inwido
Annual and Sustainability
Report 2020

| The year in brief
RECORD STRONG
PROFITS AND
GROWTH | Message from the CEO
CONSUMER
DRIVEN
EXPANSION | Net sales
6,681 SEKm
Operating EBITA
729 SEKm | ESG & Sustainability
SUSTAINABILITY
FOR PROFITABLE
GROWTH |
| --- | --- | --- | --- |

Contents

The year in brief ... 4
Message from the CEO ... 6
This is Inwido ... 8
Business model ... 10
Strategy ... 12
Business Area North ... 14
Business Area South ... 16
e-Commerce ... 18
Sustainability ... 20
Innovative collaborations ... 30
Market and trends ... 32
M&A ... 34
Financial targets ... 36
Why invest in Inwido? ... 38
The Inwido share ... 40
Five-year summary ... 42
Message from the Chairman of the Board ... 44
Corporate governance report ... 45
Board of Directors and auditor ... 50
Group Management ... 52
Financial statements 2020 ... 55
Attestation by the Board of Directors ... 100
Audit Report ... 101
Definitions ... 104
Shareholder information ... 105

About the Annual Report

The annual report describes Inwido's operations and financial performance for 2020 and includes a corporate governance report. Sustainability Issues are integrated into the operations and, accordingly, also into the Annual Report and corporate governance report. Further guidance on sustainability issues can be found on pages 20-29 in this annual report as well as on Inwido.com.

Project group: Inwido
Federation: Linda Gustafsson, BJ om Guttorg, Ianna Opitz, Olof Tydvall,
Sect. Olof Engvall and Björn Gettberg. Project management: Anders Neulenberg.
Design: Ola Ohlensborg.
Printing: Holmbergs.

Inwido's vision

We improve people's lives indoors by offering the best customized window and door solutions while developing our employees and generating sustainable value for our shareholders.

Inwido's climate ambition 2030/2050

We will reduce our carbon dioxide emissions by 50 percent by 2030 and be carbon neutral by 2050.

THE YEAR IN BRIEF

A challenging but strong year generating power for the future

2020 was a year that, despite serious challenges due to the covid-19 pandemic, turned out according to plan. Inwido delivered the Group’s highest sales to date, record strong profits and a sharply reduced level of debt. All in line with Inwido’s commitments to continuously strengthen the balance sheet to be able to do new value-generating acquisitions at the right moment. Here are some of the highlights of the year.

2020 was a record year in terms of sales and profits. In 2020, Inwido delivered an increase in result at the same time as a strong cash flow reduced net debt to 0.9x EBITDA. Net sales increased by 2% percent to SEK 6,681 million (6,631). With higher sales and considerably reduced costs, the operating EBITA margin was strengthened, to 10.9 percent.
Two years after the launch of Inwido’s developed governance model, conditions have been created for increased profit generation, via decentralization and increased autonomy in the Group’s 28 business units. The business units have full business and profit responsibility, make their own decisions based on local conditions and cultivate close and strong customer relationships. At the same time, Inwido’s Group management refined processes and strategies with which they control and develop Inwido’s business units. The development with record-breaking profits, despite the ongoing pandemic, testifies to the strength of the governance model.
In 2020, the Group’s sales from e-trade, in the e-Commerce business unit, grew organically by 34 percent and now amounts to 12 percent of the Group’s sales. Planned investments in customer friendly and attractive e-trade, together with an increased interest in renovations during the covid pandemic, contributed to the business unit’s growth. In 2020, e-Commerce customers ordered windows and doors with fast delivery from one of Inwido’s eleven e-commerce brands, such as Sparvinduer, Bonusfönster, JNA and Bedst & Billigst.
With swift action and a decentralized mandate, the covid pandemic was handled according to three clear principles: 1. Protect our employees. 2. Help stop the spread. 3. Keep our operations running. The efficiency of production, especially in Sweden and Finland, was negatively affected by a higher sick leave and the operations in the United Kingdom and Ireland had to be temporarily closed during the spring. The long-term impact of covid-19 is difficult to predict, but we are highly prepared to act, if and when the situation requires this.
Inwido’s sustainability commitment in the environment, workplace and society was expanded in 2020. The Group decided on a long-term climate ambition, which means that the Inwido Group will half carbon dioxide emissions by 2030 to be completely carbon neutral by 2050. Inwido’s sustainability compass was refined, internal sustainability work was strengthened and the outside world, namely customers, investors, decision-makers and the mass media increasingly recognized Inwido’s contribution to a long-term sustainable transition for people, the environment and societies.

TOP 5 important events

Record profits and growth
Our steering model delivered e-Commerce grew strongly
Covid-19 puts us to the test
Sustainability in focus

Inwido AB (publ) | Annual and Sustainability Report 2020

THE YEAR IN BRIEF

Inwido in numbers 2020

During 2020, net sales increased organically by 2 percent and amounted to SEK 6,681 million. Operating EBITA for the year amounted to SEK 729 million (646) and the operating EBITA margin was 10.9 percent (9.7).

External net sales by business area, SEK million

6,681

Net sales, SEK million

729

Operating EBITA, SEK million

10.9%

Operating EBITA margin

-7.1%

Reduction of carbon dioxide emissions per window wing

Net sales and operating EBITA margin

Earnings per share

Net debt/Operating EBITDA

CO2 kg per window wing

Inwido AB (publ)

Annual and Sustainability Report 2020

MESSAGE FROM THE CEO

A challenging but successful 2020

Challenging, educational, difficult to plan and successful. This is my summary of a very different and dynamic year for Inwido. A year that, to a great extent, was marked by the covid-19 pandemic.

Despite difficult circumstances, both for Inwido, our employees, customers and business partners, 2020 was a year that proved the strength of our decentralized business model. We succeeded in strengthening our position in most segments on our key markets, both in the geographies that had a more favorable market development and in the more challenging markets. Our profits developed positively with good cash flows, continuously strengthened margins and a return to organic growth after a few years of declining volumes. This in the midst of a challenging pandemic. In addition to the good profits, I am very proud of the way in which we, thanks to a decentralized structure with strong leaders, managed to protect our employees, contribute to reduced spread of the infection and at the same time keep our activities in societies going. I want to give a big praise to our skilled leaders and employees in all 28 business units. You have done a fantastic job.

Our ability to succeed during the year was largely based on us being able to handle a world in rapid and unexpected change, with both rising and falling demand, with rapid adjustments in capacity as well as costs, and at the same time manage to maintain good efficiency and profitability. Of course, not everything went exactly as we wanted. On the negative side, I see that we were somewhat overcautious during the initial phase of the pandemic, in terms of how we planned capacity, activities and costs. With the result at hand, we could have been faster on the throttle in certain geographies and this caution partly

held back our ability for even greater growth in the more favorable market segments. In addition, the pandemic hampered our ability to travel and visit potential acquisition targets, which was disappointing. But in hardship we grow, and we came out of 2020 stronger.

Developments in Inwido's two business areas

In business area North, the year started somewhat slow with relatively low activity in the industry market, declining volumes and more challenging margins. Towards the end of the year, we experienced an overall increasingly stable consumer market and experienced some signs of an industry market in recovery. It was also positive to note a turnaround with somewhat stronger margins in the business area, in both the third and fourth quarter, as well as a relatively strong order backlog at the end of the year.

Business area South continued a very positive development in 2020, not least the e-Commerce business which grew significantly, with good profitability, in all its main markets. With a focus on the consumer-driven market, especially in Denmark, our growth was maintained with continued very strong profits. In both North and South, we have had a positive cash flow development, which significantly strengthened our balance sheet.

e-Commerce. A strong growth engine

During the year, Inwido's ability to expand manifested itself primarily within our e-Commerce business unit. An organic growth of 34 percent is the result of conscious investments

in customized e-trade, with a positive impact fueled by the strong "home and renovation trend". Our expansion in e-Commerce continues with investments in even more elaborate web platforms and offerings. At the same time as we scale our e-commerce business across different markets, with central systems and combined production power in three countries, we have a strong focus on being relevant to all different market needs. In 2021, we will continue with extensive production and capacity investments in both Poland and Estonia. At the same time, we are strengthening the organization to secure further sales growth, not least in the German market, where we have made a strong organic breakthrough in recent years.

Investments for continued value creation

As Europe's leading window group, our business concept is to develop and sell the market's best customized window and door solutions, via a decentralized structure and with focus on the consumer-driven market. We will do this with a strong focus on taking responsibility for both people and society as well as the climate. In 2020, we continued our activities to develop and strengthen our business units. Among other things, we have successfully launched a new ERP system for increased efficiency and better governance in our Swedish business units. We have also continued to raise the level of activity as well as ambition in the area of sustainability, among other things, through Elitfönster, which has joined the climate initiative Roadmap 2045, and, by our business units adopting ambitious and important sustainability commitments to customers and markets. We have also successfully pursued the work of optimizing operating capital across all our business units.

> “We managed to strengthen our position in most segments on our key markets, both in the geographies which had a more favorable market development as well as on more challenging markets.”

Inwido AB (publ)

Annual and Sustainability Report 2020

MESSAGE FROM THE CEO

Watch the Movie!

To see Henrik's presentation of Inwido, scan the QR code and take part of Inwido - A window of opportunity.

The impact and lessons from the Covid-19 pandemic

The pandemic has shown us that our decentralized model with strong local management teams, with profits and operational responsibility, is the right governance model to efficiently meet difficult operational conditions, as well as more positive market development. I am proud of how our employees have coped with the ever-changing challenges and believe that in the long term the pandemic, together with the investments we make in, among other things, leadership, will strengthen the Group and increase our resilience. Of course, we closely follow the continued development of the pandemic to act if and when required.

Sustainability for the environment, society and people

The most important role for Inwido in the sustainability transition we want to be a part of and impact in society, is to deliver energy-efficient windows and doors to homes, offices and public buildings around Europe. This is our single biggest contribution for a sustainable world. Since 40 percent of the EU's total energy consumption come from buildings, we have an important and inspiring role to play in energy efficiency. At the same time, we must continuously increase our internal efficiency in terms of impact on the environment, people

and societies. Something we take very seriously and which you can read more about in this annual report's extended sustainability reporting. That is why I am proud that in 2020 we launched a new and clear ambition regarding greenhouse gases. Namely, to half our carbon footprint by 2030 and to run a climate-neutral business by 2050.

Ready for the next stage of the acquisition journey

We closed 2020 with a very strong balance sheet and an underlying business that, despite a challenging year, is delivering well. We have invested actively for increased organic growth, clearly manifested in our e-Commerce business, and at the same time have increased the level of activity regarding acquisitions for profitable growth. Based on our M&A strategy, we run a structured process to evaluate, rank and interact with a number of potential acquisitions in the geographies we focus on in Europe. In cases where there is a bilateral interest, we then continue the dialogue and have at any given time at least a handful of discussions underway with different intensity. All in all, this means that we view the opportunities for good acquisition-driven growth in the coming years positively. We are ready and are now working to take the next step on our M&A journey.

Outlook 2021

We started 2021 with a very strong order backlog after a, for the season, strong order intake during the fourth quarter of 2020. The short- and medium-term outlook remains very uncertain as the consequences of the pandemic are still difficult to foresee. In the longer term, our market outlook remains positive and we are passionate about realizing the next level of our potential. The need for energy-efficient windows and doors, not least stimulated by the EU's so-called Green Deal, combined with population growth and an increased willingness to invest in homes, provides good conditions for the market in the long term. We therefore continue to strengthen our business with investments in product development, production, marketing and not least our dedicated employees, while our efforts in the M&A area have increased gradually.

We face the future with great ambitions and inexhaustible energy. But as always, we do it with humility for the unknown in general and the covid-pandemic's continued impact on societies and people in particular.

Malmö, 29 March 2021

Henrik Hjalmarsson

President and CEO

Inwido AB (publ)

Annual and Sustainability Report 2020

This is Inwido

Inwido improves people's lives indoors with windows and doors. As Europe's leading window Group, our business concept is to develop and sell the market's best customized window and door solutions. Thanks to a decentralized structure and focus on the consumer-driven market, we are growing long-term and sustainably, both organically and through acquisitions.

Inwido share

Inwido was listed on the Nasdaq Stockholm September 26, 2014 and had 10,334 shareholders on December 31, 2020.

THREE GOOD REASONS TO INVEST IN INWIDO:

A strong home for local market leaders
Positioned for future growth
Long-term values for shareholders

Our vision

We improve people's lives indoors by offering the best customized window and door solutions while developing our employees and generating sustainable value for our shareholders.

Our Business concept

As Europe's leading window Group, Inwido's business concept is to develop and sell the market's best customized window and door solutions through a decentralized structure and with focus on the consumer-driven market, in order to create long-term sustainable growth, organically and through acquisitions.

We are located in eleven countries

Inwido consists of 28 business units with approximately 4,300 employees. We have operations in Denmark, Estonia, Finland, Ireland, Lithuania, Norway, Poland, Romania, the United Kingdom, Sweden and Germany.

Production locations and operations

We have operations in towns that are marked on the map. With our production facilities and distribution centers, we can take advantage of synergies and reduce purchasing costs while we, at the same time, are close to our customers.

e-Commerce

Inwido's e-trade sales directly to consumers in Denmark, Finland, Norway, the United Kingdom, Sweden and Germany are gathered in the e-Commerce business unit.

Inwido AB (publ)
Annual and Sustainability Report 2020

North

Business area North brings together the Group's operations in Sweden, Norway and Finland. The Nordic region is traditionally Inwido's stronghold, with a number of well-known brands such as Swedish Elit-fönster and Hajom, Finnish Tiivi and Pihla and Norwegian Lyssand and Frekhaug.

South

Business area South brings together the Group's operations in Denmark, the United Kingdom, Ireland and Poland. This also includes e-Commerce. Well-known brands are, for example, Danish KPK, Outline, SparVinduer and British CWG Choices.

Inwido focuses on the following seven UN goals:

THE GLOBAL GOALS

Inwido AB (publ)

Annual and Sustainability Report 2020

BUSINESS MODEL

A home for strong market leaders

As Europe's leading window Group, Inwido's business concept is to develop and sell the market's best customized window and door solutions, via a decentralized structure and with focus on the consumer-driven market, in order to grow sustainably, organically and through acquisitions in the long term.

In the window and door industry, consumer focus and local market awareness are crucial for those seeking success. The market is fragmented – consumer preferences can vary widely between regions, even within the same country. Virtually all products are made to measure and adapted to the customer's unique needs. This insight is what has made Inwido Europe's leading window manufacturer.

The key to success

The Inwido Group's key to long-term profitability is to take advantage of the operations' local strengths and potential. The Group is clearly decentralized, and the business units develop their own operations and build their own success based on individual needs, conditions and opportunities. At the same time, the Group contributes with knowledge, purchasing synergies, technology, e-trade expertise, financing, leadership development, sustainability focus and other strategic strengths that come with size. This makes the Group's business units more profitable and more efficient with Inwido behind them, than if they had been completely independent.

Since the beginning, profitable growth through acquisitions has been a success factor for Inwido. Companies that are acquired can either be already profitable market leaders in their niche, or businesses where there is potential for profitable growth. Read more about Inwido's acquisition strategy on page 34.

BUSINESS MODEL

Inwido creates value on many levels

Inwido and its decentralized operations create unique values for customers, employees, shareholders and society. The independent business units within the Group have full responsibility for business and profits, while the Group contributes with coordination gains in, for example, purchasing, logistics, leadership, sustainability and technology. Below are examples of areas that Inwido centrally contributes to in developing its business units.

Financing

Acquisitions contributing to future growth
Shared activities to improve capital efficiency
Improved financing terms

Purchasing

Central coordination for lower purchase prices
More efficient planning with Group-wide overview
Requirement for suppliers and other stakeholders to take responsibility and act sustainably

Operational management

Knowledge exchange between factories
Simplifying products and platforms
Reduced sick-leave and fewer workplace accidents
KPIs and performance review

How Inwido and its companies contribute to...

Shareholders

Growth over time
Stable returns
An investment in market leading window and door operations

Employees

Safeguarding continued competence development
Driving health and safety issues as well as issues around employees' well-being
Responsible leadership
High level of ethical and moral responsibility

Society

Jobs and community participation particularly in rural and sparsely populated areas
Products that reduce climate impact
Reduced expenses for sick-leave through safe working environments and reduced sick-leave

Inwido AB (publ)

Annual and Sustainability Report 2020

STRATEGY

Strategic priorities

A decentralized structure, focus on the consumer-driven market, sustainable growth driven by acquisitions and synergies that create structural improvements. This is how Inwido's business concept and strategic priorities can be summarized. Together, they create a platform for continued growth.

Inwido's business concept

Four cornerstones for sustainable and profitable growth

A decentralized structure drives customer and results focus
By giving the business units full business and profit responsibility, the customer and results focus increases, which makes them stronger, long-term.
Focus on consumer driven markets for profitable growth
By focusing on the needs of the consumer-driven market, with strong channel and segment positions and attractive products and offers that create added value, we generate profitable growth over time.
Sustainable growth driven through acquisitions
Growth is accelerated through acquisitions of profitable and strong companies with potential for further improvements. This ensures sustainable long-term value creation.
Synergies drive structural improvements
With focus on purchasing, finance, leadership, technology and sustainability economies of scale are created, and best practice is spread across the Group.

Inwido AB (publ)

Annual and Sustainability Report 2020

STRATEGY

Inwido's market landscape

Inwido's recipe for success lies in the Group's decentralized operations and understanding of local customer needs, channel and segment positioning. By developing and mastering a complex channel strong niche positions are created based on a unique mix of product type, segment or geography. It is at the intersections between the three dimensions below that the Inwido Group can create unique competitive advantages in each market.

The Inwido Group evaluates and develops ongoing strategies for our business units' market positioning and customer offering in three dimensions. Each combination of these dimensions creates unique strengths and competitive advantages.

SEGMENT – for example sales via installers or directly to the customer, via retail, e-trade or the construction industry

PRODUCT TYPE – for example product focus premium, mainstream or value as well as windows, doors or sliding doors

GEOGRAPHY – for example Sweden, Finland, Denmark, the United Kingdom, Germany, etc

Inwido AB (publ)

Annual and Sustainability Report 2020

BUSINESS AREA

North

Key data North

Key ratios	2020	2019
Net sales, SEK million	3,658	3,750
Operating gross profit, SEK million	774	844
Operating gross margin, %	21.2	22.5
Operating EBITA, SEK million	218	226
Operating EBITA-margin, %	6.0	6.0

Share of external net sales

Net sales by market segment

BUSINESS AREA NORTH

The convenience trend drives sales

Business Area North brings together the Group’s operations in Sweden, Norway and Finland. The Nordic region is historically Inwido’s strongest foot hold, with a number of well-known brands. In the North, the larger business units are characterized by a market-leading position, while the many smaller units are often market leaders in a channel or niche. Inwido’s President and CEO Henrik Hjalmarsson is also Executive Vice President, Inwido North.

What characterizes the business units in business area North?

In the North, we have a relatively large heterogeneity both in terms of the nature of the markets as well as the business units’ segment and product focus. The business area have two large business units, with broad offerings to both the consumer and industrial segments, in Sweden and Finland. They have a broad product range, good coverage over several segments and a wide product offering, and, as a consequence, strong local brands. We also have strong niche positions towards the window replacement segment as well as in the sliding door and premium segments in both Finland and Sweden. Our operations in Norway have a strong position in the retail channel, even more so regionally in certain geographies, with two strong brands.

What characterizes the markets in business area North?

Market dynamics vary a lot between countries. For example, in Norway, but also to some extent in Sweden, the retail channel is very strong, both towards the consumer segment, but also on the industrial side. This means that a majority of the total market volume passes retailers, either builders’ merchants or DIY chains. In Sweden in particular, windows are also sold to larger construction companies, as well as to house manufacturers directly, and this also increasingly applies to windows to the consumer with installation as well as an offer for the window replacement segment. In Finland, where the window market is different, the consumer segment, towards single family homes as well as apartments, is dominated by sales directly to the home and property owner with installation. The majority of sales to the industry market go directly to them, but the retail channel remains an attractive channel as well as the growing sales to window replacements, even if they are relatively smaller. In Sweden and Norway in particular, the e-trade channel, operated by our e-Commerce business unit, is growing rapidly.

What synergies are there between the business units in business area North?

Locally, we pursue relatively large synergies between the operations, for example in Sweden and Finland. Functions such as IT, accounting and payroll systems are largely shared, in order to obtain cost benefits, with not only Group-wide purchases but also purchases from local suppliers being coordinated. Within each geography, we also work actively to exchange know-how and offer career paths across the operations, all to ensure long-term leadership development.

What are the trends in the consumer / renovation and new build market?

The trends vary, as do the markets in general, depending on geography. In general, it can be said that the consumer market has been a bit weaker for a period in business area North, partly driven by lower renovation subsidies and increased amortization requirements in Sweden as well as uncertainty around the oil industry and a depreciated Norwegian currency in Norway and some uncertainty in the economic outlook in Finland. At the same time, especially in 2018, new build compensated to some extent for this, but it has also recently weakened and overall the markets in business area North have shrunk in recent years. In general, polarization and fragmentation in the market increase. The convenience trend drives sales of windows with installation at the same time as the e-trade segment is growing strongly, not least in the DIY segment, especially in Sweden and Norway. In parallel increasing consolidation within the retail chains especially in Sweden, has created both challenges and opportunities. Overall, with a decentralized and customer-focused model, we are well positioned to capitalize on increasing market differentiation.

What drives growth in the market?

We see the greatest growth within e-trade as well as in sales with installation, mainly in Sweden. It opens up opportunities for us both in e-Commerce and in terms of sales to window installers and sales with installation.

President and CEO Inwido and Executive Vice President North

How do you see acquisition opportunities in business area North?

In general, we have strong market positions with relatively high market shares in Sweden and Finland. This means that our opportunities for major acquisitions in these geographies are limited. When it comes to our acquisition opportunities, they are either focused on continuing to strengthen our long-term position in Norway, or to strengthen segment or niche positions, for example in segments with strong growth, in Sweden or Finland, with slightly smaller acquisitions.

Three important events in 2020?

First and foremost, I am pleased with Elitfönster’s launch of the new planing line FlexPro, a strategically important investment of SEK 55 million for better customer order management, a higher degree of processing, many work steps in one machine and simplified material handling. In addition, I am proud that Elitfönster became the first window company to join the construction industry sustainability initiative “Roadmap 2045”. In Finland, it is rewarding to follow Pihla Group’s success with the innovation Tiivi Connect antenna glass, which has both achieved commercial success and been awarded a UK innovation award during the year. In addition, the challenging currency depreciation of just over 10 percent in Norway has been handled in an impressive way, with rapid cost measures and high agility.

Inwido AB (publ)
Annual and Sustainability Report 2020

BUSINESS AREA

South

Key data South

Key ratios	2020	2019
Net sales, SEK million	2,872	2,713
Operating gross profit, SEK million	918	831
Operating gross margin, %	31.9	30.6
Operating EBITA, SEK million	543	458
Operating EBITA-margin, %	18.9	16.9

Share of external net sales

Net sales by market segment

Industry

BUSINESS AREA SOUTH

The renovation trend is driving market activity

Business Area South brings together the Group’s operations in Denmark, the United Kingdom, Ireland and Poland. The business area also includes e-Commerce, Inwido’s online sales in six markets. South is characterized by several medium-sized and some smaller business units, as well as a greater focus on the renovation market. Asger Drewes Jørgensen is Executive Vice President, Inwido South.

What characterizes the business units in business area South?

The most important thing is that they are consumer and renovation focused. Only our business unit in Ireland has an even mix between new build and consumer. The rest of the operations are almost exclusively consumer and renovation focused. When it comes to the size of the units, they vary from smaller niche and premium players, to medium-sized and large players with a mass market focus. South is also the base for our e-trade operations within the e-Commerce business unit, which operates in northern Europe.

What characterizes the markets in business area South?

Since business area South spans over several countries, there is no uniform market characteristic. While the Danish market is moderately fragmented with a handful of large players and many small ones, the UK market is much more fragmented with as many as 1,400 companies in the industry. Installers is an important customer category in almost all markets in business area South, but several of the markets also have a significant share of direct sales, meaning that we sell directly to intermediaries such as carpenters and installers. When it comes to direct sales to the end consumer reached through our e-trade operation, the market in Denmark where our e-Commerce business unit originates, is well developed. Germany is on the upside part of the curve and the UK and Irish markets are just starting of e-trade sales of windows and doors.

What synergies are there between the business units in business area South?

In the countries where we have several operations, such as Denmark and the United Kingdom, synergies are created across several support functions such as IT, finance, HR and product development. We work actively to share and introduce best practices between the businesses. In addition, the business units are supported by the Inwido Group in terms of ensuring synergies in purchasing, despite the fact that the products are tailored to each individual market.

What are the trends in the consumer/renovation and new build market?

Just as the markets are different, so are the trends. A general trend is the growth in e-trade. More and more end consumers are comfortable finding and buying doors and windows themselves and then having an installer finish the project, if they do not do the installation themselves. In the Danish market, the renovation segment is in steady growth. Uncertainty about the covid pandemic and Brexit affects the UK market. Ireland, especially the area around Dublin, has continued to have a housing shortage, which is driving market activity. Finally, the Polish market for wooden windows is expected to grow moderately.

What drives growth in the market?

In the consumer and renovation segment, we see a connection between consumers’ overall confidence in our brands and the development of our business units. In addition, trends in home and renovation have benefited us during the covid pandemic. Government subsidies for the renovation of private homes are also a positive contribution. Finally, as mentioned earlier, e-trade is a major driver of growth.

How do you look upon M&A opportunities in South?

Our strong position in the Danish market means that we have quite limited alternatives in Denmark. The fragmented UK market offers interesting opportunities for acquisitions, but the uncertainty around the economy as a whole after Brexit means that we are extra careful in evaluating possible candidates. With the strong growth and results we have from e-Commerce, we continue to look for potential company acquisitions to further stimulate this business unit. Finally, we want to strengthen our presence in Germany, a market that is fragmented and where there are good opportunities to drive value from Inwido’s ownership of one or more businesses.

Asger Drewes Jørgensen, Executive Vice President South.

Three important events in 2020?

Many of this year’s important events are related to the market dynamics that arose during the Covid-19 pandemic. First, an increased focus on houses and homes has driven our already successful e-Commerce business unit to new heights in terms of growth and profits. One other event affected our Danish operations during the year. When the Danish Prime Minister announced the closure of Denmark in March, we had already planned for similar scenarios and quickly applied the brakes. But the market was very positively affected by the increased focus on the home and our e-trade activity increased sharply. Therefore, we quickly had to switch from brake to gas and increase capacity to take advantage of favorable market dynamics. A third example was our business units in the UK, which had to close overnight. It is not an easy task to pause a business quickly, but it was really a test of good leadership, planning and execution to be able to restart the businesses after the sudden closing.

Inwido AB (publ) | Annual and Sustainability Report 2020 17

E-COMMERCE

e-Commerce

– a strong growth engine

Buying windows and doors online is easy. Something that an increasing number of homeowners are doing to obtain quality products, quickly delivered and at a competitive price. In 2020, 12 percent of Inwido’s sales were made online, directly to consumers, and the e-Commerce business unit grew organically by 34 percent.

Inwido’s e-Commerce business unit offers windows and doors from eleven brands such as Sparvinduer, Bonusfönster, JNA and Bedst & Billigst. To simplify e-trade and the digital customer experience, Inwido’s e-Commerce business unit offers three channels for purchasing windows and doors online.

Online. Customers order directly on the web.
Assisted online. Customers call, chat or email in connection with placing their order online.
Customers visit a showroom for advice and guidance before placing orders online.

Inwido’s e-Commerce business unit is managed from Odense, Denmark, where Bo Overgaard Christensen leads the operations.

How did Inwido’s e-Commerce business unit develop in 2020?

Based on a number of planned initiatives and activities, 2020 was a strong year of growth and profit for the e-Commerce business unit. The covid pandemic that erupted in the spring was followed by increased customer demand, which has helped to support the positive and underlying growth.

What factors are behind the strong growth?

The success is based on a mix of internal and external factors. In addition to the trend that more and more customers are comfortable buying windows online, increased homework contributed to more people choosing to renovate their homes. We have gained market shares in some of our less established markets in which we are now strengthening our positions with increased knowledge and market-specific offers. In addition, we have increased capacity, shortened delivery times and improved supply chain accuracy/delivery speed from our three factories in Estonia, Poland and Romania.

Which markets grew the fastest?

We have stable growth in all markets. All countries contributed positively to our growth and all markets delivered higher growth than expected. That says something about the strength of our concept, where growth does not just come from one brand or market.

What investments have been made in e-Commerce?

We have invested in increased capacity, increased efficiency and increased competitiveness. A new product platform with focus on Norway and Sweden, for example, has been developed. At the same time, we invest in web platforms and online solutions that make it easier and more secure to shop online. We have also strengthened our organization so that we have a strong and international platform for expansion into new markets.

How do you see e-trade in 2021 and beyond - what will drive the development?

E-trade is here to stay and overall online shopping is growing as a business model in all industries

and in all markets. Consumers are becoming more and more familiar with shopping online and this also applies to complex products. We have come a long way but still have a lot to do to take full advantage of our potential. For example, we have only scratched the surface in Germany where the potential is greater than all our other markets combined. In addition, there are several completely new markets for us in Europe that fit our concept and business model.

Inwido AB (publ) | Annual and Sustainability Report 2020

This is how e-trade works

Who is the e-trade customer?

The typical e-trade customer is a “do it yourself” private person who can replace the window him- or herself or leave it to an installer. The consumer buys a few windows at a time and replaces windows in the house over a two to three-year period.

What does the buying process look like?

The typical customer journey is about finding, comparing and completing the order for windows and doors online. About 80 percent of the buying process takes place online without personal contact with customer service.

What is important for online customers?

Price. Good prices with the right quality and simple price comparisons on the internet place great demands on competitiveness.
Comfort. Websites must be intuitive and easy to navigate before check-out.
Delivery on time. As in all e-trade, fast and error-free delivery is an important parameter.
Trust. Customers check reviews online regarding quality, guarantees, customer care, etc. for trust scores.

History – Inwido’s e-Commerce journey

After JNA started in 1990 and Sparvinduer in 2006, Inwido’s business unit e-Commerce has expanded in line with the growing confidence in buying building materials online. In 2006, Danish Sparvinduer was the first company to launch online sales of windows and doors, which provided a valuable edge for the mail order and e-trade pioneer. In 2014, Inwido acquired JNA and Spar Vinduer, which further drove the expansion with a larger international footprint.

In 2018, the Danish company Bedst og Billigst was acquired, which meant that the e-Commerce business grew strongly. Upon the acquisition, the Swan Windows factory in Romania was incorporated into the e-Commerce business unit.

Daily, 700 people go to work to provide Inwido’s e-trade with windows and doors. The largest factory is located in Sokolka, Poland, with approximately 300 employees, Jõesuu in Estonia has approximately 200 employees and Glodeni Romania has approximately 120 employees.

Inwido AB (publ)

Annual and Sustainability Report 2020

Sustainability

SUSTAINABILITY

"We give more than we take - because sustainable businesses drive sustainable value"

In 2020, Inwido's sustainability work continued to develop, both within the Group's operations and in how the products contribute to reduced climate impact. With a refined sustainability compass our efforts are aimed to give more than we take. This means that what our businesses consume to produce windows and doors in the long run will lead to greater benefit for the environment, people and communities.

In the interview below with Lena Wessner - Senior Vice President, Human Resources, Organization & Sustainability, you learn more about Inwido's efforts in increased sustainability.

Why is sustainability important to Inwido?

As Europe's leading window Group, we have to care for and contribute to our environment, our employees and our society. For Inwido, sustainability is associated with a large and increasing responsibility. That is why we launched a Group-wide sustainability compass in 2017 and in 2020 presented an ambitious carbon dioxide ambition, with zero emissions by 2050. We are inspired by the fact that sustainability requirements are increasing from both consumers and employees as well as investors and legislators. Therefore, we choose to invest in addressing these requirements and contribute to a long-term sustainable world. If we do not invest in this, or are too slow, others will run past us and then we will lose both customers and talented existing and future employees.

How does sustainability efforts materialize in the Inwido Group?

First and foremost, our operations push the development towards more energy-efficient windows and doors, which contribute to lower energy consumption in houses and homes. For example, energy efficient products can help consumers live a sustainable lifestyle and contribute to reduced climate impact, at the same time as they also get a cost-effective solution. Sustainability is also an important aspect of being attractive as an employer and business partner. By growing sustainably, we can create new jobs and offer developing and

secure employments. As a responsible employer, we get to work with knowledgeable, motivated and ambitious colleagues who develop even further in our business units. Since the majority of our operations are located in rural areas or in smaller towns, the importance of our operations is significant in local society. Our success is linked to the well-being and labor market of the communities we act in, and there are many examples of how our businesses are deeply involved in local society and contributes to increased prosperity and vitality.

How does Inwido drive the sustainability issue?

Our Group has developed and follows ambitious key KPI's and measures these regularly in our 28 business units and for the Group as a whole. Our long-term ambition is to half carbon dioxide emissions by 50 percent by 2030 and be carbon neutral by 2050. In addition, there are locally relevant and selected key KPI's depending on the markets' different requirements and conditions. Four times a year follow-up meetings are held where all MDs, sustainability managers and others participate to share results, knowledge and best practice. But sustainability responsibility also extends beyond our nearby environment. We require suppliers and business partners to follow our code of conduct with ethical guidelines on, for example, anti-corruption and human rights. It's together and in close collaborations we can make a real difference.

What has gone well in 2020?

We are very inspired about our reduction of carbon dioxide emissions per wing by seven percent during 2020. In addition, we took several steps during the year towards being more visible and clearer with our sustainability ambitions. We have updated our sustainability compass so that it is synchronized with the development that is taking place around us and has included the latest ambitions within ESG (Environment, Social, Governance), the EU-Taxonomy, Green deal, etc. Of course, it was particularly important also that we launched a long-term climate ambition.

Why did Inwido choose to launch a climate ambition?

It's simply a must. How else are we to be credible if we only think here and now? We must have greater ambitions and we need a plan for how we will manage it. Otherwise it's just empty words. We do this for ourselves but also for future generations, our children and their children.

Inwido AB (publ)

Annual and Sustainability Report 2020

SUSTAINABILITY

Inwido's climate ambition
2030/2050

We will reduce
our carbon dioxide
emissions by
50 percent
by 2030 and be
carbon neutral
2050

We give more than we take
Because sustainable companies
create sustainable value

Code of conduct and ethical guidelines

In everyday life, the Group's sustainability work is governed by two basic policies: Code of conduct for employees and business partners as well as policy for health, safety and working environment, as well as through ongoing management and follow-up via, for example, the business units' boards. The policies meet the requirements set out in a number of important international and accepted principles, including the UN Declarations of Human Rights, the UN Global Goals, the UN Global Compact and its 10 principles. In addition, we also have a well-established whistleblower function.

Inwido's sustainability compass

With the help of responsibly produced and energy efficient products, people can create a sustainable lifestyle, at home and at work. We follow three strategic guidelines according to our sustainability compass:

1. Be an environmental friend

Why?
We need natural resources to do responsible business

How?
- We provide products that drive energy efficiency and savings
- We decrease climate and environmental impact from our operations and suppliers
- We use wood from sustainable forestry
- We reuse, recycle and choose sustainable materials while reducing waste

2. Be a good place to work

Why?
Empowered colleagues make a difference

How?
- We develop our employees and make them feel involved and valued
- We invest in health and safety
- We strive for equal opportunities
- We actively work to improve employee satisfaction

3. Be a responsible business

Why?
Aligning with society creates more opportunities

How?
- We have zero tolerance regarding corruption and unethical business behavior
- We demand responsible behavior from all suppliers and partners
- We comply with strict codes of conduct
- We support our local communities

Inwido AB (publ)
Annual and Sustainability Report 2020

SUSTAINABILITY

A spectrum of sustainability investments

Inwido continuously increases its commitment to sustainability and regularly reports to relevant initiatives and protocols in order to be transparent and traceable, to make it possible to follow and evaluate our efforts in sustainability issues. These are reported below.

