000	2019	2018
Parent company
Group contributions, received	68,400	23,000
	68,400	23,000

Note 10

Tax on net profit

SEK 000	2019	2018
Group			Group
Current tax
Tax expense for the period	-10,807	-10,128
Withholding tax	-5,299	-3,486
Adjustment of tax attributable			Tax effect of:
to previous year	74	-442
	-16,032	-14,056
Deferred tax (Note 22)
Occurrence and reversal of temporary differences	-2,259	-733
Deferred tax in the deductible value of loss carry-forwards changed in the year	-8,578	-4,712
	-10,837	-5,445
Total reported tax expense, Group	-26,869	-19,501

Parent company
Current tax
Tax expense for the period	0	0
Withholding tax	-995	-1,146	Parent company
Adjustment of tax attributable
to previous year	0	0
	-995	-1,146
Deferred tax			Tax effect of:
Occurrence and reversal
of temporary differences	156	12
Deferred tax in the deductible value
of loss carry-forwards changed in the year	-7,362	1,021
	-7,206	1,033
Total reported tax expense, parent company	-8,201	-113

Reconciliation of actual tax

SEK 000	2019	2018
Group
Profit before tax	91,842	63,038
Tax at applicable rate, parent company (21.4% and 22.0% respectively)	-19,654	-13,868
Tax effect of:
- Other tax rates for foreign subsidiaries	-697	-315
- Non-deductible expenses	-3,525	-3,032
- Non-taxable revenues	297	96
- Use of previously unreported loss carry-forwards	1,498	1,088
- Taxable deficits for which no deferred tax asset has been reported	-55	-776
- Effect of changed tax rate	228	-171
- Tax attributable to previous year	74	-442
- Withholding tax	-5,299	-3,486
- Other	264	1,405
Reported tax, Income Statement	-26,869	-19,501
Parent company
Profit before tax	33,204	-7,571
Tax at applicable rate, parent company (21.4% and 22.0% respectively)	-7,106	1,666
Tax effect of:
- Non-deductible expenses	-374	-441
- Non-taxable revenues	46	312
- Effect of changed tax rate	228	-504
- Tax attributable to previous year
- Withholding tax	-995	-1,146
Reported tax, Income Statement	-8,201	-113

Consolidated tax totaling 8,665,000 SEK (3,340,000) attributable to actuarial revaluation of pension obligations was reported in other comprehensive income.

Property, plant and equipment

2018		Group			Parent company
SEK 000	Buildings and land	Plant and machinery	Equipment, tools, fixtures and fittings	Total	Equipment, tools, fixtures and fittings
Cost
Opening balance 1 Jan. 2018	58,169	36,743	147,463	242,375	9,419
Purchases	46	7,463	17,279	24,788	135
Sales		-2,914	-8,090	-11,004	-30
Exchange differences	1,877	691	3,660	6,228
Closing balance 31 Dec. 2018	60,092	41,983	160,312	262,387	9,524
Depreciation
Opening balance 1 Jan. 2018	-28,411	-14,691	-114,326	-157,428	-8,857
Depreciation for the year	-2,154	-4,007	-12,192	-18,353	-233
Sales		963	7,109	8,072	31
Exchange differences	-511	-445	-2,890	-3,846
Closing balance 31 Dec. 2018	-31,076	-18,180	-122,299	-171,555	-9,059
Carrying amounts
As of 1 Jan. 2018	29,758	22,052	33,137	84,947	562
As of 31 Dec. 2018	29,016	23,803	38,013	90,832	465

2019		Group			Parent company
SEK 000	Buildings and land	Plant and machinery	Equipment, tools, fixtures and fittings	Total	Equipment, tools, fixtures and fittings
Cost
Opening balance 1 Jan. 2019	60,092	41,983	160,312	262,387	9,524
Restatement on adoption of IFRS 16			-16,892	-16,892
Reclassification		5,629	-5,629	0
Purchases through business combinations			1,376	1,376
Purchases	2,558	19,768	10,625	32,951	281
Sales	-8,244		-2,558	-10,802
Exchange differences	2,033	701	2,504	5,238
Closing balance 31 Dec. 2019	56,439	68,081	149,738	274,258	9,805
Depreciation
Opening balance 1 Jan. 2019	-31,076	-18,180	-122,299	-171,555	-9,059
Restatement on adoption of IFRS 16			11,191	11,191
Depreciation for the year	-2,229	-6,789	-9,259	-18,277	-198
Sales	4,503		2,558	7,061
Exchange differences	-635	-474	-1,863	-2,972
Closing balance 31 Dec. 2019	-29,437	-25,443	-119,672	-174,552	-9,257
Carrying amounts
As of 1 Jan. 2019	29,016	23,803	38,013	90,832	465
As of 31 Dec. 2019	27,002	42,638	30,066	99,706	548

Leased assets

As of 31 December 2018, leased items that the Group held through finance leases were included in the equipment, tools, fixtures and fittings items at the following amounts:

SEK 000	31 Dec. 2019	31 Dec. 2018
Leased assets
Cost	0	16,892
Accumulated depreciation	0	-11,191
Total	0	5,701

From 2019 onwards, leased assets are reported in a separate balance sheet item, see Note 12.

Note 12

Leases

SEK 000	Real estate	Equipment	Vehicles	Total
Rights of use
Cost
Opening balance 1 Jan. 2019	197,328	2,719	12,995	213,042
Purchases through business combinations	8,056	0	0	8,056
Purchases	7,882	0	7,283	15,165
Sales	-8,658	0	-2,503	-11,161
Exchange differences	3,570	13	166	3,749
Closing balance 31 Dec. 2019	208,178	2,732	17,941	228,851
Depreciation
Opening balance 1 Jan. 2019	-92,464	0	0	-92,464
Sales	8,550	0	802	9,352
Depreciation for the year	-31,041	-878	-7,594	-39,513
Exchange differences	-2,033	3	13	-2,017
Closing balance 31 Dec. 2019	-116,988	-875	-6,779	-124,642
Carrying amounts
As of 1 Jan. 2019	104,864	2,719	12,995	120,578
As of 31 Dec. 2019	91,190	1,857	11,162	104,209

SEK 000 31 Dec. 2019
Lease liabilities
Long-term	69,598
Short-term	36,084
Total	105,682

See also Note 1 Accounting policies for more information on the Group's reporting of leases.

Intangible assets

SEK 000	Goodwill	Development expenditure	IT expen diture	Patents	Trademarks & brands	Customer contracts	Technology platforms	Total
Group 2018
Purchases
Opening balance 1 Jan. 2018	503,135	342,466	95,309	0	106,050	101,999	19,193	1,168,152
Internally developed assets		64,472	3,035					67,507
Other investments			708					708
Sales			-116					-116
Exchange differences for the year	22,291	846	72		2,715	3,333	1,194	30,451
Closing balance 31 Dec. 2018	525,426	407,784	99,008	0	108,765	105,332	20,387	1,266,702
Accumulated amortization and impairment
Opening balance 1 Jan. 2018		-192,434	-56,807		-64,850	-83,681	-15,809	-413,581
Amortization and impairment in the year		-32,738	-10,197		-6,734	-6,798	-1,826	-58,293
Sales			36					36
Exchange differences for the year		-827	-36		-1,363	-2,528	-957	-5,711
Closing balance 31 Dec. 2018	0	-225,999	-67,004	0	-72,947	-93,007	-18,592	-477,549
Carrying amounts
As of 1 Jan. 2018	503,135	150,032	38,502	0	41,200	18,318	3,384	754,571
As of 31 Dec. 2018	525,426	181,785	32,004	0	35,818	12,325	1,795	789,153

Group 2019
Purchases
Opening balance 1 Jan. 2019	525,426	407,784	99,008	0	108,765	105,332	20,387	1,266,702
Reclassification		-339		339				0
Internally developed assets		64,028						64,028
Acquired via business combinations	282,556		175	2,294		15,130		300,155
Other investments			453					453
Exchange differences for the year	-709	304	1,916	7	1,650	2,883	798	6,849
Closing balance 31 Dec. 2019	807,273	471,777	101,552	2,640	110,415	123,345	21,185	1,638,187
Accumulated amortization and impairment
Opening balance 1 Jan. 2019		-225,999	-67,004	0	-72,947	-93,007	-18,592	-477,549
Reclassification		121	987	-121	-987			0
Amortization in the year		-41,411	-9,830	-36	-7,123	-6,614	-945	-65,959
Exchange differences for the year		-304	-1,979	-4	-845	-2,342	-715	-6,189

Closing balance 31 Dec. 2019		-267,593	-77,826	-161	-81,902	-101,963	-20,252	-549,697
Carrying amounts
As of 1 Jan. 2019	525,426	181,785	32,004	0	35,818	12,325	1,795	789,153
As of 31 Dec. 2019	807,273	204,184	23,726	2,479	28,513	21,382	933	1,088,490

The Group reports the following intangible asset classes:

Useful life	Amortization method
Indefinite	Impairment test
3-5 years	Straight-line amortization over the asset's useful life based on cost
3-10 years	Straight-line amortization over the asset's useful life based on cost
3-5 years	Straight-line amortization over the asset's useful life based on cost
10-20 years	Straight-line amortization over the asset's useful life based on cost
6-10 years	Straight-line amortization over the asset's useful life based on cost
8-10 years	Straight-line amortization over the asset's useful life based on cost

The parent company reports the following intangible asset classes:

Intangible asset class	Useful life	Amortization method
IT expenditure	3-10 years	Straight-line amortization over the asset's useful life based on cost

IT expenditure

SEK 000
Parent company 2018
Accumulated cost
Opening balance 1 Jan. 2018	84,038
Other investments	3,035
Closing balance 31 Dec. 2018	87,073
Accumulated amortization and impairment
Opening balance 1 Jan. 2018	-51,714
Amortization for the year	-8,238
Closing balance 31 Dec. 2018	-59,952
Carrying amounts
As of 1 Jan. 2018	32,324
As of 31 Dec. 2018	27,121
Parent company 2019
Accumulated cost
Opening balance 1 Jan. 2019	87,073
Other investments	8
Closing balance 31 Dec. 2019	87,081
Accumulated amortization and impairment
Opening balance 1 Jan. 2019	-59,952
Amortization for the year	-8,063
Closing balance 31 Dec. 2019	-68,015
Carrying amounts
As of 1 Jan. 2019	27,121
As of 31 Dec. 2019	19,066

Impairment tests for cash-generating units including goodwill

The following cash-generating units, which constitute the segments "Westermo", "Beijer Electronics" and "Korenix", have significant reported goodwill values in relation to the Group's total reported goodwill values:

Total goodwill value in Group	807,273	525,426
Korenix	51,326	53,268
Beijer Electronics	246,316	237,864
Westermo	509,631	234,294
SEK 000	2019	2018

The "Westermo" unit

The impairment test for the Westermo unit is based on the measurement of value in use. This value is based on cash flow forecasts for a total of 5 years (5), the first of which is based on the unit's budget for the forthcoming financial year.

The cash flows forecast for a total of five years after 2019 are based on average yearly growth of revenues of 7% (11), an increase in gross profit of 6% (12) and an increase of overheads of 8% (8). Perpetual growth of revenue and expenses of 1.5% (1.5) is assumed subsequently.

The present value of forecast cash flows has been calculated by applying a discount rate of 10% (10) after tax. Material assumptions in the forecasts are stated below.

Important variables	Measurement method
Revenue growth	Growth of revenues is based on the unit's business plan, which includes an assessment of general market growth and the business unit's planned launch of new products and solutions.
Costs of materials and gross profit	Cash flow forecasts are based on improved percentage gross profit. This assumption is based on a changed composition of the product portfolio with a higher share of software sales, and streamlining of production and logistics over the period.

The "Beijer Electronics" unit

The impairment test for the Beijer Electronics unit is based on measurement of value in use. This value is based on forecast cash flows for a total of 5 years (5), of which the first is based on the unit's budget for the coming financial year.

