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ANNUAL REPORT

2020

Contents Highlights 2020 Group summary Chief Executive's Review Vision, business concept, goals and strategies Acquisitions Value-adding link Business model Product areas Region Sweden Region Finland, the Baltic states and China Region Denmark, Norway, the UK and East Central Europe Employees Sustainability and quality management

3 4 6 8 10 12 13 14 16 18 20 22 24

ANNUAL REPORT

29 Five-year Group Summary KPIs for the last five years 30 Directors' Report including the Corporate Governance Statement 31 Board of Directors 38 Senior Executives 39

Financial Statements of the Group Statement of Income Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows

40 41 42 44 45

Financial Statements of the Parent Company Income Statement Balance Sheet Statement of Changes in Equity Cash Flow Statement

46 47 49 50

Accounting Policies and Notes to the Financial Statements 51 Signatures Auditor's Report

85 86

OTHER

OEM shares Definitions Annual General Meeting Addresses

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89 92 93 96

2020

Unchanged turnover but strong earnings performance 2020 turned out to be a turbulent year due to the Corona pandemic which started to affect demand in March. However, both sales and earnings growth in the first quarter were in line with the previous year. The pandemic had a major impact on our business activities in the second quarter and net sales were down 10 % on the same period last year. The organisation adapted positively to a new way of working, however, which meant that operating profit improved. Demand stabilised in the third quarter and net sales fell 2 % due to the effects of foreign exchange fluctuations. As the restrictions imposed to contain the coronavirus pandemic were eased, sales activities partly returned to normal. Operating profit rose 3%. The increasing level of infections in the fourth quarter led to tighter restrictions. Demand improved, however, and net sales rose 6%. Together with cost-cutting measures, this resulted in a 34 % increase in revenue compared with the same period last year. Full-year sales remained flat year-on-year. Currency movements had an adverse 1 percentage point impact on growth and acquisitions had a positive 1 percentage point effect, which means there was no change in organic growth. Growth was strongest in Region Sweden, followed by Region Finland, the Baltic states and China. Operating profit (ebita) stood at a new record high of sek 422 million, up 10 % over 2019. The ebita margin has increased during the year from 11.7% to 12.9% due primarily to cost-saving measures implemented during the pandemic. The performance in 2020 means that oem has exceeded all of its financial targets except for the growth target. One acquisition was completed In January 2020, Zoedale Ltd was acquired. It has an annual turnover of approximately sek 37 million. The company represents ASCO, Valpes, Omal and other manufacturers of valves and actuators for various process and industrial applications. Dividend The Board of Directors of oem is proposing a dividend payment of sek 7.50 per share, which is the equivalent of sek 174 million. The Board is also proposing a transfer corresponding to sek 12.50 per share to the shareholders via an automatic redemption programme. This is equivalent to a transfer of up to sek 290 million and oem will still have a strong equity/ assets ratio after the proposed dividend payment.

SUMMARY

2020

2019

Net sales

SEK million

3,283

3,299

EBITA

SEK million

422

385

Profit before tax

SEK million

401

367

Profit for the year SEK million

317

289

Earnings per share

SEK

13.69

12.47

Shareholders' equity per share

SEK

58.95

46.03

894

887

Share price at year-end SEK

309.00

250.00

Average no. of employees Equity/assets ratio

Dividend

SEK

7.50*

0.00

*Proposed dividend for 2020.

NET SALES (SEK MILLION) 3,500 3,000 2,500 2,000 1,500 1,000

EBITA

(SEK MILLION)

400 300 200 100 0

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GR O U P SU MMARY

OEM in 2 minutes

3.3 37 30,000 400 894

BILLION IN TURNOVER

ENTITIES IN 14 COUNTRIES

CUSTOMERS

SUPPLIERS

EMPLOYEES

OEM is one of Europe's leading technology trading groups. The company is a value-adding link between customers and leading manufacturers of products and systems for industrial applications. OEM brings value to its customers by offering a wide and diverse range of products, coupled with far-reaching technical product competence and applications know-how. With a strong marketing and sales organisation, OEM serves as the extended arm of the suppliers in each market and aims to make them a leading player in their niche. This makes OEM the best distribution channel for its suppliers in OEM's markets. Offering

oem has a portfolio of more than 60,000 products from over 400 suppliers who, with strong brands, are among the leading players in their respective niches. oem's extensive product knowhow, years of experience and outstanding applications expertise offer customers a strong partner all along the supply chain, from product development and design to purchasing and production. Market

oem has 37 operating business units in 14 countries split into three geographic regions. Its domestic market is Sweden, where oem holds a market leading position in most of its product areas. In other regions, the company's position varies from market to market. oem's goal is to be one of the largest players in all its chosen markets. Customers

The majority of oem's customers operate in various segments of the manufacturing industry. Many of them are so-called Original Equipment Manufacturers (oem), which means that they manufacture various kinds of machinery and equipment using constituent components from subcontractors. Other customers include installation companies, wholesalers and retailers for the professional and consumer markets.

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2020 2020 Acquisition of Zoedale Ltd.

2018 Acquisition of ATB Drivtech.

2016 Acquisition of Sitek-Palvelu.

KINA

2014 Acquisition of Nexa and Scanding. Shanghai Cixi

Jyväskylä

2011 Acquisition of Svenska Batteripoolen, Svenska Helag and Flexitron. Set up in Hungary.

Björneborg Rauma Esbo Åbo

Drammen Karlstad

Jönköping Göteborg

Allerød

2009 Set up in China.

Stockholm Pärnu

TRANÅS Nässjö

Riga

Malmö

2007 Acquisition of Klitsö.

Vilnius

2005 Acquisition of Telfa. Leicester

Warszawa

Haag

2000 Jörgen Zahlin is appointed as Managing Director. Acquisition of Ernström Hydraulik.

Prag Trnava

1998 Set up in Poland.

Budapest

Sales

EBITA

Regions

1986 First acquisition Industri AB Reflex.

9 %

18 % 21%

Employees

61 %

20 %

25 % 71 %

54 % 21 %

Sweden

Finland, the Baltic states and China

1991 OEM International is formed and becomes the Parent Company.

Denmark, Norway, UK and East Central Europe

1982 Set up in Norway. 1974 OEM Automatic AB is set up by the Franzén and Svenberg families.

2019 Acquisition of Cabavo AB and the pumping division of Finisterra AS. Expansion of the logistics centre in Tranås.

2017 Acquisition of Rauheat. 2015 Acquisition of Rydahls, ATC Tape Converting and Scannotec. 2012 Acquisition of Akkupojat. New logistics centre in Finland.

2010 New logistics centre in Sweden. Disposal of Cyncrona. 2008 Acquisition of Elektro Elco. Set up in Slovakia. 2006 Set up in the Czech Republic. 2002 Sales declined by 30 %.

2001 Telecom crisis. 1997 OEM and Cyncrona merge. Acquisition of Internordic Bearings.

1989 Set up in the UK. 1983 Listed on the Stockholm Stock Exchange. Set up in Denmark. 1981 Set up in Finland.

1974 O E M 2 02 0

C H IEF EX ECUT I VE'S R EVIEW

2020 – a turbulent year

After 5% growth in the first quarter, the situation changed completely with the pandemic triggering an abrupt decline in demand. There was considerable uncertainty about the consequences of the pandemic and a series of activities was carried out to create as safe a working environment as possible and maintain the required level of service to our customers. The impact of the pandemic on the Group's operations varied among industries and markets. Some entities reported a drop in sales of more than 35% in the second quarter and the decline in sales overall was 10%. There was a reduction in numbers of infections in the third quarter and demand gradually improved. The sales activities gradually got back to normal and the decrease in sales levelled off at 2%, although several entities continued to contend with a significant slump.

As the numbers of infections rose in the fourth quarter, the health of our organisation once again became a top priority. Each organisation had settled into new routines and found effective ways of conducting sales activities suited to the situation. Economic activity continued to pick up and sales in the 2020 quarter grew by 5% year on year, which meant that full-year sales were on a par with last year. Throughout the challenges of this past year, the Group has once again demonstrated that it has the agility and strength to navigate difficult situations. Thanks to the creativity, loyalty and hard work of our operations, our customers have continued to receive a high level of service and our full-year sales are comparable with the previous year's.

”

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I am greatly impressed by the way in which the level of service to our customers has been maintained.

Earnings trend

This proved to be another year of record earnings, with profit before tax up 10% to sek 401 million. The ebita margin also reached a new record level of 12.9%. The strong performance can be attributed to a number of cost-cutting measures that were implemented in the second quarter, along with significant reductions in travel and marketing costs. In addition to this, several companies in Sweden and other countries received government financial support, mainly paid out in the April to August period when economic activity was particularly slow. Growth across the regions

Thanks to a strong fourth-quarter performance, Region Sweden succeeded once again in delivering its best results and highest sales ever. Sales increased by 2% excluding the impact of foreign currency exchange rate fluctuations and ebita rose 6%. During the year, ATC Tape Converting and Elektro Elco reported a 35% increase in demand and 24% rise in sales figures. oem Automatic, the Group's largest company, which has a broad customer base and is thus a good bellwether of the economic health of Swedish industry, reported a 3% year-on-year decline in sales. Despite the pandemic, region Finland, the Baltic states and China, which was already suffering a slowdown in the latter part of 2019, managed to deliver sales figures that were on a par with the previous year. The operations in China reported a 4 % increase in sales, while other entities in Finland and the Baltic States posted a drop in sales. Cost-cutting measures and, to some extent, government support grants boosted ebita by 18%. In Region Denmark, Norway, the UK and East Central Europe, the impact of the pandemic was generally stronger and net sales fell by 5 %, with an 8% drop in organic sales. Two acquisitions that have been made boosted sales by 6%. The operations in Norway and Hungary fared best, with 19 % and 10% growth in sales respectively. The operations in Norway posted 3 % positive growth even if the impact of the acquisition that was made in the autumn of 2019 is deducted. The operations in Slovakia, Denmark and the UK were most severely affected by the pandemic. In this region, ebita rose 4%, also because of cost-cutting measures and some government support grants. Acquisitions

In early 2020, the UK company Zoedale Ltd was acquired. The company offers a range of valves and actuators and, at the time of acquisition, was generating annual net sales of sek 37 million. This is an excellent example of a complement to an existing company and it strengthens the product offering in the UK market. Acquisition activities were suspended during the spring due to the outbreak of the pandemic, but were resumed in the autumn. The pandemic has had some impact on the acquisition process as it

has been less possible to physically visit potential takeover targets. Acquisitions continue to be an important part of oem's growth strategy and our activities in this area will be ramped up when circumstances have improved. Digitalisation is more important than ever We have been progressing towards a more digitalised environment for several years and our digital operations played a vital role in keeping our business moving during the pandemic. Employees have been able to work from home and interact with others through video meetings, which has meant that most areas of our business have continued to operate with the same momentum. From a longer-term perspective, we need to meet physically and visit various businesses to maximise the development opportunities of the Group. But it has been very impressive how the organisation has adapted to the new situation and new ways of working. Thanks to the new models of working created during the pandemic, we will be operating more efficiently and effectively in many areas in the future. Investment in digital platforms has been a priority and will remain a central element of the Group's development plans. Dividend oem's dividend philosophy is that dividends shall be paid to the extent considered reasonable, taking into account the financial position and any need for investments and potential acquisitions. Due to the uncertainty throughout the spring of 2020, it was decided there would be no dividend for the 2019 financial year. The proposal for the 2020 financial year is a dividend of sek 7.50 per share combined with a redemption share of sek 12.50 per share. The dividend is equivalent to 55% of earnings per share after tax and a direct return of 2.4% based on oem's year-end share price. The proposed dividend means that oem has raised its dividend by an average of 15% every year over the last 12 years except for 2019. Highly-efficient business model What we have experienced in the past year is unlike anything we have seen before. The uncertainty in the market created by the pandemic has forced the operations to keep making adjustments to their plans and activities. I am greatly impressed by the way in which the level of service to our customers has been maintained and by the creativity, loyalty and dedication shown by the organisation. Many of oem's operations have gained new market share during the pandemic and we are a stronger Group today. Tranås, March 2021

Jörgen Zahlin Managing Director and CEO, OEM International AB.

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V IS IO N , BU SI NESS CONCEPT, GOA LS A ND STRATEGIES

Vision, business concept, goals and strategies SALES GROWTH (%)

VISION

10 %

OEM will be a leading technology trading group in industrial components and systems in selected markets in Northern, Central and East Central Europe.

BUSINESS CONCEPT oem offers an extensive and detailed range of industrial components and systems from leading suppliers. A well-structured local market organisation and efficient logistics make oem a better alternative to

The result for 2020 was 0% compared with the minimum target of 10 %.

10% 11.6

11.2

11.0

11.7

12.9

The result for 2020 was 12.9 % compared with the minimum target of 10 %.

EBITA margin

Financial targets

Return on equity A minimum return on equity of 20% per annum through a business cycle. Return on equity reached 26.1 % in 2020. The average return on equity has been 28.5% for the past five years.

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the suppliers' own sales organisations. oem provides a high level of expertise and service and markets the products according to the specific conditions of each market.

oem's overall business objective is to be one of the largest technology trading companies in its chosen geographic markets. Profitability will be on par with, or better than, that of the largest players in each market.

Sales growth Minimum sales growth of 10% per annum through a business cycle. In 2020, sales remained unchanged from the previous year. 1 percentage point came from acquisitions, foreign currency exchange rate movements had a negative 1 percentage point impact on growth and organic growth was 0. Average annual sales growth was 8% in the last five-year period.

15 17

EBITA MARGIN (%)

GOALS AND OBJECTIVES

oem shall deliver sustainable profitable growth coupled with a good return on shareholders' equity and with minimal financial risk. The company has four financial targets:

7 16

A minimum ebita margin of 10 % per annum through a business cycle. In 2020, the ebita margin reached 12.9 %. The average ebita margin has been 11.7% for the past five years.

Equity/assets ratio A minimum equity/assets ratio of 35 %. The equity/assets ratio was 69 % at the end of 2020. The average equity/assets ratio has been 59 % for the past five years.

RETURN ON EQUITY (%)

20 % 30

The result for 2020 was 26 % compared with the minimum target of 20 %.

EQUITY/ASSETS RATIO (%)

35 % 53

59 18

The result for 2020 was 69 % compared with the minimum target of 35 %.

Face-to-face meetings are critical to understanding customer needs and a practical way for OEM to offer its experience and technical expertise.

STRATEGIES oem has defined five strategic areas that are important to its future development and success and for achieving its financial targets. Growth

oem will create growth organically, through acquisitions and geographic expansion. These three together will generate growth that meets the growth target. 1) Organic growth oem gives priority to organic growth. oem achieves organic growth by increasing its market share and expanding the range that the company offers its customers. oem's operations are expected to grow above the underlying market growth in those areas where the company is well established. In markets where oem has yet to achieve a position among the five largest players, the aim is to achieve considerably higher growth. 2) Acquisitions Business combinations are central to oem's strategy for developing its operations. oem acquires companies and product ranges that strengthen its market position within current product areas in existing markets, and companies that add a brand-new range or give oem access to a new geographic market. 3) Geographic expansion Geographic expansion into new markets will take place when it is possible for oem to become a prominent player by representing several of the company's suppliers. Product range

oem shall offer a product range consisting of industrial components and systems from leading suppliers. The range is adapted to the local markets in which oem operates. oem's key strategy is ongoing development of its range and it implements this strategy

through partnerships with existing and new suppliers. Each local marketing organisation is also tasked with finding new products that will further enhance the competitive edge of the portfolio of offerings. Marketing activities

oem shall have strong marketing activities based largely on faceto-face selling. Personal meetings are crucial to understanding customer needs, and a practical way for oem to offer its experience and technical expertise. Face-to-face selling is supported by digital and printed marketing communication materials. Logistics

oem shall develop logistics solutions that deliver excellent customer service and quality and a high level of cost-efficiency. The Group has 15 logistics units. Each unit adapts its range to current operations and works towards greater coordination of the stockholding with other warehouses. In connection with many of oem's logistics units there are processing units that effectively provide unique adjustments for specific customers and the installation of products. Employees and management

There should be a familial culture with a focus on entrepreneurship in all operations. oem shall give its employees opportunities to develop within the company, taking account of business goals and strategies as well as the employees' ambitions. Recruitment and employee strategies will lead to a significant number of leadership positions being filled internally.

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A C Q U ISI T I O N S

The Group expands through acquisition Acquisitions are central to business development and growth creation. Acquired businesses add new products, extend the customer base and bring new expertise to the Group. The aim is for acquisitions to add sales of SEK 150 - 200 million each year.

ACQUISITION STRATEGY oem primarily strives for three kinds of acquisitions. The first two described here are the most common: • Operations with products that complement oem's portfolio in a market where it has an established presence. • Operations that give access to a new geographic market for one of oem's existing product areas. • Operations of product-owning companies in one of the markets where oem has an established position. Identifying companies for acquisition

oem is constantly on the look-out for potential takeover targets. All of oem's operations have a responsibility to identify potential acquisition targets, which is coordinated by Group management. A network of brokers, audit firms and banks also helps ensure a constant inflow of interesting acquisition targets. oem strives to engage in dialogue at an early stage with the owners of potential targets. It is important to build a trusting relationship and present the platforms that oem can offer for developing and expanding the businesses after they have been acquired. The ideal acquisition targets have a number of common features: • Trading company or product-owning company with annual sales of sek 20 - 200 million. • Represents manufacturers or has its own brands. • May have processing or simpler production facilities. • The selling entity sees it as advantageous to have an owner that is strongly committed to and interested in taking the business to the next stage of development.

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Focus on the business

Central to oem's culture is a strong commitment to the operations and business. When analysing acquisition targets, there is therefore a strong focus on the business and areas such as the organisation, company culture, portfolio of offerings and future potential. In addition, an appraisal is performed to determine the effects of the acquisition on oem's other operations and what synergies could be achieved. oem makes acquisitions either by purchasing an entire company (with or without the previous owner remaining with the company) or by purchasing a company's assets. Moving the acquired company to the next level of development

Based on its philosophy to be an active and long-term owner, oem creates a development plan for each business it acquires. oem can, for example, make its existing operations work to the advantage of the acquired company by opening up new markets and customer groups. The acquired company can continue to operate as a separate company or is integrated into one of the existing operations. The basis for these considerations is what is best for the current business and where are the greatest opportunities for growth.

Acquisitions completed 2005 - 2020

ACQUISITIONS DURING THE YEAR

2020 Zoedale Ltd

United

The pumping division of 2019 Finisterra AS

Norway

2019 Cabavo AB

Sweden

2018 ATB Drivtech AB

Sweden

2017 Rauheat OY

Finland

2017 Candelux Sp.z o.o.

Poland

2016 Sitek-Palvelu OY

Finland

RF Partner AB and 2016 Ranatec Instrument AB

Sweden

AB Ernst Hj Rydahl 2015 Bromsbandfabrik

Sweden

2015 Scannotec OY

Finland

2015 ATC Tape Converting AB

Sweden

2014 Kübler Svenska AB

Sweden

2014 Scanding A/S

Denmark

2014 ASE/Conta-Clip

Poland

2014 Mytrade OY

Finland

2014 Nexa Trading AB

Sweden

2012 Datasensor Ltd

United Kingdom

2012 TemFlow Control AB

Sweden

In 2020, oem made one acquisition which delivered additional annual sales of sek 37 million to the Group.

2012 Vanlid Transmission AB

Sweden

2012 Akkupojat OY

Finland

ZOEDALE LTD

2011 Flexitron AB

Sweden

In January 2020, the operations of Zoedale Ltd were acquired. The business has an annual turnover of approximately sek 37 million. The company represents ASCO, Valpes, Omal, Bernard Controls, Peter Paul and other manufacturers of valves and actuators for various process and industrial applications. Reason for the acquisition: The acquisition expands the product range and strengthens the offering to customers on the UK market. Type of acquisition: It operates as a separate company.

2011 Svenska Batteripoolen AB Sweden 2011 Scapro AB

Sweden

2011 Svenska Helag AB

Sweden

2011 Echobeach Ltd

United Kingdom

2010 All Motion Technology AB

Sweden

2009 Lasa Maskin AS

Norway

2008 Elektro Elco AB

Sweden

2008 OK Kaapelit OY

Finland

2007 Klitsø Processtechnic A/S Denmark 2007 MPX Elektra ApS

Denmark

2007 Crouzet AB

Sweden

2006 EIG spol s r.o.

Czech Republic

2005 Telfa AB

Sweden

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VA L U E- AD DI NG L I N K

Value-adding technology trading group OEM's very existence is based on the creation of value for customers and suppliers, which has made OEM one of Europe's leading technology trading groups. OEM creates value for its customers' products and processes by offering an extensive range of products and systems, and the technical expertise of its employees. OEM creates value for its suppliers by reaching out to markets and customers that the suppliers would otherwise find it difficult to reach.

Value for the customers

oem gives customers access to top-quality products from leading suppliers, help with development projects and the means to streamline logistics processes. oem thus creates both technical and economic value for its customers. oem's employees have considerable knowledge of the operations' product range and the areas of application for these products. This means the customer has access to experience and expertise that can support them in their choice of constituent components and in development projects. A large percentage of oem's sales is generated by bespoke products produced for unique customer applications. A key feature of the customer offering are value-added services, for instance, different OEM gives its customers access to over 60,000 products from more than 400 suppliers.

components are pre-assembled on delivery according to the customers' specifications. oem works closely alongside its customers who often choose oem as a supplier for the coordination of an increasingly large amount of their purchases. Value for the suppliers

Strong sales organisations, high availability and modern marketing form the foundation of oem's business and are strong reasons why the company has been entrusted to represent the leading manufacturers in their markets. oem's goal is to be the manufacturers' best sales channel and make them the leading players in their niches. In many cases, collaboration with oem gives the manufacturers access to customers whom they would not be able to reach as easily on their own. oem serves as the extended arm of the manufacturers in their respective markets and takes complete responsibility for the customer relationship. oem has a close relationship with the manufacturers. These are long-standing, loyal relationships and the company avoids marketing rival products. oem builds up a wealth of expertise and know-how on the manufacturers' products and how they can be used in the customers' operations. oem uses its expertise to bring ideas and proposals to the suppliers of how products can be developed and adapted to meet different customer requirements. Logistics as a competitive advantage

An important part of the value generated by oem is created through oem's logistics units. The company offers over 60,000 products from more than 400 suppliers to its 30,000 customers, which makes the logistics process complex. oem has a continuous focus on making the flow of goods a streamlined and seamless process. Coordinating the work to larger logistics centres increases efficiency and automates the flow of goods, thereby improving cost-efficiency, quality and service. oem also customises its logistics operations to meet the requirements and needs of larger customers, with regard to time, packaging sizes and other aspects, which creates clear advantages for the customers.

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B US I NE S S M O D EL

OEM's business model

The business model is based on being a link between manufacturers and customers with the intent of creating value.

MANUFACTURERS

CUSTOMERS

The development of our business operations is based on

Four central processes

Product range development. OEM offers a unique and extensive range of products from leading manufacturers.

Logistics. OEM OEM has an efficient logistics process with high service standards.

Sales process. OEM runs an efficient sales process based on personal selling and extensive product knowledge.

Market communication. OEM creates modern marketing communication that supports its sales.

What this means for our manufacturers:

What this means for our customers:

Assistance with marketing in local markets.

Access to components from more than 400 manufacturers.

Can have their products marketed with complementary products.

In-depth component knowledge.

Reach markets and customers that are difficult to reach when acting alone.

End-to-end solutions with complementary components.

Help with product customisation. Logistics solutions that meet customer demands. Feedback for their own product development.

Possibility to reduce the number of manufacturers. Deliveries to the right place at the right time. Assurance of high product quality.

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PR O D U C T AR EAS

Extensive product range in six product areas OEM's extensive product offering is combined with considerable knowledge of products and applications, which gives customers access to high-quality products and the best possible support when choosing products for each particular application. The product range comes from market-leading suppliers, primarily in Europe, the USA and Asia, and is grouped into six main product areas.

oem's offering comprises standard products and systems and bespoke solutions, developed in collaboration between the customer, supplier and oem. Product range development

Extension and improvement of the range is an ongoing process which generally takes place in three ways: •

Development of the product range takes places collaboratively with existing suppliers, by expanding the collaboration to much of their range and working together on new product development.

•

The range is continuously being expanded and enhanced

Market alignment

oem's offering differs across the various geographic markets. This is a natural consequence of oem having been established in different markets for varying lengths of time and the fact that each market has its own demands, requirements and characteristics. Each local operation has to align its offering with local demand and the suppliers that are available as partners in each market.

as oem establishes partnerships with new providers of products that complement the existing range. •

Acquisitions provide access to new ranges or products that complement an existing range.

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lti

Installation components

Appliance components

ite

Motors, ball bearings & brakes

Pressure & flow components

Machinery components & cables

Electrical components

MARKET PRODUCT AREA

ELECTRICAL COMPONENTS

MACHINERY COMPONENTS & CABLES

PRESSURE & FLOW COMPONENTS

The product area comprises products supplied by oem Automatic, Telfa, Sitek-Palvelu, oem Automatic Klitsø and Zoedale.

The product area comprises products supplied by oem Automatic, oem Automatic Klitsø, Svenska Batteripoolen and Akkupojat.

The product area comprises products supplied by oem Automatic and oem Automatic Klitsø.

Products include:

Energy chains, machine cables, vehicle products, warning devices and cameras for 2D and 3D applications.

Products include:

Relays, terminal blocks, sensors, machine safety products and batteries. Areas of application:

Areas of application:

The products are used inside or around control cabinets. Sensors and safety components are used in machinery, automated production lines, etc. Batteries are used as starter batteries or industrial batteries for power backup, etc.

Most of the products are targeted at original equipment manufacturers for use in the machinery that they produce, for example fork-lift trucks and construction equipment. Parts of the range also target medical equipment and consumer-oriented applications where camera technology is required.

The products primarily target original equipment manufacturers for use in the machinery that they produce. They cover a wide range of applications, from heat pumps to medical equipment.

Examples of customers:

Komatsu Forrest, Epiroc, ABB and electrical wholesalers.

Products include:

Valves, hoses, sensors and pumps. Areas of application:

Examples of customers:

Tetra Pak, Epiroc, Delaval, Volvo and Getinge.

Examples of customers:

Toyota Material Handling Manufacturing, Epiroc, Sandvik, Cellavision and Flir.

MOTORS, BALL BEARINGS & BRAKES

APPLIANCE COMPONENTS

INSTALLATION COMPONENTS

The product area comprises products supplied by oem Motor, Internordic, Ernst Hj Rydahl Bromsbandfabrik, oem Automatic and oem Automatic Klitsø.

The product area comprises products supplied by oem Electronics, Svenska Helag, ATC Tape Converting, Agolux and oem Automatic.

The product area comprises products supplied by Elektro Elco, Agolux and Nexa Trading.

Products include:

Lighting and products for wireless control in the home.

Drive electronics, motors, gears, ball bearings, seals, brake and friction systems. Areas of application:

The products are targeted at original equipment manufacturers for use in the machinery and equipment that they produce and they are used for food industry equipment, medical equipment and park and garden equipment. Brake and friction products also target the automotive industry. Examples of customers:

Displays, keyboards and LED lighting. Areas of application:

The products target original equipment manufacturers, high-volume manufacturers and contract manufacturers for use in the electronic equipment and devices that they produce. The products are used in devices in a variety of areas, from conference phones to medical analysis instruments. Examples of customers:

Products include:

Areas of application:

Indoor and outdoor lighting for the home with LED technology. Wireless control of lights, sunshades and doors in the home. Examples of customers:

Electrical wholesalers that target professional installers, such as Solar and Elektroskandia. Building and DIY stores such as Bauhaus and Clas Ohlson.

Husqvarna, Nibe, Franke and Axis.

Tetra Pak, Cytiva, Öhlins, Husqvarna, Toyota Material Handling Manufacturing, Nobina, Getinge Disinfection.

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R E GION SWED EN

Good growth after a strong close to the year % OF GROUP NET SALES

OPERATING PROFIT EBITA (SEK MILLION)

NUMBER OF EMPLOYEES

61 303 474

After ending the year on a strong note, region Sweden achieved 2% organic growth in sales. The pandemic had a serious impact on demand during the second and third quarters, after which demand gradually started to pick up. Earnings rose 6% to the highest level ever, largely due to a reduction in activities and the implementation of streamlining measures. Offering

Sweden is oem's largest region and accounts for 61% of the Group's total sales. The operations comprise 12 companies that specialise in their areas of expertise with in-depth knowledge of different products and applications. oem's complete range of industrial components and systems, more than 60,000 products in all, is available in the Swedish market. The offering is based on an extensive portfolio of standard products. These are sold as individual components and, increasingly, assembled to provide bespoke solutions for various applications, particularly for the manufacture of machinery and appliances. oem often has strong partnerships with its customers and is frequently involved in their development activities to help optimise the customers' product and manufacturing processes using its product knowledge and expertise in the various areas of application. Another area in which oem brings added value to its customers is flexible logistics solutions. Market

Swedish industry is oem's main market. It is a well-developed, mature market with underlying annual growth normally of a couple of percent and where developments for Swedish export companies play an important role. Demand declined drastically due to the negative impacts of the pandemic, particularly in the second and third quarters. This led to negative market growth for the year as a whole. oem holds a strong position in the Swedish market and is the market leader in many segments. Its customers are primarily equipment and appliance manufacturers, along with manufacturing companies in the automotive, forestry, telecommunications, IT and medical technology industries. In certain segments, customers also include wholesale companies, builders merchants and DIY stores. Swedish industrial companies normally keep their design and development units in Sweden, but have often relocated their manufacturing processes to countries where production costs are lower. Increased globalisation and digitalisation, with growth in e-commerce as a consequence, also bring greater transparency, especially in terms of price competition for standard products. oem is committed to ensuring competitive pricing while enabling continuous value creation by offering innovative support and tailored

O E M 2 02 0

Strong sales organisations, high availability and modern marketing form the foundation of OEM's business.

solutions that add real value to businesses. This means that oem often maintains its customer relationships and continues to supply its customers even if they relocate their production abroad. Developments in 2020

The economic downturn that had begun in the second half of 2019 was exacerbated by the pandemic. The extent to which customers have been affected has varied considerably. Demand in some customer segments has remained the same or increased, while in others there has been a dramatic fall in demand. Elektro Elco, a leading supplier of LED lighting products, has delivered a positive performance for several years and reported strong growth of just over 20% in 2020. ATC, a supplier of tape for various industrial applications, has expanded its portfolio and entered new customer segments, resulting in growth of more than 30% during the year. Nexa Trading, a supplier of smart home security solutions, and Batteripoolen, a supplier of industrial and starter batteries, have both delivered positive performances and achieved 4% growth with an enhanced level of profitability. Following a decline in demand in the autumn of 2019, oem Automatic, the Group's largest company, reduced its negative growth to 3% thanks to a strong end to 2020. Demand from several of its major customers has reduced, but the company also has customers that continue to develop in a positive direction with healthy growth figures.

