Annual report 2021
Table of contents
Introduction
The situation in Ukraine 3
This is Ferronordic 4
The year in brief 5
CEO comments 6
Business model 8
Vision and values 9
Strategic objectives 11
Value creation 13
Ferronordic as an investment 14
Background and history 15
Market outlook
Markets and driving forces 17
Russia/CIS 19
Germany 23
Operations
Russia/CIS 28
Germany 33
Brands 36
Digital platform 38
Sustainability
A new strategy 40
International standards 41
Stakeholder dialogue and
materiality analysis
42
Planet rst 43
Fair workplace 45
Sustainable offer 47
Sustainability risks 48
Outlook for 2022 49
Taxonomy 50
KPI index 51
The share
The Ferronordic share 53
Corporate governance
Corporate governance report 56
Board of directors 61
Management and auditors 63
Formal annual report
Directors' report 66
Risks and uncertainties 70
Financial reports 73
Notes 85
Board signatures 121
Auditor's report 122
The statutory annual report comprises pages
40–51, 56–60 and 66–121.
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
3
FERRONORDIC ANNUAL REPORT 2021
The situation in Ukraine
This annual report was prepared in the midst of an ongoing military conict in
Ukraine. Ferronordic regrets the tragic turn of events and the human suffering and
hopes for a peaceful resolution to the conict. The conict situation negatively
affects our business in Russia and creates signicant risks for Ferronordic. We
closely monitor the changes in our business environment but realise that any
forecasts and other predictions about the Russian market and our operations there
will be highly uncertain. We have therefore refrained from forward-looking commit-
ments as far as possible in this report.
Our business model and vision however remain unchanged. We have always
considered our mission to help our customers to achieve leadership in the broadest
sense and to deliver value to all our stakeholders. We want to be an active player
in local communities and a good and fair employer that offers our employees edu-
cation, professional development and career opportunities. We want to be a positive
force in the transition to a sustainable society and work for a better environment.
We strive to increase efciency and productivity, to reduce resource waste and
improve safety in the workplace. Our business culture is based on high ethical
standards and zero tolerance for corruption. It is through long-term investments in
shared values and sustainable protability that we can continue to make a positive
contribution to people, society and the environment. Our businesses in Germany
and Kazakhstan are not directly impacted by the situation in Ukraine and we con-
tinue to focus on growth and delivering value to our customers in these markets.
4
FERRONORDIC ANNUAL REPORT 2021
Revenue by industry (2021)
General construction and other
Road construction
Mining
Forestry
%
1
11
10
2
25
43
8
Quarries and Aggregates
Oil and gas
Transportation
Revenue by geographical segment
Russia/CIS
Germany
%
78
22
Revenue by activity (2021)
Equipment and truck sales
Aftermarket sales
Contracting services
Other revenue
%
2
62
23
14
This is Ferronordic
Ferronordic is a service and sales company in the areas of construction equipment and trucks.
The Company operates in Russia, Kazakhstan and Germany.
Germany
Since 2020, Ferronordic is a dealer of Volvo and
Renault Trucks in parts of Germany. Ferronordic’s
growing network covers approx. 20 percent of the
total German truck market, including Frankfurt,
Hannover and fast growing cities in the east part of
the country like Dresden and Leipzig.
Russia/CIS
The Russia/CIS segment consists of the markets in
Russia and Kazakhstan. In Russia, Ferronordic is
the dealer of Volvo Construction Equipment, Sandvik
(excluding Northwest and Central Russia), Rottne,
Mecalac, Dressta as well as certain other brands.
Ferronordic is also an aftermarket partner of Volvo
Trucks and Renault Trucks in parts of Russia. The
operations in Russia also include a centre for machine
and component rebuild. In Kazakhstan, Ferronordic
is the dealer of Volvo Construction Equipment and
Mecalac.
Contracting services
In addition to service, sales and rental, Ferronordic
also offers contracting services where the Company
owns the machines and hires the operators. Ferronordic
operates the machines for its customers to excavate
and transport overburden or rock and is paid based
on the amount and distance of earth and rock trans-
ported. At present, Ferronordic only offers contracting
services in Russia.
Headquarters in Stockholm, Sweden
Ferronordic is headquartered in Stockholm. Today,
the Group has 109 facilities and employs approx.
1,800 people in Russia, Kazakhstan and Germany.
The shares in Ferronordic AB (publ) are listed on
Nasdaq Stockholm since 2017.
3 Markets • 1,791 Employees • 109 Facilities • SEK 6,212 m Revenue • 7.8% Operating margin
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
5
FERRONORDIC ANNUAL REPORT 2021
The year in brief
2021 2020 2019 2018 2017
New units sold, SEK m 2,046 1,721 965 948 738
Revenue, SEK m 6,212 4,635 3,747 3,241 2,567
Growth, % 34 24 16 26 55
EBITDA, SEK m 698 504 494 322 214
Margin, % 11.2 10.9 13.2 9.9 8.3
Operating prot, SEK m 483 328 358 274 187
Margin, % 7.8 7.1 9.5 8.4 7.3
Result per share after full dilution, SEK 23.26 15.25 17.26 13.22 8.06
Net debt/(Net cash), SEK m 198 (20) 593 (303) (312)
Return on capital employed, % 29 20 27 41 36
Working capital/Revenue, % 2 5 20 1 5
Total assets, SEK m 3,973 2,628 2,343 1,727 1,414
Equity/total assets, % 28 31 36 38 43
Group
• Revenue increased by 34 percent due
to strong demand, product mix and
price development as well as positive
development in the aftermarket and in
contracting services.
• Operating margin amounted to 7.8 per-
cent (7.1) and operating prot increased
by 47 percent to SEK 483 m.
• Strong cash ow from operating
activities. Working capital and net debt
remained low.
• Earnings per share after dilution amounted
to SEK 23.26 (15.25) and growth in
earnings per share was 52 percent.
• Return on capital employed of 29 per-
cent (20).
• Given the uncertain outlook, the Board
has decided to recommend to the AGM
in 2022 that a dividend should not be
paid.
• Focus on sustainability and steps towards
electromobility.
Russia/CIS
• Sales of construction equipments in
units increased by 13 percent in a
market that grew by 47 percent.
• Net sales increased by 33 percent,
mainly due to machine product mix and
growth in aftermarket and contracting
services.
• Operating margin increased to 11.4 per-
cent (10.8), mainly due to a better gross
margin and a larger share of net sales
from contracting services.
• Expansion of machine and component
rebuild and contracting services.
• Ferronordic became dealer for Sandvik
mobile and stationary crushers and
screens.
Germany
• Sales of trucks in units increased by
29 percent in a market that increased
by 10 percent.
• Net sales increased by 39 percent with
contributions from sales of used trucks
and strong aftermarket sales.
• Operating prot was negatively affected
by restructuring costs.
• Acquisitions and network integration of
ve workshops.
• Investments in organisation- and network
development.