The forecast cash flows for a total of 5 years beyond 2019 have been based on average yearly growth of revenues of 8% (7), an increase in gross profit of 9% (8) and an increase in overheads of 8% (5). Perpetual growth of revenue and expenses of 1.5% (1.5) has been assumed subsequently.

The present value of forecast cash flows has been calculated by applying a discount rate of 10% (10) after tax. Material assumptions of the forecasts are reviewed in the following table.

Important variables	Measurement method
Revenue growth	Growth of revenues is based on the unit's business plan, which includes an assessment of general market growth and the business unit's planned launch of new products and solutions.
Costs of materials and gross profit	Cash flow forecasts are based on improved percentage gross profit. This assumption is based on a changed composition of the product portfolio with a higher share of software sales, and streamlining of production and logistics over the period.

The "Korenix" unit

The impairment test for the Korenix unit is based on the measurement of value in use. This value is based on cash flow forecasts for a total of 5 years (5), the first of which is based on the unit's budget for the forthcoming financial year.

The cash flows forecast for a total of five years after 2019 are based on average yearly growth of revenues of 12% (11), an increase in

gross profit of 13% (14) and an increase of overheads of 5% (7). Perpetual growth of revenue and expenses of 1.5% (1.5) has been assumed subsequently.

The present value of forecast cash flows has been calculated by applying a discount rate of 10% (10) after tax. Material assumptions in the forecasts are stated below.

Important variables	Measurement method
Revenue growth	Growth of revenues is based on the unit's business plan, which includes an assessment of general market growth and the business unit's planned launch of new products and solutions.
Costs of materials and gross profit	Cash flow forecasts are based on improved percentage gross profit. This assumption is based on a changed composition of the product portfolio, and streamlining of production and logistics over the period.

Sensitivity analysis for cash-generating units including goodwill

When analyzing impairment of goodwill, the company conducted sensitivity analyses for the cash-generating units. The following restatements have been made compared to the information presented above:

	2019	2018
Variable
Discount rate	+1%	+1%
Sales growth	-1%	-1%
Gross profit	-1%	-1%
Overheads	+1%	+1%

These analyses demonstrate that there is no impairment of any of the cash-generating units.

Impairment tests of cash-generating units including capitalized development expenditure

The following segments and cash-generating units have significant carrying amounts of capitalized development expenditure. Capitalized development expenditure has a determinable useful life. This expenditure is amortized over a period of 3-5 years. The book value of capitalized development expenditure amounts to:

SEK 000	2019	2018
Westermo	107,918	92,404
Beijer Electronics	79,630	77,948
Korenix	16,636	11,433
Total value of capitalized development expenditure, group	204,184	181,785

Sensitivity analysis of cash-generating units containing capitalized development expenses

When analyzing the impairment of capitalized development expenses, the company has conducted the sensitivity analyses of the expected future sales growth and gross margin of underlying products. The following restatements have been made compared to the base calculation:

	2019	2018
Sales growth	-10%	-10%
Gross margin	-10%	-10%

The sensitivity analyses indicate that there is no impairment given these restatements of computation variables.

Participations in Group companies

SEK 000	31 Dec. 2019	31 Dec. 2018
Accumulated cost
At beginning of year	553,557	424,523
Acquisition of minority share		2,043
Acquired entities, within group		150,000
Divested entities, within group		-23,642
Increase via shareholders' contribution
Increased via share-based payment	1,592	633
Liquidated companies
Carrying amount at end of year	555,149	553,557

Specification of parent company and Group holdings of participations in group companies

SEK 000			31 Dec. 2018
			Carrying
Subsidiary/corp. ID no./reg. office	No. of shares	Holding, %a	amount
Westermo Network Technologies AB, 556361-2604, Eskilstuna	100,000	100.0	254,451
Westermo Data Communications AB, 556687-8962, Eskilstuna	1,000	100.0
Westermo Fastighets AB, 556288-4360, Eskilstuna	10,000	100.0
Westermo OnTime AS, 981567560, Oslo	2,353,724	100.0
Westermo Data Communications Ltd., 3059742, Southampton	50,000	100.0
Westermo Data Communications GmbH, 30070-54742, Waghäusel	50,000	100.0
Westermo Data Communications SARL, 4333142590001, Champlan	7,624	100.0
Westermo Data Communications Pte Ltd., 200707554, Singapore	1	100.0
Westermo Data Communications Pty Ltd., 611 051 846, North Ryde, NSW	10,000	100.0
Beijer Electronics AB, 556701-4328, Malmö	1,000	100.0	48,041
Brodersen Automation AB, 556288-8650, Jönköping	3,000	100.0
Beijer Electronics AS, 912965058, Drammen	1,117	100.0
Brodersen Automation AS, 957004083, Drammen	300	100.0
Beijer Electronics A/S, 56162712, Roskilde	1,000	100.0
Beijer Electronics Holding GmbH, 22383, Unterensingen	1	100.0
Beijer Electronics Verwaltungs GmbH, HRB 22383, Unterensingen	1	100.0
Beijer Electronics GmbH & Co. KG, HRA 222129, Unterensingen	1	100.0
Beijer Electronics Trading (Shanghai) Co, Ltd, Shanghai	1	100.0
Beijer Electronics Corp., 05027350, Taipei	116,534	100.0
Beijer Electronics Korea Co., Ltd., 110111-5841188, Seoul	10,000	100.0
Beijer Elektronik ve Tic. A.Ş, 556233, Istanbul	100,000	100.0
Beijer Electronics UK Ltd, 9863522, London	50,000	100.0
Beijer Electronics Automation AB, 556701-3965, Malmö	1,000	100.0	100
Korenix Technology Co., Ltd, Taipeib	18,467,000	100.0	100,965
Smart Jumbo Investment Ltd, Samoa	300,000	100.0
Korenix Technology Ltd, Shenzhen	2,000,000	100.0
Korenix Technology Ltd, Samoa	1	100.0
Lanshan Co., Ltd, Taiwan	2,300,000	50.5
Beijer Electronics Holding Inc., 36-4027234, Chicago	1,000	100.0	150,000
Beijer Electronics Inc., 87-0396688, Salt Lake City	10	100.0
			553,557

a Equity as a percentage of capital, corresponding to the share of the votes for the total number of shares.

bOf the Group's total holdings, 52.5% is held by Beijer Electronics Group AB.

SEK 000			31 Dec. 2019
			Carrying
Subsidiary/corp. ID no./reg. office	No. of shares	Holding, %a	amount
Westermo Network Technologies AB, 556361-2604, Eskilstuna	100,000	100.0	255,219
Westermo Data Communications AB, 556687-8962, Eskilstuna	1,000	100.0
Westermo Fastighets AB, 556288-4360, Eskilstuna	10,000	100.0
Westermo OnTime AS, 981567560, Oslo	2,353,724	100.0
Westermo Data Communications Ltd., 3059742, Southampton	50,000	100.0
Westermo Data Communications GmbH, 30070-54742, Waghäusel	50,000	100.0
Westermo Data Communications SARL, 4333142590001, Champlan	7,624	100.0
Westermo Data Communications Pte Ltd., 200707554, Singapore	1	100.0
Westermo Data Communications Pty Ltd., 611 051 846, North Ryde, NSW	10,000	100.0
Nera Management AG, CHE-114.272.568, Bubikon	100	100.0
Neratec Solutions AG, CHE-107.669.950, Bubikon	516	100.0
Virtual Access HoldingsLtd., 353755, Dublin	4,250,000	100.0
Virtual Access (Ireland) Ltd., 253172, Dublin	1,000,000	100.0
Virtual Access Technology Ltd., 370589, Dublin	1,000,000	100.0
Beijer Electronics AB, 556701-4328, Malmö	1,000	100.0	48,742
Brodersen Automation AB, 556288-8650, Jönköping	3,000	100.0
Beijer Electronics AS, 912965058, Drammen	1,117	100.0
Brodersen Automation AS, 957004083, Drammen	300	100.0
Beijer Electronics A/S, 56162712, Roskilde	1,000	100.0
Beijer Electronics Holding GmbH, HRB 22383, Nürtingen	1	100.0
Beijer Electronics Verwaltungs GmbH, HRB 724413, Nürtingen	1	100.0
Beijer Electronics GmbH & Co. KG, HRA 222129, Nürtingen	1	100.0
Beijer Electronics Trading (Shanghai) Co, Ltd, 9131000079453912XD, Shanghai	1	100.0
Beijer Electronics Corp., 05027350, Taipei	116,534	100.0
Beijer Electronics Korea Co., Ltd., 110111-5841188, Seoul	83,759	100.0
Beijer Elektronik ve Tic. A.Ş, 556233, Istanbul	100,000	100.0
Beijer Electronics UK Ltd, 9863522, London	50,000	100.0
Beijer Electronics Automation AB, 556701-3965, Malmö	1,000	100.0	100
Korenix Technology Co., Ltd, Taipeib	18,467,000	100.0	101,088
Lanshan Co., Ltd, Taiwan	2,300,000	50.5
Beijer Group Holding Inc., 36-4027234, Chicago	1,000	100.0	150,000
Beijer Electronics Inc., 87-0396688, Salt Lake City	10	100.0
Westermo Data Communications Inc., 20-4447643, Elgin	100	100.0
			555,149

Specification of parent company and Group holdings of participations in group companies

In 2019, Westermo Network Technologies AB acquired Nera Management AG and its subsidiary Neratec Solutions AG, as well as Virtual Access Holdings Ltd. and its subsidiaries Virtual Access (Ireland) Ltd. and Virtual Access Technology Ltd.

Korenix Technology Co. Ltd. liquidated its subsidiaries Smart Jumbo Investment Ltd., Korenix Technology Ltd. Shenzen and Korenix Technology Ltd. Samoa.

Information on acquisitions is in a separate Note, see Note 29.

a Equity as a percentage of capital, corresponding to the share of the votes for the total number of shares. bOf the Group's total holdings, 52.5% is held by Beijer Electronics Group AB.

Participations in associated companies

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Carrying amount at
beginning of year	0	1,000
Carrying amount at end of year	0	1,000

SEK 000	31 Dec. 2019	31 Dec. 2018
Parent company
Carrying amount at
beginning of year	0	1,000
Carrying amount at end of year	0	1,000

Company and reg. office

SEK 000	31 Dec. 2019	31 Dec. 2018
Carrying amount
HCA Participações S.A., Sao Leopoldo, Brazil	0	1,000

In 2019, Beijer Electronics Group AB sold all its holdings in HCA Participações S.A. The capital gain was 213,000 SEK.

Note 17

Long-term receivables from Group companies

SEK 000	31 Dec. 2019	31 Dec. 2018
Parent company
Accumulated cost
At beginning of year	156,700	291,503
Additional receivables	272,652	1,352
Amortization for the year	-26,055	-146,377
Exchange differences for the year	-1,246	10,222
Carrying amount at end of period	402,051	156,700

The fair value of loans to related parties is measured at cost, and in those cases where denominated in foreign currency, at the closing day rate.

The additional receivables for the year are lending to Westermo Network Technologies AB to finance the acquisition of subsidiaries.

The effective interest on long-term receivables to related parties is 0.50–3.59% (0.50–3.20).

Note 18

Inventories

Note 16

Long-term receivables

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Accumulated cost
At beginning of year	2,631	2,396
Additional receivables	745	142
Amortization for the year	-278	-56
Exchange differences for the year	164	149
Carrying amount at end of period	3,262	2,631

Because all long-term receivables are essentially subject to variable interest rates and the effect of discounting is marginal, fair value is judged to largely correspond to book value.

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Raw materials and consumables	142,605	105,249
Finished goods and goods for resale	53,953	59,059
Work in progress	6,522	10,665
Advance payments to suppliers	245	0
Goods in transit	11,485	2,706
	214,810	177,679

Accounts receivable and other current receivables

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Accounts receivable	308,098	253,336
Provision for doubtful debt	-4,144	-2,685
Accounts receivable—net	303,954	250,651
Other receivables	26,448	27,502
Prepaid expenses and accrued Income	17,441	19,904
	347,843	298,057

The fair value of accounts receivable and other receivables is consistent with book value.

