Proact IT Group — Annual Report 2020

Apr 14, 2021

ANNUAL REPORT 2020

Welcome to Proact

Contents

Year in Review	1
CEO's statement	2
Value creation at Proact	4
Vision, mission and targets	6
Strategy	7
Market overview	8
Offering	10
Customers and partners	11
Sustainability	12
Employees	16
The share	18
Directors' report	20
Risks and risk management	26
Corporate governance report	29
Board of Directors	34
Management	35
Consolidated statement of comprehensive income	36
Consolidated balance sheet	37
Consolidated statement of changes in equity	38
Consolidated cash flow statement	39
Income statement, parent company	40
Balance sheet, parent company	41
Statement of changes in equity, parent company	42
Cash flow statement, parent company	43
Notes to the accounts	44
Certification	69
Audit report	70
Auditor's statement concerning the sustainability report	74
Five-year summary	75
Definition of key ratios	76
Shareholder information	77

Pages 4 to 7 and 12 to 17 show the reviewed statutory sustainability report.

Proact in brief

Proact is Europe's leading data and information management specialist, focusing on cloud services and data centre solutions. We help our customers to store, network, protect, secure and add value from data by means of increased flexibility, productivity and efficiency. Handel & Tjänster 19% (22)

Proact's primary target group segment focuses on large and medium-sized companies and authorities with large volumes of business-critical digital information. The three biggest industry segments in 2020 were Public Sector, Trade & Services and Manufacturing Industry. Olja, Energi 6% (7) Bank, Finans 8% (9) Media 2% (2) Övrigt 15% (11)

Revenues per sector

Proact employs more than 1,000 people and is active in 15 countries in Europe and the US. With more than 25 years in the industry, we have completed thousands of successful projects all over the world and now have more than 4,000 customers who rely on our services, support and expertise.

Revenues per business unit

Belgium, the Czech Republic, Denmark, Estonia, Finland, Germany, Latvia, Lithuania, the Netherlands, Norway, Slovakia, Spain, Sweden, the United Kingdom and the USA.

Year in Review

• The development in comprehensive income for Proact in 2020 was very good. Profit improved significantly, while net sales increased and the company also saw strong cash flow during the year.
• Proact entered into a number of exciting new contracts in 2020, with customers such as NHS Blood and Transplant, Fortnox, Statnett, IT 4K, the Swedish Agency for Health Technology Assessment and Assessment of Social Services and the Swedish Institute, to which we supplied our entire range of solutions and services to our customers' data centres, in private and public clouds, and as outsourcing services.
• Investments were made in both skills and development of our portfolio linked with IT infrastructure, private and public cloud services and support and consultancy services. An updated hybrid cloud platform was launched. We entered into partnerships with suppliers operating in the field of AIOps in order to enhance our offering to the market and our internal efficiency, and we introduced network solutions based on the latest technical development, known as SD-WAN (software-defined wide area networks), so that we could offer our customers secure, efficient hybrid clouds.
• We acquired another company during the year, Cetus Solutions in the United Kingdom, in line with our acquisition strategy. This acquisition reinforces the Proact offering in the field of cloud and workplacen services. The integration of PeopleWare, which was acquired in late 2019, was also completed during the year. MSEK %
• We continued to focus on our objective of increasing the percentage of service sales. New contracts relating to cloud services worth SEK 331 million were concluded during the year, while revenues for the year from cloud services increased by 37 per cent to SEK 716 million. 2 500 3 000 3 500 4 000
• We also placed major emphasis on maintaining staff commitment and motivation throughout the year, when a majority of our employees worked from home throughout much of the year. Internal communication has been developed, and both groupwide and local initiatives have been implemented. 500 1 000 1 500 2 000
• Our employees are our most important resource, and good leadership is key if we are to be able to retain and develop them. A lot of work has been done throughout the year on further development of leadership at Proact, and the company has reinforced its management in a number of countries and at Group level during the year. Systemintäkter, MSEK Tjänsteintäkter, MSEK EBITA-marginal, % 0 2016 2017 2018 2019 2020

Revenues and EBITA margins

System revenues, SEK m. Service revenues, SEK m. EBITA-margin, %

"Technical development, primarily in the fields of cloud services, security and networking, are progressing at a rapid pace, and efforts to develop our portfolio and our partnerships with leading suppliers of technology will continue to be an important focal point."

3,633 Revenues during the year, SEK millions

168

Profit before tax, SEK millions

4.50 Proposed dividend per share, SEK

Key ratios and figures

	2020	2019
Total revenues, SEK millions	3,633.1	3,407.9
EBITA, SEK millions	216.7	134.2
EBITA margin, %	6.0	3.9
Profit before tax, SEK millions	167.7	101.7
Net margin, %	4.6	3.0
Earnings per share (outstanding shares), SEK 1)	14.39	8.75
Dividend per share, SEK 2)	4.50	2.50

1) Proact has a long-term performance share scheme that may give rise to maximum dilution of 0.89 per cent. The company has bought back shares that are in its own custody, which affects the key ratios and figures above.

2) A decision was made at an extraordinary general meeting held in November 2020 to distribute a dividend of SEK 2.50 per share for the 2019 business year. The Board of Directors will propose distribution of a dividend of SEK 4.50 per share to the 2021 Annual General Meeting for the 2020 business year.

CEO's statement

2020 was an eventful year in which we managed to deliver our best results ever despite the ongoing pandemic, while also developing our cloud service portfolio and reinforcing our cooperations with customers and partners.

Taking a look back over the past year, the fact that COVID-19 dominated much of it is unavoidable. When 2020 began, no one could have imagined how much would change, given what we were used to and what we expected.

Of course, Proact has also been impacted by the pandemic. Our staff, our most important resource and our competitive advantage, has largely been working from home, and we have needed to find new ways of motivating them, engaging them and communicating internally. Customers have clearly been hesitant when it comes to entering into major contracts, particularly long contracts in respect of cloud services. There has been a major decline in demand in some industries, which has also impacted customers' purchases of Proact services and products.

Given this fact, I am particularly proud that Proact has delivered its best result ever, with an adjusted EBITA of SEK 219 million and an EBITA margin of 6.0 per cent. Our revenues during the year amounted to SEK 3,633 million, representing an increase of 7 per cent, driven mainly by our latest acquisitions. In my opinion, organic sales growth of 1 per cent has been adversely affected by COVID-19. Although the switch to working from home has increased the digitalisation rate, some customers have been more hesitant and reduced their investments, impacting our possibilities for closing deals to the extent we would otherwise have anticipated.

Developed offerings and reinforced partnerships

However, our customers all over Europe still need to store and secure business-critical data. We entered into a comprehensive contract with Fortnox in Sweden during the year with a view to modernising their business-critical platform from which they provide their customers with cloud-based software solutions. Another example is the contract we entered into with NHS Blood and Transplant (NHSBT) in the United

Kingdom. NHSBT administers transfusion and organ donation services in the United Kingdom, and Proact is supplying a cloudbased solution for their business-critical IT infrastructure which will enhance their flexibility and scalability. Other initiatives worth mentioning include Statnett in Norway, where we have extended our partnership in respect of backups, our multi-year contract concluded with the Swedish Institute for management of their IT infrastructure, applications and networks, and the contract we concluded with the Swedish Agency for Health Technology Assessment and Assessment of Social Services in Sweden, where we are acting as an extension of their IT department and providing advisory services and strategic partnership in their ongoing digitalisation initiative.

In the longer term, it is clear to us that the demand for secure, flexible solutions for data management with high uptime will continue to grow. Therefore, we perceive good opportunities to combine organic growth and acquisitions in order to achieve our growth target of 10 per cent per annum once we emerge out of the pandemic. None of the fundamental factors in our market analysis has changed, except for the fact that digitalisation may progress even more quickly.

Increasing our percentage of service sales, primarily contracted cloud services, is still a cornerstone of our strategy. This is why we are constantly working on developing our service offering and further enhancing the quality of our supply of services, and we introduced a series of new and improved services in 2020. In 2020 we introduced network services based on the latest technical development, known as SD-WAN (software-defined wide area networks), so that we could offer our customers efficient, secure hybrid cloud solutions. We also launched Wide Area Network as a Service (WANaaS), a supplement to our network services that facilitates secure, simple network connection between workstations,

data centres and cloud services in order to manage what are known as multicloud solutions. Our new Service Management for Public Cloud service was also introduced in order to facilitate multicloud solutions for customers wishing to use public cloud services for parts of their IT infrastructure. We also launched a further developed version of Proact Hybrid Cloud, giving our customers even greater flexibility when it comes to moving data between different platforms depending on their specific needs, while also allowing them to retain control over where their data is stored and how it is used. We have also launched a new backup service for Office 365.

Moreover, we have reinforced and launched new partnerships with partners and suppliers. Among other things, we entered into partnerships with suppliers working with AIOps, use of intelligent software for monitoring of IT systems and faster resolution of any problems arising. We have extended our partnership with Dell Technologies via our new certification in respect of VxRail and entered into a new strategic partnership with Ironscales to improve our Anti-phishing service offering.

Work involving quality and predictability in our supply of services has been another focus area during the year. We implemented ServiceNow for our contracted cloud and support services as part of this continuous improvement work: this will enhance the customer experience while also making it possible to streamline our supply of services.

Acquisition reinforcing our offering

We acquired PeopleWare in the Netherlands at the end of 2019. PeopleWare has been integrated in our local operation over the past year, and we now have an operational organisation offering a complete portfolio of services to our joint customer base in the Netherlands. In my opinion, continuing to acquire companies on our key markets that supplement our offerings, add specialist expertise and reinforce our market presence

is an important tool for us when it comes to adding value for our customers and employees and, in the long run, our shareholders. That is why it is pleasing to see that we completed a further acquisition in 2020 – of Cetus Solutions in the United Kingdom – further reinforcing our cloud and workplace service offering

Positioning for the future

As we look to the future, we need to manage the ongoing pandemic and its consequences while also working to ensure a good positioning for the company as we gradually return to a more normalised world. Given our developed offerings and reinforced partnership, I am of the view that we have every opportunity to take on new contracts on our markets and increase upselling among our existing customers. Technical development, primarily in the fields of cloud services, security and networking, are continuing to progress rapidly, and efforts to develop our portfolio and our partnerships with leading suppliers of technology will continue to be an important focal point in 2021 so that we can maintain our position as a leading data management specialist.

Finally, I would like to thank all 1,000 of our staff, whose enormous commitment and focus on customers have made it possible for them to successfully supply high-quality products and services throughout the year. I would also like to thank our 4,000 customers for their continuing trust in us. In summary, I am very pleased with everything we have achieved in 2020, and I am cautiously optimistic about a 2021 in which we – I hope – will return to a more normalised world and be able to further reinforce our position on the exciting markets in which we have a presence.

Jonas Hasselberg President and CEO Proact IT Group AB (publ)

"Given the ongoing pandemic, I am particularly proud of the fact that Proact has delivered its best result ever."

Value creation at Proact

focus areas

Clarified market positioning

Read more on page 7

Development of the offering with emphasis on the customer Read more on page 7

High-quality services with satisfied customers

Read more on page 7

Focus on employees

Read more on page 7

Accelerate growth through acquisitions

Read more on page 7

CORE VALUES:

Integrity Commitment Excellence

Value created Value

Customers

• Secured access to business-critical information and data
• Robust infrastructure
• Robust security procedures • Reduced IT costs
• Secure, flexible IT systems
• Custom solutions

Suppliers

• Ethical business
• Long-term partnerships

Employees

• International environment
• Specialist expertise
• Development opportunities
• Stable employer

Communities

• Job opportunities
• Customer solutions that help to bring about more efficient utilisation of resources

Shareholders

• Dividends • Attractive investment
• Yield

distributed

Suppliers

2,539 million SEK Cost of goods and services

Employees

927 million SEK Salaries and remuneration

Communities

35 million SEK Income taxes

Shareholders

The Board of Directors will propose distribution of a dividend of SEK 4.50 per share to the Annual General Meeting for the 2020 financial year.

Remaining in the company for new investments

91 million SEK

Vision, mission and targets 6

Vision

Our ambition is to be the world's most reliable IT service partner, facilitating business value and growth for our customers.

Mission

% % 8 We offer a combination of market-leading multicloud solutions and unique expertise to create business benefits and growth via IT, adding persistent value for our customers.

%

6

Long-term financial targets		Outcome	5 8 12 Historical target attainment 4 6
>10%	Sales growth The average total sales growth should amount to at least 10 per cent per year.	Sales growth amounted to 7 per cent.	3 10 Target 4 % 2 8 1 2 12 6 0 0 2016 2017 2018 2019 2020 10 Target 4 2016 2017 2018 2019 2020 % 8 2 12 6 0 10 Target 2016 2017 2018 2019 2020 4 8 2 Times 6 % 0 2.0 4 2016 2017 2018 2019 2020 Target 8 Target 1.5
>8 %	Margin The EBITA margin should amount to 8 per cent.	The company generated an EBITA margin of 6 per cent of revenues for the full year.	2 max 2 7 1.0 % 0 6 2016 2017 2018 2019 2020 0.5 5 8 Target 4 0.0 7 3 6 % −0.5 2 5 −1.0 1 8 Target 4 2016 2017 2018 2019 2020 0 7 3 % 2016 2017 2018 2019 2020 6 2 5 1 8 Target 4 0 7 3 2016 2017 2018 2019 2020 % 6
<2 times	Debt levels Net liabilities should be no more than twice EBITDA.	At the end of the year, the company had a debt/equity ratio of –0.06 times EBITDA.	2 5 50 1 4 Times 0 40 3 2016 2017 2018 2019 2020 2.0 2 Target Target 30 1.5 1 Times max 2 0 20 1.0 2016 2017 2018 2019 2020 2.0 0.5 10 Target 1.5 max 2 0.0 Times 0 1.0 2016 2017 2018 2019 2020 −0.5 2.0 0.5 Target −1.0 1.5 0.0 Times 2016 2017 2018 2019 2020 max 2
>25 %	Return on capital employed Return on capital em ployed should amount to at least 25 per cent.	For 2020, the return on capital employed amounted to 17 per cent.	1.0 −0.5 2.0 0.5 % Target −1.0 1.5 max 2 2016 2017 2018 2019 2020 0.0 35 1.0 % −0.5 30 0.5 50 25 Target −1.0 0.0 2016 2017 2018 2019 2020 20 40 % −0.5 15 30 Target 50 −1.0 10 2016 2017 2018 2019 2020 20 5 40 % 0 10 30 Target 2016 2017 2018 2019 2020 50
25-35%	Dividends In the long term, the company intends to issue a dividend of 25–35 per cent of profit after tax.	A dividend of SEK 4.50 per share is proposed for 2020, which is equivalent to 31.1 per cent of profit after tax.	0 20 40 % 2016 2017 2018 2019 2020 10 Target 30 50 0 20 40 2016 2017 2018 2019 2020 % 10 Target 30 35 0 20 2016 2017 2018 2019 2020 30 % 10 25 Target 35 20 0 2016 2017 2018 2019 2020 30

Target

Target

%

25

10

Strategy

Strategy

The company works in accordance with five defined strategic focus areas in order to achieve specified growth targets. The Proact strategy is based on our customers' digitalisation journey, giving rise to new needs in respect of data management, innovation, data analysis, automation and streamlining. Our job is to help customers to store, connect, protect and drive value through their data by providing a market-leading offering with an efficient delivery model.

Strategic focus areas	Priorities	Follow-up, 2020
Clarified market position Our offering, geographical spread, expertise and partner relations provide us with good opportu nities to further our market position. We must be clear and consistent in our offering on all markets, in all channels and to all target groups.	• Adopt a clearer position as a market-leading data manage ment specialist • Clarify and emphasise the scope of our offering and expertise	We have clarified our position on the market as a data management specialist and correspond ingly updated our portfolio positioning. We have worked on clarifying our brand, including a new website, a new graphic profile and new sales material reflecting Proact more accurately.
Development of the offering with emphasis on the customer We must exploit our strong customer relations and make the most of the potential in our existing cus tomer base by focusing more clearly on extending our portfolio. Moreover, we have to step up our efforts to reach out to new customer segments and industries with our offering. Our central and local teams work in close partnership with our custom ers and partners for continuous development of our offering.	• Grow our service sales by means of our own cloud ser vices (Managed Cloud Services) • Extend our multicloud offering for smooth integration between different IT supply models • Develop our data centre offering still further • Develop and further improve our sales execution and "go-to market" model	We have launched a number of new services, in cluding WAN as a Service, Service Management for Public Cloud, SD-WAN as a Service and an update to our cloud platform PHC (Proact Hybrid Cloud). Despite the ongoing pandemic, we have managed to extend our portfolio with existing customers and entered into significant contracts with a number of customers, including Statnett, the Swedish Institute, the Swedish Agency for Health Technology Assessment and Assess ment of Social Services in Sweden, IT4K, Fortnox and NHS Blood and Transplant.
High-quality supply of services with satisfied customers We create a cost-effective organisation for the pro vision of services by means of consistent proces ses and procedures at our delivery hubs. We must go on improving and streamlining our supply of services through digitalisation, skills management and enhanced tools, processes and procedures.	• Further improve quality and the customer experience • Efficiency and "time-to-market" in our supply of services	We have built new, more efficient processes and procedures during the year in order to stream line delivery at our hubs. We have also launched a completely new customer portal (ServiceNow) to enhance both the customer experience and the efficiency of our services.
Focus on employees Our core values must constitute the foundation for our corporate culture and create consensus with regard to how we add value for our stakeholders. We must go on working with our sustainability plan and implementing the content in our corporate manual and code of conduct.	• Management development fo cusing on change management • Further develop our ability to attract, develop and retain highly skilled staff • Greater focus on sustainability, prioritising diversity, our code of conduct and environmental issues	Our management development work has con tinued through reinforcement of our corporate management. We have devised a development scheme for the company's managers starting in 2021, with emphasis on strategy activation and change management. A new careers page on the company's website has been launched in order to highlight the Proact employer brand, corporate culture and employees.
Accelerate growth through acquisitions We are continuing to focus on supplementing or ganic growth with strategic corporate acquisitions, leading to increased market shares in important geographical regions and contributing to growth within strategic focus areas.	• Accelerate the growth rate with emphasis on increased prof itability and balance between systems and services • Increase market shares in impor tant geographical regions	We acquired Cetus Solutions in the United King dom during the year. Cetus will reinforce Proact's presence and the ability to supply to medi um-sized and large enterprises and authorities in the United Kingdom. PeopleWare, which was acquired in October 2019, has undergone opera tional integration under the Proact brand.

Market review

The market for Proact services and solutions is influenced by a number of long-term trends. We map and actively monitor market development in order to position ourselves correctly, develop new business opportunities and reinforce our competitiveness.

Describing development in 2020 would be inconceivable without first mentioning COVID-19. The impact of the pandemic on our market is mainly temporary, although the course it has taken has been even more protracted than anyone could have predicted.

However, we are seeing a lasting impact where established IT trends are being reinforced and development is being accelerated. This is primarily true of remote working, which increasingly appears to be "the new normal". In turn, this will impact demand for solutions relating to workplace services, storage, networking and security in the long term. Proact is in a strong position here thanks to our expertise and a strong portfolio. Our latest acquisitions, Cetus Solutions in the United Kingdom and PeopleWare in the Netherlands and Belgium, have injected significant resources in respect of workplace services.

The pandemic has also helped to increase the pace of digital transformation with increased demand for automation solutions, as well as tools and services that facilitate efficient co-working without physical meetings. When it comes to operational support and monitoring IT infrastructure, an increasing proportion of the work will be carried out remotely: this is something that Proact already offers and applies routinely.

The megatrends that we have identified previously and are working strategically to commercialise and create value from still exist: innovation, digitalisation, multicloud and information security.

The trend whereby a growing proportion of IT investments is being decided upon by clients other than the IT department has been reinforced in 2020 and can be viewed as a logical consequence of the fact that digitalisation has become a driving force in customers' contract and business development.

Innovation

Companies and authorities are discovering new opportunities for driving growth and developing their operations through IT-based innovation. Innovation is made possible by new ways of analysing and processing ever larger data volumes – often with the assistance of artificial intelligence (AI), automation and "data analytics", which have definitely made a breakthrough. In the shadow of this activity, IT departments are battling with redundancy and complexity while also attempting to meet increasingly stringent user demands within tight budgets. Many customers choose to cope with this fragmented reality by striking a balance between traditional IT infrastructure and a future-oriented cloud strategy.

Opportunities for Proact

Proact's technical offering in combination with our specialist expertise on data and information management allows our customers to create new opportunities for innovation linked with AI, machine learning and large-scale data analysis, for example. As a strategic partner, Proact is much more than just a knowledgeable advisor. We can also support our customers from concept to implementation of new types of IT solutions that drive innovation, regardless of whether the customer wants to achieve this by building private clouds, using public clouds or choosing a multicloud solution. The challenge is to reach out to all our customers' stakeholders as strategic IT investments nowadays may involve the entire operation, with final decisions being made by senior management.

Digitalisation

The ever-increasing pace of digitalisation is the megatrend of greatest significance to Proact's operations. This trend is leading in turn to user demands for greater uptime and simplicity. Digitalisation and digital transformation also paving the way for new activities and business models. A well-managed IT function is still a prerequisite for efficient running of the core business. Market growth is being driven increasingly by customers investing strategically in order to further digitise their operations and develop data-driven business models.

Opportunities for Proact

The combination of digitalisation and rapid technical development is making our customers' IT infrastructures increasingly complex. At the same time, there is an increase in the need for innovative and flexible IT where data is viewed as a growing resource for operations. For Proact, which specialises in data management, this provides great opportunities to relieve stress on our customers by taking over and streamlining routine tasks, giving them the opportunity to invest more time in value creation and innovation.

IT as a service – multicloud

One clear market trend is that more and more customers are not just buying IT as a service, but also supplying IT as a service to internal and external users, who themselves order and consume different services depending on their needs. To facilitate the delivery of IT as a service, companies and authorities are increasingly choosing multicloud solutions that combine different kinds of cloud services and allowing the cloud approach to characterise their own IT organisation as well.

Opportunities for Proact

Our strong offering when it comes to data centres and multicloud solutions gives our customers flexibility to combine traditional IT infrastructure with private and public cloud services. We help our customers to choose and implement the right type of solution for each individual demand and need. Among other things, we offer Proact Hybrid Cloud, a multicloud platform with the flexibility required to form a consistent, automated and secure IT ecosystem. The cloud platform gives the customer full control even when Proact takes responsibility for ongoing data management. Our customers can always choose the location of their physical data storage, which gives us competitive advantages.

Uptime and security

All companies and authorities are dependent on access to information to allow their operations to work. Data protection and access to data are of particular importance, therefore. Shortcomings in security procedures and uptime can lead to disruptions within the business, with disastrous consequences. One example of such consequences involves the high-profile ransomware attacks that have affected a number of Nordic companies during the year, resulting in significant financial harm.

Opportunities for Proact

Information security is the number one priority issue at all companies and organisations, where threats from cyberattacks and other vulnerabilities are growing. This, in combination with legal requirements for secure data management, means that investments in security have to increase. Many companies and organisations do not have their own resources to handle current security threats, so they risk missing out on business opportunities, losing sales, harming the company's reputation or potentially having to deal with dissatisfied customers. Given our specialist expertise and extensive experience of managing and protecting our customers' data, Proact provides advice on information security and offers services that reduce our customers' vulnerability and enhance their levels of preparedness.

Competitive situation

Our competitors can be divided into the following segments.

• Competing integrators and service providers/product manufacturers: This segment includes product manufacturers, public cloud service providers and global system integrators with proprietary products and/or services. Here, Proact mainly encounters less specialised resellers who work locally in a region, or larger, local system integrators with broader offerings; the latter frequently with an ambition to develop a solutions portfolio and expertise similar to Proact's.
• Global IT service companies: Large, global IT service companies have a strong presence on the European market. Customers who select their outsourcing services are finding there is less of a need for their own system solutions and services, which limits Proact's potential as a system supplier. There appears to be no major competition for Proact's operating services as Proact focuses mainly on medium-sized organisations, whereas global suppliers focus primarily on comprehensive undertakings for their biggest customers.

Why Proact?

Proact offers unique specialist expertise relating to services and IT infrastructure at customer data centres, in private clouds, in the public cloud or as a hybrid solution incorporating all these elements.

We have more than 1,000 specialists working at more than 40 offices in 15 countries all over Europe and North America – which makes as local enough to understand and help our customers, but global enough to be able to take action if we need to.

Offering

The Proact offering reflects our clear strategic positioning as data management specialists.

We offer flexible, automated solutions that give customers the opportunity to combine their own infrastructure with private and public cloud platforms in combination with the cloud services and data centres run by Proact itself.

This offering includes all the components that our customers need in order to store and secure data in an increasingly complex environment. Our solutions link data in order to facilitate innovation, allowing customers to develop their business and organisation and achieve the goals of the business.

Our product and service offering is positioned in five different segments:

Consultancy services and data strategy advice

Proact is independent when it comes to selecting technology and works with various market-leading infrastructure platform types for the creation, management and processing of data.

Our customers can maintain better control over their IT environments and data by working with Proact's specialists and utilising our consultancy services, while also benefiting from modern technology and hybrid services. We evaluate, design, implement, simplify and optimise their technical solutions – and always with a view to driving business benefits for our customers.

Storage and infrastructure

Proact offers flexible, cost-effective storage and IT infrastructure for all types of IT deliverables: at the local data centre, in a private cloud, in a Proact cloud, in the public cloud, as a combination of multiple models (multicloud) or in a fully outsourced environment. We adapt solutions in order to monitor, manage and support customers' storage and infrastructure. Our customers know exactly where their data is and who has access to it.

Data networking

Proact designs, installs and manages network solutions that facilitate fast, secure access to data. Proact's managed cloud services also form part of networking.

Protection and security

We make sure data is protected and secure, regardless of the delivery model. We provide local cloud platforms that are able to meet even the most stringent local legal requirements on our major markets in terms of data security and uptime.

Our data protection services also include modern backup, with rapid recovery of large data volumes. These are often supplemented by disaster recovery solutions to help clients withstand extreme situations such as ransomware attacks. Proact also offers 24-hour monitoring, operational support and proprietary support services.

Creating value through data

Proact offers a series of solutions and services that make it possible for customers to release value from their data so that they can work smarter and faster. Using our solutions as a basis, the digitalisation journey can take place efficiently thanks to development of better innovation, automation, data analytics, artificial intelligence (AI) and more modern workplace solutions.

Customers and partners

Customers

Proact's customers are information-intensive companies and authorities with large volumes of business-critical digital information. The efficient supply of IT is completely crucial to the company's customers. All industries need IT environments which work well, so Proact has customers who operate in a wide range of different fields.

Proact works in close cooperation with customers on a local level, but at the same time makes the most of its strength as an international company. As an independent specialist, Proact's objective is always to understand customers' needs and requirements from both a business and a technical perspective.

Proact's customers are mainly large and medium-sized enterprises and authorities, and Proact currently enjoys good revenue distribution between different industry segments. The three biggest industry segments are Public Sector, Trade & Services and Manufacturing Industry. Proact's customer relations are often long-term, and in 2020 repeat custom accounted for around 97 per cent of the Group's revenues. The ten biggest customers in 2020 were responsible for 21 (18) per cent of revenues, and no one customer represented more than 5 (3) per cent. The biggest customers are active in a number of the countries in which Proact operates. Handel & Tjänster 19% (22) Oentlig Sektor 28% (25) Telekom 10% (9) Tillverkande Industri 12% (15) Olja, Energi 6% (7) Bank, Finans 8% (9) Media 2% (2) Övrigt 15% (11)

Revenues per sector

Partners

Proact has long-term close relationships with a small number of carefully selected strategic suppliers. Proact has a well-defined innovation process which allows it to evaluate new services and products from existing partners in a structured manner while also seeking and taking on services and products from new partners. This process ensures that Proact is always at the cutting edge of technical development and thereby able to use the very latest technology when designing new services and new IT infrastructure for its customers.

The company's biggest suppliers include Cisco, Dell Technologies, NetApp and VMware. In most cases, Proact works in partnership with two or more different suppliers within each technical field. This makes it possible for Proact to maintain extremely high levels of specialist expertise and awareness with regard to each product, while also reducing the risk of business disruptions should the relationship with any supplier be altered for any reason.

NHS Blood and Transplant (NHSBT)

NHSBT needed to modernise its business-critical applications in order to support and improve its operations. That was why the management wanted to establish a new data centre platform; to facilitate new private cloud functions, and to increase flexibility and scalability. Proact was selected as the best partner to help NHSBT with designing, implementing and supporting the new solution.

With this new solution, NHSBT will benefit from simplified administration, reduced maintenance costs and better automation possibilities which will eliminate time-consuming manual tasks. Internal IT resources can instead support value-driven, business-critical projects which benefit and improve users' experiences.

"Our priority in the selection phase was to choose a professional, flexible partner that had the necessary experience to deliver this critical project. We chose Proact because they understood NHSBT and the challenge we faced," says Neil Hatfield at NHSBT.

Fortnox

balancing.

Sustainability at Proact

Pages 4 to 7 and 12 to 17 show the sustainability report for the Group in accordance with Chapter 6 of the Swedish Company Accounts Act.

Materiality analysis

The group management team have conducted a new materiality analysis for our sustainability agenda during the year, and this has been discussed further with the Board of Directors. The materiality analysis has been conducted with Proact stakeholders in mind – defined as employees, customers, suppliers, owners and society in general – as well as our ability to add long-term value. The materiality analysis has been conducted in order to create a sustainability agenda with clear, relevant priorities. Risks have also been analysed and evaluated in order to establish a sustainability agenda that will help Proact to continue operating as a company that adds long-term value.

Structure of our sustainability work

Guidelines for our sustainability efforts are established by the Board of Directors. The CEO bears ultimate responsibility for successful implementation of our sustainability strategy. The Group executive is responsible for devising a strategy and following up the results of the Group's sustainability work. A member of the Group executive is responsible for the sustainability agenda, and there is regular reporting on sustainability work at Group executive meetings. Day-to-day operational responsibility rests with the relevant business units and the joint delivery organisation, with the assistance of the expertise functions Legal, People & Culture, Portfolio & Technology and Finance. Sustainability in respect of employees is one of the targets for all members of the group management team's performance-based annual bonus scheme. Each member of the corporate management team may also be allocated personalised sustainability targets.

Stakeholder involvement

Open discussion with our stakeholders is crucial so that we can successfully identify factors that are crucial to our stakeholders, global trends and market expectations. We adopt a structured approach to stakeholder involvement, with investor meetings and ad hoc meetings, for example, as well as surveys such as customer and staff surveys. Interacting with our stakeholders on social media has become increasingly important as a way of understanding our stakeholders' perceptions in the countries in which we operate, and also at Group level.

Our view of sustainability

Proact maintains a holistic approach to sustainability which includes social, business-related and environmental perspectives. We have created a sustainability agenda on the basis of these perspectives, including relevant targets and activities where we can exert an influence and make a contribution. This involves consideration of important areas for stakeholders and the areas that Proact considers to be crucial for its sustainability work. The social agenda includes a number of crucial activities for staff, just as the business-related agenda includes activities for customers and suppliers. Proact does not manufacture its own products, but high-quality processes, reduced energy consumption and materials handling are prioritised at Proact in terms of the environment.

UN Sustainable Development Goals

Proact confirms the importance of the UN's Sustainable Development Goals (SDGs) as a collective global objective: to protect our planet and create prosperity for all. As a company, we can exert major influence by adapting the way in which we work to meet the

needs of the generations of tomorrow. The SDGs that we think our activities can assist with have been integrated in our sustainability agenda.

