Annual Report

INTRODUCTION

This is NOTE	2
CEO's statement	4

OPERATIONS

Vision, business concept, strategy and targets	6
Business model	8
Value-creating partnerships with customers	10
Market and competitors	12
Risk management	13

SUSTAINABILITY REPORT

Sustainability	14
UN Global Compact	17
Human resources	20

THE NOTE SHARE

Share data and shareholders	26

CORPORATE GOVERNANCE

Corporate Governance Report	28
Group Management	35
Board of Directors	36

FORMAL ANNUAL ACCOUNTS

Report of the Directors	39
Five-year summary	45
Consolidated Financial Statements	46
Notes on the Consolidated Financial Statements	50
Parent Company's Financial Statements	64
Notes on the Parent Company's Financial Statements	68
Auditor's report	73

Shareholders' information

Annual General Meeting

The Annual General Meeting (AGM) will be held at 2:00 p.m. on Monday, 19 April at Bonnier Magasinet, Stockholm, Sweden. Information on the notification procedure for the Meeting will be uploaded to the website jointly with the invitation by no later than four weeks prior to the Meeting.

Notification

Shareholders intending to participate in the AGM must be recorded in the share register maintained by Euroclear Sweden AB by Friday, 9 April, and notify NOTE of their intention to participate by no later than Tuesday, 13 April 2021. For entitlement to participate at the Meeting, shareholders with nominee-registered holdings must request temporary inclusion in the share register maintained by Euroclear Sweden AB (voting registration). Shareholders must inform their nominee in good time prior to Tuesday, 13 April 2021, when this process should be complete.

Business

Information on the agenda of the AGM is published in the Swedish Official Gazette and will be available on NOTE's website. Documentation is also available from NOTE coincident with notification of intention to participate at the Meeting.

Dividend

To ensure maximum financial freedom of action during the beginning of 2021 and to be able to actively participate in the ongoing structural transformation of the industry, the Board currently proposes that no dividend be paid for 2020. However, the Board may return later in the year and propose a dividend given the strong balance sheet NOTE has.

Nomination Committee

The Nomination Committee has the following members: Johan Hagberg, own holdings Thomas Tang, Mediuminvest A/S Fredrik Hagberg, own holdings and Myggenäs Gård Per Olof Andersson, own holdings

Financial information

Calendar

Interim Report, Jan–Mar 19 Apr 2021 Interim Report, Jan–Jun 13 Jul 2021 Interim Report, Jan–Sep 19 Oct 2021

Investor relations contacts

Henrik Nygren Chief Financial Officer Tel: +46 (0)70 977 0686 E-mail: [email protected]

Ordering financial information

Financial and other relevant information can be ordered from NOTE. Out of consideration for the environment, a subscription service is readily available from NOTE's website.

Website: www.note-ems.com E-mail: [email protected] Tel: +46 (0)8 568 99000 Address: NOTE AB (publ), Box 3691, 103 59 Stockholm, Sweden

This is NOTE

NOTE is one of the leading EMS (electronics manufacturing services) partners in northern Europe. NOTE manufactures high end electronics on assignment from customers at eight state-of-the-art plants across Europe and Asia.

NOTE produces PCBAs, subassemblies, and increasingly, box build products. NOTE's products are embedded in complex systems used in applications including electronic control, surveillance and security.

Most of NOTE's customers are active in manufacturing, communication, medtech, defence and high end consumer electronics. NOTE is also playing an active role in the ongoing green technology shift in Sweden and internationally, and its sales in greentech are increasing. Primarily, NOTE's customer base

consists of large corporations operating on the global market, but also businesses whose main sales are in northern Europe. NOTE's business model is based on delivering value-added consulting services and manufacture, as well as tailored logistics solutions for the best total cost. NOTE's customer offering covers complete product lifecycles, from design to after-sales.

In Western Europe, NOTE has plants located in geographical regions with high industrial activity and innovation

capabilities. At these plants, NOTE provides sophisticated production technology services in close partnership with customers, such as component selection, developing test equipment, prototyping and batch production. NOTE's plants in Estonia and China are close to major final markets, and in regions with strong traditions of production and high skills levels. Over and above developmentoriented services, NOTE also provides cost-efficient batch production of PCBAs and box build products.

Key facts

History: Founded in 1999.
Average number of employees 2020: 1,101
Manufacturing units in Sweden, Finland, the UK, Estonia and China.
Share: NOTE's initial public offering was in 2004. The share is quoted on Nasdaq Stockholm (Small Cap/ Industrial Goods & Services).

Overview, SEK million	2020	2019	Delta
Net revenue	1,874	1,760	114
Operating profit	149	124	25
Operating margin	8.0%	7.1%	0.9%
Profit before tax	143	116	27
Profit for the year	116	92	24
Cash flow after investments and acquisition	172	75	97

Earnings per share before dilution

Cash flow per share, after investments and acquisition

SEK 6.06

CEO's statement

2020 was a record year for NOTE with sustained high growth, a 20% increase in operating profit and really strong cash flow.

Focusing on profitable growth

NOTE has performed strongly for several years. The combination of sales growth and rationalisation on our cost side have been contributors to increased market shares and progressively expanding margins. The critical success factors are the company's capability to assure quality and delivery precision of the highest class to customers, and in these segments, we've secured a sector-leading position.

2020 was a disorienting year. Boosted by successful new business sales, we moved into the year with a high growth rate of about 20%. The spread of covid-19 drastically altered conditions in several sectors. In my view, we took on the challenges the pandemic presented professionally and responsibly. Despite extensive restrictions, and being compelled to close our plants in the UK and China for safety reasons periodically, we still achieved growth of 15% in the first half-year. After the summer, and due to lockdowns in several countries, we obviously saw more caution on the market, which alongside customers' inventory adjustments, resulted in reduced volumes on several ongoing customer assignments. In addition, our growth was checked in the autumn, due to challenges completing development and manufacturing projects at the normal rate during the pandemic.

However, we have maintained the strong momentum of our business. Our business model builds on long-term customer relationships and partnerships. Our customer base is broad, and we already partner with several of the Nordic leaders across a broad spectrum of

sectors. We have great growth potential to increase business within our strong customer base. In this way, we secured several of our biggest-ever deals in the year, mainly in industry and medtech.

We're still experiencing high interest in our flexible and industrially broad-based offering. By focusing on the market and technology segments where we're already strong, we successfully secured a large number of new accounts in the year in traditional industries, as well as in new, expansive application segments.

Record progress in the year

For the full year, sales increased by 6% to SEK 1,874 million, our highest-ever sales level. Including exchange rate fluctuations, organic growth was 7%, which is below our growth target of at least 10%. However, our plants in Sweden, Finland and Estonia achieved record sales levels. Extensive closures across the UK economy, which also impacted our operations in China, meant that sales in the UK and China were clearly down on the previous year.

It is pleasing that despite problematic market conditions, we succeeded in maintaining our positive earnings trend. Operating profit increased by 20% to SEK 149 million, and our operating margin widened by 0.9 percentage points to 8.0%, both our highest-ever levels. The profit increase has several sources, including increased sales, stable margins on customer assignments, efficiency programmes completed and the very robust progress of our operations in Sweden and Finland.

We invested in quality and performance enhancements in the year, and significantly increased the automation level of our plants. In 2021, we will also substantially expand capacity at our plant in Torsby, Sweden.

We also devoted substantial energy to ensuring the efficient utilisation of working capital. In tandem with positive profit performance, this was a contributor to cash flow after investments increasing to SEK 172 million, or SEK 6.06 per share, also the highest-ever level. Our Balance Sheet is strong with an equity to assets ratio of over 50% and low net debt of SEK 28 million, excluding the estimated liability on rented properties (IFRS 16 Leases).

We also take a positive view of the rising priority of sustainability issues. Within NOTE, we've taken on the challenges in the sustainability segment methodically and responsibly. One of NOTE's strengths is that we were one of the first companies in our sector to join the UN Global Compact and adopt its ten principles on human rights, labour law, the environment and anti corruption, as early as 2011. In business terms, we are on the offensive, and actively participating in the green technology shift that is surging ahead in Sweden and internationally. Our intention is to highlight this progress clearly in our reporting through 2021.

Given the current market situation, I think we have very good prospects in 2021 of achieving our growth target of at least 10% and maintaining our positive earnings trend.

Future

In the wake of the pandemic, our growth slowed in the second half-year. However, our underlying business continued to perform positively.

We are securing new customers and projects convincingly, and by year-end, our order books were about 20% larger than a year previously. Alongside the start-up of batch production on several major new customer projects, this gives cause for continued optimism for our future. Given the current market situation, I think we have very good prospects in 2021 of achieving our growth target of at least 10% and maintaining our positive earnings trend.

Johannes Lind-Widestam

Vision, business concept, strategy and targets

Digitalisation and the need to be constantly connected is growing, as is the usage of electronics in products that used to be mechanical. NOTE is playing an active role in this process. Its goal is to be the best collaborative partner in the sector, adding value by bringing leading quality and high delivery precision for a competitive cost.

Vision

NOTE—the customer's obvious EMS partner. NOTE will be the best collaborative partner in the sector, and add value for customers by bringing sector-leading quality and high delivery precision for a competitive cost. NOTE takes on daily responsibility for function-critical products, which are often embedded in customers' larger systems. Customers should feel secure with NOTE as a supplier, and that production, shipments and sourcing are managed so their core business can progress.

In-house, NOTE adopts the view that its customers should not have any reason to choose a different partner. "We make it work."

Business concept

NOTE is a leading northern European EMS partner with an international platform for manufacturing electronics-based products that require high technology competence and flexibility.

A clear growth agenda with three main lines:

Increase our current business while expanding our services portfolio.
Attract new customers with minimum revenue potential of SEK 10 million in the segments where we are already strong.
Execute carefully selected acquisitions and production takeovers.

To succeed, we need:

To retain sector-leading quality and delivery precision.
Flexibility and responsiveness to customer needs.
To offer competitive component pricing.
To optimise capacity utilisation and manufacture where conditions are optimal.
A strong financial position.

Financial targets

Growth target

NOTE will increase its market shares organically and through acquisitions. The organic growth target is a minimum of 10% yearly.

Profitability target

NOTE will grow with profitability. Its target is for a minimum return on operating capital of 20%. For the long term and over a business cycle, profitability will also exceed the average of other mid-sized international and comparable competitors.

Capital structure target The minimum equity to assets ratio should be 30%.

Dividend policy

Each year, the Board of Directors will be evaluating the level of dividends it views as optimal for the year. This can be distributed to shareholders in the form of dividends and/or share buy-backs. Future dividends should primarily be adapted to NOTE's investment requirement and financial position.

NOTE's values

Committed

"We make it work." We are solution oriented, driven and provide a stimulating working environment, internally and for our customers.

Proactive

We endeavour to do business on a proactive, clear and sustainable footing.

Quality focused

"Get it right from the start." There is a quality focus about everything we do.

Flexible

We always strive to satisfy customer needs, and adjust setups as required.

Business model

NOTE manufactures electronics and box build products on assignment from customers. Maintaining high quality and flexibility, NOTE manufactures product for industrial use that need to cope in demanding environmental conditions such as extreme cold, heat, humidity, desert and tropical rainstorms.

A partner with a strong, complete offering

NOTE's customer offering especially addresses the high mix segment, which applies stringent standards of flexibility and technological competence in manufacture, because products in this segment often have to adapt to satisfy specific customer needs over time. These needs may change for different reasons, commercial or technological, such as dependency on lead-times, predictability and testing requirements. Products are often embedded in customers' end-products, such as control systems, sophisticated communication equipment and various types of

measuring instrument.

Industrialisation services including prototyping, as well as tailored logistics solutions and after-sales services are components of NOTE's customer offering.

Because materials often make up the majority of total cost, NOTE offers competitive pricing of electronic components and other production materials. NOTE provides this to all customers through a structured, quality-assured process and effective interplay between its central sourcing function and local sourcing departments at each plant.

NOTE operates an established partnering model, which brings skills to segments such as mechanical

engineering, plastics, cabling and displays, to ensure competitiveness in box build manufacture.

Getting things right from the start creates value-added

Close dialogue with customers brings NOTE complete understanding of the product and its lifecycle. In combination with highly developed sourcing competence, this offers great potential to manage production and the supply chain so that total cost is favourable. NOTE creates value-added for both parties by avoiding costly mistakes and re-thinks.

Customer needs determine the location of batch production. Decisive factors

NPI = New Product Introduction. NOTE has a highly developed business process for customers about to launch a new product on the market. NOTE increases customer profitability by actively contributing experience and know-how in selecting materials, sourcing, testing, production, quality and logistics.

can be the customer's geographical final market, cost structure, volume and currency risks.

The closeness that NOTE provides customers is critical when projects require continuous contact and the exchange of best practice between partners. Dialogue back in the design and industrialisation phases on materials selection, sustainability classification, production techniques and functional testing, enables development of the best product possible, optimised for batch production. NOTE helps to shorten lead-times until a product reaches final markets, reducing capital tied-up, and realising a competitive edge on the market for the customer.

Focused rationalisation work

We become competitive by delivering the right quality at the right time at an advantageous total cost. In recent years, NOTE

has attained an industry-leading position in terms of quality and delivery precision. Within the framework of NOTE's efficiency efforts, services are constantly being developed to meet customer demands and expectations. This work is conducted locally at each plant, and through a variety of group-wide projects. Over and above initiatives to expand and improve its customer offering, NOTE focuses on actions that improve delivery precision and quality levels, performance, and rationalisation in the cost and working capital segments.

ISO 9000 is a family of international standards that are the foundation of NOTE's quality work. All NOTE plants hold ISO 9001 certification. Half of NOTE's plants also hold the ISO 13485 medtech standard. While ISO-certified management systems are the foundation of quality work, NOTE's people make

the real improvements through their focus, attitude, consistent follow-up and methodical work.

Sustainability

Sustainability issues are an important and integrated component of business activities. Back in 2011, NOTE was one of the first companies in its sector to join the Global Compact, started on a UN initiative. Several NOTE functions help limit the negative environmental impact associated with manufacture and transportation, and ensure compliance with policies and directives in the sustainability segment.

For more information on NOTE's sustainability work, see the Sustainability Report on pages 14-23.

	NOTE TORSBY AB	NOTE NORRTELJE AB	NOTE LUND AB	NOTE HYVINKÄÄ OY	NOTE UK LTD	SPEEDBOARD ASSEMBLY SERVICES LTD	NOTE PÄRNU OÜ	NOTE ELECTRONICS (DONGGUAN) CO LTD
ISO 9001	•	•	•	•	•	•	•	•
ISO 13485	•	•	•					•
ISO 14001	•	•	•	•	•	•	•	•
ISO 45001		•		•			•	•
	Sweden	Sweden	Sweden	Finland	UK	UK	Estonia	China

Certifications

ISO 9001: A standard for management system.

ISO 13485: Standard for medtech.

ISO 14001: Standard for environmental management.

ISO 45001: Standard for work environment.

Value-creating partnerships with customers

NOTE is a flexible company that wants to create value through cost-efficient solutions for technologically sophisticated products in partnership with its customers. Meet Plejd and Merus Power–two of NOTE's 300-plus customers.

Plejd—an expansive company active in smart lighting

Swedish company Plejd has been a NOTE customer since 2018, producing smart lighting for businesses and consumers. Its products are installed by certified electricians, and are normally operated by existing switches or switch panels. The system's units form a wireless mesh network, which enables wide reach and high reliability.

After installation, customers can control lighting themselves easily, either using existing switches, Plejd's app, or

by integrating with Google Home, for example.

Lighting can also be scheduled, and scenarios created.

NOTE assists Plejd with NPI support, manufacturing, box build and logistics management.

NOTE currently produces a range of smart home products at its plant in Lund, Sweden, with shipments to all Plejd's northern European customers.

"We've found a long-term partner in NOTE, who takes responsibility for our whole supply chain. We appreciate their feel for quality, wide choice of plants worldwide, and the capability to adapt to our needs and keep pace with our high growth," says Michael Blixman, Plejd's Chief Operating Officer.

Merus Power Oy - a global Greentech company

Merus Power, a Finnish company, designs, manufactures and sells worldleading electrical energy storage and power quality solutions which enables energy savings. Power electronics, innovative design and sustainability are the heart of the company.

NOTE provides NPI services and complex electronics for Merus Power's energy storage and power quality solutions. The production takes place at NOTE's plant in Hyvinkää, Finland.

NOTE's global manufacturing and supply chain network combined with a local presence was one of the main reasons why NOTE was selected as a manufacturing partner for Merus Power's products during 2019. The partnership is based on effective communication, which makes tackling possible issues smooth and efficient. Component availability and rapid capacity increase has never been an issue for NOTE.

"Excellent quality is important for the both of us and NOTE enables Merus Power to do its best in product development, software knowledge and electrical efficiency", says Maiju Levirinne, Purchasing & Logistics Director at Merus Power.

Market and competitors

NOTE is active on the market for outsourced EMS, which is continuously evolving due to the growing technology dependence in society.

Background

Europe is unique in the global market for manufacturing services. Compared to the rest of the world, there is no other continent that has as many high-cost countries close to those with far lower cost levels. This has influenced the structure and evolution of the European market.

The majority of market participants in Europe are domestic, smaller enterprises often linked to one or a few customers.

The global players that have started up in Europe primarily locate their operations in Eastern European countries. Several of them are significantly larger than NOTE, and operate in different segments, such as volume manufacture in sectors like automotive and consumer goods.

Generally, the value players located in Western Europe add for their customers can be regarded as more specialised services, while the value created by providers in Eastern Europe is primarily cost driven. However, the trend is towards evening out the discrepancies between these regions.

The market for outsourced electronics production has emerged and evolved as a consequence of customers' increasing focus on core business, more electronics content in various types of products, the growing demand for manufactured products and a desire to cut costs and capital tied-up.

The market in 2020

Underlying demand for outsourced EMS in Europe has been making strong progress for a long time. Contributors include the increased electronics content in manufacturing, and the emergence of new, expansive application segments, enabled by developments including the Internet of things (IoT) and the implementation of new and advanced green

technology in the environmental sphere. In 2020, the Chinese market was still under a negative influence of restrictions to global trade.

Covid-19 pandemic

The global spread of covid-19 and widespread shutdowns of industrial activity on several markets periodically triggered reduced demand on many customer assignments. Overall, NOTE thinks the pandemic had a negative sales impact of the order of SEK 200 million in the year, especially clear in the UK and China. However, sales in Sweden, Finland and Estonia remained very healthy, actually hitting record levels, mainly as a result of high sales to new business customers, and start-ups of batch production on several new, major projects.

Market trends, customer needs and future prospects

Globalisation and intensifying competition mean a growing focus on core business, which generally benefits businesses active in outsourcing. In recent years, the outsourcing market has undergone a major transformation. The primary drivers have been price pressure on components, more outsourcing, the relocation of production from high-cost to low-cost countries, demands for shorter lead-times from idea to finished product, localisation to consider trade barriers and robust economic progress in growth regions, with the resulting emergence of new end-user markets. Going forward, it is likely that important factors will remain the search for cost-efficient production, rationalisation, as well as continued production migration. Where previously, migration was mainly from West to East, in recent years, NOTE is witnessing growing interest in production close to

end-customer markets, for reasons of sustainability and total cost.

Additionally, many products are now manufactured with a greater automation content, so countries such as Sweden becoming more competitive as products involve less manual processing. Closeness to customer development centres and the greater flexibility this brings is another trend also driving volumes in the low-end to mid-range segments into Europe. The research and customer satisfaction surveys that NOTE regularly conducts reveal that flexibility and closeness in partnering are important to NOTE's customers. Customer satisfaction surveys also indicate the demand for more sophisticated technology to reduce lead-times from idea to finished product. The demand for tailored logistics solutions is rising, to improve flexibility and reduce capital tied-up.

Over the next three years, several market commentators anticipate demand for EMS services in Europe being in high growth. Accentuated by increasing restrictions to global trade, more emphasis on sustainability issues, and not least, as a consequence of the prevailing pandemic, there is a clear trend for customers demanding development and manufacturing services closer to home. With increased capacity and efficient plants in Europe, NOTE's organisation is well prepared to meet this progress.

Competitors

A few of NOTE's competitors active on the Nordic market are Enics, Inission, Kitron, OrbitOne and Scanfil. There is also a range of regional and local players, often niche oriented, who operate on one or several of NOTE's markets.

Risk management

continuously to improve its IT security.

OPERATIVA RISKER OPERATIONAL RISK OPERATIVA RISKER
RISK	EXPOSURE AND MANAGEMENT	RISK	EXPOSURE AND MANAGEMENT
Customers The risk that a customer leaves NOTE or does not fulfil its obligations.	NOTE has a large number of active accounts, the 15 largest in sales terms represented 47% of its sales in 2020. In most cases, NOTE manufactures a range of products for each customer. Usually, customers choose to place all their production of each product with the same supplier, so they can achieve economies of scale and limit material commitments and risks. Accordingly, NOTE's production volumes are closely linked to which products are manufactured, and the lifecycle phase of	Sustainability risks Risk of shortcomings in occupational health and safety, as well as cor ruption.	Certain materials are manufactured by suppliers or sub-contractors in countries where there are risks of shortcomings in occupational health and safety, as well as corruption. Accordingly, NOTE works actively on concentra ting its sourcing of materials on suppliers with sustainable and responsible standpoints on these issues. NOTE communicates its Code of Conduct to suppliers continuously through audits, agreements and business related meetings.
Capacity risk	customer's products, so sales variations can be signifi cant for individual customers. Usually, materials risk is regulated by agreements with customers. NOTE follows up on material risks continuously by applying tried-and tested processes. Overall, NOTE has good production capacity. Production	Environmental risks The risk that operations harm the environment, and costs for complying with new, more stringent environmental directives.	Unlike many other sectors such as the heavy engine ering and raw materials industries, NOTE's business has a fairly limited environmental impact. To comply with applicable environmental legislation, NOTE has essentially transferred to lead-free production.
The risk of not having sufficient production capacity.	is of a similar nature in several of the group's plants and NOTE can transfer production from one plant to another. However, sudden fluctuations in demand can create capacity challenges in the group's plants.	Liability Risks in addition to the above sustainability and	NOTE's role includes it being a collaborative partner for customers, but not a product owner. This means that materials selection and production are in accordance
Materials Price and access to materials.	The pricing of, and access to, electronic components and other production materials vary significantly depen ding on market conditions. NOTE has a central organisa tion to deal with group-wide sourcing issues.	environmental risks where NOTE may be liable for claims due to commit ments in its business.	with the customer's specification. Usually, the standards applying to NOTE's documentation of services rendered are extensive and can be considered complex. Quality monitoring of NOTE's production and strategic suppliers is a continuous process.
Inventories NOTE has inventories corresponding to some 20% of sales. The risk of components Sourcing on customers' behalf is normally formalised and production materials through agreements with customers. Considering the com not being consumed, and plexity of EMS and variation in demand, NOTE collaborates thus losing value. closely with customers to limit the risk of obsolescence in inventories. Obsolescence risk is monitored continuously.			NOTE's insurance cover is assessed to be reasonable and is adapted to operational risks. Where possible and financially viable, there is insurance cover that is appro priate for operations.

NOTE sells to a large base of customers active in Cyclical and seasonal variations manufacturing, communication, medtech, defence and		FINANCIAL RISKS
	high-end consumer electronics. Usually, customers outsource all their electronics production to one or more EMS partners. Accordingly, NOTE's manufacture is never for capacity reasons or to supplement customers' in house resources. Deterioration of the global economy, or a demand downturn on NOTE's major markets, would risk impacting NOTE's sales and earnings.	RISK Currency The risk that a fluctuation in exchange rates affects the group's profit, cash flow or Balance Sheet negatively.	EXPOSURE AND MANAGEMENT Against the background of an increasing share of value-added being generated in foreign plants and the purchasing of electronic components and other production materials being largely in foreign currencies (EUR/USD), NOTE has fairly extensive currency management. With the aim of limiting currency risks, NOTE trades in currency
Production downtime Downtime in production affecting deliveries to customers and causing extra costs.	Because NOTE conducts high end manufacture of electronics, it is subject to stringent demands for efficient processes and state-of-the-art production equipment. The risk of production downtime is limited by production being of a similar nature across several of the group's plants. Accordingly, NOTE can transfer production from one plant to another, and have its units interact on production, which limits its risks from long-term produc tion downtime. NOTE has extensive insurance cover, including cover to minimise consequential losses caused by production downtime.	Financing The risk that refinancing loans is more difficult or costly, and that accor dingly, NOTE's solvency is negatively affected. Customer credit The risk that a customer is unable to pay its debt	forwards and similar instruments. NOTE needs external finance, primarily linked to the wor king capital of operations. Different sources of finance are continuously evaluated in close collaboration with NOTE's lenders. Funding costs and NOTE's prospects of re-financing are closely linked to market conditions and NOTE's profitability and cash flow. Overall, NOTE has a diversified customer base where no single customer (group) represents more than 6% of sales. In terms of NOTE's business setup, there are some
Competence The risk of not possessing sufficient competence in all parts of the business.	NOTE provides sophisticated EMS which require high technical competence across several segments. NOTE endeavours for staff to achieve continuous skills deve lopment.	to NOTE.	individual customers that do create fairly high exposure in accounts receivable–trade and inventories, including outstanding purchase orders. If these customers' solvency deteriorated, this could have an adverse impact on NOTE's earnings. NOTE evaluates and credit checks new and
IT IT-related disruptions can cause production down time, loss of invoicing and/or reduced efficiency in administration and sales.	NOTE's operations require highly functional IT systems. NOTE has a selection of local applications and operating environments with varying functionality and capacity. Following a far-reaching, group-wide project, a shared, business-specific ERP system has been introduced at all NOTE plants in Sweden, Estonia and Finland. This is a key step in realising the ambition of further harmonising internal processes and systems support group wide. NOTE works		existing customers. Ongoing financial reporting includes close monitoring of accounts receivable–trade and inventories, including outstanding purchase orders.