Change in provision for doubtful debt

SEK 000	31 Dec. 2019	31 Dec. 2018
Opening balance	-2,685	-2,248
Reported in Income Statement:
- additional allowances via acquisitions	-1,642	0
- Additional allowance	-588	-550
- Reversed unutilized allowances	177	144
Utilized in the year	666	60
Exchange differences	-72	-91
Closing balance	-4,144	-2,685

Accounts receivable are judged individually at each reporting date. The individually judged receivables subject to impairment mainly relate to customers that have experienced unexpected financial difficulties. A judgment that a portion of the receivables is expected to be recoverable has been made. The expense for doubtful and bad debt is included in the other expenses item in the Income Statement. The maximum exposure to credit risk on the reporting date is the fair value of each category of receivable stated above. The Group has no assets pledged as collateral.

The Group is not dependent on major customers. The Group has no single customer that provides more than 10% of total Group sales.

Carrying amounts, by currency, relating to the Group's accounts receivable and other receivables are as follows:

SEK 000	31 Dec. 2019	31 Dec. 2018
SEK	38,159	38,598
EUR	130,772	100,694
USD	82,025	77,531
TWD	29,114	20,116
GBP	21,568	20,160
CNY	18,802	19,482
NOK	5,743	5,251
DKK	5,785	3,565
TRY	4,300	3,436
Other currencies	11,575	9,224
	347,843	298,057

Prepaid expenses and accrued income

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Rents	1,609	4,866
Insurance	1,666	1,753
Lease payments	39	1,567
Bank charges	1,071	1,313
Licenses	2,530	1,791
Other items	10,528	8,614
	17,443	19,904
Parent company
Rents	2,309	2,110
Insurance	804	960
Bank charges	1,071	1,313
Licenses	2,434	1,703
Other items	833	1,512
	7,451	7,598

Borrowing

This Note contains information about the company's contractual terms relating to borrowing. For more information on the company's exposure to interest risk and the risk of exchange rate fluctuations, see Note 25.

Book value is judged to be a close approximation of fair value. Bank borrowing is renegotiated every three months with new interest rates on market terms. Finance lease liabilities are discounted at the implicit interest rate at the start of each lease.

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Long-term liabilities
Bank loans	416,109	300,000
Finance lease liabilities*		4,604
	416,109	304,604
Current liabilities
Bank loans	40,052	40,000
Overdraft facility	147,301	34,649
Finance lease liabilities*		2,072
	187,353	76,721

*In the previous year, lease liabilities relating to finance leases only were recognized, pursuant to IAS 17 Leases. For 2019, lease liabilities have been recognized as a separate balance sheet item, with the associated note disclosure, pursuant to IFRS 16 Leases.

Covenants

The company's bank borrowings are subject to covenants in the form of two financial key ratios according to the definitions below.

Total leverage

Total leverage according to the covenant is defined as interest-bearing liabilities, excluding provisions for pension obligations and lease liabilities pursuant to IFRS 16 Leases, less cash and cash equivalents in relation to EBITDA and excluding restructuring costs.

Total leverage may not exceed 3.50 (3.50).

Interest coverage ratio

Interest coverage ratio is defined as EBITDA and excluding restructuring costs in relation to net interest income/expense (interest expenses less interest income). Net interest income/expense does not consider interest expenses relating to lease liabilities pursuant to IFRS 16 Leases.

The interest coverage ratio may not be less than 3.50 (3.50).

Compliance with covenants

Each quarter, the company reports the quantitative outcome of both loan covenants to lenders based on the financial information stated in quarterly reports. The company satisfied all covenants in its 2019 and 2018 annual financial statements.

SEK 000	31 Dec. 2019	31 Dec. 2018
Parent company
Long-term borrowing
Bank loans	416,109	300,000
	416,109	300,000
Short-term borrowing
Bank loans	40,000	40,000
Overdraft facility	144,890	34,649
	184,890	74,649

Note 21

Pension provisions, etc.

Defined-benefit obligations

SEK 000	2019	2018
Group
Defined-benefit obligations
Present value of funded obligations	21,642	19,523
Fair value of plan assets	-20,252	-16,943
Deficit in funded plans	1,390	2,580
Present value of unfunded plans	168,321	128,636
Net amount in Balance Sheet	169,711	131,216
The net amount is divided between plans in the following countries:
Sweden	168,321	128,203
Taiwan	1,390	3,013
Net amount in Balance Sheet	169,711	131,216

2019	2018

45%	47%
26%	23%
20%	24%
9%	6%
100%	100%

100% (100) of plan assets relate to funded obligations in Taiwan. Under Taiwanese legislation, the state pension authority manages all such assets.

Pension expense

SEK 000	2019	2018
Defined-benefit plans
Expense for pensions accrued in the year	4,307	4,091
Return on plan assets	-208	-228
Interest expense	3,651	3,479
Expense for defined-benefit plans	7,750	7,342
Expense for defined-contribution plans	32,481	26,916
Payroll tax and tax on profits	5,453	4,890
Total expense, defined-contribution plans	37,934	31,806
Total expense for benefits after terminated employment	45,684	39,148

Reconciliation of net amounts for pensions in the Balance Sheet

The following table illustrates how the net amount in the Balance Sheet changed in the period:

SEK 000	2019	2018
Amount at beginning of year	131,216	113,698
Expense for defined-benefit plans	7,750	7,342
Return on plan assets	-667	-481
Contributions from employees	-1,925	-1,400
Disbursement of benefits	-1,265	-1,128
Actuarial revaluation, financial assumptions	34,543	12,931
Translation difference	59	254
Amount at end of year	169,711	131,216

Actuarial assumptions

The following material actuarial assumptions were applied when calculating obligations (weighted averages):

SEK 000	2019	2018
Discount rate, %	1.54	2.57
Future salary increases, %	2.81	3.01
Inflation, %	1.81	2.03
Staff turnover, %	5.96	5.90
Expected remaining lifespan after pensionable age 65	22.51	22.51
Group
Assets pledged for pension obligations	None	None
Parent company
Assets pledged for pension obligations	None	None

For more information on the method for determining the discount rate: see note 1, section (Q) Employee benefits, section (ii) Defined benefit plans. A sensitivity analysis of the effect of the discount rate on the scale of defined benefit obligations is stated below in the sensitivity analysis section.

Book value is considered a close approximation of fair value. Provisions for pensions are discounted at a satisfactory market interest rate for their term.

Sensitivity analysis

The value of defined-benefit obligations consists of the present value of expected future pension disbursements. Accordingly, measurements of the defined-benefit obligations are materially dependent on the applied discount rate in the computation of present value. Adjustments of the discount rates are a change in actuarial assumptions, and accordingly, the effects of these restatements are reported in actuarial gain or loss.

The effect of restatements of certain assumptions on the present value of obligations as of 31 December 2019 is stated below.

Adjusted discount rate (percentage point)	-0.50%	+0.50%
Present value of obligation (+ increase / - decrease)	23,171	-20,043
Adjusted salary growth (percentage points)	-0.50%	+0.50%
Present value of obligation (+ increase / - decrease)	-5,332	6,203
Adjusted inflation expectations (percentage points)	-0.50%	+0.50%
Present value of obligation (+ increase / - decrease)	-16,490	18,623
Adjusted term (years)	-1 year	+1 year
Present value of obligation (+ increase / - decrease)	-7,004	7,045

Estimate for the coming financial year

Total	8,373
Interest expense	2,838
Return on plan assets	-157
Expense for pensions accrued in the year	5,692
Defined-benefit obligations
SEK 000	2020

Regarding the coming financial year's income statement item of actuarial profit/loss, the company does not wish to present any quantified estimate, because this amount is materially dependent on the value of the discount rate, which in turn, is dependent on macroeconomic factors. The company refers the reader to the section on the sensitivity analysis and progress of the discount rate in this section on actuarial assumptions in order for the reader to obtain a view of possible progress. Given currently available information, the company does not judge that any material changes to the discount rate will occur for the coming year.

Defined contribution plans

The company judges that the expense for defined contribution plans will be at a level that is comparable with recent years.

Deferred tax

SEK 000	Deferred tax asset	Deferred tax liability	Net
Group 31 Dec. 2018
Tangible assets	2,679	2,471	208
Intangible assets	0	47,124	-47,124
Inventories	6,514	0	6,514
Pension provisions	19,570	0	19,570
Untaxed reserves	0	638	-638
Other provisions	1,923	106	1,817
Loss carry-forwards	19,521	0	19,521
Deferred tax liability, net	50,207	50,339	-132

SEK 000	Deferred tax asset	Deferred tax liability	Net
Group 31 Dec. 2019
Tangible assets	2,679	2,819	-140
Right-of-use assets	1,579		1,579
Intangible assets	0	52,230	-52,230
Inventories	4,779	606	4,173
Pension provisions	27,919	0	27,919
Untaxed reserves	0	638	-638
Other provisions	1,621	185	1,436
Loss carry-forwards	11,290	0	11,290
Deferred tax liability, net	49,867	56,478	-6,611

SEK 000	Amount at beginning of year	Adoption of IFRS 16	Recognized through profit or loss	Recognized through other comprehensive income	Purchases	Exchange differences	Amount at end of year
Group
Tangible assets	208		-287			-61	-140
Right-of-use assets	0	1,616	157			-194	1,579
Intangible assets	-47,124		-1,670		-3,130	-306	-52,230
Inventories	6,514		-1,739		-606	4	4,173
Pension provisions	19,570		-316	8,665			27,919
Untaxed reserves	-638		0				-638
Other provisions	1,817		-293			-88	1,436
Loss carry-forwards	19,521		-8,234			3	11,290
	-132	1,616	-12,382	8,665	-3,736	-642	-6,611

Of the Group's deferred tax assets, 5-10 MSEK are expected to be used in 2020.

Of the Group's deferred tax liabilities, 2-4 MSEK is expected to be settled in 2020, with additional estimated new deferred tax liabilities of 1-3 MSEK.

Loss carry-forwards

Tax loss carry-forwards for which no deferred tax liability have been capitalized total 175.6 MSEK (68.2), of which 100.7 MSEK from acquisitions.

SEK 000
Due year
2020	4,604
2021	11,859
2022	0
2023	0
2024	0
After 2024	11,104
No due date	148,072
Total	175,639

Other provisions

SEK 000	31 Dec. 2019	31 Dec. 2018
Opening balance	4,346	5,298
Additional via business combinations	3,608
Recognized in Income Statement:
– additional provisions	1,323	222
– reversed unused amounts	-1,024	-1,174
Used in year	-1,477
Exchange differences
Closing balance	6,776	4,346

Of the closing balance for the year, 6,775,000 SEK (4,273,000) is guarantee provisions.