Social agenda Employees

We believe in the future through the people we work with. Our transformation, from being viewed as a product company to being considered to be a broader service company, requires us to maintain and develop skills and expertise among our staff. We are based in various locations, so challenges and opportunities may differ. We have a shortage of certain skills in some places, for example, while elsewhere we are preparing for a generational shift. We must deal with these challenges and opportunities responsibly; and they require systematic planning and strong leadership together with health and well-being issues.

Proact's employee strategy spearheads our ambition to create a company that turns our business plans into reality through a culture demonstrating high levels of commitment, professionalism, constant learning, openness and inclusion. A place of work that people do their best to get to. A strong culture, management development, talent and performance management, alongside the employer brand and recruitment, are key areas in our employee strategy.

Leadership is one of our top priorities, as we feel that this is the strongest driving force for our success and a strong culture. A Leadership Index was examined for the first time this year as part of our staff survey. The Proact Leadership Index was 80, which is higher than the general benchmark. This benchmark included all industries, and the outcome was 77 – the same level as the specific industry benchmark (IT, Technology and Innovation). Proact's staff survey also provides a Team Efficiency Index alongside an Engagement Index, which measures the level of energy and the perception of clarity. Proact's results for these indices were 80 for team efficiency and 82 for engagement, both of which were higher than the general index (75 and 79, respectively) and the industry-specific benchmark (77 and 80, respectively).

We are also of the opinion that Diversity & Inclusion is a key to driving innovation and reinforcing competitiveness. Employees with a wealth of backgrounds, perspectives and experience make the company more robust.

Proact must offer equal opportunities for employment, remuneration and all other staff-related processes and working methods, with no discrimination on grounds of ethnicity, skin colour, gender, gender identity, sexual orientation, civil status, pregnancy, parenthood, religion, political opinions, nationality, ethnic background, social origin, social status, affiliation to an indigenous population, disability, age or trade union membership.

As far as gender is concerned, our aim is to achieve a gender balance of 70 men and 30 per cent women by 2025 throughout our entire workforce and at all management levels. Distribution within the corporate management team has improved over the year, from 90 per cent men and 10 per cent women in 2019 to 73 per cent men and 27 per cent women in 2020. The distribution in our 2020 workforce was 81 per cent men and 19 per cent women, representing an improvement on 2019 (83 per cent men and 17 per cent women).

We are committed to offering a place of work that gives our staff positive experiences in terms of both physical and mental health and well-being. Good technology has allowed everyone to work from home during the year, and we have followed up their well-being in two special surveys. These surveys have returned good results. Another good sign is that our result in the Employer Net Promotor Score (e-NPS) in the annual staff survey has improved from 2 (2019) to 19 (2020). e-NPS gauges how willing employees are to recommend Proact to a friend as an employer.

Business ethics

Proact is an international company operating in fifteen countries, all of which have different laws, cultures and traditions. All business must be run sustainably, in compliance with applicable legislation and in line with the company's values of integrity, commitment and excellence.

Our Code of Conduct includes 13 vital principles applicable to all our employees and provides guidance on doing ethically correct business, respecting human rights and employee rights, and operating in compliance with legislation in respect of the environment, anti-corruption, competition and anti-discrimination.

Other documents and policies of relevance to our business ethics and compliance include:

• Company handbook
• Data Privacy Policy
• Finance Policy
• Slavery and Human trafficking statement
• Supplier Code of Conduct

Compliance with laws and regulations is always a top priority for us, but in a changing world we are of the opinion that it is every bit as important to adopt a broader approach as regards compliance. Our Company handbook includes guidelines for recruitment and promotion that form an important basis for our ambitions in respect of diversity and inclusion. People with the same qualifications must be given the same employment terms and opportunities without diction or discrimination on the basis of age, ethnicity, religion, gender or disability. Our latest staff survey showed that our employees do not experience discrimination.

Proact has a whistleblower policy that provides all staff with information on how suspected deviations from the company's Code of Conduct are to be reported. All

Proact staff must report, without delay, any known breaches of the Code of Conduct or any concerns they may have with regard to breaches as specified in the policy. Such reports and concerns will be examined in depth as a matter of urgency. Anyone reporting such fears in good faith will be protected by Proact from all forms of reprisal. The whistleblower policy is part of our Code of Conduct, which is communicated to all staff.

One whistleblower case has been dealt with during the year in accordance with the company's procedure.

How we work

We have a Compliance function to investigate compliance and any grievances. This function answers to our Legal team, headed by our General Counsel which also includes the CFO and VP People & Culture. Our Compliance function conducts quarterly audits, which are compiled and presented to the CEO along with proposals for action. Existing violations relate primarily to "Contract playbook rules", where contracts have failed to comply with the internal process for compilation or approval.

Our 130 or so managers who are responsible for personnel have been offered training during the year on the Code of Conduct and our Company handbook, along with all policies. Our managers have signed a document to confirm that they have viewed and understood the contents. We have also worked on a process to ensure that newly appointed managers are given automatic access to this training so that they can make the most of it.

New employees view the Code of Conduct and Company handbook as part of their local introduction to the company.

Business-related agenda Customers and deliveries

We have an extensive history of long and close relationships with our customers. Our customers can be found in all sectors of society; companies, healthcare services, the educational system, authorities and government. Their needs are key elements in how we develop products, services and processes; through systematic feedback, and also by exchanging expertise in respect of various sustainability issues. Finding efficient, secure and sustainable solutions for customers, often relating to large volumes of information, is at the very heart of what we do.

Quality in respect of information security is one of the most important aspects for our customers, and one of the biggest risks. We have held ISO certification in a number of our countries since 2013. In this context, it is crucially important for us to deliver in accordance with ISO27001, quality management systems for information security, and to go on maintaining this level. The quality management systems are specific to each country and require annual updates and audits.

In order to manage the trust which our customers have placed in us, our services are supplied in accordance with established standards such as "ITIL Service Management", which includes a number of processes for the supply of cost-effective IT services based on the customer's business.

The Proact Code of Conduct also constitutes a framework for our employees, allowing them to behave professionally with our customers and do responsible business. Ethical assessments and positions in respect of the business in which we want to be involved are discussed at the business areas' quarterly progress checks with the CEO.

Suppliers

We spend significant sums on procuring goods every year. Most of our suppliers are based in Europe and North America, where compliance with basic human rights is good compared with many other parts of the world. Our suppliers are normally also major corporations that have devised extensive schemes relating to responsible, sustainable enterprise, and we develop long-term partnerships. All our suppliers undergo an approval process which involves evaluation of both product safety and corporate responsibility. As part of our vendor management initiative this year, we have developed an extensive set of questions in order to gain a clear understanding of our suppliers' standards in terms of sustainability. The admission process is also documented in Company handbook, which is an important steering instrument for our operations. We also conduct regular follow-ups and reviews. Our aim is to ensure compliance with international principles relating to human rights, labour law, the environment and corruption.

Environmental agenda Work processes

As a technology company that does not manufacture its own products or have extensive logistics chains, Proact's biggest contribution to environmentally sustainable development rests in high-quality, resourceefficient, sustainable work processes, as well as reduced energy consumption and materials handling.

The company's objective is for all operations to have relevant certification so that they can be pursued in a safe, structured manner in accordance with the local requirements on the market in question. In most cases, the companies in the countries in which Proact works extensively hold accreditation to ISO9001 (quality), ISO14001 (environment) and ISO27001 (data security), but the companies in the countries in which Proact works less extensively are also certified in accordance with of the most common ISO systems.

Energy and materials

As regards energy consumption, we are working in accordance with a devised schedule for reducing the number of data centres within the Group. Reducing the number of data centres will also reduce our consumption of electricity, heating and cooling. The number of data centres remained at the same level last year due to corporate acquisitions. This year, we have two fewer data centres. Another clear objective is to continue to steer towards renewable energy, as well as increasing efficiency utilisation at the remaining data centres. All in all, these initiatives are helping us reduce adverse

impact on the environment. In 2021, we intend to evaluate short-term and long-term benefits, costs and any delays with an environmentally certified data centre strategy.

Circular economy is a prerequisite for sustainable development. Methods and processes devised are used to ensure that biological material is composted, that endof-life electronics are reused to the greatest extent possible and the paper and packaging are recycled correctly at all Proact operations. We aim to always use limited resources efficiently in order to prevent or reduce any harmful impact on the environment as a consequence of what we do. This

involves promoting systems for recycling and reuse of materials and efforts to prevent occupational injuries and illnesses.

Proact operates in compliance with applicable laws and regulations concerning disposal of electronic equipment.

	Area	Objectives for 2020	Outcome
	Code of conduct	Training for all managers	✓
	Leadership	Start measuring and benchmarking a new model of the leadership index for staff surveys	✓
Social agenda	e-NPS (happy employee index)	Increase from 2 to 7	19 ✓
	Diversity	Increase the proportion of women to 30 per cent at all levels by 2025	19
Business-related agenda	Customers	Regular review of customer structure and ongoing contracts in accordance with a structured form Start measuring and benchmarking customer surveys	Regular review ✓ Customer surveys for 2021
	Suppliers	Start work by asking suppliers about their sustainability in accordance with a structured form	✓
mental	Work processes	Retain existing certifications at annual audits	✓
agenda Environ	Energy/data centres	Reduce the number of data centres by two and assess a green data centre strategy	Reduced by two✓ Data centre strategy for 2021

Our most valuable asset

Age structure

Distribution per function

Gender distribution, corporate management Företagsledning

Our vision and strategy, which involves relocating and developing our customer offering and increasing our growth, both organically and through acquisitions, means that our staff and their commitment and development are even more key. Administration 11% Sales and marketing 23% Service operations 66%

We perceive a number of particularly important focus areas that we need to go on developing over the next few years.

Leadership

In a constantly changed world, leadership is all about creating sustainable results by developing both business and staff. Leadership at Proact is a key to maintaining close proximity to customers and staff, and we want to give our managers opportunities and tools to promote their success.

We strive to work in a structured manner and maintain a long-term approach, identifying people with management talent and planning for promotion and succession. Management and succession planning for all country management teams has taken place for the second year in late 2020, as well as our second LTI programme for senior management and key individuals. Ledande befattningshavare

Our managers undergo development through management training within the scope of our own Proact Academy training initiative, or via other initiatives. A development scheme for around 50 Proact managers was formulated in late 2020. This scheme will begin in early 2021 and include a number of modules. It's aim is to enhance skills as regards managing change, and to reinforce Proact managers as well as the company's culture and management network. Men 86% Women 14%

Employer brand and recruitment

We work together with our customers to face up to today's challenges when it comes to storing and managing increasing information and data volumes in society. One of the most crucial elements that makes Proact an attractive employer is that staff are able to get involved in identifying solutions for our customers, working on exciting projects. Men 73% Women 27% Företagsledning

We took on over 100 new employees in 2020 and welcomed around 50 employees via acquisitions. We are becoming increasingly aware of reinforcing our brand both internally and externally, on a long-term basis. Proact is marketed via participation in trade fairs in the industry, running digital campaigns and visiting universities and colleges in order to reinforce the brand -29 years 17% 30-39 years 28% 40-49 years 31% 50-59 years 20% 60- years 4%

externally. When working on our new website, we spent time on reflecting our culture more effectively, communicating the fact that we need a variety of talented people to help us see things from different perspectives, as well as innovative power in order to face up to the challenges of the future. We are proud of our values and our inclusive corporate culture, and we want to show them off. The recruitment process is owned by every manager with the support of HR, ensuring that candidates' experiences are good and that candidates are chosen who match our culture.

Talent development

If Proact is to be able to offer our customers flexible solutions, learning is not an opportunity – it is a must. For the most part, staff learn things as they go about their day-to-day work together with colleagues and customers. We have to offer roles and tasks that allow staff to develop, where everyone feels they are being challenged and are helping to implement Proact's customer solutions and relationships with customers.

To enhance opportunities for learning and bring new staff up to speed more quickly, we also offer Proact Academy. Proact Academy is a platform that offers various forms of training and practice, and it has a number of sub-groups:

• Sales Academy
• Portfolio Academy
• Vendor Academy
• Marketing Academy

The platform has been built during the year to handle recorded material as well, and the content has been extended to include 60 new sessions and use "on demand" services.

Discussions between staff and managers on development and performance are an important factor when it comes to enhancing motivation and commitment. Annual staff appraisals ensure that last are given the opportunity for discussion and to devise plans for development. 82 (73) per cent of staff took part in staff appraisals in 2020. Ledande befattningshavare

Culture and the work environment Men 86%

Proact's values support our vision, forming the basis for our culture and the introduction of new employees. They provide guidance as well as constituting a guiding principle that we can go on striving towards in our partnerships with customers, and within Proact. Women 14%

We perform a staff commitment survey every year in order to give all our staff the opportunity to make their voices heard and let us know how we can work together to improve Proact. A transparent new survey process was Administration 11% Sales and marketing 23% Service operations 66%

introduced this year, where both managers and employees can view the results via a portal. This year's survey achieved a response rate of 79 per cent, representing an increase on previous years. Proact has been given a good score as a recommended place to work, which means that our Employer Net Promotor Score (e-NPS) has risen to 19 (2020) from 2 (2019), the best result in the history of the company. The indices for Proact's team efficiency, engagement and leadership are higher than the benchmarks that include all industries. This survey is a valuable tool for managers and staff alike and provides a basis of structured discussion and improvement of working methods and commitment. The executive team makes decisions on measures of key importance for the company as a whole. Managers present results and report on activity plans for their own respective fields of responsibility. We are devoted to creating a work environment in which everyone feels that they are respected and appreciated and able to do their best.

To be an attractive employer, we need to ensure that our staff have a good and safe environment in which to work. This is important for customers and other stakeholders as well, because maintaining a good work environment for Proact's employees safeguards long-term results. We have also conducted two staff surveys on account of COVID-19, examining employees' situations as they mostly work from home. We surveyed employees' perceptions of information, the company's guidelines, communication with colleagues and managers, duties, work equipment/ technology, anxiety and aspects that could be improved. The results of these surveys have been good, the transition to working from home has surpassed expectations for most people, and the results have remained consistent over time. Among other things, we have increased the amount of information provided and increased financial support to all our staff in order to improve their home workplaces, as well as listening to the suggestions for improvements that they have submitted.

As far as health is concerned, all staff in Sweden are covered by occupational healthcare, which includes regular health checks, vocational rehabilitation and support. Proact companies in other countries have local procedures for occupational health care. Besides this, Proact in Sweden offers all its staff wellness allowances, activities to promote health and medical insurance.

Proact's values

Integrity

• We are independent and navigate by our own compass, on the basis of honesty and respect.
• We are open and clear in our communication.
• We rely on one another and the people with whom we do business.
• We keep our promises and deliver on agreements made.

Commitment

• This constitutes the foundation for all our relationships.
• We formulate clear targets and have the best interests of our customers at heart.
• We guarantee the most outstanding service level possible for the projects we implement.
• We share our knowledge, our experience and our commitment.

Excellence

• Excellence is the very essence of what we supply.
• Decades of experience have given us a knowledge base that we always apply.
• Recruitment, training and development are reflected in our specialist expertise.
• We use our specialist expertise and experience to create custom solutions which add value in both the short and the long term.

Key ratios and figures	2020	2019
Number of employees at year-end	1,022	1,016
Women, %	19	17
Average number of full-time employees	973	834
Employee Net Promoter Score (scale –100 to +100)	19	2

The share

The share

Proact shares have been listed on Nasdaq Stockholm with ticker symbol PACT since July 1999. Share capital amounts to SEK 10,618,837, divided over 9,333,886 shares with a quotient value of 1.14. All shares entitle the holder to an equal share of the company's assets and profits and entitle the holder to one vote at the Annual General Meeting. At the Annual General Meeting, every individual entitled to a vote may vote with the full number of votes he owns and represents in shares, without limitation as to voting rights.

Stock exchange

4.3 million Proact shares for a value of SEK 765 million were traded in 2020 at an average price of SEK 178.66. The share price at the start of the year was SEK 188.80, compared with SEK 273.00 at year-end.

Ownership structure

Proact had 5,659 shareholders as at 31 December 2020, of whom most were private individuals with small holdings. There were 48 shareholders with holdings in excess of 20,000 shares, the largest of these being Aktiebolaget Grenspecialisten with a holding of 1,035,778 shares and Livförsäkringsbolaget Skandia with 1,013,941 shares. Kr Antal aktier 300

At the Annual General Meeting held on 6 May 2020, the Board of Directors was authorised to acquire up to 10 per cent of the company's shares by the next Annual General Meeting. Up to and including 31 December 2020, no shares have been bought back under this authorisation. The company holds 182,269 shares in its own custody as at 31 December 2020. 900 1 200 1 350 225 250 275

As far as the Board of Directors is aware, there are no contracts between shareholders requiring specific information in accordance with the Swedish Company Accounts Act. 600 125 150 175

Shareholder value 100

Shareholder value arises when the company is positioned correctly and has long-term profitability. Proact upholds its creation of longterm profitability for its shareholders by constantly focusing on good business development with improved profitability within the Company and reinforcement of the Company's market-leading position as a specialist and independent integrator in Europe. Proact (Totalavkastning) SIX Return Index Omsatt antal aktier i 1000-tal per månad Källa: WebfinancialGroup 150 2016 2017 2018 2019 2020 50 75

Share price trends

Information to shareholders

The complete annual report for 2020 will be available for inspection at the company's office from mid-April 2021 and will be made publicly available on the company's website. Interim reports are available on the Company's website at www.proact.se. For more information on the company, please contact Proact IT Group AB, telephone +46 (0) 8 410 666 00, email: info@proact.se.

Number of shares per shareholder, 31/12/2020

Holding	Number of shareholders	Percentage of shareholders	Number of shares	Percentage of share capital
1–500	5,050	89.2%	459,018	4.9%
501–1,000	290	5.1%	226,344	2.4%
1,001–5,000	226	4.0%	468,386	5.0%
5,001–10,000	31	0.5%	212,908	2.3%
10,001–15,000	9	0.2%	112,455	1.2%
15,001–20,000	5	0.1%	89,200	1.0%
20,001–	48	0.8%	7,765,575	83.2%
Total	5,659	100.0%	9,333,886	100.0%

Shareholders, 31/12/2020	Number of shares	Percentage of capital and votes
Aktiebolaget Grenspecialisten	1,035,778	11.1%
Livförsäkringsbolaget Skandia	1,013,941	10.9%
Länsförsäkringar Småbolag Sverige	764,623	8.2%
Euroclear Bank S.A/N.V, W8-IMY	658,978	7.1%
Skandia Sverige Hållbar	422,611	4.5%
Unionen	370,000	4.0%
State Street Bank and Trust CO, W9	327,169	3.5%
Alcur Select	302,832	3.2%
HSBC Bank Plc, W8IMY	249,489	2.7%
Skandia Småbolag Sverige	213,159	2.3%
Other	3,975,306	42.6%
Total	9,333,886	100.0%

Key ratios per share

	2020	2019	2018	2017	2016
Profit after tax, SEK1)	14.39	8.75	13.87	12.22	10.32
Share price, 31 Dec, SEK	273.00	184.00	163.40	180.50	146.00
Dividend, SEK2)	4.50	2.50	4.15	3.75	3.50
Direct returns, %	1.6	1.4	2.5	2.1	2.4
Equity, SEK3)	65.78	57.28	51.12	41.37	35.84
Average number of shares, thousands	9,152	9,152	9,158	9,263	9,248
Number of outstanding shares at end of period, thousands	9,152	9,152	9,152	9,205	9,133
Number of bought-back own shares at end of
period, thousands	182	182	182	129	201

1) Calculated on the basis of the weighted average number of outstanding shares. There is no dilution in the periods reported above. Proact have a long-term performance share scheme that may involve dilution not exceeding 0.89 per cent.

2) A decision was made at an extraordinary general meeting held in November 2020 to distribute a dividend of SEK 2.50 per share for the 2019 business year. The Board of Directors will propose distribution of a dividend of SEK 4.50 per share to the 2021 Annual General Meeting for the 2020 business year.

3) Calculated on outstanding shares at end of period.

Five reasons to own shares in Proact

Market-leading offering	Proact has a clear, qualitative offering in the field of data centres with associated consultancy and support services, as well as cloud services. Proact supplies flexible, secure IT services that help customers to reduce risks, lower costs and increase productivity.
Attractive non cyclical market	Increased digitalisation is a clear global market trend, so having an IT function that works well is of increasingly strategic importance and frequently a prerequisite for efficient running of core business. This is why the part of the IT market on which Proact works is relatively insensitive to cyclical fluctua tions. Annual economic market growth has stood at between 1 and 5 per cent over the last few years.
Clear strategy for growth	Implementation of relevant activities relating to the sale, marketing and development of our offering is ensured regularly so as to create good organic growth in existing markets, as well as ensuring that we have relevant partners. There is also expansion into new markets, as well as specialist areas such as security and networks. Growth through acquisitions is another important part of the strategy.
Focus on increased margins	SEK % 4,5 4,5 To improve the EBITA margin, we will be continuing to focus on good cost control and continuous 4,0 4,0 streamlining of our business. The target of increasing the percentage of contracted services from 3,5 3,5 the company's total revenues will have a positive effect on the EBITA margin. 3,0 3,0 2,5 2,5
	2,0 2,0 1,5 1,5
Share dividend	Utlandsboende 1,0 1,0 ägare 28% Finansiella 0,5 0,5 Proact's business has a strong cash-generating ability thanks to low investment needs and företag 39% 0,0 0,0 efficient management of operating capital. The company's policy on dividends is to allocate 25–35 Övriga juridiska 2016 2017 2018 2019 2020 personer 17% per cent of its profit after tax. Svenska fysiska Utdelning per aktie, SEK Direktavkastning, % personer 12% Föreslagen utdelning 2020
	Intresse- organisationer 4%

Distribution of ownership, % of capital (Euroclear)

Dividends

Directors' report

The Board of Directors and the Chief Executive Officer of Proact IT Group AB (publ), corporate ID number 556494-3446, hereby submit the annual financial statements and consolidated financial statements for the 2020 financial year. The consolidated balance sheet and income statement and the balance sheet and income statement for the parent company will be ratified at the Annual General Meeting on 6 May 2021.

General information

The name of the company is Proact IT Group AB (publ), and it has its registered office in the Municipality of Stockholm, Sweden, at the address Kistagången 2, 164 28 Kista. The company has been listed on Nasdaq Stockholm under the ticker symbol PACT since 1999.

Business approach

Proact is one of Europe's leading data and information management specialists, focusing on cloud services and data centre solutions. We help our customers to store, network, protect, secure and add value by means of data, focusing on increased flexibility, productivity and efficiency. Proact has implemented thousands of successful projects all over the world, has more than 4,000 customers and manages hundreds of thousands of petabytes of information in the cloud. Proact comprises wholly-owned and partly-owned subsidiaries in Europe and North America. As at 31 December 2020, Proact employed 1,022 staff in Belgium, Denmark, Estonia, Finland, Latvia, Lithuania, the Netherlands, Norway, Slovakia, Spain, the United Kingdom, Sweden, the Czech Republic, Germany and the USA.

Proact Finance AB is a wholly-owned subsidiary which offers customers financial services for both services and products via the Group's other subsidiaries.

The parent company, Proact IT Group AB (publ), is globally responsible for issues relating to the Group as a whole.

The past year

The company has continued to develop its portfolio in 2020, primarily with regard to cloud services, and a number of new products and solutions have been introduced. The integration of PeopleWare, which was acquired in November 2019, was completed.

The COVID-19 pandemic has left its mark on much of the year, and the management team have been regularly following up its impact on the company's customers, suppliers and employees. A cost scheme was implemented during the year, and it is thought that this will lead to annual savings of SEK 40 million.

October saw the acquisition of service provider Cetus Solutions Ltd., operating in the United Kingdom, at a purchase price of GBP 10 million.

The company saw growth of 7 per cent in 2020 while also concluding cloud contracts worth a total of SEK 331 (341) million, representing a decline of 3 per cent compared with the previous year. Adjusted EBITA amounted to SEK 219.4 (165.6) million. This increase is due mainly to a reduction in sales and administration costs. Cash flow has been positive, and the company has net cash amounting to SEK 22 million.

Group revenue and profit

For 2020 as a whole, the company's revenues amounted to SEK 3,633 (3,408) million, representing an increase of 7 per cent.

Revenues per Business Unit	Jan–Dec 2020	Jan–Dec 2019	Jan–Dec 2018
Nordics	1,745	1,715	1,570
UK	605	565	630
West	1,118	959	967
East	192	202	179
Proact Finance	105	97	97
Groupwide	–132	–131	–125
Total revenues	3,633	3,408	3,318

For Business Unit Nordics, total revenues increased by 2 per cent. System revenues increased by 1 per cent, while service revenues increased by 5 per cent. For Business Unit UK, total revenues increased by 7 per cent. Organic growth amounted to 5 per cent. System revenues increased by 20 per cent, while organic growth amounted to 16 per cent. Revenues from service operations fell by 4 per cent, and organically the decrease also amounted to 4 per cent. For Business Unit West, total revenues increased by 17 per cent, declining organically by 5 per cent. System revenues fell by 14 per cent, while service revenues increased by 59 per cent. System revenues fell organically by 18 per cent, while service revenues increased by 16 per cent. For Business Unit East, total revenues fell by 5 per cent. Organically, this decrease amounted to 3 per cent. System revenues fell by 8 per cent, while service revenues increased by 1 per cent. System revenues fell organically by 7 per cent, while service revenues increased by 3 per cent. Future contracted cash flows from Proact Finance amounted to SEK 171 (162) million as at 31 December 2020. Handel & Tjänster 19% (22) Oentlig Sektor 28% (25) Telekom 10% (9) Tillverkande Industri 12% (15) Olja, Energi 6% (7)

Proact has good revenue distribution in respect of its various industry segments. The three biggest industry segments are Public Sector, Trade & Services and Manufacturing Industry. Media 2% (2) Övrigt 15% (11)

Revenues per sector

Retail and Services 19% (22) Public Sector 28% (25) Telecoms 10% (9) Manufacturing Industry 12% (15) Oil, Energy 6% (7) Banking, Finance 8% (9) Media 2% (2) Other 15% (11)

Revenues per operating segment	Jan–Dec 2020	Jan–Dec 2019	Jan–Dec 2018
System sales	2,192	2,203	2,175
Service operations	1,440	1,203	1,139
Other revenues	1	2	4
Total revenues	3,633	3,408	3,318

1) Currency effects are the differences between profit for the year, translated at the currency exchange rates for the year and the previous year respectively.

System revenues remained unchanged compared with the previous year, amounting to 2,192 (2,203) during the year. When adjusted for currency effects1) and acquisitions, system revenues fell by 1 per cent. The revenues for the services business, attributable to consultancy services, contract customer support, management and cloud services, increased by 20 percent compared to the previous year. When adjusted for currency effects1) and acquisitions, service revenues increased by 5 per cent.

New agreements for cloud services have been signed for a value of SEK 331 (341) million. The revenues from cloud services are recognised as income over the term of the contract, which is normally between 3 and 5 years. Both customer support and cloud services are contributing to a positive development of the company's total contracted revenues, which is important for the company's future growth in profits. Revenues for the year from cloud services totalled SEK 716 (523) million, an increase of 37 per cent.

Adjusted operating profit before depreciation of intangible assets, adjusted EBITA, for the full year 2020 totalled SEK 219 (166) million, which is an increase of 32 per cent compared to the previous year. Profit before tax amounted to SEK 168 (102) million for the same period, representing an increase of 65 per cent.

EBITA per Business Unit	Jan–Dec 2020	Jan–Dec 2019	Jan–Dec 2018
Nordics	118.3	95.6	71.2
UK	39.1	34.3	46.2
West	48.9	22.4	71.8
East	18.8	15.6	16.1
Proact Finance	–0.4	–1.7	0.3
Groupwide	–5.2	–0.6	–2.6
Adjusted EBITA (before
exceptional items)	219.4	165.6	203.0
Exceptional items	–2.8	–31.5	–2.6
EBITA	216.7	134.2	200.5

EBITA improved at Business Unit Nordics during the year, mainly due to an improvement in the profitability of service operations and the fact that sales and administration costs fell by 7 per cent. EBITA improved at Business Unit UK, primarily due to an organic reduction in sales and administration costs amounting to 7 per cent, along with the acquisition of Cetus. EBITA improved at Business Unit West during the year. The improved EBITA margin is due primarily to the effects of improvements implemented previously in Germany. EBITA also improved at Business Unit East due to higher gross margins and a 6 per cent reduction in sales and administration costs.

The reported tax expense over the financial year amounted to SEK 35 (22) million, equivalent to an effective tax rate of 21 (21) per cent.

Earnings per share amounted to SEK 14.39 (8.75).

Financial position and cash flow

The Group's cash and cash equivalents totalled SEK 468 (373) million as at 31 December 2020. In addition to this, the Group has an unused overdraft facility of SEK 198 (253) million. The equity ratio was 20.7 (18.3) per cent as at 31 December 2020. Net debt have fallen by SEK 183 million over the year, and as at 31 December 2020 the company has net cash of SEK 22 million. Excluding leasing liabilities, the Group has net cash amounting to SEK 257 million.

Cash flow amounted to SEK 126 (96) million for the year as a whole, of which SEK 468 (330) million was from operating activities. SEK 105 (94) million has been invested in fixed assets, of which SEK 50 (48) million was invested in Proact Finance in respect of customer deliverables, and SEK 48 (108) million has been paid out in respect of acquisition of companies. A change in loans from credit institutes and use of overdraft facilities have had a total impact of SEK 11 million on cash flow. Dividends paid to the parent company's shareholders amounted to SEK 23 (38) million.

Of total bank overdraft facilities of SEK 198 (253) million, SEK 0 (0) million has been utilised. Bank loans amount to SEK 212 (231) million. The parent company has bank loans of SEK 212 million relating to a three-year credit facility totalling SEK 350 million. The credit facility has a one-year extension option that was exercised in 2020, and hence the loan will run until October 2023. This bank loan includes lending terms in respect of net debt in relation to EBITDA. The lending terms have been met by a good margin in 2020 and as at 31 December 2020. The Group also uses invoice factoring in Sweden and Finland.

Total goodwill for the Group amounts to SEK 552 (516) million, attributable primarily to the operations in the Netherlands, the United Kingdom, Sweden, Germany and Norway. Other intangible assets amount to SEK 112 (93) million and are depreciated over a useful life of five to ten years. The increase in goodwill and other intangible assets relates primarily to the acquisition of Cetus Solutions.

The Group's total deductions for losses amount to SEK 95 (129) million. It has been assessed that of this amount, SEK 5 (11) million can be made use of against future taxable profits and the tax effect of the estimated future deduction has been recorded as a deferred tax claim. As at 31 December 2020, a total of SEK 16 (16) million has been recorded as deferred tax receivables, of which SEK 1 (3) million is attributable to fiscal deficits. Tax expense for the year amounts to SEK 35 (22) million. Tax paid throughout the year amount to SEK 40 (46) million.

Employees

The average number of employees over the year was 973 (834). On 31 December 2020, the company employed 1,022 (1,016) people. The acquisition of Cetus Solutions has contributed 47 people.

Parent company

The parent company's revenues totalled SEK 109 (101) million. Profit before tax for the year amounted to SEK 54 (60) million. This result is largely due to dividends and Group contributions from subsidiaries. The parent company's liabilities in a joint Group currency account amounted to SEK 297 (265) million as at 31 December 2020. At the end of the period, the number of people employed by the parent company totalled 16 (18).