Sustainability

A sustainable and ethical business operation is the foundation of sustainable success. To achieve this, NOTE works on issues affecting the environment, social conditions, human resources, human rights, anti corruption and bribery. This work evolves in consultation with NOTE's stakeholders, and with the aid of applicable legislation, standards and other regulations.

Timeline of NOTE's sustainability work

1997 Norrtälje, Sweden plant ISO 14001 certified.

2004 Lund, Sweden plant ISO 14001 certified.

2002 Torsby, Sweden plant ISO 14001 certified.

2010 UK and Chinese plants ISO 14001 certified.

2006 Code of Conduct produced.

2011 NOTE joins UN Global Compact.

2012

Finnish plant ISO 14001 certified.

Estonian plant receives sustainability award from the Estonian Chamber of Commerce and Industry.

Global Goals for Sustainable Development

NOTE has been a member of the UN Global Compact since 2011, and supports its ten principles on human rights, labour law, the environment and anti corruption. Each year, NOTE evaluates which of the UN's 17 Sustainable Development Goals NOTE can contribute to through its operations. The links between these goals and NOTE's activities, targets and strategies are reviewed in the pages stated in the contents to the left.

NOTE and sustainability

NOTE contributes to sustainable development through its operations, and achieves this through responsible business, transparency and good business ethics, but also by NOTE developing and implementing environmentally adapted production processes. NOTE has developed policies, methodologies and initiatives over the years, and sustainability work involves all group companies, covering everything from appropriate conduct towards the company's stakeholders and helping customers choose components and technologies with good environmental and quality performance, to locating manufacture close to final markets, and limiting the environmental impact of transportation as far as possible.

In tandem with improving its impact on the environment and wider society, NOTE endeavours to conduct itself responsibly on those markets where it is active.

Sustainability issues are included in yearly customer satisfaction surveys, to identify segments that customers consider important to focus on.

NOTE's sustainability objective

The objective is to contribute to, and improve, the societies where NOTE operates, by developing sustainable initiatives in its business. The group's shared values and policies are intended to lead, influence and direct its activities. NOTE complies with international standards and directives in the sustainability segment.

Environmental policy and working methods

NOTE endeavours to achieve long-term, sustainable development by manufacturing with the minimum possible environmental impact. NOTE endeavours to comply with, or exceed, applicable environmental legislation, and pursues continuous improvement in the environmental segment.

International ISO guidelines, under the ISO 14000 family of standards, are a stable foundation for NOTE's environmental work.

All the group's manufacturing units hold ISO 14001 environmental certification and are audited by internal and external resources. The group's sourcing company was also certified according to the ISO standard in the year. NOTE was one of the earliest companies in its sector to receive ISO 14000 environmental certification, back in 1997.

Despite differences in environmental legislation between countries, NOTE has the ambition of all its plants following a consistent line of environmental work. Its manufacturing units exchange best practice, best-in-class actions and proposals for improvement on a variety of forums.

Manufacturing units sort the waste from consumables at source and monitor energy consumption continuously. Improvement projects are conducted to reduce waste, energy consumption and CO2 emissions.

NOTE also applies environmental consideration in other parts of its business, through channels including discussions with its customers on sourcing materials and production setups.

2013

Estonian plant ISO 14001 certified.

Estonian and Chinese plants implement OHSAS 18001.

Human Rights and Anti Corruption policies produced.

2014

Estonian plant receives Silver Sustainable Business Index Award from the Responsible Business Forum for the fifth consecutive year.

2015

Finnish plant OHSAS 18001 certified.

2017

Equality policy produced. Norrtälje, Sweden plant nominated for Samhall's Visa vägen ('Showing the Way') award.

2018

GDPR Privacy policy produced.

2020

Windsor and Components ISO 14001 certified. Norrtälje, Sweden ISO 45001 certified.

On the transportation side, NOTE is coordinating freight agreements to optimise its transportation, and thus limit CO2 emissions. Corrugated board and combustible waste are compacted to minimise the amount of waste transports, which affect the environment.

Chemicals are handled in accordance with designated procedures and legislation.

NOTE holds many of its meetings virtually, which helps reduce travel. Executing functions within ERP systems minimises the usage of paper, with electrical or hybrid vehicles prioritised as company vehicles.

NOTE environmentally audits its strategic suppliers, and maintains continuous dialogue with suppliers on other environmental issues such as consolidating transports, manufacturing methodologies and quality performance. It uses environmentally certified electrical power contracts in those plants where they are available on the market. In those cases where other alternatives are used, those with the most environmentally friendly range are selected.

Social conditions and human resources

2020 presented a lot of new challenges. The pandemic resulted in NOTE adapting to a new reality—life with social distancing and changed working conditions, but also the opportunity to think in new ways. Protecting NOTE's business and its employees is fundamental to NOTE. Demonstrating commitment, empathy and consideration have gained extra importance, even if often at a distance.

Countries have taken different actions in their efforts to combat the virus, which have also impacted NOTE's working environment in various ways. For example, plants have reorganised their operations to different extent to satisfy local social distancing standards. Using remote working, our office staff have been able to help limit the amount of physical contact. IT functions have

operated through remote working, virtual meetings, and visits have been arranged flexibly and safely.

NOTE always endeavours to be an employer offering everyone the same opportunities to work and develop. The group's collective skills are built on diversity, which brings dynamism and differing perspectives to work.

NOTE is opposed to all forms of discrimination. One tool for working on this and other issues is its whistleblower function, which had one reported case requiring investigation and follow-up action in the year. NOTE's Privacy policy regulates the use of personal data, and has been produced in accordance with the EU GDPR (General Data Protection Regulation). Internal training programmes were conducted to further enhance IT security, and are an important tool for minimising IT risks and creating awareness among staff.

All NOTE employees are entitled to collective bargaining agreements, and to form and join trade unions. Collective bargaining agreements are in place at most NOTE plants. Four NOTE plants also use ISO 45001 (OHSAS 18001) to guide their efforts. This far-reaching, global and verifiable occupational health and safety standard involves external auditing and certification. NOTE's goal is that all plants will be ISO 45001 certified by 2022.

16 work-related incidents were reported in 2020, as well as two injuries at work, causing a total of 30 days' sickness absence.

NOTE conducts an annual employee satisfaction survey, and in 2020, the response frequency was 75% (80% in 2019).

Respect for human rights and anti corruption

NOTE respects human rights and its conduct prevents them from being infringed. In addition to responsibility for its own operations, this also implies a responsibility for respecting human rights in business relations with the company's

stakeholders. NOTE's Human Rights policy states principles and attitudes applying to labour law and equality, for example.

NOTE's Code of Conduct formalises how the company expects suppliers to conduct themselves on issues concerning human rights, labour law, child labour, corruption and the environment. This is conveyed through the supply chain and monitored in supplier audits.

NOTE's Anti Corruption policy includes principles stating the group's standpoint on corruption. The policy also reviews segregation of duties, how internal controls are conducted, and stipulates a whistleblower procedure.

Within the auspices of its internal controls, NOTE has a documented process for evaluating risk and compliance with policies. In 2021, NOTE intends to keep encouraging positive social progress in the locations where it has a presence.

Full versions of NOTE's Code of Conduct, and its Human Rights, Equality and Anti Corruption policies are available at www.note-ems.com. For information on NOTE's business model and risk management, see the operational review on pages 8 and 13.

Average number of employees by country

Average number of employees

UN Global Compact

Since 2011, NOTE has been a member of the Global Compact, formed on the request of the UN's then General Secretary Kofi Annan at the World Economic Forum in Davos in 1999. Its aim is to frame international principles on human rights, labour law issues, the environment and corruption against businesses.

The Global Compact's ten principles

The Global Compact has compiled ten principles affecting human rights, labour law, the environment and anti corruption. Member companies have undertaken to comply with these principles.

Each year, NOTE reports its COP (Communication on Progress) to the UN. This is a framework that defines how sustainability work is conducted within the group, and towards external stakeholders. The COP reviews its actions, approach and goals. NOTE has been at the Participant level since 2019. Each year, NOTE makes a sales-based donation to the UN Global Compact.

NOTE's Code of Conduct is based on the Global Compact's ten principles and the full version is available on its website. A summary of our plants' executed and forward-looking work on Global Compact principles follows.

Communication of Progress

PRINCIPLE 1: BUSINESSES SHOULD SUPPORT AND RESPECT THE PROTECTION OF INTERNATIONALLY PROCLAIMED HUMAN RIGHTS

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006. NOTE endeavours to develop business with companies that have the corresponding ethical rules on accountability. NOTE should provide information, and adopt a clear standpoint, on human rights.

RESULT 2020

Work on ensuring compliance with the Code of Conduct is continuous.

In the year, NOTE encouraged existing and new customers and suppliers to join, or support, the UN Global Compact by communicating the significance of these issues at meetings and in audits.

NOTE signed agreements with another six strategic or contracted suppliers (three in 2019), who accepted NOTE's Code of Conduct or have their own, equivalent code.

NOTE conducted follow-up audits on 14 suppliers (24 in 2019) that had previously accepted NOTE's Code of Conduct and the ten principles of the UN Global Compact. The form used for supplier audits included questions on human rights. NOTE published a newsletter in the year to provide information on sustainability. This included material on NOTE's Code of Conduct and Human Rights policy. Targeted information was published internally, along with presentation material updated with information on the Global Compact's ten principles.

The share of sourcing from strategic and contracted suppliers is approximately 54% (56% in 2019).

Instead of Christmas gifts for customers and suppliers, as in previous years, NOTE decided to make a corresponding donation to organisations that help promote a better world. This year, NOTE made a donation to the UNHCR.

GOALS 2021

Keep influencing suppliers to accept NOTE's Code of Conduct and encourage customers and suppliers to join the UN Global Compact or support its ten principles. Continuously follow up on NOTE's Code of Conduct and the ten principles of the UN Global Compact in supplier audits. All strategic suppliers to be compliant with NOTE's sustainability standards and accept NOTE's Code of Conduct or have their own, equivalent code.

Increase the share of sourcing from strategic and contracted suppliers by two percentage points.

PRINCIPLE 2: BUSINESSES SHOULD ENSURE THAT THEY ARE NOT COMPLICIT IN HUMAN RIGHTS ABUSES

APPROACH

NOTE has been applying its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006. NOTE's Human Rights policy has been implemented in all plants' business systems. NOTE's whistleblower function has been implemented at all NOTE companies.

RESULT 2020

Work on ensuring compliance with the Code of Conduct internally. Internal audits were conducted to ensure compliance with relevant policies, laws and ordinances.

In the year, NOTE's customers demanded for materials analysis, and continued its work on reducing the usage of conflict minerals by helping customers select materials, to avoid this type of material. NOTE published a newsletter in the year to provide information on sustainability. This included material on NOTE's Code of Conduct and Human Rights policy. Targeted information was published internally, along with presentation material updated with information on the Global Compact's ten principles.

One whistleblower case caused an internal investigation and follow-up actions.

GOALS 2021

Continue to promote human rights internally and towards the company's stakeholders by informing and developing monitoring methods.

PRINCIPLE 3: BUSINESSES SHOULD UPHOLD THE FREEDOM OF ASSOCIATION AND THE EFFECTIVE RECOG-NITION OF THE RIGHTS TO COLLECTIVE BARGAINING

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006.

All NOTE employees are entitled to collective bargaining and to form, and join, trade unions. Collective bargaining agreements are in place at most NOTE plants. NOTE's Human Rights policy states the group's internal standpoints on this principle.

Four plants also use OHSAS 18001/ISO 45001 as guidance for their work. This is a far-reaching, global and verifiable standard in occupational health and safety, with external auditing and certification.

RESULT 2020

Work on ensuring compliance with the Code of Conduct is continuous.

In the year, NOTE encouraged existing and new customers and suppliers to join, or support, the UN Global Compact by communicating the importance of these issues.

A fourth plant affiliated to the ISO 45001 health & safety standard (previously OHSAS 18001) and was certified in 2020.

NOTE signed agreements with another six strategic or contracted suppliers (three in 2019), who accepted NOTE's Code of Conduct or have their own, equivalent code.

NOTE conducted follow-up audits on 14 suppliers (24 in 2019) that had previously accepted NOTE's Code of Conduct and the ten principles of the UN Global Compact. The results of these audits indicate that suppliers are complying with applicable laws and regulations.

The share of sourcing from strategic and contracted suppliers is approximately 54% (56% in 2019).

In the year, NOTE continued its work on reducing the usage of conflict minerals by assisting its customers in material selection so that components containing minerals from regions in conflict can be eliminated in product design and start-up projects.

GOALS 2021

Influence suppliers to accept NOTE's Code of Conduct and encourage customers and suppliers to join the UN Global Compact or support its ten principles. At least one further plant to be certified according to the ISO 45001 health & safety standard. The goal for the group is for all manufacturing plants to be ISO 45001 certified by 2022 at the latest.

Continue to conduct monitoring of NOTE's Code of Conduct and the UN Global Compact's ten principles in supplier audits.

Increase the share of sourcing from strategic and contracted suppliers by two percentage points.

PRINCIPLE 4: BUSINESSES SHOULD UPHOLD THE ELIMINATION OF ALL FORMS OF FORCED AND COMPULSORY LABOUR

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006. As part of its business principles, NOTE and its customers' and suppliers' employees should enter employment and contracts of their own free will.

NOTE's Human Rights policy stipulates that employment with the company should always be voluntary. Additionally, work should always be conducted without compulsion or harassment, either physical or psychological.

RESULT 2020 AND GOALS 2021

See principle 3.

PRINCIPLE 5: BUSINESSES SHOULD UPHOLD THE EFFECTIVE PROHIBITION OF CHILD LABOUR

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006. NOTE complies with relevant laws and ordnances on child labour. NOTE does not employ children and does not collaborate with companies that use children as part of their workforce.

The group's standpoints on this principle are stated in NOTE's Human Rights policy.

RESULT 2020 AND GOALS 2021

See principle 3.

PRINCIPLE 6: BUSINESSES SHOULD UPHOLD THE ELIMINATION OF DISCRIMINATION IN RESPECT OF EMPLOYMENT AND OCCUPATION

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006.

NOTE believes in a workplace where all employees have equal opportunities to work and progress. NOTE sees and benefits from all employees' specific competence and developmental opportunities, regardless of sex, ethnicity, sexual orientation, disability, age and social background.

NOTE's Equality policy states the company's principles governing equal opportunities and diversity, which are encouraged in all parts of its business. The company endeavours to achieve equal opportunities in terms of employment and working conditions, as well as developmental opportunities. The company pursues diversity on recruitment. Its working climate should feature respect and tolerance. If any instances

of harassment or bullying are reported, the group will take action immediately. The company's Diversity policy states how new Board members are to be appointed from a diversity perspective.

RESULT 2020

NOTE conducted a group-wide employee satisfaction survey in the year, whose results are fed back into NOTE's forward planning and development work.

In 2020, one whistleblower case caused an internal investigation and follow-up actions.

Work on ensuring compliance with NOTE's Code of Conduct is continuous.

In the year, NOTE encouraged existing and new customers and suppliers to join, or support, the UN Global Compact by communicating the significance of these issues in meetings and audits.

NOTE signed agreements with another six strategic or contracted suppliers (three in 2019), who accepted NOTE's Code of Conduct or have their own, equivalent code.

Follow-up audits were conducted on 14 suppliers (24 in 2019) that had previously accepted NOTE's Code of Conduct and the ten principles of the UN Global Compact. The results of these audits indicate that suppliers are complying with applicable laws and regulations.

The share of sourcing from strategic and contracted suppliers is approximately 54% (56% in 2019).

GOALS 2021

Conduct a group-wide employee satisfaction survey and use its results in business processes.

Influence suppliers to accept NOTE's Code of Conduct and encourage customers and suppliers to join the UN Global Compact or support its ten principles.

Continue the work of following up on NOTE's Code of Conduct and the ten principles of the UN Global Compact in supplier audits.

Increase the share of sourcing from strategic and contracted suppliers by two percentage points.

A PRECAUTIONARY APPROACH TO ENVIRONMENTAL CHALLENGES

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006.

NOTE's manufacturing units hold ISO 14001 environmental certification and undergo internal and external audits.

NOTE's plants run improvement projects in the environmental segment and measure a series of environmental factors such as electronic scrap, energy consumption and transport. All plants have environmental targets, which are monitored regularly.

NOTE is endeavouring to increase the share of sourcing from strategic and other contracted suppliers. NOTE has a good understanding of these suppliers' environmental work and can help them to develop and improve in the environmental segment.

RESULT 2020

Work on ensuring compliance with NOTE's Code of Conduct is continuous.

More selective soldering machines have been installed, reducing tin slag, and enabling a more environmentally friendly process than previously. Recycling of slag from the wave soldering process has improved, and is conducted locally at some plants through oxide pressing before being sent away for further recycling.

NOTE's plants work on the basis of individual targets and circumstances in the environmental segment. Many initiatives are ongoing, which include plant lighting being wholly or partly replaced with LED equivalents to save energy. Timers have been installed at some plants to ensure lighting is not used unnecessarily, and that machinery is shut down. Electric hybrids are used as company vehicles, and vehicle charging points have been installed at some plants to facilitate charging. Ridesharing and commuting by cycle or public transport are also encouraged. Employees are encouraged to minimise paper consumption, and to switch off lighting and equipment after use.

The NOTE group's newest plant, in Windsor, UK gained ISO 14001 certification in the year. The group's sourcing company has also been certified according to ISO 14001.

NOTE's complete REACH-EU Regulation policy, stipulating how NOTE works to comply with this EU regulation for handling chemicals, is available at its website.

NOTE encouraged existing and new customers and suppliers to join, or support, the UN Global Compact by communicating the significance of these issues.

NOTE signed agreements with another six strategic or contracted suppliers (three in 2019), who accepted NOTE's Code of Conduct or have their own, equivalent code. Follow-up audits were conducted on 14 suppliers (24 in 2019) that had previously accepted NOTE's Code of Conduct and the ten principles of the UN Global Compact. The results of these audits demonstrate that suppliers are complying with relevant laws and ordinances.

The share of purchasing from strategic and contracted suppliers is approximately 54% (56% in 2019).

GOALS 2021

Continue progress towards still more environmentally friendly production and set requirements for more environmental transportation. Continue to reduce waste volumes.

Invest in environmentally friendly technology such as solar cells for vehicle charging points, work to promote biological diversity and reduce water consumption.

Implement environmentally friendly electricity sourced from solar, wind power, hydropower and biogas at more plants where possible.

Influence suppliers to accept NOTE's Code of Conduct and encourage customers and suppliers to join the UN Global Compact or support its ten principles.

Continuously follow up on NOTE's Code of Conduct and the ten principles of the UN Global Compact in supplier audits.

Increase the share of sourcing from strategic and contracted suppliers by two percentage points.

PRINCIPLE 8: UNDERTAKE INITIATIVES TO PROMOTE GREATER ENVIRONMENTAL RESPONSIBILITY

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006. NOTE's plants hold ISO 14001 environmental certification and undergo internal and external audits.

NOTE works actively on developing guidelines and methodologies designed to minimise the group's negative environmental impact. Employees are encouraged to participate in this process.

NOTE is endeavouring to increase the share of sourcing from strategic and other contracted suppliers. NOTE has

a good understanding of these suppliers' environmental work and can help them to develop and improve in the environmental segment.

RESULT 2020 AND GOALS 2021

See principle 7.

PRINCIPLE 9: ENCOURAGE THE DEVELOPMENT AND DIFFUSION OF ENVIRONMENTALLY FRIENDLY TECHNOLOGY

APPROACH

NOTE takes a positive view of developing environmental technology and actively supports new manufacturing methods and components that are more environmentally friendly. NOTE conducts environmental risk assessments when introducing new equipment, technology and logistics solutions. Experience is shared between the group's plants.

An environmental perspective is considered jointly with customers when tailoring product manufacture. A database for identifying RoHS, Reach and conflict minerals in components is being used.

NOTE is endeavouring to increase the share of sourcing from strategic and other contracted suppliers. NOTE has a good understanding of these suppliers' environmental work, and can help them to develop and improve in the environmental segment.

RESULT 2020 AND GOALS 2021

See principle 7.

AGAINST CORRUPTION IN ALL ITS FORMS, INCLUDING EXTORTION AND BRIBERY

APPROACH

NOTE has been using its Code of Conduct, which supports the ten principles of the UN Global Compact, since 2006. NOTE has an Anti Corruption policy and Whistleblower

policy and procedure implemented in all plants' ERP systems.

NOTE encourages employees to resolutely counter all

forms of corruption, extortion and bribery. Simultaneously, NOTE expects the corresponding

attitudes from its customers and suppliers. NOTE does not accept any gifts, whether to customers or from suppliers, other than items of low value.

NOTE's Purchasing policy prohibits bribery and corruption, with sourcing managed according to ethical rules.

NOTE has group-wide and local authorisation procedures expedient for its business.

RESULT 2020

Work on ensuring compliance with NOTE's Code of Conduct is active and continuous.

One case of suspected corruption was reported via the whistleblower procedure and preventive measures were taken.

In the year, NOTE encouraged existing and new customers and suppliers to affiliate to or support the UN Global Compact by communicating the importance of these issues.

NOTE signed agreements with another six strategic or contracted suppliers (three in 2019), who accepted NOTE's Code of Conduct or have their own, equivalent code.

NOTE conducted follow-up audits on 14 suppliers (24 in 2019) that had previously accepted NOTE's Code of Conduct and the ten principles of the UN Global Compact. The results of these audits demonstrate that suppliers are complying with relevant anti corruption laws and ordinances.

The share of purchasing from strategic and contracted suppliers was approximately 54% (56% in 2019).

GOALS 2021

Influence suppliers to accept NOTE's Code of Conduct and encourage customers and suppliers to join the UN Global Compact or support its ten principles.

Continuously follow up on NOTE's Code of Conduct and the ten principles of the UN Global Compact in supplier audits.

Increase the share of sourcing from strategic and contracted suppliers by two percentage points.

SHARE OF SOURCING FROM STRATEGIC SUPPLIERS*

* THE OPERATIONS OF SEVERAL PLANTS ALTERED IN THE WAKE OF THE PANDEMIC 2020. THIS IMPACTED OUR STRATEGIC SOURCING IN 2020.

WORK ATTENDANCE GROUP

The world around us is changing, and so are we. The UN Global Compact and its ten principles are a good foundation for our sustainability work and guide us in our evolution as a sustainable company. Our Communication on Progress reviews what NOTE is doing to help create a better world.

Johannes Lind-Widestam, CEO and President

Human resources

NOTE's employees are the key to our successes. Their commitment, inventiveness and desire to help customers create the strength of NOTE's global business.

Because NOTE is a global organisation, developing the interaction between plants is important. NOTE has plants in Sweden, Finland, the UK, Estonia and China. Collaboration is through channels including a number of functional forums, in segments including quality, sourcing, accounting and sales. NOTE also works continuously on harmonising its working methods and monitoring tools, as well as clarifying guidelines. NOTE's improvement and development processes involve many of its employees group wide. NOTE continuously monitors business-related key performance indicators such as ongoing central and local improvement projects.

The workforce was upsized and downsized in the year to cope with demand fluctuations and to implement rationalisation. The average number of employees was 1,101 in 2020. Staff turnover was 14.7% in the group overall, of which 7.7% was in the European plants.

Achieving the goal of being the best collaborative partner in the sector, with leading delivery precision and quality for a competitive overall cost, demands a lot from everyone involved. Meet some of NOTE's employees in the next section.

Training

To assure quality and competence in the electronics assembly process, several NOTE plants maintain long-term collaborations with external partners in soldering and electronics assembly training. Usually, these programmes involve practical work and the certification of qualified electronic assemblers.

NOTE enables university and college students to write their dissertations and serve internships.

Employee satisfaction survey

As in previous years, an employee satisfaction survey was sent to the group's staff, who responded.

It is important that every employee feels that they can deliver value-added to customers, and that everyone understands how to get there, and why.

Their responses have helped plan defined activities and timelines for execution. The outcomes are also used for NOTE's future planning and development work.

For more information on our staff, please refer to page 43 of our formal annual accounts.

Division between blue collar and white collar workers

During the year, NOTE and its staff were impacted by the pandemic in various ways. We needed to review our working methods and procedures to reduce the risk of spreading infection. That's why as CEO, I'm delighted that my colleagues took on the challenge this presented, which demonstrates that they are the strength of this global business.

Johannes Lind-Widestam, CEO and President

Gender division group

Gender division managers

Gender division Board of Directors in NOTE AB

Risto Retsnik

Warehouse Manager, Pärnu, Estland

Risto Retsnik is one of the ambassadors for sustainability within NOTE Group. He has participated in several sustainability projects at NOTE's plant in Pärnu.

"My new idea is still developing. It's about trying to create a greener mindset amongst us. We would be able to save trees by changing our current operation cards a bit, that would also give more control of the internal process and manual data entry", says Risto.

Altogether, NOTE Group use about 261,000 pieces of paper per year just to print operation cards. By changing and implementing new operation cards, 25 trees per year could be saved.

Risto has worked at NOTE for 2 years. His work assignments include daily warehouse tasks management such as planning intake, storage of goods, kitting and making sure finished products leave the plant on time. Risto is also work environment officer, workers representative, first aid practitioner and one of Pärnu's internal process auditors.

Part of Risto's daily tasks is to find better ways of working and improve warehouse processes. These ongoing challenges are the parts that Risto enjoys most about his job.

Heather Rolfe

QA and Technical Director, Windsor, UK

Heather Rolfe is the QA and Technical Director at NOTE's plant in Windsor. She was in charge when the plant recently gained their ISO 14001 certification. This process contains many different steps.

For example, current environmental laws and other environmental demands needed to be identified, a project plan was established, and internal environmental audits were performed.