Global Compact

Since 2019, Inwido has reported to the UN's Global Compact, meaning that Inwido undertakes to work actively on sustainability issues and to report on this work to the UN. The work is based on the Global Compact's 10 basic principles, which is based on internationally accepted conventions on human rights, labor rights, the environment and anticorruption.

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.

Principle 2: Make sure that they are not complicit in human right abuses.

Labor law

Principle 3: Business should uphold the freedom of association and the effective recognition of the right to collective bargaining.

Principle 4: The elimination of all forms of forced and compulsory labor.

Principle 5: The effective abolition of child labor.

Principle 6: The elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: Business should support a precautionary approach to environmental challenges.

Principle 8: Undertake initiatives to promote greater environmental responsibility.

Principle 9: Encourage the development and diffusion of environmentally friendly technologies.

Anti-corruption

Principle 10: Business should work against corruption in all its forms, including extortion and bribery.

Carbon Disclosure Project

All Inwido business units report data regularly in accordance with Inwido's sustainability KPIs. A large proportion of these KPIs are used in the annual reporting to the CDP, including Inwido's greenhouse gas or carbon dioxide emissions. The CDP reporting has become Inwido's principal channel for reporting and describing its climate strategy, as well as for gathering its reporting and follow-up of emissions, etc. Inwido is at Management level in CDP's ranking, which is the second highest level.

Sustainalytics och MSCI ESG Rating

In 2020, Inwido was listed on Sustainalytics' ESG ranking for the first time. The ranking forms the basis for international fund managers' investments in sustainable companies and rates them according to risks for environmental, social and corporate governance issues. In 2020 Inwido received 24.2 in the ESG Risk Rating, which is classified as an average rating. In the international ranking MSCI ESG Rating, Inwido was raised to AA, which is the second highest level on a seven-point scale.

The UN's 17 global goals

Inwido and its business units work to promote the UN's 17 goals for sustainable development. Inwido focuses, to varying degrees, on the following seven goals. Goal 3, Good health and well-being, Goal 5, Gender equality, Goal 7, Affordable and clean energy, Goal 8, Decent work and economic growth, Goal 11, Sustainable cities and communities, Goal 12, Responsible consumption and production, and Goal 13, Climate action.

EU-Taxonomy

According to the EU taxonomy, buildings in the EU are the single largest energy-consuming sector, accounting for about 40 percent of energy consumption and 36 percent of carbon dioxide emissions. Replacing energy-inefficient windows and doors with energy-efficient ones is therefore considered an important part of achieving climate goals in Europe. Taxonomy establishes criteria for determining whether an economic activity can be classified as environmentally sustainable. Reporting in relation to Taxonomy will be required by both investors (end of 2021) and companies (in 2022). Inwido's products fall into construction and energy efficiency and already today, the taxonomy has set specific energy requirements for windows and doors. For example, windows must pass a U-value of 0.7 and doors 1.2.

Group-wide sustainability meetings

In 2020, Inwido arranged four Group-wide sustainability meetings in which senior executives from the business units participated. During these meetings, the teams go through the sustainability work and reporting is followed up. Knowledge sharing takes place between both large and small business units, which leads to collaborations across company borders. In addition to reporting, meetings are thematized in, for example, energy, production, work environment and community involvement, etc. During the annual Management Meeting, the Group's sustainability award was presented to the business unit having implemented the most significant sustainability initiatives. In 2020, the sustainability award was presented to Outline for their many years of investment in the Outline Plus department, which trains, for example, those on long-term sick leave and helps them gradually return to work. In addition, during the autumn, Outline's leadership and trust index was raised to as much as 83 percent, which testifies to successful investments in a sustainable workplace.

Inwido AB (publ)

Annual and Sustainability Report 2020

SUSTAINABILITY

"We must have a long-term perspective"

Jonas Hernborg, MD Elitfönster

What does "sustainability" mean to you?

To care about our world and our society so that we can leave behind something good for our children and their children. Whether it is about the climate or sustainable business, we must have a long-term perspective.

In your work - how do you contribute to a more sustainable society?

With investments in good workplaces, collaboration with schools and involvement in our local community. We influence business partners and suppliers by setting requirements and having common goals. Not least, we try to influence politicians and decision-makers in matters of the environment and sustainable construction where we also feel that we can and should contribute.

Why did Elitfönster choose to support Byggföretagen's climate initiative roadmap 2045?

Their clear goal of net zero emissions of greenhouse gases by 2045 is completely in line with our own goals. The more people who work together towards a common goal, the greater the power and chance we have to succeed. It is also a way to collaborate with our customers in a positive and constructive way.

Will your efforts in sustainability increase or decrease over the next five years ... and why?

Of course they will increase! It is a must if we are to succeed in governing our society and our world. As a company, our goal is to give more than we take, and we want to influence others to do the same.

Inwido AB (publ)

Annual and Sustainability Report 2020

SUSTAINABILITY

"Most important is to reduce our environmental impact"

Antti Vuonokari, Senior Vice President Inwido Northeast and MD Pihla Group

What does the word "sustainability" mean to you?

Sustainability means a responsibility for my choices and how our businesses strive to create a better future, for my children and the next generation.

In your work - how do you contribute to a more sustainable society?

We must influence our local community in a positive way, create a good workplace with a high ethical standard and most importantly reduce our environmental impact. In practice, this means less energy consumption, reduced material use and new, energy-efficient products to the market. I am happy to work in an industry that produces energy efficient products. Replacing old windows and doors with our new energy-efficient products means a significant environmental improvement.

Will your efforts for sustainability increase or decrease over the next five years?

Increase! Because I want to do it and because there is an expectation and demand for it. Especially the young generation asks what the purpose of our business is and how we positively contribute to and take responsibility for sustainability.

Inwido AB (publ)

Annual and Sustainability Report 2020

SUSTAINABILITY

The result of our sustainability work

Inwido has established several key KPIs to evaluate the progress of our sustainability efforts. The development of these indicators clearly shows what progress we are making and what we should prioritize in our continued sustainability ambitions.

Targets

Comments

Outcome 2020

ENERGY CONSUMPTION

Inwido aims at reducing energy consumption from its own operations with on average five percent annually.

Energy consumption in 2020 decreased in comparable figures from the previous year. This is mainly explained by higher production efficiency. We are constantly working to find new solutions to further reduce our energy consumption. The figures for 2018 and 2019 have been adjusted to be fully comparable with the 2020 outcome.

Kwh energy per window wing

CARBON DIOXIDE EMISSIONS (scope 1 and 2)

Inwido's objective is to reduce carbon dioxide emissions from its proprietary operations with on average 5 percent annually.

Carbon dioxide emissions decreased in 2020 compared with the previous year. Increased production efficiency and a higher proportion of renewable energy explains the decrease. We are constantly working to find new solutions for further reducing our carbon dioxide consumption and to find renewable sources of energy. The figures for 2018 and 2019 have been adjusted to be fully comparable with the outcome of 2020.

CO₂ per window wing

WOOD FROM SUSTAINABLE FORESTRY

Inwido's objective is to use 100 percent wood from certified suppliers who ensure traceability to legal and sustainable sources.

In 2020, Inwido increased the proportion of wood from sustainable forestry that is used in production. We are continuing our long-term efforts to ensure that our suppliers live up to our sustainability requirements.

Proportion of wood from certified sustainable forestry

ACCIDENTS WITH LOST WORKING DAYS

Inwido's objective is for zero accidents to occur in its operations.

The number of accidents resulting in lost working days decreased during the year. Mapping of accident risks together with implementation of activities and long-term prevention to avoid accidents have contributed very positively during the year. No accidents that generated deaths have occurred in 2020, nor in the historical figures.

Accidents, lost working days (per million working hours)

Inwido AB (publ)

Annual and Sustainability Report 2020

SUSTAINABILITY

Targets

Comments

Outcome 2020

ABSENCE DUE TO SICKNESS, SHORT AND LONG-TERM

Inwido's objective is for total short-term sick-leave to be below 2 percent, and for total sick-leave (both short-term and long-term) to be below 3 percent.

As a result of Covid-19, the previous positive trend in sick leave was broken in 2020. In relation to the pandemic, the Group has together with its business units taken the necessary measures and complied with local restrictions. In parallel, we continue our active work to reduce sick leave.

EQUALITY IN MANAGEMENT

Inwido's objective is to maintain an even gender distribution in management Groups and on the Board of Directors.

Inwido's long-term ambition is to achieve an even distribution between women and men on the Board of Directors and in management. In 2020, the proportion of women elected by the AGM increased. The proportion of women in Inwido's management team is unchanged between 2019 and 2020.

RURAL EMPLOYMENT

Inwido seeks to nurture rural communities and aims for at least 20 percent of the number of employees to be employed in business units operating in rural locations.

The proportion of rural employees increased from 25 to almost 27 percent in 2020. It is mainly driven by a change in the workforce in some of our business units.

CODE OF CONDUCT FOR SUPPLIERS

Inwido's objective is for 100 percent of suppliers to comply with Inwido's Code of Conduct.

The proportion of suppliers of direct materials having signed Inwido's Code of Conduct rose from 95.7 to 96.5 percent in 2020. The increase is due to rigorous efforts regarding suppliers' compliance with Inwido's requirements.

Inwido AB (publ)

Annual and Sustainability Report 2020

SUSTAINABILITY

Leadership, employeeship and the right skills

All of Inwido’s business units have a common need. Their need for the right skills. As a Group, Inwido contributes with structured processes for developing our employees and identifying talent.

Machines are good and well, but employees and managers determine whether or not Inwido’s business units will succeed. To ensure that all of the business units work with competence in a structured manner, Inwido contributes processes and insights on employee matters, from recruitment and introduction to development and exit processes. The ambition is for the Inwido business units to build robust employer brands with strong corporate cultures and motivated employees.

Leadership and employeeship in continuous development

For Inwido it is of great importance to develop our leaders and employees and to identify talent. With the best leaders for the operations, both employees and our business units can develop. Since 2012, we have conducted regular management audits, in which we look at competence development, employee development and future management needs from a Group perspective. We continuously map and analyze the Group’s future competence needs and conduct leadership training, both locally and at the Group level. All of this is done so that business unit managers can, in turn, develop their employees in the direction most needed. In 2020, a program was developed for the development of Managing Directors within the Group. With 28 business units in the Group, attracting and developing talented potential Managing Directors with suitable capabilities in, for example, collaboration, business and industry knowledge, leadership, finance, sales and marketing and self-perception is crucial, as is having a clear plan for succession among the Managing Directors.

In 2020, Inwido also conducted training and e-learning courses on the Codes of conduct, security, GDPR, etc. Inwido also has an independent whistleblower function, to which incidents can be reported anonymously.

Employee surveys – a force for development

Within the Inwido Group, employee surveys are a measure of the “mood” of the business units and employees. For example, issues of safety and health are particularly prioritized, and it is gratifying that neither bullying nor discrimination cases have been reported to the Group. The employee survey is carried out annually throughout the Group with the overall objective of reaching a leadership and trust index of 75 percent. The November 2020 survey showed a strong positive trend on many levels, including an increase in the leadership and trust index to 74 percent, from 71 percent in the previous survey. 79 percent of employees think it’s a great place to work, 76 percent are very proud of their work, 77 percent like their colleagues very much and 73 percent have great confidence in management. The proportion of employees responding to the survey also increased, amounting to 87 percent. As the graph shows, the trend has moved steadily in a positive direction in the recent ten measurements, and our work to improve continues.

LEADERSHIP AND CONFIDENCE INDEX

74%	average trust index
73%	have great confidence in management
76%	are very proud of their work
77%	like their colleagues very much
79%	think this is a great place to work

Inwido AB (publ) | Annual and Sustainability Report 2020

STANDARDITY

HOW OUR HR PROCESSES ARE GOVERNED

Surveys

Inwido conducts surveys of employees' views on credibility, respect, fairness, pride and camaraderie, from both an organizational and leadership perspective.

Assessments

Every two years, a review is performed of the business units' MDs and management teams from the competence perspective, this is known as a management audit, and is carried out in conjunction with succession and talent planning. Similar processes are carried out locally on an ongoing basis.

Training

Through a Group-wide MD and management development program and an introduction program for the most senior executives, we ensure consensus on development and leadership within the business units.

Ongoing training is also conducted locally for managers and employees at various levels. In addition, employees receive regular training via e-learning on IT security, GDPR and the Code of Conduct.

Checks

The Inwido Group ascertains and compiles statistics on accidents, incidents and sick leave in all business units. The statistics are followed-up quarterly. We also measure the proportion of employees who have attended development talks at least once annually.

Guidance

Everyone in the Group is to acquaint themselves with, and adhere to, Inwido's Code of Conduct for employees. Additional guidelines that we follow internally can be found in our policies for Health, Safety, Equality, Development talk and Work-Environment. Introductory programs are conducted locally and at Group level for employees and executives.

INNOVATIVE COLLABORATIONS

Innovative collaborations for the windows and doors of the future

Each year, Inwido’s business units purchase goods and services for approximately SEK 3.5 billion, of which SEK 2 billion involves procurement from some 700 suppliers of materials essential in the production of windows and doors. The largest categories are wood, aluminum, glass, fittings and coatings, which are all sourced from various suppliers, predominantly within Europe. By evaluating and improving both the Group-wide and local purchasing work, “best practice” is ensured. Read about three of Inwido’s important and long-standing suppliers.

Sustainable and easy care is a winning concept when it comes to windows that withstand the forces of the weather. After several decades of collaboration with Hydro, Inwido’s business units are at the forefront when it comes to the marriage between wood and aluminum. And now pioneering steps are being taken towards recycled aluminum.

Ever since aluminum-clad wooden windows were launched in the 80’s, the window type has gained in popularity. Today’s collaboration between Hydro and Inwido business units started already in the days of Myresjöfönster. And the cooperation has always been close.

We have collaborated since the 80s and today we supply Inwido’s companies in Sweden, Norway and Poland with aluminum profiles. Together with product specialists, we develop leading products, efficient logistics flows and pioneering advances in durability and recycled aluminum together, says Henrik Stark, Sales Director Hydro Extruded Solutions.

In addition to being specialists in the products, Hydro also invests in offering leading flexibility in logistics and delivery. A wide spectrum of specifications must always be available so that Inwido’s factories can produce the right windows at the right time. Short lead times and flexibility are key words.

“Aluminum and wood create durable windows”

Inwido AB (publ)

Annual and Sustainability Report 2020

INNOVATIVE COLLABORATIONS

Wood is the building material of the future"

For twenty years Stora Enso has been one of Inwido's largest suppliers of wood. A material which is the backbone of energy-efficient windows and doors. With a strong Nordic tradition in wooden windows and energy efficiency, Inwido's business units act in symbiosis with Stora Enso to jointly strengthen the future of wood in constructions.

Wood is a fantastic building material that has gained momentum with increased sustainability requirements. Today it is possible to create constructions and windows that were never thought possible, with renewable material. The

fact that wood is flexible, strong, beautiful and durable makes it versatile. Combining wood with aluminum and creating new composite materials based on wood fiber secures the place of wood in the future, says Pekka Södervall, Head of Business Line Industrial Components at Stora Enso.

Stora Enso supplies Inwido's Swedish, Finnish, Danish and Norwegian operations with environmentally certified, 100-year-old pine. Depending on local market requirements, deliveries are adapted to different production conditions. As different as windows and doors are in different markets, deliveries are just as tailored. Regardless, products are based on 100 percent environmentally certified wood from sustainable forestry, certified according to PEFC or FSC.

Since 1979, Pilkington has been a central supplier of float glasses to the Inwido Group's insulating glass factory in Lenhovda. And despite the fact that you mainly think of the glass itself when you think of windows, it is in the coating that the true innovation rests.

Through intensive research and development, for example in energy coatings, we create smart glass with fantastic energy performance, which benefits customers, says Anett Karlsson, Technical Advisory Service Manager at Pilkington in Halmstad.

Together with product specialists from Inwido's business units, innovations such as self-cleaning, condensation-free and antibacterial glass have been developed, in addition to ground-breaking progress in higher energy efficiency. Today, the u-value of a window can almost be compared to that of a wall, that's how far the development has reached. So, glass is, no doubt, a material for the future, Anett says.

Glass is fantastic. While it is perhaps the most invisible material in a house, it is the glass and windows that make the biggest impression. Now we look forward to 40 new exciting years together to jointly create a beautiful and more energy efficient world, concludes Anett.

Glass is a fantastic material"

Inwido AB (publ)

Annual and Sustainability Report 2020

MARKET AND TRENDS

Well-positioned for future growth

Inwido's business units operate in a market that is undergoing change. Digitalization, new competitors and new sales channels are continuously redrawing the playing field. At the same time, there is a strong underlying demand for windows and doors.

The market for windows and doors has always been a complex one. However, if it was previously a matter of understanding consumers' local preferences in terms of materials and window designs, today it is equally a matter of understanding how digitalization brings new consumer behaviors, new products and services, new competitors and new channels to the market. Inwido's business units make their decisions based largely on their own local markets. Those markets can, in turn, differ considerably. There are a number of factors that can make one region entirely unlike its neighbor. Everything, from local construction techniques to lifestyle, government regulations, seasonal variations or simply consumers' preferences and tastes, determine development. At the same time, there are a number of shared market trends that will decide how Inwido, as a Group, acts moving forward. Some of the most important trends are presented below.

Four trends affecting developments in the market

Renovation drives the market forward

Although the new construction sector is important, it is not dominant within Inwido. Individual consumers' needs for home renovations are what steer the trend to a large extent. The most common customers are owners of small single-family homes, seeking to change two or three windows and opting to do the work themselves or to engage a craftsman. There is also a large underlying need for renovation across Europe that will drive the market forward regardless of how the new construction market develops.

External sustainability requirements are increasing

A growing number of countries demand that citizens and companies reduce their climate footprint. This increases demand for products that help reduce energy consumption, enabling a more climate-smart life for all. Inwido develops products and services that save energy, thereby helping consumers reduce their impact on the climate.

Urbanization opens new opportunities

Around the world, people are increasingly choosing to move to cities. This increases demand for smaller homes, while, for many, good product design has become increasingly important. This in turn drives demand for larger windows, for example, that bring in more daylight, as well as for windows and doors that enhance the sense of safety and security in urban environments.

Digitalization changes behaviors

Digitalization entail an increasing number of everyday objects being connected to the Internet. New technical solutions for safety, lighting, ventilation and comfort, for example, will increasingly be integrated into people's homes. At the same time, people's changed behaviors and development towards the connected home allow new players to enter the market. This increases competition, extends the product range and changes buying and selling patterns among customers.

Inwido AB (publ)

Annual and Sustainability Report 2020

MARKET AND TRENDS

How the Nordic window market is expected to grow

To understand what is expected to drive growth and value development in the Nordic market over the long term, Inwido produces regular analysis and trend reports. The latest Nordic Markets Study was compiled in 2020, quantifying seven main trends affecting demand for windows and doors. The Nordic window market is expected to grow by 15 to 25 percent between 2020 and 2030.

The report, prepared by industry consultants, describes how long-term trends can affect window markets in Sweden, Norway, Denmark and Finland.

The following seven trends were analyzed and quantified

1) Population and household growth
2) Urbanization
3) Ageing population and labor market changes
4) Climate change and sustainability
5) Subsidies
6) Safety/security
7) Technology

Population growth, energy efficiency, safety and environmental aspects are driving growth

Although none of the trends will have a significant impact on the market in isolation, together they are expected to contribute to stable growth, with an estimated total positive impact of 15-25 percent between 2020 and 2030, (1.4-2.3 percent annually). Note that this estimated growth is driven by these seven trends only. Other factors affecting the window market, such as GDP changes, changes in private consumption, and so forth, have not been considered.

What the European market looks like

The European window and door market is extremely fragmented, comprising a large number of small, local players and a small number of larger players. Windows are the dominant product. In the Nordic region, solutions combining wood and aluminum dominate with 90-95 percent of the market. The market for exterior doors is estimated at about one-fifth of the total market. Accessories are not reported separately in the overview below.

WESTERN EUROPE

Market value: Approximately EUR 18 billion
Materials distribution: PVC 47%, wood and wood/aluminum 53%
Nordic Region only: Wood and wood/aluminum 90%
Customer segments: Renovation 60%, new construction 40%

EASTERN EUROPE

Market value: Approximately EUR 4.15 billion
Materials distribution: PVC 75%, wood and wood/aluminum 25%
Customer segments: Renovation 54%, new construction 46%

Sources: Estimates by Interconnection Consulting and Inwido

Some conclusions from the report

Demographic changes are expected to have a positive impact on the markets, mainly due to population growth, and primarily in Sweden, Norway and Denmark. Overall, the Nordic population is expected to increase by 5.1 percent or 1.4 million by 2030, driving housing needs. Based on population growth alone, some 630,000 additional new homes would need to be built over the period. To some extent, the population increase will offset the somewhat negative volume effects on the window market from urbanization and ageing. However, urbanization is expected to have a positive effect on the value trend, partly due to increased demands for sound insulation in cities.
Climate change and sustainability, with more extreme weather and more rain, the need for increased durability is expected to contribute positively to value growth in the market, including an increasing proportion of windows in wood/aluminum.
Safety, security and technology content is also expected to have a positive impact on the market, bringing a larger proportion of high value products.

Inwido AB (publ)
Annual and Sustainability Report 2020

M&A

Our acquisition strategy, a cornerstone for continued growth

Growing by acquiring companies and then developing them, is part of Inwido's DNA. Accordingly, we are always seeking out value-generating acquisitions with continued potential to develop their profits.

Inwido's acquisition philosophy is associated with its ambition of providing a strong home for Europe's leading companies in doors and windows. When assessing suitable acquisition candidates, we therefore begin with eight key criteria linked to the Group's overall operational targets.

Acquisition candidates shall: Sell windows and/or doors, generate stable profits, hold strong positions in their markets, operate in the renovation segment, have strong management, offer synergies, be present in the Nordics, the UK, Poland and/or the DACH countries and offer promising potential for development.

In the initial analysis, these eight criteria are not exclusive – meaning that a potential acquisition need not meet all eight criteria – although they do help prioritize potential acquisitions based on Inwido's proven capacity for making value generating acquisitions, as well as on the Group's established strategic priorities. In addition to the eight key criteria for acquisitions, the following success factors also contribute:

Early focus on value generating savings with Inwido's purchasing synergies
Strong and robust integration and business development plan, including management continuity
Implementation of business improvements through the application of Inwido's business model
Strong cash flow generation to "amortize" the acquisition and provide scope for new acquisitions

A thorough acquisition process

Inwido acquires good companies to make them better. In the actual acquisition process, we examine both the companies and their market conditions. We take the time and effort to build long term relationships with acquisition candidates and wait for the right timing. Because of this the acquisition processes can take a long time, sometimes several years. Succeeding in profitable growth through acquisitions requires applying a meticulous acquisition process from start to finish – from initial analysis to due diligence, negotiation, integration and follow-up. This is how we assure the quality of the acquisitions that are made and how we ensure that we have the skills in place needed to develop the acquired company. In addition to the basic requirement of good financial performance, it is very important that the acquired companies have, or are assigned, management teams that are ambitious in continuing to operate the companies and contributing to profitable growth in Inwido's decentralized business model. We devote a lot of time to getting to know the management of the company and other key employees early in the acquisition process, to develop a mutual understanding of culture and values.

50+ acquisitions over 20 years

Based on Inwido's M&A strategy, with eight focus areas, a structured process is run to evaluate, rank and then interact with a large number of potential acquisitions in the geographies Inwido focuses on in Europe.

Inwido AB (publ)

Annual and Sustainability Report 2020

M&A

Why Lasse sold his company to Inwido

200-year-old Siberian larch wood paired with craftsmanship beyond the ordinary. This is the core of Bøjsø døre og vinduer A/S. Since 1972, they have had the honor to supply windows to, among other places, the royal castle Amalienborg in Copenhagen. In 2017, the founding family decided to sell the company to Inwido. To secure its future.

After my father's start of the company and the transfer to me as owner and MD in 2010, the sale felt like a "perfect match", says Lasse Sørensen, MD Bøjsø døre og vinduer A/S.

At Bøjsø's factory in Vorbasse in Jutland, windows and doors are manufactured for unique needs. They do what no one else does and for a niche market. When the company was sold to Inwido, it was a family business in the second generation, in which the founder Bøje's son Lasse was prepared to take over the business in 2010. With a lifelong relationship with the company, he has experienced ups and downs.

When the financial crisis hit in 2008, we had a challenging period and had to make tough decisions to secure the business. We made it but it was tough. The idea of finding a new, strong owner was born and my conviction was to give the company new and better chances to develop further, with a committed owner behind it, says Lasse.

Continued growth and development

During the four years that Inwido has owned the company, the business has developed in sales, production and leadership. Today, Lasse receives support and development in the daily management. In addition, he gets access to the Inwido Group's combined purchasing power, leadership and knowledge sharing.

Selling my family's "child" was one of my life's biggest decisions, but my expectations have been met. Inwido has been honest in its strategy to decentralize the business and let us run and develop the company, while standing by with resources and support. It has been an exciting journey and I look forward to continuing to develop our operations, concludes Lasse Sørensen.

> "After my father started the company and the transfer to me as owner and MD in 2010, the sale was a perfect match"

Bøjsø doors and windows have replaced windows at Amalienborg Castle in Copenhagen.

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL TARGETS

Our targets and performance

Inwido's overall objective is to generate favorable returns and long-term value development for shareholders by growing profitably. Four financial targets indicate the direction and set limits.

INWIDO'S FINANCIAL TARGETS

Targets	Comments	Outcome 2020
GROWTH
Inwido's objective is to exceed growth in our current markets through organic growth, as well as selective acquisitions and initiatives in Europe.	In 2020, net sales increased by 1 percent, while organic growth amounted to 2 percent. Our assessment is that Inwido had organic growth in the Nordic region that was slightly better than the market as a whole.	2%
PROFITABILITY
Inwido's profitability target is an operating EBITA margin of 12 percent. Inwido may not achieve the profitability target during years when the market trend is weaker. In such cases, we will undertake measures to further enhance profitability, which we have been successful with in the past.	The operating EBITA margin for the year increased to 10.9 percent (9.7). The higher margin is mainly due to an effect of higher volumes, a more favorable mix and improved efficiency and implemented cost savings.	10.9%
CAPITAL STRUCTURE
Inwido's net debt in relation to operating EBITDA shall, excluding temporary deviations, not exceed a multiple of 2.5.	Net debt in relation to operating EBITDA decreased to a multiple of 0.9 (2.2) excluding IFRS 16. The decreased net debt in relation to operating EBITDA compared with the preceding year is explained by an improved operating profit in combination with a successful effort to reduce working capital. Furthermore, the AGM's decision to, in line with the Board's proposal, not pay out a dividend due to the covid-19 pandemic contributed to a reduced net debt.	0.9x
DIVIDEND
Inwido aims to pay its shareholders an annual dividend that corresponds to approximately 50 percent of net profit. However, Inwido's financial status in relation to the target, cash flow and future prospects shall be taken into consideration.	In line with the dividend policy, the Board proposes that the dividend for the financial year 2020 be set at SEK 4.50 per share (0), which corresponds to 52 percent of the year's reported profit after tax.	4.50 SEK

Inwido AB (publ)

Annual and Sustainability Report 2020

WHY INVEST IN INWIDO?

This is how shareholder value is created

Since the IPO in September 2014, Inwido has delivered an annual share dividend (apart from 2020 due to covid-19), growth and step by step consolidated its position as Europe’s leading window group. With Inwido’s business model, the Group strives to maintain and strengthen the incentives to invest in Inwido.

All of this serves to continue building shareholder value in the long-term and to develop Europe’s leading window group.

Inwido will:

Continue to create value through purchasing and technology
Continue to stimulate decentralized business units with a strong business focus
Continue to develop profit- and goal-oriented leadership
Continue to improve the capital efficiency to provide scope for investment
Continue to invest in strong companies, helping them grow even stronger

38 Inwido AB (publ) | Annual and Sustainability Report 2020

WHY INVEST IN INWIDOT

Three reasons to invest in Inwido

1

A strong home for local market leaders

In our industry, consumer insight and customer focus at the local level are key competitive advantages. Based on this knowledge, Inwido has developed into a strong home for local market leaders. We have a solid financial history with stable cash flows and profitability, even in challenging economic conditions, which creates long-term benefits for both investors and companies, as well as societies. Inwido enables long-term, sustainable growth and profitability through economies of scale in purchasing, financing, leadership, technology and sustainability.

2

Positioned for future growth

There is a continued high demand for products and services that improve people's lives indoors with customized windows, doors and associated services. With deep roots in the industry, we provide homes and workplaces with new, energy-efficient solutions, which in turn make it possible for people to live more sustainably. Our business units are well positioned to act on external trends and new growth opportunities in areas such as e-commerce, sustainability and technology.

3

Long-term values for shareholders

Our guiding principle is to create shareholder value through sustainable and profitable growth, organically and through acquisitions. By acquiring and developing the best window and door businesses, we will continuously strengthen our leading position in Europe while improving people's lives indoors, developing employees and generating value for shareholders.

THE INWIDO SHARE

The Inwido share

Sales and trading

The share's ticker symbol is INWI and the ISIN code is SE0006220018. During 2020, a total of approximately 62 million shares were traded at a value of approximately SEK 4,811 million on the Nasdaq Stockholm exchange. An average of 246,023 shares was traded per trading day, which corresponds to a value of slightly more than SEK 19 million. During the period, an average of 989 trades were carried out per trading day.

Share capital

At the end of 2020, Inwido's share capital amounted to SEK 231,870,112, distributed between 57,967,528 shares with a par value of SEK 4 per share. All shares carry equal voting rights and an equal share in the Company's profit and capital.

Ownership structure

At year-end, Inwido had 10,334 shareholders. The largest single shareholder was BNY Mellon, whose total share ownership amounted to 13 percent of the capital and votes in the company. The ten largest shareholders accounted for about 56 percent of the capital and votes. Foreign shareholders' ownership totalled approximately 63 percent.

Dividend

Inwido's long-term aim is to pay its shareholders an annual dividend that corresponds to approximately 50 percent of net profit. However, Inwido's financial status in relation to the target, cash flow and future prospects shall be taken into consideration. In line with the dividend policy and taking the capital structure into account, the Board of Directors proposes that the dividend for the 2020 financial year be set at SEK 4.50 per share (0), corresponding to 52 percent of profit for the year after tax. The proposal will mean a total dividend payment of approximately SEK 261 million.

Share price performance

The closing rate for Inwido's share on 31 December 2020 was SEK 120.50, giving a market capitalization of approximately SEK 6,985 million. The average share price during the period was SEK 80.10. Over 2020, the share price rose by 67 percent. Over the same period, the OMX Stockholm PI rose by 13 percent.

Distribution of shareholdings between private individuals and legal entities

Shareholders as of 31 December 2020	Number of shareholders	Shareholders (%)	Capital	Capital (%)	Votes	Votes (%)
Physical persons	9,657	93.45%	4,437,181	7.65%	4,437,181	7.65%
of whom, domiciled in Sweden	9,587	92.77%	4,370,053	7.54%	4,370,053	7.54%
Legal entities	677	6.55%	53,530,347	92.35%	53,530,347	92.35%
of whom, domiciled in Sweden	304	2.94%	17,045,757	29.41%	17,045,757	29.41%
Total	10,334	100.00%	57,967,528	100.00%	57,967,528	100.00%
of whom, domiciled in Sweden	9,891	95.71%	21,415,810	36.94%	21,415,810	36.94%

Owner distribution Swedish/foreign owners

Shareholders as of 31 December 2020	Number of shareholders	Shareholders (%)	Capital	Capital (%)	Votes	Votes (%)
Resident in Sweden	9,891	95.71%	21,415,810	36.94%	21,415,810	36.94%
Rest of the Nordic region	222	2.15%	2,952,151	5.09%	2,952,151	5.09%
Other parts of Europe (excl. Sweden and Nordic Region)	164	1.59%	20,785,669	35.86%	20,785,669	35.86%
USA	35	0.34%	12,683,751	21.88%	12,683,751	21.88%
Rest of world	22	0.21%	130,147	0.22%	130,147	0.22%
Total	10,334	100.00%	57,967,528	100.00%	57,967,528	100.00%

Source: Modular Finance

Inwido AB (publ) | Annual and Sustainability Report 2020

THE INWIDO SHARE

Facts about the Inwido share

Name:	Inwido AB (publ)	Beta (3-year period):	1.22
Exchange:	Nasdaq Stockholm	Currency:	SEK
Marketplace:	XSTO	Listing:	26 September 2014
Segment:	Mid Cap	Price on 31 December 2020:	120.50
ISIN code:	SE0006220018	Highest for the year, 2020 (29 December):	122.10
Symbol:	INWI	Lowest for the year, 2020 (19 March):	45.50

Source: Nasdaq, Infront Analytics

Data per share

SEK (unless otherwise stated)	2020	2019	2018	2017	2016
Earnings per share, before dilution	8.69	7.48	7.47	5.02	7.38
Earnings per share, after dilution	8.69	7.48	7.45	5.01	7.37
Dividend per share 1)	4.50	-	2.50	3.50	3.50
Share price on 31 December	120.50	72.10	55.60	83.75	94.50
Dividend yield, % 2)	3.7%	-	4.5%	4.2%	3.7%
Shareholders' equity per share before dilution	71.68	65.13	60.31	52.92	50.44
Shareholders' equity per share after dilution	71.68	65.13	60.20	52.82	50.35

1) Proposed dividend for 2021
2) Dividend/share price at year-end
Source: Inwido and Nasdaq Stockholm

Largest shareholders

Name	Number of shares	Capital (%)	Votes (%)
BNY Mellon SA/NV (Former BNY), WBIMY	7,542,752	13.01%	13.01%
State street bank and trust co, W9	5,517,799	9.52%	9.52%
Fjärde AP-Fonden	5,167,287	8.91%	8.91%
Swedbank Robur Fonder	4,381,287	7.56%	7.56%
BNY Mellon NA (former Mellon), W9	2,699,303	4.66%	4.66%
JP Morgan Chase Bank N.a.	1,850,000	3.19%	3.19%
The Northern Trust Company	1,622,562	2.80%	2.80%
Verdipapirfondet Holberg Norden	1,325,000	2.29%	2.29%
JP Morgan Chase Bank N.a.	1,269,928	2.19%	2.19%
JP Morgan Bank Luxembourg S.a.	1,241,259	2.14%	2.14%
Subtotal	32,617,177	56.27%	56.27%
Total, other shareholders	25,350,351	43.73%	43.73%
Total	57,967,528	100.00%	100.00%

Ownership structure, size categories

Holdings as of 31 December 2020	Number of shareholders	Number of shares	Capital (%)	Votes (%)
1 – 500	8,395	1,014,755	1.75%	1.75%
501 – 1,000	889	734,210	1.27%	1.27%
1,001 – 5,000	723	1,676,967	2.89%	2.89%
5,001 – 10,000	113	878,485	1.52%	1.52%
10,001 – 15,000	35	431,952	0.75%	0.75%
15,001 – 20,000	26	477,000	0.82%	0.82%
20,001 –	143	52,754,159	91.01%	91.01%
Total	10,324	57,967,528	100.00%	100.00%

Inwido AB (publ)

Annual and Sustainability Report 2020

FIVE-YEAR SUMMARY

Five-year summary

SEK million (unless otherwise stated)	2016	2017	2018	2019	2020
Income measures
Net sales	5,672	6,371	6,667	6,631	6,681
Gross profit	1,587	1,646	1,712	1,694	1,736
EBITDA	791	723	781	870	939
Operating EBITDA	801	794	797	876	956
EBITA	664	535	635	621	712
Operating EBITA	673	649	657	646	729
Operating profit (EBIT)	656	521	618	601	695
Margin measures
Gross margin, %	28.0	25.8	25.7	25.5	26.0
EBITDA margin, %	13.9	11.3	11.7	13.1	14.1
Operating EBITDA margin, %	14.1	12.5	12.0	13.2	14.3
EBITA margin, %	11.7	8.4	9.5	9.4	10.7
Operating EBITA margin, %	11.9	10.2	9.9	9.7	10.9
Operating margin (EBIT), %	11.6	8.2	9.3	9.1	10.4
Capital structure
Net debt	1,667	1,669	2,141	2,075	1,096
Net debt (excl. IFRS 16)	1,667	1,669	2,141	1,711	740
Net debt/operating EBITDA, multiple	2.1	2.1	2.7	2.4	1.1
Net debt/operating EBITDA, multiple (excl. IFRS 16)	2.1	2.1	2.7	2.2	0.9
Net debt/equity ratio, multiple	0.6	0.5	0.6	0.5	0.3
Interest coverage ratio, multiple	10.6	8.3	9.2	8.9	9.6
Equity	3,013	3,167	3,501	3,776	4,155
Equity/assets ratio, %	48	48	49	51	52
Operating capital	4,680	4,836	5,642	5,850	5,251
Return measures
Return on equity, %	14.7	9.7	13.2	11.9	12.4
Return on operating capital, %	15.5	11.0	11.8	9.9	12.2
Employees
Average number of employees	3,741	4,361	4,455	4,356	4,345
Share data (number of shares, thousands)
Earnings per share, before dilution, SEK	7.38	5.02	7.47	7.48	8.64
Earnings per share, after dilution, SEK	7.37	5.01	7.45	7.48	8.64
Shareholders' equity per share before dilution, SEK	50.44	52.92	60.31	65.13	71.68
Shareholders' equity per share after dilution, SEK	50.35	52.82	60.20	65.13	71.68
Cash flow per share, before dilution, SEK	8.43	10.20	7.49	15.96	20.86
Cash flow per share, after dilution, SEK	8.42	10.19	7.47	15.96	20.86
Number of shares, before dilution	57,968	57,968	57,968	57,968	57,968
Number of shares after dilution	58,071	58,071	58,071	57,968	57,968
Average number of shares	57,968	57,968	57,968	57,968	57,968

Inwido AB (publ)

Annual and Sustainability Report 2020

FIVE-YEAR SUMMARY

Net sales and operating EBITA margin

Net debt/operating EBITDA

Gross margin

Earnings per share before dilution

Calculation of alternative key ratios not defined by IFRS

Income measures

Group, SEKm	2020	2019
Operating profit (EBIT)	695	601
Depreciation/amortization and impairment	245	268
Items affecting comparability, other items	16	7
Operating EBITDA	956	876
Gross profit	1,736	1,694
Items affecting comparability depreciation/amortization and other items	1	24
Operating gross profit	1,737	1,718
Operating profit (EBIT)	695	601
Depreciation/amortization of acquisition-related intangible assets	18	20
EBITA	712	621
Items affecting comparability depreciation/amortization and other items	16	25
Operating EBITA	729	646
Items affecting comparability	-16	-25
Amortization/depreciation	0	-18
Other items	-16	-7

Capital structure

Group, SEKm	2020	2019
Cash and equivalents	-1,133	-243
Other interest-bearing assets	-17	-18
Interest-bearing liabilities, non-current	2,135	2,212
Interest-bearing liabilities, current	111	123
Net debt	1,096	2,075
Total assets	8,017	7,471
Cash and equivalents	-1,133	-243
Other interest-bearing assets	-17	-18
Non-interest-bearing provisions and liabilities	-1,616	-1,360
Operating capital	5,251	5,850

Inwido AB (publ)

Annual and Sustainability Report 2020

MESSAGE FROM THE CHAIRMAN OF THE BOARD

Active corporate governance lay the foundation for continued value creation

As Chairman of the Board, I am pleased to note that 2020 was another successful year for Inwido. Both in terms of growth, profits and a rapidly declining debt. This despite the fact that no one was able to anticipate the challenges that this year would offer Europe's leading window group. Inwido has not only mastered these challenges but also managed to turn them to their advantage when the home and renovation trend gained extra strength during this covid year. With swift action, MDs of the decentralized organization handled the pandemic according to three principles: 1. Protect employees. 2. Help stop the spread. 3. Maintain the Group's operations. The way in which Group management, through the governance model and decentralized operations, managed to meet this challenge is nothing short of impressive.