The parent company's operations remained unchanged during the period and comprise groupwide functions and work relating to capital market and shareholder relations. There have been no significant transactions with related parties besides those with the executive in the capacity of employees.

Environment

The company does not carry on any business affected by registration or licence obligations under the Swedish Environmental Code.

Research and development

The company's research and development operations are run by means of an innovation process established within the company. This process is ensuring that the company will meet the market's needs and requirements as effectively as possible, and also that new products and services will be developed in a time-efficient, costeffective manner. No research and development expenditure has been capitalised.

The company also maintains close contact with the leading and most important suppliers of data storage and cloud service systems. The company also keeps track of technical developments in the company's focus areas by means of participation in trade fairs and seminars.

Risks and uncertainty factors

The Group manages financial risks on the basis of a finance policy laid down by the Board. The Group's operational risks are mainly assessed and managed by the Group executive and reported to the company's audit committee and Board of Directors.

For a detailed description of risks and risk management, see the section entitled "Risks and risk management".

Board and executive

Jonas Hasselberg has been Chief Executive Officer and President of Proact IT Group AB since 1 September 2018. Other senior executives in 2020 were Ann-Charlotte Arnshav (VP Service Operations), Sander Dekker (Business Unit Director West) (until April), Danny Duggal (VP Commercial & Communications), Jonas Ekman (VP Mergers & Acquisitions), Linda Höljö (CFO) (from August 2020), Peter Javestad (VP Business Transformation), Mark van Liempt (Business Unit Director West) (from May), Sara Ossborn (VP People & Culture), Jonas Persson (CFO) (until July 2020), René Schülein (Business Unit Director Central from June), Per Sedihn (CTO & VP Portfolio & Technology) and Martin Thompson (Business Unit Director UK).

Eva Elmstedt was re-elected Chairman of the Board at the Annual General Meeting on 6 May 2020. Martin Gren, Annikki Schaeferdiek and Thomas Thuresson were re-elected to the Board. Board member Erik Malmberg was elected.

Each year, the Board defines an agenda for the Board and instructions for the Managing Director. This agenda determines – among other things – which issues are to be discussed, the forms of Board meetings, minutes and reports, as well as the distribution of work between the Board and the CEO.

The Board has met eleven times in 2020. At all ordinary general meetings, the Board has discussed Proact's operations and financial position, looking at lines of business and financial administration. In addition, the Board has discussed strategic issues such as financial targets, the establishment of business and operational plans, acquisitions, issues relating to personnel and organisation, legal issues and essential policies. Individual Board members have assisted the Group executive on various issues of a strategic nature. The Board has appointed two Board members to make up an audit committee

and two to make up a remuneration committee. The company's auditor participates in Board meetings at least once a year and on such occasions reports on observations from the inspection. The audit committee has met five times over the year. The company's auditor has participated in all meetings of the audit committee throughout the year.

Guidelines on remuneration for senior executives

The 2020 Annual General Meeting decided that the following guidelines for remuneration to senior executives should apply until the 2024 Annual General Meeting, unless circumstances arise that necessitate revision of this at an earlier stage.

These guidelines include the CEO, the Vice President and the corporate management team. The guidelines must be applied to remuneration agreed and amendments made to remuneration agreed previously when the guidelines have been adopted by the 2020 Annual General Meeting. The guidelines do not cover remuneration decided upon by the Annual General Meeting.

Promotion of the company's business strategy, long-term interests and sustainability by the guidelines

The combination of digitalisation and rapid technical development in the fields of data analytics and artificial intelligence, for example, means that customers' IT infrastructures are becoming increasingly complex, with growing information volumes. If Proact is to be relevant to customers, it must go on ensuring an excellent customer experience and providing a market-leading offering and delivery model.

Essentially, Proact is working in accordance with the following strategies in order to achieve this:

• Development of the offering By constantly developing our offering, we must meet the ever-changing needs of the market and so always be able to offer our customers the most effective and up to date solutions, such as hybrid clouds and "multi-clouds". We are independent of suppliers and build our solutions using products from both market leaders and new niche stakeholders.
• Focus on customers We must make the most of the potential in our existing customer base by maintaining strong, close relationships with customers. Moreover, we have to step up our efforts to reach out to new customer segments and industries with our offering.
• High-quality services A cost-effective organisation is created by means of consistent processes and procedures. Our core values – integrity, commitment and excellence – constitute the foundation for our corporate culture and create consensus with regard to how we add value for all our stakeholders. We will streamline our operations further by continuing to provide high-quality services, optimising through digitalisation and gathering together our specialist expertise.
• Corporate acquisitions We will be continuing to focus on completing organic growth with strategic corporate acquisitions that will lead to increased market share and growth in strategic areas, as well as helping to improve profitability and achieve a healthier balance between systems and services.

Successful implementation of the company's business strategy and safeguarding of the company's long-term interests, including its sustainability, require the company to be able to recruit and retain qualified staff. For this, the company needs to be able to offer competitive remuneration. These guidelines make it possible to offer senior executives competitive overall remuneration.

Long-term share-related incentive schemes have been established within the company. Decisions on these have been made by the Annual General Meeting, so they are not covered by these guidelines. This is why the long-term share related incentive scheme proposed by the Board for adoption by the 2020 Annual General Meeting is not covered either. This scheme essentially corresponds to existing schemes. These schemes include the CEO and corporate management team, among others. The performance requirements used to assess the outcome of the schemes are clearly linked with the business strategy, and hence to the company's long-term value creation, including its sustainability. These performance requirements currently include profit per share and net revenues. The schemes also define requirements for personal investment and multi-year holdings.

Flexible cash remuneration covered by these guidelines must aim to promote the company's business strategy and long-term interest, including its sustainability.

Forms of remuneration, etc.

Remuneration must be in line with market conditions and must comprise the following components: fixed cash salary, flexible cash remuneration, pension benefits and other benefits. The Annual General Meeting may also – independently of these guidelines – make decisions on remuneration related to shares and share prices, for example.

It must be possible to gauge compliance with criteria for the payment of flexible cash remuneration over a period of one or more years. The flexible remuneration must be limited in terms of the maximum amount paid annually and on average, and flexible cash remuneration for senior executives must amount to no more than 70 per cent of the fixed annual cash salary.

Further flexible cash remuneration may be payable under extraordinary circumstances, provided that such extraordinary events are limited in time and are implemented merely at individual level, either with a view to recruiting or retaining employees or as compensation for extraordinary effort that goes above and beyond the individual's regular work. Such remuneration must not exceed an amount equivalent to 50 per cent of the fixed annual cash salary, and it must not be paid more than once per year per individual. Decisions on such remuneration must be made by the Board pursuant to proposals by the remuneration committee.

Pension benefits, including health insurance, must be of definedcontribution type for the Chief Executive Officer. Flexible cash remuneration must not be pensionable. The pension premiums for defined-contribution pension must amount to no more than 30 per cent of the fixed annual cash salary. Pension benefits, including health insurance, must be of defined-contribution type for other senior executives unless the executive is covered by a defined-benefit pension according to compulsory collective agreement provisions. Flexible cash remuneration must the pensionable to the extent defined by compulsory collective agreement provisions that are applicable to the executive. The pension premiums for definedcontribution pension must amount to no more than 25 per cent of the fixed annual cash salary.

Other benefits may include life insurance, health insurance and car benefits. Premiums and other expenses relating to such benefits must not exceed, in total, a maximum of 20 per cent of the fixed annual cash salary.

As regards employment conditions governed by regulations other than Swedish ones and relating to pension benefits and other benefits, appropriate adjustments may be implemented in order to ensure mandatory compliance with such regulations or defined local practice, complying with the overall purpose of these guidelines as far as possible.

Termination of employment

When employment is terminated by the company, the notice period must not exceed twelve months. In total, fixed cash salary during the notice period and severance pay must not exceed an amount corresponding to eighteen monthly salaries for all senior executives. When employment is terminated by the executive, the notice period must not exceed six months, with no entitlement to severance pay.

Criteria for allocation of flexible cash remuneration, etc.

Flexible cash remuneration must be linked to predefined, measurable criteria, which may be financial or non-financial. They may also involve customised quantitative or qualitative targets. These criteria must be formulated so that they promote the company's business strategy and long-term interests, including sustainability, by maintaining a clear link to the business strategy, for example, or promoting the long-term development of the executive.

The extent to which the criteria have been met must be assessed/ established when the measurement period for compliance with criteria for payment of flexible cash remuneration comes to an end. The remuneration committee prepares the assessment in respect of flexible cash remuneration to the Chief Executive Officer. The Chief Executive Officer is responsible for assessment in respect of flexible cash remuneration to other officers. As far as financial targets are concerned, this assessment must be based on the latest financial information published by the company.

Salaries and employment terms for employees

When preparing the Board's proposals for these remuneration guidelines, salaries and employment terms for the Group's employees have been taken into account in that information on employees' overall remuneration, remuneration components, increases in remuneration and the rate of increase over time have constituted elements in the decision data used by the remuneration committee and the Board when evaluating the fairness of the guidelines and the restrictions pursuant to the same. The development of the difference between remuneration to senior executives and remuneration to other employees will be outlined in the remuneration report.

The decision-making process for establishing, reviewing and implementing the guidelines

The Board has established a remuneration committee. The work of the committee includes preparing the Board's decisions regarding proposals for guidelines for remuneration to senior executives. The Board must compile proposals for new guidelines every four years as a minimum and submit these proposals to the Annual General Meeting for a decision to be made. The guidelines must apply until new guidelines have been adopted by the Annual General Meeting. The remuneration committee must also monitor and evaluate flexible remuneration schemes for the corporate executive, the application of guidelines for remuneration to senior executives and applicable remuneration structures and remuneration levels within the company. The Chief Executive Officer and other members of the corporate executive do not attend Board meetings to discuss and make decisions on issues relating to remuneration if they are impacted by the issues at hand.

Deviating from the guidelines

The Board may decide to deviate entirely or partly from the guidelines on a temporary basis if there are specific reasons for doing so in a particular case and deviation is necessary in order to safeguard the long-term interests of the company, including its sustainability, or in order to guarantee the financial strength of the company. As stated above, the work of the remuneration committee includes discussing the Board's decisions on remuneration issues, which includes decisions on deviation from the guidelines.

There have been no deviations from the guidelines in 2020.

Performance share scheme

A decision was made at the Annual General Meeting on 6 May, with the requisite majority, to implement a performance share scheme in accordance with the Board's proposal. The 2020 performance share scheme follows the same structure as the performance share scheme decided upon at the 2019 Annual General Meeting, but it includes a further performance target linked with Proact's return on capital employed. The 2020 performance share scheme has been formulated to drive profitability and growth and includes around 17 individuals; the company's Chief Executive Officer, the Group executive and other key individuals within the company. For more information, see note 9.

Corporate governance

Corporate governance at Proact IT Group AB (publ) is based on the Companies Act, the Swedish Company Accounts Act, the Articles of Association, the listing agreement with Nasdaq Stockholm and the Swedish Code of Corporate Governance. The corporate governance report, including the Board of Directors' report on internal auditing for 2020, has been compiled as a separate document which can be found on page 29. The report is also published on the Proact website.

Sustainability report

In accordance with Chapter 6, section 11 of the Swedish Company Accounts Act, Proact IT Group AB (publ) has compiled the statutory sustainability report as a report separate from the annual financial statements. The content of this report can be found on page 12.

Ownership structure

Proact shares have been listed on Nasdaq Stockholm with ticker symbol PACT since July 1999. Proact had 5,659 (4,763) shareholders as at 31 December 2020, of whom most were private individuals with small holdings. The two biggest shareholders, each with holdings in excess of 10 per cent, were Aktiebolaget Grenspecialisten with a holding of 11.1 per cent and Livförsäkringsbolaget Skandia with a holding of 10.9 per cent.

As far as the Board of Directors is aware, there are no contracts between shareholders requiring specific information in accordance with the Swedish Company Accounts Act.

The share

Share capital amounts to SEK 10,618,837, divided over 9,333,886 shares with a quotient value of 1.14. All shares entitle the holder to an equal share of the company's assets and profits and entitle the holder to one vote at the Annual General Meeting. At the Annual General Meeting, every individual entitled to a vote may vote with the full number of votes he owns and represents in shares, without limitation as to voting rights.

Buy-back of own shares

Shares are bought back partly with a view to adjusting the company's capital structure, and partly with a view to using bought-back shares as cash in or for the financing of acquisitions of companies or businesses.

At the Annual General Meeting held on 6 May 2020, the Board of Directors was authorised to acquire up to 10 per cent of the company's shares by the next Annual General Meeting. Up to and including 31 December 2020, no shares have been bought back under this authorisation.

During 2020, no shares in the company's own custody have been used for acquisitions of companies.

The total number of own shares held by the company is 182,269 as at 31 December 2020, which is equivalent to 2.0 per cent of the total number of shares. The total purchase price paid for shares in own custody is SEK 32.5 million, corresponding to an average acquisition value of SEK 178 per share.

Significant events after the end of the fiscal year

No significant events have occurred after the end of the financial year.

Expectations of the future

Most of our customers are large and medium-sized companies and organisations within a range of different industries on the majority of markets in Europe. The rapid rate of digitalisation taking place within the majority of industries means that IT is taking on more and more strategic importance, as an IT function that works well is frequently a prerequisite for efficient running of the core business. In turn, this means that the underlying growth in digital business-critical information is still high. The combination of rapid digitalisation and the increasing volume of business-critical information means that IT infrastructure is becoming increasingly complex and new demands are being made. As a result, more and more companies and organisations are evaluating options for using various services

and new fields of technology in order to simplify their IT operations and ensure that their supply of IT services meets the requirements defined by business operations and their customers.

Securing business-critical information is of the utmost importance, no matter what it involves: following various regulations or legal requirements, or ensuring protection against mistakes, sabotage or malicious program code. Hence information security is a very important part of any business and affects the business decisions made.

One clear market trend is that more customers are wanting to offer in-house IT as a service, where users themselves order and consume different types of IT service based on the needs of each individual user. To facilitate the supply of IT as a service, companies and authorities are implementing a combination of private and public cloud services, known as hybrid clouds, to an ever-increasing extent. The aim of this is to be able to supply cost-effective, flexible IT services to both internal and external users.

Besides the above market trends, automation – for example – is a field that is becoming increasingly important as it creates opportunities for facilitating administration, hence reducing complexity and risks. Automating the underlying elements at a data centre allows IT services to be supplied more quickly, and these services are more capable of supporting the commercial requirements and needs demanded by the business.

The need for ongoing streamlining, as well as a growing demand for solutions and services in Proact's specialist fields, is indicating major potential for growth for the company. Proact has established methods, processes and services to offer so as to meet demand on the market and provide the most effective support to its customers.

Dividend policy

The company's policy on dividends is adapted to suit the Group's profit level, financial position and investment requirements. The dividend proposal is weighed up between shareholders' expectations for reasonable direct returns and the company's need to be able to finance itself. In the long term, Proact intends to issue a dividend of 25–35 per cent of profits after tax.

Dividend proposal and proposed appropriation of profits

The Board of Directors will propose a dividend of SEK 4.50 (2.50) per share to the Annual General Meeting for the 2020 business year.

The Annual General Meeting has at its disposal:

Total non-restricted equity	319,080,466	SEK
Profit for the year	52,455,797	SEK
Retained earnings	266,624,669	SEK

The Board of Directors proposes appropriation of retained earnings as follows:

Total	319,080,466	SEK
Carried forward	277,898,189	SEK
Dividend, SEK 4.50 per share	41,182,277	SEK

There are 9,333,886 registered shares within the company, of which – as at 30 March 2021 – 182,269 shares are bought-back own shares not entitled to dividends.

The Board submits the following statement of motivation in accordance with Chapter 18, Subsection 4 of the Companies Act in respect of the proposal on appropriation of profits:

The proposed dividend amounts to 10 per cent of the company's equity and 7 per cent of the Group's equity. Non-restricted equity in the parent company at the end of the 2020 financial year amounted to SEK 319,080,466. The annual report indicates that the Group's equity ratio amounts to 20.7 per cent. It may further be noted that the Group has cash and cash equivalents amounting to approximately SEK 468 million, unutilised bank overdraft facilities amounting to approximately SEK 198 million and net cash of SEK 22 million.

For the company's accounted profit/loss for the financial year and its situation as at 31 December 2020, please see the income statement and balance sheet below, the equity report and the cash flow analyses, as well as the notes pertaining to these.

Risks and risk management

Proact's risk management aims to identify, control and reduce risks linked with its operations. Most of these activities take place within each subsidiary, but certain legal, strategic and financial risks are managed at Group level. Risks relating to market and operations are managed within each subsidiary. As most of the risks relating to operations are attributable to Proact's relationships with customers and suppliers, these are evaluated regularly so as to be able to determine the business risks involved.

liquidity problems, declining sales and, in the longer term, impact on profit. Given this fact, Proact is working to ensure short-term solutions, while in parallel devising long-term options for the prevailing situation. As things stand at present, Proact has a better insight into the short-term consequences of COVID-19 and is still of the opinion that the Group can manage the situation in the short term as the company has good liquidity and stable finance. The Company's has every chance of continuing to provide contracted services such as support and operating services and outsourcing services. However, there is still significant uncertainty concerning the future development of the pandemic and its impact on economies and companies. There is still a risk of negative impact on supply chains, which in turn may affect access to the products and components sold by the company. Proact has not furloughed personnel and has only received government funding in the form of a very limited

reduction in social security contributions.

CONT. MARKET RISKS PROBABILITY HANDLING IMPACT

Products and technology

The IT sector is constantly undergoing development as regards products and technology, with requirements for more efficient solutions helping users to save money.

Competitors

Most competition comes from integrators focusing on general IT business, public cloud services suppliers and global IT service companies.

Currency risk

Currency risk is the risk of changes in currency exchange rates having an adverse effect on the income statement, balance sheet and cash flow.

Proact is constantly evaluating new technologies, products and services in close partnership with its customers and suppliers to be able to provide the best solutions possible for the market.

Proact's competitive advantages lie mainly in being an independent integrator with specialist expertise and extensive experience with regard to data centres with associated consultancy and support services, and also in the field of cloud services.

Proact is particularly subject to exchange rate risks in the USD and EUR currencies, as most of its purchases are from suppliers which invoice in these currencies. The currency risk which may arise is managed by means of a currency clause with customers which covers the currency risk which may occur from the time of tendering until delivery to the customer, and also by hedging major purchases in foreign currencies. Under Proact's financial policy, all exposure in excess of EUR 200 thousand/USD 250 thousand must be hedged. The fair value of outstanding forward contracts as at 31 December 2020 amounted to SEK +2,313 (–2,835) thousand. The purchase and sale of foreign currencies is reported in note 14.

Sensitivity analysis

The Group's profit is affected by factors such as changes in foreign currency exchange rates in relation to SEK. Many of the Group's purchases are made in EUR and USD, while at the same time sales to end customers are made in local currency.

A 10 per cent change in currency exchange rates would affect profit before depreciation as follows:

SEK/EUR –10% SEK +/–19 million (effect on equity after tax SEK +/–14 m) SEK/USD +/–10% SEK +/–12 million (effect on equity after tax SEK +/–9 m) The effects above have been calculated based on circumstances in 2020 and the events must be viewed as isolated, without measures being taken to compensate for any drop-off in earnings.

In accordance with the Group's financial policy, all external borrowings have short interest terms; three months on average. No interest rate derivatives were utilised to manage this risk in 2020. Lending and interest rates are specified in greater detail in Note 24.

Sensitivity analysis

An instantaneous reasonable change in the interest rate as at 31 December would have no significant impact on the Group's profit or equity. The balances attributable to interest-bearing liabilities are not affected by an instantaneous change in the interest rate as they are valued at accrued acquisition cost. Liabilities to credit institutions have variable interest rates, and the reported interest rate is on a par with the current interest rate on liabilities to credit institutions, and other financial assets and liabilities have short terms. On the basis of this, the book values of all financial assets and liabilities are deemed to be a reasonable estimate of their fair values.

Interest risks

Interest risk is the risk that permanent changes in market interest rates will adversely affect cash flow or the fair value of financial assets and liabilities. Interest rate risk exposure arises mainly from outstanding external loans. The impact on net interest is partly due to average interest terms on borrowings.

FINANCIAL RISKS PROBABILITY HANDLING IMPACT

Liquidity risk Liquidity risk is the risk of the company not being able to meet its payment obligations in full, or of only doing so on significantly unfavourable terms due to a shortage of cash.

Fundamentally, liquidity risk is managed with caution at Proact. Liquidity planning, in combination with credit limits and lending facilities, is used to ensure that the Group has sufficient liquid funds at all times.

At the end of the year, Proact had cash and cash equivalents amounting to SEK 468 (373) million and an unutilised overdraft facility of SEK 198 (253) million, and at the same time net cash has increased by SEK 183 million to SEK 22 million during the 2020 financial year. Liabilities relating to leasing in accordance with the IFRS 16 accounting rules – see also Note 27 – has had a negative impact on net cash in the amount of SEK 234 million. Excluding leasing liabilities, the company has net cash amounting to SEK 257 million. According to the company's finance policy, the parent company must manage the Group's investments of surplus liquidity. Investments must be made in bank accounts or in interest-bearing Swedish securities. Securities must relate to government bonds or certificates issued by banks or by brokers owned by banks. Investments must only be made in certificates with a K1 rating or in certificates issued by finance companies which are under the supervision of the Swedish Financial Supervisory Authority. No investments may have a term longer than six months. Short-term liquidity requirements are currently provided for by overdraft facilities. To ensure that these needs can be met, a strong financial position is required in combination with active efforts to gain access to such credit.

CONT. FINANCIAL RISKS PROBABILITY HANDLING IMPACT

Finance risk

"Finance risk" relates to the risk of the financing of the Group's capital requirements and refinancing of outstanding loans being impaired or made more expensive.

Bank loans amount to SEK 212 million. The parent company has bank loans of SEK 212 million relating to a three-year credit facility totalling SEK 350 million. The credit facility had a one-year extension option that expired in November 2020: this option was exercised and the loan will therefore continue to run until October 2023. This bank loan includes lending terms in respect of net debt in relation to EBITDA. The lending terms have been met by a good margin in 2020 and as at 31 December 2020. See Note 24 for further information. The company also uses invoice factoring in Sweden and Finland. With invoice factoring, the risk remains with the company until the customer pays. Overdraft facilities granted amounted to SEK 198 million, of which SEK 198 million was unutilised as at 31 December 2020. The company is unable to guarantee that no capital requirement will arise. Failure to generate profits or meet future needs for finance may substantially affect the market value of the company.

Capital

The group's objective is to maintain a stable financial position which safeguards the Group's ability to continue operating and generating returns for shareholders, while also benefiting other stakeholders.

Credit/counterparty risk

Credit risk is the risk that the counterparty in a transaction will not meet its financial obligations and that collateral does not cover the company's receivable.

Proact's managed capital consists of equity. The company's objective is to use established strategies to achieve a good financial position and so prepare profits for shareholders by increasing the value of the managed capital. There are no external capital requirements other that those referred to in the Swedish Companies Act. A dividend of SEK 22,879,043, equivalent to SEK 2.50 per share, was issued in 2020 for the 2019 business year.

The predominant element of Proact's credit risk relates to receivables from customers. Proact's sales are divided over a large number of end-customers spread over a broad geographical area, which limits the concentration of credit risk. The credit risk within the Group must be kept to a minimum by establishing a credit limit for each and every one of the company's customers and partners, as well as entering into contracts where considered necessary with a view to minimising credit risk. Below is an analysis of accounts receivable as at 31 December:

2020 % 2019 % Not due 468.5 86.5% 515.7 84.1% <30 days 56.9 10.5% 80.6 13.1% 31–60 days 8.9 1.6% 12.6 2.0% 61–90 days 5.2 1.0% 1.8 0.3% >90 days 2.0 0.4% 2.8 0.4%

The credit quality of non-overdue receivables is deemed to be good. Customer losses for the year amount to SEK 263 (309) thousand. Reserves for uncertain receivables amount to SEK 4,858 (1,041) thousand. Of total trade receivables, 3 (3) per cent are older than 30 days.

SUSTAINABILITY RISKS	PROBABILITY	HANDLING	IMPACT
Risks involving business ethics Proact must be awarded assignments in accordance with applicable procurement rules and on the basis of principles involv ing business ethics.		Proact maintains a zero tolerance approach to bribery in accordance with the Proact code of conduct, which all employees have viewed. The company has a whistleblower policy that provides all staff with informa tion on how to report suspected deviations. One whistleblower case has been dealt with during the year.
Equality and diversity To promote diversity in the workplace.		Proact ensures that people with similar qualifications are given the same employment terms and opportunities without diction or discrimi nation on the basis of age, race, skin colour, national origin, religion, gender or disability.
Social and environmental responsibility To comply with applicable laws, standards and guidelines in respect of health, safety and the environment.		Proact operates in compliance with all applicable laws and industry standards with regard to working hours and working conditions for staff, and undertakes appropriate measures to ensure that our suppliers also operate in compliance with these laws and standards. Proact tolerates no forms of contemporary slavery, human trafficking or breaches of human rights in either the business or the supply chain. Proact always aims to use limited resources efficiently in order to prevent or reduce any harmful impact on the environment as a consequence of what the company does.

Corporate governance report

Proact IT Group AB (publ) is a parent company in the Proact Group which consists of a number of subsidiaries as outlined in the annual report, Note 17.

This corporate governance report has been compiled in accordance with the Swedish Company Accounts Act and the Swedish Code of Corporate Governance.

The parent company and Group are governed via the Annual General Meeting, the Board of Directors and the Chief Executive Officer in accordance with the Swedish Companies Act, the Swedish Company Accounts Act, the company's Articles of Association, the listing agreement with Nasdaq Stockholm and the Swedish Code of Corporate Governance. This code is based on the "comply or explain" principle. Proact deviates from the recommendations of the code in respect of one item: the company's half-yearly and nine-monthly reports have not been reviewed by the auditors. The Board is of the opinion that any such review on the basis of a cost perspective is not necessary, given the company's degree of complexity and business risks.

Governance structure

Annual General Meeting

The Annual General Meeting is the supreme governing body of Proact. The Annual General Meeting of Proact IT Group AB is held annually in April or May adjacent to the company's head office in Kista. The time and date of the meeting are published at the latest when the interim report for the third quarter is issued and published simultaneously on the company's website. The Annual General Meeting elects Proact's Board of Directors and its Chairman. The other tasks of the Annual General Meeting also include:

• approving and adopting the company's income statements and balance sheets;
• making decisions on allocation of the company's profit;
• making decisions on changes to the Articles of Association;
• electing auditors;
• making decisions on discharge from liability for Board members and the Managing Director;
• making decisions on remuneration for the Board of Directors and auditors; and

• approving the appointment of the nomination committee. Shareholders who do not have the opportunity to attend the General Meeting in person may instead participate via a representative.

The "Ownership" section in the Directors' Report indicates the direct or indirect shareholdings in the company which represent at least one-tenth of the voting rights for all shares in the company.

The "Shares" section also indicates the restrictions on how many votes each shareholder can cast at an Annual General Meeting.

Annual General Meeting 2020

58 shareholders, constituting 48.2 per cent of both the number of shares and the total number of votes in the company, were represented at Proact's Annual General Meeting which took place in Kista on 6 May 2020. The Board of Directors, executive team and company's auditors were present at this meeting. Among other things, the following decisions were made:

• Chairman of the Board Eva Elmstedt was appointed Chairman of the meeting.
• The income statement and balance sheet, and the consolidated income statement and consolidated balance sheet were approved and adopted.
• No dividend was distributed for the 2019 financial year: the profit was carried forward.
• The Board of Directors and Managing Director were granted discharge from liability for the 2019 business year.
• Remuneration payable to the Board of Directors was set at a total of SEK 1,665,000.
• Remuneration to the auditors will be paid in accordance with an approved invoice.
• Eva Elmstedt was re-elected as a Board member and was also re-elected Chairman of the Board. The following other Board members were re-elected:
• o Martin Gren
• o Annikki Schaeferdiek
• o Thomas Thuresson
• The following Board member was elected:
• o Erik Malmberg
• Establishment of guidelines on remuneration for senior executives.
• A decision was made, with the requisite majority, to implement the performance share scheme in accordance with the Board's proposal. This scheme has been formulated to drive profitability and growth and includes around 17 individuals; the company's CEO, the Group executive and other key individuals within the company. For more information, see note 9.
• Establishment of principles for the appointment of a nomination committee for the 2020 Annual General Meeting.
• A decision was made to authorise the Board to make decisions on the new issue of shares. It was noted that payment through offsetting must only take place in connection with company acquisitions.
• A decision was made to authorise the Board to implement acquisitions and transfers of the company's own shares. It was also decided that the Board can only buy back shares in such numbers that bought-back shares, together with any newly issued shares according to the authorisation decided upon in the section above, do not exceed a total of 10 per cent of the now outstanding number of shares. It was noted that payment through offsetting must only take place in connection with company acquisitions and that the company is not allowed to sell its own shares on Nasdaq Stockholm.
• A decision was made to amend the Articles of Association as the record date prior to general meetings of listed companies must fall six business days before the meeting in accordance with a legal amendment to the Swedish Companies Act, which came into force on 3 September 2020. A number of editorial changes were also decided upon due to legal amendments already implemented.

Extraordinary General Meeting

An Extraordinary General Meeting was held in Kista on 5 November 2020. 61 shareholders, constituting 41.6 per cent of both the number of shares and the total number of votes in the company, were represented at the Annual General Meeting. Proact's Chairman and the company's management team attended this meeting. A decision was made concerning distribution of a profit of SEK 2.50 per share for the 2019 financial year.

Nomination committee

At the Annual General Meeting of Proact held on 6 May 2020, a decision was made for the nomination committee to comprise representatives for the four biggest shareholders in terms of votes as at 30 September 2020; or the five biggest shareholders in terms of votes in the cases stated in the paragraph below. The nomination committee therefore has the right to require the attendance of the Chairman of the Board at meetings of the nomination committee. The Chairman of the Board must, without delay, contact the four biggest shareholders in terms of votes in accordance with Euroclear Sweden's list of shareholders as at 30 September 2020, and offer each and every one of them the opportunity to appoint a member of the nomination committee within a reasonable time.

If there is a change in the company's ownership structure after 30 September but before the date occurring two months before the forthcoming Annual General Meeting, and if a shareholder constituting one of the four biggest shareholders in the company in terms of votes after this change expresses a desire to the Chairman of the nomination committee to become part of the nomination committee, this shareholder shall have the right to either appoint a further member of the nomination committee or, if so decided by the nomination committee, to appoint a member of the nomination committee who will replace the member that is the smallest shareholder in terms of votes after the change in ownership and that has appointed a member of the nomination committee. In addition, any member appointed by a shareholder that has sold more than half of its shareholding after 30 September and thus no longer constitutes one of the ten biggest shareholders in the company will be obliged to resign from the company's nomination committee within two weeks of the date of the sale.

The names of the members of the nomination committee must be published as soon as the nomination committee has been appointed. If any of the biggest owners declines to appoint a representative on the nomination committee, the next shareholder in order of size must be given the opportunity to appoint such a representative. A representative of the shareholders is appointed Chairman of the nomination committee. The mandate period of the nomination committee continues until a new nomination committee has been appointed.

Where appropriate, the nomination committee must prepare and submit to the Annual General Meeting proposals for:

• election of a Chairman for the meeting;
• election of a Chairman of the Board and other company directors;
• directors' fees divided between the Chairman and other members, plus remuneration for committee work;
• election of and payment to auditors (where appropriate); and
• decisions on principles for the appointment of a nomination committee.