In order to meet the requirements that are demanded of an environmentally certified company, some changes needed to be done. For example, the company's environmental aspects were identified and how they should be handled. The plant's recycling process was further improved.

"Working with the ISO 14001 standard and our new EMS system has been an enjoyable experience for the team here at NOTE Windsor. The framework that our EMS provides enables us to expand upon and work on a wider range of environmental aspects. Adopting and complying with the new processes and procedures has been especially important for Windsor," Heather says.

Niklas Andreasson

Quality Manager, Norrtälje, Sweden

NOTE's plant in Norrtälje received its ISO 45001 certification in 2020. The certification is for health & safety, and required a lot of effort from everyone involved. Niklas Andreasson played a key role in the process. His duties included investigating what needed to be done, informing and training colleagues, as well as coordinating the work.

The decision to aim for certification was taken about a year ago. The process has several stages, including creating new procedures in our management system, and scheduling audits. The auditor ensures that the company is complying with the ISO standard during audits.

Two minor instances of non-compliance were identified. After formulating and presenting an approved action-plan, the Norrtälje plant received its certification.

The process was generally positive, although some sections were challenging. "The Covid-19 pandemic meant that the final process was more difficult than expected. Some parts, such as our internal audits, don't work as well remotely. Because our teams were unable to meet, we couldn't run checks, exercises and training as effectively as we wanted to," explains Niklas.

Apart from improving employee safety, reducing workplace risks and creating better, safer working conditions, certification means that the plant must ensure that subcontractors satisfy our standards. This means that production that is unsafe or unhealthy cannot just be outsourced to an uncertified party. Selecting a certified partner makes this standard much easier to satisfy.

Niklas has learnt some key lessons from this project.

"Checking and ensuring compliance with health & safety rules is an extensive task, requiring the review of a lot of documentation, and involves a lot of considerations," he concludes.

My new idea is still developing. It's about trying to create a greener mindset amongst us.

Risto Retsnik, NOTE Pärnu

Auditor's report on the statutory sustainability report

To the general meeting of the shareholders in NOTE AB (publ) Corporate identity number 556408-8770

Engagement and responsibility

It is the board of directors who is responsible for the statutory sustainability report for the year 2020 on pages 14–23 and that it has been prepared in accordance with the Annual Accounts Act.

The scope of the audit

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 substantially different and 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.

Opinion

A statutory sustainability report has been prepared.

Discrepancies between reports

Swedish and English-language versions of this report have been produced. In the event of any discrepancy between the two, the Swedish version shall apply.

Niklas Renström Authorised Public Accountant Öhrlings PricewaterhouseCoopers AB

Stockholm, Sweden, 12 March 2021

Share data and shareholders

NOTE's share price rose by 51% in the year.

Share price performance

NOTE's share price was SEK 59.60 (39.45) per share at year-end. The high in the year was SEK 77.00 on 27 August. The low of the year of SEK 22.00 was on 18 March. The stock exchange OMX Stockholm Small Cap PI index increased by 24% in the year.

At the end of the year, NOTE's market capitalisation was SEK 1,691 (1,139) million. The number of shareholders increased by 109%, to 9,535 (4,560) at year-end.

Turnover

36,749,606 NOTE shares were traded on the Stockholm Stock Exchange in 2020, corresponding to a rate of turnover of 130%. An average of 145,832 shares were traded per day.

Trading

Listing:	Nasdaq Stockholm
Segment:	Small Cap
Sector:	Industrial Goods & Services
Ticker symbol:	NOTE
ISIN code:	SE0001161654
No. of shares as of
31 December 2020:	28,372,600

Dividend policy

To ensure maximum financial freedom to act in early-2021 to enable active participation in the sector's ongoing structural transformation, the Board of Directors is proposing that no dividend is paid for 2020. However, the Board of Directors may return to this issue later in the year, and propose a dividend, in light of the strong Balance Sheet NOTE has.

Incentive programmes

At year-end 2020, there were two, threeyear incentive programmes outstanding from 2018-2019. The active programmes have a total of 611,000 share warrants, corresponding to about 2% of the number of outstanding shares.

Redemption of treasury shares

The AGM 2020 decided to cancel 1,000,000 shares that had previously been re-purchased.

10 largest shareholders as of 31 December 2020, by holding

Name	No. of shares	Proportion of capital/votes, %
Johan Hagberg	5,861,404	20.66
Mediuminvest A/S	1,625,000	5.73
Vevlen Gård AS	1,500,000	5.29
Fredrik Hagberg, personal holdings and Myggenäs Gård	1,247,500	4.40
Avanza Pension	1,087,556	3.83
AAT Invest AS	1,000,000	3.52
Claes Mellgren	722,000	2.54
Nordnet Pensionsförsäkring AB	666,776	2.35
Per-Olof Andersson	600,000	2.11
Kjell-Åke Andersson with family	424,314	1.50
Total	14,734,550	51.93

Division by size, holdings by shareholder as of 31 December 2020

Size of holding	No. of shareholders	No. of shares	Proportion of capital/votes, %
1–500	7,032	952,786	3.36
501–2,000	1,744	1,915,560	6.75
2,001–5,000	422	1,385,389	4.88
5,001–20,000	220	1,991,410	7.02
20,001–50,000	64	2,000,620	7.05
50,001–500,000	43	5,816,599	20.50
500,001–5,000,000	9	8,448,832	29.78
5,000,000 –	1	5,861,404	20.66
Total	9,535	28,372,600	100.00

Share price 2016–2020

Share capital history

Year	Transaction	Change in no. of shares	Change in share capital (SEK)	Total no. of shares	Total share capital (SEK)	Quotient value (SEK)
1999	Incorporation	3,000	300,000	3,000	300,000	100.00
2000	Bonus issue	27,000	2,700,000	30,000	3,000,000	100.00
2000	Split 10:1	270,000	–	300,000	3,000,000	10.00
2002	New share issue	84,000	840,000	384,000	3,840,000	10.00
2003	New share issue	15,000	150,000	399,000	3,990,000	10.00
2004	Split 20:1	7,581,000	–	7,980,000	3,990,000	0.50
2004	Option exercise	310,200	155,100	8,290,200	4,145,100	0.50
2004	New share issue	1,334,000	667,000	9,624,200	4,812,100	0.50
2010	New share issue	19,248,400	9,624,200	28,872,600	14,436,300	0.50
2020	Cancellation of repurchased shares	-1,000,000	-500,000	27,872,600	13,936,300	0.50
2020	Bonus issue	-	500,000	27,872,600	14,436,300	0.52
2020	New share issue/Option exercise	500,000	258,969	28,372,600	14,695,269	0.52

Corporate Governance Report

Introduction

The regulatory structure for governing and controlling NOTE primarily consists of the Swedish Companies Act, applicable provisions for listed companies, the Swedish Code of Corporate Governance (the Code), International Financial Reporting Standards (IFRS), as well as internal guidelines.

Articles of Association

The Articles of Association are approved by the Annual General Meeting (AGM) and include a number of mandatory duties of a more fundamental nature in accordance with applicable legislation. They include stipulating that the Board of Directors should consist of a minimum of three and a maximum of ten ordinary members.

Resolutions on amending the Articles of Association may be passed by Annual or Extraordinary General Meetings.

Shareholders

At the end of 2020, NOTE had one shareholder, Johan Hagberg, representing more than 10% of the shares of the company. Johan Hagberg represented 20.7%.

For more information on the share and shareholders, see the NOTE share on pages 26–27.

Shareholders' meetings

Shareholders' meetings are the company's chief decision-making body, where shareholders exercise their voting rights. All shareholders recorded in the share register on the record date, and

Laws and practice

More information on the laws and practice formalising Swedish corporate governance are available at sites including:

The Swedish Corporate Governance Board, www.bolagsstyrning.se, where the Swedish Code of Corporate Governance is stated.
NASDAQ Stockholm, www.nasdaqomx. com, which states the rules for issuers.
The Swedish Financial Supervisory Authority, www.fi.se, which states Authority's statutes and information on insiders.

that have duly notified the company of their participation, are entitled to participate in the Meeting and vote for their total holdings of shares, personally or by proxy. Each share corresponds to one vote. Individual shareholders that wish to have a matter considered at the Meeting can request this with NOTE's Board of Directors at the address published on the company's website, in good time prior to the Meeting.

Resolutions of the Meeting are published after the Meeting in a Press Release and the minutes of the Meeting are published on the website. NOTE's AGM will be held in Stockholm, Sweden.

The AGM should be held within six months of the end of the financial year. The AGM considers matters relating to items including dividend to shareholders, adopting the Income Statement and Balance Sheet, discharging the Board members and CEO from liability, electing Board members, the Chairman of the Board and Auditors, and approving the guidelines for remunerating senior management and fees for the Board of Directors and Auditors.

Annual General Meeting 2020

NOTE's AGM was held on 23 April 2020 at Spårvagnshallarna in Stockholm, Sweden. Shareholders jointly representing 23.9% of the capital and votes attended the Meeting. The Meeting resolved on matters including re-electing Anna Belfrage, Johan Hagberg, Bahare Hederstierna, Claes Mellgren and Charlotte Stjerngren as Board members for the period until the next AGM is held. Kjell-Åke Andersson and Kaj Falkenlund left the Board. Johan Hagberg was re-elected Chairman. The AGM also approved fees in accordance with the Nomination Committee's proposal.

The Meeting approved the Board of Directors' proposal to not pay a dividend to shareholders for the financial year 2019, and authorised the Board to decide on purchasing and transferring treasury shares.

Nomination Committee

The AGM resolves on how the Nomination Committee is appointed. The AGM 2020 resolved that the Nomination Committee for the forthcoming AGM shall be formed by the four largest shareholders that wish to participate, each appointing a representative at least six months prior to the AGM, with the Chairman of the company's Board of Directors serving as convener. If one or more of the shareholders waives its right when Nomination Committee members are to be appointed, the next largest shareholder is then offered the corresponding opportunity.

The duty of the Nomination Committee is to consult on, and submit proposals to the AGM regarding:

Election of a Chairman of the Meeting.
Election of the Chairman of the Board and Board members.
Directors' fees for the Chairman, other Board members and remuneration for Committee work.
Election and remuneration of the external Auditor.
Resolution on principles of composition of the Nomination Committee for the next AGM.

As part of its work, for the AGM 2021, the Nomination Committee has considered the appraisal of the work of the Board in the year. Proposals for new Board members have been prepared, which also consider NOTE's Diversity policy.

The Nomination Committee's proposed Board members, Directors' fees and election of Auditors will be presented in the convening notice for the AGM.

Nomination Committee members for the AGM 2021

Committee member	Share of capital/votes, 31 Dec 2020, %
Johan Hagberg, personal holdings	20.66
Thomas Tang, Mediuminvest A/S	5.73
Fredrik Hagberg, personal holdings and Myggenäs Gård	4.40
Per-Olof Andersson, personal holdings	2.11

A report on the work of the Nomination Committee will be presented at the AGM 2021.

No special remuneration was paid to the members of the Nomination Committee.

Diversity policy

NOTE's Diversity policy is adopted by the Board of Directors. The Chairman of the Board is responsible for communicating the policy to the Nomination Committee, which applies it for appointing Board members. The overall purpose is to identify Board members with the right competence and experience to manage NOTE's strategy work responsibly and successfully. Diversity in terms of age, gender, geographical origin, education and professional background are also considered.

No Board member should be subject to discrimination based on ethnic background, religion, physical or psychological disability, age, gender, sexual orientation or for any other reason.

Board of Directors

The duty of the Board of Directors is to manage the company's affairs on behalf of the shareholders. The Board of Directors judges the group's financial situation on an ongoing basis, determines budgets and annual financial statements.

The Board of Directors is also responsible for formulating and monitoring the company's strategies through plans and objectives, decisions on acquisitions and divestments of operations, major investments, appointments and remuneration of the

CEO and senior management, as well as ongoing monitoring of operations in the year.

Each year, the Board of Directors adopts documentation including down approvals list, finance policy, instructions for financial reporting and for the Board of Directors, and rules of procedure, which formalise matters including the segregation of duties between the Board of Directors and the CEO, alongside the Instructions for the CEO. The Chairman of the Board leads the Board of Directors' work and ensures that it is conducted in accordance with the Swedish Companies Act, applicable regulations for listed companies, including the Code and other laws and ordinances. The Chairman is also responsible for maintaining ongoing contact with the group management, and for ensuring that the Board's decisions are implemented appropriately.

The Chairman is also responsible for the yearly evaluation of the work of the Board, which is conducted through a survey provided to all Board members. The results are compiled and discussed by the Board. The Chairman is also responsible for providing the Nomination Committee with access to this evaluation.

The Board has five members elected by shareholders' meetings and two employee representatives, one being a deputy.

The Board of Directors has an allround composition of sector knowledge and competence from Board work and management of listed companies as well as finance, accounting, structural change and sales, and strategic sourcing.

Board of Directors 2020 Attendance statistics Board member Position Board meetings Remuneration Committee Committee Johan Hagberg Chairman 6/6 2/2 – Kjell-Åke Andersson Member 1/1 - - Anna Belfrage Member 6/6 - 3/3 Kaj Falkenlund Member 1/1 - - Bahare Hederstierna Member 6/6 2/2 - Claes Mellgren Member 6/6 - – Charlotte Stjerngren Member 6/6 - 3/3 Christoffer Skogh Employee representative, member 6/6 - –

The work of the Board in 2020

Each scheduled Board meeting conducts a review of operations, results of operations and financial position of the group and outlook for the remainder of the year. In addition, the Board takes a standpoint on overall issues such as the company's strategy, sales and marketing, financing, budget and long-term operational planning.

The Board of Directors endeavours for NOTE to be an employer where all staff get an equal opportunity to work and develop. Employees' specific competences should also be valued, regardless of gender, ethnicity, sexual orientation, disability, age or social background. The Board of Directors encourages the integration of equal opportunities and diversity into all aspects of operations.

The Board of Directors held six meetings where minutes were taken in the year. Employees of the company participated in Board meetings to present reports. The company's Auditor attended one Board meeting in the year. The company's CFO served as secretary.

Audit Committee

The members of the Audit Committee are appointed at the Board meeting following election for one year at a time. The main duty of the Audit Committee is to consult on matters for the Board of Directors' decision. The Audit Committee

is not authorised to reach decisions independently.

Reporting to the Board on issues considered at Audit Committee meetings is either in writing or orally at the following Board meeting. In the year, the members of the Audit Committee were Anna Belfrage and Charlotte Stjerngren.

The duties of the Audit Committee are to:

Work on quality-assuring financial reporting.
Discuss the audit and the view of the company's risks with the Auditor.
Follow up on external Auditors' reviews and appraise their work.
Set guidelines for services in addition to auditing that the company may purchase from the Auditor.
Support the Nomination Committee in preparing proposals for Auditors and their remuneration.
Ensure that the company has systems for internal control.

The Audit Committee maintains close and regular collaboration with the group's finance function on internal and external reporting of financial information.

There is also a well-developed collaboration on matters of internal control, selection and appraisal of auditing policies and models. In the financial year 2020, the Audit Committee monitored compliance with the adopted guidelines and held three meetings with the company's Auditors, to discuss audit issues and internal controls. The Auditors' written reports were distributed to the Board of Directors after review and comment from the company.

Audit

The following main issues were considered:

Following up on the Auditor's reporting on the financial statement and ongoing reviews.
Appraisal of the Auditor's actions in the year.
Following up on the internal audit function's review in the year. The focus was on valuations of inventories, accounts receivable–trade and goodwill, and auditing foreign subsidiaries.

Remuneration Committee

The members of the Remuneration Committee are appointed at the Board meeting following election for one year at a time. In 2020, the Remuneration Committee members were Johan Hagberg and Bahare Hederstierna.

The duties of the Remuneration Committee are to:

Consult on matters regarding

remuneration principles, remuneration and other employment terms for group management.

Monitor and evaluate programmes for performance-related pay for group management, subsidiary Presidents and other key individuals.
Monitor and evaluate application of the guidelines for remuneration to senior management that the AGM has resolved on and applicable remuneration models and remuneration levels in the company.

In the financial year, the Remuneration Committee discussed remuneration issues and monitored compliance with adopted guidelines.

The following main issues were considered:

Evaluation and approval of remuneration models for group management.
Specifying the profitability-based, variable remuneration programme for group management, subsidiary Presidents and other key individuals, which ran during 2020.

After an evaluation, the Remuneration Committee concluded that:

NOTE is following the guidelines for remunerating senior management that the AGM 2020 approved.
Applicable remuneration models and levels are reasonable against the background of the company's operations.
Compensation from the profitability-based, variable remuneration programme that ran during 2020 for group management, subsidiary

Presidents and other key individuals amounted to SEK 4.7 million excluding social security contributions.

Guidelines for remuneration and other benefits for senior management

For information on these guidelines, refer to the formal annual accounts on page 41-43. For information on remuneration and other benefits, see Note 8, Employees, personnel expenses and remuneration to senior management, on page 54.

Auditors

The AGM appoints the Auditors. The Auditors review the company's annual accounts, consolidated accounts and accounting records, and the administration by the Board of Directors and CEO. The Auditor in Charge also presents an Audit Report to the AGM.

The AGM 2020 re-elected Öhrlings PricewaterhouseCoopers AB as audit firm, with Niklas Renström as Auditor in Charge until the AGM 2021.

The group's operational governance

Chief Executive Officer

NOTE's CEO leads operating activities. This responsibility covers accounting issues, monitoring the group's strategies and business performance and ensuring that the Board of Directors receives the necessary information to be able to take well-founded decisions.

The CEO reports to the Board of Directors, informing them of how operations are progressing based on the decisions they have taken. Written instructions define the segregation of duties between the Board of Directors and the CEO.

Group management

NOTE's group management is responsible for various parts of operations. This responsibility includes the preparation and execution of the group's overall strategies.

During the financial year, group management held regular meetings to review results of operations, the conditions of operations and strategic and operational issues.

Governance of subsidiaries' operations Subsidiaries' operations are followed up monthly on the basis of a number of operational targets, financial targets and key indicators.

Internal controls and risk management

Control environment

The segregation of roles and duties between the Board of Directors and CEO is determined annually at the Board meeting following election via the rules of procedure for the Board of Directors and CEO and instructions for financial reporting. Ongoing work to maintain effective internal controls has been delegated to, and is mainly managed by, the CEO and the group's finance function. NOTE also works in close collaboration with its Auditors.

The fundamental guidelines for internal control are managed via policies, instructions and similar governance documents. The content of these documents is updated and evaluated where necessary. The Board of Directors is responsible for key governance documents, and the group's finance function is responsible for other documents. NOTE has also developed an internal reporting package for financial information, which is monitored monthly within the group.

Risk assessment

Through its operations, NOTE is exposed to a number of operational and financial risks. NOTE's finance policy states the limits within which financial risks should be managed. The finance policy is updated annually and adopted by the Board of Directors.

NOTE also has a procedure for formalising management of the biggest risks in operations. These risks are evaluated from a matrix of probability and degree of financial impact. Existing control measures for the biggest risks in this matrix have been documented and additional controls introduced where required. Guidelines and limits relating to risk assessments are updated regularly.

For more information on risks and risk management, see Operations on page 13 and Note 24, Financial risks and finance policy on page 61-62.

Monitoring control activities

The monitoring of NOTE's units is in continuous development. The units' financial and operational progress is followed closely in various forums. Matters that are addressed include financial key ratios and monitoring of goal-oriented activities relating to quality, cost, delivery and growth.

The need for an internal audit function is evaluated yearly. Considering the group's size and scope, the Board of Directors considers that NOTE does not need a separate internal audit function. The practical management of internal controls is conducted by NOTE's finance function.

Auditor's report on the Corporate Governance Statement

To the general meeting of the shareholders in NOTE AB (publ) Corporate identity number 556408-8770

Engagement and responsibility

It is the board of directors who is responsible for the corporate governance statement for the year 2020 on pages 28–33 and that it has been prepared in accordance with the Annual Accounts Act.

The scope of the audit

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

Opinions

A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the annual accounts and the consolidated accounts and are in accordance with the Annual Accounts Act.

Discrepancies between reports

Swedish and English-language versions of this report have been produced. In the event of any discrepancy between the two, the Swedish version shall apply.

Niklas Renström Authorised Public Accountant Öhrlings PricewaterhouseCoopers AB

Stockholm, Sweden, 12 March 2021

Group management

	JOHANNES LIND-WIDESTAM	DAVID KRANTZ	HENRIK NYGREN	KAMRAN SHAHABI
Position	Chief Executive Officer	Chief Procurement Officer	Chief Financial Officer	Director Business Development & Sales
Employed	2018	2017	2006	2014
Born	1972	1980	1956	1989
Education	M.Sc. (Econ.)	M.Sc. (Eng.) in communications and transport systems.	M.Sc. (Eng.) in indu strial engineering and management.	Business Management at IHM Business School
Other significant assignments	None.	None.	None.	None.
Professional experience	Experience of a range of executive posi tions, including serving as CEO of Kitron Sverige AB and Elos Medtech AB.	Long-term experience of procurement and supply chains in operational and ex ecutive positions with companies including Ericsson.	CFO and business controller of major listed Swedish and in ternational industrial groups such as SSAB, Danaher Corporation and Snap-on Inc. Previous experience of business deve lopment and trade sales for companies including Retriva AB.	Experience of sales in operational and executive roles for companies including Högbloms, Coca Cola Enterprises and Tele2.
NOTE shareholdings*	127,100 shares.	10,000 shares.	200,000 shares.	2,279 shares.
NOTE option holdings	465,000 options.	0 options.	65,000 options.	0 options.

* As of 26 February 2021, including any holdings by related natural persons or legal entities and reported in accordance with the Market Abuse Regulation.

Board of Directors

ANNA BELFRAGE

CLAES MELLGREN

Position	Chairman	Board member	Board member	Board member
Elected	2017	2019	2015	2019
Born	1971	1962	1981	1959
Education	Political economist and mathematician.	M.Sc. (Econ.)	M.Sc. (Econ.)	M.Sc. (Eng.)
Main occupation	Professional investor.	Directorships and finan cial consultant.	Vice President Global Key Account Management at Knorr Bremse GmbH.	Business angel and non executive director.
Other directorships	None.	Board member of CINT AB, Ellevio AB, Isofol Medical AB, Mycronic AB and Serneke AB.	None.	Board member of AQ Group (Nasdaq Mid Cap) and Automation Region.
Professional experience	Former mathematics teacher, entrepreneur active in the entertain ment industry, as well as cultural producer active within regional adult education provider ABF Stockholm.	Broad-based experience of accounting and manufacturing. Previous positions include serving as CFO of ABS Group, Beijer Electronics Group and Södra Skogsägarna.	Fifteen years within purchasing and supply chain in the vehicle indu stry. Broad experience of various global leadership roles in Sourcing at Volvo Cars and Volvo Trucks, most recently as Strategic Purchasing Manager for electronics at Knorr Bremse GmbH.	Founder of AQ Group, and the company's CEO between 2010 and 2018. Previously active as pro duction, logistics and site manager at various ABB units in Västerås, Sweden.
NOTE shareholdings*	7,108,904 shares.	0 shares.	5,000 shares.	722,000 shares.

Non-affiliated to company and management	Yes.	Yes.	Yes.	Yes.
Non-affiliated to major shareholders	No.	Yes.	Yes.	Yes.

*As of 26 February 2021, including any holdings by related natural persons or legal entities and reported in accordance with the Market Abuse Regulation.

CHARLOTTE STJERNGREN

CHRISTOFFER SKOGH JOHAN LANTZ

Board member	Employee representative, Board member	Employee representative, Deputy Board member
2019	2017	2017
1976	1975	1972
M.Sc. (Econ.) and B.A.	Senior high school graduate, social sciences programme.	M.Sc. (Econ.)
Partner and investor relations consultant at Cord Communications.	Sales Manager & Vice President of NOTE Norrtelje.	Business Development Manager of NOTE.
None.	None.	None.
Over ten years' experience as a Financial Analyst at investment bank Carnegie, focusing on telecom, IT and small caps. Broad based experience as a finance journalist, most recently as Editor-in-Chief at finance channel EFN.	Former employee representative of NOTE from 2009-2014. 15 years' experience as an Account Manager. Broad based experience of several functions including manufacturing, supplier development and strategic procurement.	Sales experience in various roles.
8,041 shares.	700 shares.	0 shares.

Yes.	Yes.	Yes.
Yes.	Yes.	Yes.

Formal Annual Accounts

Report of the Directors	39
Five-year summary	45
Consolidated Financial Statements	46
Notes on the Consolidated Financial Statements	50
Parent Company's Financial Statements	64
Notes on the Parent Company's Financial Statements	68
Auditor's report	73

Report of the Directors

OPERATIONS–GENERAL

NOTE is one of northern Europe's leading EMS partners. Its market positioning is especially strong in the high mix market segment, i.e. products that require a high level of technological competence and flexibility. NOTE produces PCBAs, subassemblies and box build products. NOTE's offering covers the complete product lifecycle, from design to after-sales. The group consists of parent company NOTE AB (publ) and wholly owned subsidiaries in Sweden, Finland, the UK, Estonia and China.

OPERATIONS IN 2020

NOTE has performed strongly for several years. The combination of sales growth and rationalisation on its cost side have been contributors to increased market shares and progressively expanding margins. The critical success factors are the company's capability to assure quality and delivery precision of the highest class to customers, and in these segments, NOTE has secured a sectorleading position.

2020 was a disorienting year. Boosted by successful new business sales, NOTE moved into the year with a high growth rate of about 20%. The spread of covid-19 drastically altered conditions in several sectors. Despite extensive restrictions, and being compelled to close its plants in the UK and China for safety reasons periodically, NOTE still achieved growth of 15% in the first half-year. After the summer, and due to lockdowns in several countries, the company obviously detected more caution on the market, which alongside customers' inventory adjustments, resulted in reduced volumes on several ongoing customer assignments. In addition, growth was checked in the autumn, due to challenges completing development and manufacturing projects at the normal rate during the pandemic.