Note 24

Accrued expenses and deferred income

SEK 000	31 Dec. 2019	31 Dec. 2018
Group
Accrued salaries and vacation pay	77,835	73,870
Accrued social security expenses	53,431	42,445
Accrued consulting expenses	4,261	4,792
Restructuring	1,010	1,763
Personnel-related	582	1,146
Other	428	617
Deferred income	2,700	3,515
Other items	13,551	18,740
	152,788	145,125

SEK 000	31 Dec. 2019	31 Dec. 2018
Parent company
Accrued salaries and vacation pay	4,227	6,195
Accrued social security expenses	5,913	4,797
Other items	2,130	1,923
	12,270	12,915

Financial risks and finance policy

Net debt

The Group's net debt as of 31 December 2019 and 2018 respectively was as follows:

SEK 000	31 Dec. 2019	31 Dec. 2018
Cash and cash equivalents	121,903	94,488
Loan liabilities—due within one year	187,353	76,833
Loan liabilities— due after one year	585,820	435,708
Net debt	651,270	418,053

SEK 000	31 Dec. 2019	31 Dec. 2018
Cash and cash equivalents	121,903	94,488
Gross liability—fixed interest		6,676
Gross liability—variable interest	773,173	505,865
Net debt	651,270	418,053

	Cash and cash	Finance leases due within	Finance leases due after	Loan liabilities due within	Loan liabilities due after
SEK 000	equivalents	one year	one year	one year	one year	Net
Net debt as of 1 Jan. 2018	89,281	2,211	3,431	47,322	453,698	417,381
Cash flow	1,326	-2,211		27,327	-40,000	-16,210
Exchange differences	3,881					-3,881
Other changes	0	2,184	1,061		17,518	20,763
Net debt as of 31 Dec. 2018	94,488	2,184	4,492	74,649	431,216	418,053

Net debt as of 1 Jan. 2019	94,488	2,184	4,492	74,649	431,216	418,053
Restatement on the adoption of IFRS 16		-2,184	-4,492			-6,676
Business combinations	23,518					-23,518
Cash flow	1,382			112,704	116,109	227,431
Exchange differences	2,515					-2,515
Other changes	0				38,495	38,495
Net debt as of 31 Dec. 2019	121,903	0	0	187,353	585,820	651,270

Loan, interest and maturity structure

The following table illustrates the maturity structure of borrowing by original currency, and the maturity structure and renegotiation dates of interest terms, as of the reporting date.

		Fixed-interest	Remaining duration, fixed		Nominal amount in original	Nominal amount in presentation
SEK 000	Interest rate, %	period	interest period	Currency	currency	currency
Group
Bank loans:
Bank loan	1.35%	90 days	90 days	SEK	170,000	170,000
Bank loan	1.35%	90 days	90 days	SEK	20,000	20,000
Bank loan	1.25%	90 days	90 days	EUR	20,000	208,672
Bank loan	1.25%	90 days	90 days	CHF	6,000	57,437
				SEK/EUR/USD/ NOK/DKK/GBP
Overdraft facility a	1.00%	90 days	90 days	/SGD/CHF		147,353
						603,462

a The final maturity of bank loans is 15 March 2023, when the underlying bank facility expires. The overdraft facility has contracted interest of 0.30% on credit granted.

Financial assets & financial liabilities

The Group has the following financial instruments:

Financial assets

SEK 000	31 Dec. 2019	31 Dec. 2018
Financial assets measured at amortized cost
- Accounts receivable	303,954	250,651
- Cash and cash equivalents	121,903	94,488
Financial assets measured at fair value through profit or loss:
- Unlisted shares		1,000
	425,857	346,139

Accounts receivable are amounts relating to customers for goods sold or services rendered in operating activities. Generally, accounts receivable become due for payment within 30-90 days, and accordingly, all accounts receivable are classified as current assets. The fair value of accounts receivable corresponds to carrying amounts, because the discounting effect is not considered material.

Unlisted shares are measured at level 3 in the fair value hierarchy. See note 15 for more information.

Transaction exposure

The Group's transaction exposure for 2019 is divided between the following currencies:

	Sales		EBIT
SEK 000	Amount	%	Amount	%
Group
EUR	612,073	39.3	406,947	393.2
USD	395,160	25.4	-6,477	-6.3
NOK	46,371	3.0	29,678	28.7
DKK	25,589	1.6	14,702	14.2
GBP	114,299	7.3	87,541	84.6
CHF	7,568	0.5	-17,241	-16.7
TRY	27,928	1.8	20,894	20.2
TWD	48,243	3.1	-157,889	-152.6
CNY	85,167	5.5	54,821	53.0
SGD	20,556	1.3	13,488	13.0
AUD	15,943	1.0	7,395	7.1
SEK	153,837	9.9	-353,963	-342.0
Other currencies	5,965	0.4	3,601	3.5
	1,558,699	100.0	103,497	100.0

Financial liabilities

SEK 000	31 Dec. 2019	31 Dec. 2018
Financial liabilities measured at amortized cost
- Borrowings	603,462	381,325
- Accounts payable	126,088	111,407
	729,550	492,732

The fair value of borrowing corresponds to carrying amount because interest on this borrowing is on a par with current market interest rates or due to borrowing being short term.

Accounts payable are unsecured and normally paid within 30 days. The fair value of accounts payable are considered to correspond to carrying amount, because they are inherently short term.

The following table states the maturities of financial liabilities.

	Contracted maturities
SEK 000	Within 12 months	Between 1 and 2 years	Between 2 and 5 years	Total
Group
Borrowing	187,353	40,000	376,109	603,462
Accounts payable	126,088			126,088
	313,441	40,000	376,109	729,550

Translation exposure

Foreign net assets of the Group are divided between the following currencies:

Currency/Amount, 000	Foreign currency	Swedish currency	%
Group 2019
TWD	744,195	230,626	37.2
USD	23,757	221,346	35.7
EUR	5,570	58,112	9.4
CNY	23,641	31,520	5.1
GBP	1,788	21,836	3.5
DKK	12,088	16,884	2.7
TRY	10,308	16,140	2.6
SGD	1,505	10,391	1.7
AUD	1,451	9,591	1.5
CHF	196	1,877	0.3
NOK	-469	-496	-0.1
Other currencies		2,865	0.4
		620,692	100.0

Finance policy

Through its operations, the Group is exposed to various types of financial risk. Financial risk means fluctuations in the company's profits and cash flow ensuing from variations in rates of exchange, interest levels and credit risks. The Board of Directors decides on currency hedging and additional new long-term funding.

Interest risks

The Group's net financial income/expense and profit or loss are affected by fluctuations in interest rates. The Group's average interest fixing period is some 90 days. Interest rates at year-end vary between 1.00 and 1.35% (0.80–0.95%). The average interest factor for the year is approximately 1.3% (1.3). An interest rate fluctuation of 1% would affect consolidated profit before tax by some 6.0 MSEK (4.7) with the loan exposure at the end of the financial year.

Credit risks

Group cash and cash equivalents are divided between the parent company and its subsidiaries, with no single entity holding more than 15% (26) of Group total cash and cash equivalents. The Group's policy is to invest cash and cash equivalents in regionally reputable and leading banks with a high credit rating.

The Group is exposed to credit risks in accounts receivable. The Group's customers are subject to credit checks involving the collection of information on customers' financial positions from various credit agencies. The Group has prepared a Credit Policy for managing customer credit, which continuously monitors customers' progress and solvency.

Advance payments, bank guarantees or other collateral are necessary for customers with low credit ratings or insufficient credit history. In the Group, accounts receivable more than 120 days overdue are generally 100% provisioned. However, consideration should be taken to the incidence of credit insurance, etc. Additionally, individual assessments are made where necessary. The cost of doubtful and bad debt in 2019 was 0.6 MSEK (0.6), or 0.04% (0.04) of Group sales.

Currency risks

The Group operates internationally and is exposed to various types of currency risk. The primary exposure relates to purchases and sales in foreign currencies, where the risk may be in fluctuations in the currency of the financial instrument, customer's or supplier's invoice, and the currency risk in expected or contracted payment flows, termed transaction exposure. Currency fluctuations also occur in the translation of foreign subsidiaries' assets and liabilities to the parent company's functional currency (translation exposure). In the financial year, the Group did not apply currency hedging to its payment flows or exposure in foreign subsidiaries, in accordance with the Group's policy.

The largest procurement currencies for the Group are the USD, EUR and TWD. The largest invoicing currencies are EUR, USD, SEK and GBP. The Group has some flow matching of its currency exposure, implying relatively low value at risk (theoretical risk value).

The policy is for the Group subsidiaries to manage their currency risk by controlling revenues and expenses against functional currency, and allow the parent company to conduct netting of various currencies.

The parent company evaluates its net exposure to each purchasing and sales currency on an ongoing basis with the aim of judging the effect on consolidated profit. A 10% depreciation/appreciation of the Swedish krona against all transaction currencies would increase/ decrease sales by some 140 MSEK and EBIT by some 45 MSEK, given year-2019 levels and mix of sales and earnings. 90% (90) of Group sales are in foreign currency.

The Group has significant net assets denominated in TWD and USD. A 10% depreciation/appreciation in the value of the SEK against TWD and USD respectively would increase/decrease equity by 23 MSEK and 22 MSEK respectively.

Liquidity risks

Beijer Electronics has loans that become due for payment at different times. An overdraft facility represents a portion of these loans, which has a contracted one-year term, and can be renewed for 12 months at the end of its term after renewed evaluation. The Group's other finance accrues variable interest with straight-line amortization. The Group is within the limits of the terms of credit issued by lenders as guarantees for credit issuance.

Beijer Electronics Group AB's current bank facility expires on 15 March 2023.

Capital risk

The Group's target for its capital structure is to ensure the Group can continue its operations, so it can continue to generate returns for shareholders, benefit other stakeholders and maintain an optimal capital structure to limit the cost of capital. To maintain or adjust its capital structure, the Group may change the dividend paid to shareholders, repay capital to shareholders, issue new shares or sell assets to reduce its liabilities. There are no financial capital risks because the company does not have a financial trading mandate, but works with operating capital exclusively.

Pledged assets and contingent liabilities and contingent assets

	Group		Parent company
SEK 000	31 Dec. 2019	31 Dec. 2018	31 Dec. 2019	31 Dec. 2018
Pledged assets	11,559	11,044	None	None
Contingent liabilities
Guarantee commitments, FPG/PRI	1,412	1,293	208	178
Guarantee commitments in favor of subsidiaries
rent guarantees			14,832	20,010
credit guarantee			2,087
customs guarantees			678	678
other*			6,901	5,469
Other commitments	4,578	4,381
Total contingent liabilities	5,990	5,674	24,706	26,335

*Beijer Electronics UK Ltd., with company registration number 09863522, is exempted from statutory audits pursuant to Section 479A of the UK Companies Act 2006. Beijer Electronics Group AB is the guarantor for all of the subsidiary's liabilities as of 31 December 2019. 3,786,000 SEK of this amount is intra-group liabilities.

Note 27

Related parties

The parent company has related party relationships with its subsidiaries (see Note 14). For transactions with the CEO, Board members and senior executives, see Note 6.

Summary of transactions with related parties

Related party relationship	Year	Sales of services to related party	Purchases of services from related party	Receivable from related party as of 31 December	Liability to related party as of 31 December
Subsidiaries	2019	33,931	1,777	474,933	132,298
Subsidiaries	2018	33,464	3,900	184,526	95,727

Transactions with related parties are priced on an arm's length basis.

Cash flow

SEK 000	31 Dec. 2019	31 Dec. 2018
Cash and cash equivalents—Group
Cash and cash equivalents include the following components:
Cash	95	141
Checks	4,429	5,836
Bank balances	117,379	88,511
Total, Balance Sheet	121,903	94,488
Total, Cash Flow Statement	121,903	94,488
Cash and cash equivalents—parent company
Cash and cash equivalents include the following components:
Cash	0	0
Bank balances	1,166	1,166
Total, Balance Sheet	1,166	1,166
Total, Cash Flow Statement	1,166	1,166

Interest paid and dividend received

	Group			Parent company
SEK 000	2019	2018	2019	2018
Dividend received				1 417
Interest received	515	679	6,485	5,859
Interest paid	-7,205	-5,721	-7,139	-5,659
	-6,690	-5,042	-654	1,617

Adjustments for items not included in cash flow

Group		Parent company
SEK 000	2019	2018	2019	2018
Depreciation, amortization and impairment	123,748	76,646	8,261	8,471
Profit from sale of property, plant and equipment	-911	2,861
Pension provisions	4,776	4,975	1,547	1,374
Other provisions	2,430	-952
Unrealized exchange gains/losses			-3,694	-8,767
Unpaid expense for restructuring program		1,000
Other	116	612	100
	130,159	85,142	6,214	1,078

Unutilized credit facilities

	Group			Parent company
SEK 000	2019	2018	2019	2018
Unutilized credit facilities amount to	105,110	215,351	105,110	215,351

Business combinations

Through its Westermo business entity, Beijer Electronics Group acquired 100% of Swiss company Neratec Solutions AG at the beginning of July 2019. Neratec specializes in wireless network products, focusing on reliable and robust communication solutions for trains and rail infrastructure. Neratec complements and enhances Westermo's offering to these segments. Neratec's annualized sales are some 60 MSEK, and it has some 25 employees. Neratec was consolidated into the Group and Westermo's accounts effective 1 July 2019.