SEK m
Revenue
0
2,000
4,000
6,000
8,000
2120191817
%
Operating margin
0
2
4
6
8
10
2120191817
SEK m
Operating cash flows
-400
-200
0
200
400
600
800
2120191817
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
6
FERRONORDIC ANNUAL REPORT 2021
A record year followed by great uncertainty
When I summed up 2021 a couple of months ago, I concluded that it was our best year to date. Our
operations in Russia/CIS increased both in net sales and protability. We also continued to develop our
businesses within contracting services and remanufacturing and expanded our collaboration with Sandvik.
In Germany, we invested in our organisation and network to build a stronger platform for the future. At
Group level, we continued to develop our sustainability strategy and took steps to promote electromobility.
At the time, the outlook was positive, although the geopolitical situation was already tense. The military
conict in Ukraine and the subsequent sanctions against Russia have since fundamentally changed the
situation and all forecasts are now uncertain.
Russia/CIS – an uncertain future
Despite operational disruptions and supply constraints,
our business in Russia/CIS continued to grow both
revenue and protability and achieved record operat-
ing and net results in 2021. Revenue grew 33 percent
and operating prot by 40 percent. Our digital sales
system and dedicated service teams both contributed
to strong aftermarket sales. Our contracting services
project in Norilsk reached planned capacity, we
expanded our project in Irkutsk and started a new
project at an iron ore deposit in Russian Karelia. Our
machine and component rebuild centre worked with
high capacity utilisation. We continued to grow our
footprint and business in Kazakhstan.
Following 24 February, our business in Russia
faces unprecedented uncertainty. Our main partners
have temporarily suspended deliveries to Russia,
logistics are curtailed to and within the country, the
banking system and currency is under pressure and
the economy will likely deteriorate. Following our
preliminary assessment of the sanctions, we will
adapt our organisation but continue to sell products
and services that are not restricted from our inventory
and from partners that continue to supply. Our service
and sales teams, contracting services organisation
and machine rebuild center continue to work towards
increased efciencies and a circular economy. We also
work to keep our organisation going and our people
moving towards shared values.
Germany – building the platform
The German market for heavy trucks recovered in
2021 and grew in units by 10 percent compared to the
pandemic year of 2020. Our sales grew by 29 percent
and we gained market shares. Our aftermarket sales
increased by 36 percent, of which 9 percentage points
were organic.
In 2021, we invested in our people, organisation
and workshop network. We appointed a new head of
our German business at the beginning of the year.
During the year, we completed the acquisition of
ve workshops in strategic locations and began the
construction of a new sales hub facility in Hannover.
We also invested signicant resources in training our
employees, with special emphasis on customer focus.
We changed the organisation and compensation
system to increase efciency and results orientation.
These investments cost money. During the year,
we incurred acquisition and restructuring costs of
SEK 25 m. We are however convinced that these
investments will bring returns in the future.
Overall, we made good progress during the year and
are cautiously optimistic about the future. In 2022,
we will continue to grow our network and develop
our service organisation. My assessment is that we
can achieve a positive operating result in Germany in
2022.
Sustainability – more important than ever
The transport sector is a signicant source of emis-
sions in terms of carbon dioxide. We are therefore
facing a major shift to more climate-smart fuels. In this
process, electrication will be a key factor.
Through our partnership with the Volvo Group,
we have a great advantage in both trucks and
construction machines. We can offer products to our
customers that meet not only strict requirements for
environmental performance, but also for quality and
safety for the operators.
Electrication is a key part of our strategy for
increased growth and protability. By being a close
partner to both suppliers and our customers, we can
help them in their transition to emission free transport.
This creates new business opportunities for both them
and for us.
We have high ambitions and put the highest de-
mands on ourselves when it comes to business ethics
and anti-corruption. This may mean that we miss
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
7
FERRONORDIC ANNUAL REPORT 2021
business opportunities in the short term, but a strong
business moral is part of our DNA. It strengthens our
competitive position and offers superior business
opportunities in a longer perspective.
A strong team – our key asset
The record year 2021 is the result of close teamwork
by our many competent and committed employees.
The result reects their initiative, strive towards inno-
vative solutions and close cooperation with our cus-
tomers. This is what drives our mutual success and
what always underpinned Ferronordic’s growth and
development. It is the importance of our employees
and their relationship with our customers that drives us
to constantly invest in the education and the devel-
opment of our employees, which also means that we
create value for the communities in which we operate.
Our ability to contribute to long-term positive
change in all our markets is a key reason for us to
continue our efforts, support our customers and stay
with our people.
Outlook
As a result of the military conict in Ukraine and the
subsequent sanctions and counter-sanctions, the
prospects for Ferronordic’s operations in Russia
have deteriorated signicantly. Some of our partners,
including the Volvo Group, have announced that
they are temporarily stopping deliveries to Russia. If
the supply suspension to Russia continues, it could
have a signicant impact on our revenues, earnings
and cash ows. In addition, it is likely that the negative
impact on the Russian economy and industry from the
sanctions will be signicant. Our operations in Kazakh-
stan continue but they are a smaller part of sales and
may also be negatively affected by a worsening eco-
nomic situation in Russia. In Germany, we believe that
a recovery from the pandemic will lead to increased
demand for trucks and service. The tense geopolitical
situation may however also affect the German econo-
my and market. In a longer perspective, we however
believe that the underlying conditions and business
opportunities in the German market are strong.
Lars Corneliusson, President and CEO
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
8
FERRONORDIC ANNUAL REPORT 2021
Ferronordic’s business model
Ferronordic is a service and sales company in the areas of construction equipment and trucks. The
business consists of selling, repairing and maintaining different types of machines, trucks, engines,
spare parts and attachments. In addition, Ferronordic provides consultancy services such as machine
operator trainings and also has a growing business in contracting services and remanufacturing. The
vision of Ferronordic is to help its customers achieve industry leadership through an outstanding team,
a strong brand portfolio and customer-focused solutions.
Ferronordic’s business model consists of four main types of customer business
relationships, where the trend is moving towards an integration with the customer.
This translates into growing commitment in terms of service and aftermarket
coverage, capital investment and expertise. It puts growing demands on nancial
strength and customer understanding, but also allows for higher margins. For the
customer, this trend tends to imply higher operational reliability and productivity
and thus more stable revenues and stronger margins. The business model is
scalable and relatively easy to export to new geographic markets.
The customer buys a
machine or truck as well as
service and spare parts if
needed.
The customer buys a
machine or truck as well
as ongoing service and
maintenance according to
the agreed plan.
The customer rents a
machine or truck with or with-
out an operator and commits
to ongoing service according
to the agreed plan.
The customer purchases
a service performed by
Ferronordic. Ferronordic is
responsible for equipment,
stafng, service and main-
tenance.
Margin on machine and
revenue for service and
spare parts.
Margin on machine and
revenue for contracted
service and spare parts.
Rental for machine, as well
as possibly for contracted
operator and related service
and spare parts.
Remuneration for work per-
formed, for example related
to the number of tons and/or
kilometers.
Machine sales,
aftermarket and service
Machine sales with
service agreement
Rental of machine
with or without operator
Contracting services
Business
arrangement
Ferronordic’s
revenue
Description
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
9
FERRONORDIC ANNUAL REPORT 2021
Vision, values and strategic cornerstones
Vision
To be the leading service and sales company in its markets.