However, NOTE maintained strong business momentum. NOTE's business model builds on long-term customer relationships and partnerships. The customer base is broad, and NOTE already partners with several of the Nordic leaders across a broad spectrum of sectors. NOTE has great potential to grow business in its strong customer base. NOTE secured several of its biggest-ever deals in the year in this way, mainly in industry and medtech.

The interest in NOTE's flexible and industrially broad-based customer offering remains substantial. By focusing on those technology market and technology segments where NOTE is already strong, NOTE secured many new business customers, in traditional industries, and new, expansive application segments.

For the full year, sales increased by 6% to SEK 1,874 million, NOTE's highest-ever sales level. Including exchange rate fluctuations, organic growth was 7%, which is below the growth target of at least 10%. However, NOTE's plants in Sweden, Finland and Estonia achieved record sales levels. Extensive closures across the UK economy, which also impacted NOTE's operations in China, meant that sales in the UK and China were clearly down on the previous year.

It is pleasing that despite problematic market conditions, NOTE succeeded in maintaining its positive earnings trend. Operating profit increased by 20% to SEK 149 million, and the operating margin widened by 0.9 percentage points to 8.0%, both NOTE's highest-ever levels. The profit increase has several sources, including increased sales, stable margins on customer assignments, efficiency programmes completed and the very robust progress of operations in Sweden and Finland.

NOTE invested in quality and performance enhancements in the year, and significantly increased the automation level of its plants. In 2021, NOTE will also substantially expand capacity at its plant in Torsby, Sweden.

NOTE also put significant energy into ensuring the efficient utilisation of working capital. In tandem with positive profit performance, this was a contributor to cash flow after investments increasing to SEK 172 million, or SEK 6.06 per share, also the highest-ever level. NOTE's Balance Sheet is strong with an equity to assets ratio of over 50% and low net debt of SEK 28 million, excluding the estimated liability on rented properties (IFRS 16 Leases).

NOTE also takes a positive view of the rising priority of sustainability issues, and has taken on the challenges in the sustainability segment methodically and responsibly. One of NOTE's strengths is that it was one of the first companies in its sector to join the UN Global Compact and adopt its ten principles on human rights, labour law, the environment and anti corruption, as early as 2011. In business terms, NOTE is on the offensive, and actively participating in the green technology shift that is surging ahead in Sweden and internationally. NOTE's intention is to highlight this progress clearly in reporting through 2021.

SALES AND RESULTS OF OPERATIONS 2020 Group

Sales

NOTE is a competitive electronics manufacturer in the Nordics, and a stable business partner for Swedish and international companies that need advanced EMS. NOTE's business model is based on long-term customer relationships and partnerships. NOTE sells to a large customer base, essentially active across industry, communication, medtech, defence and high end consumer electronics.

The customer base includes both large

global corporations active worldwide, and local enterprises whose sales are mainly in northern Europe. Usually, customers outsource all EMS to one or several pro duction partners. Another clear trend is for customers increasingly demanding the manufacture and direct shipment of box build products.

The spread of covid-19 resulted in a clear demand slowdown across several sectors and regions. However, overall demand for NOTE's services progressed positively in the year. Sales increased by 6% to SEK 1,874 (1,760) million. Growth was wholly organic, and the impact of altered exchange rates, mainly USD and EUR, was negative at about 1%.

The sales increase consisted of expanded partnerships with established customers, and the progressive impact of increased sales to new business customers. Most of NOTE's new business customers are businesses across Europe and Asia. Several of these assignments, which usually start with industrialisation services (service sales, prototyping and pilot series), have now resulted in batch production and higher volumes.

Demand in Sweden and Finland was very strong in the year, especially from industrial and medtech customers. Exten sive restrictions and shutdowns across UK industry due to the pandemic contri buted to sales in the UK reducing by 20%, which was a contributor to restricting sales growth in Western Europe to 13%. Sales from the Estonian plant, which are mainly to northern European customers, made positive progress. Growth was 7%, primarily because of intensified customer partnerships across industry, and the start-up of several new customer as signments. Sales from the plant in China are to local and global customers. The extended production stoppage in Q1, and safety measures against the pandemic, combined with some production transfer from China to Europe, resulted in sales reducing by 15%.

NOTE's healthy growth in Western Europe should be viewed against the background of a rapidly changing mar - ket. Previously, manufacturers were very keen to locate electronics manufacture in Asia. Accentuated by increasing res trictions to global trade, a sharper focus on sustainability issues, and not least the current pandemic, there is a clear trend for customers increasingly deman ding development and manufacturing services closer to home. With more capacity and efficient plants in Europe, NOTE's organisation is well prepared to meet this progress.

NOTE's 15 largest customers in sales terms represented 47% (45%) of group sales. No single customer (group) represented more than about 6% (6%) of total sales.

The group's order backlog, which is a combination of fixed orders and customer forecasts, progressed positively. At yearend, the order backlog was some 20% (25%) above the previous year's level.

Results of operations

In order to keep increasing competi tiveness and create the potential for profitable sales growth, NOTE has been conducting methodical improvement work at all the group's units for several years. This work is conducted locally at each plant and through a number of groupwide projects. Over and above initiatives to expand and develop its customer of fering, NOTE's focus is on measures that improve delivery precision and quality performance, and on cost and working capital rationalisation.

Mainly as a consequence of increased sales with stable margins on current and new business accounts, gross profit increased by 9% to SEK 225 (206) mil lion. The gross margin widened somewhat to 12.0% (11.7%), essentially a result of increased productivity after completed rationalisation and a higher automation level in manufacture.

Sales and administration overheads increased by 3% to SEK 85 (82) million. As a share of sales, these overheads reduced to 4.5% (4.7%).

Other operating income/expenses, which mainly consist of the revaluation of assets and liabilities denominated in foreign currency, were SEK 9 (0) million.

Operating profit in the year improved by 20% to SEK 149 (124) million, and the operating margin widened by 0.9 percen tage points to 8.0% (7.1%).

Largely as a result of positive cash flow and reduced net debt, net financial income/expense improved to SEK -6 (-8) million.

Profit after net financial items increased by 23% to SEK 143 (116) million, equiva lent to a profit margin of 7.6% (6.6%).

Profit after tax was up by 25% to SEK 116 (92) million, or SEK 4.11 (3.31) per share. The tax expense for the year cor responded to 19% (20%) of profit before tax.

Parent company

The parent company, NOTE AB (publ), is primarily focused on the manage ment, coordination and development of the group. Revenue for the period was unchanged, SEK 38 (38) million, and mainly related to intra-group services. Operating profit was negatively affected by changes in exchange rates on loans to foreign subsidiaries. In the light of restrictions related to central government support associated with covid-19, no group contributions have been received. Net financial items therefore decreased sharply to SEK -1 (76) million. The parent company's profit after tax amounted to SEK -1 (44) million.

FINANCIAL POSITION, CASH FLOW AND CAPITAL EXPENDITURE Cash flow

Competing successfully in the high mix market segment sets demanding standards on flexibility in manufacture, the effective supply of materials and the capability to deliver custom logistics solutions. Ac cordingly, NOTE faces a major challenge to continuously improve its business methods and internal processes in these segments.

Due to the global spread of covid-19 and a high share of electronic component manufacture being located in China, NOTE did a lot of work as early as Q1 to identify

and overcome challenges in sourcing materials. Disruptions to incoming component shipments occurred throughout the year, but to a lesser extent than initially feared. Accordingly, NOTE was able to maintain delivery precision to customers at a high level. The progress of inventories was fairly stable in the year, and continued rationalisations helped reduce capital tied-up in inventory by just over 4%.

NOTE is making continuous efforts to monitor credit risks and limit the number of outstanding days of credit. A change in the factoring finance solution in Estonia meant that accounts receivable—trade decreased by just over SEK 30 million in Q1. This was a contributor to accounts receivable—trade being 11% lower at year-end than a year previously. The number of outstanding days of credit was at the same level as the previous year.

Against the background of adverse market conditions in several sectors, NOTE is concerned that credit risks may increase. NOTE adopts a conservative valuation methodology, and accordingly, its provisions for potential risks in accounts receivable and inventory increased in the year.

Accounts payable—trade mainly consist of purchases of electronic components and other production materials. NOTE works actively to evolve its partner model on the supplier side, which has outcomes including concentrating sourcing on fewer, quality-assured suppliers. This also helps rationalise the utilisation of working capital. Primarily because of inventory reduction, accounts payable—trade were 9% lower than at the previous year-end.

Continued positive earnings performance, combined with the more efficient utilisation of working capital, was a contributor to a significant improvement in cash flow. For the full year, cash flow was SEK 172 (75) million, or SEK 6.06 (2.69) per share.

Equity to assets ratio

According to NOTE's externally communicated financial targets, its minimum equity to assets ratio should be 30%. The equity

to assets ratio improved further in the year, to 51.2% (41.2%).

Liquidity and net debt

NOTE is maintaining a sharp focus on measures that further improve the group's liquidity and cash flow.

At year-end, the group's available cash and cash equivalents, including unutilised overdraft facilities, were SEK 184 (189) million. Given NOTE's strong financial position, a decision was made to temporarily reduce the group's level of invoice factoring in Q4. This action reduced reported available cash and cash equivalents at year-end by about SEK 100 million, as reflected in financing activities in the cash flow statement. Factored accounts receivable—trade were approximately SEK 274 (224) million in the period. Disregarding estimated financial liabilities on the additional right-of-use assets resulting from IFRS 16 Leases, net debt at yearend was SEK 28 (138) million.

Investments

Capital expenditure on fixed assets in the year was SEK 90 (44) million, of which SEK 20 (4) million consisted of additional investments in rented properties (IFRS 16 Leases). Adjusted for the latter, investments were 3.7% (2.2%) of sales. They mainly consisted of projects to increase efficiency and capacity.

Plan depreciation and amortisation increased to SEK 49 (44) million, of which SEK 17 (16) million was additional depreciation of right-of-use assets, mainly on rented properties, after the adoption of IFRS 16 Leases.

RESEARCH AND DEVELOPMENT ACTIVITIES

In its business as a manufacturing partner, NOTE is closely involved in its customers' development processes through its operations, including contributing to the industrialisation phase and guiding and developing manufacturing processes for its customers. This work is continuous and not reported separately in the accounts.

NOTE continued to work on developing and implementing a group-wide ERP system in the year. The costs, which satisfy the criteria for capitalised expenditure, have been capitalised in the Balance Sheet.

THE NOTE SHARE

The total number of shares of the company is 28,372,600. All shares are of the same class and have a quotient value of SEK 0.52 per share. The AGM 2020 resolved to cancel 1 million shares acquired at the end of 2018. In May 2020, a three-year incentive programme involving share warrants, which was initiated in 2017, expired. All share warrants were exercised, which meant that 500,000 new shares were issued, pursuant to the terms and conditions of the programme, raising SEK 11.7 million for the company.

On 31 December 2020, there were 611,000 outstanding share warrants in the incentive programmes approved by the AGM in 2018, and an EGM in 2019.

There are no limitations on transferring shares in the form of pre-emption clauses or similar that the company is aware of. As of the reporting date there was one shareholder with a shareholding of more than 10%, Johan Hagberg with 20.7% (20.3%) of the votes.

The company's Board members are elected annually by the AGM, which also approves amendments of the Articles of Association.

Otherwise, there are no known circumstances that could affect possibilities to acquire the company through a public takeover bid for the shares of NOTE.

For more information on the share and shareholders, see the NOTE share on pages 26–27.

GUIDELINES FOR REMUNERATING SENIOR MANAGERS

Senior managers are the CEO and other members of group management. These guidelines also cover any compensation to Board members in addition to Directors' fees. The guidelines apply to remuneration agreed after the AGM 2020, and on amendments to already

agreed remuneration subsequently. The guidelines do not cover remuneration resolved by shareholders' meetings.

The promotion of the company's business operations, long-term interest and sustainability by the guidelines

In order to be successful on the market and protect the company's long-term interests, including its sustainability, NOTE needs to hire and retain qualified staff. Accordingly, total compensation of the company's employees should be on market terms and competitive, and be in relation to responsibility and authority.

Forms of remuneration, etc.

Remuneration should consist of the following components: basic salary, potential variable salary subject to separate agreement, pensions and other benefits. In addition—and independent of these guidelines—shareholders' meetings may resolve on share and share price-related payments, for example.

Basic salary

Basic salary should consist of basic cash salary and subject to yearly review. Basic salary should reflect the standards applying to the position in terms of skills, responsibility, complexity, and the way it contributes to achieve business objectives. Basic salary should also reflect the performance the manager achieved, and thus be individualised and differentiated.

Variable salary

In addition to basic salary, the CEO and other members of group management may be eligible to receive value variable salary on the satisfaction of defined criteria, subject to separate agreements. Variable salary should be linked to one or more predetermined and measurable goals set by the Board of Directors. Outcomes should relate to the satisfaction of objectives of a financial nature, such as profitability, growth and cash flow, and where necessary, individual measurable and qualitative goals.

Because these goals link senior ex-

ecutives' compensation to the company's results of operations and sustainability, they promote execution of the company's business strategy, long-term interests and competitiveness. The criteria should apply for one financial year at a time. The satisfaction of criteria for the payment of variable salary should be measured yearly. As for financial goals, judgement is based on the company's most recently published financial information.

The terms and conditions governing variable salary are designed so that in exceptional circumstances, the Board of Directors can limit or suspend payment of variable salary if such action is considered reasonable.

Additional cash compensation may be payable in extraordinary circumstances to reward extraordinary efforts over and above the individual's regular duties. Decisions on such compensation should be taken by the Board of Directors after proposal by the Remuneration Committee. However, total variable salary in a calendar year may not exceed an amount corresponding to 100% of basic salary.

Pension

For the CEO and other senior managers, pension benefits including health insurance should be defined contribution, and premiums should not exceed 30% of basic yearly salary. Variable salary should not be pensionable.

Other benefits

Other benefits, which may include company cars, travel expenses and health insurance, should be on market terms and only comprise a limited portion of total compensation.

Termination conditions

The notice period of the CEO and other members of group management should be six months for termination from the manager's side. On termination from the company's side, a maximum notice period of 12 months should apply. On termination from the company's side, the total of severance and redundancy

payments should not be of an amount exceeding 24 months' basic salary.

In addition, compensation for potential non-competition undertakings may be payable. Such remuneration should compensate for potential income losses, and may only be payable where the previous senior manager is not entitled to severance pay. Such compensation may be up to a maximum of 100% of basic salary at the time of termination, and be payable for a period the non-competition undertakings applies, which should be a maximum of 24 months after terminating employment.

Fees to Board members

In special cases, NOTE's Board members elected by shareholders' meetings may be compensated for services in their relevant skills segments, which are not service on the Board, for a limited period. A fee on market terms may be payable for these services (including services rendered by a Board members through a wholly owned company), providing that such services contribute to NOTE's operations and long-term interests, including its sustainability.

Salary and other employment terms of employees

When consulting on the Board of Directors' proposal on these remuneration guidelines, the salary and employment terms of the company's employees have been considered by factoring information on employees' total compensation, the components of such compensation, increases and rates of increases to compensation over time, into the Remuneration Committee's and the Board of Directors' supporting data when evaluating the reasonableness of the guidelines and their ensuing limitations.

Consultative and decision-making process

The duties of the Remuneration Committee appointed by the Board of Directors include consulting on the principles for remunerating the group management,

and the Board of Directors' decision on proposed guidelines for remunerating senior managers. The Board of Directors consults on proposals for new guidelines at least every fourth year, and submits this proposal to the AGM for resolution.

The guidelines apply until new guidelines are adopted by a shareholders' meeting. The Remuneration Committee monitors and evaluates the programme governing variable compensation to group management, the application of guidelines for remunerating senior managers, and applicable compensation structures and levels in the company. Remuneration of the CEO is resolved within the framework of principles approved by the Board of Directors, after considering the recommendation of the Remuneration Committee. Remuneration of other senior managers is decided by the CEO within the framework of the adopted principles after consulting with, and receiving a recommendation from, the Remuneration Committee. The CEO and other members of group management do not participate in the Board of Directors' consideration of, and decision-making on, remuneration-related issues, to the extent they are affected by these issues.

Departure from the guidelines

The Board of Directors may decide on wholly or partly departing from these guidelines temporarily, if there are special circumstances in an individual case, and if the departure is necessary to protect the company's long-term interests, including its sustainability, or for ensuring the company's financial viability.

Regarding potential employment terms subject to regulations other than Sweden, customary modifications of pension and other benefits should be made to comply with such regulations or accepted local practice, where the overall purpose of these guidelines should be served as far as possible.

For more information on remuneration, see note 8, Employees, personnel expenses and remuneration to senior managers on page 54.

SUSTAINABILITY The environment, obligation of disclosure and certification

The operations in Sweden are U-classified, and do not require advance testing or reporting. Instead, the regulatory authority (municipal environmental and health board) can require actions or further investigation—if required for environmental or health reasons. NOTE's production plants have ISO 14001 environmental certification.

EU directives

The WEEE directive regulates the processing of electronic waste. Because NOTE does not have producer liability, no provisioning for processing electronic waste from consumer electronics has been made in accordance with IFRIC 6. This responsibility rests with product owners.

The EU Reach regulation formalises the usage of chemicals. NOTE is classed as a downstream user and/or end-user of chemicals, and is only subject to the obligation to register substances and prepare risk assessments in those cases where the company uses what are known as SVHC materials.

Human resources

The average number of full-time employees was 1,101 (1,070) in the year, 569 (610) of them being women.

Work attendance in the group was 96.2% (95.8) of regular working hours and staff turnover was 14.7% (20.7).

For more information on employees, see the Sustainability Report on pages 20–23.

For more information on the environment, social conditions and human resources, as well as human rights and anti corruption, see the Sustainability Report on pages 14–23.

SIGNIFICANT RISKS OF OPERATIONS Operational risks

NOTE is one of the leading northern European EMS partners. It has especially strong market positioning in the high mix market segment, i.e. for products that require high technology competence and flexibility. NOTE produces PCBAs, subassemblies and box build products. The customer offering covers complete product lifecycles, from design to aftersales.

NOTE's business model, which is designed to increase sales growth combined with limited overheads and investment costs in high-cost countries, helps reduce risks in operations.

For more information on operational risks, see Operations on page 13.

Financial risks

Through its operations, the group is exposed to different forms of financial risks, such as borrowing and interest risk, currency risk, as well as liquidity and credit risks. Essentially, the group is financed through equity, loans and accounts payable–trade. Depending on economic and market conditions, NOTE's prospects of securing the required funding and liquidity should be considered as a significant risk.

Invoicing is in Swedish krona and foreign currency, mainly USD and EUR. Otherwise, exchange rate risks lie mainly in the sourcing of production materials. Net exposure in foreign currency is essentially hedged through binding agreements where the customer bears the currency risk, and partly through cash flow hedges. The hedged currencies are USD and EUR.

For more information on financial risks, see Operations on page 13 and Note 24 Financial risks and finance policy, on page 61-62.

POST-BALANCE SHEET EVENTS

million, which is 9.1% of the group total. Essentially, the UK subsidiaries' sales are to customers in the UK. The same applies to purchasing, which essentially, is from companies in the UK.

The group has no other significant events after the end of the financial year to report.

EXPECTATIONS OF FUTURE PRO-GRESS

NOTE's growth slowed in the second halfyear in the wake of the pandemic. However, the underlying business continued its strong progress. NOTE is securing new business customers and projects convincingly, and by year-end, order books were about 20% larger than the previous year. With the start-up of batch production on several major new customer projects, this gives cause for continued optimism. Based on the current market situation, NOTE judges that it has very good potential to achieve its growth target of at least 10% in 2021, and continue NOTE's positive earnings trend.

PROPOSED APPROPRIATION OF PROFITS

The Board of Directors propose that profit be appropriated as follows (SEK):

Total	87,961,232
Profit for the year	-703,686
Brought forward	88,664,918

Total	87,961,232
Carried forward	87,961,232
Distributed to shareholders	-

BOARD OF DIRECTORS' REASONED STATEMENT ON THE PROPOSED DIVIDEND

To ensure maximum financial freedom to act in early-2021 and enable active participation in the sector's ongoing structural transformation, the Board of Directors is proposing that no dividend is paid for 2020. However, the Board of Directors may return to this issue later in the year, and propose a dividend, in light of the strong Balance Sheet NOTE has.

With regard to NOTE's results of operations and financial position otherwise, please refer to the Income Statement and Balance Sheet and the Notes on the Financial Statements below. NOTE's financial year is the period 1 January to 31 December inclusive. All amounts are in SEK 000 unless otherwise indicated.

Five-year summary

SEK m (unless otherwise stated)

Consolidated Income Statement	2020	2019	2018	2017	2016
Net revenue	1,873.8	1,760.4	1,378.6	1,175.7	1,098.1
Gross profit	224.7	206.5	171.7	140.3	131.7
Operating profit	149.1	124.4	83.9	93.4	60.2
Profit before tax	142.5	116.0	78.8	88.8	54.5
Profit for the year	115.7	92.3	64.2	72.1	45.2
Consolidated Balance sheet
Assets
Non-current assets	324.5	288.0	217.5	146.3	152.3
Current assets	784.7	841.1	747.5	609.6	542.2
Total assets	1,109.2	1,129.1	965.0	755.9	694.5
Equity and liabilities
Equity	567.6	465.2	383.6	369.2	318.0
Non-current liabilities	110.3	70.6	29.1	14.0	9.3
Current liabilities	431.3	593.2	552.3	372.7	367.2
Total equity and liabilities	1,109.2	1,129.1	965.0	755.9	694.5
Consolidated Cash Flow Statement
Cash flow from operating activities	188.7	96.5	26.8	39.7	48.6
Cash flow from investing activities	–17.0	–21.5	–102.8	30.0	–7.7
Cash flow after investing activities	171.7	75.0	–76.0	69.7	40.9
Cash and cash equivalents at beginning of period	72.6	31.0	87.2	71.6	47.3
Cash flow before financing activities	171.7	75.0	–76.0	69.7	40.9
Cash flow from financing activities	–171.9	–33.5	18.0	–53.8	–17.0
Exchange rate difference in cash and cash equivalents	–4.8	0.1	1.8	–0.3	0.4
Cash and cash equivalents at end of year	67.6	72.6	31.0	87.2	71.6
Consolidated key figures
Earnings per share (basic), SEK	4.11	3.20	2.22	2.50	1.57
Earnings per share (diluted), SEK	4.05	3.18	2.22	2.49	1.57
Cash flow per share after investing activities, SEK	6.06	2.60	–2.63	2.41	1.42
Market capitalisation at end of period	1,691	1,139	616	702	491
Operating margin, %	8.0	7.1	6.1	7.9	5.5
Profit margin, %	7.6	6.6	5.7	7.6	5.0
Return on operating capital, %	22.7	20.7	17.8	24.2	16.1
Return on equity, %	22.5	21.7	17.1	21.0	14.9
Operating capital (average)	655.5	599.5	471.1	385.2	373.7
Interest-bearing net debt	85.3	193.1	157.7	22.9	60.4
Equity to assets ratio, %	51.2	41.2	39.8	48.8	45.8
Net debt/equity ratio, multiple	0.2	0.4	0.4	0.1	0.2
Interest coverage ratio, multiple	9.5	8.1	6.4	18.3	8.6
Capital turnover rate (operating capital), multiple	2.9	2.9	2.9	3.1	2.9
Sales per employee, SEK 000	1,702	1,645	1,407	1,289	1,113

Operating margin 2020 8.0%

Equity to assets ratio 2020

Cashflow after investments 2020

For Financial definitions, see Note 31 on page 63.

Consolidated Income Statement

SEK 000	NOTE	2020	2019
Net revenue	2, 3	1,873,792	1,760,442
Cost of goods sold and services		–1,649,102	–1,553,987
Gross profit		224,690	206,455
Selling expenses		–50,884	–49,532
Administrative expenses		–34,069	–33,000
Other operating revenue	4	47,379	24,390
Other operating expenses	5	–37,978	–23,955
Operating profit	3, 6, 7, 8, 26, 28	149,138	124,358
Financial income		10,113	7,890
Financial expenses Net financial income/expense	9	–16,732 –6,619	–16,257 –8,367
Profit before tax		142,519	115,991
Tax	10	–26,859	–23,719
Profit for the year, attributable to Owners of the Parent Company		115,660	92,272
Earnings per share (basic), SEK	17	4.11	3.31
Earnings per share (diluted), SEK	17	4.05	3.30

Consolidated Statement of Other Comprehensive Income

SEK 000	2020	2019
Profit for the year	115,660	92,272
Other comprehensive income
Items that can be subsequently reversed in the Income Statement:
Exchange rate differences	–27,816	11,036
Cash flow hedges	–45	23
Tax on cash flow hedges and exchange rate difference	2,936	–1,558
Total other comprehensive income, net after tax	–24,925	9,501

Total comprehensive income for the year, attributable to Owners of the Parent Company	90,735	101,773

Consolidated Balance Sheet

SEK 000	NOTE	31 Dec 2020	31 Dec 2019
Assets
Goodwill	11	105,706	109,860
Customer relations	11	8,815	13,138
Other intangible assets	11	11,776	13,588
Right-of-use assets–rented properties	12	55,151	53,922
Property, plant and equipment	3, 13	136,731	95,646
Long-term receivables	14	634	674
Deferred tax assets	10	5,748	1,132
Total non-current assets		324,561	287,960
Inventories	3, 15	354,094	370,057
Accounts receivable–trade	3, 23, 24	338,284	380,221
Tax receivables		4,595	1,715
Other receivables	14	2,827	7,103
Prepaid expenses and accrued income	16	17,141	9,413
Cash and cash equivalents	23, 27	67,738	72,619
Total current assets		784,679	841,128
Total assets		1,109,240	1,129,088
Equity	18
Share capital		14,695	14,436
Other paid-up capital		229,478	218,087
Reserves		–7,201	17,724
Retained profit incl. profit for the year		330,662	215,002
Total equity attributable to Owners of the Parent Company		567,634	465,249
Liabilities
Long-term interest-bearing liabilities	19, 23, 24	55,468	20,800
Non-current lease liabilities for right-of-use assets–rented properties	19, 23, 24	39,876	38,114
Deferred tax liabilities	10	14,960	11,704
Total non-current liabilities		110,304	70,618
Current interest-bearing liabilities	19, 23, 24	40,910	190,695
Current lease liabilities for right-of-use assets–rented properties	19, 23, 24	16,763	16,093
Accounts payable–trade	23, 24	246,429	269,654
Tax liabilities		20,352	10,355
Other liabilities	21	29,486	28,074
Accrued expenses and deferred income	22	76,797	71,620
Other provisions and other financial liabilities	20, 23, 24	565	6,730
Total current liabilities		431,302	593,221
Total equity and liabilities		1,109,240	1,129,088

For information on the group's pledged assets and contingent liabilities see Note 25 on page 62.