The purchase consideration is divided between basic and contingent considerations. The outcome of the contingent consideration is dependent on Neratec's sales growth in the financial year 2020, and will be settled by 1 March 2021 at the latest. The maximum outcome is 0.4 MEUR.

SEK 000	2019
Purchase consideration
Cash and cash equivalents	56,390
Contingent consideration	3,840
Total purchase consideration	60,230
Acquisition-related expenses	1,882
Carrying amount of identifiable acquired assets and liabilities taken over
Property, plant and equipment	88
Patents	2,294
Customer relations	15,130
Other intangible assets	952
Current assets	16,621
Cash and cash equivalents	8,235
Current liabilities	-3,208
Long-term liabilities	-3,426
Deferred tax liabilities	-3,710
Total identifiable net assets	32,976
Goodwill	27,254
Total	60,230

Through its Westermo business entity, Beijer Electronics Group acquired 100% of Irish company Virtual Access at the end of October 2019. Virtual Access is a technology enterprise specializing in wireless industrial routers and gateways, as well as managed connectivity services. The company's yearly sales are some 130 MSEK, and it has some 40 employees. Virtual Access has been consolidated into the Group and Westermo's accounts effective 1 November 2019.

The purchase consideration is divided between basic and contingent considerations. The outcome of the contingent consideration is dependent on virtual access's EBIT in financial years 2020-2021, and will be settled by 1 March 2022 at the latest. The maximum outcome is 9 MEUR.

SEK 000	2019
Purchase consideration
Cash and cash equivalents	212,931
Contingent consideration	96,755
Total purchase consideration	309,686
Acquisition-related expenses	2,007
Stamp duty	2,864
Carrying amount of identifiable acquired assets and liabilities taken over
Property, plant and equipment	500
Intangible assets	178
Current assets	48,267
Cash and cash equivalents	15,283
Current liabilities	-9,844
Long-term liabilities	0
Deferred tax liabilities	0
Total identifiable net assets	54,384
Goodwill	255,302
Total	309,686

Analysis and measurement of identifiable acquired intangible assets was not completed as of 31 December 2019. Accordingly, the above measurement is preliminary.

Acquisition-related expenses are included in administrative overheads in the Consolidated Income Statement, and profit before tax in the Consolidated Cash Flow Statement.

The acquired operation contributed net sales of 25,578,000 SEK and net profit of 87,000 SEK to the Group in the period 1 July to 31 December 2019.

If the acquisition had been executed on 1 January 2019, the consolidated pro forma net sales contribution would be some 47 MSEK, with a loss before tax of some -7 MSEK as of 31 December 2019. These amounts have been computed using the subsidiary's earnings, adjusted for differences in accounting policies between the Group and the subsidiary, and further depreciation and amortization that would have occurred providing that the restatement of tangible and intangible non-current assets to fair value had been applied effective 1 January 2019.

Acquisition-related expenses are included in administrative overheads in the Consolidated Income Statement, as well as profit before tax in the Consolidated Cash Flow Statement.

Stamp duty is included in tax in the Consolidated Income Statement, and in income tax paid in the Consolidated Cash Flow Statement.

The acquired operation contributed net sales of 9,464,000 SEK and net profit of 7,000 SEK to the Group in the period 1 November to 31 December 2019.

If the acquisition had been executed on 1 January 2019, the consolidated pro forma net sales contribution would be some 98 MSEK, with EBIT of some 12 MSEK as of 31 December 2019. These amounts have been computed using the subsidiary's earnings, adjusted for differences in accounting policies between the Group and the subsidiary, but excluding any depreciation and amortization that would have occurred providing that the restatement of tangible and intangible non-current assets to fair value had been applied effective 1 January 2019.

Subsequent events

In March, the group's Westermo business entity signed a new customer agreement with an estimated value of 80 MSEK for the provision of network equipment to a major North American train operator.

Note 31

Earnings per share

SEK 000	2019	2018
Net profit	64,954	43,518
Number of outstanding shares	28,601	28,601
Earnings per share before dilution	2.27	1.52
Earnings per share after dilution	2.25	1.51
Dividend paid per share, SEKa	0.50	0.00

a The proposed dividend for 2020 is 0 SEK per share.

Note 32

Proposed appropriation of profit

SEK 000	2019	2018
Retained profit	261,258	279,121
Net profit	25,003	-7,684
Total	286,261	271,437

Total dividend	0	14,301
Carried forward	286,261	257,136
Total	286,261	271,437

Note 33

Parent company

Beijer Electronics Group AB is a Swedish-registered limited company with its registered office in Malmö, Sweden. The parent company's shares are quoted on the NASDAQ OMX Nordic Stockholm Small Cap List, under the ticker symbol BELE. The address of the head office is: Box 426, 201 24 Malmö, Sweden.

The Consolidated Accounts for 2019 include the parent company and its subsidiaries, collectively termed the Group. The Group also includes participations in associated companies.

Note 34

Alternative key figures

Alternative key figures are used to describe the progress of underlying operations and to improve comparability between periods. They are not defined on the basis of IFRS but are consistent with how Group Management and the Board of Directors measures the company's financial performance. These key figures should not be viewed as substitutes for financial information presented in accordance with IFRS, but rather, as a complement.

For definitions, see page 104.

Effect of revised reporting standard

This Note reviews the effects of the adoption of IFRS 16 Leases on the consolidated financial statements. The new accounting policies are reviewed in note 1, section (L) Leases.

The group has just over 100 leases that are affected by the new accounting standard at the adoption date, most of them vehicle leases. The Group's financial reporting is mainly impacted by premises lease contracts. There are also a number of leases on office equipment.

The Group has chosen the modified transition approach for implementing the new Standard, which means the full effect of application of the Standard is restated in the opening balances for the financial year 2019 without restating comparative figures. For certain premises leases, the Group has decided to adopt a method involving the assets side being measured on the basis of the lease's actual start date, and the liabilities side measured on the basis of the date of initial adoption (DOIA) as the start date. For other leases, the DOIA has been used as the start date for measuring the asset and liability, which are essentially equal at the DOIA.

Direct acquisition expenses for rights of use have not been restated on transition. Right-of-use leases of less than 12 months, or with a cost of less than 5,000 USD, have not been included in the reported liabilities or rights of use.

An incremental borrowing rate has been determined per region. Right-of-use periods have been determined on the basis of the contract terms, and with the knowledge of cancellation and extension clauses, and a view of the asset's significance to operations.

The change in accounting policy has impacted the following balance sheet items as of 1 January 2019:

SEK 000
Property, plant and equipment	-5,701
Rights of use	120,578
Deferred tax assets	1,174
Prepaid expenses	-4,909
Borrowing	-6,676
Lease liabilities	122,134

The net effect on accumulated profit or loss as of 1 January 2019, was a decrease of 4,136,000 SEK.

On adoption of IFRS 16, the Group reported lease liabilities relating to leases previously classified as operating leases pursuant to the provisions of IAS 17 Leases. These liabilities have been measured at the present value of the remaining lease payments. In this measurement, the lessee's incremental borrowing rate as of 1 January 2019 has been applied. The lessee's weighted incremental borrowing rate applied for these lease liabilities as of 1 January 2019 was 2.2%.

For leases previously classified as finance leases, the company recognizes the carrying amounts of the lease asset and lease liability immediately prior to adoption as the carrying amount of the right of use and lease liability at the DOIA. The valuation principles of IFRS 16 have been applied after this date only.

SEK 000
Measurement of lease liability
Obligations for operating leases As of 31 December 2018	118,977
Discounted by the lessee's incremental borrowing rate at the DOIA	112,934
Additional: liability for finance leases as of 31 December 2018	6,676
Other adjustments	2,524
Lease liability reported as of 1 January 2019	122,134

Corporate Governance Report 2019

Beijer Electronics Group AB is a Swedish public limited company quoted on the NASDAQ OMX Nordic Stockholm Small Cap List, with the ticker BELE. Beijer Electronics Group applies the Swedish Code of Corporate Governance. The complete Code is available at www.corporategovernanceboard.se.

The Corporate Governance Report for the financial year 2019 has been prepared in accordance with the Code's recommendations. The company has no instances of non-compliance to report.

The company's Auditors have performed a statutory review of the Corporate Governance Report.

The Group is referred to as beijer group below.

Shareholders and Articles of Association

There were 4,564 (3,411) shareholders at the end of the year. The largest shareholder is Stena Adactum AB with some 29.1% of the votes. Of total share capital at year-end, some 14.7% (17) was held by foreign investors. The company has two share classes, ordinary shares and class C shares, and the maximum permitted issue of class C shares is 5% of all the shares of the company, which carry 1/10 of a vote per share. The share capital amounts to 9,595,367 SEK, divided between 28,786,102 shares, of which 28,601,379 ordinary shares each carrying 1 vote, corresponding to 28,601,379 votes, and 184,723 class C shares each carrying 1/10 vote, corresponding to 18,472.3 votes. Each ordinary share has a quotient value of 0.33 SEK. For more information on the share and shareholders, see pages 10-11. Information on shareholders is updated quarterly, and is also available at the Group's website, www.beijergroup.com.

beijer group's Articles of Association have no special provisions regarding the appointment or dismissal of Board members or amendments to the Articles of Association. For such resolutions at shareholders' meetings, the majority requirements stated in the Swedish Companies Act apply.

AGM 2019

The AGM was held on 8 May 2019. 102 shareholders attended the Meeting personally or by proxy, representing some 73% of the votes. Chairman of the Board Bo Elisson was elected Chairman of the Meeting. All ordinary Board members and the company's Auditors attended the Meeting.

Chairman of the Board Bo Elisson reported on the work of the Board of Directors in the financial year 2018. The company's President and CEO Per Samuelsson reviewed the past year, the three business entities and their operations, as well as the company's progress in the first quarter of 2019. The Auditors reported their observations of the company's accounting records and administration to the Meeting, and presented a review of their work over the past year.

The minutes of the Meeting are available from the company and have been published on the company's website. Some of the resolutions of the Meeting follow:

To pay a dividend of 0.50 SEK per share for the financial year 2018, in accordance with the Board of Directors' proposal.
That the Board of Directors shall consist of five (5) members with no deputies.
To re-elect the Board members Ulrika Hagdahl, Bo Elisson, Johan Wester, Karin Gunnarsson and Lars Eklöf as Board members in accordance with the Nomination Committee's proposal.
To re-elect Bo Elisson as Chairman of the Board in accordance with the Nomination Committee's proposal.
To appoint registered public accounting firm Öhrlings PricewaterhouseCoopers, Malmö, Sweden as the company's auditor for the period until the end of the AGM 2020.
That total fees to the Chairman of the Board and other Board members are 1,400,000 SEK,
That fees for service the Board of Directors' Audit Committee would be 75,000 SEK to the Chairman of the Committee, and 50,000 SEK to other members,
That fees for service on the Board of Directors' Remuneration Committee would be 50,000 SEK to the Chairman of the Committee and 30,000 SEK to other members,
To adopt the Nomination Committee's proposal for instructions for the Nomination Committee,
To adopt the Board of Directors' proposed guidelines for remunerating senior executives,
To authorize the Board of Directors to decide on the new issue of a maximum of 2,860,137 ordinary shares on one or more occasions in the period until the next AGM,
To resolve on the creation of a long-term share-based incentive plan, LTI 2019/2022, and the associated hedging measures.