Mission
To support the growth and leadership of its customers.
Values and principles
Ferronordic’s core values are quality, excellence and respect.
These values guide the Company when interacting with customers,
partners, suppliers and each other. They dene Ferronordic and
determine what the Company invest in and how it delivers prod-
ucts and services to its customers.
Quality
Ferronordic value long-term partnerships with its customers and
partners. This requires a consistent focus on quality in products,
services and relationships. The Company lives up to its commit-
ments and strive to exceed expectations in everything it does.
Excellence
Ferronordic and its team are passionate specialists and experts
who create value for their customers and partners. The Company
is continuously improving its processes and products to deliver a
better customer experience.
Respect
Ferronordic deals fairly and openly with each other, customers,
suppliers and the societies the Company works in. The Company
and its employees show tolerance and promote equal opportuni-
ties for all - regardless of gender, ethnic and religious backgrounds
or disability.
Offer
Feronordic’s offer is based on a broad experience in its industry
and on solving the challenges the customers face in their everyday
operations. Furthermore, the offer is built on quality products, a
well-developed infrastructure and a dense network of workshops
but extends to bespoke professional solutions for the customers’
businesses, such as contracting services.
Vision
Mission
Values & operating principles
Our offer
Strategic cornerstones
Ferronordic has a clearly stated vision of where the Company is going and a mission that underpins the
daily work. A clear picture of who we are, where we are going and what values lead us create conditions
for business success while ensuring ethical and sustainable business practices.
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
10
FERRONORDIC ANNUAL REPORT 2021
Strategic cornerstones
Ferronordic’s strategic cornerstones capture pillars and principles that underpin how the Company runs its business. The
cornerstones also reect Ferronordic’s values and guide its employees in their daily work.
Strategic cornerstones
Great
team
Ferronordic’s success
is based on a strong
team working towards
common goals. Working
for Ferronordic means
taking the initiative
and making decisions,
regardless of rank or
position. The Company’s
employees are not afraid
to make mistakes but
see it as part of learning
and growing. Ferronordic
openly addresses prob-
lems and strives to be
part of the solution. The
teams are fast-paced,
dynamic and determined
to create value for the
customers. Every em-
ployee understands that
mutual trust, dialogue
and openness are the
best ways to improve
results and move the
business forward.
Operational
excellence
Ferronordic and its
empoyees have a quality
mindset focusing on con-
tinuous improvements.
The Company welcomes
and drive change, is
exible and agile and
always strives to improve
its products and services
for the benet of both
customers and environ-
ment. Ferronordic invests
in the latest technology
and develops new
solutions. The Company
manages resources and
recycles machines and
components. It is both
economically and eco-
logically sustainable and
contributes to a circular
economy.
Building on
strong brands
Ferronordic collabo-
rates with world-leading
suppliers of construction
equipments and trucks.
The Company offers
premium products of
uncompromising quality,
world-class comfort,
maximum efciency,
highest safety and
minimum environmental
impact. Each brand has
a leading position in its
segment, which Ferro-
nordic contributes to
developing and strength-
ening. The brands and
products complement
each other, which means
that Ferronordic can
deliver both broad and
customised solutions to
its customers.
Customer
orientation
Ferronordic’s mission is
to support its customers’
growth and contribute to
their leading positions
in their industries and
markets. The Company
does this by developing
products and business
solutions based on their
unique needs, which
contribute to better
productivity, greater
exibility and higher cost
efciency. Ferronordic is
keen to establish close
collaborations, deliver
high-quality services and
products and offer cus-
tomised and tailor made
solutions.
Superior
infrastructure
Ferronordic cares about
its customers, their
pro ductivity, efciency
and the safety of their
employees. The Compa-
ny’s offering and value
creation are based on
providing professional
services and solutions
whenever and wherever
the customers need it.
A prerequisite for this
is Ferronordic’s dense
network of 109 facilities
in Russia/CIS and Ger-
many, some of which are
on site at the operations
of the customers. The
Company’s mechanics
also travel to customers’
facilities to minimise any
downtime.
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
11
FERRONORDIC ANNUAL REPORT 2021
Strategic objectives
Ferronordic has a mature and diversied business. The Company operates in three markets and repre-
sents several leading manufacturers in addition to Volvo. Ferronordic has also developed vertically by
investing in a machine and component rebuild centre, expanding its rental and used businesses and
signicantly growing its operations in contracting services.
Strategic goals
The strategic goals describe how Ferronordic believes
that the Company can create growth and value for all
its stakeholders.
Leadership in the market for
construction machines and trucks
Ferronordic’s success is based on successful cus-
tomers. For customers to become leaders in their
industries, Ferronordic’s offering must be a leader
in terms of performance, competence and products.
Aftermarket absorption rate of at least 1.0 x
An aftermarket absorption rate of at least 1 means
that the gross prot from the aftermarket business
covers all xed costs and that Ferronordic is resilient
even in sharp economic downturns and weak markets
with small or no new sales.
Expansion to related business areas
Ferronordic has built a well-developed service net-
work, a strong sales organisation and an innovative
digital sales approach. This platform can be used
to take on new brands and business models, which
results in better capacity utilisation, higher returns and
increased value to Ferronordic’s customers. In 2020,
Ferronordic expanded its business model to become
dealer for Volvo Trucks and Renault Trucks in parts of
Germany. In 2021, Ferronordic leveraged its Russian
network to become dealer for Sandvik mobile and
stationary crushers and screens.
Development of contracting services
In contracting services, Ferronordic integrates more
closely with the customers. Instead of selling a ma-
chine to a mining customer, Ferronordic owns, services
and operates the machine on behalf of the customer.
The customer pays per cubic meter or kilometer in a
transport-as-a-service model. The customer has more
visibility on costs and pushes some of the operating
risks to Ferronordic. Meanwhile, Ferronordic can
operate the equipment more efciently and also use
the experience elsewhere in its business. Ferronordic
believes that contracting services is an important part
of the future of the industry and intends to further
develop this part of the business.
Since launching contracting services, the busi-
ness area has grown to 144 machines (of which 50
are subcontracted) in 2021 and 696 employees (of
which 237 are subcontracted). In 2021 sales amounted
of SEK 842 m (461).
Industry-leading digital
service and sales platforms
To further support its service and sales organisation
and its customers, Ferronordic has developed a dig-
ital platform. This platform converts signals from the
machines’ so called telematics systems into different
information about the operating status and conditions
of the machines. This information is disseminated
to the relevant customer service or sales person
in Ferronordic’s CRM system, which in turn allows
Ferronordic to anticipate and prevent to predicted
problems. Ferronordic will continue to invest in the
digitisation of its sales. At the end of 2021, 5,099 out
of 6,320 construction machines were connected to the
Company’s platform.
Geographical expansion
Russia/CIS is a demanding and difcult market. The
know-how and the experiences accumulated in this
market can be employed in other markets. Ferronordic
see further opportunities to leverage its organisation
and network infrastructure to offer complementary
products and services for new brands or to expand its
product offering in new markets.