SALES (SEK million)

OPERATING PROFIT EBITA (SEK million)

2,000

300

1,900

250

1,800 1,700

225

1,600

200

1,500 1,400

175

1,300

150

1,200

125

1,100 1,000

Electrical components Machinery components & cables Pressure & flow components Motors, ball bearings & brakes Appliance components Installation components

PRODUCT AREA

MARKET

100

Examples of customers:

Tetra Pak, Toyota Material Handling Manufacturing, Rexel, Elektroskandia, ABB, Epiroc and Husqvarna. Competitors include:

Addtech, Indutrade, Lagercrantz. Operations are conducted through the following companies: OEM Automatic AB, Elektro Elco AB, OEM Electronics AB, OEM Motor AB, Internordic Bearings AB, AB Ernst Hj Rydahl Bromsbandfabrik, Nexa Trading AB, Svenska Batteripoolen AB, Telfa AB, Svenska Helag AB, Agolux AB and ATC Tape Converting AB.

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R E GION F I N L AND, T H E B ALTIC STATES A ND CHINA

Strong performance in a weak economy % OF GROUP NET SALES

OPERATING PROFIT EBITA (SEK MILLION)

NUMBER OF EMPLOYEES

21 83 184

Following a strong fourth quarter, Region Finland, the Baltic states and China delivered sales figures that were on a par with the previous year. Demand was heavily impacted by the pandemic in the second and third quarters but then gradually improved during the fourth quarter. Translated into Swedish krona, earnings rose 18% to the highest level ever. This was largely due to a reduction in activities, the implementation of streamlining measures, and a shift in sales turnover from major customers to smaller customers, resulting in an improved gross margin. Offering

oem's second region comprises the operations in Finland, the Baltic states of Estonia, Latvia and Lithuania, and China. The region accounts for 21% of oem's total sales. Finland is the first country in which OEM established operations outside of Sweden and is the Group's second largest market. The operations are managed through seven entities with in-depth knowledge of products and application areas. oem's portfolio comprises a complete range of industrial components and systems, spread across the Group's six product areas. The offering comprises both bespoke products and systems, and standard products. The product mix differs slightly from that in Sweden depending on local demand and availability of the range. oem's customers in Finland are primarily major manufacturers of machinery. oem originally established operations in the Baltic states and China to follow Swedish and Finnish customers that outsourced their production there. The portfolio is therefore narrower and chiefly comprises products in the areas of Electrical components, Appliance components and Flow technology. The portfolio is gradually being expanded in response to increasing demand and is being aligned to meet the needs of each local market. In both the Baltic states and China, parts of oem's range are also sold to local customers. Market

Manufacturing industries are oem's main market in Finland, with forest and construction equipment, mining machinery and lifting equipment examples of key segments. The Finnish economy has been experiencing slow growth for some time now. The effects of the pandemic led to negative growth in 2020 in most industries, except for forestry equipment and sauna production which saw an increase in demand. Finland is very dependent on exports and is strongly impacted by economic developments in the rest of Europe. oem has a strong position in the Finnish market and a lack of growth has resulted in increased market share. oem's operations

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Despite the rather weak sales growth, profitability has improved in almost all entities. This has been achieved mainly through cost-cutting and efficiency measures. In local currency, operating profit

in the Baltic states and China, which are largely based on supplying products and systems to Swedish and Finnish customers that have outsourced their production activities there, are affected more by the strategic decisions of their respective customers than by general developments in the market.

(ebita) rose 19% during the year and the ebita margin stood at 12%. The region's earnings rose to the highest level ever. The improved gross margin was driven in part by a shift in sales turnover from major to smaller customers.

Developments in 2020

oem has been on a strong growth trajectory for a considerable period of time and holds a strong position in the Finnish market. Economic conditions in 2019 caused a slowdown which was accentuated in 2020 by the consequences of the pandemic. Translated into Swedish krona, net sales fell by 1 % and currency movements had a negative 1 percentage point impact on net sales, representing organic growth of 0%. oem can report good growth for several of the smaller operations in the region. Hidea-lite, which sells LED lighting, posted an 18 % increase in net sales. oem Motor, which markets motors and bearing units, increased by 12%. During the year, SitekPalvelu merged with the largest entity oem Automatic, which boosted sales by 2%. oem Electronics reported weaker growth with a 3% fall in sales. Rauheat, which markets HVAC & plumbing products, reported a 13% fall in sales, which is largely due to a major one-off order in 2019. A new managing director took over during the year and the company conducted a review of its organisation and strategies to create a basis for growth. The operations in the Baltic states posted a 5 % drop in sales, while sales in China grew by 1 %. Compared with the Finnish companies, the operations in the Baltic states and China are small and their impact on total growth in the region is marginal.

OPERATING PROFIT EBITA (SEK million)

SALES (SEK million) 700

650

600

550

500

450

400

350

300

250

Ba C

Installation components

Appliance components

Motors, ball bearings & brakes

Pressure & flow components

lti

Machinery components & cables

Electrical components

MARKET PRODUCT AREA

Examples of customers: Arnon, Sandvik Mining, Onninen, Harvia, Ponsse. Competitors include:

Lapp Automaatio, Addtech, Indutrade, Wexon. . Operations are conducted through the following companies: OEM Finland OY with the business areas OEM Automatic, OEM Electronics, OEM Motor and Hide-a-lite. Akkupojat Oy, Rauheat Oy, OEM Automatic OU, OEM Automatic UAB, OEM Automatic SIA, OEM Automatic (Shanghai) Co.Ltd.

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R E GION DENMAR K , N ORWAY, UK A ND EA ST CENTRA L EUROPE

Generally weak demand with some bright spots % OF GROUP NET SALES

OPERATING PROFIT EBITA (SEK MILLION)

NUMBER OF EMPLOYEES

18 39 217

OEM's positive growth across the region in recent years slowed down as the pandemic took hold. The first quarter showed continued strong growth, while demand was clearly down in the second and third quarters. Most markets experienced a measurable recovery during the last quarter. The operations in Norway and Hungary managed to maintain growth throughout 2020. Cost-cutting measures coupled with government support grants helped sustain profitability and allow the organisations to remain intact. Offering

oem's third region is the most varied, with operations in seven countries. This geographic spread results in variation in customers and offerings. The region also includes country-specific customer types that are unique to the Group. In some cases, the local product portfolio is specially tailored to these customers. The region accounts for 18% of oem's total sales. The offering in the region comprises standard products in combination with bespoke products and systems. Products in the areas of Electrical components, Pressure & Flow components, Machinery components & cables, and Motors & Transmissions are offered in the entire region. Appliance components are available in Norway, Denmark, Poland, the Czech Republic and Slovakia. Installation components are also available in Denmark and Norway. The range is continually being enhanced with the introduction of entire product areas and expansion of existing offerings. oem's operations in the region are conducted through seven oem Automatic companies. oem Electronics is established in Poland, the Czech Republic, Slovakia and Denmark, and Hide-a-lite lighting is also marketed in Denmark and Norway. Market

oem's markets in the region differ both geographically and in terms of economic growth. All markets have experienced reduced demand during the year. oem holds a strong position in most of its markets in the region. Food and pharmaceutical processing industries are a key customer group in Denmark. In Norway, the customers are primarily small-scale industrial businesses and wholesalers. Customers in the UK are a mix of large and small-scale companies with smaller industrial businesses making up the largest customer group. Local distributors that supply components to local manufacturers are another key customer group. oem's markets in East Central Europe have performed strongly for several years, except for 2020. The operations have continued to advance the development of their product portfolios,

O E M 2 02 0

area of flow technology. However, the operations have been seriously affected by the current economic situation resulting in zero growth in 2020. Several new manufacturers were launched in the past year. Overall, this means that we can look forward to 2021 with confidence. oem's operations in East Central Europe have reported positive performances over several years. The impact of the lower level of economic activity in 2020 was felt here too, resulting in a 4% drop in net sales. Profitability was maintained by implementing cost-cutting measures. Looking at

putting them in a strong position for the future. The customers are manufacturing companies operating in a wide range of industries. In Poland, for example, the domestic mining and minerals industries are important customer segments and customers in the Czech Republic include subcontractors in the automotive industry. The product portfolios and customer bases of oem's operations in Slovakia and Hungary are still relatively small. Both of these countries have a number of key customers that manufacture vehicles and electronic products. They are still to be seen as emerging markets.

the figures separately for each company, Poland has decreased by 4% and the Czech Republic by 3 %. Slovakia was hit hardest during the year with sales turnover down 20 %. Hungary maintained a strong performance, however, and posted a 10% increase in sales turnover. The operations in Slovakia and Hungary are still small compared with the others in the region.

Each local marketing organisation is tasked with finding new products that will further enhance the competitive edge of the portfolio of offerings.

Developments in 2020

2020 saw a decline in demand due to the negative impacts of the pandemic, resulting in a 5 % drop in net sales. Acquisitions made in Norway and the UK had a 6 % impact on turnover and currency movements had a negative 3% impact on turnover. Overall, this means that the organic growth was negative at 8%. The operations in Denmark reported lower demand from a few larger customers, resulting in a decrease in turnover of 11 %. Since the operations are mainly concentrated on cyclical sectors, this generates significant fluctuations when business activities vary from year to year. We intend to minimise these effects over time by continuing to focus on the expansion of our portfolio and customer base. The operations in Norway reported good growth in 2020 with a 19% increase in net sales. The single most positive impact comes from the acquisition of the pumping division of Finisterra AS. The other product areas have also posted some growth despite the current low level of economic activity. Profitability is also higher than it was in 2019. The operations in the UK reported a 9 % drop in turnover for the year. The acquisition of Zoedale Ltd has expanded the product portfolio there, especially in the

600

550

35 30

500

450

20 15

400

350

300

U d

te ni

g un

o Sl

ic bl

Machinery components & cables

Electrical components

MARKET PRODUCT AREA

OPERATING PROFIT EBITA (SEK million)

SALES (SEK million)

Examples of customers:

RS Components, Skoda, Domino, Sporveien Oslo. Competitors include:

Pressure & flow components

IMO, Dacpol, MRC Hypteck, Omron.

Motors, ball bearings & brakes

Operations are conducted through the following companies:

Appliance components Installation components

OEM Automatic Klitsø A/S, OEM Automatic Ltd, OEM Automatic Sp z o. o., OEM Automatic AS, OEM Automatic spol. s.r.o., OEM Automatic s.r.o. and OEM Automatic Kft.

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E M P L O Y EES

Expertise and commitment central elements of the portfolio The employees' commitment and expertise are the guarantee that OEM will retain its position in the long-term and short-term as one of Europe's leading technology trading groups. In today's competitive market, where the products are becoming more and more similar, it is often the employees that make the difference.

The employees' skills are regularly upgraded and expanded. Individual development plans combine the business goals and individual goals and support the process of formulating plans for the professional development of the employees.

AGE SPLIT (No.l/age)

300

250

250 200 150

Average no. of employees

894

887

Employees at year-end

885

897

200

Women (%)

150

Sick leave person / yr (DAYS)

Training costs / employee

Wellness costs / employee

(SEK 000)

0 11

– 12

8–

–

–5

–4

–3

4–

1–

-1

-2 O E M 2 02 0

2019

100

2020

LENGTH OF EMPLOYMENT (No./years)

(SEK 000))

Employee expertise is based on top technical and applications know-how combined with a strong sales focus. Sales staff and product specialists are key people in the relationships with customers and manufacturers and build lasting and trusting relationships in line with oem's business model. It is crucial to use the tools created by digitalisation in the business process with customers and suppliers and in the company's internal processes. The organisation's ability to adapt to and benefit from the opportunities offered by digitalisation are key to the company's competitive edge. Strong culture

OEM's long-term approach has solidified the business into one coherent organisation that puts performance and well-being at its core. The corporate culture is based on the watchwords – positive attitude, commitment, modesty, tenacity and openness. Creativity and inquiring minds are encouraged

oem's leadership culture is based on strong teams and specific targets. Each manager builds his or her team and sets clear goals for both the team and each individual. Employees are encouraged to contribute to the development of the company and shape their own careers by being interested, creative and goal-oriented. Most leaders are recruited internally and a great amount of energy and effort is channelled into identifying and developing individuals with leadership qualities who can become future leaders, both locally and centrally. Career progression is generally within the respective company. This is supplemented with Group-wide talent-development programmes and other central initiatives aimed at improving skills and building networks among the employees. Experience of sales work or work within the product organisation is highly valued in career progression and the company encourages employees to move to positions in different parts of the company and different countries too. Young employees add dynamism and drive

An important part of steadily building a strong, competitive organisation is to continuously hire young employees. Young engineers who are interested in technology and sales add dynamism and drive. Induction programmes and individual development plans enable new employees to quickly learn their duties and are assigned progressively more responsible work. oem has a trainee programme for newly-graduated employees with degrees in engineering or economics and the potential to assume leadership responsibilities in the future. oem also works collaboratively with several educational institutions, offering internship opportunities, guidance in thesis research projects and other assistance. This is a means of attracting future personnel and reaching out with information about oem's business and operations. Ambitious sales force

The sales professionals must work closely alongside the customers,

assume considerable business responsibility and provide customers with the best service in the market. oem has high ambitions when it comes to the ability of the sales staff to identify and take maximum advantage of business opportunities. The sales personnel follow training programmes that run over several years to ensure they have the extensive knowledge of the products that is required. Newly-hired sales personnel attend internal and external courses aimed at promoting personal development and creating an efficient sales methodology. A solid background in sales also opens other career opportunities at oem, such as sales manager or product manager. Personal development and long-term vision

oem continuously works to improve its attractiveness as an employer to current and future employees. oem's long-term competitiveness is built on a pipeline of young talent and a workforce of employees who grow and develop long-term with the company. The employees' know-how and expertise are regularly updated through training in sales, technology, finance, IT and other areas, as part of their personal development. oem encourages employees to continue developing their skills and abilities in different ways and the production of individual development plans is one of the activities. Business objectives are combined with individual goals to produce plans that facilitate the ongoing development of the skills of the employees. At annual performance appraisals, the contents of the personal development plans are discussed, completed activities are evaluated and plans for the coming year are established. Well-being and health for performance

Well-being and health are essential for enabling employees to perform and develop as individuals and in a team, and oem has always made the well-being of its employees a central priority. Regular investments are made to create safe, healthy and attractive workplaces and the company encourages its employees to adopt a healthy lifestyle by offering physical activity opportunities and preventive care and wellness initiatives. Activities designed to create cohesion and group dynamics are often conducted in conjunction with conferences or workplace meetings. Strives to improve equality

All employees shall have equal opportunities based on their qualifications for the job, without regard to religion, ethnicity, nationality, gender, age, disability or sexual orientation. oem's sector is traditionally male-dominated, but the company strives for a more equal gender balance by increasingly seeking to hire women for male-dominated positions. Hiring employees

oem regularly recruits employees, largely in the area of sales and marketing, to strengthen existing organisations and hire replacements because of natural turnover of staff. In 2020, the headcount decreased from 897 employees to 885 as a result of the pandemic.

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S U S TA I NABI L I T Y AN D QUA LITY MA NAGEMENT

A sustainable future OEM is certain that sustainability is a key competitive tool and essential for continued economic growth and strong profitability. It is an ongoing process in which a healthy business culture and a responsible sustainability programme also leverage OEM's competitive advantage and position as an attractive employer.

In 2013, oem established a Code of Conduct that provides a Group-wide platform for its CSR-related activities. The Code of Conduct is based on the UN Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption. These areas encompass the essential components of the responsibility that it is natural to take for all of the Group's companies. The objective is to create effective and responsible work with relevant activities, and that development in environmental, ethical and social issues takes place harmoniously. CODE OF CONDUCT

Human rights 1) oem supports and respects international human rights within the company's sphere of influence. 2) oem shall not be complicit in human rights abuses. Working rights 3) oem upholds freedom of association and recognises the right to collective bargaining. 4) oem has a zero-tolerance policy towards any type of forced or compulsory labour. 5) oem has a zero-tolerance policy towards any type of child labour. 6) oem is against all discrimination with regard to recruitment and the performance of work. The environment 7) oem supports the precautionary approach with regard to environmental hazards. 8) oem undertakes initiatives to promote greater environmental awareness. 9) oem encourages the development of environmentally-friendly technologies. Anti-corruption 10) oem is committed to countering corruption in all forms, including extortion and bribery.

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Key sustainability issues

oem's Board has the ultimate responsibility, through the Group management team, for the Group's sustainability activities. Of the key sustainability issues, the focal points and risk areas identified as being of the greatest importance for both oem and the Group's stakeholders are the following. Environmental responsibility – The environmental impact from the Group's product and

passenger transport, heating of premises and products and packaging materials.

Economic and ethical responsibility – Financial stability and strength is essential for investment in sustainable business development. Ensure responsible business practices that represent human rights and oppose corruption. Social responsibility – As a responsible employer, be able to offer employees skills develop-

ment, a positive working environment, good health and safety, and oppose and prevent all forms of discrimination and harassment in the workplace. The operational responsibility lies in a decentralised corporate culture in the companies. The Group's companies perform at least three sustainability-related activities each year. One of the activities in 2020 was to measure and report emissions of greenhouse gases in accordance with the Greenhouse Gas Protocol (GHG Protocol).The activities are followed up by the boards and management teams. If necessary, the Parent Company can support these activities with tools and processes.

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S U S TA I NABI L I T Y AN D QUA LITY MA NAGEMENT

Report emissions of greenhouse gases in compliance with the GHG Protocol

To improve its sustainability efforts, oem reported emissions of greenhouse gases in 2020 as defined by the ghg Protocol, which is one of the most widely used emissions reporting standards in the world. The ghg Protocol requires emissions to be broken down into 3 categories, or scopes. In 2020, oem focused on reporting in accordance with scopes 1 and 2, and kept to goods transport and business travel in scope 3.

Scope 1

Direct greenhouse gas emissions over which the business has control.

Scope 2

Indirect greenhouse gas emissions from electricity, district

heating, district cooling and steam.

Scope 3

Other indirect greenhouse gas emissions arising in the value chain.

TYPE OF EMISSION

Direct emissions Indirect emissions

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SCOPE

1 2 3

IMPACT

1, 040 tonnes of CO2 0.11 tonnes of CO2 2,642 tonnes of CO2

Primarily travel by company car. Mainly electricity use. Mainly goods transport.

The transport of goods is responsible for the most emissions, followed by business travel by car. The impact of the pandemic on the company's travel is evident through reduced emissions from business travel. Greater focus on sustainability

The results of the report also form a basis for future activities and the development of sustainability activities that began in 2020. In the future, the sustainability targets will be linked to the UN Global Goals, Agenda 2030, and some of its 17 goals. A sustainability board made up of individuals from a number of the Group's companies was also set up in 2020. The purpose of the board is to ensure there is an increased focus on sustainability throughout the Group. oem is committed to a culture of openness and high ethical standards. Employees play a key role in identifying any non-conformances and are able to report suspected wrongdoing via oem's whistleblowing system. Committed to reducing its carbon footprint

The environment is part of oem's Code of Conduct and priority is given to activities that lead to greater environmental responsibility. Goods transport, travel, heating of premises and manufacturing and use of products have the greatest environmental impacts in oem's operations. There has been a strong focus on these areas for many years and oem strives to find good environmental solutions and supports development initiatives in these areas. oem's extensive knowledge of the products and applications also enables it to help customers make environmentally-sound and good-quality choices of components and solutions. In

combination with supplier assessments, which provide information on the suppliers' sustainable development practices, this is an integral part of its sustainability activities. Warehouse management is another important part of oem's sustainability programme. The operations are continuously working to optimise inventory levels of different products so that the correct quantities are purchased while improving availability for the customers. The environmental impacts of freight transport operators are monitored to enable the best transport options to be selected. oem is also committed to reusing packaging materials as far as possible.

Quality is critical to competitive advantage Ensuring quality at every stage of the business process is critical to oem's competitive advantage. The companies have therefore long been working in a systematic manner to develop and improve quality and efficiency. The Group's own activity management system, “oqd” – oem Quality Development is based on Toyota's principles. The management system includes close monitoring of non-conformances, visualisation of results compared to objectives and improvement initiatives from employees. oem Automatic in Sweden has developed the system which is also used to varying extents in the rest of the Group.

Energy savings produce results

Certified companies

One successful activity is an energy-saving project spanning several years that oem is conducting at its facilities in Tranås. Activities and investments that have been carried out include modernisation of the ventilation system, expansion of the heat pump system with geothermal cooling to replace an older electric boiler, and installation of automatic high-speed doors to reduce heating costs and improve the workplace environment. In December 2019, a solar panel array was installed at oem's logistics centre at Höganloft. It generated approximately 240 mwh in 2020. Lighting in most of the properties was replaced with led lighting and this will continue in 2021. Thanks to the energy-saving measures, the amount of electricity used at the Höganloft logistics centre was the same in 2020 as in 2017, despite a 40% expansion of the facility's area. At other properties, energy consumption has fallen by between 25 and 50%, depending on the property.

In Sweden, oem Automatic, oem Electronics, Svenska Batteripoolen, Internordic Bearings, Telfa, Ernst Hj Rydahl Bromsbandfabrik, Svenska Helag, Agolux, ATC Tape Converting, oem Motor and Elektro Elco have been awarded iso 14001 environmental management system certification and iso 9001 quality management system certification. In Poland, oem Automatic has been awarded iso 9001 quality management system certification. Sustainability report

oem's full Sustainability report is available for viewing at www. oem.se

The solar panel array on the new part of OEM's logistics centre at Höganloft generated some 240 MWh in 2020.

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ANNUAL REPORT

2020

Five-year Group summary.. ................ 29 KPIs for the last five years ................. 30 ANNUAL REPORT Directors' Report including the Corporate Governance Report .......... 31 Board of Directors ............................ 38 Senior executives ............................. 39 Financial Statements of the Group Statement of Income ........................ 40 Statement of Comprehensive Income 41 Statement of Financial Position . . ....... 42 Statement of Changes in Equity ........ 44 Statement of Cash Flows .................. 45 Financial Statements of the Parent Company Income Statement ............................ 46 Balance Sheet .................................. 47 Statement of Changes in Equity ........ 49 Cash Flow Statement .. ...................... 50 28

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Accounting Policies and Notes to the Financial Statements . . .......... 51 Signatures ........................................ 85 Auditor's Report ............................... 86 OTHER OEM shares . . .................................... 89 Definitions ........................................ 92 Annual General Meeting ..................... 93 Addresses ........................................ 96

Five-year Group summary SEK million

2020

2019

2018

2017

2016

Sweden

2,010

1,992

1,866

1,668

1,539

Overseas

1,273

1,306

1,246

1,071

843

3,283

3,299

3,112

2,739

2,382

Operating income before depreciation and amortisation

483

444

376

338

304

Amortisation/depreciation

-74

-73

-53

-56

-46

-8

-4

-6

-8

-4

401

367

317

274

255

-84

-78

-69

-60

-54

PROFIT/LOSS FOR THE YEAR

317

289

248

214

201

EBITA

422

385

343

308

277

2020

2019

2018

2017

2016

Intangible fixed assets

187

195

193

201

196

Property, plant and equipment

324

342

260

251

227

Inventories

579

629

569

494

428

Current receivables

517

512

501

478

404

Cash and cash equivalents

376

TOTAL ASSETS

1,992

1,725

1,563

1,482

1,340

Equity

1,366

1,066

926

804

709

FROM THE STATEMENT OF INCOME

Net sales

Profit/loss from financial items Profit before tax Tax

FROM THE STATEMENT OF FINANCIAL POSITION

Financial assets and deferred tax assets

Non-current liabilities

145

144

135

146

132

Current liabilities

481

514

502

532

498

1,992

1,725

1,563

1,482

1,340

TOTAL EQUITY AND LIABILITIES

In the table above, IFRS 16 Leases is applied for 2019 - 2020. IAS 17 Leases is applied for the comparative figures for 2016-2018. Definitions can be found on page 92.

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KPIs for the last five years OEM GROUP

2020

2019

2018

2017

2016

SEK million

3,283

3,299

3,112

2,739

2,382

38.8

40.0

39.1

35.4

Group's profit before tax

SEK million

401

367

317

274

255

Consolidated profit for the year

SEK million

317

289

248

214

201

EBITA

SEK million

422

385

343

308

277

Return on total capital

22.7

22.9

22.5

21.8

Return on capital employed

31.9

33.3

33.0

32.2

31.6

Return on equity

26.1

29.0

28.7

28.3

30.2

Net sales of which overseas

Debt/equity ratio

times

0.08

0.16

0.25

0.29

Interest coverage ratio

times

123.6

94.1

85.1

72.6

57.3

EBITA margin

12.9

11.7

11.0

11.2

11.6

Operating margin

12.4

11.3

10.4

10.3

10.9

Profit margin

12.2

11.1

10.2

10.0

10.4

Capital turnover rate Net sales/employee Equity/assets ratio Operating cash flows Quick ratio Average number of shares outstanding Earnings per share

times/yr

1.65

1.91

1.99

1.85

1.78

SEK million

3.7

3.5

3.3

3.2

68.6

61.8

59.2

54.2

53.0

SEK million

469

291

217

192

219

186

108

107

100

thousands

23,107

SEK

13.73

12.50

10.74

9.25

8.70

thousands

23,169

Earnings per share

SEK

13.69

12.47

10.71

9.23

8.67

Shareholders' equity per share

SEK

58.95

46.03

39.97

34.69

30.62

Average total number of shares

Dividend*

SEK

7.50

6.75

6.00

5.50

Quoted price as per 31 December

SEK

309.00

250.00

190.50

177.00

151.00

times

22.6

20.0

17.8

19.2

17.4

2.4

3.5

3.4

3.6

P/E ratio Direct return Average no. of employees

No.

894

887

882

824

756

Salaries and remuneration

SEK million

396

393

377

338

297

* The dividend for 2020 refers to the dividend proposed by the Board. In the table above, IFRS 16 Leases is applied for 2019 - 2020. IAS 17 Leases is applied for the comparative figures for 2016-2018. Definitions can be found on page 92.

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Directors' Report The Board of Directors and the Managing Director of OEM International AB (publ.), CRN 556184-6691, with its headquarters in Tranås, Sweden, hereby present the Annual Report and the consolidated financial statements for the 2020 financial year. The Annual Report and the Consolidated Financial Statements, including the Auditor's Report, are given on pages 31-88. Figures for 2019 are given in brackets. THE GROUP Business review

OEM is a leading technology trading group operating in 14 selected markets in northern Europe, East Central Europe, the UK and China. Operations are conducted in subsidiaries in the Nordic countries, the UK, Poland, the Czech Republic, Slovakia, the Netherlands, Hungary, Estonia, Latvia, Lithuania and China. OEM is a value-adding link between its customers and leading manufacturers of products and systems for industrial applications. As one of Europe's leading technology trading groups, OEM brings value to its customers by offering an extensive range of products coupled with considerable technical product and applications expertise. With a strong marketing and sales organisation, OEM serves as the extended arm of the suppliers in each market and aims to make them a leading player in their niche. This makes OEM the best distribution channel for its suppliers in OEM's markets. Its extensive range of industrial components comprises products in the areas of electrical components, flow technology, installation components, ball bearings and seals, motors, transmissions, brakes and appliance components. The range is constantly evolving with the addition of new products and the replacement or discontinuation of unprofitable products. The clearly-defined product range that is marketed in each region and the added values created by the organisation form a distinct brand concept. The brand concepts are launched on new geographic markets as they grow in strength. The Group is structured and primarily managed as three market regions, • Sweden, • Finland, the Baltic states and China, • Denmark, Norway, UK and East Central Europe. The objective of this organisation is to consolidate OEM's long-term competitive edge and increase growth outside of Sweden. OEM's Class B share is listed on NASDAQ Nordic Mid Cap in Stockholm. Incoming orders, net sales and profit Incoming orders increased by 2% to SEK 3,368 million (3,303). At SEK 514 million, the order book was 21% up on the corresponding date of the previous year.

2,750

2,500 2,250 2,000

1,750 1,500

Region Denmark, Norway, UK and East Central Europe

3,000

5 2016

2017

2018

2019

Net sales SEK million, EBITA margin %.