Strong growth in e-trade bodies well

Among many areas of joy, I would like to focus on the fast-growing e-Commerce business unit. With strategic investments in the development of customer-oriented e-trade, not only did Inwido succeed in exceeding expectations but, even more impressively, deliver on this greatly increased customer interest. With full control and ownership of all steps of e-trade, from modern factories to sales and delivery, Inwido has a unique opportunity to continue to increase value creation in e-trade.

An important contribution to increased sustainability for people and the environment

With products that directly contribute to energy efficient homes and properties, Inwido is a prominent player in climate change. This is proven by the sharp increase in interest from investors and customers. During the year, a sustainability ambition was launched, which means that carbon dioxide emissions will be reduced by 50 percent by 2030 to be completely climate neutral by 2050. An important and ambitious commitment. The fact that all business units are deeply involved in the work and that senior executives have variable salary components linked to sustainability goals manifests the Group's commitment and credibility. However, Inwido's focus on sustainability also means social responsibility for employees and communities. I would like to take this opportunity to praise the Group's methodological work in developing its workplaces and creating the industry's best worksites. A focus that was manifested in the 2020 employee survey, which reached an all-time high in the Inwido Group's leadership and trust index.

Acquisition work is intensified

Growing through acquisitions is in Inwido's DNA and the management has a passion for buying good companies and making them better. A prerequisite for success in profitable acquisition growth is to work according to a careful acquisition process from start to finish; from initial analyzes to due diligence, negotiation, integration and follow-up. In this way, it is secured that the quality of the acquisitions are in place, and that Inwido have the capabilities in place required to develop the acquired company. With Inwido's experience of over 50 acquisitions and with a sharp decline in net debt in 2020, efforts are now being intensified in accordance with the acquisition strategy.

Good corporate governance creates value

Responsible corporate governance is a cornerstone in efforts to create trust among all the Group's stakeholders. In the Board's work, it is important to keep an eye on the long-term development and to monitor a good balance between the Group's business opportunities and management of risks that our increasingly complex and dynamic world presents. In close cooperation with the management, the board ensures that the company is managed in a focused, efficient, ethical and sustainable manner, today and in the future. Inwido has a well-balanced board with deep competence, experience and personal qualities to meet all the business's challenges and opportunities. Since I have declined re-election as Chairman of the Board, I would also like to take this opportunity to thank the Board for a developing and stimulating time together. I am proud to have been able to contribute to Inwido's strong development and can securely hand over the chairman's seat, confident that Inwido is facing a promising future. In conclusion, I would like to send a special thank you to the Group management and all employees for a job exceptionally well-done during the challenging 2020. You have every reason to be proud of your impressive efforts in developing Europe's leading windows Group, regardless of the challenges you face.

Malmö in March 2021

Georg Brunstam
Chairman of the Board

> "I would like to thank the board, management and employees for a developing and stimulating time together and I am proud to have contributed to Inwido's strong development. I am confident that Inwido is facing a promising future."

44 Inwido AB (publ) | Annual and Sustainability Report 2020

CORPORATE GOVERNANCE REPORT

Corporate Governance Report

Good corporate governance forms the basis for ensuring for shareholders that Inwido is managed as sustainably, responsibly and efficiently as possible. In turn, this improves confidence in the Company in the capital market and among the general public – confidence that is essential if we are to have the liberty to realize our strategies so that we can generate value over the long term.

Operations

Inwido improves people's lives indoors with windows and doors. As Europe's leading window group, Inwido's business concept is to develop and sell the market's best customized window and door solutions through a decentralized structure and with focus on the consumer-driven market, in order to create long-term sustainable growth, organically and through acquisitions. Inwido consists of 28 business units with approximately 4,300 employees in 11 countries. In 2020 the Group achieved sales of SEK 6.7 billion with an operating EBITA margin of 10.9 percent. Inwido has been listed on the Nasdaq Stockholm exchange since 2014.

Governance principles

Inwido AB (publ) ("Inwido" or "the Company") is a Swedish public limited company whose shares are listed on the Nasdaq Stockholm exchange. The governance of Inwido is based on the Company's Articles of Association, the Swedish Companies Act, other relevant Swedish and foreign regulations and legislation, and internal guidelines. Inwido's governance is also based on Nasdaq Stockholm's regulations for issuers, as well as the Swedish Corporate Governance Code ("the Code"). Inwido followed the Code in all respects in 2020.

This Corporate Governance Report has been prepared in accordance with the Annual Accounts Act and the Code. Inwido's auditors have reviewed the report and an opinion from the auditors has been included in this. Corporate Governance Reports and other information on corporate governance are available from Inwido's website: www.inwido.com.

Inwido strives to conduct its operations in a sustainable, responsible and efficient manner that generates value for our customers, shareholders, employees, suppliers, local communities and other stakeholders. Alongside the financial goals, the Company's strategy supports this focus. The Company's strategy, financial goals and sustainability ambitions are described in the 2020 Annual Report.

The highest decision-making body in the company is the General Meeting, which normally convenes once a year in the form of the Annual General Meeting, although, under certain conditions, it may also convene as an Extraordinary General Meeting. Although the company prepares the Annual General Meeting, shareholders can influence and propose items for the Meeting's agenda.

Share capital and shareholders

Inwido's shares have been traded on the Nasdaq Stockholm exchange since September 2014. At the end of 2020, share capital in Inwido amounted to SEK 231,870,112, distributed between 57,967,528 shares of a single class. The shares have a par value of SEK 4 each. Each share entitles the holder to one vote and equal entitlement to participation in the Company's assets and earnings. On 31 December 2020, there were 10,334 shareholders. See pages 40-41 of the annual report for further information about owners and share capital.

Insider trading and registration

Inwido has ambitious objectives in terms of proper ethical behaviour. Inwido's Board of Directors has adopted an insider policy as part of efforts to maintain a high level of ethics and to safeguard that Inwido maintains a good reputation in the eyes of the general public and the capital market. The policy aims to reduce the risk of insider trading and other illegal acts and to create conditions for compliance with applicable rules.

Inwido's corporate governance structure

Shareholders' influence in the Company is exercised at the General Meeting, which is the Company's highest decision-making body. At the General Meeting, each shareholder is entitled to attend, in person or by proxy, and to vote in accordance with his/her shareholding. At the Annual General Meeting, which is the regular General Meeting held annually, the shareholders elect the Board members, the Chairman of the Board and the auditors, and determine their fees. The Annual General Meeting resolves whether to adopt the income statement and balance sheet, to approve the distribution of profits and to discharge the Board members and the President and CEO from liability. The Annual General Meetings also decides on the principles for the Nomination Committee, as well as on principles for remuneration and other terms of employment for the President and CEO and other senior executives. The Annual General Meeting or Extraordinary General Meeting may also resolve to change the Articles of Association, increase or reduce the share capital, etc. Annual General Meetings are convened through a notice published in the Official Swedish Gazette (Post- och Inrikes Tidningar) and on the Company's website. The fact that an Annual General Meeting has been convened will be published in Swedish national daily newspaper Dagens Industri.

Inwido's Corporate Governance Report

Major external regulations

Swedish Companies Act
Swedish Annual Accounts Act
Swedish and international accounting legislation
The Nasdaq Stockholm exchange's regulations for issuers
Swedish Code of Corporate Governance (www.bolagsstyrning.se)

Key internal regulations/governance instruments

Articles of Association
Formal work plan for the Board of Directors
Instructions for the CEO of Inwido AB and for the individual business units, instructions for the Audit Committee, Remuneration Committee and for financial reporting
Code of conduct for employees and business partners
Equality policy
Finance policy
Sustainability compass
Insider policy
Recruitment policy
Business Continuity Plan
IT policy
Communication policy
Processes for internal control and risk management
Other control instruments, policies, manuals and recommendations

Inwido AB (publ)

Annual and Sustainability Report 2020

CORPORATE GOVERNANCE REPORT

On behalf of the shareholders, the Board is tasked with administering the Company's affairs in the interests of the Company and all of its shareholders.

The Chairman of the Board bears the specific responsibility for the work of the Board being well organized and efficient. The Audit Committee and Remuneration Committee are appointed by the Board of Directors. The Company's auditor is appointed by the General Meeting to audit the Company's annual report and accounts, as well as the administration of the Company by the Board of Directors and the President and CEO. The auditor reports to the shareholders at the Annual General Meeting by means of the audit report. The Board of Directors establishes a formal work plan for the Board and instructions for the President and CEO. The Board appoints the President and CEO, who is to oversee the ongoing management of the Company. In turn, the President and CEO appoints the Group Management team.

Nomination Committee

Each year, a Nomination Committee shall be appointed at the initiative of the Chairman, with the rules governing the composition of the Committee being adopted by the Annual General Meeting. The principle is that the Nomination Committee shall comprise representatives from the Company's largest shareholders and that it should consist of four members. The members of the Nomination Committee shall include one representative apiece for each of the three largest shareholders in terms of voting rights listed in the share register maintained by Euroclear Sweden as per 31 August of the year preceding the year in which the Annual General Meeting is held, plus the Chairman of the Board, who should also convene the Nomination Committee for its first meeting. The member representing the largest shareholder in terms of voting rights shall be appointed chairman of the Nomination Committee.

If, earlier than two months prior to the Annual General Meeting, one or more shareholders having nominated members of the Nomination Committee is no longer one of the three largest shareholders in terms of number of votes, members appointed by these shareholders shall make their seats available and the shareholder or shareholders that are among the three largest shareholders in terms of number of votes shall be entitled to appoint a representative each. In the event that a member steps down from the Nomination Committee before its work has been completed and the Nomination Committee finds it desirable that a replacement be appointed, that replacement shall be appointed by the same shareholder or, if that shareholder is no longer among the largest in terms of number of votes, the replacement should be appointed by the next shareholder in line in terms of size. Changes in the composition of the Nomination Committee are to be announced immediately.

Each year, a survey is conducted among the Board members regarding the work of the Board of Directors, its composition, qualifications, experience and efficacy. The survey forms the basis for the Committee's assessment of whether the Board ought to be strengthened with additional expertise or if there are other reasons to change the composition of the Board. Normally, the Nomination Committee also meets the President and CEO and sometimes individual Board members too. Proposed new Board members are interviewed by the Nominating Committee. In particular, the Nomination Committee shall take into account the requirement of diversity and breadth of the Board and to strive for balance in terms of gender. The Nomination Committee assesses the composition of the Board with respect to its independence, taking into account all proposals regarding the composition of the Board of Directors submitted to the Committee that may have been received from other shareholders. The names of the Nomination Committee representatives and the shareholders they represent are to be announced no later than six months prior to the Annual General Meeting. Based on the ownership structure as of 31 August 2020, the three largest shareholders in Inwido were asked to participate in the nomination process for 2021. In addition to the Chairman of the Board, Thomas Wuolikainen from Fjärde AP-fonden (chairman of the Nomination Committee), Ulrik Grönvall from Swedbank Robur Fonder and Joel Eklund of the Eklund family were appointed.

The Nomination Committee's proposals are to be presented in the notice to attend the Annual General Meeting and on Inwido's website. In connection with this, the Nomination Committee shall provide, on the Company's website, a reasoned opinion on the proposed composition of the Board with regard to the provisions in the Code regarding the composition of the Board of Directors. In particular, the proposal must be justified in view of the requirement that a balance should be sought with regard to gender. The opinion shall also contain a brief account of how the Nomination Committee has conducted its work and of the equal opportunities policy that the Committee has applied in preparing its proposal.

The Nomination Committee shall propose to the Annual General Meeting a chairman of the Meeting, the number of Board members, the Board of Directors, the Chairman of the Board, the auditor, Board remuneration (divided between the Chairman and the other members, as well as remuneration for committee work), auditor's fees and, to the extent considered necessary, amendments to the instructions for the Nomination Committee. The Nomination Committee shall submit its reasoned opinion on its proposals to the Annual General Meeting. Shareholders wishing to submit proposals to the Nomination Committee may send these by e-mail to [email protected] no later than two months prior to the meeting. The Nomination Committee's proposals are published in conjunction with or prior to the notice of the Annual General Meeting. The members receive no remuneration for their work on the Nomination Committee.

Extraordinary General Meeting

Inwido AB held an Extraordinary General Meeting on 21 January 2020 for the purpose of electing new Board members. In accordance with the Nomination Committee's proposal, the Extraordinary General Meeting resolved to elect Kerstin Lindell and Christer Wahlquist as new Board members for the period up until the end of the next Annual General Meeting.

Annual General Meeting for the 2019 financial year

The Annual General Meeting for the 2019 financial year took place on 5 May 2020 in Malmö, Sweden. At the Annual General Meeting, 45 percent of the total number of shares and votes was represented in person or by proxy. Due to the Covid-19 pandemic, a number of measures were implemented before and during the Annual General Meeting with the aim of limiting contagion. Among other things, the attendance of Board members and members of Group Management was limited. The Chairman of the Board, Georg Brunstam, was elected Chairman of the Meeting.

The Annual General Meeting approved the presented income statement and balance sheet, as well as the consolidated statement of comprehensive income and statement of financial position. The Company's retained earnings and profit for the year were carried forward. The Meeting discharged the Board and CEO from responsibility.

In addition, the following principal decisions were made:

Election of Board members and auditors Georg Brunstam, Kerstin Lindell, Henriette Schütze, Christer Wahlquist and Anders Wassberg were re-elected as Board members. Benny Ernstson had declined re-election. Georg Brunstam was re-elected as Chairman of the Board. Authorized Public Accountant Linda Bengtsson, KPMG, was elected as the principal auditor.

Fees

It was determined that fees will be paid to the Board in the unchanged amount of SEK 275,000 to each Board member not employed by the Company and SEK 580,000 to the Chairman of the Board. It was decided that the special fee of SEK 50,000 for committee work would remain unchanged and be paid to each member of the Audit Committee, SEK 130,000 to the chairman of the Audit Committee and SEK 25,000 to each member and the chairman of the Remuneration Committee.

Dividend

The Annual General Meeting resolved in accordance with the proposal by the Board of Directors and the CEO that no dividend be paid for the 2019 financial year and that the funds at the company's disposal be brought forward to a new account.

Guidelines for remuneration of senior executives

See Note 8 in the 2020 Annual Report.

Guidelines for authorization for the Board of Directors to implement new share issues

In accordance with the proposal by the Board of Directors, the Meeting resolved to authorize the Board, up until the 2021 Annual General Meeting, to decide to issue at most 5,796,752 shares in the Company, corresponding to 10 percent of the Company's share capital. Shares may be issued with or without deviating from the preferential rights of existing shareholders and through cash payment, set-off or payment in kind. The purpose of the authorization is to strengthen the company's opportunities to implement or finance company acquisitions, or, in connection with this, to strengthen the company's capital base.

Annual General Meeting for the 2020 financial year

In view of the risk of spreading Covid-19 and with the support of the Act on exemptions to facilitate the holding of General Meetings, Inwido's Annual General Meeting will be conducted by postal vote without the physical presence of shareholders, proxies and third parties on 6 May 2021. This means that

Inwido AB (publ) | Annual and Sustainability Report 2020

CORPORATE GOVERNANCE REPORT

shareholders may exercise their voting rights at the Annual General Meeting only by voting in advance.

Composition of the Board of Directors

The Board of Directors of Inwido shall consist of three to ten members. The trade unions are entitled to appoint two members with voting rights and two deputies. The President and CEO is not a member of the Board but participates in all Board meetings on a co-opted basis. Other officers in the Group participate in Board meetings to present reports and to act as secretary. The 2020 Annual Report contains more information about the Board members.

Procedures and responsibilities of the Board

In addition to its statutory meeting, the Board of Directors shall hold three to six meetings per financial year. Additional meetings shall be held as necessary. Each year, the Board of Directors establishes written rules of procedure elucidating the responsibilities of the Board of Directors and governing the mutual division of labour between the Board and its committees including the role of the Chairman, the chain of command within the Board, the Board's meeting schedule, the convening of Board meetings, agendas and minutes, as well as the Board's work on accounting and auditing matters and financial reporting. The Board has also adopted a set of instructions for the President and CEO and other special policies. The Board continuously assesses the work of the President and CEO and the Board addresses this issue specifically once a year without senior management being present.

The responsibility of the Board includes monitoring the work of the President and CEO through the continuous review of operations over the year, safeguarding a structure for the appropriate management of Inwido's interests. The responsibility of the Board also includes determining strategies and objectives, preparing specific policies, making decisions on major acquisitions and divestments of operations, making decisions on other major investments, making decisions on investments and loans in accordance with the financial policy, issuing financial reports,

evaluating operational management, as well as planning succession. The Board assures the quality of the financial reports by means of adopted control instruments and instructions to the President and CEO, and through its consideration of reports from the Audit Committee in the form of minutes and observations, as well recommendations and proposals for decisions and measures. The Board also safeguards the quality of the financial reports by addressing the appurtenant materials in detail during Board meetings. As part of its assurance of quality, the Board of Directors also meets the company's auditor once a year without the attendance of the President and CEO or anyone else from senior management.

Role of the Chairman of the Board

The Chairman organizes and manages the work of the Board, ensuring that it is conducted in accordance with the Swedish Companies Act, other legislation and regulations, as well as the Board's internal control instruments. The Chairman monitors operations through ongoing contacts with the CEO and is responsible for ensuring that the other members of the Board receive satisfactory information and data on which to make decisions. The Chairman is responsible for ensuring that the Board members continuously update and deepen their knowledge of Inwido and that they receives the training otherwise necessary to be able to conduct their work efficiently. The Chairman of the Board shall ensure that the Board's duties and working methods are assessed annually and discussed with the Board members, and that the Nomination Committee is informed of the results, with the purpose of developing the Board of Directors' working methods and efficiency. Such an evaluation was carried out in 2020, primarily by means of a detailed questionnaire to the Board. The results of the evaluation were presented to the Nomination Committee, as well as for the Board of Directors in its entirety.

Work of the Board in 2020

Over the year, the Board held a total of nine meetings. At the scheduled Board meetings, the

The Board and its work in 2020

Name	Elected, year	Independent^{1)}	Board meetings^{2)}	Audit Committee	Remuneration Committee	Board fees in SEK thousands^{3)}
Chairman of the Board:
Georg Brunstam	2017	Yes/Yes	9/9	4/4	1/1	735
Board members:
Anders Wassberg	2009	Yes/Yes	9/9	4/4	1/1	350
Christer Wahlquist^{4)}	2020	Yes/Yes	9/9	-	-	79
Henriette Schütze	2018	Yes/Yes	9/9	4/4	-	325
Kerstin Lindell^{4)}	2020	Yes/Yes	9/9	-	-	79
Employee representatives:
Robert Wernersson	2012	-	5/9	-	-	-
Tony Johansson	2016	-	8/9	-	-	-

1) Refers to independence in relation to the Company, its management and independent in relation to major shareholders in the Company.
2) Of which, two Board meetings were held via correspondence.
3) Including committee fees. Board fees relate to the period from the 2019 Annual General Meeting and until the 2020 Annual General Meeting.
4) Elected in connection with the Extraordinary General Meeting in January 2020.

President and CEO reported on the Group's earnings and financial position, including the outlook for the coming quarters. Beyond approving the annual and interim reports and adopting a business plan and associated financial plan, the following key issues were addressed by the Board of Directors during the year:

Due to the Covid-19 pandemic, the Board of Directors decided to withdraw the proposed dividend
Revision and adoption of the Company's policies
Acquisitions
Investments
Risk assessment
Product development
Organization

Audit Committee

Inwido's Board of Directors includes an Audit Committee. It shall consist of at least three Board members appointed by the Board. The Committee has no decision-making authority and members are appointed annually by the Board of Directors at the statutory Board meeting or when a committee member must be replaced. The Committee members appointed in May 2020 were Georg Brunstam (chairman), Henriette Schütze and Anders Wassberg. The work of the Audit Committee is regulated by a special set of instructions adopted by the Board as part of its agenda. The Committee's work focuses on the quality and accuracy of the financial accounts and reports, efforts in internal financial control, the Group's adherence to applicable regulations and, where appropriate, transactions between the Group and related parties.

In addition, the Audit Committee maintains regular contact with the auditor for Inwido AB and the Group in order to engender an ongoing exchange of ideas and information between the Board and the auditor on audit issues. Furthermore, the Committee shall assess the auditor's work and set guidelines for the services, besides auditing, that Inwido may procure from its auditor.

The Audit Committee held four meetings in 2020. The meetings of the Audit Committee are minuted and reported verbally at Board meetings. Each month, consolidated accounts are prepared and submitted to the Board and Group Management.

External financial information is provided regularly in the form of:

Year-end and interim reports.
Annual Report.
Press releases about important items of news that are believed to affect the assessment of Inwido.
Presentations for financial analysts, investors and the media on the dates on which year-end and interim reports are published.
Meetings with financial analysts and investors.

Remuneration Committee

Inwido's Board of Directors also includes a Remuneration Committee. It shall consist of two Board members appointed by the Board. The Chairman of the Board may chair the Remuneration Committee. Other members of the Remuneration Committee elected by the General Meeting shall be independent in relation to the company and its senior management. In part, the Remuneration Committee has an advisory role and in part it prepares matters to be addressed and decided on by Inwido's Board of Directors. The Remuneration Committee operates

Inwido AB (publ)

Annual and Sustainability Report 2020

CORPORATE GOVERNANCE REPORT

under the rules of procedure adopted by the Board. The principal tasks of the Remuneration Committee are to prepare the Board's decisions regarding remuneration principles, remuneration and other terms of employment for company management, to monitor and assess programmes of variable remuneration for company management, and to monitor and assess the application of the guidelines for remuneration to senior executives determined by the Annual General Meeting, applicable remuneration structures and remuneration levels within Inwido.

Each year, at the statutory Board meeting, or when a committee member must be replaced, the Board appoints the committee members. The Committee members appointed in May 2020 were Georg Brunstam (Chairman) and Anders Wassberg. The Remuneration Committee held one meeting in 2020. The meetings of the Remuneration Committee are minuted and reported verbally at Board meetings.

Group Management

The President and CEO leads operations in accordance with the Companies Act and within the parameters set by the Board. In consultation with the Chairman of the Board, the President and CEO prepares the data and materials the Board requires to make its decisions, presents matters and explains proposed decisions. The President and CEO is also responsible for Inwido's commercial, strategic and financial development, leading and coordinating daily operations in line with the Board's guidelines and decisions. The President and CEO also appoints the members of Group Management in consultation with the Chairman of the Board.

Group Management holds regular meetings led by the President and CEO. Representatives from Group Management meet with the management of each business unit at local management group meetings on a rolling basis.

External auditors

At the 2020 Annual General Meeting, authorized public accountant Linda Bengtsson of the KPMG AB firm of auditors was elected as the Company's auditor for the period extending until the end of the following Annual General Meeting. The auditor maintains regular contact with the Chairman of the Board, the Audit Committee and Group Management. Inwido's auditor shall review the annual report and accounts, as well as the President and CEO's management work. The auditor works according to an audit plan that takes into account comments submitted by the Board via the Audit Committee. The auditor reports his findings to the Board. Reporting takes place partly during the audit, and ultimately in connection with the annual report being issued and approved. The auditor also participates in one Board meeting per year, where she outlines the audit process and her observations in an audit report.

Over the year, the auditor has also performed certain consulting assignments outside the scope of the audit — these have mainly involved advice on accounting matters.

The external audit is conducted in accordance with generally accepted accounting principles in Sweden. The auditing of documentation for the annual report for legal units outside Sweden is conducted in accordance with legal requirements and other applicable regulations in the relevant countries, in accordance with generally accepted accounting principles and accompanied by audit reports where so required by local legislation.

Internal audit

Inwido has developed systems for governance and internal control. Among other things, the central accounting unit performs an ongoing internal audit of the Group's companies. The Board of Directors and the Audit Committee follow up Inwido's assessment of internal control, including through contacts with Inwido's auditors, which perform annual audits of the internal control. Given the above, the Board has elected not to establish a specific internal audit unit.

Internal control of financial reporting

The responsibility of the Board and the President and CEO regarding internal control is regulated by the Swedish Companies Act. The Board's responsibility is also regulated in the Code. In accordance with the Code, the Board shall describe how the internal control of financial reporting is organized, which is carried out through the Corporate Governance Report.

The principal purpose of internal control is to ensure the achievement of the company's targets for appropriate and efficient operations, reliable reporting and adherence to applicable legislation and regulations. Internal control relating to financial reporting serves to provide reasonable security with regard to the reliability of external financial reporting and to ensure that external financial reports are prepared in accordance with legislation and applicable accounting standards. This report on internal control has not been reviewed by the Company's auditors. The starting point for internal control process is the regulatory framework for internal control issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Control environment

The Board bears the overall responsibility for internal control regarding financial reporting. To establish and maintain a functioning control environment, the Board has adopted a set of basic documents that have a bearing on financial reporting, including, in particular, the formal work plan for the Board and instructions for the President and CEO. In addition, the Board has appointed an Audit Committee whose principal task is to ensure that the established principles for financial reporting are complied with and that appropriate relations are maintained with the Company's auditors. The responsibility for maintaining an effective control environment and for ongoing internal control efforts regarding financial reporting is delegated to the President and CEO, who reports regularly to the Board of Directors in accordance with established procedures. In addition, reports are provided by the Company's auditors.

The internal control structure also builds on a management system based on Inwido's organization with clearly defined roles, areas of responsibility and delegated authority. Operational decisions are made

The Board of Directors' work in 2020

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Annual and Sustainability Report 2020

CORPORATE GOVERNANCE REPORT

at the company level while decisions regarding strategy, overarching financial matters, acquisitions and major investments are made by Inwido's Board and Group Management. Control documents addressing accounting and financial reporting represent crucial components in the control environment with regard to financial reporting. These documents are updated regularly in connection with changes in accounting standards and legislation.

Risk assessment

The Group conducts continuous risk assessment to identify key risks relating to financial reporting. With regard to financial reporting, risk is primarily judged to involve significant errors in the accounts; for example when it comes to the reporting and valuation of assets, liabilities, revenues and expenses or other discrepancies. Fraud and losses through embezzlement represent another risk. Risk management is built into every process. Various methods are used to evaluate and limit risks and to ensure that the risks to which Inwido is exposed are managed in accordance with adopted policies, instructions and established monitoring procedures. These policies, instructions and procedures are intended to reduce possible risks and promote correct accounting, reporting and disclosure.

Control activities

The risks identified with regard to financial reporting are managed through the Company's

control activities, such as authorization controls in IT systems and signature authentication. The control structure includes clear organizational roles that enable an efficient division of responsibilities for specific control activities serving to uncover or prevent the risk of errors arising in reports. Local controllers/finance managers participate in the assessment of their own reporting alongside the central controller function. The continuous analysis of financial reporting, like the analysis conducted at Group level, is highly important in ensuring that financial reports are free of material errors. The Group's finance function plays a key role in the internal control process and is responsible for ensuring that financial reports from each unit are submitted correct, complete and on time.

Information and communication

Inwido continually provides the market with information on the Group's development and financial position in relevant channels. Policies, guidelines and internal instructions regarding financial reporting ensure quality in external communication. The employees concerned are given access to and notified of regular updates and messages regarding changes in accounting principles, reporting requirements or other provision of information via the Group-wide intranet.

Malmö, 29 march 2021

The Board of Directors of Inwido AB (publ)

Follow-up

The President and CEO is responsible for internal control being organized and followed up in accordance with the guidelines adopted by the Board. The CEO is responsible for ensuring that independent and objective reviews are conducted with the aim of systematically assessing and proposing improvements to the Group's processes for governance, internal control and risk management. Financial control is exercised by the Group's finance function. Financial data are reported each month, along with a forecast for the coming month. Inwido's management reviews results on a monthly basis, analyzing deviations from the financial plan and the preceding year. Deviations are investigated and evaluated for possible internal control activities. The monthly accounts are also discussed with the management of each company. The Board receives monthly financial reports and follows up on financial reporting at each of its meetings. The Board and Group Management review financial reporting ahead of the publication of the annual report and interim reports. The closing accounts for the period January-September, as well the year-end accounts are subject to a summary "review" by the Company's auditors. The Company's auditors present their observations to the Board. The auditors' duties also include monitoring internal control within the Group's subsidiaries on an annual basis.

Malmö, 29 march 2021

The Board of Directors of Inwido AB (publ)

Auditor's report on the Corporate Governance Report

To the Annual General Meeting of Inwido AB (publ), corporate identity number 556633-3828

Assignment and division of responsibilities

It is the Board of Directors that is responsible for the Corporate Governance Report for 2020 on pages 45-49 and for it having been prepared in accordance with the Annual Accounts Act.

Focus and scope of the review

Our examination has been conducted in accordance with FAR's auditing standard RevU 16 The auditor's examination of the Corporate Governance Report. This means that our examination of the Corporate Governance Report 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

Opinions

A corporate governance statement has been prepared. Disclosures in accordance with Chapter 6, Section 6, 2nd paragraph, items 2-6 of the Annual Accounts Act and Chapter 7, Section 31, 2nd paragraph of the same act are consistent with the annual and consolidated accounts and are in accordance with the Annual Accounts Act.

Malmö, 29 March 2021

KPMG AB

Linda Bengtsson

Authorized Public Accountant

Inwido AB (publ)

Annual and Sustainability Report 2020

BOARD OF DIRECTORS AND AUDITOR

Board of Directors and auditor

Georg Brunstam

Chairman of the Board

Born: 1957

Education: Graduate Engineer

Member of the Board since: 2017

Other assignments: President and CEO of HEXPOL AB (publ), Chairman of the Board of AAK AB (publ), Board member of Melker Schörling AB and Nibe Industrier AB (publ) Independent in relation to major shareholders

Previous positions: President and CEO of Hexpol AB (publ), President and CEO of Nolato AB (publ), Group Management and BA President of Trelleborg AB (publ)

Own holdings and holdings of related parties: 6,000 shares

Anders Wassberg

Board member

Born: 1965

Education: Graduate engineer, Chalmers University of Technology

Member of the Board since: 2009

Other assignments: President of Stena Adactum AB, Chairman of the Board Ballingslöv International AB, Chairman of the Board Kährs Holding AB, Chairman of the Board Svedbergs i Dalstorp AB (publ), Board member Envac AB and Board member Gunnebo AB. In addition member of Stena Sphere Coordination Group. Independent in relation to major shareholders

Previous positions: President and CEO of Ballingslöv International AB, President of AB Gustav Kähr, President of Beijer Byggmaterial AB

Own holdings and holdings of related parties: 10,000 shares

Henriette Schütze

Board member

Born: 1968

Education: MBA Accounting and Auditing, Authorized Public Accountant in Denmark, EMBA

Member of the Board since: 2018

Other assignments: CFO of Gubi. Member of Dee4 Capital's Investment Advisory Committee, member and chairman of the Nominations Committee of 3Shape A/S

Independent in relation to major shareholders.