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
12
FERRONORDIC ANNUAL REPORT 2021
Financial targets and dividend policy
Ferronordic’s nancial targets should follow from and support its strategic objectives.
KPI Target Historical outcome
Revenue
Double the 2020 revenue in its current
markets by 2025 (in SEK)
1)
Operating margin Above 7%
Net debt / EBITDA Below 3 times (over a business cycle)
Dividend policy The ambition is to distribute at least 50% of net
income if net debt/EBITDA is less than 1.0 x,
post dividend payment, and to pay at least
25% if net debt/EBITDA is more than 1.0 x.
2)
The Board will take several factors into
account when proposing the level of dividend
including legal requirements, the articles of
association, the Group’s expansion opportuni-
ties, its nancial position and other investment
needs.
1)
Current markets are dened as Russia, the entire CIS and Germany.
2)
Previous year’s IFRS results
0
2,000
4,000
6,000
8,000
21
20191817
SEK m
0
2
4
6
8
10
2120191817
%
-2
0
2
21
20191817
0
2
4
6
8
10
2120191817
SEK
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
13
FERRONORDIC ANNUAL REPORT 2021
Trust capital
Relationships with 13,700 cus-
tomers and partners as well as
suppliers and decision makers.
Intellectual capital
Strong customer relationships and
solution-oriented organisation.
World-leading suppliers. A unique
digital sales and service platform
that generates sales leads and
concrete proposals to customers
based on data from the connected
machines and trucks.
Manufactured capital
A machine and truck eet with a
value of SEK 584m for rental or
use in contracting services.
A network of 109 service work-
shops and a centre for machine
and component rebuild.
Human capital
1,791 employees with extensive
experience and both broad and
deep collective competence.
Financial capital
SEK 2,067 m in invested capital
from customers, shareholders and
credit institutions.
Ferronordic creates value for its
customers by offering aftermarket
services, machines, trucks and
additional services that enable
customers to conduct their busi-
ness with the highest productivity
and without disrupting production.
The business model consists of
four types of business approaches
where the development is
moving towards an increasing
commitment in terms of service,
aftermarket, capital tied up and
stafng. This puts demand on
nancial strength and a high
degree of availability, while at
the same time leading to higher
margins. For the customer, this
development means increased
predictability, higher operational
reliability and thus more secure
revenues.
For shareholders
Market capitalisation and dividend.
For the society
Opportunity to build infrastructure,
extract raw materials and transport
goods, i.e. activities that are crucial
for modern society.
Jobs and tax revenues.
For customers
High-quality and efcient machines,
trucks and related services that
make it possible to conduct their
business with the highest produc-
tivity and without interruptions in
protability.
Business development in collabora-
tion with customers and partners.
For employees
Personal and professional devel-
opment.
Competitive salary.
For nanciers and suppliers
Growing market shares and pay-
ments for goods sold.
For shareholders
SEK 109 m in dividend.
119% in total shareholder return.
For the society
SEK 112 m in taxes paid.
1,791 jobs.
For customers
1,246 machines sold.
800 trucks sold.
30 million cubic metre transported/
handled.
For employees
SEK 674 m in salaries paid and other
remuneration.
For nanciers
SEK 49 m in interest and other
nance costs.
For suppliers
SEK 4,829 m in payments to
suppliers.
Ferronordic’s value creation
Resources Business model Value creation Created value 2021
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
14
FERRONORDIC ANNUAL REPORT 2021
Ferronordic as an investment
Ferronordic combines growth opportunities with a robust business model.
1. Strong brand portfolio
Ferronordic’s relationships with world-leading
manufacturers of construction equipment and trucks
provide the Group with a platform from which to offer
premium products and services to current and new
customers. By developing these relationships and
complementing them with other strong brands, Fer-
ronordic can develop its customer offering and grow
based on its existing organisation and infrastructure.
2. Robust business model and
experienced management
Ferronordic’s business model is based on a strong
team and a solid aftermarket business. The model
has been tested and shown to withstand extreme
market uctuations. High absorption from the af-
termarket business provides resilience. Continued
service development, such as contracting services,
has diversied the business model and increased
integration with customers. In addition, Ferronordic
has a management team and a Board with extensive
experience within the industry and markets.
3. Innovation for increased customer value
The world is changing rapidly. Ferronordic wants to
drive and be a leader in the development of its markets.
The Company’s own digital sales and service platform
creates value throughout the value chain. Through
contracting services, Ferronordic has built a business
model where the Company becomes an integrated
part of the customers’ activities and helps them to
achieve leadership in their respective industries.
4. Sustainability a part of the business
Ferronordic strives to help its customers to achieve
leadership in the broadest sense. The Company
aims to be an active player in local communities and
a good and fair employer that offers its employees
education, professional development and career op-
portunities. Ferronordic strives to be a positive force
in the transition to a sustainable society and work for
a better environment.
5. Conservative nancial policy and
potential for good returns
To ensure nancial exibility and strength, Ferronordic
strives to maintain a strong balance sheet. The
Company has delivered a strong cash ow over time,
which provides opportunities for both reinvestments
with good returns and dividends to shareholders.
Ferronordic has a well-balanced dividend policy
that balances protability and cash ow with nancial
strength. The goal is to distribute at least 50 percent
of the net prot if the net debt / EBITDA is below 1.0x
and at least 25 percent if the debt / equity ratio is
above 1.0x.
0
3,000
5,000
7,000
2120191817
SEK m
0
2
4
6
8
10
Revenue and
operating margin
%
0
5
10
15
20
25
2120191817
SEK
Dividend and
earnings per share
Dividend per
share
Earnings per share
Revenue
Operating margin
0
3,000
5,000
7,000
2120191817
SEK m
0
2
4
6
8
10
Revenue and
operating margin
%
0
5
10
15
20
25
2120191817
SEK
Dividend and
earnings per share
Dividend per
share
Earnings per share
Revenue
Operating margin
Introduction
Market outlook
Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
15
FERRONORDIC ANNUAL REPORT 2021
Background and history
Ferronordic was founded in June 2010 when the Company acquired Volvo Construction Equipment’s
distribution business in Russia. At the time, the Company had six facilities and 160 employees. Since
then, the Company has grown, despite crises and large uctuations on the market. Ferronordics’ devel-
opment can be described in three phases.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Ferronordic‘s history
started in June 2010,
when the Group took
over the construction
equipment distribution
business from Volvo
CE in Russia. At the
time, the business had
six facilities and about
160 employees.
Establishment of the
rst workshop for
Volvo and Renault
trucks.
Ferronordic has a net-
work of 109 facilities
and approximately
1,800 employees.
Launch of
contracting
services.
Issuance and listing
of preference shares
on Nasdaq First North
Premier.
First major project
in contracting
services with GV
Gold.
Authorised dealer for
Volvo CE and Mecalac in
Kazakhstan.
Listing on Nasdaq
Stockholm.
Ferronordic has a network
of 69 facilities and more
than 800 employees.
Phase I 2010–2013
Building the platform
• Development of organisation,
infrastructure and processes.
• Investments in marketing and
education as well as growing
market shares.
• Establishment of the rst
workshop for Volvo and
Renault trucks in 2012.
