ANNUAL AND SUSTAINABILITY REPORT 2020

CONTENTS
INTRODUCTION

CORPORATE GOVERNANCEMUNTERS’ PURPOSE

1

COMMENTS FROM THE CHAIRMAN OF THE BOARD 

THIS IS MUNTERS 2CORPORATE GOVERNANCE REPORT 

58

EVENTS 2020

4

BOARD OF DIRECTORS 

68

COMMENTS FROM THE CEO 

6

GROUP MANAGEMENT70

TARGETS		

8

AUDITOR’S REPORT

71

MARKET ANALYSIS AND TRENDS 

10MUNTERS IN THE COMMUNITY 

12STRATEGY

56

FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORT 

72

FINANCIAL STATEMENTS 

78

STRATEGIC PRIORITIES14

NOTES87

S USTAINABILITY INTEGRATED IN THE STRATEGY16

ASSURANCE120

OPERATIONSAUDITORS’ REPORT 

121

DEFINITIONS OF FINANCIAL KEY PERFORMANCE INDICATORS

125

MARKET18
CUSTOMERS 

20

THE SHARE AND MUNTERS HISTORYINNOVATION22

THE SHARE 		126

EXCELLENCE IN EVERYTHING WE DO 

INFORMATION TO SHAREHOLDERS

128

24

PEOPLE26

65 YEARS OF INNOVATION

129

BUSINESS AREAS 

MUNTERS EMPLOYEES AROUND THE WORLD

130

28

AIRTECH30
F OODTECH 

34

SUSTAINABILITY REPORTS USTAINABILITY REPORT 2020

38

The formal annual report for Munters Group AB (publ), corp. reg. no. 556819-2321, refers
to pages 72–120. Because all amounts in this report are rounded, rounding differences canoccur. This English version of the Annual Report is a translation of the Swedish original. The
Swedish text is the binding version and shall prevail in the event of any discrepancies.

RESOURCE EFFICIENCY42

RESPONSIBLE BUSINESS PRACTICES44

PEOPLE & SOCIETY

46

FINANCIAL CALENDARSTAKEHOLDER DIALOGUE

48

APRIL 22

INTERIM REPORT Q1 2021

MAY 19ANNUAL GENERAL MEETING 2021

JULY 17

INTERIM REPORT Q2 2021

OCTOBER 22

INTERIM REPORT Q3 2021

RISK MANAGEMENTRISK MANAGEMENT

50

SE

MU

O

SE

MU
N

S PURPOFORCUSTOMER
SUCCESSAND A
HEALTHIER
PLANET

T ER

N

TE

RS PURP

Curiosity and an ambition to create pioneering technologies area part of our DNA. Our climate solutions are mission-critical for ourcustomers’ success and contribute to a more sustainable planet.

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INTRODUCTION|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

GLOBAL LEADER IN ENERGY-EFFICIENT
CLIMATE SOLUTIONSMUNTERS IS A GLOBAL leader in innovative, energy-efficient and sustainable climate solutions.

The solutions guarantee the perfect climate. Munters has two business areas: AirTech andFoodTech. AirTech is a global leader in energy-efficient air treatment for industrial andcommercial applications. FoodTech is one of the world’s leading suppliers of innovative andenergy-efficient climate control systems for livestock farming and greenhouses, as well assoftware for controlling and optimizing the entire food production value chain.

OUR PRODUCTION AND ASSEMBLY PLANTS
Read more about our business areas on pages 28–37

Tobo
Hamburg
HorstmarLansing

HruskyAmesbury
Selma

17

Jiang Yin

Tel Aviv

Fort Myers

Number of plants

Beijing

Chiusaveccia & Pieve de Teco

Buena VistaTokyo

ChashanMonterrey

Mumbai (Ambernath)
Pune

Araucaria
Johannesburg

Production plants
Assembly plants

Sales and production, countries

Number of employees, December 2020

Percentage of women in senior positions

>30

3,500

22%

2

(21)

Net sales
MSEK
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

16

17

18

19

20

Net sales by region, 2020

»Munters is a global leader ininnovative, energy-efficient andsustainable climate solutions formission-critical processes«
Americas 43%
EMEA 33%
APAC 23%nnn

Customer segments’ share of net sales, 2020n Industrial 26%
n Services 14%
n Poultry 13%n Data Centers 12%

n Swine 9%
n Components 7%
n Other 19%

Operating profit and margin
MSEK
800

12

600

9

400

6

200

3

0

16

17

18

19

20

0

Consolidated net debt to adjusted
EBITDA (R12*)12
multiple
4

9

3

6

2

3

1
0

Q4
19

Q1
20

Q4
20

Q3
20

Q4
20

3

INTRODUCTION|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

EVENTS 2020
STRATEGIC EVALUATION OF DATA CENTERS AND MIST ELIMINATION
Various strategic alternatives have been evaluated for Data Centers and Mist
Elimination, and in February 2020 this resulted in the decision to keep the businesses in Munters. Given our strategic direction, we see them as a good fit since they
operate in markets with good growth potential, driven by digitization and highdemand for sustainable solutions.
UPDATED STRATEGY
President and CEO Klas Forsström andthe rest of the management launched
an updated strategy in February withGroup-wide priorities in the areas
Customers, Markets, Innovation,
Excellence in everything we do andPeople.

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R K E TSTHE COVID-19 PANDEMIC HAS IMPACTED MUNTERS
In 2020, Munters was impacted by the Covid-19 pandemic. In the first quarter, ouroperations were affected in Asia and later during the year in Europe and the US.
All of our production units, with the exception of two small units, have maintained
production without major disruptions, however.
Market conditions were challenging with delays in both deliveries to customers
and investments by customers. Employees did a fantastic job managing the pandepandemic and at the same time have focused on implementation of the strategy.
NEW ORGANIZATIONIn February, Munters announced a new organization. The change creates clearerownership and accountability for the business areas AirTech and FoodTech while
capturing synergies and driving value throughout the Group.
The former role of Global Operations has been replaced by Strategic
Operations, and Stefan Måhl was appointed to the position. In addition, two new
positions were created on the Group Management Team:• Head of Innovation, where Stéphane Darcq was appointed to drive R&D
processes, including coordination of shared technology and new productdevelopment.
• Head of Commercial Excellence, where Stefan Aspman was appointed to coor
coordinate sales training, drive and develop values-based sales, pricing strategies
and how we go to market.

PIA BRANTGÄRDE LINDER NAMEDPRESIDENT OF FOODTECHIn February, Pia Brantgärde Linder
was appointed President of Business
Area FoodTech as of August 16,
2020. Pia had a long career at ABB,
most recently as Senior Vice President
and Business Unit Manager for High
Voltage Products in Northern Europe.

DIGITAL CROSSROADS DATA CENTER PROJECT
At the beginning of the year, AirTech received a major order from Digital
Crossroads on Lake Michigan in the US for a climate solution for a data center
project. Munters will deliver an energy-efficient climate solution that utilizes cooling from the lake.
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A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | I N T R O D U C T I O N

65 YEARS OF INNOVATIONIn April, Munters turned 65. Today, Carl Munters’ air treatment solutions are more
important than ever to reduce global consumption of energy and water resources.
Strong innovation has set Munters apart throughout its history and does so to thisday.
“Carl Munters’ spirit lives on in the company as a combination of innovationand engineering,” says Klas Forsström, Munters President and CEO.
MUNTERS CAPITAL MARKETSUPDATEIn late May, Munters held an interactive
Capital Markets Update for owners,
institutional investors, analysts andother stakeholders. During the day,management presented an overview
of the Group strategy and the strategic
priorities of the business areas.

RESTRUCTURING PROGRAM
In July, a restructuring program
was launched. The businessarea AirTech exited the non-corepart of the commercial business in
the US and consolidated operationsin the Netherlands.

INCREASED CAPITALEFFICIENCYActive efforts were made toincrease capital efficiency. The
initiative has significantly improved
working capital and reduced the lever
leverage ratio from 2.9 in 2019 to 1.9 atthe end of 2020.

1.9x

SUSTAINABILITY REPORTING
A strong focus for Munters sustainabisustainability work in 2020 has been a comcom
prehensive analysis of the company’s
carbon dioxide emissions. Also several
initiatives has been done to strengthen
many aspects of our sustainability
agenda, within the framework of thestrategy. See more on pages 38–47.

MAJOR FRAMEWORK AGREEMENTFOR CLIMATE SOLUTION IN SWINEFARMINGIn May, Munters signed a major framework agreement with a customer in theswine segment in China. FoodTech has
built up a local presence in the Chinese
agricultural market thanks to Munters’
strong brand built on applications
know-how and high quality.

ORDER FOR LITHIUM BATTERY PRODUCTION
In August, Munters received a major order to provide desiccant dehumidification
solutions for a lithium battery production facility in the US.
“We are very pleased to have received a major order for our dehumidification
solutions in the fast-growing lithium battery market, which is one of our three priority market segments,” said Peter Gisel-Ekdahl, President of AirTech.
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INTRODUCTION|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

PRESIDENT AND CEO KLAS FORSSTRÖM

STRONG DEVELOPMENT IN A
CHALLENGING BUSINESS CLIMATE
2020 WAS A SPECIAL YEAR FROM many different perspectives. At Munters, we started

implementing our long-term strategy at the same time that the business climate has beenchallenging. Our highly customer-centric and agile organization succeeded in strengthening
the company, and we reported higher profitability and cash flow for the year. With greater
financial strength, we are now taking the next steps in Munters’ journey.

I want to begin by stressing that 2020 was an exceptional
year. For the world and for Munters. But in spite of this,it was a very active year and it is with great humility andrespect that I thank all our employees for the amazing work
they have done. Together, we have managed to strengthen
the company and continuously strive toward our long-term
ambitions. At the same time, we have protected our employees’ health and safety on a daily basis and handled theimpacts of the Covid-19 pandemic.
DEVELOPMENT IN 2020
Currency adjusted order intake increased in 2020 withgrowth in the Chinese swine segment for FoodTech and in
the Industrial segment for AirTech. Data Centers US underperformed compared with a very strong 2019. Currency
adjusted net sales increased, driven by solid growth in
the Chinese swine segment, the Pharma segment and in
Services. This was partly offset by weaker development in
the Mist Elimination sub-segment. Adjusted EBITA for theyear increased by 4 percent to MSEK 906.
Our efforts to increase efficiency produced good results andled to strong operating cash flow, which rose by nearly 50
percent compared to 2019, with consolidated net debt inrelation to adjusted EBITDA of 1.9x, down from 2.9x.
In 2020, we changed our organizational structure. We
have also launched our long-term strategy, with five strategic priorities: Customers, Market, Innovation, People andExcellence in everything we do. We are working intensely to
put the necessary pieces in place to deliver on the long-term
strategy for profitable growth.
CUSTOMER-CENTRIC IN EVERYTHING WE DO
Munters’ strength is our unique applications know-how,which we have built up over the years. This expertise
enables us to create unique, customized climate solutions
for many industries. As a result, we can together with ourcustomers meet their climate control needs in an energy-efficient and sustainable way. One example of innovationis AirTech’s Remote Assist. The service allows our product
6»The clearer you can make the whole value
chain, the better employees will understandhow they can contribute and produce top
results«experts and service technicians to share real situations in a
web-based AI solution with customers to commission complete climate systems or give service instructions, with great
success.
In FoodTech, our SaaS solution* for among others Tyson
Foods, the world’s second largest producer of meat fromchicken, beef and pork, has been successful. This advanced
software solution for processing real-time data from farms
makes the customer more efficient and produces better animal
health with less shrinkage and waste.
OUR MARKET IS DRIVEN BY STRONG TRENDS
The strong overarching trend around the world is thegrowing demand for sustainable products that improve
resource efficiently and animal health. This is creating strong
demand for complete climate systems. The pandemic during
the year has also increased the drive toward digitizationand health and safety, which has benefited segments suchas pharma and food. A strong focus on indoor climates andproduction safety has also increased, and here Munters canhelp with and be part of the solution for a more sustainable
and safe environment
INNOVATION IN COLLABORATION WITH
CUSTOMERS
We have a long history of innovation that has given us
access to unique technology. This means that we can create
the most effective solution for the customer, for example, in*Software-as-a-Service (SaaS)the production of lithium batteries or for stalls. Through an
optical climate system, we can help customers to be more
efficient with energy and water resources and at the sametime create growth. In 2020, we launched SyCool, a climate
system for data centers where the refrigerant is reused in theprocess, minimizing water consumption. The Saturn platform
is another innovative product: modular fans for greenhouses
that provide more benefits for the customer and higher capital efficiency for us.
EXCELLENCE IN EVERYTHING WE DO
To increase efficiency, we are continuing to work withGroup-wide processes. An efficiency program was launched in 2020 with the ambition to strengthen the ways wework and build a leading value chain and processes. In thisway, we will ensure scalability in our operations and that
our investments produce profitable, cash-generating future
growth. We have also decided in business area AirTech toexit the non-core part of the commercial business in the US.
In the Netherlands, operations have been consolidated.
Through the Group-wide effort to increase efficiency,
our working capital has been reduced significantly.
PEOPLE ARE THE HUB IN OUR BUSINESSIn my experience, the clearer you explain the importance ofcontinuous improvements, innovation and the entire value
chain for an organization, the better employees will understand how they can contribute and produce top results. That
is why the organizational structure was changed: to simplify
how we work. As a result, the business areas have profit
and loss responsibility for their respective area to capturesynergies and raise efficiency.

»It is with great humility and respect that
I thank all our employees for the amazing
work they have done«
I want to again thank all our employees, who did a fantastic
job in a challenging business climate in 2020.
OUTLOOK FOR 2021
The start of 2021 has unfortunately seen continued uncertainty in the wake of the pandemic. But I look forward tocontinuing with all our energy to implement the strategy
throughout the organization and to work with continuous
improvements.
I see the organization as a team, and with a clearer
structure and goals we can go far and win. We want toremain attractive to both current and future owners as well as
our employees.
Our focus on innovation will ensure our long-term competitiveness, and we are well equipped to continue to grow organically and through collaborations or acquisitions. Munters
is well positioned in a market driven by sustainability, energy
efficiency and digitization.

Stockholm, March 2021

Klas Forsström, President and CEO

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INTRODUCTION|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

FUTURE OBJECTIVESBOTH FINANCIAL AND SUSTAINABILIT Y GOALS benefit our strategy for profitable, cash flow-

generating growth. A responsible business with stable finances and efficient resource use isessential for Munters to successfully carry out its strategy.

FINANCIAL TARGETS
Net sales growth

Adjusted EBITA margin

Capital structure%%

multiple

10

16

4

5

12

3

0

8

2

-5

4

1

-10

0
16

17

18

19

20

16

17

18

19

20

0

16

17

18

Dividend policy

1920– Target as of 2019

– Targetn TargetAnnual organic, currency
adjusted net sales growth of
5 percent, supplemented by
selected add-on acquisitions.

An adjusted EBITA margin of
14 percent in the medium term.

A ratio of consolidated net debt
to adjusted EBITDA of 1.5x to
2.5x, which may temporarily
exceed the target level (e.g., inconnection with acquisitions).

8

According to the dividend
policy adopted by the Board of
Directors, Munters’ aim is to pay
an annual dividend corresponding to 30–50 percent of net
income for the year. The pay-out
decision will be based on thecompany’s financial position,
investment needs, acquisitions
and liquidity position. Therecan be no assurances whether
in any given year a dividend
will be proposed or declared,
however. The Board of Directors
is proposing a dividend for2020 of SEK 0.70 (0) per share.
This represents 30 percent of net
income for 2020.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | I N T R O D U C T I O NSUSTAINABILITY TARGETS
Resource efficiency
Energy efficiency

Share of renewable electricity

MWh/Tkr

%

%

1,5

60

60

1,0

40

40

0,5

20

20

0

17

18

19

20

Continuous reduction ofelectricity consumption in our
production units.

0

17

18

19

20

The percentage of electricity
from renewable sources inour production facilities willcontinually increase.

Recycling rate

0

17

18

19

20

Our goal is to continually raise
our recycling rates (i.e., thepercentage of waste reused or
recycled out of the total amountof waste).

Corporate Social Responsibility
Supplier code of contact

Whistleblower plaints%

number of

100

15

80
10

60
40

5

20
0

18

19

0

20

Our ambition is that our largest
suppliers will follow and sign ourcode of conduct for suppliers.

18

19

20

The number of whistleblower
complaints through the externalreporting channel.

People and Society
Proportion of women

Accidents

%
30

%
4

25

3

20
15

2

10

1

5
0

2017 2018 2019 2020

0

17

18

19

20

– Target 2025 n Employees n Excecutives

Our goal is to increase thepercentage of female employees
and executives to 23 percent in2020 and 30 percent in 2025.

The goal is to continuously reduce the number of production
accidents. We measure Total Recordable Incident Rate (TRIR),
which is calculated as the number of accidents where theemployee has to seek medical attention multiplied with 200,000/
number of hours worked.

For more information on the outcomes forthe sustainability targets 2020, see pages
38–49.

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TRENDS IN SUSTAINABLE
CLIMATE CONROLPERHAPS THE MOST IMPORTANT MEGATREND for Munters is climate change with a focus on

resource efficiency where the Group is well-positioned and can be part of the solution for amore sustainable world. The strong global trends support the use of advanced solutions forclimate control.

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CLIMATE CHANGE

INCREASED DIGITIZATIONSTRICTER RULES AND
REQUIREMENTS IN
PRODUCTION ENVRONMENTS

Demand is increasing around the world
for sustainable and energy-efficient
climate solutions which help Munters’
customers reduce emissions. Achieving
global climate goals will require major
investments and force more companies
to take responsibility for and ensuresustainability throughout the value
chain, which is a success factor.
Munters energy-efficient solutions help
customers to meet their climate andsustainability commitments.

Growing data traffic, increased use ofcloud services and a growing numberof connected devices are driving
growth in industries that are exposed todigitization. Digitization also opens thedoor to new ways to create value andinteract with customers. One exampleof this is offering connected service
and support.
Munters’ customer solutions provide
better control and efficiency throughthe value chain in the customer’s
production environment by offering
connected products and utilizing data
analysis.

Specific types of production types,
such as the production of lithium-ion
batteries, require an extremely precise
climate to ensure quality. Stricter rules
related to traceability and biosafety instock breeding and food production
are placing increased demands on
every link in the food chain.
Regulatory authorities around theworld are contributing to this throughincreased control to reduce contaminants from various industries.

How Munters addresses climatechange:Munters’ products can extend theservice life of bridges and other infrastructure and thereby create resource
efficiency.
Our solutions can separate hazardous substances in industrial processes
and flue gases. Munters enables alarge proportion of the world’s production of lithium-ion batteries by supplying ultra-dry air.

How Munters addresses digitization:
Digitization facilitates new systems ofcomplete solutions, e.g., SonarEcho
within FoodTech, with long-term potential for Munters to sell indoor climate asa service.
Today there is high demand forcooling systems for data centers. Ourdata center solutions provide significant energy savings compared withtraditional cooling.

How Munters addresses stricter rules
and regulations:
We facilitate, for example, hygienic
spray drying for the manufacture of
powdered milk and pharmaceuticals.
In addition, our technology treats
emissions from coal-fired power plants
and ships. We also eliminate volatileorganic compounds (VOC) from theauto industry’s paint processes andsemiconductor production.

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INTRODUCTION|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

MUNTERS CONTRIBUTES TO SUSTAINABLE
VALUE CREATION IN SOCIETY
MUNTERS OFFERS INNOVATIVE, EFFICIENT AND SUSTAINABLE SOLUTIONS for customers in manydifferent customer segments where controlling indoor temperature and humidity control is
mission-critical. Our solutions reduce customers’ climate and environmental impact throughlower consumption of energy and water. In this way our solutions contribute to cleaner air,higher efficiency and reduced carbon emissions.

DATA CENTERS

Digitization and global data traffic
continue to increase, and an evergrowing number of data centers arebeing built around the world.
Advanced climate cooling solutions
are critical to reliability and alsoenable lower energy consumption
and carbon emissions.

M ARINE INDUSTRY

Munters’ mist eliminators remove 95 percent of the harmful sulfur found in ship
emissions. Engines and ventilation systems
on ships also have to be protected.
Munters offers modern air intake systems
that stop rain and snow, sea salt andharmful particles.

ELECTRONICS

Our solutions provide an optimal
environment for demanding customers in the electronics industry.
Manufacturers of lithium-ion batteries,
monitors, components and LEDs get abetter air environment for their sensitive
processes along with lower energy
costs and reduced carbon emissions.

12

FOOD & BEVER AGES

Our solutions control climate conditions thewhole way “from farm to table,” ensuring
hygiene and optimal product quality at thesame time that they conserve energy andincrease productivity.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | I N T R O D U C T I O N

PHAR M ACEUTICALS

Munters offers customized dehumidification solutions for the pharmaceuticalindustry. Careful control and monitoring
keep humidity constant, so medicines in
the form of tablets, capsules, granules
and powders maintain their quality andshelf life.

FMCG AND RETAIL

Retail and grocery stores generatehigher sales with lower operating
costs when they install Munters’
efficient, high-performance HVAC systems. Heating and ventilation systems
work better, and so do refrigeratorsand freezers.

DIGITAL SOLUTIONS FORCHICKEN FAR MING

LITHIUM-ION BAT TERYPRODUCTION

AGRICULTURE

GREENHOUSESFor large producers of chicken and otherlivestock farming, a controlled production
chain is essential. Through AI solutions
Munters FoodTech MTech Systems cancontrol production, which increases animal
health and profitability while reducing
waste.

Munters develops and manufacturesenergy-efficient climate control systems
for sustainable farming. We optimize
the indoor climate for poultry farming,
egg production, pork farming and milkfarms., thereby contributing to improved
animal health and meeting strict quality
and food safety requirements.

Lithium-ion battery production requires ahighly controlled environment with stabletemperature and humidity in order to guarantee quality and safety in production.
Half of the world’s lithium-ion batteries
for the auto industry are manufactured
in environments with Munters climate
solutions.

By providing the perfect indoor climate
for growing plants, Munters’ solutions give
growers the opportunity to produce under
optimal conditions. The innovative productrange includes control equipment ventilation, evaporative cooling and heating.

*FMCG = Fast Moving Consumer Goods

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MUNTERS’ STRATEGICPRIORITIESMUNTERS HAS A STRONG POSITION in most of our markets. We work constantly to improve and

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strengthen our market position, which is the foundation for achieving our financial targets anddelivering on our strategic ambitions. The key to success is how we respond in working toward
our goals. Munters’ strategic priorities show which areas we see as important to our success.
For each strategic priority our two business areas have clear action plans and ambitions what
we want to achieve.

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MARKETS
Munters is active around the world in a market being driven by strong trends
in sustainability and digitization. We have focused resources on strengthening our position in areas where we can be a market leader and growing
our service business. For Munters, being a market leader means not only
having a leading position but also higher profitable growth than others in
the industry.
CUSTOMERS
We closely cooperate our customers. We try to understand their needs
not only today but also in the future. Our expertise is built throughunique insight into our customers’ businesses and production processes.
Our focus is on getting to market and pricing strategies. Every day
Munters is working to deliver value over and above our customers’
expectations.
INNOVATION
Munters works in a structured way to optimize innovation in the organization. We work closely with customers to understand their needs, and withother institutions that can offer additional competence and create value
for customers. By continuously questioning and improving how we work,
we create sustainable solutions, innovations and business models for the
future.
EXCELLENCE IN EVERYTHING WE DO
We strive for quality and efficiency in everything we do. We work with
continuous improvements in every area. We prioritize and focus on selected
investments and areas of improvement. We follow up, learn, correct andimprove.
PEOPLE
Munters’ employees are the hub of the business. Through collaboration anda passion for creating sustainable solutions for our customers and partners,
we contribute to our customers’ success and a better world.
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SUSTAINABILITY IS CRITICAL TOOUR GROWTHSUSTAINABILIT Y IS A BROAD CONCEPT that spans many elements. For Munters, it means thateverything we do has to be sustainable for all our stakeholders and the environment.
Our sustainability agenda is focused on three areas: resource efficiency, responsible businesspractices and people & society. We integrate these three parts in our strategy and ourstrategic priorities.

MARKETS
Climate change and population growth are important drivers for Munters’market. For example, the world’s data centers today account for a considerable part of the world’s energy consumption, and Munters is contributing bysignificantly reducing consumption. Population growth is causing an increased
need for resource-efficient farming with a focus on animal health and reduced
waste. Munters is part of the solution for more sustainable food production.
CUSTOMERS
We contribute to our customers’ success by delivering energy-efficient
climate solutions with the highest functionality. Through close collaboration,
we can help them reach their sustainability targets, e.g., in waterand energy efficiency and animal health in connection with foodproduction.

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INNOVATION
Our leading innovations and product solutions are often critical in many
sectors and create a perfect climate by precisely controlling temperature andmoisture. Climate control often accounts for a significant share of the energy
consumption of a business, and through innovative products Munters canhelp customers achieve major savings.
EXCELLENCE IN EVERYTHING WE DO
We are constantly working to increase efficiency and quality and to reduce
our environmental impact. In health and safety, we are working to strengthenskills within the organization. Our processes are designed to create continuous improvements and sustainability throughout the company.
PEOPLE
Employees are the hub of our business and we attach great importance toensuring their safety and health. We are convinced that diversity leads tostronger innovation.

16

The following pages describe
Munters’ strategic priorities bybusiness area, and pages 38–47
provide more detailed informationon our sustainability agenda.

Å R S R E DAON
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S RRAEPPPOORRTT 22002200 || M
MUUNNTTEERRSS || SSTTRRATATEEGGYIGLOBAL COMPACT AND AGENDA 2030

Munters has committed since 2018
to report in accordance with the UN
Global Compact’s ten principles onhuman rights, labor, the environment
and anti-corruption. The Code of
Conduct and the special Code of
Conduct for suppliers are based onthese ten principles and describe
Munters’ view on issues such as theenvironment, social responsibility,business ethics and human rights.
Compliance with these policies ismonitored each year and reported to
the Board of Directors.
Based on its priority sustainability
areas and opportunities to make adifference, Munters has chosen tofocus on nine of the UN Sustainable
Development. They are also linked to
Munters’ strategic goals.

GOAL 2. ZERO HUNGER

Munters’ products contribute to greater resource efficiency in food production. By
increasing efficiency, we can help to reduce the load on the Earth’s resources andpromote sustainable agriculture.

GOAL 4. QUALIT Y EDUCATION

Munters regularly holds activities in its local workplaces to promote education,
including mentorships.

GOAL 5. GENDER EQUALIT Y

We are convinced that diversity leads to greater innovation and higher profitability.
Munters currently has a relatively low proportion of female employees. We havetherefore decided to focus on gender equality mainly in our diversity work.

GOAL 6. CLEAN WATER AND SANITATION

Munters’ products contribute to increased resource efficiency, which also includes
less use of water in the processes where Munters’ products are installed.

GOAL 7. AFFORDABLE AND CLEAN ENERGY

Through our energy-efficient products, we can ensure that our customers willconsume less energy and that their environmental impact will be lower.

GOAL 8. DECENT WORK AND ECONOMIC GROW TH

In every country and area where Munters works, it is essential that we have an
inclusive workplace with decent conditions for all.

GOAL 9. INDUSTRY, INNOVATION AND INFR ASTRUCTURE

We are working to reduce our own environmental impact through energy- andresource-efficient production facilities. We also contribute with innovative solutions
for our customers, so they can reduce their impact.

GOAL 12. RESPONSIBLE CONSUMPTION AND PRODUCTION

We work continuously to limit the environmental impact of the transportation methods
we use.

GOAL 16. PEACE, JUSTICE AND STRONG INSTITUTIONS
Munters has zero tolerance for all forms of corruption and bribery.

SUSTAINABLE LITHIUM BAT TERY PRODUCTION GENER ATES ENERGY SAVINGS UP TO 40%
Founded in 1997 in Shenzhen, China,
Sunwoda Group is a world leading producer of lithium ion batteries. From consumer
electronics to electric cars and energy
storage, Sunwoda supplies the domestic
and international markets with high-quality
battery cells. It has automated and digitized
production lines with smart manufacturing to
cut costs and the factories’ climate footprint
while making its products more competitive.
Munters has delivered dehumidification
solutions for Sunwoda’s battery production
since 2016. Stable climate control is criticalto the production lines, which require cold
dry air to preserve battery quality andperformance. Together with its advanced

services, Munters was able to graduallymaximize Sunwoda’s production times andproduct quality.
In 2020, Sunwoda invested in its first large
battery production base in Nanjing, which
requires extremely dry air in its production
line for intake air. High performance,
accurate humidity control and reliability are
essential to uninterrupted production andhigh quality.
For the first two stages of the project
Sunwoda selected Munters’ GREENDRY
dehumidification system, which is based on
60 years of innovation and global applications experience and is specially designed
for manufacturing conditions that requirevery low humidity. Munters climate systems
consume up to 40 percent less energy thanother technologies and significantly reduceclimate impacts. In addition to the benefitsof high energy savings, Munters’ equipment
also performs reliably, ensuring high-quality
electric battery production for Sunwoda andits customers.

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TREND TOWARD SUSTAINABILITY IS
DRIVING THE MARKET
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globally in climate control solutions with a focus on
dehumidification and humidification. We are benefiting from a number of global factors thatare creating good growth opportunities. One overarching trend is the increased demand forsustainable products and improved resource efficiency, e.g., high energy efficiency and low
water consumption in complete climate systems.
MUNTERS HAS A LEADING M ARKET POSITIONSUSTAINABLE MARKET TRENDS CREATEOPPORTUNITIES FOR GROWTH
Climate change is the most important megatrend for ourbusiness. In addition, customers are demanding high production efficiency and quality to support advanced climate
control solutions. Other factors that favor market growth
include digitization, increased demand for sustainableproduction and better animal health, and further industrialization and rising living standards in emerging markets.
The climate control market is undergoing consolidation
with a few global players. Growth has historically been stablein most customer segments and the market is expected to see
continued growth.
With strong technology and solid applications expertise,
Munters is well positioned to help industrial and commercial
customers with turnkey climate and energy related solutions.
Munters is also a leader in livestock farming and greenhouses
with innovative products and software to control and optimize
the entire food production value chain.
LOCAL PRESENCE AROUND THE WORLD
The most important countries with the largest share of
Munters’ sales are the US, China and Germany.
The company has 17 production facilities and sales andmanufacturing in over 30 countries. In addition, Munters has
four assembly plants in four countries. Staying close to local
customers reduces lead times and shortens logistics flows.
Munters also has sales offices in a number of countries. The
head office is based in Kista, outside Stockholm.
PRIORITY MARKETS
Munters works continuously to evaluate and improve its offering. The product portfolio changes depending on the priorities
in research and development and the service offering. With astrong presence, Munters has several products and solutions
that are adapted to local markets and customers.

18

Going forward, we will focus on strengthening our positionin markets where we are or can be a leader, i.e., where we
see that we can be one of the three leading suppliers. Our
strategy is to grow in markets we see as priorities:• In business area AirTech: The industrial segment with afocus on lithium battery production, the food industry,
Data Centers and Mist Elimination.
• In business area FoodTech: Markets with good underlying growth, e.g., Asia and the greenhouse segment. The
digital offer is a focus as well.
• Two common growth areas for AirTech and FoodTech aredata-driven products and solutions as well as services.
ACQUISITIONS AND PARTNERSHIPS ARE IMPORTANT
TO FUTURE GROWTH
An important part of the growth strategy is to acquire local
companies that strengthen either Munters’ local presenceor its offer. Munters is open to three possible acquisition
situations:
1. To create growth through smaller acquisitions oflocal companies that give us a stronger market presence.
This can, for example, be a strategy to grow our service
business.
2. To create growth by acquiring companies with a technology that strengthens our global or regional offer.
3. Larger acquisitions as well to create both an increased market presence and broaden our product offer.
Munters has over its history acquired several companies;
see more information on page 129. No acquisitions weremade in 2020.
We also work with partnerships, e.g., with universities, which are an important part of Munters’ strategy tostrengthen its local presence and drive innovation forward.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | O P E R AT I O N S“Climate change is perhaps the mostimportant megatrend for Munters, which
supports the use of advanced solutions forclimate control”

SUSTAINABILIT Y FOCUS
Munters produces energy-efficient climate control systems that
reduce customers’ electricity and water consumption. In addition,
our solutions contribute to less waste and sustainable production
environments with better animal health.
We have absolutely zero tolerance for corruption and bribery.
To ensure that all our employees understand the processes wefollow, we provide repeated training on our Code of Conduct. In
2021, an updated version of the code will be rolled out globally.
We constantly work with and train key employees in theorganization on working conditions and diversity.

Munters’ ambition is toincrease the share of its
sales from services to:30%

Net sales by region, 2020nnn

Americas 43%
EMEA 33%
APAC 23%

MUNTERS DONATES FACEM ASKS TO FIGHT THE
CORONAVIRUS
Munters has donated facemasks and protective equipment to support
countries in their fight against COVID-19. At the beginning of thepandemic, when the availability of facemasks were scarce, a total of
9,800 masks were distributed in seven locations around the world. In
Tierp, Sweden, facemasks were handed out in senior living facilities.
“An incredibly valuable contribution that will come in handy in ouroperations,” Ulrica Stjerngren, Area Manager for Disabled Care,
told Upsala Nya Tidning.
In Virginia, in the US, masks were donated to a local hospitaland various fire and police departments. And in Italy, Munters has
supported local hospitals in Imperia with much-needed protectivegear.
In the UK, Munters received a letter from the local National HealthService (NHS) thanking the company for the generous donation.
“Our staff have been truly heartened by the way our local
communities have come together to support them and the volunteers
in our hospitals,” Caroline Walker, Chief Executive of the North West
Anglia NHS Foundation Trust, wrote.
Stefan Måhl, Group Vice President of Strategic Operations at
Munters, added: “We made a collective decision to support thecommunities in which we operate. It’s very satisfying to see that themasks were well received around the world.”
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CLOSE COLLABORATION WITH
CUSTOMERS CREATES EFFICIENT
CLIMATE SOLUTIONS
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SINCE ITS FOUNDING, MUNTERS HAS worked closely with customers. Over the years, we havebuilt up unique applications expertise within our niche enabling us to customize climate
solutions in many industries. In this way we help to meet our customers’ climate control needsin an energy-efficient and sustainable way.

COLLABORATION WITH CUSTOMERS ON
APPLICATIONS AND PROCESSES
Munters is currently located in many countries with the majority of its products and solutions. With employees around theworld, we are a global and at the same time local company.
The strategy is focused on developing a thorough understanding of our customers’ needs and utilizing our broad-based
expertise in various applications, technologies and components to deliver the right climate solutions.
Munters’ sales team works closely with each customer’s
production engineers and research and development departdepartment. This ensures that our solution will meet the specific criteria and application requirements and deliver high energy
efficiency. Continuous development of new applications andcompetencies provides the opportunity for future updates aswell. Munters’ goal is to understand customers’ needs andprocesses better than they do themselves.
HOW MUNTERS MEETS CUSTOMERSAirTech primarily sells to its customers through its own sales
representatives in each local market in mature markets in
Europe and the US. An important success factor is our long
history in these markets and the applications expertise andexperience of our sales representatives in the marketingorganization.
Sales are also made to a lesser extent through distributors – e.g., for OEM components for customers that use
Munters’ products and technology as part of their solutions.
This is mainly done in growing markets, e.g., for manufacture of direct evaporative cooling.
The business area FoodTech sells primarily throughdistributors in local markets. Software solutions are mostoften sold directly to food producers. In some geographicalmarkets and segments, climate control products are also solddirectly to the end customer

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SUSTAINABILITY A STRONG DRIVER FOR
CUSTOMERS
Munters’ systems are used in many mission-critical applications in many industries where a stable indoor climate is
essential. Due to a growing focus on sustainability, resource
efficiency – including energy or water consumption – isbecoming an increasingly important success factor for
Munters. A large part of a climate system’s cost is energy
consumption during its operational life. Consequently, amore energy-efficient system can save costs and reduce thecustomer’s climate impact.
GOOD GROWTH OPPORTUNITIES IN SERVICES
Service, upgrades and product replacements offer growthpotential with good profitability. Thanks to a local presence
in many countries and our close relationships with customers, we can offer a high standard of service and support
for our installed base of products. This extends their service
life and creates higher efficiency from installed solutions.
Services today are offered primarily in the business area
AirTech. FoodTech is developing and offers a data-driven
service system called SaaS (Software-as-a-Service). In 2020,
FoodTech received several orders for this offer. At the endof 2020, FoodTech’s systems were installed in 25 of the 26
largest food integrators in the US, including Tyson Foods.
For more information on this offer, see page 36.
In 2020, Services accounted for 14 percent of net sales.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | O P E R AT I O N S“Munters goal is to understand customers’
needs and processes better than they dothemselves”

SUSTAINABILIT Y FOCUS
Munters maintains a continuous dialogue with customers.
Through periodic surveys, we make sure we know how
they feel and value our products, solutions and services. In
2020, several different surveys were conducted, especiallyin connection with the strategy reformulation and update. A
major global survey initiated in late 2020 will be valuable
in the efforts to raise quality and generate greater value.
Collaborating with customers is critical for us and we place
great importance on helping them achieve their sustainability
targets, including in water and energy consumption as well asanimal health in food production.

Airtech’s most importantcustomer segments, shareof net sales 2020

n
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Industrial 37%
Services 20%
Data centers 17%
Components 11%
Mist elimination 9%
Commercial 6%

FoodTech’s most importantcustomer segments, shareof net sales 2020

n
n
n
n
n
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Poultry 43%
Swine 30%
Layer 13%
Mtech 6%
Greenhouses 4%
Dairy 3%

REMOTE ASSIST TO ENSURE SAFET Y AND EFFICIENCYDuring a year in which conditions made it difficult to access customer
installations, AirTech’s new Remote Assist offer has been a major
success. Service has been provided virtually together with customers.
Keeping Munters’ climate solutions in operation is critical in manybusinesses. When face-to-face meetings are not possible, we canhelp customers through Munters Remote Assist, an online service
solution that gives them access to our experts and service technicians
regardless of where they are located, whenever it is needed.
Remote Assist is based on a Merged Reality solution that allows
service technicians, engineers or customers to share real timesituations with product experts virtually, so that practical service
and repair instructions can be demonstrated and followed by thecustomer.
The solution protects the health and safety of our employees
and customers, at the same time that the tool makes Munters moreavailable to customers and increases the service efficiency.

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EFFICIENT PRODUCT PLATFORMSCREATE LEADING CLIMATE SOLUTIONS
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WITH MUNTERS’ LONG HISTORY of pioneering discoveries, many patents and extensive

applications know-how, we create market-leading climate solutions. Our focus is on investingin our core technologies, solutions and digitization, to optimize our product portfolio andinnovative production technology. We are proud that our products and innovations help
customers to more efficiently utilize resources.

SOLUTIONS FOR MISSION-CRITICAL PROCESSES
Munters’ products and solutions are often used in mission-critical processes, where they create a perfect climate by precisely controlling temperature and moisture. In developing thebest climate solution for the customer, our goal is to under
understand their needs better than they do themselves. We haveextensive knowledge of specific applications and accessto unique technology we have often developed ourselves.
Coupled with our history of innovations, this enables us tocreate the most efficient solution for the customer, whether
for lithium battery production plant, a data center or animal
stalls.
Climate control systems often account for a large shareof the energy consumption in many of our customers’ operations. With an optimal system, we can help them to more
efficiently use energy and water resources.
In 2020, Munters invested 4.1 percent (3.8) of total net
sales in research and development.
MODULAR PRODUCT PLATFORMS
The work to establish global product platforms continued in2020 in order to provide the same high-performance products and consistent execution in every region. Here there
are major opportunities for efficiency gains in the Group.
CUSTOMERS’ NEEDS ARE CENTRAL TO MUNTERS’DEVELOPMENT MODEL
Close collaboration between teams from Munters and ourcustomers increases the precision and efficiency of ourinnovation work. Each business area is responsible for research and development in its respective product areas, withtechnology centers close to customers.
We all share the Munters Product Development Model(MPDM), a multidisciplinary model with clear control points.
With this model, the development process is based on individual creativity, disciplined innovation and direct insight into
customers’ needs

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ACTIVITIES IN THE INNOVATION PORTFOLIO
We work with an innovation portfolio where several activities are underway at the same time to maximize the results
and minimize the time spent on research and development.
The activities are:
• Research, where we develop new knowledge that can beused for new innovations• Technological development, where we develop new systems that can be integrated in the Group’s products• Product development, where we develop new products
and climate solutions• Further development, how we maintain and update installed products
OUR BASIC TECHNOLOGIES INCLUDE:• Dehumidification rotors• Systems for direct evaporative cooling• Heat exchangers with in direct evaporative technology• Mist eliminators• Controllers for monitoring the production climate• Agricultural fans
• Air dehumidifiers• Control equipment• Data analysis/visualization
In addition to these basic technologies, Munters has beendeveloping software for many years that enables our technicians and partners to quickly configure optimal solutions.
PRODUCT LAUNCHES IN 2020
During the year, Munters launched a number of new products, including:• SyCool: an innovative climate solution for data centersthat consumes minimal amount of water• Munters Rotem Trio: a digital controller for farms (seecase)• Saturn: a modular fan series that increases functionality
and reduces complexity.
.

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We intend to streamline the product portfolio with a focus on three different levels:
Focus

Ambition

Status 2020

Reduce the number of product variations (SKUs)

Reduce the number of product variations by -40% from 2019
to the end of 2021

Approx. -30% decrease

Standardization of components in current and future
products

Reduce by -25% by 2023, e.g., types of screws, spareparts, etc.

Ongoing

Modularization for the future

New products will be modularized, combine less complexity
with customization

Ongoing, first product launches during the year

SUSTAINABILIT Y FOCUS
Through its leading technology, Munters is in a good position
to not only work sustainably as a company but also be able
to play a role in helping customers become more resource
efficient through our innovative products and solutions. We
have energy-efficient solutions that help customers reduce theirenergy consumption. During a climate solution’s life cycle,
energy use is greatest during the time it is installed at thecustomer (approximately 80 percent). Munters is constantly
working to reduce the climate systems resource consumption,
which contributes to customers being able to achieve theirenvironmental goals.

Munters’ goal is to reduce its number of
products variations from 2019 to the end of2021 by:-40%“With an optimal
climate system, we canhelp customers to more
efficiently use energy orwater resources.”

MUNTERS ROTEM TRIO CONTROLLER IMPROVESANIM AL WELFARE
The innovative Munters Rotem Trio controller takes the technology
and functionality for animal stables to a new level. The controller
manages all aspects of the farm’s climate, reaching the best air
quality and animal welfare. Rotem Trio’s dynamic ventilation
guarantees perfect climate conditions and rapidly responds toweather changes while reducing energy consumption.
The intuitive interface with a clear and easy-to-use instrument
panel offers an energy-saving eco mode and automatic air quality
control. Rotem Trio improves functionality, usability and efficiency
for the farm.
Munters Rotem Trio replaces several products in FoodTech’s
existing line, reducing inventory and raising efficiency.

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CONTINUOUS IMPROVEMENTS IN A
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O P E R AT I O N S

MUNTERS ASPIRES TO EFFICIENCY and quality at every level of the company with a smaller

carbon footprint and improved health and safety. Work began during the year to strengthenGroup-wide processes to ensure continuous improvements and sustainability at every step.

In spite of the challenging business climate caused by the
pandemic in 2020, we managed to keep all of our production units, with the exception of one small facility, in operation with only minor disruptions. We have taken action asneeded, adjusted our costs and investments, and adapted
the supply chain to mitigate the impacts of COVID-19.

electrical installations. All units are assessed on a rolling
three-year schedule. In 2020, risk evaluations were conducted at seven manufacturing plants. Due to the pandemic,
they were done virtually for the sake of safety. The quality ofthe evaluations is still considered good, since the participating parties have experience from previous on-site visits.

IMPLEMENTATION OF THE STRATEGYIn July 2020, measures were announced to improve thecustomer offer and optimize our market presence. In
AirTech, a decision was made to exit the non-core part ofthe commercial business in the US. Thanks to a stronger
order intake in Data Centers US, production of data center
products in Texas has been expanded. Munters also decided
to consolidate operations in the Netherlands.

ZERO ACCIDENT VISION
Munters has a Vision Zero plan for serious workplace accidents, and reducing the number of accidents is one of our
top priorities. The goal is to continuously reduce the numberof workplace accidents by being proactive. In 2020,
the number of accidents dropped significantly. The Total
Recordable Incident Rate (TRIR) fell to 1.2 from 2.7 last year.

TTOE FOR INCREASED EFFICIENCY
A project called Transformation Towards Operational
Excellence (TTOE) has been initiated to increase efficiency
through linked processes and information flows. The ambition is to build a leading value chain and processes. This
will ensure the scalability of the business, and the increased
investments will lead to profitable, cash-generating growth in
the future.
CONTINUOUS IMPROVEMENTS THROUGH MPS
We at Munters are continuously improving how we work inevery area as a leading theme throughout the organization.
The Munters Production System (MPS), which is based onlean principles, is being applied in our production processes. The goal is that all units will apply MPS by the end of
2021.
LOWER ENVIRONMENTAL IMPACT THROUGHSUSTAINABLE PRODUCTION
We systematically evaluate our production units to prevent
environmental impacts while increasing the focus on healthand safety. Other areas that are covered include fire safety,
waste and chemical management, and an overhaul of24

A STRONGER SUPPLY CHAIN
Our supplier network is valuable to us and is built on mutual
trust and years of partnership. Munters sources goods andservices from around 1,900 suppliers in 35 countries. A
global sourcing organization coordinates procurement inorder to increase standardization and consolidate sourcing
volumes to fewer suppliers.
The 25 largest direct material suppliers by volume represented 33 percent of the total sourcing volume in 2020.
The goal set in 2018 for the period 2019– 2021 is to cut
the number of direct material suppliers in half. In 2020, thenumber decreased by 10 percent.
RESPONSIBLE PROCUREMENT
All suppliers are expected to live up to Munters’ ethicalguidelines. In 2020, 100 (92) percent of our suppliers had
signed the revised Code of Conduct.
Compliance with the Code of Conduct is monitored
through visits and audits conducted by Munters or third
parties. In cases where the supplier did not meet the requirements, an action plan is prepared and if the timetable is notfollowed the relationship will be terminated.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | O P E R AT I O N SSUSTAINABILIT Y FOCUS
A sustainability perspective is reflected at every level of Munters’
operations with an emphasis on responsible business practices,increased diversity, health and safety, lower carbon emissions andpositive contributions to the communities where we live.
2020 was a special year when Munters worked to safeguard
its employees’ health and safety during the pandemic. It wasalso gratifying that the number of workplace accidents dropped
significantly for the year.

LOWER ENERGY CONSUMPTION IN OURPRODUCTION PROCESSESThe climate impact from our manufacturing facilities mainly
comes from heating for heating, ventilation, cooling and production processes. The goal is to continuously reduce energy
consumption and make the plants and processes more efficient. We monitor energy efficiency by comparing electricity
consumption to production value. In 2020, the ratio was
0.96 (1.05). Renewable energy accounted for 50 percent(40) of the electricity used by our production facilities.

The number of accidents (TRIR)
decreased sharply to 1.2 in 2020
compared with 2.7 in 2019.

1.2
WASTE FROM OUR PRODUCTION FACILITIES
We work continuously to reduce manufacturing waste andincrease recycling. A linchpin in this work is continuous
quality improvement, to reduce spillage and save costs andthe environment. In 2020, the recycling rate was 51 percent(53). The goal is to continuously reduce the percentage of
waste that cannot be reused or recycled.
LOWER WATER CONSUMPTION
Lower water consumption and water treatment in our production processes are an important contribution to reducing
environmental impacts. We separate chemicals and particles
in the wastewater from our plants. Our goal is to gradually
reduce water consumption in the plants and processes.