Previous positions: CFO Nordic Tankers, CFO Georg Jensen, CFO Cimber Sterling, VP DFDS A/S, VP ISS A/S, Manager Arthur Andersen

Own holdings and holdings of related parties: 1,750 shares

Christer Wahlquist

Board member

Born: 1971

Education: Graduate Engineer and MBA

Member of the Board since: 2020

Other assignments: President and CEO of Nolato AB

Previous positions: President of Nolato Medical, Head of Marketing and Sales at Nolato AB

Own holdings and holdings of related parties: 2,400 shares

Kerstin Lindell

Board member

Born: 1967

Education: Graduate Engineer, Licentiate of Technology and MBA

Member of the Board since: 2020

Other assignments: Chairman of the Board of Bona AB, Board member of HEXPOL AB and Peab AB

Previous positions: President and CEO of Bona AB, Head of R&D at Akzo Nobel Industrial Wood Coatings

Own holdings and holdings of related parties: 4,000 shares

Inwido AB (publ)

Annual and Sustainability Report 2020

BOARD OF DIRECTORS AND AUDITOR

Robert Wernersson

Employee representative
Born: 1965
Member of the Board since: 2012
Other assignments: Board member of Inwido Produktion AB and Elitfönster AB, Chairman of Unionen Växjö
Own holdings and holdings of related parties: 0 shares

Tony Johansson

Employee representative
Born: 1967
Member of the Board since: 2012
Other assignments: Board member of GS department 3 Halland/Kronoberg trade union
Own holdings and holdings of related parties: 0 shares

Carin Kärrå

Employee representative (deputy)
Born: 1964
Member of the Board since: 2016
Own holdings and holdings of related parties: 0 shares

Linda Bengtsson

Authorized Public Accountant, KPMG AB
Born: 1974
Auditor in charge for Inwido since: 2020

Inwido AB (publ)
Annual and Sustainability Report 2020
51

GROUP MANAGEMENT

Group Management

Henrik Hjalmarsson

President and CEO as well as Executive Vice President North

Born: 1976
Education: MSc Mechanical Engineering and Technology Management, Lund University
Employed since: 2017, member of Group Management since 2017
Other positions: Chairman of the Board, Repasco AB and Board member Scandi Standard AB (publ)
Previous positions: SVP Inwido Sweden-Norway (2017-2019), CEO Findus Nordic (2016-2017)
Own holdings and holdings of related parties: 20,000 shares

Jonna Opitz

Senior Vice President, Communications & MultiBrands

Born: 1969
Education: B.Sc. Media and Communications, Växjö University; Executive MBA, Lund University,
Employed since: 2009, member of Group Management since 2009
Other positions: Board member, Nexam AB (publ)
Previous positions: VP Corporate Communications for ReadSoft AB (2006-2009), Corporate Communications Manager for PartnerTech AB (2001-2006)
Own holdings and holdings of related parties: 20,000 shares

Peter Welin

CFO and Deputy CEO

Born: 1973
Education: MA Economics, Lund University
Employed since: 1998, member of Group Management since 2004
Previous positions: Business Area Manager for Inwido Sverige AB (2003-2004), President of Allmogefönster in Sweden (2000-2003)
Own holdings and holdings of related parties: 141,528 shares

Anffi Vuonokari

Senior Vice President Inwido Northeast and Managing Director Pihla Group

Born: 1976
Education: Masters degree in Administrative Sciences/Public Law from the University of Vaasa
Employed since: 2006, member of Group Management since 2020
Other positions: Member of the Board of the Finish carpentry industry
Previous positions: Senior positions in sales and production at Pihla Group, Board member Klas1
Own holdings and holdings of related parties: 9,375 shares

Asger Drewes Jørgensen

Executive Vice President, South

Born: 1975
Education: MSc Business Administration, Copenhagen Business School
Employed since: 2016, member of Group Management since 2016
Other positions: Chairman of the Board of Translyft A/S
Previous positions: SVP Inwido Denmark (2016-2018), President & CEO Arla Foods USA (2012-2015)
Own holdings of related parties: 3,200 shares

Lena Wessner

Senior Vice President, Human Resources, Organization & Sustainability

Born: 1961
Education: B.Sc. in Business and Economics, Lund University and various international management programmes
Employed since: 2010, member of Group Management since 2010
Previous positions: HR Manager E.ON ES (2009-2010), Head of HR Operations Sony Ericsson Mobil Communication AB (2006-2009)
Own holdings of related parties: 12,500 shares

Inwido AB (publ)
Annual and Sustainability Report 2020

Financial statements 2020

Directors' Report 56
Consolidated statement of comprehensive income 64
Consolidated statement of financial position 65
Consolidated statement of changes in equity 66
Consolidated cash flow statement 67
Income Statement, Parent Company 68
Statement of comprehensive income, Parent Company 68
Balance Sheet, Parent Company 69
Statement of changes in equity, Parent Company 70
Cash flow statement, Parent Company 71
Note 1 Accounting principles 72
Note 2 Financial risks and policy 77
Note 3 Distribution of income 80
Note 4 Segment reporting 81
Note 5 Acquisitions and disposals of businesses 82
Note 6 Other operating income 82
Note 7 Other operating expenses 82
Note 8 Employees and personnel expenses 82
Note 9 Auditors' fees and reimbursements 85
Note 10 Operating expenses by type of expense 85
Note 11 Financial income and expenses 86
Note 12 Taxes 86
Note 13 Intangible assets 88
Note 14 Tangible non-current assets 90
Note 15 Participations in associated companies 91
Note 16 Receivables from Group companies 92
Note 17 Inventories 92
Note 18 Cash and equivalents 92
Note 19 Equity 92
Note 20 Interest-bearing liabilities 94
Note 21 Liabilities to credit institutions 94
Note 22 Provisions 94
Note 23 Accrued expenses and prepaid income 95
Note 24 Leases 95
Note 25 Pledged assets, contingent liabilities and contingent assets 96
Note 26 Related parties 96
Note 27 Group companies 97
Note 28 Specifications for cash flow statement 98
Note 29 Significant events after the end of the year 99
Note 30 Key estimates and assessments 99
Note 31 Details of the Parent Company 99
Attestation by the Board of Directors 100
Auditor's Report 101
Definitions of alternative key ratios not defined by IFRS 104
Information for shareholders 105

DIRECTORS' REPORT

Directors' Report

The Board of Directors and the President of Inwido AB (publ), corporate identity number 556633-3828, domiciled in Sweden and with registered offices in Malmö, hereby present their annual report and consolidated annual accounts for the 2020 financial year.

Group relationships

Inwido AB (publ) is the Parent Company for the Inwido Group. Inwido's shares are listed on the Nasdaq Stockholm exchange.

Operations

Inwido consists of 28 business units with approximately 4,300 employees in 11 countries. In 2020 the Group achieved sales of SEK 6.7 billion with an operating EBITA margin of 10.9 percent.

Shares in Inwido AB (publ) have been listed on Nasdaq Stockholm since 2014 under the ticker "INWI".

Seasonal variations

Inwido's operations are affected by seasonal fluctuations. The weakest period is the first quarter, which normally accounts for about 20 percent of annual sales. The second and third quarters are normally of equal strength and combined account for slightly more than 50 percent of annual sales, while the last quarter of the year is normally the strongest with slightly less than 30 percent of annual sales. The largest seasonal variations are within the Consumer market, although sales to the Industry market are also dependent on the season and weather.

Financial targets

Inwido's operations are governed by four financial targets aimed at providing shareholders with good returns and long-term growth in value.

Profitability

Inwido's profitability target is an operating EBITA margin of 12 percent. Inwido may not achieve the profitability target during years when the market trend is weaker. In such cases, the company will undertake measures to further enhance profitability, which Inwido has been successful with in the past.

Sales growth

Inwido's objective is to exceed growth in our current markets through organic growth, as well as selective acquisitions and initiatives in Europe.

Capital structure

Inwido's net debt in relation to operating EBITDA shall, excluding temporary deviations, not exceed a multiple of 2.5.

Dividend policy

Inwido aims to pay its shareholders an annual dividend that corresponds to approximately 50 percent of net profit. However, Inwido's financial status in relation to the target, cash flow and future prospects shall be taken into consideration.

Key data

See pages 102-103 for definitions of alternative ratios not defined by IFRS.

Group development in 2020

Despite Covid-19, 2020 was a year successful year for Inwido. Inwido delivered record profits and the Group's highest sales to date. A strong balance sheet was also achieved by sharply reducing the level of indebtedness. In 2020, net sales increased by 1 percent, while organic growth increased by 2 percent. Operating EBITA for the year amounted to SEK 729 million and the operating EBITA margin was 10.9 percent. Higher volumes, a more favourable customer mix and good cost control helped improve profitability. At the same time, the Group delivered very strong cash flow during the year, resulting in a reduction in net debt to a multiple of 0.9 in relation to operating EBITDA (excluding IFRS 16). Inwido ended the year with an order backlog that was 48 percent higher than in the corresponding period in the preceding year.

Inwido's e-commerce business is growing strongly and accounted for 12 percent of the Group's sales in 2020 and organic growth amounted to 34 percent.

Effects of Covid-19 and reporting of government subsidies

From an operational and financial perspective, the negative impact of the Covid-19 pandemic on the Group's operations is relatively limited, with some exceptions.

In Business Area North, it is primarily consumer sales in Finland, entailing home visits and installation at the homes of end-customers, that have been impacted negatively by the Covid-19 pandemic. In addition, some of the business units, particularly in Sweden, have experienced operational disruptions from delayed deliveries of input goods and greater absence due to illness than normal. In Business Area South, the UK and Irish business units were forced to restrict their activities because of the Covid-19 pandemic, particularly during the second quarter, while shutdowns in municipalities in North Jutland, where Inwido maintains its larger Danish production units, affected capacity and efficiency there in November.

Over the 2020 full year, government subsidies related to Covid-19 amounted to SEK 25 million, of which more than half pertained to the operations in the UK and Ireland, where these helped us retain employees despite the uncertainty surrounding the impact of the pandemic. Temporary respites with taxes and fees related to the Covid-19 pandemic totalled SEK 8 million as of 31 December 2020 and are booked as non-interest-bearing liabilities.

Consolidated net sales and profit

Group

Consolidated net sales amounted to SEK 6,681 million (6,631) in 2020, corresponding to organic growth of 2 percent.

Consolidated EBITA amounted to SEK 712 million (621) and the EBITA margin amounted to 10.7 percent (9.4). Operating EBITA, that is EBITA before items affecting comparability, amounted to SEK 729 million and the operating EBITA margin was 10.9 percent. See "Items affecting comparability" below for additional information. The higher margin is due in particular to higher volumes, a more favourable customer mix and good cost control.

Net financial items amounted to an expense of SEK 71 million (43). The discrepancy compared with the preceding year's net financial items is explained primarily by positive exchange rate effects during the preceding year, which could partly be offset by lower interest expenses in 2020. Consolidated profit before tax rose to SEK 623 million (558). Income taxes for 2020 amounted to SEK 123 million (125). Profit after tax rose to SEK 501 million (433). Earnings per share rose to SEK 8.64 (7.48).

Business Area North

Net sales for Business Area North amounted to SEK 3,658 million (3,750), corresponding to a decrease of 2 percent compared with the corresponding period in the preceding year. The reasons for the lower net sales were primarily a somewhat hesitant consumer market in Finland. In some of the Swedish units, absence due to illness was higher than normal due to Covid-19 restrictions. This impacted efficiency and opportunities to complete deliveries in pace with rising order intake.

Business Area North's order backlog was 27 percent higher at the end of the year than at the end of the preceding year. Operating EBITA amounted to SEK 218 million (226) and the operating EBITA margin was unchanged at 6 percent.

Business Area South

Net sales for Business Area South rose to SEK 2,872 million (2,713), corresponding to an increase of 6 percent compared with the corresponding period in the preceding year.

The strong e-commerce trend continues, as reflected in e-Commerce's organic growth of 34 percent for the year. The business unit ended the quarter with a 55 percent higher order book compared with the corresponding point in the preceding year. The business unit accounted for 12 percent of the Group's sales over the full year. In the final quarter of the year, the larger Danish units were

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negatively affected by Covid-19 related shutdowns.

At the end of the year, Business Area South's order backlog was 82 percent higher compared with the equivalent period in the preceding year. Operating EBITA rose to SEK 543 million (458) and the operating EBITA margin rose to 18.9 percent (16.9).

Items affecting comparability

Items affecting comparability that are non-recurring and have a significant impact on profit are important in understanding the underlying development of operations. Expenses relate primarily to acquisition-related expenses and restructuring measures during a consolidation phase, in which the company enhances efficiency through, for example, closures or reorganization of production facilities and sales units. These expenses primarily consist of impairment of assets, personnel costs and other external expenses.

For the full-year 2020, items affecting comparability amounted to a negative net of SEK 16 million (25). These items comprised impairments of key projects and structural measures as a consequence of the Covid-19 pandemic.

Cash flow

For full-year 2020, cash flow from operating activities after changes in working capital amounted to SEK 1,209 million (926). The deviation from the previous year is primarily explained by stronger operating profit combined with less working capital being tied up.

Cash flow from investing operations amounted to a negative SEK 180 million (274). The deviation from the preceding year is mainly explained by a lower level of investment in 2020, as well as by acquisitions made in the corresponding period in the preceding year.

Cash flow from financing activities was negative in the amount of SEK 111 million (574). The discrepancy compared with the preceding year is primarily explained by the resolution of the Annual General Meeting (in line with the Board of Directors' proposal) not to implement a dividend because of the Covid-19 pandemic, as well by bank loan amortizations during the preceding year.

Gross investments, depreciation, amortization and impairment

Gross investments in tangible fixed assets amounted to SEK 167 million (210). Amortization, depreciation and impairment totalled SEK 255 million (268).

Financial position and liquidity

Inwido's principal financing consists of bank loans based on credit agreements expiring in the period 2022-2025. The aforementioned credit agreement includes financial covenants that are followed up on a quarterly basis. Inwido meets the terms of existing credit agreements.

The Group's net debt at the end of the year amounted to SEK 740 million (1,711) excluding IFRS 16 and to SEK 1,096 million (2,075) including IFRS 16. The lower net debt compared with the corresponding period in the preceding year is primarily explained by continued strong operating cash flow, including reduced working capital.

At the end of the year, indebtedness, calculated as interest-bearing net debt/operating EBITDA, was 0.9 (2.2) excluding IFRS 16, and 1.1 (2.4) including IFRS 16. Net debt was reduced by SEK 979 million in 2020. Consolidated cash and equivalents were SEK 1,133 million (243) at the end of the year. Available funds, including unutilized credit facilities, amounted to SEK 2,598 million (1,416).

Employees

There were an average 4,345 (4,356) employees in the Inwido Group during the year. See the section "Employees" and Note 8 for further information.

Sustainability Report

Inwido details its sustainability work as an integrated part of the Annual Report, the Corporate Governance Report and the Directors' Report. Presented on page 20-29 is a summary of key sustainability information. Below follows an overview of where further information is contained in this publication.

Our stakeholders and our business model

Inwido's key stakeholders are customers, consumers (in their capacity as end-users of our products), investors, employees, suppliers and local decision makers in the markets where Inwido is active. For more information about our business model, how we generate value and our work with the environment and sustainability, see pages 10-11, page 38 and pages 20-29.

Our policy documents

Inwido has established policies and guidelines that govern the Group's work in the areas of the environment, ethics and human rights. See the description on page 22 of the Annual Report and our Code of Conduct on www.inwido.com.

Results of policies and guidelines

For the work carried out in 2020, see the section Targets and target fulfilment on page 37 and Our strategic priorities on page 12.

Significant risks in these areas and how they are managed

See the Sustainability section on pages 20-29 and the Risk section on pages 56-59 of the Directors' Report.

Environment and sustainability

The Group ascribes great importance to adhering to and exceeding legal requirements in the area of the environment and conforming to the Group's environmental policy. Of the Group's total net sales in Sweden, a large proportion derive from activities requiring permits or compulsory registration. The Group's other production units have been inspected by local environmental authorities and meet the requirements imposed by local environmental legislation.

The Swedish business units are affiliated with an active and targeted environmental programme. The production units within Elitfönster, Hajom Skjutdörrrar and SnickarPer are environmentally certified in accordance with ISO 14001. All production units within Elitfönster, Hajom Skjutdörrrar and SnickarPer also conduct operations requiring permits or registration in accordance with Swedish environmental legislation. The obligation to undergo testing applies to the use of solvents and the operation of solid fuel furnaces.

In Sweden, Inwido conducts operations requiring permits at five operational locations: Lenhovda in Kronoberg County, Vetlanda, Hänger, Bankeryd and Sävsjö in Jönköping County. The permit for Lenhovda applies to the manufacture of windows and sealed glass panes. The permit for Vetlanda applies to the manufacture of windows. The permits for Hänger and Bankeryd apply to the manufacture of doors. The permit for Sävsjö applies to the pre-treatment and powder coating of aluminium profiles. Operations requiring registration are conducted at two sites: Vetlanda in Jönköping County, Hajom in Västra Götaland County and Steelform in Kronoberg County. The facilities for which permits are required adhere to the decisions made by the environmental committees of the relevant municipalities.

The operations primarily affect the environment through emissions of solvents and dust to the atmosphere as a result of surface treatment and impregnation, as well as the operation of solid fuel furnaces. Solvent-filtration plants have been installed in Lenhovda, Vetlanda, Hänger and Bankeryd. In Hajom, solvents are used to such a minor extent that filtration is not required. At the other facilities, surface treatments are carried out using water-based paints and filtration is not required. Flue-gas filtration to reduce dust emissions has been installed on all solid fuel boilers. Current permits cover the production volumes expected in 2021.

Inwido is working purposefully to reduce the Group's energy consumption, carbon dioxide emissions and other emissions, as well as monitoring and controlling waste and materials with the objective of reducing negative environmental impact. Elitfönster has joined the Construction and Civil Engineering sector's "Roadmap 2045" with the target of achieving net zero emissions of greenhouse gases by 2045. Other key sustainability-related areas of focus for Inwido are sustainable products and transactions and a safe and stimulating work environment. See the "Sustainability" section for further information on Inwido's sustainability efforts.

Risks and risk management

The governance of Inwido is based on the company's Articles of Association, the Swedish Companies Act, other relevant Swedish and foreign regulations and legislation, and internal guidelines. Inwido's governance is also based on Nasdaq Stockholm's regulations for issuers, as well as the Swedish Corporate Governance Code ("the Code"). Inwido followed the Code in all respects in

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See the Corporate Governance Report in this Annual Report or Inwido's website, inwido.com, for further information about the corporate governance principles applied by Inwido.

Inwido defines risk as something that can affect Inwido's achievement of targets negatively. Risk is a natural part of all business operations, but can be managed and it is the responsibility of Group management to ensure that risks are identified and managed. In turn, this requires an effective and structured risk management process. The overall objective of Inwido's risk management is to ensure a systematic approach to identifying risks and ensuring that they are managed from an early stage. The objective is also to make risk management a natural part of day-to-day operations by engendering a culture of risk awareness among all employees and a knowledge of how to manage risks to achieve business objectives. Inwido operates in 11 countries through 28 business units. This spread, combined with a large number of customers in different market segments and a large number of suppliers, limits the commercial risks.

The governing document for Inwido's risk management consists of a Corporate Risk and Insurance Policy. The purpose of this document is to define Inwido's view of risk by setting out objectives and responsibilities. The Board of Directors reviews and approves the Corporate Risk and Insurance Policy.

The President & CEO is ultimately responsible for the implementation and enforcement of the risk management process and for keeping the Board of Directors updated on an ongoing basis. The President & CEO is also responsible for the risk management process being developed, adapted and reviewed.

In the process of identifying risks that should either be eliminated and prevented, or simply identified and monitored, a "Risk Mapping Matrix" is prepared each year. The Managing Directors of each of the local business units are responsible for this mapping

of risks and for assessing the probability of risks occurring and their potential effects – in monetary terms if possible. Inwido's Group management and the local management teams then define together what risks can be considered acceptable and how the risks that are unacceptable, should be managed (through plans of action) to make them acceptable. Each of the Managing Directors of the local business units is responsible for implementing risk management within each of their companies. Inwido divides risks between financial, operational and external risks.

The financial risks are managed primarily by the central finance department. The responsibility of the Board and President & CEO for internal control regarding financial reporting is regulated by the Swedish Companies Act. The Board's responsibility is also regulated in the Code. In accordance with the Code, the Board shall describe how the internal control of financial reporting is organized, which is carried out through the Corporate Governance Report.

The principal purpose of internal control is to ensure the achievement of the company's targets for appropriate and efficient operations, reliable reporting and adherence to applicable legislation and regulations. Internal control relating to financial reporting serves to provide reasonable security with regard to the reliability of external financial reporting and to ensure that external financial reports are prepared in accordance with legislation and applicable accounting standards. See the Corporate Governance Report in this Annual Report or Inwido's website, inwido.com, for further information on internal control regarding financial reporting

Operational and external risks are managed by the local business units supported by the central functions.

The overview below shows the overall risks within each risk category and how Inwido manages those risks.

Financial risks

RISK

MANAGEMENT/EXPOSURE

Financial credit risks

Credit risks in financial management relate primarily to the probability of financial losses resulting from counterparties' incapacity to meet contractual obligations arising from financial transactions or instruments.

Financial credit risks are limited by engaging counterparties with a high credit rating who chiefly participate in the Group's mid-term and long-term financing. In 2020, no credit losses were incurred as a consequence of investments in cash equivalents or financial instruments.

Currency risks

Transaction exposure

The Group is exposed to currency risk in the form of transaction exposures arising through purchases and sales of goods and services in currencies other than each Group company's local currency.

The Group applies a finance policy adopted by the Board of Directors. Transaction exposure shall primarily be minimized through internal measures such as matching of flows and choice of invoicing currency. Currency clauses can be used if contractually transparent and possible to follow up, ensuring that the Group is not exposed to any hidden currency risks. Secondarily, currency risks are to be mitigated by means of financial instruments.

Currency hedging is arranged with maturities of up to 12 months and is based on the latest estimates available. Currency hedges must meet the following conditions with an accuracy of about +/- 20 percentage points:

Hedge horizon	Degree of hedging
1-3 months	70%
4-6 months	60%
7-9 months	40%
10-12 months	20%

Contracted future payments for non-current assets in foreign currency may be secured up to the full cost.

No hedging is required if the net exposure to any single currency is less than the equivalent of EUR 1 million annually.

Translation exposure

When the business units' balance sheets in local currency are translated into SEK, a translation difference arises as a consequence of the current year being translated at a different closing rate than the previous year. The income statement is translated at the average exchange rate for the year while the balance sheet is translated at the exchange rate as per 31 December. The translation exposure forms the risk represented by the translation difference as the change in shareholders' equity.

The Group does not hedge this risk. An annual analysis is made of the translation exposure trend and the related risks.

See Note 2.

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Interest rate risks

Interest rate risk represents how changes in market interest rates affect cash flow and the Group's earnings, as well as the value of financial instruments.

The management of the Group's interest exposure is centralized, meaning that the central finance function is responsible for identifying and managing this exposure in accordance with the finance policy adopted by the Board of Directors. Inwido strives to achieve a good spread of interest maturities to avoid fixing of interest rates at the same time for large loan volumes.

Inwido's short-term interest rate exposure (aggregated positions with a residual weighted average length of <1 year) should be between 50 and 80 percent of the total debt portfolio, excluding short-term seasonal debt.

The average period of fixed interest on the Group's gross borrowing, including the effects of interest rate derivatives, may not exceed three years.

Financing and liquidity risks

Financing and liquidity risks represent the risk that it will be difficult or costly to refinance loans reaching maturity or that it will not be possible to meet payment obligations due to insufficient liquidity or difficulties in obtaining external financing.

Inwido seeks to achieve good planning and foresight with regard to funding issues with the objective of Inwido always being offered cost-effective financing on favourable market terms for comparable borrowers. To safeguard adequate payment capacity, Inwido's objective is to secure sufficient liquidity or credit facilities. The Group's debt/equity ratio and forecasts of its liquidity are followed up on an on-going basis. See Note 2.

Operational Risks

RISK

MANAGEMENT/EXPOSURE

Risk of losses on accounts receivable

The risk that the Group's customers fail to meet their payment obligations for accounts receivable constitutes a customer credit risk.

Inwido reduces counterparty risks relating to customers by applying the Group's credit policy. Credit checks are performed on the Group's customers with information regarding their financial status being obtained from various credit information agencies. The risk of credit losses is also limited through credit insurance, which covers the majority of Inwido's insurable receivables. Bank guarantees or other sureties are required of customers with low credit ratings or insufficient credit history. Trade and other receivables are subjected to on-going age analysis. The assessment of credit risk is primarily managed by each subsidiary.

As per the balance sheet date, there were no significant concentrations of customer credit exposures. See Note 2.

Refund and product liability risks

Inwido could incur expenses in correcting faults in delivered products and, in certain cases installation, and could be found liable for damages to individuals or property.

Inwido seeks to limit these risks by following locally adapted procedures for quality assurance and through extensive testing of the Group's products. In 2020, warranty costs amounted to approximately 2.2 percent (2.0) of net sales.

Human capital risk

It is important for Inwido to be able to attract and retain qualified employees. The loss of key individuals could negatively affect the Group's earning capacity.

Inwido works actively to safeguard regeneration and identify future leaders. Senior executives are regularly assessed to identify needs vis-à-vis on-going in-service training and competence development. In addition to applying a market-based salary structure, Inwido also uses various forms of incentives for key individuals within the Group.

Risk of operational interruptions

Inwido could be affected by operational interruptions due to equipment failure, fire, strikes or natural disasters, for example.

Together with its insurance advisors, Inwido conducts regular risk inspections of its production units. The results of these inspections are used to implement preventative measures to reduce the risk of disruptions and accidents in operations. Inwido is, to a certain extent, able to transfer production to other units, mainly within each respective market, in the event that a unit becomes inoperative.

Inwido also strives to maintain well-functioning cooperation with local trade union organizations, thereby reducing the risk of conflicts and strikes.

Risk associated with product development

Inwido's sustained earnings and competitive vigour is to some extent dependent on its capacity to develop and sell new innovative products and solutions demanded by customers. In recent years, market requirements have increased, including in terms of the products' energy performance. Extensive and successful product development by competitors could entail risks in the form of weaker sales for Inwido, and that Inwido must invest significant additional amounts in its own product development in the future. Furthermore, companies currently working in adjacent fields may decide to establish themselves in Inwido's area of operations.

Through Inwido's strong market presence, shifts, trends and new requirements from customers and other stakeholders are caught, providing a basis for the focused, on-going development of the product portfolio. An important part of Inwido's strategy is to develop new products in the areas it considers important for continued growth and to retain its market share.

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Operational risks, cont.

Business development risks

Risks associated with business development such as corporate acquisitions and the Group's long-term strategic focus.

In connection with acquisitions, there is a risk that business risks associated with the acquired companies arise. Establishing operations in new markets may also bring unexpected costs for Inwido. In addition to company-specific and geographic risks, the acquired company's relationships with key personnel, customers and suppliers may be adversely affected. There is also a risk that integration processes could take longer than expected, be more costly than anticipated and that expected and that expected synergies totally or partially fail to materialize. This may mean that the asset values attributable to the acquisitions (goodwill) cannot be realized and consequently that it may be necessary to recognize impairment in those values.

Inwido has developed procedures for the analysis, implementation, review and integration of acquisitions, including due diligence. Risks associated with the Group's long-term planning are primarily addressed once a year when the Board adopts the Group's strategic plan.

Corporate governance and policy risks

These are risks associated with Group executives making decisions that do not agree with Inwido's strategy, internal guidelines and policy documents. Furthermore, employees at Inwido and others with a close relation to Inwido, as well as its customers and suppliers, could commit acts that are unethical, illegal (for example, in violation of applicable corruption and bribery legislation) or that otherwise contravene applicable legislation and regulations or Inwido's internal guidelines and policies.

If Inwido's internal controls and other measures to safeguard compliance with laws, regulations, internal guidelines and policy documents prove insufficient, Inwido's reputation may be damaged and its operations, financial position and earnings could be negatively affected.

Inwido develops internal control procedures on an on-going basis. Examples of these are the division of labour between the Board of Directors and the CEO, instructions for the Managing Directors of the local business units, reporting instructions and Inwido's Code of Conduct.

Insurance risks

Insurance risk involves the expenses that Inwido could incur due to inadequate insurance cover for products, property, disruptions, liability, the environment, transport, life and pensions.

The Group applies a coordinated programme for insurance and secures insurance policies to the extent that this is considered commercially motivated. At the same time, continuous efforts are made to minimize risks in operations through proactive measures. Insurance cover is also maintained for Inwido's senior executives and Board members. Inwido takes the view that its insurance protection is appropriate for the risks normally associated with its operations. There is naturally no guarantee that Inwido will not incur losses beyond the scope of its insurance cover.

Risk associated with IT systems

Inwido's ability to effectively and securely manage sales and other business-critical operations depends on Inwido's IT systems and processes working well and without interruption. Such systems can be disrupted by, for example, software failures, computer viruses, hacking, sabotage and physical damage. Several different business systems are used within Inwido. Most of these are customized and do not intercommunicate, resulting in a certain degree of task duplication and an increased risk of error in connection with internal sales, for example. Customized business systems can also entail Inwido being dependent on external and internal key competencies and access to external expertise regarding the Group's business systems being limited.

Inwido is gradually working to replace industry-unique and company-specific business systems with more general and shared business systems. Among other things, this is intended to enhance operational and data security, and to reduce vulnerability in access to internal and external systems expertise.

Risk associated with suppliers

Inwido's products consist of components from several different suppliers. To be able to manufacture, sell and deliver products, Inwido is dependent on external suppliers meeting agreed requirements regarding volumes, quality and delivery times for example. Deliveries from suppliers that are inaccurate, delayed or that fail to materialize may mean, in turn, that Inwido's deliveries are delayed or must be cancelled, or are deficient or incorrect.

Inwido does not have full insight into its suppliers' operations and consequently it has only a limited capacity to ascertain that its efforts to ensure that suppliers operate in a sustainable and responsible way have an impact. Therefore, Inwido is also exposed to the risk that suppliers act in a manner that could harm Inwido's reputation and brands.

Inwido has close partnerships with leading suppliers within each component group and also reduces the risk of a possible dependence by sourcing through alternative suppliers. Furthermore, Inwido has pre-established contingency plans for the most critical supplies of components, and these plans are reviewed annually. To safeguard supply and to increase its control of the value chain, the Inwido Group also includes a number of companies that produce sealed window panes and fittings and refine aluminium profiles.

Inwido is committed to responsible business and has the ambition that this approach should permeate the entire value chain. As part of this, Inwido requires all major suppliers to acquaint themselves with and sign Inwido's code of conduct for business partners.

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External risks

RISK	MANAGEMENT/EXPOSURE
Market risk
Demand for Inwido's products is affected by activity in the housing market and overall consumer confidence, among other factors. The new building market is more cyclical than the renovation market. In a general economic downturn with lower building activity, demand for Inwido's products and services could decrease. Political decisions can also influence customer demand independently of economic trends (see Political decisions below).	Inwido maintains a presence in a large number of countries and in different market segments, thereby balancing, to a certain extent, various country-specific risks. In addition, most of Inwido's sales take place in the less cyclical consumer market. Inwido's operations are also affected favourably by the debate on climate change and increasing demands for energy-efficient housing, which are not particularly affected by economic trends.
Competition
Inwido operates in markets that primarily comprise a large number of local competitors but that also include companies that operate internationally.	Inwido is Europe's leading supplier of windows and doors, with a strong market position in most of its markets. Inwido's size allows it to derive economies of scale and benefit from best practices in areas including purchasing, product development, production and processes. Inwido constantly strives to meet customer needs with new, innovative, energy-efficient and attractively designed products. This is one of the most important prerequisites for the Group's future competitiveness.
Prices for raw materials
Inwido relies on ongoing deliveries of wood, glass, aluminium, fittings, etc. Inadequate supply could entail increased expenses and, in certain cases, disrupted production. Normally, there is a certain displacement between purchase and sales price adjustments due to agreements entered with suppliers and customers. Altered price levels affect Inwido's purchasing prices with a delay of up to six months.	Inwido has built up its relations with key suppliers over many years. Inwido's central purchasing organization coordinates purchases of the major material categories. By centralizing its purchasing, Inwido is able to enhance its negotiating position and cut costs for materials.
Political decisions
Political decisions can affect demand positively or negatively. Political decisions include changes in tax legislation in countries where Inwido operates. Changes in taxation and subsidies for homes and residential building can, in the long term, affect demand for Inwido's products and services. In addition, changed standards and regulations regarding residential building can impose requirements for changes in the product range in specific markets.	The Group mostly operates in countries where the risk of political decisions that would drastically change its market conditions is judged to be relatively low. In addition, Inwido is active in local industrial organizations that often provide Inwido with early insight into external changes that may affect its business operations.
Risk of legal disputes
This risk involves the expenses that the Group could incur as a consequence of pursuing legal processes, expenses associated with settlements and expenses for any damages it is required to pay.	Inwido's assessment is that there are currently no disputes that could have a material impact on the Group's financial position. Where necessary, Inwido makes provisions for perceived risks of possible losses.
Tax risks
Inwido conducts operations in several countries. Operations, including the implementation of transactions between Group companies, are conducted in accordance with Inwido's interpretation of applicable tax laws, tax agreements and other regulations in the area of tax law and the requirements of the relevant authorities. It is not certain that Inwido's interpretation of the aforementioned laws, agreements, other regulations and requirements is correct in all regards.	Inwido works according to the guidelines in the Group's internal pricing policy.
Covid-19
In general, the negative impact of the Covid-19 pandemic on the Group's operations has been relatively limited from an operational and financial perspective. However, the pandemic has been challenging for some parts of the supply chains, as well as the efficiency of some factories.	The continued developments with regard to the Covid-19 pandemic are a major focus within Inwido and the company is doing its utmost to safeguard the health of our employees, our impact on the communities in which we operate, particularly in terms of limiting the spread of infection, and minimizing any adverse effects on our operations.
In the short to medium term, demand in the consumer and industry markets may be affected and Inwido is monitoring developments closely to act if and when the situation requires this.

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Significant events after the end of the financial year

The Nomination Committee has proposed to the 2021 Annual General Meeting that Per Bertland be elected as the new Chairman of the Board with Georg Brunstam having declined re-election.

Parent Company

The Parent Company is a public limited company with registered offices in Sweden. The Parent Company, Inwido AB (publ), is purely a holding company with no operations of its own. The Parent Company's profit mainly reflects the net of revenues for joint Group services and deductions for wages, other remunerations and interest expenses.

The share and ownership

On 26 September 2014, Inwido's shares were listed on the Nasdaq Stockholm exchange in the Mid-Cap segment. On 31 December 2020, Inwido AB's paid and registered share capital was SEK 231,870,112 and there was a total of 57,967,528 issued and registered shares. The company has one (1) class of shares. Each share entitles the holder to one vote at general meetings. On 31 December 2020, the closing price was SEK 120.50 and the company's market capitalization was SEK 6,985 million. See "The Inwido share" on pages 40-41 for more information on the share and shareholders.

Guidelines for remuneration and other terms of employment for Group management 2020

See Note 8.

The Board of Directors of Inwido AB's proposed guidelines for remunerations to senior executives

The Board of Directors of Inwido AB (publ) does not propose any changes to the guidelines on remunerations for senior executives for the year 2021 (see Note 8).

Corporate governance report

See separate Corporate Governance Report on pages 45-49.

Proposed treatment of profit

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

Share premium reserve	890,705,916
Accumulated profit	347,413,384
Profit for the year	33,952,137
Total, SEK	1,272,071,437

The Board of Directors and President and CEO propose that the profit at the disposal of the Annual General Meeting be distributed in the following manner:

Distributed to shareholders: SEK 4.50 per share	260,853,876
Brought forward to new account	1,011,217,561
Total, SEK	1,272,071,437

In line with the dividend policy and taking the capital structure into account, the Board of Directors proposes that the dividend for the 2020 financial year be set at SEK 4.50 per share (0). The proposed record date for entitlement to dividends is 10 May 2021. If the Annual General Meeting approves the proposal, it is anticipated that the dividend will be paid on 14 May 2021.

Outlook for 2021

As Europe's leading window group, Inwido's business concept is to develop and sell the market's best customized window and door solutions through a decentralized structure and with focus on the consumer-driven market. We will achieve this with a continued strong focus on assuming responsibility for people and society, as well as for the climate. Accordingly, inspired by our new climate ambition, we will halve our carbon dioxide emissions by 2030, to be completely carbon neutral by 2050. In 2020, we reduced our carbon dioxide emissions by slightly more than 7 percent per unit produced, an important step in these efforts. We now enter 2021 with comfort, strengthened by a record order backlog, great ambitions and inexhaustible energy. As always, however, we will achieve this with a hefty dose of humility for the unknown in general and for the continued impact of the Covid-19 pandemic on societies and people in particular.