2020

Region Finland, the Baltic states and China

3,250

Sales are conducted under the names of OEM Automatic, OEM Electronics, OEM Motor, Internordic Bearings, Telfa, Elektro Elco, Nexa Trading, Svenska Helag, Svenska Batteripoolen, Agolux, Ernst Hj Rydahl Bromsbandfabrik and ATC Tape Converting. Net sales rose 1% to SEK 2,013 million (1,995). Foreign currency exchange rate movements have had an adverse 1% impact on net sales, which means that organic growth in the region was 2%. The companies reporting strongest growth are ATC Tape Converting and Elektro Elco, whose sales rose 35% and 24% respectively in the period, while Batteripoolen and Nexa posted 4% growth. OEM Automatic, the Group's largest company, reported a 3% fall in sales year-on-year. Incoming orders rose 5% to SEK 2,085 million (1,986). In 2020, incoming orders were 4% higher than net sales. EBITA rose 6% to SEK 303 million (286). The increase in revenue is primarily attributable to cost savings and also, to some extent, support funding from governments for businesses during the pandemic. EBITA has also been positively affected by a SEK 1.9 million remeasurement of contingent considerations.

3,500

Region Sweden

Sales are conducted under the names of OEM Automatic, OEM Electronics, Akkupojat and Rauheat. In 2020, net sales for the region decreased by 1% to SEK 695 million (699). Exchange rate fluctuations adversely affected net sales by 1%, which means there was no organic growth in the region. The entity in China reported growth during the year with a 4% increase in net sales. Other entities in Finland and the Baltic states have not reached previous performance levels. The operations in the Baltic states and China are small and their impact on total growth in the region is marginal. The operations in Sitek-Palvelu were integrated with OEM Automatic in the fourth quarter through a new business area for pumps, process applications and pressure and flow components. Incoming orders for the region fell by 2% to SEK 698 million (711). Incoming orders were in line with net sales. EBITA rose 18% to SEK 83 million (71), due primarily to a lower cost base and, to some extent, government financial support measures during the pandemic.

SEK million

Net sales were down slightly year-on-year to SEK 3,283 million (3,299). Net sales fell by 1% for comparable entities, which is also the decrease excluding the impact of foreign currency exchange rate fluctuations. The majority of the Group's business activities have been adversely affected, mainly in the second and third quarters, by the market slump caused by the outbreak of Covid-19, and then began to recover in the fourth quarter. This means there is almost no change in net sales over the previous year. During the year, Elektro Elco, ATC Tape Converting and OEM Automatic in Norway and Hungary showed strongest growth performance amongst the entities. Operating profit before amortisation of acquisition-related intangible fixed assets (EBITA) increased 10% during the year to SEK 422 million (385). The increase can be attributed primarily to lower levels of activity in all operations which resulted in cost savings. The operating margin before amortisation of acquisition-related intangible fixed assets (EBITA margin) was 12.9% (11.7%). Profit before tax was SEK 401 million (367) and profit after tax rose 10% to SEK 317 million (289). The year's profit after tax corresponds to SEK 13.73 (12.50) per share outstanding.

Sales are conducted under the names of OEM Automatic, OEM Automatic Klitsö, OEM Electronics and Zoedale. Net sales fell by 5% to SEK 575 million (604) for the full-year 2020. Acquisitions boosted net sales by 6%, while foreign exchange movements had a negative 3% impact, delivering negative organic growth of 8% in the region. The operations in Norway and Hungary reported growth of 19% and 10% respectively during the year. Incoming orders decreased by 3% to SEK 586 million (606). Incoming

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orders were 2 % higher than net sales in 2020. In 2020, EBITA rose 4% to SEK 39 million (37) with a SEK 3.3 million gain upon the remeasurement of contingent consideration. Profitability and financial position Return on capital employed was 31.9% (33.3%). Return on equity was 26.1 % (29.0 %) which exceeds the Group's financial target of 20% through a business cycle. The Group's equity/assets ratio at year-end was 68.6 % (61.8 %). Shareholders' equity per share calculated on the aggregate number of shares was SEK 58.95 (46.03). Cash and cash equivalents, comprising cash and bank balances, amounted to SEK 376 million (42). The Group's cash and cash equivalents, together with committed undrawn credit facilities, amounted to SEK 762 million (403) at year-end.

SEK million 350

% 35

part of Region Denmark, Norway, the UK and East Central Europe on 1 February 2020. A Group-wide programme is in progress aimed at achieving a simpler, more distinct legal Group structure through mergers and voluntary liquidations. Employees At year-end, the headcount was 885 (893), a decrease of 8 employees. 13 of these employees come from acquired companies. The average number of employees during the year was 894, compared with 887 in the previous financial year. 20% (20%) of the employees are women. Absence due to illness stands, on average, at 7 days per person, which is 1 day less than last year. OEM encourages a healthy lifestyle through various forms of exercise and preventive healthcare. The average cost of training per employee is SEK 2,000 (4,000). Further information is provided in Note 5. Risks and risk management

300

250

200

150

100

OEM's results, financial position and strategic position are affected by a number of internal factors over which OEM has control and a number of external factors where the opportunity to influence the chain of events is limited. The most important risk factors include the economic situation in combination with structural changes, the competitive situation and the dependence on suppliers and customers. The main financial risks are currency risk in purchase transactions and translation risk in net investment in foreign operations. A description of financial instruments and an explanation of how OEM manages the financial risks are given in Note 24.

Economy

2016

2017

2018

2019

2020

Profit after tax SEK million, Return on equity %. Cash flow

Operating cash flow was SEK 469 million (291). After net investments of SEK -34 million (-89) and amortisation, new loans and paid dividends for a total of SEK -97 million (-199), the year's cash flow was SEK 337 million (3). SEK million 500 400 300 200

OEM is affected by the general development of the economy, which is usually measured in terms of GDP growth. The company operates in a wide range of different sectors and geographic areas which lessens the impact of economic fluctuations in specific industries and geographic markets on its business. However, while the pandemic is still ongoing, there is general uncertainty about future economic developments. Structural changes OEM is affected by structural changes in the market, for example, customers want fewer suppliers, rapid developments in technology or competition from lower-cost countries. OEM works actively to increase the value of its product offering, regardless of customer group. This has clearly contributed to the Group's performance and to the fact that it continues to be a priority supplier for many customers. By working alongside the customers, it is possible to capture trends and know when it is commercially justifiable to enter a new product area in order to keep abreast of advances in technology. OEM offers a high level of service and expert technical advice to offset the effects of competition from lower-cost countries. OEM also strives to establish close links with customers by becoming involved during planning and development stages when OEM's employees are able to help customers by providing expert input for different processes. Dependence on suppliers and customers

100 0

2016

2017

2018

2019

2020

Operating cash flow, SEK million. Investments The Group's gross investment for the year, excluding acquisitions, was SEK 7.9 million (12) in machinery and equipment, SEK 0.4 million (55) in buildings, and SEK 0.3 million (5.3) in other intangible fixed assets comprising patents and software. Group changes On 31 January 2020, the entire shareholding of Zoedale Ltd in the UK was acquired. The company markets valves and actuators for different processes and industrial applications. Its head office is located in Bedford. It has an annual sales turnover of approximately SEK 37 million and became

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Its dependence on individual suppliers is one of the key operational risks to which a single subsidiary can be exposed. In order to minimise this risk, the subsidiaries work close to their suppliers in order to create strong relationships on several levels. Furthermore, the majority of the suppliers are represented on several markets, which strengthens the relationships. The relationships are based on long-term, close collaborative partnerships. The Group has more than 400 suppliers in total. No supplier accounts for more than 4% of total Group sales. The expiration and addition of a number of supplier agreements each year is a normal part of the business. OEM has a broad customer structure, with approximately 30,000 customers spread across several industrial segments and geographic markets. No customer accounts for more than about 3% of total Group sales, which remains unchanged from last year. Competitive situation Restructuring and consolidations in the industrial trading sector are continuously changing the competitive situation. Economies of scale can lead to a price squeeze, but OEM's strategy includes reaching market-leading

positions with a portfolio of products and services where the price is not the decisive factor. The impact of COVID-19 on the OEM Group The pandemic had a limited impact on sales in the first quarter of the year. Most of the operations reported lower sales and earnings in the second quarter. Business gradually improved in the third quarter and delivery capacities of suppliers returned to normal. Despite more stringent restrictions and increased spread of the virus in the fourth quarter, demand picked up and almost all the Group's companies ended the year on a strong note. The Group saw a reduction in costs during the year, largely due to less travel and cancelled marketing activities. Government financial assistance has been received in both Sweden and other countries for part of the year. Short-term work supported by government grants was activated in most of the operations in Sweden in the second quarter. The Norwegian, Danish and UK operations implemented similar measures with government support based on local conditions. It was mainly during the first few months of the pandemic, when there was considerable uncertainty about the future, that Government funding was received in Sweden. Most of the Swedish operations ended temporary layoffs during the summer months. The pandemic has affected the Group's operations to varying degrees and measures have been implemented based on the situation of the respective operation. Reduced travel, a slight decrease in headcount and postponed or cancelled marketing activities are some of the cost-cutting measures taken. In light of the pandemic, it was decided to withdraw both the planned redemption programme and the proposed dividends totalling SEK 394 million. The health of our employees, suppliers and customers is OEM's main concern and we continue to carefully monitor the pandemic. The management of each company is updated on the regulations and recommendations of the respective governments to contain the spread of the virus to the greatest extent possible. Measures taken to limit transmission of the virus include physical distancing in the workplace, guidelines on the use of lunch rooms and conference rooms, remote meetings instead of face-to-face meetings, and clear information to employees with the aim of mitigating the spread of the virus both inside and outside the workplace. Working from home, either all or some of the time, has been implemented at times during the year where this has been possible. The increased spread of the virus in the last quarter of the year shows that the situation remains uncertain and it will be necessary to continue to adapt ways of working and strategies to the particular situation of each market and operation. The general consensus is that the vaccination programme, which has begun to roll out, will reduce the spread of the virus in the community. Nevertheless, there is considerable uncertainty about when the situation will become more stable. Financial support received from the government for short-term work and sick pay in Sweden and government funding for temporary staff redundancies in Denmark, Norway and the UK have been recognised as revenue in Other Operating Income in the condensed consolidated statement of income. The government has not yet confirmed the support for short-term work in Sweden, but we assess that the companies in the OEM Group that have applied for and received government support for short-term work are eligible for the funding. Events after the close of the reporting period Events arising from Covid-19 are described separately above. Otherwise, there are no other significant events to report after the close of the reporting period. Expectations of future development

The most important tasks for the Group are to focus on growth and to continue improving the profitability of existing operations. Added to this are the sales and earnings resulting from successful acquisitions. The Group continues with the aim to increase its sales share outside of Sweden. OEM's objective is to achieve a good return on shareholders' equity with limited financial risks during stable growth.

The targets for one business cycle are: • at least 10 % annual sales growth, • a minimum EBITA margin of 10 %, • a minimum return on equity of 20 %, • an equity/assets ratio that does not drop below 35 %. OEM is well placed for further expansion with its strong market position, financial performance and organisation. However, while the pandemic is still ongoing, there is general uncertainty about economic developments. The Group has not issued a forecast for 2021. Research and development OEM conducts research and development activities of its own on a limited scale. Development is mainly conducted by the suppliers themselves using market demand data provided by the companies. Environmental impact In 2020, OEM had a Swedish subsidiary whose operations require licensing or registration under the Swedish Environmental Code. The operations requiring registration represent an insignificant portion of the company's total operations. None of the Group's companies are involved in any environment-related disputes. OEM's focus on trade means that the greatest environmental impact comes from transportation, environmentally harmful substances, printed materials, packaging materials and heating. OEM takes a structured approach in all of these areas to find the best environmental solutions and support development initiatives in these areas. The OEM Group's environmental policy dictates continuous efforts to minimise its external environmental impact in the short term and long term. Sustainability report In compliance with Chapter 6, Section 11 of the Swedish Annual Accounts Act (ÅRL), the company has decided to publish its sustainability report, which is required by law, separately from its Annual Report. The sustainability report and the Annual Report have been presented to the auditors. The sustainability report is available for viewing at www.oem.se. PARENT COMPANY The Parent Company is to be an active owner and develop the subsidiaries. In addition to clear management-by-objectives, this means contributing expertise and resources in the fields of IT, financial control, HR administration, market communication, and quality and environmental control. The Parent Company's net sales were SEK 57 million (57). Net sales relate entirely to services to subsidiary companies. Profit before year-end appropriations and tax amounted to SEK 55 million (44). With regard to non-financial information, the Group's information also includes the Parent Company, where applicable. The financial position of the Parent Company is dependent on the financial position and growth of the subsidiaries. The Parent Company is therefore indirectly affected by the risks that are described in the section Risks and Risk Management. Guidelines for remuneration of senior executives The policies for remuneration of senior executives adopted at the 2020 Annual General Meeting are presented in Note 5. The remuneration of the Chairman and Members of the Board of Directors is paid in accordance with the resolution of the Annual General Meeting. The chairperson of the Audit Committee will receive remuneration of SEK 50,000. No other special fees are paid for work on committees. The Board proposes that the 2021 Annual General Meeting adopts the following guidelines for remuneration of senior executives within the OEM Group. The guidelines cover remuneration of the Managing Director, Group management and other managers who report directly to the Managing Director. OEM’s vision is that the company shall be a leading technology trading group in industrial components and systems in selected markets in Northern, Central and East Central Europe. To realise this vision, the company has defined five strategic areas; growth, product range, marketing activities, logistics, and employees and leaders. These are important to the company’s future development and success and to the achievement of its financial targets. It is important that OEM has senior executives with a focus on business acumen, a strong commitment to the company, and a sustainable leadership that promotes the long-term interests of the company. The level of remuneration of senior executives shall enable the

O E M 2 02 0

company to retain qualified leaders within the organisation in the long term and also ensure it is able to recruit qualified leaders both externally and internally Market-competitive salaries and other remuneration terms shall apply for senior executives. Share-based compensation, so-called incentive schemes, shall be presented for approval at the Annual General Meeting. Variable remuneration may be provided, capped at the equivalent of seven monthly salaries. The variable remuneration shall be linked to the company’s financial targets and based on performance during a calendar year. Senior executives shall have premium-based pension schemes, capped at 30 % of fixed pay. The period of notice on the company's part may not exceed 24 months and involves the obligation to work during the period of notice. Employment agreements shall not contain provisions for severance pay. The Board of Directors may waive these guidelines in individual instances should there be special reasons for doing so. Any deviation from the guidelines by the Board of Directors shall be reported in the remuneration report for the next Annual General Meeting. Shares OEM shares The company's 23,169,309 shares are divided into 4,743,696 A shares and 18,425,613 B shares. One Class A share entitles its holder to ten voting rights and one Class B share to one voting right. The face value per share is SEK 1.67. Repurchase of shares With the objective to improve the Group's return on shareholder's equity and earnings per share, the Board of Directors obtains shareholder approval at the Annual General Meeting to grant OEM International AB the authority to repurchase its own shares. The Annual General Meeting gives approval for authority to repurchase up to 10% of the number of shares, which is 2,316,931 shares. In 2011, the company repurchased 61,847 shares at an average price of SEK 53.26. No shares have been repurchased during the period 2012-2020. The company's total shareholding was 61,847 shares on 31 December 2020, which is equivalent to 0.3% of the aggregate number of shares. The 2021 Annual General Meeting will propose that shareholders resolve to renew the mandate for the repurchase of up to 10% of the number of shares. Other information The Board of Directors is appointed by the Annual General Meeting. The Articles of Association contain a preemption clause which states that if Class A shares are transferred from one shareholder to another shareholder in the company, or to someone not previously a shareholder in the company, the shares shall be offered immediately to the other holders of Class A shares for redemption through a written application to the company's Board of Directors. The Articles of Association also include a conversion provision enabling holders of Class A shares to convert all or part of their holding of Class A shares into Class B shares. If the company decides to issue new shares of Class A and B, through cash issue or set-off, owners of Class A and B shares shall have preferential rights to subscribe for new shares of the same type. Proposed dividends The Board of Directors is proposing a dividend payment of SEK 7.50 (-) per share, which is the equivalent of SEK 174 million. The complete proposal for allocation of profits is presented in Note 31. Proposed share split and redemption procedure To facilitate trading of company shares and alter the company's capital structure, OEM's Board of Directors proposes a 4:1 share split combined with an automatic redemption procedure. This procedure splits each existing share in the company into four shares, one of which is a redemption share. The redemption share will be redeemed for SEK 12.50.

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CORPORATE GOVERNANCE STATEMENT Introduction OEM International AB (the company) applies the Swedish Code of Corporate Governance (the Code) in accordance with the NASDAQ Stockholm's rules for issuers. The Code is aimed at creating good prerequisites for an active and conscientious owner role and constitutes an element in the self-regulation of Swedish enterprise. It is based on the "comply or explain" rule, which means that non-compliance with a term of the Code is not a breach provided there is an acceptable reason that can be explained. OEM International has noted a non-conformance with the rules of the Code concerning the Nomination Committee. The non-conformance is explained in detail under the heading Nomination Committee. Division of responsibilities The purpose of corporate governance is to create a clear division of roles and responsibilities between the owners, the Board of Directors and the executive management. Corporate governance in OEM is based on the Swedish Companies Act and other legislation and regulations, the rules applicable to companies listed on the stock exchange, the Articles of Association of the company, the internal governing instruments of the Board of Directors, the Swedish Code of Corporate Governance and other internal guidelines and regulations. Shareholders OEM International AB is a public company and was listed on the Stockholm Stock Exchange in December 1983. OEM International AB had 4,120 shareholders at the end of 2020. The ten largest shareholders controlled 67% of the share capital and 88% of the voting rights at year-end. The following shareholders had, directly or indirectly, shareholdings representing at least one-tenth of the number of voting rights for all shares in the company: Orvaus AB 27.7%, Siv Franzén 21.3%, Agne Svenberg 18.3% and AB Traction 10.0%. Articles of Association The Articles of Association stipulate that OEM International AB is a public company whose business is to "engage in sales of automatic components and carry on any and all activities compatible therewith". The total share capital is SEK 38,615,515 and the number of shares is 23,169,309 divided into 4,743,696 Class A shares with 10 voting rights each and 18,425,613 Class B shares with one voting right each. The company's Board of Directors is to consist of not less than four and not more than seven members. The company shall have at least one auditor appointed by the Annual General Meeting and a deputy auditor if the elected auditor is not an auditing firm. Notice of annual general meetings and extraordinary general meetings convened for the purpose of amending Articles of Association must be issued between six and four weeks before the meeting and resolutions must be supported by shareholders with at least two-thirds of both the voting rights and the shares represented at the meeting. Notice of an extraordinary general meeting convened for other purposes shall be issued no later than three weeks prior to the meeting. Notice of an annual general meeting shall be published in the "Post- och Inrikes Tidningar" newspaper and on the company's website. It must be announced in Svenska Dagbladet that notice has been issued. No limitation to the number of voting rights for represented shares applies to voting at the general meeting. There is a pre-emptive clause regarding the A Class shares and a priority clause in connection with a cash or set-off issue. The current Articles of Association were adopted at the 2018 Annual General Meeting and can be viewed on the company's website, www.oem.se (see under Investors/Corporate Governance/Articles of Association). Annual General Meeting The Annual General Meeting is the highest decision-making body in OEM International AB where the shareholders exercise their voting rights. The Annual General Meeting passes resolutions concerning the adoption of the Statement of Income for the Group, the Statement of Comprehensive Income for the Group, the Statement of Financial Position for the Group and the Income Statement and Balance Sheet for the Parent Company,

distribution of dividends, election of Board of Directors and, where applicable, election of auditors, remuneration of Board Members and other senior executives, remuneration of auditors and other business in accordance with the Swedish Companies Act and the Articles of Association of the Company. The Annual General Meeting is to be held in the municipality of Tranås within six months of the end of the financial year. All shareholders entered in the share register prior to the meeting who have registered their participation are entitled to participate and vote for their total shareholding. Shareholders who wish to exercise their voting rights at the Annual General Meeting and whose shares are registered with a nominee must temporarily re-register their shares in their own name as instructed in the notice of the Annual General Meeting. Shareholders can be represented by agents. Meeting minutes are published on the company's website, www.oem.se (see under Investors/Corporate Governance/Annual General Meeting). Shareholders who represented 25.3% of the total number of shares and 35.0% of the voting rights attended the 2020 Annual General Meeting held on 22 April 2020. Petter Stillström was appointed to chair the Annual General Meeting. The annual report and the Auditor’s Report were presented at the Meeting. In connection therewith, the Chairman of the Board Petter Stillström submitted information about the work of the Board. Petter Stillström, member of the Audit Committee, reported on the work of the Audit Committee and its cooperation with the auditors. Martin Odqvist, authorised public accountant, Öhrlings PricewaterhouseCoopers AB, reported on the auditing process for 2019 presented a summary of the Auditor's Report. The company's Managing Director and CEO, Jörgen Zahlin had presented a written summary of the company's business activities for 2019 and answered shareholder questions.

a member of the Nomination Committee shall be entitled to dismiss such a member and appoint a new one and also appoint a new representative if the member appointed by the shareholder chooses to withdraw from the Nomination Committee. Changes to the composition of the Nomination Committee shall be published as soon as such changes are made. The composition of the Nomination Committee was published on 19 October 2020. The composition of the Nomination Committee is published on OEM's website, www.oem.se, under Investors/Corporate governance/Nomination committee. The Nomination Committee shall prepare proposals for the following items of business to be presented for resolution at the 2021 Annual General Meeting:

The 2020 Annual General Meeting decided: • that the profit available, SEK 406,892,250, would be carried forward. • to elect Petter Stillström, Ulf Barkman,Mattias Franzén, Richard Pantzar, Jörgen Rosengren, Agne Svenberg and Åsa Söderström Winberg as members of the Board of Directors • to elect Petter Stillström as Chairman of the Board • to adopt the proposal of the Nomination Committee that the Nomination Committee should be made up of representatives of not less than three and no more than four of the largest shareholders and that the Chairman of the Board should act as Chairman of the Nomination Committee • to adopt the proposal of the Board of Directors that remuneration received by senior executives from OEM International AB is mainly comprised of fixed and variable components. The remuneration shall be market-competitive and the variable amount shall be capped at 7 monthly salaries. The company's management shall have market-competitive, premium-based pension schemes, capped at 30% of fixed remuneration. • to be allowed to issue up to 1,800,000 new Class B shares in connection with business combinations, in line with the proposal of the Board of Directors. • to adopt the proposal of the Board of Directors to repurchase a maximum of 10% of the company's shares.

The Nomination Committee for the 2021 Annual General Meeting is composed of:

The 2021 Annual General Meeting will be held on 22 April 2021 in Tranås. Nomination Committee

At the Annual General Meeting held on 22 April 2020, it was decided that the Nomination Committee shall comprise one representative from each one of no less than three and no more than four of the company's largest shareholders and the Chairman of the Board, unless he/she is a member as a shareholder representative. If a shareholder does not exercise his/her right to appoint a member, the next largest shareholder in terms of voting rights is entitled to appoint a member in the Nomination Committee. The names of the members and the names of the shareholders they represent shall be published at least six months before the 2021 Annual General Meeting and shall be based on the known number of votes immediately before publication. The term of office of the Nomination Committee shall run until a new Nomination Committee is appointed. The Chairman of the Nomination Committee shall be the Chairman of the Board. Should there be any significant changes in the company's ownership structure after the appointment of the Nomination Committee, the composition of the Nomination Committee shall also be changed in line with the principles above. Shareholders who appointed a representative to be

• proposal for a Chairman for the Meeting • proposal for members of the Board of Directors • proposal for Chairman of the Board of Directors • proposal for remuneration of the Board of Directors • proposal for remuneration for any committee work • proposal for auditors • proposal for auditors' fees • proposal for a resolution regarding the Nomination Committee The Nomination Committee shall discharge its duties as required by the Swedish Code of Corporate Governance and may, if necessary, take independent professional advice at the company's expense in the furtherance of its work.

• Petter Stillström (AB Traction), Chair • Richard Pantzar (Orvaus AB) • Mattias Franzén (Siv Franzén) • Agne Svenberg Ongoing dialogue is conducted within the Nomination Committee which held a minuted meeting where it acquainted itself with the assessment of the work of the Board of Directors during the past year and it discussed the composition of the Board of Directors. The Nomination Committee's proposals to the Annual General Meeting will be presented in the notice of the Annual General Meeting and on the company's website. The composition of the Nomination Committee above deviates from the regulations of the Code, which stipulate that the majority are members of the Board, that not more than one of the Board Members on the Committee may be dependent on large shareholders and that a Board Member should not be a Chairman of the Nomination Committee. It is deemed that it is reasonable for a company of this size to have a Nomination Committee that is represented by the largest shareholders and that these also serve as Board Members. BOARD OF DIRECTORS Composition of the Board of Directors The Articles of Association require that the Board of Directors shall comprise not less than four and not more than seven members elected by the Annual General Meeting for the period until the end of the next Annual General Meeting. Since the 2020 Annual General Meeting, the Board has consisted of the following members, all of them elected by the Annual General Meeting: Petter Stillström (Chair), Ulf Barkman, Mattias Franzén, Richard Pantzar, Jörgen Rosengren, Agne Svenberg and Åsa Söderström Winberg. All Board Members are independent with regard to the company and the company's management. Board members Ulf Barkman, Jörgen Rosengren and Åsa Söderström Winberg are independent from the company and the company's management, and also from the company's major shareholders. Additional information about the members of the Board elected by the General Meeting is given in the section about the Board of Directors on page 38 in this Annual Report and on the company's website, under Investors/Corporate Governance/The Board.

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The Nomination Committee takes age, gender, education, professional background and other aspects of diversity into consideration when nominating candidates to fill Board vacancies. The composition of the Board should be appropriate for the company’s business operations, stage of development and conditions in general, characterised by diversity and a breadth of skills, experience and backgrounds among its members. The above provides the Nomination Committee with a good basis on which to appraise whether the composition of the Board is satisfactory and whether the requirement for skills, breadth and experience has been met. Chairman of the Board It is the duty of the Chairman of the Board, Petter Stillström, who was re-elected as Chair at the 2020 Annual General Meeting, to ensure that the work of the Board is conducted efficiently and that the Board discharges its duties as required by the Swedish Companies Act, other legislation and regulations, rules applicable to companies listed on the stock exchange (including the Code) and the Board's internal governing instruments. It is the Chairman's task to ensure that the Board continuously updates and deepens its knowledge about the company and receives satisfactory data and decision-making information for its work, to establish the agenda for the meetings of the Board in consultation with the Managing Director, to verify that the decisions of the Board are implemented and ensure that the work of the Board is assessed annually. The Chairman of the Board represents the company in ownership issues. Duties of the Board Each year, the Board establishes written rules of procedure that regulate the Board's work and its mutual division of responsibilities, including its committees, the decision-making procedure in the Board, the Board's meeting procedure and the Chairman's duties. The Board has also issued an instruction for the Managing Director, which regulates his duties and reporting obligation to the Board of Directors. As necessary, the Board also reviews and approves policies concerning the Group, such as the treasury policy. The Board monitors the work of the Managing Director by regularly reviewing operations during the year. It is responsible for purposefully structuring the organisation, and the procedures and guidelines for the management of the company's business. It is also responsible for ensuring that there is a satisfactory system of internal control. The Board is also responsible for the development and follow-up of the company's strategies, decisions concerning acquisition and sale of operations, major investments, appointments and remuneration of the Managing Director and other senior executives as stated in the guidelines adopted by the Annual General Meeting. The Board of Directors and the Managing Director present the annual report to the Annual General Meeting. Work of the Board In accordance with the adopted rules of procedure, the Board of Directors holds at least six ordinary meetings per year plus an inaugural meeting after the Annual General Meeting and whenever necessitated by the situation. During 2020, the Board had a total of 10 meetings, including the inaugural meeting. The Board Members have participated in all Board meetings with the exception of Åsa Söderström Winberg and Ulf Barkman on one occasion each. When the members were unable to attend, they presented their opinions and views on the items of business to the Chairman of the Board prior to the meeting. All resolutions have been passed unanimously by the Board of Directors. The secretary of the Board is the company's CFO. Other company employees take part in the meetings of the Board in connection with the presentation of specific issues or when otherwise deemed appropriate. The work of the Board during the year has covered a range of matters, including issues concerning the strategic development of the Group, operating activities, the trend in earnings and profits, business combinations, disposal of companies and properties, organisation, the Group's financial position and funding of the Group's capital structure. The work of the Board is subject to an annual assessment. This is done by each Board member rating a number of relevant issues with the opportunity to provide comments. The results are compiled and presented to the Nomination Committee.