SUCCESS THROUGH PROFITABLE GROW TH AND STRONGER CASH FLOW
Munters has to grow and efficiently use its
working capital to be successful and reachthe financial targets. Growth has to be
combined with strong cash flow and more
efficient tied-up capital, i.e., the amount of
capital needed to operate the company, inorder to create the flexibility to accommodate future strategic priorities.
Working capital is essentially a function of
three things:• Customers: The payment terms incontracts with customers and whether
they pay on time. It is important thatprojects are as cash neutral as possible
from beginning to end. Efficiency here ismeasured by accounts receivable andoutstanding days.
• Suppliers: Contracts with our suppliers
and payment terms for our deliveries.

Efficiency here is measured by accounts
payable and outstanding days.
• Inventory: Size given delivery cycles forincoming material; the production process
determines how efficient we arethroughout the value chain.

Cash conversion ratio
%
120
80
40

Further efforts in 2020 to improve capitalefficiency have produced very good results.
Working capital improved to MSEK 720 in
December 2020 (MSEK 1,018 last year).
This led to a significantly improved leverage
ratio of 1.9x, compared with 2.9x on
December 31, 2019. This is very positive andcreates the ability to repay loans, operate
more flexibly and make acquisitions in the
future.

0

2019

2020

2019

2020

Leverage
%
5
4
3
2
1
0

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INCLUSIVE CULTURE AND WORKPLACE
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MUNTERS’ EMPLOYEES are the hub of our business. Through collaboration and a passion for

creating sustainable solutions for our customers and partners, we contribute to our customers’
success and a better world.

SAFETY FIRST DURING THE PANDEMIC
It was a challenging year due to the Covid-19 pandemic.
When the virus began to spread, our focus first and foremost
was to ensure the health and safety of our employees andother stakeholders. Munters’ employees around the world
have contributed fantastically with hard work and greatcommitment.
Munters’ highest priority is our employees’ health andwell-being, which is why we were quick to introduce anumber of strict measures aligned with the World HealthOrganization’s (WHO) recommendations. For example,
restrictions were introduced for travel and visitors, as well as
guidelines to wear a face mask and other protective equipment in offices and production facilities. We also encouraged
employees to work from home wherever possible.

WHISTLEBLOWER CHANNEL
Munters’ employees can anonymously report serious improprieties in the workplace through an online whis-tleblower
channel maintained by an independent service provider. In
2020, a company-wide course was held for employees on
the differences between whistleblowing and complaints andhow to file a report. In 2020, 12 whistleblower cases werereceived and addressed through the channel.
DEVELOPMENT AND CAREER PATHS
We support individual career paths for all our employees
and encourage them to take on new challenges.

NEW ORGANIZATIONThe organizational structure was modified in the year to
be more project-focused and customer-centric. Clearerownership and accountability will enable us to capturesynergies and drive value throughout the Group.
The former role of Global Operations has been replaced by Strategic Operations. Stefan Måhl was appointed
to the position during the year. In addition, two new roles
were created in the Group Management Team: Innovation,
headed by Stéphane Darcq, and Commercial Excellence,with Stefan Aspman, formerly with Sandvik, taking over asGroup Vice President in February 2021.

HEALTH AND WELL-BEING
Munters has various guidelines on the environment and occupational health and safety and promotes a work-life balance.
We have zero tolerance for work-related accidents and theaim is to continuously improve safety at our work sites. We
closely monitor the Total Recordable Incident Rate (TRIR),
which is the ratio of accidents to the number of hours worked.
For further information, see page 47.
Earlier in 2020, Munters conducted the Safety Perception
Survey developed by DuPont Sustainable Solutions (DSS) to
get a better picture of the company’s safety culture. Based on
the survey, Munters needed to strengthen its leadership whenit comes to safety and Group-wide processes. This has led toactive work during the year, which has already yielded goodresults with significantly reduced accidents measured as TRIR.

DIVERSITY AND INTEGRATION
Munters has a mix of employees with different perspectives
and backgrounds. This provides valuable insight and createsa dynamism that leads to innovative solutions and new ways
of working.
Our goal is greater gender equality. In 2020, there were
22 percent female executives, or 1 percent below the target
for 2020 of 23 percent. The management team consists of
38 percent women. By 2025, Munters’ goal is to increase
the percentage of female employees and executives to 30
percent.

EMPLOYEE SURVEY
The employee survey is an important tool to gauge theGroup’s strengths and weaknesses. In 2020, Munters upgraded the survey. The results showed that employees have had
confidence in the company’s management, decisions andcommunication during the Covid-19 pandemic. Workplacesafety also ranked high, as did leadership and engagement.
One area where the survey pointed to improvement potential
is how Munters’ strategy is communicated in the organizationand how local organizations around the world will develop
and adapt to the new strategy.

26

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | O P E R AT I O N S

PLANNED ACTIVITIES 2021
• Launch a mentoring program in the organization• Further improvements to Munters Academy• Update our internal career framework• Continue to strive for gender parity• Education in the Code of Conduct• Education in unconscious bias, diversity and inclusion as
well as antiracism• Develop forms of collaboration and communication

SUSTAINABILIT Y FOCUS
We place a high priority in ensuring our employees’ healthand safety. We are convinced that diversity leads to stronger
innovation.
INCENTIVE PL AN TIED TO SUSTAINABILIT Y
Munters has introduced a compensation system for senior
management and key employees that will tie in with oursustainability targets. Through the Long-Term Incentive Plan (LTIP),
we will evaluate how well we as a company increase the shareof renewable energy in our production facilities, the number offemale leaders we hire, and the number of suppliers who sign
our Code of Conduct.

OUR VALUES• Sustainable value creation• Passion for results• There is always a better way• Team spirit
Our values are reflected in everything we do. Together with
our Code of Conduct, they clarify how we relate to each otherand with customers and other stakeholders.

Percentage offemale employees

Percentage offemale executives

%

%

25

25

20

20

15

15

10

10

5

5

0

17

18

19

20

0

17

18

19

20

In 2020, a comprehensive analysis of the reporting of various
sustainability key ratios was carried out. This has led to the ratio forthe proportion of female executives being revised down from thepreviously reported 25 percent to 21 percent in 2019.

MUNTERS COMPASS FOR CHANGE M ANAGEMENT PROGR A M
To succeed in a changing world, managers and employees must be given the necessary skills andtraining in the change process. Munters has therefore introduced change management learnings called
Munters Compass which comprises of training modules and a change Navigators network.
In 2021, more than 600 managers and internal influencers will participate in virtual workshops onchange management, coaching and storytelling.

»My biggest lesson so far is that I can create my own Munters story
and tell it from the heart. I look forward to the next session.«
ANNA SANDBERG
DIRECTOR GROUP FINANCIAL CONTROL27

O P E R AT I O N S|

MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

MUNTERS’ BUSINESS AREAS
WE OFFER INNOVATIVE, efficient and sustainable solutions for customers in many different

industries where controlling humidity and temperature is mission-critical. Munters has
two business areas: AirTech and FoodTech.

AirTech, share of the group’s sales

70%

AIRTECH is a global leader in energy-efficient air
treatment for industrial and commercial applications.
AirTech offers climate solutions for mission-critical processes that require exact control of moisture and temperature,with a focus on energy efficiency and sustainable climate
systems. Our climate systems also provide better indoor
air quality and comfort, as well as increased production
capacity.

FoodTech, share of the group’s sales

30%
FOODTECH is one of the world’s leading suppliersof innovative and energy-efficient climate control
systems for livestock farming and greenhouses, as well
as software for controlling and optimizing the entire foodproduction value chain. FoodTech’s solutions increase productivity while enabling sustainable food production wherestrict requirements are placed on quality, animal health andfood safety.

28

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | O P E R AT I O N S

Share of AirTech’s net sales

INDUSTRIAL 37%
SERVICES 20%

DATA CENTERS 17%

COMPONENTS 11%

MIST ELIMINATION 9%

COMMERCIAL 6%

Share of FoodTech’s net sales

POULTRY 43%
SWINE 30%

L AYER 13%

MTECH 6%

GREENHOUSES 4%DAIRY 3%29

S TI R TATAEC
EH
G I || MMUUNNT TEERRSS || AÅNRNSR
UEADL OAVNI SDNSI N
U SGTAOI N
CHA BHI LÅI TL LYB A
R ER PHOERTS
T R2A0P2P0O R T 2 0 2 0

AIRTECH IS A GLOBAL LEADER in energy-efficient air treatment for industrial and commercial

applications. AirTech offers climate solutions for mission-critical processes that
require exact control of moisture and temperature, with a focus on energy efficiency
and sustainable climate systems. Our climate systems provide better indoor air quality andcomfort, emissions control and increased production capacity.

Order intake,rolling 12 months

Net sales and operating profit

Customer segments,
share of net sales 2020

MSEK

MSEK

MSEK

MSEK

6,000

800

1,500

6,000

4,500

600

1,125

4,500

3,000

400

750

3,000

1,500

200

375

1,500

0

n
n

30

18

19

Net sales
Operating profit

0

20
n
n

Q4
19

Q1
20

Q2
20

Q3
20

Q4
20

0

Order intake, per quarter
Order intake, rolling 12 months

n
n
n
n
n
n

Industrial 37%
Services 20%
Data Centers 17%
Components 11%
Mist Elimination 6%
Commercial 9%

Regions,
share of net sales 2020nnn

Americas 51%
EMEA 29%APAC 19%

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | A I R T E C H»Our strong customer offering with missioncritical climate solutions and customer-centric
approach has created higher profit despite thechallenges during the pandemic.«
PETER GISEL-EKDAHLGROUP VICE PRESIDENT AND PRESIDENT OF AIRTECH

IMPORTANT EVENTS 2020
• The lithium battery segment is growing with several major
orders in both Europe and the US• Major order for Digital Crossroad data center projectnear Lake Michigan, in the US• SyCool, an innovative cooling technology for data centersthat consumes no water, was launched• Services’ share of sales is growing despite the pandemic.
Remote assistance, which provides security to customers
and employees while also delivering higher efficiency,
was launched as well
• To streamline the customer offering and optimize ourmarket presence, we exited the non-core part of thecommercial business in the US

ORDER INTAKE
Order intake decreased by 3%. Currency adjusted orderintake was unchanged. Excluding divested operations, thecurrency adjusted order intake increased slightly. Orderintake in the US industrial segment was strong in the pharma
and lithium battery segments. Services reported positive
development. Data Centers US had a weaker order intake
due to very strong development in 2019. Mist Elimination
had a weaker order intake, mainly driven by a weakermarine sub-segment.
NET SALESNet sales decreased by 4%. The currency adjusted decrease
was 2%. The decrease was mainly due to a decline in Mist
Elimination due to the weaker marine sub-segment. The
pharma segment had good growth driven by Covid-19
relief efforts and production of test equipment. Services had
good growth in the Americas. The APAC region decreased slightly due to very strong sales to the lithium battery
segment in 2019.
RESULTS
The adjusted EBITA margin improved to 14.0 percent (12.8)
due to an improved gross margin and continued lower
indirect costs. Operating profit was unchanged from 2019
at SEKM 565 (565) with a margin of 11.4 percent (11.0).

Net sales 2020, MSEK

4,937

(5,159)Operating profit 2020, MSEK

Number of Full-Time Equivalents (FTEs),
end of year 2020

565

2,286

(565)

(2,184)31

AIRTECH|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

STRATEGY – CUSTOMERSA continuous dialogue with new andexisting customers, together withunique applications know-how, gives
us a strong base for continued growth.
With strong technology, Munters iswell positioned to help our customers
with complete climate solutions.
Services and upgrades accounted for
20 percent of net sales and are an
increasingly important part of AirTech’s
offering that extend the service life ofclimate solutions and increase customer value.
Approximately 11 percent of
AirTech’s sales relates to components
sold to distributors or OEM customers
that use Munters’ products and technologies as part of their solutions.
STRATEGY – MARKETThe global market for energy-efficient
air treatment is characterized by alarge number of firms, many of them
local. A consolidation has been underway for several years. Growth has
historically been stable and the market

is expected to further grow. The focus
on sustainable climate solutions withefficient electricity and water consumption is a strong driver in the market.
Munters offers climate solutions that
require exact control of moisture andtemperature to many different industries. Our focus is on efficient solutions
for mission-critical processes that can
reduce the customer’s electricity andwater consumption and hazardous
emissions.
AirTech’s priority customer segments are the food industry, lithium-ion
battery manufacturers, service providers, data centers and humidification
components.
Munters has an extensive global
service network with its own local service centers around the world. Thanks
to this local presence, we maintainclose relationships with our customers
and can quickly provide service for the
installed base.
Our service and support offering
is a valuable product upgrade. They
lead to lower energy consumption andconsistent quality and environmental
performance while extending the service life of our products.
Decisions were made during theyear to exit the non-core part of thecommercial business in the US, expand
Data Center product manufacturing in
Texas and consolidate the operationsin the Netherlands.
AirTech has 13 production plants
in 13 countries and assembly plants ineight countries. The number of full-time
equivalents (FTEs) as of December
31 was 2,286 (2,184). The majorityof employees are based in the US,
Sweden, India and China.
STRATEGY – INNOVATIONAt AirTech, it is important that ourapplication experts team up with thecustomers’ process owners to find an
optimal solution. In this way, Munters
can offer an innovative solution that fills
a number of different climate control
functions and is optimized basedon the customer’s specifications andneeds. We offer a wealth of expertise

CLIM ATE SYSTEM WITH LOW DEW POINT FOR BAT TERY RESEARCH AT THE
UNIVERSIT Y OF BIR MINGHA M
Energy Materials Group at the University of Birmingham in the UK focuses on the development of rechargeable battery materials and manufacturing processes. The aim is tobuild better batteries through research, which will contribute to sustainable economy and acarbon-neutral future through the electrification of the transport sector. The research involves
lithium ion, sodium ion and solid-state chemistries that are extremely sensitive to moisture.
Working with such reactive materials requires very dry climate conditions to prevent any
damage or explosive reactions, and to ensure product integrity/quality.
The research team had previous experience with Munters’ low dew point facilities installedin various industrial and academic settings. That’s why Munters was approached to design abespoke turnkey battery dry room for battery research.
As principle contractor for this project, Munters was able to demonstrate its know-how andflexibility from concept to completion. A turnkey project offers added value for Munters andprovides a more comprehensive solution for the client. By acting as principle contractor, wewere able to demonstrate our full capability and flexibility. With the added complexity ofworking in a listed building with special building regulations and with minimal disruption to
University life, we provided further added value for the client.
The researchers at the University of Birmingham have many collaborations with large
companies, especially in the automotive industry. The previous solution offered limited air
throughput, flexibility and commercial appeal. With the newly installed climate solution
from Munters, the University of Birmingham can offer scaled up research services that would
otherwise have been limited.
With the new dry room climate solution, the room maintains a consistent -40°C dew
point at a temperature of 20°C, with the capacity for approximately 6 people. The Munterssystem is high performing but still energy efficient, resulting in a cost-effective solution for the
University of Birmingham’s battery research.

32

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | A I R T E C H

on specific applications and accessto various technologies and components which we have often developed
ourselves.
We are seeing increased interestin data collection through sensors
on our climate solutions to analyze
data in real time. Munters is therefore
developing connected digital solutions
that provide performance analysis andremote monitoring.
In 2020, we further strengthened
our product portfolio through thelaunch of SyCool, the market’s mostefficient product for data centers,
where the cooling solution does notconsume water.
During the year, the service operations launched Remote Assistance, aMerged Reality solution that allows
field technicians, engineers or customers to share real situations digitallywith product experts, so that practicalservice and repair instructions can bedemonstrated and handled virtually.
The service ensures safety for the fieldtechnicians who are working with thecustomer, at the same time that thesolution delivers increased efficiency.
STRATEGY – PEOPLE
People and collaboration are thefoundation for AirTech. We believethat we are “stronger together” andwe encourage teamwork, effective
problem solving and cross-functional
interactions.
Our goal is to train and equip our
employees for the journey ahead, sothat they go into it with knowledge andpassion. We are therefore developing
training programs in both functional areas and leadership as part of
Munters Academy. We are also developing methods and training for managers to support the changes. Everyone
in our diverse group of people will beable to contribute and flourish as wedevelop.

STRATEGY – EXCELLENCE IN
EVERYTHING WE DO
We strive for efficiency and quality
in everything we do and always look
for the best ways to improve how wework. Throughout the organization weshould constantly challenge ourselves
to be better.
We have defined a number of activities to build a solid foundation andcreate the focus the organization needs
to successfully navigate this strategic
journey. These activities include improving marketing skills and strengthening
the marketing organization, beingtransparent about costs, strengthening
the R&D organization and creating ascalable service organization.

COAL-FIRED POWER PL ANT BECOMES AN ENERGYEFFICIENT DATA CENTER
Digital Crossroad’s data center in Hammond, Indiana is an
example of a creative conversion of an existing energy facility
into a sustainable data center. A strong sustainability focus led
to an efficient, environmentally minded design that benefits bothcustomers and the community.
Located on Lake Michigan, the facility was converted from aformer coal-fired power plant called State Line. In the 1950s, State
Line was considered the world’s largest electricity producing generator, and held that title for nearly 25 years. In 2012, the plantreached the end of its operating lifespan and was shut down. In
2018, Digital Crossroad acquired the property with the intention
to convert the site into a high-powered, renewable energy data
center. Through adaptive re-use of the existing property, thecompany wants to positively impact the community and region
with a sustainable design that showcases how a modern data
center can be built on a legacy facility while also reducing theenvironmental impact.
The advantages of this facility include an existing electricalinfrastructure and access to cooling from Lake Michigan. Munters’
cooling solution for this project is based on an energy-efficient,
indirect airside economizer (IASE) heat exchanger with water
spirals that use cold water from the lake, combined with supplemental DX cooling. Each air handling system is designed todeliver over 75,000 SCFM (standard cubic feet per minute) ofcooled air to the data center.

33

T ROATGCI H | | M M
UNE DUOS N IDN SGU OC HI NHAÅBLI L B
S RRA
FS O
D ET EU TNETRESR S | |Å RASNR N
AV
L IA
S TA
I TAYR H
R EEPT O
T P2P 0O2R0T 2 0 2 0

FOODTECH IS OF THE WORLDS’ leading suppliersof innovative and energy-efficient climate
control systems for livestock farming andgreenhouses, as well as software for controlling andoptimizing the entire food production value chain.
Munters’ solutions increase productivity while enablingsustainable food production where strict demands areplaced on quality, animal health and food safety.

Order intake,rolling 12 months

Net sales and operating profit

MSEK

MSEK

MSEK

MSEK

2,500

300

700

7,000

2,000

240

600

6,000

500

5,000

400

4,000

300

3,000

200

2,000

100

1,000

1,500

180

1,000

120

500

0

n
n

34
2019

2020

Customer segments,
share of net sales 2020

60

18

19

Net sales
Operating profit

20

0

0

n
n

Q4
19

Q1
20

Q2
20

Q3
20

Q4
20

Order intake, per quarter
Order intake, rolling 12 months

n
n
n
n
n
n

Poultry 43%
Swine 30%
Layer 13%
MTech 6%
Greenhouses 4%
Dairy 3%

Regions,
share of net sales 2020nnn

Americas 25%
EMEA 43%APAC 32%

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | F O O D T E C H»Despite the challenging business climate, we
increased both growth and profit thanks toour strong market offer and our dedicatedemployees.«
PIA BRANTGÄRDE LINDERGROUP VICE PRESIDENT AND PRESIDENT OF FOODTECHIMPORTANT EVENTS 2020
• Pia Brantgärde Linder took over as President of Business
Area FoodTech in August 2020
• Increased profit despite challenging business climate
during the pandemic, which primarily affected Europe andthe Americas• A major framework agreement was signed in the swine
segment in China, where investments increased• Strong development for digital offer and software solutions
with new orders from among others Tyson Foods and JBS/
Pilgrims• Launch of the Munters Rotem Trio controller for connectedclimate systems used in livestock farming• Launch of the Saturn modular fan series, which reducescomplexity and increases functionality

ORDER INTAKE
Order intake increased by 5%. Currency adjusted orderintake increased by 9%. The increase was mainly due tovery strong order intake in Asia, driven by the swine segment
in China. In the Americas and Europe, demand was weaker.
Order intake has been negatively affected by the Covid19-pandemic with limited access to customers and delayedcustomer investments. The Americas were also weak due tocontinued low demand in the swine segment.
NET SALESNet sales increased by 13%. The currency adjusted increase
was 22%, driven by good growth in the swine segment in
China. Europe reported flat sales with growth in the broiler
segment, mainly in Germany, with good export sales to the
CIS countries. This was offset by negative effects from theCovid-19-pandemic especially in Europe and the Americas.
In the Americas, net sales declined mainly due to continued
weak net sales in the swine segment.
RESULTS
The adjusted EBITA margin improved to 14.6 percent(13.7). The improvement was driven by increased net sales.
Operating profit was SEK 291 M (226) with a margin of
13.7 percent (11.1).

Net sales 2020, MSEK

2,126

(2,032)

Operating profit 2020, MSEK

Number of Full-Time Equivalents (FTEs),
end of 2020

291

861

(226)

(833)

35

FOODTECH|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

STRATEGY – CUSTOMERSFoodTech offers complete systems forcontrolling the environment in farms
and greenhouses, including equipment
for ventilation, cooling and heating, as
well as various types of control systems
and software. Our offering is built onlong experience and innovative products that are reliable and sustainable.
We are one of the world’s leading
suppliers of advanced climate control
for various agricultural segments,
with a strong position in the layer andbroiler markets in the US and Europe.
FoodTech is also one of the leaders inthe swine farming market, with a strong
position in the US and growing sales
in China. FoodTech’s priority customer
segments are the layer and broiler
segments, the swine segment, dairy
segment, software solutions for foodproducers and greenhouses.
Efficient climate control is one of themost important factors for profitable,
sustainable production. Both international companies and independent
growers are among our customers.

FoodTech is working actively tostrengthen its digital offer. Thanks totechnology and systems from MTech
Systems, we have many of the world’s
largest food producers in the broiler
segment as customers, who use oursoftware for planning and monitoring
their operations.
Sales are primarily throughdistributors in local markets. Software
solutions are most often sold directly
to food producers as Software as aService (SaaS). In some geographicalmarkets and segments, climate control
products are also sold directly to theend customer.
STRATEGY – MARKET
Demand is increasing for advanced
climate control solutions that ensure
increased energy efficiency and lower
emissions. It is also being driven by
demand for less use of antibiotics inlivestock farming from both regulatorsand consumers.
Increased traceability of food is a
rapidly growing need that is leading

to increased demand for data collection and analysis throughout the
food chain, including feed production, farms, production facilities andtransportation all the way to the store.
Together with increased demands
for productivity, this has led to rapid
development of the software used byfood producers to plan, control andoptimize the entire production chain
from feed to finished product.
The Chinese swine market recovered in 2020 after having previously
been impacted by African swine
fever, which in 2019 led to a drastic
reduction in swine production. There isa shift underway in the Chinese market
from smaller farms without climate
control equipment to multi-story farms
with advanced technology.
FoodTech has two production
facilities in two countries and assemblyplants in two countries. The number offull-time equivalents (FTEs) at year-end
was 861 (833), the majority of whomare based in the US, Italy, Israel andChina.

T YSON FOODS INCREASES EFFICIENCY AND REDUCES WASTE WITH MTECH SYSTEMS
Tyson Foods, Inc. is an American foodmultinational based in Springdale, Arkansas.
As the world’s second largest producer ofchicken, beef and pork, Tyson has a responsibility to sustainably feed the world. People
are increasingly interested in where theirfood comes from and Tyson is transparent ineverything it does. Its goal is to combine thehighest quality food with land stewardship,
animal welfare and resource conservation.

To do so requires technology, real-time
information and data controls. FoodTech
MTech Systems is therefore helping Tyson
to replace an internal platform for chicken
production around the US.
MTech Systems’ “Protein” software is anadvanced production planning tool with a
Sonar IoT platform that receives real-timedata from farms around the US. This gives
Tyson access to daily information, including

environmental, consumption and animal
health indicators. MTech also uses modelingof artificial intelligence to help Tyson identity
problems and improve production. The
system guarantees that customers like Tyson
can be global leaders in animal health while
also being more profitable through the useof innovative technology, predictable models
and artificial intelligence to optimize theentire food chain.
Among the benefits for Tyson of using MTech
Systems are:
• Provides real-time production information• Creates full traceability in the entire foodchain
• Scheduled processing, feed deliveries
and service visits• Predicts problems and challenges andaddresses them before they arise• Minimizes waste in production• Better utilizes manpower by understanding actual needs• Continuously monitors the indoor climate
in order to guarantee human and animal
health as well as safety

36

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | F O O D T E C H

STRATEGY – INNOVATIONFor FoodTech to stay on the forefrontof product development, we collaborate with end customers and resellers
to optimize our product development
process and customize solutions
with regard to moisture content,
temperatures, emissions and energy
consumption.
A strong driver is digitization,
and we are seeing great interest in
real-time data collection and analysis
from our customers. Digitized processes are, and will remain, an importantfactor to optimize production, improveenergy efficiency, increase integration
between various actors, and strengthen
the food production value chain.
Munters is currently a world leader
in the software used by food producers
to plan, control and optimize their
entire production chain from feed tofinished product. There is great interest
in and potential for these internet-based solutions, but competition is stiffand requires continued investments
and improvements.

Munters Rotem Trio, a new climate
controller for livestock farming, waslaunched in 2020. The system improves efficiency and control with new
functionality, at the same time that it
replaces many old products FoodTech
had offered.
Also launched during the year was
the modular fan series Saturn, which
reduces complexity and inventory for
distributors and customers while increasing functionality through a range of
product models.
STRATEGY– PEOPLE
Our employees are the core of ourbusiness. Communication, leadershipand empowering people are especially important at FoodTech, where
we are spread around the world withlong distances between our facilities.
We want all our people to know andfeel that they can take initiative anddecisions, and make a difference. We
realize the importance of communication at every level, both to share information within the business area but
also to increase collaboration between

MUNTERS’ CLIM ATE SOLUTION IMPROVES ANIM AL
HEALTH IN EGG PRODUCTION
Munters has delivered an innovative climate solution to Granja
Pinilla, a leading Spanish producer of organic eggs. As anelement in improving the health of its hens and thereby the qualityof the laid eggs, the company transferred part of its production toa free range solution. Here the hens can roam free outdoors forpart of the day rather than spending all 24 hours a day indoors.
The challenge was that it took up to five times more manual laborto gather eggs. A free range system can lead to a higher level of
egg losses and risk of fighting between hens for nesting space aswell as poorer indoor air quality.
Granja Pinilla turned to Munters for help with its indoor
climate. Open doors and hens that go out and in makes for dusty
air, which reduces indoor air quality.
Munters’ optimized climate solution included air throttles andspeed controlled fans that eliminated the pressure difference
between in- and outdoors. It is important to avoid having air
stream through door openings. During the warm months, tunnel
ventilation is used, guaranteeing very low heat stress and no light
disruptions for the hens.
Today the hens have reached maximum egg production andthey lay eggs completely normally in the nesting area. The eggs
are clean with no residual dirt. When the indoor climate is evenly
distributed, fighting between the hens is avoided. The hens feelbetter year round, air quality is improved and dust in the air has
been drastically reduced.

business units. We want to improve
our leadership abilities – both throughformal training and by creating aframework that makes it easier for all
employees to grow as leaders.
Safety and well-being should
always be a top priority – Munters will
be a safe workplace.
STRATEGY – EXCELLENCE IN
EVERYTHING WE DO
For FoodTech, “Excellence in everything we do” includes being a company that is easy to do business with,
but also working efficiently internally.
Activities in this area include the launchof a partner and pricing program,product streamlining and improvements
to the supply chain.
Many initiatives related to Munters
Production System (MPS) have beensuccessfully implemented in recent
years within FoodTech, and MPS,
like other procurement activities, willremain an important part our continuous improvements.

The climate solution from
Munters produced improved
animal health and betterworking conditions for egg
gatherers, with less dust and
dirt.

37

SU
T RSATTAEI NGA
I B|I L I TMYURNETPEOR RST || ÅM
R SURNETDEORS
V I S |N I A
NN
GNO
UC
AH
L AHN
ÅD
L L BS A
U RS HTAE ITNSRAAB PI LPI O
T YR TR E2P0O2 R0T 2 0 2 0

STRONG SUSTAINABILITY WORK
IN 2020
IN 2020, Munters placed an increased focus on sustainability. A comprehensive analysis of

GHG emissions from our production facilities was conducted during the year, at the same timethat several initiatives were taken to strengthen many aspects of our sustainability agenda, allwithin the framework of the overarching strategy. The management of Munters remains firmly
convinced that more ambitious targets must be set for sustainability work going forward. The
ambition is to set clearer targets for several areas in 2021.

In 2020, progress was made in severalof Munters’ priority sustainability
areas. An intensive effort was made toreassess every aspect of our sustainability work. This has led to clearer
priorities and definitions of what weneed to focus on going forward.
ORGANIZATION AND
GOVERNANCE
The sustainability agenda is part of
Munters’ strategy. The President and
CEO is ultimately responsible for integrating the sustainability agenda andthe company’s strategic priorities andthat the company’s various goals are
met. Group Management is responsible for ensuring that the sustainability
agenda is fully integrated in their strategy and for following up establishedtargets and regularly communicating
the results and outcomes to the Boardof Directors and affected parts of theorganization.
The Group’s basic approach tosustainability issues is described ina number of policies and governing
documents. The two most important
documents are the Code of Conduct
for employees and the special Code of
Conduct for suppliers. In addition, thework is governed by several different
documents, e.g., HR policy, environmental policy, occupational health &safety policy and the rules on businesstravel.
38

Sustainability risks are mappedand evaluated as part of the yearly risk
assessment process. For more information on the most material sustainability
risks and how we manage them, seepages 50–55.
GLOBAL COMPACT AND
AGENDA 2030
Munters has committed since 2018
to report in accordance with the ten
principles of the UN Global Compact’s
on human rights, labor, the environment and anti-corruption. The Codeof Conduct and the separate Codeof Conduct for suppliers are basedon these ten principles and describe
Munters’ view on issues such as theenvironment, social responsibility,business ethics and human rights.
Compliance with these policies is monitored each year and reported to theBoard of Directors. In addition to the
Global Compact, Munters has chosen
to embrace the Carbon Disclosure
Project (CDP) and reported to it in2019 and 2020. In 2020, Muntersreached a CDP rating of C, which was
an improvement from the year before.
Our ambition is to improve step-by-stepand clarify our external reporting ofsustainability work in coming years.
An employee survey was conducted in 2020 similar to the ones donein 2017 and 2018. For more information, refer to page 26.

Based on the priority sustainability areas and opportunities to makea difference, Munters has chosen tofocus on nine of the UN Sustainable
Development Goals; see page 17.
They are also linked to Munters’ strategic goals.

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A major restructuring program within
Munters in 2019 also led to a reduced
focus on sustainability issues. In autumn
2019, an analysis was launched of thearea and which issues are the highest
priority. In 2020, Munters therefore
placed greater focus on the qualityof its sustainability reporting. In
addition, GHG emissions reporting
was included during the year, in
accordance with the GHG Protocol.
At the same time, initiatives have beentaken to strengthen the work with security, diversity and the environment. In thestrategy work conducted during the year,
sustainability was an integral aspect. For
2021, the ambition is to further strengthen
our reporting processes, analyze the prioprio
rity areas and set more ambitious targets.

STAKEHOLDER DIALOGUE
Business partners

Channels for dialogue

Important issues

Business partners
Customers
Resellers
Suppliers

Continuous dialogue with customers and resellers. Munters
also conducts regular customer surveys and meetings andconferences with suppliers to ensure a positive dialogue.

Delivery reliability, quality and continuous
suggestions for improvements. Compliance on
environmental, ethical and social issues such aslabor laws and human rights.

Employees
Current employees
Potential employees

Employee surveys
Conferences and employee meetings
Employment interviews
Participation in job fairs at various universities
Partner in various projects that promote collaborations
between businesses and the academic sector

Inclusion and diversity
Health and safety
Discrimination and harassment

Capital market
Shareholders
Potential shareholders
Analysts
Lenders

Individual meetings and continuous dialogue withshareholders and potential shareholders
Participation in investor conferences
Continuous dialogue with the stock analysts whocover Munters
Individual meetings and continuous dialogue withMunters’ lenders.

Munters’ overarching strategy and financial
and strategic targets.
The company’s sustainability agenda andfocus areas
Innovation with a focus on energy efficiency
and strategic priorities such as digital solutions,modular platforms, etc.

39

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MUNTERS’ OVERARCHING STRATEGIC priorities are driven by various aspects of sustainability. For

Munters, sustainability means that everything we do will be done sustainably for our stakeholders
and our community. At the same time, our medium-term financial targets are important to achieve
in order to create the flexibility for future investments.

O
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As we work towards these targets, we take various decisions and actions to achieve our ambitions in the best way. Our ambitions contain priorities on resource efficiency, responsible businesspractices and people & society. These three areas today provide the framework for Munters’sustainability agenda. On the following pages we describe the three areas in detail, the opportunities and challenges we see, activities that were implemented during the year, and our plans
going forward.

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S TRREAT
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RESOURCEEFFICIENCYRESPONSIBLE
BUSINESS PRACTICESPEOPLE &SOCIETY

Priority areas:

Priority areas:

Priority areas:

SUSTAINABLE PRODUCTS
We strive to offer energy- and resource-efficient solutions and thereby help
our customers to reduce their environmental impact. Our solutions andproducts contribute to higher energy
efficiency and lower emissions throughan entire service life. By also offering
a competitive range of services, we
can optimize the quality and service
life of the products.

SUSTAINABLE AND
PROFITABLE OPERATIONS
Our ambition is to create value forour stakeholders, including shareholders and employees, by maintaining sustainable and profitable
operations.

EQUAL AND INCLUSIVESUSTAINABLE PRODUCTION
Through energy- and resource-efficient production facilities, along withconstant analysis and efficiency improvements, we are working to minimize
our environmental and climate impacts.
The Group has 17 production facilities
in ten countries. As part of an ongoing
effort, we analyze our environmental
impact through the entire value chain,with a strong focus on measuring andminimizing GHG emissions.

BUSINESS ETHICS
Complying with laws and regulations is
the foundation of an ethical and sustainable business. Acting ethically builds
credibility and strong relationships thatcreate opportunities for fruitful collaboration and profitable business. For
example, we work with the Codes ofConduct for employees and suppliers.
COLLABORATIONS AND
PARTNERSHIPSWe require our collaborating partners,
such as suppliers and distributors, toobserve the same ethical guidelinesthat we have pledged to ourselves.

WORK ENVIRONMENT
We offer a fair, safe and inclusive
workplace. To ensure that we deliveron our values, all employees haveto be engaged, enjoy their workand have the opportunity to develop
professionally. We are convinced thatdiversity provides us with different
perspectives and valuable insightsthat improve our company and ouroffering.
COMMUNITY ENGAGEMENT
We dialogue with our stakeholders
and the local communities where
we operate. Our collaborations withothers in locations where we operate
is important to attract both customers
and potential employees. In addition,
many of our projects create a senseof community and pride among our
employees, which also creates value
for Munters.

SUSTAINABLE TRANSPORTATION
We limit the environmental impactof the shipping methods we use bychoosing low-emission alternatives
and through active logistics planning.
Munters has customers and suppliers inlarge parts of the world, and transporting materials and products – aswell as our business travel – has asignificant environmental impact.

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RESOURCE EFFICIENCY
Governance documents that serve as guidance for various aspects of Resource Efficiency:
1. Munters Production Systems: Describes Munters’ overarching production process.
2. Munters Product Development Process (MPLS): Describes Munters’ product development system.
3. Munters Loss Prevention Standard: Describes processes for workplace safety and crisis management.
4. Policy on the environment, health and safety: Munters’ commitment to environmentally friendly and safe production.
5. Certifications: ISO 9001:2015, ISO 14001 and ISO 45001.
6. Code of Conduct for suppliers: Describes the requirements Munters imposes on its partners, e.g., suppliers and distributors,
in the areas of environmental and social responsibility as well as business ethics.

Priorities and their challenges
SUSTAINABLE PRODUCTS AND OFFERINGS

2020

Our challenge is in prioritizing which projects to pursue to make our
products even more energy-efficient but also more sustainable fromthe broader perspective. The choice of material, green design andlifecycle analysis are all becoming increasingly important to offering
services that optimize service life and utilization. In addition, theproducts have to be taken care of after they are no longer in use.
Offering complete product lifecycle service is an ambition of Munters’
for the future.

In 2020, we worked on the training material for the “Munters
Production Systems” process in collaboration with the businessareas and Strategic Operations function. Due to the ongoingpandemic, the material was designed so that the training can beheld in person or virtually.

SUSTAINABLE PRODUCTION
In this area, there are several major challenges. One we are strongly
focused on is reporting our GHG emissions. Our analysis work is
continuing with the ambition to measure and minimize all our GHG
emissions. Among other challenges we see is that access to electricity
from renewable sources, such as water and solar, is limited in somelocations where we have production.

In 2020, a compliance audit was conducted using the Munters
Loss Prevention Standard in 7 manufacturing plants and offices.
In 2019, nine audits were conducted. Intense work was done toincrease workplace safety. For more information, refer to page45.
In 2020, GHG emissions from our manufacturing plants were
measured according to Scope 1* emissions from fossil fuelcombustion and Scope 2*from electricity consumption. Quarterly
reporting of GHG emissions is now included as part of the plants’ongoing reporting. The overwhelming share of GHG emissions
from production comes from electricity consumption, which is why
the efforts to reduce GHG emissions are closely tied to increased
use of electricity from renewable sources whenever available, as
well as improved energy efficiency. In these areas, Munters has
clearly stated goals and reported progress in 2020.

SUSTAINABLE TR ANSPORTATION
Challenges we see include securing access to more environmentallyfriendly shipping alternatives and reducing business travel. Improved
virtual meeting technology has enabled us to meet having to travel. In
2020, we were successful in maintaining our operations with drasticallyreduced business travel. Our ambition is to reduce future emissions
from business travel to the 2019 level. For freight, we have continued
to improve our internal processes and management to ensure that we
minimize the amount of goods transported by air. In addition, we will
use electric and hybrid vehicles as far as possible in the future.

42

In 2020, we completed the global mapping of GHG emissions
for all vehicles used in our operations; this information is now
included as a significant part of the company’s registry of leased
and owned vehicles. On the basis of this information, alongwith user information we have gathered, we can now estimate
emissions from our vehicles and set concrete targets to reducethem by switching to greener vehicles.

Sustainable Development Goals (SDG)
The activities Munters carries out in thearea of resource efficiency support thefollowing areas in the UN Agenda 2030 for
Sustainable Development.

“In 2020, we had the following certifications: 13 manufacturing plants have
ISO:9001:2015 certification, 5 have ISO
14001 certification and 3 have ISO 45001
certification.
Our ambition is to certify more plants incoming years. In 2021, we will continue ouranalysis work to see which certifications canbe obtained for more plants.”

2021
In 2021, training in Munters Production Systems (MPS) will be introduced for plant and leanmanagers. The focus is on the strategy behind MPS, the standards it is based on and how they will
be implemented, and how the work is followed up together with a rollout plan for 2021. The training
and testing of various processes and models, as well as the rollout, will be done in 2021 by thebusiness areas and Strategic Operations function.

Services as a share of net sales
Munters’ ambition is to raise services as ashare of net sales to 30%.

14%Energy efficiency
Electricity consumption in our production
facilities will continually decrease. (MWh/production value SEK 000).

0.96(2019: 1.05)

Green electricity
The share of electricity from renewablesources in our production facilities willcontinually increase.

50%
During the year, an updated Munters Loss Prevention Standard will be launched through a programof digital and local training. We will continue to provide employees with safety training.
In 2021, we will continue to improve the quality of the reporting and tie GHG emissions from ourmanufacturing plants to our overarching climate goals. With the mapping that was done in 2020 wehave a good idea of how to prioritize improvements in order to have the biggest possible environmental impact.

(2019: 13)(2019: 40)

Recycling rate
Reused or recycled waste as a percentageof the total amount of waste will continually increase.

47%(2019: 53)

In general, we succeeded in significantly
increasing the recycling rate in many ofour production facilities in 2020. We
also conducted several major cleanups of
non-recyclable materials during the year,
which led to a lower recycling rate.

In 2020, the need to regionalize our value chain became more apparent due to the Covid-19 pandemic. We will continue to ensure that we have several suppliers of critical components. Measures toincrease the share of sustainable transports will continue. It is an important part of how we work withsustainability and our value chain to reduce our environmental impact.
A new framework for Munters’ auto policy comprising all categories of vehicles and users wasdrafted and will be launched in early 2021. The primary goal is to reduce vehicle emissions by
30% by 2023. As infrastructure improves with an expanded network of charging stations, which isimportant especially for our service vehicles, we can raise that figure.

Environmental fines
Fines received owing to non-compliancewith environmental laws and regulations.
The goal is not to receive any fines.

5 TSEK(2019: 50)*The GHG Protocol, an abbreviation for Greenhouse Gas Protocol, is a standard for calculating and reporting greenhouse gas
emissions. The emissions are reported in Scopes 1, 2 and 3. Scope 1 includes direct emissions, Scope 2 includes indirect emissions
from purchased electricity, steam, heat or cooling, and Scope 3 other indirect emissions.

.

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RESPONSIBLE BUSINESS PRACTICES
Governance documents that serve as guidance for various aspects of Responsible Business Practices:
1. Munters Code of Conduct: Defines Munters’ fundamental view on environmental, ethical and human rights issues.
2. Code of Conduct for suppliers: See description in the section Resource efficiency.
3. Anti-corruption policy: Munters’ commitment that employees and partners will comply with anti-corruption laws and regulations.
4. Data protection policy: Provides guidance on how personal data is handled correctly, in compliance with the law.
5. Compliance with competition rules: Explains the fundamentals of competition law to prevent violations.
6. Whistleblower policy: See description in the sidebar on page 43.
7. Compliance with sanction regulations: Defines the controls employees have to perform in conjunction with the movement of goods,
services and technology across national borders to ensure we do not violate sanctions.
8. Insider policy: Provides guidance for employees on insider regulations, to reduce the risk of illegal trading.

Priorities and challenges
SUSTAINABLE AND PROFITABLE OPER ATIONS

2020

We see major challenges going forward but also great opportunities by contributing to a more sustainable planet. In 2020, GroupManagement clarified the ambitions for Munters’ sustainability work.
Munters’ vision and strategy reflect the job that has been done toensure that Munters is becoming a more sustainable business andcan offer customers solutions with a stronger sustainability focus than
before.

In 2020, we continued to integrate sustainability aspects in theoverarching strategy and strategic priorities.

BUSINESS ETHICS
Munters has operations in many countries, and the views on what is
moral and ethical differ in different cultures. A number of countries
in which Munters operates rank relatively low on Transparency
International’s annual Corruption Perception Index. In these countries,
we therefore place higher requirements on an effective process toensure compliance with laws and regulations and that human rights
are not put at risk.

The whistleblower policy was updated in 2020, after which
training was created and rolled out for HR employees.
The HR organization introduced training on “Human Trafficking
Awareness & Reporting Obligations” for employees in HR,
procurement and Strategic Operations.

COLL ABOR ATIONS AND PARTNERSHIPS
If our partners do not act in abidance with the law and in an ethicalmanner, it could affect Munters negatively in several ways. We
therefore set clear demands for our suppliers in the Code of Conduct
for suppliers, which they must review and affirm that they will comply
with. Routine dialogue with all partners on these issues yields several
advantages and opportunities for in-depth, long-term relationships,
while preventing risk in this area. Munters uses a large number ofsuppliers spread among many countries in which the cultures andattitudes towards issues concerning human rights and the environment
differ greatly. This requires effective tools, a clear procedure andtraining by the organization to verify that suppliers meet our very strict
requirements.

44

In 2019, we worked only on having major suppliers sign our
Code of Conduct for suppliers. In 2020, we changed the definition and all major suppliers, of both direct and indirect materials,
signed it. During the year, thereby achieving our goal to have
100 percent of major suppliers sign the code.

Sustainable Development Goals (SDG)
The activities Munters carries out in the areaof ethical business practices support thefollowing areas in the UN Agenda 2030 for
Sustainable Development.

“In 2020, Munters reached a Carbon
Disclosure Project (CDP) rating of C. In theprevious year, which was the first year that
Munters reported to CDP, we had a ratingof D-.”

Code of Conduct for suppliers
The goal for 2020 was to have all
our major suppliers of both direct andindirect materials sign the Code of
Conduct.

100%(2019: 92)2021

In 2019, we reported only how large
a share of major suppliers of directmaterials had signed the Munters Codeof Conduct for suppliers.

In 2021, we will continue to drive our sustainability work forward with a focus on setting clearer
goals in priority areas and strengthening the management, analysis and reporting of sustainability
indicators.

Number of whistleblower complaints
Number of whistleblower complaints
through the external reporting channel.

12
The HR organization will launch training on the whistleblower policy for all employees.
During the year, the Munters Code of Conduct will be updated, after which training will be launched
for all employees.
The HR organization will continue the roll-out of “Human Trafficking Awareness & Reporting
Obligations” training for employees in Europe and Asia.

The goal is to continue to ensure that 100% of all major suppliers sign the Code of Conduct for
suppliers.

(2019: 7)

Whistleblower policy
Munters’ whistleblower policy applies
to all employees, business partners,
subsidiaries and joint ventures. The
policy clearly states that if any serious
violation committed by the company or
any employee, consultant, contractor
or supplier is reported, Munters will
immediately address it and thoroughly
investigate and take action. In addition,an analysis is always conducted todetermine how similar improprieties
can be prevented in the future. We alsooffer a web-based reporting channel foranonymous complaints. This reporting
tool is provided by an external partner,
WhistleB, to ensure anonymity.

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PEOPLE & SOCIETY
Governance documents that serve as guidance for various aspects of People & Society:
1. Environmental policy
2. Policy on the environment, health and safety: Munters’ commitment to environmentally friendly and safe production.
3. Policy on diversity and inclusion: Munters’ commitment to an equitable, inclusive and collaborative workplace marked by diversity.
4. Anti-discrimination and harassment policy: Munters’ commitment to protect its employees against discrimination, harassment andbullying in the workplace.
5. Flex work policy: Encouragement to managers at Munters, where possible, to offer employees flexible working hours.
6. Whistleblower policy: Defines Munters’ view on mismanagement and improprieties and the procedure employees can use to
make Group Management and the Board of Directors aware of such situations.

Priorities and challenges
EQUITABLE AND INCLUSIVEWORK ENVIRONMENTDiversity and safety are never-ending jobs, and thechallenge lies in staying focused on the issue by
routinely conducting various kinds of activities to ensurethat the subject remains top of mind.
Safety work at our production facilities has beena more important focus in recent years. All accidents
have been routinely reported to Group Management
since the end of 2018 with a clear analysis of the accident itself, what caused it and what needs to change
to ensure that a similar accident does not occur. A few
years ago, Munters set a goal that 30 percent of both
employees and managers will be women by 2025. All
aspects of diversity are equally important, but since wesaw that the percentage of women in the company waslow (only 16 percent when measurements began in2016), management chose to focus on gender equality
first.

2020

2021

Munters joined with DuPont during theyear to improve safety work throughout
the company. For more information,refer to the section on quality andsafety on page 45.
In 2020, key employees in HR
received training on gender bias tostrengthen their knowledge and awareness of the importance of genderequality and how we can improve it in
the workplace.
We joined various professional
networks such as Women in HVACR
and the Society of Women Engineers
in the US to proactively contact female
candidates for various positions.

The key employees in HR who received
gender bias training in 2020 will holdthe same training for all managers
within Munters in 2021.

Munters participated in a number of
local community activities in 2020.
This included mask donations during
the pandemic; refer to page 19.

In 2021, Munters will celebrate EarthDay through various local activities.
In the US, Munters will be accepting
blood donations at its various facilities(provided that conditions allow).

COMMUNIT Y ENGAGEMENT
We dialogue with our stakeholders and the local
communities where we operate. Examples of activities
routinely conducted at our facilities include participation in job fairs arranged by schools, collaboration withschools where we offer mentoring and project work,
open houses for employees’ families and various formsof support for sports clubs and relief organizations.
Activities in this area currently are not managed
centrally; it is up to each production facility or office
to decide what is right in their situation. It can be achallenge to find projects that are not simply charities
but also contribute positively to Munters from a businessperspective.