• Issuance and listing of prefer-
ence shares on Nasdaq First
North Premier in October
2013.
At the end of 2013, the opera-
tions consisted of 75 facilities
and more than 700 employees.
Phase II 2014–2016
Managing the downturn and building resilience
• Reduced Russian market by 83% during 2014–
2015 and severely weakened Russian ruble due to
sharply falling oil prices.
• Sharply reduced sales but maintained operating
prot.
• Optimising networks and adaptation of organisation
and business model, including increased focus
on aftermarket and cost savings to increase the
coverage ratio.
• Expansion of the offering contributed to a greater
degree of utilisation of existing investments.
• Ofcial dealer of Terex Trucks 2014.
• Agreement with Dressta and Rottne 2016.
• Launch of contracting services in 2014.
• Expanded aftermarket operations for Volvo and
Renault Trucks.
At the end of 2016, the operations consisted of
69 facilities and more than 800 employees.
Phase III 2017–2021
Leveraging the platform
• Ofcial dealer for Mecalac in Russia in 2017.
• Started the development of its own digital sales and service platform.
• Ordinary shares were listed on Nasdaq Stockholm at the end of 2017.
• The rst major project in contracting services with GV Gold started at
the end of 2018.
• In 2019, Ferronordic took over the import of machines and spare parts
to Russia and Kazakhstan for Volvo CE.
• Geographical expansion.
• Authorised dealer for Volvo CE and Mecalac in Kazakhstan in
January 2019.
• Authorised dealer for Volvo and Renault Trucks in approximately
20% of the German market in January 2020.
• Establishment of a centre for machine and component rebuild in December
2019.
• Development of contracting services through a new project as a general
contractor for the development of a new mining deposit with platinum
group metals.
• Appointed dealer for Sandvik stationary and mobile crushers and
screens in 2021.
• Further expansion of the centre for machine and component rebuild.
At the end of 2021, the operations consisted of 109 facilities and approxi-
mately 1,800 employees.
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
Introduction
The situation in Ukraine
This is Ferronordic
The year in brief
CEO comments
Business model
Vision and values
Strategic objectives
Value creation
Ferronordic as an investment
Background and history
Market outlook
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook
17
FERRONORDIC ANNUAL REPORT 2021
Operations Sustainability The share
Corporate
governance
Formal
annual report
Markets and driving forces
The world’s population is steadily increasing and more people are moving to cities. At the same time,
the volume of world trade continues to increase. This is increasing the demand for raw materials,
transport, infrastructure and buildings - industries in which Ferronordic and its customers operate. The
big challenge lies in meeting today’s needs without compromising future generations’ opportunities to
meet theirs. A large part of the solution can be found in increased efciency and productivity, digitisation,
electrication and circular thinking.
Growing demands
• Raw materials
• Transports
• Infrastructure
• Buildings
The challenge
• Stress on the envi-
ronment, climate and
societies
The solutions
• Digitisation
• Electrication
• Circular thinking
Basic trends
• Population growth and
urbanisation
• Globalisation
• Growing prosperity and
consumption
Basic trends
Population growth and urbanisation
We are almost 8 billion people on earth today. In 2030, the world’s population is
estimated to amount to 8.5 billion. 70 percent of these people are expected to live
in cities, which means a continued urbanisation process.
Globalisation
Countries in the world are increasingly closely connected in a network of distribution
and communication chains. International trade continues to increase. Volumes are
again at record levels. While the current geopolitical tension may slow this trade
down in the short-run, Ferronordic believes the long-term trend is rm.
Growing prosperity
According to the IMF, the global economy grew by almost 6 percent 2021. This
means that we are back on the growth curve that prevailed before the pandemic.
Growing demands
Raw materials
Commodity prices have risen sharply in recent years. In 2021, several types of raw
materials hit record prices. Demand is driven by a growing population, increased
prosperity and technological development.
Transports
The basic trends all lead to an increased need for transport, both within and between
countries.
Infrastructure
Increased demand for transport leads to an increased need for investment in infra-
structure. In addition, many countries have been neglecting the infrastructure for a
long time and have a pent-up demand for investment.
Buildings
With more people, growing prosperity and urbanisation comes increased demand
for housing, factories, schools and other buildings.
The challenge
The big, global challenge is to meet the growing demand for raw materials, trans-
ports, infrastructure and buildings without compromising future generations’ ability
to meet their needs. Sustainability has therefore become a leading consideration
and driving factor when it comes to innovation and development of technology,
products and services.
18
FERRONORDIC ANNUAL REPORT 2021FERRONORDIC ÅRSREDOVISNING 2021
The solutions
Digitisation
By 2030, 90 percent of the world’s population is estimated to have access
to the Internet. At the same time, more and more machines, trucks, houses
and other installations are connected digitally through what is referred to
as the internet of things. This connectivity creates opportunities to harvest
the data from people and machines to analyse consumption, utilisation and
application. This can in turn be used to improve productivity and reduce
resource consumption to increase efciency and reduce wear and tear for
the equipment to last longer.
Electrication
One of the most critical challenges in sustainability is climate change
and the need to reduce our use of fossil fuels. One key factor for this is
fuel efciency and electrication of machines and vehicles. Together with
digitisation, electrication also creates new business opportunities where
companies such as Ferronordic can take more operational responsibility
and offer tailor-made solutions with greater shares of electric and autono-
mous systems.
Circular thinking
The circular economy is based on an effort to utilise everything that is
manufactured and consumed for as long as possible. When machines and
components are worn down, they are recycled and rebuilt as much as pos-
sible and as many times as possible. This means that you maintain, repair,
reuse, remanufacture and recycle equipment to minimise resource waste
(see page 47 for a more detailed description).
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
19
FERRONORDIC ANNUAL REPORT 2021
Economic and political development
Russia’s economy is characterised by the country’s large natural resources. In 2021, the country was
the world’s third largest producer of oil, the world’s second largest producer of natural gas and a leading
producer and exporter of minerals and gold. Russia is also the world’s largest forest country with
800 million hectares of forest land, which corresponds to 20 percent of the world’s total.
From 2017 until 2020, Russia’s economy grew on average by almost 2 percent
per year. According to the IMF, Russia’s economy shrank by 2.7 percent in 2020,
mainly due to the Covid pandemic, and then grew by 4.5 percent in 2021.
Stronger commodity market and higher ination
The oil price also recovered in 2021 after the big fall, especially in the rst half of
2020. In October 2021, the oil price was over 80 USD/barrel and then fell back
slightly. The average price per barrel was well above the 2019 level and ended
up at 69 USD/barrel. Other raw materials also saw sharply rising levels during the
year. These include natural gas, gold, silver and copper.
The Russian ruble strengthened slightly against the Swedish krona, from
9.0 RUB/SEK at the beginning of the year to 8.2 at the end of the year. Ination
increased to 8.4 percent in December 2021, compared with 4.9 percent a year
earlier. The Russian central bank therefore implemented a number of interest
rate increases during the year. Prior to the invasion of Ukraine, the World Bank
considered ination to be the biggest risk in the Russian economy. In addition,
the country has a low vaccination rate, which increases the risk of new pandemic
outbreaks. The conict in Ukraine and the ensuing sanctions against Russia have
hit the Russian currency hard. The sanctions are expected to negatively affect the
Russian economy and public nances and hit most sectors and industries in the
country.
