HANZA : annual report 2020

ALL YOU NEED IS ONE ™

Annual Report 2020

Contents

Business description

This is HANZA	4
The year in brief	6
CEO word	8
Trends and Market	10
Strategies and Objectives	12
Customer case - Getinge	14
Sustainability
Sustainable business	16
A Sustainable employer	22
The shares and ownership structure	24
Formal Annual Report
Management Report	27
Corporate Governance Report	33
Consolidated Income Statement	37
Consolidated Comprehensive Income Statement	37
Consolidated Balance Sheet	38
Consolidated Report of Changes	40
in Shareholders' Equity
Consolidated Statement of Cash Flow	41
Parent Company Income Statement	42
Parent Company Comprehensive	42
Income Statement
Parent Company Balance Sheet	43
Parent Company Report of Changes	45
in Shareholders' Equity
Parent Company Statement of Cash Flow	46
Notes	47
Declaration	81
Auditor's Report	82
Board of Directors and Group Management
Board of Directors	86
Group Management	87
Five-year overview	89
Definitions	90
Addresses	91

Financial calendar

• Interim report for the period January to March 2021: April 26, 2021
• Interim report for the period January to June 2021: July 27, 2021
• Interim report for the period January to September 2021:
  November 9, 2021

Annual general meeting

HANZA Holding AB:s 2021 AGM will be held on April 26, 2021.

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Please note that this English translation is for information purposes only. In case of any discrepancies between this version and the Swedish version of the annual report, the Swedish version shall prevail.

HANZ A ANNUAL REPORT 2020

HANZA modernizes and streamlines the manufacturing industry. By gathering different manufacturing technologies locally, the company creates shorter lead times, more environmentally friendly processes and increased profitability for its customers.

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HANZ A ANNUAL REPORT 2020

THIS IS HANZA

This is HANZA

HANZA offers a combination of advisory services and manufacturing solutions, which enables

increased growth and profitability for customers. HANZA's manufacturing solutions are mainly conducted in own factories, but also through collaborations with strategic manufacturing partners.

By gathering expertise and different manufacturing tech- nologies, HANZA takes a holistic approach and creates added value for the customer by reducing the number of contacts the customer needs to have. Complete and collected contract manufacturing strengthens the customer's control over the production chain and promotes efficiency in production. Our top competencies are found in several areas such as design and product development, PCB assembly, cabling, sheet metal processing, machining, final assembly and testing, logistics and more.

Strengths and advantages

HANZA's wide and integrated range of both design and manufacturing processes provide high flexibility, capacity and quality control in accordance with various customer's agreements, whose demand can vary considerably and on short notice. HANZA has a clear competitive advantage as the customer only needs to use one contract manufacturer with integrated operations, instead of having to work with several parties and with own synchronization including final assembly and delivery to customer. Customers who take advantage of HANZA's experience in product development from an early stage can significantly lower their total cost and get a more efficient manufacturing process.

Ability to adjust operations according to demand and needs

Temporary fluctuations and systematic changes in market demand may cause significant variations in customers' order volumes. Thus, HANZA's production and sales to different customers can be difficult to forecast. By controlling the manufacture of both the product's various components and the final assembly within the Group and the relevant cluster, HANZA can quickly adapt production according to different situations and the customer's capacity needs. Freed resources from one production can be allocated to a parallel production for another customer within the same factory. By gathering resources within the same manufacturing cluster, HANZA can also share staff and skills between different factories, as and when demand varies.

Short lead times

HANZA has created an organization that meets the customer's requirements for clear communication and short lead times. HANZA builds up the customer's own production unit in a so-called "Business unit", where all the resources required for each specific project are gathered, such as project management, planning, purchasing, pro- duction, quality and more.

Total solutions

In addition to contract manufacturing, HANZA also offers qualified advisory services; a service product within manufacturing solutions - Manufacturing Solutions for Increased Growth and Earnings ("MIG"). With MIG, the customer's production chains are analyzed and improved, which creates a foundation for higher growth and improved profit- ability. HANZA thus becomes a strategic business partner that can assist throughout the product life cycle. HANZA builds prototypes, provides customer feedback on industrial design and layout seen from a production aspect, assembly, delivery and after sales. HANZA has extensive experience in production technology and industrialization for everything from low-volume products to volume production in a large number of industries. Together with the company's customers, it is decided where and how the product in question is to be manufactured in order to achieve optimal logistics arrangements and value for the customer and HANZA.

Dynamics and flexibility

Different customers' operations often require a high pace, which places high demands on the dynamism and flexibility of their partners. HANZA focuses on speed, simplicity and efficiency to meet customer needs.

Manufacturing clusters

HANZA currently has operations in six manufacturing clus- ters; Sweden, Finland, Germany, Baltics, Central Europe (Poland and the Czech Republic) and China. These are reported, based on primary customer markets divided into the following segments:

• Main markets - Manufacturing clusters located within or close to HANZA's primary geographical customer markets, which today comprise Sweden, Finland, Norway and Germany. Today, HANZA's manufacturing clusters
  in Sweden, Finland and Germany are therefore included. HANZA's operations in these areas are characterized by proximity to customers' own factories and close coopera- tion with the customers' development departments.
• Other markets - Other manufacturing clusters outside HANZA's primary geographic customer markets. Today, it comprises HANZA's manufacturing clusters in the Baltics, Central Europe and China. Operations are characterized by a high work content, extensive complex assembly, and proximity to important end customer areas.
• Business development - mainly group wide functions within the parent company, as well as group wide projects and functions not allocated to the other two segments.

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HANZ A ANNUAL REPORT 2020

THIS IS HANZA

HANZA's six manufacturing clusters

Main markets			Other markets
Sweden	Finland	Germany	The Baltics	Central Europe	China
Employees: 358	Employees: 85	Employees: 119	Employees: 643	Employees: 256	Employees: 82
Factories: 4	Factories: 2	Factories: 1	Factories: 3	Factories: 3	Factories: 1

The above refers to the average number of employees during 2020 and the number of factories at the end of the year. In March 2021, another factory with just over 100 employees in Finland was added through acquisitions.

Sales development

(SEK MILLION)

			2,068	2,155
		1,811
1,,306	1,400
2016	2017	2018	2019	2020

EBITDA development

(SEK MILLION)

			68
		61
				48
	36
25
2016	2017	2018	2019	2020

Our manufacturing solutions are primarily based on the following technologies

Logistics	Sheet and heavy	Cable	Machining	PCB assembly	Final assembly
mechanics	Harnesses	and test

Customers

Among HANZA's customers are leading companies such as ABB, Epiroc, Getinge, GE, Oerlikon, SAAB and Siemens.

Responsible business

A production located in HANZA's manufacturing clusters means that the customer enjoys both environmental bene-

fits and high-quality products with safer supply and logistics chains compared to traditional contract manufacturing. In this way, sustainability is an integral part of HANZA's strategy and long-term business.

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HANZ A ANNUAL REPORT 2020