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Remuneration of the Board The remuneration of the members of the Board elected by the Annual General Meeting is decided by the Meeting in accordance with the proposal of the Nomination Committee. The 2020 Annual General Meeting approved the proposal that fees of SEK 450,000 be paid to the Chairman of the Board and SEK 225,000 to each of the Board members elected at the Meeting, for the period until the 2021 Annual General Meeting. The total remuneration of Board members, in accordance with the approval of the Annual General Meeting, is thus SEK 1,800,000. The chairperson of the Audit Committee will receive remuneration of SEK 50,000. No additional remuneration has been paid to any Board Member. Remuneration Committee The Board has appointed a Remuneration Committee, which consists of the Chair, Petter Stillström, and the Board member Agne Svenberg. The Remuneration Committee prepares "the Board's proposals for policies for senior executives' remuneration" and the application of these. The proposal is discussed by the Board and is subsequently presented to the Annual General Meeting for adoption. Based on the resolution of the Annual General Meeting, the Board decides on the remuneration of the Managing Director. Based on the proposal of the Managing Director, the Remuneration Committee passes a resolution on the remuneration of other members of the Group management. The Board is informed of the decisions of the Remuneration Committee. Salaries and other terms of appointment for Group management shall be set at competitive levels. In addition to base salary, Group management may also receive variable remuneration, which is capped at 7 monthly salaries. Compared with 2019, the level for variable pay in relation to fixed pay is unchanged. Senior executives in the OEM Group shall have market-competitive, premium-based pension schemes, capped at 30% of fixed remuneration. The pension scheme level is the same as for 2019. All share-related incentive schemes are to be decided by the Annual General Meeting. At present, there are no similar incentive schemes. The maximum term of notice is 24 months and shall also include the obligation to work during the term of notice. The Remuneration Committee met once in the year to review and approve the above policy proposals. Guidelines for the remuneration of senior executives will be proposed for approval and adoption at the 2021 Annual General Meeting and are presented on page 33 of this report. Audit Committee During the year, the Board has had a special Audit Committee consisting of Chairman Ulf Barkman and Petter Stillström. The Audit Committee shall, without it otherwise affecting the Board's responsibilities and duties, oversee the company's financial reporting and the efficiency of the company's internal control activities and risk management relating to the financial reporting, keep itself informed about the audit of the Annual Report and consolidated financial statements, examine and monitor the objectivity and independence of the auditor and specifically pre-approve any services that the auditor provides the company with other than audit-related services. The Audit Committee evaluates the audit work that has been carried out and informs the company's Nomination Committee of the results of the evaluation and assists the Nomination Committee in preparing proposals for auditors and remuneration of the auditors' work. The Audit Committee has convened on four occasions and has met with an external auditor on three of them. The Board and the Audit Committee have held a review meeting with and received a report from the company's external auditor in connection with the Board meeting in February 2021 at which the Board approved the annual financial statements. The auditors' reports have not led to any specific measures by the Board or the Audit Committee. Managing Director and Group Executive Team The Managing Director, Jörgen Zahlin, manages the operations in accordance with the Swedish Companies Act, other acts and regulations, the rules applicable to companies listed on the stock exchange, the Articles of Association of the Company, the internal governing instruments of the Board of Directors and the goals and strategies set by the Board. The Managing Director prepares the necessary information and basis for decisions prior to the Board meetings, in consultation with the Chairman of the Board, presents the items and justifies proposals for resolutions.

The Managing Director leads the work of the Group's executive team and makes decisions in consultation with the members of the executive team. In 2020, the members were Jörgen Zahlin, Johan Broman, Jens Kjellsson, Urban Malm, Patrick Nyström, Fredrik Falkenström and Björn Pettersson. Group management holds regular business reviews under the leadership of the Managing Director. The Managing Director and members of Group management are presented on page 39 of this Annual Report and on the company's website (under About OEM/Group Executive Team). Auditors As required by the Articles of Association, the company must have at least one auditor appointed by the Annual General Meeting and, if the auditor is not an auditing firm, it must also have a deputy auditor. The company's auditors work according to an audit plan and report their observations to company management teams, the Group's executive team, the Audit Committee and the Board of Directors both during the course of the audit and in connection with the adoption of the annual financial statements. Internal procedures and control systems are reviewed as and when required. A final review of the annual financial statements and the Annual Report is carried out in January and February. A review is conducted in the interim report for the third quarter. An account of the remuneration of the auditors, including the fees for consulting services, is presented in Note 6. The auditors are required to continually assess their independence before deciding whether to undertake an engagement to provide consulting services. An account of the audit is reported to the shareholders in the form of an auditor’s report and other opinions, which constitute a recommendation to the shareholders on various items of business for resolution at the annual general meeting. The Auditor’s Report contains proposals for adoption of the Income Statement and Balance Sheet for the Parent Company and the Statement of Comprehensive Income and the Statement of Financial Position for the Group, the appropriation of the company's profit and the discharge of the members of the Board and the Managing Director from liability. The scope of the audit includes assessing compliance with the Articles of Association, the Swedish Companies Act, the Swedish Annual Accounts Act and International Financial Reporting Standards (IFRS), issues related to measurement of items recognised in the Statement of Financial Position/Balance Sheet for the Group/the Parent Company. The company's auditors meet with the Audit Committee three times a year and once a year with the Board. The company's auditors also attend the Annual General Meeting to explain and give opinions on the audit work. At the 2020 Annual General Meeting, Öhrlings PricewaterhouseCoopers AB was appointed as the company's auditor until the conclusion of the 2021 Annual General Meeting. Martin Odqvist was appointed as the principal auditor. Öhrlings PricewaterhouseCoopers AB performs the audit of OEM International AB and most of the subsidiaries. Martin Odqvist's other major clients include Balco Group, AB Fagerhult and Herenco Holding. Internal control and risk management regarding financial reporting for the financial year 2020 As required by the Swedish Annual Accounts Act, the Board of Directors must annually submit a presentation of the most important elements of the company's system for internal control and risk management with regard to its financial reporting. Pursuant to the Swedish Companies Act, the Board of Directors is responsible for internal control. This responsibility includes an annual assessment of the financial reporting submitted to the Board and placement of requirements to its contents and presentation in order to ensure the quality of the reporting. This requirement means that the financial reporting must be fit for its purpose and appropriate and apply the applicable accounting rules, acts and regulations and any other requirements placed on listed companies. The Board of Directors is responsible for ensuring that there is an adequate system for internal control, which covers all essential risks of errors in financial reporting. OEM's system for internal control comprises the control environment, risk assessment, control activities, information, communication and follow-up. Control environment OEM builds and organises its operations on decentralised profit and budget responsibilities. The basis for internal control in a decentralised organisation is a firmly-established process, aimed at defining goals and

strategies for each organisation. Defined decision-making channels, powers and responsibilities are communicated through internal instructions and through guidelines and policies adopted by the Board of Directors. These documents set out the division of responsibilities and duties between the Board of Directors and the Managing Director and within the operational activities. They also include a financial policy, a manual of accounting for financial reporting and statements, and instructions on preparation of final accounts. A Group-wide reporting system is used for the Group's year-end procedures. Risk assessment OEM has established procedures for handling risks that are deemed by the Board and the company's management to be essential for the internal control regarding financial reporting. The Group's exposure to a number of different market and customer segments and the division of its operations into some 30 companies ensures a significant spread of risk. The risk assessment is carried out based on the Group's Statement of Financial Position and Statement of Comprehensive Income in order to identify the risk for significant errors. The greatest risks for the OEM Group as a whole are related to intangible fixed assets, inventories and trade receivables. Control activities OEM has established a number of control activities based on risk assessments that have been carried out. The activities are both preventive and ascertaining and include transaction-related checks, such as rules regarding authorisations and investments, and clear payment procedures, as well as analytical checks performed by the Group's controller organisation and central financial function. There are also various control activities related to the management of the purchase, logistics and sales processes. Controllers and financial managers on all levels in the Group have a key role with regard to integrity, competence and ability to create the environment that is required to achieve transparent and fair financial reporting. An important overall control activity is the monthly performance follow-up, which is carried out via the internal reporting system and which the Board of Directors analyses and comments on as part of its internal work. This involves comparing performance against set targets and previous results and reviewing a number of key ratios. Each company in the Group has an active Board where the majority of the companies have someone from the Group's management team as chairperson. The Group management makes regular visits to the subsidiaries that are subject to financial follow-up. Information, communication and follow-up Internal information and external communications are regulated at an overall level. Relevant steering documents and instructions are available on the Group's intranet. The Board of Directors receives comments from the Managing Director concerning the state of the business and the development of the operations on a monthly basis. The Board of Directors also deals with all quarterly financial statements, as well as the annual report prior to their publication. The financial situation is discussed at each Board meeting. The members of the Board then have an opportunity to pose questions to the company's management. The company's auditors attend Audit Committee meetings three times a year and Board meetings once a year and present their observations. The members of the Board then have an opportunity to pose questions. Every year, the Board takes a position on significant risk areas and assesses the internal control. Furthermore, OEM's management continuously assesses the internal control regarding financial reporting, above all, through own analysis, by asking questions and taking part in the work of the control function. Internal audit The company and the Group have a relatively simple legal and operating structure and working steering and internal control systems. The Board continuously follows up the different Group companies' assessments of internal control, among other things, through contacts with the company's auditors. The Board has therefore decided not to have a separate internal audit.

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Board of Directors Born in 1972.

Board Chairman since 2017 and Board member since 2010. Master of Economics.

Not employed by OEM.

CEO and major shareholder in AB Traction.

Born in: 1957.

Board member since 1997.

Other appointments: Chairman of the Board in Nilörngruppen AB and Softronic AB.

MBA.

Not employed by OEM.

Other appointments: Board member of NGS Group AB.

Board member of BE Group AB, Hifab Group AB and AB Traction incl. Group companies.

Independence: Independent of the company and the company's management, and also independent of the company's major shareholders.

Independence: Independent of the company and the company's management, but not independent of the company's major shareholders.

Petter Stillström

Number of shares: 0

Ulf Barkman

Born in 1968.

Board member since 2019.

Born in 1983.

Not employed by OEM.

Masters degree in Business Administration (MBA).

Board member since 2019.

M.Sc. Engineering.

Other appointments: Managing Director of TR Equipment AB and AB Tranås Rostfria.

Not employed by OEM.

Other appointments: Managing Director of Orvaus AB.

Chairman of the Board of MAZE Holding i Tranås AB and Padel Tranås AB.

Board member of Orvaus AB, Centrumfastigheter i Norrtälje AB and founder and board member of Vinterfors Invest AB.

Board member of OEM Automatic AB, TR Equipment AB, AB Tranås Rostfria AB and I&B Medical AB.

Independence: Independent of the company and the company's management, but not independent of the company's major shareholders.

Mattias Franzén

Number of shares: 42,000 OEM Class B

Number of shares: 5,366 OEM Class B

Richard Pantzar

Number of shares: 0

Born in 1941.

Board member 1974 - 2014 and since 2019.

Born in: 1967.

Engineer.

Board member since 2017.

Not employed by OEM.

M.Sc. Engineering.

Other appointments: Chairman of the Board of Eges El & Automation AB and Personality Gym AB.

Not employed by OEM.

Other appointments: Managing Director of Bufab AB.

Independence: Independent of the company and the company's management, but not independent of the company's major shareholders.

Independence: Independent of the company and the company's management, and also independent of the company's major shareholders.

Jörgen Rosengren

Number of shares: 740 OEM Class B

Born in 1957.

Board member since 2015. MBA.

Not employed by OEM.

Other appointments: Chairman of the Board of Scanmast AB.

Board member of Skanska AB, Vattenfall AB, Delete OY and FIBO AS. Member of IVA, The Royal Swedish Academy of Engineering Sciences. Independence: Independent of the company and the company's management, and also independent of the company's major shareholders.

Åsa Söderström Winberg

O EOME M 2 02 2 02 0 0

Number of shares: 1,000 OEM Class B

Agne Svenberg

Number of shares: 1,200,000 OEM Class A, 23,400 OEM Class B.

Senior executives

Born in 1964. Engineer.

Managing Director of OEM International AB since 1 March 2000. Managing Director and CEO since 1 January 2002.

Born in 1976.

Group employee since 1985.

Finance Director.

Other appointments: Chairman of the Board of BE-Group AB.

Jörgen Zahlin

Number of shares: 39,832 OEM Class B

Group employee since 2006.

Johan Broman

Number of shares: 1,350 OEM Class B

Born in 1977.

Business Director.

Born in 1969.

Group employee since 1997.

Head of Marketing/ Business Development.

Group management member since 1 January 2021.

Group employee since 2017.

Björn Pettersson

Number of shares: 0

Andreas Andersson

Born in 1968.

Born in 1962.

Group employee since 1990.

Group employee since 1983.

Managing Director of OEM Automatic AB.

Jens Kjellsson

Number of shares: 1,151 OEM Class B

Number of shares: 11,000 OEM Class B

Managing Director of OEM Electronics AB.

Urban Malm

Number of shares: 2 , 000 OEM Class B

Born in 1977.

Managing Director of Elektro Elco AB.

Born in 1969.

Group employee since 2018.

CEO of OEM Motor AB.

Group management member since 1 January 2021.

Carl Reuthammar

Number of shares: 0

Group employee since 1998.

Fredrik Falkenström

Number of shares: 0

Patrick Nyström Born in 1958. Born in 1976.

CEO of OEM Finland OY.

Group employee since 2002.

Group management member since 1 January 2021.

Marko Salovaara

Number of shares: 0

Head of Region Finland, the Baltic states and China. Group employee since 1982, ended employment on 28 February 2021.

Number of shares: 22,500 OEM Class B

O E M 2 02 0

Consolidated Statement of Income SEK million

Note

2020

2019

Net sales

3,282.8

3,298.7

Other operating income

15.4

0.5

Operating income

Operating costs Commodities

-2,139.3

-2,133.6

Staff costs

-551.7

-568.2

Other expenses

-124.7

-153.4

Depreciation/amortisation of property, plant and equipment and intangible fixed assets

-74.0

-72.6

408.5

371.3

Operating profit Finance income and expense Finance income

0.4

0.6

Finance expense

-8.0

-4.8

400.9

367.2

-83.6

-78.2

317.3

289.0

317.3

289.0

–

Profit before tax Income tax

PROFIT FOR THE YEAR

Profit for the year attributable to: Parent Company shareholders Non-controlling interests Earnings per share, SEK * Average number of outstanding shares *

* No effects of dilution present.

O E M 2 02 0

13.73

12.50

23,107,462

Consolidated statement of comprehensive income SEK million

Note

2020

2019

317.3

289.0

-17.5

8.7

-0.4

0.1

0.0

Other comprehensive income for the year

-17.9

8.8

COMPREHENSIVE INCOME FOR THE YEAR

299.4

297.8

299.4

297.8

–

Profit for the year Other comprehensive income Items that have been or can be recycled to the income statement for the year Exchange differences on translation of foreign operations for the year Items that have not been or cannot be recycled to the income statement for the year Revaluation of defined-benefit pension schemes Tax effect from revaluation of defined-benefit pension schemes

Comprehensive income for the year attributable to: Parent Company shareholders Non-controlling interests

O E M 2 02 0

Consolidated statement of financial position SEK million

Note

31 Dec 2020

31 Dec 2019

Goodwill

145.8

141.0

Other intangible fixed assets

41.0

54.1

186.8

195.1

288.0

ASSETS Fixed assets Intangible fixed assets

Property, plant and equipment Buildings and land

272.7

Fixtures, fittings, tools and equipment

51.5

54.3

324.2

342.2

8.3

3.8

Financial assets and deferred tax assets Deferred tax assets

Non-current receivables

0.3

Total fixed assets

0.3

8.7

4.1

519.6

541.4

578.9

629.2

578.9

629.2

Current assets Inventories Commodities

Current receivables Tax receivables

1.0

1.4

456.2

452.1

44.2

41.3

15.7

17.4

517.1

512.2

376.1

41.9

Total current assets

1,472.1

1,183.3

TOTAL ASSETS

1,991.7

1,724.7

Trade receivables Other receivables Prepaid expenses and accrued income

Cash and cash equivalents

O E M 2 02 0

Consolidated statement of financial position SEK million

31 Dec 2020

31 Dec 2019

Share capital

38.6

Other contributed capital

39.4

Translation reserves

22.4

39.9

1,265.5

948.6

1,365.9

1,066.5

EQUITY AND LIABILITIES Equity

Note 17

Retained earnings, including profit for the year Total equity attributable to Parent Company shareholders Liabilities Non-current liabilities Interest-bearing liabilities Non-current interest-bearing liabilities

42.5

50.0

Provisions for pensions

2.0

1.6

Non interest-bearing liabilities Non-current liabilities

3.7

3.5

Deferred tax liabilities

94.4

86.8

2.0

144.6

143.9

Other provisions Total non-current liabilities Current liabilities Interest-bearing liabilities Overdrafts

29.7

92.7

Other current liabilities

31.2

Trade payables

164.0

172.7

Tax liabilities

21.6

17.3

Non interest-bearing liabilities

Other liabilities Accrued expenses and prepaid income Total current liabilities TOTAL EQUITY AND LIABILITIES

97.2

74.6

137.6

125.9

481.3

514.3

1,991.7

1,724.7

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Consolidated statement of changes in equity SEK million

Opening equity 1 Jan 2019

Share capital

Other contributed capital

Translation reserve

Retained earnings, including profit for the year

Total shareholders' equity

38.6

39.4

31.2

816.8

926.0

289.0

0.1

8.8

-1.4

1,104.5

1,222.4

-156.0

Profit for the year Other comprehensive income for the year

8.7

Adjustment on transition to IFRS 16 (net)** Comprehensive income for the year

38.6

39.4

39.9

Transactions with owners: Dividends paid CLOSING BALANCE 31 DEC 2019 * Opening equity 1 Jan 2020

38.6

39.4

39.9

948.6

1,066.5

38.6

39.4

39.9

948.6

1,066.5

317.3

-17.5

-0.3

-17.9

22.4

1,265.5

1,365.9

–

1,265.5

1,365.9

Profit for the year Other comprehensive income for the year Comprehensive income for the year

38.6

39.4

Transactions with owners: Dividends paid CLOSING BALANCE 31 DEC 2020 *

38.6

* Equity attributable to Parent Company shareholders. ** See Note 13 in the 2019 Annual Report for additional information

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39.4

22.4

Consolidated statement of cash flows SEK million

Note

2020

2019

400.9

367.2

76.7

73.0

477.6

440.2

-74.2

-76.7

403.4

363.5

Change in inventories

45.4

-54.1

Change in trade receivables

-8.8

-8.6

Change in other operating receivables

-1.6

-0.4

Change in trade payables

-9.0

-13.2

Change in other operating liabilities

39.2

4.0

468.8

291.1

Operating activities Profit before tax Adjustments for non-cash items

Taxes paid Operating cash flows before movements in working capital

Operating cash flows Investing activities Acquisition of subsidiaries, net effect on cash and cash equivalents

-25.7

-10.9

Acquisition of intangible fixed assets

-0.3

-12.7

Acquisition of property, plant and equipment

-8.8

-66.8

0.4

1.3

-34.3

-89.0

Sales of property, plant and equipment Investing cash flows Financing activities Loans raised

2.9

1.6

Loan amortisation

-1.7

-1.6

Repayment of lease liabilities

-35.3

-34.8

Change of overdraft

-63.0

Dividends paid

-8.5 -156.0

Financing cash flows

-97.1

-199.3

CASH FLOW FOR THE YEAR

337.4

2.8

Cash equivalents at beginning of year

41.9

38.5

Exchange rate difference cash equivalents

-3.2

0.6

376.1

41.9

Cash equivalents at end of year

O E M 2 02 0

Parent Company income statement SEK million

Note

2020

2019

57.4

56.6

0.5

–

Other external costs

-26.9

-23.2

Staff costs

-26.8

-28.3

Depreciation/amortisation of property, plant and equipment and intangible fixed assets

-6.8

-8.1

-2.6

-2.9 47.4

Operating income Net sales Other operating income Operating costs

Operating profit Income from interests in Group companies

57.9

Other interest income and similar income

1.3

1.1

-1.1

-1.9

55.4

43.7

Other interest expense and similar charges Profit/loss after financial items Year-end appropriations Difference between tax depreciation and depreciation according to plan: Expenses brought forward for software

2.5

3.0

Fixtures, fittings, tools and equipment

-0.3

Tax allocation fund, provision

-75.0

-28.0

Tax allocation fund, reversal

40.0

32.0

259.5

285.7

-2.0

-5.0

280.1

331.1

-48.2

-61.2

231.9

269.9

Group contributions received Group contributions paid Profit before tax Tax on profit/loss for the year PROFIT FOR THE YEAR* *Comprehensive income for the year is equal to profit for the year.

O E M 2 02 0

Parent Company balance sheet SEK million

ASSETS

Note

31 Dec 2020

31 Dec 2019

5.4

9.8

5.4

9.8

12.6

Fixed assets Intangible fixed assets Expenses brought forward for software

Property, plant and equipment Buildings and land

12.1

Fixtures, fittings, tools and equipment

4.9

6.2

17.0

18.8

374.4

424.3

Financial assets Interests in Group companies

Non-current receivables from Group companies

Total fixed assets

–

374.4

424.3

396.8

452.9

507.7

550.3

22.7

6.7

Current assets Current receivables Receivables from Group companies Other receivables Prepaid expenses and accrued income

Cash on hand and demand deposits Total current assets TOTAL ASSETS

3.9

5.6

534.2

562.6

260.4

–

794.6

562.6

1,191.4

1,015.4

O E M 2 02 0

Parent Company balance sheet SEK million

SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES

Note

31 Dec 2020

31 Dec 2019

Share capital

38.6

Reserve fund

32.3

Equity Non-distributable equity

Fund for development fees

5.4

6.1

76.3

77.0

Profit brought forward

407.7

137.0

Profit for the year

231.9

269.9

639.6

406.9

715.8

483.9

Distributable equity

Total shareholders' equity Untaxed reserves Accelerated amortisation

2.7

4.9

Accruals funds

330.3

295.3

333.0

300.2

1.9

2.0

1.9

2.0

1.6

3.5

1.6

3.5

–

61.3

Total untaxed reserves Provisions Deferred tax liabilities

Total provisions Non-current liabilities Non interest-bearing liabilities Other liabilities

Total non-current liabilities Current liabilities Interest-bearing liabilities Bank loans and overdrafts

Non interest-bearing liabilities Trade payables

2.5

4.5

Tax liabilities

22.0

26.1

Liabilities to Group companies

98.1

108.5

4.1

13.3

12.3

12.2

139.1

225.9

1,191.4

1,015.4

Other current liabilities Accrued expenses and prepaid income Total current liabilities TOTAL EQUITY, PROVISIONS AND LIABILITIES

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Parent Company statement of changes in equity SEK million

Distributable equity

Non-distributable equity

Total shareholders' equity

Share capital

Reserve fund

Fund for development costs

Profit/loss brought forward including profit/loss for the year

38.6

32.3

3.8

295.2

370.0

Provisions to development fund for the year

3.5

-3.5

–

Winding-up of development fund for the year

-1.2

1.2

–

269.9

-156.0

Opening equity 1 Jan 2019

Comprehensive income for the year * Dividends paid CLOSING EQUITY 31 DEC 2019

38.6

32.3

6.1

406.9

483.9

38.6

32.3

6.1

406.9

483.9

Provisions to development fund for the year

1.2

-1.2

–

Winding-up of development fund for the year

-2.0

2.0

–

231.9

–

639.6

715.8

Opening equity 1 Jan 2020

Comprehensive income for the year * Dividends paid CLOSING EQUITY 31 DEC 2020

38.6

32.3

5.4

Proposed dividend, SEK 7.50 per share

173.8

Proposed redemption, SEK 12.50 per share

289.6

* Comprehensive income for the year is equal to profit for the year.

NUMBER OF SHARES Opening number 1 Jan 2019 CLOSING NUMBER 31 DEC 2019 Opening number 1 Jan 2020 CLOSING NUMBER 31 DEC 2020

Total

Outstanding

23, 169, 309

23, 107, 462

23, 169, 309

23, 107, 462

23,169,309

23,107,462

23,169,309

23,107,462

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Parent Company cash flow statement SEK million

Note

2020

2019

55.4

43.7

Operating activities Profit/loss after financial items Adjustments for non-cash items

Taxes paid Operating cash flows before movements in working capital

7.5

8.6

62.9

52.3

-52.4

-43.8

10.6

8.5

2.2

-98.1

Cash flow from changes in working capital Change in other operating receivables Change in trade payables

-2.0

1.3

Change in other operating liabilities

-7.5

1.4

3.2

-86.9

-8.9

-10.9

Operating cash flows Investing activities Acquisition of shares in subsidiaries

Liquidation of subsidiaries

47.3

–

Acquisition of intangible fixed assets

-0.3

-4.4

Acquisition of property, plant and equipment

-0.3

-4.8

37.7

-20.2

285.7

239.9

Investing cash flows Financing activities Group contributions, received Group contributions, paid

-5.0

-61.3

28.2

–

-156.0

Financing cash flows

219.5

107.1

CASH FLOW FOR THE YEAR

260.4

–

260.4

–

Change of overdraft Dividends paid

Cash equivalents at beginning of year Cash equivalents at end of year

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Accounting Policies and Notes to the Financial Statements Amounts in SEK millions unless otherwise stated

Note 1 Accounting policies Compliance with standards and legislation

Reporting of operating segments

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and statements concerning interpretation published by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the European Union. Furthermore, the Group has applied the Swedish Financial Accounting Standards Council's recommendation RFR 1 (Supplementary Accounting Regulations for Groups). The accounting policies adopted for the Parent Company are the same as those used for the Group, except in the cases specified below in the section "Accounting Policies of the Parent Company".

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses and whose operating results are reviewed regularly by the Group's executive team. Note 2 provides a more detailed description of the grouping and presentation of operating segments.

Requirements for preparing Parent Company and Group financial statements

The Parent Company's functional currency is the Swedish krona (SEK), which is also the official reporting currency for the Parent Company and the Group. This means that the financial statements are presented in Swedish krona. All amounts are rounded off to the nearest million with one decimal, unless otherwise stated. Assets and liabilities are stated at historical cost, except derivative instruments and contingent considerations which are measured at fair value. Fixed assets and non-current liabilities consist of amounts that can be expected to be recovered or paid more than twelve months after the balance sheet date. Current assets and current liabilities consist of amounts expected to be recovered or paid within twelve months from the balance sheet date. The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and assumptions are based on historical experience and other factors that are believed to be reasonable and relevant under the circumstances. Estimates and assumptions are reviewed on a regular basis and are compared to actual results. Significant estimates and judgements are presented in Note 28. The consolidated accounting policies outlined below have been applied consistently throughout the periods reported in the Group's financial statements, unless otherwise stipulated below. Amended accounting policies arising from new or amended International Financial Reporting Standards, IFRS, effective in 2020 The following amendment came into effect on 1 January 2020. The definition of a business has been amended. The amended definition requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs. The definition of the term “outputs” has been narrowed to focus on goods and services provided to customers, generating investment income and other revenues. It now excludes the previous definition “returns in the form of lower costs and other economic benefits”. The amendment has not had any impact on the consolidated financial statements, but may have an impact on future acquisitions to which these amendments will apply. Other amendments to standards or new interpretations have not had any significant impact on the Group, nor are they expected to in coming periods. New IFRS standards and interpretations that have not yet been adopted A number of new standards and interpretations become effective for the financial year commencing 1 January 2021 and thereafter and have not been applied in the preparation of these financial statements. There are no published standards not yet in force that are expected to have any significant impact on the Group.

Principles of consolidation for subsidiaries Subsidiaries are entities in which OEM International AB has the power to exercise control, either directly or indirectly. Control exists when the Parent Company has power over the investee, either directly or indirectly, when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Business combinations are recognised in accordance with the acquisition method. The method means that the acquisition of a subsidiary is regarded as a transaction through which the Group indirectly acquires the subsidiary's assets and assumes its liabilities. Goodwill in business combinations is calculated as the sum total of the consideration transferred minus the fair value of the subsidiary's identifiable assets and assumed liabilities. A negative difference is recognised directly in the profit or loss for the year. Transaction costs in connection with business combinations are expensed at the time of acquisition. Contingent consideration in acquisitions is measured at fair value both at the acquisition date and continuously afterwards; any and all changes in value are recognised in profit or loss. The financial statements of the subsidiaries are included in the consolidated financial statements from the effective date of acquisition until the day that control ceases. Transactions to be eliminated on consolidation All inter-company receivables and liabilities, income or expenses, and unrealised gains or losses arising from inter-company transactions between Group companies are eliminated in their entirety when preparing the consolidated financial statements. Foreign currency Transactions in foreign currencies Transactions in foreign currencies are translated to the functional currency at the exchange rate prevailing on the date of the transaction. Functional currency is the currency that applies in the primary economic environments in which the Group companies operate. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the exchange rate prevailing on balance sheet date. Exchange rate differences resulting from translations are reported in the profit or loss for the year. Non-monetary assets and liabilities reported at their historical acquisition costs are translated at the exchange rate prevailing on the date of the transaction. Financial statements of foreign operations Assets and liabilities in foreign operations, including goodwill and other fair value adjustments, are translated from the functional currency of the foreign operation to the Group's reporting currency, Swedish kronor (SEK), at the closing rate on the reporting date. Income and expense in foreign entities are translated to Swedish kronor (SEK) at an average rate that represents an approximation of the rates that applied when each transaction took place. Exchange differences arising when translating currency of foreign operations are recognised in other comprehensive income and are accumulated in a separate component of shareholders' equity that is referred to as a translation reserve. When a foreign entity is divested, the accumulated translation differences attributable to the entity are realised and reclassified from the translation reserve of the shareholders' equity to the profit or loss for the year.

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Cont. Note 1 Income Performance obligations and revenue recognition The Group's revenues come from the sale of goods for resale, which is recognised when control of the goods is passed to the buyer. The revenue is recognised based on the amount specified in the contract with the customer and the sold quantity. The outcome of agreed volume discounts/ rebates and market contributions is estimated and reduces the revenue at the time of sale and is included in accrued expenses. The performance obligations of the Group are considered to be satisfied when control of the good is transferred to the customer. When contracts allow customers to return goods, revenue is recognised only when it is highly probable that there will not be a significant reversal in the cumulative amount of revenue. Assessments of expected returns are based on past data for specific customers and goods. Expected returns are recognised as a reduction in revenue and as a refund liability, and the cost of goods associated with the returns is reduced and an asset equivalent to the right to recover the goods returned is recognised. The characteristics of and the point in time for satisfaction of the performance obligations including significant payment terms

Income tax consists of current tax and deferred tax. Income tax is reported in the income statement for the year unless the underlying transaction is charged to other comprehensive income or directly to equity, in which case any related tax effect is charged to other comprehensive income or to equity. Current tax is the tax that is to be paid or received for the current year. This includes adjustments of current tax attributable to prior periods. Current and deferred tax are calculated with application of the tax rates and regulations in effect or in practice at the balance sheet date. Deferred tax is calculated using the balance sheet method on the basis of temporary differences between the carrying amounts and tax values of assets and liabilities. Temporary differences are not considered in consolidated goodwill. Measurement of deferred tax is based on how the carrying amount of assets or liabilities is expected to be recovered or settled. Deferred tax assets, relating to deductible temporary differences and loss carry-forwards, are only recognised to the extent that it is probable that these can be utilised. The value of deferred tax assets is reduced when it is no longer deemed likely that they can be utilised.