Work of the nomination committee

The composition of the nomination committee was published on 16 October 2020, comprising Jens Ismunden, Chairman (Aktiebolaget Grenspecialisten), Stephanie Göthman (Livförsäkringsbolaget Skandia), Johannes Wingborg (Länsförsäkringar Fondförvaltning AB) and Karin Möllborg (Carey Trustees Limited). This nomination committee represented a total of around 37 per cent of votes in Proact as at 30 September 2020.

The nomination committee has applied rule 4.1 in the Swedish Code of Corporate Governance as its diversity policy when devising the proposal for the Board, with the aim of achieving effective composition of the Board in terms of diversity and breadth with regard to factors such as gender, nationality, age and industry experience. The ambition of the nomination committee is to propose a Board composition where members complement one another with their respective experience and skills in a manner that gives the Board the opportunity to help bring about positive development of the company. The nomination committee always focuses on diversity so as to ensure that the Board has different perspectives on its Board work and the considerations made. The nomination committee also takes into account the need for regeneration and carefully examines whether the proposed Board members have the opportunity to devote sufficient time and care to their Board work. All shareholders have the opportunity to consult the nomination committee with suggestions for Board members. The nomination committee has held several minuted meetings.

A report on the work of the nomination committee is published on the Proact website – www.proact.se – in connection with the publication of its proposal to the 2021 annual general meeting concerning election of the Board of Directors.

Board of Directors

Proact's Board of Directors makes decisions on issues relating to Proact's strategic focus, investments, finance, organisational issues, acquisitions and divestments and more important policies. The Board must also ensure that correct information is given to Proact's stakeholders in accordance with the governing regulations mentioned above.

Board composition and diversity

According to the Articles of Association, the Board of Directors must consist of three to eight members, with at most five deputy members. These members, and where appropriate their deputies, are elected each year at the Annual General Meeting for the period until the next Annual General Meeting. At the Annual General Meeting held on 6 May 2020, it was decided that the Board would consist of five members and no deputies for the period until the next Annual General Meeting. The nomination committee applies the Swedish Code of Corporate Governments, section 4.1, as its diversity policy. The objective is to propose composition of a Board with complementary experience and skills, also demonstrating diversity in terms of age, gender, nationality and industry experience. The composition of the present Board is the result of the work of the nomination committee prior to the 2020 Annual General Meeting. The Board comprises members with experience of various industries, and there is even gender distribution.

The Articles of Association contain no provisions relating to the appointment or compulsory retirement of Board members or to amendments to the Articles of Association.

The Board is deemed to be compliant with the stock exchange rules from Nasdaq Stockholm and the Swedish Code of Corporate Governance in respect of requirements for independent Board members.

Every business year, the Board of Directors carries out – either independently or with the help of external parties – a review of the work of the Board and CEO by means of:

• Evaluation of the work of the Board A questionnaire provided by StyrelseAkademien was implemented during the fourth quarter of the financial year. The results of the questionnaire will be discussed by the Board and communicated to the nomination committee. The nomination committee will then hold interviews with all members during the first quarter of next year.
• Evaluation of the work of the Managing Director

• The Managing Director's view of the work of the Board

This review forms the basis for the Board's future working methods.

Board remuneration

The Annual General Meeting held on 6 May 2020 established the total remuneration to the Board at SEK 1,665,000. The Chairman of the Board will be paid a fee of SEK 525,000, while other members will be paid SEK 210,000 each, plus SEK 300,000 for committee work to be distributed SEK 200,000 to the audit committee and SEK 100,000 to the remuneration committee. No further payments have been made to the Board over the year.

Board members are not included in any share or share pricerelated incentives schemes issued by the company.

The Board's procedures

The work of the Board is governed by a set of procedures established annually which regulate the members' mutual division of work, decision-making arrangements, signing on behalf of the company, a meeting agenda for the Board and the tasks of the Chairman. The work of the Board follows a set agenda intended to ensure that the Board's information needs are satisfied and that there is an appropriate distribution of work between the Board and the Managing Director.

In 2020, the Board held eleven meetings compared with ten in the previous year. The control issues arising at Board meetings are dealt with by the Board where appropriate following preparation by the remuneration committee or audit committee. In addition, the company's auditors report directly at least once a year to the Board their observations from the review and their assessments of the company's internal accounting control.

Besides the ongoing follow-up and monitoring of business, over the year the Board of Directors has dealt with strategies, acquisition issues, capital structure and organisational issues. Additional Board meetings were also held in order to monitor the impact of COVID-19 on the company.

Composition of the Board and attendance at Board meetings, 2020

Board member	Remuneration committee	Audit committee	Attendance at Board meetings
Eva Elmstedt	•		100%
Annikki Schaeferdiek			100%
Martin Gren	•		100%
Thomas Thuresson		•	100%
Erik Malmberg		•	100%

Board members' independence in respect of Proact, Proact's executive and major owners

Board member	Function	Date of birth	Nation	ality Elected	Indep endent	Share holding, 31/12/2020
Eva Elmstedt	Chairman 1960 Swedish			2009	Yes	8,560
Martin Gren			Member 1962 Swedish	2017	No	1,045,7781)
Annikki Schaeferdiek			Member 1969 Swedish	2017	Yes	1,000
Thomas Thuresson			Member 1957 Swedish	2018	Yes	–
Erik Malmberg			Member 1982 Swedish	2020	Yes	–

1) Holding personally and via legal entity.

Other information on Board members

• Eva Elmstedt (Board work and investments, previous senior positions at companies including Nokia, Ericsson, 3 and IBM) Member of the Board at Addtech AB, Arjo AB, Semcon AB and Smart Eye AB.
• Martin Gren (founder and advisor to Axis Communications) Chairman at Axis Communications AB Member of the Board at Askero Sagoboks Förlag AB, AB Grenspecialisten and H. Lundén Holding AB.
• Annikki Schaeferdiek (founder and CEO of Syster P AB, plus Board work and international experience of the IT/Telecoms industry) Chairman at Competella AB

Member of the Board at Syster P AB, Formpipe Software AB and Axiell Group AB

• Thomas Thuresson (Board work and CEO at Tetra Laval Real Estate AB, various previous positions at Alfa Laval Group, inc. CFO) Chairman at Terratech Group AB

Member of the Board at JM AB, Solix Group AB and Skiold A/S.

• Erik Malmberg (Investment Advisory Professional, Triton Advisers (Sweden) AB)

No other directorships.

DECEMBER

Establishment of budgets. Organisational development. Evaluation of the work of the Board, the CEO and the corporate management team.

OCTOBER

Interim report, January–September. Review of risks.

SEPTEMBER

Strategy and sustainability, guidelines on budget.

AUGUST Additional COVID-19 follow-up. JULY Interim report, January–June.

FEBRUARY

Year-end report, report from the auditors, review of communication and commercial direction.

MARCH

Decision on annual reports, preparation of Annual General Meeting.

APRIL

Interim report for January–March, review of supply of services.

MAY

Annual General Meeting, inaugural Board meeting, establishment of instructions and policies.

Election of committees. Start-up strategy.

JUNE

Additional COVID-19 follow-up plus acquisitions.

Remuneration committee

The duty of the remuneration committee is to examine the principles for remuneration, including performance-based remuneration and pension terms for the company's senior executives, and to give recommendations to the Board concerning these issues. Issues relating to the Managing Director's terms of employment, remuneration and benefits are prepared by the remuneration committee and decided upon by the Board of Directors. This committee also discusses the general starting points for setting salary levels within the Group.

More information on remuneration to the Chief Executive Officer and other corporate executive staff can be found in the annual report, Note 9.

The remuneration committee has held three minuted meetings over the year, as well as maintaining constant contact by telephone and email.

Audit committee

The job of the audit committee is to prepare Board work on quality assurance of the company's financial reporting. This committee maintains constant contact with the company's external auditors in order to stay abreast of the focus and scope of the audit and discuss views on the company's risks. Decisions by the Board are required for non-audit services from the selected auditor that exceed SEK 500 thousand of the budgeted audit fee. Total fees for non-audit services must not exceed 70 per cent of the budgeted audit fee. This committee is also tasked with providing its evaluation of the audit work to the nomination committee and with assisting the nomination committee with production of the nomination committee's proposals to the Annual General Meeting concerning the election of auditors and the size of the audit fee.

After the 2020 Annual General Meeting, the audit committee comprises two Board members. The Chairman of the audit committee prepares and convenes the meetings of the audit committee.

The audit committee has held five minuted meetings during the year, as well as maintaining constant contact by telephone and email.

External auditors

The Annual General Meeting which was held on 6 May 2020 elected the firm of auditors Öhrlings PricewaterhouseCoopers AB (PwC), with Nicklas Kullberg as principal auditor, for the period up to the 2021 Annual General Meeting.

The auditors review the Board's and the Managing Director's management of the company and the quality of the company's accounts documentation.

The auditors' report on the results of their review to shareholders by means of the audit report, which is presented at the Annual General Meeting. In addition, the auditors submit detailed reports at the meetings of the audit committee with the committee and to the Board of Directors at least once a year.

The company's half-yearly and nine-monthly reports have not been reviewed by the auditors. This is a deviation from the recommendation in the Swedish Code of Corporate Governance. The Board is of the opinion that any such review on the basis of a cost perspective is not necessary, given the company's degree of complexity and business risks.

PwC performs certain services for Proact in addition to audits. When PwC is engaged to provide services other than auditing, this takes place in accordance with the rules decided upon by the audit committee for approval of the nature and scope of the services and remuneration for the same. Proact is of the opinion that execution of these services is within the guidelines and has not impacted upon PwC's independence.

Further information on remuneration to the auditors can be found in the annual report, Note 8.

Chief Executive Officer and Group executive

Jonas Hasselberg has been Chief Executive Officer and President of Proact IT Group AB since 1 September 2018. Jonas Hasselberg holds a Master of Science degree in Engineering Physics from KTH Royal Institute of Technology and has experience of senior positions at Telia Company, Nokia, Mycronic and Microsoft. Other appointments: Board member at Edgeware AB (finished in January 2021). Jonas Hasselberg owned 5,500 shares in the company as at 31 December 2020. Jonas Hasselberg has no significant shareholdings or co-ownership in companies with which Proact has significant business relationships.

The Chief Executive Officer manages operations in accordance with the instructions of the Board of Directors and the approved distribution of work between the Board and the Chief Executive Officer. The Managing Director is responsible for keeping the Board informed and for ensuring that the Board is provided with the requisite decision data. The Managing Director presents reports to the Board but is not a Board member. This is in accordance with applicable policy, in which either the Managing Director or another senior executive must be a Board member in the parent company. In ongoing contact, the Managing Director keeps the Chairman informed of the development and financial position of the company and the Group besides providing periodic reporting.

The Managing Director and other members of the corporate executive hold regular meetings in order to review results development, update forecasts and plans, and make decisions on various issues.

As at 31 December 2020, Proact's Group executive consisted of the Chief Executive Officer and ten other senior executives.

The subsidiaries running operations report to the relevant Business Unit Directors, who in turn report directly to the Managing Director. Reporting takes place on a monthly basis, with more in-depth quarterly reviews of the operations in question. The Boards of Directors of the subsidiaries principally consist of members of Proact's Group executive. The Chairman positions at the subsidiaries are held either by the Managing Director of Proact IT Group AB or by the relevant Business Unit Directors.

Remuneration to senior executives

The Annual General Meeting held on 6 May 2020 adopted the Board's proposal concerning guidelines for remuneration to senior executives, which should apply until the 2024 Annual General Meeting, unless circumstances arise that necessitate revision of this at an earlier stage. These guidelines include the CEO, the Vice President and the corporate management team. The guidelines must promote the company's business strategy, long-term interests and sustainability by the guidelines

Provision of information

Proact strives to maintain communication with its shareholders and other stakeholders which is correct, clear, factual, reliable and quick. It must also be characterised by openness.

Proact regularly publishes interim reports and annual reports in Swedish and English. Events which are deemed to affect rates are published as press releases. The Proact website also includes a wide range of company information which is updated regularly.

In addition, Proact communicates with the capital market and the media by means of meetings with analysts and journalists in connection with the publication of the interim reports and annual reports. Representatives of Proact also take part regularly in various meetings of shareholders and analysts.

The Board's report on internal control

Control environment

Internal controls at Proact are based on a control environment which includes organisation, decision paths, authorisations and responsibilities. This is documented and communicated in steering documentation such as internal policies, guidelines and instructions. For example, this is applicable to the distribution of work between the Board of Directors and the Chief Executive Officer, and between the various units within the organisation, and also via instructions for rights of authorisation, accounting and reporting, etc. The Board follows up to ensure compliance with set principles for financial reporting and internal controls, and also maintains the appropriate relationships with the company's auditors.

The corporate executive reports to the Board based on established procedures. The corporate executive is responsible for the system of internal controls which is required for handling significant risks in ongoing operations. For example, guidelines and instructions for various officials are compiled in order to reinforce understanding and the importance of their respective roles, and hence also to contribute towards good internal control.

Risk assessment and control activities

The Board holds overall responsibility for risk management. Clear organisation and decision-making arrangements aim to create good awareness of risks among employees and well balanced risk-taking. The risk assessment includes identification, charting and assessment of risks at all levels within the Group. Activities and reporting take place regularly in order to maintain good internal control, and hence to prevent and detect risks.

Information and communication

Essential guidelines and manuals – such as the finance manual and financial policy – affect financial reporting and are updated and communicated regularly to the relevant personnel within the Group. There are both formal and informal information channels for the corporate executive and Board for essential information from employees. For external communication, the company complies with the governing rules discussed previously.

Follow-up

The Board receives monthly financial statements, as well as non-conformance reports relating to the company's profit and position. Extraordinary incidents and emerging risks are also reported each month. The Board regularly evaluates the information submitted by the corporate management. The work of the Board also includes ensuring that measures are implemented with regard to any shortcomings and proposals for measures which have arisen during external audits. Given the size of the company, there is no separate department for internal audits. Instead, this work is carried out from the Group finance function together with the company's own lawyers. The company performs regular audits of its subsidiaries. The outcome is reported to the CEO, CFO and Board of Directors.

Board of Directors

	Eva Elmstedt	Martin Gren	Erik Malmberg	Annikki Schaeferdiek	Thomas Thuresson
Role	Chairman	Member	Member	Member	Member
Current position			Investment advisor at Triton Advisers (Sweden) AB	CEO of Syster P AB	CEO of Tetra Laval Real Estate AB
Date of birth	1960	1962	1982	1969	1957
Elected	2009	2017	2020	2017	2018
Training	BSc in Economics and Computer Science from Indiana University of Pennsyl vania and Stockholm School of Economics	Honorary doctorate in entrepreneurship from Lund University of Technology	MBA, Stockholm School of Economics	MSc from the Institute of Technology at Linköping University	Graduate in Business Administration, Lund University BPSE, IMD
Experience	Board work, senior positions at companies including Nokia, Ericsson, 3 and IBM	Founder of and advisor to Axis Communications AB	Investment Advisory Professional at Triton Advisers (Sweden) AB and equity research analyst at Goldman Sachs International	Board work, inter national experience of the IT/telecoms industry, CEO of Netwise, business area manager at an Ericsson multimedia unit, founder of Syster P	Board work and CEO at Tetra Laval Real Estate AB, various previous positions at Alfa Laval Group
Other directorships	Director: Addtech AB, Arjo AB, Semcon AB and Smart Eye AB	Chairman: Axis Communications AB Director: Askero Sagoboks Förlag AB, AB Grenspecialisten and H. Lundén Holding AB	No other directorships	Chairman: Competella AB Director: Syster P AB Formpipe Software AB and Axiell Group AB	Chairman: Terratech Group AB Director: JM AB, Solix Group AB and Skiold A/S
Independence in respect of Proact, Proact's executive and major owners	Yes	No	Yes	Yes	Yes
Number of shares	8,560	1,045,778	–	1,000	–

Management

Role	CEO & President, Acting Business Unit Director, Nordics & Baltics	CFO & VP Investor relations	VP Services Operation	VP Commercial & Communications
Date of birth	1967	1972	1968	1979
Employed since	2018	2020	2020	2011
Number of shares	5,500	450	450	900

	Jonas Ekman	Peter Javestad	Mark van Liempt	Sara Ossborn
		VP Business	Business Unit Director,
Role	VP Mergers & Acquisitions	Transformation	West	VP People and Culture
Date of birth	1975	1974	1968	1972
Employed since	2019	1998	2019	2019
Number of shares	900	5,360	450	900

René Schülein Per Sedihn Martin Thompson

Role	Business Unit Director, Central	CTO & Acting VP Portfolio & Technology	Business Unit Director, UK
Date of birth	1966	1964	1979
Employed since	2020	1994	2003
Number of shares	450	–	900

Consolidated statement of comprehensive income

Amounts in SEK thousands	Note	2020	2019
	1
System revenues		2,192,107	2,203,067
Service revenues		1,439,681	1,203,039
Other revenues		1,346	1,758
Total revenues	2,3	3,633,134	3,407,864
Cost of goods and services sold	5,6,7,9,13,14,19	–2,816,718	–2,619,220
Gross profit	5,28	816,416	788,644
Sales and marketing expenses	9,13	–359,869	–407,162
Administration expenses	5,6,8,9,13	–274,481	–276,046
Operating profit	7,8,13,14,27	182,066	105,436
Financial income	10	6,355	7,540
Financial expenses	11	–20,713	–11,285
Profit before tax	14	167,708	101,691
Income tax	12	–35,363	–21,513
Profit for the year		132,345	80,178
Other comprehensive income
Items that can be transferred to profit/loss for the year
Hedging of net investment in foreign operations		–8,041	–892
Tax effect of hedging of net investment in foreign operations		1,721	191
Translation differences		–27,754	14,966
Total items that can be transferred to profit/loss for the year, after tax		–34,074	14,265
Total comprehensive income for the year		98,271	94,443
Profit/loss for the year attributable to:
Parent Company's shareholders		131,680	80,060
Non-controlling interests	17	665	118
		132,345	80,178
Total comprehensive income for the year attributable to:
Parent Company's shareholders		97,712	94,299
Non-controlling interests		559	144
		98,271	94,443
Earnings per share
Earnings per share for profit/loss attributable to
the parent company's shareholders, SEK1)	31	14.39	8.75
Weighted average number of outstanding shares		9,151,617	9,151,617

1) The company has a long-term performance share scheme which may involve maximum dilution of 0.89 per cent.

Consolidated Balance Sheet

Amounts in SEK thousands	Note	31/12/2020	31/12/2019
	1
ASSETS
FIXED ASSETS Goodwill	5,15	551,670	516,421
Other intangible assets	5,15	112,231	93,233
Tangible fixed assets	5,16	78,658	85,405
Right-of-use assets	27	231,118	298,919
Other non-current receivables	18,21,27	408,810	350,887
Deferred tax receivables	12	15,853	16,247
TOTAL FIXED ASSETS		1,398,340	1,361,112
CURRENT ASSETS
Inventories	19	12,963	20,247
Accounts receivable	14,20	541,428	613,360
Current tax receivables Other receivables		14,023 65,226	20,764 63,085
Prepaid expenses and accrued income	21	423,647	424,981
Cash and cash equivalents	26	468,309	373,161
TOTAL CURRENT ASSETS		1,525,596	1,515,598
TOTAL ASSETS		2,923,936	2,876,710
EQUITY AND LIABILITIES
EQUITY	30
Equity pertaining to the parent company's shareholders
Share capital (9,333,886 shares, quotient value 1.14)		10,619	10,619
Other capital contributions		297,964	297,964
Other reserves		–12,846	21,122
Retained earnings including profit/loss for the year		306,212	194,506
Equity pertaining to the parent company's shareholders		601,949	524,211
Equity pertaining to non-controlling interests	17	3,052	1,664
TOTAL EQUITY		605,000	525,875
LIABILITIES
Non-current liabilities
Bank loans	24	211,806	230,686
Leasing liabilities		139,823	198,076
Other non-current liabilities	23,24,27	468,369	403,983
Deferred tax liabilities	12	33,217	28,051
Non-current liabilities, total		853,215	860,796
Current liabilities
Accounts payable	14	501,925	530,181
Current tax liabilities		18,345	13,523
Bank loans	24	–	513
Leasing liabilities		94,665	104,563
Other liabilities	22,24	149,808	130,077
Accrued expenses and prepaid income	23	700,978	711,182
Total current liabilities		1,465,721	1,490,039
TOTAL LIABILITIES		2,318,936	2,350,835
TOTAL EQUITY AND LIABILITIES		2,923,936	2,876,710

Consolidated statement of changes in equity

Attributable to the parent company's shareholders

Closing balance as at 31 December 2020	10,619	297,964	–9,107	–3,739		306,212 601,949	3,052	605,000
Total transactions with shareholders	–	–	–	–	–19,974	–19,974	829	–19,146
Translation of share of profit among non-controlling interests	–	–	–	–	–	–	–	–
Share of profit among non-controlling interests	–	–	–	–	–	–	–	–
Conversion of financial liability to holding without a controlling influence to share of equity	–	–	–	–	1,408	1,408	963	2,371
Long-term incentive scheme	–	–	–	–	1,497	1,497	–	1,497
Dividends	–	–	–	–	–22,879	–22,879	–	–22,879
Dividends to non-controlling interests	–	–	–	–	–	–	–135	–135
Transactions with shareholders
Total comprehensive income for the year			–6,320	–27,648	131,680	97,712	559	98,271
Other comprehensive income			–6,320	–27,648		– –33,968	–106	–34,074
Profit for the year			–	–	131,680	131,680	665	132,345
Opening balance as at 1 January 2020	10,619	297,964	–2,787	23,909		194,506 524,211	1,664	525,875
Closing balance as at 31 December 2019	10,619	297,964	–2,787	23,909		194,506 524,511	1,664	525,875
Total transactions with shareholders	−	−	−	−		–37,909 –37,909	–262	–38,171
Translation of share of profit among non-controlling interests	–	–	–	–	492	492	–492	–
Share of profit among non-controlling interests	–	–	–	–	–492	–492	492	–
Change of fair value of financial liability to non-controlling interests	–	–	–	–	25	25	−	25
Long-term incentive scheme	–	–	–	–	45	45	–	45
Dividends	–	–	–	–	–37,979	–37,979	–	–37,979
Dividends to non-controlling interests	–	–	–	–	–	–	–262	–262
Transactions with shareholders
Total comprehensive income for the year	–	–	–701	14,940	80,060	94,299	144	94,443
Other comprehensive income	–	–	–701	14,940	–	14,239	26	14,265
Profit for the year	–	–	–	–	80,060	80,060	118	80,178
Opening balance as at 1 January 2019	10,619	297,964	–2,086	8,969	152,355	467,821	1,782	469,603
Amounts in SEK thousands Note 30	Share capital	capital contribu tions	investment in foreign operations	Translation of foreign subsidiaries	inc. profit/loss for the year	Total	non controlling interests	Total equity
		Other	Hedging of net		Retained earnings,		Attributable to

Consolidated cash flow statement

Amounts in SEK thousands	Note	2020	2019
	26
CASH FLOW FROM OPERATIONS FOR THE YEAR
Income for the year		132,345	80,178
Adjustment for items not affecting cash flow:
Depreciation and write-downs of fixed assets	5,15,16	187,578	166,313
Financial leasing	27	47,303	40,092
Other financial items		–248	–1,968
Other adjustments		2,221	8,499
Changes in provisions		–2,975	–1,270
Income tax 1)	12	–4,415	–24,696
Cash flow from operating activities before changes in working capital		361,809	267,148
Cash flow from changes in working capital
Inventories		6,727	10,907
Operating receivables		6,931	–45,132
Operating liabilities		92,624	96,593
Cash flow from current operations		468,091	329,516
INVESTMENT ACTIVITIES
Acquisition of businesses	17,32	–47,577	–107,817
Disposals of businesses	26	–	–7,296
Investments in tangible fixed assets	16	–81,060	–92,456
Disposals of tangible fixed assets	16	1,383	948
Investments in intangible fixed assets	15	–23,635	–2,008
Decrease, non-current receivables	18	6,437	2,971
Increase, non-current receivables	18	–4,264	–499
Cash flow from investment activities FINANCING ACTIVITIES		–148,716	–206,157
Dividends to non-controlling interests	17	–135	–262
Dividends		–22,879	–37,979
Change in bank overdraft facilities		–	–5,629
Borrowing		124,285	176,577
Repaid loans		–135,773	–53,051
Increase, total other financial liabilities		629	–
Decrease, total other financial liabilities		–159,507	–107,286
Other cash flow from financing activities		–33	–14
Cash flow from financing activities		–193,413	–27,644
CASH FLOW FOR THE YEAR		125,962	95,715
Cash and cash equivalents at start of year		373,161	269,941
Translation difference in cash and cash equivalents		–30,814	7,505
CASH AND CASH EQUIVALENTS AT YEAR-END		468,309	373,161

1) Income tax SEK 35,363 (21,513) thousand, tax paid SEK 39,778 (46,209) thousand. Net adjustment for items that do not affect cash flow and paid tax SEK –4,415 (–24,696) thousand.

Income statement, parent company

Amounts in SEK thousands	Note	2020	2019
Revenues	4,14	108,550	100,915
Gross profit	4	108,550	100,915
Administration expenses	5,9	–120,700	–125,763
Operating profit	9	–12,150	–24,848
Financial income	10	55,490	66,280
Financial expenses	11	–19,330	–1,621
Profit before tax and appropriations	14	24,010	39,811
Group contribution		30,000	20,636
Profit before tax	14	54,010	60,447
Income tax	12	–1,554	150
Profit for the year		52,456	60,597

Statement of comprehensive income, parent company

Amounts in SEK thousands	2020	2019
Profit for the year	52,456	60,597
Other comprehensive income	–	–
Total comprehensive income for the year	52,456	60,597

Balance sheet, parent company

Amounts in SEK thousands	Note	31/12/2020	31/12/2019
ASSETS
FIXED ASSETS
Intangible fixed assets	5,15	26,450	9,193
Tangible fixed assets	5,16	967	1,150
Shares in Group companies	17	491,802	491,802
Current receivables from Group companies		246,628	288,792
Deferred tax receivables	12	27	604
TOTAL FIXED ASSETS		765,874	791,541
CURRENT ASSETS
Current tax receivables		1,028	1,488
Current receivables from Group companies	18	195,260	118,863
Other receivables		1,060	1,377
Prepaid expenses and accrued income	21	8,141	19,013
Cash and cash equivalents	26	–	–
TOTAL CURRENT ASSETS		205,489	140,741
TOTAL ASSETS		971,363	932,282
EQUITY AND LIABILITIES
EQUITY	30
Restricted equity
Share capital (9,333,886 shares, quotient value 1.14)		10,619	10,619
Statutory reserve		28,236	28,236
Capitalised development costs		37,751	15,904
Total restricted equity		76,606	54,759
Non-restricted equity
Retained earnings		266,624	249,256
Profit for the year		52,456	60,597
Total non-restricted equity		319,080	309,853
TOTAL EQUITY		395,686	364,612
LIABILITIES
Non-current liabilities
Liabilities to credit institutions	24	211,806	230,686
Liabilities to Group companies	18	11,087	12,214
Non-current liabilities, total		222,893	242,900
Current liabilities
Accounts payable		6,775	9,529
Liabilities to Group companies	18,26	328,711	299,773
Other liabilities	22,24,32	6,814	5,423
Accrued expenses and prepaid income	23	10,484	10,045
Total current liabilities		352,784	324,770
TOTAL LIABILITIES		575,677	567,670
TOTAL EQUITY AND LIABILITIES		971,363	932,282

Statement of changes in equity, parent company

				Capitalised
	Number of		Statutory	development	Retained	Profit for	Total
Amounts in SEK thousands Note 30	shares	Share capital	reserve	costs	earnings	the year	equity
Closing balance as at
31 December 2018	9,333,886	10,619	28,236	14,094	194,414	94,586	341,949
Transfer of previous year's profit	–	–	–	–	94,586	–94,586	–
Dividends	–	–	–	–	–37,979	–	–37,979
Long-term incentive scheme	–	–	–	–	45	–	45
Reversal of capitalised
development costs	–	–	–	1,810	–1,810	–	–
Buy-back of own shares	–	–	–	–	–	–	–
Own shares used during acquisitions	–	–	–	–	–	–	–
Earnings for the year	–	–	–	–	–	60,597	60,597
Closing balance as at 31 December 2019	9,333,886	10,619	28,236	15,904	249,256	60,597	364,612
Transfer of previous year's profit	–	–	–	–	60,597	–60,597	–
Dividends	–	–	–	–	–22,879	–	–22,879
Long-term incentive scheme	–	–	–	–	1,497	–	1,497
Reversal of capitalised
development costs	–	–	–	21,847	–21,847	–	–
Buy-back of own shares	–	–	–	–	–	–	–
Own shares used during acquisitions	–	–	–	–	–	–	–
Earnings for the year	–	–	–	–	–	52,456	52,456
Closing balance as at 31 December 2020	9,333,886	10,619	28,236	37,751	266,624	52,456	395,686

Cash flow statement, parent company

Amounts in SEK thousands	Note	2020	2019
	26
CASH FLOW FROM OPERATIONS FOR THE YEAR
Income for the year		52,456	60,597
Adjustment for items not affecting cash flow:
Depreciation and write-downs of fixed assets	5,15,16	6,601	6,272
Write-down of shares in subsidiaries	17	–	3,607
Other financial items		–7,987	19,045
Other adjustments		1,497	45
Income tax 1)	12	–69	–865
Cash flow from operating activities before changes in working capital		52,498	88,701
Cash flow from changes in working capital:
Operating receivables		–64,014	–83,755
Operating liabilities		28,014	–20,082
Cash flow from current operations		16,498	–15,136
INVESTMENT ACTIVITIES
Investments in tangible fixed assets	16	–602	–863
Disposals of tangible fixed assets	16	–	1
Investments in intangible fixed assets	15	–23,073	–2,008
Changes in non-current receivables	18	42,164	–69,807
Cash flow from investment activities		18,489	–72,677
FINANCING ACTIVITIES
Dividends		–22,879	–37,979
Borrowing		124,285	176,577
Repaid loans		–135,266	–51,651
Other cash flow from financing activities		–1,127	866
Cash flow from financing activities		–34,987	87,813
CASH FLOW FOR THE YEAR		–	–
Cash and cash equivalents at start of year		–	–
CASH AND CASH EQUIVALENTS AT YEAR-END		–	–

1) Income tax SEK 1,554 (–150) thousand, tax paid SEK 1,623 (715) thousand. Net adjustment for items that do not affect cash flow and paid tax SEK –69 (–865) thousand.

1 Notes to the accounts

Note 1 Accounting policies

Corporate information

The consolidated accounts and annual report relating to the 2020 financial year for Proact IT Group AB have been prepared by the Board of Directors and Chief Executive Officer, who on 30 March 2021 have approved this annual report and these consolidated accounts for publication. The annual report and consolidated accounts will be submitted to the Annual General Meeting on 6 May 2021 for approval and adoption. The parent company is a Swedish limited company (publ) listed on NASDAQ Stockholm and based in Stockholm, Sweden. The primary operations of the Group involve offering specialist skills in the field of storage and archiving of large volumes of business-critical information.

General accounting policies

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB), and interpretation pronouncements from the International Financial Reporting Interpretations Committee (IFRIC) as assumed by the EU. In addition, Swedish Financial Reporting Board's recommendation RFR 1 (Supplementary accounting rules for groups) has been applied.

The annual financial statements for Proact IT Group AB have been compiled in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 (Accounting for Legal Entities). Differences between the parent company's and the Group's applied accounting policies stem from the limited opportunities for applying IFRS to the parent company as a consequence of the Annual Accounts Act, and in some cases because of applicable tax regulations.