46

For more information on how wedialogue with various stakeholders,refer to pages 48-49.

Sustainable Development Goals (SDG)
The activities Munters carries out in the areaof people & society support the following
areas in the UN Agenda 2030 for Sustainable
Development.

Percentage of women
Our aim is to increase the percentage of women in our workforce.
The target is 30 percent by 2025.

21%(2019: 21)

Percentage of women in
management
Our aim is to increase the percentage of women in management. The
target is 30 percent by 2025.

SECURITY AND QUALITY AROUND THE WORLD
Early in 2020, Munters conducted a safety study
developed by DuPont Sustainable Solutions(DSS) with the aim of better understanding thesafety culture. On-site inspections were conducted in Buena Vista and Virginia, in the US; Tobo
and Kista, Sweden; and Beijing, China.
The results were clear. Munters needed tostrengthen its leadership and improve workplace safety. It was then decided to collaborate
with DSS to develop a strategy for real, lastingchange.
This resulted in the rollout of the Safety
Observation Program (STOP), which is designed
to change habits and improve safety. Despite
the ongoing pandemic in 2020, we succeededin holding training in several locations, and theresults are already evident in the form of thenumber of accidents as measured by the Total
Recordable Incident Rate (TRIR), which was 1.4
in 2020, compared with 2.7 in 2019.
“The roll-out of our STOP program willcontinue in 2021. Ensuring everyone’s safety inthe workplace is a big job, but we are strongly
focused and committed. I expect the STOP
program to enable for us to be even more safety
conscious and focused in 2021,” says
David Cromwell,Vice President
Global Quality and
Safety.

MUNTERS’ COMMITMENT TO DIVERSITY AND GENDER EQUALITY
Munters is committed to improving gender equality. We want to ensure that qualified womenare represented in all our recruiting processes
and that women can have a career at Munters.
We do so by:• Proactively seeking qualified women throughvarious professional networks• Ensuring that our recruiting ads and job
descriptions are gender neutral• Trying to have at least two qualified womenin every recruitment for both internally andexternally advertised positions• Recruiting women from universities and local
colleges to ensure that we have talent within
the company• Seeking new channels and ways to offer
flexible working hours throughout theorganization• Training all managers globally in Gender
Balance recruiting• Ensuring that our recruiting processes are freefrom unconscious biases that candidates mayotherwise be exposed to Ensuring that every
employee, man and woman, has anindividual development plan
• Identifying “high potential” women in our“People Strategy Sessions”• Trying to set goals for managers to help raise
the percentage of women in the company

22%(2019: 21*)

*In 2020, a comprehensive analysisof the reporting of various sustainability key ratios was carried out. This
has led to the ratio for the proportionof female executives being revised
down from the previously reported
25 percent to 21 percent in 2019.
Total Recordable Incident Rate*(TRIR)
Munters strives to continually reduce
the number of accidents in production, which we measure by Total
Recordable Incident Rate (TRIR).
1.2 (2019: 2.7)

1.2

(2019: 2.7)

*Number of accidents where theemployee sought medical treatment
multiplied by 200,000 and divided
by the number of hours worked.

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STAKEHOLDER DIALOGUEMUNTERS HAS OPERATIONS AROUND THE WORLD and collaborates with a number of different stakehol-

ders, including employees, owners, distributors, partners and people who work in environments
where Munters’ climate control solutions are installed. To create long-term shareholder value, wehave to ensure value creation for all stakeholders. This is why we maintain a close dialogue andcollaboration with many of them. This gives us a better understanding of how and what we can
improve in our work.

KRISTIN KUHANGELHead Of Human Resources / Reventa
What is the best thing about working for
Munters?
For me, it is working with a fantastic local
team and at the same time closely withinternational colleagues from around theworld. It is very stimulating and inspiring toshare insights, experiences and opinions.

Have you embraced Munters’ core values?
I feel that all our core values are woven
together: When you are passionate about
the things you do, you will not only create
sustainable value but also find better ways
to handle different situations, processes andprojects. My performance is even better
when I work with a functional, supportiveand constructive team. The various perspectives and ideas help me to think outside thebox, which can be enlightening. Personally,
I enjoy living by these values every day,and I try to share them with others while still
having fun at work.

CARL RAGNERSTAM
Stock analyst, Nordea
What stands out about Munters among thecompanies you cover?
Munters stands out in several areas. This
includes a well-positioned business modelwith exposure to structurally growing
markets such as animal health and electrification. Also, I feel that Munters has
proven it is prepared to take action with theimplementation of the Full Potential Programin 2019 and the focus on strategic priorities
in 2020.

48

What are your expectations in terms of
Munters’ sustainability work?
We at Nordea expect continuous improvements in sustainability reporting andincreased transparency in Munters’ sustainability work. Among the indicators we see
as important to evaluate this work are GHG
emissions in accordance with Greenhouse
Gas Protocol and their Scope 1, 2 and 3.
In addition also waste, water consumption
and employee sick leave.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | S U S TA I N A B I L I T Y R E P O R T

JONATHAN SCHÖNBÄCK
Portfolio manager, ODIN fonder
What distinguishes Munters among thecompanies you have invested in?
With its products and strategy, Munters has
the opportunity to improve our environment
and thereby benefit everyone. Munters has
the potential to attract the right talent thanks
to a clear purpose to improve the planetby helping customers succeed. One of thethings we look at most in our analysis isculture. By building strong teams, Munterscreates a corporate culture that can push thecompany to success.

What are your expectations in terms of
Munters’ sustainability work?
Basically, we believe that a strong corporate
culture makes the right decisions at every level
and thereby minimizes wasted resources andmaximizes the potential in its products. Thanks
to the well-defined niche Munters operates inand the course it has charted going forward,
our expectations are obviously high that you
will continue to make us at ODIN Fonder
proud owners. Munters has every opportunity
to create a better future for coming generations, and it is important that this potential isfully maximized.

DHL GLOBAL FORWARDING
Partner
What separates Munters as a customer?
DHL Global Forwarding is happy to work withMunters because of the positive, open andhonest dialogue and communication we havewith every level of the company. We see thisas the core of a strategic partnership that wehope will continue for many years.
Do you consider Munters a sustainable
company?
From DHL Global Forwarding’s perspective,
Munters is a leader in sustainability. Today thecompany uses our carbon neutral shipping
option for ocean freight. This is one of the initiatives to reach our goal of eliminating carbon
emissions by 2050.

JESPER HEDBERG
Project engineer at the technology
department, Cloetta
What distinguishes Munters as a supplier?
Munters dehumidifiers are very important toensure a good air quality and the right conditions for optimal manufacturing processes
at Cloetta. We have chosen Munters as thepreferred key supplier of dehumidification
products as we have a very good and close
dialogue with the company and are satisfied
with the result. Munters works continuously tofind the best solutions for us.

What do you expect from Munters regarding
sustainability?
We expect good energy-efficiency. In addition, it is very important to us that Muntersproducts allow us to choose the type of energythat is most optimal for us. We are now in aphase where we want to switch to a greateruse of district heating. Together with Munters,
we have succeeded in rearranging and modifying Munters products so that they work wellwith this energy source. In addition, we haveinstalled energy meters to over time measure
what result the conversion gives us. Munters
has shown that they are offensive and canadopt to the customer to facilitate and enableclimate-smart energy choices.

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RISK MANAGEMENT|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

RISK MANAGEMENTRISKS ARE A NATURAL ELEMENT of all businesses. Every day we make decisions where effective

risk management and assessment are critical for Munters to achieve its business goals.
Risk assessment creates a base to ensure that we manage and capitalize on the opportunities
every risk entails.

RISK MANAGEMENT
Risk assessment and management are an important part ofthe company’s strategic planning process. Risk management
is also an important part of the internal control process.
Management of operational risks at Munters is integrated in
the strategic planning process and various business processes and controls, e.g., approval requirement for certain decisions. Certain cross-process risks are coordinated centrally,such as information security, IT security, responsible businesspractices, and anti-corruption and bribery. Financial risk
management is governed by a Group policy and carried out
by Group Treasury. For more information on financial risk
management, refer to Note 3.
The Board of Directors has ultimate responsibility for theGroup’s risk management and approves the company’srisk management policy. Group Management identifies,
evaluates and manages risks in their respective areas of
responsibility. The CFO is responsible for coordinating risk
evaluation and compiles the documentation reported to the
Audit Committee and to the Board of Directors.
RISK EVALUATION PROCESSEnterprise Risk Management (ERM) is an integral part of
Munters’ overarching management system consisting ofvarious policies. The purpose of ERM is to give a comprehensive overview of the risks and uncertainties that the company
is exposed to and to support value creation, ensure risk awareness and balance risks versus return. The ERM framework
is designed to identify and manage existing risks in order toreach the company’s strategic goals. The framework provides
methods to identify and evaluate risks. In addition, the ERM
process ensures that Group Management has reached a50

consensus on Munters’ risk tolerance in relation to the company’s goals.
Every business area and Group function within Muntersis responsible for identifying and managing risks within theirorganization in accordance with the Munters risk process andcurrent policies and guidelines.
The ERM function, which reports to the CFO, is responsible each year for overseeing a Group-wide risk evaluationas part of the strategy process. In 2020, this process was
carried out in autumn. The risk evaluations are compiled by
the business areas and Group functions, which identify andevaluate risks based on their probability and potential impact
on the business. The most significant risks and uncertainties, and how they are managed, are regularly reported toGroup Management, the Audit Committee and the Board of
Directors.
RISK MITIGATION AND RISK CULTURE
The Munters ERM shifts focus based on how the strategic priorities change. A new strategy was adopted in early 2020,
based on which new risk areas were given higher priority.
In addition, Munters has an ambition to develop a more

Identified risks arecharted in a risk
matrix. They areevaluated based on
the potential impact
on Munters, theprobability they will
occur and how well
the risk is managed.

ImpactMunters serves customers in various industries and market
segments. Munters has production and assembly plants,
along with sales and sales offices, in around 30 countries.
Together, this provides underlying risk diversification. Our
global presence also creates challenges due, for example,
to cultural, legal and political differences.

Probability

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | R I S K M A N A G E M E N T

focused ERM strategy, where risk analysis is a more
integral part of strategy development.
Risk mitigation
The ERM function is responsible for implementation of
the ERM strategy and ERM activities at the Group level.
Responsibility for the company’s primary risks is delegatedamong members of Group Management, and each line
manager is responsible for managing the risks that arise
within their respective area of responsibility. Those responsible for each Group function and business area appoint
one or more risk officers to implement the risk work within
the unit. The GVP and CFO are responsible for oversightof the ERM, and the Board of Directors and the Audit
Committee are responsible for monitoring the effectivenessand appropriateness of the ERM.
Risk culture
Munters’ risk culture is the attitude, the conduct and theunderstanding of risk that affects decision-making. For
Munters to manage its risks centrally and independently,
strong risk awareness is needed at every level of the organization, and it is important to have the right resources toensure that the requirements set forth in the framework canbe met, monitored and supported in an appropriate way.
ERM PROCESSThe ERM process applies to the entire Group and to all roles
with responsibility for risk management activities. The focus
is on getting the Group functions and business areas toclearly link their risks to strategic goals and decision-making
responsibility.
Risk management planning is done collaboratively by
those with risk responsibility in the Group functions and business areas, together with the Enterprise Risk Management
function.
RISK IDENTIFICATION
Current risks within each business area are identified

through a bottom-up process. Different risk categories areused as inspiration to identify risks as they arise and ensurethat the company’s risk register covers all applicable risk
areas.
RISK ANALYSIS
Munters’ primary risks are defined as the company’s mostimportant identified risks and are presented on pages
54–55. Responsibility for each such risk is delegated to amember of Group Management. The ERM function identifies
potential risks in Munters’ risk register in connection witha workshop with the various business areas and Groupfunctions. These risks are then discussed and consolidated
by Group Management, after which key risks are allocatedto a member of Group Management. The ERM function isthen responsible for coordinating risks and monitoring themwithin the company.
The impact of an identified risk is estimated from threedifferent perspectives: financial, strategic and operational.
The highest risks for each unit are presented in a risk map(see the example on page 50). The map shows the impact
and probability of each risk area. The ERM function helps to
identify opportunities to consolidate risks based on common
characteristics.
RISK COMMUNICATION AND REPORTING
The Munters Risk Council has been established to facilitate
coordination within the company and make improvements
to the ERM framework and the management of actual risks.
The chairman of this Council, on which Group Management
participates, is responsible for ERM.
The ERM function regularly coordinates the reportingof the key risks’ status to the Munters Risk Council. All risks
identified outside the reporting cycle, and which potentiallycould be significant at the Group level, are escalated to the
ERM function. The ERM function reports on the status of thecompany’s risks twice a year to the Audit Committee. These
reports contain an overarching risk map and follow-up on
management of the risks.

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MUNTERS| ÅRSREDOVISNING OCH HÅLLBARHETSRAPPORT 2020

RISK MANAGEMENTMUNTERS PRIMARY RISKS are distributed by categories. These risk categories and their risk

universe are used as inspiration during the analysis work to identify risks and ensure that thecompany’s risk register covers all applicable risk areas.

RISK CATEGORIES
Risks are divided into four categories: Strategic,
Operational, Regulatory and Financial. This encompasses
both general risks due to political and macroeconomic
trends, and specific risks directly related to the Group’s operations. A number of risks lie outside Munters’ direct control,
while others can be controlled. Sustainability risks are fully
integrated in the framework.
STRATEGIC RISKS
Strategic risks are related to the market’s development andinclude risks from macrotrends, climate change and politicalrisks. Strategic risks are also associated with the brand andstrategic direction, organizational culture, resource allocation, major investments and acquisitions. Risks associatedwith internal and external communication also fall into thiscategory.
OPERATIONAL RISKS
Operational risks are associated with the company’s internal
resources: systems, procedures and employees. This can
include environmental risks or the risk of a business interruption due to a data intrusion, fire, machinery breakdown orextreme weather. Examples of operational risks that affect
employees are the risks associated with health and security,
succession planning, the ability to retain core competencies
and relationships with trade unions.
REGULATORY RISKS
Regulatory risks include the risk of loss of reputation andcosts owing to the violation of laws and regulations, andbribes and corruption. This category also covers risks resulting from the violation of human rights and the provisionsof signed agreements with employees, customers and otherbusiness partners

52

FINANCIAL RISKSThe Group’s financial risks mainly consist of currency, interest and financing risks. A description of the financial risks
and how they are managed can be found in Note 3.
INSURABLE RISKS
Munters works actively with insurance solutions, andGroup-wide policies are governed by central guidelines.
This includes all the usual types of business insurance, suchas general liability, product liability and injury prevention,
the main purpose of which is to prevent property damage
and business interruptions. Also included are property andcasualty insurance, directors and officers liability insurance,and employment practices liabilities.
Insurance is obtained from both the Swedish and international insurance market. In addition, Munters’ internal
audit function is responsible for independently evaluating theeffectiveness of a sample of the internal control processes
each year.
MUNTERS LOSS PREVENTION STANDARD
We also work preventively to minimize the risks related
to fire, the work environment, and health and safety. The
Munters Loss Prevention Standard (LPS) is built on theGroup’s guidelines and rules, but also local laws and otherregulations as well as insurance requirements. LPS is used inrisk evaluations by our production and assembly facilities.
The objective is that all production plants are evaluated overa three-year cycle; in 2020, seven facilities were evaluated(2019: 9). LPS is also used for evaluations in conjunction
with business acquisitions, investments and construction. In
2021, a comprehensive overview of LPS and its underlying
directive will be done with the goal to launch an updated
version during the year.

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MUNTERS DURING THE COVID-19 PANDEMIC

When Covid-19 broke out, Munters
acted quickly to target specific measures, both globally and at a local level,
and to stay updated on every country’s
guidelines and politics as they changed.
The keys during the pandemic havebeen to keep our employees safe, meet
our commitments to customers, andmaintain close, continuous communication with suppliers.

• Limits on visits have been introduced
in all our factories and offices• Large meetings and gatherings havebeen discontinued• Employees have been encouraged
to work from home and use virtual
meetings and other technology tocommunicate• We have introduced a travel policy
with a focus on employee safety

Our employees make the difference• During the pandemic, our employees’ commitment and competence
have made it possible for us to keep
production running and continue tosupply products to our customers. We
have local teams who ensure that all
health and government guidelines
and mandates are followed. In thefirst quarter, our operations wereaffected in Asia and later during theyear in Europe and the US. All of our
production units, with the exceptionof two small units, have maintained
production without major disruptions,however. In addition:• We have provided all production,
service, sales and other offices witha clear global response and contingency plan to facilitate a safe andhealthy work environment

We have maintained our commitment
to customers
Market conditions were challenging
in 2020 with delays in both deliveries to customers and investments bycustomers. The safety and health of
our employees and customers is a toppriority. We were especially focusedon this in 2020, at the same time that
we have monitored our processes andprotocols to maintain uninterrupted
customer service and support and havebeen attentive to our customers’ needs.
Communication with suppliers andlogistics chains
To safeguard our value chain in thelast year, we have not only maintained
close communication with our suppliers
and supply chains but also:• Actively managed access to criticalcomponents for each production unit
globally• Previously demanded that all suppliers follow professional industry
standards, local laws and ordinances, and Munters’ code of conduct
for suppliers. We have monitored theCovid-19 situation daily. We havemaintained close contact with alltransporters in our supply chain andcarefully monitored shipments using
tracking services.
Our responsibility to society
As a global company, we are awareof our responsibility to the communities
where we operate and of our role inlimiting the spread of the coronavirus.
In the last year, it has been very important to stay informed and updated on
facts and follow all health and government guidelines. Our response andcontingency plan was adjusted during
the year as needed.
Today, we continue to focus on
employee safety and fulfilling deliveries
to our customers.

SAFETY FIRST DURING THE PANDEMIC
Munters’ production facility in Virginia
has 280 employees and manufactures
products for the data center segment within
AirTech. In recent years, growth has beenstrong thanks to major investments in data
infrastructure in the US. Among Munters’
customers are several of the world’s largest
computer companies.
To protect employees during the pandemic, the plant was forced to close twice
during the year because of COVID-19, but inspite of this they managed to deliver goodresults. The facility has checked employees’
temperature at the entrance and asked

them about their health. Inside the facility
masks have been worn. At the slightest riskof illness, the employee is sent home withfull pay until they have tested negative inorder to protect their colleagues and family.
This focus on safety has helped to reassure
employees.
The response from the community andlocal authorities has been very positive that
Munters has done much more than othercompanies. The management team has beenproactive in protecting employees and built
their support to fight the pandemic.

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RISK MANAGEMENT|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

RISK MANAGEMENT
THROUGHOUT 2020, THE COMPANY was focused on crisis management due to the Covid-19

pandemic. We also continued to work on the priority risks identified in 2019. At the sametime, a new strategy and strategic priorities were launched. The risk assessment conducted inlate 2020 found a total of 13 risks that could significantly impact Munters. Several of theserisks were not identified in 2019. A brief description of these risks and how they are controlled
and managed is provided below.

Risk

Risk description

Management

Market information

Risk that Munters will not gather sufficient
information by monitoring developments in themarket and with respect to competitors.

Today, the local units have a thorough understanding of themarket. In 2020, work was begun to strengthen data collection
and analysis and form a unified picture of the market.

Interconnected
processes

Risk that Munters will not have internal
processes that are linked from “order-to-cash”
through the entire value chain.

A project was launched in 2020 to improve efficiency bysharing best practices and following lean principles. To
achieve efficiency and quality in everything we do, we haveto ensure that our processes – “from order-to-cash” – are linked
through the entire value chain. Through this project we ensurescalability and that future investments will produce profitable,
cash-generating growth.

Competition

Political instability and increased customs
duties in important markets could affectthe possibility of marketing and selling our
products and services.

This risk is discussed every month at follow-up meetings. The
business areas discuss their view of the market and competitive
situation ahead of every meeting. By continually reiterating thisrisk, we increase awareness and the ability to be proactive.

M&A integration

The risk of not achieving goals for completed
investments and acquisitions, e.g., with respect
to synergies.

A person directly responsible for M&A was appointed in
2020, in connection with which a project was launched toreview and update the company’s integration processes.

Progress insustainability

Risks associated with the progress Munters
makes in areas related to sustainability.

We work constantly to ensure that we deliver on our sustainability promise. The focus on this increased in 2020 and willfurther intensify in 2021. For more information, refer to pages
38–49.

STR ATEGIC RISKS

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Risk

Risk description

Management

Business interruption

Risks associated with the fact that key productcomponents are only manufactured in one
or a few manufacturing plants, because ofwhich a disruption could affect a large part ofoperations and, e.g., cause long lead times.
It also includes the risk of data intrusion, fireor other natural disasters that could lead to abusiness interruption.

Since the start of 2020, Munters actively monitors its market
presence and value chain. Part of this has been monitoring therisk of a business interruption and how Munters can modify the
production of key components. This work will continue in futureyears.

Management of thevalue chain andensuring production
capacity

Risks associated with Munters being dependent on a few suppliers and that this could
cause long lead times. In addition, that we will
not have sufficient production capacity to fulfill
our business plans or have overcapacity thatadversely impacts the business.

As part of managing this risk, Munters has been working forseveral years to regionalize its value chain. In 2020, Munters
was busy managing the value chain during the pandemic whileat the same time focusing even more on regionalizing it. One
consequence of the regionalization is that the dependence ona few suppliers is being reduced.

Quality control

Risk of insufficient quality control processes,
which could result in the company’s products
having to be recalled or not working as promised, thereby negatively impacting earnings
and customer relationships.

The focus on quality and processes to strengthen quality
awareness increased in 2020. Several initiatives have beentaken to increase customer satisfaction, reduce warranty claims
and strengthen the production process.

Work-life balance

Risk that Munters cannot ensure a work-lifebalance, which could result in high workloads,
stress and lower productivity.

2020 was an exceptional year as many employees worked
under different conditions than before. A number of employees
have had high workloads as a result. In 2021, every management team member has responsibility for actively monitoring
how managers balance their employees’ workloads.

IT risks

Cyberthreats are a risk that has also increasingly targeted Munters and its products.
Some products contain a large amount ofsoftware, and it is becoming more common for
products to be connected to various networks.
There is a risk that Munters’ existing IT systems
could be structured in a way that does not
optimally support the company’s businessprocesses or strategic ambitions. There is also
an information management risk consisting,e.g., of IT attacks.

In 2020, Munters strengthened its ability to identify andcounter cyber threats by informing and training employees
in combination with investments in existing and new security
systems. Annual penetration tests were carried out according
to plan to ensure that the security requirements for the IT
infrastructure were met and that preventive updates andimprovements were carried out. A major analysis of Munters’
cyber security with the help of an external adviser was carriedout. This type of activity is carried out together with otheranalyzes of existing IT-related processes.

Contractual routines

Risk that contracts with customers andsuppliers are not negotiated and approved inaccordance with applicable internal routinesand that this results in contractual risks, suchas overcommitments.

Munters has a structured internal contract vetting processthat applies to both business areas. In addition, Munters has
an internal risk committee that includes members of GroupManagement, who review major contracts. A checklist forcontracts that are not based on standard terms and conditions
is strictly applied throughout the organization.

Compliance withlaws, regulations andguidelines

Risk that the Group’s employees and distributors do not comply with laws, regulations
and external and internal guidelines. This canhave legal and financial consequences anddamage the Group’s reputation.

Munters has clear policies and guidelines in place. It is the
responsibility of each manager to ensure that all employees
have information about who they are. In addition, different
training is conducted annually for all employees in different
areas to ensure a high level of knowledge and awareness.

Sanctions

Risk that Munters signs agreements withcustomers who violate applicable sanction
regulations in the US, the EU and the UN,
and that this results in legal and financial
consequences as well as damage to theGroup’s reputation.

Munters has a sanctions policy and guidance for these issues.
The company’s compliance officer is responsible for managing
these issues on an ongoing basis. The company routinely
collaborates with outside advisers to monitor developments inthe area.

OPER ATIONAL RISKSREGUL ATORY RISKS

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MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

CHAIR M AN OF THE BOARD M AGNUS LINDQUISTDIGITIZATION AND SUSTAINABILITY
ARE STRONG DRIVERS FOR MUNTERS

2020 WAS DOMINATED BY THE PANDEMIC, and Munters is perfectlyaligned with our time’s megatrends – sustainability and digitization – which
accelerated during the year. Munters’ products and solutions help our customers
to be more efficient with energy and water resources and to achieve their environmental goals and a more sustainable planet.
A Group-wide strategy was launched during the year with activities in ourpriority areas: Customers, Market, Innovation, Excellence in everything we do
and People. We on the Board of Directors have followed how Munters’ progressin these priority areas, by launching new innovations such as our AI-based
software solutions for the food industry. These solutions in a unique way offer
several of the world’s largest food producers full control over their entire
production chain. This improves their profit as well as animal health, while at thesame time reducing waste. Digitizing our customer solutions gives Munters great
growth potential, and here the focus is on our innovative processes.
Sustainability is ingrained how we do business, with an emphasis on
responsible business practices, increased diversity, health and safety, lower
greenhouse gas emissions and positive contributions to the communities where
we work. To underscore this, sustainability goals, in addition to financial goals,
were added as targets to the long-term bonus program in 2020.
The organization has been streamlined to be even more customer-centric,
where the business areas have clearer responsibility throughout the entire value
chain. The management team has been strengthened as well, with important skills
to lead Munters into the future. In spite of the pandemic, employees have acted
decisively to address the challenges we have faced, and I would like to thankthem on behalf of the Board for the great efforts made during the year.
It has been a special and eventful year, but notwithstanding the challenges
Munters has increased profitability and is on the way to becoming a world-classcompany. Through our 65-year history we have offered technologically advanced
solutions, deep applications know-how and an understanding of customers. I lookforward to our continued journey.

Stockholm, March 2021
Magnus Lindquist, Chairman of the Board

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CORPORATE GOVERNANCE REPORTTHE GOAL OF CORPOR ATE GOVERNANCE IS TO GUAR ANTEE that the company is managed

as efficiently as possible for the shareholders. This includes establishing an effective
organizational structure, systems for internal control and risk management, and transparent
internal and external reporting.

SWEDISH CORPORATE GOVERNANCE CODE
Munters Group AB (Munters, or “the Company”) is a
Swedish public company listed on Nasdaq Stockholm.
Corporate governance is primarily regulated by the Swedish
Companies Act and other Swedish legislation, Nasdaq
Stockholm’s Nordic Main Market Rulebook for Issuers of
Shares, and the Swedish Corporate Governance Code (“theCode”). This corporate governance report has been prepared in accordance with the Swedish Annual Accounts Act
and the Code. Munters’ auditors have reviewed the report;
a statement from the auditors can be found on page 71 in
the Annual and Sustainability report.

58

CORPORATE GOVERNANCE MODEL
The shareholders exercise their voting rights at the general
meetings of Munters Group AB, which is the parent company of the Munters Group, to decide on among otherthings the composition of Munters Group AB’s Board of
Directors and the election of Auditors.
A Nomination Committee appointed in accordancewith the instruction approved by Munters Group AB’s
Annual General Meeting submits proposals to the General
Meeting concerning the election of Board members andthe Chairman of the Board as well as proposed resolutions
concerning remuneration of the Board. The Nomination
Committee also submits proposals to the General Meetingfor the election of auditors and for resolutions on fees to theauditors.
The Board is ultimately responsible for the Munters
Group’s organization and the management of its operations.
In addition, the Board appoints the President andCEO of Munters Group AB. The CEO is in charge of theGroup’s daily management in accordance with the Board’s
instructions.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | C O R P O R AT E G O V E R N A N C E

Corporate governance structure

1. Shareholders

2. General Meeting
6. External Auditor

3. Nomination Committee

5. Audit Committee

8. External Auditor
4. The Board of Directors

9. Internal control offinancial reporting

7. CEO

7. Group Management

Daily management

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MUNTERSCOMPLIANCE
External governance systems
The external governance systems thatprovide a framework for Munters’ corporate governance consist primarily of theSwedish Companies Act, the Swedish
Annual Accounts Act, the Nasdaq
Stockholm Rulebook for Issuers and theCode, as well as other applicable regulations and relevant legislation.
Internal governance systems
The Articles of Association adopted by
the Annual General Meeting (AGM),
the Munters Board Rules of Procedure
adopted by the Board, the instructions
for the CEO, and the instructions for theCompensation and Audit Committees
constitute the key internal governancesystems.
In addition, the Group has a numberof policies and instructions with rules andprinciples for the Group’s operations andemployees. In 2020, the Munters Boardof Directors passed resolutions on thefollowing policies and instructions:• Rules of Procedure for the Board of
Directors• Instructions for the CEO• Instructions for the Compensation
Committee• Instructions for the Audit Committee• Code of Conduct• Steering documents• Finance policy• Sustainability policy• Communication policy• Insider policy• Internal control policy
Deviations from the Code
The Code applies to all Swedishcompanies whose shares are listed on aregulated market in Sweden. The Codeprovides a norm for good corporate
governance at a higher level of ambition
than the minimum requirements of theSwedish Companies Act and other rules.
The Code is built on the “comply
or explain” principle. This means thatthe company does not have to observe
every rule in the Code at all times, but
can choose other solutions deemed
to better address the circumstances in
the individual case, provided that thecompany openly reports every suchdeviation, describes the solution chosen
instead and indicates the reasons for thisin the corporate governance report.
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Munters has not deviated from any
rules.
MUNTERS’ ARTICLES OF
ASSOCIATION
Munters’ Articles of Association wereadopted at an Extraordinary General
Meeting on May 7, 2017 and containno special provisions on the appointment
and dismissal of Board members or onrevisions to the Articles of Association.
For the complete Articles of Association,refer to the Munters website.
1. Shareholders
Shares in Munters have been listedon Nasdaq Stockholm since May 19,
2017. At year-end, share capital amounted to SEK 5,533,734.51, distributed
among 183,457,817 shares. All shares
are of the same class and have equal
rights in every respect. On December
31, 2020, Munters had 4,912 shareholders (compared with 5,988 on
December 31, 2019). The largest shareholders were FAM (26.0 percent of thevotes), Odin Fonder (8.5 percent of thevotes), First Swedish National Pension
Fund (8.4 of the votes) and Swedbank
Robur fonder (8.3 percent of the votes).
Additional information on the shareand shareholders can be found in thesection on the Munters share and on the
Munters website.
.
Share buy-back
For the purpose of guaranteeing deliveryof shares to participants in the longterm incentive program resolved at the2020 AGM, the Board of Directors
was authorized by the AGM to decideon the acquisition of at most 685,000
own shares for the period up to the next
AGM. The Board of Directors decided toutilize the buy-back authorization on July16, 2020, and shares were repurchased
between July 20, 2020 and July 30,
2020. In total, 685,000 shares wererepurchased at an average share priceof SEK 63.25.
The total number of own shares
Munters holds is 2,537,000, corresponding to approximately 1.4 percent of theshare capital
2. General Meeting
The right of the shareholders to decide
on matters concerning Munters is
exercised at the General Meeting (GM).

Shareholders who are recorded in theshare register on the record date andhave registered for the GM within thetime indicated in the notice to attend
have the right to participate in the GM,
either in person or by proxy.
Decisions at the GM are normallytaken by simple majority. On certain
issues, however, the Swedish Companies
Act prescribes a qualified majority of
votes, and in specific cases a certain
portion of shareholders must be present
for a quorum.
The AGM must be held within six
months of the end of the financial year.
Munters’ AGMs are held in Stockholm,
Sweden, every calendar year before theend of June.
Under the Articles of Association,
notices convening General Meetings
are issued by announcement in Post- och
Inrikes Tidningar (the Swedish Official
Gazette) as well as on the Munters
website. An announcement that a notice
convening a GM has been issued shallbe made in Svenska Dagbladet.
Apart from the AGM, an
Extraordinary General Meeting can beheld if the Board considers it necessary,or if Munters’ auditor or owners of atleast 10 percent of total shares in thecompany request one.
All shareholders who are directly
recorded in the share register maintained by Euroclear Sweden six weekdays prior to the AGM and who havenotified the company of their intention
to participate in the AGM not later
than the date indicated in the noticeof the AGM are entitled to attend theAGM and vote for the number of shares
they hold. In addition to notifying thecompany, shareholders whose sharesare nominee registered through a bankor other nominee must request that theirshares be temporarily registered in theirown names in the register maintained by
Euroclear Sweden AB to be entitled toparticipate in the AGM. Re-registration
may be temporary and requested fromthe nominee, as per the nominee’s
instructions, well in advance. Temporary
re-registration by the nominee not later
than the four weekdays before the AGM
will be accepted.
Shareholders who wish to have
an issue brought before the General
Meeting must submit a request in writing
to the Board of Directors. The request

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | C O R P O R AT E G O V E R N A N C E

must normally be received by the Boardof Directors seven weeks before theGeneral Meeting at the latest.
2020 Annual General Meeting
The AGM on May 7, 2020 at Kista
Science Tower in Stockholm was attended by 96 shareholders representing
73.5 percent of the share capital. The
company’s Chairman of the Board attended the meeting and other Board members were available by telephone. The
company’s auditor-in-charge reported
by telephone on the audit work as wellas the Auditor’s Report and the Auditor’sReport for the Group.
The issues resolved by the AGM included
the following:• That no dividend be distributed forthe financial year 2019
• Re-election of Board members
Magnus Lindquist, Helen Fasth
Gillstedt, Per Hallius, Lena Olving,
Kristian Sildeby and Juan Vargues
and election of Håkan Buskhe andAnna Westerberg as new Board
members• Re-election of Magnus Lindquist as
Chairman of the Board• Fees to the Board of Directors• Compensation guidelines for senior
executives• Long-term incentive program forGroup Management and certain
other key employees, including theissuance of employee stock options
and hedging arrangements in respect of the program• Authorization of the Board of
Directors, until the next AGM, toresolve to issue, on one on more
occasions, new shares and/or convertible bonds and/or warrants up
to a total of 18,359,780 shares thatcan be issued, that convertible bondsthat can be converted to, and thatcan be subscribed for by exercising
warrants.

2021 Annual General Meeting
The 2021 Annual General Meeting will
be held on May 19, 2021. For further
information, refer to page 128 of theAnnual and Sustainability Report andthe Munters website.
3. Nomination Committee
Nomination Committee activities
The Nomination Committee is charged
with preparing and submitting proposals on behalf of the shareholders forelection of the Chairman of the AGM
and election of a Chairman of the Boardand other Board members, election ofauditors, decisions on fees to auditors
and to the Board (divided between the
Chairman and the other members, aswell as remuneration for committeework) and, where necessary, changes
to the appointment of the Nomination
Committee. In addition, the Nomination
Committee assesses the independenceof Board members in relation to thecompany and its major shareholders.
The company’s Audit Committee assists
the Nomination Committee with theproposal for the election of auditors; theNomination Committee’s proposals to
the General Meeting for auditors’ elections shall contain the recommendationof the Audit Committee.
Prior to submitting its proposal to
the Board, the Nomination Committee
may review the evaluation of the Board’s
activities and members, and otherwise
seek information on the Board’s activities
through interviews with the company’s
CEO and some or all Board members.
Shareholders who wish to submit
proposals to the Nomination Committee
may do so by e-mail: valberedningen@munters.se or by post: Munters GroupAB, Nomination Committee, Box 1188,
SE-164 26 Kista, Sweden.
Composition of the Nomination
Committee
Under the Nomination Committee

instructions adopted by the 2017
AGM and in force until further notice,
the Nomination Committee shall becomposed of representatives from thefour largest shareholders by votes aslisted in the share register maintained by
Euroclear Sweden AB as of August 31
of each year. According to this instruction, the Chairman of the Nomination
Committee shall appoint the member
representing the largest shareholder
by votes. The Nomination Committee
also includes the Chairman of theBoard, who convenes the Nomination
Committee’s first meeting.
The composition of the Nomination
Committee shall normally be announced
no later than six months before thatmeeting. No remuneration shall be
paid to the members of the Nomination
Committee. Changes in the compositionof the Nomination Committee shall bemade public immediately.
Nomination Committee prior to the2021 AGM
The composition of the Nomination
Committee was published througha press release and on the Munters
website on October 1, 2020. The
Nomination Committee for the 2021
AGM consists of:• Magnus Fernström (FAM AB)• Jonathan Schönbäck (Odin Fonder)• Mats Larsson (First Swedish National
Pension Fund)• Jan Dworsky (Swedbank Robur
Fonder)• Magnus Lindquist (Chairman of theBoard of Munters).
The Nomination Committee appointed
Magnus Fernström as Chairman of theNomination Committee in accordancewith the Nomination Committee’s instruction. From the time it was constituted
up until the submission of the Annual
Report, the Nomination Committee has
held five meetings.

Nomination committee prior to the 2021 AGM
Name

Appointed by

Magnus Fernström

FAM AB

Holdings/votes at December 31, 2020

Jonathan Schönbäck

Odin fonden

8,5 %Mats Larsson

Första AP-fonden

8,4 %Jan Dworsky

Swedbank Robur Fonder

8,3 %Magnus Lindquist

Chairman, Munters

26,0 %–

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MUNTERS

4. The Board of Directors
Board activities
The duties of the Board of Directors
are primarily set forth in the Swedish
Companies Act and the Code. In
addition, Board activities are guided
by formal rules of procedure adopted
each year by the Board. The rules ofprocedure govern the division of workand responsibility between the members of the Board, its committees, theChairman and the CEO. The instructions
for the CEO also contain instructions
for financial reporting. The tasks of
the Board include adopting strategies,
business plans and targets; issuinginterim reports and year-end financial
statements; managing risks; and setting
policies and guidelines. The Board shallalso monitor economic developments,
ensure the quality of financial reporting
and the internal controls, and evaluate
the Group’s operations based on theobjectives and guidelines set by the
Board. Moreover, the Board is responsible for appointing the CEO. Finally,
the Board of Directors decides on major
investments and organizational andoperational changes.
Composition of the Board of Directors
Under the company’s Articles of
Association, Munters’ Board of| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

Directors shall consist of at least threeand no more than ten members electedby the AGM. At the 2020 AGM,
six Board members were re-elected
and two new members were elected.
Under Swedish law, the trade unions
have the right to representation on the
Board; in 2020 they were represented
by two members and two deputies.
A presentation of the Board members
can be found in the section “Board of
Directors.”
The CEO and CFO of Munters arepresent at Board meetings. Attorney
Johan Lekholm serves as the Board’s
secretary. Other officers participate
in Board meetings to present specificissues.
The reasoned statement of theNomination Committee for the 2020
AGM indicates that the Nomination
Committee applied Rule 4.1 of theCode as its diversity policy in drawing
up its proposal for the Board of
Directors. The goal of the policy isfor the Board, given the company’s
operations, stage of development, andconditions in general, to have a suitable composition marked by diversity
and breadth as regards the competence, experience, and background of
the members elected by the GM, andto promote gender parity. The 2020

AGM resolved to elect Board members in accordance with the proposalof the Nomination Committee. The
Nomination Committee’s aim is toachieve greater diversity on the Boardof Directors, primarily through the goalof improving gender equality. In theprocess to find new Board members,
the Nomination Committee therefore
sought to identify female candidates
who meet the established qualifications. After weighing the desiredcompetencies, one female and one
male candidate were identified. Eightmembers were elected at the 2020
AGM: three women and five men.
Changes to the composition of theBoard in 2020
Johan Ek and Andreas Näsvik stepped
down as members of the Board of
Directors at the 2020 AGM, in connection with which Håkan Buskhe andAnna Westerberg were elected as new
Board members.
Independence of the Board
The company meets the requirements in
the Code as a majority of the members
elected by the AGM are independent of the company and company
management, and that at least twoof them are independent of the major

Composition of the Board of Directors
Name

Attendance
Independence

Boardmeetings

Audit
Committee

Compensation
Committee

100 000 2)

Yes

150 000 3)

Yes

16/16

–

12/12

16/16

5/5

–

Yes

16/16

–

–

Yes

10/10

–

–

Yes

16/16

5/5

–

No 4)

16/16

2/3

12/12

Yes

16/16

–

5/5

–

No 4)

10/10

–

–

–

–

16/16

–

–
–

Elected inFee, SEK 1)

Committee fees

Magnus Lindquist, Chairman

2018

1 050 000

Helen Fasth Gillstedt

2017

400 000

Per Hallius

2013

400 000

Anna Westerberg 5)

2020

400 000

Lena Olving

2017

400 000

100 000 3)

Kristian Sildeby 6)2017

400 000

150 000 2) 3)

Juan Vargues

7)

2019

400 000

50 000Håkan Buskhe 5)

2020

400 000

Pia Nordqvist 8)

2004

–

–
–

2)

Simon Henriksson 8)

2017

–

–

–

16/16

–

Tor Jansson 9)

2019

–

–

–

12/16

–

–

Robert Wahlgren 9)

2009

–

–

–

15/16

–

–

Compensation for work from the 2020 AGM to the 2021 AGM.
Compensation Committee fee.
Audit Committee fee.
4)
Independent in relation to the company and Group Management, but not to the company’s major shareholders.
5)
Anna Westerberg and Håkan Buskhe were elected to the Board of Directors at the AGM on May 7, 2020.
6)
Kristian Sildeby was elected to the Audit Committee at the AGM on May 7, 2020.
7)
Juan Vargues was elected to the Compensation Committee at the AGM on May 7, 2020.
8)
Employee representative.
9)
Employee representative, deputy.
1)

2)

3)

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shareholders. The independence of theBoard members at the time of publication of this report is shown in thetable, “Composition of the Board of
Directors.”
Responsibilities of the Chairman of the
Board
The Chairman of the Board of Directors
leads and oversees the work on the
Board, ensuring that its activities are
conducted efficiently. The Chairman
also ensures that the Swedish
Companies Act and other applicablelaws and regulations are observed,that the Board receives the necessary training, and that it improves its
knowledge of Munters. The Chairman
monitors operations in close dialogue
with the CEO, conveys opinions fromshareholders to the other Board members, and serves as spokesperson for
the Board. The Chairman of the Board
is responsible for other Board members receiving sufficient information
to perform their work effectively, andfor ensuring that the Board’s decisions
are implemented. The Chairman of theBoard is also responsible for the Board
annually evaluating its work.
Board fees
The 2020 AGM resolved that fees of
SEK 1,050,000 would be paid to the
Chairman and SEK 400,000 eachto the other members elected at themeeting. It was further resolved thatfees of SEK 150,000 would be paid
to the chair of the Audit Committee,
with SEK 100,000 to each of theother members of the committee;
and SEK 100,000 to the chair of theCompensation Committee, with SEK
50,000 to each of the other membersof the committee.
Evaluation of Board activities
An evaluation is conducted each year
to ensure the quality of the Board’s
work and to identify any need for
additional competence or experience. The Chairman of the Board is

responsible for conducting the evaluation and reporting it to the Nomination
Committee. Upon request of theNomination Committee, the Board
members shall participate in interviews
with the Nomination Committee tofacilitate the evaluation.
An evaluation of the Board’s work
was conducted in 2020 by having an
external consultant interview all Board
members. The results of the interviews and the Board evaluation havebeen reported to the Board and theNomination Committee.
Board Committees
The Board of Directors has two committees: The Audit Committee and theCompensation Committee. Reports
to the Board on issues addressed atcommittee meetings are submitted inwriting or given orally. The work ofeach committee is performed in accordance with the instruction of the Board.
Minutes of committee meetings areprovided to all Board members.

2020 Board meetings
In 2020, the Board of Directors held 16 meetings.
Following is an overview of the most important issues addressed at these meetings.

January• Approval of
proposed
strategic plan for
the Group.

March• Review of
Munters’ work to
reduce risks inconnection with
Covid-19.
• Approval tolaunch the TTOE
project.

May• Approval of revised
policies proposed bymanagement.
• Re-election ofCompensation and
Audit Committee
members andelection of new
members.
• Decision to adopt therules of procedure for
the Board of Directors
and the rules ofprocedure for theCompensation and
Audit Committees.

July• Approval andrelease of the Q2
report.
• Decision to
repurchase sharesby virtue of theauthorization fromthe 2020 AGM tosafeguard
commitments
under the incentive
program.

September• Review ofongoing
strategy work.

November• Approval of
proposed
strategy plan.

February• Decision on
dividend
proposal for thefinancial year
2019.
• Approval andrelease of theyear-end report
(Q4).

April
• Approval of theannual report for2019.
• Approval andrelease of the Q1
report.

June• Review of ongoingstrategy work.

AugustOctober• Approval andrelease of the
Q3 report.

December• Review ofcybersecurity
and risks.