Nomination Committee for the AGM 2020

The Nomination Committee was presented on 27 September 2019 and has 4 members, with one representative of each of the four largest shareholders before publication (holdings on the last business day of August 2019). The Chairman of the Board is co-opted to the Nomination Committee. Martin Svalstedt, representing Stena Adactum AB, leads the work of the Nomination Committee. The Nomination Committee's duty is to prepare proposals for Board members, the Chairman of the Board, fees to Board members and Auditors, and Chairman of the next AGM. The Nomination Committee remains in place until a new Committee is appointed. The Nomination Committee held three meetings where minutes were taken. A number of informal telephone and email discussions were also held. All Board members have been interviewed by the Nomination Committee and responded to a survey on the Board's work.

Nomination Committee Name	Owner's representative of	Votes, % 31 Aug. 2019
Martin Svalstedt	Stena Adactum AB	29.07
Per Trygg	SEB Fonder	9.02
Bengt Belfrage	Nordea Fonder	11.27
Ulf Hedlundh	Svolder AB	12.15
Bo Elisson, Chairman of the Board
Total		61.51

In its work on proposing a Board of Directors for the forthcoming term of office, the Nomination Committee appraised the work of the Board. The findings of this appraisal included the Board members being very committed, and their attendance was high. Generally, the Nomination Committee was able to conclude that Board work was effective, and that the members of the Board of Directors represent broad competence, with thorough industrial and financial knowledge, as well as knowledge of international trading conditions and markets.

When preparing its proposal for the Board of Directors, the Nomination Committee especially considered the stipulations of rule 4.1 of the Swedish Code of Corporate Governance, i.e. that the Board of Directors should have an expedient composition in terms of the company's operations, developmental phase and other circumstances, featuring diversity and breadth in terms of members' competence, experience and backgrounds, and that an even gender balance should be pursued. The Nomination Committee applied the relevant provision of the Swedish Code of Corporate Governance as its diversity policy when preparing its proposal. The Nomination Committee's proposal for the Board of Directors to the AGM was presented on 14 February 2020.

The Nomination Committee proposes that the Board of Directors consists of five members. The Nomination Committee is proposing re-election of Board members Ulrika Hagdahl, Bo Elisson, Johan Wester, Karin Gunnarsson and Lars Eklöf. The Committee also proposes that the Board of Directors' current Chairman, Bo Elisson, remains as Chairman.

The proposed Board members represent broad-based skills, including thorough industrial and financial know-how, as well as knowledge of international trading conditions and markets. In its reasoned statement regarding its proposal to the Board, the Nomination Committee stated that the Board has an expedient composition, featuring versatility and breadth in terms of Directors' skills, education, age, experience, background and length of service. The Nomination Committee's proposal implies that 40% of Board members are women.

The rules stipulating independence of Board members in accordance with the Swedish Code of Corporate Governance have been observed. According to the Nomination Committee, all proposed Board members, apart from Johan Wester, are independent of the company's major shareholders. All Board members are independent of the company.

Board of Directors

The Board of Directors bears ultimate responsibility for the company's organization and administration and taking decisions on strategic matters. In the financial year 2019, the company's Board of Directors had five members appointed by the AGM.

The company has not set any specific age limit for Board members, nor any time limit for how long a Board member can serve on the Board of Directors. For detailed information on Board members, see the company's website and page 95.

The role of the Chairman of the Board

Apart from leading the Board of Directors' work, the Chairman of the Board continuously monitors progress by maintaining ongoing contact with the Chief Executive Officer on strategic matters. The Chairman of the Board represents the Group on ownership-related matters.

The Board of Directors' working methods

The Board of Directors' work conforms to a yearly plan. Decisions are taken by the Board after an open discussion led by the Chairman. The Chief Financial Officer, also Compliance Officer for the Code of Corporate Governance, serves as Secretary of the Board of Directors. Apart from the Board meeting following election, which is held coincident with the AGM, the Board normally meets five times per year (scheduled meetings). Extra meetings are convened when necessary. The Board of Directors' and Chief Executive Officer's rules of procedure are adopted yearly at the Board meeting following election. Each meeting follows an agenda, with supporting documentation provided to Board members in good time before each Board meeting.

The Annual Accounts, proposed appropriation of profits and the financial statement are considered each financial year in the first scheduled Board meeting of the financial year. Coincident with this process, the company's Auditors submit a report to the Audit Committee regarding the Auditors' observations and judgments of the audit conducted. The Chief Executive Officer is assigned to submit Interim Reports approved by the Board of Directors at scheduled meetings later in the financial year. Each scheduled meeting also includes several other matters on its agenda, including a report on the current results of operations.

The Board of Directors appraises its own work, and that of the Chief Executive Officer, on an ongoing basis. In addition, a formal appraisal is conducted led by the Chairman of the Board. In 2018, the appraisal was completed in the form of a survey presented to each Board member. Board members sent their responses to an external party, independent of the Board of Directors and the company, who collated the responses. The appraisal was then presented to the Chairman and to other Board members in connection with the Board meeting in December 2019.

Work of the Board in 2019

In the financial year 2019, the Board of Directors held 10 (7) Board meetings in addition to the Board meeting following election. Extensive contact was maintained between the company, the Chairman of the Board and other members between Board meetings. The company's Auditors attended the first Board meeting of the year, reporting their observations on the Group's internal controls and financial statement. The Auditors met the Board of Directors' Audit Committee on two other occasions.

Remuneration Committee

The Remuneration Committee is appointed yearly by the Board of Directors. The Remuneration Committee consults on the Board of Directors' decisions on remuneration of the Chief Executive Officer, decides on remuneration to other senior executives and consults on proposals for potential incentive plans. The Remuneration Committee collects decision support data and views from other Board members, the CEO and CFO. The Committee also collects comparative decision support data externally. In 2019, the members of the Remuneration Committee were Bo Elisson and Johan Wester, with Bo Elisson serving as Chairman. In the financial year 2019,

Work of the Board of Directors in 2019

			Attendance			Independent
Board member	Elected	Position	Audit Committee	Remuneration Committee	Board meetings	Fee**, SEK	Company	Major share holders
Bo Elisson1	2013	Chairman		2/2	11/11	550,000	no	no
Ulrika Hagdahl1	2006	Member	2/3		10/11	275,000	no	no
Johan Wester2	2015	Member		2/2	11/11	255,000	no	yes
Karin Gunnarsson2	2018	Member	3/3		11/11	255,000	no	no
Lars Eklöf	2018	Member			11/11	225,000	no	no
Total						1,560,000

1 Fee includes compensation of 50,000 SEK for committee work.

2 Fee includes compensation of 30,000 SEK for committee work.

**Fee paid in arrears, and approved by AGM 2018.

the Remuneration Committee held 2 (2) meetings. Remuneration for committee work was paid in accordance with the resolution of the Annual General Meeting 2019. Guidelines for remunerating senior executives for the financial year 2019 were approved at the AGM in May.

Audit Committee

The Audit Committee members are Karin Gunnarsson and Ulrika Hagdahl, with Karin Gunnarsson serving as Chairman. The duty of the Committee is to analyze, discuss and supervise the company's risk management, governance and internal controls, and financial reporting. The Committee maintains contact with the company's Auditors to stay informed on the audit of the accounts, reviewing and supervising auditor impartiality, and to discuss the orientation and scope of audit work. The Audit Committee has adopted guidelines for other services apart from auditing the company can purchase from the company's auditors. The complete guidelines are available at the company's website. Remuneration for committee work was paid in accordance with the resolution of the Annual General Meeting 2019.

Remuneration to the Board and Management in 2019

In 2019, the Chief Executive Officer of the parent company, also President of the Group, and other senior executives drew basic salary and other benefits that are reported in Note 6, page 65. Other senior executives mean the five people that made up Group management in 2019 alongside the Chief Executive Officer.

Remuneration to the CEO

Apart from contracted basic salary, for the financial year 2019, the Chief Executive Officer is also entitled to variable remuneration. Variable remuneration is based on the Group's EBIT, sales and free cash flow, and is a maximum of six months' salary. Pension and other customary benefits are additional. Each year, 35% of gross salary including bonus is provisioned as pension assurance for the CEO. This pension is defined contribution and becomes payable at age 65. According to agreement, the CEO has a notice period from the company's side of 18 months, which cannot be claimed for termination initiated by the CEO. The notice period from the Chief Executive Officer's side is six months. No other remuneration upon termination has been agreed.

Remuneration to other senior executives

Other senior executives have basic salary with a variable component. The variable component is based partly on the Group's and partly on each business entity's EBIT, sales growth and cash flow. Yearly variable remuneration is a maximum of six months' salary. Other senior executives have defined contribution pension agreements on market terms. Other customary benefits are additional. Maximum notice periods of 12 months for termination from the company's side have been agreed for other senior executives.

Incentive plans

The purpose of incentive plans is to promote senior management's commitment to the Group's progress and thus increase value for the Group's shareholders. Consistent with a previous resolution by the AGM 2018, the AGM 2019 resolved to create a long-term share-based incentive plan, LTI 2019/2022 for management and a number of key individuals within the Group. The plan measures performance in 2019, but has a three-year term, and involves up to 20 employees of the Group. Participants in the plan undertake to hold shares of the company themselves, to then receive what are termed performance shares on satisfying or exceeding performance targets in 2019.

Directors' fees

Directors' fees, including fees for committee work, resolved by the AGM 2018, were 1,560,000 (1,560,000) SEK, which were disbursed in 2019, and allocated as in the above table. The AGM in May 2019 resolved on Directors' fees including fees for committee work, of 1,605,000 SEK for 2019, to be disbursed in 2020.

Management and corporate structure

The Chief Executive Officer is responsible for the company's ongoing administration, which covers all matters that are not reserved for the Board and administered by management. Instructions approved by the Board of Directors formalize the Chief Executive Officer's authorization to make decisions regarding investments, company acquisitions and divestments and finance matters.

Senior executives currently consist of the Chief Executive Officer, the EVP/CFO, HR Director and presidents of the three business entities Westermo, Beijer Electronics and Korenix. Group management meetings are held regularly to discuss the Group's strategic and operational progress and to monitor results of operations. For more information on senior executives, see the company's website and page 100.

Business entities

The Group's operations are organized into three business entities. The Presidents of each business entity are members of Group management, and are responsible for the Income Statement and Balance Sheet of each entity.

Internal controls over financial reporting

In tandem with adopting the Interim Report for the third quarter and annual Financial Statement, the company's Auditors report their observations from auditing and evaluating the company's internal controls. The company's Auditors participate in Board meetings and special meetings with the Audit Committee, which enables Board members to ensure that internal control is satisfactory and that reporting to the Board is effective.

According to the Swedish Companies Act, the Board is responsible for internal controls. This responsibility includes issuing annual financial reports. The Board of Directors receives the reports and sets standards on their content and presentation to assure quality. This implies that financial reporting should be expedient by applying applicable accounting standards and other requirements of listed companies. The CEO presents a financial report to the Board of Directors at least once monthly, presented in a manner specified by the Board of Directors in advance. This enables the Board of Directors to monitor any divergences in terms of reporting or content.

Control environment, risk assessment and control structures

beijer group structures and organizes its operating activities proceeding from decentralized responsibility for profitability. The base of internal controls in a decentralized operation consists of a well-secured process intended to define targets and strategies for each business.

Defined decision-paths, authorizations and responsibilities are communicated through internal instructions, regulations and policies adopted by the Board of Directors. The Group's primary financial policy documents are its accounting policies, finance policy and a reporting manual, including instructions for each financial statement. The company has an established control structure to manage the risks the Board of Directors and management consider significant to internal controls regarding the Group's accounting organization.

Accounting managers at all levels play a key role in terms of integrity, skills and the ability to create the environment necessary to achieve transparent and accurate financial reporting. Another important overall control activity is the monthly update on results that is conducted via the internal reporting system, and analyzed and subject to comment in reports to the Board. Monitoring the results of operations includes reconciliation against targets set, the most recent forecast and monitoring established key financial ratios.

In accordance with the Code's stipulations, the Board of Directors has taken a view on the need for a dedicated internal audit function, and concluded that at present, there is no need to create such resources within the Group. Coincident with its evaluation of this need, the Board of Directors considered the Group's size, risk outlook and the control functions already established within the Group, which include regular internal audits operated by the central finance function.