Significant differences between the Group's and the parent company's accounting policies

The parent company is compliant with the same accounting policies as the Group, with the following exceptions. Shares in subsidiaries are reported in the parent company in accordance with the cost method. There may also be Group contributions within the parent company which are reported as appropriations at the parent company. As of the 2016 financial year, the parent company is setting aside capitalised development costs relating to software to the Fund for development costs within restricted equity. This fund is being reduced with depreciation on these capitalised development costs. The parent company reports all leasing as operational leasing.

Uncertain assessments and estimates

The balance sheet includes uncertainty in assessment and estimates, primarily in the items goodwill and deferred tax receivables attributable to loss carryforwards.

As regards goodwill and intellectual property rights, the writedown test is based on assumptions on the future on the basis of circumstances which are known at the time of testing, When calculating utilisation value of assets assumptions are made about future earnings evolution. Future earnings may not accord with the assumptions made if conditions in the market change without the company executive adapting the organisation and business in accordance with the changed market conditions; in which

case future earnings may be worse and thus the need for major adjustments to recorded amounts may arise. More information on write-down testing can be found in Note 15.

Fiscal deficits are capitalised insofar as they are deemed to be potentially usable against future tax profits on the basis of assumptions on future profit development. See Note 12 for further information.

Changes to accounting policies and information

The Group applies the same accounting principles as those described in the annual report for 2019. No new standards have been adopted by the EU, and no amended or revised standards, interpretations and improvements that are to be applied as of 1 January 2020 have resulted in any changes for the Group.

2021 and ahead

IASB has not published any new standards approved by the EU application as of 1 January 2021.

Consolidated accounts Scope of the Group

The Group includes Proact IT Group AB and all companies over which the parent company has a controlling influence. The Group checks a company when it is entitled to a variable return from its holding in the company and has the opportunity to influence this return through its influence within the company, which normally means that the parent company owns more than 50 per cent of votes for all shares and participations.

Subsidiaries are included in the consolidated financial statements from the day on which controlling influence passes to the Group. They are excluded from the consolidated financial statements from the day on which the controlling influence ceases.

Internal Group transactions, balance sheet items, revenues and expenses on transactions between Group companies are eliminated. Profit or loss arising from intra-group transactions and that are recorded as assets are also eliminated. The accounting policies for subsidiaries have been amended where necessary in order to guarantee consistent application of the Group's principles.

The purchase method

The purchase method is used to report on the Group's operating acquisitions. The purchase price for the acquisition of a subsidiary is made up of the fair value of transferred assets, liabilities and the shares issued by the Group. The purchase price also includes the fair value of all assets or liabilities which are a consequence of a contract on a contingent purchase price. Acquisition-related expenses are reported in the income statement when they arise. Identifiable acquired assets and transferred liabilities in a business combination are initially valued at fair value on the acquisition date. For every acquisition, the Group decides whether all non-controlling interests in the acquired company are recognised at fair value or at the proportional percentage of the net assets of the acquired company.

The amount by which the purchase price, any holding without a controlling influence and the fair value on the acquisition date of earlier shareholdings exceeds the fair value of the Group's share of identifiable acquired net assets is recognised as goodwill. If this

Note 1 – Continued

amount falls below the fair value for the assets of the acquired subsidiary, in the event of what is known as a "bargain purchase", the difference is recognised directly in the statement of comprehensive income.

Translation of foreign subsidiaries

The consolidated financial statements are presented in Swedish kronor (SEK), which is the parent company's functional currency.

Income statement and balance sheet items, including goodwill, of companies with functional currencies other than SEK are translated into SEK. As a result, assets and liabilities are translated at the rate on the balance sheet date and the income statement items at the average rate over the period. Translation differences are presented as a separate item under Other comprehensive income in the statement of comprehensive income. When investments are divested, the previous translation differences are recognised in the statement of comprehensive income as part of capital gains.

Transactions and balance sheet items in a currency other than the functional currency are translated in each operation to the functional currency using the average exchange rate for transactions for the period and the exchange rate as at the balance sheet date for balance sheet items.

Non-controlling interests

Non-controlling interests comprise the part of subsidiary results and net assets which are not directly or indirectly owned by the parent company. The Group handles transactions with noncontrolling interests as transactions with the Group's shareholders. In the case of acquisitions from non-controlling interests, the difference between the purchase price paid and the current acquired share of the book value of the subsidiary's net assets is recognised against equity. Profits and losses on divestments to non-controlling interests are also recognised against equity.

In 2010, Proact signed a contract concerning the purchase of 60 per cent of Storyflex Inc. The business is being run under the name Proact Czech Republic, s.r.o. The parties entered into a contract which meant that Proact had the opportunity/an obligation to acquire the remaining share within three to seven years of the time of acquisition. A further 20 per cent was acquired in 2013, along with a further 6 per cent in 2014. This agreement concerning the opportunity/obligation to acquire the remaining percentage expired in 2018. No agreement concerning buyout has been concluded, which is why the estimated value of the selling options assigned to owners without a controlling influence that were previously recognised as a financial liability in the consolidated balance sheet has been converted into a share of equity that is attributable to owners without a controlling influence.

Note 2 Reporting by segment

The information below is presented from an executive perspective, which means that it is presented in the manner applied in internal reporting. Reportable segments are identified on the basis of internal reporting to the highest executive decision-maker. The Group has identified the Chief Executive Officer as its highest executive decision-maker.

The company manages and reports on results by operating segment, known as Business Units (BUs). Transactions between units take place under market conditions. Total assets/liabilities per segment are not reported to the highest executive decision maker. The same range of products and services is offered within each BU, with the exception of Proact Finance.

The business units are as follows:

Nordics:	Sweden, Norway, Finland, USA and Denmark
UK:	United Kingdom
East:	Estonia, Latvia, Lithuania, Czech Republic and Slovakia
West:	Netherlands, Belgium, Spain and Germany

Proact Finance: Proact's finance company under its own auspices is reported separately as this company supports all geographical regions

					Proact
Financial year 2020	Nordics	UK	West	East	Finance	Groupwide	Eliminations	Group
External revenues	1,678,636	598,016	1,063,250	188,188	105,042	2	–	3,633,134
Internal revenues	66,328	6,926	55,148	3,868	137	141,728	–274,135	–
Total revenues	1,744,964	604,942	1,118,398	192,056	105,179	141,730	–274,135	3,633,134
Profit before tax and
exceptional items	83,208	26,257	27,856	18,626	3,389	11,156	–	170,492
Exceptional items 1)	–	–2,784	–	–	–	–	–	–2,784
Profit before tax	83,208	23,473	27,856	18,626	3,389	11,156	–	167,708
Tax								–35,363
Profit/loss for the year								132,345
					Proact
Financial year 2019	Nordics	UK	West	East	Finance	Groupwide	Eliminations	Group
External revenues	1,631,713	562,394	918,609	197,697	97,449	2	–	3,407,864
Internal revenues	83,443	2,956	40,422	4,290	–	137,775	–268,886	–
Total revenues	1,715,156	565,350	959,031	201,987	97,449	137,777	–268,886	3,407,864
Profit before tax and
exceptional items	69,915	21,859	8,625	14,786	2,184	15,801	–	133,170
Exceptional items 1)	–2,108	–1,388	–10,803	–	–	–17,180	–	–31,479
Profit before tax	67,807	20,471	–2,178	14,786	2,184	–1,379	–	101,691
Tax								–21,513
Profit/loss for the year								80,178

1) This item is not presented in accordance with IFRS, but as it is included in internal reporting the company has opted to include it in the presentation above, see also Note 13.

Geographical information	2020	2019
External revenues 1, 2)
Sweden	1,149,369	926,764
United Kingdom	598,017	562,394
The Netherlands	672,387	517,901
Other countries	1,213,361	1,400,805
Total	3,633,134	3,407,864

1) These revenues are attributable to the geography in question, based on the country in which the company is located. There is no other information, e.g. on whether the company has sales to customers in other countries.

2) The section "Risks and risk management" include information stating that an individual customer is responsible for most of the net sales.

Intangible and tangible fixed assets and

Total	973,677	993,978
Other countries	154,308	194,699
The Netherlands	323,679	359,626
United Kingdom	341,014	296,092
Sweden	154,676	143,561
right-of-use assets	31/12/2020	31/12/2019

Note 3 Revenues per sector

ACCOUNTING POLICIES

Revenue recognition

Proact is applying IFRS 15 "Revenue from Contracts with Customers" as of 1 January 2018. The basic principle for revenue reporting is that Proact should report revenues on the basis of the fact that everything commences from a contract concerning the sale of a product or service between two parties. Thus the first action is to identify a customer contract, which generates an asset (rights, i.e. a promise of obtaining remuneration) and a liability (commitment, i.e. a promise to transfer goods/services) for the vendor. The commitments (performance commitments) in the contract are identified and the transaction price is distributed over various commitments, if there is more than one. Income is recognised when the commitment to supply promised goods or services to the customer is fulfilled.

Revenue streams

• The Group mainly generates revenue through:
• System sales sale and installation of hardware and software
• Maintenance and support services
• Independent IT consultancy services
• Cloud services

System sales

Every item of hardware and software is a separate performance undertaking. Income from the sale of hardware and software is recognised when Proact has transferred all material risks and benefits associated with ownership of the product, i.e. when the customer takes control of hardware and/or software. In most cases this is at the time of transferring legal ownership and when the goods are physically handed over to the purchaser. The sale has not been completed in cases where material risks associated with the ownership of the goods remain. The income is recognised only when the sale has been completed.

Invoicing takes place at the time of delivery, or in certain cases at the time of approval of the deliverable. Customer does not have the right to return hardware or software after the time of delivery or approval of the deliverable. The payment terms are normally between 30 and 90 days. Proact has no guarantee obligations to the customer.

Proact acts as the principal for the sale of supplier guarantees and maintenance. Income and expenses for this are recognised gross in the income statement and on a straight-line basis over the contract period.

Services

Maintenance and support income

Maintenance and support income stems mainly from fixed price service agreements. Maintenance and support are two different performance commitments, and the income is recognised on a straight-line basis over the contract period.

IT consultancy services

IT consultancy services have been divided into six different performance commitments: Analysis and Design, Implementation (Installation, Project Management, Documentation, Training) and Operation.

Proact sells consultancy services with three different charging options: current account, fixed price and time banks. Income is reported as the work is carried out in the case of sales on a current account basis. Fixed price projects, or capped current account, are recognised as they are completed. Of the estimated total income for a project, during each period the proportion settled corresponds to the share of estimated total costs accumulated during the period. Time banks are billed in advance and income is recognised as consultancy hours are used.

Cloud services

Income from cloud services has been divided into five different performance commitments: Service Management, Premium Support Plus, Customer Support, Private Cloud and Shared Cloud.

Income from cloud service activities is recognised when the performance commitments are fulfilled, which normally takes place on a straight-line basis over the term of the contract. If the client services are sold together with installation, any income for installation and costs for installation are reported on a straight-line basis over the term of the contract.

Proact charges cloud services on the basis of two different measurement methods: a fixed basic charge and a fixed price per unit for any usage in excess of an agreed volume included in the fixed basic charge.

The various services (performance commitments) included in a cloud service offering can be recognised as a single performance commitment if the services mean that all performance commitments are fulfilled over the same period. In these cases, the income is recognised for the charge per unit that is charged to the customer on a monthly basis.

If any performance commitment – such as customer support – is performed over any period of time, part of the income per unit must be allocated to that service and recognised when this performance commitment is fulfilled.

Volume discounts

Proact has contracts with customers for the storage of data where the pricing model means that the customer pays a certain price per GB stored. The contract includes volume discounts where the price per GB is reduced for every additional GB stored if the customer exceeds certain levels during the specific measurement period (month/quarter). With these contracts, the customer is charged monthly for a minimum capacity (GB).

Income and usage measured on a monthly basis

With use of storage space (GB) measured on a monthly basis, the amount of income to which Proact is entitled for the period is determined at the end of the month. The income is recognised on the basis of the amount invoiced during the month.

Income and usage measured on a quarterly basis

Proact has to calculate variable remuneration for volume discounts (price per GB) where usage is measured per quarter. Proact has to estimate how many GB the customer will use during the period, and hence how much expected remuneration is to be recognised.

Rental income

Income from leasing operations is generated on an ongoing basis, and rental income is recognised on a straight-line basis over the rental period.

Composite customer contracts

Sales in the form of what are known as composite customer contracts, which may include hardware, software and service in a single contract, are common in the Group's business. If the contract includes various services and/or products and services (a composite customer contract), it is necessary to calculate distribution of the transaction price between each service and product (performance commitment) promised in the contract on the basis of the independent selling price of the products and services. More information on the various performance commitments that can be included in a composite contract is provided above, and when income is recognised for each performance commitment.

Costs for obtaining customer contracts

Costs for obtaining customer contracts are capitalised in accordance with IFRS 15. In Proact's case, this relates to sales commissions only. The costs are then charged to expenses over the period that Proact believes the customer will remain with Proact. For 2020, expensed sales commissions for obtaining customer contracts amounted to SEK 11,608 (10,158) thousand.

	Group
Revenues per operating segment	2020	2019
System sales	2,192,107	2,203,067
Service operations	1,439,681	1,203,039
Other revenues	1,346	1,758
Total	3,633,134	3,407,864

	Group
Revenues per operating segment	2020	2019
Nordics	1,744,964	1,715,156
UK	604,942	565,350
West	1,118,398	959,031
East	192,056	201,987
Proact Finance	105,179	97,449
Groupwide	141,730	137,777
Eliminations	–274,135	−268,886
Total	3,633,134	3,407,864

	Group
Revenues per sector	2020	2019
Public sector	1,032,577	843,981
Retail and wholesale trade and services	686,541	760,087
Telecoms	347,723	302,837
Manufacturing industry	449,586	528,839
Banking, finance	288,523	307,794
Oil, energy	221,003	225,637
Media	62,263	58,061
Other	544,918	380,628
Total	3,633,134	3,407,864

Note 3 – Continued

service revenues Total contract assets	37,650 46,487	1,439,681	1,402,678	–24,212	13,156	23,847	37,003 39,207
Accrued
Accrued system revenues	8,837	2,192,107	2,189,903	–7,731	1,106	1,098	2,204
Contract assets1)	Opening balance, 2020	Total system and service revenues for the year	of which revenues attributable to performance com mitments fulfilled and invoiced during the year	Contract assets settled during the year, attributable to performance com mitments fulfilled in previous years	Remaining contract assets, attributable to performance commitments fulfilled in previous years	Additional contract assets, attributable to performance com mitments fulfilled during the year	Closing balance, 2020
		Group

1) There have been no provisions or write-downs relating to contract assets in 2020.

Total contract assets	40,176						46,487
Accrued service revenues	13,631	1,203,039	1,165,389	10,781	200	37,450	37,650
Accrued system revenues	26,545	2,203,067	2,194,230	−25,439	175	8,662	8,837
Contract assets2)	Opening balance, 2019	Total system and service revenues for the year	of which revenues attributable to performance com mitments fulfilled and invoiced during the year	Contract assets settled during the year, attributable to performance com mitments fulfilled in previous years	Remaining contract assets, attributable to performance commitments fulfilled in previous years	Additional contract assets, attributable to performance com mitments fulfilled during the year	Closing balance, 2019
	Group

2) There have been no provisions or write-downs relating to contract assets in 2019.

Contract liabilities				Group
	Opening balance, 2020	Total system and service revenues for the year	of which taken up as income, attribut able to con previous years	of which taken up as income, attributable to contracts concluded during the year	Deferred revenues, attributable to contracts concluded in previous years	Deferred revenues, attributable to contracts concluded during the year	Closing balance, 2020
Deferred system revenues	417,013	2,192,107	236,306	1,955,801	195,636	305,524	501,160
Deferred service revenues	497,762	1,439,681	329,289	1,110,392	168,473	351,751	520,224
Total contract liabilities	914,775						1,021,384

				Group
Contract liabilities	Opening balance, 2019	Total system and service revenues for the year	of which taken up as income, attribut able to contracts concluded in previous years	of which taken up as income, attributable to contracts concluded during the year	Deferred revenues, attributable to contracts concluded in previous years	Deferred revenues, attributable to contracts concluded during the year	Closing balance, 2019
Deferred
system revenues	332,615	2,203,067	162,636	2,040,431	155,948	261,065	417,013
Deferred
service revenues	496,616	1,203,039	337,748	865,291	158,868	338,894	497,762
Total contract liabilities	829,231						914,775
Long-term contracts with performance commitments that are not yet fulfilled or are partially unfulfilled, are expected to generate revenues:			within 1 year	within 1–2 years	3 years and later	Total agreed revenues for performance commitments that	are not yet fulfilled or are partially unfulfilled
Expected system revenues			268,862	132,097	123,273		524,232
Expected service revenues			756,662	389,283	338,730		1,484,675
Total			1,025,524	521,380	462,003		2,008,907

Note 4 Intra-Group purchases and sales

Of the parent company's total purchasing expenses and sales income, SEK 50,696 (53,712) thousand, 44 (45) per cent, refers to purchasing and SEK 108,548 (100,913) thousand, 100 (100) per cent, refers to sales to other Group companies.

Note 5 Depreciation and write-down of fixed assets

	Group		Parent company
	2020	2019	2020	2019
Depreciation/impairment included in expenses for sold goods and services
Depreciation
– Intangible assets	28,624	23,039	–	–
– Tangible assets	14,516	12,381	–	–
– Spare parts and demonstration equipment	3,917	4,021	–	–
– Right-of-use assets	81,741	71,187
Write-downs
– Tangible assets 1)	–	64	–	–
Depreciation included in administration expenses
– Intangible assets	5,964	5,680	5,816	5,616
– Tangible assets	17,892	15,885	785	656
– Right-of-use assets	34,924	34,056	–	–
Total		187,578 166,313	6,601	6,272

1) Write-downs for 2019 relate to Equipment at the company Proact Netherlands B.V., amounting to SEK 64 thousand (EUR 6 thousand).

Note 6 Research and development costs

No research and development costs relating to services or products were specifically charged to income or capitalised during the year.

Note 7 Operating expenses

The difference between total revenues and recognised operating profit is explained by the following expense items:

	Group
Operating expenses by expense type	2020	2019
Product cost 1)	2,175,299	2,094,329
Other expenses	139,531	167,098
Personnel expenses	948,660	874,688
Depreciation and write-downs	187,578	166,313
Total operating expenses	3,451,068	3,302,428

1) Includes re-coverage expenses

Note 8 Information about auditor's remuneration

Auditing assignments are the statutory review of the annual report and bookkeeping and administration by the Board of Directors and Chief Executive Officer.

The above statutory assignments include other quality assurance services to be implemented in accordance with statute, the articles of association, regulations or contracts.

Tax advice includes both advice and review of compliance of tax. Other services are other assignments.

	Group		Parent company
Fees and remuneration	2020	2019	2020	2019
Öhrlings PricewaterhouseCoopers AB 1)
Audit assignments		3,499 3,939	559	651
Other statutory assignments	25	72	25	–
Tax advice	40	3	40	3
Other services	110	239	110	239
Other auditors
Audit assignments	556	402	–	−
Total		4,230 4,655	734	893

1) Öhrlings PricewaterhouseCoopers AB have been the selected auditors since the 2017 Annual General Meeting.

Of audit assignments, SEK 1,411 (1,064) thousand relates to PwC Sweden; of Other statutory assignments, SEK 25 (–) thousand relates to PwC Sweden; of Tax advice fees, SEK 40 (3) thousand relates to PwC Sweden; and of Fees for other services, SEK 110 (239) thousand relates to PwC Sweden.

Note 9 Average number of employees, salaries, other remuneration and social costs, etc.

ACCOUNTING POLICIES

Employee benefits

Pensions

In defined contribution plans the Group pays contributions to a separate legal entity. The contributions are charged to income as they arise. The Group has no legal obligations other than paying something above the ongoing contributions.

The Group has no defined benefit pension plans.

Severance pay

The Group reports expenses for severance pay in the statement of comprehensive income when it is demonstrably obliged either to give notice to employees in accordance with a detailed formal plan without the option of recall, or to provide compensation as a result of an offer made to encourage voluntary resignation from employment. Benefits due more than 12 months after the balance sheet date are discounted to net present value.

Bonus schemes

Where there are legal commitments the Group recognises a liability and a cost for bonuses based on a formula that allows for sales and/or profits in accordance with the company's bonus models.

Note 9 – Continued

	Average number		of which women		of which men
Average number of employees	2020	2019	2020	2019	2020	2019
Parent company
Sweden	17	16	7	5	10	11
Subsidiaries
Sweden	179	179	23	19	157	160
Norway	42	44	6	7	36	37
Finland	35	39	2	3	33	36
Denmark	12	14	1	1	11	13
Latvia	15	15	5	4	10	11
Lithuania	15	16	4	4	12	12
Estonia	18	17	4	3	15	15
Czech Republic	16	16	4	4	12	12
The Netherlands	307	143	42	18	265	125
Belgium	12	11	1	–	12	11
Spain	–	6	–	1	–	5
Germany	83	99	26	27	57	73
United Kingdom	222	219	39	42	183	177
USA	–	−	–	−	–	−
Total subsidiaries	956	818	155	133	801	685
Group total	973	834	162	138	811	695

Board members and		Number		of which women	of which men
senior executives	2020	2019	2020	2019	2020	2019
Group and parent company
Board members and Chief Executive Officer/President	6	6	2	2	4	4
Other senior executives	10	9	3	1	7	8

	Salaries and remuneration to the Board of Directors and Chief Executive Officer (of which bonuses, etc.)			Salaries and remuneration to other employees		Salaries and remuneration Total	Payroll overheads (of which pension expenses)
Salaries, remuneration and payroll overheads	2020	2019	2020	2019	2020	2019	2020	2019
Parent company	6,151	6,388	23,336	19,914	29,487	26,302	14,752	13,232
	(452)	(684)			(452)	(684)	(4,734)	(4,028)
Subsidiaries	24,332	24,629	691,939	628,046	716,271	652,675	166,131	152,008
	(5,255)	(5,405)			(5,255)	(5,405)	(43,653)	(41,067)
Group total	30,483	31,017	715,275	647,960	745,758	678,977	180,883	165,240
	(5,707)	(6,089)			(5,707)	(6,089)	(48,387)	(45,095)

Remuneration to the Board of Directors and senior executives

	Directors' fees1)		Committee fees1)			Total fees
	2020	2019	2020	2019	2020	2019
Chairman of the Board Eva Elmstedt	525	525	60	60	585	585
Board member Martin Gren	210	210	60	60	270	270
Board member Annikki Schaeferdiek	210	210	27	65	237	275
Board member Thomas Thuresson	210	210	115	115	325	325
Board member Anders Thulin 2)	88	210	−	−	88	210
Board member Erik Malmberg 3)	123	−	38	−	160	−
Total	1,365	1,365	300	300	1,665	1,665

1) Relates to the actual fee for the calendar year in question according to a resolution by the Annual General Meeting.

2) Board member up to and including the 2020 Annual General Meeting.

3) Board member from the 2020 Annual General Meeting.

	Chief Executive Officer		Other senior executives
	2020 Jonas Hasselberg	2019 Jonas Hasselberg	2020	2019
Base salaries	3,960	3,960	15,760	14,629
Performance-related pay	602	434	2,943	3,540
Benefits	63	64	848	912
Pension costs	1,203	1,209	2,247	1,355
Severance pay	−	−	3,513	1,094
Total	5,828	5,667	25,311	21,530

All Group companies have only defined contribution pension plans. The Chief Executive Officer's pension premium is equivalent to 30 per cent of his set annual salary. The variable element of the salary provides no entitlement to a pension. Retirement age is 65. The Chief Executive Officer's pensionable salary for the year amounted to SEK 3,960 (3,960) thousand. There are no other pension liabilities besides the paid-in pension contributions. The company must give the Chief Executive Officer nine months' notice of termination of employment, and the Chief Executive Officer must give the company six months' notice. If employment is terminated by the

company, severance pay of nine months' basic salary will also be payable to the Chief Executive Officer. The severance pay must be offset against any payment from a new employer. The variable element of the Chief Executive Officer's salary is based on the company's growth and profit.

There were ten (nine) other senior executives in 2020. Of the other senior officers, seven people are employed by the parent company and three people are employed by subsidiaries. Proact's pension terms in accordance with a defined contribution pension plan are applicable to other senior officers. The variable element of the salary entitles the incumbent to a pension,

Note 9 – Continued

and retirement age is 65. The pensionable salary for other senior executives for the year amounted to SEK 16,905 (12,762) thousand for the year. There are no other pension liabilities besides the paid-in pension contributions. The company must give other senior executives 3–9 months' notice of termination of employment, and other senior executives must give the company 3–6 months' notice. Should the company give notice to terminate their employment, other senior executives are entitled to severance pay of 0–12 months' salary.

The variable element of the salaries of other senior executives is based on growth and profits both locally and within the Group.

Queries relating to remuneration and benefits to the Chief Executive Officer and other senior executives will be dealt with by the Board of Directors and its remuneration committee.

Long-term incentive schemes

The 2019 Annual General Meeting decided to introduce a long-term incentive scheme in the form of a performance share scheme, LTI 2019. This scheme will run from 2019 until April 2022. The scheme was designed for around 17 senior executives and other key personnel. Participation in LTI 2019 requires participants to own a certain number of shares in Proact throughout the entire period, and they must also be employed by Proact throughout the entire period and at the time of allocation. The CEO is able to invest 900 shares, the corporate management team 450 shares and other key personnel 340 shares. All participants have the same performance targets. The number of shares allocated will be dependent on how well the performance targets are met. Participants can be assigned a maximum of five new shares in Proact IT Group AB for every share with which they participate if the performance targets defined by the Board in respect of net revenues and profit per share for 2021 are met. The shares will be allocated after the first quarterly report for 2022 is published. A maximum of 32,490 performance shares can be awarded to participants in the scheme.

The 2020 Annual General Meeting decided to introduce a long-term incentive scheme in the form of a performance share scheme, LTI 2020. This scheme will run from 2020 until April 2023. The scheme was designed for around 17 senior executives and other key personnel. Participation in LTI 2020 requires participants to own a certain number of shares in Proact throughout the entire period, and they must also be employed by Proact throughout the entire period and at the time of allocation. The CEO is able to invest 900 shares, the corporate management team 450 shares and other key personnel 340 shares. All participants have the same performance targets. The number of shares allocated will be dependent on how well the performance targets are met. Participants can be assigned a maximum of five new shares in Proact IT Group AB for every share with which they participate if the performance targets defined by the Board in respect of net revenues, profit per share and return on capital employed for 2022 are met. The shares will be allocated after the first quarterly report for 2023 is published. A maximum of 35,500 performance shares can be awarded to participants in the scheme.

Options

There are no option programmes.

Proact shareholdings of the Board of Directors, the Chief Executive Officer and other senior executives

	Shareholding in Proact
Board of Directors	31/12/2020
Eva Elmstedt	8,560
Martin Gren1)	1,045,778
Annikki Schaeferdiek	1,000
Thomas Thuresson	–
Erik Malmberg	–

1) Holding personally and via legal entity.

Chief Executive Officer and other senior executives	Shareholding in Proact 31/12/2020
Jonas Hasselberg (CEO and President)1)	5,500
Martin Thompson	900
Peter Javestad	5,360
Danny Duggal	900
Jonas Ekman	900
Sara Ossborn	900
Linda Höljö	450
Ann-Charlotte Arnshav	450
Mark van Liempt	450
René Schülein	450
Per Sedihn	–

Note 10 Financial revenues

	Group		Parent company
	2020	2019	2020	2019
Interest income	5,513	6,924	294	1,643
Interest income from Group companies	–	−	4,506	3,304
Income from participations in Group companies	–	−	50,690	61,333
Other items	842	616	–	−
Total	6,355	7,540	55,490	66,280

The Group's entire interest income is attributable to loans and receivables. For shares in Group companies, see also Note 17.

Note 11 Financial expenses

	Group		Parent company
	2020	2019	2020	2019
Interest expenses	15,486	14,600	6,210	6,135
Interest expenses to Group companies	–	−	1,091	946
Exchange rate differences	1,739	−7,318	11,115	−7,196
Other items	3,488	4,003	914	1,736
Total	20,713	11,285	19,330	1,621

All of the Group's interest expenses are attributable to loans and other liabilities.

Note 12 Income tax

ACCOUNTING POLICIES

Taxes

Deferred taxes are calculated according to the balance sheet method for all temporary differences that arise between the carrying value and the taxrelated value of assets and liabilities. Deferred tax assets including as yet unexercised tax loss carryforwards are recognised only if it is deemed that they can be exercised. Deferred tax liabilities/tax assets are reassessed each year at the current tax rate and reported in the consolidated statement of comprehensive income as part of tax for the year. Tax liabilities/tax assets are assessed at nominal amounts and in accordance with the applicable tax rules and rates. Net deferred tax assets and deferred tax liabilities are recognised if they relate to the same tax authority.

		Group		Parent company
Tax expense (–) / tax income (+)	2020	2019	2020	2019
Current tax for the year		–33,473 −30,716	–149	−
Adjustment relating to previous years' tax	252	2,658	–828	−
Deferred tax	–2,488	6,545	–577	150
Tax in the income statement	–35,709 −21,513		–1,554	150

During the year, the Group paid tax of SEK 39,778 (46,209) thousand, and SEK 1,623 (715) thousand for the parent company.