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5. Audit Committee
The main tasks of the Audit Committee
are to ensure that the Board of
Directors fulfills its supervisory duty inrelation to internal control, auditing,financial risk management, accounting
and financial reporting; to prepare
matters regarding the procurement ofaudit and other services provided by
the auditor; and to prepare certain
accounting and auditing matters to beresolved by the Board.
The Audit Committee also reviews
procedures and routines for the
aforementioned areas. The Audit
Committee submits recommendations
and proposals to ensure the reliability of the financial reporting and its
compliance with generally accepted
accounting principles, continually
discusses the company’s accounting
principles and financial control withthe auditors and Group Management,
and considers recommended improvements to internal control. In addition,
the Audit Committee monitors theimpartiality and independence of theauditor, evaluates the audit work, anddiscusses the collaboration between
the auditor and the company’s internal
control function. The Audit Committee
also assists the Nomination Committee
in preparing nominations for auditor
and proposals in respect of audit feesby submitting recommendations to theNomination Committee.
During the period between
two consecutive AGMs, the Audit
Committee is required to hold at least
five meetings, normally in conjunction
with the ordinary meetings of theBoard of Directors.
In 2020, the Audit Committee
consisted of Helen Fasth Gillstedt(Chair), Lena Olving, Andreas Näsvik
(through May 7, 2020) and KristianSildeby (as of May 7, 2020). The
Audit Committee fulfills the requirements in respect of accounting andauditing competence as set forth in the
Swedish Companies Act.
The Audit Committee and the
Auditor have among other things
reviewed the external audit plan andthe approach to risk management. The
Audit Committee held five meetingsin 2020. Board member attendance64| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

is shown in the table, “Compositionof the Board of Directors.” The Audit
Committee regularly reports the resultsof its work to the entire Board, andthe minutes of the Audit Committee’s
meetings are provided to all Board
members
6. Compensation Committee
The task of the Compensation
Committee is to prepare issues relating
to compensation for the CEO and
Munters’ other senior management.
The Compensation Committee proposes guidelines for, among other things,
the breakdown between fixed andvariable compensation, the principal
conditions for bonuses and incentive
schemes, conditions for non-monetary
benefits, pensions, termination, andseverance pay. The Committee also
prepares proposals for individual compensation packages for the CEO andother senior executives. Furthermore,
the Compensation Committee monitorsand evaluates the outcome of variable
compensation schemes and the company’s compliance with compensation
guidelines adopted by the Annual
General Meeting, in addition to preparing the report submitted to the Board
for approval at the AGM. See also
“Remuneration guidelines for senior
executives” below.
In 2020, the Compensation
Committee consisted of Magnus
Lindquist (Chair), Kristian Sildeby,
Andreas Näsvik (through May 7,2020) and Juan Vargues (as of May 7,2020). The Compensation Committee
held eight meetings in 2020. Board
member attendance is shown in thetable, “Composition of the Board of
Directors.”
7. Group Management and CEO
In addition to the President and CEO,Group Management consisted in 2020of two business area Presidents and the
CFO, and four Group Vice Presidents
responsible for the central functions
Strategic Operations, Innovation,
Commercial Excellence and HR &Communications & Sustainability.
The CEO is responsible for dayto-day management according to
the Board’s instructions. The CEO’s

responsibilities include taking allmeasures necessary to ensure that theorganization and the control of thecompany’s accounting comply withcurrent rules and regulations. The CEO
also prepares all necessary informationand supporting documentation for
Board meetings and, if requested by
the Chairman of the Board, summonsthe meeting. The CEO reports at Board
meetings and submits motivated proposals for resolution by the Board.
The CEO ensures that the Board
members continually receive all theinformation needed to assess the company’s financial situation. The qualityof the report shall be such that it allows
the Board to make a well-grounded
assessment.
Changes to Group Management in
2020
Pia Brantgärde Linder took over as
President of Business Area FoodTech
on August 16, 2020. Johan Ekeström,Interim President of Business Area
FoodTech, returned to his role as
VP Finance for FoodTech. Stéphane
Darcq was appointed to the new roleof Group Vice President and Head of
Innovation as of December 1, 2020.
On October 28, 2020, Stefan Aspman
was appointed to the new role as
Head of Commersial Excellence as ofFebruary, 2021.
Remuneration guidelines for senior
executives
Guidelines for remuneration to senior
executives are evaluated and put
forward for approval by the Board of
Directors at the AGM at least every
four years.
Compensation for the CEO is prepared by the Compensation Committee
and resolved by the Board of Directors.
Compensation for other senior executives is prepared by the CEO and resolved by the Compensation Committee.
A prerequisite for successful implementation of Munters’ business strategy
and the safeguarding of the company’s long-term interests, including its
sustainability, as well as delivery on
the company’s ambitions, is that thecompany is able to recruit and retain
qualified employees. This requires that

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | C O R P O R AT E G O V E R N A N C EGroup Structure
President and CEO, Klas Forsström

AirTechPeter Gisel-Ekdahl

Strategic Operations
Stefan MåhlFoodTech
Pia Brantgärde Linder

Innovation
Stéphane Darcq

HR, Communications and Sustainability
Sofia Gellar

Munters can offer a competitive total
remuneration based on market terms,
as the remuneration guidelines forsenior executives allow.
Compensation can consist of:• Fixed annual salary• Variable annual salary• Pension• Other benefits
The Board of Directors annually evaluates whether or not to propose a longterm incentive program to the AGM.
The 2020 AGM resolved to introduce
a long-term incentive program in theform of an employee stock option
program for Group Management andcertain other key employees.
For additional information on compensation to senior executives, longterm incentive programs and pension
benefits, refer to Notes 31 and 32.
8. External Auditor
Munters’ external auditor is appointed
by the AGM. The auditor reviews thesix- or nine-month interim reports andaudits the annual financial statements
and consolidated accounts. The auditor
also reviews the corporate governance report and confirms whether
the Group has presented a sustainability report. The auditor reports theresults of the audit in the Audit Reportand in an opinion on the corporate
governance report, and provides
a separate opinion on whether theguidelines for remuneration to senior
executives in effect since the previous
Annual General Meeting have been
complied with. The audit is conducted

Commercial Excellence
Stefan Aspman

Finance and Strategy
Annette Kumlien

in accordance with the International
Standards on Auditing and generally accepted auditing standards in
Sweden. The audit is reported on acontinual basis over the year to thecompany’s Audit Committee. During
the year, the auditor participated in
all Audit Committee meetings and in
the Board meeting where the annual
accounts were addressed. The auditor
participates in the AGM and describes
the audit work and the observations
made in the audit report.
The auditor’s fee for their audit
work is paid according to approved
invoices. Apart from the audit work,
Munters’ audit firm Ernst & Young AB
provided other services during theyear, primarily on tax-related issues.
For information on remuneration to
Ernst & Young AB, refer to Note 33.
Ernst & Young AB has been
Munters auditor since 2010, andRickard Andersson, authorized public
accountant and member of FAR (theprofessional institute for authorized
public accountants in Sweden), hasbeen auditor-in-charge since 2019.
Munters’ 2020 AGM re-elected Ernst &Young AB as auditor for a term of one
year, through the 2021 AGM.
9. Internal control of financial reporting
Internal control involves providing clarity and order and ensuring that what
has to be done is done as intended.
Internal control is the collective term
for the organization and the systems,
processes and routines that enable this.
Munters has an internal control
function with the objective to support

management so that it can continuously
ensure good internal control of financial reporting. The work that is conducted through this function is primarily
focused on ensuring compliance withdirectives and guidelines, and to create
effective conditions for control activities
in key processes related to the financial reporting. The Audit Committee isregularly informed of the results of thework that the internal control function
within Munters performs with regard torisks, control activities and follow-up on
the financial reporting.
Munters’ internal control of thefinancial reporting is based on theframework issued by the Committeeof Sponsoring Organizations of theTreadway Commission (COSO). This
framework covers five main areas:
control environment, risk assessment,
control activities, information and communication, and monitoring.
.
Control environment
Internal control is shaped by the overall
control environment. The Board of
Directors is responsible for establishingan effective system of internal control
and supervising the work through theCEO. Group Management sets thetone for the business and influences
employees’ awareness with respect
to control. One condition for a strong
control environment is that there areclearly defined values in terms of ethics
and integrity, and that they are communicated through governing documents
such as policies, guidelines, manuals
and codes. For the financial reporting,Group Management issues within
65

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MUNTERSd

Munters control environment

3. Control activities
Munters policies and guidelines to all
subsidiaries, which are followed up
with newsletters, telephone conferencesand direct control activities. Courses
are also conducted for many accounting areas and internal reporting
requirements/systems.
Risk assessment
A risk assessment is conducted on a
yearly basis pursuant to the Group’s
risk management policy. The purpose
is to identify, document and quantify
the consequences and probability ofevents occurring that would prevent
Munters from achieving its objectives.
The Enterprise Risk Management(ERM) framework is an integral partof Munters’ overarching management
system consisting of various policies.
The purpose of the ERM framework is
to strengthen governance by integrating risk management with the design
and implementation of Munters’ strategy. The ERM framework is designed
to identify and manage existing risks inorder to reach the company’s strategic goals. The framework provides
methods to identify and evaluate risks.
In addition, the ERM process ensures that Group Management has acommon understanding of Munters’ risk
tolerance in relation to the company’s
goals.

66

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| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0nt

C O R P O R AT E G O V E R N A N C E

Risk responsibility
The Enterprise Risk Management (ERM)
function is responsible for implementation of the ERM strategy and ERM activities at the Group level. Responsibility
for the company’s primary risks isdelegated among members of GroupManagement, and each line manager
is responsible for managing the risks
that arise within their respective areaof responsibility. Those responsible
for each Group function and businessarea appoint one or more risk officers
to implement the risk work within theunit. The GVP, CFO is responsible foroversight of the ERM, and the Board of
Directors and the Audit Committee areresponsible for monitoring the effectiveness and appropriateness of the ERM.
For more information on Munters’ risk
work, refer to pages 50–55 in the risk
management section and Note 3.
Control activities
Controls have been designed basedon identified risks to detect, preventand correct errors and discrepancies.
Controls can take place at the transaction level, as Group-level controls andas IT general controls. Control activities
are carried out in the entire organization, at all levels, and for all functions.
Transaction-based controls, which canbe either manual or automatic, areperformed to manage the risk of errors
in the financial reporting. Examples ofsuch controls include reconciliations
and analysis. Company-wide controls
are designed for among things toguarantee that instructions on payment approvals, authorizations andresponsibilities in credit granting are
followed. Examples of general IT controls are change management, back-up
routines and authorizations. The
company’s GVP, CFO is responsible for
ensuring that identified risks relating to
the financial reporting at Group level
are addressed. In each legal entity,
the accounting staff is responsible forhaving the necessary control activities
in place, and that accounting andthe financial statements are correct
and accurate. Global controllers andfinance directors in each legal entity
update forecasts and conduct outcome
analysis. All business areas present
their financial results in written monthly
reports to the GVP, CFO, who in turnpresents them to Group Management.
Since 2019, the internal control
function carries out and coordinates
evaluation activities through Munters’internal control system, where thesubsidiaries report on a quarterly basis
whether key controls have been performed in accordance with Munters’ Risk
and Control framework.
Information and communication
Munters has information and communications channels that aim at
ensuring that information is identified,collected and communicated in a way
and within a timeframe that enables
employees and directors to performtheir tasks. Reporting instructions andaccounting guidelines are conveyed
to affected employees through monthly
newsletters and quarterly teleconferences. The Group uses a common system
for reporting and consolidation offinancial information.
Governing documents – in the formof policies, guidelines and manuals forthe financial reporting – are communicated primarily via the intranet
and the Group’s financial handbook,and updated as needed. Informationfor external parties is communicated on the Munters website together
with other news and press releases.
Quarterly reports are published andA N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | C O R P O R AT E G O V E R N A N C E

supplemented with presentations andinvestor meetings. The Annual Reportis provided to shareholders and otherstakeholders through publication on
the Munters website, and in print uponrequest.
Monitoring
Monitoring and testing of control activities are routinely conducted throughout
the year to ensure that the risk has
been taken into account and satisfactorily managed. Testing is carried out by
employees who are independent of thecontrols and possess the competence
to evaluate the controls. Failed controls
must be mitigated, which means that
actions must be taken and implemented

to correct deficiencies. Reports arepresented to the Audit Committee twice
yearly.
The Board of Directors has final
responsibility for all decisions regarding compliance within Munters. The
Board reviews and approves internal
control policies on a yearly basis. Ifneeded, reviews and approvals are
more frequent.
Every head of a division is ultimately responsible for the financial
information for their division. The
information is followed up at the business area level by Group Management
and, lastly, by the Board of Directors.
Munters’ financial position, strategies
and investments are discussed at every

Board meeting. The Board is also
responsible for monitoring internal
control. This includes ensuring thatmeasures are taken to address any
shortcomings and following up on proposed measures that were pointed out
in conjunction with the external audit.
Assessment of the need for a separate
internal audit function
Munters has no internal audit function,
as it is the Board’s opinion that thecompany’s internal organization andprocesses for monitoring fulfill thisfunction in a satisfactory manner. For
certain special audits, outside expertise
can also be sought.

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BOARD OF DIRECTORS|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

BOARD OF DIRECTORS

Magnus Lindquist
Born 1963
Chairman of the Board
since December 2018.
Chairman of theCompensation committee.
Education and professional
experience: Bachelor in
Economics and Business
Administration, Stockholm
School of Economics. Morethan 20 years of experiencefrom senior positions in
global industrial companies, mainly as Group Vice
President at Autoliv andPerstorp Group. Many
years of experience as a
Senior Partner of Triton.
Other current assignments/
positions: Chairman of theBoard of Cary Group AB.
Partner of CORDET CapitalPartners.
Selected previous
assignments: Chairman ofNorma, Ambea, Alimak
and Polygon, and a board
member of Bravida,
Mycronic, Ovako and Trust
Payments Ltd.
Holding in Munters Group
AB: 400,000 shares.
Independent in relation
to the Company’s major
shareholders: Yes
Independent in relation to
the Company and GroupManagement: Yes

68

Kristian Sildeby
Born 1976
Board member since2017. Member of the
Audit committee and theCompensation committee.
Education and professional experience: M.Sc. in
Business Administration,
Stockholm School of
Economics. Investment
Manager at FAM AB.
Former Vice President,
Head of Finance and Risk
Management at Investor
AB.
Other current assignments/
positions: Chairman of
82an Invest AB, Board
member of Höganäs AB,
Kivra AB, Nefab Holding
AB, Spendrups Bryggeri AB
and Peltarion AB.
Selected previous assignments: Chairman of theBoard of Blasieholmen
54 Restaurang AB. Board
member of Lindström& Göthberg Executive
Development AB and PowerWind Partners AB.
Holding in Munters Group
AB: 6,000 Shares.
Independent in relation
to the Company’s major
shareholders: No
Independent in relation to
the Company and GroupManagement: Yes

Helen Fasth Gillstedt
Born 1962
Board member since 2017.
Chairman of the Audit
committee.
Education and professional experience: M.Sc.
in Finance & Control andInternational Business,
Stockholm School of
Economics. Studies in
Sustainable Development,
Stockholm Resilience Centerat Stockholm University
and KTH Royal Institute ofTechnology. Over twenty
years of experience insenior positions at Statoil
and SAS Group.
Other current assignments/
positions: Board memberof Handelsbanken Fonder
AB and its representative
on nomination committees,
Storytel AB, PowerCell AB,
Samhall AB, and CEO of
Blong AB.
Selected previous assignments: Board member of
Humana AB, AcadeMediaAB, Lindorff Group AS,
Swedesurvey AB, Svefa
Holding AB (publ), Intrum
AB.
Holding in Munters Group
AB: 4,000 shares.
Independent in relation
to the Company’s major
shareholders: Yes
Independent in relation to
the Company and GroupManagement: Yes

Simon Henriksson
Born 1984
Deputy member since2017.
Employee representative
appointed by IF Metall.
Position at Munters:
Material supplier, Tobo
plant.
Holding in Munters
Group AB: 350 shares.

Juan Vargues
Born 1959
Board member since2019. Member of theCompensation committee.
Education and professional
experience: Management
education IMD Lausanne(CH); Executive MBA,
Lund University (EFL); andhigh school degree in
Mechanical Engineering,Tekniska Vuxengymnasiet,
Gothenburg. Many yearsof experience from senior
positions with global manufacturers, including ASSAABLOY and Besam.
Other current assignments/
positions: President andCEO of Dometic Group AB.
Selected previous assignments: Executive Vice President
ASSA ABLOY and Presidentof ASSA ABLOY Entrance
Systems, President andCEO of the Besam Group,
various positions within the
SKF Group.
Holding in Munters Group
AB: Independent in relation
to the Company’s major
shareholders: Yes
Independent in relation to
the Company and GroupManagement: Yes

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | B O A R D O F D I R E C T O R S

Per Hallius
Born 1962
Board member since 2013.
Education and professional
experience: MBA, Harvard
Business School. M.Sc. in
Economics and Business
Administration, Stockholm
School of Economics.
Independent advisor, board
representative and investor.
Almost 25 years in management consulting, mostrecently as Senior Partner at
the Boston Consulting Group.
Other current assignments/
positions: Chairman ofConsilium Safety TopCo
AB. Deputy Chairman of
Ruukki Construction Oy.
Board member of PMH
Affärsutveckling AB, Beowulf
AB and Quant AB. Industrial
advisor and Operating
Chairman to Nordic CapitalFunds. Advisor to senior
executives in large industrial
multinationals.
Selected previous assignments: Chairman of theBoard of United Minds
Samhällsanalys AB and
Nefab Group ABB.
Holding in Munters Group
AB: 84,031 shares.
Independent in relation
to the Company’s major
shareholders: Yes
Independent in relation to
the Company and GroupManagement: Yes

Lena Olving
Born 1956
Board member since 2017.
Member of the Audit
committee.
Education and professional experience: M.Sc. in
Mechanical Engineering,
Chalmers University ofTechnology. Various senior
positions at Volvo Cars,
including 5 years in Asia
and 7 years in GroupManagement. Former
President and CEO of
Mycronic AB, Samhall
Highland AB, and COO
and deputy CEO of SaabAB.
Other current assignments/positions: Partnerand founder of Olving &Ohberg AB, Chairman of
Academic Work Holding
AB, Scandinova Systems
AB and the Swedish Royal
Opera. Board member ofAssa Abloy AB, Investment
AB Latour, Stena Metall
AB, NXP and IVA’s
Business Executives Council(Näringslivsrådet).
Selected previous assignments: Board member of
Alfa Laval AB, Gunnebo
AB, Norsk Hydro AS,
Novozymes AS and SJ AB.
Holding in Munters Group
AB: 500 shares
Independent in relation
to the Company’s major
shareholders: Yes
Independent in relation to
the Company and GroupManagement: YesHåkan Buskhe
Born 1963
Member of the Board since
2020.
Education and professional
experience: M.Sc. Licentiateof Engineering, Chalmers
University of Technology,
Gothenburg. More than
30 years of experience inprogramme and operations
management and businessdevelopment from national
and international commer
commercial industrial companies,
including Saab AB, E.ON
Nordic AB och E.ON
Sverige AB.
Selected previous assignments: Board member of Nefab
AB, Vattenfall AB and of
the Association of Swedish
Engineering Industries(Teknikföretagen); Vice
Chairman of AeroSpaceand Defence Industries
Association of Europe(ASD); Chairman of Green
Cargo AB; President andCEO of Saab AB; President
and CEO of E.ON Nordic
AB and E.ON Sverige AB;
Executive Vice Presidentof E.ON Sverige AB; CEOof Land Operations for
Schenker AG, Schenker
North and Schenker-BTL AB;
CEO of Storel AB, Carlsberg
and Coca-Cola Distribution
AB; Production Director ofCarlsberg Sverige.
Holding in Munters Group
AB: -Independent in relation
to the Company’s major
shareholders: No
Independent in relation to
the Company and GroupManagement: Yes

Independent in relation
to the Company’s major
shareholders: Yes
Independent in relation to
the Company and GroupManagement: Yes

Anna Westerberg
Born 1975
Board member since 2020.

Robert Wahlgren
Born 1969
Deputy member since2010.

Education and professional experience: MSc,
Industrial Engineering andManagement, Chalmers
University of Technology,
Gothenburg. Eleven yearsof experience in leading
positions in the global industrial company Volvo. Solidknowledge of digitalizationand innovation as well as
sales and development ofservices and products in a
global environment.
Other current assignments/
positions: Senior Vice
President for Volvo Group
Connected Solutions.
Directorships in Volvo Group
Connected Solutions, Volvo
Group Venture Capital.
Selected previous assignments: President for Volvo
Group Venture Capital;
Vice President ProductManagement Industrial for
Volvo Penta; Managing
Director for InfocandyGroup Ltd; Management
Consultant at Applied Value
LLC and Applied Value AB.
Holding in Munters Group
AB: -Employee representative
appointed byUnionen. Position at
Munters:
Customized Project
Engineering Coordinator,
Munters Europe AB.
Holding in Munters
Group AB: -Tor Jansson
Born 1989
Deputy member since
2019.
Employee representative
appointed by IF Metall
is not shown in the photo.
Position at Munters:
Componentpackaging,factory in Tobo, Sweden.
Holding in Munters
Group AB: -Pia Nordqvist, not shown in
the photo, has been a board
member employee representative
appointed by the Union from2010 to 1 February 2021.
No replacement has yet been
appointed.

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GROUP MANAGEMENT|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

GROUP MANAGEMENT

Annette Kumlien
Group Vice President and CFO since2019.
Principal education: Bachelor of
Science in Business Administrationfrom the Stockholm School of
Economics.
Professional experience: SVP and
COO at Diaverum and prior to that
CFO. Previously CFO at several
listed companies as Höganäs andPergo, as well as business controllingroles at Perstorp and Sandvik.
Other current assignments: Memberof the Board of Directors in Cavotec
SA and Cary Group AB.
Holding in Munters Group AB:
8,000 shares.
Klas Forsström
Born 1967
President and CEO since 2019.
Principal education: M.Sc. inMaterials Physics and an MBAfrom Uppsala University as well as
advanced management studies at
INSEAD.
Professional experience: Previously
President of Sandvik Machining
Solutions Business area. Prior tothat, more than 20 years of different
senior management positions at
Sandvik, including positions such as
President of Sandvik Hard Materials
and Sandvik Coromant.
Holding in Munters Group AB:
67,900 shares.
Stefan Aspman
Group Vice President and Headof Commercial Excellence since
February, 2021.

70

Principal education: Masterof Science in Business andEconomics with a Major in Business
Administration and Management,
at Dalarna University and Uppsala
University and Beijing Jiatong
University, China.
Professional experience: close to
20 years in Strategic Marketing
and Offer Management, 10 years
in several strategic key positions
within Sandvik including Head ofBusiness Control and Performance
Management at Sandvik Coromant
and Global Head of Commercial
Pricing and Profitability Management
for the Sandvik Machining Solutions
business area. Also experience asbusiness strategy consultant.
Holding in Munters Group AB:Pia Brantgärde LinderGroup Vice President and Presidentof FoodTech since August 2020.
Principal education: M.Sc. in
Mechanical Engineering from
Chalmers University of Technology
and an Executive Master of Business
Administration (EMBA) from
Stockholm School of Economics.
Professional experience: Previously
Business Area Manager for HV
Products North Europe at ABB.
Prior to that more than 20 years at
ABB in various senior management
positions globally, including General
Manager for HV Breakers, Headof Operations for a global productgroup, Technology Manager, ProjectManager and Area Sales Manager.
Other current assignments: Memberof the Board of Directors in Roxtec
Group.
Holding in Munters Group AB: -Peter Gisel-EkdahlGroup Vice President and President
AirTech since 2019.
Principal education: M.Sc. in
Chemical Engineering, KTH
Royal Institute of Technology.
M.Sc. in Business Administration,
Copenhagen Business School.
Professional experience: President
FoodTech under 2011 until end of
October 2019 and Group Vice
President, and before this held
various positions in Wedholms andHackmans. Previous assignments
include deputy board member ofDrivec AB. Deputy member of theBoard of Directors in Drivec AB.
Other current assignments: Board
member of ABECE AB and Chairman
Wedholms AB (Wedcooling Group).
Holding in Munters Group AB:
191,576 shares.

Holding in Munters Group AB:
15,000 shares.
Sofia Gellar
Group Vice President and Headof HR, Communications andSustainability since 2018.
Principal education: Bachelorof Science in Human Resources
Development and Labor Relations,
Stockholm University, Sweden.
Professional experience: Morethan 20 years of experience within
Human Resources and has held positions such as Head of Corporate HR
and Head of HR Support at Scania,
Head of Talent Management SSAB
EMEA and VP Human Resources
Ruukki Construction.
Holding in Munters Group AB:-

Stefan MåhlGroup Vice President and Head of
Strategic Operations since August
2020.

Stéphane Darcq
Group Vice President and Head of
Innovation since November 2020.
FoodTech Vice President Research &Development and Marketing since
March 2019

Principal education: Degree of
Bachelor of Science in Engineering,
Automation Technology at KTH RoyalInstitute of Technology
Professional experience: Various
senior positions within Munters, i. a.
as Global Purchasing Manager andInterim responsible for Operations
within the AirTreatment division in
Europe. Purchasing Director andHead of Quality Assurance at LGP
Allgon/Powerwave Technologies
and Vice President Strategic
Purchasing and Component
Engineering at Siemens-Elema AB
Medical Solutions.

Principal Education: Bachelor of
Science from the French Instituteof Industrial Refrigeration. Master
degree in business managementfrom the Management School of
Lyon.
Professional Experience: Extensive
experience in HVAC, holding
various global positions in productmarketing, business development
and product development. Has
worked for companies like Carrier,
Daikin, LG Air Conditioning or more
recently Chief Technology Officer for
FläktGroup.
Holding in Munters Group AB: -A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | A U D I T O R ´ S R E P O R T

AUDITOR’S REPORT

AUDITOR’S REPORT ON THE STATUTORYSUSTAINABILITY STATEMENT
To the general meeting of the shareholders of Munters GroupAB (publ.), corporate identity number 556819-2321

AUDITOR’S REPORT ON THE CORPORATE
GOVERNANCE STATEMENT
To the general meeting of the shareholders of Munters GroupAB (publ.), corporate identity number 556819-2321

Engagement and responsibility
It is the Board of Directors who is responsible for the statutory sustainability statement for the year 2020 on pages
38–47 and that it has been prepared in accordance with
the Annual Accounts Act.

Engagement and responsibility
It is the Board of Directors who is responsible for the corporate governance statement for the year 2020 on pages
58–67 and that it has been prepared in accordance with
the Annual Accounts Act.

The scope of the audit
Our examination has been conducted in accordance with
FAR’s auditing standard RevR 12 The auditor’s opinion
regarding the statutory sustainability statement. This meansthat our examination of the corporate governance statement
is different and substantially less in scope than an audit
conducted in accordance with International Standards on
Auditing and generally accepted auditing standards in
Sweden. We believe that the examination has provided us
with sufficient basis for our opinions.

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

Opinions
A statutory sustainability statement has been prepared.

Opinions
A corporate governance statement has been prepared.
Disclosures in accordance with chapter 6 section 6 thesecond paragraph points 2-6 the Annual Accounts Act
and chapter 7 section 31 the second paragraph the samelaw are consistent with the annual accounts and theconsolidated accounts and are in accordance with theAnnual Accounts Act.

Stockholm 19 March 2021
Ernst & Young AB
Rickard Andersson
Authorized Public Accountant

Stockholm 19 March 2021
Ernst & Young AB
Rickard Andersson
Authorized Public Accountant

71

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BOARD OF DIRECTORS’ REPORTThe Board of Directors and the CEO of Munters Group AB (publ),
corp. reg. no. 556819-2321, with its registered office in Stockholm,
Sweden, hereby submits the consolidated accounts and annual
report for the fiscal year January 1 to December 31 2020. “Munters
Group AB” or “the Parent Company” refer to Munters Group AB(publ), and “Munters” or “the Group” refer to the Munters Group,
which comprises Munters Group AB and its Group companies.
The Board of Directors approved the annual accounts for
publication March 16, 2021. The Group and Parent Company
statement of comprehensive income and financial position will be
submitted for approval at the Annual General Meeting on May 19,
2021.

OPERATIONSThe Munters Group is a world-leading supplier of energy efficientdehumidification and air treatment solutions. Using innovativetechnology, Munters’ experts create the perfect climate forcustomers in a variety of business segments. Munters has been apioneer in the field of air treatment since the company was founded
in 1955. As of now production and sales occur in over 30 countries
by our 3,500 coworkers. Munters AB has since 2017 been listed on
Nasdaq Stockholm and is organized into two business segments:
AirTech and FoodTech.

The summary below for 2020 refers to the continued operation and, with respect to the income statement for 2019–2018, restated for
discontinued operation. The profit/loss items order intake, net sales, EBIT and EBIT margin for the period 2017–2016 are also restated for
discontinued operations and reflect the continuing operations.

Five-year summary, MSEK

2020

2019

2018

2017

Order intake

7,249

7,302

6,698

6,316

Net sales

7,015

7,153

6,412

6,122

Earnings before interest and tax

707

556

529

491

EBIT margin, %

10,1

7,8

8,3

8,0

Profit/Loss after financial items

552

367

404

152

Income for the year

432

283

327

173

Net dept, MSEK 1)

2,116

3,062

2,843

2,661

39

36

40

41
9,198

Equity/assets ratio, % 1)

9,574

10,0939,268

Investments (excl. leased assets)

Total assets

217

191

232

170

Average number of employees

3,282

3,406

3,653

3,559

1)

2016
5,840
5,610
537
9,6
153
85
2,724
38
8,991
183
2,953

Net dept and the equity/asset ratio for 2016 are calculated excluding shareholders loans.

Continued and discontinued operation
The income statement for 2020 and 2019 reflects profit for the year
split between the continued and the discontinued operation in linewith IFRS 5, Non-current Assets Held for Sale and Discontinued
Operations.
The discontinued operation is defined as the business connectedto the Data Centers operations in Dison, Belgium, where the production ceased during 2019, but minor installation services at customer
sites has continued in 2020. All income statement items in this reportrefers to Munters continued operation, if not otherwise stated. See
more information on the discontinued operation in note 9.
Order intake and net sales
Group
Order intake decreased -1% to MSEK 7,249 (7,302), but increased
currency adjusted 2%.
Net sales decreased -2% to MSEK 7,015 (7,153), but increased
currency adjusted 1%.
AirTechBusiness area AirTech order intake decreased -3%, currency adjusted
flat development. The currency adjusted order intake was flat
mainly due to AirTech exiting the non-core Commercial segment inJuly 2020. Excluding this exit, the currency adjusted order intake
increased slightly. Order intake in the Industrial segment in the US
was strong. This was driven by the pharma sub-segment where
Covid-19 relief efforts and the production of test equipment led toa good growth. Also, the lithium battery sub-segment experienced
good growth with several orders in US and Europe. Services had a72

positive development, mainly driven by the industrial and commercial
segments in the US. The order intake of humidification components(WET-pads) increased driven by demand from OEMs in Europe.
Data Centers US had weaker order intake on the back of a verystrong development in 2019. Mist Elimination had a weaker orderintake, primarily driven by a weaker marine sub-segment that was
negatively impacted by a low oil price in combination with theeffects from the Covid-19 pandemic.
Net sales in business area AirTech declined -4%, currency
adjusted decrease of -2%. The decline was mainly due to a
decline in Mist Elimination primarily driven by a weaker marine
sub-segment that was impacted negatively by a low oil price in
combination with the effects from the Covid-19 pandemic. The
pharma sub-segment had good growth driven by Covid-19 relief
efforts and production of test equipment. Services had a good
growth because of a good development in Americas where net
sales to the existing installed base grew despite facing challenges
to access customer sites due to the Covid-19 pandemic. In region
APAC net sales was slightly lower on the back of a very strong
net sales to the lithium battery sub-segment in 2019. AirTech alsodecided to exit the non-core Commercial segment in July 2020,
which had a slightly negative effect.
FoodTechBusiness area FoodTech order intake increased by +5%, currency
adjusted increase of +9%. The increase was mainly because of avery good development of order intake in Asia, driven by the swine
segment in China. In Americas and Europe, demand was softer. Both
Americas and Europe has been negatively affected by the Covid-19

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pandemic throughout the year, mainly as access to customers’ sites
has been limited combined with delayed customer investments.
Americas was also soft due a continued weak demand in the swine
segment.
Net sales in business area FoodTech increased +5%, currency
adjusted increase of +8%, driven by a good growth in the swine
segment in China on the back of a weak 2019 when it was
negatively impacted by the African Swine Fever (ASF). Europe had
a flat development with growth in the broiler segment, mainly inGermany that had good export sales to the CIS countries. This wasoffset by negative effects from the Covid-19 pandemic in Europe
and Americas especially, which affected net sales negatively in Asia
early in the year and later in Europe and Americas. In Americas, net
sales declined mainly due to continued weak net sales in the swine
segment, partly offset by a slight growth for MTech Systems in the US
and the broiler segment in Brazil.
Gross profit
Gross profit amounted to MSEK 2,350 (2,331) and gross margin was
33.5% (32.6).
Indirect costs
Selling and administrative costs for Munters amounted to MSEK
1,356 (1,580) corresponding to 19% (22) of net sales.
Operating profit (EBIT) and adjusted EBITA
Group
Operating profit was MEK 707 (556), corresponding to an operating
margin of 10.1% (7.8%). Depreciation amounted to MSEK 221(213),
amortizations and write-downs of MSEK 87 (134), where MSEK
39 (88) was related to amortization of intangible assets fromacquisitions. Depreciation of leased assets was MSEK 113 (138), seespecification of IFRS 16 impacts in note 13. EBIT was also impacted
by MSEK -111 (-181) from IAC´s.
AirTechAdjusted EBITA in business area AirTech increased 4% to MSEK 689(662), corresponding to an adjusted EBITA margin of 14.0% (12.8).
Amounts in MSEKEBIT, including discontinued operation

AirTechFoodTech

Other

Total
701

559

291

-149

EBIT, discontinued operation

-6

0

0

-6

EBIT, continuing operation

565

291

-149

707

Amortizations intangeble assets,continuing operation

-30

-20

-37

-87

EBITA, continuing operation

594

311

-111

794

Items affecting comparability incontinuing operation

-95

1

-18

-111

Adjusted EBITA,
continuing operation

689

310

-94

906

The improved margin was a result of stable gross margin, increased
efficiency and continued lower indirect costs.
FoodTech
Adjusted EBITA in business area FoodTech increased 12% to MSEK
310 (278) corresponding to an adjusted EBITA margin of 14.6%(13.7). The improvement was driven by increased net sales.
Net financial items
Financial income and expenses amounted to MSEK -156 (-189). The
financial expenses were positively impacted by a lower USD interest
rate compared to last year

Taxes
Income taxes was MSEK -120 (-83) and the effective tax rate was
22% (23).
Items affecting comparability
During the second quarter 2020, Munters decided upon a further
step in the implementation of the strategy, focused on sharpening thecustomer offering and footprint optimization measures.
At the end of June, 2020 Munters made a restructuring and inventory provision of MSEK -136, mainly within business area AirTech,
related to severance costs, warranty claims and winding down
activities for the exit of the non-core part of the commercial businessin the US. The full amount was expensed to other operating expenses
and recorded as an IAC. As a result of an analysis made of thebusiness during the fourth quarter, a provision related to inventory
was partly released of MSEK 12, total items affecting comparability
for the year therefore amounted to MSEK -124.
Due to the current global pandemic, Munters has also incurred
Covid-19 related IACs, comprising of a net of sanitation, hazard pay
expenses and received government grants/government assistance for
e.g. salary payments and social security contributions. These items
amounted to MSEK 8.
In addition to this, Munters has had IACs related to a previous
customer claim of MSEK -8, legal fees and fines of MSEK -5, a net
gain of MSEK 6 for a sale of a previous office building and an
income of MSEK 13 for refund of sales tax in Brazil. Total IACs for2020 therefore amounts to MSEK -111 (-181).
Investments
Investments in owned tangible assets amounted to MSEK 114 (118).
A large portion relates to machinery and equipment from the production units in Sweden, China, Italy, US and Germany. Depreciations
totaled MSEK 221 (213).
Investments in intangible assets excluding goodwill other assets
related to acquisitions totaled MSEK 103 (74). Investments mainly
relates to capitalized development costs in Sweden, Israel and the
US. Amortizations amounted to SEKm 87 (134).
Goodwill
Goodwill as of December 31, 2020 amounted to MSEK 3,952(4,348). The decrease is a result of currency effects from a stronger
SEK in relation to USD in comparison to last year.
Financial position and liquidity
In 2020 Munters established a new revolving credit facility (RCF) of
MSEK 750, which was secured by a guarantee from The Swedish
Export Credit Agency (EKN), maturing in 2023. The purpose of the
MSEK 750 RCF is to serve as a back-up facility. It was established
as a precautionary measure in the challenging business environment
due to the Covid-19 outbreak.
Munters primary financing facilities consists of a term loan of
MUSD 250 and a revolving credit facility (RCF) of MEUR 185. Thereis no mandatory amortization, and final maturity date is May 2022.
The loan agreements have one financial covenant, consolidated
net debt in relation to adjusted EBITDA, with some adjustments. The
accounting standard for leases, IFRS 16, does not affect the covenantcalculation according to the loan agreement definition and neither
does the net pension liability. In order to secure the implementationof the strategy in the light of the current global pandemic, an amendment of the loan agreement was signed with the bank group in May.
The financial covenant is temporarily eased until the first quarter
2021, the threshold for the leverage ratio is set to 5.5x.
Interest-bearing liabilities amounted to MSEK 2,786 (3,497).
Cash and cash equivalents amounted to MSEK 970 (722) as ofDecember 31, 2020.
At the end of the year the term loan was fully drawn with MUSD
250 and MEUR 56 (91) of the total revolving credit facility were
utilized in EUR and SEK. Available unutilized credit facilities asof December 31, 2020 amounted to MEUR 129 (94). Along with73

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the main loan facility, an amount of MSEK 15 (25) in local debt isout-standing in i.e. Brazil and India.

options, whereof 90,000 cash settled. For more information of theemployee stock option program, see Note 32.

SIGNIFICANT EVENTS DURING THE YEAR
Global pandemic
In late 2019, a corona virus was found in China that could spreadto humans and cause the disease Covid-19. In early 2020, theglobal spread of the corona virus escalated, and whole world was
impacted. For Munters, the outbreak has had a mixed impact,with the largest impact experienced in the second and fourth
quarter, with delays both in deliveries to customers as well as
postponed investments by customers. However, all the production
units, except one minor unit, upheld production with only minor
disturbances throughout the year. Continuous mitigating actions
has been made and the cost base and investments has beenadjusted, as well as the supply chain. Currently, the market
visibility of demand remains low due to the lingering Covid-19
outbreak.

Next step in the implementation of the refined strategy
During the second quarter 2020, Munters decided upon a further
step in the implementation of the strategy, focused on sharpening
the customer offering and footprint optimization measures. A
decision was made that AirTech should exit the non-core part of thecommercial business in the US. Due to the high order backlog in
Data Centers, US, production increased in Texas. In the Netherlands
a consolidation of operations. In addition, it was communicated that
other measures will be taken to ensure the implementation of thestrategy. The measures are expected to be implemented by the fourth
quarter 2021.

Strategic evaluation of the Data Centers and Mist Elimination
operations
During 2019 a strategic evaluation of the Data Centers and Mist
Elimination operations was conducted. In February 2020, thisresulted in a decision to keep these businesses in Munters. Bothbusinesses made significant progress during 2019. Considering
Munters strategic direction we see a good strategic fit. Bothbusinesses operate in markets with good growth potential, driven
by digitalization and high demands for sustainable solutions.
The businesses are today part of business area AirTech.
Organizational change
In February, Munters announced an organizational change. Thechange aims at creating a clearer business ownership and capture
local synergies and value drivers across the Group, by aligning
the value chain within the business areas. The change meansthat the business areas have full profit and loss responsibility for
their respective area. The role Global operations in the Groupmanagement team changed into a Strategic operations role withfocus on driving lean practices, manufacturing excellence, shared
tools and processes and overall footprint optimization. Two roles
were added; Innovation, with focus on driving R&D processes,
including shared technologies coordination and product introduction development and Commercial excellence, with focus on
coordinating sales training, drive practice of value selling, pricing
strategies and go-to-market methods.
New President Business area FoodTech
In February, it was announced that Pia Brantgärde Linder,
previously Senior Vice President and Business Unit Manager ofHigh Voltage Products in Northern Europe at ABB, had been
appointed President of Business Area FoodTech. Pia started her
position at Munters on August 16, 2020.
2020 Annual General Meeting
The Annual General Meeting of Munters Group AB was held on
May 7, in Kista, Stockholm. In accordance with the Nomination
Committee’s proposal the following Board members were reelected as ordinary members proposal: Magnus Lindquist, Helen
Fasth Gillstedt, Per Hallius, Lena Olving, Kristian Sildeby andJuan Vargues. In addition, Håkan Buskhe and Anna Westerberg
were elected as new Board members and Magnus Lindquist was
re-elected as Chairman of the Board of Directors.
At the annual general meeting in May 2020 it was resolved inaccordance with the Board’s proposal on the implementation of aperformance based long-term incentive programme (“LTIP 2020”or the “Programme”). The programme was to comprise no morethan 1,699,000 employee stock options to be granted to membersof the group management and certain other key employees,
approximately 74 employees in total. A total of 69 employees
has accepted the offer comprising 1,580,000 employee stock
74

Nomination committee for the 2021 Annual General Meeting
In October Munters announced the nomination committee forthe 2021 Annual General Meeting. The Nomination Committee
shall be composed of the representatives of the four largest shareholders in terms of voting rights listed in the shareholders’ register
maintained by Euroclear Sweden AB as of 31 August eachyear, and the Chairman of the Board, who will also convene thefirst meeting of the Nomination Committee. The committee comprises: Magnus Fernström, FAM AB, Chairman of the Nomination
Committee, Jan Dworsky, Swedbank Robur Funds, Mats Larsson,
First Swedish National Pension Fund, Jonathan Schönbäck, Odin
Fund Management and Magnus Lindquist, Chairman of the Boardof Munters Group AB.
Change in number of shares
In November 851,500 subscription warrants in Munters’ warrant
program series 2017/2020 was exercised. As a consequence, thenumber of shares and votes in the company increased by 860,015
and as at December 31, 2020, there were in total 184,457,817
shares and votes in Munters Group AB.
Increased group management
In November it was announced that Munters had appointed
Stéphane Darcq, as Group Vice President and Head of Innovation asof December 1, 2020. In this role he reports to CEO Klas Forsström
and is part of Munters Group Management team. Stéphane
combines this role with the role he also previously had, as responsible for Product Management, Product Development and Marketing
within business area FoodTech.
In November it was announced that Stefan Aspman, previously
Head of Business Control and Performance Management at Sandvik
Coromant, Product Management and R&D, had been appointed
Head of Commercial Excellence as of February, 2021. He willreport to CEO Klas Forsström and be a part of Munters GroupManagement Team.
FINANCIAL INSTRUMENTS
Financial instruments in the Group, beyond those arising in operating
activities, consist of interest-bearing bank borrowings and currency
derivatives. Further information on the financial instruments ispresented in Notes 3, 19 and 20.
RESEARCH AND DEVELOPMENT
Costs for research and development amounted to MSEK 186(197), corresponding to 2.7 % (2.8) of net sales. Capitalization ofinternally generated intangible assets amounted to MSEK 80 (62).
Activities in the area comprise research initiatives, technologicaland product development, and product ownership. To ensuresustainable value creation, innovation, development and productlaunches are balanced. A clear trend has been to focus on digitization and smarter products, which will create great opportunities
in both business areas. Sustainability and energy efficiency aresomething Munters considers very important, and a large partof our research resources are used for the development of newtechnologies in these areas.

ANÅ
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EMPLOYEESThe number of permanent full time employees at year-end was 3,214(3,088). The increase is linked to investments in R&D,new hires in
the factory in the Czech Republic, where manufacturing was takenover from the former factory in Dison, Belgium, and within Munters
software part.
Employee turnover was 17% (26). The lower turnover mainly
comes from the US and China. Last year the turnover was negatively
affected by the FPP-program. The average age was 43 (43). Womenaccounted for 21% (21).
For remuneration to senior management as well as adopted
remuneration guidelines see Note 31.
SIGNIFICANT RISKS & UNCERTAINTIES
Munters’ significant risks and uncertainties can be divided into four
categories: strategic, operational, regulatory and financial.
These are both general risks, which depend on the political andmacroeconomic developments, and specific risks, which are directly
related to the Group’s operations. Some risks lie beyond Munters’
direct control, while others can be controlled. Sustainability risks are
fully integrated into the framework. A risk assessment is performed
annually for the purpose of identifying and remedying the mostimportant risks. Munters’ primary risks are defined as the company’s
most important identified risks and are presented on the pages
46–47 of this report.
During 2020 the Covid-19 outbreak had a mixed impact on
Munters with the largest impact experienced in the second andfourth quarter, with delays both in deliveries to customers as well as
postponed investments by customers. All our production units, except
one minor unit, upheld production with only minor disturbances
throughout the year. In 2020, Munters continuously implemented
mitigating actions and adjusted the cost base and investments as wellas the supply chain.
Financial risks mainly consist of currency, interest rate andfinancing risks. The continued development of the global economy
including changes in interest rates and currencies are a factor of
uncertainty for the future earnings development. A more detailed
description of the business financial risks and how these are controlled and managed can be found in Note 3.
PARENT COMPANY
The Parent Company does not engage in sales of goods andservices to external customers. Cash and cash equivalents at the endof the period amounted to MSEK 62 (28). The Parent Company had
three permanent employees, one man and two women.
SHARE CAPITAL AND OWNERSHIPThe share capital of SEK 5,533,735 comprises 184,457,817 shares,
whereof 2,537,000 shares in custody, with a par value of SEK 0.03
per share, accounting for 1.4%. The shares in Munters Group AB are
listed on Nasdaq Stockholm under the symbol MTRS. Munters Group
AB’s ten largest shareholders as of December 31, 2020 hold 70.1%(69.6) of the number of shares outstanding. Of these, FAM AB holds
26.0 % (21.1) as at December 31, 2020. No other shareholder holds
more than ten percent of the shares in Munters Group AB either
directly or indirectly.
PROPOSAL ON DISTRIBUTION OF DIVIDEND
Earnings of SEK 4,165,054, 000 are at the disposal of the Annual
General Meeting. The Board of Directors of Munters Group AB
propose that the Annual General Meeting 2020 resolve that adividend of SEK 0.70 should be paid, resulting in a total of MSEK
129, and that the remaining standing profits at the disposal of theAGM be carried forward.

PROVISIONS IN ARTICLES OF ASSOCIATIONThe Annual General Meeting is charged with appointing and dismiss
Board members. The Annual General Meeting decides on changes
to the Articles of Association.
GUIDELINES FOR REMUNERATION TO SENIOREXECUTIVES
The guidelines for remuneration to senior executives that has appliedin 2020 are shown in Note 31. The company’s auditors havereviewed that the guidelines decided by the Annual General Meeting
have been followed
The Board of Directors proposes that the 2021 annual general
meeting resolve on guidelines for the remuneration of senior executives to be in force until further notice, pursuant to the following.
The group of executives encompassed by the guidelines
comprises the CEO and other members of the group management.
The guidelines also encompass any remuneration to Board members, otherthan Board fees. The guidelines shall apply to remuneration agreed,
and amendments to remuneration already agreed, after adoption of
the guidelines by the 2021 annual general meeting. The guidelines
do not apply to any remuneration resolved by the general meeting.
The guidelines’ promotion of the company’s business strategy, longterm interests and sustainability
Munters business strategy is to be a global leader in energyefficient and sustainable climate solutions. Our solutions enableenergy efficient production processes with reduced carbon dioxide
emissions for our customers. Using innovative technologies, Munterscreates the perfect climate for demanding and sophisticatedindustrial applications and processes, of which the largest segments
are food, pharmaceuticals, and agriculture.
Munters conducts operations in two business areas:• AirTech is a global leader in energy-efficient air treatment forindustrial and commercial fields of application.
• FoodTech is one of the world’s leading suppliers of innovative andenergy-efficient climate systems for livestock farming and greenhouses, as well as software for controlling and optimizing the entire
food production value chain.
For further information regarding Munters business strategy,
see Munters website (https://www.munters.com/en/about-us/
munters-in-short/).
A prerequisite for the successful implementation of Munters businessstrategy and safeguarding of the company’s long-term interests,
including its sustainability, as well as delivery on the ambitions
the company has, is that the company is able to recruit and retain
qualified personnel. In order to do so, Munters must be able to offer
a competitive total remuneration based on market terms, which theseguidelines enable.
Munters has implemented long-term share-related incentive
programs in 2017-2020, in which some senior executives have had
the opportunity to participate. These programs have been resolved
by each general meeting and are therefore excluded from theseguidelines. For information regarding performance criteria, terms
and conditions, and costs for these programs, see the Board of
Directors’ complete proposal for each general meeting on Munters
website and in Munters annual report.
Variable cash remuneration covered by these guidelines shall aim
to promote the company’s business strategy and long-term interests,
including its sustainability.
Types of remuneration, etc.
The remuneration shall be on market terms and may consist of thefollowing components: fixed annual cash salary, variable cash
salary, pension and other benefits. Additionally, the general meeting
may, irrespective of these guidelines, resolve on, for example, shareand share price-related remuneration.

75

FS ITNRAATNECGI IA L |R EM
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M| UÅNRTSERRESD O|V I A
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T YP PROERP TO 2
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Fixed cash salary
The fixed cash salary shall reflect the demands and responsibility
that the position entails as well as individual performance. The fixedcash salary shall be revised annually.
Variable cash salary
Variable cash salary may consist of annual variable cash salaryand / or long-term variable cash salary. The annual variable cash
salary shall be maximized to 100 per cent of the fixed annual cash
salary for the CEO and 70 per cent of the fixed annual cash salaryfor other members of the group management. The satisfaction of
criteria for awarding variable cash salary shall be measured overa period of one year.
The annual variable cash salary shall be linked to predetermined and measurable financial criteria, such as operating
result and working capital. By linking the remuneration of thesenior executives to the company’s earnings and financing of its
operating activities, the criteria promote the implementation of thecompany’s business strategy and long-term interests, including its
sustainability. Furthermore, the criteria for variable cash salary
shall be designed so that they do not encourage excessive risktaking.
The long-term variable cash salary shall be awarded after one,
two, and three years, respectively, and shall be maximized to a
total of 50 per cent of the annual fixed cash salary for the CEO,and 45 per cent of the annual fixed cash salary for other membersof Group Management, distributed pro-rata over the three years.
The satisfaction of criteria for pay out of long-term variable cash
salary shall be measured during a one-, two- and three-year
period, respectively, before pay out.
The long-term variable cash salary shall be linked to predetermined and measurable financial criteria (weighting 70 per cent)and non-financial criteria (weighting 30 per cent). The financial
criteria may consist of, for example, adjusted EBITA and Operating
Working Capital and the non-financial criteria may consist of, forexample, weighted sustainability goals (such as the share of green
electricity in the Group’s total electricity consumption, the share offemale leaders within the Group and the share of suppliers thathas signed Munters Supplier Code of Conduct). By linking the
remuneration of the senior executives to the company’s earnings,
financing of day-to-day operations, and sustainability, the criteria
promote the implementation of the company’s business strategy
and long-term interests, including its sustainability. The criteria forlong-term variable cash salary shall be designed so that they do
not encourage excessive risk-taking.
A certain part of the net amount after tax of paid out as longterm variable cash salary is expected to be invested in Muntersshares, according to the share ownership policy which the Board
intends to adopt. The entire net amount after tax is expected to beinvested in Munters shares until the holding in value corresponds
to 200 per cent of the gross annual fixed cash salary for the
CEO and 100 per cent of the gross annual fixed cash salary forother members of Group Management. When such a holding has
been achieved, half of the net amount after tax is expected to beinvested in Munters shares.
To which extent the criteria for awarding variable cash salary
have been satisfied shall be evaluated when the measurement
period has ended. The Board of Directors is responsible for theevaluation so far as it concerns variable cash salary to the CEO.
The Remuneration Committee is responsible for the evaluation so far
as it concerns variable cash salary to other members of the GroupManagement. For financial objectives, the evaluation shall be basedon the latest financial information made public by the company.
Terms and conditions for both annual variable cash salary andlong-term variable cash salary shall be designed so that the Boardof Directors, if exceptional economic circumstances prevail, has theoption of limiting or refraining from payment if such a measure isconsidered reasonable.