Strong recovery in Kazakhstan
Kazakhstan is the largest economy in Central Asia, both in absolute terms and per
capita. Like Russia, the country’s economy is characterised by large production of
oil and other raw materials. For example, Kazakhstan is the world’s 12th largest oil
producer, the world’s largest producer of uranium and has the world’s 9th largest
copper reserves.
After several years of good economic growth, Kazakhstan also suffered a
downturn in connection to the Covid pandemic. According to the World Bank’s
latest report (January 2022), the country’s GDP decreased by 2.5 percent in 2020,
but was expected to grow by 3.5 percent in 2021 and 3.7 percent in 2022.
Source: British Petroleum Statistical Review of World Energy (2020)
and U.S. Geological Survey, Mineral Commodity Summaries (2021).
%
Oil production
0
5
10
15
20
USA
Saudi Arabia
Russia
Canada
Iraq
UAE
China
Iran
Kazakhstan
19
12
12
6
5
4
4
3
2
0
5
10
15
20
25
%
Copper reserves
Chile
Australia
Peru
Russia
Mexico
USA
Congo
Poland
Kazakhstan
23
11
9
7
6
5
4
4
2
0
5
10
15
20
25
%
Natural gas production
USA
Russia
Iran
China
Qatar
Canada
Australia
Norway
Kazakhstan
24
17
7
5
4
4
4
3
1
0
5
10
15
20
%
Gold reserves
Australia
Russia
South Africa
USA
Indonesia
Brazil
Canada
China
Kazakhstan
20
13
9
6
5
4
4
4
2
Russia/CIS
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
20
FERRONORDIC ANNUAL REPORT 2021
Market development
Russian imports of high-quality foreign construction equipment has increased
sharply since the early 2000s. Initially, the market was mainly driven by a pent-up de-
mand to replace and upgrade the existing machine population. In addition, custom-
ers increasingly began to compare the total cost of ownership for different machines
and brands. After a sharp decline in connection to the economic downturn in 2014
and 2015, the market partly recovered up until 2020, when the pandemic struck
the economy.
Although the market for imported construction equipment has recovered after
the pandemic, it is still only about two thirds of the market it was in 2012–2013.
Units
Import of construction equipment to Russia
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2021202020192018201720162015201420132012201120102009
1,649
474
8,004
2,078
18,627
6,892
21,009
9,983
20,573
10,646
13,568
8,280
3,573
2,107
4,354
2,097
8,426
4,377
10,310
5,026
11,766
7,313
9,668
6,235
Non Chinese Chinese
15,979
12,021
Source: Russian import statis-
tics compiled by Volvo CE.
Note: Excluding bulldozers,
forestry machines and rigid
haulers
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
21
FERRONORDIC ANNUAL REPORT 2021
21
FERRONORDIC ÅRSREDOVISNING 2021
Industries
General construction
and other
Mining Road construction Forestry
Quarries and
aggregates
Oil and gas
Main area of use
Construction, mainte-
nance and demolition
of buildings, industrial
facilities and infrastruc-
ture as well as other
areas such as agri-
culture, recycling and
waste management.
Excavation and trans-
port of earth and rock.
Construction and main-
tenance of roads and
other infrastructure in
connection to mines.
Construction and
maintenance of roads,
landing strips etc.
Logging, log transport-
ation, stacking etc.
Construction and
maintenance of roads
and other infrastructure
in connection to forest
operations.
Extraction and produc-
tion of raw materials
for the construction
industry.
Construction and main-
tenance of pipelines,
reneries and other
infrastructure (e.g.
roads within or to oil
and gas elds).
Main geographic area
Whole Russia
Kazakhstan
Ural, Siberia, Far East,
Northwest, Kazakhstan
Whole Russia
Kazakhstan
Northwest
Siberia
Volga
The Far east
Central
Northwest, South,
Siberia, Central, Ural,
Kazakhstan
Volga
Ural
Siberia
Kazakhstan
% of new machines
sales in 2021
37% 18% 19% 15% 8% 2%
Competitors
Caterpillar
Hyundai
Komatsu
Caterpillar
Hyundai
Komatsu
Wirtgen (in John Deer
Group)
Bomag
JCB
John Deer
Ponsse
Komatsu
Caterpillar
Komatsu
Hyundai
Komatsu
Caterpillar
Hitachi
Comments
The customers range
from large construction
companies to smaller
subcontractors.
Demand includes all
from larger production
machines to smaller
and simpler ones.
Customers’ focus
on productivity and
efciency creates high
demands on spare
parts availability and
service quality.
Short season creates
focus on productivity
and demands spare
parts availability and
service quality. Large
population of Volvo CE
machines creates great
demand for spare parts
and service.
The core business with-
in the forest industry
(e.g. tree felling) is
generally on higher
technical level than e.g.
transport of timber,
which provides different
purchasing strategies
among customers.
Larger companies with
a focus on productivity
promotes premium
brands. High machine
utilisation requires
regular and efcient
service and repairs
at the right time,
preferably in the form of
package solutions.
Dominated by a few
large companies that
often outsource con-
tracts to sub-suppliers.
Market segments
21
FERRONORDIC ANNUAL REPORT 2021
Russia/CIS
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
22
FERRONORDIC ANNUAL REPORT 2021
Trends and driving forces
Future demands for Ferronordic’s products and services are mainly driven by:
• activity within the construction- and transport sector
• developments within the commodity and raw material industries
• pent-up demand for new and efcient machines
• higher demands from customers
In the current situation, it is not possible to tell how the Russian economy and the
market will develop, nor if and when supplies of machines and parts may resume
in partial or full extent.
Russia/CIS
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
23
FERRONORDIC ANNUAL REPORT 2021
Economic and political development
Germany is Europe’s largest economy and among the ve largest economies in the world. The country
is also one of the world’s leading exporting countries with vehicles, machinery, chemicals, electronics
and pharmaceuticals as the largest export goods. In addition to its size, the German economy is
characterised by a very high degree of maturity and a large degree of diversication. The service sector
accounts for approx. 70 percent of the total economy.
Broad but weak recovery
Germany’s economy grew by 2.7 percent in 2021 according to ofcial German
sources. It is a broad recovery since 2020 when the country’s GDP decreased by
4.6 percent and higher than the average for the immediately preceding 10-year
period. However, the economy has still not fully recovered from the fall of 2020.
One factor that has held back the recovery is the disruption in the global distribution
chains, especially for inputs to the export industry.
The German Bundesbank predicts that GDP will increase by 4.2 percent in
2022 and then level off somewhat in 2023 when the growth is expected to land at
3.2 percent.
Ination in 2021 was 3.1 percent according to the German Federal Bureau of
Statistics. This is the highest gure since 1993. High energy prices and bottlenecks
in global distribution systems are cited as main reasons for growing price pressure.