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Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Consolidated statement of comprehensive income

1 Jan. – 31 Dec., SEKm	Note	2020	2019
Net sales	3	6,680.9	6,630.6
Cost of goods sold	10	-4,944.6	-4,936.6
Gross profit/loss		1,736.3	1,693.9
Other operating income	6	24.0	22.0
Selling expenses	10	-601.6	-640.9
Administrative expenses	9, 10	-424.7	-416.7
Research and development expenses	10	-38.4	-53.7
Other operating expenses	7	-2.8	-4.9
Participations in the earnings of associated companies	15	1.8	1.7
Operating profit/loss	8, 24	694.6	601.4
Financial income	11	1.3	27.4
Financial expenses	11	-72.5	-70.4
Net financial items		-71.1	-43.0
Earnings before tax		623.5	558.4
Taxes	12	-122.9	-125.2
Profit for the year		500.6	433.2
Other comprehensive income
Items reallocated to, or that can be reallocated to profit for the year
Translation differences, foreign operations		-121.1	15.6
Other comprehensive income for the year		-121.1	15.6
Comprehensive income for the year		379.6	448.8
Profit for the year attributable to:
Parent Company shareholders		500.6	433.2
Non-controlling interests		0.1	0.0
		500.6	433.2
Comprehensive income for the year attributable to:
Parent Company shareholders		379.5	448.5
Non-controlling interests		0.1	0.3
		379.6	448.8
Earnings per share
Before dilution (SEK)	19	8.64	7.48
After dilution (SEK)		8.64	7.48

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Consolidated statement of financial position

As per 31 Dec., SEKm	Note	2020	2019
Assets	2
Intangible non-current assets	13	4,490.5	4,650.4
Tangible non-current assets	14	1,260.8	1,272.8
Participations in associated companies	15	16.2	14.4
Financial investments	2	2.3	2.7
Deferred tax assets	12	47.3	47.2
Other non-current assets	2	28.4	37.0
Total non-current assets		5,845.5	6,024.6
Inventories	17	447.0	494.5
Current tax assets		112.8	104.8
Trade receivables	2	401.3	511.9
Prepaid expenses and accrued income		29.4	29.0
Other receivables	2	48.2	63.0
Cash and equivalents	2, 18	1,132.7	242.8
Total current assets		2,171.4	1,446.0
Total assets		8,016.9	7,470.5
Shareholder's equity	19
Share capital		231.9	231.9
Other capital provided		946.0	946.0
Other reserves		106.1	227.2
Profit brought forward including profit for the year		2,871.0	2,370.5
Equity attributable to Parent Company shareholders		4,155.0	3,775.6
Non-controlling interests		0.0	0.0
Total shareholder's equity		4,155.1	3,775.5
Liabilities	2
Non-current interest-bearing liabilities	2, 20	1,849.2	1,926.8
Non-current lease liabilities	24	285.7	285.3
Deferred tax liabilities	12	119.9	119.2
Other liabilities	2	4.4	12.5
Total non-current liabilities		2,259.2	2,343.8
Other current interest-bearing liabilities	2, 20	38.7	41.7
Current lease liabilities	24	72.2	81.6
Other provisions	22	33.0	31.3
Trade and other payables	2	722.4	528.7
Tax liabilities		101.2	89.9
Other liabilities	2	191.8	185.6
Accrued expenses and prepaid income	23	443.4	392.5
Total current liabilities		1,602.6	1,351.2
Total liabilities		3,861.8	3,695.0
Total equity and liabilities		8,016.9	7,470.5

Information on the Group's pledged assets and contingent liabilities, see Note 25.

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Consolidated statement of changes in equity

2019, SEKm	Equity attributable to Parent Company shareholders					Non-controlling interests	Total equity
	Share capital	Other capital contributions	Translation reserve	Profit brought forward	Total
Equity, opening balance, 1 Jan. 2019	231.9	946.0	211.8	2,106.2	3,495.9	5.1	3,501.0
Adjustment in accordance with IFRS 16				-29.0	-29.0	0.0	-29.0
Adjusted equity, opening balance, 1 Jan. 2019	231.9	946.0	211.8	2,077.1	3,466.8	5.1	3,472.0
Profit for the year				433.2	433.2	0.0	433.2
Other comprehensive income
Change in translation reserve for the year (exchange rate difference)			15.3		15.3	0.2	15.6
Other comprehensive income for the period			15.3		15.3	0.2	15.6
Total comprehensive income for the period, excluding transactions with the company's owners			15.3	433.2	448.5	0.3	448.8
Transactions with the Group's owners
Dividends paid to Parent Company shareholders				-144.9	-144.9	-	-144.9
Acquisition/divestment of participation in non-controlling interests				5.1	5.1	-5.4	-0.3
Total Transactions with the Group's owners	-	-	-	-139.8	-139.8	-5.4	-145.2
Equity, closing balance, 31 Dec. 2019	231.9	946.0	227.2	2,370.5	3,775.6	0.0	3,775.5
2020, SEKm	Equity attributable to Parent Company shareholders					Non-controlling interests	Total equity
---	---	---	---	---	---	---	---
	Share capital	Other capital contributions	Translation reserve	Profit brought forward	Total
Equity, opening balance, 1 Jan. 2020	231.9	946.0	227.2	2,370.5	3,775.6	0.0	3,775.5
Profit for the year				500.6	500.6	0.1	500.6
Other comprehensive income
Change in translation reserve for the year (exchange rate difference)			-121.1		-121.1	0.0	-121.1
Other comprehensive income for the period			-121.1		-121.1	0.0	-121.1
Total comprehensive income for the period, excluding transactions with the company's owners			-121.1	500.6	379.5	0.1	379.6
Transactions with the Group's owners
Total Transactions with the Group's owners	-	-	-	-	-	-	-
Equity, closing balance, 31 Dec. 2020	231.9	946.0	106.1	2,871.0	4,155.1	0.0	4,155.1

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Consolidated cash flow statement

1 Jan. – 31 Dec., SEKm	Note	2020	2019
Operating activities	2, 18
Earnings before tax		623.5	558.4
Depreciation/amortization and impairment of assets		255.0	268.5
Adjustment for items not included in cash flow	28	15.1	10.0
Income tax paid		-118.2	-123.2
Cash flow from operating activities before changes in working capital		775.4	713.7
Cash flow from changes in working capital
Increase(-)/decrease(+) in inventories		34.6	51.6
Increase(-)/decrease(+) in operating receivables		103.6	144.1
Increase(-)/decrease(+) in operating liabilities		295.7	16.2
Cash flow from operating activities		1,209.3	925.6
Investing activities
Acquisitions of tangible non-current assets		-166.9	-210.2
Divestments of tangible non-current assets		3.8	5.3
Acquisitions of intangible assets		-14.3	-29.9
Acquisitions of subsidiary companies/businesses, net effect on liquidity	5	-	-37.0
Divestments of financial assets		-2.4	-1.9
Cash flow from investing activities		-179.7	-273.7
Financing activities
Dividends paid to Parent Company shareholders		-	-144.9
Change in interest-bearing liabilities	28	-111.1	-429.3
Cash flow from financing activities		-111.1	-574.1
Cash flow for the year		918.5	77.8
Cash and equivalents at beginning of the year		242.8	165.0
Exchange rate difference in cash and equivalents		-28.5	0.0
Cash and equivalents at end of the year		1,132.7	242.8
Interest paid		-37.5	-49.0
Interest received		1.1	2.3

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Income Statement, Parent Company

1 Jan. – 31 Dec., SEKm	Note	2020	2019
Net sales	3	73.7	65.5
Gross profit/loss		73.7	65.5
Administrative expenses	9	-76.8	-93.5
Other operating income	6	0.6	1.4
Other operating expenses	7	-	-
Operating profit/loss	8	-2.5	-26.6
Result from financial items:
Profit/loss from participations in Group companies	11	0.6	21.4
Profit from participations in associated companies	15	-	-
Other interest income and similar profit/loss items	11	47.4	91.3
Interest expense and similar profit/loss items	11	-39.8	-43.1
Profit after financial items		5.6	43.0
Appropriations
Difference between depreciation/amortization according to plan and reported depreciation/amortization		0.1	-
Group contributions received		129.1	190.7
Group contributions paid		-92.4	-99.1
Earnings before tax		42.4	134.7
Taxes	12	-8.4	-24.3
Profit for the year		34.0	110.4

Statement of comprehensive income, Parent Company

Items reallocated to, or that can be reallocated to profit for the year
Profit for the year	34.0	110.4
Other comprehensive income for the year	-	-
Other comprehensive income for the year	-	-
Comprehensive income for the year	34.0	110.4

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Balance Sheet, Parent Company

As per 31 Dec., SEKm	Note	2020	2019
Assets
Non-current assets
Intangible non-current assets	13	0.2	11.1
Tangible non-current assets	14	1.7	2.0
Financial non-current assets:
Participations in Group companies	27	2,324.4	2,251.1
Participations in associated and jointly controlled companies	15	1.0	1.0
Receivables from Group companies	16	1,210.4	1,812.6
Deferred tax assets	12	7.8	6.8
Other receivables		0.0	0.0
Total financial non-current assets		3,543.6	4,071.5
Total non-current assets		3,545.6	4,084.6
Current assets
Current receivables:
Current tax assets		4.6	-
Receivables from Group companies	16	80.9	72.5
Prepaid expenses and accrued income		4.0	4.2
Other receivables		0.0	0.0
Total current receivables		89.5	76.7
Cash and equivalents		1,041.1	159.1
Total current assets		1,130.6	235.8
Total assets		4,676.1	4,320.4
Shareholders' equity and liabilities
Equity	19
Restricted equity:
Share capital (57,968 thousand shares)		231.9	231.9
Statutory reserve		55.3	55.3
Non-restricted equity:
Share premium reserve		890.7	890.7
Accumulated profit		347.4	237.0
Profit for the year		34.0	110.4
Total shareholder's equity		1,559.3	1,525.3
Untaxed reserves
Accumulated depreciation/amortization in addition to plan		0.2	0.3
Total untaxed reserves		0.2	0.3
Non-current liabilities
Liabilities to credit institutions	21	1,846.6	1,893.1
Liabilities to Group companies		1,222.0	853.0
Deferred tax liabilities	12	0.0	0.0
Other liabilities		10.9	9.3
Total non-current liabilities		3,079.5	2,755.4
Current liabilities
Liabilities to Group companies		0.2	0.4
Trade and other payables		6.9	11.0
Current tax liabilities		0.0	0.6
Other liabilities		10.6	11.3
Accrued expenses and prepaid income	23	19.5	16.3
Total current liabilities		37.2	39.5
Total equity, untaxed reserves and liabilities		4,676.1	4,320.4

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Statement of changes in equity, Parent Company

2019, SEKm	Restricted equity		Non-restricted equity
	Share capital	Statutory reserve	Share premium reserve	Accumulated profit	Profit/loss for the year	Total shareholders’ equity
Equity, opening balance, 1 Jan. 2019	231.9	55.3	890.7	287.0	95.0	1,559.8
Profit for the year					110.4	110.4
Other comprehensive income for the year					-	-
Comprehensive income for the year					110.4	110.4
Appropriation of profit				95.0	-95.0	-
Transactions with the Group’s owners
Dividend				-144.9		-144.9
Equity, closing balance, 31 Dec. 2019	231.9	55.3	890.7	237.0	110.4	1,525.3
2020, SEKm	Restricted equity		Non-restricted equity
---	---	---	---	---	---	---
	Share capital	Statutory reserve	Share premium reserve	Accumulated profit	Profit/loss for the year	Total shareholders’ equity
Equity, opening balance, 1 Jan. 2020	231.9	55.3	890.7	237.0	110.4	1,525.3
Profit for the year					34.0	34.0
Other comprehensive income for the year					-	-
Comprehensive income for the year					34.0	34.0
Appropriation of profit				110.4	-110.4	-
Transactions with the Group’s owners
Dividend				-		-
Equity, closing balance, 31 Dec. 2020	231.9	55.3	890.7	347.4	34.0	1,559.3

Inwido AB (publ)

Annual and Sustainability Report 2020

FINANCIAL STATEMENTS

Cash flow statement, Parent Company

1 Jan. – 31 Dec., SEKm	Note	2020	2019
Operating activities
Profit after financial items		5.6	43.0
Depreciation/amortization and impairment of assets		29.1	23.1
Adjustment for items not included in cash flow	28	29.7	38.6
Income tax paid		-14.6	-23.5
Cash flow from operating activities before changes in working capital		49.8	81.2

Cash flow from changes in working capital
Increase(-)/decrease(+) in inventories		-	-
Increase(-)/decrease(+) in operating receivables		86.9	111.8
Increase(-)/decrease(+) in operating liabilities		-3.0	-8.6
Cash flow from operating activities		133.7	184.5

Investing activities
Acquisitions/divestments of intangible assets		-0.3	-12.2
Acquisitions/divestments of tangible non-current assets		-	0.9
Investments in financial assets		-	-
Divestments of financial assets		447.6	404.3
Cash flow from investing activities		447.4	393.0

Financing activities
Dividends paid		-	-144.9
Change in interest-bearing liabilities	28	326.0	-301.1
Cash flow from financing activities		326.0	-446.0

Cash flow for the year		907.1	131.4
Cash and equivalents at beginning of the year		159.1	27.7
Exchange rate differences in cash and equivalents		-25.1	-
Cash and equivalents at end of the year		1,041.1	159.1

Dividends received		18.2	21.4
Interest received		46.0	62.8
Interest paid		-33.2	-43.9

Inwido AB (publ)

Annual and Sustainability Report 2020
71

NOTES

NOTE 1

Accounting principles

Agreement with standards and legislation

The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) as adopted by the EU. In addition, the Swedish Financial Reporting Board's recommendation RFR 1 Supplementary accounting rules for groups has also been applied.

Valuation principles applied in the preparation of the consolidated financial accounts.

Assets and liabilities are reported at historical cost with the exception of certain financial assets and liabilities, which are reported at fair value. Financial assets and liabilities measured at fair value consist of derivative instruments, unlisted shares and conditional purchase considerations.

Functional currency and reporting currency

The functional currency of the Parent Company is SEK and this is also the reporting currency of the Group. Consequently, the financial accounts are presented in SEK. All amounts are rounded off to the nearest thousand unless otherwise stated.

Assessments and estimates in the financial accounts

Preparation of the financial accounts in accordance with IFRS requires management making assessments, estimations and assumptions that affect the application of the accounting principles and the figures reported for assets, liabilities, income and expenses. The actual outcome may deviate from these estimations and assessments. The estimations and assessments are reviewed regularly. Changes in estimations are reported in the period in which they are made if they only affect that period, or in the period in which they are made and future periods if they affect both the period concerned and future periods. Assessments made by management in the application of IFRS that have a significant effect on the financial statements and estimates that may cause material adjustments to the financial statements of the ensuing year are described in greater detail in Note 29.

Amended accounting principles necessitated by new or amended IFRS

Amended accounting principles necessitated by new or amended IFRS applicable as of 1 January 2020 have had no material effect on the Group's reporting.

New IFRS yet to be applied

New and amended IFRS for future application are not expected to have any significant impact on the consolidated accounts.

Operating segment reporting

Operating segments are parts of the Group that conduct operations from which it can generate income and incur expenses and for which independent financial information is available.

Operating segments are reported in a manner consistent with the internal reporting provided to the highest executive decision maker. The highest executive decision maker is the function responsible for allocating resources and assessing the performance of the operating segments. In this context, the Group has identified the President and CEO and Group management as the highest executive decision maker. Inwido's reports two operating segments, North and South. See Note 4 for further details of the operating segments.

In the segment reporting, IAS 17 is still applied for leases rather than IFRS 16, which is a difference between the accounting principles applied in the consolidated accounts and those applied for the segments.

Classification

Non-current assets essentially consist of amounts that are expected to be recovered or paid more than 12 months after the balance sheet date. While current assets essentially consist of amounts that are expected to be recovered or paid within 12 months of the balance sheet date. Non-current liabilities essentially consist of amounts that Inwido is unconditionally entitled to choose to pay later than 12 months after the end of the reporting period. If Inwido has no such entitlement at the end of the reporting period – or if the liability is expected to be settled within the normal business cycle – the amount is reported as a current liability.

Consolidation principles

Subsidiaries

Subsidiaries are companies over which Inwido AB has a controlling influence. A controlling influence exists if the Parent Company has an influence over the target of the investment, is exposed or has rights to variable returns on its commitment and can exercise its influence over the investment to affect the return. In assessing whether a controlling influence exists, shares potentially conveying voting rights are taken into account as is the existence of de facto control.

Acquisitions

Subsidiaries are reported in accordance with the acquisition method. The method entails acquisitions of subsidiaries being viewed as transactions through which the Group indirectly acquires the subsidiary's assets and assumes its liabilities. The acquisition analysis determines the fair value of the acquired identifiable assets and assumed liabilities, as well as any possible non-controlling interests on the date of acquisition. Transaction expenses that arise, with the exception of transaction expenses attributable to the issue of equity instruments or liability instruments, are recognized directly in profit/loss for the year.

For business combinations for which payment made, possible non-controlling interests and fair value of previously owned participations (in the event of gradual acquisitions) exceed the fair value of the acquired assets and assumed liabilities that are recognized separately, the difference is recognized as goodwill. When the difference is negative, what is known as a bargain purchase, this is recognized directly in profit for the year. Payment made in connection with the acquisition does not include payments that relate to the settlement of previous business connections. This type of settlement is recognized in profit.

Conditional purchase prices are recognized at fair value at the point of acquisition. In cases where the conditional purchase price is classified as an equity instrument, no revaluation or settlement is carried out under equity. Other conditional purchase prices are revalued on each report date and the change is recognized in profit/loss for the year.

Acquisitions that do not relate to 100 percent of the subsidiary give rise to non-controlling interests. There are two options for reporting non-controlling interests. The two options are to recognize the percentage of non-controlling interests that makes up proportional net assets, or to recognize non-controlling interests at fair value, which means that non-controlling interests form a percentage of goodwill. The choice between the two alternatives for recognizing non-controlling interests can be made on a case by case basis. For acquisitions that are made in stages, goodwill is determined on the day the controlling interest arises. In transactions with non-controlling interests, in connection with acquisitions or on other occasions, the company has chosen to apply the Present Access Method (PAM) for those transactions in which non-controlling interests remain exposed to the return associated with their holding. This represents a selection of accounting policy for such transactions. PAM entails a liability being recognized at the present value of the amount for which the shares will be redeemed. The item is offset against shareholders' equity attributable to Parent Company shareholders (retained earnings). For futures and equity relating to options, subsequent changes in the carrying amount of the liability are recognized in the income statement.

Acquisitions from non-controlling holdings

Acquisitions from non-controlling interests are recognized as transactions under shareholders' equity, i.e. between the Parent Company's owner (under profit brought forward) and non-controlling interests. Consequently no goodwill arises as a result of these transactions. The change in non-controlling interests is based on their proportional share of net assets.

Sales to non-controlling interests

Sales to non-controlling interests where a controlling interest remains are recognized as transactions under shareholders' equity, i.e. between the Parent Company's owner and non-controlling interests. The difference between proceeds received and the non-controlling interest's proportional share of acquired net assets is reported under retained profit.

Associated companies

Associated companies are those in which the Group has a significant, but not controlling, influence over operational and financial control, commonly through holdings corresponding to between 20 and 50 percent of votes. From the point

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

at which a significant influence is obtained, holdings in associated companies are reported in the consolidated accounts in accordance with the equity method. The equity method entails the value of holdings in associated companies reported in the consolidated accounts being equivalent to the Group's share of the associated companies' equity, as well as consolidated goodwill and any other consolidated surplus. In the consolidated income statement, participations in the earnings of associated companies include the Group's participations after tax in the net earnings of associated companies, adjusted for possible amortization/depreciation and impairment or reversal of acquired surpluses. Dividends received from an associated company decrease the reported value of the investment.

Foreign currency

Transactions in foreign currencies

Transactions in foreign currencies are translated into the functional currency at the exchange rate in force on the transaction date. The functional currency is the currency of the primary economic environments in which the business units carry out their business. Monetary assets and liabilities in foreign currencies are translated to the functional currency at the exchange rate in force at the balance sheet date. Exchange rate differences arising from the conversions are recognized in profit/loss for the year. Non-monetary assets and liabilities recognized at their historical costs are translated at the exchange rate applicable at the time of the transaction. Non-monetary assets and liabilities recognized at fair value are converted to the functional currency at the rate in effect at the time of the fair value assessment.

Foreign businesses financial statements

Assets and liabilities in foreign businesses, including goodwill and other groupwise surplus or deficit values, are translated from the foreign operation's functional currency into the Group's reporting currency, SEK, at the exchange rate applicable on the balance sheet date. Income and expenses in a foreign operation are translated into SEK at an average exchange rate approximating the currency exchange rates applicable on the relevant transaction dates. Translation differences arising in connection with the translation of foreign operations are reported in other comprehensive income and accumulated in a separate component in equity titled translation reserve.

Income

Sales of windows and doors

The Group's sales consist mainly of sales doors and windows manufactured based on a specific customer order where the customer has specified the model, dimensions, colour, materials, type of glass in windows, etc. Inwido is also entitled to full payment even if customers cancel their orders. Accordingly, the criteria for revenue recognition in accordance with IFRS 15 are met in principle. The manufacturing time for each individual order is, however, very short, meaning that Inwido, for practical reasons, does not recognize the revenue until the goods have been delivered to the customer, because the difference between revenue recognition over time and revenue recognition on delivery would not give rise to a significant difference in the Group's recognition of revenue from sales of windows and doors. Revenues are recognized after deductions for any discounts and volume-based customer bonuses.

Sales of windows and doors with installation

On installation of windows and/or doors in the customer's property, the criteria for revenue recognition over time in IFRS 15 are fulfilled because Inwido's performance improves a property controlled by the customer. The degree of completion is measured based on the number of windows or doors installed in relation to the total number of doors or windows to be installed.

Leasing

When an agreement is entered into, the Group assesses whether the agreement is, or contains, a lease arrangement. An agreement is, or contains, a lease arrangement if it transfers the right to determine the use of an identified asset for a certain period in exchange for compensation.

At the start of the lease or when reviewing a lease containing several components – leasing and non-leasing components – the Group distributes the compensation, in accordance with the agreement, between each component based on the stand-alone price. However, for leases of buildings and surrounding land where the Group is a lessee, the Group has chosen not to distinguish non-leasing components and recognizes leasing and non-leasing components paid in fixed amounts as a single leasing component.

Leasing agreements where the Group is the lessee

The Group recognizes a right-of-use asset and a lease liability on the commencement date of the lease. The right-of-use asset is initially valued at cost, which consists of the initial value of the lease liability plus leasing fees paid on or before the commencement date plus any initial direct expenses. The right-of-use asset is depreciated on a straight-line basis from the commencement date until the end of the asset's useful life or the end of the lease period, whichever is sooner, which, for the Group, is normally the end of the lease term. In rarer cases, where the cost of the right-of-use asset reflects the Group's intention to exercise an option to purchase the underlying asset, the asset is depreciated until the end of its useful life.

The lease liability – which is divided between long-term and short-term – is initially valued at the present value of the remaining lease fees over the assessed term of the lease. The lease period is the non-cancellable period plus additional periods in the agreement if it is deemed reasonably certain on the commencement date that these will be utilized. The Group leases buildings and surrounding land for warehouses and production units. These leases normally have a maturity of between 10 and 25 years. Some leases include an option to renew the lease at the end of its term with an additional term of the same length. Some leases include leasing fees based on fluctuations in local price indexes. Certain leases include extension and termination options that the Group may opt to exercise or not up to one year before the end of the non-cancellable period. Whether it is reasonably certain that an extension option will be exercised is determined on the commencement date of the lease. The Group is reviewing whether it is reasonably certain that an extension option will be exercised if there is an important event or significant change in circumstances within the Group's control. For the Group's leased production units, extension options are considered reasonably safe to exercise if they can be exercised within a ten-year period, provided that the operations are conducted normally. The Group's leases for office premises and showrooms consist mainly of non-cancellable periods of three to five years, which are extended by additional periods of three to five years if the Group does not terminate the lease within a notice period of 9 to 12 months. In most cases where offices are concerned, the Group makes the assessment that it is not reasonably certain that the contracts will be extended beyond the initial period – that is, the term of the lease is usually deemed to be a single period. The Group leases vehicles and forklifts with lease terms of three to five years. In some cases, the Group has an opportunity to purchase the asset at the end of the lease term. In other cases, the Group guarantees the residual value of the leased asset at the end of the lease term. Extension options exist only to an insignificant extent.

Leasing fees are normally discounted at the Group's marginal borrowing rate, which, in addition to the Group's/Company's credit risk, reflects the term of each lease, the currency involved and the quality of the underlying asset as collateral. However, in cases where the implicit interest rate of the lease can easily be determined, that interest rate is applied, which is the case for some of the Group's vehicle leases.

The lease liability consists of the present value of the following fees over the assessed term of the lease.

fixed fees, including any explicitly referred to as such,
variable leasing fees linked to an index or price ("interest-linked (including fees tied to STIBOR or EURIBOR rates)"), initially valued using the index or price ("rate") applicable on the commencement date,
any residual value guarantees expected to be paid,
the exercise price for a call option that the Group is reasonably certain that it will be able to exercise and
Penalties payable on termination of the lease agreement if the estimated term of the lease suggests that such termination will occur.

The value of the liability is increased by the interest expense for each period and reduced by the lease payments. Interest expense is calculated by multiplying the value of the liability by the discount rate.

The lease liability for the Group's premises with indexed rent is calculated based on the rent applicable at the end of each reporting period. At this time, a corresponding adjustment is made in the liability as is made in the carrying amount for the right-of-use asset. Correspondingly, the values of the liability and the asset are adjusted in connection with the re-assessment of the term of the lease. This is performed when the termination date of the previously assessed term of the lease has passed, when significant events occur or when circumstances under the Group's control change significantly, affecting the applicable assessment of the term of the lease.

The Group presents right-of-use assets and lease liabilities as separate items in the statement of financial position.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

For leases with a term of 12 months or less, or with an underlying asset of low value (less than SEK 50,000), no right-of-use asset or lease liability are reported. Leasing fees for such leases are expensed on a straight-line basis across the term of the lease.

Financial income and expenses

Financial income consists of interest income on invested funds, dividend income, interest expenses on leases, as well as gains on changes in the value of financial assets/liabilities measured at fair value through the Income Statement. Interest income from financial instruments is recognized according to the effective interest method. The effective interest rate is the interest rate that precisely discounts the estimated future deposits and disbursements across the expected maturity of the financial instrument at the reported gross value of a financial asset or the accrued acquisition value of a financial liability. Financial expenses consist of interest expenses on loans, the effect of the resolution of present value calculations for provisions, value losses on financial assets/liabilities valued at fair value via profit and the impairment of financial assets. Borrowing expenses are recognized in profit/loss applying the effective interest method, except where they are directly attributable to the acquisition, construction or production of assets that take considerable time to complete for their intended use or for sale, in which case they are included in the cost of the assets. No interest is currently expensed, since, in the Group's assessment, it does not have any assets that qualify in accordance with IAS 23. Exchange rate gains and losses are reported net.

Taxes

Income taxes consist of current tax and deferred tax. Income taxes are recognized in profit or loss unless the underlying transaction is recognized in other comprehensive income or in shareholders' equity, whereby the associated tax effect is recognized outside profit or loss. Current tax is tax due for payment or receipt in respect of the financial year, using tax rates decided or virtually decided upon on the balance sheet date. Adjustment of current tax related to earlier periods is also included. Deferred tax is calculated in accordance with the balance sheet method, proceeding on the basis of temporary differences between the carrying amounts and taxable values of assets and liabilities. Temporary differences are not taken into consideration that arise on initial recognition of goodwill or of assets and liabilities that are not business combinations affecting reported or taxable profit at the time of the transaction. Nor are temporary differences taken into account that are related to investments in subsidiaries and associated companies which are not expected to be reversed in the foreseeable future. The valuation of deferred tax provided is based on how carrying amounts of assets or liabilities are expected to be realized or settled. Deferred tax is calculated by applying the tax rates and regulations decided or virtually decided upon at the balance sheet date. Deferred tax receivables for tax-deductible temporary differences and loss carryforwards are recognized only to the extent it is likely that these items will be able to be utilized. The value of deferred tax receivables is derecognized when it is no longer deemed likely that they can be utilized. Any additional income tax arising from a dividend is recognized at the same time as the dividend is recognized as a liability.

Financial instruments

Financial instruments reported in the statement of financial position include, on the asset side, cash and cash equivalents, trade receivables, unlisted shares, derivatives and other receivables. On the liability side, there are accounts payable, loan liabilities, derivatives and liabilities for conditional purchase considerations.

Recognition and measurement on initial accounting

Accounts receivable and debt instruments issued are reported when issued. Other financial assets and financial liabilities are recognized when the Group becomes party to the contractual terms of the instrument. Financial instruments are initially recognized at fair value with additions/deductions for transaction expenses, except for instruments measured at fair value on an ongoing basis through the Income Statement, for which transaction expenses are instead expensed as they arise. Accounts receivable (without a significant financing component) are initially valued at the transaction price determined in accordance with IFRS 15.

Classification and subsequent valuation of financial assets

Under IFRS 9, a financial asset is classified on initial recognition as valued either

at amortized cost, at fair value through other comprehensive income (debt instrument investment), at fair value through other comprehensive income (equity investment), or fair value through the Income Statement. The following describes how Inwido's various holdings of financial assets have been classified:

Holdings of shares and participations in unlisted companies

The Group's holdings of shares and participations in unlisted companies are valued at fair value through the Income Statement.

Derivative assets

Derivatives are reported at fair value through the Income Statement as Inwido does not apply hedge accounting.

Other financial assets

All other financial assets, which constitute the majority of the Group's financial assets, are reported at amortized cost. This is because they are held within the framework of a business model that has the objective of receiving the contractual cash flows while the cash flows from the assets consist solely of payments of principal and interest.

Classification and subsequent valuation of financial liabilities

Financial liabilities are classified as measured at amortized cost or measured at fair value through profit or loss. The financial liabilities that are measured at fair value through the Income Statement consist of conditional purchase considerations for business combinations and derivatives of negative fair value for Inwido. All other financial liabilities are reported at amortized cost applying the effective interest method.

Derecognition of financial assets and financial liabilities

The Group derecognizes a financial asset from the statement of financial position when the contractual right to cash flows from the financial asset ceases or if the Group transfers the right to receive the contractual cash flows through a transaction whereby all material risks and benefits of ownership are transferred. A financial liability is derecognized from the statement of financial position when the commitments specified in the contract are fulfilled, cancelled or cease to apply. The Group also derecognizes a financial liability when the contractual terms are modified and the cash flows from the modified liability are significantly different. In that case, a new financial liability is recognized at fair value based on the modified terms.

Impairment

Carrying amounts of the Group's assets are reviewed at each balance sheet date to assess whether there is any indication of impairment. IAS 36 is applied in impairment testing for assets other than financial assets which are tested in accordance with IFRS 9, inventories and deferred tax assets. For the exceptions stated above, the carrying amount is assessed according to the relevant standard.

Impairment tests for tangible and intangible assets, and holdings in subsidiaries, associated companies, joint ventures, etc. If a need for impairment is indicated, the recoverable amount of the assets calculated in accordance with IAS 36 (see below). The recoverable amount for goodwill, other intangible assets with indefinite useful lives and intangible assets that are not yet ready for use is calculated annually. If, in connection with impairment testing, largely independent cash flows cannot be established for an individual asset, assets are grouped at the lowest level at which largely independent cash flows can be identified – this is known as a cash generating unit. Impairment is recognized when an asset's or cash generating unit's carrying amount exceeds the recoverable amount. Impairment is charged to the statement of comprehensive income. Impairment of assets attributable to a cash generating unit is primarily allocated to goodwill. After this, a proportional impairment of all other assets included in the unit is implemented.

The recoverable amount is the higher of fair value less expenses to sell and value in use. Upon calculating the value in use, future cash flows are discounted at a discount rate that takes into account risk-free interest and the risk associated with the specific asset.

Impairment is reversed if there is an indication that it is no longer necessary, and there has been a change in the assumptions which formed the basis of the calculation of the recoverable amount. However, impairment of goodwill is never reversed. A reversal is only made to the extent that the asset's carrying amount after reversal does not exceed the carrying amount that the asset would have had, with a deduction for amortization, if no write-down had been carried out.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

Impairment of financial assets

For the financial assets that are valued at amortized cost, a provision for expected loan losses is calculated and recognized. The provision for credit losses is initially calculated and reported based on expected credit losses over a 12-month period. If the credit risk has increased significantly since the financial asset was first recognized, a provision is calculated and recognized for credit losses based on expected credit losses for the entire remaining maturity of the asset. For accounts receivable not including a significant financing component, a simplified method is applied and the provision for credit losses is calculated and recognized on the basis of expected credit losses for the entire remaining term, regardless of whether the credit risk has increased significantly or not. The calculation of expected credit losses is based mainly on data from historical losses for similar receivables and counterparties. The historical data is evaluated and adjusted continuously based on the current situation and the Group's expectation of future events.

Tangible non-current assets

Owned assets

Tangible non-current assets are stated in the Group at cost less accumulated depreciation and any write-downs. The cost includes the purchase price and expenses directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended. Borrowing expenses directly attributable to the purchase, construction or production of assets that take considerable time to complete for the intended use or for sale are included in cost. Accounting principles for impairment are described on the following page. The cost of non-current assets manufactured in-house includes expenses for materials, expenses for employee benefits, if applicable, other manufacturing expenses considered directly attributable to the non-current asset and estimated costs of dismantling and removing the asset and restoring the site or area where they are located. Tangible assets comprising parts with different useful lives are treated as separate components of tangible assets. The carrying amount for a tangible non-current asset is derecognized from the statement of financial position on scrapping or sale, or when no future economic benefits are expected from the use, scrapping or sale of the asset. Gains or losses arising from the sale or scrapping of an asset constitute the difference between the sale price and the asset's carrying amount less direct sales costs. Gains and losses are recognized as other operating income/expense.

Subsequent expenses

Subsequent expenses are only added to the cost if it is probable that the future economic benefits associated with the asset will flow to the company and the cost can be measured reliably. All other subsequent expenses are expensed in the period they arise. The question of whether a subsequent expense is attributable to the replacement of identified components, or parts thereof (whereby such expenses are capitalized) plays a decisive role in determining if that expense should be added to cost. Even in cases where new components are constructed, the expense is added to the cost. Any non-depreciated carrying amounts for replaced components, or parts of components, are scrapped and derecognized in connection with replacement. Repairs are expensed as they are incurred.

Depreciation principles

Depreciation is carried out on a linear basis over the asset's estimated useful life. The Group applies the component approach, whereby the component's assessed useful life forms the basis for depreciation.

Estimated useful lives:

Buildings 25–50 years
Land improvements 20–27 years
Machinery and technical plant 10 years
Equipment, tools, fixtures and fittings 3–5 years

Land is not depreciated. Depreciation methods used and the residual value and useful life of assets are reviewed at each year-end.

Intangible assets

Goodwill

Goodwill represents the difference between the cost of the business combination and the fair value of acquired assets, assumed liabilities and contingent liabilities. Goodwill is stated at cost less any accumulated impairment. Goodwill is distributed to cash generating units and is tested annually to determine possible impairment needs. Goodwill arising from acquisitions of associated companies is included in the carrying amount for participations in associated companies. For business combinations where the cost is less than the net value of the acquired assets and assumed liabilities and contingent liabilities, the difference is recognized directly in profit or loss.

Product development expenses

Development expenses, where research results or other knowledge are applied to achieve new or improved processes, are recognized as an asset in the statement of financial position if the product or process is technically and commercially feasible and the company has sufficient resources to complete development and to then use or sell the non-current asset. Most of the Group's product expenses pertain to unique customer adaptations or updating existing products in line with technical advances. For such expenses, the criteria for capitalization stipulated by IAS 38 are not considered to have been met and the expenses are recognized as expenses against profit/loss for the year in which they are incurred.

Market and customer-based assets

Market and customer-based assets primarily include valued customer relationships and brands identified in connection with acquisitions. Customer relations are recognized at cost less accumulated amortization and impairment. Brands acquired by the Group are recognized at cost less accumulated depreciation (see below) and any impairment alternatively considered to have an indefinite useful life where they are recognized at cost less accumulated impairment. For brands with an indefinite useful life, impairment testing is performed at least once annually.

Other intangible assets

Other intangible assets mainly include customer agreements and software acquired by the Group. These assets are recognized at cost less accumulated amortization and impairment. Expenses for internally generated goodwill and internally generated trademarks are recognized in profit or loss as they are incurred.

Subsequent expenses

Subsequent expenses for capitalized intangible assets are only recognized as assets in the statement of financial position if they increase the future economic benefits for the specific assets to which they refer. All other expenses are expensed as they are incurred.