76

Additional variable cash remuneration may be awarded in
extraordinary circumstances, provided that such extraordinaryarrangements are limited in time and only made on an individual
basis, either for the purpose of recruiting or retaining executives,
or as remuneration for extraordinary performance beyond theindividual’s ordinary tasks. Such remuneration may not exceed anamount corresponding to 50 per cent of the fixed annual cash salaryand shall not be paid more than once per year and per individual.
Resolution on such remuneration shall be made by the Board of
Directors based on a proposal from the Compensation Committee.
PensionFor the CEO, pension benefits, including health insurance, shallbe defined contribution. Variable cash salary shall not qualify forpension benefits. Pension contributions for defined contribution
pension shall amount to not more than 35 per cent of the fixedannual cash salary.
For other members of the group management, pension benefits,
including health insurance, shall be defined contribution unless theexecutive concerned is subject to defined benefit pension under
mandatory collective agreement provisions. Variable cash salary
shall qualify for pension benefits to the extent required by mandatory collective agreement provisions applicable to the executive.
Pension contributions for defined contribution pension shall amountto not more than 35 per cent of the fixed annual cash salary.
Other benefits and compensation
Other compensation may consist of other benefits that are customary and in line with market terms, such as medical insurance, life
insurance and company cars, which shall not constitute a significant part of the total remuneration. Such benefits may amount to
not more than 10 per cent of the fixed annual cash salary.
For employments governed by rules other than Swedish, pension
benefits and other benefits may be duly adjusted for compliance withmandatory rules or established local practice, taking into account, tothe extent possible, the overall purpose of these guidelines.
Consultancy fee to Board members
In specific cases, and for a limited time, Munters Board members
elected by the general meeting may be able to be remunerated
for services within their respective areas of expertise, which does
not constitute board work. For these services (including services
performed by a Board member wholly-owned company), a fee onmarket terms can be paid, provided that such services contributeto the implementation of Munters business strategy and safeguarding of Munters long-term interests, including its sustainability.
Such consultancy fee may, for each Board member, in no caseexceed one year’s Board fee.
Termination of employment
Fixed cash salary during the notice period and severance pay,
as well as remuneration for any non-compete restrictions, shall in
total not exceed an amount corresponding to the fixed cash salary
for two years for the CEO and 18 months for other members of
the group management. Severance pay shall not be paid if noticeof termination of employment is made by the CEO and othermembers of the group management. The notice period between
the company and the CEO, and other members of the groupmanagement, shall not exceed 6 months.
Remuneration for any non-compete restrictions shall compensate
for any loss of income and shall only be paid for such period as
the former executive does not have the right to severance pay. The
remuneration shall amount to not more than 60 per cent of the fixedannual cash salary at the time of termination of employment, unlessotherwise provided by mandatory collective agreement provisions,and shall be payable during the period subject to the non-compete
restriction, which shall not exceed 12 months after termination of
employment.

A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | F I N A N C I A L R E P O R T S

Salary and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these
remuneration guidelines, salary and employment conditions for
employees of the company and the group’s Swedish operation havebeen taken into account by including information on the employees’
total remuneration, the components of the remuneration and increase
and growth rate over time, in the Compensation Committee’s and theBoard of Directors’ basis of decision when evaluating whether theguidelines and the limitations set out herein are reasonable. In thecompany, i.e. in Munters Group AB, there are only four employees(all are senior executives).
Preparation and decision-making process
The Board of Directors has established a Compensation
Committee. The committee’s tasks include, among other things,
preparing the Board of Directors’ decision to propose guidelines
for remuneration to senior executives. The Board of Directors shallprepare a proposal for new guidelines at least every fourth year
and submit the proposal to the annual general meeting. The guidelines shall be in force until new guidelines are adopted by thegeneral meeting. The Compensation Committee shall also monitor
and evaluate programs for variable remuneration for the groupmanagement, the application of the guidelines for remuneration
to senior executives as well as the current remuneration structuresand compensation levels in the company. The CEO and othermembers of the group management do not participate in the
Board of Directors’ processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters. Remuneration to the CEO is prepared by the Compensation
Committee and decided by the Board of Directors. Remuneration
to other members of the group management is prepared by the
CEO and decided by the Compensation Committee.

CORPORATE GOVERNANCE REPORT ANDSUSTAINABILITY REPORT
Munters Group AB has chosen to prepare the Corporate
Governance Report and Sustainability Report as a separate
document from the Annual Report. The Corporate Governance
Report is outlined on Pages 58–70 and the Sustainability Report on
Pages 38–49. For descriptions of risks and controls in conjunction
with preparation of the consolidated accounts, refer to the Corporate
Governance Report.
FINANCIAL STATEMENTS AND NOTESThe Group’s income and financial position in other respects arepresented in the following statements of comprehensive income,financial position, cash flows and changes in equity, as well as in
the Notes. The Parent Company’s income and financial position inother respects are presented in the following income statement andbalance sheet, statement of changes in equity, cash flow statement
and notes. All amounts are in millions of Swedish kronor (MSEK)
unless otherwise specified.

Derogation from the guidelines
The Board of Directors may temporarily resolve to derogate fromthe guidelines resolved by the general meeting, in whole or inpart, if in a specific case there is special cause for the derogation
and a derogation is necessary to serve the company’s long-term
interests, including its sustainability, or to ensure the company’s
financial viability. As stated above, the Compensation Committee’stasks include preparing the Board of Directors’ resolutions in remuneration-related matters, which includes preparing any resolutions
to derogate from the guidelines.
SIGNIFICANT EVENTS AFTER PERIOD END AND
FUTURE OUTLOOKIn February 2021, Munters agreed with Hunter New England
Local Health District through a mediation procedure. The company
has sued Munters Australian subsidiary, Munters Pty Ltd. of MSEK
74 plus interest and expenses, for breach of contract in relation toservices provided at John Hunter Hospital in the spring of 2008. A
provision of MSEK 24 was made in 2020 based on a best estimateof the outcome of the mediation, and at the same time, a receivableon the insurance company of MSEK 16 was booked. Final mediationentailed a settlement of MSEK 32, implying a further cost for Muntersof MSEK 9, including court cost. As the amount is considered small,no adjustment has been made to the reported provision at year-end,
hence the cost will impact the profit in 2021.
In March 2021, a final agreement was reached regarding
insurance compensation linked to previous exchange of specificcomponents at a customer site within the European Data Center
business, which since September 2019 has been reported as a
discontinued operation. The agreement entailed a final remunerationof MEUR 6, corresponding to approximately MSEK 60. The costs forthe exchange amounted to MSEK 116 and were reported during thethird quarter of 2019.

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MUNTERSR SI RNPGO ROTC2H0 H
Å L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| A N N U A L A N D S U SÅTANEADBOI LVI TI SYNRI E
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STATEMENTS OF COMPREHENSIVE INCOME

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

1

S t at e m en t o f c o m p re h e n s iv e i n c o m e
GR OU P
Note

2020

2019

4, 6

7,015

7,153

Cost of goods sold-4,665-4,822Gross profit/loss

2,350

2,331

Amounts in MSEK
Net sales

46

9Selling expenses

-818

-970

Administrative costs

-538

-610

Research and development costs

-186

-197

Other operating income

7

7

-148

-7

5, 6, 7, 8, 9

707

556

Other operating expenses
Earnings before interest and tax (EBIT)
Financial income

10

1

7

Financial expenses

10

-157

-196

552

367

11

-120

-83

432

283

-6

-448

Net income for the year

426

-164

Attributable to Parent Company shareholders

420

-166

6

2

Profit/Loss after financial items
Tax

Net income for the year from continuing operation
Net income from discontinued operation

9

Attributable to non-controlling interests
Earnings per share for net income from continuing operation attributable to the ordinary equity holders of the company:
Earnings per share before dilution, SEK

2.35

1.55

Earnings per share after dilution, SEK

2.35

1.55

Earnings per share for net income attributable to the ordinary equity holders of the company:
Earnings per share before dilution, SEK

21

2.32

-0.91

Earnings per share after dilution, SEK

21

2.32

-0.91

-325

122
-44

Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss in subsequent periods:
Exchange-rate differences on translation of foreign operations
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Actuarial gains and losses on defined-benefit pension obligations, incl. payroll tax

24-7

Income tax effect on other comprehensive income not to be reclassified to profit or loss in subsequent periods

11

1

9

-331

87

Comprehensive income for the year

95

-77

Attributable to Parent Company shareholders

91

-79

Attributable to non-controlling interests

4

2

Other comprehensive income, net after tax

78

78

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STATEMENTS OF FINANCIAL POSITIONFINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 20202

S t at e m en t of fin a n c ia l p osit ion
GR OU P
Amounts in MSEK

2020

Note

2019

ASSETSNON-CURRENT ASSETS
Goodwill
Patents, licenses, brands, and similar rights

8, 15

3,952

4,348

8, 14,15

1,356

1,469

Buildings and land

8, 13

209

248

Plant and machinery

8, 13

467

554

Equipment, tools, fixtures, and fittings

8, 13

161

162

Construction in progress

13

41

55

Other financial assets

19

19

19

Deferred tax assets

11

Total non-current assets

246

249

6,451

7,103

CURRENT ASSETS
Raw materials and consumables

8

350

350

Products in process

8

118

107

Finished products and goods for resale

8

215

296

Projects in progress

3

7

Advances to suppliers

512

3, 17, 19

935

1,050

Prepaid expenses and accrued income

18

376

288

Derivative instruments

19

-

5

55

56

Accounts receivable

Current tax assets
Other receivables

19

96

96

Cash and cash equivalents

19

970

722

Total current assets

3,123

2,989

TOTAL ASSETS

9,574

10,093

77
99

FINANCIAL REPORTS|

MUNTERSR SI RNPGO ROTC2H0 H
Å L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| A N N U A L A N D S U SÅTANEADBOI LVI TI SYNRI E
20

STATEMENTS
OF FINANCIAL
POSITIONRAPPORT ÖVERFINANSIELL
STÄLLNING

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 20203

S t at e m en t of fin a n c ia l p osit ion
GROUP
Amounts in MSEK

2020

Note

2019

EQUITY AND LIABILITIESEQUITY
Attributable to Parent Company shareholders

23

Share capital
Other capital contributions
Reserves

6

6

5,144

5,083

341

664

Profit brought forward-1,745-2,125

Total shareholders’ equity attributable to equity holders of the Parent Company

3,746

3,628

Non-controlling interests
Total equity

5

-0

3,751

3,627

NON-CURRENT LIABILITIES
19, 20

2,690

3,371

Provisions for pensions and similar commitments

24

299

282

Other provisions

25

33

24

Other liabilities

19

132

134

Deferred tax liabilities

11

Interest-bearing liabilities

Total non-current liabilities

371

409

3,525

4,221

CURRENT LIABILITIESInterest-bearing liabilities

19, 2097126

Advances from customers

4

509

374

Accounts payable

19

529

556

Accrued expenses and deferred income

26

742

716

Derivative instruments

19

2

-

52

32
153

Current tax liabilities
Other liabilities

19

111

Provisions for pensions and similar commitments

24

10

9

Other provisions

25

248

278

Total current liabilities

2,299

2,244

TOTAL EQUITY AND LIABILITIES

9,574

10,09380

80

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STATEMENTS OF CHANGES IN EQUITYFINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

4

S t at e m en t o f c h a n g e s in eq u i t y
Attributable to Parent Company shareholders

SharecapitalOther
capitalcontributions

Translation
reserve

Profitbrought
forward

6

5,083

664

-2,125

Income for the year

-

-

-

420

420

6

426

Other comprehensive income, net after tax

-

-

-324

-6

-329

-1

-331

Total comprehensive income for the period

-

-

-324

415

91

4

95

Issue of warrants *)

0

61

-

-

61

-

61

Change in non controlling interest

-

-

-

-1

-1

1

0

Put/call option related to non controlling interests

-

-

-

-4

-4

-

-4

Repurchase of shares

-

-

-

-43

-43

-

-43

Share option plan, including deferred tax **)

-

-

-

14

14

-

14

0

61

-

-34

27

1

28

Closing balance, December 31, 2020

6

5,144

341

-1,745

3,746

5

3,751

Opening balance, January 1, 2019

6

5,083

543

-1,912

3,719

-4

3,716

Income for the year

-

-

-

-166

-166

2

-164

Other comprehensive income, net after tax

-

-

121

-35

86

1

87

Total comprehensive income for the period

-

-

121

-200

-80

3

-77

Put/call option related to non controlling interests

-

-

-

0

0

-

0

Acquisition of non-controlling interests

-

-

-

0

0

1

1

Repurchase of shares

-

-

-

-16

-16

-

-16

Share option plan, including deferred tax **)

-

-

-

4

4

-

4

Other

-

-

-

-1

-1

-0

-1

-

-

-

-13

-13

1

-12

6

5,083

664

-2,125

3,628

-0

3,627

GR OU P
Amounts in MSEK
Opening balance, January 1, 2020

Total

Noncontrollinginterests

Total
equity

3,628

-0

3,627

Changes in equity, 2020

Transactions with owners in their capacity as owners:

Changes in equity, 2019

Transactions with owners in their capacity as owners:

Closing balance, December 31, 2019*) wherof warrant issue cost, KSEK 250.
**) whereof deferred tax, MSEK 7 (-).

8811

FINANCIAL REPORTS|

MUNTERSR SI RNPGO ROTC2H0 H
Å L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| A N N U A L A N D S U SÅTANEADBOI LVI TI SYNRI E
20

STATEMENTS
OF CASH FLOWSRAPPORT FÖRÄNDRINGARI EGET KAPITALFINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

5

S t at em en t of c a s h flows
GROUP

2020

2019

701

105

Depreciation, amortization, and impairments

308

408

Other profit/loss items not affecting liquidity

38

63

Amounts in MSEK

Note

OPERATING ACTIVITIES
Earnings before interest and tax (EBIT), including discontinued operation
Reversal of non-cash items:

Change in provisions:-1

158

Cash flow before interest and tax

Provisions

1,047

735

Paid financial items

-151

-177

Taxes paid

-102

-111

Cash flow from operating activites before changes in working capital

794

448

Cash flow from changes in working capital:
Changes in accounts receivable

110

82

4

47

Changes in accrued income

-103

-54

Changes in accounts payable

155Changes in advances from customer

184

88

Cashflow from operating working capital

210

168

Changes in other receivables and liabilites

-27

54

Cash flow from changes in working capital

183

221

Cash flow from operating activities

977

669

Changes in inventory

INVESTING ACTIVITIESBusiness acquisitions

12

Sales of tangible assets
Sales of intangible assets
Investment in tangible assets

13

Investment in intangible assets

14

Cash flow from investing activities

-9

-

14

18

2

2

-114

-118

-103

-76

-209

-174

FINANCING ACTIVITIESIssue of warrants

23

61

-

Loans raised

20

329

284

Amortization of loans

20

-698

-332

Repayment of lease liabilities

20

-130

-123

Repurchase of shares

23

-43

-16

-481

-185

Cash flow from financing activities
Cash flow for the year

287

310

Cash and cash equivalents at January 1

722

404

Exchange-rate differences in cash and cash equivalents
Cash and cash equivalents at December 31

19

-38

7

970

722

Interest received totaled MSEK 1 (7). Interest paid totaled MSEK -144 (-176).

82

82

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6

In c om e s ta t em en t
PA R ENT C OMPA NY

2020

2019

Net sales--

Gross profit/loss--

Administrative costs

-22

-44

Other operating expenses

-5

-

-27

-44

Amounts in MSEK

Note

Earnings before interest and tax (EBIT)-0-0

Profit/Loss after financial items

-28

-44

Group contributions

23

43

Profit/Loss before tax

-5

0

2

0

-3

-1

Financial expenses

Tax

10

11

Income for the year

OTH ER C OMPR EH ENS I VE I NC OME

2020

2019

Profit/Loss for the year

-3

-1

Other comprehensive income, net after tax

-

-

-3

-1

Amounts in MSEK

Comprehensive income for the year

Note

83

FINANCIAL REPORTS|

MUNTERSR SI RNPGO ROTC2H0 H
Å L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| A N N U A L A N D S U SÅTANEADBOI LVI TI SYNRI E
20

BAL
ANCE SHEETBALANSRÄKNING

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

7

Ba la n c e s h eet
PA R ENT C OMPA NY
Amounts in MSEK

Note

2020

2019

16

4,099

4,086

ASSETSNON-CURRENT ASSETS
Participations in subsidiaries

Deferred tax assets
Total non-current assets

4

0

4,104

4,086

CURRENT ASSETS
Prepaid expenses and accrued income

18

Current tax assets

0

0

1

0

Receivables from subsidiaries

27

45

Cash and cash equivalents

6228

Total current assets

90

74

4,194

4,160

6

6

TOTAL ASSETSEQUITY AND LIABILITIESEQUITY

23

Restricted equity
Share capital

Unrestricted equity
4,136

4,074

Other capital contributions

18

18

Profit brought forward

14

41

Income for the year

-3

-1

4,171

4,139

Provisions for pensions and similar commitments

1

0

Tot al n on - c u r r en t l iabilit ies

10

Share premium reserve

Total equity
NON-CURRENT LIABILITIESCURRENT LIABILITIES
Accounts payable
Accrued expenses and deferred income

26

1

3

21

11

Liabilities to subsidiaries

00

Other liabilities-

2

Other provisions

Total current liabilities
TOTAL EQUITY AND LIABILITIES

84

-

5

22

21

4,194

4,160

84

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CHANGES IN EQUITYFINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 20208

C h a n g e s in eq u i t y
PARENT COMPANY

Amounts in MSEK
Opening balance January 1, 2020

RestrictedequityUnrestricted equity

Share
capitalSharepremium Other capitalreserve contributions

Profitbrought
forwardIncome forthe year

Total

6

4,074

18

41

-1

4,139

-

-

-

-

-3

-3

61

Changes in equity, 2020
Income for the year
Total comprehensive income for the period
Issue of warrants *)

0

61

-

-

-

To be carried forward

-

-

-

-1

1

-

Repurchase of shares

-

-

-

-43

-

-43

Share option plan, including deferred tax **)

-

-

-

17

-

17

0

61

-

-27

1

35

Closing balance, December 31, 2020

6

4,136

18

14

-3

4,171

Opening balance January 1, 2019

6

4,074

18

68

-11

4,155

-

-

-

-

-1

-1

To be carried forward

-

-

-

-11

11

-

Repurchase of shares

-

-

-

-16

-

-16

-

-

-

-27

11

-16

Closing balance, December 31, 2019

6

4,074

18

41

-1

4,139

Changes in equity, 2019
Income for the year
Total comprehensive income for the period*) wherof warrant issue cost, KSEK 250.
**) whereof deferred tax MSEK 2.

85

FINANCIAL REPORTS|

MUNTERSÅSR TAS RIENDAOBVI LI S
ORCTH 2H
L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| ANNUAL AND SUI TNY I N
R EGP O
0Å
20

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

9CASH FLOW STATEMENTRAPPORT FÖRÄNDRINGAR I EGET KAPITAL

Cash flow
PARENT COMPANY

2020

2019

Profit/Loss after financial items

-28

-44

Profit/loss items not affecting liquidity
Taxes paid

-3
-1

5
0

-32

-39

Amounts in MSEK

Note

OPERATING ACTIVITIESCash flow from operating activities before changes in working capital

Cash flow from changes in working capital
Cash flow from operating activities

7

11

-25

-28

FINANCING ACTIVITIESIssue of warrants

610Group contributions

41-5

Loan amortization

-0

0

-43

-16

59

-21

Cash flow for the year

34

-49

Cash and cash equivalents at January 1

28

77

Cash and cash equivalents at December 31

62

28

Repurchase of shares
Cash flow from financing activities

86

23

86

ANÅ
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YLRL BE APOR HR ET T2S 0R 2
A0P P |O RM
T U2N0 T2E0R S| |MFUI N TAENR C
SIA| L SRTERPATO ER GT SI
FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

10

NOTES
NOTE 1 ACCOUNTING POLICIES
Munters Group AB, corp. reg. no. 556819-2321, is a Swedish
public limited company registered in Sweden with its registeredoffice in Stockholm, Sweden. The address of the headquarters is
Munters Group AB, Box 1188, SE-164 40 Kista, Sweden, visiting
address Borgafjordsgatan 16 in Kista. This Annual Report andConsolidated Accounts were signed by the Board of Directors for
Munters Group AB on March 16, 2021, and approved for releaseby the Board on the same date. The income statements andbalance sheets for the Parent Company and the Group publishedin the Annual Report and Consolidated Accounts is to be adopted
by the Annual General Meeting on May 19, 2021. The mostimportant accounting policies applied in preparing the financial
reports are reported below. In the main, the same principles
applied to the Parent Company were applied to the Group. The
extent to which the Parent Company’s accounting policies differ
from those of the Group, or to which it was deemed important to
explain the principle applied in the Parent Company, is indicatedunder a special heading at the end of this Note.
BASIS OF PREPARATIONThe Consolidated Accounts were prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the EU, the Swedish Annual Accounts Act and the Swedish
Financial Reporting Board’s recommendation RFR 1 –Supplementary Accounting Rules for Corporate Groups. The Parent
Company’s Annual Report has been prepared in accordance with
the Annual Accounts Act and with the application of the Swedish
Financial Reporting Board’s recommendation RFR 2 – Accounting
for Legal Entities. IFRS rules for measurement and disclosure arethus applied, with the exception of the deviations indicated in thesection titled Accounting Policies of the Parent Company.
B as is f or as s ess me n t
The Consolidated Accounts are based on historical acquisition
costs with the exception of financial derivatives, acquisition options
and purchase considerations that are valued at fair value.
N ew an d ame n de d I F R S appl ie d f rom J an u ary 1 , 2 0 2 0The following new and amended standards are adopted by theGroup as of January1, 2020;• Definition Material – Amendments in IAS 1 and IAS 8• Definition of a Business – Amendments in IFRS 3• Interest Rate Benchmark Reform (IBOR) – Amendments in IFRS
9, IAS 39 and IFRS 7.
With regard to the interest rate benchmark reform, as Munters
does not apply hedge accounting, the changed accounting
requirements have not had any effect. Munters has agreements thatare affected by the reform, but the effect cannot yet be calculated
reliably. None of the other changes linked to new and changed
standards have had any impact on any reported amounts and are
not expected to have any significant impact on future periods.
N ew an d ame n de d I F R S t h at h av e n ot s t art e d be in g appl ie d
A number of new standards and interpretations enter into force forthe financial year beginning after 1 January 2020 and have notbeen applied to the preparation of this financial report. None ofthese new IFRS or IFRIC changes are expected to have a significant
impact on the Group's financial statements.

BASIS FOR CONSOLIDATIONThe Consolidated Accounts encompass Munters Group AB (theParent Company) and its subsidiaries. Subsidiaries are allcompanies over which the Group has a controlling influence. The
Group has controlling influence over a company when it is
exposed to, or has the right to, variable returns from its holdings in
the company and can impact the returns through its controllinginfluence in the company. Subsidiaries are included in theConsolidated Accounts as of the date on which controllinginfluence was transferred to the Group. They are excluded from theConsolidated Accounts as of the date on which controllinginfluence ceases.
The financial statements for the Parent Company and its
subsidiaries included in the Consolidated Accounts refer to thesame period and have been prepared in accordance with theaccounting policies that apply to the Group. All intra-grouptransactions, revenues, costs, gains, or losses that arise intransactions between companies included in the Consolidated
Accounts have been wholly eliminated.
B u s in ess ac qu is it ion s
The Group assesses for each transaction whether a businesscombination or an asset acquisition exists. A business combination
exists when the entity acquires controlling influence over abusiness/businesses. A business consists of activities and assets,
which at the minimum consist of inputs and substantial processes
that can produce goods or services to customers to provide returns
in the ordinary business.
For transactions where essentially the fair value of the acquired
assets consists of an asset or a group of similar assets, a simplified
assessment is recognized as an asset acquisition. The choice to use
the simplified assessment is applied transaction by transaction.
The Consolidated Accounts have been prepared using
application of the acquisition method, which involves eliminating
the acquisition cost of shares in subsidiaries against their equity at
the time of acquisition. Transaction costs related to acquisitions are
not included in the acquisition cost, but are expensed on an
ongoing basis. The equity acquired in the subsidiaries isestablished using a market-based evaluation of assets, liabilities
and contingent liabilities at the time of acquisition. The Group’s
equity thus includes only that part of the subsidiaries’ equity that
arose after the time of acquisition. In the event of businesscombinations where the sum of (i) the acquisition cost of shares insubsidiaries; (ii) the value of holdings without controlling influence;and (iii) the fair value of previous holdings exceeds the fair value
at the time of acquisition as regards the Group’s share of theidentifiable net assets required, the difference is recognized as
goodwill. A potential negative difference – negative goodwill – isrecognized as income immediately after being established.
The useful life of each individual intangible asset is establishedand then amortized over the established useful life. If the useful life
is deemed indefinite, no amortization is recognized. An assessmentthat causes the useful life of an intangible asset to becomeindefinite takes all the relevant circumstances into account and isbased on the premise that there is no predictable maximum time
limit for the net cash flow generated by the asset. The useful life of
goodwill is assumed to be indefinite and goodwill is not amortized.
If the initial recognition of a business combination is incompleteat the end of the reporting period when the business combination
took place, the amounts for items where recognition is incomplete
is recognized on a preliminary basis. These preliminary amounts
can be adjusted during the evaluation period, or additional assets
or liabilities can be recognized, to reflect new information
obtained about the facts and conditions that existed as of the time87

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MUNTERSR SI RNPGO ROTC2H0 H
Å L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| A N N U A L A N D S U SÅTANEADBOI LVI TI SYNRI E
20

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 202011of acquisition, and would have impacted the recognized amounts
at that time if the information had been available.
Contingent considerations are classified as financial liabilities
and re-evaluated every period to fair value. Re-evaluation profits
and losses, if any, are recognized in income for the year. If thebusiness combination is carried out in several steps, the previous
equity shares in the acquired company are re-evaluated to their fairvalues at the time of acquisition. Any resulting profit or loss arisingout of the re-evaluation is recognized in income for the year.
Munters has call options and has issued put options regarding
non-controlling participations, which were agreed on in
conjunction with the business combination. Depending on theconditions in the options as well as in the shareholder agreements,
each of the options are classified and recognized based on one of
the two following principles:

recognized in the income statement. Fair value is used as the initialrecognized value and constitutes the basis for the continued
recognition of the remaining holding as an associated company,
joint venture or financial asset.

• In the event the conditions are deemed to mean that all
economic benefits and disadvantages accrue to Munters rightfrom the time of acquisition, no non-controlling interest isrecognized but a liability equivalent to the fair value of the
future redemption price, on the other hand, is; changes invalue attributable to the liability are recognized over theincome statement. At 31 December 2020, Muntersrecognizes no options based on this principle.

• assets and liabilities are translated into the exchange rate on
the balance date;• In the event the conditions in the put/call options are notdeemed to mean that all financial benefits and disadvantages
accrue to Munters as of the time of acquisition, Muntersrecognizes non-controlling participation initially and allocatesthis part of the income. The Group also recognizes a liability
corresponding to the discounted expected redemption pricefor the options whereupon non-controlling participations
attributable to the options are eliminated. The difference
between liabilities for the options and the non-controlling
participations to which the options refer is recognized directlyin equity and disclosed separately from other changes inequity. The dissolution of the discounting effect is also
therefore directly recognized against equity. Muntersrecognized the option attributable to MTech Systems in the US
based on this principle.
N o n - c o n t r o l l i n g i n t e re s t s
In the event of acquisitions under one hundred percent but wherecontrolling influence is achieved, non-controlling interest isdetermined either as a proportional share of fair value on
identifiable net assets excluding goodwill, or at fair value. This
choice of principle is made for each individual businesscombination.
Non-controlling interests are recognized as individual items in
the Group’s equity. The Group’s earnings and each component inother comprehensive income are attributable to the Parent
Company’s owners and to non-controlling interests. Losses
attributable to non-controlling interests, if any, are also recognized
if it means that the share is negative. Transactions with noncontrolling interests that do not lead to loss of control arerecognized as equity transactions (i.e. as transactions with owners
in their role as owners). A change in holdings is recognizedthrough an adjustment of the recognized values for controlling andnon-controlling interests so that they reflect the changes in theirrelative interests in the subsidiary. Upon acquisition from noncontrolling interests, the difference between fair value of purchaseconsideration paid and the actual share acquired of therecognized value of the subsidiary’s net assets are recognized inequity. Profits and losses on divestments to non-controlling interests
are also recognized in equity.
When the Group no longer has controlling interest, eachremaining holding is evaluated at fair value at the time whencontrolling interest was lost. The change in recognized value is

88

Trans l at ion of t he ac c ount s , func t ional c urre nc y and re port ing
c urre nc y of fore ig n s ubs idiarie s
Items included in the financial reports for the various units in theGroup are valued in the currency used in the economic
environment where the respective companies primarily operate(functional currency).
The Consolidated Accounts are prepared in SEK, which is thefunctional and reporting currency of the Parent Company. Resultsof operations and financial condition for all Group companies thathave a functional currency other than the reporting currency aretranslated into the Group’s reporting currency as follows:• revenue and costs are translated into the average exchange
rate; and all exchange-rate differences that arise arerecognized in other comprehensive income.
Goodwill and adjustments of fair value that arise in connection
with acquisition of foreign operations are handled as assets andliabilities in that operations and are translated into the exchange
rate as of the balance date.
Exchange-rate differences attributable to translation of a net
investment in foreign operations are recognized in theConsolidated Accounts, together with exchange rate differences
attributable to borrowing or other financial instruments classified as
hedging instruments for such investments, in Other comprehensive
income and classified as hedge reserves in equity. Accumulated
gains and losses in equity are recognized in the income statement
when foreign operations are fully or partially divested.
The following foreign exchange rates have been used in translating
accounts:
Average rate

Closing rate

Currency

Country

2020

2019

2020

2019

AUD

Australia

6.34

6.57

6.26

6.51

CAD

Canada

6.86

7.13

6.40

7.13

CNY

China

1.33

1.37

1.25

1.33

DKK

Denmark

1.41

1.42

1.35

1.40

EUR

Euro zone

10.49

10.59

10.04

10.43

GBP

United Kingdom

11.80

12.07

11.09

12.21

JPY

Japan

0.09

0.09

0.08

0.09

NOK

Norway

0.98

1.07

0.95

1.06

SGD

Singapore

6.67

6.93

6.18

6.90

THB

Thailand

0.29

0.30

0.27

0.31

USD

United States

9.20

9.46

8.19

9.32

ZAR

South Africa

0.56

0.65

0.56

0.67

TRANSACTIONS IN FOREIGN CURRENCIESTransactions denominated in foreign currencies are translated into
the functional currency at the exchange rates that apply on thetransaction date. Exchange rate gains and losses that arise inconnection with payment of such transactions and upon translationof monetary assets and liabilities in foreign currency to theexchange rate on the balance date are recognized in the income
statement. Exchange rate differences concerning operatingreceivables and operating liabilities are recognized in EBIT, while
exchange rate differences attributable to financial assets andliabilities are recognized as financial income or financial expense.
Realized and unrealized exchange rate differences are thus
recognized in income for the year.

88

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SEGMENT REPORTING
Operating segments are reported using a method that tallies with
the internal reporting submitted to the chief operating decision
maker. The chief operating decision maker is the function
responsible for allocating resources and evaluating the Group’s
financial position and earnings. In Munters, this function has been
identified as Group Management. Group Management monitors
operations from a product-based perspective, which also
constitutes Munters’ operating segments: AirTech and FoodTech,
which are also the Groups reportable segments. The accounting
policies applied by the segments are the same policies applied by
the Group.
DISCONTINUED OPERATION
Since September 30, 2019 Munters is reporting a discontinued
operation, see further information in Note 9. The discontinued
operation relates to the disposal group that has been abandoned
constituting the European Data Centers-factory in Dison, Belgium.
According to IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations a single amount shall be disclosed in thestatement of comprehensive income comprising the total of the posttax profit or loss of the discontinued operation. A disclosure of thesingle amount is required and is presented in the separate note
together with a disclosure of cash flows from operating, investing
and financing activities related to the discontinued operation.
REVENUE RECOGNITION
Munters provides goods such as equipment, components and spareparts to customers within two operating segments. Customer
contracts can contain pure equipment orcomponent sales or salesof equipment including activities such as installation, startup andcommissioning services. Both equipment and installation, startup
and commissioning services are all distinct in accordance with thedefinitions in IFRS 15 meaning any bundled sales will compriseseveral performance obligations.
Sal e of g oods
The majority of customer contracts within Munters fulfill therequirement to recognize revenue at a point in time, which meansrevenue for the performance obligation to deliver equipment isrecognized when this performance obligation is satisfied (whencontrol passes of the equipment).
Customer contracts within the segment Data Centers within
AirTech fulfill the requirement to recognize revenue over time, i.e.
equipment is highly customized and customer contract terms
stipulate that cost incurred will be recovered with a reasonableprofit margin should the customer decide to terminate the contract.
Revenue for the performance obligation to deliver equipment isrecognized over time using a measurement of progress towards
complete satisfaction method. Munters uses an output method forthis purpose (equipment produced and passed internal quality
control), meaning number of equipment in relation to total
equipment in the customer contract.
Contracts including installation, startup and commissioning
activities (bundled sales) include several separate performanceobligations and the performance obligations to provide installation,
startup and commissioning services are satisfied over time, whichmeans revenue related to these performance obligations is
recognized over time according to the progress of completetion.
Revenue relating to these activities was already prior to IFRS 15
recognized over time as they were performed.
In a bundled sale the total transaction price is allocated to eachperformance obligation according to each performance obligations
relative standalone selling price.
There are in general no significant variable considerations in thecustomer contracts, but some contracts agree to volume and cash
discounts. In such cases an estimate is made of the variable

12

remuneration that is expected to be refunded to the customer andthat part of the transaction price is recognized as a liability.
R e n d e r i n g o f s e rv i c e
In addition to installation, startup and commissioning services thatcomes from bundled sales Munters provides other kind of services
to customers such as maintenance services. Revenue from service
contracts are recognized over time as the customer simultaneously
receives and consumes the benefits of the services.
W arrant y obl ig at ionsMunters provides assurance-type warranties where the warranty isa guarantee of quality of the goods provided. These warranties willcontinue to be accounted for under IAS 37 Provision, Contingent
Liabilities and Contingent Assets. Munters’ commitment to repair or
replace defective products in accordance with normal warranty
rules is reported as a provision, see Note 25 for details.
There are a number of contracts with customers that include
extended warranty. These warranties are regarded as service-typewarranties and accounted for as separate performance obligations
with revenue recognized over the contraced time.
I n t e re s t i n c o me
Interest income on receivables of long maturity is calculated using
the effective-interest method. Interest income includes the accrued
amount of transaction costs and any discounts, premiums, andother differences between the original value of the receivable andthe amount received when due.
Div ide nds
Dividends are recognized as revenue when the right to receive
payments has been established. This applies even if the dividends
are disbursed from profits resulting before the time of acquisition.
Consequently, the investment may need to be tested foramortization.
REPORTING OF GOVERNMENT GRANTS AND
GOVERNMENT ASSISTANC E
Munters, like other employers, was eligible for a number ofdifferent personnel-related government assistance during the year.
All government assistance relating to personnel-related expenses
are recognized in the income statement as cost reductions in thesame period as the corresponding underlying cost. Munters has
also received government grants in a few countries. When it’sreasonably certain that these grants will be received, they arereported as other operating income in the same period as theattributable costs arise.
WARRANTY COMMITMENTS
Warranty costs are recognized in cost of goods sold. Provisions forwarranty costs are calculated at a standard rate in an amount that
corresponds to the average warranty costs in relation to sales in
the most recent 24-month period, with an adjustment for known
warranty claims exceeding the standard provision. Provisions forwarranty commitments are related to the stated warranty period.
INCOME TAXESTax expenses for the period cover current tax calculated on taxable
earnings according to the prevailing tax rate. Current tax costs areadjusted with changes to deferred tax assets and liabilities
attributed to temporary differences and loss carry-forwards. Current
tax costs are calculated on the basis of the tax regulations decided,or decided in practice, in the countries where the Parent Company
and its subsidiaries operate and generate taxable income. Taxes
are recognized in the income statement except when theunderlying transaction is recognized directly in equity or other88
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comprehensive income, in which case the associated tax is also
recognized in equity or other comprehensive income.
Deferred tax is recognized on all temporary differences arising
between the carrying amount on assets and liabilities and theirrecognized tax base in the Consolidated Accounts. Deferred tax
liability, however, is not recognized if it arises out of the initialrecognition of goodwill. Nor is deferred tax liability recognized if
it arises out of a transaction constituting the initial recognition of anasset or liability that is not a business combination and at the timeof the transaction impacts neither recognized nor taxable earnings.
Deferred income tax is calculated by applying the prevailing tax
rate (and laws) that were decided or announced as of the balancedate and are expected to be in effect when the deferred tax asset
is realized or a deferred tax liability is settled. Deferred tax assets
on loss carry-forwards are recognized to the extent that it will bepossible to deduct such losses from future profits.
Deferred taxes attributed to temporary differences regarding
holdings in subsidiaries, associated companies or joint ventures
are recognized only to the extent to which the Parent Company
can control the timing of reversal of the temporary differences andthat it is probable that such a reversal will not occur in theforeseeable future. Deferred tax assets and liabilities are offset
when there is a legal right to offset for current tax assets and tax
liabilities, and when the deferred tax assets and liabilities are
attributed to taxes levied by the same tax authority and relate toeither the same tax subject, or different tax subjects when there isan intent to settle accounts through net payments.
TANGIBLE AND INTANGIBLE FIXED ASSETS
Non-current assets are recognized in the statement of financial
position at acquisition cost, less accumulated depreciationaccording to plan and any impairment losses. The assets ofacquired companies are recognized at fair value on the date ofacquisition, less accumulated depreciation or amortization.
The acquisition cost of the asset is depreciated or amortized on astraight-line basis to the estimated residual value over the
anticipated useful life of the asset. For anticipated useful lives, refer
to Note 8, Depreciation, amortization and impairment losses. Eachasset’s remaining useful life is tested at the end of each accounting
period, and adjusted as necessary.
Non-current assets with indeterminate useful life are recognizedin the statement of financial position at cost and tested for
impairment when there is an indication of impaired value or atleast once a year.
B uil ding s , mac hine ry and e quip me nt
Land is not subject to depreciation because it is considered to havean indefinite useful life. Normal maintenance and repair costs are
expensed as they arise. More extensive renovation and upgrade
costs are reported as an asset and depreciated over the remaining
useful life of the asset.
L e as ing
Leases are recognized as right-of-use assets and a corresponding
liability on the day that the leased asset is available for use by theGroup.
Assets and liabilities arising from leases are initially recognizedat present value. The lease liabilities include the present value ofthe following lease payments:• fixed payments (including in-substance fixed payments) after
deducting any incentives in connection with the signing of thelease as well as variable lease payments that depend on anindex or a rate, initially measured with the help of an index orrate on the commencement date;• amounts expected to be payable by the lessee under residual
value guarantees;90

13• the exercise price of an option to purchase the underlying
asset if the Group is reasonably certain to exercise that
option;• payments of penalties for terminating the lease, if the leaseterm reflects that the Group will exercise an option toterminate the lease.
Lease payments that will be made for reasonably certain options toextend the lease are also included in the measurement of theliability.
The lease payments are discounted by the lease’s implicit interest
rate. If this interest rate cannot be determined easily, which isnormally the case for the Group’s leases, the marginal loan rate isused, i.e. the rate that the individual lessee would paid to borrowthe necessary funds to buy an asset of similar value as the right-ofuse asset in a similar economic environment with similar terms andcollateral.
The Group is exposed to future increases in variable lease
payments based on an index or a rate, which are not included in
the lease liability until they take effect. When adjustments of lease
payments based on an index or a rate take effect, the leaseliability is remeasured and adjusted against the right-of-use asset.
Lease payments are divided between amortization of the liability
and interest. The interest is recognized in profit and loss over thelease term in a way that produces a fixed rate for the lease liability
recognized in each period. On the other hand, Munters has novariable payments such as turnover-based rents or the like.
Options to extend and terminate contracts are included in a
number of the Group’s leases primarily of factories. The terms areused to maximize flexibility. The overwhelming share of the options
to extend and terminate leases can only be exercised by the Groupand not by the lessors.
Munters has no appreciable residual value in the leases.
Right-of-use asset are measured at cost and include the following:• the amount that the lease liability was originally measured at;• lease payments paid on or before the commencement date,after deducting any incentives received upon signing thelease;• initial direct costs;• costs to restore the asset to the condition under the terms of
the lease.
Right-of-use assets are normally subject to straight-line depreciation
over the shorter of the useful life and the lease term. If Munters is
reasonably confident of exercising a purchase option, the right-ofuse asset is depreciated over the useful life of the underlying asset.
Payments for short-term leases and all leases of low-value assets
are expensed on a straight-line basis in the income statement.
Short-term leases have a term of 12 months or less. Leases of lowvalue assets include IT equipment, telephones and some officefurniture.
G oodw il l
Goodwill relates to the value by which consideration remitted, noncontrolling interest (if any) in one’s own company and the fairvalue of previous equity share in the acquired company at the dateof acquisition (if the business combination was carried out in steps)
exceed the fair value of identified net assets. If the amount falls
below fair value for the net assets acquired (in the event of an
acquisition at low price), the average difference is recognizeddirectly in the income statement.
Goodwill is not amortized, but the impairment is tested yearly or
more often if events or changes in circumstances indicate apossible decrease in value. Goodwill is reported at acquisition costless accumulated amortizations. In connection with the sale of a90

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unit, the recognized value of goodwill is included in the resulting
profit/loss.
P a t e n t s , l i c e ns e s a n d s i m i l a r i n t e l l e c t u a l p r o p e r t y r i g h t s
Direct external expenses for the development of software forinternal administrative use are capitalized, provided future
efficiency gains are probable and exceed the expenses committed.
Activities during the feasibility study phase, and maintenance andtraining costs, are expensed on an ongoing basis.
R e se arc h and de v e l opme nt
Costs for research are expensed as they are incurred. Researchoutlays are recognized as an intangible asset in the statement offinancial position, provided that it is technically feasible and alsothat the Group intends to complete the asset for use or sale. There
should also be conditions to use and sell the asset, and it should bepossible to demonstrate the probability of future financial benefits.
In addition, adequate resources are required to complete thedevelopment and to use or sell the asset. Outlays arising before thementioned criteria are met are expensed. Depreciation ofcapitalized development starts when the asset is complete andready to use. Amortization occurs on a straight-line basis over theuseful life, usually three to five years, and is recognized in thereport on comprehensive income as research and development
costs.
I mpairme nt t e s t
When there is an indication that a non-current asset’s value has
declined, the carrying amount of the asset is assessed. Goodwill
and other intangible assets with an indefinite useful life are
impairment tested on a yearly basis, or more often if there areindications of impairment.
I m p a i r m e n t t e s t i ng o f i n d i v i d u a l a s s e t s
In the event a recognized value of an asset exceeds its estimatedrecoverable amount, the asset is depreciated to its recoverable
amount. The recoverable amount is the higher of the asset’s fairvalue minus sales costs, and its value in use. The recoverable
amount is assessed individually for each cash-generating unit.
“Net sale value” refers to the most likely sale price in a normallyfunctioning market. “Value in use” refers to the present value of theestimated future cash flows that are expected to result from the useof the asset plus the estimate residual value at the end of the asset’s
useful life.
Value in use is normally measured using discounted cash flow
models, which requires assumptions of such parameters as a
discount rate, future cash flows, and the expenses necessary to
generate the estimated cash flows. Any impairment previously
recognized is reversed, if the recoverable amount is deemed to
exceed the carrying amount. The reversal amounts are limited suchthat a carrying amount must not exceed what it would have been if
no impairment had been recognized in prior periods.
I m p a i r m e n t t e s t i ng o f g o o d w i l l
For the purpose of testing the need for amortization, goodwill
acquired in a business combination is allocated to cash-generating
units or groups of cash-generating units expected to be favored bysynergies in the acquisition. Each unit or group of units goodwill
has been allocated to correspond to the lowest level in the group at
which the goodwill in question is monitored in internal governance.
The Group's cash-generating units consist of the Group's previous
four business areas: Air Treatment, FoodTech (formerly AgHort),
Data Centers, and Mist Elimination. The two later business areas
have been reorganized in 2019 and are now an integral part of
the AirTech business area. Impairment of goodwill is never
reversed.

14

INVENTORY
Inventory (raw materials and consumables, products in process andfinished products and goods for resale) is valued at the lower ofacquisition cost and net sales value. Net sales value is theestimated sale price in operating activities less applicable variable
sales costs. For products manufactured in-house, the acquisition
cost consists of direct manufacturing costs plus a reasonable shareof indirect manufacturing costs. Interest expenses are not includedin the value of inventory. Measurement has taken into accountnormal capacity utilization. The acquisition cost is determinedusing the first-in, first-out method. Otherwise, weighted average
cost may be used if this method is a good approximation of thefirst-in, first-out method. Required impairment is recognized forobsolescence based on each item’s age and rate of turnover.
FINANCIAL INSTRUMENTS
Financial instruments are all forms of contracts that give rise to afinancial asset in one company and a financial liability or anequity instrument in another company.
C l as s ific at ion
Munters classifies its financial assets and financial liabilities in thefollowing measurement categories:• those to be measured subsequently at fair value through profit
or loss (FVPL), and• those to be measured at amortized cost.
M e a s u re me n t
At initial recognition, the group measures a financial instrument at
its fair value plus, in the case of a financial instruments not at fairvalue through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial instruments.
Transaction costs of financial instruments carried at FVPL are
expensed in profit or loss. Subsequent measurement depends onthe group’s business model for managing the instruments and the
cash flow characteristics of the instruments. There are threemeasurement under IFRS 9.
A m o r t i z e d c os t
Instruments that are held for collection/payment of contractual cash
flows where those cash flows represent solely payments ofprincipal and interest are measured at amortized cost. Interest
income/expense from these financial instruments is included infinance income/expense using the effective interest rate method.
Any gain or loss arising on de-recognition is recognized directly in
profit or loss and presented in other gains/losses together withforeign exchange gains and losses. Impairment losses arepresented as separate line item in the statement of profit or loss.
F a i r v a l u e t h r o u g h o t h e r c o m p r e h e n s i ve i n c o m e ( FV OC I )Assets that are held for collection of contractual cash flows andforselling the financial assets, where the assets’ cash flows
represent solely payments of principal and interest, are measured
at FVOCI. Movements in the carrying amount are taken through
OCI, except for the recognition of impairment gains or losses,
interest income and foreign exchange gains and losses which arerecognized in profit or loss. When the financial asset isderecognized, the cumulative gain or loss previously recognized in
OCI is reclassified from equity to profit or loss and recognized inother gains/(losses). Interest income from these financial assets is
included in finance income using the effective interest rate method.
Foreign exchange gains and losses are presented in othergains/(losses) and impairment expenses are presented as separate
line item in the statement of profit or loss.

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F a i r v a l u e t h r o u g h p r o f i t a n d l o s s s t a t e me n t ( F V P L )Instruments that do not meet the criteria for amortized cost or
FVOCI are measured at FVPL. A gain or loss on a debt investmentthat is subsequently measured at FVPL is recognized in profit or loss
and presented net within other gains/(losses) in the period inwhich it arises.