New political leadership
Following the federal elections in September 2021, Germany got a new government
in December. For the rst time in 17 years, the country is not governed by a
Christian Democratic Chancellor. The new government is a three-party coalition
consisting of Social Democrats, Greens and Liberals, with the Social Democrat
Olaf Scholz as head of government. Economic policy is expected to end up in
the middle of the political scale, but with greater investments in climate and the
environment than before. Fiscal policy discipline is predicted to be maintained.
Germany
Car & car parts
Machines
Chemical products
Data processing devices, electronic & optical devices
%
20,6
14,5
4,5
3,7
15,5
7,1
3,7
Pharmaceutical products & similar
Electrical appliances
Food & feed
Metals
Other vehicles
Rubber & plastic goods
Other
9,3
9,1
7,3
4,7
German exports (2020)
GDP (current prices) Germany
3,000
4,000
5,000
USD billion
2013 2014
2015 2016
2017
2018
2019
2020
2021
2022
(E)
2023
(E)
Source: IMF Database
Source: German Federal Ministry for Economic Affairs and Energy
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
24
FERRONORDIC ANNUAL REPORT 2021
Ferronordic’s sales area corresponds to approx. 20 percent of the German market
for heavy trucks. The area includes some of the busiest and most developed
parts of Germany, such as Hanover and Frankfurt Rhein-Main, the second largest
metropolitan region in the country. It also includes a large part of eastern Germany,
with fast-growing cities such as Leipzig and Dresden. In addition to new sales, the
market also consists of used trucks, service, maintenance and rental.
Europe’s most important market
Germany’s economic importance makes the country the largest market in Europe
for heavy trucks. There is a strong correlation between the economic development
and new sales of trucks.
Germany’s position in the EU also makes the country a logistics center
serving over 82 million Germans, 150 million consumers in its nine neighboring
countries and almost 500 million EU inhabitants. This has contributed to Germany
having one of the most advanced transport infrastructures in Europe with the conti-
nent’s second largest port, over 250 inland ports and 21 international airports.
Development 2021
Despite the economic upswing, component shortages and supply chain disruptions
led to a weaker recovery of the truck market than expected. Total new sales was
largely unchanged. However, in the heavy and medium segments, truck sales in
units increased by 10.4 and 5.6 percent respectively compared with the previous
year.
The supply constraints on new trucks had a positive effect on the market for
used trucks – both in terms of truck sales in units and the price development. In
addition, the total mileage increased signicantly compared to 2020, which tends
to increase the aftermarket business.
The truck market
The truck market in Germany is mature and demanding, with customers who place great value on
brand, tailor-made business solutions and dense and high-quality network coverage. Maximising the
utilisation and minimising unplanned stops is crucial for customers’ business and protability.
Heavy truck registrations in Germany
0
80,000
20212020201920182017201620152014201320122011201020092008
67,797
Heavy trucks registration
1
Average truck toll mileage index
*
40,322
48,827
60,218
55,167
55,215
61,940
58,574
65,280
66,441
68,450
70,264
50,427
55,386
1)
Germany registrations data compiled by Volvo Trucks (until December 2020).
*
Truck toll mileage index is a xed base index that traces the development
of the mileage of heavy trucks (with four or more axles) on German federal
motorways and is calculated from digital process data from the truck toll
collection system.
Germany
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
25
FERRONORDIC ANNUAL REPORT 2021
Market segment trucks
Size segment Heavy trucks, >16 tons Medium duty trucks, 7–16 tons Light trucks, <7 tons
Main customer groups
Logistics and transport companies, con-
struction and civil engineering companies
etc.
Logistics and transport companies, con-
struction and civil engineering companies etc.
Logistics and transport companies, con-
struction and civil engineering companies,
municipalities and municipal contractors etc.
Main areas of use
Long-distance driving and regional trans-
ports, timber transports, heavy transports,
construction and civil engineering trans-
ports, mining and quarry transports etc.
Local and regional distribution, light con-
struction, utility and refrigerated transport
etc.
A lot of different transport assignments, in-
cluding mobile workshops, freight transport,
postal and courier services etc.
% of new truck sales
in Germany
84.5% 10.5% 5.0%
Germany
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
26
FERRONORDIC ANNUAL REPORT 2021
Trends and driving forces
Many of the challenges faced by the German truck business in 2021 are likely to
persist into the current year. This especially applies to the component shortages
and global supply chain disruptions in the global distribution chains. Another chal-
lenge is the lack of truck drivers. The German economy and market may also be
negatively affected by the geopolitical tensions around the situation in Ukraine and
the sanctions and counter-sanctions. In a longer perspective, Ferronordic believes
that the German truck industry will remain resilient for the following reasons:
A strong German economy
The German economy is expected to continue to play an important role for the
whole of the EU and the rest of Europe. This means a continued demand for trucks
and transport services.
Electrication and increased environmental requirements
Global climate challenges affect all markets and businesses. This factor is pre-
dicted to be extra important for the new German government in its priorities. This
will increase the pace of conversion of the transport sector and the phasing out of
fossil fuels. The transition to electric transport will start in the lighter segments, but
in the long-run the entire transport sector is facing a shift.
With electrication comes not only a need to replace the truck eet; it also
leads to the demand for completely new services and complex solutions. Companies
that can guarantee charging infrastructure and give advice on which trucks and
equipment that best meets the needs of customers and requirements of the future
will be able to take market shares.
Development of the transport industry
In parallel with the technical development and partly as a result of it, the transport
industry is also developing. Ferronordic estimates that the fragmented German
haulage industry will undergo a consolidation with fewer, but larger actors. This
also brings a professionalisation that puts greater demands on
Ferronordic and other partners within the industry.
Continued growth in e-commerce
The rapid development of e-commerce puts new and higher demands on transports
and logistics. The pandemic has accelerated this trend. The demand for fast
deliveries increases the need for logistics and storage hubs in locations close to
consumers and for efcient transport both to and from such facilities.
This has led several e-commerce operators to take a stronger grip on the
entire transport chain to ensure increased delivery capacity to consumers. This
increases the demand for reliable logistics operators and their partners.
Germany
Market outlook
Markets and driving forces
Russia/CIS
Germany
Introduction
Market outlook Operations Sustainability The share
Corporate
governance
Formal
annual report
Operations
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
28
FERRONORDIC ANNUAL REPORT 2021
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
Russia/CIS
The business segment Russia/CIS includes all of Ferronordic’s operations in
Russia and Kazakhstan, such as machine sales, repair, service, remanufacturing
of machines and components and contracting services. At the core of the business
is Ferronordic’s network of 94 workshops and approximately 1,500 employees.
The service network is complemented by mobile service teams, with which fully
equipped van and trained mechanics can carry out a full range of service of repairs
at the customers’ site.
Machines sales
In Russia and Kazakhstan, Ferronordic sells new and used machines from various
manufacturers. The Company’s main partner is Volvo CE, which manufactures
machines such as dump trucks, wheel loaders, excavators and pavers. In addition,
Ferronordic sells bulldozers from Dressta, backhoe loader and compact equipment
from Mecalac and forestry machines from Rottne. In 2021, sales of new Volvo CE
machines, rental, attachments and Volvo CE aftermarket sales accounted for
68 percent of total sales in Russia/CIS. Ferronordic also sells machine attachments
from various manufacturers, such as harvester heads for forestry machines.