Depreciation principles

Amortization is charged to statement of comprehensive income on a linear basis over the intangible assets' estimated useful lives, provided the useful life is not indefinite. The useful lives of assets are reassessed at least once per year. Goodwill and brands with an indefinite useful life or that are not yet ready for use are tested for possible impairment annually and as soon as indications arise that the asset in question has decreased in value. Intangible assets with a definite useful life are depreciated from the point at which they are available for use.

The estimated useful lives are:

Customer agreements 5 years
Software 5–10 years
Development expenditure generated internally 5–10 years
Customer relations 5–15 years
Brands Indefinite useful life

Inventories

Inventories are stated at the lower of cost and net realizable value. The cost for inventories is based on the first-in first-out principle (FIFO) and includes costs arising upon acquisition of the inventories and their transport to their current location and condition. For manufactured goods and work in progress, the purchase value includes a reasonable proportion of indirect expenses based on normal capacity. Net realizable value is the estimated sales price in the ordinary course of business, less estimated expenses for completion and bringing about a sale.

Share capital

Dividends

Dividends are recognized as a liability once approved by the Annual General Meeting.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

Employee benefits

Defined contribution plans

For salaried employees in Sweden, defined benefit pension commitments for retirement and family pension under the ITP 2 plan are secured through an insurance policy with Alecta.

Consequently, the ITP2 pension plan insured through a policy with Alecta is recognized as a defined contribution plan. Other pension plans in the Group are defined contribution pension plans. Defined contribution pension plans are those for which the Group only pays fixed fees and is under no obligation to pay additional fees if plan assets are insufficient. Consequently the employee bears the risk regarding future pension levels. Obligations regarding defined contribution plans are recognized as an expense in the statement of comprehensive income at the rate at which they are earned by employees performing services for the company.

Remuneration on termination of employment

An expense for remuneration in connection with termination of employment for employees is recognized only if the company is demonstrably obliged in a formal detailed plan to terminate employment ahead of the normal point in time, with no realistic possibility of a retraction. When remuneration is paid as an incentive for voluntary departure, an expense is recognized when the offer has been made and can no longer be withdrawn. The amount is calculated based on a probability calculation regarding the number of employees who will accept the offer.

Short-term employee benefits

Current employee benefits are calculated without discounting and are expensed as the relevant services are received. Expected expenses for profit sharing and bonus payments are recognized as liabilities when the Group has a present legal or constructive obligation to make such payments as a consequence of services being received from employees and that obligation can be calculated reliably.

Options and convertibles programme

Until 2019, Inwido had a warrants programme whereby warrants have been sold to senior executives. The options were sold at a price equal to the estimated fair value on the acquisition date, meaning that there were no amounts to report as share-based compensation in the balance sheet or in the income statement under IFRS 2. The Group also had a convertible programme in which all employees were given the opportunity to participate. The convertibles expired in 2019. The convertibles were also issued at a price equal to fair value on the acquisition date. The convertibles were split into one part that was debt and another that was equity. The value of the debt portion was calculated as the fair value of a similar liability not conveying entitlement to conversion. The equity portion represents the difference between the fair value of the convertible as a whole and the estimated fair value of a similar liability not conveying entitlement to conversion.

Provisions

A provision is recognized in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic resources will be required to settle the obligation and a reliable estimate of the amount can be made. When the effect of the timing of the payment is important, provisions are calculated by discounting the expected future cash flow at a pre-tax interest rate which reflects current market assessments of the time value of money and, if applicable, the risks associated with the liability.

Guarantees

A provision is made for guarantees when the underlying products or services are sold. The provision is based on historical data regarding guarantees and a total appraisal of conceivable outcomes in relation to the probabilities with which those outcomes are associated.

Restructuring

Restructuring provisions are recognized when the Group has adopted a detailed formal restructuring plan and the restructuring has been commenced or publicly announced. No provisions are made for future operating expenses.

Parent Company's accounting principles

The Parent Company has prepared its Annual Report in accordance with the Swedish Annual Accounts Act (1995:1554) and Recommendation RFR 2 of the Swedish Financial Accounting Standards Council, on Accounting for Legal Entities. Statements issued by the Swedish Financial Reporting Board are also applied.

RFR 2 means that the Parent Company in the annual report for the legal entity shall apply all EU-approved IFRS standards and statements as far as possible within the framework of the Annual Accounts Act, the Pension Obligations Vesting Act (tryggandelagen) and taking into consideration the relationship between accounting and taxation. The recommendation stipulates which exceptions and additions to IFRS shall be applied.

Changes in accounting principles

Changes to IFRS or RFR 2 applicable as of 1 January 2020 have had no material effect on the Parent Company's financial statements. Nor are any upcoming changes to IFRS or RFR 2 assessed to have any material effect on the Parent Company's financial statements.

Differences between the Group's and Parent Company's accounting principles

The differences between the Group's and Parent Company's accounting principles are shown below. The accounting principles shown below for the Parent Company have been applied consistently to all periods presented in the Parent Company's financial statements.

Classifications and presentation

The income statement and statement of comprehensive income are produced separately for the Parent Company, whereas for the Group these two reports are combined into a single statement of comprehensive income. In addition the titles 'balance sheet' and 'cash flow statement' are used for the Parent Company for statements that for the Group are titled 'consolidated statement of financial position' and 'consolidated statement of cash flows' respectively. The Parent Company income statement and balance sheet have been prepared in accordance with regulations stipulated in the Annual Accounts Act, while the statement of comprehensive income, summary of changes in equity and cash flow statement is based on IAS 1 or IAS 7 respectively. The differences compared with the consolidated statements that are evident in the Parent Company's income statement and balance sheet comprise mainly the reporting of financial income and expenses, non-current assets and equity.

Subsidiaries, associated companies and joint ventures

Investments in subsidiaries, associated companies and joint ventures are accounted for in the Parent Company in accordance with the cost method. This means that transaction expenses are included in the carrying amount for holdings in subsidiaries, associated companies and joint ventures. In the consolidated accounts, transaction expenses attributable to subsidiaries are recognized directly in profit/loss as they are incurred. Conditional purchase prices are valued based on the likelihood that the purchase price will be paid. Possible changes in the provision/receivable are added to/reduce the cost. In the consolidated accounts, conditional purchase prices are recognized at fair value with changes in value over profit/loss

Untaxed reserves

Untaxed reserves including deferred tax liability are recognized in the Parent Company. In the consolidated accounts however, untaxed reserves are divided into deferred tax and equity.

Group contributions

Group contributions received by the Parent Company from its subsidiaries are reported in the Parent Company according to the same principles as normal dividends from subsidiaries, in other words, as a financial income item in the income statement. Group contributions paid by the Parent Company to its subsidiaries are recognized as an appropriation in the income statement.

Leasing

In accordance with the exemption provided in RFR 2, the Parent Company does not apply IFRS 16. As a lessee, leasing fees are expensed on a straight-line basis across the term of the lease, with no right-of-use assets or lease liabilities therefore being recognized in the Balance Sheet. In the same way as in the consolidated financial statements, leases on buildings are not broken down into leasing and non-leasing components. For underlying assets of this kind, leasing and non-leasing components are instead reported as a single leasing component.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 2

Financial risks and policy

Through its operations, the Group is exposed to various kinds of financial risks.

Financial risks are those involving fluctuations in the Group's earnings and cash flow as a consequence of changes in exchange rates, interest rate levels, and refinancing and credit risks. The Group's financial policy for the management of financial risks has been designed by the Board of Directors and provides a framework of guidelines and regulations in the shape of risk mandates and limits for financing activities. To read more about the company's financial risks, please see the Financial Risks section in the Directors' Report.

Responsibility for the Group's financial transactions and risks is managed centrally by the Parent Company's finance department. The overarching objective for risk management efforts is to provide cost effective financing and to minimize the negative effects of market fluctuations on the Group's earnings.

Liquidity risks

To ensure that the Group always has access to external financing, the finance department shall make sure that commitments to grant credit, both short and long-term, are available. Efforts shall be made to maintain the highest level of cost efficiency possible within the set framework. Inwido's principal financing consists of bank loans based on credit agreements expiring in the period 2022-2025. The aforementioned agreement includes financial covenants that are followed up on a quarterly basis. Inwido meets the terms of existing credit agreements.

Consolidated cash and equivalents were SEK 1,133 million (243) at the end of the period. The Group's cash and equivalents are deposited in banks with credit ratings in the range AA—to BBB—(Standard & Poor's). Available funds, including unutilized credit facilities, amounted to SEK 2,598 million (1,682).

Consolidated borrowings from banks, excluding lease liabilities and utilized overdraft facilities, amounted to a nominal amount of SEK 1,872 million at year-end, with the maturity structure of the loan debt being shown in the table below. At the end of 2020, the average remaining time to maturity on Inwido's long-term financing was 3 years.

Maturity structure, financial and operational liabilities – undiscounted cash flows

SEKm	2020						2019
	Nominal amount, functional currency	0-6 months	7-12 months	1-5 years	5 years or later	Total	0-6 months	7-12 months	1-5 years	5 years or later	Total
Bank loans	1,871.9	40.9	19.0	1,925.4	-	1,985.4	22.4	22.1	1,987.7	54.4	2,086.5
Overdraft facilities	15.9	16.2	0.3	1.7	0.6	18.7	36.7	0.9	3.6	-	41.2
Derivatives	6.4	1.7	0.4	4.5	-	6.6	0.1	0.1	6.9	0.1	7.1
Trade and other payables	722.4	722.4	-	-	-	722.4	528.7	-	-	-	528.7
Lease liabilities	357.9	33.5	44.1	195.3	132.0	405.0	42.9	38.9	180.4	105.1	367.4
Other liabilities	189.8	189.1	0.7	0	-	189.8	184.3	1.6	0.0	5.8	191.8
Total		1,003.9	64.5	2,155.6	103.8	3,327.8	815.1	63.6	2,178.6	165.4	3,222.7

Interest rate risk

Interest rate risk represents how changes in market interest rates affect cash flow and the Group's earnings, as well as the value of financial instruments. The fixed interest period is the factor that most affects the interest rate risk. Management of the Group's interest rate risk is centralized, meaning that the central finance department is responsible for identifying and managing interest rate risk in accordance with the finance policy adopted by the Board of Directors. Derivative instruments, such as interest rate swaps, are used to manage interest rate risk by allowing interest rates to be switched from fixed to floating or vice versa. Interest swap contracts are recognized in the Group company whose interest-bearing liabilities are hedged. Net interest paid regarding interest swap agreements is recognized as an interest expense, while net interest received is recognized as interest income.

Essentially, net interest risk in the Group is associated with the Group's interest-bearing financial liabilities, which are listed in the table in Note 20. As per 31 December 2020, the fair value of the swaps amounted to a negative net of SEK 4.4 million (3.6). The underlying nominal debt amounted to SEK 503 million (518).

As per 31 December 2020, interest-bearing liabilities, excluding financial leasing and overdraft facilities, amounted to SEK 1,872 million (1,924) and the average period of fixed interest, excluding derivatives was approximately 4 months (4). The average period of fixed interest, including derivatives was approximately 10 months (14).

Sensitivity analysis – interest risk

If interest rates had been 1 percentage point higher/lower, with all other variables remaining constant, the interest expense for the year before tax would have been SEK 15 million higher and SEK 4 million lower, respectively, calculated on the average interest-bearing debt in 2020 and without taking existing interest rate derivatives outstanding per 31 December 2020 into account.

If interest rates had been 1 percentage point higher/lower, with all other variables remaining constant, the interest expense for the year before tax would have been SEK 10 million higher and SEK 1 million higher, respectively, calculated on the average interest-bearing debt in 2020 and taking existing interest rate derivatives outstanding per 31 December 2020 into account.

The asymmetric relationship between a higher and a lower interest rate level is due to the fact that the currency loans concerned are covered by negative base rates and that a majority of the loans include a zero-floor clause, which is not the case for interest-rate derivatives.

Interest rates with different maturities and in different currencies can fluctuate differently. These calculations are based on all yield curves shifting in parallel by one percentage point. The Group has a seasonal debt for which the interest rate risk is not calculated due to its short term nature.

Credit risks in trade receivables

The risk that the Group's customers fail to meet their obligations, that is, that no payment is obtained for trade receivables, constitutes a customer credit risk. Credit checks are performed on the Group's customers with information regarding their financial status being obtained from various credit information agencies. Bank guarantees or other sureties are required for customers with low credit ratings or insufficient credit history. The Group holds global customer credit insurance, meaning that most of the Group's insurable accounts receivable are covered. The credit quality of non-provisioned trade and other receivables is deemed to be good.

As per the balance sheet date, there were no significant concentrations of credit exposures. At the end of 2020, 18 of the Group's 20 largest insured customers were fully insured and the Group had an acceptance rate of more than 75 percent with the insurance company. The maximum exposure for credit risk is the same as the gross value of the trade and other receivables in the balance sheet.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

Note 2, cont.

Specification of trade receivables

SEKm	Group 2020
	Carrying amount, invoices	Provisions for losses on accounts receivable	Carrying amount
Not overdue	322.1	-	322.1
Overdue 0-60 days	68.1	-2.3	65.8
Overdue 61-180 days	15.5	-4.1	11.3
Overdue 181-365 days	6.6	-4.9	1.7
More than 1 year	14.4	-14.1	0.4
Total trade receivables	426.7	-25.4	401.3
SEKm	Group 2019
---	---	---	---
	Carrying amount, invoices	Provisions for losses on accounts receivable	Carrying amount
Not overdue	387.8	-0.1	387.7
Overdue 0-60 days	102.0	-2.5	99.5
Overdue 61-180 days	19.7	-3.5	16.2
Overdue 181-365 days	9.5	-5.0	4.5
More than 1 year	16.2	-12.2	4.0
Total trade receivables	535.1	-23.3	511.9

Provision account for impairment of trade receivables

Group, SEKm	2020	2019
Opening balance	-23.3	-31.2
Impairment for the year	-11.0	-10.4
Reversal of previous impairments	8.0	18.2
Exchange-rate differences	0.9	0.1
Closing balance	-25.4	-23.3

Currency risks

Transaction exposure

Hedging horizon

1-3 months: 70%
4-6 months: 60%
7-9 months: 40%
10-12 months: 20%

Degree of hedging

1-3 months: 70%
4-6 months: 60%
7-9 months: 40%
10-12 months: 20%

Contracted future payments for non-current assets in foreign currency may be secured up to the full cost.

If the net exposure to a single currency is less than the equivalent of EUR 1 million annually, hedging is not necessary.

The table below shows the net flows and hedge volumes that the business units have had in each currency during each relevant year.

Group, SEKm	2020		2019
	12 months net flows	Total hedges*	12 months net flows	Total hedges*
SEK	-219.9	107.8	-212.1	128.9
EUR	-251.5	203.6	-250.3	198.4
NOK	1.8	-	2.1	-
DKK	-47.8	7.5	-47.8	15.5
GBP	4.0	-	5.8	-
PLN	-109.3	48.1	-104.6	75.2
USD	-12.2	-	-7.9	-

Net flows in EUR and DKK have been adjusted for exposure against DKK and EUR respectively due to the currency peg between these currencies.

Translation exposure

The hedging of translation exposure is guided by the Group's finance policy. Translation exposure is not currently hedged as the risk is relatively limited. However, an analysis of these risks is made once a year to ensure that they do not increase. Foreign net assets in the Group are mainly distributed among the following currencies:

Group Currency, SEKm	2020			2019
	Local currency	SEK	%	SEK	%
SEK	1,827.9	1,827.9	44.0	1,681.5	44.5
NOK	-113.7	-136.5	-3.3	-146.0	-3.9
DKK	976.4	1,362.5	32.8	1,209.7	32.0
EUR	123.5	1,246.5	30.0	1,224.9	32.4
GBP	-16.9	-196.5	-4.7	-192.8	-5.1
PLN	23.3	43.6	1.0	-7.4	-0.2
RON	4.8	7.5	0.2	5.6	0.1
Total		4,155.0	100	3,775.6	100

A 10 percent strengthening of the SEK against other currencies as of 31 December 2020 would entail a negative change in shareholders' equity of SEK 232.2 million (204.7) and a negative change in profit of SEK 66.6 million (38.4). This sensitivity analysis is based on all other factors (e.g. interest rates) remaining unchanged. The same conditions were applied for 2019.

Fair value

In all instances, fair value corresponds to the financial instrument's carrying amount. In all material respects, the carrying amounts for assets and liabilities recognized at their carrying amounts are equivalent to their fair value.

78
Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

Fair values and carrying amounts are detailed in the balance sheet below:

Group 2020, SEKm	Financial assets measured at amortized cost	Financial assets measured at fair value in profit or loss	Financial liabilities measured at fair value in profit or loss	Financial liabilities measured at amortized cost	Total carrying amount	Fair value
Financial investments		2.3			2.3	2.3
Other non-current receivables	28.4				28.4	28.4
Trade receivables	401.3				401.3	401.3
Other current receivables	46.9	1.3			48.2	48.2
Cash and equivalents	1,132.7				1,132.7	1,132.7
Total	1,609.3	3.6	-	-	1,612.9	1,612.9
Non-current interest-bearing liabilities			0.0	1,849.2	1,849.2	1,849.2
Other non-current liabilities			4.4	0.0	4.4	4.4
Current interest-bearing liabilities			0.0	38.7	38.7	38.7
Trade and other payables				722.4	722.4	722.4
Other current liabilities			2.0	189.8	191.8	191.8
Total	-	-	6.4	2,800.1	2,806.4	2,806.4
Group 2019, SEKm
Financial investments	0.0	2.7			2.7	2.7
Other non-current receivables	37.0				37.0	37.0
Trade receivables	511.9				511.9	511.9
Other current receivables	63.0	0.0			63.0	63.0
Cash and equivalents	242.8				242.8	242.8
Total	854.6	2.7	-	-	857.4	857.4
Non-current interest-bearing liabilities			0.0	1,926.8	1,926.8	1,926.8
Other non-current liabilities			6.6	5.8	12.5	12.5
Current interest-bearing liabilities			0.0	41.7	41.7	41.7
Trade and other payables				528.7	528.7	528.7
Other liabilities			0.0	185.6	185.6	185.6
Total	-	-	6.6	2,688.5	2,695.2	2,695.2

Investments in shares and participations classified as available for sale and not quoted in an active market and whose value cannot be measured reliably are valued at cost.

Disclosures regarding determination of fair value

Group, SEKm	2020				2019
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Non-current investments – shares and participations	-	-	2.3	2.3	-	-	2.7	2.7
Current receivable – derivative	-	1.3	-	1.3	-	0.0	-	0.0
Total	-	1.3	2.3	3.6	-	0.0	2.7	2.7
Non-current liability – derivative	-	4.4	-	4.4	-	6.6	-	6.6
Current liability – derivative	-	2.0	-	2.0	-	-	-	-
Non-current liability – conditional purchase consideration	-	-	-	-	-	-	-	-
Total	-	6.4	-	6.4	-	6.6	-	6.6

Level 1: According to prices noted in an active market for the same instrument
Level 2: Based on directly or indirectly observable market data not included in Level 1
Level 3: based on input data not observable in the market

The Group enters into derivative contracts under the International Swaps and Derivatives Association's (ISDA) master netting agreement. According to these agreements, when a counterparty fails to settle its obligations under all transactions, the agreement is cancelled and all outstanding balances are settled with a net amount. No derivatives have been offset in the balance sheet.

The table below presents a reconciliation of opening and closing balances for financial instruments recognized at fair value in the statement of financial position using valuation techniques based on non-observable in-data (level 3).

Group, SEKm	Financial investments – shares and participations	Acquisition-related liabilities – conditional purchase consideration
Fair value 1 Jan. 2020	2.7	-
Acquisitions, cost	-	-
Translation difference	0.0	-
Settlement of conditional purchase consideration	-	-
Total recognized gains and losses:
- recognized in profit for the year*	-0.4	-
Fair value 31 Dec. 2020	2.3	-
Fair value, 1 Jan. 2019	2.7	-23.9
Acquisitions, cost	-	-
Translation difference	0.0	-0.4
Settlement of conditional purchase consideration		20.2
Total recognized gains and losses:
- recognized in profit for the year*	0.0	4.1
Fair value, 31 Dec. 2019	2.7	-

Acquisition liability recognized as other operating income in profit for the year

Inwido AB (publ)
Annual and Sustainability Report 2020

NOTES

Note 2, cont.

Calculation of fair value

The following is a summary of the main methods and assumptions used to establish the fair value of the financial instruments presented in the table above.

Derivative instruments

For foreign exchange forward contracts, fair value is determined on the basis of quoted prices where available. If these are not available, fair value is calculated by discounting the difference between the contracted forward rate and the forward rate that can be signed on the balance sheet date for the remaining contract period. Discounting is applied at a risk-free interest rate based on government bonds.

For interest rate swaps, fair value is based on the valuation made by the mediating credit institute, with the fairness of this being tested by discounting calculated future cash flows in accordance with the terms and maturity dates of the contract based on market interest rates for similar instruments on the balance sheet date.

Where discounted cash flows are applied, future cash flows are calculated based on company management's best assessment. The interest rate applied in discounting is based on market rates for similar instruments on the balance sheet date. Where other valuation methods have been applied, input data are based on market related data on the balance sheet date.

Interest-bearing liabilities

For financial liabilities that are not derivative instruments, fair value is calculated by discounting future cash flows on principals and interest applying market interest rates on the balance sheet date.

Financial lease liabilities

Fair value is based on the present value of future cash flows discounted at market interest rates for similar lease agreements.

Conditional purchase consideration

The fair value of conditional purchase considerations is based on forecast EBITA in the acquired companies at the future agreed date. These values are discounted at the current market interest rate at the time of acquisition.

Trade receivables and trade payables

For trade and other receivables and payables with a remaining maturity of less than six months, the carrying amount is considered to reflect fair value. Accounts receivable and accounts payable with a maturity of more than six months are discounted in connection with the determination of fair value.

Parent Company

The Parent Company conducts certain Group-wide services and is therefore not exposed to any substantial financial risks.

NOTE 3

Distribution of income

Distribution of income from contracts with customers in principal geographic markets. Consolidated income from contracts with customers coincide with recognized net sales.

Net sales by country, SEKm	2020	2019
Sweden	2,084.8	2,011.7
Denmark	1,983.7	1,786.1
Norway	408.0	409.9
Finland	1,535.4	1,646.2
Poland	84.4	105.6
UK	333.3	422.0
Ireland	149.0	169.9
Germany	69.8	44.6
Other	32.5	34.5
	6,680.9	6,630.6

The table below provides a reconciliation of income distribution in market segments and the Group's operating segments (see Note 4).

Contract balances

Information on receivables, contract assets and contract liabilities from contracts with customers is summarized below.

Group, SEKm	2020	2019
Receivables included in trade receivables and other receivables	401.3	511.9
Contract assets	25.1	25.9
Contract liabilities	44.4	26.5

Contract assets relate primarily to the Group's right to remuneration for work performed but not invoiced per the balance sheet date for major projects where revenue recognition takes place over time in accordance with IFRS 15. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Group issues an invoice to the customer.

Contract liabilities relate primarily to advances received from customers for the manufacture of customized products. The SEK 27 million reported as a contractual liability at the beginning of the period was recognized as income on 31 December 2020.

No information is provided if the remaining performance commitments have, as of 31 December 2019, an original expected term of at most one year, which is permitted in accordance with IFRS 15.

To all material purposes, the Parent Company's contract balances consist of trade receivables.

The Group has no remaining performance commitments that, per 31 December, had an original expected maturity of less than one year. Accordingly, details of remaining performance commitments are not provided.

Net sales distribution between market segments by operating segment

SEKm	North		South		Other		Group-wide and eliminations		Group
	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
Net sales	3,658.3	3,749.7	2,872.5	2,713.1	368.2	374.4	-218.0	-206.7	6,680.9	6,630.6
Consumer*	2,171.0	2,259.9	2,532.0	2,471.6	-	-	-	-	4,703.0	4,731.6
Industry*	1,446.2	1,460.2	270.5	170.6	-	-	-	-	1,716.7	1,630.9
Other	33.5	26.7	47.9	49.4	179.7	192.0	-	-	261.1	268.1
Internal sales	7.7	2.9	22.0	21.4	188.4	182.4	-	-	-	-

Consumer: Sales to the Consumer market are conducted through the following channels: direct sales, retailers, middlemen, manufacturers of prefabricated homes, small building companies. Industry: Sales to the Industry market are conducted through the following channels: large building companies, retailers, manufacturers of prefabricated homes.

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

NOTE 4

Segment reporting

Inwido's operations are divided into business areas based on the parts monitored by the company's highest executive decision makers. Inwido's operations are organized so that Group management monitors the Operating EBITA, EBITA, return and cash flow generated by the Group's business areas. The principal measure of profit followed up by Group management is operating EBITA. Since decisions are made regarding the allocation of resources on the basis of the business areas, these constitute the Group's segments. Consequently, the Group's internal reporting is structured so that Group management can monitor all business areas' performance and earnings. The following two operating segments have been identified: South and North. The group Other, mainly includes companies that conduct coating operations and produce aluminium components for windows and doors, for example, which are sold internally within the Group. The effect of IFRS 16 is not allocated per business area but recognized separately.

Group-wide expenditures derive from shared Group projects and functions such as central management, the finance department, purchasing, IT, sales and marketing, HR and eliminations of internal profits.

Sales and purchases within the Group are priced and allocated in accordance with the Group's transfer pricing documentation. Other transactions within the Group are priced on market terms. For receivables from, and liabilities to, Group companies, terms are in line with the market.

Group 2020, SEKm	North	South	Other	Group-wide and eliminations	IFRS16 effect	Total
External sales	3,650.7	2,850.4	179.8	-	-	6,680.9
Internal sales	7.7	22.0	188.4	-218.1	-
Total net sales	3,658.3	2,872.5	368.2	-218.1	-	6,680.8
Gross profit/loss	774.4	917.0	35.0	0.3	9.7	1,736.3
Operating EBITDA	298.2	601.2	32.1	-64.1	88.4	955.8
Operating EBITA	218.2	543.4	24.3	-69.5	12.4	728.8
EBITA	212.4	539.1	24.3	-75.8	12.4	712.3
Of which, EBITA in associated companies	1.8	-	-	0.0	-	1.8
EBIT						694.6
Net financial items						-71.1
Earnings before tax						623.5
Goodwill	2,117.3	2,008.6	82.5	0.0	-	4,208.4
Tangible non-current assets	464.8	412.9	50.9	1.7	330.6	1,260.8
Acquisitions of tangible non-current assets	83.5	76.3	7.1	0.0	81.8	248.7
Acquisitions of intangible assets, including goodwill	13.9	0.1	0.0	0.3	-	14.3
Group 2019, SEKm
---	---	---	---	---	---	---
External sales	3,746.9	2,691.7	192.0	-	-	6,630.6
Internal sales	2.9	21.4	182.4	-206.7	-
Total net sales	3,749.7	2,713.1	374.4	-206.7	-	6,630.6
Gross profit/loss	844.9	825.6	33.9	-18.1	7.8	1,693.9
Operating EBITDA	308.2	514.6	30.3	-66.9	89.9	876.1
Operating EBITA	225.6	457.8	22.3	-71.9	11.9	645.5
EBITA	226.5	452.6	22.3	-92.2	11.9	621.0
Of which, EBITA in associated companies	1.7	-	-	0.1	-	1.7
EBIT						601.4
Net financial items						-43.1
Earnings before tax						558.3
Goodwill	2,166.2	2,088.3	82.5	0.0	-	4,337.0
Tangible non-current assets	470.3	410.3	51.8	2.0	338.4	1,272.8
Acquisitions of tangible non-current assets	77.4	87.8	4.2	0.0	40.9	210.2
Acquisitions of intangible assets, including goodwill	16.9	1.7	0.0	11.3	-	29.9

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 5

Acquisitions and disposals of businesses

Acquisitions and disposals in 2019

Värmelux OY

On 12 March 2019, Inwido acquired the remaining 17 percent of the shares in Värmelux OY, meaning that Inwido owns 100 percent of the company. The acquisition was financed through existing credit facilities.

NOTE 6

Other operating income

Group, SEKm	2020	2019
Rental income	1.1	1.3
Gain on sale of non-current assets	3.2	2.0
Exchange gains on operating receivables/liabilities	2.2	-
Insurance compensation	0.4	1.3
Revaluation of acquisition-related liabilities	-	4.1
Government grants	6.5	1.1
Other	10.6	12.2
Total	24.0	22.0
Parent Company, SEKm	2020	2019
---	---	---
Exchange gains on operating receivables/liabilities	0.6	1.4
Other	-	-
Total	0.6	1.4

NOTE 7

Other operating expenses

Group, SEKm	2020	2019
Loss on sales of non-current assets	0.0	0.4
Exchange losses on operating receivables/liabilities	-	0.7
Other	2.8	3.8
Total	2.8	4.9
Parent Company, SEKm	2019	2019
---	---	---
Other	-	-
Total	-	-

NOTE 8

Employees and personnel expenses

Group, SEKm	2020	2019
Wages, remunerations, etc.	1,567.3	1,567.1
(Of which, wages and remunerations to the Board of Directors, CEO, senior executives and other key individuals)	(62.8)	(65.4)
(Of which, bonuses to the Board of Directors, CEO, senior executives and other key individuals)	(14.0)	(8.8)
Pension expenses, defined contribution plans	134.1	143.3
(Of which, to the Board of Directors, CEO, senior executives and other key individuals)	(11.0)	(10.0)
Social security contributions	240.5	242.5
	1,941.9	1,952.9

Senior executives comprise members of Group Management. Other key individuals comprise key positions within Inwido AB and the Managing Directors of the local business units. In 2020, there was a total of 37 senior executives (37), including the CEO, senior executives and key individuals.

Average number of employees

	2020	Women %	2019	Women %
Parent Company (Sweden)	16	19%	17	29%
Total, Parent Company	16	19%	17	29%
Subsidiaries
Sweden	1,487	33%	1,497	33%
Finland	741	23%	818	23%
Denmark	841	26%	778	26%
Poland	435	31%	435	35%
Estonia	219	42%	216	42%
Norway	107	46%	104	43%
UK	284	14%	299	15%
Lithuania	56	50%	54	61%
Ireland	20	40%	21	43%
Romania	139	45%	117	50%
Total in subsidiaries	4,329	30%	4,339	30%
Total, Group	4,345	30%	4,356	30%

The calculation of the average number of employees has taken into account the number of months that acquired companies have been included in the Group over the year.

Gender distribution in executive management

	2020	2019
Parent Company	Women, %	Women, %
Board of Directors (proportion of members elected by the Annual General Meeting)	40%	25%
Total, Group
Boards of Directors	13%	4%
Other senior executives	14%	14%

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

Salaries, other remunerations and social security expenses

Parent Company SEKm	2020		2019
	Wages and remunerations	Social security expenses	Wages and remunerations	Social security expenses
Board of Directors, CEO, senior executives and other key individuals	27.0	15.6	24.6	14.7
(of which, bonuses)	(6.5)		(2.9)
Other employees	5.8	3.3	8.4	4.6

Of social security expenses, SEK 5.6 million (5.4) represent pension expenses for members of the Board of Directors, the CEO, senior executives and other key individuals, and SEK 1.2 million (1.4) for other employees.

Guidelines for remuneration to senior executives

At the Annual General Meeting in May 2020, the following guidelines were adopted regarding remunerations to senior executives.

These guidelines include individuals who are senior executives of Inwido, which include the CEO and other members of the Group Management of Inwido during the period of which these guidelines are in force, fall within the provisions of these guidelines. The guidelines are forward-looking, i.e. they are applicable to remuneration agreed, and amendments to remuneration already agreed, after adoption of the guidelines by the annual general meeting 2020. These guidelines do not apply to any remuneration decided or approved by the general meeting.

To the extent a member of the Board performs services for Inwido in addition to the Board assignment, certain cash remuneration may be paid for such work. The cash remuneration shall be at market level, based on the nature and contribution of such work.

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

Inwido acquires, owns and develops Europe's leading companies within the window and door industry. Today, Inwido is Europe's largest windows group and

a natural home for the region's strongest companies. The key to Inwido's success is the local connection. A prerequisite for the successful implementation of Inwido's business strategy and safeguarding of its long-term interests, including its sustainability, is that Inwido is able to recruit and retain qualified personnel. To this end, it is necessary that Inwido offers competitive remuneration. These guidelines enable the company to offer the executive management a competitive total remuneration. For more information regarding the company's business strategy, please see https://www.inwido.com/.

Types of remuneration, etc.

The total remuneration and the terms and conditions for the senior executives shall be based on relevant market conditions and shall be comprised of a balanced mixture of fixed cash salary, variable cash remuneration, pension benefits and other benefits. Additionally, the general meeting may – irrespective of these guidelines – resolve on, among other things, share-related or share price-related remuneration.

Fixed cash salary

FThe fixed cash salary shall be determined taking into account the executive's responsibility, authority, competence and experience.

Variable cash remuneration

The variable cash remuneration shall be linked to predetermined, well-defined and measurable criteria for the group, which can be financial or non-financial. The variable cash remuneration may amount to not more than 50 per cent of the total fixed cash salary under the measurement period for such criteria. The criteria for variable cash remuneration shall to 60 per cent linked to operational EBITA, to 20 per cent be linked to the relation between the working capital being tied up and sales, and to 20 per cent be linked to measurable strategical individual criteria, which may be financial or non-financial. The satisfaction of criteria for awarding variable cash remuneration shall be measured over a period of one or several years. The criteria for awarding variable cash remuneration shall aim at promoting Inwido's business strategy and long-term interests, including its sustainability, by for example being clearly linked to the business strategy or promote the executive's long-term development. For the purpose of promoting a common endeavor to achieve Inwido's business strategy, long-term interests and sustainable development of Inwido, and ultimately an increased shareholder value, the senior executives shall have the same financial criteria for awarding variable cash remuneration.

Salaries and other remunerations to senior executives

Group 2020, SEKm	Basic salary, Board fees	Variable remuneration	Pension cost	Share-based remuneration	Other remuneration	Total	Pension commitments
Chairman of the Board
Georg Brunstam	0.7	-	-	-	-	0.7	-
		-	-	-	-		-
Board members
Anders Wassberg	0.4	-	-	-	-	0.4	-
Christer Wahlquist	0.3	-	-	-	-	0.3	-
Henriette Schütze	0.3	-	-	-	-	0.3	-
Kerstin Lindell	0.3	-	-	-	-	0.3	-
President
Henrik Hjalmarsson	5.6	2.5	1.7	-	0.2	10.0	-
Other senior executives (5 persons)	13.4	5.5	3.2	-	0.5	22.6	-
Total	21.0	8.0	4.9	-	0.7	34.5	-
Group 2019, SEKm
Chairman of the Board
Georg Brunstam	0.7	-	-	-	-	0.7	-
Board members
Anders Wassberg	0.4	-	-	-	-	0.4	-
Benny Ernstson	0.3	-	-	-	-	0.3	-
Henriette Schütze	0.3	-	-	-	-	0.3	-
President
Henrik Hjalmarsson	5.7	0.9	1.7	-	0.2	8.5	-
Other senior executives (5 persons)	13.9	2.9	3.2	-	0.5	20.5	-
Total	21.2	3.9	4.9	-	0.7	30.7	-

Inwido AB (publ)

Annual and Sustainability Report 2020

Note 8, cont.

Pension benefits

For the CEO and other executives, pension benefits, including health insurance (Sw: sjukförsäkring), shall be premium defined unless the executive concerned is subject to defined benefit pension under mandatory collective agreement provisions. Variable cash remuneration equivalent to maximum 50 per cent of the maximum variable cash remuneration shall qualify for pension benefits, unless otherwise required by mandatory collective agreement provisions. The pension premiums for premium defined pension shall amount to not more than 30 per cent of the pensionable income for the CEO and not more than 25 per cent of the pensionable income for other executives.

Other benefits

Other benefits than fixed cash salary, variable cash remuneration and pension benefits shall be applied restrictively. Such other benefits may include, for example, life insurance, medical insurance (Sw: sjukvårdsförsäkring) and company car, and may amount to not more than 10 per cent of the fixed annual cash salary.