The impairment methodology applied depends on whether there
has been a significant increase in credit risk. For trade receivables,
the group applies the simplified approach permitted by IFRS 9,which requires expected lifetime losses to be recognized frominitial recognition of the receivables, see Note 17 for further
information.

A c c o u n t s r e c e i v a b le a n d o t h e r r e c e i v a b l e s
As the expected tenor of accounts receivable is short, they arerecognized at the amount expected to be paid based on estimatedcredit losses with consideration of historical default rates. Any
amortization of accounts receivable affects operating profit or loss.
Accounts receivables and other receivables are measured atamortized cost.

O ffse t t ing of financ ial ins t ru me nt s
Financial assets and liabilities may be offset against each otherand recognized net in the Consolidated Accounts in cases where
Munters has agreed with the counterparty that assets and liabilities
will be netted. No offsetting has taken place in the statement offinancial position.

De riv at iv es
Derivatives are recognizes in the statement of financial position on
the trading date and measured at fair value both initially and in
subsequent revaluations at the end of every reporting period.
Changes in value are recognized in the income statement, no
hedging is applied.
C a s h a n d c a s h e q u i v a l e n ts
Cash and cash equivalents are defined as cash, bank balances,
investments in securities maturing in three months or less andutilized overdraft facilities. Utilized overdraft facilities arerecognized in the statement of financial position as current
liabilities.
A cc ou n t s pay abl e an d ot h e r pay abl e s
Accounts payable are commitments to pay for goods and services
acquired from suppliers in operating activities. The amounts areunhedged and most often paid within 30 days. Accounts payable
and other liabilities are classified as current liabilities if they fall
due within one year. If not, they are recognized as non-current
liabilities. Accounts payables and other liabilities are measured atamortized cost.
B orrow ing
Borrowing is initially recognized at fair value, net after transaction
costs. It is subsequently recognized at amortized cost, and any
difference between the amount received and the amount repaid isrecognized in the income statement, allocated over the borrowing
period using the effective-interest method.
Fees paid for loan facilities are recognized as transaction costs
for borrowing to the extent it is probable that the credit line will be
used, either in whole or in part. In such cases, the fee isrecognized when the credit line is used. When no proof exists that
it is probable the credit line will be used, either in whole or in part,the fee is recognized as an advance payment for financial services
and allocated over the tenor of the loan commitment in question.
C o n t i n g e n t p u r c h as e c o n s i d e r a t i o n sContingent purchase considerations are initially and thereafter,
recognized at fair value in the statement of financial position.
Changes in value are recognized in the income statement, or
alternately in other operating expenses.
Re c og nit ion and de re c og nit ion
Regular way purchases and sales of financial assets arerecognized on trade-date, the date on which the group commits topurchase or sell the asset. Financial assets are derecognized when
the rights to receive cash flows from the financial assets have
expired or have been transferred and the group has transferred
substantially all the risks and rewards of ownership.
I mpairme nt
The Group assesses on a forward looking basis the expected credit
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PROVISIONS
Provisions are recognized when the Group has or may beconsidered to have an obligation as a result of events that haveoccurred, and where it is probable that payments will be required
to fulfill the obligation. An additional prerequisite is that it must be
possible to reliably estimate the amount to be paid. Provisions for
restructuring measures are allocated when a detailed, formal planfor the measures is established and well-founded expectations havebeen created among those who will be affected by the measures.
Provisions are measured as the present value of the amount
expected to be required to settle the obligation. In this connection a
discount rate before tax is used that reflects a current market
assessment of the time value of money and the risks associatedwith the provision. The increase in the provision owing to time
passing is recognized as an interest expense.
CONTINGENT LIABILITIES AND CONTINGENTASSETSContingent liabilities are reported when there are possible
obligations relating to transpired events that will only become
actual obligations given the occurrence or non-occurrence of oneof more uncertain future events that are not entirely within thecontrol of Munters. Contingent liabilities may also be an obligation
arising from transpired events but not reported as a liability or aprovision because it is not probable that the obligation will besettled or because the amount of the obligation cannot becalculated with sufficient reliability.
A contingent asset is a possible inflow of resources and is notrecognized as an asset in the statement of financial position before
it is as good as certain that an inflow of resources will arise as an
asset.
EMPLOYEE BENEFITS
S h o r t - t e r m e m p l o y e e b e n e f i ts
Liabilities for salaries and benefits expected to be settled within 12
months after the end of the fiscal year are recognized as current
liabilities at the undiscounted amount that is expected to be paid
when the liabilities are settled. The cost is recognized as theservices are performed by the employees.
P o s t - e m p l o y m e n t b e ne f i t s
Within the Group, there are several defined-contribution as well as
defined-benefit pension plans and other non-current employee
benefits, including some with pension plan assets.
De fine d- c ont ribut ion pe ns ion pl ans
In defined-contribution pension plans, the Group pays apredetermined premium to a separate legal entity and does nothave any legal or informal obligation to make additional payments
if, when compensation to the employee is to be paid, the legal
entity has insufficient assets. The Group’s payments relating todefined-contribution plans are recognized as an expense during
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expense relates. Deferred fees are recognized as an asset to theextent that cash repayment or reduction in future payments can beof benefit to the Group.
D e f i n e d - b e ne f i t p e n s i o n p l a n s
All other plans for post-employment benefits other than definedcontribution plans are defined-benefit plans. The liability or asset
regarding defined-contribution pension plans that is recognized in
the statement of financial position is the present value of thedefined-benefit obligation at the end of the reporting period lessthe fair value of the plan assets. The defined-benefit pension
obligation is calculated annually by independent actuaries using
the projected unit credit method. The present value of the definedbenefit obligation is established by discounting estimated future
cash flows using the interest rate for high-quality corporate or
housing bonds issued in the same currency that the benefits will be
paid in, with tenors comparable to the pension obligation inquestion.
For Swedish plans, the discount rate equals the housing bondrate. Net interest is calculated by applying the discount rate todefined-benefit plans and to the fair value of the plan assets. This
cost is included in labor costs in the income statement.
Revaluation gains and losses arising out of experience
adjustments and changes to actuarial assumptions are recognizedin other comprehensive income during the period in which theyarose. They are included in profit brought forward in the statementof changes in equity and in the statement of financial position.
Expenses for employment during previous periods are recognizeddirectly in the income statement. Expenses for the year for
employment in the current year are recognized in administrative
costs and the interest expense for the defined-benefit net liability isrecognized in financial expenses in the income statement.
Special employer’s contribution in Sweden is calculated on the
difference between the pension obligation adopted according to
IAS 19 and according to the rules applied for the legal entities.
Calculated future employer’s contribution is recognized in thestatement of financial position as a part of the pension obligation.
The change in the provision is recognized, to the extent that it
pertains to the effects of revaluations, in other comprehensive
income.
Share - bas e d payme nt
The Group has a number of share-based payment plans where thecompany obtains services from employees as consideration for theGroup’s equity instruments. Information on these plans is disclosed
in Note 32.
E mpl oye e s t oc k opt ion prog ram
The fair value of the service that entitles employees to an allotmentof options through the Munters employee stock option program isrecognized as a staff cost with a corresponding increase in equity.
The total amount to expense is based on the fair value of theoptions that are allotted:• including all market related terms (e.g., target share price)• excluding any impact from service terms and non-market
related terms for vesting (e.g., profitability, sales goals andthat the employee remains employed by the company for agiven period of time),• including the impact of terms that do not constitute vestingterms (e.g., requirement that employees retain the shares for agiven period of time).
The total cost is recognized over the vesting period, i.e., the period
over which all the specified vesting terms will be met. At the end ofeach reporting period, the Group reevaluates its assessments of
how many shares are expected to be vested based on the nonmarket related vesting terms and the service terms. Any differencecompared with the original estimates that the revaluation gave rise16

to is recognized in profit or loss with corresponding adjustments inequity.
The social security contributions that arise on the allotment ofstock options are regarded as an integral part of the allotment, andthe cost is treated as cash settled share-based payment.
When the options are exercised, the correct number of sharesare transferred to the employee. Payments received, after
deducting any directly related transaction costs, are credited toequity.
Synt he t ic opt ionsShare-based payment settled in cash is recognized as staff costs
over the time the service is performed. The fair value of the liability
is remeasured at the end of each reporting period and recognized
as a commitment for employee benefits in the balance sheet.
SHARE CAPITAL
Ordinary shares are classified as equity. Mandatory redeemablepreferential shares are classified as liabilities. Transaction costs
that can be directly attributed to issue of new shares or options arereported, net after tax, in equity as a deduction from proceeds.
DIVIDENDS
Dividends to the Parent Company’s shareholders are recognized as
a liability in the Group’s financial reports in the period when thedividend was approved by the Parent Company’s shareholders.
EARNINGS PER SHARE
Earnings per share before dilution are calculated by dividing
earnings attributable to the Parent Company’s shareholders,
excluding dividends attributable to preferential shares, by aweighted average number of ordinary shares outstanding during
the period. Earnings per share after dilution are calculated byadjusting the amount used for calculating earnings per share
before dilution through observing the effect after tax of dividends
and interest expenses on potential ordinary shares and of theweighted average of additional ordinary shares that would havebeen outstanding in the event of a conversion of all potential
ordinary shares.
RELATED PARTY DISCLOSURESThe companies related to Munters are defined as the Parent
Company, subsidiaries, and associated companies with anownership exceeding 10% (FAM AB) as well as other companies
managed by FAM AB. “Related physical persons” are defined as
Board members, senior executives, and close family members ofsuch persons. Companies in which any of the mentioned physicalpersons have significant influence are also defined as companies
related to Munters. Information on transactions that entail a transfer
of resources, services, or obligations between related parties isdisclosed, regardless of whether or not remuneration is paid. The
disclosure contains information as to the character of therelationship and the effect of the relationship on the financial
statements.
EVENTS AFTER THE END OF THE REPORTING
PERIODIf events arise that are significant but should not be taken into
account when the amounts in the statement of comprehensive
income and statement of financial position are adopted, then thecharacter of the event and, if possible, an estimate of its financial
impact will be disclosed in the Board of Directors’ Report andnotes. “Significant” implies that an omission to disclose theinformation could influence financial decisions made by users of
the financial statements.
Significant events that confirm the situation existing at the end of
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to the signing of the Annual Report will results in adjustments to theamounts in the Annual Report.
ACCOUNTING POLICIES OF THE PARENT COMPANY
The Parent Company’s Annual Report has been prepared inaccordance with the Annual Accounts Act and with the applicationof the Swedish Financial Reporting Board’s recommendation RFR 2– Accounting for Legal Entities. This means that IFRS are appliedwith the deviations and additions presented below.
F i n a n c i a l s t a t e m e nt s
Under the requirements in RFR 2, the Parent Company’s financial
statements deviate from those presented for the Group. This meansthat the Parent Company has the following five statements in the
Annual Report: income statement, other comprehensive income,balance sheet, statement of cash flow and statement of changes inequity.
F in an c ial in s t ru me n t s : R ec og n it ion an d me as u re me n t
The Parent Company does not apply IFRS 9 Financial Instruments.
Instead, measurements are based on the acquisition costs of assets
and liabilities.
O w ne r s h i p o f s u b s i d i a r i e s
Holdings in subsidiaries are recognized in the Parent Company
using the cost method. If there are indications of a decline in value,
the value is tested and, if required, the holdings are impaired.
G roup c ont ribut ions
The Parent Company recognized all Group contributions, paid andreceived, as appropriations.
Share hol de rs ' c ont ribut ion
Shareholders' contributions from the Parent Company arerecognized directly in the receiver’s equity and capitalized in theshares and participations of the Parent Company, to the extent
impairment is not required.
L e as ing
In the event that the Parent Company has any leases, these are notrecognized in the balance sheet but are expensed linearly over thecontract period of the lease.

NOTE 2 SIGNIFICANT ESTIMATES AND
ASSESSMENTS
In preparing the financial statements, Group management and theBoard of Directors makes assessments and assumptions that affectthe final accounts and disclosures. These assessments are based on
experience and the various assumptions that management and theBoard consider reasonable under the prevailing circumstances. The
conclusions thus drawn form the basis for determinations
concerning carrying amounts of assets and liabilities in cases
where they cannot be readily determined using information fromother sources. Actual outcomes may differ from these assessments,
if other assumptions are made or other conditions applied.
The estimates and assessments that are considered to have thegreatest impact on Munters earnings and financial position are
outlined below.
M e a s u re me n t o f g o o d w i l l
The Group tests for impairment of goodwill each year. This test
requires an estimation of parameters affecting future cash flows
and a determination of a discount rate. Then the recoverable
amount of each individual cash-generating unit is established by
calculating the value in use. Note 15 presents the significant
assumptions made to test goodwill and describes the effects of94

17

reasonable and possible changes to the assumptions on which thecalculations were based. At the end of 2020 the Group
recognized goodwill to a value of MSEK 3,952 (4,348).
A c q u i r e d i n t a n g i b l e a s s e ts a n d e s t a b l i s h i n g u s e f u l l i v e s
When businesses are acquired, the intangible assets acquired aremeasured at fair value. In cases where there is an active market for
the acquired assets, the fair value is determined based on prices inthat market. Because active markets are often lacking for theseassets, valuation models have been developed to estimate fairvalues. One example of a valuation model is discounted future
cash flows. These assets are amortized based on established useful
lives. Company management makes assumptions and judgements
regarding how long each asset will generate financial benefits for
the Group. At the end of 2020 the Group recognized Technology,
Customer relationships and Brands to a value of MSEK 1,126(1,278).
D e v e l o p m e n t e x p e ns e sDetermining whether an intangible asset resulting fromdevelopment should be recognized as an asset requires anassessment of the extent to which certain specific conditions are
satisfied. With regard to capitalized development projects,
management’s assessment is that their technical and financial
feasibility are confirmed. At the end of 2020 the Group
recognized intangible assets regarding product development to avalue of MSEK 165 (140).
D e f e r r e d t a x a s s e ts o n l o s s c a r r y -f o r w a r d s
The Group recognizes deferred tax assets on loss carry-forwards tothe extent that it is probable such losses can be deducted fromfuture profits. The actual outcome may deviate from theassessments made because of factors such as changes in thebusiness climate or to tax regulations.
At the end of 2020 the Group’s total tax loss carry-forward was
MSEK 1,242 (1,307). In the consolidated balance sheet, a value
for tax purposes of capitalized loss carry-forwards was recognizedin the amount of MSEK 64 (90) relating primarily to Sweden,
Australia, the Netherlands, Mexico and Germany.
C o n t i n g e n t p u r c h as e c o n s i d e r a t i o n s
A contingent purchase consideration in connection withacquisitions is often dependent on future financial performance
related to the acquired unit. Actual results may differ from theseassumptions, which involve changing a previously recognizedcontingent consideration.
L e g al dis pu t es
Provisions for legal disputes are estimates of the future cash flowsthat will be required to settle the obligations. The disputes primarily
relate to contracted obligations attributable to contracts withcustomers and suppliers, though other types of disputes also arise
in normal business operations.
Group Management considers it improbable that any of the
known disputes in which Munters is currently involved, and where
no provisions have been recorded, will have a significant negative
impact on the Group’s accounts.
R e ve n u e r ec o g n i t i o n
A number of customer contracts fulfill the requirement to berecognized over time based on the degree of completion. The
forecasts for each contract constitute an estimate of final revenue
and expenses.
L e as ing
When defining the lease period, management takes into accountall available information that provides a financial incentive to
exercise an extension option, or not to exercise an option to94

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terminate a contract. Opportunities to extend a contract areincluded only in the lease period if it is reasonable certain toextend the contract (or not terminate the contract). The majority ofthe extension options in lease agreements of office premises andvehicles have not been included in the reported lease liability as
the Group can compensate the assets without significant costs orinterruptions in the business. On the other hand, for leaseagreements of factories, it is more common that extension options
are included in the valuation, especially where the Group has
spent improvement expenditure in the factories in order to adapt
them to Munters operations or otherwise estimates that it would
involve costs and interruptions in the business if the contact isterminated. The lease period is reconsidered if an option is
exercised (or not exercised) or whether the Group is required toexercise the option (or not take advantage of it). The assessment of
whether it is reasonably certain is reconsidered only if there is any
material event or change in circumstances affecting this assessment
and the change is within the lessee's control.

NOTE 3 FINANCIAL RISK MANAGEMENT
Through its operations in a global environment, Munters is exposed
to several different financial risks, such as currency risk, interest
rate risk, credit risk, and liquidity risk.
The financial risks are controlled and managed based on afinancial policy approved by the Board of Directors. The policy
covers the entire Group and is updated on an annual basis. The
purpose of the policy is to create a framework for managing thevarious financial risks. Risk management and financing activities
are handled centrally by CFO and the Group Treasury function,
monitored and controlled by the Board of Directors, Audit
Committee and CEO. The overall objective is to limit the volatility
attributable to financial factors in the income statement andbalance sheet, protect financial assets and future cash flows, aswell as optimize the Group’s financing and meet financial
covenants in banking agreements. The Treasury function, whichacts as the Group’s internal bank, identifies, evaluates, and hedges
financial risks in close cooperation with the Group’s operational
units.
Percentage ofrevenue

Percentage
of costs

Currency

2020

2019

2020

2019

USD

43.1%

41.8%

41.4%

37.7%

EUR

23.8%

25.2%

24.5%

28.7%

CNY

14.3%

12.2%

11.3%

9.4%

SEK

2.8%

3.8%

9.5%

3.5%

JPY

2.5%

1.8%

2.2%

1.2%

GBP

2.3%

2.7%

2.0%

2.4%

BRL

1.5%

1.5%

0.8%

1.4%

AUD

1.5%

1.3%

1.1%

0.6%

DKK

1.3%

1.4%

1.2%

1.2%

KRW

1.2%

1.1%

0.6%

0.6%

THB

1.1%

3.5%

1.0%

4.0%

SGD

0.8%

1.1%

0.5%

0.6%

Other

3.7%

2.7%

3.7%

8.6%

Total

100%

100%

100%

100%

C urre nc y ris k
Due to Munters global presence, the Group is exposed totransaction exposure by transactions in foreign currency andthrough translation exposure when translating income statements
and balance sheets into SEK.

18

Trans ac t ion e xpos ure
Group internal sales in foreign currency primarily occur through theGroup’s production companies, which invoice the Group’s sales
companies in their functional currency. By doing so, transaction
exposure and hedging operations are concentrated to a few
companies in the Group.
The hedging of transaction exposure shall primarily occur
through so-called natural hedges, whereby incoming and outgoing
cash flows in foreign currencies are matched in order to minimize
the net exposure. For example, Munters has decided to have majorpart of its external loans in USD to get a natural hedge towards thelarge inflows of USD presented in the table above. Otherwise,
hedging shall primarily occur through forward selling of currency.
The value of forward contracts at year-end was MSEK -2.3 (4.9),
see Note 19. Munters does not apply hedge accounting for thesefinancial instruments.
A significant proportion of Munters’ income and expense isgenerated in foreign currencies, of which the most significant arepresented in the table above. The geographic distribution of
Munters’ production plants results in a matching of revenues andexpenses in local currencies, which limits the currency exposure.
Munters’ sensitivity to variations in exchange rates is presented in
the table below. The analysis includes transaction exposure and isbased on EBIT for 2020. All other factors influencing earnings are
assumed unchanged in the calculation.
Estimated effect on
EBIT
SEK +10% compared with

MSEK

USD

-47.9

CNY

-34.3

EUR

-14.6

BRL

-6.0

KRW

-5.3

AUD

-4.3

INR

-4.2

GBP

-3.9

JPY

-3.9

MXN

0.7

CZK

2.2

ILS

6.8

Other currencies

-15.1

Total

-129.9Trans l at ion e xpos ure
A large proportion of Munters’ subsidiaries have net assets in theirfunctional currency, which is different from the Group’s reporting
currency. When these are translated into SEK, translationdifferences arise which are recognized in other comprehensive
income. Translation differences attributable to net investments inforeign currency are not hedged. However, pursuant to thefinancial policy, this is monitored and calculated regularly in orderto determine its impact on earnings and financial position. The
effect on other comprehensive income of the translation of foreignsubsidiaries’ net assets into SEK totaled MSEK -325 (122). Thisrefers mainly to subsidiaries that have USD, EUR and CNY asfunctional currency.
I n t e re s t r a t e r i s k
Interest rate risk refers to the risk of the value of financial
instruments and interest-bearing assets and liabilities changing due
to changes in interest rate levels. To ensure efficiency and risk
control according to policy, the majority of borrowings aremanaged by the Group Treasury function.
Munters is exposed to interest rate risk through interest-bearing
borrowings, which are one of the Group’s sources of financing in
addition to equity and cash flow from operating activities. Interest-

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MUNTERSS RIENDAOBVI LI ISTN
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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

bearing borrowings consist primarily of a long-term bank loan witha variable interest rate. In addition, few subsidiaries are permitted
to keep individual third party bank debt.
The Group has no significant interest-bearing assets besides bankbalances, so revenues and cash flow from operating activities arelargely independent of changes in market interest rates.
The Group had at the end of 2020 no outstanding interest rate
derivatives.
I n t e re s t e x p o s u r e
The average fixed interest term for the Group’s external loans was
2 months (2) at year-end 2020. If the interest rate increases with
one percentage in all countries where Munters has loans orinvestments, the impact on net financial income and expense would
be approximately MSEK 20 (26). This sensitivity analysis assumes
that all other factors, such as exchange rates, remain unchanged.
C re dit ris k
Credit risk is the risk of Munters incurring losses due to a
counterparty failing to pay.
C re dit e xpos ure
For Munters, the predominant portion of credit risk relates toaccounts receivable. Munters works actively to limit this risk. An
approved credit rating is required for a counterparty to beapproved. Advance payment is generally encouraged, and partial
advance payment is required when the value of the order is asignificant amount and delivery extends over a long period of time.
Accounts receivable are also mainly spread among manycustomers, primarily companies in different industries and withwide geographical distribution, which limits concentration of thecredit risk. The Group’s five largest customers accounted for 13%(8) of total revenues, calculated on a full-year basis. At December
31, 2020, the five largest customers accounted for 7% (13) of total
outstanding accounts receivable.
To ensure that the Group’s accounts receivables are paid, themanagement of receivables is regulated in a special policy.
According to this policy, each business unit must have establishedand documented processes for handling unpaid receivables. The
documented processes include specifications of time limits fortaking various actions, including legal action, as well as who is
responsible at various stages of the process. Documentation ofactions taken ensures that follow-up is possible. The measures arematched to amounts and to different groups of customers andbusiness areas in a manner that will result in efficient handling of
overdue accounts receivable.
C ount e rpart y e xpos ure
A list of approved counterparties and maximum exposure to eachapproved counterparty is established in the financial policy.
Approved counterparties should be characterized by high ethicalvalues and have a credit rating of at least A-/A2 according toStandard & Poor’s/Moody’s credit assessments. Exceptions may
sometimes be made for local banks, but such cases must have theadvance approval of the CFO.
L iquidit y r is kLiquidity risk refers to the risk of Munters, at a given point in time,
not having sufficient liquidity to cover expected or unforeseen
expenses.
The liquidity reserve is defined as bank balances or invested
funds that can be released within two banking days without any
additional or minor cost, plus any unutilized credit facilities,
committed for minimum 12 months, less any outstanding
uncommitted debt. Management continually monitors forecasts ofGroup cash flows and liquidity reserves to ensure that the Group
has sufficient funds to satisfy the needs of operating activities andto cover interest payments and loan repayments. According to the96

19

financial policy, the long-term liquidity reserve shall exceed anamount equivalent to 1.5 months of disbursements. Short term theliquidity reserve can fall below that level to MSEK 350. A risk to
go below the permitted threshold level requires immediate actions.
At the end of 2020, the Group had unutilized credit facilities of
MSEK 2,042 (985). The Group’s total liquidity reserve lessrestricted cash per end of 2020 amounted to MSEK 2,770(1,496).
Group Treasury works actively to ensure an effective cash
management structure within the Group by centralizing the liquidity
to the parent company through cash pools and other form of
sweeping mechanisms. Cash surplus shall primarily be used to
repay on external debt. The Group’s cash and cash equivalents
shall be deposited in bank accounts or high-liquidity interestbearing instruments. Any surplus liquidity in subsidiaries shall bedeposited with Group Treasury. By securing accessibility toguaranteed long-term credit facilities, spreading maturities andsources of financing for borrowings, the Group will avoid
expensive financing and refinancing difficulties. For more
information about the Group’s borrowings, see Note 20.
C apit al s t ruc t ure
Munters aims to have a capital structure that ensures long-term
stability in operations, satisfies various investment requirements andsafeguards the value of the Group. Munters endeavors to ensurethat Group’s subsidiaries shall have an optimal capital structure
relating to financing requirements, foreign exchange and tax
regulations in each jurisdiction. Subsidiary financing shall mainly
be done by internal loans or capital contributions. Requirements in
the Groups external loan agreement and common praxis following
the type of business of the individual subsidiary and country shallbe taken into consideration when deciding form of financing. An
analysis of the subsidiaries’ capital structure is done on a yearlybasis to secure that the different requirements are met.

NOTE 4 NET SALESSat is fac t ion of pe rform anc e obl ig at ions and p ayme nt t e rms
Munters overall supply consists of goods, such as equipment,
components and spare parts, and services, such as installation,
startup commissioning and maintenance services, within two
different operating segments: AirTech and FoodTech.
Customer contracts range from pure component deliveries,
mainly within FoodTech and in segment Mist Elimination within
AirTech, to contracts comprising equipment, installation, start-up
and commissioning services, mainly within AirTech.
The performance obligation to deliver goods within AirTech(excluding segment Data Centers) and FoodTech is in the great
majority of contracts satisfied when Munters delivers the goods
according to the delivery terms in the contract, however there arecontracts within AirTech that are satisfied over time as Muntersproduces the goods. The performance obligation to deliver goods
in segment Data Centers within AirTech is satisfied over time as
Munters produces the goods. This because the Data Centerscustomer contracts are customer-specific deliveries without
alternative use for Munters and with the right to recovere cost
incurred with a reasonable profit margin should the customer
decide to terminate the contract.
Installation, startup and commissioning services are services
satisfied over time as Munters performs The same relates toaftermarket services, such as maintenance services and extended
warranties, and services and subscription contracts within Munters
software delivery.
Within FoodTech and in segment Mist Elimination within AirTech,
payment terms are in general at point of delivery, which also
correlates to time of revenue recognition Within AirTech andespecially within segment Data Centers customer advance payment

96

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C ont rac t bal anc e s
Accounts receivables are non-interest bearing receivables with ageneral payment term of 30-90 days. Within FoodTech andsegment Mist Elimination within AirTech revenue recognition andbilling in general aligns. However, within FoodTech there arecontracts with billing annually in advance. These contracts qualifies
for revenue recognition over time and therefore deferred revenue
balances arises. Within FoodTech there is also other contracts
qualifying over where payment terms deviates from revenue
recognition, which result in both deferred revenue and accrued
income balances.
Within AirTech it is common with advanced billings, which
creates advances from customers. Within AirTech the great
majority of customer contracts qualifies for at a point in timerevenue recognition meaning that once equipment are delivered,revenue is recognized fully for that performance obligation andany advances in the balance sheet is netted off and remainingbalance is recognized as an accounts receivable.
However, within segment Data Centers within AirTech the great
majority of the customer contracts qualifies for over time revenue
recognition meaning that as soon as the measurement of progressof a performance obligation exceeds any advanced billings
contract assets are recognized due to the fact that the billing terms
does not allow for further billing until further milestones have beenreached.

is generally encouraged, and partial advance payment is required
when the value of the order is a significant amount and delivery
extends over a long period. In these customer contracts, there is nota one to one correlation between payment terms and revenue
recognition, which creates customer balances in the financial
statement.
A l l oc at ion of N e t s al es
The majority of customer contracts within Munters operating
segments AirTech (excluding segment Data Centers) and FoodTech
fulfill the requirements to recognize net sales at a point in time,even though there are a number of customer contracts within thesebusiness areas that requires to recognize net sales over time, whichis reflected in the below matrix. In contrast, the majority ofcustomer contracts within segment Data Centers within AirTech
requires to recognize net sales over time.
In addition equipment sales Munters also provides different kindsof services to customers such as installation, commissioning, startup
and maintenance. Net sales from services are recognized overtime as these services are performed.
Allocation of the transaction price in a customer contract withseveral performance obligations is based on standalone selling
prices.
AirTechFoodTech

Total

Goods transfered at a point in time

3,136

1,883

5,019

Goods transfered over time

1,408

59

1,466

2020

Services transfered over time

397

150

546

4,940

2,091

7,031

16

-

16

4,924

2,091

7,015

AirTechFoodTech

Total

Goods transfered at a point in time

3,509

1,793

5,302

Goods transfered over time

1,361

57

1,418

Total
Related to the discontinued operation
Related to the continuing operation

2019

Services transfered over time
Total

457

151

608

5,327

2,002

7,329

Related to the discontinued operation

176

-

176

Related to the continuing operation

5,151

2,002

7,153

20

Contract balances

2020

2019

Accounts receivables (Note 17)

935

1,050

Accrued income (Note 18)

255

193

whereof Contract asset

252

181

Advances from customers

509

374

Deferred revenue (Note 26)

51

63

Contract liabilities

Trans ac t ion pric e al l oc at e d t o re maining pe rformanc e
obl ig at ions
For information on the aggregate amount of the transaction priceallocated to the performance obligations that are unsatisfied (orpartially unsatisfied) as of the end of the reporting period (Orderbacklog), see segment information in Note 6.

NOTE 5 INFORMATION ON COST BY NATURE

2020 Group

Cost ofgoods soldMaterial costs

Sales costs

Administrative
costs

R&D costs-2,944---

Other production costs

-846

-

-

-

Personnel and other administration

-711

-733

-500

Cost of depreciation

-147

-144

-38

-34

-5

Amortization and write downs on intangible assets

-3

-47

-4

-33

Other costs

-17

Total

-

-

Other costs

Total

-

-2,944

-52

-898

-71

-2,162
-

-

-221

-1

-87

-23

-41
-6,353-4,665

-818

-538

-186

-148

2019 Group

Cost ofgoods sold

Sales costs

Administrative
costs

R&D costs

Other costs

Total

Material costs-2,993-----2,993

Other production costs

-907

-

-

-

-

-907

Personnel and other administration

-701

-837

-564

-162

-

-2,264

Cost of depreciation

-130

-36

-41

-6

-

-213

Amortization and write downs on intangible assets

-3

-97

-4

-30

-

-134

Other costs

-87

-

-

-

-7

-94

-4,822

-970

-610

-197

-7

-6,606

Total

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Other costs include restructuring costs of MSEK 124 M (-), linked tothe decision to take another step in the implementation of thestrategy, focused on sharpening the customer offering and footprint
optimization measures, primarily within the AirTech business area.
The restructuring costs relate to severance costs, warranty claims

21

and winding down activities in connection with the exit of the noncore part of the commercial business in the US, a consolidation of
the operations in the Netherlands and some additional measures toensure the implementation of the strategy.

NOTE 6 OPERATING SEGMENTS
R e p o r t a b l e o p e r a t i n g s e g me n t s
The Group’s reportable operating segments have been identified
from a management perspective. Thus, the segment information
disclosed is based on internal reporting to the chief operating
decision maker, which at Munters has been equated with Groupmanagement. The Group’s operations are managed and reported
by two business segments, AirTech and FoodTech.
Air Treatment manufactures and markets products and holistic
solutions for controlling humidity and improving the indoor climate.
Customers’ manufacturing processes and warehousing are
becoming more efficient and product quality, shelf life, andhygiene are improving.
In 2019, the previous operating segments Data Centers and Mist
Elimination were integrated into AirTech. The Data Centersbusiness is active in indoor climate systems for medium-sized tolarge data centers. Mist Elimination manufactures and markets
environmentally friendly solutions and products for drip capture,including the purification of flue gas. The comparative figures havebeen restated in accordance to the new business segments.
FoodTech manufactures and markets energy-efficient products andsystems to create the right indoor climate for the animal husbandry
and horticultural industries.
Business segment consolidation is performed applying the same
policies as for the Group as a whole. Transactions between
business segments are conducted on market terms. Key control andreporting concepts are order intake, net sales, EBIT, and operating
working capital. No individual external customer represents 10%
or more of Munters’ sales.

AirTechOrder backlog
Whereof recognized to net sales within one year

Other &
Eliminations 1)

FoodTech

Total

2020

2019

2020

2019

2020

2019

2020

2019

1,737

1,780

516

526

0

0

2,253

2,307

1,583

1,626

437

425

0

0

2,020

2,051

Order intake

5,101

5,253

2,196

2,087

-48

-38

7,249

7,302

Sales from external customers

4,924

5,151

2,091

2,002

0

0

7,015

7,153

13

8

35

31

-48

-38

0

0

4 ,9 3 7

5 ,1 5 9

2 ,1 2 6

2 ,0 3 2-48-38

7 ,0 1 5

7 ,1 5 3

Earnings before interest and tax (EBIT)

565

565

291

226

-149

-236

707

556

Change in accounts receivable

82

Transactions between business segments
Net sales

125

-44

28

85

-42

40

110

Change in inventories

-4

22

8

25

0

0

4

47

Change in accrued income

-88

-50

-15

-4

0

0

-103

-54

Change in acounts payables

-10

8

28

-7

-3

5

15

5

Change in advances from customers

170

79

14

8

0

0

184

88

Cashflow from operating working capital

192

15

63

107

-45

45

210

168

Other disclosures
Investments, excl. leased assets

99

92

95

78

24

10

217

180

Number of permanent emloyees

2,286

2,184

861

833

68

71

3,214

3,088

2020

2019

G E O G RA P H I C I N F O R M A T I O N
The information below is based on where customers have theirregistered head office.
2020

2019

170

180

2,860

2,744

Germany

507

459

China

986

920

Other countries

2,492

2,850

Total

7,015

7,153

External net sales
SwedenUnited States98

Non-current assets
Sweden513

497

United States

3,963

4,141

Euro countries

1,159

1,707

Other countries

551

491

6,186

6,835

Total

The information presented in the table above regarding non-current
assets is grouped according to assets location, i.e. where the entity
carries on its production of goods and services. Non-current assets
consist of buildings and land, plant and machinery, equipment,
tools, and installations, construction in progress, patents, licenses,
brands and similar rights and goodwill.

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NOTE 7 OTHER OPERATING REVENUE AND
EXPENSESGroup

Parent Company

2020 20192020 2019

Other operating income
Return on capital gains tax

13

-

-

-

Capital gains on sale of property

6

-

-

-

Goverment grants related to Covid-19

8

-

-

-

Goverment grants related to R&D

11

-

-

Realized exchange rate differences

3
-

2

Other

9

4

Total

46

9

0

-

-

0

-

Other operating expenses
Costs related implementation to refined str

-124

-

-

Realized exchange rate differences-9

Unrealized exchange rate differences

-4

-1

-

-

Other

-11

-5

-5

Total

-148

-7

-5

-0

-

-0

Other operating income includes, among other things, a refund ofincorrectly charged sales tax in Brazil, a sale of a former officebuilding and government grants related to Covid-19 and grants
linked to R&D, respectively.
Other operating costs include restructuring costs linked to thedecision to take another step in the implementation of the strategy,
focused on sharpening the customer offering and footprint
optimization measures, primarily within the AirTech business area.
The restructuring costs relates to severance pay, guarantee
commitments and closure costs in connection with closure of the
non-core part of the commercial segment in the United States,
consolidation of operations in the Netherlands and some
additional identified measures to ensure the implementation of thestrategy. The restructuring costs relates to severance costs, warranty
claims and winding down activities in connection with the exit of
the non-core part of the commercial business in the US, aconsolidation of the operations in the Netherlands and some
additional measures to ensure the implementation of the strategy.

NOTE 8 DEPRECIATION, AMORTIZATION
AND IMPAIRMENT LOSSES
Amortization of intangible assets and depreciation of property,
plant, and equipment are based on the historical acquisition cost
and the estimated useful life of different groups of assets. For assets
acquired during the period, depreciation or amortization is
calculated from the acquisition date. Depreciation andamortization are charged primarily on a straight-line basis over thefollowing useful lives.
Research and development work

3–5 years

Patents, licenses, brands (with definitive useful life)

3–10 years

Customer relationships

7–12 years

Technology
Brands (with indefinitive useful life)

6–10 years
Not amortized

Machinery and equipment

3–10 years

Buildings

20–33 years

Leased buildings

2–10 years

Leased plants

2–15 years

Leased machines
Leased cars

2–5 years
2–5 years

22

The brands that emerged in connection with business combinationsacquired when Munters Group AB acquired Munters AB via
Munters Holding AB are deemed to have an indefinite useful life,
while the useful life of customer relationships and technology also
identified are estimated at 6–12 years. Depreciation, amortization,and impairment losses on non-current assets were charged toincome for the year as shown above.
Group

2020

2019

Cost of goods sold

-147

-133

Selling expenses

-84

-133

Administrative costs

-38

-45

Research and development costs

-38

-36

Total

-308

-347

Impairment losses on inventories are based on the age of the items
and the turnover rate. Most of the write-downs and reversal ofwrite-downs are related to the obsolescence that is made at eachperiod end.
No significant part of the inventory is valued at the net realizablevalue.
Group
Inventory provision

2020

2019

Opening balance

-88

-77

Write down current year

-47

-18

Reversal of previous years write down

1110Organizational change

30Exchange rate differences

8

-2

-112

-88

Closing balance

NOTE 9 DISCONTINUED OPERATIONSOn September 9, 2019 Munters decided and closed its European
Data Centers-factory in Dison, Belgium, following the finalization ofnegotiations with the unions. The production has ceased but minor
installation services remains at customer sites. Therefore, thisbusiness is classified as a discontinued operation and the earnings
from this business is presented on a separate line in the income
statement with restated comparatives disclosed.
The closure is according to the plan of the FPP-program launchedat the start of 2019 to increase the overall performance of thecompany.
In relation to the closure process of Dison, specified components,
for a previously sold customized Munters solution, had to be
replaced at a specific customer’s sites. As a result of this, Munters
incurred non-recurring cost of MSEK 116. The reimbursement to thecustomer was paid during the fourth quarter 2019. Munters has
insurance solutions in place for this type of events, but since
Munters has not concluded the discussions with its insurance
providers the final financial and cash flow net effect on Munters
cannot yet be determined. No asset has been accounted for.
The income statement for the discontinued operation is presented
below. Net sales for 2020 refer to installations at customer. The
discontinued operation has mainly had cash flows from operating
activities in the form of payments mainly related to severance pay.

999

FINANCIAL REPORTS|

MUNTERSÅSR TAS RIENDAOBVI LI S
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R EGP O
0Å
20

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

Group

2020

2019

Net sales

16

176

Cost of goods sold

-11

-427

Gross profit

6

-251

Selling expenses

-8

-39

Administrative costs

-2

-39

Research and development costs

0-9

Other operating expenses

-2

-113

Operating profit

-6

-450

Financial income and expenses-0-5Profit/Loss after financial items

-6

-455

Tax

0

8

Net income for the year

-6

-448

-149

-431

Cash flow from operating activities

23

NOTE 10 FINANCIAL INCOME AND
EXPENSESGroup

Parent Company

2020

2019

Interest income, other

1

7

-

-

Other financial income

0

0

-

-

1

7

-

-

-113

-155

-0

-0

2020

2019

Financial income

Financial expenses
Interest expenses, loans
Interest expenses, leaseagreements

-17

-19

-

-

Financing Fees

-13

-14

-

-0

Exchange-rate differences

-9

1

1

Other financial expenses

-5

-10

-

-

-157

-196

1

-0

-156

-189

1

-0

Total

NOTE 11 INCOME TAXESGroupParent Company

2020

2019

2020

2019

-125

-119

0

0

5

37

2

0

-120

-83

2

0

Pr of it / Los s bef or e t ax

552

367

-5

-1

Tax according to prevailing tax rate for the Parent Company

-117

-78

6

9

Difference attributable to foreign tax rates

-1

-7

-

-

Non-deductible expenses

-6

-4

-0

-0

Non-taxable income

7

4

-

-

Utilization of losses not recognized as an asset in the balance sheet

2

-1

-

-

-26

2

1

-0
-0

Current tax
Deferred tax related to temporary differences and loss carry-forwards
Tax recognized in income statement for the year

Reconciliation of effective tax

Tax effect of:

Change in valuation of deferred tax on temporary differences and losses
Revaluation of deferred tax assets/liabilities due to change in tax rate

2

5

-0

Tax attributable to prior years

25

-2

-

-

Witholing tax

-7

-

-

-

Group contribution

-

-

-5

-9

Other

-1

-2

-

-

-120

-83

2

0

Tax recognized in income statement for the yearGroup
Tax attributable to components of OCI

2020

Group
2019

Deferred tax attributable to:
Actuarial gains and losses on defined-benefit
pension obligations
Total

100

1

9

1

9

2020

2019

Buildings

4

3

Plant, machinery, equipment

54Intangible assets

00Inventory

33

29

Deferred tax assets

Accounts receivable

7

7Provisions (excl deferred tax liability)

24

14

Pension provision

35

34

Accrued expenses and prepaid income

50

46

Goodwill

43

Other items

17

18

Loss carry-forward

65

90

Closing balance

246

249

100

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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

Group
Deferred tax liabilities

2020

2019

Buildings

3

3

Plant, machinery, equipment

29

29

Brands299

299

Other intangiable assets

1253

Inventory

0

1

Accrued expenses and prepaid income

1

1

Goodwill

22

22

Other items
Closing balance

5

1

371

409

Reconciliation of net change in deferred tax assets from the
beginning of the year to the end of year:
Group

2020

2019

161

194

Charges recorded in this year's profit

-5

-37
-9

Change in deferred taxes
Opening balanceTax on amounts recorded in OCI-1

Tax on amounts recorded in equity-7-

Exchange-rate differences for the year

-23

13

Closing balance

125

161

Deferred tax assets for pension provisions refer to the difference
between the calculation of defined-benefit pension obligations
based on local tax legislation and IAS 19 Employee Benefits.
Deferred tax assets relating to loss carry-forwards arerecognized to the extent that it is deemed likely that the losses
will be used to offset taxable income.
At year-end, there were tax loss carry-forwards in the groupcompanies amounting to MSEK 1,242 (1,307), of which MSEK
1,195 (1,249) may be carried forward for an unlimited periodof time. Loss carry-forwards for which deferred tax assets are notrecognized totaled MSEK 941 (919), of which MSEK 941 (917)
may be carried forward for an unlimited period of time.

24

Consequently, deferred tax assets on loss carry-forwards totaling
MSEK 301 (389) were recognized. These losses relate to thesubsidiaries in Australia MSEK 4 (15), Germany MSEK 24 (42),Netherlands MSEK 47 (36), Sweden MSEK 220 (260), Denmark
MSEK 7 (11), Brazil MSEK 0 (2), and Mexico MSEK 0 (21). Tax
losses in Netherlands may be carried forward for nine years. In
the other countries, losses may be carried forward for an
unlimited period of time. During the year, Netherlands havegenerated tax deficits that are deemed to be used and thus adeferred tax asset is reported on them. Deferred tax liabilities aremainly attributable to the surplus values identified in connection
with the acquisition of Munters AB in 2010.

NOTE 12 BUSINESS ACQUISITIONS ANDDIVESTMENTS
ACQUISITIONS 2020
There have been no business acquisitions or divestments in
2020. Companies within the MTech group have been merged
and the 100% owned subsidiary Munters BV have been mergedwith its parent company, HB Beheer B.V. As this concerned amerger of a 100% owned subsidiary, no merger result arose in
the Group. In addition, an additional purchase price of
MSEK 9 (-) was paid, related to the acquisition of Humi-Tech
Services Ltd 2018.
ACQUISITIONS 2019
There have been no business acquisitions or divestments in
2019. However, Munters UK's wholly owned subsidiary HumiTech Services Ltd has been merged with its parent company.
Since this related to a merger of a wholly owned subsidiary, no
merger result has impacted the Group.

NOTE 13 FIXED ASSETS AND RIGHT-OF-USE ASSETSDISTRIBUTION OWNED AND LEASED ASSETS
Presented below is the Groups owned and leased assets.

2020 Group

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures,and fittings

Construction inprogress

Total

Owned assets

138

258

124

41

560

Leased assets

72

209

37

-

318

Total

209

467

161

41

878

2019 Group

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures,and fittings

Construction inprogress

Total

Owned assets

166

277

121

55

618

Leased assets

82

277

41

-

400

Total

248

554

162

55

1,019

11
00
11

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MUNTERSÅSR TAS RIENDAOBVI LI S
ORCTH 2H
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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

25

OWNED ASSETS
Presented below is the Groups owned fixed assets split per asset category.

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures,and fittings

Opening balance

441

898

Capital expenditures

4

36

-17

-35

2020 Group

Construction inprogress

Total

539

55

1,933

51

23

114

-51

-0

-103

Acquisition cost

Sold/Scrapped
Reclassification

0

23

12

-35

1

Exchange difference

-36

-74

-46

-2

-158

Closing accumulated acquisition value

392

849

505

41

1,787

Accumulated depreciation
Opening accumulated depreciation

-264

-617

-407

-

-1,288Depreciation for the year

-11

-51

-46

-

-109

Sold/Scrapped

11

28

46

-

85

Reclassification

-1

0

-0

-

-0

Exchange difference

21

48

33

-

102

-244

-591

-375

−

-1,209

Closing accumulated depreciation
Write downs

-11

-5

-11

-

-27

Sold/Scrapped

Opening accumulated write-downs

0

5

4

-

9

Exchange difference

1

-0

0

-

1

Closing accumulated write-downs

-10

0

-7

−

-17

Closing carrying amount

138

258

124

41

560

Depreciation is based on an asset’s acquisition cost and its
estimated useful life as specified in Note 8. The carrying amount ofland totaled MSEK 33 (39). Despite the Covid-19 outbreak, allproduction units, except one smaller unit, have been in operation

with only minor disruptions throughout the year. Despite theprevailing pandemic, no need for impairment has been identified.

2019 Group

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures,and fittings

Construction inprogress

Total

Acquisition cost
Opening balance

414

854

514

62

1,844

Capital expenditures

5

26

58

28

118

Sold/Scrapped

-0

-13

-55

-0

-69

Reclassification

11

11

7

-38

-8

Exchange difference

10

20

15

3

48

Closing accumulated acquisition value

441

898

539

55

1,933

Opening accumulated depreciation

-244

-577

-377

-

-1,197

Depreciation for the year

-14

-48

-51

-

-113

0

13

38

-

51

8

-8

-

0

-6

-13

-10

-

-29

-264

-617

-407

−

-1,288

Accumulated depreciation

Sold/Scrapped
Reclassification
Exchange difference
Closing accumulated depreciation-

Write downs
Opening accumulated write-downs

-1

-8

-0

-

-9

Write-downs for the year

-10

-5

-11

-

-26

Reclassification

-0

8

0

-

8

Exchange difference

0

-0

0

-

0

Closing accumulated write-downs

-11

-5

-11

−

-27

Closing carrying amount

166

277

121

55

618

102

102

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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

LEASED ASSETS
G e ne r a l d e s c r i p t i o n o f M u n t e r s ’ le a s e s
Munters leases various offices, warehouses, equipment andvehicles. In addition, Munters leases half of its manufacturing
facilities around the world, which amounts to around ten factories.
The leases are normally signed for fixed periods, but with theoption to extend some contracts. The terms are negotiatedseparately for each lease and contain a number of covenants.
The leases only include variable payments that are based on anindex, which is taken into account in the valuation of the leaseliability and the right-of-use asset on the day the index isremeasured. The leases contain both lease and non-lease
components and it is only the lease component that has been
included in the calculation of the lease liability and the right-of-use
asset.
Options to extend or terminate a lease are included in a numberof the Group’s leases. The terms are used to maximize flexibility inthe management of the assets used in operations. The
overwhelming share of the options to extend or terminate leases
can only be exercised by the Group and not by the lessor.