Control of the goods is transferred to the customer when the goods are sent from the Group's warehouses or when the goods have been delivered, depending on the terms of the contract. Invoices are generated at this point in time. The due date is normally 30 to 60 days from the invoice date.

Financial instruments

Revenue recognition

Recognition in and derecognition from the statement of financial position.

Revenue is recognised when the goods have been delivered and the control of the goods has been transferred.

The minimum lease fees are allocated as interest expense and amortisation for the outstanding liability. The interest expense is spread over the term of the lease, so that each accounting period is charged with an amount corresponding to a fixed rate of interest for the liability recognised in the respective period. Variable payments are expensed on the income statement for the year in the periods in which they occur.

Recognition of a financial asset or financial liability in the statement of financial position is at the point when the entity becomes a party to the contractual provisions of the instrument. A receivable is recognised when the entity has performed and there is a contractual liability for the counterparty to pay, even if an invoice has not been sent. Trade receivables are recognised in the statement of financial position upon issuance of invoice. Liabilities are included when the counterparty has performed and there is a contractual liability to pay, even if the invoice has not been received. Trade payables are recognised on receipt of invoice. A financial asset is derecognised and removed from the statement of financial position when the contractual rights are realised, expire or when control of the contractual rights is lost. The same applies to part of a financial asset. A financial liability is removed from the statement of financial position when the obligation is discharged or otherwise extinguished. The same applies to part of a financial liability. A financial asset and a financial liability are offset and reported in the statement of financial position as a net amount only when there is a legal right to set off the amount and an intention to adjust the items with a net amount or, at the same time, realise the asset and settle the liability.

Finance income and expense

Initial recognition

Finance income and expense include interest income from bank assets, receivables and interest-bearing securities, dividend income, interest expenses related to loans, exchange rate differences attributable to financial investments and financing activities and derivative instruments used in the financial operating activities. Interest income from receivables and interest expense related to liabilities are calculated using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. Interest income and interest expense respectively include periodic amounts of transaction costs and discounts where applicable, premiums and other differences between the originally recognised value of the receivable and of the liability respectively and the amount that is settled at maturity and the estimated future receipts and payments through the term of the agreement. Dividend income is recognised when the right to retain payment has been established. Exchange gains/losses are recognised net.

Financial instruments are recognised initially at fair value plus/less transaction costs, with the exception of instruments that are continuously recognised at fair value through profit or loss. These transaction costs are instead recognised as an expense as they occur. Trade receivables (without a significant financing component) are measured initially at their transaction price as stated in accordance with IFRS 15.

Government support grants Government grants are recognised at fair value when there is reasonable assurance that the grants will be received and the Group will comply with the conditions attached to them. Government grants received for short-term work, sick pay and temporary layoffs are recognised as Other Operating Income in the income statement on a systematic basis over the periods in which the expenses are incurred. Operating costs and finance income and expense Finance leases

Taxes

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Financial instruments reported in the statement of financial position as assets consist primarily of cash and cash equivalents, loan receivables, trade receivables and derivatives. Trade payables, loan liabilities, contingent considerations and derivatives are reported as liabilities.

Classification and subsequent measurement of financial assets Financial assets are classified initially either as measured at amortised cost, fair value through other comprehensive income (liability instrument investment), fair value through other comprehensive income (equity investment), or fair value through profit or loss. The Group's various holdings of financial assets have been classified as described below: Derivative assets The Group uses foreign exchange forward contracts in order to economically hedge certain exposures to foreign exchange risk associated with purchases in foreign currencies. Changes in the fair value of the foreign exchange forward contracts have been recognised under commodities

Cont. Note 1 in the consolidated statement of income. OEM does not apply hedge accounting. Other financial assets All other financial assets are measured at amortised cost. This is because the objective of the business model is to hold these assets to collect their contractual cash flows, and that the cash flows from the assets are solely payments of principal and interest. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, deposits available on demand held with banks and similar institutions, and short-term deposits with a maturity on acquisition of three months or less, which are exposed to only an insignificant risk for fluctuations in value. Classification and subsequent measurement of financial liabilities Financial liabilities are classified either as measured at amortised cost or measured at fair value through profit or loss. Derivative liabilities Since OEM does not apply hedge accounting, all derivative liabilities are recognised at fair value through profit or loss. Further details can be found above under "Derivative assets". Contingent considerations Contingent considerations assumed in a business combination are recognised at fair value through profit or loss. Changes in fair value are recognised in "Other Operating Costs" or "Other Operating Income". Other financial liabilities All other financial liabilities are measured at amortised cost using the effective interest rate method. Property, plant and equipment Owned assets Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes the purchase price, including expenses directly attributable to their acquisition and costs incurred to prepare the assets for their intended purpose. Cost includes directly attributable expenses, such as the cost of delivery and handling, installation, title deeds, consultancy services and legal services. Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets. Accounting policies for impairment are presented below. The reported value of tangible fixed assets is removed from the statement of financial position on the disposal or retirement of the asset, or when no future economic benefits are expected from its use or disposal/ retirement. Gains or losses arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset, less direct selling costs. The gain or loss is recognised in other operating income/cost. Right-of-use assets The Group mainly has leases for property, machinery, equipment and vehicles. As a lessee, the Group recognises the leases as a right-of-use asset and associated liability at the date on which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost (interest). The finance cost is to be spread over the lease term so as to produce a constant rate of interest on the remaining balance for the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight line basis. The leases are normally for a fixed period with an option to renew. Assets and liabilities arising from leases are initially measured on a present value basis. The lease liabilities include the present value of the

following lease payments: • fixed payments • variable lease payments that are based on an index • the exercise price of a purchase option if the Group is reasonably certain to exercise that option. The lease payments are discounted using the interest rate implicit in the lease. Otherwise, if this rate cannot be determined, using the incremental borrowing rate. The right-of-use assets are measured at cost and include: • the initial measurement of the lease liability, and • payments made at or before the date on which the leased asset becomes available to the lessee. Leases of low-value underlying assets or leases with a term of 12 months or less are recognised as an expense on a straight-line basis over the lease term. Leases of low-value underlying assets generally comprise office equipment. Extension and termination options Some leases contain extension or early termination options. The terms are used to create maximum flexibility in the management of leases. Options to extend or terminate a lease are included in the asset and the liability as it is reasonably certain that they will be exercised. Subsequent expenditure Subsequent expenditure is added to the acquisition cost only if it is likely that the future economic benefits associated with the asset will flow to the enterprise and the acquisition cost can be calculated in a reliable manner. All other subsequent expenditure is reported as an expense in the period it is incurred. A subsequent expenditure is added to the acquisition cost if the expense refers to the exchange of identified components or parts thereof. Even in those cases when a new component has been constructed, the expense is added to the acquisition cost. Any undepreciated values reported for replaced components, or parts of components, are discarded and charged to expenses when the component is replaced. Repairs are recognised as an expense during the period in which they are incurred. Methods of depreciation for owned property, plant and equipment Straight-line depreciation is applied over the estimated utilisation period of the assets. Land is not depreciated. The Group applies component depreciation, meaning that the estimated useful life of components forms the basis for depreciation. Estimates of useful life: • buildings, business property ........................................... see below • land improvements ............................................................. 20 years • plant and machinery ........................................................ 5-10 years • fixtures, fittings, tools and equipment.............................. 3-10 years Business property comprises a number of components with different useful lives. The main group is buildings and land. Land is not depreciated as its useful life is considered to be indefinite. The buildings consist of a number of components with different useful lives. The following main groups of components have been identified and form the basis for depreciation of buildings: Shell ....................................................................................... 100 years Frame extensions, interior walls, etc...................................... 30 years Installations and inner surfaces; heating, electricity, plumbing, ventilation, etc. .................................................. 20-32 years External surfaces, walls, roof, etc. ...................................... 20-50 years The depreciation methods applied and the residual values of the assets and their useful lives are reviewed at the close of every year.

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Cont. Note 1 Intangible fixed assets Goodwill Goodwill is carried at cost less any accumulated impairment. Goodwill is allocated to cash-generating units and is tested for impairment annually. Other intangible fixed assets Acquired supplier relationships with an indeterminable useful life are carried at cost less any accumulated impairment. Supplier relationships with an indeterminable useful life are deemed to exist in terms of certain acquisitions of agents or comparable relationships with individual suppliers who have historically exhibited a very long-term agent relationship. Circumstances are reviewed annually to determine if they still indicate that the useful life is indeterminable. Impairment tests are performed annually and when there is any indication of impairment. Other acquired supplier relationships are carried at cost less accumulated amortisation and impairment. Other intangible assets include software, trademarks and customer relationships. These have a determinable useful life and are recognised at cost less accumulated amortisation and impairment. Expenditures for internally generated goodwill and internally generated brand names are not capitalised as assets but are expensed in the income statement as incurred. Subsequent expenditures

Subsequent expenditure on capitalised intangible assets is reported as an asset in the statement of financial position only when it increases the future economic benefits of the specific asset to which it relates. All other expenditure is expensed when incurred. Methods of amortisation

Amortisation is recognised in the income statement on a straight-line basis over the estimated life of the intangible asset, provided it has a definite useful life. Goodwill has an indefinite useful life and is tested for impairment each year or whenever there is an indication that the tangible asset may be impaired. The useful life of the assets are reviewed annually at least, refer also to Note 12. Estimates of useful life: • IT software............................................................................ 5 years • brand names/trademarks.................................................. 5-10 years • customer relationships.......................................................... 5 years • supplier relations ....................................... 5 years (unless indefinite) Capitalisation of borrowing costs Borrowing costs that are directly attributable to the construction of qualifying assets are capitalised as part of the cost of that asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Firstly, borrowing costs arising on loans, which are specific to the qualifying asset are capitalised. Secondly, borrowing costs arising on general loans, which are not specific to any other qualifying asset are capitalised. For the Group, the capitalisation of borrowing costs is mainly relevant in the construction of storage and production facilities using its own direct labour. Inventories Inventories are stated at the lower of cost and net realisable value. The cost of inventories is calculated by applying the first-in, first-out method (FIFO) and includes expenditure arising on acquisition of the inventory assets and transportation thereof to their current location and state. Net realisable value is based on the estimated selling price in the operating activities less further costs expected to be incurred to completion and for realising a sale. Impairments The section below explains the impairment test for property, plant and

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equipment and intangible assets, investments in subsidiaries and for financial assets. Assets for sale and disposal groups, inventories and deferred tax assets are exempt. The recognised value of the exempt assets is assessed in accordance with the respective accounting standards. Impairment tests for property, plant and equipment and intangible fixed assets and interests in subsidiary undertakings If there is any indication of impairment, then the asset's recoverable amount is calculated, see below). The recoverable amount is also calculated annually for goodwill and other intangible assets with indefinite useful lives. If essentially independent cash flow cannot be isolated for individual assets, then the assets are grouped at the lowest levels where essentially independent cash flows can be identified – a so-called cash-generating unit. An impairment loss is recognised when the carrying amount of an asset or cash-generating unit, or pool of units, exceeds its recoverable amount. An impairment loss is recognised as an expense in the income statement for the year. Impairment losses attributable to a cash-generating unit, or pool of units, are mainly allocated to goodwill. They are thereafter divided proportionately among other assets in the unit (pool of units). The recoverable amount is the highest of the fair value minus selling costs and value in use. Value in use is measured by discounting future cash flows using a discounting factor that takes into account the risk-free rate of interest and the risk associated with the specific asset. Impairment losses on assets are reversed if there is an indication that impairment has ceased and there is a change in the assumptions that formed the basis of calculating the recoverable amount. Impairment losses on goodwill are never reversed. A reversal only occurs to the extent that the asset's carrying amount after reversal does not exceed the carrying amount that would have been recognised (less depreciation or amortisation, where applicable), had no impairment loss been recognised. Impairment of financial assets OEM recognises a loss allowance for expected credit losses on financial assets measured at amortised cost. The loss allowance for trade receivables is measured at an amount equal to the expected losses for the remaining time to maturity. The loss allowance for other receivables is measured at an amount equal to 12 months' expected credit losses, provided that the credit risk of the receivable has not increased significantly since initial recognition. If the credit risk of the receivable has increased significantly since initial recognition, the loss allowance is instead measured at an amount equal to the expected credit losses during the remaining time to maturity. The loss allowance is calculated as the present value of all cash shortfalls (i.e. the difference between the cash flows as stated in the contract and the Group's expected cash flows). Receivables with a short term to maturity are not discounted. Assets are reported in the balance sheet net of any impairment losses. Impairment losses are recognised in the income statement. The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. Capital payments to shareholders Repurchase of own shares Purchase of such instruments is recognised as a deductible item from equity. Payment from sales of equity instruments is recognised as an increase in equity. Any transaction costs are recognised directly in equity. Dividends paid Dividends are recognised as a liability after the Annual General Meeting has approved the dividend Earnings per share Earnings per share are calculated by dividing the Group's profit for the

Cont. Note 1 year attributable to the Parent Company's shareholders by the weighted average number of shares outstanding during the year. Employee benefits Defined-contribution pension schemes Defined-contribution pension schemes are classified as those schemes for which the company's obligation extends only to the contributions the company has committed to pay. In such cases, the size of the employee's pension is determined by the contributions the company pays to the plan or to an insurance company and the return on capital yielded by the contributions. Consequently, it is the employee that carries the actuarial risk (that compensation is lower than expected) and the investment risk (that the invested assets will be insufficient to cover the expected compensation). The entity's obligations concerning contributions to defined-contribution schemes are recognised as an expense in profit or loss for the year at the rate they are earned through services performed by the employees for the entity. Defined-benefit pension schemes The Group's obligation regarding defined-benefit pension schemes is calculated separately for each scheme by estimating the future compensation that the employees have earned through their employment; this compensation is discounted to present value. The discount rate used is the interest rate on high-quality corporate bonds on the reporting date, extrapolated to match the terms of maturity for the Group's retirement benefit obligations. If there is no active market for such corporate bonds, the market interest rate on government bonds is used instead. The retirement benefit obligation is recognised net, less the fair value of the plan assets. Pension rights earned are recognised in the operating profit, with the exception of the impacts of revaluation and interest rate as per below. The interest expense/income net on the defined-benefit obligation/asset is recognised in the income statement under net financial items. The net interest income is based on the interest rate in effect at the time of discounting the net obligation, i.e. interest on the obligation, plan assets and interest on the effect of any asset ceiling. Other components are recognised in operating profit. Effects of revaluation comprise actuarial gains and losses and the difference between actual return on plan assets and the interest rate included in the net interest income. The effects of revaluation are recognised in other comprehensive income. Termination benefits An entity shall recognise an expense for termination benefits at the earlier of either when the entity can no longer withdraw the offer of those benefits to the employees, or when the entity recognises costs for a restructuring. Where an offer of benefits is made to encourage voluntary redundancy, an entity shall recognise an expense at the earlier of either when the employee accepts the offer, or when the entity can no longer withdraw the offer of those benefits. The calculation of the expense is based on the probability of the offer being accepted, the number of employees expected to accept the offer and the length of time for which payment is expected to be made. Benefits that are settled after twelve months are discounted to their present values. Short-term benefits to employees Short-term benefits to employees are calculated without discounting and recognised as costs when the related services are received. The Group recognises a provision for the expected cost of bonus payments when it has a legal or constructive obligation to make such payments as a result of services received from employees. Government grants Where entitlement to receive a grant is not based on future performance, government support grants are recognised as revenue as the conditions for receiving the grant are met. Government grants are measured at the fair value of the amount that has been or will be received.

Provisions Provisions are different from other liabilities because the time of payment and the amount of the payment are uncertain. A provision is reported in the statement of financial position when the Group has a legal or informal obligation owing to a past event and it is likely that an outflow of economic resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are measured at the best estimate of the amount required to settle the obligation at the reporting date. If the effect is material, provisions are determined by discounting the expected future cash flows. Contingent liabilities A contingent liability is reported when there is a possible obligation that arises from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, or when there is an obligation that is not recognised as a liability or provision because it is not possible that an outflow of resources will be required or cannot be measured reliably. Parent Company accounting policies The Parent Company has prepared its Annual Report according to the Annual Accounts Act (1995:1554) and the Swedish Financial Accounting Council's recommendation RFR 2, Accounting for Legal Entities. In addition, the Swedish Financial Accounting Council's pronouncements for listed companies are applied. RR 2 means that the Parent Company in the annual accounts for the legal entity must apply all IFRS and interpretations adopted by the EU as far as this is possible within the framework of the Swedish Annual Accounts Act, the Swedish Pension Obligations Vesting Act and taking into account the relationship between accounting and taxation. The recommendation specifies exemptions and additions relative to IFRS. Amended accounting policies The Parent Company's accounting policies for 2020 are the same as for 2019. Differences between the Group's and Parent Company's accounting policies The differences between the accounting policies of the Group and those of the Parent Company are presented above and below. The accounting policies for the Parent Company as described below have been applied consistently to all periods presented in the Parent Company's financial statements. Classification and presentation Where the Group uses the terms statement of financial position and statement of cash flows, the Parent uses balance sheet and cash flow statement. The income statement and balance sheet for the Parent Company are prepared in accordance with the schedule of the Swedish Annual Accounts Act, whereas the statement of comprehensive income, statement of changes in equity and cash flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The Parent's income statement and balance sheet differ to the Group's mainly with regard to reporting of finance income and expense, non-current assets, equity, untaxed reserves and the occurrence of provisions as a separate heading in the balance sheet. Sales of services and similar assignments Services are sold only on an ongoing basis to subsidiaries. Revenue arising from the rendering of services is recognised in the income statement for the year in which the service is rendered by reference to the stage of completion at the end of the reporting period. The stage of completion is determined on the basis of contract costs incurred in relation to the total estimated contract costs.

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Cont. Note 1 Subsidiaries Interests in subsidiary undertakings are recognised in the Parent Company using the cost method. This means that transaction costs are included in the carrying amount for interests in subsidiary undertakings. In the consolidated financial statements, transaction costs are recognised directly in profit for the year as they are incurred. Contingent consideration is measured using probabilities of payment. Any changes to the provision are added to or deducted from the cost. Financial assets and liabilities The Parent Company has decided not to apply IFRS 9 for financial instruments. Non-current financial assets in the Parent Company are valued at cost less any impairment losses and financial current assets are valued at the lower of cost and net realisable value. The rules for impairment according to IFRS 9 are applied for financial assets measured at amortised cost. Financial liabilities are stated at amortised cost on the same basis as in the consolidated financial statements. Financial guarantee contracts The Parent Company's financial guarantee contracts consist of guarantee commitments to support subsidiaries. The Parent Company recognises financial guarantee contracts as provision in the balance sheet when the company has an obligation for which payment will probably be required to settle the obligation. Anticipated dividends Anticipated dividends from subsidiaries are reported when the Parent Company has sole right to determine the size of the dividend and the Parent Company has decided on the size of the dividend before the Parent Company has published its financial statements.

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Property, plant and equipment Owned assets Property, plant and equipment in the Parent Company is stated at cost less accumulated depreciation and any impairment, on the same basis as for the Group, but with additions for any increases arising on revaluation. Leased assets The Parent Company recognises all leases in accordance with the regulations for operating leases. Borrowing costs Borrowing costs in the Parent Company are charged to the income statement in the period in which they arise. No borrowing costs are capitalised on assets. Taxes The Parent Company reports untaxed reserves including deferred tax liability. In the consolidated financial statements, however, untaxed reserves are divided between deferred tax liability and shareholders' equity. Shareholders' contributions Shareholders' contributions are charged directly to equity for the receiver and are capitalised in shares and contributor participations, to the extent that impairment is not required. Group contributions The Parent Company recognises issued and received Group contributions as year-end appropriations.

Note 2 Operating segments equipment and intangible fixed assets include all investments except for investments in expendable equipment and minor value assets. Internal prices between the Group's different segments are set using the "arm'slength principle", i.e. between parties who are independent of each other, well informed and with an interest in completing the transactions. Basically all income comes from product sales, consisting of components mainly for industrial automation in the product areas of electrical components, flow technology, motors, transmissions and brakes, appliance components, installation components, and bearing solutions and seals. Customers include machinery and appliance manufacturing industries, wholesalers, electrical contractors, catalogue distributors, strategic end users and electronics manufacturers and strategic contract manufacturers in northern Europe. Internal sales have elements of services, both at the Parent Company and subsidiaries. All Parent Company sales relate to services sold to the subsidiaries. Other Group-wide operations include the Parent Company, owning the shares in underlying companies, and property companies owning business properties in the locations where the Group conducts its business activities. The Parent Company is to be an active owner and develop the subsidiaries. In addition to clear management-by-objectives, this means contributing expertise and resources in the fields of IT, financial control, HR administration, market communication, quality and environmental control, and warehouse management.

The Group's operations are divided into operating segments based on the business areas for which the company's chief operating decision maker, the Group's executive team, monitors the profit, returns and cash flows from the Group's various segments. The operating segments, in the form of market regions, have five managers in Sweden, four managers in Finland, the Baltic states and China, and three managers in the Denmark, Norway, UK and East Central Europe region. They are responsible for the day-to-day operations and provide Group management with regular reports on the performance of the segment and resource requirements. The Group's internal reporting system is designed to allow the Group management to monitor the performance and results of each of the market regions. The Group's segments have been identified using data from this internal reporting system, and the different areas have been assessed in order to merge segments that are similar. This means that segments have been aggregated if they share similar economic characteristics, such as long-term gross margins and have similar product areas, customer categories and methods of distribution. In the segments' profit, assets and liabilities are included directly attributable items and items that can be distributed to the segment in a reasonable and reliable manner. Non-distributed items consist of interest and dividend income, gains from the sale of financial investments, interest expenses, losses from the sale of financial investments, tax expenses and general administration expenses. Assets and liabilities not distributed to the segments are deferred tax assets, deferred tax liabilities, interest-bearing assets and liabilities. The segment's investments in property, plant and YEAR 2020

Sweden

Finland, Baltic states and China

Denmark, Norway, UK and East Central Europe

Group-wide operations

Eliminations

Total consolidated

3,282.8

Income 2,013.0

695.0

574.8

–

Internal sales

External sales

141.7

7.9

4.4

83.9

-237.9

–

Total income

2,154.7

702.9

579.2

83.9

-237.9

3,282.8

298.6

76.4

36.3

14.2

-16.9

408.5

Profit/loss Operating profit Financial items

-7.6

Tax expenses

-83.6

PROFIT/LOSS FOR THE YEAR

298.6

76.4

36.3

6.5

-16.9

317.3

EBITA

302.9

83.0

38.9

14.2

-16.9

422.0

15.0

11.9

6.8

Assets

865.8

284.7

239.5

534.8

-318.5

1,606.3

Liabilities

517.5

80.1

76.8

46.6

-318.5

402.5

–

14.8

0.3

15.1

19.7

6.8

12.7

0.8

40.1

4.8

6.6

2.5

4.8

18.7

23.1

7.3

16.4

8.6

55.3

EBITA margin, %

12.9

Other disclosures

Investments in intangible fixed assets Investments in property, plant and equipment Amortisation and impairment of intangible fixed assets Depreciation of property, plant and equipment

O E M 2 02 0

Cont. Note 2

YEAR 2019

Sweden

Finland, Baltic states and China

Denmark, Norway, UK and East Central Europe

Group-wide operations

Eliminations

Total consolidated

3,298.7

Income 1,995.4

698.9

604.4

–

Internal sales

External sales

146.5

7.9

3.4

79.8

-237.6

–

Total income

2,141.9

706.8

607.9

79.8

-237.6

3,298.7

280.2

63.6

36.4

10.6

-19.4

371.3

Profit/loss Operating profit Financial items

-4.2

Tax expenses

-78.2

PROFIT/LOSS FOR THE YEAR

280.2

63.6

36.4

6.4

-19.4

289.0

EBITA

285.9

70.6

37.4

10.6

-19.4

385.2

14.3

10.1

6.2

Assets

905.3

312.0

242.3

563.1

-345.0

1,677.7

Liabilities

507.5

78.4

67.2

65.7

-342.3

376.6

9.2

–

7.4

4.4

21.0

15.3

3.9

14.0

6.4

39.6

5.9

7.0

1.1

5.7

19.7

23.1

8.3

14.0

7.5

52.9

EBITA margin, %

11.7

Other disclosures

Investments in intangible fixed assets Investments in property, plant and equipment Amortisation and impairment of intangible fixed assets Depreciation of property, plant and equipment

O E M 2 02 0

Cont. Note 2

SPECIFICATION OF EXTERNAL REVENUE PER REGION AND PRODUCT AREA Year 2020

Finland, the Baltic states Denmark, Norway, UK and China and East Central Europe

Sweden

Total consolidated

Breakdown of external revenue by product area Automation

730.9

417.5

559.8

1,708.2

Components

298.4

73.1

15.0

386.5

Installation components

403.4

42.0

–

445.4

Other

580.2

162.4

–

742.7

2,013.0

695.0

574.8

3,282.8

TOTAL EXTERNAL REVENUE* *No customer accounts for more than 10% of sales Year 2019 Breakdown of external revenue by product area Automation

751.6

399.9

578.9

1,730.4

Components

308.8

76.3

24.7

409.8

Installation components

335.5

35.9

0.9

372.2

Other

599.5

186.8

–

786.3

1,995.4

698.9

604.4

3,298.7

TOTAL EXTERNAL REVENUE* *No customer accounts for more than 10% of sales

GEOGRAPHIC AREAS

External sales * 2020

Sweden

Assets **

2019

2020

Investments** 2019

2020

2019

2,010.3

1,992.5

303.3

321.9

12.7

26.6

Finland

631.8

633.8

97.7

110.2

4.2

3.4

United Kingdom

153.3

143.2

42.5

26.7

6.4

3.8

Denmark

144.0

169.7

39.0

41.7

1.1

0.6

Poland

121.4

133.2

12.0

15.1

1.7

6.2

Norway

73.7

68.3

8.1

11.9

1.3

Czech Republic

55.7

60.0

4.2

5.4

1.0

1.3

China

31.3

31.0

0.6

0.2

0.0

0.1

Estonia

23.7

26.4

0.7

0.6

0.3

Hungary

13.6

13.5

0.5

1.0

0.7

Slovakia

13.0

16.5

0.5

0.6

0.1

The Netherlands

2.7

2.9

1.7

2.0

0.1

0.5

Lithuania

6.3

6.0

0.3

0.1

0.2

0.1

Latvia

1.9

1.7

–

3,282.8

3,298.7

510.9

537.3

27.8

44.9

TOTAL

* External sales are broken down by location of sales point. ** Relates to intangible fixed assets and property, plant and equipment

O E M 2 02 0

Note 3 Other operating income The Group

Remeasurement of contingent consideration Government grants* TOTAL

Parent Company

2020

2019

2020

2019

5.2

0.5

–

10.2

–

0.5

–

15.4

0.5

0.0

* Government grants for short-term work and sick pay have been received in Sweden and for temporary layoffs in Denmark, Norway, Hungary and

the UK. All grants are related to Covid-19. .

See Notes 4 and 24 for additional information.

Note 4 Business combinations 2020 On 31 January 2020, the entire shareholding of Zoedale Ltd in the UK was acquired. The company markets valves and actuators for different processes and industrial applications. Its head office is located in Bedford. It reports annual sales of approximately SEK 37 million and, at the time of acquisition, the company had 15 employees. The company became part of Region Denmark, Norway, the UK and East Central Europe on 1 February 2020. The consideration for the business acquired was SEK 20.1 million, plus a contingent consideration estimated at SEK 6.1 million, based on how the business develops in 2020 and 2021. The impact of acquisition transactions on consolidated sales in 2020 was approximately SEK 25.1 million and on profit before tax approximately SEK -2.2 million. If the acquired business had been consolidated from the start of 2020, the effect on sales and profit before tax would have been approximately SEK 27.4 million and SEK -2.7 million respectively.

O E M 2 02 0

2019 The operations of Cabavo AB in Sweden were acquired on 10 September. The company markets electric motors, servo actuators and drive electronics for industrial applications. The operations generate annual sales of approximately SEK 8 million and have been part of Region Sweden since October 2019. The consideration for the business acquired was SEK 3.9 million, plus a contingent consideration estimated at SEK 5.1 million, based on how the business develops from 2019 to 2022. The impact of acquisition transactions on consolidated sales in 2019 was approximately SEK 1.1 million and on profit before tax approximately SEK 0.3 million. If the acquired business had been consolidated from the start of 2019, the effect on sales and profit before tax would have been approximately SEK 8 million and SEK 1.3 million respectively.