Consolidated Statement of Changes in Equity

SEK 000	Share capital	Other paid-up capital	Reserves	Retained profit incl. profit for the year	Total equity attribu- table to Owners of the Parent Company
Opening equity, 1 Jan 2019	14,436	218,729	8,223	142,241	383,629
Comprehensive income
Profit for the year				92,272	92,272
Other comprehensive income
Exchange rate differences			11,036		11,036
Cash flow hedges			23		23
Tax on cash flow hedges and exchange rate difference			–1,558		–1,558
Total comprehensive income			9,501	92,272	101,773
Payment warrants		–642			–642
Dividend				–19,511	–19,511
Closing equity, 31 Dec 2019	14,436	218,087	17,724	215,002	465,249

SEK 000	Share capital	Other paid-up capital	Reserves	Retained profit incl. profit for the year	Total equity attribu- table to Owners of the Parent Company
Opening equity, 1 Jan 2020	14,436	218,087	17,724	215,002	465,249
Comprehensive income
Profit for the year				115,660	115,660
Other comprehensive income
Exchange rate differences			–27,816		–27,816
Cash flow hedges			–45		–45
Tax on cash flow hedges and exchange rate difference			2,936		2,936
Total comprehensive income			–24,925	115,660	90,735
Cancellation of repurchased shares	–500			500	–
Bonus issue	500			–500	–
New share issue	259	11,391			11,650
Closing equity, 31 Dec 2020	14,695	229,478	–7,201	330,662	567,634

Consolidated Cash Flow Statement

SEK 000	NOTE	2020	2019
	27
Operating activities
Profit before tax		142,519	115,991
Reversed depreciation and amortisation		49,302	44,237
Other non-cash items		12,322	831
Tax paid		–17,921	–19,966
		186,222	141,093
Change in working capital
Increase (–)/decrease (+) in inventories		–15,574	5,166
Increase (–)/decrease (+) in trade receivables		26,414	–44,379
Increase (+)/decrease (–) in trade liabilities		–8,358	–5,392
		2,482	–44,605
Cash flow from operating activities		188,704	96,488
Investing activities
Purchase of property, plant and equipment		–15,939	–18,370
Purchase of intangible assets		–1,025	–3,097
Cash flow from investing activities		–16,964	–21,467
Financing activities
Borrowings	27	–	8,937
Amortisation of leasing debts and other interest-bearing liabilities	27	–183,511	–22,258
New share issue		11,650	–
Payment warrants		–	–642
Dividends paid		–	–19,511
Cash flow from financing activities		–171,861	–33,474
Cash flow for the year		–121	41,547
Cash and cash equivalents
At beginning of period		72,619	30,987
Cash flow before financing activities		171,740	75,021
Cash flow from financing activities		–171,861	–33,474
Exchange rate difference in cash and cash equivalents		–4,760	85
Cash and cash equivalents at end of period		67,738	72,619

Notes on the Consolidated Financial Statements

NOTE 1 Critical accounting principles

Consistency with standards and law

The consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as endorsed by the EU and interpretation statements from the International Financial Reporting Interpretations Committee (IFRIC). RFR's (Rådet för finansiell rapportering, the Swedish Financial Reporting Board) recommendation RFR 1, Supplementary Accounting Rules for Groups, has been applied.

Basis of preparation of the consolidated financial statements

The parent company's functional currency is the Swedish krona, which is also the presentation currency for the parent company and group. Unless otherwise stated, all amounts are rounded to the nearest thousand.

Judgements made by management when applying IFRS that have a significant impact on the financial statements and estimates made that may imply significant restatements of following years' financial statements are reviewed in more detail in Note 28, Critical estimates and judgements on page 63.

The following accounting principles for the group have been applied consistently for all periods presented in the consolidated financial statements, unless stated otherwise below. The group's accounting principles have been applied consistently on reporting and consolidating the parent company and subsidiaries.

The annual accounts and consolidated accounts were approved by the Board for issuance on 12 March 2021. The Consolidated Income Statement and Balance Sheet will be subject to adoption at the AGM (Annual General Meeting) on 19 April 2021. Swedish and English-language versions of this Report have been produced. In the event of any discrepancy between the two, the Swedish version shall apply.

Revised accounting principles

None of the IFRS or IFRIC interpretation statements that are mandatory for first-time adoption in accounts for financial years beginning 1 January 2020 or later are expected to have any material impact on the group.

New standards and interpretations

A number of new standards and interpretations come into effect for financial years beginning after 1 January 2020, and were not applied in the preparation of these financial statements. None of them are expected to have any material impact on the consolidated financial statements.

Operating segments

Operating segments are reported in a manner consistent with internal reporting submitted to the chief operating decision maker. The chief operating decision maker is that function with responsibility for allocating resources and judging the results of an operating segment. In the group, this function has been identified as the CEO.

Classification, etc

Essentially, the non-current assets and non-current liabilities of the group exclusively comprise amounts expected to be recovered or paid after more than 12 months from year-end. Essentially, the current assets and current liabilities of the group only comprise amounts expected to be recovered or paid within 12 months of the reporting date.

Consolidation principles

Subsidiaries

Subsidiaries are companies under the controlling influence of NOTE AB. A controlling influence implies the direct or indirect right to formulate a company's financial and operational strategies with the aim of receiving economic rewards. When judging whether a controlling influence exists, potential shares conferring voting rights that can be exercised or converted without delay are considered.

The group comprises the parent company and 12 wholly owned companies. Subsidiaries are reported in accordance with acquisition accounting. Acquisition accounting means that acquisition of a subsidiary is considered as a transaction whereby the group indirectly acquires the subsidiary's assets and takes over its liabilities and contingent liabilities. The consolidated cost is determined using an acquisition analysis relating to the acquisition. This analysis determines partly the cost of participations or operation, and partly the fair value of acquired identifiable assets and liabilities and contingent liabilities taken over on the acquisition date. The cost of subsidiary shares and operations is the total of the fair value of assets paid, liabilities arising or taken over, and for equity instruments issued that are submitted as payment in exchange for the acquired net assets. In business combinations where the acquisition cost exceeds the fair value of acquired assets and liabilities and contingent liabilities taken over that are recognised separately, the difference is recognised as goodwill. When the difference is negative, this is recognised directly in the Income Statement. Subsidiary financial statements are consolidated from the acquisition date until the date the controlling influence ceases. For acquisitions until 2009 inclusive, transaction expenses directly attributable to the acquisition were also included in cost. For acquisitions from 2010 onwards, transaction costs are recognised in the Income Statement.

Transactions to be eliminated on consolidation

Receivables from and liabilities to group companies, revenues or expenses and unrealised

gains or losses arising from group transactions, are fully eliminated when preparing the consolidated financial statements.

Foreign currency

Foreign currency transactions and balance sheet items

Foreign currency transactions are translated to the functional currency (SEK) at the rate of exchange ruling on the transaction date. Foreign currency monetary assets and liabilities are translated to the functional currency at the rates of exchange ruling at the reporting date. The exchange rate differences arising on translation are recognised in the Income Statement. The exceptions are when the transactions are hedges that satisfy the requirements of hedge accounting, when the loss/gain is recognised in other comprehensive income.

Exchange rate gains and losses relating to loans and cash and cash equivalents are recognised as financial revenue or expenses in the Income Statement. All other exchange rate gains and losses are recognised as other operating revenue or expenses in the Income Statement.

Financial statements of foreign operations

The assets and liabilities of foreign operations including goodwill and other consolidated surpluses and deficits are translated to Swedish krona at the rates of exchange ruling at the reporting date. The revenues and expenses of foreign operations are translated to Swedish krona at an average rate of exchange, which is an approximation of the rates of exchange ruling at each transaction date. Translation differences arising from the currency translation of foreign operations are recognised in other comprehensive income.

Revenues

When NOTE has a binding agreement with a customer, performance obligations and transaction price pursuant to this agreement are identified. An agreement that is binding is normally reached when a customer places an order that is confirmed by NOTE. Orders are often based on some form of master agreement, but these are non-binding in terms of quantities. Transaction prices are measured as the fair value of what will be received, and correspond to the amount received for sold goods after deducting for discounts, returns and VAT.

Sale of goods

NOTE's revenues are mainly sourced from the production of goods in the form of PCBAs, subassemblies or box build products. Products are manufactured according to customer specification, but NOTE participates in tailoring the manufacturing process. NOTE's performance obligation is to produce and deliver in accordance with the customer's order. Revenue from the sale of goods is recognised in profit or loss when the performance obligation is considered satisfied, which is when control over the goods transfers to the customer in accordance with the terms & conditions of delivery. Usually, a performance obligation is fulfilled at a single point in time. If there is significant uncertainty regarding payment, associated expenses or the risk of returns, and if NOTE retains a commitment in the ongoing management usually associated with ownership, no revenues are recognised.

Sales of services

Revenue for the sale of services occurs in the form of consulting services relating to prototyping, etc. Revenue from the sale of services is recognised over time providing that NOTE is entitled to compensation if a project is cancelled in advance. If there is no such right, revenue is recognised when the project has been completed, and the right to compensation is invoked.

Central government support

Central government support intended to cover expenses is allocated and recognised in profit or loss over the same period as the expenses the subsidies are intended to compensate for. Central government support for investments is recognised as a reduction of the carrying amount of the asset.

Leases

The group recognises rights of use and lease liabilities relating to all lease arrangements in its Balance Sheet, with certain exceptions. This model reflects the lessee's rights to use an asset for a specific period of time at the start of the lease, and its liability to pay for this right. In evaluating a lease arrangement, lease components are separated from those components not containing a lease, and the lease period is defined considering any applicable extension or cancellation options.

The lease liability is initially measured as the present value of lease payments that are not paid at the start state, normally discounted based on the group's incremental borrowing rate for leases. Lease payments included in the liability are fixed payments, variable payments affected by indexation or other adjustment factor, residual values and penalties for breach of contract.

Rights of use are initially measured at cost, which initially, is the same amount as defined on initial measurement of the lease liability, restated for any lease payments before and at the start state, less any discounts received, plus any initial direct expenses or restoration costs.

The group applies the practical expedient entitling it not to recognise short-term lease arrangements, and leases with low underlying asset values. For these arrangements, expenses are recognised on a straight-line basis. The interest cost for least liabilities is presented as a component of financial expenses separately from amortisation of rights of use. In the Cash Flow Statement, payments attributable to the lease liability are recognised in financing activities, while payments for short-term leases, leases of low value assets and variable lease payments not included in measurement of the lease liability are recognised in operating activities.

The group has decided to continue to recognise machinery and other plant financed with leases under the property, plant and equipment item.

For more information see note 12 Right-of-use assets on page 57 and note 13 Property, plant and equipment on page 58.

Financial income and expenses

Financial income and expenses comprise interest income on bank balances and receivables, interest expenses on loans and lease liabilities, exchange rate differences and un-realised and realised gains on financial investments and derivative instruments used in financing activities.

Interest income/ expenses are recognised according to the effective interest method. Effective interest is the interest that discounts estimated future payments received and made during the expected term of a financial instrument, at the financial asset's or liability's recognised net value. The calculation includes all expenditure paid or received from contract counterparties that is a part of effective interest, transaction expenses and all other premiums and discounts.

Financial instruments

Classification

The group classifies its financial assets and liabilities in the following categories: financial assets and liabilities measured at fair value, and assets and liabilities measured at amortised cost. The classification of investments in debt instruments depends on the group's business model for accounting financial assets and the contracted terms for the cash flows of these assets.

Financial assets and liabilities measured at fair value

For the group, any derivatives not included in hedge accounting, and the contingent portion of the purchase consideration of acquisitions is included in this category.

Assets measured at amortised cost

The group's assets in this class consist of trade receivables, cash and cash equivalents and the financial instruments recognised under other receivables.

Trade receivables and other financial receivables are initially recognised at transaction price. However, trade receivables with a significant financing component are recognised at fair value. The group holds trade receivables in order to collect contracted cash flows and accordingly, at subsequent reporting dates, measures them at amortised cost by applying the effective interest method less any credit allowances. Trade receivables and other receivables are included in current assets apart from items with due dates more than 12 months from the reporting period, which are classified as non-current assets.

Cash and cash equivalents consist of cash funds and immediately available balances with banks and corresponding institutions.

Liabilities recognised at amortised cost

The group's liabilities in this class consist of non-current and current interest-bearing liabilities, accounts payable—trade and those financial instruments recognised in other liabilities.

Interest-bearing liabilities, accounts payable—trade and other financial liabilities are initially recognised at fair value including transaction costs, and subsequently at amortised cost by applying the effective interest method.

NOTE uses debt factoring as part of its external finance. The whole factored trade receivable is recognised as a pledged asset in consolidated contingent liabilities. The factoring liability is recognised as a current interest-bearing liability on payment. Upon full payment from the customer, the amount of the accounts receivable–trade and the factoring liability are written down to zero, and NOTE's contingent liability ceases.

90% of the risk in accounts receivable—trade for NOTE's factoring finance in Estonia has been transferred to the lender. A change was conducted in 2020, which means that these receivables are not recognised as outstanding accounts receivable—trade financed with debt factoring.

Recognition and measurement

A financial asset or financial liability is recognised in the Balance Sheet when the company becomes party to the instrument's contracted terms. Accounts receivable–trade are recognised in the Balance Sheet when invoices are sent. Liabilities are recognised when the counterparty has delivered and there is a contracted obligation to pay, even if no invoice has been received. Accounts payable–trade are recognised when invoices are received.

A financial asset is de-recognised from the Balance Sheet when the contracted rights are realised, mature or the company relinquishes control over them. The same applies to part of a financial asset. A financial liability is de-recognised from the Balance Sheet when the contracted obligation is satisfied or otherwise extinguished. The same applies to part of a financial liability.

A financial asset and financial liability is offset and recognised at a net amount in the Balance Sheet only when there is a legal right to offset the amount and there is an intention to settle the items at a net amount or to simultaneously realise the asset and settle the liability.

Purchases and sales of financial assets are recognised on the transaction date, which is the date the company undertakes to purchase or sell the asset.

Impairment of financial assets

Assets recognised at amortised cost

The group judges the future expected credit losses associated with assets measured at

amortised cost. The group recognises a credit loss allowance for such expected credit losses at each reporting date. For trade receivables, the group applies the simplified approach to credit allowances, i.e. the allowance corresponds to the expected loss throughout the term of trade receivables. To measure expected credit losses, trade receivables have been grouped based on allocated credit risk characteristics and expected overdue days. The group uses forward-looking variables for expected credit losses. Expected credit losses are recognised in the Consolidated Income Statement under the cost of goods sold item. Extraordinary credit risks due to Covid-19 are recognised in the Consolidated Income Statement under the Other operating expenses item.

Hedge accounting

Currency exposure regarding future forecast flows is partly hedged through currency forwards. Currency forwards that hedge future flows are recognised in the Balance Sheet at fair value. Changes to fair value are recognised in other comprehensive income and are reclassified from equity to profit or loss in those periods when the hedged item affects profit or loss. When a forecast transaction is no longer expected to occur, the accumulated gain or loss recognised in other comprehensive income is immediately reclassified from equity to the Income Statement.

Property, plant and equipment

Property, plant and equipment are recognised in the group at cost less deductions for accumulated depreciation and potential impairment losses. The cost includes the purchase price and expenses directly attributable to bringing the asset into the location and condition for use in accordance with the purpose of its acquisition. The accounting principles for impairment losses are reported below.

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

The carrying amount of property, plant and equipment is de-recognised from the Balance Sheet on disposal or sale, or when no future economic rewards are expected from using or disposing of/selling the asset. Profits or losses arising upon disposal or sale of an asset comprise the difference between the sales price and the asset's carrying amount less direct selling expenses. Profits and losses are recognised as other operating revenue/ expenses.

Additional expenditure

Additional expenditure is added to cost only if it is likely that the future economic rewards associated with the asset will arise for the company, and the cost can be measured reliably. All other additional expenditure is recognised as a cost in the period it occurs. Additional expenditure is added to cost to the extent that the performance of the asset is improved in relation to the level applying when originally acquired. All other additional expenditure is recognised as a cost in the period it occurs. Whether expenditure relates to the exchange of identifiable components, or parts thereof, is decisive to evaluation of when additional expenditure is added to cost, whereupon such expenditure is capitalised. Even in those cases where new components are added, expenditure is added to cost. Potential carrying amounts not expensed on exchanged components, or parts of components, are retired and expensed at exchange. Repairs are expensed on an ongoing basis.

Depreciation principles

Depreciation is on a straight-line basis over the estimated useful lives of assets. Land is not depreciated. The group utilises component depreciation, which means that the components' estimated useful lives are the basis for depreciation.

Estimated useful lives:

Land improvements	20 years
Buildings, real estate used in business operations	see below
Leasehold improvements–permanent equipment, servicing facilities etc.
in buildings	5 years
Leasehold improvements–permanent installation, buildings	20 years
Permanent equipment, servicing facilities etc. in buildings	see below
Plant and machinery	5–10 years
Equipment, tools fixtures and fittings	3–5 years

Real estate used in business operations comprises a number of components with differing useful lives. The main division is buildings and land. However, buildings comprise several components, whose useful lives vary. The useful lives of these components are assessed to vary between 10 and 100 years.

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

Framework	100 years
Additions to framework, interior walls, etc.	20–40 years
Fixtures and fittings, heating, electricity, ventilation and sanitation, etc.	20–40 years
Exterior surfaces, frontage, external roofing, etc.	20–30 years
Interior surfaces, mechanical equipment, etc.	10–15 years

The depreciation methods applied and residual values and useful lives of assets are reevaluated at each year-end.

Intangible assets

Goodwill

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

Goodwill is recognised at cost less potential accumulated impairment losses. There is no amortisation of goodwill. Goodwill from a business combination is allocated to the groups of cash generating units that are expected to benefit from the synergies of the

business combination. NOTE allocates goodwill to the Western Europe and Rest of World business segments. Goodwill is subject to impairment tests at least yearly.

Customer relationships

Customer relationships have been identified on business combinations and are an intangible asset. Customer relationships are measured at fair value on acquisition, and then amortised on the straight-line basis over their expected useful life corresponding to the estimated time they will generate cash flows (see below).

Other intangible non-current assets

Other intangible non-current assets consist of capitalised expenditure for software, and trademarks etc. Other intangible assets acquired by the group are recognised at cost less accumulated amortisation (see below).

Expenses incurred for internally generated goodwill and internally generated trademarks and brands are recognised in the Income Statement when the expense occurs.

In 2014, the group commenced implementation of a new ERP system whose cost was covered by purchased consulting hours and time allocated to the project internally, which satisfies the criteria for capitalised expenditure.

Additional expenditure

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

Amortisation

Amortisation is recognised in the Income Statement on a straight-line basis over the estimated useful lives of intangible assets, providing such useful lives are not indefinite. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are:

$\rightarrow$ Goodwill

Goodwill	–
Customer relationships, trademarks, brands and similar rights	5 years
Capitalised expenditure on software	10 years
Capitalised expenditure for process development	3–5 years

Inventories

Inventories are recognised at the lower of cost and net realisable value. Net realisable value is the estimated sales price in operating activities less estimated expenditure for completion and achieving a sale.

Cost is calculated by applying the FIFO (first in first out) method and includes expenditure arising from the acquisition of inventory items and their transportation to their current location and condition. The cost of producing finished goods and work in progress includes a reasonable proportion of indirect expenses based on normal capacity utilisation.

The cost of finished and semi-finished goods produced by the company includes direct production expenses and a reasonable proportion of indirect production expenses. Valuations consider normal capacity utilisation.

Inventories are recognised net of deductions for individually judged risk of obsolescence.

Impairment

With the exception of inventories, deferred tax assets and financial assets, the carrying amounts of the group's assets are subject to impairment tests at each reporting date. If there are indicators of impairment, the asset's recoverable value is calculated. Assets exempted by the above are subject to impairment tests in accordance with the relevant standards.

An impairment loss is recognised when an asset or cash-generating unit's carrying amount exceeds its recoverable value. An impairment loss is charged to the Income Statement. Impairment losses on assets attributable to cash-generating units (group of units) are primarily assigned to goodwill. A proportional impairment loss of the unit's other constituent assets (group of units) is effected subsequently.

Measuring recoverable values

Recoverable value is the greater of fair value less selling expenses and value in use.

Reversal of impairment losses

Impairment of goodwill is not reversed. Impairment losses on other assets are reversed if changes to the assumptions forming the basis for calculating the recoverable value have occurred. An impairment loss is only reversed to the extend the asset's carrying amount after reversal does not exceed the carrying amount the asset would have had if no impairment loss had been effected, considering the depreciation or amortisation that would then have been effected.

Share capital

Dividends

Dividends are recognised as a liability after the AGM has approved the dividends.

Employee benefits

Defined-contribution pension plans

Obligations regarding expenditure on defined-contribution plans are recognised as an expense in the Income Statement when they occur.

A defined contribution pension plan is a pension plan by which NOTE pays fixed charges to a separate legal entity. NOTE does not have any legal or informal obligation to pay further contributions if this legal entity does not have sufficient assets to pay all benefits to employees associated with employees' service during current or previous periods.

Termination benefits

A cost for remuneration coincident with the notices of termination to staff is recognised only if the company has demonstrably committed to terminate employment before the normal time, without the realistic possibility of withdrawing its decision, by a formal detailed plan. When remuneration is disbursed as an offering to encourage voluntary redundancies, a cost is recognised if it is probable that the offer will be accepted and that the number of employees who will accept the offer can be reliably estimated.

Provisions

Provisions are recognised in the Balance Sheet when the group has an obligation, and it is likely that an outflow of economic resources will be necessary to fulfil the obligation and the amount can be reliably measured. Provisions are measured at the present value of the amounts expected to be required to fulfil the obligation.

Restructuring programme and other non-recurring expenses

A restructuring programme provision is recognised when the group has determined an executable and formal restructuring programme plan, and the restructuring programme has either begun or been publicly disclosed.

Non-recurring expenses mean expenses of significant amounts, and simultaneously, of such a nature that they can be considered as non-operating and not recurrent each year. For example, non-recurring expenses are impairment of assets in disputes and expenses relating to changing CEOs.

Tax

Income tax comprises current tax and deferred tax. Income tax is recognised in the Income Statement apart from when the underlying transaction is recognised directly in other comprehensive income or directly against equity, whereupon the associated tax effect is recognised in other comprehensive income or directly in equity.

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

Deferred tax is calculated according to the balance sheet method, proceeding from temporary differences between carrying amounts and taxable values of assets and liabilities. The following temporary differences are not considered; for temporary differences arising in the first-time recognition of goodwill, the first-time recognition of assets and liabilities that are not business combinations, and that at the time of the transaction neither influence reported nor taxable profits. Nor are temporary differences attributable to participations in subsidiaries not expected to be reversed within the foreseeable future considered. The measurement of deferred tax is based on how the carrying amounts of assets or liabilities are expected to be realised or settled. Deferred tax is calculated by applying the tax rates and tax regulations that are enacted or substantively enacted as of the reporting date.

Deferred tax assets on taxable temporary differences and loss carry-forwards are only recognised to the extent it is likely that they will be utilised. The value of deferred tax assets is reduced when it is no longer considered likely that they can be utilised.

Earnings per share

The measurement of earnings per share is based on the consolidated profit for the year and on the weighted average number of shares outstanding in the year. When measuring earnings per share after dilution, the average number of shares is adjusted to take into account effects of any diluting ordinary shares, which, in the relevant reporting period, derive from share warrants issued to senior management.

Contingent liabilities

A contingent liability is recognised when there is a possible commitment resulting from events that have occurred and whose incidence is only confirmed by one or more uncertain future events, or when there is a commitment that is not recognised as a liability or provision because it is not likely that an outflow of resources will be necessary or the size of the commitment can be reliably measured.

NOTE 2 Revenue from customer segments

All group sales are derived from EMS operations, i.e. contract manufacture services for electronics products. Essentially, revenue is recognised when control over the goods has transferred, which occurs on shipment from the warehouse. Generally speaking, NOTE has a diversified customer base where no single customer (group) represents more than 6 % (6%) of total group sales

	Western Europe		Rest of World		Intra-group		Total
External net revenue	2020	2019	2020	2019	2020	2019	2020	2019
Industrial	802,093	670,251	421,613	418,310	–	–	1,223,706	1,088,561
Communication	90,540	114,170	154,056	195,915	–	–	244,596	310,085
Medtech	262,664	181,155	5,076	718	–	–	267,740	181,873
Defence	86,361	133,750	0	0	–	–	86,361	133,750
High end consumer	11,795	7,247	39,594	38,926	–	–	51,389	46,173
Total	1,253,453	1,106,573	620,339	653,869	–	–	1,873,792	1,760,442

Regarding future sales, the group order backlog consists of a combination of fixed orders and customer forecasts/material authorizations. The order backlog amounts normally to approximately six months sales.