26

Following is a specification of leased assets as of December 31,
2020. Note 20 discloses the lease liabilities associated with theleased assets.
Total interest expenses, which are included in financial expenses,
amounted to MSEK -17 (-19) during the year, whereof MSEK -17(-17) related to the continuing operation and MSEK 0 (-2) related tothe discontinued operation. Depreciation and write downs for theyear amounted to MSEK -113 (-141), whereof MSEK -113(-106) related to the continuing operation and MSEK 0 (-35)
related to the discontinued operation.
Short-term leases and leases of low-value assets were expensed
for MSEK 4 (8). These leases will mean payments of MSEK 6 (10)between the years 2022–2025 and MSEK 1 (1) during 2026 andbeyond.
The total cash flow from leases recognized in the balance sheet
in 2020 was MSEK 130 (123) and is presented under financing
activities as repayment of lease liabilities. In addition, the leasing
liability was affected by a change in accrued interest of MSEK 17(19), see Note 20.

Buildings,
leasedPlant andmachinery,leasedEquipment andtools, leased

Total

Opening balance

139

325

75

539

New contract

29

1

31

61

Exchange difference

-17

-36

-4

-57

Closing accumulated acquisition value

148

285

79

512

2020 GroupAcquisition cost

Accumulated depreciation
Opening accumulated depreciation

-36

-48

-29

-112

Depreciation for the year

-34

-46

-33

-113

Sold/Scrapped

3

5

24

31

Exchange difference

10

13

1

25

Closing accumulated depreciation

-57

-76

-37

-169

-21

-0

-5

1

0

Closing accumulated write-downs

-20

-0

-5

-25

Closing carrying amount

72

209

37

318

Buildings,
leasedPlant andmachinery,leasedEquipment andtools, leased

Total

Write downs
Opening accumulated write-downs
Exchange difference

2019 Group

-26
-

1

Acquisition cost
Opening balance
New contract
Exchange difference
Closing accumulated acquisition value

141

328

76

545

-2

-3

-1

-6

139

325

75

539

Accumulated depreciation
Opening accumulated depreciation
Depreciation for the year
Exchange difference
Closing accumulated depreciation

-36

-48

-29

-114

0

1

0

1

-36

-48

-29

-112

Write downs
Opening accumulated write-downs
Write-downs for the year
Exchange difference

-21

-0

-5

-27

0

0

Closing accumulated write-downs

-21

-0

-5

-

-26

0

Closing carrying amount

82

277

41

400

11
00
33

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MUNTERSÅSR TA
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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

27

NOTE 14 PATENTS, LICENSES, CUSTOMER RELATIONS AND OTHER INTANGIBLE ASSESWITH DEFINITE USEFUL LIFE

2020 Group

Technology

Internallygenerated
Customer
relationships intangible assets

Other
intangible
assets

Total

Acquisition cost
Opening balance

250

172

2,033

Capital expenditures

650
-

961
-

80

23

103

Sold/Scrapped

-

-

-33

-2

-35

Reclassification

-

-

-4

4

-1

Exchange difference

-59

-81

-23

-4

-167

Closing accumulated acquisitions

591

880

270

193

1,934

Opening accumulated amortization

-541

-892

-84

-108

-1,624

Amortizations for the year

-17

-23

-36

-11

-87

14

1

15

Accumulated amortization

Sold/Scrapped-

Exchange difference
Closing accumulated amortizations

-

50

78

9

3

139

-509

-837

-97

-115

-1,557-26-14

Write downs
Opening accumulated write-downs-2

Sold/Scrapped

-10
-

-

18

-51
-

18

Exchange difference

0

1

1

0

2

Closing accumulated write-downs

-2

-9

-8

-13

-32

Closing carrying amount

81

34

165

65

345

Te c hnol og yThis item includes technology, MSEK 81 (107), where the majorityof which was identified in conjunction with the acquisition of
Munters AB in 2010.

I n t e r n a l l y ge n e r a te d i n t a n g i b l e a s s e ts
Internally generated intangible assets mainly relates to recognizeddevelopment costs within FoodTech, AirTech and segment Data
Centers within AirTech.

C u s t o me r r e l a t i o n s h i p sThis item includes customer relationships, MSEK 34 (60), where themajority of which was identified in conjunction with the acquisitionof Munters AB in 2010.

O t he r i n t a n g i b l e a s s e t s
Other intangible assets mainly include patents, tradenames,
licenses, and similar rights in Sweden, Germany, the United States,
the Netherlands and China.

2019 Group

Technology

Internallygenerated
Customer
relationships intangible assets

Other
intangible
assets

Total
1,920

Acquisition cost
Opening balance

632

Capital expenditures
Sold/Scrapped

933
-

-2

185

170

-

62

11

74

-

-0

-15

-17

-

Reclassification/Internal transfers

0

-4

4

0

Exchange difference

19

29

6

1

56

Closing accumulated acquisitions

650

961

250

172

2,033

Opening accumulated amortization

-508

-799

-52

-107

-1,466

Amortizations for the year

-18

-69

-29

-15

-131

15

16

Accumulated amortization

Sold/Scrapped0

Reclassification/Internal transfers

-

-

-1

0

-1

Exchange difference

-15

-24

-1

-1

-41

Closing accumulated amortizations

-541

-892

-84

-108

-1,624-28-13

Write downs
Opening accumulated write-downs

-2

-10

-53

Write-downs for the year

-

-

-1

-

-1

Reversed write-downs

-

-

3

-

3

-

Reclassification

0

0

1

Exchange difference

-0

-0

-1

-0

-1

Closing accumulated write-downs

-2

-10

-26

-14

-51

107

60

140

51

358

Closing carrying amount

104

1

104

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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

NOTE 15 GOODWILL AND OTHERINTANGIBLE ASSETS WITH
INDEFINITE USEFUL LIFE
Intangible assets with indefinite useful life consist of brands andgoodwill.
2020 Group

BrandsGoodwill

1,118

4,706

A c quisition c ost
Opening balance
Exchange-rate differences for the year

-102

-411

Closing balance

1,016

4,294

-358

Accumulated impairment
Opening balance-6

Exchange-rate differences for the year

1

15

Closing balance

-5

-343

Closing carrying amount

1,011

3,952

2019 Group

BrandsGoodwill

1,086

4,569

A c quisition c ost
Opening balance
Exchange-rate differences for the year
Closing balance

32

137

1,118

4,706

Accumulated impairment
Opening balance

-6

-351

Impairment of the year

0

-2

Exchange-rate differences for the year

0-6

Closing balance

-6

-358

1,111

4,348

Closing carrying amount

Recognized brands per cash-generating unit

2020

2019

Air Treatment

824

908

FoodTech

125

136

Mist Elimination

62

67

1,011

1,111

Closing carrying amount
Recognized amount of goodwill per cash-generating
unit

2020

2019

Air Treatment

2,813

3,106

FoodTech

1,005

1,095

134

146

3,952

4,348

Mist Elimination
Closing carrying amount

Goodwill as of December 31, 2020 amounted to MSEK 3,952(4,348). The decrease was a result of exchange rate effects,
mainly owing to a stronger SEK against USD compared to theprevious year.
Management estimates that brands have an indefinite useful life
because there is no predictable limit for the period of time during
which the brand is expected to generate net payments for thecompany.

28

brands were tested in September, since then, no impairment
indication has occurred.
Goodwill and brands with an indefinite useful life are allocatedto the Group’s cash-generating units, which are the smallest
identifiable groups of assets that, as part of continual usage,
generate cash inflows that are substantially independent of otherassets or groups of assets. The Group’s cash-generating units
consist of the Group’s four former business areas: AirTech,
FoodTech, Data Centers, and Mist Elimination. The latter twobusiness areas were reorganized in 2019 and are now an integral
part of AirTech.
Impairment testing of recognized goodwill and brands has been
based on recoverable amounts for cash-generating units
established through calculating future value in use. Future cash
flows for the first five years are mainly based on the strategic planfor 2021-2025 approved by the Board and Group management,
and projections thereof. The growth rate in the terminal period
after the first five years has been determined as 2% (2).
Significant assumptions used to calculate values in use are sales
growth and the EBITA margin, utilization of operating capital
employed, other capital employed and the discount rate.
Management has established the growth rate forecast based on
previous results and expectations about future market trends by
operating segment based on the adopted strategic plan. These
assessments take into account various economic indicators andinternal and external analyses thereof. Also taken into account areimportant aspects of financial performance described in theGroup’s strategic plan.
This year’s impairment test did not result in any impairment, nor
did the previous year’s test.
The calculations for 2020 used a nominal discount rate (average
weighted cost of capital before tax) of 12.2% (12.3).
A sensitivity analysis for the parameters discount rate, sales
growth and EBIT margin has been performed for each cashgenerating unit, as below. The effects refer to a change in theindividual parameter, all else being equal.
Se ns it iv it y anal ys is
Dis c ount rat e
A 9.4 percentage point (3.0) increase in the discount rate would
be required for goodwill and brand impairment to be necessary inthe cash-generating unit Air Treatment and a 14.5 percentage
point (5.9) increase in FoodTech and 12.0 percentage point(10.0) increase for Mist Elimination.
N e t s al es g row t h
For Air Treatment, FoodTech and Mist Elimination, no reasonable
decrease in net sales growth is judged to lead to a need for
impairment.
E B I TA - m a r g i n
A decrease of 8.2 percentage points (4.) in the EBITA margin forthe period from 2021 to 2025, perpetuity value included, would
be required for impairment of goodwill and brands to benecessary in the cash-generating unit Air Treatment. For FoodTech
and Mist Elimination, no reasonable decrease in the EBITA margin
is judged to lead to a need for impairment.

IMPAIRMENT TESTING OF GOODWILL AND BRANDS
The values of goodwill and brands are tested annually, or more
frequently if necessary, to ensure that the value does not deviate
negatively from book value. The carrying amounts for goodwill and

105

FINANCIAL REPORTS|

MUNTERSR EI NDO| A N N U A L A N D SÅURSSTAA BVIILSI N
T YI NRG
E PO
OC
R TH 2H0Å2L0L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 202029

parent company, HB Beheer BV. MTech Processing LLC have been
merged with its parent, MTech Systems USA, LLC.

NOTE 16 PARTICIPATION IN
SUBSIDIARIESNOTE 17 ACCOUNTS RECEIVABLES
Time analysis of accounts receivable,
Country

Carrying
amountMunters Holding AB (corp. reg. no. 556818-974Sweden

4,099

Direct shareholdings, 100%

2020

2019

Current

671

708< 30 days

150

207

30-90 days

66

96

4,099

91-180 days

37

24

> 180 days

12

15

Closing balanc e

935

1,050

Registered office: Stockholm

Material indirect shareholdings

Country

Percentage, %Munters AB (Corp.reg. no. 556041-0606)

Sweden100

AB Carl Munters (Corp.reg. no. 556035-1198) Sweden
Munters Europe AB (Corp.reg. no. 5563803039)
Sweden100

net provision for bad debt

Provisions for bad debts corresponded to 5% (5) of total
receivables and changed as follows:100

Pro Component Sweden AB (Corp.reg. no.
556904-0891)
Proflute AB (Corp.reg. no. 556558-3415)
Munters Corporation
Munters Canada Inc
Munters de Mexico S de RL de CV

SwedenSwedenUnited States
CanadaMexico

100
100
100
100
100

Shelf Service Company No 1 S de RL de CV

Mexico100

Exchange-rate differences-41

Munters Brasil Industria e Commércio Ltda
Munters Beteiligungs GmbH
Munters Euroform GmbH
Munters GmbH
Munters Reventa GmbH
Munters Netherlands BV
HB Beheer BV
Munters Spain S.A.U.
Munters Czech s.r.o.

BrazilGermany
Germany
Germany
Germany
Netherlands
Netherlands
Spain
Czech

100
100
100
100
100
100
100
100
100

Closing balance

45

48

Munters France S.A.S.
Munters Italy SpA
Munters Ltd
Munters Management Service Ltd
Munters Belgium SA
HB Drying Belgium
Munters Finland OY
Munters Israel Ltd
Munters A/S
Munters (Pty) Ltd

FranceItaly
UK
UK
Belgium
Belgium
FinlandIsraelDenmarkSouth Africa

100
100
100
100
100
100
100
100
100
100

Munters-Form Endüstri Sistemleri Sanayive
Ticaret A.Ş.
Munters India Humidity Control Private Ltd

Turkey
India

80
100

Munters Air Treatment Equipment (Beijing) Co.,
Ltd
China

100

Jiangyin SAT Air Treatment Equipment Co Ltd
Munters Korea Co., Ltd
Munters Company Ltd
Munters (Thailand) Co. Ltd
Munters K.K.
Munters Pte Ltd
Munters Pty Ltd
MTech Systems USA, LLC
MTech Systems America Latina Ltda

100
100
100
100
100
100
100
66
66

A c q u is it io n c o s t a t Ja n u a r y 1
Share option program
Accumulated acquisition cost at
December 31

2020

2019

Opening balance48

44

Provision for anticipated losses

19

43

Realized losses-6-6

Reversals of unutilized amounts

-13

-33

Provision for bad debts

ChinaSouth Korea
ThailandThailandJapan
Singapore
Australia
United States
Brazil
2020

2019

4,086

4,086

13

-

4,099

4,086

The group applies the simplified approach under IFRS 9 Financial
Instruments to measure expected credit losses. This “expected credit
loss model” uses a lifetime expected loss allowance for all tradereceivables and contract assets. The model is based on historicaldefault rates over the expected life of the trade receivables
adjusted for forward looking estimates. Based on Munters historicalstatistic from confirmed credit losses the historical default rate has
an insignificant effect on the credit loss provision and therefore theprovision for bad debt is built on individual forward-looking
estimates. Despite the prevailing Covid-19 pandemic, Munters has
not identified an increased risk of credit losses. An analysis wasmade early in the year to identify credit exposure to particularly
vulnerable industries and geographical areas linked to Covid-19
outbreaks to consider additional risk. The analysis showed low
exposure. The global pandemic has not affected the need forreservations to any great extent.

NOTE 18 PREPAID EXPENSES AND
ACCRUED INCOME
Group

Parent Company

2020

2019

2020

Prepaid leases

7

7

-

-

Prepaid insurance premiums

22

26

0

0

Accrued income

255

193

-

-

Prepaid expenses for goods andservices

20

26

-

-

Other items

72

37

-

0

Closing balance

376

288

0

0

2019

No restrictions exist regarding Group’s access to the subsidiaries
assets, as a result of regulations or minorities. During the year, the
100% owned subsidiary, Munters BV have been merged with its

106

106

A NÅNRUS A
R EL DAONVDI SSNUI SNTA
G IO
NC
AB
HI LHI TÅYL LRBEAPROHRETT S2R0A2P0P O| R TM U
20
N2T 0
E R|
S |M UF INNTAE N
R SC I|A LS TR RE AT
P OERGT IS
FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

At year-end, there were forward currency contracts in the Group
as follows below:

NOTE 19 FINANCIAL INSTRUMENTS BY
CATEGORY
Book value of financial assets and liabilities by
category

30

2020
2020

2019

Nominalamount inlocal
currency

Financial assets measured at amortized cost
Other non-current financial assets

19

19

Accounts receivable

935

1,050

2019

Carrying
amountNominalamount inlocal
currency

Carrying
amountOther current receivables

96

96

AUD/SEK

7

-0.1

1

0.0

Cash and cash equivalents

970

722

CAD/SEK

0

-0.1

2

-0.3

2,021

1,887

CNH/SEK

0

0.0

-9

0.0

Financial assets measured at fair value throughprofit/loss

DKK/SEK

0

0.0

-5

0.0

EUR/SEK

14

-1.2

-14

2.7

Currency derivatives whose cash flows are notsubject to hedge accounting

GBP/SEK

1

-0.1

2

-0.1

5

JPY/SEK

90

-0.3

20

-0.0

5

SGD/SEK

2

-0.3

2

-0.0

USD/SEK

8

-0.0

-16

3.0

ZAR/SEK

-20

-0.2

-20

-0.4

Closing balance-

Closing balance
Total

2,021

1,892

2020

2019

2,440

3,057

Non-current interest-bearing lease liabilities

250

314

Current interest-bearing liabilities

14

16

Current interest-bearing lease liabilities

82

102

Accounts payable

529

556

Accrued expenses

9

12

Other non-current liabilities

12

1

Other current liabilities

111

153

3,446

4,209

2

-

121

134

Financial liabilities measured at amortized costNon-current interest-bearing liabilities

Closing balance
Financial liabilities at fair value through profit/loss
Currency and interest rate derivatives whose cash
flows are not subject to hedge accounting
Acquisition option MTech, non-current 1)
Contingent consideration Humi-Tech Services Ltd.
Closing balance
Total

-

8

123

142

3,569

4,351

1) Fair value adjustments recorded through equity. Acquisition option is valid
through January, 2023.

F air v al ue of as s e t s and l iabil it ie s
The carrying amounts of interest-bearing assets and liabilities in thestatement of financial position may deviate from their fair value forreasons such as changes in market interest rates. Munters deems
that the interest rate on interest-bearing liabilities is in line withmarket terms at December 31, 2020, and the fair value at the endof the reporting period therefore in all material aspects
corresponds to the carrying amount.
The fair value of financial instruments such as accounts
receivable, accounts payable, and other non-interest-bearing
financial assets and liabilities, which are recognized at amortizedcost less any impairment, is deemed equal to the carrying amountbecause of the short maturities of these instruments.

Total

-2.3

4.9

Negative net amounts refer to sales, and positive net amounts refer
to purchases. All forward contracts are short-term and fall due forpayment during 2021.
F i n a n c i a l a s s e ts a n d l i a b i l i t i e s t h a t a r e o f f s e t , o r w h i c h a r e
c o v e re d b y a l e g a l l y b i n d i n g m a s t e r ne t t i n g a r r a n g e me n t o r
s i m i l a r a g r e e m e nt
Financial assets and liabilities that can be offset against each otherconsist of foreign exchange derivatives covered by a legallybinding master netting arrangement. In the year 2020 these items
are not offset in the balance sheet. The carrying amounts of such
assets and liabilities are listed in the table above.
C ont ing e nt e arn- out s and put / c al l ac quis it ion opt i ons
The Group’s contingent earn-outs and put/call acquisition options,recognized at fair value in the statement of financial position, were
measured according to IFRS 9 and categorized in level 3
according to the fair value hierarchy.
The opening balance for the period was related to the put/call
option from the acquisition of MTech Systems in 2017 and acontingent consideration related to the acquisition of Humi-Tech
Services Ltd in July 2018. The put/call option related to MTech
Systems matures at January, 2023 and is based on EBITDA for the
12 months prior to execution. The earn-out in Humi-Tech Services
Ltd is based on EBITDA for the fiscal years of 2018 and 2019 andwas settled during 2020. Other changes during the period relates
to a discounting effect on the put/call option and currencytranslations.
Contingent price considerations
Opening balance
Payments
Discounting
Exchange-rate differences for the year
Closing balance

2020

2019

142
-9
4
-16
121

136
1
5
142

D e r i v a t i v e i n s t r u me n t s
The Group’s derivatives, recognized at fair value in the statementof financial position, are measured according to IFRS 9
categorized in level 2 according to the fair value hierarchy to IFRS
13. This means that fair value is based on data for the asset or
liability other than quoted prices on an active market for identicalassets or liabilities that are observable either directly (as quoted
prices) or indirectly (derived from quoted prices).

11
00
77

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MUNTERSÅSR TAS RIENDAOBVI LI S
ORCTH 2H
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R EGP O
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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

NOTE 20 INTEREST BEARING LIABILITIESI n t e re s t b e a r i n g l i a b i l i t i e s , n o n - c ur r e n t
Munters primary financing facilities consist of a term loan of MUSD
250 and a revolving credit facility of MEUR 185. The facilities
have no mandatory amortization requirement. The final maturity
date is in May 2022.
During the year, a new revolving credit facility of MSEK 750
maturing in 2023 has been established. The facility is secured by aguarantee from EKN (The Swedish Export Credit Agency). The
purpose of the MSEK 750 RCF is to serve as a back-up facility,
established as a precautionary measure in the challenging businessenvironment due to the Covid-19 outbreak. Total amount of
unutilized credit facilities is showed in Note 3 under header
Liquidity Risk.
The loan agreements have one financial covenant; consolidated
net debt in relation to adjusted EBITDA, with some adjustments. The
accounting standard for leases, IFRS 16, does not affect thecovenant calculation according to the loan agreement definitionand neither does the net pension liability. In May 2020, an

31amendment of the loan agreement was signed with the bankgroup. The financial covenant is temporarily eased until the firstquarter 2021, also as a precautious measure due to uncertainty
during the pandemic.
As of December 31, the total Interest-bearing liabilities amounted
to MSEK 2,455 (3,081). The table below outlines the long term
debt on Group level together with local bank debt in groupcompanies in among others, India and Brazil. Munters’ financial
policy regulates the management of external borrowings. The
Group’s forecasted performance in relation to the limits stipulatedby the covenant is closely monitored. This ensures that the Groupfulfills its commitments to external lenders and minimizes theliquidity and financing risk. At December 31, 2020, the covenant
was met.
The total average weighted interest rate including both long- andshort term financing at the end of the year was 2.7% (4.0) and3.1% (4.2) including financing cost.
Term Loan is deducted by financing cost activated in balance
sheet. Drawings under the revolving credit facility are listed among
non-current loans below

Interest bearing loans, non-current

Book v a l u e

MaturityType of loan

Interest rate

Currency

2020

2019

2022

Term Loan

Variable

USD

2,039

2,317

2022

Utilized committed credit facilities Sweden

Variable

EUR

301

459

2022

Utilized committed credit facilities Sweden

Variable

SEK

100

280

Other non-current loan

Fixed/
Variable

Variouscurrencies

2020-2021
Total

0

1

2,440

3,057

I n t e re s t b e a r i n g l i a b i l i t i e s , c u r r e nt
The table outlines current bank debt in Munters subsidiaries in among others Brazil and China.
Interest bearing loans, current
MaturityBook v a l u eType of loan

Interest rate

Currency

2020

2019

Other current loan

Variablecurrencies

14

24

14

24

2,455

3,081

Total
Total non-current and current loans

Other financial liabilities fall due within the next year, with the exception of the acquisition option, which, upon utilization, falls due inJanuary 2023.
C h an g es in in t e res t be arin g l iabil it ie s
Munters has during the year amortized on loans in SEK and EUR under the revolving credit facility.
The change during the year is also caused by currency effects originating from fluctuations in USD exchange rate.

Non-current loans 2020

Currency effects Non cash movements

Closing balance

Opening balance

Cash flow

2,329

-

-282

-

2,047

Revolving credit facility

739

-326

-12

-

401

Other third party debt

1

-1

0

-

Term loan

Financing fees
Total

Current loans 2020

-12

-

3,057

-327

-294

0

4

-8

4

2,440

Opening balance

Cash flow

Other third party debt

24

-10

Total

24

-10

-

-

14

3,081

-336

-294

4

2,455

Total non-current and current loans

108

Currency effects Non cash movements--

Closing balance
14108FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 202032

A NÅNR USR
AEL DAONVDI S SNUI N
S TA
G IO
NC
AH
B I LHI TÅYL L RB EAPROHRETT S2R0A2P0P O|R TM 2
U 0N2T0E R|S |M UF NI NT AERNSC |I A LS TRREATP OERGTIS

Non-current loans 2019

Opening balanceTerm loan

Cash flow

Currency effects

Non cash
movements

Closing balance

2,243

-

87

-

2,329

Revolving credit facility

778

-44

5

-

739

Other third party debt

2

-1

-

-

1

-20

-

-

8

-12

3,002

-45

91

8

3,057

Opening balance

Cash flow

Currency effects

Non cash
movements

Closing balance

Other third party debt

11

13

-

-

24

Total

11

13

-

-

24

3,013

-32

91

8

3,081

Financing fees
Total

Current loans 2019

Total non-current and current loans

C h an g es in l e ase l iabil it ie s
Munters has during the year changed liabilities relating to lease agreements with the below amounts, involving signing of new leaseagreements, amortization of current agreements and interest and currency effects.

Lease liabilities 2020

Openingbalance

Impact of new
accounting New contracts
policy during the year

Amortizationsof loans

Interest on
loans Currency effects

ClosingbalanceNon-current interest-bearing lease liabilities

314

-

46

-98

13

-26

Current interest-bearing lease liabilities

102

-

15

-32

4

-7

82

Total

416

−

61

-130

17

-33

332

Impact of new
accounting New contracts
policy during the year

Amortizationsof loans

Interest on
loans Currency effects

Closingbalance

Lease liabilities 2019

Openingbalance250

Non-current interest-bearing lease liabilities

-

354

43

-95

14

-2

314

Current interest-bearing lease liabilities

-

104

8

-28

4

13

102

Total loans

−

458

51

-123

19

11

416

M at urit y anal ys is of l e as e l iabil it i e s
The remaining undiscounted lease payments have the following
due date:
Undiscounted leasing liabilities

2020

2019

Remaining term 1 year or less

105

102

Remaining term 1 to 5 years

216

248

Remaining term over 5 years

93

127

Total

414

476

NOTE 21 EARNINGS PER SHARE
KSEK
Net income
Attributable to Parent Company
shareholders
Attributable to non-controlling interests

period. The average share price during the full year exceeded theexercise price for all three employee stock option programs,
implying a dilution effect on the number of average outstanding
shares for the year.
The warrant program from 2017 expired in November, whichcaused a conversion of a total of 851,500 warrants, resulting in
860,015 new shares.

NOTE 22 PROPOSED DISTRIBUTION OF
EARNINGS
The following earnings (in KSEK) are at the disposal of the Annual
General Meeting:

2020

2019

425,831-164,015

Unrestricted equity in parent company:

2020

Opening balance of unrestricted equity

4,133,272

420,184-165,672

5,647

1,658

Average number of outstanding shares
before dilution

181,545,456

181,983,219

Average number of outstanding shares
after dilution

181,557,708

181,983,219

Where of average number of shares in
own custody

2,194,500

1,614,583

Earnings per share before dilution, SEK

2.32

-0.91

Dividend

Earnings per share after dilution, SEK

2.32

-0.91

To be carried forward

4,035,933

Total

4,165,054

Issue of warrants

61,295

Repurchase of shares-43,325

Employee share options

16,941

Income for the year

Computing earnings per share, basic and diluted, is based on the
net income attributable to the Parent Company’s ordinary
shareholders. The number of shares used in the calculation consistsof a weighted average of outstanding ordinary shares during the

Total-3,1294,165,054

Th e Bo a r d o f Dir ec t o r s p r o p o s es t h a t ea r n in gs b e
dis t r ibu t ed as f ol l ow s :129,120

According to the dividend policy adopted by Munters´ Board of
Directors, Munters shall aim to pay an annual dividend
corresponding to 30-50 percent of the profit for the year. Decisions
on any dividend proposals are made by the Board, taking into

109

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MUNTERSÅSR TAS RIENDAOBVI LI S
ORCTH 2H
L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| ANNUAL AND SUI TNY I N
R EGP O
0Å
20

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020account Company’s financial position, investment needs,
acquisitions and liquidity.
In 2020, a great deal of work was done at Munters to increasevalue creation throughout the company. At the beginning of theyear, a new strategy was launched. The implementation of thisstarted during the year and gave rise to restructuring costs whichwere announced in July 2020. At the same time, the ongoingmeasures continued, with the aim of strengthening the company inthe long term. The outbreak of the Covid-19 pandemic had anegative effect on Munters, especially during the second and fourth
quarters. Despite the challenging business climate, Munters
reported stable order intake and net sales. Profitability and cash
flow generation were strengthened and the leverage decreased.
The Board therefore proposes that a dividend of 30% of the profit
for the year shall be paid for 2020, meaning MSEK 129 and adividend per share of SEK 0.70.

NOTE 23 EQUITY
Share c apit al
The share capital of 5,533,735 (5,507,934) SEK comprises
184,457,817 (183,597,802) shares with a par value of SEK
0.03 (0.03) per share. The warrant program from 2017 expired
during November, which resulted in an exercise of a total of
851,500 warrant options, resulting in 860,015 new shares.
The shares in Munters Group AB are listed on Nasdaq Stockholm
under the symbol MTRS. The ten largest owners in Munters GroupAB hold a total of 70.1% (69.6) of outstanding shares. Of these,
FAM AB holds 26.0% (21.1). No other shareholder holds morethan ten percent of the shares, either directly or indirectly, in
Munters Group AB.
The table below shows the changes in the number of shares.
Number of shares
Opening number, January 1, 2019

1 8 3 ,5 9 7 ,8 0 2

Equity shares B

183,597,802

Changes 2019:-

Closing number, December 31, 2019

1 8 3 ,5 9 7 ,8 0 2

Equity shares B

183,597,802

Of which in own custody/treasury shares
O p en in g n u m b er , Ja n u a r y 1 , 2 0 2 0Equity shares B

1,852,000

New share issue

183,597,802

860,015

Closing number, December 31, 2020

1 8 4 ,4 5 7 ,8 1 7Equity shares B

184,457,817

Of which in own custody/treasury shares

2,537,000

T r a n s l a t i o n r e s e r ve
The reserve for exchange rate differences consists of differencesthat arise when the income statements and balance sheets offoreign subsidiaries are translated into SEK. The positive exchangerate effects during 2020 were mainly due to a stronger SEK
against USD compared to previous year.
Reserve for exchange rate differences
Opening balance, January 1, 2019

543

Exchange rate differences

121

Closing balance, December 31, 2019

664

Exchange rate differences-324

Closing balance, December 31, 2020

341

110

H o l d i n g s o f t r e a s u r y s h a r e s 2 0 20
The Board of Directors of Munters Group AB (“Munters”) resolved,
pursuant to the authorization granted by the Annual General
Meeting held on Maj 7, 2020 to repurchase the company’s own
shares on Nasdaq Stockholm. The purpose of the repurchaseprogram was to secure the delivery of shares to the participants ofMunters’ long-term incentive program, which was resolved by the
Annual General Meeting 2020, and to cover costs related to theprogram. In total, Munters repurchased 685,000 shares during theyear at an average price of SEK 63.25. Payment for the shares
was made in cash and amounted to MSEK 43. As of December
31, 2020 Munters Group AB held 2,537,000 shares in custody,
equal of the registered share capital. The shares had a par valueof SEK 0.03 per share.
H o l d i n g s o f t r e a s u r y s h a r e s 2 0 19
The Board of Directors of Munters Group AB (“Munters”) resolved,
pursuant to the authorization granted by the Annual General
Meeting held on May 8, 2019 to repurchase the company’s own
shares on Nasdaq Stockholm. The purpose of the repurchaseprogram was to secure the delivery of shares to the participants ofMunters’ long-term incentive program, which was resolved by the
Annual General Meeting 2019, and to cover costs related to theprogram. In total, Munters repurchased 385,000 shares during theyear at an average price of SEK 40.98. Payment for the shares
was made in cash and amounted to MSEK 16. As of December
31, 2019, Munters Group AB held 1,852,000 shares in custody,
equal to 1.0% of the registered share capital. The shares had apar value of SEK 0.03 per share.
Div ide nd during t he pe riod
There has been no dividend paid during 2020 or 2019.

NOTE 24 PROVISIONS FOR PENSIONS AND
SIMILAR COMMITTMENTS
2020

2019

Non-current defined-benefit obligations to employees

285

269

Other benefits to employees

1414

Non-current

299

283

Group

1 8 3 ,5 9 7 ,8 0 2

Changes 2020:

33

Current defined-benefit obligations to employees

66

Other current employee benefits

3

3Current

109Total provisions for pensions
and similar obligations

309

292

Where-of provisions recognized for pension
obligations

291

276

The Group finances pension plans for its employees in several
countries. These plans mainly follow practice in the country inquestion and may be defined-contribution or defined-benefit plans
or a combination of both. The most important defined-benefit
pension plans cover employees in Sweden, Italy and France. In
France and Italy, provisions are made for mandatory remuneration
when employment ceases. For senior executives of the Group,
there are guidelines regarding pension rights and pension plansdescribed in Note 31.
Defined-benefit pension plans in Sweden constitute 96% (96) of
total Group provisions for pensions recognized under IAS 19. The
calculations are primarily based on final salary and the plans are
unfunded. The pension plans in Italy and France, which constitute110

A N NÅU RASL RAE NDO
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The Swedish pension plans (known as ITP plans) supplement thecountry’s social insurance system, and result from agreements
between employer and employee organizations. ITP plans mainlycomprise retirement pensions, disability pensions and survivor’s
pensions. The ITP plan has two parts, firstly, ITP1, which is adefined-contribution pension plan applying to employees born in1979 or later, and secondly, ITP2, which is a defined-benefit
pension plan applying to employees born before 1979. Whitecollar employees within the Group in Sweden were covered byboth these parts. The ITP2 plan is managed within Munters in the
FPG/ PRI system. Financing occurs through provisions to an
account in the balance sheet, safeguarded by credit insurance fromthe mutual insurance company Försäkringsbolaget PRI
Pensionsgaranti. Defined-benefit pension plans subjects the Group

2020 Group
Opening balance

Present
value ofdefinedRecognizedbenefit Fair value ofprovision,
obligation plan assets
net
293

-17

276

obligation

14-

Experience adjustments

Benefits paid by employer toplan assets

221

10

-

6

0

6

16

0

16

0

4

18

0

18

Remeasurement, included in
Other comprehensive income

5

0

5

Actuarial changes arising fromchanges in financial assumptions

4

-3

0

Experience adjustments

44

-

44

47

-3

44

-7

0

-6

2

-

2

7

0

7

Transactions
-6

0

-6

Benefits paid by employer
Benefits paid by employer toplan assets

-3

-3

-3

-9

-1

1

-0

310

-19

291

20

-19

1

Sweden

279

-

279

Other countries

11

-

11

-

1

1

-7

1

-6

0

0

0

293

-17

276

21

-20

1

Sweden

262

-

262

Other countries

12

-

12

Exchange rate differences for theyear
Closing balance
Of which funded plans:

Of which funded plans:Belgium

-15

10

4

-

Closing balance

236

Current service cost

-6
Exchange rate differences for theyear

Opening balance

obligation

Transactions
Benefits paid by employer

2019 Group

Present valueof defined
benefit Fair value of Recognized
obligation
plan assets provision, net

14

Remeasurement, included in
Other comprehensive income
Actuarial changes arising fromchanges in financial assumptions

to different kinds of risk attributable to increases in life expectancy,
inflation and salary.
In the Group, there are also defined-contribution plans thatmainly comprise retirement pensions, disability pensions andsurvivor’s pensions. The premiums are paid continuously during theyear by each Group company to separate legal entities, such as
insurance companies. The size of the premium is based on salary.
The cost of these defined-contribution plans for the period totaled
MSEK 50 (63).
Munters recognizes actuarial gains and losses in othercomprehensive income in the period they occur to the extent thatthey refer to post-employment remuneration. Actuarial losses
totaled MSEK 7 (44) for the period.
Below is the recognized provisions for pensions under IAS 19 in
the consolidated balance sheet:

Comprehensive income for theyear

Comprehensive income for theyear
Current service cost

34

Belgium
Of which unfunded plans:

Of which unfunded plans:

111
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Plan assets comprise insurance contracts signed with independent
insurance companies. No portion of plan assets in 2020 or 2019
was invested in the Company’s equity instruments, debt
instruments, real estate, or other assets used by the Company. The
Group only has a minor share of funded plans. The most importantactuarial assumptions are as follows:
2020
Weigh t ed v a l u es

S w edenOt h er s

Discount rate, %

1.20

0.55

Future inflation, %

1.50

1.75

Future wage and salary increases, %

2.25

-

Pension increases, %

1.50

-

Social security increases, %

2.25

-

2019
Discount rate, %NOTE 25 OTHER PROVISIONS

2020 GroupOt h er s

1.45

0.70

Provisions
forwarranties

Restructuring

Other
provisions

Total

Opening balance

122

137

44

302

Additional provisions

38

111

38

187

Reversals of unutilized
provisions

-20

0

-0

-20

Utilized during the year

-27

-139

-4

-169

Exchange rate differences

-8

-6

-5

-20

105

103

73

281

Provisions
forwarranties

Restructuring

Other
provisions

Total

Closing balance

2019 GroupS w eden

35

Opening balance

88

0

35

123

Additional provisions

66

192

34

292

Future inflation, %

1.75

1.75

Future wage and salary increases, %

2.25

-

Reversals of unutilized
provisions

Pension increases, %

1.75

-

-22

0

-22

-45

Social security increases, %

2.25

-

Utilized during the year

-12

-54

-4

-69

Exchange rate differences

2

-2

2

2

122

137

44

302

At the end of the reporting period, the discount rate is derived froma functioning market based on investment-grade corporate bonds
adjusted for the duration of the commitment.
Se ns it iv it y anal ys is
A reduction of 0.5 percentage points in the discount rate would
increase the pension commitments by around MSEK 34 (33),
while an increase in the rate of 0.5 percentage points would
reduce the commitment by around MSEK 30 (28). Alteredassumptions with respect to inflation being 0.5 percentage points
lower would reduce the commitment by around MSEK 22 (21)and increase it by around MSEK 25 (24) in an assumption of it
being 0.5 percentage points higher. The sensitivity analysis isperformed by one actuarial assumption changing, while the otherassumptions are kept unchanged. The method shows thesensitivity of the liability to an individual assumption. This is a
simplified method, because actuarial assumptions are normallycorrelated.
Assumptions about life span are based on public statistics andexperience from mortality surveys in each country, and are set in
consultation with actuarial experts. As of this year, for Swedish
pension plans, the most current life span investigation DUS14.
Munters’ budgeted fees for defined-benefit obligations equal MSEK
15 (12) for 2021.
Duration analysis regarding expected payments for postemployment pension benefits (not calculated on present value):
2020

2019

Within the next 12 months

65

Between 1 and 2 years

65

Between 2 and 5 years

17

17

Between 5 and 10 years

31

30

Total

60

57

Age analysis - expected payments

The weighted average duration for the defined-benefit commitments
is 21 years (21).

112

Closing balance

2020

2019

Current portion

33

278

Non-current portion

248

24

Closing balance

281

302

Pr ov is ion s c on s is t of :During the year, provision for warranties was made by MSEK 38(66) including MSEK 7 (-) related to a limited number of customer
claims where Munters have not fulfilled agreed specifications. The
estimated costs will be incurred because of certain components
having to be replaced at the relevant customer installations.
Although the company’s current assessment is that the risk islimited, it cannot be excluded that additional customer claims may
arise. During last year, the provision was unusually high, driven
mainly by a number of specific project deliveries, where
replacement of critical components and repair work on site was
required. In addition, higher quality costs, mainly in the US,
contributed to higher warranty provision. Munters warranty
provision is based upon management’s best estimates of amounts
necessary to settle future and existing claims. The provision isbased on historical trends of units sold and payment amounts,
combined with current understanding of the status of existingclaims. Regular evaluations are made of the adequacy of theseprovisions, and they are adjusted when appropriate. However, thefuture realized outcome for settling the warranty claims can differ
materially from the provision recorded.
Provision for restructuring was made by MSEK 111 (192), andrelates to sharpening the customer offering and footprint
optimization measures. During the year, an exit was made of the
non-core part of the commercial business in the US and theoperations in the Netherlands were consolidated. The remaining
activities is estimated to be completed during 2021. During
previous year, additional provision for restructuring related to thethree-phase plan launched at the beginning of the year to capture
Munters’ full potential to improve the Group’s earnings, which
included layoffs in various parts of the Group as well as the closingof the European Data Centers factory in Dison, Belgium.
Other provisions includes a provision of MSEK 24 (-) related to
Hunter New England Health District, who sued Munters’ Australiansubsidiary, Munters Pty Ltd., corresponding to MSEK 74 plus
interest and expenses, for breach of contract in relation to services
provided to John Hunter Hospital in the spring of 2008. The

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services were provided as part of Munters Pty Ltd.’s MoistureControl Services, which was later divested in 2010. Because of thefact that it was decided just before the end of 2020, that theprocess should go to mediation procedure, to be initiated in
February 2021, a provision was recorded based on an estimatedreasonableness of the mediation outcome. Munters Pty Ltd. has
certain insurance cover under its local liability insurance and forexcess amounts, up to the limit in force at the time, under Munters
AB's insurance. A receivable on the insurer was recorded of MSEK
16 (-). In the case of Munters Pty Ltd. is held liable for the damage,there is a risk that the company may bear the part of the damage
that exceeds what the insurances cover. See Note 34 foradditional disclosures on significant events after the end of thereporting period related to this case.

NOTE 26 ACCRUED EXPENSES AND
DEFERRED INCOME
Group

Parent Company

2020 2019

2020

2019

268
128
68
12
63
15

20
0

8
0

165

162

1

3

742

716

21

11

Other expenses related topersonnel
Received goods not yet invoiced
Commissions
Interest expenses
Deferred income
Audit and lawyers fees

306
153
45
9
51
13

Other
Closing balance

Deferred revenue mainly refers to subscription agreements within
Munters software business.

NOTE 27 PLEDGED ASSETS,CONTINGENT ASSETS AND
CONTINGENT LIABILITIESGroupParent Company

2020

2019

2020

2019

-

-

2

2

Guarantees from banks andinsurance companies

315

324

197

204

Closing balance

315

324

199

206

Contingent liabilities
PRI guarantees

36

legal defense. The company is currently also party to a dispute in
New Jersey, US, regarding environmental damage to a property
that had previously been leased by a company acquired by
Munters and later merged with one of Munters’ subsidiaries in the
US. During the year, Munters' request for a so-called De Minimis
Quantity Exemption was finally rejected by the New Jersey
Supreme Court, which means that the matter has now beenreferred back to the New Jersey Department of Environmental
Protection ("NJDEP"), and an investigation into the cause andextent of the environmental damage has begun. Although apotential environmental liability is hard to estimate, the company
assesses that there is insurance cover for any environmental
liability. Furthermore, Munters has some contractual protection forcosts from the previous owner. As Munters will probably have tobear approximately MSEK 6 in regulatory fines and fees issued by
NJDEP, but subject to ongoing discussions, a provision of MSEK 6
has been made during the year.
In connection with the closure of Dison, specific components of apreviously sold system solution needed to be exchanged at acustomer site, which entailed a one-time cost of MSEK 116.
Munters has insurance for these types of events but has notcompleted discussions with the current insurer and thus no asset
has been reported.

NOTE 28 TRANSACTIONS WITH RELATEDPARTIESThe shares in Munters Group AB are held by FAM AB by 26%(21.1). Other related parties to Munters include other portfolio
companies managed by FAM AB and Munters Board of Directors
and Group Management. There has been no transactions or
outstanding dealings during 2020.
During 2019, the Chairman of the Board of Directors, Magnus
Lindquist, and the Interim CEO, Johan Ek, acquired in total
6,000,000 call options, (3,000,000 call options per person) for
shares in Munters for a value of MSEK 13.8 from a company
controlled by Nordic Capital Fond VII.
The Parent Company has a related party relationship with its
subsidiaries. Information about participations in subsidiaries isprovided in Note 16. Transactions between Munters Group AB
and its subsidiaries have been carried out on market terms.
Remuneration for individual members of the Board and senior
executives is presented in Note 31. Munters has not provided
guarantees or securities to or on behalf of Board members or
senior executives. Munters has not identified any transactions withother related parties, besides those specified in this note and thoseto which reference is made.

PRI guarantees refers to pension liabilities in Sweden. Other
guarantees are operational guarantees, such as advances andcompletion guarantees. Within Munters there are no pledged
assets.
L it ig at ion
Munters is involved in a small number of commercial disputes. It is
the management’s assessment that none of these disputes, where
there has not been a provision recorded, will involve an outflow ofresources.
Munters’ subsidiary in the United States, Munters Corporation iscurrently named as co-respondent in 1 (2) asbestos-related cases.
In the past few years, Munters Corporation has in a number ofcases won through summary judgments, and these are no longer inprogress. Munters Corporation is of the firm opinion that theremaining claims are unfounded and intend to strongly dispute
every claim. Munters Corporation has coverage for the asbestosrelated claims through several insurance policies. Subject to certain
reservations, the insurance companies have confirmed that, until
further notice, they will pay a significant portion of the expenses for
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FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

NOTE 29 AVERAGE NUMBER OFEMPLYOEES AND GENDER
2020
Average number of employees
Group

NOTE 31 REMUNERATION TO THE BOARD
AND SENIOR EXECUTIVES
2019

of whichof which

Numbermen, %

Numbermen, %

United States

930

78

898

82

China

374

82

361

79

Sweden

362

70

351

71

Mexico

264

72

262

69

Germany

231

83

233

82

Belgium

45

90

201

92

India

165

90

174

90

Italy

154

81

160

83

Israel

138

78

157

78

Brazil

127

85

100

88

Czech Republic

76

88

97

85

United Kingdom

72

81

79

80

Japan

62

84

60

85

Netherlands

46

80

55

28

Australia

2

50

34

86

France

33

79

33

82

Singapore

24

75

25

80

South Africa

20

80

20

80

Denmark

20

69

19

71

Korea

19

63

19

74

Spain

13

77

13

77

Turkey

13

69

12

67

Finland

12

83

11

82

Canada

6

67

5

60

Austria

33

85

5

80

Poland

4

100

4

100

Vietnam

2

50

3

67

United Arab Emirates

4

83

3

80

Switzerland

3

67

1

0

Thailand

18

67

0

0

Other

10

74

10

75

Total

3,282

79

3,406

79

G e nde r dis t ribut ion – B oard of D ire c t ors and g roup
manag e me nt
At year-end, the Board of Directors consisted of five men and three
women. Group management, including the CEO, consisted of three
men and three women.

NOTE 30 SALARIES, OTHER
REMUNERATION AND SOCIALSECURITY EXPENSES
Group

Parent Company

2020

2019

2020

2019

Salaries and remuneration

1,710

1,719

22

22

Social security expenses

427

431

7

7

Pension expenses - defined
contribution

50

63

5

5

Pension expenses - defined
benefit
Total

114

37

14

10

-

-

2,201

2,223

35

34

G u ide l in es
The group of executives encompassed by the guidelines comprises
the CEO and other members of the group management. The
guidelines also encompass any remuneration to Board members,
other than Board fees. The guidelines do not apply to any
remuneration resolved by the general meeting.
T h e g u i d e l i n e s ’ p r o m o t i o n o f t h e c o m p a n y ’ s b u s i n e s s s t r a te g y ,l o n g - t e r m i n te r e s t s a n d s u s t a i n a b i l i t y
Munters business strategy is to be a global leader in energyefficient and sustainable climate solutions. Our solutions enableenergy efficient production processes with reduced carbon dioxide
emissions for our customers. Through innovative technologies, theGroup creates the perfect climate for demanding industrial
applications, the largest segments of which are manufacturing,
defense, data centers, food, pharmaceutical and agriculture.
Munters conducts operations in two business areas:••

AirTech is a global leader in energy-efficient air
treatment for industrial and commercial fields ofapplication.
FoodTech is one of the world’s leading suppliers ofinnovative and energy-efficient climate systems forlivestock farming and greenhouses, as well as software
for controlling and optimizing the entire food production
value chain.