Additional remuneration

Additional variable cash remuneration may be awarded in extraordinary circumstances, provided that such extraordinary arrangements are limited in time and only made on an individual basis, either for the purpose of recruiting or retaining executives, or as remuneration for extraordinary performance beyond the individual's ordinary tasks. Such remuneration may not exceed an amount corresponding to 100 per cent of the fixed annual cash salary and may not be paid more than once each year per individual. Any resolution on such remuneration shall be made by the Board of Directors based on a proposal from the Remuneration Committee.

Foreign employments

Remuneration under employments subject to other rules than Swedish may be duly adjusted to comply with mandatory rules or established local practice, taking into account, to the extent possible, the overall purpose of these guidelines.

Executives who are expatriates to or from Sweden may receive additional remuneration and other benefits to the extent reasonable in light of the special circumstances associated with the expat arrangement, taking into account, to the extent possible, the overall purpose of these guidelines. Such benefits may not in total exceed 25 per cent of the fixed annual cash salary.

Remuneration to Board members

In cases where a Board member (including through a wholly‐owned company) pTo the extent a member of the Board performs services for Inwido, in addition to the board assignment, certain cash remuneration may be paid for such work (consulting fee), provided that such services promote the implementation of Inwido's business strategy and long‐term interests, including its sustainability. The annual consultant fee shall be at market terms and be related to the benefit for Inwido. For each Board member, such consultant fee may not exceed 100 per cent of the annual fee for the Board member. Such consultant fees, as well as other terms and conditions, shall be determined by the Board of Directors.

DThe satisfaction of criteria for awarding variable cash remuneration, etc.

The Remuneration Committee shall prepare, monitor and evaluate matters related to variable remuneration. To which extent the criteria for awarding variable cash remuneration has been satisfied shall be evaluated and determined, respectively, when the measurement period has ended. For financial objectives, the evaluation shall be based on the latest financial information made public by Inwido. Remuneration to the CEO is resolved by the Board of Directors upon the Remuneration Committee's proposal. Remuneration to other senior executives is resolved by the Remuneration Committee upon the CEO's proposal.

Programs and criteria for variable cash remuneration shall be designed in such a way as to enable the Board of Directors, if exceptional financial conditions prevail, to restrict or omit payment of the variable cash remuneration if such action is deemed reasonable and consistent with Inwido's responsibility towards shareholders, employees and other stakeholders. The Board of Directors shall have the possibility, pursuant to applicable law or contractual provisions, to in whole or in part reclaim variable remuneration paid on incorrect grounds.

Termination of employment

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

After the termination of the employment, senior executives may be compensated for non‐compete undertakings, however, only to the extent severance pay is not paid during the same period of time. The purpose of such remuneration shall be to compensate the senior executive for the difference between the fixed salary at the time of termination of the employment, and the (lower) income which is obtained, or could be obtained, by a new employment agreement, assignment or own business. The remuneration may be paid during the period the non‐compete undertaking is applicable, and no longer than a period of 24 months after the termination of the employment.

Salary and employment conditions for employees

In the preparation of the Board of Directors' proposal for these remuneration guidelines, salary and employment conditions for employees of Inwido have been taken into account by including information on the employees' total income, the components of the remuneration and increase and growth rate over time, in the Remuneration Committee's and the Board of Directors' basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.

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

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

Derogation from the guidelines

The Board of Directors may temporarily resolve to derogate from the guidelines, in whole or in part, if in a specific case there is special cause for the derogation and a derogation is necessary to serve Inwido's long‐term interests, including its sustainability, or to ensure Inwido's financial viability. As set out above, the Remuneration Committee's tasks include preparing the Board of Directors' resolutions in remuneration‐related matters. This includes any resolutions to derogate from the guidelines.

Remuneration to senior executives

Total remuneration to the President and CEO and other senior executives includes fixed salary, variable remuneration, pension and other benefits. These remuneration components are based on the guidelines for remuneration for senior executives adopted by the 2020 Annual General Meeting and which are set out in the Directors' Report.

The tables below account for the actual cost of remuneration and other benefits for the financial years 2020 and 2019 to the Board of Directors, the President & CEO and other senior executives. The latter are those individuals who, alongside the President and CEO, are members of Group Management. The Board fees for 2020 were determined at the Annual General Meeting in May 2020 and refer to the period up until the next Annual General Meeting and are paid after the Annual General Meeting for the financial year 2020.

Remuneration to the Board

Fees are paid to the Chairman and other Board members as determined by the Annual General Meeting. The Annual General Meeting in May 2020 resolved that the fees to the Board should total of SEK 1,960 thousand (1,685) to be distributed among the members as follows: SEK 580 (580) to the Chairman and SEK 275 (275) to each of the other members of the Board who are not employees of the company.that fees for work on the audit committee shall be SEK 130 to the chairman and SEK 50 each to the other members, and that fees to the members and chairman of the Remuneration Committee shall amount to SEK 25 each. Other remunerations have been paid in the form of taxable travel expenses.

NOTES

Remunerations to other senior executives

Remunerations

Remuneration to the President and CEO includes fixed salary, variable remuneration, pension and other benefits. Basic salary, excluding vacation pay, for the President and CEO amounts to SEK 5,438 (5,280). For the President and CEO, variable remuneration may amount to at most 50 percent of basic salary. Any bonus payments and the size of these are related to the degree to which predefined annual targets are met.

Remunerations to other senior executives include fixed salary, variable remuneration, pension and other benefits. For other senior executives, variable remuneration may amount to at most 45 percent of basic salary. Any bonus payments and the size of these are determined by the President and CEO based on the degree to which financial and individual targets are met. The financial targets are linked to operating EBITA and working capital. The individual targets are based on personal performance. An amount of SEK 1.4 million has been disbursed as extraordinary remuneration to senior executives following a decision by the Board of Directors.

Periods of notice and severance pay

The President and CEO has 12 months' notice on termination by the company and six months' notice on resignation. During the period of notice, the President and CEO is entitled to full salary and other employment benefits, whether obliged to work or not. He is not entitled to any additional severance pay.

Other senior executives have a period of notice of 12 months. On voluntary resignation, a period of termination of six months applies. During the period of notice, other senior executives are entitled to full salary and other employment benefits. They are not entitled to any additional severance pay.

Pension benefits

In addition to benefits under the Act on Income-Based Retirement Pension, pension payments are made for the President & CEO in the amount of 30 percent (30) of fixed annual salary plus holiday pay, which comprise pensionable income. The Company's commitment is limited to paying the annual premium. The pension is not non-vesting.

For other senior executives, a defined contribution pension solution and traditional ITP2 plan are applied. The Company's commitment is limited to paying the annual premium. The pension is not non-vesting.

Remuneration Committee

For information about the company's process to prepare and determine remunerations to senior executives, please see the Corporate Governance Report on pages 45-49.

Incentive programmes

The 2016 Annual General Meeting approved the Board's proposal on the establishment of a long-term incentive programme consisting of two parts: an issue of convertibles with the opportunity for all employees to participate and an issue of subscription warrants to approximately 50 of the company's senior executives and so-called Senior Leaders.

Senior executives in group management subscribed for a total of SEK 8.2 million in convertible loans and subscribed a total of 104,480 warrants. In 2017, two new senior executives subscribed for a total of 24,000 warrants.

The incentive programme ended on 30 September 2019. Since the conversion price exceeded the current market price during the conversion period, no new shares were issued within the framework of the incentive programme.

For more information about the incentive programme, see Note 19.

Defined benefit pensions

For salaried employees in Sweden, defined benefit pension commitments for retirement and family pension (alternatively family pension) under the ITP 2 plan are secured through an insurance policy with Alecta. According to a statement from the Swedish Financial Reporting Board, UFR 10 Classification of ITP plans financed through insurance with Alecta, this is a defined benefit plan that covers several employers. For the 2020 financial year, the company has not had access to information enabling it to report its proportional share of the plan's obligations, plan assets and costs, which means that it has not been possible to account for the plan as a defined benefit plan. Consequently, the ITP2 pension plan, which is insured through a policy with Alecta, is recognized as a defined contribution plan. The premium for the defined benefit retirement and family pension is calculated individually and is dependent on factors including previously earned pension and the expected remaining period of service. The Group's share of the total contributions to the plan amounted to SEK 7.2 million (7.5) for 2020. For the next year, the estimated total fees amount to SEK 7.1 million.

NOTE 9

Auditors' fees and reimbursements

SEKm	Group		Parent Company
	2020	2019	2020	2019
KPMG
Audit assignments	4.5	5.2	0.8	0.8
Audit work not included in the audit assignment	0.5	0.2	0.1	0.1
Tax advisory services	0.2	0.4	0.0	0.0
Other advisory services	0.1	0.2	0.0	0.1
Other auditors	-	-	-	-
Audit assignments	1.2	1.2	-	-
Audit work not included in the audit assignment	-	0.0	-	-
Tax advisory services	-	-	-	-
Other advisory services	-	0.1	-	-
	6.5	7.3	0.8	1.0

Auditing assignments refer to the audit of the annual report and accounting, the administration of the Board and CEO, as well as other tasks undertaken by the company's auditors in order to complete the assignment.

Auditing activities beyond the auditing assignment refers to reviews such as certificates interim reports etc. that have resulted in a report from the auditor.

Consultancy services taxes refers to assignments that have been carried out in relation to taxes and fees.

Consultancy services other refers to all other assignments that are not included in the above.

NOTE 10

Operating expenses by type of expense

Group, SEKm	2020	2019
Raw materials and input goods	2,407.4	2,417.0
Changes in inventories of finished products and products in progress	26.9	8.4
Personnel costs	2,009.1	2,091.1
Depreciation and impairment	255.0	268.5
Transport	328.3	298.5
Installation	209.6	231.7
Energy	52.6	60.5
Repairs and maintenance	87.1	83.7
IT and telephony	130.2	160.5
Other external expenses	503.2	428.2
Total	6,009.3	6,047.9

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 11

Financial income and expenses

Group, SEKm	2020	2019
Financial income
Interest income^{1)}	1.1	2.3
Assets and liabilities valued at fair value
Other financial income	0.2	0.6
Exchange rate difference	-	24.4
Total	1.3	27.4
Group, SEKm	2020	2019
---	---	---
Financial expenses
Interest expenses^{1)}	-37.5	-49.0
Interest expenses for leases in accordance with IFRS 16	-11.5	-11.6
Assets and liabilities valued at fair value	2.5	0.7
Exchange rate difference	-12.5	-
Impairment, shares and participations	-	0.0
Other financial expenses	-13.5	-10.5
Total	-72.5	-70.4
Net financial items	-71.1	-43.0

1) Interest income and expenses are attributable to all intents and purposes to financial assets and liabilities measured at accrued cost.

Parent Company, SEKm	2020	2019
Profit/loss from participations in subsidiaries
Dividend	18.2	21.4
Impairment, shares and participations	-17.6	-
Total	0.6	21.4
Other interest income and similar profit/loss items
Interest income	0.5	0.6
Interest income, Group companies	45.5	62.2
Exchange rate difference	-	28.5
Other financial income	1.4	-
Total	47.4	91.3
Interest expense and similar profit/loss items
Interest expenses	-33.2	-43.9
Exchange rate difference	-0.9	-
Change in value of derivatives	-0.8	3.3
Other financial expenses	-4.9	-2.4
Total	-39.8	-43.1
Net financial items	8.2	69.6

NOTE 12

Taxes

Group, SEKm	2020	2019
Current tax expense (-) / income (+)
Tax expense/income for the period	-128.4	-122.1
Adjustment for taxes attributable to previous years	7.3	-4.6
Deferred tax expense (-) / income (+)
Deferred tax on temporary differences	-2.2	2.8
Deferred tax expense /income due to changes in tax rates	-	0.0
Utilization of previously capitalized loss carryforwards	0.5	-1.3
Total consolidated tax recognized	-122.9	-125.2
Parent Company, SEKm	2020	2019
---	---	---
Current tax expense (-) / income (+)
Tax expense (-) / income (+) for the period	-9.4	-24.1
Adjustment for taxes attributable to previous years	-	-
Deferred tax expense (-) / income (+)
Deferred tax on temporary differences	1.0	-0.2
Deferred tax expense /income due to changes in tax rates	0.0	-
Total reported tax expense in the Parent Company	-8.4	-24.3

Reconciliation of effective tax

Group, SEKm	2020	2019
Earnings before tax	623.5	558.4
Less participations in profit/loss of associated companies	-1.8	-1.7
Calculated profit/loss before tax	621.7	556.7
Tax according to the current tax rate for the Parent Company, 21.4% (21.4%)	-133.1	-119.1
Effect of different tax rates for foreign subsidiaries	2.5	4.1
Non-deductible expenses	-2.8	-5.2
Non-taxable income	0.5	2.3
Increase in loss carryforwards with no equivalent capitalization of deferred tax	-4.7	-8.3
Utilization of loss carryforwards not previously capitalized	4.5	6.4
Impairment of previously capitalized loss carryforwards	-	-
Effects of changed tax rates and regulations	-	0.0
Taxes attributable to previous years	7.3	-4.6
Other	2.8	-0.8
Recognized effective tax	-122.9	-125.2

Weighted average nominal tax rate for the year 21% (21).

Parent Company, SEKm	2020	2019
Earnings before tax	42.4	134.7
Tax according to the current tax rate for the Parent Company	-9.1	-28.8
Non-deductible expenses	-4.9	-1.0
Non-taxable income	4.6	5.5
Other	1.0	-
Recognized effective tax	-8.4	-24.3

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

Deferred tax receivables and liabilities recognized

Recognized deferred tax assets and liabilities relate to the following:

Group, SEKm	Deferred tax assets		Deferred tax liabilities		Net
	2020	2019	2020	2019	2020	2019
Tangible assets	8.0	8.0	-22.3	-21.6	-14.2	-13.5
Intangible non-current assets	-1.2	-1.4	-81.2	-85.1	-82.5	-86.5
Financial assets	-	-	-0.3	-0.5	-0.3	-0.5
Inventories	0.7	0.8	-0.7	-0.9	0.0	-0.1
Trade receivables	0.2	0.1	-	0.0	0.2	0.2
Other receivables	-	-	-0.2	-0.2	-0.2	-0.2
Trade and other payables	-	-	-	-	-	-
Interest-bearing liabilities	-	0.6	-	-	-	0.6
Pensions	7.4	6.5	0.0	-	7.4	6.5
Provisions	0.5	0.6	21.8	19.1	22.3	19.7
Other	2.0	1.6	0.5	0.7	2.6	2.2
Tax loss carryforwards	22.6	24.5	-	-	22.6	24.5
Untaxed reserves	7.0	5.8	-37.5	-30.8	-30.5	-25.0
Tax receivables/liabilities, net	47.3	47.2	-119.9	-119.2	-72.6	-72.0
Deferred tax receivables/liabilities maturing within one year	0.4	0.9	0.0	0.0	0.4	0.9
Deferred tax receivables/liabilities maturing after one year	8.0	5.9	-1.8	-1.2	6.3	4.6
Deferred tax receivables/liabilities without maturity	38.9	40.5	-118.2	-118.0	-79.3	-77.5
Parent Company, SEKm
Pensions	6.9	6.1	-	-	6.9	6.1
Other	0.9	0.7	-	-	0.9	0.7
Tax receivables/liabilities	7.8	6.8	-	-	7.8	6.8
Set-off	-	-	-	-	-	-
Tax receivables/liabilities, net	7.8	6.8	-	-	7.8	6.8

Deferred tax assets for loss carryforwards are mainly attributable to Norway, Poland and the UK. If the operations in Norway, Poland and the UK do not generate profits in the future, tax assets for loss carryforwards may be impaired.

Temporary difference between recognized value and tax base for participations etc. directly owned by the Parent Company

For both years, the temporary differences in the Parent Company's directly owned participations amount to zero. For the Group, the amount is not material.

Deferred tax receivables and liabilities not recognized

Deductible temporary differences and tax loss carryforwards for which deferred tax receivables have not been recognized amount to:

	Group		Parent Company
SEKm	2020	2019	2020	2019
Tax losses	85.7	101.4	-	-
	85.7	101.4	-	-

Nearly all of the Group's tax loss carryforwards have an indefinite period of applicability. According to current tax regulations, deductible temporary differences do not expire. Deferred tax assets have not been recognized for these items as the Group is likely to use them to offset future taxable profits.

In certain countries where the Group has operations, the results of operations are tax exempt, provided that the profits generated are not distributed. On the balance sheet date, the total tax exempt reserves amounted to SEK 114 million (110), which would mean a tax liability of SEK 23 million (21) if the subsidiaries were to pay dividends from these reserves.

Changes in deferred tax assets and liabilities for the year

Group, SEKm	2020					2019
	Balance at 1 Jan 2020	Reported in profit for the year	Recognized in shareholders' equity	Translation difference	Balance at 31 Dec. 2020	Balance at 1 Jan 2019	Reported in profit for the year	Recognized in shareholders' equity	Translation difference	Balance at 31 Dec. 2019
Tangible non-current assets	-13.7	-1.5	-	0.8	-14.2	-18.3	-3.0	7.9	-0.2	-13.5
Intangible assets	-93.7	0.3	-	3.7	-82.5	-84.8	0.2	-	-1.9	-86.5
Financial assets	-0.5	0.1	-	0.0	-0.3	-0.5	-	-	0.0	-0.5
Inventories	-0.1	0.1	-	0.0	0.0	0.4	-0.4	-	0.0	-0.1
Trade receivables	0.2	0.1	-	0.0	0.2	0.1	0.0	-	0.0	0.2
Other receivables	-0.2	0.0	-	0.0	-0.2	-0.3	0.1	-	0.0	-0.2
Interest-bearing liabilities	0.6	-0.6	-	-	-	0.1	0.6	-	-	0.6
Pensions	6.5	0.9	-	-	7.4	6.1	0.5	-	-	6.5
Provisions	19.7	3.5	-	-0.9	22.3	15.6	3.9	-	0.2	19.7
Other liabilities	2.2	0.4	-	-0.1	2.6	2.5	-0.2	-	0.0	2.2
Tax loss carryforwards	24.5	0.5	-	-2.4	22.6	25.0	-1.3	-	0.8	24.5
Tax allocation reserve	-25.0	-5.5	-	0.0	-30.5	-26.1	1.1	-	0.0	-25.0
Total	-79.4	-1.7	-	1.1	-72.6	-80.3	1.5	7.9	-1.2	72.0

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

NOTE 13

Intangible assets

Group, SEKm	Internally developed intangible assets		Acquired intangible assets
	Development expenditure	Market and customer-based assets	Other intangible assets	Goodwill	Development projects in progress	Total
Accumulated cost
Opening balance, 1 Jan. 2019	28.5	228.9	250.2	4,308.5	90.1	4,906.1
Other investments	-	-	18.0	-	11.9	29.9
Disposals and scrappings	-	-	-21.4	-	-	-21.4
Reclassifications	-	-	29.7	-	-27.3	2.3
Exchange rate differences for the year	0.4	5.8	3.4	56.2	0.4	66.5
Closing balance, 31 Dec. 2019	28.9	234.7	279.8	4,364.7	75.1	4,983.2
Opening balance, 1 Jan. 2020	28.9	234.7	279.8	4,364.7	75.1	4,983.2
Other investments	0.0	-	7.3	-	7.0	14.3
Disposals and scrappings	-22.9	-	-2.5	-	-	-25.4
Reclassifications	-	-	15.0	-	-3.3	11.6
Exchange rate differences for the year	0.0	-10.0	-11.0	-129.5	-0.1	-150.7
Closing balance, 31 Dec. 2020	5.9	224.7	288.7	4,235.2	78.6	4,833.1
Accumulated amortization and depreciation
Opening balance, 1 Jan. 2019	-26.7	-59.5	-174.9	-27.3	-	-288.4
Disposals and scrappings	-	-	-	-	-	-
Impairment for the year	-	-	3.4	-	-	3.4
Depreciation for the year	-0.9	-10.5	-31.1	-	-	-42.5
Reclassifications	-	-	-1.4	-	-	-1.4
Exchange rate differences for the year	-0.4	-0.8	-2.4	-0.4	-	-4.0
Closing balance, 31 Dec. 2019	-27.9	-70.7	-206.4	-27.7	-	-332.8
Opening balance, 1 Jan. 2020	-27.9	-70.7	-206.4	-27.7	-	-332.8
Disposals and scrappings	22.9	-	2.4	-	-	25.4
Impairment for the year	-	-	-13.4	-	-	-13.4
Depreciation for the year	-0.6	-10.4	-23.1	-	-	-34.1
Reclassifications	-	-	-	-	-	-
Exchange rate differences for the year	0.0	2.4	8.9	0.9	-	12.3
Closing balance, 31 Dec. 2020	-5.6	-78.6	-231.6	-26.8	-	342.6
Carrying amounts
As of 1 Jan. 2019	1.8	169.4	75.3	4,281.2	90.1	4,617.7
As of 31 Dec. 2019	1.0	164.0	73.4	4,337.0	75.1	4,650.4
As of 1 Jan. 2020	1.0	164.0	73.4	4,337.0	75.1	4,650.4
As of 31 Dec. 2020	0.3	146.0	57.1	4,208.4	78.6	4,490.5

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

Note 13, cont.

Amortization is included in the following items in the income statement:

	2020	2019
Cost of goods sold	-12.4	-16.6
Administrative expenses	-19.9	-22.2
Research and development expenses	0.0	-1.1
Total	-34.1	-42.5

Impairment is included in the following items in the income statement:

Cost of goods sold	-	-18.0
Administrative expenses	-7.4	-
Research and development expenses	-6.0	-
Total	-13.4	-18.0

During 2020, a review was conducted of centrally organized development projects, as a consequence of the new governance model Simplify, resulting in impairment being recognized in central product and IT investments.

All intangible assets, except goodwill and trademarks, are amortized. The acquired trademarks that are deemed to have an indefinite useful life are derived from the acquisition of Säästke OÜ, and JNA Vinduer and Døre A/S. The useful life is deemed indefinite in the case of well-established brands in their market, which the Group intends to maintain, utilize and develop in its operations. The brands are also considered to be of considerable economic significance as these are an integral part of the offering to the market by signalling the quality and innovation in the products and thus being able to affect pricing and competitiveness. Accordingly, these brands are considered have an indefinite life through their connection with the operations and the intention to use them in the future. For information on amortization, see the accounting principles detailed in Note 1.

Impairment testing for cash-generating units including goodwill and brands

Group, SEKm, 2020	Goodwill	Trademark
North	2,117.3	0.0
South	2,008.6	41.8
Other	82.5	0.0
Group-wide and eliminations	0.0	0.0
Total	4,208.4	41.8
Group, SEKm, 2019	Goodwill	Trademark
---	---	---
North	2,166.2	0.0
South	2,088.3	43.3
Other	82.5	0.0
Group-wide and eliminations	0.0	0.0
Total	4,337.0	43.3

Taking into account the fact that an assessment has been made that the cash flows attributable to trademarks cannot be separated from the other cash flows of the cash-generating unit, impairment testing is performed for both goodwill and brands together by calculating the recovery value for the cash-generating unit.

In impairment testing, the recoverable amount consists of the assessed value in use of the cash generating units. The discount rate is 8.1-8.4 percent (8.0-8.3). For the operating segments North and South, the discount rate of 8.1 percent has been applied. For Other, the discount rate of 8.4 percent has been applied. The difference between the discount rates is the specific risk premium. It is the company's assessment that the risk premium is lower for South than for North because of their customer segments and product structure. Other parameters in the discount rate are the same for the operating segments. The value is based on cash flow calculations, of which the first five years are based on a business forecast approved annually by company management together with the local management teams. The margins in the business forecast are based on the assumptions in the table below. The cash flows calculated for periods after the first five years are based on 2.5 percent (2.5) annual growth. The Company estimates that the annual

growth rate exceeds the central banks' long-term inflation target of 2 percent because of population growth and urbanization in each market. The margins for the first five years have been estimated in line with development over the forecast period and normalized to reflect a future level over a business cycle. The key assumptions in the five year business forecast are detailed in the table below.

Key variables	Assessment method
Market growth	Expected market growth is based on a transition from the current competitive situation to the expected long-term growth trend. The forecast includes the strategy to increase the proportion of sales generated within the consumer segment, increased sales of new products and accessories, establishment of new markets and sales channels, strong demand for energy-efficient products and the expected demographic trend. The forecast agrees with previous experience and forecasts.
Purchasing of goods and services	The forecast for purchasing costs is based on expected inflation, changes in choice of material, volume advantages and other synergies within the Group. In addition, estimates have been made regarding the price trend for the principal groups of materials based on external data sources. The forecast agrees with previous experience and forecasts.
Personnel costs and efficiency	Forecast personnel costs are based on expected wage increases, adopted and implemented efficiency measures and other synergies within the Group. The forecast agrees with previous experience and forecasts.

In the Group's assessment, possible changes in key assumptions will not result in a need for impairment. In view of the Group's operations, the essential key variables are largely the same for the Group's different cash-generating units.

Acquired intangible assets

Parent Company, SEKm	Other intangible assets	Development projects in progress	Total
Accumulated cost
Opening balance, 1 Jan. 2019	1.8	21.6	23.4
Other investments	-	11.3	11.3
Reclassifications	29.0	-26.9	2.1
Impairment for the year	-20.0		-20.0
Closing balance, 31 Dec. 2019	10.8	6.0	16.8
Opening balance, 1 Jan. 2020	10.8	6.0	16.8
Other investments	0.3	-	0.3
Reclassification	6.0	-6.0	0.0
Impairment for the year	-	-	-
Closing balance, 31 Dec. 2020	17.0	-	17.0
Accumulated amortization and depreciation
Opening balance, 1 Jan. 2019	-1.8	-	-1.8
Depreciation for the year	-4.7	-	-4.7
Impairment for the year	2.0	-	2.0
Reclassification	-1.2	-	-1.2
Closing balance, 31 Dec. 2019	-5.7	-	-5.7
Opening balance, 1 Jan. 2020	-5.7	-	-5.7
Depreciation for the year	-2.0	-	-2.0
Impairment for the year	-9.1	-	-9.1
Reclassification	0.0	-	0.0
Closing balance, 31 Dec. 2020	-16.8	-	-16.8
Closing balance, 31 Dec. 2019	5.1	6.0	11.1
Closing balance, 31 Dec. 2020	0.2	-	0.2

During 2020 and 2019, a review was conducted of centrally organized development projects, as a consequence of the new governance model Simplify, resulting in impairment being recognized in central product and IT investments.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 14

Tangible non-current assets

The Group’s tangible non-current assets comprise both proprietary and leased assets. For information on leased tangible non-current assets that comprise right-of-use assets, see Note 24 Leases.

Group, SEKm	2020	2019
Tangible non-current assets
Proprietary tangible non-current assets	930.2	934.5
Leased tangible non-current assets	330.6	338.4
Total	1,260.8	1,272.8

Proprietary tangible non-current assets

Group, SEKm	Land and buildings	Machinery and equipment	Construction in progress	Total
Cost
Opening balance, 1 Jan. 2019	686.8	2,111.1	102.4	2,900.3
Other investments	21.6	75.9	71.8	169.3
Disposals and scrappings	-3.9	-41.9	-0.2	-46.0
Reclassification	1.2	66.0	-69.0	-1.7
Exchange rate differences	3.1	16.5	0.9	20.4
Closing balance, 31 Dec. 2019	708.9	2,227.5	106.0	3,042.3
Opening balance, 1 Jan. 2020	708.9	2,227.5	106.0	3,042.3
---	---	---	---	---
Other investments	5.2	76.8	84.9	166.9
Disposals and scrappings	-0.6	-4.4	0.0	-5.0
Reclassification	8.2	20.7	-42.0	-13.1
Exchange rate differences	-21.1	-65.8	-3.0	-89.9
Closing balance, 31 Dec. 2020	700.6	2,254.8	145.8	3,101.2
Group, SEKm	Land and buildings	Machinery and equipment	Construction in progress	Total
---	---	---	---	---
Depreciation and impairment
Opening balance, 1 Jan. 2019	-354.6	-1,652.7	-	-2,007.3
Disposals and scrappings	2.7	39.9	-	42.6
Impairment for the year	-	-0.3	-	-0.3
Depreciation for the year	-21.4	-108.3	-	-129.7
Reclassification	-0.6	1.4	-	0.8
Exchange rate differences	-0.9	-13.0	-	-13.9
Closing balance, 31 Dec. 2019	-374.8	-1,733.1	-	-2,107.9
Opening balance, 1 Jan. 2020	-374.8	-1,733.1	-	-2,107.9
---	---	---	---	---
Disposals and scrappings	0.5	3.8	-	4.3
Impairment for the year	-3.8	0.0	-	-3.8
Depreciation for the year	-22.6	-105.1	-	-127.7
Reclassification	-1.1	2.6	-	1.5
Exchange rate differences	10.2	52.3	-	62.6
Closing balance, 31 Dec. 2020	-391.5	-1,779.5	-	-2,171.0

Carrying amounts

As of 1 Jan. 2019	332.2	458.5	102.4	893.1
As of 31 Dec. 2019	334.1	494.5	106.0	934.5
As of 1 Jan. 2020	334.1	494.5	106.0	934.5
As of 31 Dec. 2020	309.1	475.4	145.8	930.2

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

Group, SEKm	2020	2019
Amortization is included in the following items in the income statement:
Cost of goods sold	-117.0	-123.2
Selling expenses	-2.8	-2.5
Administrative expenses	-7.9	-4.0
Research and development expenses	-0.1	-
Total	-127.7	-129.7
Impairment is included in the following items in the income statement:
Cost of goods sold	-3.8	-0.3
Selling expenses	0.0	0.0
Total	-3.8	-0.3

Restructuring in sales channels and production in Business Area South necessitated recognition of impairment of tangible fixed assets in 2020.

Parent Company, SEKm, Equipment	2020	2019
Amortized cost
Opening balance	4.0	6.1
Acquisitions	-	-
Reclassification	-	-2.1
Closing balance	4.0	4.0
Accumulated depreciation
Opening balance	-1.9	-2.8
Depreciation for the year	-0.4	-0.4
Reclassification	-	1.2
Closing balance	-2.3	-1.9
Carrying amounts	1.7	2.0

NOTE 15

Participations in associated companies

Group, SEKm	2020	2019
Carrying amount at start of year	14.4	12.6
Disposals of associated companies	-	-
Participations in profit/loss of associated companies	1.8	1.7
Translation difference	-	-
Carrying amount at end of year	16.2	14.4

Specified below are the consolidated values for the ownership proportion of income, profit, assets and liabilities.

Associated companies

2020, SEKm	Country	Income	Earnings	Assets	Liabilities	Equity	Proprietary holding in %	Participation in profit/loss after tax	Value if listed	Carrying amount
Parent Company's:
WeBe Home AB	Sweden	1.8	0.0	1.9	0.8	1.0	40.0	0.0	-	1.3
Subsidiaries':
UAB Panorama Nordic Ltd	Lithuania	36.1	4.6	36.2	-3.6	32.6	40.0	1.8	-	14.9
								1.8		16.2
2019, SEKm	Country	Income	Earnings	Assets	Liabilities	Equity	Proprietary holding in %	Participation in profit/loss after tax	Value if listed	Carrying amount
Parent Company's:
WeBe Home AB	Sweden	4.6	0.2	2.5	-3.4	-0.9	40.0	0.1	-	1.3
Subsidiaries':
UAB Panorama Nordic Ltd	Lithuania	35.6	4.2	33.6	-5.1	-29.2	40.0	1.7	-	13.0
								1.7		14.4

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 16

Receivables from Group companies

Parent Company, SEKm	2020	2019
Accumulated cost
Opening balance	1,885.1	2,364.5
Additional receivables	37.3	478.6
Settled receivables	-631.0	-958.1
Impairment of receivables	-	-
Closing balance, 31 Dec.	1,291.3	1,885.0

NOTE 17

Inventories

Group, SEKm	2020	2019
Raw materials and consumables	271.8	282.8
Products in progress	63.8	64.7
Finished goods and goods for resale	111.4	147.0
	447.0	494.5

Operating expenses include inventory impairments of SEK 0.6 million (1.8) after reversals of previous impairments of SEK 0.2 million (5.5). The reversals are largely attributable to new assessments of existing order backlogs.

NOTE 18

Cash and equivalents

Group, SEKm	2020	2019
Cash and equivalents include the following sub-components:
Cash and bank balances	1,132.7	242.8
Total according to balance sheet and cash flow statement	1,132.7	242.8

NOTE 19

Equity

Parent Company	2020	2019
Number of shares, thousands
Ordinary shares (nominal value SEK 4 (4))	57,968	57,968

Share capital

Holders of ordinary shares are entitled to dividends determined in due course and to one vote per share at Annual General Meetings. All shares carry equal entitlement to a share in the company's remaining net assets.

Other capital contributions

Pertains to capital provided from shareholders. This includes premiums paid in connection with share issues.

Reserves

Translation reserve

The translation reserve encompasses all exchange rate differences arising from the translation of the financial statements of foreign operations prepared in a currency other than that in which the Group's financial statements are presented. The Parent Company and the Group present their financial statements in SEK.

Profit brought forward including profit for the year

Included in profit brought forward and profit for the year are the profits earned by the Parent Company and its subsidiaries, associated companies and joint ventures. This equity item includes earlier provisions to the reserve fund, excluding transferred share premium reserves.

Dividend

Parent Company, SEKm	2020	2019
Paid during the year	-	144.9
Proposed for payment	260.9	-

Appropriation of profit

Proposal for profit distribution.

Parent Company, SEKm	2020	2019
The following funds are at the disposal of the Annual General Meeting:
Share premium reserve	890.7	890.7
Accumulated profit	347.4	237.0
Profit for the year	34.0	110.4
Total, SEK	1,272.1	1,238.1
The Board of Directors and President and CEO propose that the profit at the disposal of the Annual General Meeting be distributed in the following manner:
Distributed to shareholders: SEK 4.50 per share (0)	260.9	-
Brought forward to new account	1,011.2	1,238.1
Total, SEK	1,272.1	1,238.1

Capital management

According to Board policy, the Group's financial objective is to maintain a favourable capital structure and financial stability enabling it to retain the trust of creditors and the market, while also providing the basis for continued business development.

The Board's ambition is to maintain a balance between the high return that increased borrowing permits and the advantages and security offered by a sound capital structure. The net debt in relation to EBITDA is followed up continuously in the internal reporting to management and the Board.

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

Capital is defined as equity including non-controlling interests.

Group, SEKm	2020	2019
Capital
Total equity	4,155.1	3,775.5
	4,155.1	3,775.5
Net debt
Financial liabilities, excluding IFRS 16	1,890.4	1,971.8
Lease liabilities, IFRS 16	355.3	363.5
Financial interest-bearing receivables	-17.2	-18.0
Cash and equivalents	-1,132.7	-242.8
Net debt	1,095.8	2,074.5
Net debt/total equity	0.3	0.5
Net debt/operating EBITDA (multiple)	1.1	2.4
Net debt/operating EBITDA (multiple), excluding IFRS 16	0.9	2.2

Net debt decreased by SEK 979 million in 2020. During the same period, total equity increased by SEK 379 million and the net debt/equity ratio decreased to 0.3 (0.5). Consolidated cash flow from ordinary operations has primarily been used for investments and to amortize debt.

Our long-term acquisition strategy stands firm and, given a strong balance sheet, we have stepped up our acquisition efforts, continuing our discussions with potential target companies.

Financial targets

Inwido's operations are governed by four financial targets aimed at generating profitable growth and providing shareholders with good returns and long-term growth in value.

Sales growth

Inwido's objective is to exceed growth in our current markets through organic growth, as well as selective acquisitions and initiatives in Europe.

Profitability

Capital structure

Inwido's net debt in relation to operating EBITDA shall, excluding temporary deviations, not exceed a multiple of 2.5.

Dividend policy

Earnings per share

Earnings per share before dilution is calculated as the earnings for the period attributable to Parent Company shareholders divided by the average number of shares outstanding per reporting period.