NOTE 3 Operating segments

Significant key figures for NOTE's operating segments are in the following table. Western Europe consist of units located in geographical regions with high industrial activity and innovation standards in Sweden, Finland and the UK. These units provide advanced production technology services in close collaboration with customers, such as component selection, developing test equipment, prototyping and batch production. Rest of World, located in Estonia and China, are close to large end markets and in regions with strong traditions of production and high competence levels. In addition to development-oriented services, these units also offer cost-efficient volume production of PCBAs and box build products. Intra-Group are group-wide business support functions in the parent company and for the sourcing operations in NOTE Components. The segment also includes group eliminations.

		Western Europe	Rest of World		Intra-group		Total
	2020	2019	2020	2019	2020	2019	2020	2019
External net revenue	1,253,453	1,106,573	620,339	653,869	–	–	1,873,792	1,760,442
Internal net revenue	3,621	4,462	31,002	65,129	–34,623	–69,591	–	–
Net revenue	1,257,074	1,111,035	651,341	718,998	–34,623	-69,591	1,873,792	1,760,442
Operating profit	121,152	101,684	36,251	29,166	–8,265	6,492	149,138	124,358
Financial income and expenses–net							–6,619	–8,367
Profit before tax							142,519	115,991

Significant assets by segment
Right-of-use assets –rented properties	44,048	48,280	2,079	4,864	9,024	778	55,151	53,922
Property, plant and equipment	102,802	54,639	33,339	40,212	590	795	136,731	95,646
Inventories	232,552	237,525	121,542	132,532	–	–	354,094	370,057
External accounts receivable–trade	245,644	237,878	92,083	141,955	557	388	338,284	380,221
Total assets	874,680	842,778	361,243	443,345	–126,683	–157,035	1,109,240	1,129,088

OTHER INFORMATION
Investments in property, plant and equipment	66,654	27,080	2,861	9,304	0	645	69,515	37,029
Depreciation and amortisation	–33,914	–27,917	–11,306	–12,815	–4,083	–3,505	–49,302	–44,237
Average number of employees	523	468	559	585	19	17	1,101	1,070

NOTE's registered office is in Sweden. Revenues from external customers in Sweden were SEK 921.7 (722.6) million, from the rest of Europe SEK 663.7 (727.1) million and from the rest of the world SEK 288.4 (310.6) million. Non-current assets in Sweden (excluding financial) were SEK 171.8 (123.1) million, in Estonia SEK 30.0 (35.0) million, the UK SEK 67.3 (72.0) million and in other countries SEK 49.2 (56.0) million as of the reporting date. Deferred tax assets in Sweden were SEK 0.7 (–1.9) million and other countries SEK 5.1 (3.0) million as of the reporting date.

NOTE 4 Other operating revenue
	2020	2019
Exchange gains on trade receivables/liabilities	41,295	22,810
Reversed contingent consideration, acquisition	5,712	–
Other	372	1,580
Total	47,379	24,390

NOTE 6 Operating expenses by type

	2020	2019
Cost of goods and materials	–1,199,912	–1,122,347
Personnel expenses	–369,782	–346,453
Depreciation and amortisation	–49,302	–44,237
Other	–153,037	–147,437
Total	–1,772,033	–1,660,474

NOTE 7 Auditors' fees and reimbursement

	PwC		Other Auditors
	2020	2019	2020	2019
Auditing assignment	–1,229	–1,029	–622	-619
Tax consultancy	–	–	–70	–12
Other services	–	–	–	–60

Auditing of the consolidated accounts was conducted through the whole year. No separate fees were payable for reviewing interim reports.

NOTE 5 Other operating expenses

	2020	2019
Exchange losses on trade receivables/liabilities		–29,320 –23,955
Extraordinary credit risk	–8,615	–
Other	–43	–
Total		–37,978 –23,955

NOTE 8 Employees, personnel expenses and remuneration to senior management

Expenses for employee benefits	2020	2019
Salaries and benefits	–283,414	–267,167
Pension expenses, defined-benefit plans	–	–
Pension expenses, defined-contribution plans	–19,275	–16,688
Social security contributions	–67,093	–62,598
Total	–369,782	–346,453

The group received central government support in the year, mainly related to Covid-19, which reduced its personnel expenses. Essentially, this support was received in the UK operation. Support received amounts to SEK 10.9 million, of which SEK 9.4 million reduced expenses for salaries and benefits and where social security contributions and pension expenses reduced by SEK 1.5 million,. For more information on central government support, see note 26 Central government support on page 62. Additionally, some reduction of social security contributions occurred in Sweden for a period, which meant that the cost of social security contributions reduced by a further SEK 2.4 million.

Average number of employees		2020 Of which men		2019 Of which men
Sweden	362	66%	305	60%
UK	119	52%	123	19%
Finland	58	46%	54	54%
Estonia	268	30%	268	28%
China	294	41%	320	46%
Group total	1,101	48%	1,070	43%

	2020	2019
Division between sexes in group management	Share of women	Share of women
Board members, Presidents	30%	29%
Other senior management, 3 (3) people	0%	0%

Alecta

The commitments for retirement and survivors' pensions for salaried employees in Sweden are largely insured through a policy with Alecta. Statement UFR10 from The Swedish Financial Reporting Board, Classification of ITP plans financed by insurance in Alecta, defines this as a defined-benefit multi-employer plan. For the financial year 2020, the company did not have access to sufficient information enabling the plan to be reported as a definedbenefit plan. Thus, ITP (Supplementary Pensions for Salaried Employees) plans insured through Alecta are reported as defined-contribution plans.

The expenditure for pension policies with Alecta in the year were SEK 2.6 (2.3) million. The charges for next year are estimated at some SEK 2.9 million. The group's share of total expenditure to the plan is negligible. Alecta's surplus can be divided between policyholders and/or beneficiaries. At year-end 2020, Alecta's surplus, expressed as a collective consolidation ratio was 148% (148%). The collective consolidation ratio comprises the market value of Alecta's assets as a percentage of insurance commitments calculated in accordance with Alecta's actuarial calculation assumptions, which are not consistent with IAS 19.

Defined-contribution pension plans

The group has defined-contribution pension plans in Sweden for white-collar and blue-collar staff, which the companies fund fully. There are defined-contribution plans in foreign countries, which are partly paid by subsidiaries and partly covered through employees' contributions. Payments to these plans is on an ongoing basis subject to the regulations of each plan.

	2020	2019
Expenses for defined-contribution plans*	–19,275	–16,688

*Includes 2,647 (2,305) for an ITP plan insured with Alecta.

		Basic salary,		Performance
Senior management's remuneration		Directors' fees		related pay		Other benefits		Pension expenses			Total
Remuneration and other benefits		2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
Chairman of the Board:	Johan Hagberg	–275	–303	–	–	–	–	–	–	–275	–303
Board members:	Kjell-Åke Andersson, left April 2020	–47	–141	–	–	–	–	–	–	–47	–141
	Anna Belfrage	–205	–184	–	–	–	–	–	–	–205	–184
	Bahare Hedenstierna	–150	–137	–	–	–	–	–	–	–150	–137
	Kaj Falkenlund, left April 2020	–47	–131	–	–	–	–	–	–	–47	–131
	Claes Mellgren	–140	–131	–	–	–	–	–	–	–140	–131
	Charlotte Stjerngren	–175	–154	–	–	–	–	–	–	–175	–154
CEO	Johannes Lind-Widestam	–2,810	–2,457	–1,586	–885	–135	–44	–887	–769	–5,418	–4,155
Other senior management (3 (3) people)		–4,298	–3,809	–1,156	–656	–283	–260	–1,142	–1,121	–6,879	–5,846
Total		–8,147	–7,447	–2,742	–1,541	–418	–304	–2,029	–1,890	–13,336 –11,182

Comments on the table:

Salary, benefits and Directors' fees are remuneration charged to consolidated profit for 2020. Directors' fees expensed in 2020 consist of fees for January-April approved by the AGM 2019, and fees for May-December approved by the AGM 2020. Performance related pay refers to expensed bonus for the financial year, which is paid out in 2021. There was a profitability-based, performance-related remuneration programme for the CEO, senior managers, subsidiary Presidents and other key staff, during the financial year 2020. This programme had 19 (18) participants. In 2020, an estimated outcome of SEK 4.7 (2.6) million excluding social security contributions, was charged to the group's profit, of which SEK 2.7 (1.5) million related to senior managers which was 75% (47%) of the possible maximum. Other benefits mostly refer to car benefits. The Report of the Directors states the details of the remuneration guidelines for senior managers.

Share warrants for senior managers and other key individuals

As of 31 December 2020, NOTE has two outstanding incentive programmes of share warrants issued to senior managers and other key individuals. The dilution effect on full exercise is 611,000, or some 2% of the number of outstanding shares. A three-year incentive programme of share warrants (2017/2020), which was initiated in 2017, expired in the year. All share warrants were exercised, which meant that 500,000 new shares were issued under the terms and conditions of the programme, raising SEK 11.7 million for the company.

		2017/2020		2018/2021		2019/2022	Total
Share warrant programmes (no. of warrants in 000)		31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
CEO: Johannes Lind-Widestam	–	100	65	65	400	400	465	565
Other senior management	–	300	65	130	–	–	65	430
Others	–	100	81	16	–	–	81	116
Total	–	500	211	211	400	400	611	1 111

Share warrant programmes

Incentive programme 2017/2020

NOTE's AGM in 2017 resolved to introduce an incentive programme to group management and key individuals based on the issue of a maximum of 600,000 share warrants. This programme was fully subscribed and granting was according to the principles adopted by the Meeting. These share warrants had a term of just over three years, until May 2020. The options were transferred on market terms, and the exercise price was SEK 23.30. Each option gave the holder the right to subscribe for one new NOTE share. A repurchase was executed in the programme in 2019, whereupon the number of outstanding options was 500,000, which meant 500,000 shares on full exercise. The programme expired in May 2020, and 500,000 shares were issued as a result of the exercise of the share warrants, which meant that the company raised SEK 11.7 million.

NOTE 8 Cont.

Incentive programme 2018/2021

NOTE's AGM in 2018 resolved to introduce an incentive programme based on share warrants for group management and other key individuals. A total of 380,000 share warrants have been granted, according to the principles adopted by the Meeting. These share warrants have a term of just over three years, until May 2021. The options were transferred on market terms, and the exercise price is SEK 29.00. Each option gives the holder the right to subscribe for one NOTE share. Some repurchases were executed in the programme in 2019, whereupon the number of outstanding options was 211,000, which means 211,000 shares on full exercise.

Incentive programme 2019/2022

NOTE's EGM in January 2019 resolved to introduce an incentive programme for CEO Johannes Lind-Widestam based on the issue of a maximum of 400,000 share warrants. The programme was fully subscribed. These share warrants have a term of just over three years, until March 2022. The options were transferred on market terms, and the exercise price is SEK 29.20. Each option gives the holder the right to subscribe for one new NOTE share, which means 400,000 shares on full exercise.

NOTE 10 Tax

Reported in Income Statement	2020	2019
Current tax expense (–)/tax revenue (+)
Tax expense for the period	–25,799	–21,015
Adjustment of tax attributable to previous year	610	499
Total current tax	–25,189	–20,516

Deferred tax expense (–)/tax revenue (+)
Deferred tax relating to temporary differences/
appropriations	–1,670	–3,203
Total deferred tax	–1,670	–3,203
Total reported tax in group	–26,859	–23,719

Reconciliation of effective tax % 2020 % 2019 Profit before tax 142,519 115,991 Tax at applicable rate for parent company –21.4% –30,499 –21.4% –24,822 Effect of other tax rates for foreign subsidiaries 2.2% 3,097 2.4% 2,836 Non-deductible expenses –1.7% –2,528 –2.0% –2,322 Non-taxable revenue 0.8% 1,173 0.6% 716 Un-reported tax revenue on loss for the year 0.0% –3 –0.4% –488 Previously unreported tax loss carry-forwards used to reduce the current tax expense 0.8% 1,139 - - Tax attributable to previous year 0.4% 610 0.4% 499 Other 0.1% 152 –0.1% –138 Total reported tax in group –18.8% –26,859 –20.4% –23,719

Deferred tax assets and loss carry-forwards

Deferred tax assets are temporary differences relating to the measurement of fixed assets and provisions, which will be allocated over most years.

Deferred tax assets are recognised in deductible loss carry-forwards to the extent it is likely that they can be used against future taxable profits. Deductible temporary differences and tax loss carry-forwards for which deferred tax assets have not been reported in the Income Statement and Balance Sheet amount to SEK 4.6 (5.1) million. None of the loss carry-forwards are subject to time limitation.

Provisions for deferred tax	31 Dec 2020	31 Dec 2019
Carrying amount at beginning of period	11,704	7,724
Amount provisioned in period	8,397	4,583
Amounts utilised in period	–5,141	–603
Carrying amount at the end of period	14,960	11,704

		Deferred tax asset		Deferred tax liability		Net
Recognised in Balance Sheet	31 Dec 2020	31 Dec 2019	31 Dec 2020	31 Dec 2019	31 Dec 2020	31 Dec 2019
Intangible assets	–	–1,799	3,250	2,496	–3,250	–4,295
Property, plant and equipment and right-of-use assets –rented properties	142	135	1,142	1,179	–1,000	–1,044
Derivatives measured at fair value	88	14	–	–	88	14
Provisions	5,518	2,782	957	1,248	4,561	1,534
Untaxed reserves	–	–	9,611	6,781	–9,611	–6,781
Tax receivables/liabilities	5,748	1,132	14,960	11,704	–9,212	–10,572

Change in deferred tax in temporary differences and loss carry-forwards

	Balance as of 1 Jan 2019	Reported in Income Statement	Reported against Comprehen sive Income	Reported directly in equity	Balance as of 31 Dec 2019	Balance as of 1 Jan 2020	Reported in Income Statement	Reported against Comprehen– sive Income	Reported directly in equity	Balance as of 31 Dec 2020
Intangible assets	–4,764	638	–169	–	–4,295	–4,295	854	191	–	–3,250
Property, plant and equipment
and right-of-use assets –rented
properties	–1,159	47	68	–	–1,044	–1,044	44	–	–	–1,000
Derivatives measured at fair value	35	–14	–7	–	14	14	61	13	–	88
Provisions	2,561	–837	–190	–	1,534	1,534	3,027	–	–	4,561
Untaxed reserves	–2,501	–4,347	67	–	–6,781	–6,781	–2,830	–	–	–9,611
Other	–	1,310	–1,310	–	–	–	–2,826	2,826	–	–
Total	–5,828	–3,203	–1,541	–	–10,572	–10,572	–1,670	3,030	–	–9,212

NOTE 9 Net financial income/expense

Financial income	2020	2019
Interest income	313	497
Exchange rate gains	9,800	7,393
Total	10,113	7,890
Financial expenses
Interest costs on financial liabilities measured at amortised cost	–2,501	–4,032
Interest costs of property, plant and equipment financed with leases	–1,113	–623
Interest costs of liabilities for right-of-use assets –rented properties	–1,338	–1,553
Bank charges	–3,309	–3,219
Exchange rate losses	–8,471	–6,830
Total	–16,732 –16,257
Net financial income/expense	–6,619	–8,367

NOTE 11 Intangible assets

	Goodwill,	Customer	Capitalised expenditure	Trademarks and
	purchased	relations	for software	brands etc	Total
Cumulative cost
Opening balance, 1 Jan 2019	108,720	15,921	20,805	2,066	147,512
Investments	–	–	3,097	–	3,097
Reclassification and exchange rate effects	3,170	1,216	–25	11	4,372
Sales and retirements	–	–	–	–	–
Closing balance, 31 Dec 2019	111,890	17,137	23,877	2,077	154,981
Opening balance, 1 Jan 2020	111,890	17,137	23,877	2,077	154,981
Investments	–	–	1,025	–	1,025
Reclassification and exchange rate effects	–4,154	–1,581	–59	–28	–5,822
Sales and retirements	–	–	–1,521	–1,330	–2,851
Closing balance, 31 Dec 2020	107,736	15,556	23,322	719	147,333
Accumulated amortisation and impairment
Opening balance, 1 Jan 2019	–2,030	–531	–8,026	–1,947	–12,534
Reclassification and exchange rate effects	–	–78	–	–8	–86
Amortisation for the year	–	–3,390	–2,329	–56	–5,775
Sales and retirements	–	–	–	–	–
Closing balance, 31 Dec 2019	–2,030	–3,999	–10,355	–2,011	–18,395
Opening balance, 1 Jan 2020	–2,030	–3,999	–10,355	–2,011	–18,395
Reclassification and exchange rate effects	–	573	13	27	613
Amortisation for the year	–	–3,315	–2,769	–21	–6,105
Sales and retirements	–	–	1,521	1,330	2,851
Closing balance, 31 Dec 2020	–2,030	–6,741	–11,590	–675	–21,036
Carrying amounts
As of 1 Jan 2019	106,690	15,390	12,779	119	134,978
As of 31 Dec 2019	109,860	13,138	13,522	66	136,586

As of 1 Jan 2020	109,860	13,138	13,522	66	136,586
As of 31 Dec 2020	105,706	8,815	11,732	44	126,297

Amortisation are included in the following lines of the
Income Statement	2020	2019
Cost of goods sold and services	–6,080	–5,609
Selling expenses	–25	–166
Total	–6,105	–5,775

Impairment testing of goodwill

NOTE allocates and tests goodwill in the Western Europe and Rest of World operating segments. The following table states goodwill values by operating segment.

	31 Dec 2020	31 Dec 2019
Western Europe	93,532	97,686
Rest of World	12,174	12,174
Total	105,706	109,860

Impairment tests are based on measurement of value in use, a value based on cash flow forecasts totalling 3 (3) years. Cash flow for the first year is based on budget set by the Board of Directors. The following two years are based on the company's best judgement. Cash flow beyond the forecast period is extrapolated using the assessed growth rate as follows.

Impairment testing is conducted in the two operating segments– Western Europe and Rest of World. As operations are monitored otherwise, goodwill is monitored and impairment is tested at operating segment level.

Testing is based on estimated present values of future cash flows for each constituent legal entity of the operating segment. The present value of these aggregated cash flows are then compared with the goodwill and capital employed that is allocated to the operating segment.

The present value of forecast cash flow is calculated by applying a discount rate after tax based on risk-free interest and the risk judged to be associated with the operation. Against the background of NOTE mainly having shared borrowings, and that the group's entities operate on the same markets, the same discount rate after tax of 8.3% (7.6%) has been applied for both operating segments. The discount rate before tax amounts to 10.5% (9.6%).

The recoverable values for both Western Europe and Rest of World exceed carrying amounts.

Important variables Method for defining values Growth in the forecast period Market growth has been estimated at 5 (5)% during the forecast period for all units. Market growth is based on historical experience, estimates in sector research and other externally available information. Growth after the forecast period Growth after the forecast period is estimated at 2.0 (2.0)%. Cost of materials The cost of electronic components is expected to reduce during the forecast period, partly because of continued rationalisation of the production process and partly through increased purchasing volumes and improved co-ordination or purchasing processes. Personnel costs Payroll expenses have been estimated using collective agreements and considering historical pay increases. In addition, a growing share of production being conducted in the group's plants in low-cost countries has also been considered.

Sensitivity analysis, goodwill impairment testing

With the above calculation assumptions and considering the growth and profitability potential estimated by NOTE in its business model, there is no impairment of goodwill values at the reporting date.

If there is no market growth during or after the forecast period, this would not cause any impairment. An increase of the discount rate after tax by one percentage point, from 8.3% to 9.3%, would not imply any impairment.

Value in use reduces but still significantly exceeds the carrying amount of both Western Europe and Rest of World.

NOTE 12 Right-of-use assets

	Rented properties
Cumulative cost
Opening balance, 1 Jan 2019	65,382
Investments	4,450
Sales and retirements	–
Reclassification and exchange rate effects	–69
Closing balance, 31 Dec 2019	69,763

Closing balance, 31 Dec 2020	85,392
Reclassification and exchange rate effects	–2,193
Sales and retirements	–1,816
Investments	19,638
Opening balance, 1 Jan 2020	69,763

Depreciation and impairment

–15,841
25
–
–15,866
–

Closing balance, 31 Dec 2020	–30,241
Reclassification and exchange rate effects	893
Sales and retirements	1,816
Depreciation for the year	–17,109
Opening balance, 1 Jan 2020	–15,841

Carrying amounts

As of 1 Jan 2019	65,382
As of 31 Dec 2019	53,922

As of 1 Jan 2020	53,922
As of 31 Dec 2020	55,151

Lease liabilities attributable to right-of-use assets –rented properties	31 Dec 2020	31 Dec 2019
Non-current lease liabilities attributable to right-of-use as sets –rented properties	39,876	38,114
Current lease liabilities attributable to right-of-use assets –rented properties	16,763	16,093

For more information on the maturity analysis of lease liabilities, see note 24 Financial risks and finance policy on page 61, and for more information on the cash flow effect related to liabilities attributable to right-of-use assets –rented properties, see note 27 Cash Flow Statement on page 62.

The following amounts related to right-of-use assets are recognised in the Income Statement:

Amortisation are included in the following lines of the

Income Statement	2020	2019
Cost of goods sold and services	–15,922	–14,698
Administrative expenses	–529	–520
Selling expenses	–658	–648
Total	–17,109	–15,866

	2020	2019
Interest costs (included in financial costs)	–1,338	–1,553
Expenditure related to short-term leases	–	–594
Expenditure related to leases were the underlying asset is of low value that are not short-term leases (included in cost of goods sold, administrative expenses and selling
expenses).	–4,794	–5,130

The group has decided to continue to recognise machinery and other plant financed with leases under the property, plant and equipment item, see note 13 Property, plant and equipment on page 58. On 31 December 2020, their value was SEK 78,078 (38,061).

NOTE 13 Property, plant and equipment

	Buildings and land (real estate used in business operations)	Cost incurred on other party's property	Machinery and other plant	Equipment, tools, fixtures and fittings	Total
Cumulative cost
Opening balance, 1 Jan 2019	24,836	12,736	215,501	42,685	295,758
Investments	356	2,171	31,448	3,054	37,029
Sales and retirements	–	–	–15,351	–155	–15,506
Reclassification and exchange rate effects	354	362	2,182	1,814	4,712
Closing balance, 31 Dec 2019	25,546	15,269	233,780	47,398	321,993
Opening balance, 1 Jan 2020	25,546	15,269	233,780	47,398	321,993
Investments	312	1,872	61,841	5,490	69,515
Sales and retirements	–	–	–10,968	–411	–11,379
Reclassification and exchange rate effects	–932	–867	–4,993	–2,681	–9,473
Closing balance, 31 Dec 2020	24,926	16,274	279,660	49,796	370,656
Depreciation and impairment
Opening balance, 1 Jan 2019	–11,593	–8,876	–160,684	–34,705	–215,858
Depreciation for the year	–481	–1,210	–18,025	–2,880	–22,596
Sales and retirements	–	–	15,335	126	15,461
Reclassification and exchange rate effects	–216	–344	–1,484	–1,310	–3,354
Closing balance, 31 Dec 2019	–12,290	–10,430	–164,858	–38,769	–226,347
Opening balance, 1 Jan 2020	–12,290	–10,430	–164,858	–38,769	–226,347
Depreciation for the year	–786	–1,401	–20,544	–3,357	–26,088
Sales and retirements	–	–	10,968	411	11,379
Reclassification and exchange rate effects	653	696	3,097	2,685	7,131
Closing balance, 31 Dec 2020	–12,423	–11,135	–171,337	–39,030	–233,925
Carrying amounts
As of 1 Jan 2019	13,243	3,860	54,817	7,980	79,900
As of 31 Dec 2019	13,256	4,839	68,922	8,629	95,646
As of 1 Jan 2020	13,256	4,839	68,922	8,629	95,646
As of 31 Dec 2020	12,503	5,139	108,323	10,766	136,731

Collateral

As of 31 December 2020, property with a carrying amount of 12,503 (13,256) was pledged as collateral for bank borrowings. As of 31 December 2020, there is ownership reservation on machinery, with a carrying amount of – (–). For leased production equipment, the lessee retains the right to the leased asset.

Property, plant and equipment financed with leases

In addition to the right-of-use assets accounted in note 12 Right-of-use assets on page 57, leased production equipment is also included in the Machinery and other plant category in the table of Property, plant and equipment. Only production equipment with remaining lease liability is recognised as leased production equipment.

Leased production equipment via several different lease

contracts*	2020	2019
Opening balance	52,646	57,549
Investments and exchange rate effects	50,364	19,576
Transfer to right of ownership	–6,629	–24,479
Accumulated depreciation and exchange rate effects	–24,190	–38,104
Transfer to right of ownership	4,721	23,519
Total	78,078	38,061

Liabilities attributable to property, plant and equipment
financed with leases	31 Dec 2020	31 Dec 2019
Non-current liabilities attributable to property, plant and equipment financed with leases	55,468	20,800
Current liabilities attributable to property, plant and equip ment financed with leases	16,070	9,627

For more information on the maturity analysis of liabilities attributable to property, plant and equipment financed with leases, see note 24 Financial risks and finance policy on page 61, and for more information on the cash flow effect associated with liabilities attributable to property, plant and equipment financed with leases, see note 27 Cash Flow Statement on page 62.