A prerequisite for the successful implementation of Muntersbusiness strategy and safeguarding of the company’s long-term
interests, including its sustainability, as well as delivery on theambitions the company has, is that the company is able to recruitand retain qualified personnel. In order to do so, Munters must beable to offer a competitive total remuneration based on market
terms, which these guidelines enable.
Munters has implemented long-term share-related incentive
programs in 2017, 2018, 2019 and 2020, in which some senior
executives have had the opportunity to participate. These programs
have been resolved by each general meeting and are therefore
excluded from these guidelines. For information regarding
performance criteria, terms and conditions, and costs for these
programs, see the Board of Directors’ complete proposal for eachgeneral meeting on Munters website and in Munters annual report.
Variable cash remuneration covered by these guidelines shall
aim to promote the company’s business strategy and long-term
interests, including its sustainability.
Type s of re mune rat ion, e t c .
The remuneration shall be on market terms and may consist of thefollowing components: fixed annual cash salary, variable annual
cash salary, pension and other benefits. Additionally, the general
meeting may – irrespective of these guidelines – resolve on, forexample, share and share price-related remuneration.
F ixe d c as h s al ary
The fixed cash salary shall reflect the demands and responsibility
that the position entails as well as individual performance. The
fixed cash salary shall be revised annually.
V ariabl e c as h s al ary
Variable cash salary shall be maximized to 140 per cent of the
fixed annual cash salary for the CEO and 70 per cent of the fixedannual cash salary for other members of the group management.
The satisfaction of criteria for awarding variable cash salary shallbe measured over a period of one year.
The variable cash salary shall be linked to predetermined andmeasurable financial criteria, such as operating result and working

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capital. By linking the remuneration of the senior executives to thecompany’s earnings and financing of its operating activities, thecriteria promote the implementation of the company’s businessstrategy and long-term interests, including its sustainability.
Furthermore, the criteria for variable cash salary shall be designed
so that they do not encourage excessive risk taking.
To which extent the criteria for awarding variable cash salary
has been satisfied shall be evaluated when the measurement
period has ended. The Board of Directors is responsible for theevaluation so far as it concerns variable cash salary to the CEO.
For variable cash salary to other members of the groupmanagement, the Compensation Committee is responsible for theevaluation. For financial objectives, the evaluation shall be basedon the latest financial information made public by the company.
Terms and conditions for variable cash salary shall be designed
so that the Board of Directors, if exceptional economic
circumstances prevail, has the option of limiting or refraining frompayment if such a measure is considered reasonable.
Additional variable cash remuneration may be awarded in
extraordinary circumstances, provided that such extraordinaryarrangements are limited in time and only made on an individual
basis, either for the purpose of recruiting or retaining executives, or
as remuneration for extraordinary performance beyond theindividual’s ordinary tasks. Such remuneration may not exceed anamount corresponding to 50 per cent of the fixed annual cash
salary and shall not be paid more than once per year and per
individual. Resolution on such remuneration shall be made by the
Board of Directors based on a proposal from the Compensation
Committee.
P e ns i o n
For the CEO, pension benefits, including health insurance, shall bedefined contribution. Variable cash salary shall not qualify forpension benefits. Pension contributions for defined contribution
pension shall amount to not more than 35 per cent of the fixedannual cash salary.
For other members of the group management, pension benefits,
including health insurance, shall be defined contribution unless theexecutive concerned is subject to defined benefit pension under
mandatory collective agreement provisions. Variable cash salary
shall qualify for pension benefits to the extent required bymandatory collective agreement provisions applicable to the
executive. Pension contributions for defined contribution pension
shall amount to not more than 35 per cent of the fixed annual cash
salary.
O t he r b e n e f i t s a n d c o m p e n s a t i o n
Other compensation may consist of other benefits that are
customary and in line with market terms, such as medical
insurance, life insurance and company cars, which shall notconstitute a significant part of the total remuneration. Such benefits
may amount to not more than 10 per cent of the fixed annual cash
salary.
For employments governed by rules other than Swedish, pension
benefits and other benefits may be duly adjusted for compliancewith mandatory rules or established local practice, taking into
account, to the extent possible, the overall purpose of theseguidelines.
C on s u l t an c y f ee t o B oard me mbe rs
In specific cases, and for a limited time, Munters Board members
elected by the general meeting may be able to be remunerated forservices within their respective areas of expertise, which does notconstitute board work. For these services (including services
performed by a Board member wholly-owned company), a fee onmarket terms can be paid, provided that such services contribute to
the implementation of Munters business strategy and safeguardingof Munters long-term interests, including its sustainability. Such38

consultancy fee may, for each Board member, in no case exceed
one year’s Board fee.
Te rminat ion of e mpl oyme nt
Fixed cash salary during the notice period and severance pay, as
well as remuneration for any non-compete restrictions, shall in total
not exceed an amount corresponding to the fixed cash salary for
two years for the CEO and 18 months for other members of thegroup management. Severance pay shall not be paid if notice oftermination of employment is made by the CEO and othermembers of the group management. The notice period between thecompany and the CEO, and other members of the groupmanagement, shall not exceed 6 months.
Remuneration for any non-compete restrictions shall compensate
for any loss of income and shall only be paid for such period as
the former executive does not have the right to severance pay. The
remuneration shall amount to not more than 60 per cent of the
fixed annual cash salary at the time of termination of employment,
unless otherwise provided by mandatory collective agreement
provisions, and shall be payable during the period subject to thenon-compete restriction, which shall not exceed 12 months aftertermination of employment.
Sal ary an d e mpl oyme nt c ondit io ns for e mpl oye e s
In the preparation of the Board of Directors’ proposal for these
remuneration guidelines, salary and employment conditions for
employees of the company and the group’s Swedish operation
have been taken into account by including information on theemployees’ total remuneration, the components of the remunerationand increase and growth rate over time, in the Compensation
Committee’s and the Board of Directors’ basis of decision whenevaluating whether the guidelines and the limitations set out herein
are reasonable. In the company, i.e. in Munters Group AB, there
are only four employees (all are senior executives).
P re parat ion and de c is ion- making proc e s s
The Board of Directors has established a Compensation
Committee. The committee’s tasks include, among other things,
preparing the Board of Directors’ decision to propose guidelines
for remuneration to senior executives. The Board of Directors shallprepare a proposal for new guidelines at least every fourth year
and submit the proposal to the annual general meeting. The
guidelines shall be in force until new guidelines are adopted by thegeneral meeting. The Compensation Committee shall also monitor
and evaluate programs for variable remuneration for the groupmanagement, the application of the guidelines for remuneration tosenior executives as well as the current remuneration structures andcompensation levels in the company. The CEO and other membersof the group management do not participate in the Board of
Directors’ processing of and resolutions regarding remunerationrelated matters in so far as they are affected by such matters.
Remuneration to the CEO is prepared by the Compensation
Committee and decided by the Board of Directors. Remuneration toother members of the group management is prepared by the CEO
and decided by the Compensation Committee.
De rog at ion from t he g uide l ine s
The Board of Directors may temporarily resolve to derogate fromthe guidelines resolved by the general meeting, in whole or in part,
if in a specific case there is special cause for the derogation and aderogation is necessary to serve the company’s long-term interests,
including its sustainability, or to ensure the company’s financial
viability. As stated above, the Compensation Committee’s tasks
include preparing the Board of Directors’ resolutions inremuneration-related matters, which includes preparing any
resolutions to derogate from the guidelines.

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39

2020

Amounts in KSEK

Board
fee/BasesalaryVariable
remuneration

Other
benefits*

Pensionexpenses

Share
based
payments

Total

Members of the Board:(3 women and 5 men)
Magnus Lindquist, chairman

1,188

-

-

-

-

1,188

Helen Fasth Gillstedt, board member and chairman of audit committe

550

-

-

-

-

550

Anna Westerberg, boardmember from AGM May 7, 2020

300

-

-

-

-

300

Andreas Näsvik, board member, until AGM May 7, 2020

137

-

-

-

-

137

Håkan Buskhe, board member from AGM May 7, 2020

300

-

-

-

-

300

Johan Ek, board member, until AGM May 7, 2020

91

-

-

-

-

91

Juan Vargues, board member

400

-

-

-

-

400

Kristian Sildeby, board member

525

-

-

-

-

525

Lena Olving, board member

500

-

-

-

-

500

Per Hallius, board member

400

-

-

-

-

400

CEO Klas Forsström

6,568

7,899

180

2,280

558

17,485

Other senior executives, (4 women and 3 men)

13,670

5,414

3,431

4,155

1,066

27,736

Total

24,62913,313

3,611

6,435

1,624

49,612* Out of total other benefits for senior executives severance amounts to KSEK 2,700.

2019

Amounts in KSEK

Board
fee/BasesalaryVariable
remuneration

Other
benefits*

Pensionexpenses

Share
based
payments

Total

Members of the Board:(2 women and 6 men)
Magnus Lindquist, chairman

1,298

-

-

-

-

1,298

Helen Fasth Gillstedt, board member and chairman of audit committe

550

-

-

-

-

550

Andreas Näsvik, board member

550

-

-

-

-

550

Joachim Zetterlund, board member and chairman of remcom until May 7, 2019

125

-

-

-

-

125

Johan Ek, board member

183

-

-

-

-

183

Juan Vargues, board member

300

-

-

-

-

300

Kristian Sildeby, board member

438

-

-

-

-

438

Lena Olving, board member

500

-

-

-

-

500

Per Hallius, board member

400

-

-

-

-

400

CEO Johan Ek, until Aug 11, 2019

4,210

-

-

-

-

4,210

CEO Klas Forsström, as of Aug 12, 2019

2,708

5,399

75

948

127

9,257

Other senior executives, until Feb 13, 2019 (3 women and 10 men), from Feb
14, 2019 (3 women and 3 men)

15,696

2,582

12,6854,566

461

35,990Total

26,958

7,981

12,7605,514

588

53,801* Out of total other benefits for senior executives severance amounts to KSEK 11,500

The B oard of D ire c t ors
Fees to the Chairman of the Board and other external Board
members are paid in accordance with the decision of the Annual
General Meeting. No board fees are paid to the company's CEOor to the employee representatives.
Salaries and other remuneration paid to the Board for the year
2020 amounted to KSEK 4,391 (4,343) excluding social security
contributions. In accordance with the resolution of the 2020
Annual General Meeting, the total fee for external board members
elected at the AGM amounted to a total of KSEK 4,400, calculated
on an annual basis. Of this amount, KSEK 1,050 is paid to the
Chairman of the Board (Magnus Lindquist) and KSEK 400 each toother external members of the Board.
Th e C ommit t ee s
In addition to these amounts, the AGM has decided to pay a fee
for committee work, which should be paid to board members
elected at the meeting, with a total amount of KSEK 150 to the
Chairman of the Audit Committee (Helen Fasth Gillstedt), and KSEK
100 to each of the other members of the Audit Committee (Lena116

Olving and Kristian Sildeby) and a total amount of KSEK 100 to
the Chairman of the Remuneration Committee (Magnus Lindquist)and KSEK 50 to the other members of the Remuneration Committee(Juan Vargues and Kristian Sildeby).
P res ide n t an d C EO
Munters' President and CEO, Klas Forsström, has a fixed annual
base salary of KSEK 6,630. For three months (April-June), the fixedsalary was reduced by 10%, which meant that the annual fixedsalary for the financial year 2020 amounted to KSEK 6,568
including holiday pay. In addition, Klas Forsström also has avariable cash salary, linked to Munters' annual incentive program(Performance Pay), which amounts to a maximum of 140% percentof the fixed salary.
In addition to the variable remuneration attributable to Munters'
annual incentive program, the reported variable salary also
includes a second partial payment of the special bonus targets thatwere agreed upon during hiring in 2019. The bonus targets werelinked to qualitative targets that were met during the year, and116

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KSEK 1,500 was paid during 2020. The total variable salary forthe financial year 2020 thus amounted to a total of KSEK 7,899.
S e n i o r E x e c u t iv e s
Salaries and other remuneration to Executive Management for theyear 2020 amounted to KSEK 27,736 (35,990), excluding social
security contributions.
Re duc t ion of fixe d s al ary due t o C ov id- 1 9
Munters' CEO and President, as well as the Senior Executives,
jointly decided to reduce their fixed salary by 10% over a threemonth period (April-June), due to the uncertain market situation.
M u n t e r s A n n u a l I n c e n t i v e P r o g r am
Munters' annual incentive program (Performance Pay) for senior
executives and other managers within the Group, is based on
predetermined and measurable financial criteria, measured during
the financial year. All senior executives except the business area
managers are measured 100% on the Group's result. The businessarea managers are measured 70% on the business area's result,and a share of 30% on the Group's result. In 2020, the criteria
were related to Munters 'operating profit (adjusted EBITA) andoperating working capital, with a strong connection to Munters'
medium-term goals and the needs the company sees as essential topursue during the year.

NOTE 32 LONG TERM INCENTIVE PROGRAM
E mpl oye e s t oc k opt ion prog ram 2020
At the Annual General Meeting in May 2020, it was resolved inaccordance with the Board’s proposal to introduce a performancebased long-term employee stock option program to members ofGroup management and certain other key employees (“LTIP2020”). The program should comprise no more than 1,699,000
employee stock options to be granted to members of Groupmanagement and certain other key employees, approximately 74
employees in total. A total of 70 employees accepted the offer,resulting in 1,580,000 employee stock options, whereof 90,000
cash settled.
Each employee stock option that is not cash settled shall entitle
the holder to acquire one share in the company at an exercise
price of SEK 45.82. Each cash settled employee stock option shallentitle the holder to a cash amount equivalent to the value of one
share in the company, calculated as the volume-weighted average
price paid for the company’s shares on Nasdaq Stockholm during
a period of ten business days immediately prior to the exercise of
the option, with a deduction of the exercise price of SEK 45.82.
The share options are vested over a three-year period and theparticipants shall be able to exercise the employee stock options
during a one-year period as of the last date of the vesting period.
Exercise of the employee stock options shall, as a rule, be
conditional upon the program participant still being employed by
the Group at time of exercise and during the full vesting period.
The options are dived into three series. Exercise of the employee
stock options for all series are dependent on the extent to which
performance targets are satisfied related to the compoundedannual growth rate of the adjusted EBITA, the compounded annual
growth rate of net sales and a composite sustainability target
consisting of three sub-components, are met during 2020-2022.
The assessed fair value on the grant date, June 30, 2020, wasSEK 14.43 per option. The fair value on the grant date isindependently determined using an adjusted form of the BlackScholes model, see more information on the data to the model
further below. During the year, the program entailed costs,
including social security contributions, of MSEK 5.0 (-).

40

E mpl oye e s t oc k opt ion prog ram 2019
At the Annual General Meeting in May 2019, it was resolved inaccordance with the Board’s proposal to introduce a performancebased long-term employee stock option program to members ofGroup management and certain other key employees (“LTIP2019”), totaling approximately 72 employees. The program
should comprise no more than 1,595,000 employee stock options
divided in three series. No more than 100,000 of these employee
stock options was to be cash settled (also called synthetic options)and the remainder shall entitle the right to acquire one share in thecompany. A total of 68 employees accepted the offer, totaling
1,498,000 employee stock options, whereof 80,000 cash settled.
The employee stock options were allotted for no consideration.
Exercise of the employee stock options of Series A and Series B
is dependent on the extent to which certain performance targets
are satisfied during the fiscal years 2019-2021 (the “performance
period”). The performance conditions determine the extent to which(if any) the employee stock options in each series may be exercisedto acquire shares or receive a cash amount at the conclusion of thethree-year period from the grant date of the employee stock options(the “vesting period”). Each employee stock option that is not cash
settled shall entitle the holder to acquire one share in the company
at an exercise price of SEK 50.27. Each cash settled employee
stock option shall entitle the holder to a cash amount equivalent tothe value of one share in the company, calculated as the volumeweighted average price paid for the company’s shares on Nasdaq
Stockholm during a period of ten business days immediately prior
to the exercise of the option, with a deduction of the exercise priceof SEK 50.27.
The participants shall be able to exercise the employee stock
options during a one-year period as of the last date of the vesting
period.
The assessed fair value on the grant date, July 19, 2019, wasSEK 8.62 per option. The fair value on the grant date isindependently determined using an adjusted form of the BlackScholes model, see more information on the data to the model
further below. During the year, the program entailed costs,
including social security contributions, of MSEK 6.7 (2.0).
E mpl oye e s t oc k opt ion prog ram 2 0 1 8
At the Annual General Meeting on May 17, 2018, it was resolvedin accordance with the Board’s proposal on the implementation ofa long-term employee stock option program (“LTIP 2018”). The
program should comprise no more than 1,257,000 employee
stock options to be granted to members of Group management andcertain other key employees, approximately 75 employees in total.
A total of 1,239,190 employee stock options was accepted.
Participation in the plan was at the Board’s discretion and no
individual had a contractual right to participate in the plan or toreceive any guaranteed benefits. Options were granted under theplan for no consideration and carry no dividend or voting rights.
Each employee stock option that is not cash settled shall entitle
the holder to acquire one share in the company at an exercise
price of SEK 55. Each cash settled employee stock option shallentitle the holder to a cash amount equivalent to the value of one
share in the company, calculated as the volume-weighted average
price paid for the company’s shares on Nasdaq Stockholm during
a period of ten business days immediately prior to the exercise of
the option, with a deduction of the exercise price of SEK 55.
The participants shall be able to exercise the employee stock
options from the third anniversary of the allotment up to andincluding the fourth anniversary of the allotment. Exercise of theemployee stock options shall, as a rule, be conditional upon the
program participant still being employed by the Group.
The assessed fair value on the grant date, June 27, 2018, wasSEK 5.97 per option. The fair value on the grant date isindependently determined using an adjusted form of the BlackScholes model, see more information on the data to the model

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41

further below During the year, the program entailed costs,
including social security contributions, of MSEK 6.5 (2.6). Below isa summary of allotted and outstanding options (including synthetic)in the three plans.

2020

2019

Average exercise
price per share option
Opening balance

Number of Average exercise priceper share option
options

Number ofoptions

52.25

2,574,360

55.00

1,221,380

Granted during the year46

1,580,000

50.27

1,513,000

Forfeited during the year

52.51

-287,120

54.56-160,020

Closing balance

49.60

3,867,240

52.25

2,574,360

Maturity

Exercise price

Share options
December 31, 2020

Share options
December 31, 2019

June 27th, 2018

June 27th, 2021

55.00

926,240

1,076,360

July 19th, 2019

July 19th, 2022

50.27

1,376,000

1,498,000

June 30th, 2020

June 30th, 2023

45.82

1,565,000-

3,867,240

2,574,360

Outstanding stock options (including synthetic) at year-end have thefollowing maturity dates and exercise prices:

Grant date

Total

F air v al ue of al l ot t e d opt ions
The estimated fair value on the grant date for LTIP 2020 was SEK
14.43 per option, for LTIP 2019 SEK 8.62 and LTIP 2018 SEK
5.97. The fair value on the grant date is estimated using an
adjusted form of the Black-Scholes model, which includes a Monte
Carlo simulation model that takes into account the exercise price,
the term of the option, the impact of dilution (where material), theshare price on the grant date and expected price volatility of theunderlying share, the expected dividend yield, the risk-free interest
rate for the term of the option, and the correlations and volatilitiesof peer group companies. The inputs in the model for options
allotted during the year were:
•

•
•
•
•
•
•
•

the options are allotted for no consideration and vested overa three-year period. Vested options can be exercised within
one year after vesting
exercise price: SEK 45.82 (LTIP 2019: SEK 50.27; LTIP
2018: SEK 55.00)
allotment date: June 30 2020 (LTIP 2019: July 19, 2019;
LTIP 2018: June 27, 2018)
maturity date: June 30, 2023 (LTIP 2019: July 19, 2022;
LTIP 2018: June 27, 2021)
share price on the grant date: SEK 49 (LTIP 2019: SEK 42;
LTIP 2018: SEK 47)
expected price volatility of the company’s share: 40% (LTIP
2019: 36%; LTIP 2018: 26%)
expected dividend yield: 0 (LTIP 2019:0; LTIP 2018:0)
risk-free interest rate: -0.41 % (LTIP 2019: -0.36%; LTIP
2018: 0.24%)

NOTE 33 FEES TO AUDITORS
Fees and remuneration recognized as an expense to the Group’s
auditors during the period are shown below. Audit engagement
refers to the statutory audit of the annual report and accounts, aswell as the administration of the Board of Directors and thePresident, other tasks which the Company’s auditors are
responsible for performing, and advice or other assistanceoccasioned by observations in such audits or the performance ofother similar tasks. Tax advice is consulting on fiscal issues. Other
services are advice that cannot be attributed to any of the abovementioned categories.
Group

Parent Company

2020

2019

2020

2019

Audit engagements

9,634

11,086841

1,118

Audit business beyond
audit engagements

408

537

-

-

Tax advice

939

840

-

-

Other services

422

1,156

107

-

Audit engagements

129

126

-

-

Tax advice

326

480

-

-

Other services

92

67

-

-

11,95014,292948

1,118

Amounts in KSEK
Ernst & Young

Other auditors

Total

W arrant prog ram
At the extraordinary General Meeting on 7 May 2017, it was
resolved to issue warrants as part of an incentive program forcertain members of the Group Management at that time. The
warrants were issued in two separate series. The first series expired
already in 2019, however series 2017/2020 could be exercisedup until November 19, 2020 and comprised a total of 2,611,000
warrants. During the month of November, a total of 851,500
warrants was exercised, resulting in 860,015 new shares. The
average exercise price was SEK 72.

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NOTE 34 SIGNIFICANT EVENTS AFTERTHE END OF THE REPORTING
PERIODIn February 2021, Munters agreed with Hunter New England
Local Health District through a mediation procedure. The company
has sued Munters Australian subsidiary, Munters Pty Ltd. of MSEK
74 plus interest and expenses, for breach of contract in relation toservices provided at John Hunter Hospital in the spring of 2008,
see further information in Note 25. A provision of MSEK 24 wasmade in 2020 based on a best estimate of the outcome of themediation, and at the same time, a receivable on the insurancecompany of MSEK 16 was booked. Final mediation entailed asettlement of MSEK 32, implying a further cost for Munters of
MSEK 9, including court cost. As the amount is considered small,no adjustment has been made to reported provision at year end,
hence the cost will impact the profit in 2021.
In March 2021, a final agreement was reached regarding
insurance compensation linked to previous exchange of specificcomponents at a customer site within the Europén Data Center
business, which since September 2019 has been reported as a
discontinued operation. The agreement entailed a final
remuneration of MEUR 6, corresponding to approximately MSEK
60. The costs for the exchange amounted to MSEK 116 and werereported during the third quarter of 2019.

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ASSURANCE 2020

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

43

A s s u ra n c e 20 2 0
The undersigned assures that the Annual Report has been
prepared in accordance with generally accepted accounting
principles, and that the consolidated accounts have been
prepared in accordance with international accounting
standards as referred to in Regulation EC 1606/2002 of theEuropean Parliament and of the Council of July 19, 2002, on
the application of international accounting standards, provide
a true and fairview of the Company’s and the Group’s financial position andearnings, and that the Board of Directors’ report and the Boardof Directors’ report for the Group provide a fair view of thedevelopment of the Company’s and the Group’s operations,financial position, and earnings and describe material risks
and uncertainties to which the Company and the companies in
the Group are exposed.
Stockholm, March 16, 2021

Magnus Lindquist
Chairman of the Board

Klas Forsström
President and CEOHåkan Buskhe
Board Member

Helen Fasth Gillstedt
Board Member

Per Hallius
Board Member

Lena Olving
Board Member

Kristian Sildeby
Board Member

Juan Vargues
Board Member

Anna Westerberg
Board Member

Simon Henriksson
Board Member,
employee representative

Our Auditor’s report was submitted on

March 19, 2021
Ernst & Young AB

Rickard Andersson
Auktoriserad revisor

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AUDITOR’S REPORT

Audit or’s report

To the general meeting of the shareholders of Munters Group AB(publ), corporate identity number 556819-2321
REPORT ON THE ANNUAL ACCOUNTS ANDCONSOLIDATED ACCOUNTS
O pinions
We have audited the annual accounts and consolidated accountsof Munters Group (publ) for the financial year 2020. The annual
accounts and consolidated accounts of the company are included
on pages 72-120 in this document.
In our opinion, the annual accounts have been prepared inaccordance with the Annual Accounts Act and present fairly, in allmaterial respects, the financial position of the parent company asof 31 December 2020 and its financial performance and cash
flow for the year then ended in accordance with the Annual
Accounts Act. The consolidated accounts have been prepared inaccordance with the Annual Accounts Act and present fairly, in allmaterial respects, the financial position of the group as of 31
December 2020 and their financial performance and cash flow
for the year then ended in accordance with International Financial
Reporting Standards (IFRS), as adopted by the EU, and theAnnual Accounts Act. The statutory administration report isconsistent with the other parts of the annual accounts andconsolidated accounts.
We therefore recommend that the general meeting ofshareholders adopts the income statement and balance sheet forthe parent company and the group.

K e y A u d i t M a t te r s
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our audit of
the annual accounts and consolidated accounts of the current
period. These matters were addressed in the context of our auditof, and in forming our opinion thereon, the annual accounts andconsolidated accounts as a whole, but we do not provide aseparate opinion on these matters. For each matter below, ourdescription of how our audit addressed the matter is provided inthat context.

Timing of revenue recognition
Description
As described in note 1, revenues from sale of goods arerecognized at a point in time when risks and rewards aretransferred to the buyer in accordance with the delivery terms.
Revenues from larger project assignments are recognized overtime in proportion to progress of completion using an output
method at the reporting date.
The company´s customer agreements contain several different
performance obligations, as described in note 1 and 4. In order
to allocate revenue to different performance obligations, and to
determine the progress of completion of performance obligations
within project assignments, certain estimates have to be madewhich effects the timing of revenue recognition.
As a result of the above, we have assessed that the timing ofrevenue recognition is a key audit matter.

Our opinions in this report on the annual accounts andconsolidated accounts are consistent with the content of theadditional report that has been submitted to the parent company's
audit committee in accordance with the Audit Regulation(537/2014) Article 11.
B as is for O pinions
We conducted our audit in accordance with International
Standards on Auditing (ISA) and generally accepted auditing
standards in Sweden. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities section. We
are independent of the parent company and the group inaccordance with professional ethics for accountants in Sweden
and have otherwise fulfilled our ethical responsibilities inaccordance with these requirements. This includes that, based on
the best of our knowledge and belief, no prohibited services
referred to in the Audit Regulation (537/2014) Article 5.1 havebeen provided to the audited company or, where applicable, its
parent company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinions.

We have fulfilled the responsibilities described in the Auditor’s
responsibilities for the audit of the financial statements section of
our report, including in relation to these matters. Accordingly, ouraudit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of
the financial statements. The results of our audit procedures,
including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying
financial statements.

How our audit addressed this key audit matterIn our audit of the fiscal year 2020, we have evaluated thecompany´s principles of revenue recognition in accordance withapplicable GAAP. We have reviewed the company´s processes
for revenue recognition and evaluated key controls within theseprocesses.
Also, we have audited revenue transactions close to the year end
by reviewing customer agreements and delivery notes to verify
that revenue is recognized in the correct period. Furthermore, wehave evaluated the company´s estimates for determining
percentage of completion and revenue recognition related tolarger project assignments.
We have assessed whether the disclosures in the annual report isappropriate.

11
22
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Valuation of goodwill and trademarks
Description
Goodwill and trademarks amounts to MSEK 4,963 and MSEK
5,458 respectively in the consolidated statement of financial
position. As described in note 15 the company annually, or
when indicators of impairment are identified, performs an
impairment test to verify that the carrying values do not exceed
the recoverable amount. Recoverable amount is determined by
calculating the value in use for the respective cash generating
unit using a discounted cash flow model. As also described innote 15, forecasts of future cash flows for the next five years are
based on financial plans approved by the board of directors.
The financial plans include assumptions of future sales growthand operating margin, as well as utilization of operating capital
employed. Furthermore, assumptions of discount rates andgrowth beyond the five year period are required.
The impairment test of the fiscal year did result in any
impairment. As shown in note 15, changes in significant
assumptions and estimates could have an effect on the carrying
value.
Due to the assumptions and estimates made in conjunction withthese impairment tests, and due to the total amount of thecarrying value, we have considered valuation of goodwill andtrademarks as a key audit matter.

How our audit addressed this key audit matterIn our audit of the fiscal year 2020, we have evaluated thecompany’s process for preparing impairment tests. We haveaudited the cash flow models used for the impairment tests andevaluated how cash generating units are identified. We havealso evaluated the assumptions related to future cash flows bycomparing to historical outcome and forecasts, as well as
performing sensitivity analyzes. Furthermore, we have assessed
the discount rate and the assumption of long term growth rate
after the forecast period by comparisons to peers.
We have assessed whether the disclosures provided in theannual report is appropriate.

REVISIONSBERÄTTELSE

O t he r I n f o r m a t i o n t h a n t h e a n n u a l a c c o u n t s a n d c o n s o l i d a t e d
ac c ount s
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages 171. The Board of Directors and the Managing Director are
responsible for this other information.
Our opinion on the annual accounts and consolidated accounts
does not cover this other information and we do not express any
form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts andconsolidated accounts, our responsibility is to read theinformation identified above and consider whether the
information is materially inconsistent with the annual accounts
and consolidated accounts. In this procedure we also take into
account our knowledge otherwise obtained in the audit andassess whether the information otherwise appears to bematerially misstated.
If we, based on the work performed concerning this information,
conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We havenothing to report in this regard.
Re s pons ibil it ie s of t he B oard of D ire c t ors and t he M anag ing
Dire c t or
The Board of Directors and the Managing Director are
responsible for the preparation of the annual accounts andconsolidated accounts and that they give a fair presentation inaccordance with the Annual Accounts Act and, concerning theconsolidated accounts, in accordance with IFRS as adopted by
the EU. The Board of Directors and the Managing Director are
also responsible for such internal control as they determine isnecessary to enable the preparation of annual accounts andconsolidated accounts that are free from material misstatement,
whether due to fraud or error.

122

In preparing the annual accounts and consolidated accounts, The
Board of Directors and the Managing Director are responsible
for the assessment of the company’s and the group’s ability tocontinue as a going concern. They disclose, as applicable,
matters related to going concern and using the going concern
basis of accounting. The going concern basis of accounting ishowever not applied if the Board of Directors and the Managing
Director intends to liquidate the company, to cease operations,or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of
Director’s responsibilities and tasks in general, among otherthings oversee the company’s financial reporting process.
A udit or’s re s pons ibil it y
Our objectives are to obtain reasonable assurance about
whether the annual accounts and consolidated accounts as awhole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes ouropinions. 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 consideredmaterial if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions ofusers taken on the basis of these annual accounts andconsolidated accounts.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:► Identify and assess the risks of material misstatement of theannual accounts and consolidated accounts, whether due tofraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our122FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020

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opinions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal
control.
►Obtain an understanding of the company’s internal control
relevant to our audit in order to design audit procedures thatare appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of thecompany’s internal control.

►

Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by the Board of Directors and theManaging Director.

►

Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern basisof accounting in preparing the annual accounts andconsolidated accounts. We also draw a conclusion, basedon the audit evidence obtained, as to whether any material
uncertainty exists related to events or conditions that may
cast significant doubt on the company’s and the group’s
ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the annual
accounts and consolidated accounts or, if such disclosures
are inadequate, to modify our opinion about the annual
accounts and consolidated accounts. Our conclusions are
based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may

cause a company and a group to cease to continue as agoing concern.
►

Evaluate the overall presentation, structure and content of theannual accounts and consolidated accounts, including thedisclosures, and whether the annual accounts andconsolidated accounts represent the underlying transactions
and events in a manner that achieves fair presentation.

►

Obtain sufficient and appropriate audit evidence regarding
the financial information of the entities or business activities
within the group to express an opinion on the consolidated
accounts. We are responsible for the direction, supervisionand performance of the group audit. We remain solely
responsible for our opinions.

We must inform the Board of Directors of, among other matters,
the planned scope and timing of the audit. We must also informof significant audit findings during our audit, including any
significant deficiencies in internal control that we identified.
We must also provide the Board of Directors with a statementthat we have complied with relevant ethical requirements
regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we
determine those matters that were of most significance in theaudit of the annual accounts and consolidated accounts,
including the most important assessed risks for material
misstatement, and are therefore the key audit matters. We
describe these matters in the auditor’s report unless law or
regulation precludes disclosure about the matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

O pinions
In addition to our audit of the annual accounts and consolidated
accounts, we have also audited the administration of the Boardof Directors and the Managing Director of Munters Group AB(publ) for the financial year 2020 and the proposed
appropriations of the company’s profit or loss.
We recommend to the general meeting of shareholders that the
profit be appropriated (loss be dealt with) in accordance with theproposal in the statutory administration report and that themembers of the Board of Directors and the Managing Director
be discharged from liability for the financial year.
B as is for opinions
We conducted the audit in accordance with generally accepted
auditing standards in Sweden. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and thegroup in accordance with professional ethics for accountants in
Sweden and have otherwise fulfilled our ethical responsibilities inaccordance with these requirements.
We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinions.
Re s pons ibil it ie s of t he B oard of D ire c t ors and t he M anag ing
Dire c t or
The Board of Directors is responsible for the proposal for
appropriations of the company’s profit or loss. At the proposalof a dividend, this includes an assessment of whether the dividend
is justifiable considering the requirements which the company's
and the group’s type of operations, size and risks place on the sizeof the parent company's and the group’s equity, consolidation
requirements, liquidity and position in general.
The Board of Directors is responsible for the company’sorganization and the administration of the company’s affairs. This
includes among other things continuous assessment of thecompany’s and the group’s financial situation and ensuring that thecompany's organization is designed so that the accounting,management of assets and the company’s financial affairs
otherwise are controlled in a reassuring manner. The Managing
Director shall manage the ongoing administration according to theBoard of Directors’ guidelines and instructions and among othermatters take measures that are necessary to fulfill the company’s
accounting in accordance with law and handle the management ofassets in a reassuring manner.
A udit or’s re s pons ibil it y
Our objective concerning the audit of the administration, andthereby our opinion about discharge from liability, is to obtain
audit evidence to assess with a reasonable degree of assurance
whether any member of the Board of Directors or the Managing
Director in any material respect:► has undertaken any action or been guilty of any omission which
can give rise to liability to the company, or

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FINANCIAL REPORTS|

MUNTERSR SI RNPGO ROTC2H0 H
Å L L B A R H E T S R A P P O R T 2 0 2 0 | M U N T E R S | S T R AT E G I| A N N U A L A N D S U SÅTANEADBOI LVI TI SYNRI E
20

FINANCIAL REPORTING | MUNTERS | ANNUAL AND SUSTAINABILITY REPORT 2020►

in any other way has acted in contravention of the Companies
Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriationsof the company’s profit or loss, and thereby our opinion about this,is to assess with reasonable degree of assurance whether the
proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with generally
accepted auditing standards in Sweden will always detect actions
or omissions that can give rise to liability to the company, or thatthe proposed appropriations of the company’s profit or loss are notin accordance with the Companies Act.
As part of an audit in accordance with generally accepted auditing
standards in Sweden, we exercise professional judgment andmaintain professional skepticism throughout the audit. The
examination of the administration and the proposed appropriationsof the company’s profit or loss is based primarily on the audit of
the accounts. Additional audit procedures performed are based on
our professional judgment with starting point in risk andmateriality. This means that we focus the examination on suchactions, areas and relationships that are material for the operations

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47

and where deviations and violations would have particularimportance for the company’s situation. We examine and test
decisions undertaken, support for decisions, actions taken andother circumstances that are relevant to our opinion concerningdischarge from liability. As a basis for our opinion on the Board of
Directors’ proposed appropriations of the company’s profit or loss
we examined the Board of Directors’ reasoned statement and aselection of supporting evidence in order to be able to assess
whether the proposal is in accordance with the Companies Act.
Ernst & Young AB, Box 7850, 111 44, Stockholm, was appointed
auditor of Munters Group AB by the general meeting of theshareholders on the 26 May 2016 for a term of four years and has
been the company’s auditor since 2010.
Stockholm March 19, 2021
Ernst & Young AB

Rickard Andersson
Authorized Public Accountant

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DEFINITIONS OF KEY FINANCIAL INDICATORSDefinit ions of key fiAV
nancFINANSIELLA
ial in dicat or
DEFINITIONER
NYCKELTAL
In this annual report as well as in the quarterly interim reports,
there are references to a number of performance measures. Someof the measures are defined in IFRS, others are alternative
performance measures and are not disclosed in accordance withapplicable financial reporting frameworks or other legislations. The
performance measures are used by the Group to assist bothinvestors and management in analyzing Munters’ business. Below
are the performance measures found in this annual report
described, defined and the reason for use disclosed.

O r g an i c g r owt hChange in order intake and net sales compared to the previous
period, excluding currency translation effects and contributions toorder intake and net sales from businesses that were acquired
and/or divested during the current period and/or any comparison
period. The measure is used by Munters to monitor order intake
and net sales growth driven by changes in volume and pricebetween different periods.
O rde r bac kl og
Received and confirmed sales orders not yet delivered andaccounted for as net sales. Order Backlog is a useful measure toindicate the efficiency of the conversion of received and confirmed
sales orders into net sales in future periods, and is used by Munters
to monitor business performance and customer demand, and adjust
operations.
O rde r int ake
Received and confirmed sales orders during the reporting period.
The order intake is an indicator of future revenues and,
consequently, an important KPI for the management of Munters’
business.
O pe rat ing profit ( E B I T)
Earnings before interest and tax. Munters believes that EBIT shows
the profit generated by the operating activities.
A d j u s t e d E B I TA
Operating profit, adjusted for amortizations, write-downs ofintangible assets and items affecting comparability. Muntersbelieves that using adjusted EBITA is helpful in analyzing our
performance as it removes the impact of items considered not to beof recurring character and therefore do not reflect our core
operating performance.
A d j u s t e d E B I TA m a r g i n
Adjusted EBITA as a percentage of net sales. Munters believes that
Adjusted EBITA margin is a useful measure for showing theCompany’s profit generated by the operating activities.
A d j u s t e d E B I T DA
Operating profit, adjusted for depreciations and amortizations,write-downs of tangible and intangible assets and items affecting
comparability.

C apit al e mpl oye dCapital employed is calculated as the total equity plus interest
bearing liabilities.

Re t urn on c apit al e mpl oye d ( RO C E )Average operating profit (EBIT) plus financial income, divided by
the average capital employed, where capital employed is total
equity plus interest-bearing liabilities. The average capital
employed is calculated based on the last 12 months. Return on
capital employed (ROCE) is also presented applying EBIT adjusted
for IAC and Capital employed adjusted for goodwill for improving
comparability against other industrials.
C a s h a n d c a s h e q u i v a l e n ts
Cash and bank balances plus investments in securities and the likewith maturity periods not exceeding three months. This is ameasure that highlights the short-term liquidity.
LTM
LTM (last twelve months) after any key indicator means that the KPI
corresponds to an accumulation of previous twelve month reported
numbers. The measure highlight trends in different KPIs, which isvaluable in order to gain a deeper understanding of thedevelopment of the business.
N e t de bt
Net debt calculated as interest bearing debt and pension liabilities,
deducted by cash and cash equivalents. This is a measure of theability to repay the debt if it was all due.
A ve r a g e n u m b e r o f e m p l o y e es
Average number of employee is calculated as the sum of
permanent employees at the end of each of the last 13 months
divided by 13. The calculation of average number of employees isbased on full time equivalents in respective county.
O p e r a t i n g c as h f l o w
Earnings adjusted for depreciation, amortization, and impairments,
as well as for investments and operating capital.
O pe rat ing w orking c apit al
Accounts receivables, inventories, accounts payables andadvances from customers.
E arning s pe r s hare
Net income adjusted for the right of preferential shares todividend, divided by the weighted average number of ordinary
shares.
E q u i t y / a s s e ts r a t i o
Equity (including holdings with non-controlling interests) divided bytotal assets.

A d j u s t e d E B I T DA m a r g i n
Adjusted EBITDA as a percentage of net sales.
I t e ms a f f e c t i n g c o m p a r a b i l i t y ( I A C )Items affecting comparability relates to income statement items thathave an impact on operating profit and are, in our opinion,
considered not to be of recurring character.

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THE SHARE|MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

THE SHARETHE MUNTERS SHARE trended higher during the year.

In 2020, the share price increased 69 percent, while
the Stockholm Stock Exchange OMXS30 rose 4 percent
during the same period.

The closing price on the last trading day of the year was SEK 83.00 (49.06),
equivalent to a market capitalization of SEK 15.3 billion (9.0). The highest pricepaid in 2020 was SEK 84.10 (50.50) and the lowest price was SEK 21.56(33.70).
TRADING IN THE MUNTERS SHARE
In 2020, a total of 109.2 million shares (117.9) were sold. Average turnover
during the year was 433,295 shares per day (471,720).
DIVIDEND
Under the dividend policy adopted by the Board of Directors, Munters aims to
pay an annual dividend corresponding to 30–50 percent of net income for theyear. Decisions on any dividend proposals are taken by the Board in consideration of the company’s financial position, investment needs, acquisitions andliquidity position. The Board of Directors is proposing a dividend for 2020 of SEK
0.70 (0) per share, representing 30 per cent of net income for 2020.
SHARE CAPITALAt December 31, 2020, the number of shares and votes in Munters totaled
184,457,817. Each share has a quota value of SEK 0.03, and the share capital
totaled SEK 5,533,734.51.
Munters’ share capital is composed of one share class, in which each share
has the same number of votes and yields the same right to a dividend. Under the
Articles of Association, the number of shares may not fall below 150,000,000
and not exceed 600,000,000. The company’s share capital may not fall below
SEK 4,500,000 and not exceed SEK 18,000,000. The company’s shares areregistered with Euroclear Sweden AB, which administers the company’s shareregister and records the shares for individual investors. Munters Group AB has its
own holding of 2,537,000 shares related to employee incentive programs.
OWNERS
The number of shareholders at December 31, 2020 was 4,912, and the proportion of shareholders outside Sweden at year-end was 40.6 per cent. The tenlargest individual shareholders had 70.1 per cent of the share capital at that time.
FAM AB was the largest shareholder, with 26.0 percent of the share capital.

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A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | T H E S H A R E

THE TEN LARGEST SHAREHOLDERS AS OF DECEMBER 31, 2020

KEY FIGURES
Number of shares at year-end, millions

184 (184)

Name

Holding

Holding, %Market capitalization at year-end, SEK billion

15.3 (9.0)

FAM AB

47,997,797

26.0

Number of shareholders

4 912 (5 988)

ODIN Funds

15,617,971

8.5

Share price at year-end, SEK

83.00 (49.06)

First AP Fund

15,515,473

8.4

Earnings per share, SEK

2.32 (-0.91)

Swedbank Robur Funds

15,234,102

8.3

Change in share price during the year, %69.2 (44.3)

Fourth AP Fund

9,119,469

4.9

Regular dividend, SEK/share

0.70* (0.00)

Handelsbanken Funds

7,205,635

3.9

Columbia Threadneedle

6,566,840

3.6

Dividend as a % of earnings per share

30 (00)

Proportion of shares in Sweden, %59.4 (72.1)

Proportion of shares owned by 10 largest
shareholders, %70.1 (69.6)

C WorldWide Asset Management

4,373,750

2.4

La Financière de l’Echiquier

4,255,598

2.3

Norges Bank

3,256,139

1.8* Proposed dividend

ANALYSTS
Analysts who actively cover the Munters share.

Bank

Name

ABG Sundal Collier

Karl Bokvist+46 (0) 8 566 286 33

Telephone

Carnegie

Kenneth Toll Johansson+46 (0) 8 58 86 89 11

Danske Securities

Björn Enarson+46 (0) 8 568 80605

Jefferies

Simon Toennessen+44 (0) 20 7029 8346

Kepler Cheuvreux

Mats Lisss+46 (0) 8 723 51 18

NordeaCarl Ragnerstam+46 (0) 101 562 817

ParetoAnders Roslund+46 (0) 8 402 52 88

SHAREHOLDING BY SIZE
Holding

Number of
known shareholders

Holding %Votes, %1–1,000

4,384

0.4

0.4

1,001–10,000

386

0.7

0.7

10,001–50,000

63

0.8

0.8

50,001–500,000

52

5.5

5.5

500,001–1,000,000

7

2.5

2.5

1,000,001–5,000,000

13

15.9

15.9

5,000,001–10,000,000

3

12.4

12.4

10,000,001–20,000,000

3

25.1

25.1

20,000,001–

1

Unknown owners

26.0

26.0

10.5

10.5

Ownership distribution
in and outside Swedenn Sweden 59.4%
n International ownership 40.6%

The Munters share
Trading volume per day

SEK

25,000,000

100

20,000,000

80

15,000,000
60
1,000,0000

5,000,000

0

40

20

Munters
OMX General Index (OMX GI)

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I N F O R M AT I O N T O T H E S H A R E H O L D E R S|

MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

INFORMATION TO THE SHAREHOLDERSREPORTS CAN BE ORDERED
FROM MUNTERS GROUP AB:
Web: www.munters.com
Email: info@munters.se
Address: Munters Group AB
Box 1188, SE-164 26 KISTA, Sweden

FOR MORE INFOR M ATION:
Ann-Sofi Jönsson, Vice President,
Investor Relations and Enterprise
Risk Management
Phone: + 46 (0)730 251 005
Email: ann-sofi.jonsson@munters.com

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ANNUAL GENERAL MEETING 2021
The Annual General Meeting of Munters Group AB (reg.no. 556819-2321) will
be held on May 19, 2021 as a postal voting meeting.
Anyone wishing to attend the Annual General Meeting must register by casting
their postal vote in advance. Details of the registration procedure can be found in
the notice convening the Annual General Meeting.
The last day to register by casting a postal vote is May 18, 2021.

A N N U A L A N D S U S TA I N A B L I L I T Y R E P O R T 2 0 2 0 | M U N T E R S | 6 5 Y E A R S O F I N N O VAT I O N

65 YEARS OF INNOVATIONMUNTERS WAS FOUNDED IN 1955 by Carl Munters. He had worked for years with innovative

solutions to create the best possible indoor air for both people and industry. Today air
treatment systems are more important than ever to reduce global consumption of energy andwater resources.

1950s
In 1955, Munters is founded by inventor
and entrepreneur Carl Munters together
with Marcus Wallenberg. The company
develops modern air-conditioning
systems based on evaporative cooling,
dehumidification and heat recovery.
1960s
Munters expands and grows not only
in Sweden but internationally as well.
Dehumidifier production is establishedin the US. The launch of new, innovative
products continues and the best-sellingmodel ever, the M100, is launched in
1964.
1970s
The product range and areas ofapplication are expanded. Aninternational distribution network is established. The oil crisis of 1973 leads toenergy savings requirements and gives
Munters major market
potential. Munters is acquired in1974 by Incentive AB.
1980s
Resellers and agents are acquired overa period of several years to broaden
and strengthen the business. Muntersestablishes operations in a number ofcountries, including Japan in 1987.
Munters focuses on environmental
improvements and in 1988 acquires aunique Swedish air purification technology, Zeol, which it further improves withMunters’ rotor technology.

1990s
Munters expands and becomes aninternational group with sales offices inover 25 countries. A new manufacturing
plant is built in the US. Environmental
issues become increasingly importantto Munters’ customers and society as
a whole, creating a foundation for
new products in evaporative cooling.
Munters acquires Euroemme. In 1997,
Munters AB is listed on the Stockholm
Stock Exchange.
2000s
Munters invests in sales and productionin Asia. Several acquisitions makeMunters a world leader in climate
systems for livestock farming and greenhouse cultivation. Munters also acquires
Des Champs Technologies in the US andToussaint Nyssenne, a leading European
manufacturer of large-scale air treatment
systems.
2010s
In 2010, Munters is acquired by Nordic
Capital and delisted from the Stockholm
Stock Exchange. A number of strategicacquisitions are made primarily in
livestock farming and greenhouses.
Acquisitions of Rotem, an Israeli specialist in control and management systems,
and the German company Reventa.
The acquisitions of MTech Systems andEdata, software developers for poultry
and swine production. Acquisitions ofProflute and HB Group as well as Kevin
Enterprises in India. In 2017, Munters
Group (MTRS) is listed on Nasdaq
Stockholm.
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MUNTERS EMPLOYEES AROND THE WORLD |MUNTERS| A N N U A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 0

MUNTERS EMPLOYEES AROUND
THE WORLD

Average number of employees in 2020 by country*
USA

930

Japan

62

Spain

13

China

374

Netherlands

46

Turkey13
12

Sweden362

Belgium

45

Finland

Mexico264

France33

Canada6

Germany

231

Austria33

United Arab Emirates

4

India

165

Singapore24

Poland

4

Italy

154

Denmark

20

Switzerland

3

Israel138

South Africa

20

Australia

2

Brazil

127

Korea

19

Vietnam2

Czech Republic

76

Thailand18

Other countries

10

UK

72

* The average number of employees is calculated by the sum of permanent employees over the past 13 months divided by 13.

130

Average number of employees
in the world 2020

3,282

Photo Munters, Adobe Stock, Peter Phillips, Hans Alm, Studio Julke
Print Taberg Media Group, Stockholm, Sweden, 2021

FOR CUSTOMER SUCCESSAND A HEALTHIER PL ANET