Cont. Note 4

EFFECTS OF ACQUISITION

2020

2019

Intangible assets

7.3

4.4

Buildings and land

5.2

–

Other fixed assets

0.2

–

Inventories

5.0

1.5

Trade and other receivables

4.4

Cash and cash equivalents

3.4

0.1

The net assets of the acquired companies on acquisition:

Trade payables and other operating liabilities

-5.5

–

Deferred tax liability

-1.4

-1.0

18.6

5.0

7.6

4.0

26.2

9.0

Net identifiable assets and liabilities Consolidated goodwill CONSIDERATION TRANSFERRED

Goodwill

Goodwill is attributable to the benefits of co-ordination with existing units within the Group OEM Automatic and good profitability. The value of the goodwill is not tax deductible. Acquisition-related expenses

Acquisition-related expenses amount to SEK 0.4 million (-) and relate to consultancy fees for due diligence. These expenses have been recognised as other operating expenses in the Statement of Income. 2020

2019

Remuneration 20.1

3.7

Due in accordance with agreement

Service fees paid

–

0.3

Estimated contingent consideration

6.1

5.1

26.2

9.0

TOTAL CONSIDERATION TRANSFERRED

Asset acquisition 2019

On 3 December 2019, OEM acquired the customer base and inventory of the pumping division of Finisterra AS in Norway. The division reports revenues of approximately SEK 12 million. Pumps will be sold through OEM Automatic AS in Norway, which is part of Region Denmark, Norway, the UK and East Central Europe. The consideration for the assets acquired was SEK 8.0 million, plus contingent considerations estimated at SEK 2.5 million, based on how the business develops in 2020. As a result of the acquisition, other intangible fixed assets have increased by SEK 7.3 million and inventories by SEK 0.7 million. Other intangible fixed assets relate to customer relationships that will be amortised over a five-year period. Contingent consideration

It is stated in the acquisition agreements for acquisitions that have been made in 2020 and 2019 that a contingent consideration will be payable to the vendors based on the development of the coverage ratio or performance. Contingent consideration is capped at SEK 20.2 million (13.1) for these and is estimated at SEK 13.7 million (7.6) in the acquisition cost analysis. The contingent considerations have been calculated using weighted probability techniques. Remeasurement of contingent consideration

The growth of acquired businesses during 2016 to 2020 has resulted in remeasurement of contingent consideration which has decreased by SEK 5.2 million. This has been recognised as Other Income and had a positive SEK 5.2 million (0.5) effect on the operating profit in 2020. As at 31 December 2020, the carrying amount for remaining liabilities relating to contingent considerations is SEK 7.1 million (15.8) and the earn-out for remaining contingent considerations is capped at SEK 22.3 million (23.4). Further information about intangible assets is presented in Note 12.

O E M 2 02 0

Note 5 Employees and staff costs AVERAGE NUMBER OF EMPLOYEES

2020

Of which men

2019

Of which men

79%

84 %

Parent Company Sweden Subsidiaries Sweden

472

77%

476

78 %

Denmark

88%

88 %

United Kingdom

78%

80 %

Estonia

100%

100 %

Finland

158

85%

162

86 %

50%

50 %

74%

74 %

100%

100 %

The Netherlands China Lithuania Norway

90%

86 %

Poland

80%

77 %

60%

67 %

82%

78 %

83%

83 %

Total in subsidiaries

875

80%

868

80%

GROUP TOTAL

894

80%

887

80%

Slovakia Czech Republic Hungary

SALARIES, OTHER REMUNERATION AND SOCIAL SECURITY EXPENSES

2020 Salaries and remuneration

Parent Company

2019

Social security expenses

Salaries and remuneration

7.6

18.8

18.7

(of which pension expenses) Subsidiaries

(2.6) 377.7

(of which pension expenses) GROUP TOTAL

128.7

396.3

136.3

374.5

135.8 (31.2)

393.3

(33.4)

2020

8.5 (2.8)

(30.8)

(of which pension expenses)

SALARIES AND OTHER REMUNERATION ACROSS THE PARENT COMPANY AND SUBSIDIARIES AND BETWEEN SENIOR EXECUTIVES AND OTHER EMPLOYEES

Social security expenses

144.3 (34.0)

2019

Senior executives including the Board

Other employees

Senior executives including the Board

Other employees

Sweden, of which senior executives 10 people (10)

11.0

7.7

10.6

8.3

(of which bonus)

(2.7)

Subsidiaries total, of which senior executives 24 people (23)

23.5

(of which bonus)

(1.1)

Parent Company

GROUP TOTAL, OF WHICH SENIOR EXECUTIVES 34 PEOPLE (33) (of which bonus)

34.5

(2.6) 354.2

O E M 2 02 0

349.7

(2.5) 361.9

(3.8)

Pension premiums to the amount of SEK 5.6 million (5.6) have been paid for the category senior executives.

24.8

35.4 (5.1)

358.0

Cont. Note 5

REMUNERATION OF GROUP MANAGEMENT AND BOARD MEMBERS 2020

Petter Stillström Chairman of the Board

2019

Base pay, board fee

Variable remuneration

Other benefits

Pension expense

Total

Base pay, board fee

Variable remuneration

Other benefits

Pension expense

Total

0.5

–

0.5

–

0.5

Ulf Barkman, Board member

0.3

–

0.3

–

0.3

Mattias Franzén, Board Member

0.2

–

0.2

–

0.2

Richard Pantzar, Board Member

0.2

–

0.2

–

0.2

Jörgen Rosengren Board member

0.2

–

0.2

–

0.2

Agne Svenberg, Board Member

0.2

–

0.2

–

0.2

Åsa Söderström Winberg Board member

0.2

–

0.2

–

0.2

4.6

2.3

–

1.1

8.0

4.0

2.1

–

1.0

7.1

6.4

2.3

–

1.1

9.8

5.9

2.1

–

1.0

8.9

7.6

0.4

0.2

2.1

10.3

6.7

1.0

0.1

1.8

9.6

14.0

2.7

0.2

3.2

20.2

12.6

3.1

0.1

2.8

18.5

Jörgen Zahlin Managing Director

Other senior executives 6 persons (5) * TOTAL

* Of the other senior executives, four (three) people receive remuneration from subsidiaries. This remuneration is included at an amount of SEK 5.6 million (5.1). Pension expenses were SEK 1.7 million (1.3).

CEO/Managing Director Pension expenses are defined contribution. There are no other pension obligations. As in previous years, variable remuneration is based on the performance levels attained. SEK 2.3 million was paid in variable remuneration in 2020. Variable remuneration payment totalled SEK 2.1 million in 2019. The outcome of variable remuneration for 2020 and 2019 was at maximum. The period of notice for the Managing Director is 24 months from the company's side, with the obligation to work, and 6 months from the Managing Director's side. Retirement age for the Managing Director is 60 years. The CEO/ Managing Director's salary and remuneration is set by the Board. Other senior executives Pension expenses are defined contribution. There are no other pension obligations. Variable remuneration payment totalled SEK 0.4 million in 2020. Variable remuneration payment totalled SEK 1.0 million in 2019. Based on the attained profit level, variable remuneration can be paid at a maximum of 40% of base salary. The period of notice for other members of Group management is maximum 12 months, upon termination by the company, with the obligation to work, and maximum 6 months upon termination by the employee. If the company serves notice after the age of 55 years, the period of notice is increased by an additional six monthly salaries. There is an exception in an agreement signed in 2001, whereby severance pay, amounting to a further six (6) months' salaries, may be

GENDER DISTRIBUTION

made upon termination by the company when the employee reaches the age of 55. Retirement age for the other members of Group management is between 60 and 65 years. Guidelines for remuneration and other terms of appointment of senior executives Guidelines for senior executives, approved by the 2020 Annual General Meeting, state that the Managing Director, Group management and other managers who report directly to the Managing Director shall have market-competitive salaries and other remuneration terms. Sharebased compensation, so-called incentive schemes, shall be presented for approval at the Annual General Meeting. In addition to base salary, management may also receive variable remuneration, which is capped at seven monthly salaries. Senior executives shall have premium-based pension schemes, capped at 30% of fixed remuneration. The period of notice on the company's part may not exceed 24 months and involves the obligation to work during the period of notice. Employment agreements shall not contain provisions for severance pay. There is an exception in an agreement signed in 2001, whereby severance pay, amounting to a further six (6) months' salaries, may be made upon termination by the company when the employee reaches the age of 55. The severance pay does not involve the obligation to work. This exception means a maximum of 18 monthly salaries upon termination by the company.

Group (percentage of women)

Parent (percentage of women)

2020

2019

2020

2019

Board of Directors

14%

14 %

Other senior executives

O E M 2 02 0

Note 6 Fees and reimbursement of expenses to the auditors The Group PwC Audit assignments

Parent Company

2020

2019

2020

2019

2.8

2.7

0.9

0.6

Non-audit services

–

0.0

–

Tax counselling

0.1

–

Other services

0.1

–

0.1

–

3.0

2.7

1.0

0.6

Audit assignments

0.3

0.2

–

Tax counselling

0.8

0.4

–

1.1

–

0.7

–

4.1

3.3

1.0

0.6

Other auditors

Other assignments

TOTAL

–

Of the remuneration to auditors in 2020, the following has been paid to Öhrlings PricewaterhouseCoopers in Sweden: Audit services SEK 1.8 million (1.5), other statutory services SEK 0 million (-), tax advice SEK 0 million (0) and other services SEK 0.1 million (-). Audit assignments refer to the auditing of the Annual Report, the consolidated financial statements, the accounting records and the administration by the Board of Directors and the Managing Director, other tasks that are the duty of the company's auditors, as well as advice and other assistance resulting from observations made during such audits or the performance of other such duties. Tax counselling refers to all consultations in the area of tax. "Other assignments" refers to advice on accounting matters and advice on processes and internal control.

Note 7 Depreciation/amortisation and impairment of property, plant and equipment and intangible fixed assets The Group

Parent Company

2020

2019

2020

2019

-13.5

-12.2

–

0.0

–

-1.6

–

-5.2

-5.8

-4.8

-5.7

Buildings and land

-28.4

-26.6

-0.5

Fixtures, fittings, tools and equipment

-26.9

-26.3

-1.6

-1.9

-74.0

-72.6

-6.8

-8.1

Customer relationships Patents Supplier relationships Expenses brought forward for software

TOTAL

Note 8 Income from interests in Group companies Parent Company Dividends received Capital gains on liquidation Impairment of interests in Group companies TOTAL

O E M 2 02 0

2020

2019

58.6

47.4

1.0

–

-1.8

–

57.9

47.4

Note 9 Finance income/other interest income and similar income The Group Interest on bank deposits Other finance income TOTAL

Parent Company

2020

2018

2020

2019

0.4

0.6

1.2

1.1

–

0.0

–

0.4

0.6

1.3

1.1

Note 10 Finance expense/interest expense and similar charges The Group

Parent Company

2020

2019

2020

2019

Interest expense on financial liabilities

-3.3

-3.8

-1.1

-1.4

Other finance expense

-4.7

-2.4

–

-0.5

-8.0

-6.2

-1.1

-1.9

TOTAL

Note 11 Income tax RECOGNISED IN STATEMENT OF INCOME/INCOME STATEMENT

The Group

Parent Company

2020

2019

2020

2019

Current tax

-81.5

-85.1

-48.3

-61.2

Deferred tax

-2.1

6.9

0.1

0.0

-83.6

-78.2

-48.2

-61.2

Reported profit before tax

400.9

367.3

280.1

331.1

Estimated tax on reported profit before tax as per applicable tax rate for income tax in each country

-84.7

-76.5

-59.9

-70.9

–

12.5

10.1

Non-taxable income

1.9

2.4

0.2

Non-deductible items

-1.1

-4.4

-1.1

-0.7

0.3

0.4

0.1

–

-83.6

-78.2

-48.2

-61.2

Deferred tax assets

8.3

3.8

0.0

TOTAL DEFERRED TAX ASSETS

8.3

3.8

0.0

Intangible fixed assets

5.3

7.0

–

Buildings and land

9.2

8.4

1.9

2.0

Untaxed reserves

79.3

70.7

–

Other information

0.7

0.6

–

94.4

86.8

1.9

2.0

TOTAL RECOGNISED TAX EXPENSE

LINK BETWEEN TAX EXPENSES FOR THE YEAR AND INCOME BEFORE TAX

Non-taxable share dividends

Impact of changed tax rate TOTAL RECOGNISED TAX EXPENSE

Deferred tax liability

TOTAL DEFERRED TAX LIABILITY

The Group holds SEK 0.3 million (0.3) in non-capitalised deferred tax assets equivalent to loss carryforwards which, when measured cannot be considered available for use because the surplus cannot be offset against these within a reasonable future period. The acquisition of subsidiaries affected the deferred tax liability by SEK 1.4 million (0.9).

O E M 2 02 0

Note 12 Intangible fixed assets THE GROUP

2020 Goodwill

Trademarks

Customer relationships

Supplier relationships

Patents

Software

Total

152.2

43.6

143.8

46.0

0.3

40.8

426.6

–

0.3

7.6

–

7.3

–

14.8

Accumulated cost At beginning of year New acquisitions Acquisition of subsidiaries Sales and disposals Exchange rate differences for the year Total cost of acquisition

–

-0.1

–

-0.1

-2.7

-0.3

-6.0

-0.7

0.0

-9.7

157.0

43.3

145.0

45.3

0.3

41.1

431.9

ACCUMULATED AMORTISATION At beginning of year

–

-43.6

-110.2

-37.2

-0.2

-29.0

-220.2

Amortisation

–

-13.4

–

0.0

-5.2

-18.7

Sales and disposals

–

0.0

–

0.0

Exchange rate differences for the year

–

0.3

4.3

0.7

–

5.2

–

-43.3

-119.3

-36.5

-0.3

-34.3

-233.6

-11.3

Total amortisation ACCUMULATED IMPAIRMENTS At beginning of year

-11.2

–

-0.1

–

Sales and disposals

–

0.1

–

Impairments

–

-0.3

–

Exchange rate differences for the year

–

0.0

–

Total impairments

-11.2

–

-0.3

–

-11.5

CARRYING AMOUNT AT END OF YEAR

145.8

–

25.3

8.8

0.0

6.8

186.8

Total carrying amount relating to trademarks, customer relationships, supplier relationships, patents and software at year-end was SEK 41.0 million (54.1) 2020

The acquisition of the operations of Zoedale Ltd increases the value of customer relationships by SEK 7.3 million and goodwill by SEK 7.6 million. The estimated useful life of the customer relationships is five years.

O E M 2 02 0

Impairment testing of customer relationships Impairment testing of customer relationships refers to part of customer relationships from the acquisition of the assets of the company Finisterra AS in 2019.

Cont. Note 12

THE GROUP

2019 Goodwill

Trademarks

Customer relationships

Supplier relationships

Patents

Software

Total

147.3

43.4

129.3

45.7

0.3

42.6

408.5

–

7.4

–

5.3

12.7

4.0

–

4.4

–

8.4

–

-7.0

0.9

0.2

2.7

0.3

–

0.0

4.1

152.2

43.6

143.8

46.0

0.3

40.8

426.7

Accumulated cost At beginning of year New acquisitions Acquisition of subsidiaries Sales and disposals Exchange rate differences for the year Total cost of acquisition Accumulated amortisation At beginning of year

–

-43.4

-95.5

-35.3

-0.2

-30.0

-204.4

Amortisation

–

-12.2

-1.6

0.0

-5.8

-19.7

Sales and disposals

–

6.7

Exchange rate differences for the year

–

-0.2

-2.4

-0.3

–

-2.9

–

-43.6

-110.2

-37.2

-0.2

-29.1

-220.3

-11.2

–

-0.1

–

-11.3

–

Total impairments

-11.2

–

-0.1

–

-11.3

CARRYING AMOUNT AT END OF YEAR

141.0

–

33.6

8.8

0.1

11.7

195.1

Total amortisation Accumulated impairments At beginning of year Impairments

Total carrying amount relating to trademarks, customer relationships, supplier relationships, patents and software was SEK 54.1 million (56.8) at year-end 2019

The acquisition of the operations of Cabavo AB increases the value of customer relationships by SEK 4.4 million and goodwill by SEK 4.0 million. The estimated useful life of the customer relationships is five years. SEK 7.4 million, relating to customer relationships, is recognised as a result of the acquisition of the assets of Finisterra AS in Norway. The estimated useful life of the customer relationships is 5 years.

O E M 2 02 0

Cont. Note 12

GOODWILL AND INTANGIBLE ASSETS WITH AN INDETERMINABLE USEFUL LIFE

2020

2019

OEM Automatic AB

3.3

OEM Electronics AB

5.0

Internordic Bearings AB

3.0

OEM Motor AB

12.0

Elektro Elco AB

Companies Goodwill

32.5

Svenska Helag AB

3.0

Svenska Batteripoolen AB

1.8

12.0

AB Ernst Hj Rydahl Bromsbandfabrik

6.0

ATC Tape Converting AB

3.0

18.7

2.1

Nexa Trading AB

OEM Finland OY Akkupojat OY

2.0

2.1

17.2

Rauheat OY

12.0

12.4

OEM Automatic Klitsö AS

24.8

25.5

6.6

145.8

141.0

8.8

154.6

149.8

Sitek-Palvelu OY (operations moved to OEM Finland OY)

Zoedale Ltd

Supplier relationships with an indeterminable useful life Telfa AB TOTAL

The above amounts relate to goodwill amounting to SEK 145.8 million (141.0) and acquired supplier relationships for Telfa AB amounting to SEK 8.8 million (8.8). These are long-standing supplier relationships with an indefinite useful life that are appraised as stable over the foreseeable future. The values in use are based on estimated future cash flows with the starting point in existing business plans for the next year. The amounts are calculated using the value-in-use methodology. The principal assumptions for the measurement for all cash-generating units are assumptions about margins and volume growth. The business plans are based on experience from previous years, but take the companies' forecasts for anticipated future growth into consideration. Current market shares are expected to increase marginally in the forecast period. The growth in sales and earnings in the operations is expected to be in line with the business plans. Net cash flow growth is expected to come in at 2% (1-2%) for other years after the forecast period of 1 year.The gross profit margins are expected to reach the same level as at the end of 2020. The forecast cash flows have been converted to a present value using a discount rate of 10% (10%) before tax. The values in use of the units exceed their carrying amounts. The company's management believes no reasonably possible change in the key assumptions would cause the carrying values of the units to exceed the estimated values in use.

O E M 2 02 0

Impairment test for intangible assets

Impairment tests have been performed at segment level on cash-generating units containing goodwill and intangible assets with indefinite useful lives, which is considered to be the smallest cash-generating unit, based on the value in use of the units. Impairment testing has previously been performed at company level.

Cont. Note 12

PARENT COMPANY

2020

2019

38.7

41.3

Expenses brought forward for software Accumulated cost of acquisition At beginning of year New acquisitions

0.3

4.4

–

-7.0

38.9

38.7

-28.9

-29.9

-4.8

-5.7

–

6.7

-33.6

-28.9

5.4

9.8

At beginning of year

-4.1

-7.1

Change for the year

2.5

3.0

-1.7

-4.1

Asset retirement Total cost of acquisition Accumulated amortisation At beginning of year Amortisation Asset retirement Total amortisation CARRYING AMOUNT AT END OF YEAR Accumulated accelerated amortisation

TOTAL ACCUMULATED ACCELERATED AMORTISATION Expenses brought forward for software are written off during its estimated useful life of five years.

O E M 2 02 0

Note 13 Property, plant and equipment THE GROUP Owned property, plant and equipment Property, plant and equipment through right-of-use TOTAL PROPERTY, PLANT AND EQUIPMENT

2020

2019

263.2

275.1

61.0

67.2

324.2

342.2

RECOGNISED AMOUNTS OWNED PROPERTY, PLANT AND EQUIPMENT THE GROUP

2020

2019

Buildings and land

Fixtures, fittings, tools and equipment

Buildings and land

Fixtures, fittings, tools and equipment

Accumulated cost of acquisition At beginning of year

323.1

162.9

264.9

210.3

New acquisitions

0.4

7.9

54.7

12.0

Cost of acquisitions taken over upon acquisition

6.0

3.5

Sales and disposals

–

-5.5

–

-8.9

Reclassifications

-2.8

2.8

–

-53.0

Exchange rate differences for the year

-5.8

-4.4

3.5

2.4

321.0

167.2

323.1

162.9

-83.1

-127.8

-75.3

-140.3

-1.2

-3.3

Total cost of acquisition Accumulated depreciation according to plan At beginning of year Accumulated depreciation taken over upon acquisition Sales and disposals Depreciation for the year Reclassifications Exchange rate differences for the year Total depreciation CARRYING AMOUNT AT END OF YEAR

–

5.3

–

7.8

-8.6

-12.0

-6.8

-11.7

–

18.2

2.0

3.6

-1.0

-1.8

-90.9

-134.1

-83.1

-127.8

230.1*

33.1

240.0*

35.1

* Carrying amount of buildings is SEK 210.1 (166.6) for the Group and SEK 11.8 (12.2) for the Parent Company.

PARENT COMPANY

2020

2019

Buildings and land

Fixtures, fittings, tools and equipment

Buildings and land

Fixtures, fittings, tools and equipment

28.6

18.9

28.6

19.3

–

0.3

–

4.8

-–

-2.4

–

-5.2

28.6

16.9

28.6

18.9

At beginning of year

-16.0

-12.7

-15.5

-16.0

Sales and disposals

–

2.4

–

5.1

-0.5

-1.6

-0.5

-1.9

-16.4

-12.0

-16.0

-12.7

12.1

4.9

12.6

6.2

At beginning of year

–

-0.8

–

-0.5

Change for the year

–

-0.3

–

-0.3

–

-1.1

–

-0.8

Accumulated cost of acquisition At beginning of year New acquisitions Sales and disposals

Accumulated depreciation according to plan

Depreciation for year acc. to plan based on cost

CARRYING AMOUNT AT END OF YEAR Accumulated accelerated depreciation

TOTAL ACCUMULATED ACCELERATED DEPRECIATION

O E M 2 02 0

Cont. Note 13

RECOGNISED AMOUNTS PROPERTY, PLANT AND EQUIPMENT THROUGH RIGHT-OF-USE THE GROUP Recognised amounts in the balance sheet

31 Dec 2020

31 Dec 2019

42.7

48.0

Right-of-use assets Real estate Machinery and equipment

0.3

0.7

18.0

18.5

61.0

67.2

Current

29.4

29.2

Non-current

31.5

37.2

60.9

66.4

2020

2019

-19.8

Vehicles TOTAL RIGHT-OF-USE ASSETS Lease liabilities

TOTAL LIABILITIES ARISING FROM RIGHT-OF-USE ASSETS

THE GROUP Recognised amounts in the income statement Amortisation of right-of-use assets Real estate Machinery and equipment

-0.3

-14.7

-14.4

TOTAL AMORTISATION OF RIGHT-OF-USE ASSETS

-34.8

-34.4

Interest expense (included in finance expense)

-1.2

-1.3

–

0.0

-0.3

-0.6

Vehicles

Costs attributable to short-term leases (included in other expenses)

Costs attributable to leases with underlying assets of low value (included in other expenses)

The total cash flow for leases in 2020 was SEK 35.3 million (36.1)

O E M 2 02 0

Note 14 Interests in Group companies PARENT COMPANY

2020

2019

Book value At beginning of year

424.3

Acquisitions for the year

415.7

–

9.0

-1.9

-0.5

Liquidations

-46.2

–

Impairments

-1.8

–

374.4

424.3

Remeasurement of contingent considerations

CLOSING BALANCE

SPECIFICATION OF THE PARENT COMPANY'S DIRECT AND INDIRECT SHAREHOLDINGS IN SUBSIDIARIES Corp. id. no.

Reg. office

No. of shares

Share of capital

Quota value

Book value 2020

Book value 2019

OEM Automatic AB, Sweden

556187-1012

Tranås

20,000

100%

100

16.0

OEM Motor AB, Sweden

556650-6498

Tranås

1,000

100%

100

19.1

Telfa AB, Sweden

556675-0500

Gothenburg

1,000

100%

100

10.0

Apex Dynamics Sweden AB, Sweden

556771-7466

Täby

1,000

100%

100

0.1

Svenska Batteripoolen AB, Sweden

556929-8291

Tranås

5000

100%

100

0.5

Elektro Elco AB, Sweden

556564-2716

Jönköping

1,000

100%

100

68.0

OEM Electronics AB, Sweden

556054-3828

Tranås

3,500

100%

100

15.4

Internordic Bearings AB, Sweden

556493-8024

Nässjö

1,000

100%

100

12.2

Svenska Helag AB, Sweden

556225-9639

Borås

1,020

100%

100

12.6

Flexitron AB, Sweden

556414-6982

Täby

5,000

100%

100

0.4

Agolux AB, Sweden

556892-3774

Tranås

5,000

100%

100

0.5

Reflex Transmission AB, Sweden

556233-6643

Malmö

3,000

100%

100

6.5

Nexa Trading AB, Sweden

556327-6319

Gothenburg

2,000

100%

100

32.4

ATC Tape Converting AB, Sweden

556242-6121

Järfälla

2,000

100%

100

11.5

100%

0.8

AB Ernst Hj Rydahl Bromsbandfabrik, Sweden

556535-6556

Karlstad

11,000

100%

RF Partner AB, Sweden

556498-5298

Mölndal

1,000

100%

100

3.7

4.3

ATB Drivtech AB, Sweden

556315-6974

Ekerö

150

100%

1,000

1.9

2.4

Cabavo AB, Sweden

559211-3111

Täby

500

100%

100

0.9

1.6

OEM Finland OY, Finland

–

100%

–

43.7

15.8

Akkupojat OY, Finland

–

100%

–

6.3

Scannotec OY, Finland

–

100%

–

2.1

3.8

Sitek-Palvelu OY, Finland

–

100%

–

0.8

28.6

100%

–

26.7

OEM Eesti Ou., Estonia

–

10,000

100%

EEK 40

0.0

OEM Automatic SIA, Latvia

–

100%

LVL 200

0.0

OEM Automatic UAB, Lithuania

–

100

100%

LTL 100

0.0

OEM Automatic (Shanghai) Ltd, China

–

100%

USD 140

0.0

Sweden

IBEC B.V., Netherlands

Finland, Baltic states and China

Rauheat OY, Finland

O E M 2 02 0

Cont. Note 14

SPECIFICATION OF THE PARENT COMPANY'S DIRECT AND INDIRECT SHAREHOLDINGS IN SUBSIDIARIES Corp. id. no.

Reg. office

No. of shares

Share of capital

Quota value

Book value 2020

Book value 2019

OEM Automatic Klitsö AS, Denmark

–

1000

100%

DKK 1,000

46.5

OEM Automatic AS, Norway

–

100%

3.5

OEM Automatic Ltd, UK

–

100%

5.4

OEM Automatic Sp.z.o.o., Poland

–

100%

0.0

100%

–

0.0

Denmark, Norway, UK and East Central Europe

Candelux Sp.zo.o., Poland (liquidated in 2020) OEM Automatic spol.s.r.o. , Czech Republic

–

100%

CZK 100

15.5

OEM Automatic s.r.o., Slovakia

–

100%

SKK 200

0.0

OEM Automatic Kft, Hungary

–

100%

–

1.2

OEM Industrial Components AB, Sweden (liquidated in 2020)

556051-4514

Tranås

100,000

100%

5,000

–

46.2

Internordic Förvaltning AB, Sweden

556302-0873

Nässjö

1,000

100%

100

1.3

OEM Logistics AB, Sweden

556194-8521

Stockholm

2,500

100%

100

1.5

Intermate Electronics AB, Sweden

556266-6874

Tranås

1,000

100%

100

0.6

OEM Fastighetsbolag AB, Finland

–

1,200

100%

FIM 1,200

1.4

OEM Property Ltd, UK

–

400,000

100%

GBP 400

5.1

Brake Components AB

559000-6499

Tranås

1,000

100%

100

0.1

Bankerydsbackens Fastighetsbolag AB

559013-6817

Tranås

1,000

100%

100

0.1

374.4

424.3

Other business units

TOTAL

Note 15 Inventories The Group 2020 Work in progress

2019

48.0

39.3

Finished goods and merchandise

565.0

614.5

Goodwill impairment

-34.1

-24.6

578.9

629.2

TOTAL

Group impairment of inventories at the close of 2020 was SEK 34.1 million (24.6), which represents approximately 6% (4%) of the cost of the stock. To determine impairment of stock, the Group uses set obsolescence models and individual assessment of each item of inventory. Swedish companies that do not use an obsolescence schedule instead use the flat-rate 3% option to calculate the value of obsolete inventory. Based on the lowest value principle, no impairment has arisen. Costs to scrap items and change in impairment reserve are included in goods for resale in the consolidated Statement of Income.

O E M 2 02 0

Note 16 Prepaid expenses and accrued income The Group Accrued commission income, etc.

Parent Company

2020

2019

2020

0.5

1.1

–

0.0

Prepaid rent expense

2019

Prepaid insurance costs

1.7

3.9

0.2

0.4

Other prepaid expenses

13.6

12.4

3.6

5.2

15.7

17.4

3.9

5.6

TOTAL

Note 17 Equity The shares consist of Class A and Class B. The face value is SEK 1.67. 2020

Class A shares

10 votes

Class B shares

1 vote

TOTAL NUMBER OF OWN SHARES

Voting rights

4,743,696

47,436,960

4,767,096

47,670,960

18,425,613

18,402,213

23,169,309

65,862,573

23,169,309

66,073,173

-61,847

23,107,462

65,800,726

23,107,462

66,011,326

Repurchased own shares TOTAL NUMBER OF SHARES OUTSTANDING

2019

REPURCHASED OWN SHARES INCLUDED IN THE EQUITY ITEM RETAINED EARNINGS, INCLUDING PROFIT FOR THE YEAR Number of shares

Opening repurchased own shares CLOSING REPURCHASED OWN SHARES

2019

2020

2019

61,847

23.3

61,847

23.3

The Group's translation reserve

Capital management

Restricted funds may not be reduced through the payment of dividends. Reserve fund

Outcome over the last three years:

The translation reserve includes all exchange differences arising on the translation of financial statements from foreign operations that have prepared their financial statements in a currency other than that used in the consolidated financial statements. The Parent Company and the Group present their financial statements in Swedish krona. Parent company's restricted funds

The purpose of a reserve fund has been to save a proportion of the net earnings not required to cover retained losses. The amount which before 1 January 2006 went to the share premium account has been transferred to the reserve fund. Development fund When internally generated intangible assets are capitalised, a corresponding amount is transferred to a development fund classed as restricted equity. The fund is wound up at the same rate as the capitalised item is amortised. Parent company's distributable equity

The following funds and profit for the year together constitute a distributable reserve, i.e. the amount available for distribution to shareholders as a dividend. Retained earnings Retained earnings are the profits and income that remain from the prior year after paying dividends.