Financial reporting and information

The company's communication processes are intended to supply the market with relevant, reliable, accurate and up-to-date information on the Group's progress and financial position. Financial information is regularly submitted in the form of financial statements, interim reports, annual reports and press releases on important news and events that can materially affect the share price. Presentations and teleconferences for financial analysts, investors and the media are held on the day of publication of annual and quarterly reports. All reports, presentations and press releases are published on the Group's website and intranet.

Insider Policy

The company's Board of Directors has adopted an Insider Policy supplementing the Swedish Market Abuse Act. This Policy states the rules on registering insiders, their holdings and reporting, alerts and black-out periods for trading in financial instruments. The complete insider policy is available from the company's website.

Code of Conduct

The company's operations should be conducted with high standards of integrity and ethics. The Group has adopted a number of values that function as a framework for employees and promote good judgment and consistent decision-making. The company's Board of Directors approves the Code of Conduct each year for the Group's operations, which also includes guidelines for the Group's conduct in society in order to ensure its long-term value-creating ability. The document is available in full on the company's website.

Values

beijer group's values—Commitment, Drive and Trust—constitute a long-term commitment linked to its business concept, goals and strategies, guiding employees in daily activities.

'Commitment' reflects commitment to maximize customer benefit and closeness in relationships with customers, collaborative partners and employees. 'Drive' illustrates proactivity and a go-ahead approach in attitudes and technology development. 'Trust' represents honesty and conduct that inspires trust.

Board of Directors' certification

The Board of Directors and Chief Executive Officer certify that the Consolidated Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU, and give a true and fair view of the Group's financial position and results of operations. The parent company's accounts have been prepared in accordance with generally accepted accounting policies in Sweden and give a true and fair view of the parent company's financial position and results of operations.

The Directors' Report of the Group and parent company give a true and fair view of the progress of the Group's and parent company's operations, financial position and results of operations, and reviews the significant risks and uncertainty factors affecting the parent company and companies within the Group.

The Consolidated Income Statement and Consolidated Balance Sheet and the Parent Company Income Statement and Parent Company Balance Sheet will be subject to adoption at the AGM on 26 June 2020.

Malmö, Sweden, 30 March 2020

Bo Elisson Chairman

Ulrika Hagdahl Johan Wester

Karin Gunnarsson Lars Eklöf

Per Samuelsson President and CEO

Our Audit Report was presented on 31 March 2020. Öhrlings PricewaterhouseCoopers AB

Sofia Götmar-Blomstedt Authorized Public Accountant Auditor in Charge

Mikael Nilsson Authorized Public Accountant

Board of Directors

Bo Elisson

Born in 1950. Chairman of the Board since 2017 and Board member since 2013.

Main occupation: Industrial Advisor.

Other directorships: None. Education: M.Sc. (Eng.), Chalmers Institute of Technology.

Work experience: Extensive experience from ASEA/ABB, including serving as Business Area Manager of ABB Robotics. Previously Chairman of Flexlink AB and ADB Airfield Solutions in Belgium.

Holdings in Beijer Electronics Group AB: 70,000 shares and 100,000 call options.

Ulrika Hagdahl Born in 1962. Board member since 2006.

Main occupation: Directorships.

Other directorships: CEO and Board member of Montech Invest AB, Board member of HiQ International AB, AB Idre Golf Ski & Spa and Invisio AB. Deputy Board member of Albanello AB.

Education: M.Sc. (Eng.), Royal Institute of Technology, Stockholm.

Work experience: Founder of Orc Software AB (now Itiviti), formerly CEO and Board member. Holdings in Beijer Electronics Group AB: 53,000 shares through companies.

Karin Gunnarsson Born in 1962. Board member since 2018.

Main occupation: Directorships.

Other directorships: Board member of Concentric AB.

Education: M.Sc. (Econ.), Stockholm School of Economics.

Work experience: Previous experience of various finance and controlling positions including Telelogic, the Trelleborg group and Hexpol. Most recently CFO & IR Manager of Hexpol AB.

Holdings in Beijer Electronics Group AB: 8,264 shares.

Lars Eklöf Born in 1964. Board member since 2018.

Main occupation: President of Atlas Copco's Motor Vehicle Industry division.

Other directorships: None.

Education: M.Sc. (Eng.), Royal Institute of Technology, Stockholm, Bachelor of Engineering, Dartmouth College, US.

Work experience: Solid international industrial background with Atlas Copco, including experience of various sales/ marketing, product management and general management positions based in Sweden, and previously, France. President of Atlas Copco's Motor Vehicle Industry division since 2015, previously President of the Industrial Technique Service division.

Holdings in Beijer Electronics Group AB: 2,360 shares.

Johan Wester Born in 1966. Board member since 2015.

Main occupation: Senior Vice President of Stena Adactum AB.

Other directorships: Chairman of Captum Group AB, S-Invest Trading AB and Stiftelsen TorslandaIdrott, Board member of Midsona AB and Stena Renewable AB.

Education: M.Sc. (Eng.), Industrial Engineering & Management, Chalmers University of Technology.

Work experience: Previous experience with Arthur D. Little, Accenture and Flexlink, mainly in supply chain management, strategy and business development.

Holdings in Beijer Electronics Group AB: 12,025 shares through family.

Auditor

Öhrlings PricewaterhouseCoopers AB. Sofia Götmar-Blomstedt, born in 1969. Authorized Public Accountant, Auditor in Charge of Beijer Electronics Group AB since 2017..

Mikael Nilsson, born in 1981. Authorized Public Accountant. Auditor of Beijer Electronics Group AB since 2019.

Information on Board members' affiliation to the company and major shareholders is in the Corporate Governance Report on page 92.

Auditor's Report

To the general meeting of the shareholders of Beijer Electronics Group AB (publ), corporate identity number 556025-1851

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Beijer Electronics Group AB (publ) for the year 2019 except for the corporate governance statement on pages 90-93. The annual accounts and consolidated accounts of the company are included on pages 42-99 in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company and the group as of 31 December 2019 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2019 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 90-93. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group. Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.

Basis for Opinions

We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Our audit approach

Audit scope

We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the group operates.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Key audit matters

Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.

Key audit matter

Impairment testing of intangible assets

IFRS requires that intangible assets with indefinite useful lives be tested for impairment annually. At 31 December 2019, goodwill was SEK 807 million, as shown in Note 13, which also includes a breakdown between goodwill and other intangible assets.

The carrying amount has been tested for impairment applying an assessment incorporating complexity, as well as involving a significant degree of judgement. Impairment tests have been performed for Westermo, Beijer Electronics and Korenix, which are the cash-generating units in which the goodwill is recognised.

The tests consider the fact that the group is required to make forward-looking statements on the businesses' internal and external circumstances and plans. Examples of such judgements include future cash flows, which, for example, require assumptions to be made about future product launches, price increases and market ventures.

Note 1, Section C (i) and Note 13 describe how the group made its judgement and presents the key assumptions on growth rates and the cost of capital (WACC) along with sensitivity analyses.

The group has not identified any impairment for 2019.

How the key audit matter was addressed in our audit

In our audit, we have focused on assessing whether there is a risk of impairment of goodwill. We have also assessed key assumptions against the company's budget and strategic plan. Some of the assumptions and judgements made in the impairment tests concerning future cash flows and circumstances are complex and have a significant impact on the calculation of value in use. This applies in particular to estimates of future growth rates, gross margins and discount rates, where minor deviations have a significant impact on the calculation of value in use.

We have performed this by assessing the accuracy of assumptions made in previous years and by challenging assumptions linked to those factors, which have the biggest impact on the impairment test, such as growth, gross margins and the cost of capital (WACC).

By performing our own sensitivity analyses, we have also tested the safety margins for each cash-generating unit and assessed the risk of impairment based on these tests. As part of our audit, we have also assessed the calculation model used by management, and have assessed the accuracy of the disclosures made in the annual report.

Based on our audit, we have not noted any material deviations from the group's conclusions from the impairment tests.

Other Information than the annual accounts and consolidated accounts

This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-41 and 100-105. The Board of Directors and the Managing Director are responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.

In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Director's and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.

The Audit Committee shall, without prejudice to the Board of Director's responsibilities and tasks in general, among other things oversee the company's financial reporting process.

Auditor's responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of the company's internal control relevant to our audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Director's and the Managing Director.
Conclude on the appropriateness of the Board of Director's and the Managing Director's use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast significant doubt on the company's and the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause a company and a group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions.

We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of significant audit findings during our audit, including any significant deficiencies in internal control that we identified.

We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor's report unless law or regulation precludes disclosure about the matter.

Report on other legal and regulatory requirements

Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Director's and the Managing Director of Beijer Electronics Group AB (publ) for the year 2019 and the proposed appropriations of the company's profit or loss. We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Director's and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Responsibilities of the Board of Director's and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group' equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company´s organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor's responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.

As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional skepticism throughout the audit. The examination of the administration and the proposed appropriations of the company's profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company's situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability. As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

The auditor's examination of the corporate governance statement

The Board of Directors is responsible for that the corporate governance statement on pages 90-93 has been prepared in accordance with the Annual Accounts Act.

Our examination of the corporate governance statement is conducted in accordance with FAR's auditing standard RevU 16 The auditor's examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.

A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act/ the Annual Accounts Act for Credit Institutions and Securities Companies/ the Annual Accounts Act for Insurance Companies.

Öhrlings PricewaterhouseCoopers AB, SE-113 97 Stockholm, was appointed auditor of Beijer Electronics Group AB (publ) by the general meeting of the shareholders on May 8 2019 and have been the company's auditor since its initial public offering in 2000.

Malmö 31 March 2020 Öhrlings PricewaterhouseCoopers AB

Sofia Götmar Blomstedt Authorized Public Accountant Partner in charge

Mikael Nilsson Authorized Public Accountant

Senior Executives

Group Management

Rear from left:

Wesley Chen

CEO of the Korenix business entity. Born in 1960.

Employee since 2017.

Holdings in Beijer Electronics Group AB: 8,500 shares. In addition, conditional entitlement to 9,898 shares.*

Front from left:

Per Samuelsson

President and CEO of Beijer Electronics Group. Born in 1957.

Employee since 2015.

Other directorships: Chairman of BTJ Sverige AB and Directorships in Aniagra and Priveq.

Holdings in Beijer Electronics Group AB: 45,000 shares personally and through companies and 100,000 call options. In addition, conditional entitlement to 36,638 shares.*

Joakim Laurén

EVP & CFO of Beijer Electronics Group. Born in 1963.

Employee since 2016.

Holdings in Beijer Electronics Group AB: 15,000 shares. In addition, conditional entitlement to 18,287 shares.*

Tim Webster

Senior VP Human Resources of Beijer Electronics Group. Born in 1967.

Employee since 2011.

Holdings in Beijer Electronics Group AB: 5,648 shares. In addition, conditional entitlement to 9,143 shares.*

Jenny Sjödahl

CEO of the Westermo business entity. Born in 1973.

Employee since 2016.

Other directorships: Board member of Nolato AB and Nibe Industrier AB.

Holdings in Beijer Electronics Group AB: 15,005 shares. In addition, conditional entitlement to 16,857 shares.*

Stefan Lager

CEO of the Beijer Electronics business entity. Born in 1962.

Employee since 2016.

Other directorships: Board member of Bong AB.

Holdings in Beijer Electronics Group AB: 18,090 shares. In addition, conditional entitlement to 18,287 shares.*

*Within benefits plan.