Depreciation is included in the following Income

Statement lines	2020	2019
Cost of goods sold and services	–25,627	–22,250
Administrative expenses	–287	–247
Selling expenses	–174	–99
Total	–26,088	–22,596

Of which depreciation and impairment of property, plant and equipment financed with leases amounts to, and is included in, the following lines of the Income Statement:

	2020	2019
Cost of goods sold and services	–11,420	–9,090
Total	–11,420	–9,090

The following amounts related to property, plant and equipment financed with leases are also recognised in the Income Statement:

	2020	2019
Interest costs (included in financial costs)	–1,113	–623

NOTE 14 Long-term receivables and other receivables

Long-term receivables	31 Dec 2020	31 Dec 2019
Other long-term receivables	634	674
Total	634	674
Other receivables that are current asset
VAT	789	3,986
Other	2,038	3,117
Total	2,827	7,103

NOTE 15 Inventories

	31 Dec 2020	31 Dec 2019
Raw materials and consumables	281,230	249,063
Products in process	52,523	65,017
Finished goods and goods for re-sale	62,836	76,639
Obsolescence provision	–42,495	–20,662
Total	354,094	370,057

The expensed inventories for the year are stated in Note 6, Operating expenses by type, on page 53.

NOTE 16 Prepaid expenses and accrued income

	2020-12-31	2019-12-31
Accrued income	10,850	4,589
Prepaid services	1,886	795
Prepaid rent	559	0
Prepaid licenses	1,925	2,585
Prepaid insurance	595	686
Prepaid lease payments	342	491
Other prepaid expenses	984	267
Total	17,141	9,413

NOTE 17 Earnings per share

	Before dilution		After dilution
Earnings per share	2020	2019	2020	2019
Earnings per share, SEK	4,11	3,31	4,05	3,30

The calculation of earnings per share for 2020 is based on profit for the year of SEK 115,660 (92,272) and a weighted number of outstanding shares in 2020 of 28,372,600 (27,872,600) before dilution. After dilution effects, the weighted average number of outstanding shares is 28,547,958 (27,972,688).

Earnings per share after dilution

As of 31 December 2020, NOTE had issued share warrants on 611,000 (1,111,000) shares.

NOTE 18 Equity

	Share class A
No. of shares (thousands)	31 Dec 2020	31 Dec 2019
As of 1 January	27,873	27,873
New share issue	500	–
As of 31 December	28,373	27,873

As of 31 December 2020 registered share capital comprised 28,372,600 shares with a quotient value of SEK 0.52 each. The AGM 2020 resolved to cancel the 1 million treasury shares purchased at the end of 2018. A new share issue of 500,000 shares linked to the share warrant programme that expired in May 2020 was also conducted in 2020. Accordingly, the total number of outstanding shares after the repurchase was 28,372,600. There were 611,000 (1,111,000) outstanding share warrants as of 31 December 2020. There were no other instruments with potential dilutive effect as of 31 December 2020. Holders of shares are entitled to dividends, and shareholdings entitle holders to votes at the AGM, at one vote per share.

Other paid-up capital

Equity that is contributed by the owners. This includes a portion of share premium reserves transferred to the statutory reserve as a 31 December 2005, a premium of SEK 4 per share in the rights issue of 2010, less issue expenses and payment for warrants issued in 2017-2019.

Reserves

Translation reserve	31 Dec 2020	31 Dec 2019
Opening translation reserve	17,724	8,207
Translation differences for the year	–24,880	9,517
Closing translation reserve	–7,156	17,724

The translation reserve includes all exchange rate differences arising from translating financial statements from foreign operations that prepared their financial statements in currencies other than the currency the consolidated financial statements are presented in. The parent company and group present their financial statements in Swedish kronor. The translation reserve also includes the effect of exchange rate differences on long-term internal loans that are equivalent to equity in subsidiaries.

Hedging reserve	31 Dec 2020	31 Dec 2019
Opening hedging reserve	–	16
Forecast cash flow hedges for the year	–45	–16
Closing hedging reserve	–45	–

The hedging reserve includes the cash flow hedges whose effectiveness is partly tested in accordance with IFRS 9 Financial instruments and partly relates to the forecast flows that have not yet affected the Consolidated Income Statement and Consolidated Balance Sheet.

Retained profit including profit for the period

Retained profits including profit for the period include accrued profits of the parent company and its subsidiaries. Previous provisions to statutory reserves, excluding transfers to share premium reserve are included in retained profit including profit for the year.

A repurchase of treasury shares was executed in 2018, with 1 million shares acquired. The repurchase was charged to retained profits.

Capital management

The Board of Directors and management of NOTE have set the following financial targets:

Growth target

NOTE will increase its market share organically and through acquisitions. The organic growth target is a minimum of 10% yearly.

Profitability target

Capital structure target

The minimum equity ratio should be 30%. At year-end, the equity to assets ratio was 51.2 (41.2)%.

Dividend policy

Each year, the Board of Directors will judge the level of share dividend that it considers optimal for the year. This may be distributed to shareholders in the form of dividends and/ or repurchase of shares. First and foremost, future dividend will be adapted to NOTE's investment need and financial position.

NOTE 19 Interest-bearing liabilities

Non-current liabilities	31 Dec 2020	31 Dec 2019
Lease liabilities attributable to property, plant and equipment	55,468	20,800
Lease liabilities attributable to right-of-use assets –rented properties	39,876	38,114
Total	95,344	58,914
Current liabilities
Factoring	24,840	181,068
Short-term portion of lease liabilities attributable to property, plant and equipment	16,070	9,627
Short-term portion of lease liabilities attributable to right-of use assets –rented properties	16,763	16,093
Total	57,673	206,788

Pledged assets

14,695 (15,275) of collateral for bank loans, finance lease liabilities and overdraft facilities is pledged in the company's land and buildings (see also Note 13) and 212,750 (212,965) in operations. Collateral for factoring is issued at an amount of 274,021 (223,990) in pledged accounts receivable–trade.

90% of the risk in accounts receivable—trade for NOTE's factoring finance in Estonia has been transferred to the lender. A change was conducted in 2020, which means that these receivables are no longer recognised as outstanding accounts receivable—trade financed with debt factoring. In the previous year, this item amounted to 30,846.

Finance lease liabilities

Finance lease liabilities are due for payment as follows:

	2020	2019
Lease liabilities attributa ble to property, plant and	Minimi lease	Minimi lease
equipment	paymentsInterest Prinipal	paymentsInterest Prinipal
Within one year	17,519 –1,450 16,069	10,259 –632 9,627
Between one and five years	44,750 –2,675 42,075	21,514 –714 20,800
Over five years	13,653 –259 13,394	– – –
Total	75,922 –4,384 71,538	31,773 –1,346 30,427

Lease liabilities attributa	Minimi	Minimi
ble to right-of-use assets	lease	lease
–rented properties	paymentsInterest Prinipal	paymentsInterest Prinipal
Within one year	17,825 –1,062 16,763	17,290 –1,197 16,093
Between one and five years	35,155 –1,804 33,351	31,396 –1,862 29,533
Over five years	6,795 –270 6,525	9,060 –480 8,581
Total	59,775 –3,136 56,639	57,746 –3,539 54,207

For more information, see Note 24 Financial risks and finance policy on page 61.

NOTE 20 Provisions and other financial liabilities

Short-term portion of other financial liabilities	31 Dec 2020	31 Dec 2019
Contingent portion of purchase consideration for
acquisition	–	6,107
Total	–	6,107
Short-term portion of provision	31 Dec 2020	31 Dec 2019
Other	565	623
Total	565	623

Other financial liabilities	2020	2019
Carrying amount at beginning of period	6,107	8,947
Provisions in the period	–	–
Amounts utilised in the period	–	–2,840
Un-utilised amounts reversed in the period	–6,107	–
Carrying amount at end of period	–	6,107

NOTE 21 Other current liabilities

	31 Dec 2020	31 Dec 2019
Staff withholding tax	5,423	5,801
Social security contributions	4,873	4,490
VAT	17,708	16,673
Other	1,482	1,110
Total	29,486	28,074

NOTE 22 Accrued expenses and deferred income

	31 Dec 2020	31 Dec 2019
Accrued salaries and benefits	18,533	17,023
Accrued social security contributions	10,987	11,168
Accrued vacation payment	29,691	26,166
Other	17,586	17,263
Total	76,797	71,620

NOTE 23 Financial instruments by category

31 Dec 2020	Assets recognised at amortised cost	Derivatives used for hedging purposes	Liabilities recognised at amortised cost	Liabilities measured at fair value through profit or loss
Assets in the Balance Sheet
Accounts receivable–trade and other financial receivables Cash and cash equivalents	338,284 67,738	– –	– –	– –
Total assets	406,022	–	–	–
Liabilities in the Balance Sheet
Interest-bearing liabilities*	–	–	153,017	–
Other liabilities	–	426	–	–
Accounts payable–trade and other financial liabilities	–	–	246,429	–
Total liabilities	–	426	399,446	–

31 Dec 2019	Assets recognised at amortised cost	Derivatives used for hedging purposes	Liabilities recognised at amortised cost	Liabilities measured at fair value through profit or loss
Assets in the Balance Sheet
Accounts receivable–trade and other financial receivables Cash and cash equivalents	380,221 72,619	– –	– –	– –
Total assets	452,840	–	–	–
Liabilities in the Balance Sheet
Interest-bearing liabilities*	–	–	265,702	–
Other liabilities	–	65	–	–
Contingent portion of purchase consideration for acquisition	–	–	–	6,107
Accounts payable–trade and other financial liabilities	–	–	269,654	–
Total liabilities	–	65	535,356	6,107

* Includes the group's lease liabilities for right-of-use assets –rented properties and lease liabilities for property, plant and equipment financed with leases. They also constitute financial instruments, although are not in the categories stated in IFRS 9 Financial instruments, but are measured pursuant to IFRS 16 Leases.

For more information on financial instruments measured at fair value, see note 24 Financial risks and finance policy on page 61.

NOTE 24 Financial risks and finance policy

Through its operations, the group is exposed to various types of financial risk such as currency risks, funding and interest risks and liquidity and credit risks. The group's finance policy stipulates that financial risks are to be kept at the lowest possible level.

The group's finance policy for managing financial risk has been formulated by the Board and constitutes a framework for risk management. The policy's overall goal is to ensure the company's long and short-term access to capital, to adapt the financial strategy to the company's operations to enable the attainment and retention of a stable long-term capital structure, and to achieve the best possible financial income/expenses within stated risk limits.

The group's guidelines for loan financing state that there should be one main lender.

The parent company is primarily focused on the management, co-ordination and development of the group, as well as group reporting and communication with shareholders. The group's operations are conducted in legal subsidiaries, and accordingly, the actual risks occur there.

Agreement terms

Financial assets mainly consist of cash and cash equivalents and accounts receivable– trade. The risk associated with accounts receivable–trade increases with the number of outstanding days of credit. There is a market tendency to require longer credit terms.

NOTE's funding consists of a combination of factoring and traditional overdraft facilities. Pledged accounts receivable–trade were 274 (224) million at year-end.

The interest terms on the factoring and overdraft facilities are based on a variable base rate plus fixed percentage interest rates, average interest of 1.6% (1.6%) was charged to consolidated profit.

NOTE has agreed on a number of covenants to its lender as security for the liabilities. There were no breaches of covenants at year-end.

Liquidity risks

Liquidity risk means the risk of being unable to fulfil payment obligations resulting from insufficient liquidity or difficulties in raising external borrowings. Operations are funded through means such as SEK 567.6 (465.2) million of equity and interest-bearing liabilities of SEK 153.0 (265.7) million, utilised overdrafts of SEK – (–) million are included. The un-utilised overdraft facility was SEK 116.0 (116.0) million at year-end. Financial liabilities comprise loans and the utilised portion of the overdraft and factoring facilities.

Maturity analysis, financial liabilities

31 Dec 2020, SEK millions	Total	Within 1 mth.	1–3 mth.	3 mth. –1 yr.	1–5 yr.	5 yr. or longer
Bank credit facilities inclu ding overdraft & factoring*	25.1	12.0	2.4	10.5	0.2	–
Lease liabilities for right of-use assets –rented properties* Lease liabilities for property, plant and equipment finan	59.8	3.3	1.1	13.4	35.2	6.8
ced with leases*	75.7	1.6	2.8	13.1	44.5	13.7
Accounts payable–trade	246.5	137.2	97.1	12.2	–	–
Total	407.1	154.1	103.4	49.2	79.9	20.5

31 Dec 2019, SEK millions	Total	Within 1 mth.	1–3 mth.	3 mth. –1 yr.	1–5 yr.	5 yr. or longer
Bank credit facilities inclu ding overdraft & factoring*	181.8	93.7	57.2	30.7	0.2	–
Lease liabilities for right of-use assets –rented properties Lease liabilities for property, plant and equipment finan ced with leases	57.8 31.7	3.0 0.3	1.4 2.0	13.0 7.6	31.3 21.8	9.1 –
Accounts payable–trade	269.9	174.4	85.1	10.4	–	–
Contingent portion of purchase consideration for acquisition	6.1	–	–	6.1	–	–
Total	547.3	271.4	145.7	67.8	53.3	9.1

*Factoring and overdraft facilities are subject to estimated average interest of 1.6 (1.6) percentage points. A majority of these credits mature within three months. Finance lease liabilities are subject to estimated average interest of 2.0 (2.2) percentage points and a majority of these credits mature within 1–7 year.

Interest risks

Interest risk is the risk that the value of a financial instrument varies due to changes in market interest rates. Interest risks can partly comprise changes in fair value, price risk, and partly changes in cash flow, cash flow risk. Interest fixing periods are a significant factor influencing interest risk. Long interest fixing periods mainly affect cash flow risk, while shorter interest fixing periods affect price risk.

The management of the group's interest exposure is centralised, implying that the central finance function is responsible for identifying and managing this exposure. The group's exposure to market risk for changes in interest levels is mainly attributable to the

group's financial net debt which amounted to SEK 85.3 (193.1) million at year end.

There were no interest derivatives as of the reporting date, and accordingly, all interest was variable.

Credit risks

Credit risks in financing activities Credit risk consists of a party of a transaction being unable to fulfil its financial commitments.

Credit risks in accounts receivable–trade

The risk that the group's customers do not fulfil their commitments, i.e. that payments for accounts receivable–trade are not received, is a credit risk. The group's customers are subject to credit checks, implying the collection of information on customers' financial positions from various credit agencies. The group has prepared rules stating the level of decisions for credit limits, and how valuations of credits and doubtful debts should be managed. Bank guarantees or other collateral are required for customers with low creditworthiness or insufficient credit histories.

The allowance for accounts receivable—trade is SEK –11.5 (–6.4) million, and bad debt for the year amounts to SEK 0.0 (0.3) million.

The ten biggest customers provide approximately 36% (35%) of sales. The group has a relatively good diversification of customers across a range of industrial sectors.

Age analysis, accounts receivable–trade	31 Dec 2020	31 Dec 2019
Not overdue accounts receivable–trade	310,955	286,162
Overdue accounts receivable–trade 0–30 days	22,611	75,234
Overdue accounts receivable–trade > 30 days–60 days	4,718	12,107
Overdue accounts receivable–trade > 60 days	–	6,718
Total	338,284	380,221

Currency risks

The group is exposed to various types of currency risk. The primary exposure is for purchases and sales in foreign currency, where risks can partly comprise fluctuations in the currency of the financial instrument, customer or supplier's invoice, partly the currency risk in expected or contracted payment flows, termed transaction exposure. Against the background of underlying pricing of electronic components being basically in USD, despite actual purchasing often being conducted in EUR, NOTE considers it relevant to disclose the effects of the aggregate exposure to EUR and USD.

Foreign currency expenses and purchases are largely hedged through binding contracts, where the customer assumes the full currency risk. Invoicing is largely in local currency and the majority is denominated in Swedish kronor, Euro or USD and with a fairly even division between these currencies. NOTE adopts a centralised view of managing currency hedges. NOTE's corporate finance function hedges net flows in foreign currency on rolling six-month forecasts, based on the limits stipulated in NOTE's finance policy.

Allocation 6 months from the closing date

	Net exposure from sales and purchasing in foreign currencies		Total hedging		Percentage		Average exchange rate
	2020	2019	2020	2019	2020	2019	2020	2019
EUR	11,386	3,295	1,298	1,244	11%	38%	10.18	10.46
USD	16,240	10,965	3,798	4,646	23%	42%	8.25	9.32

The group classifies its forward contracts used for hedging forecast transactions as cash flow hedging.

Translation exposure

Currency risk fluctuations also exist in the translation of foreign subsidiaries' assets and liabilities to the functional currency of the parent company, termed translation exposure. The group's foreign net assets are divided between the following currencies, amounts in SEK 000 and percentage share of NOTE's total equity:

	31 Dec 2020		31 Dec 2019
Currency	Amount	%	Amount	%
CNY	107,169	18.9	111,094	23.9
EUR	121,527	21.4	98,957	21.3
GBP	105,468	18.6	112,524	24.2
NOK	2,526	0.4	2,799	0.6
Total	336,690	59.3	325,374	69.9

NOTE 24 Cont.

Assets and liabilities measured at fair value

NOTE's derivative instruments held for hedge accounting are based on valuation tier 2 of IFRS 7, i.e. fair value is based on observable data from an independent source.

The acquisition of Speedboard Assembly Services Ltd. in 2018 included an agreement on a contingent purchase consideration. This contingent consideration was measured at fair value in level 3. The contingent portion of the purchase consideration was based on the performance of Speedboard Assembly Services Ltd. in the two years following acquisition. The whole contingent consideration would be paid if the company achieved a number of predefined threshold values. The assessment as of 31 December 2019 remained that Speedboard Assembly Services Ltd. would achieve these threshold values, and accordingly, the initial opinion on full pay-out of the contingent consideration was retained. In 2020, NOTE concluded that the predetermined threshold values would not be achieved, and accordingly, the contingent portion of the purchase consideration was reversed in full.

All financial assets in the Balance Sheet are recognised at amortised cost. All financial liabilities in the Balance Sheet, apart from the contingent portion of the purchase consideration stated above, are recognised at amortised cost. Because most of the financial assets and liabilities are current items, their carrying amounts are considered to correspond to fair values.

Materials risks

Because a high proportion of the group's sales values comprise materials, both the price and access to materials are decisive to profitability. NOTE's strategic sourcing company NOTE Components AB manages a substantial portion of materials sourcing agreements.

Sensitivity analysis

The following table illustrates the effect on the group from changes in a number of parameters.

	Effect on comprehensive income
		2020		2019
Market risk, SEK million	+/– 2% +/– 5%		+/– 2% +/– 5%
Change in sales price to customers	30.4	76.0	27.7	69.2
Change in sales volume	7.5	18.6	6.8	17.1
Change in materials price*	19.5	48.7	17.6	44.1
Change in payroll overheads	6.2	15.6	5.7	14.2
Change in interest rates	1.7	4.2	3.6	9.0
Change in EUR/USD exchange rate on customer and supplier liabilities as of 31 Dec	0.8	2.0	1.0	2.6
Currency change on net assets in foreign subsidiaries	6.7	16.8	6.5	16.3

*Disregarding price adjustment clauses to customers.

NOTE 25 Pledged assets and contingent liabilities

Pledged assets for own liabilities and provisions	31 Dec 2020	31 Dec 2019
Property mortgage	14,695	15,275
Floating charge	212,750	212,965
Ownership reservation on machinery	–	–
Factored accounts receivable–trade	274,021	223,990
Total	501,466	452,230
Contingent liabilities
Guarantees issued	42,119	50,215
Total	42,119	50,215

Central government support	2020	2019
Central government support connected to Covid-19	9,033	–
Payroll subsidies	1,881	1,721
Total	10,914	1,721

The group has received support related to COVID-19, primarily in the UK and China, but also, to some extent, in Sweden.

NOTE 27 Cash Flow Statements

Interest paid	2020	2019
Interest received	283	497
Interest paid	–4,900	–4,201

Other non-cash items
Impairment losses	26,854	359
Unrealised exchange rate differences	–3,846	–700
Other items not affecting liquidity	–10,686	1,172
Total	12,322	831

Cash and cash equivalents	31 Dec 2020	31 Dec 2019
Cash and bank balances	67,738	72,619
Un-utilised overdraft facilities	116,041	116,477
Total	183,779	189,096

	Liabilities for right-of use assets –rented properties	Liabilities for property, plant and equipment financed with leases	Other inte rest-bearing liabilities	Total
Opening balance 1 jan 2019	–	18 188	170 297	188 485
Restatement on adoption of IFRS 16 Leases	64,908	–	–	64,908
Restatement of opening balance 1 Jan 2019	64,908	18,188	170,297	253,393
Cash flow effect	–15,082	–7,176	8,937	–13,321
Borrowings, non-cash	4,450	19,133	–	23,583
Exchange rate effects	–69	282	1,834	2,047
Closing balance 31 Dec 2019	54,207	30,427	181,068	265,702
Opening balance 1 jan 2020	54,207	30,427	181,068	265,702
Cash flow effect	–15,906	–12,228	–155,377	–183,511
Borrowings, non-cash	19,638	53,576	–	73,214
Exchange rate effects	–1,300	–237	–851	–2,388
Closing balance 31 Dec 2020	56,639	71,538	24,840	153,017

NOTE 28 Close relations

	2020	2019
Sale of goods and services to related parties	–	–
Purchases from related parties	–	–
Liability to related party as of 31 December	–	–
Receivable from related party as of 31 December	–	–

Transactions with related parties

Within the three-year incentive programme launched in 2017, in May 2020, senior managers purchased all 500,000 newly issued shares pursuant to the terms and conditions of the programme. This raised NOTE a total of nearly SEK 12 million. No other transactions with related parties occurred in the year.

For more information on transactions with key staff in executive positions, see Note 8, Employees, personnel expenses and remuneration to senior management, on page 54.

NOTE 29 Critical estimates and judgements

Critical judgements when applying the group's accounting principles

Some critical accounting estimates made when applying the group's accounting principles are reviewed below.

Accounts receivable—trade and inventories

In value terms, accounts receivable—trade and inventories were the largest asset items on the reporting date. Both these items are measured at net values after deducting for impairment, based on individual assessments. There is also a customer credit allowance for accounts receivable—trade based on computation from historical data and considering forward-looking information, pursuant to IFRS 9 Financial instruments. On the reporting date 31 December 2020, the reserve for obsolescence was SEK -42.5 (-20.7) million, and the allowance for doubtful debt was SEK -11.5 (-6.4) million. Information on the judgements applied and information on the risks associated with these asset items is in note 24 Financial risks and finance policy on page 61.

Goodwill

The group's goodwill is attributable to Swedish and foreign subsidiaries. Goodwill is tested for impairment pursuant to IAS 36 Impairment of Assets. As of 31 December 2020, the group's goodwill was SEK 105.7 (109.9) million. More information on the measurement of goodwill items is in note 11 Intangible assets on page 56.

Right-of-use assets, property, plant and equipment financed with leases and lease liabilities Right-of-use assets are the group's lease contracts for offices and production equipment. These contracts are signed for definite periods, and in most cases, also have extension options. How many lease terms are included in the supporting data for computation has a material impact on the size of this item. The judgement is that lease contracts on offices are reported over the contracted period. For production units, over and above the contracted period, extension options are also accounted in those cases where an extension facility exist in each contract, and this judgement is based on the business plans compiled should the initial lease term be at least three years, or longer if investments are made in production equipment with an estimated useful life of longer than three years.

Deferred tax assets

Deferred tax assets are recognised on loss carry-forwards to the extent it is likely that they can be used against future taxable earnings. The group's deferred tax assets consist mainly of provisions. On the reporting date 31 December 2020 the group's deferred tax assets were SEK 5.7 (1.1 ) million. More information on the group's deferred tax assets is in note 10 Tax on page 55.

NOTE 30 Post-balance sheet events

Brexit took place on 1 January 2021. The impact of Brexit in a longer perspective is hard to predict because its framework has not been defined. NOTE's opinion is that the impact on the group is not significant. Two of the group's subsidiaries have their registered offices in the UK, and their combined sales in 2020 was SEK 170.7 million, which is 9.1% of the group total. Essentially, the UK subsidiaries' sales are to customers in the UK. The same applies to purchasing, which essentially, is from companies in the UK.

The group has no other significant events after the end of the financial year to report.

NOTE 31 Financial definitions

Attendance – Attendance as a percentage of regular working-hours.

Average number of employees – Average number of employees calculated on the basis of hours worked.

Earnings per share – Profit after tax divided by the average number of shares.

Equity per share – Equity divided by the number of shares at year-end.

Equity to assets ratio – Equity as a percentage of total assets.

Interest-bearing net debt – Interest-bearing liabilities and provisions less cash and interest-bearing receivables.

Interest coverage ratio, multiple – Operating profit plus financial income divided by financial expenses.

Market capitalisation – Share price multiplied by total number of outstanding shares.

Net debt/equity ratio, multiple – Interest-bearing net debt divided by equity.

Operating capital – Total assets less cash and cash equivalents, non-interest bearing liabilities and provisions.

Operating margin – Operating profit as a percentage of net sales.

Order backlog – A combination of fixed orders and customer forecasts.

Profit margin – Profit after financial items as a percentage of net sales.

Return on equity – Net profit for the year as a percentage of the average equity for the most recent twelve-month period.

Return on operating capital – Operating profit as a percentage of the average operating capital for the most recent twelve-month period.

Rate of capital turnover (operating capital), multiple – Sales divided by operating capital.

Sales per employee – Sales divided by the average number of full-time employees.

Staff turnover – Number of employees whose employment was terminated voluntarily in the year as a percentage of the average number of employees.