Amounts that affected equity

2020

O E M 2 02 0

The Board's aim is to achieve a good return on total capital with a limited financial risk during stable growth. The target for one business cycle is: • Minimum sales growth of 10% per annum • A minimum EBITA margin of 10% per annum • A minimum return on equity of 20% per annum • A minimum equity/assets ratio of 35%

Sales growth EBITA-marginal

2020

2019

2018 14 %

13%

12%

11 %

Return on equity

26%

29%

29 %

Equity/assets ratio

69%

62%

59 %

Allocation of profits After the balance sheet date, the Board proposed a dividend of SEK 7.50 per share (-). The Board aims to propose a reasonable dividend of profits to the shareholders, by taking into account the financial position, the tax situation and any need for acquisitions or investments in the operation. Retained earnings in the Parent Company total SEK 639.6 million. The Board recommends a SEK 173.8 million dividend and that SEK 465.8 million be carried forward. Proposed share split and redemption procedure To facilitate trading of company shares and alter the company's capital structure, OEM's Board of Directors proposes a 4:1 share split combined with an automatic redemption procedure. This procedure splits each existing share in the company into four shares, one of which is a redemption share. The redemption share will be redeemed for SEK 12.50.

Note 18 Liabilities to credit institutions and lessors The Group 2020

2019

Bank loan

11.0

12.8

Lease liabilities*

31.5

37.2

42.5

50.0

29.7

92.7

Other non-current liabilities

TOTAL Liabilities that fall due for payment later than five years after the balance sheet date amount to SEK 7.0 million (9.6). Current liabilities Overdrafts** Current bank loans

1.9

29.4

29.2

TOTAL

60.9

123.9

LEASE LIABILITIES

2020

2019

Within one year

29.4

29.2

Between one and five years

31.5

37.2

–

60.9

66.4

Lease liabilities*

Lease liabilities fall due for payment as shown below:

Later than in five years TOTAL

*Lease liabilities relate to premises, machinery, equipment and vehicles as required under IFRS 16. **The overdraft has a covenant, which means that the Group must have an equity/assets ratio that does not drop below 35%. As at 31 December 2020, the Group's equity/assets ratio stood at 69%. See Note 24 for additional information about bank loans and overdrafts. See Note 21 for information about pledged assets for own liabilities.

Note 19 Provisions for pensions and similar obligations The Group 2020 Present value of entirely or partially funded obligations Fair value of plan assets Net of entirely or partially funded obligations

2019

8.0

7.9

-6.0

-6.4

2.0

1.6

2.0

1.6

2.0

1.6

2.0

1.6

2.0

1.6

The net amount recognised in the following items in the Statement of Financial Position: Provisions for pensions and similar obligations Net amount in the Statement of Financial Position (obligations + assets -) The net amount is split over plans in the following countries: Norway Net amount in the Statement of Financial Position (obligations + assets -)

O E M 2 02 0

Cont. Note 19

The Group 2020

2019

Obligation for defined-benefit schemes as at 1 January

7.9

7.0

Pensions earned during the period

0.4

Actuarial gains and losses

0.5

-0.2

Interest on obligations

0.2

Benefits paid

0.0

-1.0

0.5

8.0

7.9

Fair value of plan assets as at 1 January

6.4

5.4

Contributions by employer

0.3

0.7

Benefits paid

0.0

-0.3

0.1

Interest income recognised in the income statement for the year

0.1

0.0

Return excluding interest recognised in the income statement for the year

0.1

Changes in the present value of the obligation for defined-benefit schemes

Exchange rate differences Obligations for defined-benefit schemes as at 31 December Change in fair value of plan assets

Transferred to defined-contribution scheme

Exchange rate differences

-0.6

0.2

6.0

6.4

Expense for pensions earned during the year

0.5

Net interest income/expense

0.0

Other information

0.0

0.5

0.6

2.3%

2.6 %

Fair value of plan assets as at 31 December Expense recognised in the income statement

TOTAL NET EXPENSE IN THE INCOME STATEMENT

ACTUARIAL ASSUMPTIONS The principal assumptions used for the purpose of the actuarial valuations were as follows: Discount rate

In Norway, all employees are covered by defined-benefit pension schemes. SEK 0.4 million is expected to be paid in contributions for the schemes during 2021. In other countries, except for Sweden, all employees are covered by defined-contribution schemes. The company pays defined contributions to a separate legal entity and has no obligation to pay additional amounts. Costs are expensed on the consolidated income statement as the benefits are earned. Pension obligations related to the defined-benefit ITP 2 scheme for retirement and family pensions for salaried employees in Sweden are underwritten with insurance provided by Alecta. According to statement UFR 10 Reporting for Pension Scheme ITP 2, issued by the Swedish Financial Reporting Board, the ITP 2 scheme, which is underwritten by the Alecta insurance company, is a defined-benefit multi-employer scheme. For the 2020 financial year, the company did not have access to information that would enable it to report its proportionate share of the scheme's obligations, plan assets and costs. Consequently, it has not been possible to report the scheme as a defined-benefit pension scheme. The ITP 2 pension scheme, which is provided for by means of insurance with Alecta, is therefore reported as a defined-contribution pension scheme. The premium for the defined-benefit retirement and family pension is calculated individually and is based on such factors as the salary, previously earned pension and expected remaining length of service. Expected contributions in the next reporting period for ITP 2 insurance with Alecta amount to SEK 1.3 million (1.3). The Group's share of the total contributions to the pension scheme is 0.004% (0.006 %), while its share of the total number of active members in the scheme is 0.011% (0.010%). The collective consolidation level comprises

O E M 2 02 0

the market value of Alecta's assets as a percentage of the insurance commitments calculated according to Alecta's actuarial methods and assumptions, which are not consistent with IAS 19. The collective consolidation level is normally allowed to vary between 125 and 155 percent. If Alecta's consolidation level falls below 125 percent or rises above 155 percent, measures must be taken to enable the consolidation level to return to the normal range. If the consolidation level is low, an appropriate measure might be to introduce premium reductions. At the end of 2020, Alecta's surplus, in the form of the collective consolidation level, was 148 percent (148). The premiums to Alecta are determined by assumptions regarding interest rates, life expectancy, operating costs and tax on returns, and is calculated in order that the payment of a consistent amount of premium up to the date of retirement is sufficient to ensure that the entire, targeted benefit, based on the insured's current pensionable salary, is, in fact, earned. There is no agreed framework to guide the process of managing any deficit that may arise. In the first instance, losses will be covered by Alecta's collective consolidation capital and will thus not lead to increased costs through higher contractual premiums. Nor are there guidelines on how any surpluses or deficits should be allocated in the event of dissolution of the scheme or a company's withdrawal from the scheme. Most of the employees in Sweden are covered by defined-contribution pension schemes. The total cost of the Group's defined-contribution schemes is SEK 31.6 million (31.5). The Parent Company's cost for defined-contribution schemes is SEK 2.6 million (2.8).

Note 20 Other non-current liabilities The Group

Other non-current, non-interest-bearing liabilities TOTAL

Parent Company

2020

2019

2020

2019

3.7

3.5

1.6

3.5

3.7

3.5

1.6

3.5

Other non-current liabilities relate to the long-term element of contingent considerations.

Note 21 Pledged assets and contingent liabilities The Group 2020

Parent Company 2019

2020

2019

19.2

7.5

–

Pledged assets for own liabilities Property mortgages Business mortgages TOTAL Contingent liabilities Security undertakings to support subsidiaries TOTAL

18.1

62.0

60.0

80.1

79.2

7.5

–

198.6

241.3

–

198.6

241.3

See Note 18 for additional information about the company’s liabilities.

Note 22 Accrued expenses and prepaid income The Group

Parent Company

2020

2019

2020

2019

Accrued salaries and holiday pay

61.1

61.9

5.5

5.3

Accrued social security costs

29.3

29.7

3.8

Accrued supplier inv./commercial debts

23.3

16.1

–

Other accrued expenses

23.9

18.0

3.0

3.1

137.6

125.8

12.3

12.2

TOTAL

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Note 23 Untaxed reserves Parent Company 2020

2019

Accumulated accelerated amortisation At beginning of year Changes in accelerated amortisation for the year AT END OF YEAR

4.9

7.6

-2.2

-2.7

2.7

4.9

Accruals funds Allocated in the financial year 2014

–

40.0

Allocated in the financial year 2015

48.6

Allocated in the financial year 2016

55.7

Allocated in the financial year 2017

56.0

Allocated in the financial year 2018

67.0

Allocated in the financial year 2019

28.0

Allocated in the financial year 2020

75.0

–

TOTAL

330.3

295.3

TOTAL UNTAXED RESERVES

333.0

300.2

Deferred tax constitutes SEK 71.7 million (69.5) of untaxed reserves.

Note 24 Financial risks and risk management The most significant financial risks for the OEM Group are currency and customer credit risks. However the currency risks have been more or less been eliminated through matching. An elimination of risks that helps the Group achieve a relatively stable coverage ratio over time. In addition to the named risks, the Group has a limited interest rate risk in the form of a cash flow risk. The OEM Group's financial activities and management of financial risks is primarily performed in the Parent Company. This is carried out in accordance with the financial policy approved by the Board of Directors. There are frameworks for how risk management is to be conducted and for how risks are to be limited. These frameworks are characterised by a low risk level. The basis is the structured and efficient management of the financial risks that arise in the business. OEM is of the opinion that the carrying values of financial assets and liabilities approximate their fair values. The Group's holdings of such financial assets that represent fixed assets are fairly limited. Other non-current receivables were valued at SEK 0.3 million (0.3) at the close of 2020. At year-end, the Group's holding of such financial assets that represent current assets amounted to SEK 456 million (452) and accrued income to SEK 0.5 million (1.1) and other receivables to SEK 44 million (41). As shown above, more than 99% of the Group's financial assets are measured at amortised cost under IFRS 9. The financial liabilities are measured at amortised cost, except for derivatives and contingent considerations which are measured at their fair values. The Group does not have any

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liabilities with fixed interest. The risk of a shift in the interest rate causing a significant change in fair value for the Group is thus non-existent. The fair values of interest-bearing liabilities are based on estimates of future cash flows of capital and interest, discounted at market interest rate on the balance sheet date. Derivatives are classified within Level 2. The fair values of derivatives are based on the exchange rates and interest rates on the balance sheet date. At the close of 2020, the Group had derivative assets of SEK 3.7 million (-). Contingent considerations are classified within Level 3. The company's contingent considerations were valued at SEK 7.1 million (15.8) at the close of 2020. Refer to Note 4 for further information about contingent considerations. The items cash and bank balances at SEK 376 million (42), overdrafts at SEK 30 million (93) and other interest-bearing liabilities at SEK 74 million (81) have variable interest rates and are thus exposed to cash flow risk. Overdrafts apply for one (1) year and the requirement is that the equity/ assets ratio of the Group does not fall below 35%. The majority of the Swedish companies are part of a central accounting system with a total limit of SEK 250 million (250), which is the Parent Company's limit. The drawn amount is SEK - million (61). The subsidiaries' balance/liability in the central accounting system is reported in the Parent Company, either as a receivable from, or a liability to, the subsidiaries. The total limit in the Group is SEK 416 million (454). The drawn amount is SEK 30 million (93).

Cont. Note 24

FINANCIAL ASSETS AND LIABILITIES

The Group Category

2020

2019

Financial Assets Other non-current receivables

0.3

Trade receivables

456.2

452.1

Other receivables

Cash and cash equivalents

44.3

41.3

376.1

41.9

Non-current borrowings - non-hedge accounting

42.5

50.0

Other non-current liabilities - contingent considerations

3.7

3.5

Current borrowings - non-hedge accounting

31.2

Bank loans and overdrafts

29.7

92.7

Trade payables

164.0

172.7

Other liabilities - contingent considerations

3.6

12.3

Other liabilities

93.5

62.3

Financial liabilities

OEM is of the opinion that the carrying values of financial assets and liabilities approximate their fair values. Definition of categories: 1: Financial assets at amortised cost, 2: Financial assets that are recognised at fair value through profit or loss. 3: Financial liabilities that are recognised at fair value through profit or loss, 4: Financial liabilities at amortised cost.

CONTINGENT CONSIDERATIONS Opening book value

2020

2019

15.8

14.7

Acquisitions for the year

6.1

7.6

-4.5

-0.5

Consideration paid

-9.0

-6.3

Exchange rate differences

-1.3

0.2

7.1

15.8

Recycled to the income statement

Closing book value LIQUIDITY RISKS

Liquidity risk relates to the risk that the Group will not be able to fulfil its obligations associated with financial liabilities. This is offset, as far as possible, by establishing a maturity profile that makes it possible to take necessary alternative actions to secure capital if necessary. Cash and bank balance at the end of the year was SEK 376 million (42) and financial current assets were SEK 456 million (452). At the close of the year, the Group's financial liabilities were SEK 368 million (425). The maturity profile is presented in the table below. The table shows both capital payments and interest payments.

2020 Total

Within 1 month

Overdraft*

30.8

Other interest-bearing liabilities

12.8

Trade payables, etc. Lease liabilities

2019

1–3 months

3 months –1 year

1.0

–

0.0

0.1

264.9

219.0

36.9

61.8

2.5

5.0

370.3

222.5

41.9

59.2

1–3 months

3 months –1 year

1.0

–

93.0

–

0.1

1.8

12.9

250.8

192.9

54.4

–

3.5

67.4

2.5

7.4

19.8

37.8

427.2

196.4

61.9

114.7

54.2

1 year and longer

Total

Within 1 month

29.8

–

94.0

1.7

10.9

14.9

5.3

3.7

22.4

32.0 46.6

1 year and longer

* Overdraft runs for one (1) year at a time.

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Cont. Note 24

Interest rate risks The interest rate risk is low and essentially consists of the cash flow risk that arises when the items cash and bank balance, overdraft and other interest-bearing liabilities have variable interest rates. A one per cent change in interest on the balance sheet date would entail a change of SEK 2.7 million (-1.3) in the income statement.

Purchases are broken down into percentages as follows:

Currency risks The currency risks are primarily due to purchases being made in foreign currencies. The risks are managed by the customer contract often prescribing that the price must be adjusted in relation to any currency changes. Alternatively, the sale is carried out in the same currency as the purchase. A detailed report is given in connection with the below table. The currency flow of the Group is attributable to imports from Europe, Asia and North America. As long as it is possible, the Group eliminates the effects of exchange rate fluctuations by using currency clauses in the customer contract and by purchasing and selling in the same currency. On the whole, purchasing is carried out in the supplier's functional currency. The table shows that 58 % (61 %) of purchases in 2020 were in EUR, 21% (21%) USD, 3% (3 %) GBP, 9 % (9 %) SEK and 9% (6%) in other currencies. The OEM Group manages the effects of changing exchange rates by currency clauses in the sales contract and by invoicing in the same currency as the corresponding purchase. OEM sells goods to Swedish and foreign customers and either invoices in the purchasing currency or in another currency with currency clauses with regard to the purchase currency. The currency clauses adjust 80% to 100% of the changes in the exchange rate from the sales order to the date of invoicing, depending on whether OEM receives currency compensation for the profit margin or not. There is often a threshold value, which means that exchange rate changes below 2.25% are not taken into account. Currency adjustments are made symmetrically for rising and falling currency rates. Currency clauses and sales in the purchasing currency make up about 71% (68%) of all sales contracts. Where purchasing is based on sales orders, economic hedging of currency risks is achieved in sales and purchasing. However, in many cases there is a mismatch in timing between purchase orders and sales orders. Purchase orders normally run 7-60 days prior to delivery. The supplier credit period is about 28 days. The currency adjustment clauses means that only currency changes between the time of sale and the time of invoicing affect the amount reported in Swedish Kronor. Since invoicing, in accordance with currency adjustment clauses, is carried out in SEK, there is no exchange rate difference after the date of invoicing. OEM applies the same terms and conditions for adjusting currencies and prices for its Swedish and overseas customers. The changes in values related to the currency clauses are therefore treated consistently from the points of view of risk and accounting. A ten per cent change in exchange rates for the EUR and USD would, using a simplified model, mean about SEK 231 million in change in turnover. Elektro Elco AB and Nexa Trading AB use foreign exchange forward contracts. The hedged amount is USD 8.5 million (0.0). Hedge accounting is not applied. The market value was SEK 3.7 million (0.0) as at 31 December 2020. With regard to currency risk, it can be determined that OEM also has balance exposures in the form of net investment in independent foreign operations. At present, these currency risks are not hedged.

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2020

2019

EUR

58%

61 %

USD

21%

21 %

GBP

SEK

Other currencies

100%

100 %

Exchange rate changes significant currencies: Currency

Weighted average 2020

Weighted average 2019

Change

EUR 1

10.42

10.51

-1 %

USD 1

8.18

9.38

-13 %

GBP 1

11.73

11.96

-2 %

The sensitivity of the translation exposure to changes in the exchange rate is explained below: Carrying amount SEK million

Sensitivity analysis, +/5 % in exchange rate. Impact on the Group's shareholders' equity

CZK

8.8

0.4

DKK

34.7

1.7

EUR

218.9

10.9

GBP

52.1

2.6

NOK

6.7

0.3

PLN

24.4

1.2

HUF

0.9

0.0

CNY

9.1

0.5

355.6

17.8

TOTAL

Exchange rates used in the preparation of the accounts to translate the income statements and net assets of foreign subsidiaries: Currency

Weighted average 2020

Dec 2020

Weighted average 2019

Dec 2019

NOK 100

97.06

95.24

106.41

105.14

DKK 100

139.82

135.01

140.80

138.88

EUR 1

10.42

10.04

10.51

10.37

GBP 1

11.73

11.07

11.96

12.14

PLN 1

2.34

2.20

2.44

HUF 100

2.94

2.75

3.21

3.11

CZK 1

0.39

0.38

0.41

Cont. Note 24

Customer and credit risks Defined customer limits are carefully decided and strictly applied. Customer limits are assessed at company level. Customer limits and credit risk are set for all new customers via third party credit reference agencies. The credit limits for existing customer are continually updated.These are also assessed with the help of third party credit reference agencies and using internal knowledge about the customer. Short credit periods and absence of risk concentrations for individual customers, segments or geographic areas contribute to a good risk picture, Nor has a risk landscape that is confirmed by the small historical customer losses and the impact of

Covid-19 during this year led to any changes to the risk assessment. Recognised receivables are measured based on the low level of risk. The Group has approximately 30,000 purchasing customers in total. The largest individual customer accounted for approximately 3% (4%) of sales. The five largest customers accounted for 12% (12%) of sales and the ten largest customers accounted for 17% (16%) of sales. The distribution of risk is thus very good. Bad debts for the year totalled SEK 1.4 million (1.6) which represents 0.04% (0.05%) of sales. The bad debt risk is assessed as low. The average credit period was approximately 43 (44) days.

2020

2019

418.5

385.0

33.1

59.7

Trade receivables matured > 30-90 days

2.6

4.4

Trade receivables matured > 90-180 days

0.6

1.3

Trade receivables matured > 180-360 days

0.2

0.4

Trade receivables matured > 360 days

1.2

1.3

TOTAL

456.2

452.1

PROVISIONS FOR CREDIT LOSSES

2020

2019

-2.1

AGE ANALYSIS, TRADE RECEIVABLES NOT WRITTEN DOWN Trade receivables not matured Trade receivables matured 0-30 days

Balance at beginning of year Effects of business combinations

–

-0.7

-1.1

Confirmed losses

1.0

1.1

CLOSING BALANCE

-1.7

-2.1

Provision for expected losses

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Note 25 Cash Flow Statement

Additional disclosures on the cash flow statement The Group

Interest received Dividends received Interest paid

Parent Company

2020

2019

2020

2019

0.4

0.6

1.2

1.1

–

58.6

47.4

-3.3

-4.0

-1.1

-1.4

8.1

Specification items not included in the cash flow -74.3

72.6

6.8

Capital gain profits

Amortisation and impairment

0.2

0.1

-1.0

–

Other information

-2.6

0.4

-0.1

0.6

–

1.8

–

-76.7

73.0

7.5

8.6

Write-off shares TOTAL

ACQUISITION AND SALE OF SUBSIDIARY COMPANIES AND OPERATIONS – THE GROUP

The Group Acquisitions 2020

Acquisitions 2019

Intangible assets

14.9

8.4

Other fixed assets

5.4

–

Inventories

5.0

1.5

Trade and other receivables

4.4

–

Cash and cash equivalents

3.4

0.1

33.1

10.0

Deferred tax liability

1.4

1.0

Current operating liabilities

5.5

–

6.9

1.0

26.2

9.0

-26.2

-9.0

Acquired assets and liabilities

Total assets

Total liabilities Net Consideration Consideration for acquired units in the current year Consideration payable

6.1

5.3

Specified consideration for acquired units before the current year

-9.0

-7.3

Deducted: Cash and cash equivalents in the acquired operations

3.4

0.1

-25.7

-10.9

IMPACT ON CASH AND CASH EQUIVALENTS

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Cont. Note 25

Other financial liabilities

Bank loans and overdrafts

Lease liabilities

14.8

92.7

66.4

2.9

–

29.7

-1.7

-63.0

-35.3

CLOSING BALANCE 31 DEC 2020

16.0

29.7

60.9

OPENING BALANCE 1 JAN 2019

14.8

101.1

34.7

1.6

–

25.9

-1.6

-8.5

-34.8

–

40.6

14.8

92.7

66.4

CHANGE IN FINANCIAL LIABILITIES OPENING BALANCE 1 JAN 2020 Approved credit Approved credit (non cash-impacting) Repayment of credit

Approved credit Approved credit (non cash-impacting) Repayment of credit Change to IFRS 16 in respect of lease liabilities (non cash-impacting) CLOSING BALANCE 31 DEC 2019

Cash and cash equivalents Cash and cash equivalents only consist of cash and bank balances.

Note 26

Note 28

Information about the Parent Company

Significant estimates and judgements

OEM International AB (publ) is a Swedish-registered public limited company with its headquarters in Tranås, Sweden. The Parent Company shares are listed on NASDAQ Nordic Mid Cap in Stockholm. The Head Office address is Förrådsvägen 2, Box 1009, 573 28 Tranås, Sweden. The consolidated financial statements for 2020 incorporate the financial statements of the Parent Company and its subsidiaries, jointly referred to as the Group.

Note 27 Events after the balance sheet date Events arising as a result of Covid-19 are presented separately in the Directors' Report on page 33. Otherwise, there are no significant events to report after the close of the reporting period.

The company's management and the Audit Committee have discussed the developments, choices and disclosures regarding the Group's significant accounting policies and estimates, as well as the application of these policies and estimates. The recognised values for certain assets and liabilities are based in part on assessments and estimates. Goodwill impairment testing

Assumptions about future conditions and estimates of parameters were made when calculating the values in use of cash-generating units for the company's goodwill impairment testing. An account of these is given in Note 12. The company management considers that no reasonably possible change in the key assumptions would cause the carrying amounts of the units to exceed the estimated values in use. Measurement of other intangible assets

Other intangible fixed assets are mainly the values arising on acquisition, comprising SEK 8.8 million for supplier relationships and SEK 25.3 million for customer relationships. The supplier relationship, with a value of SEK 8.8 million, has an indefinite useful life. Customer relationships consist of establishments on new markets and it is deemed is that these will be written down over a five-year period. A maximum of 49 months remain of the amortisation period.

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Note 29 Earnings per share

Profit/loss for the year Earnings per share has been based on the following number of shares: Average number of outstanding shares

Earnings per share on the number of outstanding shares Earnings per share in SEK

2020

2019

317.3

289.0

23,107,462

2020

2019

13.73

12.50

There is no dilutive effect. Calculations of basic and diluted earnings per share are based on the year's profit attributable to the Parent Company's shareholders.

Note 30 Related party disclosures The OEM Group's related parties consist primarily of senior executives (Note 5), other senior executives (Note 5) and major shareholders. Other than Board fees, salaries and other remuneration, no additional remuneration has been paid to related parties. The Parent Company and its subsidiaries are related parties. See Note 14. The sale of services to the Parent Company's subsidiaries accounts for 100% of its net sales. Related party transactions are priced at market-rate terms and conditions.

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Note 31 Proposed allocation of profits PARENT COMPANY The following profits are at the disposal of the Annual General Meeting Retained earnings

407,659,857

Profit/loss for the year

231,896,700 639,556,557

The Board of Directors proposes that a dividend of SEK 7.50 per share be paid to the shareholders *

173,769,818

and that the following be carried forward

465,786,740 639,556,557

* The Board of Directors is also asking shareholders at the Annual General Meeting on 22 April 2021 to pass a resolution to approve an automatic redemption of shares entailing a 4:1 share split. This procedure splits each existing share in the company into four shares, one of which is a redemption share. The redemption share will be redeemed for SEK 12.50. In total, about SEK 290 million will thus be distributed to the shareholders in addition to the proposed cash dividend. In order to restore the share capital, the proposal also includes a bonus issue to be financed out of distributable reserves. The Board of Director's comments on the dividend proposal may be viewed on the company's website, www.oem.se or is available upon request. The Board of Directors recommends 26 April 2021 as the record date. The Board of Directors and the Managing Director declare that the Annual Report has been prepared in accordance with generally accepted accounting practice in Sweden and that the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as stipulated in the European Commission's and the Swedish Financial Reporting Board's Regulation (EC) No. 1606/2002 of 19 July 2002, regarding the application of international accounting standards. The Annual Report and the consolidated financial statements give a fair and true view of the Parent Company and the Group's financial position and results.

The Directors' Report for the Parent Company and the Group, respectively, gives a true and fair summary of the Group's and Parent Company's business operations, financial position and results and describes significant risks and uncertainties faced by the Parent Company and companies included in the Group. As seen below, the Annual Report and the consolidated financial statements were approved for publication by the Board of Directors on 16 March 2021. The Group's Statement of Income, Statement of Comprehensive Income and Statement of Financial Position and the Parent Company's Income Statement and Balance Sheet will be matters for approval at the Annual General Meeting on 22 April 2021.

Tranås, Sweden, 16 March 2021

Petter Stillström

Ulf Barkman

Chairman of the Board

Mattias Franzén

Member of the Board

Richard Pantzar

Member of the Board

Jörgen Rosengren

Member of the Board

Agne Svenberg

Member of the Board

Åsa Söderström Winberg

Member of the Board

Jörgen Zahlin

Member of the Board

Managing Director

Our Auditor's Report was presented on 18 March 2021 Öhrlings PricewaterhouseCoopers AB

Martin Odqvist

Chartered Accountant Principal auditor

Christoffer Sillén

Chartered Accountant

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Auditors' Report To the Annual General Meeting of OEM International AB (publ), Corp. ID no. 556184-6691

Statement on the Annual Report and consolidated financial statements We have conducted an audit of the Annual Report and the consolidated financial statements of OEM International AB for the year 2020, with the exception of the Corporate Governance Statement on pages 34-37. The company's Annual Report and consolidated financial statements are presented on pages 31-88 of this document. In our opinion, the Annual Report has been prepared as required by the Swedish Annual Accounts Act and presents fairly, in all material respects, the financial position of the Parent Company at 31 December 2020, and its financial performance and its cash flows for the year, in accordance with the Swedish Annual Accounts Act. The consolidated financial statements have been prepared as required by the Swedish Annual Accounts Act and present fairly, in all material respects, the financial position of the Group at 31 December 2020, and its financial performance and cash flows for the year, in accordance with the International Financial Reporting Standards (IFRS), as approved by the European Union, and the Swedish Annual Accounts Act. Our opinion does not cover the Corporate Governance Statement on pages 34-37. The Directors' Report is consistent with the remainder of the Annual Report and the consolidated financial statements. We therefore recommend that the General Meeting of Shareholders adopt the income statement and the balance sheet of the Parent Company and the Group's statement of comprehensive income and statement of financial position. Our opinions in this statement on the Annual Report and the consolidated financial statements are consistent with the content of the additional report that has been presented to the Parent Company's Audit Committee in compliance with Article 11 of the EU Audit Regulation No. 537/2014.

accounting estimates that involved making assumptions and considering forecasts about future events that are inherently uncertain. As in all audits, we also addressed the risk of override of internal controls by the Managing Director and the Board of Directors, including consideration of whether there was evidence of systematic non-conformances that have given rise to the risk of material misstatement due to fraud. We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. OEM's operations are conducted in subsidiaries in 10 or more countries, mainly in Europe. The subsidiaries in Sweden and Finland jointly account for a significant percentage of the Group's operations. It was natural and necessary to perform an audit for these entities. The audit in Sweden was performed by the Group team and in Finland by a local PwC team. After consultation with OEM's Board and Group management, the Group audit in other countries included an additional 12 entities, where an audit was also performed with the assistance of PwC's network, with the exception of the UK where it was performed by a local audit firm. The Group team has reviewed the work which is performed by all entity auditors to ensure that sufficient auditing has been performed, and has also continually communicated to understand how the audit has been conducted. In addition to this, the Group team has examined the Group consolidation, the Group's Annual Report and has assessed a number of complex transactions and issues. These have included acquisition analyses and impairment testing of intangible assets with an indefinite useful life, such as goodwill. All in all, this means that we are satisfied that sufficient audit work has been undertaken and particularly within the PwC network.