Note 12 – Continued

	Group		Parent company
Reconciliation of effective tax	2020	2019	2020	2019
Reported profit before tax		167,708 101,691	54,010	60,447
Tax for the parent company, based on Swedish 21.4 (21.4) per cent tax rate	–35,890	−21,762		–11,558 −12,936
Difference attributable to foreign tax rates	–376	1,413	–	−
Non-deductible costs	–9,045	−5,492	–15	−811
Non-taxable income	8,214	4,160	10,847	13,897
Losses for the year for which no deferred tax claims have been capi talised	–1,160	−869	–	−
Tax effect for the year relating to capitalised unused loss carryfor wards
from previous years	65	−	–	−
Tax effect for the year relating to non-capitalised unused loss carry forwards
from previous years	2,826	905	–	−
Adjustment relating to previous years' tax	252	2,658	–828	−
Adjustment relating to previous years'
deferred tax	181	−1,280	–	−
Other taxes	–430	−1,250	–	−
Other adjustments relating to deferred tax	–	4	–	−
Tax expense (–) / tax income (+)	–35,363 −21,513		–1,554	150

Deferred tax assets and tax liabilities

There are temporary differences in cases of differences between the reported tax values of assets or liabilities. The Group's temporary differences and loss carry-forwards have resulted from deferred tax liabilities and deferred tax assets associated with the following items:

2020	Opening	Deferred tax reported in income	Deferred tax reported	Exchange rate	Closing
Deferred tax assets	balance	statement (+ income/- expense)	in balance sheet	differences	balance
Unused loss carryforwards	3,245	–1,751	–	–49	1,445
Goodwill	–	333	–	–12	321
Other intangible assets	517	–611	–	–	–94
Tangible fixed assets	11,537	1,166	–	–28	12,675
Hedging of net investment in foreign
operations	–	–1,721	1,721	–	–
Provisions	427	–161	–	–23	243
Miscellaneous	1,137	49	425	–47	1,564
Net reporting	–616	283	–	32	–301
Total deferred tax assets	16,247	–2,413	2,146	–127	15,853
2020 Deferred tax liabilities	Opening balance	Deferred tax reported in income statement (- income/+ expense)	Deferred tax reported in balance sheet	Exchange rate differences	Closing balance
Goodwill	2,831	4,337	–	–459	6,709
Other intangible assets	21,307	–6,658	7,386	–1,061	20,974
Tangible fixed assets	–688	155	–	56	–477
Miscellaneous	5,217	1,958	–763	–100	6,312
Net reporting	–616	283	–	32	–301
Total deferred tax liabilities	28,051	75	6,623	–1,532	33,217

Note 12 – Continued

2019 Deferred tax assets	Opening balance	Deferred tax reported in income statement (+ income/– expense)	Deferred tax reported in balance sheet	Exchange rate differences	Closing balance
Unused loss carryforwards	1,027	2,243	–	–25	3,245
Other intangible assets	143	374	–	–	517
Tangible fixed assets	10,873	605	–	59	11,537
Hedging of net investment in foreign oper ations	–	–190	190	–	–
Provisions	602	–195	–	20	427
Miscellaneous	1,852	–1,142	396	31	1,137
Net reporting	–827	238	–	–27	–616
Total deferred tax assets	13,670	1,933	586	58	16,247
2019 Deferred tax liabilities	Opening balance	Deferred tax reported in income statement (– income/+ expense)	Deferred tax reported in balance sheet	Exchange rate differences	Closing balance
Goodwill	2,741	–	–	90	2,831
Other intangible assets	13,899	−4,475	11,616	267	21,307
Tangible fixed assets	56	−711	–	−33	–688
Provisions	157	−157	–	–	–
Other details	5,742	493	–1,104	86	5,217
Net reporting	–827	238	–	–27	–616
Total deferred tax liabilities	21,768	–4,612	10,512	383	28,051

Net deferred tax assets and tax liabilities are reported when there is a legal set-off right for current tax assets and liabilities. Deferred tax assets have been reported for unused loss carryforwards relating to tax losses in the subsidiaries where the company has assessed that it will be possible to utilise these unused loss carryforwards against future taxable profits. Expected taxable profits have been calculated individually for each company. As at 31 December 2020, it has been deemed possible to utilise 5 per cent of total loss carryforwards in the Group against future taxable profits. Deferred tax assets/liabilities attributable to deductible temporary differences relating to interests in subsidiaries are reported insofar as it is likely that the temporary difference will be returned in the future and there will be taxable profits against which the deduction can be utilised. The positive profit development over the year has resulted in the Group being able to report a tax expense amounting to SEK 35,363 (21,513) thousand.

Unutilised loss carryforwards

Unutilised loss carryforwards are reported as deferred tax assets when it is likely that these can be utilised to offset future taxable excesses. The parent company's unutilised loss carryforwards amount to SEK – (–) thousand. The Group's unutilised loss carryforwards amount to SEK 94,708 (128,569) thousand, of which SEK 4,978 (11,007) thousand has been deemed to be utilisable, which is why deferred tax receivables of SEK 1,445 (3,245) thousand have been reported.

Can be utilised at the latest by:

Total unutilised loss carryforwards	94,708	128,569
Not subject to time limit	94,708	128,569
	31/12/2020	31/12/2019

Parent company

2020	Opening balance	Deferred tax	Closing balance
Unused loss carryforwards	–	–	–
Temporary differences	604	–577	27
Total deferred tax asset (+)/ tax liability (–)	604	–577	27
2019	Opening balance	Deferred tax	Closing balance
Unused loss carryforwards	267	–267	−
Temporary differences	187	417	604
Total deferred tax asset (+)/ tax liability (–)	454	150	604

Note 13 Exceptional items

Exceptional items as stated below have affected the operating profit in 2020.

		Group
	2020	2019
Sales and marketing expenses	–	1,209
Administration expenses	2,784	30,270
Total 1)	2,784	31,479

1) Exceptional items for 2020 relate to expenses of SEK 2.8 million in connection with acquisitions.

Note 14 Foreign currencies

The currency exchange rates used for the Group's significant currencies throughout the year appear in the table below.

	date	Rate, balance sheet	Average rate
Currency	2020	2019	2020	2019
EUR	10.0375	10.4336	10.4867	10.5892
USD	8.1886	9.3171	9.2037	9.4604
GBP	11.0873	12.2145	11.7981	12.0658
NOK	0.9546	1.0579	0.9786	1.0747
CZK	0.3831	0.4098	0.3966	0.4125
DKK	1.3492	1.3968	1.4068	1.4183
JPY	0.0792	0.0853	0.0862	0.0868

Exchange rate differences	Group		Parent company
affecting net result for the year (+ profit, – loss)	2020	2019	2020	2019
Recognised within cost of goods sold	–361	438	−	−
Recognised within net financial items	–1,739	7,318	–11,115	7,196

Invoicing and goods purchased in foreign currencies

Most goods are purchased from the USA and Europe, and therefore the company is affected by changes in the dollar, pound and euro exchange rate respectively.

		Group
Invoicing and goods purchased in:		2020				2019
(Amounts in SEK thousands)	Invoicing	Percentage of total revenues	Goods purchases	Percentage of total purchases	Invoicing	Percentage of total revenues	Goods purchases	Percentage of total purchases
EUR	1,517,394	42%	1,014,712	36%	1,393,011	41%	1,014,712	39%
USD	253,045	7%	453,594	16%	258,812	8%	453,594	17%
GBP	599,558	17%	252,465	9%	537,954	16%	252,465	10%
Other currencies	1,263,137	35%	1,095,947	39%	1,218,087	36%	898,449	34%
Total	3,633,134	100%	2,816,718	100%	3,407,864	100%	2,619,220	100%

Accounts receivable and accounts payable in foreign currencies

	Group
Accounts receivable and		2020				2019
accounts payable in: (Amounts in SEK thousands)	Accounts receivable	Percentage of total accounts receivable	Accounts payable	Percentage of total accounts payable	Accounts receivable	Percentage of total accounts receivable	Accounts payable	Percentage of total accounts payable
EUR	221,903	41%	250,563	50%	240,045	39%	219,794	41%
USD	43,991	8%	48,137	10%	21,086	3%	93,259	18%
GBP	111,072	21%	77,605	15%	106,193	17%	67,404	13%
Other currencies	164,462	30%	125,620	25%	246,036	40%	149,723	28%
Total	541,428	100%	501,925	100%	613,360	100%	530,181	100%

Hedges as at 31/12/2020

The Group does not utilise hedge accounting. Concluded forward contracts constitute financial hedges.

As at the balance sheet date, hedged accounts receivable amounted to USD 2,545 (2,317) thousand and EUR 1,002 (328) thousand in the Group. In Swedish kronor, the hedged amount totals SEK 30,899 (25,016) thousand. The effect on profit is recognised within the operating profit in the statement of comprehensive income. The fair value of these forward contracts as at 31/12/2020 meant an unrealised profit of SEK 127 thousand, which has affected the statement of comprehensive income by an equivalent amount. The previous year's unrealised result was a loss amounting to SEK 86 thousand.

As at balance sheet date, hedged accounts payable amounted to USD 6,617 (2,069) thousand and EUR 5,026 (2,255) thousand in the Group. In Swedish kronor, the hedged amount totals SEK 104,638 (42,804) thousand. The effect on profit is recognised within the operating profit in the statement of comprehensive income. The fair value of these forward contracts as at 31/12/2020 meant an unrealised loss of SEK 1,851 thousand, which has affected the statement of comprehensive income by an equivalent amount. The previous year's unrealised result was a loss amounting to SEK 468 thousand.

Hedged receivables in leasing contracts as at the balance sheet date amount to EUR 5,022 (4,136) thousand, GBP 529 (746) thousand, USD 73 (1,222) thousand and NOK 16,815 (14,172) thousand within the Group. In Swedish kronor, the hedged amount totals SEK 72,926 (78,645) thousand. The effect on profit is recognised within the operating profit in the statement of comprehensive income. The fair value of these forward contracts as at 31/12/2020 meant an unrealised profit of SEK 4,037 (loss 2,281) thousand, which has affected the statement of comprehensive income by an equivalent amount.

The parent company had outstanding forward contracts amounting to a total of EUR 993 (–) thousand and USD 56 (–) thousand as at 31 December 2020. The fair value of forward contracts as at 31/12/2020 meant an unrealised profit of SEK 88 (–) thousand.

As at 31 December 2020, accounts receivable in foreign currencies amounted to SEK 444,966 (466,213) thousand and accounts payable amounted to SEK 409,132 (448,304) thousand.

Net investments (excluding goodwill) in foreign subsidiaries

Net assets in foreign subsidiaries divided by currency. When translating foreign subsidiaries' balance sheets to Swedish kronor, the Group is exposed to exchange rate fluctuations. The effect on equity in 2020 for the translation of foreign subsidiaries' accounts to Swedish kronor was SEK –27,648 (14,940) thousand.

The Group's exposure in equity to currency exchange rate fluctuations on the balance sheet date was as follows:

		2020	2019
Amount in thousands	Amount	Converted to SEK acc. to exchange rate on balance sheet date	Amount	Converted to SEK acc. to exchange rate on balance sheet date
CZK	34,081	13,056	16,354	6,702
DKK	–3,618	–4,882	−6,197	−8,656
EUR	15,092	151,486	12,778	133,321
GBP	16,758	185,801	13,369	163,296
USD	–698	–5,716	−675	−6,289
NOK	98,151	93,691	85,952	90,927
JPY	830	66	926	79

Note 14 – Continued Note 15 Intangible fixed assets

ACCOUNTING POLICIES

Goodwill

Reported goodwill is the difference between – on the one hand – the acquisition value of Group company shares, the value of non-controlling interests in the acquired operations and the actual value of a previously owned share, and on the other hand the reported value in the acquisition analysis of acquired assets and transferred liabilities. A write-down test is carried out each year, as well as when there is an indication that an asset has fallen in value. Goodwill is allocated to cash-generating units for the purposes of write-down testing. Each and every one of these cash-generating units goes to make up the Group's Business Units. In cases where the carrying amount of the asset exceeds its estimated recoverable amount, the value of the asset is written down to its recoverable amount.

Other intangible assets

Customer relations, brands and support contracts

Customer relations, brands and support contracts that are identified upon the acquisition of companies are recognised as intangible assets at acquisition value (fair value at the time of acquisition). Customer relations and brands are depreciated on a straight-line basis over a maximum of ten years. In each case a useful life is set over which the support contracts are depreciated on a straight-line basis according to plan. If there are indications of impairment, the asset's recoverable amount is assessed. In cases where the carrying amount of the asset exceeds its estimated recoverable amount, the value of the asset is written down to its recoverable amount.

Capitalised software expenses

Capitalised software expenses are made up of expenses in connection with implementation and adaptation of software which can be capitalised. Capitalised software is depreciated on a straight-line basis over a maximum of 5 years. If there are indications of impairment, the asset's recoverable amount is assessed. In cases where the carrying amount of the asset exceeds its estimated recoverable amount, the value of the asset is written down to its recoverable amount.

Write-downs

Assets that have an indeterminate useful life are not amortised but are tested annually to see whether there is any need for write-down. Assets which are depreciated/amortised are assessed in terms of decrease in value whenever an event or a change in circumstances indicates that the carrying amount may not be recoverable. Write-down takes place in the amount by which the reported value of the asset exceeds its recovery value. The recovery value is the higher of an asset's fair value minus sales costs and value in use. When assessing the write-down requirement, assets are grouped at the lowest levels at which there are separately identifiable cash-generating units.

Note 15 – Continued

			Group		Parent company
		Customer	Other intangible		Other intangible
	Goodwill	relations	assets	Total	assets
Opening acquisition value as at 1 January 2020	592,790	291,500	89,664	973,953	40,564
Acquisitions during the year	–	–	23,635	23,635	23,073
Acquisitions for the year via corporate acquisitions	60,721	32,297	–	93,018	–
Sales/disposals	–	–	–11,423	–11,423	–
Exchange rate differences	–28,142	–14,970	–5,517	–48,629	–
Closing accumulated acquisition value	625,369	308,826	96,359	1,030,554	63,637
Opening depreciation and write-downs, 1 January 2020	–76,369	–215,127	–72,803	–364,300	–31,371
Depreciation for the year	–	–27,228	–7,360	–34,588	–5,816
Sales/disposals	–	–	11,423	11,423	–
Exchange rate differences	2,670	12,813	5,328	20,811	–
Accumulated depreciation and write-downs –
closing balance	–73,699	–229,542	–63,413	–366,654	–37,187
Book value as at 31 December 2020	551,670	79,285	32,946	663,901	26,450
Opening acquisition value as at 1 January 2019	468,558	237,687	84,360	790,604	38,556
Acquisitions during the year	−	−	2,008	2,008	2,008
Accumulated acquisition values in acquired companies	−	−	1,680	1,680	−
Acquisitions for the year via corporate acquisitions	110,085	45,783	−	155,868	−
Sales/disposals	−	−	−1,233	−1,233	−
Exchange rate differences	14,147	8,030	2,849	25,026	−
Closing accumulated acquisition value	592,790	291,500	89,664	973,953	40,564
Opening depreciation and write-downs, 1 January 2019	−75,394	−186,647	−64,977	−327,018	−25,755
Depreciation for the year	−	−21,936	−6,783	−28,719	−5,616
Sales/disposals	−	−	1,233	1,233	−
Exchange rate differences	−975	−6,544	−2,277	−9,796	−
Accumulated depreciation and write-downs – closing balance	−76,369	−215,127	−72,803	−364,300	−31,371
Book value as at 31 December 2019	516,421	76,373	16,860	609,654	9,193

Distribution of goodwill per	Group			Group WACC, before tax		Growth during terminal period
cash-generating unit	31/12/2020	31/12/2019	Cash-generating unit	31/12/2020 31/12/2019		31/12/2020	31/12/2019
Business Unit Nordic	102,681	104,061	Business Unit Nordic	10.2%	9.7%	2.0%	1.8%
Business Unit East	23,959	25,206	Business Unit East	10.8%	10.3%	2.0%	1.3%
Business Unit West	239,295	246,160	Business Unit West	10.2%	9.8%	2.0%	2.0%
Business Unit UK	185,735	140,454	Business Unit UK	10.4%	9.8%	2.0%	2.0%
Total	551,670	516,421

Write-down test

Any goodwill write-down requirements are tested each year by calculating the future utilisation value of each cash-generating unit. Impairment requirements are present if the reported value of goodwill exceeds the calculated utilisation value.

When estimating the future utilisation value, the future cash flows of the respective cash-generating units have been calculated based on the forthcoming year's budget and forecasts for a further 4 years, assuming an eternal growth rate of 2 (1 to 2) per cent.

A Weighted Average Cost of Capital (WACC) before tax of between 10 and 11 (10 and 10) per cent has been used for calculation, depending on risk factor in the various cash-generating units. Besides these important assumptions in respect of WACC and future growth, profitability (margin on profit before tax) of 3 to 9 (3 to 8) per cent has been estimated, depending on company. The corporate executive's determination of important assumptions, and the values inherent in these, are based on a reflection of earlier experiences. Eternal growth of 2 per cent has been deemed reasonable on the market in which the company is active. This assessment is based on a weighted analysis of both products and services.

The company has implemented sensitivity analyses based on isolated changes of lower budget levels, lower growth figures and higher weighted capital costs:

In the event of an increase of 2 percentage points in weighted average cost of capital, all cash-generating units would still have good margins for the recoverable amount compared with the reported value.

If the growth rate in terms of net sales were to fall by 1 percentage point during the forecast period, the recoverable amount for all cash-generating units would still exceed the reported values by a good margin.

If the long-term growth rate in terms of net sales were to fall by 1 percentage point, the recoverable amount for all cash-generating units would still exceed the reported values by a good margin.

No write-down requirement was deemed to exist as at 31 December 2020.

Group

ACCOUNTING POLICIES

Property, plant and equipment are recognised at acquisition value less depreciation and write-downs. Expenditure that can be directly attributed to the acquisition of the asset is included in the historical cost. Depreciation of property, plant and equipment is based on the acquisition value of the assets and the estimated useful life. In this regard, a depreciation time of three years is applied for computers and technical equipment, five years for machinery and equipment, three years for spare parts and 50 years for buildings. The useful life of the assets is tested on every balance sheet date and adjusted where required. The book value of assets is written down to recovery value if the asset's book value exceeds its assessed recovery value. Profits and losses during disposal are determined through comparison between the sales income and reported value, and are reported in the statement of comprehensive income.

			Group				Parent company
	Computers			Leasing			Computers
	and machines	Inventories	Spare parts	contracts	Buildings	Total	and machines
Opening acquisition value as at 1 January 2020	325,202	60,997	64,406	–	18,466	469,071	2,949
Acquisitions during the year 1)	75,585	1,073	4,402	–	–	81,060	602
Accumulated acquisition values in acquired companies	1,098	1,608	–	–	–	2,706	–
Sales/disposals	–14,703	–2,405	–	–	–	–17,108	–
Reclassifications 1)	–50,423	–	–	–	–	–50,423	–
Exchange rate differences	–15,300	–2,150	–2,586	–	–1,700	–21,736	–
Closing accumulated acquisition value	321,459	59,123	66,222	–	16,766	463,570	3,551
Opening depreciation and write-downs, 1 January 2020	–279,424	–41,584	–58,581	–	–4,077	–383,666	–1,799
Depreciation for the year	–26,266	–5,856	–3,917	–	–286	–36,325	–785
Sales/disposals	14,355	2,245	–	–	–	16,600	–
Exchange rate differences	14,200	1,529	2,358	–	392	18,479	–
Accumulated depreciation and write-downs – closing balance	–277,135	–43,666	–60,140	–	–3,971	–384,912	–2,584
Book value as at 31 December 2020	44,324	15,457	6,082	–	12,795	78,658	967
Opening acquisition value as at 1 January 2019	290,224	47,699	64,677	15,212	16,982	434,794	2,115
Acquisitions during the year 1)	72,541	16,377	3,342	−	195	92,455	863
Accumulated acquisition values in acquired companies	8,869	899	−	−	−	9,768	−
Sales/disposals	−5,253	−7,807	−3,063	−	−	−16,123	−29
Reclassifications 2)	−48,637	3,067	−2,076	−15,827	−	−63,473	−
Exchange rate differences	7,458	762	1,526	615	1,289	11,650	−
Closing accumulated acquisition value	325,202	60,997	64,406	−	18,466	469,071	2,949
Opening depreciation and write-downs, 1 January 2019	−254,939	−41,796	−58,454	−2,675	−3,514	−361,378	−1,172
Depreciation for the year	−24,254	−3,719	−4,021	−	−293	−32,287	−656
Write-down	−	−64	−	−	−	−64	−
Sales/disposals	5,072	7,440	3,057	−	−	15,569	29
Reclassifications 2)	1,013	−2,901	2,024	2,877	−	3,013	−
Exchange rate differences	−6,316	−544	−1,187	−202	−270	−8,519	−
Accumulated depreciation and write-downs – closing balance	−279,424	−41,584	−58,581	−	−4,077	−383,666	−1,799
Book value as at 31 December 2019	45,778	19,413	5,825	−	14,389	85,405	1,150

1) Includes SEK 50,423 (47,510) thousand reclassified from fixed assets Computers and machines to financial leasing.

2) Includes SEK 47,510 (41,476) thousand reclassified from fixed assets Computers and machines to financial leasing, reclassification in 2019 of acquisition values (SEK –15,827 thousand) and depreciation (SEK +2,877 thousand) from Leasing contracts to Right-of-use assets for existing financial leasing contracts at the time of the transition to IFRS 16 as of 1 January 2019.

Note 17 Shares in Group companies

Shares in Group companies	Company registration number	Headquarters	Number of shares	% of share capital	Book value 31/12/2020, SEK thousands	Book value 31/12/2019, SEK thousands
Proact IT Sweden AB	556328-2754	Stockholm, SE	47,456,047	100.00%	96,672	96,672
Proact IT Norge AS	971,210,737	Oslo, NO	3,475,000	100.00%	49,523	49,523
Proact Finland OY	1084241-2	Espoo, FI	20,000	100.00%	15,519	15,519
Proact Systems A/S	18,803,291	Brøndby, DK	600	100.00%	–	−
Proact Finance AB	556396-0813	Sollentuna, SE	500 000	100.00%	5,000	5,000
Proact IT Latvia SIA	LV40003420036	Riga, LV	850	100.00%	8,499	8,499
Proact Lietuva UAB	110861350	Vilnius, LT	7,386	73.86%	7,845	7,845
Proact Netherlands B.V.	20136449	Breda, NL	44,419	100.00%	79,131	79,131
Proact Estonia AS	115131151	Tallinn, EE	22,757	100.00%	11,388	11,388
Proact IT (UK) Ltd	07493526	Chesterfield, UK	775,000	100.00%	62,112	62,112
Databasement International Holding B.V.	27326003	Zoetermeer, NL	1,802	100.00%	142,658	142,658
Proact Belgium BVBA	090211403	Drongen, BE	6,408	100.00%	–	−
Proact Czech Republic, s.r.o.	24799629	Prague, CZ	–	85.30%	13,455	13,455
Proact U.S. LLC	–	Delaware, USA	–	100.00%	–	−
Proact IT Germany GmbH	HRB 132327	Hamburg, DE	210,000	100.00%	–	−
Proact Managed Cloud Services AB	556300-7664	Örebro, SE	26,317	100.00%	–	−

491,802 491,802

Any impairment requirements in respect of shares in subsidiaries are tested each year by calculating the future utilisation value of each individual subsidiary, as referred to in Note 15.

	Parent company
Shares in subsidiaries	31/12/2020	31/12/2019
Opening book value	491,802	495,409
Write-downs	–	−3,607
Closing accumulated acquisition value	491,802	491,802
BOOK VALUE	491,802	491,802
Income from participations in Group	Parent company
companies	2020	2019
Dividends, earned	50,690	64,939
Total	50,690	64,939

Acquisition of further interests in 2020 from non-controlling interests In 2020, a previously reported financial liability to holdings without a controlling influence in 1940 Proact Czech s.r.o. was reclassified and reported as a share of equity attributable to holdings without a controlling influence instead, as the buyout option had expired and no buyout had taken place.

Acquisition of further interests in 2019 from non-controlling interests No further interests from non-controlling interests have been acquired in 2019.

Profit, equity and cash flow pertaining to non-controlling interests

Proact Czech Republic, s.r.o.1)	1,919 3,052	1,035 665	–584 –846	15%	– 1,664	– 118	– 1,254	15%
Proact Lietuva UAB	1,133	–369	–262	26%	1,664	118	1,254	26%
	31/12/2020	2020	2020	interests, %	31/12/2019	2019	2019	interests, %
	Equity, SEK thousands	Profit, SEK thousands	Cash flow, SEK thousands	Percentage of non-controlling	Equity, SEK thousands	Profit, SEK thousands	Cash flow, SEK thousands	Percentage of non-controlling

1) Proact Czech Republic s.r.o. had 100 per cent inclusion in the financial statements up to and including 2019. Liabilities to non-controlling interests were included as a financial liability in the balance sheet, see Note 24. As of 2020, the financial liability was dissolved and the company has 85.3 per cent inclusion in the financial statements. This is because the buyout option has expired and no buyout has taken place.

Dividends to non-controlling interests

Total	135	262
Proact Lietuva UAB	135	262
	2020	2019

Note 18 Receivables and liabilities with Group companies and Other long-term receivables

		Parent company
	<1 year	1–5 years	>5 years
Receivables with group companies due within	195,260	47,176	199,452
Liabilities with Group companies due within	328,711	–	11,087

There are no subordinated loans to foreign subsidiaries.

	Group
Other non-current receivables		31/12/2020 31/12/2019
Frozen accounts of tenancy agreements	954	1,326
Receivables relating to financial leasing	66,160	61,896
Pre-paid expenses and accrued income – Non-current 1)	335,118	279,995
Other non-current receivables	6,578	7,670
Total	408,810	350,887

1) See also Note 21.

Note 19 Inventories

ACCOUNTING POLICIES

Stock is valued at the lowest of the acquisition value and the net selling price. The net realisable value is the estimated sales price in operating activities, after deductions for estimated expenses for preparation and for achieving a sale.

The acquisition value for inventories is based on the first-in first-out principle (FIFO) and includes costs arising upon acquisition of the inventories and their transport to their current location and condition.

Inventories are valued at the acquisition value or the net realisable value, whichever is the lower. The reported value of goods in stock may need to be written down if they are exposed to damage, if all or some of them become too old or if their sale prices decline. Stock value as at 31 December 2020 amounted to SEK 12,963 (20,247) million. During the year, the Group wrote down inventories to the value of SEK 37 (127) thousand due to obsolescence. At the same time, write-downs amounting to SEK 46 (197) thousand were reversed in 2020 as it was possible to sell inventories written down previously.

Note 20 Accounts receivable

ACCOUNTING POLICIES

Accounts receivable

Accounts receivable are amounts attributable to customers in respect of goods or services sold that are implemented in current operations. Accounts receivable generally fall due for payment within 30–90 days, and so all accounts receivable have been classified as current assets. Accounts receivable are initially recognised at the transaction price. The Group holds accounts receivable for the purpose of collecting contractual cash flows.

Provisions for uncertain receivables and write-downs

The Group applies the simplified method for calculating expected credit losses. This method means that expected losses throughout the entire term of the receivable are used as a basis for accounts receivable and contract assets.

Provision for expected credit loss is based on the credit risk characteristics of the accounts receivable and contract assets and the number of days of delay.

The contract assets are attributable to as yet uninvoiced work and essentially have the same risk characteristics as already invoiced work for the same type of contract.

The Group it is therefore of the opinion that the loss levels for accounts receivable is a reasonable estimate of the loss levels for contract assets. Expected credit losses are based on customers' payment histories

together with the loss history. Accounts receivable and contract assets are impaired when it has been

established that it will not be possible to recover any amount.

Credit losses are recognised in the income statement as a cost of goods and services sold.

Accounts receivable – net	541,428	613,360
able	–4,858	–1,041
Provisions for impairment of accounts receiv
Accounts receivable	546,286	614,401
	31/12/2020	31/12/2019
	Group

The Group has had customer losses of SEK 263 thousand in 2020. The Group has had customer losses of SEK 309 thousand in 2019. See the section entitled "Risks and risk management" for risks and age analysis relating to accounts receivable.

Contract assets are reported separately: see Note 3 Revenue and Note 21 Interim receivables.

Note 21 Prepaid expenses and accrued income

	Group		Parent company
Current			31/12/2020 31/12/2019 31/12/2020 31/12/2019
Prepaid rental costs	3,432	789	–	−
Prepaid leasing fees	2,085	−	–	−
Prepaid insurance premiums	3,335	3,050	–	−
Prepaid maintenance charges	143,863	135,940	–	−
Prepaid system costs	205,745	203,124	–	−
Other prepaid expenses	40,433	45,585	8,141	19,013
Accrued service revenues	21,204	24,212	–	−
Accrued system revenues	2,204	7,731	–	−
Other accrued revenues	1,346	4,550	–	−
Total current
interim receivables	423,647	424,981	8,141	19,013
Non-current
Prepaid rental costs	20	94	–	−
Prepaid leasing fees	30	59	–	−
Prepaid maintenance charges	92,497	77,192	–	−
Prepaid system costs	210,104	172,875	–	−
Other prepaid expenses	8,665	9,700	–	−
Accrued service revenues	15,799	13,438	–	−
Accrued system revenues	–	1,106	–	−
Other accrued revenues	8,002	5,531	–	−
Total non-current interim receivables 1)	335,117	279,995	–	−

1) Non-current interim receivables are included as part of Other non-current receivables in the balance sheet.

Note 22 Other liabilities

	Group		Parent company
	31/12/2020 31/12/2019		31/12/2020 31/12/2019
Staff tax at source	25,602	27,181	861	856
Social security contributions	10,390	9,346	4,242	3,820
VAT liabilities	54,561	45,759	1,711	747
Advance payments from customers	329	7,299	–	−
Deferred payment of part of purchase price	36,329	22,516	–	−
Other items	22,597	17,976	–	−
Total	149,808	130,077	6,814	5,423

All liabilities are due for payment within one year.

Not 23 Accrued expenses and deferred income

	Group		Parent company
Current	31/12/2020 31/12/2019		31/12/2020 31/12/2019
Accrued wages and salaries	49,801	52,092	5,234	2,651
Accrued holiday pay liabilities	38,967	38,027	3,223	3,461
Accrued social costs	22,657	20,270	726	630
Accrued servicing costs	8,351	5,644	–	−
Prepaid system revenues	255,865	221,377	–	−
Prepaid service revenues	315,067	329,289	–	−
Other items	10,270	44,483	1 301	3,303
Total current interim liabilities	700,978	711,182	10,484	10,045
Non-current
Prepaid system revenues	245,295	195,636	–	−
Prepaid service revenues	205,157	168,473	–	−
Other items	4,447	2,817	–	−
Total non-current interim liabilities 1)	454,899	366,926	–	−

1) Non-current interim liabilities are included as part of Other non-current liabilities in the balance sheet.

Note 24 Financial assets and liabilities

ACCOUNTING POLICIES

Financial assets and liabilities

The Group classifies its financial assets in the following categories: financial assets valued at fair value via the statement of comprehensive income, financial assets valued at accrued acquisition cost, financial instruments held to maturity and financial assets that can be sold. Classification depends on the purpose for which the instruments were acquired. The Group establishes the classification of the instruments at the time of first recognition.

Only the categories relevant to the Group are described below. The Group classifies its financial liabilities in the following categories: financial liabilities valued at fair value via the statement of comprehensive income, plus other financial liabilities valued at accrued acquisition cost.

Risks linked with financial instruments, sensitivity analyses, etc. are described in the section entitled "Risks and risk management" in the annual financial statements.

Financial assets valued at fair value via the statement of comprehensive income

Assets in this category are constantly valued at fair value with value changes recorded in the statement of comprehensive income. This category consists of two subgroups: financial assets and liabilities held for trading and other financial assets and liabilities which the company has initially opted to value at fair value in the statement of comprehensive income. A financial asset is classified as a holding for trade if it is acquired with a view to being sold in the short term. Proact only has derivatives in the group financial asset held for trading.

Financial assets valued at accrued acquisition cost

Loans receivable and accounts receivable are non-derivative financial assets with determined or determinable payments which are not listed on an active market. It is noteworthy that they are incurred when the Group supplies money, products or services directly to a client without the intention of purchasing with the accrued claim. They are included in current assets, with the exception of items with due dates more than 12 months after the balance sheet date which are classified as fixed assets. The Group's financial lease receivables are reported in the balance sheet in the other non-current receivables entry.

Assets in this category are valued at accrued acquisition cost after the acquisition date. Accrued historical cost is determined from the effective interest that is calculated at the date of acquisition. Accounts receivable are recognised at the amount expected to be paid following individual assessment. The expected maturity of accounts receivable is short, and so the value has been recognised at a nominal amount without discount. Provision for expected credit loss is based on the credit risk characteristics of the accounts receivable and contract assets and the number of days of delay. The contract assets are attributable to as yet uninvoiced work and essentially have the same risk characteristics as already invoiced work for the

same type of contract. The Group it is therefore of the opinion that the loss levels for accounts receivable is a reasonable estimate of the loss levels for contract assets. Expected credit losses are based on customers' payment histories together with the loss history. Write-downs of accounts receivable are reported in operating expenses.

Financial liabilities valued at fair value via the statement of comprehensive income

Liabilities in this category are constantly valued at fair value with value changes recorded in the income statement. This category comprises financial liabilities reported by the company at fair value via the statement of comprehensive income. Proact has carried out current value calculation of additional purchase prices as they arise in this category, as well as derivatives.

Other financial liabilities valued at accrued acquisition cost

Accounts payable are without security and are normally paid within 30 days. The fair value of accounts payable and other liabilities is considered to correspond to their recognised values, as they are current by nature.