Parent Company Income Statement

SEK 000	NOTE	2020	2019
Net revenue		38,541	37,875
Cost of sold services		–14,142	–15,676
Gross profit		24,399	22,199
Selling expenses		–17,697	–18,700
Administrative expenses		–11,861	–10,803
Other operating revenue	2	8,987	14,513
Other operating expenses	3	–22,836	–8,378
Operating profit	4, 5, 6, 15	–19,008	–1,169
Profit from financial items	7
Profit from participations in group companies		–60	71,375
Interest income, etc.		3,272	6,731
Interest costs, etc.		–3,892	–2,159
Profit after financial items		–19,688	74,778
Appropriations	8	19,000	–18,800
Profit before tax		–688	55,978
Tax	9	–16	–12,136
Profit for the year		–704	43,842

Parent Company Statement of Other Comprehensive Income

SEK 000	2020	2019
Profit for the year	–704	43,842
Other comprehensive income
Items that can be subsequently reversed in the Income Statement:	–	–
Total comprehensive income for the year	–704	43,842

Parent Company Balance Sheet

SEK 000	NOTE	31 Dec 2020	31 Dec 2019
Assets
Non-current assets
Intangible assets	10
Capitalised expenditure on development work		2,910	3,590
Property, plant and equipment	10	590	795
Financial assets
Participations in group companies	16	221,379	221,379
Receivables from group companies	11	105,931	148,776
Total financial assets		327,310	370,155
Total non-current assets		330,810	374,540
Current assets
Short-term receivables
Receivables from group companies		10,566	18,730
Other receivables	12	4,364	–
Prepaid expenses and accrued income		3,451	2,685
Total short-term receivables		18,381	21,415
Cash and bank balances	17	10,530	25,405
Total current assets		28,911	46,820
Total assets		359,721	421,360

Equity and liabilities
Equity
Restricted equity
Share capital (28,372,600/28,872,600 class A shares)		14,695	14,436
Statutory reserve		148,161	148,161
Non-restricted equity
Profit brought forward		88,665	33,432
Profit for the year		–704	43,842
Total equity		250,817	239,871
Untaxed reserves
Tax allocation reserve		6,600	25,600
Current liabilities
Liabilities to credit institutions		462	591
Accounts payable–trade		2,186	3,193
Liabilities to group companies		88,297	137,607
Tax liabilities		–	3,830
Other liabilities		937	566
Accrued expensed and deferred income	13	10,422	10,102
Total current liabilities		102,304	155,889
Total equity and liabilities		359,721	421,360

Summary Statement of Changes in Parent Company's Equity

	Restricted equity		Non-restricted equity
SEK 000	Share capital	Statutory reserve	Profit brought forward	Profit for the year	Total equity
Opening equity, 1 Jan 2019	14,436	148,161	36,144	16,799	215,540
Appropriation of profit			16,799	–16,799	–
Comprehensive income
Profit for the year				43,842	43,842
Other comprehensive income
– Total comprehensive income				43,842	43,842
Transactions with shareholders
Dividend			–19,511		–19,511
Closing equity, 31 Dec 2019	14,436	148,161	33,432	43,842	239,871

		Restricted equity Non-restricted equity
SEK 000	Share capital	Statutory reserve	Profit brought forward	Profit for the year	Total equity
Opening equity, 1 Jan 2020	14,436	148,161	33,432	43,842	239,871
Appropriation of profit			43,842	–43,842	–
Comprehensive income
Profit for the year				–704	–704
Other comprehensive income
–
Total comprehensive income				–704	–704
Transactions with shareholders
Cancellation of repurchased shares	–500		500		–
Bonus issue	500		–500		–
New share issue	259		11,391		11,650
Closing equity, 31 Dec 2020	14,695	148,161	88,665	–704	250,817

Parent Company Cash Flow Statement

SEK 000	NOTE	2020	2019
Operating activities	17
Profit before tax		–19,688	74,778
Reversed depreciation		885	985
Other non-cash items		13,780	–77,494
Tax paid		–8,207	–4,511
		–13,230	–6,242
Cash flow from change in working capital
Increase (–)/decrease (+) in trade receivables		36,461	–10,298
Increase (+)/decrease (–) in trade liabilities		–121,002	32,111
		–84,541	21,813
Cash flow from operating activities		–97,771	15,571
Investing activities
Purchase of property, plant and equipment		–	–644
Purchase of financial assets		–	–5,279
Cash flow from investing activities		–	–5,923
Financing activities
Borrowings		–	591
Amortisation of interest-bearing liabilities		–129	-
Dividends paid		–	–19,511
New share issue		11,650	–
Group contributions received		71,375	40,409
Cash flow from financing activities		82,896	21,489
Cash flow for the year		–14,875	31,137
Cash and cash equivalents
At beginning of period		25,405	–5,732
Cash flow before financing activities		–97,771	9,648
Cash flow from financing activities		82,896	21,489
Cash and cash equivalents at end of period		10,530	25,405

Notes on the Parent Company's Financial Statements

NOTE 1 Critical accounting principles

Parent company accounting principles

The parent company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act and RFR's (Rådet för finansiell rapportering, the Swedish Financial Reporting Board) recommendation RFR 2, Accounting for Legal Entities. RFR's statements for listed companies have also been adopted. RFR 2 stipulates that in its annual accounts as a legal entity, the parent company should adopt all IFRS and statements endorsed by the EU, providing this is possible within the framework of the Swedish Annual Accounts Act, The Swedish Pension Obligations Vesting Act (Tryggandelagen) and with consideration to the relationship between accounting and taxation. This recommendation states the exemptions and supplements to be made from and to IFRS.

Accordingly, the parent company adopts those principles presented in Note 1 on page 50, of the consolidated accounts, subject to the exemptions stated below. These principles have been applied consistently for all years presented, unless otherwise stated.

Subsidiaries

Participations in subsidiaries are reported in the parent company in accordance with the cost method. Dividends received are only recognised as revenues if they are sourced from earnings accrued after the acquisition. Dividends exceeding these accrued earnings are considered as a re-payment of the investment and reduce the value of the participations.

Loans to subsidiaries

The parent company lends funds to subsidiaries in foreign currency. A portion of these loans is considered as a portion of net investments in subsidiaries. In previous periods, restatement of these loans to closing day rates was recognised in equity in the fair value reserve. Since 2017, these effects are recognised directly in parent company profit or loss in accordance with the revised principle RFR 2.

Other loans receivable in foreign currency are revalued at closing day rates and the revaluation is recognised in the Income Statement.

Financial guarantees

The parent company has granted sureties in favour of subsidiaries. In accordance with IFRS, these obligations are classified as financial guarantee agreements. For such agreements, the parent company applies the relaxation of RFR 2 point 72, and accordingly reports the surety as a contingent liability. When the company judges that it is likely that payment will be required to settle the obligation, a provision is made.

Borrowing costs

The company expenses all borrowing costs immediately.

Revenues

Sales of goods and conducting services assignments.

The revenue of services assignments in the parent company is recognised in accordance with Chap. 2 §4 of the Swedish Annual Accounts Act when the services are complete. All parent company sales are to other group companies.

Property, plant and equipment

Property, plant and equipment in the parent company are recognised at cost less deductions for accumulated depreciation and potential impairment losses in the same manner as for the group, but with a supplement for potential revaluations.

Intangible assets

The parent company has begun the process of implementing a new group-wide ERP system. Effective 1 January 2015, the parent company is applying the exemption of RFR 2 that permits expenditure for development, which pursuant to IAS 38 p. 57 should be recognised as an asset in the Balance Sheet, to be expensed in the period that it arises instead. Instead, capitalisation is in the group. Remaining intangible assets in the parent company have estimated useful lives of 10 years.

Leases

All lease arrangements in the parent company are reported in accordance with the rules for operating leases.

Tax

In the parent company, untaxed reserves are reported including deferred tax liabilities.

Group contributions and shareholders' contributions for legal entities

The company reports group contributions and shareholders' contributions in accordance with statements from the RR Emerging Issues Task Force. Shareholders' contributions are recognised directly to the recipient's equity and capitalised in shares and participations of the issuer, to the extent no impairment losses are necessary.

NOTE 2 Other operating revenue

	2020	2019
Exchange gains on trade receivables/liabilities	8,987	14,513
Other operating revenue	–	–
Total	8,987	14,513

NOTE 3 Other operating expenses

	2020	2019
Exchange losses on trade receivables/liabilities	–22,836	–8,378
Other operating expenses	–	–
Total	–22,836	–8,378

NOTE 4 Auditors' fees and reimbursement

	2020	2019
PwC
Auditing assignment	–694	–510
Auditing in addition to audit assignment	–	–
Tax consultancy	–	–
Other services	–	–
Total	–694	–510

NOTE 5 Employees, personnel expenses and remuneration to senior management

Expenses for employee benefits	2020	2019
Salaries and benefits	–13,544	–11,068
Pension expenses, defined-contribution plans	–2,918	–2,794
Social security contributions	–6,086	–5,353
Total	–22,548	–19,215

Average number of employees		2020 of which men		2019 of which men
Sweden	11	51%	11	53%

	2020	2019
Division between sexes in management	Share of women	Share of women
Board of Directors	60%	43%
Other senior management 3 (3) people	0%	0%

Salaries, other benefits and social security contributions

	Salaries and benefits (of which bonus)			Social security (of which pension expense)
	2020	2019	2020	2019
Management	–9,394	–7,314	–5,203	–4,634
	(–2,516)	(–1,413)	(–1,812)	(–1,880)
Other employees	–5,189	–5,357	–3,801	–3,887
	(–603)	(–869)	(–1,106)	(–1,082)

Management means the Board of Directors and the group management.

The previous year's figures for the company's management include the positive impact related to restatement of previous years' provisioning associated with the change of CEO.

NOTE 6 Operating leases

	31 Dec 2020	31 Dec 2019
Lease arrangements payable within one year	2,558	1,539
Lease arrangements payable between one and five years	8,399	573
Total	10,957	2,112

Parent company expenses for operating leases were 2,339 (2,119). A significant proportion of operating leases relates to rents for premises. In addition, NOTE is party to lease agreements relating to cars and office equipment.

NOTE 7 Net financial income/expense

Profit from participations in group companies	2020	2019
Group contributions, received	–	72,325
Group contributions, paid	–60	–950
Total	–60	71,375
Interest income etc.
Interest income, group companies	2,405	3,490
Interest income, other	–	62
Exchange rate differences	867	3,179
Total	3,272	6,731
Interest costs, etc.
Interest costs, other	–32	–888
Exchange rate differences	–3,189	–580
Other	–671	–691
Total	–3,892	–2,159

NOTE 8 Appropriations

	2020	2019
Tax allocation reserve, provision/dissolved for the year		19,000 –18,800
Total		19,000 –18,800

NOTE 9 Tax

Reported in Income Statement			2020	2019
Current tax expense (–)/tax revenue (+)
Tax expense/tax revenue for the period			–16	–12,136
Deferred tax expense (–)/tax revenue (+)
Deferred tax revenue/expense in capitalised/utilised tax values of
loss carry-forwards			–	–
Total reported tax				–16 –12,136

Reconciliation of effective tax	%	2020	%	2019
Profit before tax		–688		55,978
Tax at applicable rate for parent company	–21.4%	147		–21.4% –11,979
Non-deductible expenses	19.7%	–135	-0.3%	–141
Non-taxable revenue	0.0%	0	0.0%	0
Tax attributable to previous years	4.0%	–28	0.0%	–16
Total	2.3%		–16 –21.7% –12,136

NOTE 10 Intangible assets and Property, plant and equipment

	Capitalised expenditure on development work		Equipment, tools, fixtures and fittings
Cumulative cost
Opening balances 1 Jan 2019	5,402		842
Purchases		–	644
Sales and retirements		–	0
Closing balance, 31 Dec 2019	5,402		1,486
Opening balances 1 Jan 2020 Purchases	5,402	-	1,486 -
Sales and retirements		-	-
Closing balance, 31 Dec 2020	5,402		1,486
Depreciation
Opening balance, 1 Jan 2019	–990		-527
Depreciation for the year	–822		-164
Sales and retirements		–	–
Closing balance, 31 Dec 2019	–1,812		–691
Opening balance, 1 Jan 2020	–1,812		–691
Depreciation for the year	–680		–205
Sales and retirements		–	–
Closing balance, 31 Dec 2020	–2,492		–896
Carrying amounts
1 Jan 2019	4,412		315
31 Dec 2019	3,590		795
1 Jan 2020	3,590		795
31 Dec 2020	2,910		590
Depreciation is included in the following Income Statement lines		2020	2019
Cost of goods sold and services		–732	–766
Selling expenses		–	–220
Administrative expenses		–153	–
Total		–885	–986

NOTE 11 Long-term receivables

Receivables from group companies	31 Dec 2020	31 Dec 2019
Cumulative cost
At beginning of year	148,776	79,876
Purchase	5,992	5,280
Reclassification	–	57,501
Currency revaluation	–13,720	6,119
Re-payment	–35,117	–
Total	105,931	148,776

NOTE 12 Other receivables

	31 Dec 2020	31 Dec 2019
Tax receivable	4,364	–
Total	4,364	–

NOTE 13 Accrued expenses and deferred income

	31 Dec 2020	31 Dec 2019
Accrued consulting fees	1,778	856
Accrued salaries and benefits	5,271	5,043
Accrued social security contributions	1,649	1,997
Accrued vacation payment	1,699	1,661
Other	25	545
Total	10,422	10,102

NOTE 14 Pledged assets and contingent liabilities

Contingent liabilities	31 Dec 2020	31 Dec 2019
Rent guarantee	1,032	–
Sureties in favour of subsidiaries	41,087	42,215
Total	42,119	42,215

NOTE 15 Close relations

Close relation	År	Sales of goods and services to related parties	Purchases from related parties	Liability to related party as of 31 December	Receivable from related party as of 31 December
Company owned by Board member	2020	–	–	–	–
Company owned by Board member	2019	–	–	–	–

Transactions with staff in executive positions

For the Board of Directors', the CEO's and other senior managers' salaries and other benefits, expenses and commitments relating to pensions and similar benefits, as well as agreements on severance pay, see Note 8 on page 54.

NOTE 16 Group companies

Specification of the parent company's direct holdings of shares in subsidiaries

		31 Dec 2020	31 Dec 2019
Subsidiary Sweden/Corporate identity no./Registered office	No. of shares	Carrying amount	Carrying amount
NOTE Components AB, 556602-2116, Stockholm, Sweden	1 000	100	100
NOTE International AB, 556655-6782, Stockholm, Sweden	1 000	100	100
NOTE Järfälla AB, 556749-2409, Stockholm,Sweden	1 000	0	0
NOTE Lund AB, 556317-0355, Lund, Sweden	10 661	43,091	43,091
NOTE Norrtelje AB, 556235-3853, Norrtälje, Sweden	1 000	60,719	60,719
NOTE Nyköping-Skänninge AB, 556161-4339, Stockholm, Sweden	9 000	8,190	8,190
NOTE Skellefteå AB, 556430-0183, Stockholm, Sweden	5 000	16,078	16,078
NOTE Torsby AB, 556597-6114, Torsby, Sweden	30 000	3,000	3,000

Subsidiary other/Corporate identity no./Registered office
NOTE Electronics (Dongguan) Ltd, 441900400100981, Dongguan, China	1	47,630	47,630
NOTE Hyvinkää Oy, 1931805-1, Hyvinkää, Finland	80	1,347	1,347
NOTE Pärnu OÜ, 10358547, Pärnu, Estonia	1	26,887	26,887
NOTE UK Ltd, 5257074, Telford, UK	1 850 000	14,237	14,237
Speedboard Assembly Services Ltd, 04849220, Windsor, UK (100% owned by NOTE UK Ltd)	–	–	–
Total		221,379	221,379

The participating interest is 100 (100)% in all companies.

Cumulative cost	31 Dec 2020	31 Dec 2019
At beginning of year	267,479	254,416
Shareholder contributions	–	13,063
Total	267,479	267,479
Cumulative impairment
At beginning of year	–46,100	–33,037
Impairment for the year	–	–13,063
Total	–46,100	–46,100
Net carrying amount	221,379	221,379

NOTE 17 Cash Flow Statement

Interest paid	2020	2019
Interest received	2,405	3,490
Interest paid	–32	–888
Other non-cash items
Group contributions received/paid in the year	60	–71,375
Unrealised exchange rate differences	13,720	–6,119
Total	13,780	–77,494
Cash and cash equivalents	2020-12-31	2019-12-31
Cash and bank balances	10,530	25,405
Un-utilised credit facilities
Un-utilised credit facilities	105,000	105,000

NOTE 18 Information on the parent company

NOTE AB (publ) is a Swedish-registered limited company with its registered office in Stockholm municipality, Stockholm county, Sweden. The parent company's shares are listed on Nasdaq Stockholm Stock Exchange.

The address of the head office is NOTE AB (publ), Box 3691, 103 59 Stockholm, Sweden. The corporate identity number is 556408-8770. The consolidated accounts for 2020 comprise the parent company and its subsidiaries, collectively termed the group.

The Board of Directors and CEO hereby certify that the consolidated accounts have been prepared in accordance with IFRS as endorsed by the EU and give a true and fair view of the group's financial position and results of operations. The annual accounts have been prepared in accordance with generally accepted accounting principles and give a true and fair view of the parent company's financial position and results of operations. The Reports of the Directors of the group and parent company give a true and fair view of the group's and parent company's operations, financial position and results of operations and review the significant risks and uncertainty factors facing the parent company and group companies.

Johan Hagberg Anna Belfrage Bahare Hederstierna

Chairman Board member Board member

Claes Mellgren Charlotte Stjerngren Christoffer Skogh Board member Board member Board member, Employee representative

Johannes Lind-Widestam CEO

Stockholm, Sweden, 12 March 2021

As stated above, the annual accounts and consolidated accounts were approved for issuance by the Board of Directors on 12 March 2021. The Consolidated Income Statement and Consolidated Balance Sheet and the Parent Company Income Statement and Parent Company Balance Sheet will be subject to adoption at the Annual General Meeting on 19 April 2021.

Our Audit Report was presented on 12 March 2021

Niklas Renström Auditor in Charge Authorised Public Accountant Öhrlings PricewaterhouseCoopers AB

Auditor's Report

To the General Meeting of the Shareholders of NOTE AB (publ), corporate identity number 556408-8770

REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS Opinions

We have audited the Annual Accounts and Consolidated Accounts of NOTE AB (publ) for the year 2020.

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 of its financial performance and its cash flows 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 of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the Annual Accounts and Consolidated Accounts.

We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.

Our opinions in this report on the annual accounts and consolidated accounts are consistent with the contents of the complementary report that has been presented to the Parent Company's and the Group's audit committee pursuant to statutory 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. To the best of our knowledge and belief, this includes no prohibited services as specified in statutory audit regulation (537/2014) article 5.1 being provided to the audited company, or were applicable, its parent company or entities under its control in the EU.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Our audit approach

Scope and focus of audit

We designed our audit by determining materiality and assessing the risk of material misstatement in the consolidated financial statements. We focused on areas where the Managing Director and Board of Directors have made subjective judgments, such as key accounting estimates on the basis of assumptions and forecasts of future events, which are by their nature uncertain. Like for all audits, we also considered the risk of the Board of Directors and the Managing Director overriding internal control, and factors such as whether there is any evidence of systematic departures that have given rise to material misstatement resulting from fraud.

We tailored the scope of the our audit to conduct an expedient examination in order to comment on the consolidated financial statements as a whole, with consideration given to the group structure, accounting procedures and controls, and the industry in which the group operates.

Materiality

The scope and focus of the audit was influenced by our assessment of materiality. An audit is designed to achieve reasonable assurance regarding whether the financial statements are free from any material misstatements. Misstatements may 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 the financial statements.

On the basis of our professional assessment, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole. With the help of these and alongside qualitative considerations, we determined the scope and focus of the audit and the nature, timing and extent of our audit procedures, as well as assessing the effect of individual and aggregate misstatements on the financial statements as a whole.

Key audit matters

Key audit matters 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 accounts receivable—trade

We refer to note 23, Financial instruments per category and note 24, Financial risks and finance policy. The NOTE group sells products to a large number of customers worldwide. Its customer base is fairly diverse, with customers in different industrial sectors. The payment terms of customers are dependent on customer-specific circumstances and agreements entered.

The value of the stock of outstanding accounts receivable—trade depends on the extent customers will pay. The company's information on individual customers' solvency is limited. According to the accounting policies applied by NOTE, management conducts an individual assessment of all accounts receivable—trade that are due for payment. Based on this individual assessment, a reserve for risks of outstanding accounts receivable—trade is created. These assessments are complex and dependent on several different factors, and accordingly, inherently include a measure of uncertainty.

Our audit approach to the key audit matter

We have evaluated the design and efficiency of specific selected controls in the sales process, the management of accounts receivable—trade and payments from customers. For example, these include creditworthiness checks and reconciliation of accounts receivable balances. We have also reviewed managements' analysis of the progress of days sales outstanding (DSO) and outstanding credit risks. We have also evaluated the processes applied for measuring accounts receivable—trade and randomly selected reserves against the company's decision-support documentation.

In addition to the test of controls in the sales process and measurement of accounts receivable—trade, we monitored payments of a selection of accounts receivable—trade.

Valuation of inventories

We refer to note 15, Inventories. NOTE's production units hold inventories of raw materials and other input goods, products in progress and finished goods manufactured by NOTE.

NOTE has customer-specific manufacture of electronic components based on manufacturing orders and sales forecasts from customers. Based on NOTE's manufacture, customerspecific components include a risk of obsolescence in inventories. NOTE conducts individual assessments of inventories per customer, which considers potential obsolescence. Based on

this individual assessment, a reserve is recognised. These assessments are complex and dependent on several factors, and accordingly inherently include a measure of uncertainty.

Our audit approach to the key audit matter

We have evaluated the design and efficiency of specific selected controls in NOTE's processes for procuring raw materials and inventory management.

In addition to testing controls in the procurement processes and inventory management, we have evaluated the company's obsolescence reserve through a random review of details on the company's supporting data for measurement. We have also conducted an in-depth examination through random testing of the pricing of raw materials inventory, computed supplements on products in process and finished goods. We have also examined the inventories of significant units in terms of the time items have remained in inventory. We also perform sample inventory stock take for all significant entities.

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 1–27 and 35–37. The information in NOTE's Remuneration Report 2020 also comprises other information. 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 or 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 and fair presentation of these annual accounts in accordance with the Annual Accounts Act, and consolidated accounts in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The Board of Directors and the Managing Director are also responsible for such internal control as they determine as 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 intends 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 monitor the company's financial reporting.

Auditors' 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.

An additional review of our responsibility for the audit of the annual accounts and consolidated accounts is available at Revisorsinspektionen's website: www.revisorsinspektionen.se/ revisornsansvar. This review is part of the audit 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 NOTE 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 fulfil 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.

A further description of our responsibility for the audit of the administration is available at Revisorsinspektionen's website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor's report.

Öhrlings PricewaterhouseCoopers AB, Stockholm, Sweden, was appointed as audit firm of NOTE AB (publ) by the general meeting of shareholders on 23 April 2020, and has been the company's auditor since 18 April 2008.

Discrepancies between reports

Swedish and English–language versions of this Report have been produced. In the event of any discrepancy between the two, the Swedish version shall apply.

Niklas Renström Authorised Public Accountant Öhrlings PricewaterhouseCoopers AB

Stockholm, Sweden, 12 March 2021

Addresses

NOTE AB (publ) Sveavägen 52 111 34 Stockholm Sweden

NOTE Components AB Sveavägen 52

111 34 Stockholm Sweden

NOTE Hyvinkää Oy

Avainkierto 3 05840 Hyvinkää Finland

NOTE Lund AB Maskinvägen 3 227 30 Lund Sweden

NOTE Norrtelje AB Vilhelm Mobergs gata 18

761 46 Norrtälje Sweden

NOTE Pärnu OÜ

Laki 2 80010 Pärnu Estonia

NOTE Torsby AB

Inova Park 685 29 Torsby Sweden

NOTE UK Ltd

Stroudwater Business Park Brunel Way Stonehouse GL10 3SX Gloucestershire UK

NOTE Electronics

(Dongguan) Co Ltd No. 8 Ling Dong 3 Road Lincun Industrial Center Tangxia Dongguan China - 523710

Speedboard Assembly Services Ltd

1a Alma Road, Windsor SL4 3HU UK

Website: www.note-ems.com E-mail: [email protected]

NOTE AB (publ) Annual Report 2020

Corporate identity number 556408-8770 Text and graphic design: NOTE AB (publ). Production: NOTE AB (publ) and Redesign. Images: Thomas Hilland, David Lagerholm, Jann Lipka and Kavin Zhang. Printing: Billes Tryckeri AB. Translation: Turner Financial Translators Ltd.

AI assistant

NOTE — Annual Report 2020

3087_10-k_2021-03-16_2c240229-aa55-4597-bdb4-7ad58b308290.pdf

Annual Report

Contents

INTRODUCTION

OPERATIONS

SUSTAINABILITY REPORT

THE NOTE SHARE

CORPORATE GOVERNANCE

FORMAL ANNUAL ACCOUNTS

Shareholders' information

Annual General Meeting

Notification

Business

Dividend

Nomination Committee

Financial information

Calendar

Ordering financial information

This is NOTE

Key facts

Earnings per share before dilution

CEO's statement

Focusing on profitable growth

Record progress in the year

Future

Vision, business concept, strategy and targets

Vision

Business concept

A clear growth agenda with three main lines:

To succeed, we need:

Financial targets

Profitability target

Dividend policy

NOTE's values

Committed

Proactive

Quality focused

Flexible

Business model

A partner with a strong, complete offering

Getting things right from the start creates value-added

Focused rationalisation work

Sustainability

Certifications

Value-creating partnerships with customers

Plejd—an expansive company active in smart lighting

Merus Power Oy - a global Greentech company

Market and competitors

Background

The market in 2020

Covid-19 pandemic

Market trends, customer needs and future prospects

Competitors

Risk management

Sustainability

Timeline of NOTE's sustainability work

2012

Global Goals for Sustainable Development

NOTE and sustainability

NOTE's sustainability objective

Environmental policy and working methods

2013

2014

2015

2017

2018

2020

Social conditions and human resources

Respect for human rights and anti corruption

Average number of employees by country

UN Global Compact

The Global Compact's ten principles

Communication of Progress

APPROACH

RESULT 2020

GOALS 2021

APPROACH

RESULT 2020

NOTE Annual Report 2020