Westermo business entity

Rear from left: Andreas Eriksson, VP Product Management & Marketing Linda Kärreby, VP Human Resources Johan Inestam, CFO Erik Danielsson, VP Sales

Front from left: Patrik Wall, VP Operations Pierre Öberg, VP Research & Development Jenny Sjödahl, CEO

Beijer Electronics business entity

Rear from left: Stefan Lager, CEO Sven Knutsson, Sr. VP R&D and Supply Chain Anna Tillman Ohrås, CFO Berndt Köhring, Sr. VP Asia Front from left:

Tim Webster, Sr. VP Human Resources för Beijer Electronics Group AB

Ryan Woolf, VP Americas

Axel Gustafson, VP Product Management

Not illustrated: Sinéad Branagan, VP EMEA

Korenix business entity

Rear from left: Alan Han, Sr. Director R&D Dept. Wesley Chen, General Manager Cindy Hung, Director Marketing Dept. Steve Huang, Director Logistic Dept. Spring Liaw, Director PM Dept.

Front from left: Jany You, Vice President Finance Dept. Michelle Yu, Director APAC HR Sophia Yu, Sr. Director Global Sales Dept.

Five-year summary

SEK 000	2019	2018	2017	2016	2015
Income Statement
Revenues	1,558,699	1,417,240	1,205,912	1,121,509	1,374,575
Other operating revenue and operating expenses*	3,389	1,760	-82	1,714	9,656
Operating expenses**	-1,458,592	-1,345,054	-1,187,814	-1,162,578	-1,332,031
EBIT	103,496	73,946	18,016	-39,355	52,200
Net financial income/expense	-11,655	-10,908	-21,853	-84,844	-8,860
Profit before tax	91,841	63,038	-3,837	-124,199	43,340
Estimated tax	-26,869	-19,501	-2,373	-1,914	-19,523
Net profit	64,972	43,537	-6,210	-126,113	23,817
attributable to equity holders of the parent	64,954	43,518	-6,988	-126,061	23,957
attributable to minority interests	18	19	778	-52	-140
*of which non-recurring items
**of which non-recurring items				-50,000	-7,325

SEK 000	2019	2018	2017	2016	2015
Balance Sheet
Assets
Fixed assets	1,345,534	933,823	894,635	899,696	909,674
Current assets	574,830	486,999	435,304	423,968	426,694
Cash and cash equivalents and short-term investments	121,903	94,488	89,281	107,228	116,636
Total assets	2,042,267	1,515,310	1,419,220	1,430,892	1,453,004
Equity and liabilities
Equity attributable to equity holders of the parent	684,434	652,888	585,015	415,389	520,963
Non-controlling interests	4,249	3,847	6,221	5,773	5,977
Long-term liabilities	816,404	490,504	511,112	514,939	530,963
Current liabilities	537,180	368,071	316,872	494,791	395,101
Total equity and liabilities	2,042,267	1,515,310	1,419,220	1,430,892	1,453,004
Of which interest-bearing liabilities
Borrowing	603,462	374,649	387,322	586,260	514,157
Provisions for pensions	169,711	131,216	113,698	96,243	84,569
Liability attributable to right-of-use assets	105,682	6,676	5,642	6,623	10,727
Total	878,855	512,541	506,662	689,126	609,453
Key financial ratios
EBIT margin, %	6.6	5.2	1.5	-3.5	3.8
EBIT margin before non-recurring items, %	6.6	5.2	1.5	0.9	4.3
Profit margin, %	4.2	3.1	-0.5	-11.2	1.7
Equity ratio, %	33.7	43.3	41.7	29.4	36.3
Equity per share, SEKa	23.9	22.8	20.5	21.8	27.3
Earnings per share, SEK	2.27	1.52	-0.24	-4.41	0.84
Return on equity after tax, %	9.7	7.0	-1.2	-26.6	4.6
Return on capital employed, %	7.8	6.7	1.7	-3.2	4.8
Return on net operating assets, %	10.6	8.5	2.5	-5.8	7.4

Average number of employees 773 713 702 714 752

a Calculated on the basis of total equity attributable to equity holders of the parent.

SEK 000	2019	2018	2017	2016	2015
Cash Flow Statement
Cash flow from operating activities before change in working capital	204,665	134,733	61,765	12,673	78,676
Change in working capital	-21,405	-25,559	-13,904	-3,308	5,983
Cash flow from operating activities	183,260	109,174	47,861	9,365	84,659
Cash flow from investing activities	-333,745	-93,673	-79,400	-74,767	-79,965
Cash flow from financing activities	189,686	-14,175	17,795	72,143	-23,246
Dividend paid	-14,301	0	0	-23,834	-23,834
Cash flow for the period	24,900	1,326	-13,744	-17,093	-42,386
Cash and cash equivalents and short-term investments at beginning of year	94,488	89,281	107,228	116,636	156,842
Exchange rate difference in cash and cash equivalents	2,515	3,881	-4,203	7,685	2,180
Cash and cash equivalents and short-term investments at end of year	121,903	94,488	89,281	107,228	116,636

Definitions

Technical definitions

Automation

Automation means products and solutions that replace manual work and are intended to run, optimize and control various types of industrial process.

Cloud

Cloud services are computer resources, IT services and application software delivered over the Internet from remote servers located in server centers.

Control system

See also PLC system. A programmable system to control and monitor various types of machinery and process.

Drive system

Collective term for various types of motor control, such as frequency inverters, soft starters and servo systems.

Ethernet switch

Interconnects different segments of an Ethernet-based network.

Frequency inverter

An electronic motor control that transforms fixed network frequency and voltage to continuous variables, to achieve benefits including energy savings and reduced motor maintenance costs.

HMI

Human machine interface. See also operator panel. Collective term for products or systems developed to simplify the work of operators in monitoring and controlling machines or processes.

IIoT

Industrial Internet of Things. Collective term for connected physical devices, vehicles (connected and smart devices), buildings and other items embedding electronics, software, sensors, actuators and network connections that enable them to gather and exchange data.

Industrial data communication

Industrial data communication is utilized where there are high standards for secure data transmission, on infrastructure projects, for example.

Industrial PC

Collective term for PC systems built to cope with especially harsh environments or for applications where high reliability is necessary.

IO

Input and output signals.

IP-based data communication

Communication of data packets via wired or wireless Internet connections.

OEM

Batch-producing machinery manufacturers.

Operator panel

Panel, see also HMI. A touchscreen or keyboard panel allowing operators to monitor and control the status of machinery or processes. Such panels are often co-located with equipment where operatives work.

PLC systems

Programmable logic controllers, also known as control systems. Programmable systems for controlling and monitoring various types of machinery and process. The size of these systems varies, with the larger systems being modular, with the facility for simple modification for various needs.

SCADA system

SCADA (Supervisory Control And Data Acquisition) software for monitoring and controlling processes.

Soft control

Software installed on a computer or operator panel, for example, enabling it to function as a PLC system.

Soft motion

Software installed in a computer or operator panel for example to control the speed and position of one or more bus-connected motors.

System integrator

A company with specialist competence in one or more sectors that provides services for automating and electrifying industrial facilities, such as panel builders and machinery builders.

Financial definitions

Average

Average values are calculated as the mean value in the relevant reporting period and corresponding item in the comparative period 12 months later.

Capital employed

Equity plus interest-bearing liabilities.

Development expenditure

Expenditure for work on product development, such as personnel expenses and external consulting expenses. Also includes expenditure capitalized as an asset in the Balance Sheet.

Earnings per share

Net profit attributable to equity holders of the parent divided by the number of shares at year-end.

EBITDA

Earnings before interest, taxes, depreciations and amortizations.

Equity per share

Equity attributable to equity holders of the parent divided by the number of shares.

Equity ratio

Equity in relation to total assets.

EBIT margin

EBIT in relation to revenues.

Next desk

Interest-bearing liabilities less cash and cash equivalents and short-term investments.

Operating cash flow

Cash flow from operating activities.

Profit margin Net profit in relation to revenues.

Return on capital employed

Profit before tax plus financial expenses in relation to average capital employed.

Return on equity after tax

Net profit in relation to average equity.

Return on net operating assets

EBIT in relation to average net operating assets.

Production: Beijer Electronics Group AB Script: Beijer Electronics Group AB and JLC Finanskonsult AB Translation: Adam Turner Images: Beijer Electronics Group AB, Apelöga et al Printing: Exakta XL, ISO 14001 Certified

Invitation to the Annual General Meeting of Beijer Electronics Group AB (publ)

Shareholders of Beijer Electronics Group AB (publ) are hereby invited to the Annual General Meeting (AGM) on Friday 26 June 2020.

Entitlement to participate in the AGM

For entitlement to participate in the AGM, shareholders should:

Firstly, be included in the share register maintained by Euroclear Sweden AB by no later than Friday 19 June 2020;
Secondly, notify the company of their participation, and assistants they may wish to bring, by no later than Friday 19 June 2020.

The invitation to the AGM, including information on the time and location, will be through an announcement in the Swedish Official Gazette, and on the company's website www.beijergroup.com

Notices that the invitation has been sent will be placed in Swedish daily newspapers Dagens Industri and Sydsvenskan on 27 May 2020.

Financial information 2020

21 April 2020 Three-month Interim Report
26 June 2020……………………………… Annual General Meeting
14 July 2020 Six-month Interim Report
27 October 2020 Nine-month Interim Report

All financial information is uploaded to Beijer Electronics Group's website www.beijergroup.com, where an e-mail subscription list for press releases and financial reports is also available.

Questions relating to the Beijer Electronics Group should be addressed to Executive Assistant Annika Johnsson on tel +46 (0) 40 35 86 55, or via e-mail: [email protected].

Invitation to AGM

AUSTRALIA Sydney

AUSTRIA Vienna

BELGIUM Hellebecq

CHINA Shanghai

DENMARK Roskilde

FINLAND Helsinki

FRANCE Champlan GERMANY

Nürtingen Waghäusel

IRLAND Dublin

KOREA

NORWAY

Seoul

Drammen SINGAPORE

Singapore

Gothenburg Malmö

Stockholm Stora Sundby Västerås

SWEDEN

SWITZERLAND

Bubikon Dietlikon

TAIWAN Taipei

TURKEY Istanbul

UNITED KINGDOM

Nottingham Southampton

USA Chicago

Salt Lake City

Head office

Beijer Electronics Group AB (publ) Box 426, Stora Varvsgatan 13a 201 24 Malmö, Sweden Corp. ID no. 556025-1851 www.beijergroup.com | +46 40 35 86 00

AI assistant

Beijer Electronics Group — Annual Report 2019

3007_10-k_2020-05-14_5e9cae09-2486-42a9-a9f3-5ba3aa33fc6a.pdf

The digital society…

Contents

Operations

About our operations

Financial information

Investor and shareholder information

THIS IS BEIJER GROUP

A local presence…

…with the right skills

Key events in 2019

beijer group

Westermo

Beijer Electronics

Korenix

Key figures 2019

EBIT (MSEK)

Operating cash flow (MSEK)

EBIT margin (%)

Key figures

Product development expenditure

Key figures, employees

CEO'S STATEMENT

Acquisitions and strategic agreements boost growth

Westermo convincing

Our people create a stronger organization

Priorities for 2020

Long-term perspective

Short-term uncertainty

Outlook for 2020

The Beijer Electronics Group AB share

Issue of class C shares

Share capital

Share price and turnover

Earnings per share

Dividend

Market maker

I'm pleased to see the number of our shareholders increasing by over a thousand.

Shareholder categories, share of equity Share data, three years

Ownership by shareholding as of 31 December 2019

Stock index

Shareholders as of 31 December 2019

Solutions in our everyday lives

Energy

Marine and offshore

Infrastructure

Buildings

Transportation

– smarter and safer connections

Manufacturing

What we do

Interaction between people and technology

Communication

Westermo Business entity

Offering and market

Robust network solutions for industrial data communication

Sales channels

Market segments

Customers

Westermo providing the network solution for a new commuter train network signaling system in Melbourne

Experts in robust industrial data communication

Production

Network solutions

Leading-edge software and hardware

Solutions and concepts

Experts in robust industrial data communication Strategy and future

Acquisitions

Virtual Access

Virtual Access consolidates Westermo's market offering

Neratec

Neratec gains global reach

Beijer Electronics Business entity

Offering and market

People & Technology. Connected.

Sales channels

Market segments

Customers and sales

Solutions that help improve the environment

Beijer Electronics Group Annual Report 2019