Basis for opinion

Materiality

We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibility under these standards is described in more detail in the section “Responsibilities of the auditors”. We are independent from the Parent Company and the Group in accordance with generally accepted auditing standards in Sweden and have otherwise fulfilled our professional responsibilities in compliance with these requirements and standards. This means that, to the best of our knowledge and belief, no prohibited non-audit services as referred to in Article 5.1 of the European Regulation on specific requirements regarding statutory audit of public interest entities (No. 537/2014) have been provided to the audited entity or, where applicable, to its Parent Company or its regulated entities within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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

Our audit approach The objective and scope of the audit

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

Opinion

We designed our audit by determining level of materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at areas where the Managing Director and the Board of Directors made subjective judgements, for example in respect of significant

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Key audit matters

Cont. Auditors' Report

Key audit matter

How our audit addressed the key audit matter

Goodwill impairment testing

Together with PwC's valuation specialists, we initially examined whether the established impairment tests, one for each cash generating unit, had been conducted in accordance with accepted principles and methods. We also examined whether they had been applied consistently with previous years. We checked the key assumptions that the company management and the Board of Directors have applied in the impairment testing, such as growth, profitability, changes in working capital and discount rates. We assessed these assumptions by comparing them against the 2021 budget for each cash generating unit. We also evaluated the reasonableness by comparing them against historical performance and checked applied discount rates against observable market data, where applicable. With the impairment test as a starting point, we have carried out simulations and sensitivity analyses in order to understand how a change affects the values and indicates a possible impairment loss. These tests have also formed the basis of our review of the disclosures that are presented in Note 12 in the Annual Report.

Goodwill accounts for SEK 145.8 million of the Group's total assets, which we consider to be a significant amount. OEM describes measurement of recognised goodwill on page 54 under “Intangible fixed assets” and “Impairment losses”, and in Notes 12 and 28. Since goodwill is not amortised, it must be tested for impairment annually or more frequently. OEM has done so during the last quarter of 2020. Impairment testing involves using several assumptions about future market conditions, opportunities to achieve growth, profitability, discount rates and so on. These are complex judgements and estimates that the company management and Board of Directors have to make. Since goodwill accounts for a significant amount and the assumptions that need to be made include judgements and estimates, each of which can have a material impact on measurement, this is a key audit matter.

Information other than the Annual Report and the consolidated financial statements This document also contains other disclosures than the Annual Report and the Consolidated Financial Statements and can be found on pages 1-30 and 89-93. This other information also comprises the remuneration report that we have examined before the date for this Auditor's Report. The Board of Directors and the Managing Director are responsible for the other disclosures. Our opinion on the Annual Report and Consolidated Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the Annual Report and Consolidated Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Annual Report and Consolidated Financial Statements. In this procedure, we also take into account the knowledge we have otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the Annual Report and consolidated financial statements and for ensuring that they provide a true and fair view, as required by the Swedish Annual Accounts Act and, for the consolidated financial statements, in accordance with the International Financial Reporting Standards (IFRS) as approved by the European Union, and the Swedish Annual Accounts Act. The Board of Directors and the Managing Director are also responsible for such internal control as they determine necessary to enable preparation of an Annual Report and consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Annual Report and the Consolidated Financial Statements, the Board of Directors and the Managing Director are responsible for the assessment of the company's and the Group's ability to continue as a going concern. They disclose, as applicable, matters that can impact the ability to continue as a going concern and to use the going concern basis of accounting. The Board of Directors and the Managing Director cannot use the going concern basis of accounting, however, if they intend to liquidate the company, cease trading or have no realistic alternative but to do so. The Board's Audit Committee must oversee the company's financial reporting activities, without it affecting the responsibilities and duties of the Board.

Auditors' responsibility Our objectives are to obtain reasonable assurance about whether the Annual Report and the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Annual Report and the consolidated financial statements. A more detailed description of our responsibilities for the audit of the Annual Report and the consolidated financial statements can be found on the website of the Swedish Inspectorate of Auditors: www.revisorsinspektionen.se/revisornsansvar. This description is part of the Auditor's Report.

Statement on other legal and statutory requirements Opinion In addition to our audit of the Annual Report and the consolidated financial statements, we have also audited the administration of the Board of Directors and the Managing Director of OEM International AB for the year 2020 and the proposed appropriations of the company's profit or loss. We recommend that the General Meeting of Shareholders appropriate the profit as proposed in the Directors' Report and grant the members of the Board and the Managing Director discharge from liability for the financial year. Basis for opinion We have conducted our audit in compliance with generally accepted auditing standards in Sweden. Our responsibility under this practice is described in more detail in the section “Responsibilities of the auditors”. We are independent of the Parent Company and the Group in accordance with generally accepted auditing standards in Sweden and we have otherwise fulfilled our professional responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of the Board and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. The dividend proposal also includes an assessment of whether the dividend can be justified given the requirements that the company's and the Group's business nature, scope and

O E M 2 02 0

risks place on the size of the Parent Company's and the Group's equity, consolidation needs, liquidity and position in general. The Board is responsible for the company's organisation and management of the company's affairs. This involves regularly assessing the company's and the Group's financial situation and ensuring that the company's organisation is structured to allow satisfactory controls of its accounts, funds management and financial affairs in general. The Managing Director is in charge of day-to-day management in accordance with guidelines and instructions from the Board of Directors and is responsible for taking necessary measures to ensure that the company's accounts are prepared in accordance with legal requirements and that funds management is controlled in a satisfactory manner. Auditors' responsibility Our objective concerning the audit of the management of the company's affairs, and thereby our opinion about discharge from liability, is to obtain audit evidence to ascertain, with a reasonable degree of assurance, whether any Board member or the Managing Director, in any material respect: • has undertaken any action or been guilty of any omission which can give rise to liability to the company • in any other way has acted in non-compliance with the Swedish Companies Act, the Swedish Annual Accounts Act or the Articles of Association. Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion on this, is to ascertain, with a reasonable degree of assurance, whether the proposal is in accordance with the Swedish Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted audit-

ing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Swedish Companies Act. A more detailed description of our responsibilities for the audit of the management of the company's affairs can be found on the website of the Swedish Inspectorate of Auditors: www.revisorsinspektionen.se/revisornsansvar. This description is part of the Auditor's Report. Auditor's review of the Corporate Governance Statement The Board of Directors is responsible for the Corporate Governance Statement on pages 34-37 and for ensuring that it has been prepared in accordance with the Swedish Annual Accounts Act. Our review has been carried out in accordance with FAR's auditing standard RevU 16 Auditor's review of the Corporate Governance Statement. This means that our review of the Corporate Governance Statement has a different objective and is substantially less in scope than the objective and scope of an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that this review provides sufficient basis for our opinions. A Corporate Governance Report has been prepared. Disclosures in accordance with Chapter 6, Section 6, paragraph 2, items 2–6 of the Swedish Annual Accounts Act and Chapter 7, Section 31, paragraph 2 of the same Act are consistent with the remainder of the Annual Report and the consolidated financial statements, and are in accordance with the Swedish Annual Accounts Act. Öhrlings PricewaterhouseCoopers AB, Torsgatan 21, 113 97 Stockholm, Sweden, was appointed OEM International AB's auditor by the General Meeting of Shareholders on 22 April 2020 and has been the company's auditor since 3 June 2019.

Jönköping, 18 March 2021 Öhrlings PricewaterhouseCoopers AB

Martin Odqvist

Chartered Accountant Principal auditor

O E M 2 02 0

Christoffer Sillén

Chartered Accountant

OEM Shares OEM International on the stock exchange OEM's shares were launched on the Stockholm Stock Exchange's OTC List in December 1983 and the growth in the share price has been good since then. An investor who purchased 100 shares in OEM for SEK 12,500 at the initial public offering would have a holding of 7,200 shares worth SEK 2,224,800 on 31 December 2020. OEM's shares were transferred to the O List in 2000 and its shares have been trading on the NASDAQ Nordic Small Cap market since 2006. The shares were transferred to the NASDAQ Nordic Mid Cap market in 2014. Price trends The price of OEM International shares rose 24% during the year from SEK 250.00 to a closing price of SEK 309.00. During the year, the Stock Exchange's index for Nasdaq Stockholm_PI rose 13%. The highest price paid during the year was SEK 320.00 on 8 October, 10 December, 11 December, 14 December, 16 December, 17 December, 18 December, 22 December and 23 December. The lowest price paid during the year was SEK 171.00 on 18 March. OEM's market value at the close of 2020 was SEK 7,159 million. Sales In 2020, 2,456,563 Class B shares (1,208,972) were sold, corresponding to a turnover rate of 11% (5%). The average shareholder in OEM therefore retains shares for about 8 (15) years. OEM's Class B shares were sold on 100% (97%) of the trading days. The average daily turnover in 2020 was 9,748 shares (4,975). As at 31 December 2020, OEM International had 4,120 shareholders (3,917). Institutional ownership is about 45% (45%) and foreign ownership amounts to 16% (11 %). Repurchase of shares The repurchase programme for shares, which was adopted for the first time by the Annual General Meeting in 2000, is intended to improve the company's capital structure and contribute positively to return on shareholders' equity and earnings per share. After implemented reductions the previous year there are 23,169,309 shares in the company at year-end. In 2011, the company repurchased 61,847 shares at an average price of SEK 53.26. The company had a holding of 61,847 shares at the end of the year. The Board has been authorised by the Annual General Meeting to repur-

chase up to 10% of the total number of shares, i.e. 2,316,931 shares. The objective is to continue the repurchases up to 10% of the total number of shares wherever the Board considers the conditions to be attractive. The acquired shares will be retained, deregistered or used as payment in corporate acquisitions. We have minimised the disadvantages which this can entail, that is, that the number of shareholders is decreased and the liquidity of the share declines, by mainly purchasing large blocks of shares. Liquidity boosting measures OEM International has signed an agreement with ABG Sundal Collier ASA regarding liquidity guarantees for company shares. The aim is to reduce the difference between purchase and sales prices. The goal is to achieve a lower investment cost and to minimise the share trading risk for present and future share holders. Commitments fall within the scope of the NASDAQ Nordic Stock Exchange system with liquidity guarantees and started on 1 December 2004. Dividend policy The Board of OEM International aims to propose a reasonable dividend of profits to the shareholders, by considering the financial position and any need for acquisitions or investments in the operations. Dividends The Board proposes a dividend of SEK 7.50 (-) per share, which is 14% (-) of equity available for dividend distribution in the Group. Financial information OEM aims to maintain high quality as regards information to the market and the media. The goal is for the information to facilitate an accurate valuation and liquid trading of the shares. The dates for the Annual General Meeting, interim reports and annual report for the 2021 financial year are shown on page 93 of this Annual Report. Financial information is also published on the Group's website (www.oem.se). The Company offers shareholders the opportunity to receive interim reports and other press releases by e-mail, at the same time as they are made public to the market. Please send an e-mail to: info@oem.se and state "Corporate Information" to receive mailings from us.

Share trends 250

200

150

100

2016

2017

The chart compares the growth of the OEM share against the OMX Stockholm_PI. The start point is the 100 Index.

2018

2019

OEM International B

2020

OMX Stockholm_PI

O E M 2 02 0

Change in share capital Year

Transaction

Opening value

0.1

500

100.00

1981

Bonus issue

0.3

0.4

4, 000

100.00

1983

Split

1983

Bonus issue

Change in share capital SEK million

Total share capital, SEK million

Total no. of shares

Par value per share SEK

0.4

40, 000

10.00

0.4

0.8

80, 000

10.00

1983

New issue

0.8

1.6

160, 000

10.00

1983

New issue

0.4

2.0

200, 000

10.00

1986

Bonus issue

4.0

6.0

600, 000

10.00

1986

New issue through conversion

0.4

6.4

636, 000

10.00

1994

Split

1996

Bonus issue

6.4

1, 272, 000

5.00

6.4

12.7

2, 544, 000

5.00

1996

Bonus issue

12.7

25.4

5, 088, 000

5.00

1997

New issue through subscription in kind

20.1

45.5

9, 113, 703

5.00

2001

Reduction

-3.9

41.6

8, 332, 203

5.00

2003

Reduction

-1.0

40.6

8, 132, 203

5.00

2004

Reduction

-2.0

38.6

7, 723, 103

5.00

2007

Split

38.6

30, 892, 412

1.25

2007

Redemption

-9.6

29.0

23, 169, 309

1.25

2007

Bonus issue

9.6

38.6

23, 169, 309

1.67

2014

Split

38.6

46, 338, 618

0.83

2014

Redemption

-19.3

19.3

23, 169, 309

0.83

2014

Bonus issue

19.3

38.6

23, 169, 309

1.67

Class A shares

Class B shares

Percentage share capital

Percentage votes

Shareholding structure OEM's largest shareholders as at 30 Dec 2020

Orvaus AB

1,627,320

1,948,881

15.5%

27.7 %

Siv Franzén

1,280,376

1,235,790

10.9%

21.3 %

Agne Svenberg

1,200,000

23,400

5.3%

18.3 %

636,000

250,000

3.8%

10.0 %

AB Traction Nordea Investment Funds

2,122,748

9.2%

3.2 %

Lannebo Fonder

2,012,495

8.7%

3.1 %

SEB Investment Management

1,474,789

6.4%

2.2 %

630,681

2.7%

1.0 %

Cliens Fonder Fjärde AP-fonden

541,826

2.3%

0.8 %

Handelsbanken Fonder

479,738

2.1%

0.7 %

10,720,348

66.9%

88.4 %

7,643,418

33.1%

11.6 %

4,743,696

18,363,766

100.0%

100.0 %

Total 10 owners

4,743,696

Other TOTAL Votes per share

The company's holding of 61, 847 Class B shares is not included in the above breakdown. The purpose is to provide a clear overview of the various shareholders' interests in the company.

O E M 2 02 0

Shareholder analysis As at 30 Dec 2020* SIZE CLASS

Percentage of no. of shareholders

Percentage of share capital

1–500

71.9

1.3

501–1, 000

10.2

1.4

7.3

1.9

1, 001–2, 000 2, 001–5, 000

5.4

3.1

5, 001–10, 000

2.0

2.6

10, 001–20, 000

1.1

2.9

20, 001–50, 000

0.8

4.5

50, 001–100, 000

0.3

4.4

100, 001–5, 000, 000

0.8

77.9

100.0

TOTAL The total number of shareholders in OEM is 4,120.

* Source: Euroclear Sweden AB. Directly and fund manager registered. In the table, ownership details may be a combination of several items in Euroclear Sweden's statistics. This combination is intended to show an institution's or a private individual's total ownership in OEM.

Key indicators for OEM shares The past five years 2020

2019

2018

2017

2016

SEK

142

134

118

103

Earnings per share*

SEK

13.69

12.47

10.71

9.23

8.67

Shareholders' equity per share *

SEK

58.95

46.03

39.97

34.69

30.62

Dividend**

Key performance indicators Sales per share Sales increase per share

SEK

7.50

6.75

6.00

5.50

Dividend/Income

Dividend/Shareholders' equity

SEK

20.26

12.53

9.37

8.26

9.43

SEK

309

250.00

190.50

177.00

151.00

SEK million

7,159

5,792

4,414

4,101

3,499

Cash flow per share*

Risk key indicators Rate of turnover for shares

Valuation ratios Quoted price as per 31 December Quoted price as per 31 December* P/S ratio

times

2.2

1.8

1.4

1.5

P/E ratio

times

22.6

20.0

17.8

19.2

17.4 493

Price/Shareholders' equity

524

543

477

510

EV/Sales

times

2.1

1.8

1.5

EBIT multiple

times

16.3

15.4

13.2

13.8

14.7

2.4

3.5

3.4

3.6

Direct return * Calculated on total number of shares.

** The dividend for 2020 refers to the dividend proposed by the Board.

O E M 2 02 0

Definitions Direct return

P/E ratio

EBIT multiple

P/S ratio

EBITA*

Return on equity

Dividend per share divided by the quoted price at end of year.

Enterprise value divided by operating profit after depreciation/amortisation.

Operating profit before amortisation of acquisition-related intangible fixed assets. EBITA margin

EBITA as a percentage of net sales. Shareholders' equity per share

Shareholders' equity divided by the average number of shares. EV/Sales

Stock market value in relation to net sales.

Profit for the year divided by average shareholders' equity. Return on capital employed

EBITA plus finance income as a percentage of average capital employed. Return on total capital

EBITA plus finance income as a percentage of average total capital. Interest coverage ratio

Enterprise values (market value + net debt) divided by net sales.

Operating profit for the year plus finance income in relation to interest expense.

Capital turnover rate

Operating margin

Cash flow per share

Debt/equity ratio

Quick ratio

Equity/assets ratio

Price/Shareholders' equity

Capital employed

Net sales per share

Dividend/Shareholders' equity

Net sales per employee

Dividend/Profit payout ratio

Net sales increase per share

Earnings per share

Net debt

Profit margin

Net sales divided by total assets.

Operating cash flows divided by the average number of shares.

Current assets less inventories divided by current liabilities.

Quoted price divided by shareholders' equity per share.

Net sales divided by the number of shares on the market at end of year.

Net sales divided by average number of employees.

Increase of the net sales per share.

Interest-bearing liabilities less cash and cash equivalents. Rate of turnover for shares

The number of shares sold during the year divided by the number of outstanding shares at year-end.

*In addition to the conventional financial performance measures established by IFRS, OEM uses the term EBITA/EBITA margin as defined above. The reason is that OEM wishes to summarise the companies' operations with regard to profit and margins, adjusted for amortisations of Group-related amortisations arising in connection with acquisitions and thereby improve the comparability of financial information across different periods of time.

Quoted price as per 31 December divided by earnings per share.

O E M 2 02 0

Operating profit as a percentage of net sales.

Interest-bearing liabilities divided by shareholders' equity.

Shareholders' equity as a percentage of total capital.

Total assets minus non-interest-bearing liabilities and provisions.

Dividends in relation to the Group's shareholders' equity.

Dividends in relation to profit/loss for the year.

The profit or loss for the year divided by the average number of shares.

Profit/loss before tax as a percentage of sales.

Annual General Meeting

The Annual General Meeting will be held on Thursday 22 April 2021 in Tranås, Sweden Due to the Covid-19 pandemic and in order to minimise the risk of spreading the virus, the Board of Directors has decided that the Annual General Meeting will be conducted without the physical presence of shareholders, representatives and external parties, and that shareholders are able to exercise their voting rights by postal vote only before the Annual General Meeting. Information about the decisions made by the Meeting will be published on 22 April 2021 as soon as the final results of the postal votes are known.

Requirements for participation Shareholders wishing to attend the Meeting must: • be entered in the share register held by Euroclear Sweden AB no later than Wednesday 14 April 2021. If the shares are registered with a nominee, the shareholder must request that the nominee registers the shares for voting no later than 16 April 2021, and • send their votes using the postal voting form to the company ensuring that it arrives no later than 21 April 2021. The postal voting form is available on the company's website from 19 March 2021 (more information below). The shareholder registers to attend the Meeting by sending a postal voting form. No separate notification of participation is required. Shareholders whose shares are registered through a bank or other authorised agent must instruct their broker to register their shares in the share register held by Euroclear Sweden AB to be entitled to participate in the Meeting (voting right registration). As set forth above, the final date for the bank, broker or nominee to register the voting right with Euroclear Sweden AB is 16 April 2021.

Instructions on how to cast a postal vote The Board of Directors has decided that the shareholders may only exercise their right to vote by postal voting in accordance with the temporary AGM voting legislation. A special form must be used for the postal vote. The form is available on the company's website www.oem.se/Investors/Corporate Governance Statement/Annual General Meeting from 19 March 2021. The shareholder may not add any specific instructions or conditions to the postal vote. Doing so will result in the entire postal vote being rejected as invalid. When the form has been completed and signed, it must be delivered to OEM International AB by Wednesday 21 April 2021 at the latest. The form can be sent by e-mail to ir@oem. se or by post to OEM International AB, Anna Enström, Box 1009, 573 28 Tranås, Sweden. If the postal vote is by proxy, the original copy of the power of attorney and any authorisation documents must be sent to the company together with the postal vote by Wednesday 21 April 2021 at the latest. If you would like the postal vote form or other documents relating to the notice to be sent to you by post, contact OEM International AB, Anna Enström on +46 (0)75-242 40 05.

Dividends The Board of Directors recommends to the Annual General Meeting a dividend of SEK 7.50 per share for the financial year 2020 and Monday 26 April 2021 as the record date. If approved by the Annual General Meeting, the dividend is payable on Thursday 29 April 2021 to shareholders on the share register on the record date.

4:1 share split combined with an automatic redemption To facilitate trading of company shares and alter the company's capital structure, OEM's Board of Directors proposes a 4:1 share split combined with an automatic redemption procedure. One existing share in the company is thereby split into four shares, one of which is a redemption share. This redemption share will be redeemed for SEK 12.50. The proposal means that approximately SEK 290 million will be distributed to the shareholders in addition to the proposed cash dividend. In brief, the proposal means that: • The company implements a 4:1 share split. • One of the shares, the redemption share, will be automatically redeemed for SEK 12.50. • The proposed record date for the share split is Tuesday 4 May 2021. • Shareholders who wish to sell their redemption shares before the redemption will have the opportunity to do so from 6 May through 20 May 2021 when the trading of the redemption shares takes place on the Nasdaq Stockholm stock exchange. • Payment of the redemption amount is expected to take place on 27 May 2021. The redemption procedure is conditional on the decisions of the Annual General Meeting in April 2021 on the following items of business: • Amendment of the Articles of Association so that the limits for the share are increased from 20,000,000 – 80,000,000 to 60,000,000 – 240,000,000. • Share split, whereby each existing share, from Class A and Class B, are split into four shares, one of which will be known as a redemption share. • Reduction of the share capital for repayment to the shareholders through the withdrawal of 23,169,309 redemption shares, of which 4,743,696 are Class A and 18,425,613 are Class B shares. • Increase of the share capital by SEK 9,653,878 and 75 öre through a bonus issue, whereby the company's distributable equity shall be used. The detailed terms and conditions for the redemption procedure and related actions are set out in the formal notice of the Meeting

Business The agenda and items of business for the Meeting will be published on OEM's website (www.oem.se) and at the company's head office. Documents relating to the Meeting will also be sent by post to shareholders who so request and who provide their address.

Future reports Interim report – January - March ................. Interim report – January - June ................... Interim report – January - September.......... Financial Statement 2021 ............................

22 April 2021 13 July 2021 20 October 2021 17 February 2022

O E M 2 02 0

REGION SWEDEN OEM Automatic AB Box 1011, Dalagatan 4 573 28 TRANÅS, Sweden Tel:............ +46-75-242 41 00 E-mail:..... info@oemautomatic.se Website:. www.oemautomatic.se

Svenska Batteripoolen AB Box 1011, Fredriksbergsgatan 2 573 28 TRANÅS, Sweden Tel:............ +46-75-24 24 300 E-mail:..... kundsupport@batteripoolen.se Website:. www.batteripoolen.se

OEM Electronics AB Box 1025, Förrådsvägen 2 573 29 TRANÅS, Sweden Tel:............ +46-75-242 45 00 E-mail: info@oemelectronics.se Website: www.oemelectronics.se

Agolux AB Box 6, Dalagatan 4 573 21 TRANÅS, Sweden Tel:............ +46-75-242 45 50 E-mail: kundsupport@agolux.se Website: www.agolux.se

OEM Motor AB Box 1011, Fredriksbergsgatan 2 573 28 TRANÅS, Sweden Tel:............ +46-75-242 44 00 E-mail:..... info@oemmotor.se Website:. www.oemmotor.se

Elektro Elco AB Tallvägen 5 SE-564 35 BANKERYD, Sweden Tel:............ +46-36-290 60 00 E-mail:..... elektro@elco.se Website:. www.elco.se

Internordic Bearings AB Box 105, Lerbacksgatan 3 571 22 NÄSSJÖ, Sweden Tel:............ +46-75-242 49 40 E-mail:..... info@internordic.com Website:. www.internordic.com

ATC Tape Converting AB Box 575, Veddestavägen 17 175 26 JÄRFÄLLA, Sweden Tel:............ +46-8-564 708 80 E-mail:..... info@atc.se Website:. www.atc.se

Telfa AB Box 1011, Fredriksbergsgatan 2 573 28 TRANÅS, Sweden Tel:............ +46-75-24 24 450 E-mail:..... info@telfa.se Website:. www.telfa.se

Nexa Trading AB Datavägen 37 B 436 32 ASKIM, Sweden Tel:............ +46-31-14 13 80 E-mail:..... info@nexa.se Website:. www.nexa.se

Svenska Helag AB Box 6, Dalagatan 4 573 21 TRANÅS, Sweden Tel:............ +46-75-242 46 00 E-mail:..... helag@helag.se Website:. www.helag.se

AB Ernst Hj. Rydahl Bromsbandfabrik Box 12, Brisgatan 19, 651 02 KARLSTAD, Sweden Tel:............ +46-10-550 94 00 E-mail:..... mail@rydahls.se Website:. www.rydahls.se IBEC Aartsdijkweg 111 NL-2676 LE MAASDIJK, the Netherlands Tel:............ +31-174 52 51 00 E-mail:..... info@ibec.cn Website:. www.ibec.cn

REGION FINLAND, THE BALTIC STATES AND CHINA

OEM Automatic (Shanghai) Co., Ltd Room 117, Building 8 Shanghai Zhongtian Science & Technology Business Park, 787 KangQiao Rd SHANGHAI 201315, P.R. of China Tel:............ +86-21-3331 1200 E-mail:..... info@oemautomatic.cn Website:. www.oemautomatic.cn OEM Automatic FI Box 9, 20101 TURKU Fiskarsinkatu 3, 20750 TURKU, Finland Tel:............ +358-207 499 499 E-mail:..... info@oem.fi

Website:. www.oem.fi Akkupojat Oy Satakunnankatu 38 28130 PORI, Finland Tel:............ +358 2 631 8600 E-mail:..... akkupojat@akkupojat.fi Website:. www.akkupojat.fi OEM Electronics FI Box 9, 20101 TURKU Fiskarsinkatu 3, 20750 TURKU, Finland Tel:............ +358-207 499 499 E-mail:..... info@oem.fi Website:. www.oemelectronics.fi

Rauheat Oy Kirvestie 1 26510 Rauma, Finland Tel:............ +358 2 54 90 400 E-mail:..... rauheat@rauheat.fi Website:. www.rauheat.fi

Website:. www.oem.ee OEM Automatic SIA Vilandes 3-3 1010 RIGA, Latvia Tel:............ +372-5295 114 E-mail:..... info@oemautomatic.lv Website:. www.oemautomatic.lv

OEM Automatic Oü Aia 8 80010 PÄRNU, Estonia Tel:............ +372-5059 849 E-mail:..... info@oem.ee

OEM Automatic UAB Raudondvario str. 101, 47184 KAUNAS, Lithuania Tel:............ +370-64015 878 E-mail:..... info@oem.lt Website:. www.oem.lt

OEM Automatic Sp. z o.o. ul. Działkowa 121A 02-234 WARSAW, Poland Tel:............ +48-22-863 27 22 E-mail:..... info@pl.oem.se Website:. www.oemautomatic.pl

OEM Automatic spol. s.r.o. Prazska 239, 250 66 ZDIBY, Czech Republic Tel:............ +42-0-241 484 940 E-mail:..... info@oem-automatic.cz Website:. www.oemautomatic.cz

OEM Electronics PL ul. Działkowa 121A, 02-234 WARSAW, Poland Tel:............ +48-22-863 27 22 E-mail:..... info@pl.oem.se Website:. www.oemelectronics.pl

OEM Automatic, s.r.o. Bratislavska 8356, 917 01 TRNAVA, Slovakia Tel:............ +421-33-2400-160 E-mail:..... info@oem-automatic.sk Website:. www.oemautomatic.sk

REGION DENMARK, NORWAY, UK AND EAST CENTRAL EUROPE

OEM Automatic AS Postboks 2144 STRØMSØ Bjørnstjerne Bjørnsonsgate 110 3003 DRAMMEN, Norway Tel:............ +47-32 21 05 05 E-mail:..... post@oem.no Website:. www.oem.no

OEM Automatic Ltd Whiteacres Cambridge Road Whetstone, LEICESTER LE8 6ZG UK Tel:............ +44-116 284 99 00 E-mail:..... information@uk.oem.se Website:. www.oem.co.uk

OEM Automatic Klitsø A/S Engholm Parkvej 4 3450 ALLERØD, Denmark Tel:............ +45-70 10 64 00 E-mail:..... info@oemklitso.dk Website:. www.oemklitso.dk

Zoedale Ltd Priory Business Park, Stannard Way Bedford MK44 3 WG, UK Tel:............ +44-1234 83 28 32 E-mail:..... enquiries@zoedale.co.uk Website:. www.zoedale.co.uk

OEM Automatic Kft. P.O. Box: 111, Gyár u. 2 2058 BUDAÖRS, Hungary Tel:............ +36-23-880 895 E-mail:..... info@oemautomatic.hu

OEM INTERNATIONAL Box 1009, Förrådsvägen 2 573 28 TRANÅS, Sweden Tel: ................. +46-75-242 40 00 E-mail: .......... info@oem.se Website:....... www.oem.se

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www.oem.se

| 20 March 2021 | PRINTERS: TMG Tabergs | PHOTOGRAPHERS: Patrik Svedberg and others.

ADDRESSES