Group	2020	2019
Number of shares, 31 Dec., 000s	57,968	57,968
Average number of shares before dilution, 000s	57,968	57,968
Average number of shares after dilution, 000s	57,968	57,968
Profit after tax attributable to Parent Company shareholders (SEKm)	500.6	433.2
Earnings per share, before dilution (SEK)	8.64	7.47
Earnings per share, after dilution (SEK)	8.64	7.46

Convertible debentures and warrants

In 2016, the company launched a warrant programme whereby warrants were sold to senior executives. The incentive programme ended on 30 September 2019. Since the conversion price exceeded the current market price during the conversion period, no new shares were issued within the framework of the incentive programme.

Convertible debentures

Group, SEKm	2019
Carrying amount at start of year	13.6
Redemption of convertible debentures	-
Capitalized interest	0.3
Reported liability, 31 Dec.	13.9

Number of warrants issued

Group	2016/2019:1	2016/2019:2
Number outstanding at start of year	76,000	116,480
Past-due options	-76,000	-116,000
Number outstanding at end of year	0	0
Redeemable at end of year	0	0

Convertible debentures

The Company issued convertible debentures in June 2016 ("2016/2019:1") and September 2016 ("2016/2019:2"). The convertible debenture issued under 2016/2019:1 amounted nominally to SEK 5.1 million with a price of SEK 130.30, meaning that a total of 39,432 convertible debentures were issued under 2016/2019:1. The convertible debenture issued under 2016/2019:2 amounted nominally to SEK 9.0 million with a price of SEK 139.20, meaning that a total of 64,512 convertible debentures were issued under 2016/2019:2. The issue was implemented in connection with the introduction of an incentive programme for all employees in the Group, see Note 8. The conversion price exceeded the current market price during the conversion period and no new shares were therefore issued within the framework of the incentive programme.

Warrants

In 2016, the company issued warrants for SEK 1.7 million under the two programmes: 2016/2019:1 and 2016/2019:2. The issue was implemented in connection with the initiation of an incentive programme for senior executives, see Note 8. During the period 1 August 2019 to 15 September 2019, holders were entitled to exercise their options to receive one share for every option held at a conversion price of SEK 130.30 in respect of 2016/2019:1 and SEK 139.20 in respect of 2016/2019:2. The conversion price exceeded the current market price during the conversion period and no new shares were therefore issued within the framework of the incentive programme.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 20

Interest-bearing liabilities

The following presents details of the Company's terms for interest-bearing liabilities, without taking the Company's interest rate swaps into account. For further details of the Company's exposure to interest rate risks and currency risks, please see Note 2.

Non-current liabilities

Group, SEKm	2020	2019
Liabilities to credit institutions	1,849.2	1,926.8
Total	1,849.2	1,926.8

Current liabilities

Group, SEKm	2020	2019
Overdraft facilities	15.9	35.8
Current liabilities to credit institutions	22.7	5.9
Total	38.7	41.7

Liabilities maturing later than five years after the balance sheet date

Liabilities to credit institutions - 16.1

Terms and repayment periods

Group, SEKm	Currency	Matures	2020		2019
			Nominal book value	Carrying amount	Nominal book value	Carrying amount
Credit institute	SEK	2025	556.9	556.9	556.9	556.9
Credit institute	EUR	2021-2025	741.5	741.5	602.0	602.0
Credit institute	DKK	2021-2025	579.7	579.7	782.2	782.2
Periodized bank expense	SEK	2025	-	-6.1	-	-8.4
Overdraft facilities utilized	PLN	2020	15.9	15.9	35.8	35.8
Interest-bearing liabilities			1,894.0	1,887.9	1,976.9	1,968.5

The average interest rate in 2020 was approximately 1.0 percent (1.2).

NOTE 21

Liabilities to credit institutions

Parent Company, SEKm	2020	2019
Non-current liabilities
Bank loans	1,846.6	1,893.1
Current liabilities
Current portion of bank loans	-	-
Liabilities maturing later than five years after the balance sheet date	-	-

NOTE 22

Provisions

Group 2020, SEKm	Guarantee reserve	Res-tructuring measures	Total
Carrying amount at start of period 1 Jan. 2020	23.5	7.8	31.3
Provisions made during the period	8.2	1.7	9.9
Amounts utilized	-1.7	-4.1	-5.8
Reversal of previous provisions	-0.5	-1.1	-1.5
Translation difference	-0.6	-0.3	-0.9
Carrying amount at end of period 31 Dec. 2020	28.9	4.0	33.0
of which:
Amounts due for payment after 12 months	-	2.0	2.0
Amounts due for payment within 12 months	28.9	2.0	30.9
Group 2019, SEKm
Carrying amount at start of period 1 Jan. 2019	26.0	12.6	38.6
Provisions made during the period	7.6	3.4	11.0
Amounts utilized	-10.4	-7.3	-17.7
Reclassification	0.0	-1.1	-1.1
Translation difference	0.2	0.3	0.5
Carrying amount at end of period 31 Dec. 2019
of which:	23.5	7.8	31.3
Amounts due for payment after 12 months	-	2.1	2.1
Amounts due for payment within 12 months	23.5	5.7	29.2

Inwido AB (publ) | Annual and Sustainability Report 2020

NOTES

Guarantees

Provisions for guarantees and refunds are mainly attributable to sales of windows and doors during the 2019 and 2020 financial years. The provision was made on the basis of calculations involving historical expense data for guarantees and refunds and that are expected to mature in 2021.

Restructuring

Of the restructuring measures adopted within Inwido, SEK 16.5 million (24.5) has impacted the earnings for the year negatively. The costs are, for the most part, related to the impairment of key projects and structural measures as a consequence of the Covid-19 pandemic. As of 31 December 2020, provisions of SEK 4.0 million remain, of which SEK 2.0 million will mature in 2021.

NOTE 23

Accrued expenses and prepaid income

Group, SEKm	2020	2019
Accrued liabilities for wages and vacation compensation	271.5	236.8
Accrued social security contributions	52.2	46.1
Customer bonuses	81.4	74.8
Accrued interest expenses	3.1	4.0
Other	35.2	30.7
Total	443.4	392.5
Parent Company, SEKm	2020	2019
---	---	---
Accrued liabilities for wages and vacation compensation	11.6	7.7
Accrued social security contributions	3.7	2.4
Accrued interest expenses	3.1	4.0
Other	1.2	2.1
Total	19.6	16.2

NOTE 24

Leases

The Group's tangible non-current assets comprise both proprietary and leased assets. For information on proprietary tangible non-current assets, see Note 14 Tangible non-current assets.

The Group leases several types of assets, including premises, vehicles, machinery and IT equipment. No leases include covenants or other restrictions beyond the collateral comprising the leased asset.

Right-of-use assets

Group, SEKm	2020
	Properties	Other	Total
Amortization during the year	-51.3	-24.7	-76.0
Closing balance, 31 Dec. 2020	277.5	53.1	330.6
	2019
Amortization during the year	-54.1	-23.9	-78.0
Closing balance, 31 Dec. 2019	281.5	56.8	338.4

Additional right-of-use assets in 2020 amounted to SEK 81.8 million (40.9). This amount includes the cost of new right-of-use assets acquired during the year, as well as additional amounts when reassessing lease liabilities due to changed payments as a result of the change in the lease period.

Lease liabilities

Group, SEKm	2020	2019
Current	72.2	81.6
Non-current	285.7	285.3
Lease liabilities included in the statement of financial position	357.9	366.9

For a maturity analysis of the lease liabilities, see Note 2 Financial risks and policy in the section on liquidity risks.

Amounts recognized in profit or loss, IFRS 16

Group, SEKm	2020	2019
Amortization of right-of-use assets	-76.0	-78.0
Interest on lease liabilities	-11.5	-11.6
Expenses for short-term leases	0.9	1.6
Expenses for low-value leases, not short-term leases of low value	5.4	3.8

Amounts recognized in the cash flow report

Group, SEKm	2020	2019
Total cash outflows attributable to leases	82.4	83.7

The above cash outflows include both amounts for leases recognized as lease liabilities, as well as short-term leases and leases of low value.

Leases where the Parent Company is the lessee

Group, SEKm	2020	2019
Non-cancellable lease payments amount to:
Within 1 year	1.9	1.8
2-5 years	3.1	1.6
Later than 5 years	-	-
Total	5.0	3.4

Fees expensed for operational leases amount to:

Minimum lease fees	1.0	0.7
Variable fees	1.2	1.2
Total lease expenses	2.1	1.9

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 25

Pledged assets, contingent liabilities and contingent assets

SEKm	Group		Parent Company
	2020	2019	2020	2019
Pledged assets
In the form of assets pledged for the company's own liabilities and provisions
Assets with ownership reservation	2.5	0.3	-	-
Endowment insurance	29.0	26.1	26.9	23.7
Other	-	-	-	-
	31.5	26.3	26.9	23.7
Other pledged assets and collateral	-	-	-	-
Total pledged assets	31.5	26.3	26.9	23.7
Contingent liabilities
Guarantee obligations for the benefit of subsidiaries	-	-	43.2	67.7
Other contingent liabilities	-	-	-	-
Total contingent liabilities	-	-	43.2	67.7

NOTE 26

Related parties

Relations with related parties

The Parent Company has a related party relationship with its subsidiaries, see Note 27.

Summary of transactions with related parties

SEKm	Years	Sales and purchases of goods/services to affiliates	Interest income	Receivables from related parties at 31 Dec.	Interest expenses	Liabilities to related parties at 31 Dec.
Group
Associated companies	2020	0.0	-	-	-	0.0
Associated companies	2019	-12.6	-	-	-	1.2
Parent Company
Subsidiaries	2020	73.7	45.5	1,291.3	-	1,222.2
Subsidiaries	2019	65.5	62.2	1,885.1	-	853.4
Associated companies	2020	0.0	-	-	-	0.0
Associated companies	2019	-3.0	-	-	-	0.0

Receivables from subsidiaries are recognized net less reserves for expected credit losses in accordance with the requirements of RFR 2/IFRS 9. As of 31 December 2020, these reserves amounted to SEK 4.5 million (5.9).

Transactions with closely related parties are priced on market terms.

Sales by the Parent Company to subsidiaries pertain to services. These are priced and allocated in accordance with the Group's internal pricing documentation. Other transactions with closely related parties are priced on market terms.

For receivables from, and liabilities to, Group companies, terms are in line with the market.

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 27

Group companies

Group		Holding in %
Holdings in subsidiaries, direct and indirect ownership	Domicile of subsidiary, country	2020	2019
-UAB WinBas	Lithuania	100	100
-INWIDO DENMARK A/S	Denmark	100	100
-FROVIN VINDUER & DØRE A/S	Denmark	100	100
-OUTLINE VINDUER A/S	Denmark	100	100
-OUTRUP VINDUER OG DØRE A/S	Denmark	100	100
-KPK DØRE OG VINDUER A/S	Denmark	100	100
-TB EUROPE A/S	Denmark	0	100
-BØJSØ DØRE & VINDUER A/S	Denmark	100	100
-INWIDO EUROPE AB	Sweden	100	100
-INWIDO CE GmbH	Austria	100	100
-INWIDO E-COMMERCE A/S	Denmark	100	100
-SPARWINDOW Ltd	UK	100	100
-SPARWINDOW Ltd	Ireland	100	100
-JNA VINDUER & DØRE A/S	Denmark	100	100
-SÁÁSTKE OÜ	Estonia	100	100
-SPARVINDUER ApS	Denmark	100	100
-SPAREVINDUER AS	Norway	100	100
-SPARFÖNSTER AB	Sweden	100	100
-SPARFENSTER GmbH	Germany	100	100
-SPARIKKUNAT OY	Finland	100	100
-BEDST & BILLIGST VINDUER OG DØRE A/S	Denmark	100	100
-BONUSFÖNSTER AB	Sweden	100	100
-BEST & BILLIGST AS	Norway	100	100
-SWAN WINDOWS S.R.L.	Romania	100	100
-ENERGIVINDUET ApS	Denmark	100	100
-INWIDO IRELAND Ltd	Ireland	100	100
-CARLSON & CO Ltd	Ireland	100	100
-PIHLA GROUP OY	Finland	100	100
-INVENT SOLUTION OY	Finland	100	100
-KLAS 1 YHTIÖT OY	Finland	100	100
-VÄRMELUX OY	Finland	100	100
-SUOMEN LÄMPÖIKKUNA OY	Finland	100	100
-PROFIN OY	Finland	100	100
-PROFIN SYDÄNPUU IKKUNAT JA OVET OY	Finland	100	100
-LYSSAND FREKHAUG AS	Norway	100	100
-LYSSAND FREKHAUG SALG AS	Norway	100	100
Group		Holding in %
---	---	---	---
Holdings in subsidiaries, direct and indirect ownership	Domicile of subsidiary, country	2020	2019
-FREKHAUG VINDUET AS	Norway	100	100
-SOKÖLKA OKNA I DRZWI SA	Poland	100	100
-SOKÖLKA OKNA I DRZWI PRODUKCJA SA	Poland	100	100
-IP GLASS SP.ZO.O	Poland	100	100
-INWIDO SUPPLY AB	Sweden	0	100
-A-LACKERING AB	Sweden	100	100
-ALAKIERNIA SP.ZO.O	Poland	100	100
-INWIDO SVERIGE AB	Sweden	100	100
-OUTLINE I SVERIGE AB	Sweden	100	100
-ELITFÖNSTER AB	Sweden	100	100
-ERA FÖNSTER AB	Sweden	100	100
-ETRIFÖNSTER AB	Sweden	100	100
-HAJOM SKJUTDÖRRAR AB	Sweden	100	100
-INWIDO FÖRSÄLJNING AB	Sweden	100	100
-ELITFÖNSTER PRODUKTION AB	Sweden	100	100
-LENHOVDA FÖNSTER AB	Sweden	100	100
-NORSIÖ KOMPONENTER AB	Sweden	0	100
-TEMAFÖNSTER AB	Sweden	0	100
-SNICKAR-PER AB	Sweden	100	100
-ELITFÖNSTER PÅ PLATS AB	Sweden	100	100
-DIPLOMAT DÖRRAR AB	Sweden	100	100
-STEELFORM SCANDINAVIA AB	Sweden	100	100
-PROFIN SVERIGE AB	Sweden	100	100
-INWIDO UK Ltd	UK	100	100
-ALLAN BROTHERS Ltd	UK	100	100
-CWG CHOICES Ltd	UK	100	100
-JACK BRUNSDON & SON Ltd	UK	100	100
Accumulated cost	2020	2019
---	---	---
Parent Company, SEKm	2020	2019
At beginning of the year	2,251.2	2,183.3
Purchases and issues	91.1	67.9
Intra-Group changes	-17.8	-
Closing balance, 31 Dec.	2,324.4	2,251.2
Subsidiaries (directly owned)	Corporate identity number	Domicile of subsidiary, country	2020 SEKm
---	---	---	---
Inwido Sverige AB	556583-4693	Vetlanda	881.2
Pihla Group OY	1882624-9	Finland	223.2
Lyssand Frekhaug AS	988381063	Norway	341.1
Inwido Denmark A/S	28 84 36 15	Denmark	528.6
Sokółka Okna i Drzwi SA	0000082682	Poland	51.0
Inwido UK Ltd	1110137	UK	21.4
Inwido Supply AB	556625-4412	Sävsjö	0.0
Inwido Ireland Ltd	465489	Ireland	34.8
Inwido Europe AB	556565-5767	Vetlanda	141.7
A-lackering AB	556120-8827	Sävsjö	100.6
UAB WinBas	111775687	Lithuania	0.8
			2,324.4

Inwido AB (publ)

Annual and Sustainability Report 2020

NOTES

NOTE 28

Specifications for cash flow statement

Reconciliation of liabilities arising from financing activities

Group, SEKm	CB 2019	Cash flows	Changes not affecting cash flow				CB 2020
			Acquisitions of subsidiaries	Acquisition-related liabilities	Other	Exchange rate differences
Liabilities to credit institutions	1,968.5	-34.1	-	-	2.3	-48.8	1,887.9
Interest-bearing liabilities	-	-	-	-	0.0	0.0	0.0
Lease liabilities	366.9	-77.1	-	-	79.3	-11.2	357.9
Total liabilities arising from financing activities	2,335.3	-111.1	-	-	81.6	-60.0	2,245.8
Parent Company, SEKm	CB 2019						CB 2020
Liabilities to credit institutions	1,893.1	-	-	-	2.3	-48.8	1,846.6
Liabilities to Group companies, interest-bearing	753.9	326.0	-	-	-	49.7	1,129.6
Total liabilities arising from financing activities	2,647.0	326.0	-	-	2.3	0.9	2,976.2
Group, SEKm	CB 2018						CB 2019
Liabilities to credit institutions	2,260.4	-326.7	-	-	-	34.7	1,968.5
Interest-bearing liabilities	59.1	-24.6	-	-35.2	-	0.7	-
Lease liabilities	4.2	-78.0	-	-	424.7	16.0	366.9
Total liabilities arising from financing activities	2,323.8	-429.3	-	-35.2	424.7	51.4	2,335.3
Parent Company, SEKm	CB 2018						CB 2019
Liabilities to credit institutions	2,156.5	-299.1	-	-	0.0	35.6	1,893.1
Liabilities to Group companies, interest-bearing	754.4	-2.1	-	-	-	1.6	753.9
Total liabilities arising from financing activities	2,910.9	-301.2	-	-	0.0	37.2	2,647.0

Adjustments for items not included in cash flow

SEKm	Group		Parent Company
	2020	2019	2020	2019
Provisions	6.8	-5.7	2.6	-
Unrealized exchange rate differences	13.6	19.6	25.4	38.6
Capital gains	-1.0	-1.7	-	-
Other	-2.5	-0.7	1.6	-
Participations in profit/loss of associated companies	-1.8	-1.7	-	-
	15.1	9.8	29.7	38.6

98
Inwido AB (publ)
Annual and Sustainability Report 2020

NOTES

NOTE 29

Significant events after the end of the year

The Nomination Committee has proposed to the 2021 Annual General Meeting that Per Bertland be elected as the new Chairman of the Board with Georg Brunstam having declined re-election.

NOTE 30

Key estimates and assessments

Company management has discussed with the Audit Committee the development, selection and details of the Group's key accounting principles and estimates, as well as the application of these principles and assessments.

Impairment testing of goodwill

In the calculation of cash generating units' recoverable value for the assessment of possible goodwill impairment, several assumptions of parameters have been made. These are accounted for in Note 13. However, it is management's view that considerable changes in conditions would be necessary for these assumptions in 2021 and estimations to have a significant impact on goodwill.

Valuation of deferred tax assets

In the valuation of deferred tax assets, the size of the asset in relation to the company's estimated future cash flows and the useful life of the asset shall be taken into account.

A similar assessment is made as in the calculation of cash generating units' recoverable value for the assessment of the goodwill impairment, see Note 13. The assessment is made of the individual company in those cases where this is an individual tax-paying entity, otherwise the assessment is made of the entire Group, which is the taxable unit where joint taxation applies. However, deferred tax assets are assessed over a different period other than the assessment of goodwill impairment. In most cases, an assessment is made as to whether the claim can be utilized within the time limits of the loss carryforward or whether no time limit applies for a period of five to seven years. This assessment could lead to impairment being recognized in receivables or to the reversal of previously uncapitalized loss carryforwards.

Leases

Certain leases include extension and termination options that the Group may opt to exercise or not up to one year before the end of the non-cancellable period. When possible, the Group includes such options in new leases as they contribute to operational flexibility. On the commencement date of the lease, an assessment is made as to whether it is reasonably certain that an extension option will be exercised. The Group reassesses the leasing period in light of a key event or significant changes in circumstances that are within the Group's control and that affect whether it is reasonably certain that the Group will exercise (or not exercise) an option included in the original agreement.

NOTE 31

Details of the Parent Company

Inwido AB is a company registered in Sweden with its domicile in Malmö. The Parent Company's shares are listed on the Nasdaq Stockholm exchange. The address of the head office is Engelbrektsgatan 15, SE-211 33 Malmö, Sweden.

The consolidated accounts for 2020 comprise the Parent Company and its subsidiaries, together called the Group. The Group also includes participations in associated companies.

Inwido AB (publ)

Annual and Sustainability Report 2020

ATTESTATION BY THE BOARD OF DIRECTORS

Attestation by the Board of Directors

The Board of Directors and the President and CEO certify that the Annual Report has been prepared in accordance with generally accepted accounting standards in Sweden and that the consolidated accounts have been prepared in accordance with the international accounting standards referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards. The annual accounts and the consolidated accounts give a true and fair view of the financial position and results of the Parent Company and the Group. The Board of Directors' Report for the Parent Company and the Group gives a true and fair overview of the operations, financial position and results of the Parent Company and the Group, and describes significant risks and uncertainties that the Parent Company and the companies in the Group face.

The Annual Report and the consolidated accounts were, as stated above, approved for publication by the Board of Directors and the CEO on 29 March 2021.

Georg Brunstam
Chairman of the Board

Henriette Schütze
Board member

Kerstin Lindell
Board member

Anders Wassberg
Board member

Christer Wahlquist
Board member

Tony Johansson
Employee representative

Robert Wernersson
Employee representative

Henrik Hjalmarsson
President and CEO

My audit report was submitted on 29 March 2021.

KPMG AB

Linda Bengtsson
Authorized Public Accountant

The consolidated statement of comprehensive income and statement of financial position and the Parent Company's income statement and balance sheet are subject to the approval of the Annual General Meeting on 6 May 2021.

Inwido AB (publ)

Annual and Sustainability Report 2020

AUDITOR'S REPORT

Auditor's Report

To the general meeting of the shareholders of Inwido AB (publ), corp. id 556633-3828

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Inwido AB (publ) for the year 2020, except for the sustainability report on page 57. The annual accounts and consolidated accounts of the company are included on pages 55-100 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 the parent company as of 31 December 2020 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 2020 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 sustainability report on page 57. 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 statement of comprehensive income and statement of financial position for the group.

Our opinions in this report on the 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.

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.

Valuation of goodwill and the Parent Company's holdings in Group companies

See disclosure 13 and accounting principles on page 74 and page 75 in the annual account and consolidated accounts for detailed information and description of the matter.

Description of key audit matter

On 31 December 2020, the group reported goodwill of SEK 4,208.4 million. The carrying amount has been subject to impairment testing which involves both complexity and a significant element of judgement. Impairment testing has been performed for all of the cash-generating units that have associated goodwill, which for the Group involves three different units.

In accordance with IFRS, impairment testing is to be performed according to a specific technique requiring management to make projections about the operations' internal and external conditions and plans. Examples of such judgements are future cash flow, which, among other things, require assumptions about future market growth, purchases of goodw and services, personnel expenses and efficiency.

Another important assumption is the discount rate to be used to reflect market assessments of the time value of money and the specific risks to which the units are exposed.

As per 31 December 2020, the Parent Company reported shares in Group companies for SEK 2,324.4 million. If there are indications of significant impairment, for example, if the value of the shares exceeds the consolidated value of each Group company, the same type of testing is performed, using the same technique and inputs, as for consolidated goodwill.

Response in the audit

We have inspected the impairment tests that have been performed to assess whether they have been prepared in accordance with the prescribed techniques.

We have also assessed the reasonableness of the assumptions regarding future cash flows by reviewing and assessing the four-year business forecasts on which the testing is based. We have also interviewed Group management and evaluated the previous year's estimates of future cash flows in relation to actual outcome.

We have also assessed the discount rate applied and involved our valuation specialists in this part of the audit, mainly with regard to the assumptions about the rate of return associated with external markets.

An important aspect of our work has also been reviewing the Group's sensitivity analysis of the valuation in order to determine how reasonable changes in Group management's assumptions may affect the valuation.

We have also assessed the content of the disclosures on the impairment testing as provided in the annual and consolidated accounts.

Inwido AB (publ)

Annual and Sustainability Report 2020

AUDITOR'S REPORT

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 1-44, 50-54, 104-105 as well as the Sustainability Report on page 57. The other information comprises also of the remuneration report, which we obtained prior to the date of this auditor's report. 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 Directors 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 scepticism 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 Directors and the Managing Director.
Conclude on the appropriateness of the Board of Directors' 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.

Inwido AB (publ)

Annual and Sustainability Report 2020

AUDITOR'S REPORT

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 Directors and the Managing Director of Inwido AB (publ) for the year 2020 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 Directors 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 Directors 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's 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 scepticism 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 opinion regarding the statutory sustainability report

The Board of Directors is responsible for the sustainability report on page 57, and that it is prepared in accordance with the Annual Accounts Act.

Our examination has been conducted in accordance with FAR:s auditing standard RevR 12 The auditor's opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report 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 opinion.

A statutory sustainability report has been prepared.

KPMG AB, Box 382, 101 27, Stockholm, was appointed auditor of Inwido AB (publ) by the general meeting of the shareholders on the 5 May 2020. KPMG AB or auditors operating at KPMG AB have been the company's auditor since 2004.

MALMÖ 29 MARCH 2021

KPMG AB

Linda Bengtsson

Authorized Public Accountant

Inwido AB (publ)

Annual and Sustainability Report 2020

DEFINITIONS

Definitions of alternative key ratios not defined by IFRS

Inwido presents certain alternative financial key ratios beyond the conventional financial key ratios established by IFRS, in order to better understand the development of the operations and the financial status of the Inwido Group. Such key ratios should not, however, be considered a substitute for the key ratios required under IFRS. The alternative key ratios presented in this report are described below.

Income measures	Calculation	Purpose
Organic growth	Net sales including acquired growth for the current period divided by net sales including pro forma acquired growth during the corresponding period in the preceding year. The change is adjusted for exchange rate fluctuations by applying the current period's exchange rates to pro forma net sales during the corresponding period in the preceding year.	Organic growth excludes the effects of changes in the Group's structure and exchange rates, enabling a comparison of net sales over time.
Operating gross profit	Gross profit before items affecting comparability.	Key ratio used to measure how much of net sales is left to cover other expenses. The key ratio is also adjusted for the impact of items affecting comparability to increase comparability over time.
Operating EBITDA	EBITDA before items affecting comparability.	This key ratio is used to measure cash flow from operating activities, regardless of the effects of financing and depreciation rates on non-current assets. The key ratio is also adjusted for the impact of items affecting comparability to increase comparability over time. The key ratio is a central component in the bank covenant Net debt/operating EBITDA.
EBITA	Operating profit after depreciation, amortization and impairment but before deduction for impairment of goodwill as well as amortization and impairment of other intangible assets that arose in conjunction with company acquisitions (Earnings Before Interest, Tax and Amortization).	This key ratio enables comparisons of profitability over time regardless of amortization and impairment of acquisition-related intangible assets, and regardless of the corporate tax rate and the company's financing structure. Depreciation of tangible assets is, however, included, this being a measure of resource consumption necessary to generate earnings.
Operating EBITA	EBITA before items affecting comparability.	This key ratio increases the comparability of EBITA over time, since it is adjusted for the impact of items affecting comparability. The key ratio is also used in internal review and constitutes a central financial target for the operations.
Items affecting comparability	Income statement items that are non-recurring, have a significant impact on profit and are important for understanding the underlying development of operations.	A separate account of items affecting comparability elucidates development in the underlying operations.
Margin measures	Calculation	Purpose
Operating gross margin	Operating gross profit as a percentage of net sales.	This key ratio is a complement to operating margin since it shows the underlying surplus from net sales left to cover other expenses in relation to net sales.
Operating EBITDA margin	Operating EBITDA as a percentage of net sales.	This key ratio serves as a complement to operating margin, since it shows the underlying surplus cash flow in relation to net sales. The key ratio also enables comparison with other companies, regardless of each company's depreciation/amortization principles and the age structure of non-current assets.
EBITA margin	EBITA as a percentage of net sales.	This key ratio reflects the operating profitability of the operations before amortization and impairment of acquisition-related intangible assets. The key ratio is an important component, alongside with sales growth and capital turnover rate, in tracking the company's value creation.
Operating EBITA margin	Operating EBITA as a percentage of net sales.	This key ratio increases the comparability of EBITA margin over time, since it is adjusted for the impact of items affecting comparability.
Operating margin (EBIT margin)	Operating profit as a percentage of net sales.	This key ratio reflects the operating profitability of the operations. The key ratio is an important component, alongside with sales growth and capital turnover rate, in tracking the company's value creation.
Capital structure	Calculation	Purpose
Net debt	Interest-bearing liabilities and interest-bearing provisions less interest-bearing assets, including cash and equivalents.	The net debt measure is used to track the development of debt and to see the scope of the refinancing requirement. Since liquid funds can be used to pay off debt at short notice, net debt is used instead of gross debt as a measure of total loan financing.
Net debt/ operating EBITDA	Net debt in relation to operating rolling 12-month EBITDA.	This key ratio is a debt ratio showing how many years it would take to pay off the company's liabilities, provided that its net debt and EBITDA are constant and without taking cash flows relating to interest, taxes and investments into account.
Net debt/ equity ratio	Net debt in relation to shareholders' equity.	This key ratio is a measure of the relationship between the Group's two forms of financing. The measure shows loan capital as a share of shareholders' invested capital. The measure reflects financial strength but also the leverage effect of borrowings. A higher debt ratio entails higher financial risk and higher financial leverage.

Inwido AB (publ)

Annual and Sustainability Report 2020

DEFINITIONS

Interest coverage ratio	Profit after net financial items plus financial expenses in relation to financial expenses.	This key ratio indicates the company's capacity to cover its interest expenses.
Equity/assets ratio	Shareholders' equity including non-controlling interests as a percentage of total assets.	This key ratio reflects the company's financial position. A favourable equity/assets ratio provides a preparedness to manage periods of recession and financial preparedness for growth. At the same time, a higher equity/assets ratio provides lower financial leverage.
Operating capital	Total assets less cash and equivalents, other interest-bearing assets and non-interest-bearing provisions and liabilities.	Operating capital shows the amount of capital that the business requires to conduct its core operations. It is primarily used for the calculation of return on operating capital.
Return measures	Calculation	Purpose
Return on shareholders' equity	Profit after tax, rolling 12-month (RTM), attributable to the Parent Company's shareholders as a percentage of average shareholders' equity, excluding non-controlling interest (average calculated based on the past four quarters).	Return on shareholders' equity shows the total return, in accounting terms, on shareholders' capital and reflects the effects of both the profitability of the operations and of financial leverage. The measure is primarily used to analyze profitability for shareholders over time.
Return on operating capital	Operating profit, rolling 12-month (RTM), as a percentage of average operating capital (average calculated based on the past four quarters).	Return on operating capital shows how well the operations use the net capital tied up in the operations. This reflects the combined effect of the operating margin and the turnover rate for operating capital. The key ratio is mainly used to track the Group's value creation over time.
Share data	Calculation	Purpose
Cash flow per share before/after dilution	Cash flow from operating activities for the period divided by the weighted average number of shares outstanding for the period before/after dilution.	This key ratio measures the cash flow per share generated by the operations before capital investments and cash flows attributable to the company's financing.
Shareholders' equity per share before/after dilution	Shareholders' equity attributable to Parent Company shareholders divided by the number of shares outstanding at the end of the period before/after dilution.	This key ratio serves to describe the scale of the company's net worth per share.
Market segment	Description
Consumer	Sales to the Consumer market are conducted through the following channels: direct sales, retailers, middlemen, manufacturers of prefabricated homes, small building companies.
Industry	Sales to the Industry market are conducted through the following channels: large building companies, retailers, manufacturers of prefabricated homes.

Information for shareholders

Annual Report, reports and news

At www.inwido.com, annual reports in Swedish and English can be downloaded (PDF). Printed copies can also be ordered there. Inwido can be followed by subscribing for press releases and financial reports via the website.

Financial calendar 2021

Interim report, January-March 2021 ... 27 April
Annual General Meeting 2021 ... 6 May
Interim report, January-June 2021 ... 16 July
Interim report, January-September 2021 ... 26 October

2021 Annual General Meeting

Right to participate

Shareholders who are entitled to participate in the Meeting are those who:
- are entered in the share register of the company maintained by Euroclear Sweden AB on 28 April 2021,
- and notify the Company of their intention to participate in the Annual General Meeting by Wednesday, 5 May 2021 by casting their postal votes in accordance with the instructions provided under "Postal voting" below so that their postal votes are received by Euroclear Sweden AB on that date at the latest.

Nominee-registered shares

Shareholders who have had their shares nominee-registered must temporarily re-register the shares in their own name with Euroclear Sweden AB in order to participate in the Meeting. Such registration must be completed by 28 April 2021 at the latest. This means that shareholders must instruct their nominees in sufficient time prior to this date.

Postal voting

Shareholders may only exercise their voting rights at the Meeting by voting in advance by post. A specific form is to be used for postal voting. The form is available at the Company's website, www.inwido.com, under General Meetings/Annual General Meeting 2021. The postal voting form also serves as notification of participation in the Meeting.

The completed and signed form must be received by Euroclear Sweden AB by Wednesday, 5 May 2021 at the latest. The completed and signed form shall be submitted by post to: Inwido AB, "Annual General Meeting 2021", c/o Euroclear Sweden AB, Box 191, SE-101 23 Stockholm, Sweden, or by e-mail to [email protected] (state "Inwido AB - postal vote" on the subject line). Shareholders who are natural persons can also cast postal votes electronically via Euroclear Sweden AB's website https://anmalan.vpc.se/EuroclearProxy/ and by verifying their identity using BankID. Such electronic votes must be cast by Wednesday, 5 May 2021 at the latest.

For shareholders submitting postal votes via a proxy, a power of attorney document must be attached to the postal vote form. Power of attorney forms in Swedish and English are provided by the company on request and are also available at the company's website www.inwido.com, under General Meetings.

IR contacts

Peter Welin, CFO and Deputy CEO
e-mail: [email protected]
Tel: +46 70 32 43 190 or +46 10 45 14 55

Olaf Engvall, Investor & Public Relations Manager
e-mail: [email protected]
Tel: +46 735 414573

Inwido AB (publ)
Annual and Sustainability Report 2020

Inwido AB (publ)
Engelbrektsgatan 15
SE-211 33 Malmö, Sweden
Tel: +46 10 451 45 50
e-mail: [email protected]
www.inwido.com
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Inwido AB — Annual Report 2020

8651_10-k_2021-04-08_ee469994-1e7f-42bc-bb2f-83633219d306.pdf

Inwido's vision

Inwido's climate ambition 2030/2050

A challenging but strong year generating power for the future

TOP 5 important events

Inwido in numbers 2020

A challenging but successful 2020

Developments in Inwido's two business areas

e-Commerce. A strong growth engine

Investments for continued value creation

The impact and lessons from the Covid-19 pandemic

Sustainability for the environment, society and people

Ready for the next stage of the acquisition journey

Outlook 2021

This is Inwido

Inwido share

THREE GOOD REASONS TO INVEST IN INWIDO:

Our vision

Our Business concept

We are located in eleven countries

Production locations and operations

e-Commerce

North

South

Inwido focuses on the following seven UN goals:

A home for strong market leaders

The key to success

Inwido creates value on many levels

Financing

Purchasing

Operational management

How Inwido and its companies contribute to...

Shareholders

Employees

Society

Strategic priorities

Four cornerstones for sustainable and profitable growth

Inwido's market landscape

Key data North

The convenience trend drives sales

What characterizes the business units in business area North?

What characterizes the markets in business area North?

What synergies are there between the business units in business area North?

What are the trends in the consumer / renovation and new build market?

What drives growth in the market?

How do you see acquisition opportunities in business area North?

Three important events in 2020?

Key data South

Share of external net sales

Net sales by market segment

The renovation trend is driving market activity

What characterizes the business units in business area South?

What characterizes the markets in business area South?

What synergies are there between the business units in business area South?

What are the trends in the consumer/renovation and new build market?

What drives growth in the market?

How do you look upon M&A opportunities in South?

Three important events in 2020?

e-Commerce

How did Inwido’s e-Commerce business unit develop in 2020?

What factors are behind the strong growth?

Which markets grew the fastest?

What investments have been made in e-Commerce?

How do you see e-trade in 2021 and beyond - what will drive the development?

This is how e-trade works

Who is the e-trade customer?

What does the buying process look like?

What is important for online customers?

History – Inwido’s e-Commerce journey

Code of conduct and ethical guidelines

Inwido's sustainability compass

1. Be an environmental friend

2. Be a good place to work

3. Be a responsible business

A spectrum of sustainability investments

Global Compact

Human Rights

Labor law

Inwido AB Annual Report 2020