Borrowing is initially recognised at fair value, net after transaction costs. Borrowing is then recognised at accrued cost and any difference between the amount received (net after transaction costs) and the repayment amount is recognised in the statement of comprehensive income, distributed across the loan period, with the application of the effective interest method. Accounts payable are without security and are normally paid within 30 days.

Inclusion of derivative instruments

Derivatives are included in the balance sheet on contract date and are valued at fair value, both at first inclusion and when subsequently reassessed. All derivatives are reported on an ongoing basis at fair value, with value changes reported in the statement of comprehensive income within cost of sold product for the derivatives linked with accounts payable or financial items respectively for the derivatives linked with financial leasing contracts.

Calculation of fair value

The fair value of financial instruments such as forward exchange contracts which are not traded on an active market is established by using valuation techniques. Such methods may include an analysis of recent transactions of similar instruments or discounting of anticipated cash flows.

The nominal value less any assessed credits, for accounts receivable and liabilities to suppliers, are assumed to correspond to their fair value.

The fair value of additional purchase prices is calculated by discounting the future contracted or assessed cash flow at the current market rate of interest available to the Group for similar financial instruments. The fair value of financial liabilities is calculated for disclosure in a note by discounting the future contracted or assessed cash flow at the current market rate of interest available to the Group for similar financial instruments.

Other financial liabilities valued at accrued acquisition cost Group Parent company 31/12/2020 31/12/2019 31/12/2020 31/12/2019 Non-interest-bearing Currency derivatives 1,811 2,715 – − Other liabilities  1) 16,887 34,980 1,199 3,085 Accounts payable 501,925 530,181 6,775 9,529 Total non-interestbearing 520,623 567,876 7,974 12,614 Interest-bearing Liability on acquisition – Current 36,329 22,516 – − Liability on acquisition – Non-current 1) 7,229 24,542 – − Bank loans, of which current portion – 513 – − Bank loans, of which non-current portion 211,806 230,686 211,806 230,686 Leasing liabilities 2) 234,488 302,639 – − Total interest-bearing 489,852 580,896 211,806 230,686 Total other financial liabilities valued at

accrued acquisition cost 1,010,475 1,148,772 219,780 243,300

1) Financial liability on acquisition of Proact Czech Republic, s.r.o. amounting to SEK (2,475) thousand SEK has been settled in its entirety in 2020. Deferred payment of part of the purchase price on acquisition of PeopleWare ICT Solutions B.V. SEK 21,661 (44,583) thousand, plus SEK 21,897 thousand on acquisition of Cetus Solutions Ltd.

2) See also Note 27.

Interest-bearing liabilities,			Book
Group 31/12/2020	Interest	Maturity	value
Liability on acquisition 1)	2%	2021	21,661
Liability on acquisition 1)	2%	2021	14,668
Liability on acquisition 1)	2%	2022	7,229
Utilised overdraft facility, Nordea 2), 3)	Base rate +2.0%	31/12/2021	–
Bank loan, Nordea 3)	LIBOR 3M +1.25%	31/10/2023	41,659
Bank loan, Nordea 3)	STIBOR 3M +1.25%	31/10/2023 112,180
Bank loan, Nordea 3)	EURIBOR 3M +1.25%	31/10/2023	57,967
Leasing liability 4)	1.18%–3.56%		2021 94,665
Leasing liability 4)	1.18%–3.56%	2022-2025 139,823
Total interest-bearing

liabilities 489,852

Of the above interest-bearing liabilities, current loans that fall due in 2021 amount to SEK – thousand. Of the bank loan above, maturing on 31/10/2023, this amount of SEK 211,806 thousand relates to a three-year credit facility totalling SEK 350 million. This credit facility has two extension options of one year each, occurring after 12 and 24 months respectively. This bank loan includes lending terms in respect of net debt in relation to EBITDA. The lending terms have been met by a good margin in 2020 and as at 31 December 2020.

• 1) The interest rate used when carrying out a current value calculation for PeopleWare ICT Solutions B.V. is 2 per cent with a term until 2021, and also for Cetus Solutions Ltd. 2 per cent with a term until 2021 and 2022. 2) Interest will be payable over three months
• 3) The limit for the Group overdraft facility is SEK 197,663 thousand, and for the parent company SEK 150,000 thousand, of which the Group amount utilised amounted to SEK – thousand and SEK – thousand for the parent company.

4) Interest will be payable over one month.

Note 24 – Continued

Interest-bearing liabilities, Group 31/12/2019	Interest	Maturity	Book value
Liability on acquisition 1)	10%	2022	2,475
Liability on acquisition 1)	2%	2020	22,516
Liability on acquisition 1)	2%	2021	22,067
Utilised overdraft facility, Nordea 3, 4)	Base rate +2.0%	31/12/2020	–
Bank loan, Nordea 3)	LIBOR 3M +1.25%	31/10/2022	27,885
Bank loan, Nordea 3)	STIBOR 3M +1.25%	31/10/2022 107,177
Bank loan, Nordea 3)	EURIBOR 3M +1.25%	31/10/2022	95,624
Bank loan, Lloyds TSB Bank 2)	Base Rate +4% 04/02/2020		73
Bank loan, Lloyds TSB Bank 2)	Base Rate +4%	30/11/2020	440
Leasing liability 2)	1.18%–3.78%		2020 104,563
Leasing liability 2)	1.18%–3.78%	2021-2025 198,076

Total interest-bearing liabilities 580,896

Of the above interest-bearing liabilities, current loans that fall due in 2020 amount to SEK 513 thousand. Of the bank loan above, maturing on 31/10/2022, this amount of SEK 230,686 thousand relates to a three-year credit facility totalling SEK 350 million. This credit facility has two extension options of one year each, occurring after 12 and 24 months respectively. This bank loan includes lending terms in respect of net debt in relation to EBITDA. The lending terms have been met by a good margin in 2019 and as at 31 December 2019.

• 1) The interest rate used when carrying out a current value calculation for Proact Czech Republic, s.r.o. is 10 per cent with a term until 2022, and also for PeopleWare ICT Solutions B.V. 2 per cent with a term until 2020 and 2021.
• 2) Interest will be payable over one month.
• 3) Interest will be payable over three months.
• 4) The limit for the Group overdraft facility is SEK 253,201 thousand, and for the parent company SEK 150,000 thousand, of which the Group amount utilised amounted to SEK – thousand and SEK – thousand for the parent company.

Interest-bearing

liabilities, parent company			Book
31/12/2020	Interest	Maturity	value
Bank loan, Nordea 1)	LIBOR 3M +1.25%	31/10/2023	41,659
Bank loan, Nordea 1)	STIBOR 3M +1.25%	31/10/2023	112,180
Bank loan, Nordea 1)	EURIBOR 3M +1.25%	31/10/2023	57,967

Total interest-bearing liabilities 211,806

Of the above interest-bearing liabilities, current loans that fall due in 2021 amount to SEK – thousand. Of the parent company's bank loan above, maturing on 31/10/2023, this amount of SEK 211,806 thousand relates to a three-year credit facility totalling SEK 350 million. This credit facility has two extension options of one year each, occurring after 12 and 24 months respectively. This bank loan includes lending terms in respect of net debt in relation to EBITDA. The lending terms have been met by a good margin in 2020 and as at 31 December 2020.

1) Interest will be payable over three months.

Interest-bearing

liabilities,
--------------

parent company 31/12/2019	Interest	Maturity	Book value
Bank loan, Nordea 1)	LIBOR 3M +1.25%	31/10/2022	27,885
Bank loan, Nordea 1)	STIBOR 3M +1.25%	31/10/2022	107,177
Bank loan, Nordea 1)	EURIBOR 3M +1.25%	31/10/2022	95,624
Total interest-bearing liabilities			230,686

Of the above interest-bearing liabilities, current loans that fall due in 2020 amount to SEK – thousand. Of the parent company's bank loan above, maturing on 31/10/2022, this amount of SEK 230,686 thousand relates to a three-year credit facility totalling SEK 350 million. This credit facility has two extension options of one year each, occurring after 12 and 24 months respectively. This bank loan includes lending terms in respect of net debt in relation to EBITDA. The lending terms have been met by a good margin in 2019 and as at 31 December 2019.

1) Interest will be payable over three months.

Group term analysis, financial liabilities as at 31 December 2020 Contractual undiscounted amounts including future interest payments

			3–12	1–5	>5
	On request	<3 mths	mths	years	years
Currency derivatives	–	1,811	–	–	–
Liability on acquisition – Current element 1)	–	–	36,329	–	–
Liability on acquisition – Non-current element 1)	–	–	–	7,229	–
Bank loans, of which non-current portion	–	665		1,994 216,679	–
Accounts payable	–	501,925	–	–	–
Other liabilities	–	16,887	–	–	–
Leasing liabilities	–	31,541		94,547 114,990	–
	–	552,829		132,870 338,898	–

1) Liability on acquisition of PeopleWare ICT Solutions B.V. amounting to SEK 21,661 (44,583) thousand, and Cetus Solutions Ltd. amounting to SEK 21,897 thousand.

Group term analysis, financial liabilities as at 31 December 2019 Contractual undiscounted amounts including future interest payments

	On request	<3 mths	3–12 mths	1–5 years	>5 years
Currency derivatives	−	1,007	1,437	271	−
Liability on acquisition – Current element 1)	−	−	22,516	−	−
Liability on acquisition – Non-current element 1)	−	−	−	24,542	−
Bank loans, of which current portion	−	187	335	−	−
Bank loans, of which non-current portion	−	992		2,975 237,959	−
Accounts payable	−	530,181	−	−	−
Other liabilities	−	34,980	−	−	−
Leasing liabilities	−	26,873		80,617 203,615	−
	−	594,220		107,880 466,387	−

1) Liability on acquisition of Proact Czech Republic, s.r.o. SEK 2,475 (2,429) thousand and PeopleWare ICT Solutions B.V. SEK 44,583 thousand.

Parent company term analysis, financial liabilities as at 31 December 2020

Contractual undiscounted amounts including future interest payments

		7,440		1,994 216,679
Accounts payable	–	6,775	–	–	–
Bank loans, of which non-current portion	–	665		1,994 216,679	–
	On request	<3 mths	3–12 mths	1–5 years	>5 years

Parent company term analysis, financial liabilities as at 31 December 2019

Contractual undiscounted amounts including future interest payments
	On request	<3 mths	3–12 mths	1–5 years	>5 years
Bank loans, of which non-current portion	−	992		2,975 237,959	−
Accounts payable	−	9,529	−	−	−
	−	10,521		2,975 237,959	−

Financial assets and liabilities per valuation category

Currency derivatives 1) Leasing liabilities	1,811 –	– –	– 234,488	1,811 234,488	1,811 234,488
Liabilities, acquisitions	–	–	43,558	43,558	43,558
Bank loans	–	–	211,806	211,806	211,806
Other liabilities	–	–	16,887	16,887	16,887
Accounts payable	–	–	501,925	501,925	501,925
Total financial assets 3,4)	4,125	1,180,041	–	1,184,166	1,184,166
Currency derivatives 1)	4,125	–	–	4,125	4,125
Cash and cash equivalents	–	468,309	–	468,309	468,309
Other receivables	–	48,806	–	48,806	48,806
Accounts receivable	–	541,428	–	541,428	541,428
Rent deposits	–	874	–	874	874
Lease receivables	–	120,624	–	120,624	120,624
Group, 2020	Assets and liabilities valued at fair value through statement of comprehensive income	Financial assets valued at accrued acquisition cost	Other financial liabilities valued at accrued acquisition cost	Total carrying amount	Fair value 2)

1) Assets and liabilities relating to currency derivatives are recognised in Other non-current receivables, Other receivables, Other non-current liabilities, Other liabilities and Accrued expenses.

2) Recognised values are a reasonable estimate of fair value.

3) The Group's exposure to various risks associated with the financial instruments is described in the section entitled Risks and risk management.

The maximum exposure to credit risk as at the balance sheet date corresponds to the fair value for each category of financial assets stated above.

4) Financial assets pledged as security, see Note 25.

Financial assets and liabilities per valuation category

	Assets and liabilities
	valued at fair value through	Financial assets	Other financial liabilities	Total
	statement of comprehensive	valued at accrued	valued at accrued	carrying	Fair
Group, 2019	income	acquisition cost	acquisition cost	amount	value 2)
Lease receivables	−	117,333	−	117,333	117,333
Rent deposits	−	1,326	−	1,326	1,326
Accounts receivable	−	613,360	−	613,360	613,360
Other receivables	−	56,568	−	56,568	56,568
Cash and cash equivalents	−	373,161	−	373,161	373,161
Total financial assets 3,4)	−	1,161,748	−	1,161,748	1,161,748
Accounts payable	−	−	530,181	530,181	530,181
Other liabilities	−	−	34,980	34,980	34,980
Bank loans	−	−	231,199	231,199	231,199
Liabilities, acquisitions	−	−	47,058	47,058	47,058
Currency derivatives 1)	2,715	−	−	2,715	2,715
Leasing liabilities	−	−	302,639	302,639	302,639
Total financial liabilities 3)	2,715	−	1,146,057	1,148,772	1,148,772

1) Assets and liabilities relating to currency derivatives are recognised in Other non-current receivables, Other receivables, Other non-current liabilities, Other liabilities and Accrued expenses.

2) Recognised values are a reasonable estimate of fair value.

3) The Group's exposure to various risks associated with the financial instruments is described in the section entitled Risks and risk management.

The maximum exposure to credit risk as at the balance sheet date corresponds to the fair value for each category of financial assets stated above. 4) Financial assets pledged as security, see Note 25.

Borrowing Group, 2020 Group, 2019 Current Non-current Total Current Non-current Total Loans with pledged assets Bank loans – 211,806 211,806 513 230,686 231,199 Total loans with pledged assets – 211,806 211,806 513 230,686 231,199 Loans without pledged assets Accounts payable 501,925 – 501,925 530,181 − 530,181 Total loans without pledged assets 501,925 – 501,925 530,181 − 530,181 Total borrowing 501,925 211,806 713,731 530,694 230,686 761,380

Calculation of fair value

According to IFRS 9, certain financial instruments must be valued at fair value in the balance sheet. To do this, information is required on valuation at fair value for each level in the following fair value hierarchy:

• Level 1) Listed prices (unadjusted) on active markets for identical assets or liabilities.
• Level 2) Observable inputs for assets or liabilities other than quoted prices included in level 1, either directly (i.e. prices) or indirectly (i.e. derived from prices).
• Level 3) Data for assets or liabilities which is not based on observable market data (i.e. non-observable data).

In category 2, the Group has receivables and liabilities relating to currency hedges at a net value of SEK 2,314 thousand as at 30 December 2020. Receivables of SEK 2,122 thousand are recognised in Other non-current receivables, SEK 2,003 thousand in Other liabilities, SEK 1,811 thousand in Other liabilities.

Currency hedges are valued at market value in that early allocation of currency hedging takes place in order to find out what the forward price would be in the event of maturity at the balance sheet date. In the case of currency hedging of EUR to SEK, for example, the difference in interest rates between Sweden and Europe for the remaining original term is used, which provides the number of points to be deducted from the original forward price. The difference between the new forward price and the original forward price gives the market value of the currency hedge.

The Group has no financial assets and liabilities in category 1 and category 3. No transfers between the categories have taken place during the period.

Note 24 – Continued Note 25 Assets pledged, contingent liabilities and commitments

ACCOUNTING POLICIES

Provisions

A provision is recognised in the balance sheet when there is a commitment as a consequence of an event that has occurred, and it is likely that an outflow of resources will be required to settle the obligation, and that a reliable estimate of the amount can be made. Where the time at which payment is made is material, provisions must be set at the net present value of the payments which are expected to be required to settle the liability.

Contingent liabilities

A contingent liability is present when there is a possible commitment that stems from events that have occurred and its existence is confirmed only by one or more uncertain future events. Contingent liabilities are not recognised as a liability or provision, because it is not likely that an outflow of resources will be required or the size of the commitment cannot be calculated in a reliable manner. Thus information is provided unless the likelihood of outflow of resources is extremely low.

Pledged assets

		Group		Parent company
	31/12/2020 31/12/2019		31/12/2020 31/12/2019
Chattel mortgages 1)	34,473	73,126	–	−
Frozen resources 2)	874	1,326	–	−
Security, building 3)	18,249	21,826	–	−
Security, bank loans 4)	321,801	284,202	96,672	96,672
Pledged accounts receivable 5)	6,835	14,963	–	−
Total pledged assets	382,232	395,443	96,672	96,672

1) Chattel mortgages refer to security placed for overdraft facilities in the

United Kingdom amounting to SEK 27,718 (67,054) thousand. 2) Security for rental contract SEK 874 (1,326) thousand. Frozen liquid

funds are included in the item Other long-term receivables. 3) Security for financial lease assets in PeopleWare ICT Solutions B.V.

SEK 5,521 thousand in ABN AMRO Bank NV.

4) Shares in subsidiaries as security for bank loans of SEK 211,806 thousand with Nordea.

5) Pledged for overdraft facility in Proact Czech Republic, s.r.o.

Contingent liabilities

The parent company has contingent liabilities relating to bank guarantees and other guarantees and other business arising during normal business operations. No significant liabilities are expected to stem from these contingent liabilities.

	Group		Parent company
	31/12/2020 31/12/2019		31/12/2020 31/12/2019
Guarantees for
Other guarantees, subsidiaries 1)	70	261	70,825	94,344
Total contingent liabilities	70	261	70,825	94,344

1) Other guarantees, subsidiaries relates to customer commitments of SEK 70 thousand, supplier guarantees of SEK 70,200 thousand and guarantees for leased vehicles of SEK 625 thousand.

Commitments

As at 31 December 2020, the company had no contracted commitments which had not yet been reported in the financial statements which would result in significant future disbursements, except for commitments relating to operating and support activities. For leasing commitments, see Note 27.

ACCOUNTING POLICIES

Cash and cash equivalents and short-term investments Cash and cash equivalents are deposited in bank accounts or invested in Swedish interest-bearing securities. Cash and cash equivalents belong to the category of loans and receivables. The maturity of investments included in cash and cash equivalents is three months at the most.

Cash flow analysis

The indirect method has been applied when drawing up the cash flow statement. When applying the indirect method, net payments to and from current operations are calculated by adjusting the net result for changes in operating income and expenses during the period, items which are not included in the cash flow and items which are included in the cash flow of investment and financing business. Cash and cash equivalents comprise cash balances and immediately accessible holdings in banks and corresponding institutes, and short-term investments with a maturity from the acquisition date of less than three months and which are exposed to only a minimal risk of value fluctuation.

Information concerning interest paid

During the period, interest received in the Group amounted to SEK 612 (1,879) thousand and SEK 294 (1,643) thousand in the parent company. During the period, interest paid in the group amounted to SEK 11,457 (10,193) thousand and SEK 6,197 (6,124) in the parent company.

Acquisition of subsidiaries and activities

Cetus Solutions Ltd. in the United Kingdom was acquired during the fourth quarter of 2020. The purchase price for this company was settled using cash and cash equivalents,

GBP 7,823 thousand (SEK 92,296 thousand) paid in 2020 and GBP 2,008 thousand (SEK 23,690 thousand), of which GBP 1,339 thousand (SEK 15,798 thousand) will be paid in 2021 and GBP 669 thousand (SEK 7,892 thousand) will be paid in 2022.

Dutch company PeopleWare ICT Solutions BV was acquired in the fourth quarter of 2019. The purchase price for this company was settled using cash and cash equivalents; EUR 10,231 thousand (SEK 107,817 thousand) was paid in 2019 and EUR 2,192 thousand (SEK 23,100 thousand) was paid in October 2020, along with a further EUR 2,192 thousand (SEK 23,100 thousand) to be paid in October 2021.

Acquisitions from non-controlling interests

In 2020, a previously reported financial liability to holdings without a controlling influence in 1940 Proact Czech s.r.o. was reclassified as a share of equity attributable to holdings without a controlling influence, as the buyout option had expired and no buyout had taken place.

No acquisitions of further interests from non-controlling interests have taken place in 2019.

Divestment of subsidiaries and activities

No subsidiaries or operations were divested in 2020. The subsidiary in Spain was sold in 2019. The sale had an impact of EUR 689 thousand (SEK 7,296 thousand) on cash flow.

Acquisition of intangible fixed assets

Intangible fixed assets worth SEK 23,635 (2,008) thousand were acquired during the year.

Acquisition of tangible fixed assets

Tangible fixed assets worth SEK 81,060 (92,456) thousand were acquired during the year.

Dividends to non-controlling interests

During the year, dividends amounting to SEK 135 (262) thousand were paid out to holders without a controlling influence in a partly-owned subsidiary in the Baltic region.

Cash and cash	Group		Parent company
equivalents		31/12/2020 31/12/2019	31/12/2020 31/12/2019
Cash and bank
balances 1, 2)	468,309	373,161	–	–

• 1) Of Group cash and cash equivalents, SEK 24,754 (29,730) thousand relates to partly-owned companies in the Baltic region and the Czech Republic.
• 2) The parent company's cash and cash equivalents relate to the balance of the Group account and are recognised as liabilities to Group companies, amounting to SEK 297,396 (264,544) thousand as at 31 December 2020.

Frozen liquid assets

The Group has total frozen liquid assets of SEK 954 (1,326) thousand. Of these, SEK 954 (1,326) thousand are included in Other long-term receivables and relate to security for rental contracts. See Note 18.

Transactions not settled in cash and cash equivalents

There were no transactions settled by means of payment methods other than cash and cash equivalents in 2020.

There were no transactions settled by means of payment methods other than cash and cash equivalents in 2019.

Specification of cash flow from financing activities

			Changes not affecting cash flow
2020	Opening balance	Cash flow	Translation differences	Acqui sition related	Other details	Closing balance
Long-term bank loans	230,686	–10,981	–7,899	–	–	211,806
Other non-current liabilities 1)	602,059	–28,200	–30,528	4,915	59,946	608,192
Current bank loans	513	–507	–18	–	12	–
Other current liabilities		234,640 –130,678	–12,430		14,668 138,273	244,473
Total	1,067,898 –170,366		–50,875			19,583 198,231 1,062,594
2019
Long-term bank loans	107,440	124,226	−980	–	–	230,686
Other non-current liabilities 1)	343,598	−5,947	7,156		22,396 234,856	602,059
Current bank loans	6,427	−6,329	367	–	48	513
Other current
liabilities Total	567,483	110,018 −101,353 10,597	1,616 8,159		22,516 201,843	234,640 44,912 436,747 1,067,898

1) Non-current interim liabilities, which are included in Other non-current liabilities in the balance sheet, are classified under working capital in the cash flow statement

Note 27 Leasing

ACCOUNTING POLICIES

In Proact operations, the Group acts as both lessor and lessee.

Proact as lessee

As of 1 January 2019, Proact is applying IFRS 16 Leases to replace IAS 17 Leases. Proact is applying the simplified transition method, and the primary impact on the company's accounts originates from the recognition of IT equipment, vehicles, office equipment and rental contracts relating to premises. This change means that leasing contracts (with the exception of shortterm leasing contracts and leasing contracts of lesser value) are recognised as right-of-use assets and leasing liabilities in the balance sheet. Assets and liabilities arising from leasing agreements are initially recognised at present value. Leasing liabilities include the present value of the following lease payments:

• Set charges (including set charges in substance), after deductions for any benefits that are to be obtained in connection with the conclusion of the leasing agreement.
• Variable lease charges dependent on an index or price,
• valued initially with the help of the index or price on the initial date.
• Amounts that are expected to be paid by the lessee according to residual value guarantees.
• The redemption price for an option to buy if the company is reasonably certain to exercise such an option.

Note 27 – Continued

Right of use is depreciated on a straight-line basis throughout the right of use period. Short-term leasing contracts are contracts of less than 12 months, and contracts of lesser value include contracts containing assets of less than EUR 5,000. In the comprehensive income report, the linear operational leasing cost is replaced with a cost for depreciation of the right-of-use asset and an interest cost attributable to the leasing liability.

Leasing agreements may include both leasing and non-leasing components. As regards leasing agreements in respect of vehicles, the group has opted not to separate different leasing components, but instead to report these as a single leasing component. Non-leasing components are separated for other leasing agreements.

Any options to extend the agreement or terminate it early must be included when calculating the length of the leasing period, if it is reasonably certain that these options will be exercised. A thorough evaluation of the financial benefits must be performed before making a decision to exercise an option. The leasing period is equivalent to the initial term of the agreement for most of Group's agreements. Leasing contracts containing a buyout option are not treated as short-term contracts even if the term is less than 12 months.

Proact uses different discount rates depending on the terms of its agreements and the geographical market. Leasing payments are discounted by the interest rate implicit in the leasing agreement. If this interest-rate cannot be established easily – which is normally the case for the Group's leasing agreements – the lessee's marginal loan rate must be used: this is the interest rate that the individual lessee would have to pay to borrow the necessary funds to buy an asset of similar value as the right of use in a similar economic environment, with similar terms and securities. The Group determines the marginal loan rate as follows:

• When it is possible to do so, finance that has recently been obtained by a third party is used as a starting point and then adjusted in order to reflect changes in the finance criteria since the finance was obtained.
• Adjustments are made for the specific terms of the agreement, e.g. the lease period, country, currency and security.

Proact is exposed to any future increases in flexible lease payments based on an index or an interest rate that are not included in the leasing liability until they come into force. When adjustments of lease payments based on an index or an interest rate come into force, the leasing liability is revalued and adjusted to the right of use. Lease payments are distributed between repayment of the loan and interest. The interest is reported in the income statement over the leasing period in a manner that means a fixed interest rate for the leasing liability recognised for the period in question.

Proact as lessor

Where Proact is a lessor in accordance with a financial leasing agreement, the transaction is recognised as a sale and a lease receivable. It comprises the future minimum lease charges and any residual values guaranteed to the lessor. Lease charges received are recognised as interest income and repayment of lease receivables.

Leasing commitments

Lessors – Financial leasing agreements

Proact offers customers lease financing, hire purchase, via Proact Finance AB. Future amortisations plus interest will be received as follows:

	Gross investment	Present value of future minimum lease payments	Gross investment	Present value of future minimum lease payments
	31/12/2020	31/12/2020	31/12/2019	31/12/2019
Within 0–1 years	58,777	54,464	59,276	55,437
Within 1–5 years	70,063	66,160	64,555	61,896
After more than 5 years	–	–	–	–
	128,840	120,624	123,831	117,333
Unearned
finance income	–	8,216	–	6,498
	128,840	128,840	123,831	123,831

The total variable charge included in profit for the year amounted to SEK 2,838 (2,668) thousand. Financial revenues included in profit for the year amounted to SEK 5,069 (5,062) thousand. At the end of the leasing period, customers are offered the opportunity to purchase the underlying asset at the applicable market price. Profit on the sale of underlying assets during the year was below SEK 1 million.

Lessees − IFRS 16

The following amounts related to leasing agreements are reported in the balance sheet:

Assets with right of use	31/12/2020	31/12/2019
IT equipment	107,828	126,821
Premises	69,710	108,162
Cars	46,144	52,226
Office equipment	7,436	11,710
	231,118	298,919
Leasing liabilities	31/12/2020	31/12/2019
Current	94,665	104,563
Non-current	139,823	198,076
	234,488	302,639

Additional rights of use in 2020 amounted to SEK 74,155 thousand.

The following amounts related to leasing agreements are reported in the income statement:

Depreciation on rights of use	2020	2019
IT equipment	–54,909	–54,055
Premises	–27,243	–27,012
Cars	–31,095	–21,358
Office equipment	–3,418	–2,818
	–116,665	–105,243
Other items in the income statement	2020	2019
Interest expenses (included in financial expenditure)	–6,880	–7,190
Expenses attributable to short-term leasing agreements and leasing agreements where the asset is of low value	–3,445	–15,846
Expenses attributable to variable lease payments that are not included in leasing liabilities	–1,125	–129
	–11,450	–23,165

The total cash flow in respect of leasing agreements in 2020 amounted to SEK 133 million.

Note 28 Information on related parties

Proact IT Sweden AB has a customer contract with Axis Communications AB, co. reg. no. 556253-6143. Revenues generated from this contract amounted to SEK 18.7 million in 2020, and Proact IT Sweden AB has an outstanding receivable of SEK 2.1 million due from Axis Communications AB as at 31 December 2020. All transactions with Axis Communication AB took place at market price. Axis Communication AB is an affiliate of Proact IT Group AB via Martin Gren, who has been a Board member at Proact IT Group AB since the 2017 Annual General Meeting, while also being founder, advisor and Chairman at Axis Communication AB.

Note 29 Events subsequent to balance sheet date

No significant events have occurred after the end of the financial year.

Note 30 Equity

ACCOUNTING POLICIES

Equity

Costs attributable to the new issue of shares or options are included in equity as a reduction in cash and cash equivalents. The buy-back of own shares is classified as own shares and recognised in equity as a deduction.

Dividends

Dividends proposed by the Board of Directors reduce distributable funds and are recognised as liabilities once the Annual General Meeting has approved the dividend.

Share capital

The share capital item relates to the parent company's share capital.

Total no. of shares

According to the Articles of Association, the number of shares in the company must be no fewer than 5 million and no more than 20 million. A total of 9,333,886 shares in the company had been issued as at 31 December 2020.

9,333,886
9,333,886

No. of shares bought back

Opening balance, bought-back own shares, 01/01/2020	182,269
Number of bought-back own shares, 31/12/2020	182,269

Other capital contributions

Other capital contributions comprises capital arising from transactions with shareholders, such as premium issues.

Hedging of net investment in foreign operations

Exchange rate differences concerning net investment in operations in the United Kingdom.

Translation of foreign subsidiaries

Other reserves consist of translation differences attributable to the translation of foreign subsidiaries.

Specification of translation differences Group

Closing balance, 31/12/2020	–3,739
Change, 2020	–27,648
Opening balance, 01/01/2020	23,909

Retained earnings

Retained earnings in the group includes results for the year and previous year, dividends to shareholders, the buy-back of own shares, disposal of businesses, acquisitions from non-controlling interests and a financial liability to non-controlling interests in the Czech Republic.

Attributable to non-controlling interests

This item refers to non-controlling interests in Latvia.

Capital

Proact's managed capital consists of equity. The company's objective is to use established strategies to achieve a good financial position and so prepare profits for shareholders by increasing the value of the managed capital. There are no external capital requirements other that those referred to in the Swedish Companies Act.

Parent company

Each share entitles the holder to one vote. All shares issued are fully paid up. A dividend of SEK 22,879 thousand, equivalent to SEK 2.50 per share, was issued in 2020 for the 2019 business year. The Board of Directors will propose to the AGM on 6 May 2021 the distribution of a dividend of SEK 4.50 per share for the 2020 business year. The parent company has not issued any share options or conversion rights.

Proposed appropriation of profits

The Board of Directors will propose a dividend of SEK 4.50 (2.50) per share to the Annual General Meeting for the 2020 business year.

The Annual General Meeting has at its disposal (non-restricted equity in the parent company),

SEK thousands: Retained earnings	2020 266,624
Profit for the year	52,456
Total non-restricted equity	319,080

The Board of Directors proposes appropriation of retained earnings

as follows:
Dividend, SEK 4.50 per outstanding share 1)	41,182
Carried forward	277,898
Total	319,080

1) There are 9,333,886 registered shares within the company, of which – as at 30 March 2021 – 182,269 shares are bought-back shares not entitled to dividends.

The total of the dividend of SEK 41,182,277 proposed above may change, but to no more than SEK 42,002,487, if ownership of the number of boughtback own shares changes prior to the record day for dividends.

Note 31 Earnings per share

Earnings per share are calculated by dividing the result attributable to the shareholders in the parent company by the "Weighted average number of outstanding shares".

	2020	2019
Profit per share for the year pertaining to the parent company's shareholders	131,680	80,060
Weighted average total number of shares Weighted average number of outstanding	9,333,886	9,333,886
shares	9,151,617	9,151,617
Earnings per share before dilution, SEK	14.39	8.75

Proact has a long-term performance share scheme which may give rise to dilution not exceeding 0.89 per cent.

Note 32 Acquisitions

Acquisition, Cetus Solutions Ltd.

Acquired companies' net assets at the time of acquisition

Amounts in SEK thousands	22 Oct 2020
Intangible fixed assets	–
Tangible fixed assets	5,946
Financial non-current assets	8,908
Trade and other receivables	24,410
Cash and cash equivalents	47,310
Non-current liabilities	–11,857
Accounts payable and other current liabilities	–50,649
Net identifiable assets	24,068
Goodwill	61,978
Fair value adjustment on acquired intangible fixed assets	34,368
Fair value adjustment on acquired current liabilities	4,519
Deferred tax on acquired assets	–7,388
Purchase price inc. calculated future additional purchase price	117,544
Removed:
Acquired cash	–47,310
Deferred payment of part of purchase price	–25,248
Net cash flow	44,986
Identification of surplus values
Amounts in SEK thousands	22 Oct 2020
Intangible fixed assets
Goodwill	61,978
Customer contract	34,368
Current liabilities – Prepaid income	4,519
Total identifiable surplus values on intangible assets	96,346
Deferred tax on surplus values on intangible fixed assets
Customer contract	–6,530
Current liabilities – Prepaid income	–859
Total deferred tax on surplus values on intangible assets	–7,388
Net identifiable surplus values on intangible assets	88,958

This acquisition relates to 100 per cent of shares and votes in Cetus Solutions Ltd. This acquisition was completed on 22 October 2020.

Total acquisition costs affecting profits in 2020 amount to SEK 2.8 million. Of the total purchase price of GBP 9.8 million, 80 per cent – GBP 7.8 million – was paid in cash at the time of acquisition. Seven per cent of the purchase price will be settled six months after the acquisition date, seven per cent after 12 months and the remaining amount 18 months after the acquisition date.

The purchase price for the acquisition was greater than the recognised assets of the acquired business, and as a result the acquisition analysis gives rise to intangible assets.

Goodwill in this acquisition is justified by the fact that this is a profitable company that reinforces Proact's presence and delivery capability in the United Kingdom, as well as injecting further expertise for the delivery of cloud and workplace services to medium-sized and large companies and authorities in the United Kingdom.

Cetus, which was founded in 2001, is a privately owned company employing 47 staff and with more than 100 active customers. As a result of this acquisition, Proact – with the combined portfolio of services and expertise from both companies – will be able to provide a more complete offering to both existing and new customers.

The acquisition of Cetus is also making a contribution to Proact's strategic targets for increased revenues and improved EBITA margin, in line with the Group's updated strategy and financial targets.

The acquisition was completed on 22 October 2020, and Cetus has contributed SEK 25 million in revenues and an operating profit of SEK 2 million for 2020 as a whole. On a whole-year basis, Cetus is expected to contribute approx. SEK 160 million to the Group's revenues, along with an operating profit of approx. SEK 8 million.

Certification

The undersigned assure that the consolidated and annual financial statements have been prepared in accordance with international financial reporting standards IFRS as adopted by the EU, as well as with good accounting practice, and give a fair view of the Group's and the parent company's financial position and results, and that the Directors' Report gives a fair summary of the development of the operations, position and results of the Group and the parent company, as well as describing significant risks and uncertainty factors facing the companies which form part of the Group.

Kista, 30 March 2021

Eva Elmstedt Chairman

Annikki Schaeferdiek Board member

Martin Gren Board member

Erik Malmberg Board member

Thomas Thuresson Board member

Jonas Hasselberg Chief Executive Officer

Our audit report was submitted on 31 March 2021 Öhrlings PricewaterhouseCoopers AB

Nicklas Kullberg Authorised Public Accountant

Audit report

To the Annual General Meeting of Proact IT Group AB, co. reg. no. 556494-3446

Report on the annual financial statements and consolidated financial statements Opinions

We have performed an audit of the annual financial statements and consolidated financial statements for Proact IT Group AB (publ) for 2020, with the exception of the corporate governance report on pages 29–35. The company's annual financial statements and consolidated financial statements can be found on pages 20–69 of this document.

In our opinion, the annual financial statements have been produced in accordance with the Swedish Company Accounts Act and provide a fair view in all significant regards of the parent company's financial position as at 31 December 2020, and of its financial results and cash flows for the year in accordance with the Swedish Company Accounts Act. The consolidated financial statements have been drawn up in accordance with the Swedish Annual Accounts Act and provide in all essential respects a fair picture of the Group's financial position at 31 December 2020 and of its financial performance and its cash flows for the year in accordance with the Swedish Annual Accounts Act. Our statements do not include the corporate governance report on pages 29–35. The Directors' Report is in accordance with other parts of the annual financial statements and consolidated financial statements.

We therefore recommend that the Annual General Meeting adopt the income statement and balance sheet for the parent company and the consolidated statement of comprehensive income and balance sheet.

Our opinions in this report on the annual accounts and consolidated financial statements are consistent with the content in the supplementary report that has been submitted to the parent company's and the Group's audit committee in accordance with article 11 of the Audit Regulation (537/2014).

Basis for the opinion

We have conducted our audit in accordance with the International Standards on Auditing (ISA) and generally accepted auditing principles in Sweden. Our responsibility in accordance with these standards is described in greater detail in the section entitled Auditor's responsibility. We are independent in respect of the parent company and the Group in accordance with generally accepted auditing principles in Sweden and have otherwise fulfilled our professional ethical requirements in accordance with these requirements. This includes the fact that, to the best of our knowledge and belief, no prohibited services as referred to in article 5.1 of the Audit Regulation (537/2014) have been provided by the reviewed company or, where appropriate, its parent company or its controlled companies within the EU.

We are of the opinion that the audit proof we have acquired is sufficient and appropriate as a basis for our statements.

Our audit approach

Focus and scope of the audit

Proact sells and installs hardware and software, maintenance and support services and independent IT consultancy services. The business is run by subsidiaries all over Europe, a number of them having joined the Group through acquisitions. Acquisitions mean that value is added to the consolidated balance sheet and the parent company's balance sheet in the form of goodwill and shares in subsidiaries. The value of these assets is examined each year for write-down or when there are any indications of a need for write-down.

Proact's revenue reporting is dependent on the contract terms relating to when risks and benefits are transferred to customers. In the case of hardware sales, this generally takes place when the goods have been supplied to the customer, while support and maintenance contracts are performed and provided to customers continuously throughout the contract term. Consultancy services are normally carried out on a current account basis, and income is reported over time as the work is carried out. Customer agreements may also include a package of systems, services and software sold collectively: these are known as multicomponent agreements. When multicomponent agreements are sold, control of each element in the agreement is transferred at different times; so in certain cases the management has to estimate the independent selling price of each element in the agreement. The time for delivery of major systems is controlled by when customers are able to take delivery of their products and want them to be delivered, many sales taking place at the end of Proact's fourth quarter and offsetting into the following financial year, potentially impacting on the financial statements. Overall, this means that the recognition of revenues from sales of systems and receivables as a consequence of this are dependent on the management's assessments of the implications of the contract terms.

We formulated our audit by establishing a materiality threshold and assessing the risk of material misstatement in the financial reports. We paid particular attention to the areas where the Chief Executive Officer and Board of Directors made subjective assessments, such as important account-related estimations made on the basis of assumptions and forecasts of future events, which by their nature are uncertain. As with all audits, we have also observed the risk of the Board of Directors and the Chief Executive Officer neglecting internal inspection, and among other things considered whether there is any evidence of systematic non-conformances that have given rise to risk of material misstatement as a consequence of irregularities.

We adapted our audit in order to perform an effective review so that we could comment on the financial reports as a whole, taking into account the Group's structure, accounting processes and controls, as well as the industry in which the Group is active.

Besides the parent company, Proact IT Group AB, the Group audit has included the subsidiaries in Sweden, the Netherlands, the United Kingdom and Germany. This is equivalent to a significant part of the Group's external net sales. In addition to this, most of the Group companies are subject to statutory audits.

Materiality

The scope and focus of the audit were influenced by our assessment of materiality. An audit is formulated in order to achieve a reasonable degree of security as to whether the financial reports include any material misstatement. Misstatement may occur as a consequence of irregularities or errors. Misstatement is regarded as material if parties, individually or jointly, can reasonably be expected to influence the financial decisions made by users on the basis of the financial reports.

Based on professional judgement, we established certain quantitative materiality figures for elements such as financial reporting as a whole (see the table below). We used these and qualitative considerations to establish the focus and scope of the audit and the nature, time and scope of our review methods, and also to assess the effect of individual and combined misstatement on the financial reports as a whole.

Particularly significant areas

Particularly significant areas for the audit are the areas that, in our professional opinion, were of most significance to the audit of the annual financial statements and consolidated financial statements for the period in question. These areas were processed within the

Recognition of revenues from sales of systems in the right amount and for the right period.

Revenues from the sale of systems account for just under twothirds of the Proact Group's reported net sales, and these sales sometimes take place in the form of what are known as composite customer contracts, where hardware, software, services, and support and maintenance may all be included in one and the same contract. The price of the contract is normally set for the contract as a whole, and not on a per product or per service basis.

Contracts are therefore divided up into components, and revenue is distributed among each element of the contract. The revenue for each subcomponent is then recognised when the customer has been given control over the element in question. Thus this means that the time of revenue recognition does not normally coincide with invoicing and payment from the customer. This means that the corporate management team has to make estimates and assessments in respect of the independent sale prices of the various elements of customer contracts, which has an influence when reporting sales margins.

As a consequence of the inherent complexity of revenue recognition and the element of estimates and assessments from the corporate management team, we have deemed revenues from the sale of systems to be a particularly significant area in the audit.

Write-down testing of acquisition-related surplus values and goodwill, as well as shares in subsidiaries

The consolidated balance sheet reports acquisition-related surplus values and goodwill at a value of SEK 664 million, while the parent company's balance sheet reports shares in subsidiaries amounting to SEK 492 million.

Goodwill and acquisition-related surplus values correspond to the difference between the value of net assets and the purchase price paid in the event of an acquisition. The resulting goodwill is distributed between cash-generating units, which may differ from the level that was once generated by the acquisition as the new business is integrated into the Group. Unlike other assets, there is no depreciation of goodwill: instead, this is examined each year for write-down or when there are any indications of a need for writedown. Other acquisition-related surplus values are depreciated over the estimated useful life.

When the corporate management team examines cashgenerating units for write-down, the values recognised are compared with the estimated recoverable amount. If the recoverable amount is significantly less than the recognised amount, the asset is impaired to its estimated recoverable amount. The recoverable amount is established by calculating the utilisation value of the asset. When calculating the utilisation value, the corporate management team have to make assumptions on future growth and margin development. Future events and new information may change these assessments and estimates, and it is therefore

scope of the audit of the annual financial statements and consolidated financial statements as a whole and our stance on the same, but we make no separate comments on these areas.

Particularly significant area How our audit took the particularly significant area into account

Please see Notes 1 and 3 in the Annual Accounts for 2020 for the accounting policies specified above.

We have focused a significant part of our audit on evaluating Proact's principles and underlying assumptions in order to divide revenues from system sales over different elements.

This has been done by the undertaking the following review procedures:

• Analysis of revenues over the year, compared with the previous year.
• Tested the effectiveness of selected controls over revenue reporting.
• Reviewing a selection of major new contracts and sales against contract terms and Proact's guidelines for assessing revenue recognition.
• Performing tests of random samples to ensure that revenues have been recognised for the right period and in the right amount.
• Evaluating assumptions in revenue recognition principles by comparing deviating margins for system sales.

In our audit, we have focused in particular on how the corporate management team has tested write-down requirements and what surplus values have been identified.

We have undertaken the following review procedures:

• Evaluating the Proact process for testing acquisition-related surplus values and goodwill, as well as shares in subsidiaries for write-down.
• Reviewing how the corporate management team has identified cash-generating units and compared this with how Proact follows up goodwill internally.
• Assessment of the plausibility of the discount rate applied with the assistance of PwC's in-house valuation specialists.
• Evaluating the plausibility of assumptions made and performing sensitivity analyses for altered assumptions.
• Evaluating the management's forecasting capability by comparing previous forecasts with actual outcomes.
• Working on the basis of materiality to confirm that there are sufficient notes in the annual financial statements.

Particularly significant area How our audit took the particularly significant area into account

particularly important for the corporate management team to regularly reassess whether the value of the acquisition-related intangible assets can be justified with regard to assessments made.

The corporate management team's calculation of the utilisation value of assets is based on the budget for the next year and forecasts for the following four years. A more detailed description of these assumptions can be found in Note 15. A weighted average cost of capital before tax of 10.2–10.8 per cent (10.4–11.1 per cent) has been used, dependent on the assessed market risk for the various cash-generating units. The corporate management team has based its assumptions on future development on historical experience and analyses performed at the time of the acquisitions.

Write-down tests naturally involve more estimates and assessments from the corporate management team, which is why we have deemed this to be a particularly significant area in our audit.

Please see Notes 1 and 15 in the Annual Accounts for 2020 for the accounting policies specified above.

Information other than the annual financial statements and consolidated financial statements

This document also includes information other than the annual financial statements and consolidated financial statements, and this can be found on pages 1–19 and 75–77. The information in the remuneration report published on the Proact website also constitutes other information. The Board of Directors and Chief Executive Officer are responsible for this other information.

Our statement concerning the annual financial statements and consolidated financial statements does not include this information, and we make no statement with confirmation concerning this other information.

When performing our audit of the annual financial statements and consolidated financial statements, it is our responsibility to read the information identified above and consider whether the information is significantly incompatible with the annual financial statements and consolidated financial statements. During this review, we also take into account the knowledge that we have otherwise obtained during the audit and assess whether the information in general appears to include material misstatement.

Given the work that has been carried out in respect of this information, if we come to the conclusion that the other information includes material misstatement, we are obliged to report this. We have nothing to report in this respect.

Responsibility of the Board of Directors and the Chief Executive Officer

The Board of Directors and Chief Executive Officer are responsible for ensuring that the annual financial statements and consolidated financial statements are compiled and provide an accurate picture in accordance with the Swedish Company Accounts Act and, as regards the consolidated financial statements, in accordance with IFRS as adopted by the EU, and the Swedish Company Accounts Act. The Board of Directors and the CEO are also responsible for the internal control that they deem necessary for drawing up the annual report

and consolidated financial statements to ensure that they do not contain any material misstatement, whether these are the result of irregularities or errors.

When compiling the annual financial statements and consolidated financial statements, the Board of Directors and Chief Executive Officer are responsible for assessment of the company's and the Group's ability to continue the business. They provide information, where applicable, on circumstances that may influence the ability to continue the business and to use the assumption of continued operation. However, the assumption of continued operation will not be applied if the Board of Directors and Chief Executive Officer intend to liquidate the company, terminate the business or have no realistic alternative to doing either of these.

The Board of Directors' audit committee must monitor the financial reporting of the company without this affecting the responsibilities and duties of the Board in general.

Responsibility of the auditor

Our goal is to achieve a reasonable degree of certainty as to whether the annual report and the consolidated financial statements, as a whole, do not contain any material misstatements, whether these are the result of irregularities or errors and to submit a report containing our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA's and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Inaccuracies may occur as a result of irregularities or errors and are considered to be material if they, individually or together, can reasonably be expected to influence the financial decisions made by users on the basis of the annual report and consolidated financial statements.

A further description of our responsibility for the audit of the annual report and consolidated financial statement is available at the Swedish Inspectorate of Auditors' website: www.revisorsinspektionen.se/ revisornsansvar. This description is part of the audit report.

Report on other requirements in accordance with the law and other statutes

Opinions

In addition to our audit of the annual financial statements and consolidated financial statements, we have also performed a review of the administration of the Board of Directors and the Chief Executive Officer of Proact IT Group AB (publ) for 2020 and of the proposed appropriation of the company's profit or loss.

We recommend that the Annual General Meeting appropriate the profit as proposed in the Directors' Report and discharge from liability the members of the Board of Directors and the Chief Executive Officer in respect of the financial year.

Basis for the opinion

We have conducted the audit in accordance with generally accepted accounting policies in Sweden. Our responsibility in accordance with these is described in greater detail in the section entitled Auditor's responsibility. We are independent in respect of the parent company and the Group in accordance with generally accepted auditing principles in Sweden and have otherwise fulfilled our professional ethical requirements in accordance with these requirements.

We are of the opinion that the audit proof we have acquired is sufficient and appropriate as a basis for our statements.

Responsibility of the Board of Directors and the Chief Executive Officer

The Board of Directors is responsible for the proposed allocation of the company's profit or loss. When a proposal for a dividend is issued, this involves, inter alia, an assessment of whether the dividend is justified with reference to the requirements such as the nature, scope and risks of the business of the company and the Group with regard to the scope of the equity of the parent company and the Group, consolidation needs, liquidity and position in general.

The Board of Directors is responsible for the company's organisation and Management of the company's affairs. This includes regularly assessing the financial situation of the company and the Group and ensuring that the company's organisation is formulated so that the accounting, the management of assets and the company's financial affairs in general are controlled in a satisfactory manner. The Chief Executive Officer shall manage the ongoing administration in accordance with the guidelines and instructions of the Board of Directors and, inter alia, undertake the action necessary to ensure that the company's bookkeeping is carried out in accordance with the law and so that assets may be managed in a satisfactory manner.

Responsibility of the auditor

Our objective concerning the audit of the administration, and hence our opinion on discharge from liability, is to obtain audit proof so as to be able to assess with a reasonable degree of security whether any Board member or the Chief Executive Officer in any significant respect:

• has undertaken any action or is guilty of any negligence that may result in liability to pay compensation to the company;
• has otherwise acted in contravention of the Swedish Companies Act, the Swedish Annual Accounts Act or the company's articles of association.

Our objective concerning the audit of the proposal for appropriation of the company's profit or loss, and hence our opinion on the same, is to determine with a reasonable degree of security whether the proposal is consistent with the Swedish Companies Act.

Reasonable security is a high degree of security, but it is no guarantee that an audit performed in accordance with generally accepted auditing principles in Sweden will always discover any actions or negligence that may result in liability to pay compensation to the company, or that a proposal for appropriation of the company's profit or loss is not consistent with the Swedish Companies Act.

A further description of our responsibility for the audit of the administration can be found on the Swedish Inspectorate of Auditors website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the audit report.

Auditor's review of the corporate governance report

The Board of Directors is responsible for the sustainability report on pages 29 to 35, and for ensuring that it is prepared in accordance with the Swedish Annual Accounts Act.

Our review has been conducted in accordance with FAR's opinion RevR 16 Auditor's review of the corporate governance report. This means that our review of the corporate governance report has a different focus and is on a significantly smaller scale than the focus and scale of any audit in accordance with International Standards on Auditing and generally accepted accounting policies in Sweden. We consider our review to provide us with sufficient grounds for our opinions.

A corporate governance report has been compiled. Information in accordance with Chapter 6, Article 6(2), clauses 2 to 6 of the Swedish Company Accounts Act and Chapter 7, Article 31(2) of the same act is consistent with the other parts of the annual financial statements and consolidated financial statements and is also compliant with the Swedish Company Accounts Act.

Öhrlings PricewaterhouseCoopers AB, Torsgatan 21, Stockholm, was appointed as the auditor of Proact IT Group AB by the Annual General Meeting held on 6 May 2020 and has been the company's auditor since 2 May 2018.

Stockholm, 31 March 2021 Öhrlings PricewaterhouseCoopers AB

Nicklas Kullberg Authorised Public Accountant

The auditor's statement concerning the mandatory sustainability report

To the Annual General Meeting of Proact IT Group AB (publ), co. reg. no. 556494-3446

Mission and division of responsibility

The Board of Directors is responsible for the sustainability report for 2019 on pages 4 to 7 and 12 to 17, and for ensuring that it is compiled in accordance with the Swedish Company Accounts Act.

Focus and scope of the review

Our review has taken place in accordance with FAR recommendation RevR 12 Auditor's statement on the statutory sustainability report. This means that our review of the sustainability report has a different focus and is on a significantly smaller scale than the focus and scale of any audit in accordance with International Standards on Auditing and generally accepted accounting policies in Sweden. We consider that our review gives us sufficient grounds for our opinions.

Opinions

A sustainability report has been compiled.

Stockholm, 31 March 2021 Öhrlings PricewaterhouseCoopers AB

Nicklas Kullberg Authorised Public Accountant

Five-year summary

	2020	2019	2018	2017	2016 1)
Income statement (SEK millions)
Total revenues	3,633.1	3,407.9	3,317.7	3,243.4	2,921.7
EBITDA	369.6	271.7	231.1	218.8	191.4
EBITA	216.7	134.2	200.5	188.1	163.9
EBIT	182.1	105.4	164.5	155.6	137.2
Profit before tax	167.7	101.7	167.8	151.1	133.7
Profit for the year	132.3	80.2	127.3	114.0	96.7
EBITDA margin, %	10.2	8.0	7.0	6.7	6.6
EBITA margin, %	6.0	3.9	6.0	5.8	5.6
EBIT margin, %	5.0	3.1	5.0	4.8	4.7
Net margin, %	4.6	3.0	5.1	4.7	4.6
Profit margin, %	3.6	2.4	3.8	3.5	3.3
Equity, provisions and liabilities (SEK millions)
Equity	605.0	525.9	469.6	384.4	332.6
Balance sheet total	2,923.9	2,876.7	2,213.1	1,941.2	1,806.8
Capital employed	1,094.9	1,106.8	599.7	565.1	548.1
Net cash (+)/Net debt (–)	22.0	–160.7	142.3	80.5	13.1
Financial key ratios
Equity ratio, %	20.7	18.3	21.2	19.8	18.4
Capital turnover rate, times	1.3	1.3	1.6	1.7	1.7
Cash flow, SEK millions	126.0	95.7	39.0	1.0	42.1
Investments in fixed assets, SEK millions	269.1	440.7	83.8	166.7	60.5
Return on equity, %	23.4	16.1	29.8	31.8	29.8
Return on capital employed, %	17.1	13.2	29.5	29.2	27.2
Dividend to Parent Company's shareholders, SEK millions 2)	41.2	22.9	38.0	34.3	32.4
Key ratios per employee
Average number of employees on annual basis	973	834	798	799	723
Number of employees at year-end	1,022	1,016	810	811	718
Profit before tax per employee, SEK thousands	172	122	210	189	185
Data per share
Earnings per share (total number of shares), SEK	14.11	8.58	13.61	12.13	10.22
Earnings per share (outstanding shares), SEK 3)	14.39	8.75	13.87	12.22	10.32
Equity per share (total number of shares), SEK	64.49	56.16	50.12	40.80	35.07
Equity per share (outstanding shares), SEK 3)	65.78	57.28	51.12	41.37	35.84
Cash flow from current operations per share (total number of shares), SEK	50.15	35.30	26.01	25.82	16.53
Cash flow from current operations per share (outstanding shares), SEK 3)	51.15	36.01	26.51	26.01	16.69
Total number of shares at end of period	9,333,886	9,333,886	9,333,886	9,333,886	9,333,886
Total number of outstanding shares at end of period 3)	9,151,617	9,151,617	9,151,617	9,205,317	9,133,117
Weighted average number of shares (total number of shares)	9,333,886	9,333,886	9,333,886	9,333,886	9,333,886
Weighted average number of shares (outstanding shares) 3)	9,151,617	9,151,617	9,157,943	9,263,247	9,247,583
Number of own shares held at end of period	182,269	182,269	182,269	128,569	200,769
Number of warrants at end of period	–	–	–	–	–
Share price as at 31 December, SEK	273.00	184.00	163.40	180.50	146.00

1) Years before 2017 have not been translated for new accounting policies in accordance with IFRS 15, which is being applied from 1 January 2018.

2) The Board of Directors will propose distribution of a dividend of SEK 4.50 per share to the Annual General Meeting for the 2020 financial year. 3) Proact has a long-term performance share scheme which may give rise to dilution not exceeding 0.89 per cent.

The company has also bought back shares that are in its own custody, which affects the key ratios and figures above.

Definition of key ratios

Alternative key ratios

This financial report refers to a number of key ratios. Some of these are defined in accordance with IFRS, while others are alternative key ratios and are not presented in accordance with applicable regulations and frameworks for financial reporting. The key ratios are used within the Group in order to help both investors and management to analyse Proact's business. The key ratios used in this financial report are described, defined and justified below.

Economic key ratios	Definition	Purpose
Adjusted EBITA	Profit after depreciation of tangible fixed assets but before depreciation of intangible assets, net finan cial items and tax, adjusted for exceptional items.	Adjusted EBITA gives a more correct view of which profit is generated by the business when depreciation of intangible assets affected exten sively by assessment of the depreciation period, as well as exceptional items that vary from regular operations, is excluded.
Capital employed	Balance sheet total minus non-interest bearing liabilities inclusive of deferred tax liabilities.	Capital employed measures the company's ability to meet the needs of the business in addition to cash and cash equivalents.
Capital turnover rate, times	Revenues expressed as a percentage of the aver age balance sheet total.	This is used to show the efficiency of the use of total capital for the company.
Cash flow	Change in cash and cash equivalents.	The cash flow shows the net amount of cash and cash equivalents generated and used within the company.
Currency effects	Net sales and profit for the period, translated into currency exchange rates for the previous year.	Show underlying growth, i.e. growth excluding the effect of changes in currency exchange rates.
Debt levels	Net debt in relation to EBITDA.	Net debt/EBITDA is a theoretical measure of how many years it would take with current earnings (EBITDA) to pay off the company's liabilities.
Earnings per share	Earnings pertaining to the parent company's share holders per share	Earnings per share is used to establish the value of the company's outstanding shares.
EBIT	Operating profit before net financial items and tax.	EBIT provides a general view of total profit generated by the business.
EBIT margin	Operating profit/loss as a percentage of total revenues.	EBIT in relation to total revenues shows operational profitability and provides profit comparability over time.
EBITA	Profit after depreciation of tangible fixed assets but before depreciation of intangible assets, net finan cial items and tax.	EBITA gives a more correct view of which profit is generated by the business when depreciation of intangible assets – which is affected extensively by assessment of the depreciation period – is excluded.
EBITA margin	EBITA as a percentage of total revenues.	EBITA in relation to total revenues shows profitability at EBITA level and provides profit comparability over time.
EBITDA	Profit before depreciation (tangible and intangible assets), net financial items and tax.	Besides depreciation of intangible assets, EBITDA also excludes depreciation of tangible assets, both of which are affected extensively by assessed depreciation periods.
EBITDA margin	EBITDA as a percentage of total revenues.	EBITDA in relation to total revenues shows profitability at EBITDA level and provides profit comparability over time.
Equity per share	Equity pertaining to the parent company's share holders, per share.	The net worth per share provides a guideline on the valuation level of a share on the stock exchange in relation to the funds in the company.
Equity ratio	Equity including minority interests as a percentage of balance sheet total.	The key ratio is an indicator of the company's leverage for financing the company.
Exceptional items	Items in the income statement that are non-recur ring and have affected the profit and are important to be aware of in order to understand the underly ing result.	It is necessary to be aware of and be able to take into account expense items that deviate from normal business so that Proact's development can be analysed and assessed correctly.
Net cash/Net debt	Cash and cash equivalents minus interest-bearing liabilities to credit institutions.	To assess the ability to use available cash and cash equivalents to pay off all liabilities if they were to fall due on the date of the calculation.
Net margin	Profit before tax as a percentage of total revenues.	The net margin provides comparable profitability regardless of the corporation tax rate.
Organic growth	Growth in net sales, excluding the net sales contrib uted to the Group by companies acquired during the year, plus currency effects.	Show the underlying growth, i.e. growth excluding acquired growth.
Profit margin	Profit for the period after tax as a percentage of total revenues.	The profit margin makes it possible to compare profitability including the corporation tax rate.
Profit per employee	Profit before tax divided by the average number of annual employees	This is a measure of efficiency showing profitability per employee.
Return on capital employed	Profit after net financial items plus financial expenses, expressed as a percentage of the average capital employed.	For evaluating the profitability and efficiency of Proact's capital employed.
Return on equity	Profit for the period after tax, expressed as a percentage of average equity.	Return on equity shows what the company is generating in terms of profitability, returns, on capital invested by owners.

Shareholder information

Annual General Meeting 2021

Shareholders in Proact IT Group AB (publ), 556494-3446, are hereby invited to attend the Annual General Meeting on Thursday, 6 May 2021.

The Board of Directors has decided that the Annual General Meeting is to take place without physical attendance of shareholders, representatives or third parties on account of the coronavirus, and that shareholders will only have the opportunity to exercise their voting rights by post prior to the meeting. Information on the decisions made by the Annual General Meeting will be published on 6 May 2021 as soon as the outcome of the postal vote has been finalised.

The CEO will not be giving a statement at the Annual General Meeting as this meeting is to take place with no shareholders, representatives or third parties physically present. However, a prerecorded statement will be available on the company's website prior to the Annual General Meeting.

Registration

Shareholders wishing to participate in the Annual General Meeting by means of postal voting must

• a) be entered in the shareholder register kept by Euroclear Sweden AB on Wednesday, 28 April 2021,
• b) register by Wednesday, 5 May 2021 by casting their postal vote according to the instructions under Postal voting below so that the postal vote is received by Computershare on that day at the latest. Note that registration for the Annual General Meeting is only possible via postal voting.

For shareholders whose shares are registered to administrators via a bank or other administrator, the following rules are applicable if they are to be entitled to participate in the meeting. Besides registering by casting their postal vote, such shareholders must reregister their shares in their own name so that the shareholder is entered in the shareholder register kept by Euroclear Sweden AB as at the record date, Wednesday, 28 April 2021. Such reregistration may be temporary (known as voting rights registration). Shareholders wishing to register their shares in their own name must ask the administrator to conduct such registration in accordance with the procedures applied by the administrator in question. Voting rights registration requested by shareholders in time for registration to have been conducted by the administrator by Friday, 30 April 2021 will be taken into account when producing the shareholder register.

Postal voting

The Board of Directors has decided that shareholders are only to be able to exercise their voting rights by means of postal voting in accordance with Article 22 of the Temporary Exceptions Act (2020:198) in order to facilitate the holding of company meetings and general meetings. A special form must be used for postal voting. The postal voting form is available on the company's website at proact.eu. When completed and signed, the postal voting form can be sent by post to Computershare AB, "Proact IT Group AB:s årsstämma" [Proact IT Group AB Annual General Meeting], Box 5267, SE-102 46 Stockholm, Sweden, or by email to info@computershare.se

Future information

Interim report, 1st quarter 22 April 2021 Annual General Meeting 6 May 2021 Half-yearly report 14 July 2021 Interim report, 3rd quarter 21 October 2021 Year-end report 2021 10 February 2022

For further information, please contact

Jonas Hasselberg, President Tel.: +46 (0) 8 410 666 00 jonas.hasselberg@proact.eu

Linda Höljö, CFO Tel.: +46 (0) 8 410 667 77 linda.holjo@proact.eu

www.proact.eu

Proact IT Group AB

Kistagången 2, Box 1205, SE-164 28 Kista Telephone +46 (0) 8 410 666 00 info@proact.se www.proact.eu