In 2021, Ferronordic was appointed authorised dealer for Sandvik mobile and
stationary crushers and screens. These products are used in open pit mining and
mining and recycling, often together with machines from Ferronordic’s existing
offering from Volvo CE.
In 2021, Ferronordic increased sales of new machines in units in Russia/
CIS by 13 percent to 1,246 machines. Sales increased in most product groups,
but especially in articulated haulers, forestry equipment, bulldozers and pavers.
Mainly due to product mix, net sales of new machines in Russia/CIS increased by
29 percent to SEK 2,663 m.
Sales of used machines in units increased by 22 percent to 328 machines
and trucks. In terms of revenue, sales of used machines and trucks amounted to
SEK 226 m, which is an increase of 4 percent compared to the previous year.
2021 2020 2019 2018 2017
Units of new machines and trucks 1,246 1,102 965 948 738
Units of used machines and trucks 328 269 195 144 162
Revenue, SEK m 4,844 3,652 3,737 3,241 2,567
Gross prot, SEK m 961 714 775 614 489
Operating prot, SEK m 553 394 358 274 187
Gross margin, % 19.8 19.5 20.7 19.0 19.0
Operating margin, % 11.4 10.8 9.5 8.4 7.3
SG&A/Revenue LTM, % 1 3 19 2 5
Machine sales
Aftermarket sales
Contracting services
Other income
%
22
1
61
17
Net sales by activity
General Construction & Other
Road Construction
Mining
Forestry
%
18
1
22
31
3
12
14
Quarries & Aggregates
Oil & Gas
Transportation
New machine net sales by industry
0
300
600
900
1,200
1,500
2120191817
Number of machines sold
0
1,000
2,000
3,000
4,000
5,000
2120191817
Revenue, SEK m
Strong development despite low market volumes in Russia/CIS
0
100
200
300
400
500
600
20212020201920182017201620152014201320122011
Market (Units)
1
Operating Profit (SEK)
2
Revenue (SEK)
100 %
99 %
113 %
103 %
110 %
95 %
96 %
73 %
109 %
61 %
19 %
92 %
69 %
23 %
140 %
106 %
45 %
199 %
134 %
55 %
291 %
155 %
63 %
381 %
151 %
52 %
420 %
200 %
86 %
589 %
71 %
Source: Russian import statistics compiled by Volvo CE.
2)
2011–2016 refer to adjusted EBIT,i.e. operating prot excluding (i) amortisation of transaction-related intangible
assets and (ii) write-downs of non-current assets in Q4 2016.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
29
FERRONORDIC ANNUAL REPORT 2021
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
Aftermarket sales
Ferronordic’s vision is to be the leading service and sales company. Professional
service and timely supply of spare parts is critical to ensure uptime and productivity
for the machines that the Company is responsible for and that are an integral part
of its customers’ production processes. Ferronordic’s digital sales platform is an
important part of securing this level of uninterrupted performance to our customers.
Ferronordic performs planned maintenance, diagnostics and overhauls as well as
planned and unplanned repairs. The work is often carried out within the framework
of different types of service agreements to meet each customer’s individual needs.
The Company also offers training for machine operators. During 2021, aftermarket
sales increased by 21 percent to SEK 1,042 m.
Component and machine rebuild centre
Ferronordic is also a supplier of Volvo Certied Rebuild for articulated haulers,
excavators and wheel loaders. Volvo Certied Rebuild is a program where used
machines are rebuilt in accordance with Volvo CE’s requirements to have a second
or even third life cycle. Rebuilt machines are sold with a new warranty from Volvo CE.
At the end of 2019, Ferronordic opened its own centre for remanufacturing
of machines and components. The centre enables recycling of equipment and
contributes to a circular economy for construction machines and trucks. The centre
is rebuilding engines and gearboxes for Volvo CE, Volvo and Renault Trucks.
The components are resold to customers with a warranty or are installed in used
machines in the Volvo Certied Rebuild program. Ferronordic is also rebuilding
machines in full and has a cutting line for recycling parts and utilising scrap metal.
In 2021, the capacity of the facility increased further. Through the year,
Ferronordic rebuilt 16 machines and 305 components, compared to 4 machines
and 132 components in 2020.
Contracting services
As part of the strategy of becoming increasingly integrated into the business of its
customers and growing into related business areas, Ferronordic offers contracting
services. In contracting services the Company owns the machines and employs
the operators to perform specic work and tasks for customers. Contracting services
is a way to sell the solution to the customer, rather than the product. It can be
considered a transport-as-a-service solution.
Current projects include excavation and transportation of overburden and rock
or ore for customers within the mining industry. Payment is mainly based on the
amount and distance of earth and rock transported.
In 2021, Ferronordic continued to develop its operations in Norilsk and Irkutsk
and started a new project at an iron ore site in Russian Karelia. At the end of the
year, the Company was involved in ve active projects that together employed
696 employees, including 237 employees via subcontractors, and 144 machines,
including 50 machines via subcontractors. Revenues amounted to SEK 843 m,
which was a 83 percent compared to the previous year.
Machines Parts Service Operators Payment
Traditional methos
or the customer or the customer
Provided by the customer
Cost of machine, parts
and service
Contracting
services method
Volume based (per tonne,
cubic meter, kilometer,
square meters, etc)
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
30
FERRONORDIC ANNUAL REPORT 2021
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
Sales of new machines 2021
Type of product Number of sold units Description
Excavators
613 Used for a wide range of purposes, e.g. landscaping, excavation, trenching, demolition, loading etc.
Wheel loaders
156 Used to move or load materials. Available in different sizes and models, from compact to large production
machines.
Road construction
equipments 141 Pavers (tracked or wheeled) are used to lay asphalt in connection with the construction of roads, airports etc.
Compactors are used to press surfaces, e.g. asphalt or earth, often in connection with road construction.
Articulated haulers
140 Articulated towing vehicles for demanding conditions. Areas of use include road construction, quarrying,
mining and waste management.
Backhoe loaders
119 A tractor with a shovel or scoop in the front and excavator in the back. Used for a wide range of purposes,
e.g.digging ditches, lifting, loading, material handling and construction.
Diesel generators
15 Power generators driven by a diesel engine from Volvo Penta. Assembled in Russia and sold under
Ferronordic’s own brand.
Forestry machines
25 Harvesters are used for felling, delimbing and bucking trees. Forwarders are used to transport logs from the
stump to the roadside landing.
Bulldozers
20 Used to move earth, e.g. in road construction, aggregates and mining.
Rigid haulers
14 Massive trucks with payloads ranging from 41 to 91 tons. Used to move earth and other heavy loads in
mining, aggregates, etc.
Crushers and
screens 3 Mobile jaw crushers, cone crushers, impact crushers, coarse sorting plants and screening plants are used in
areas such as open pit mining, mining and recycling.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
31
FERRONORDIC ANNUAL REPORT 2021
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
Service network
Ferronordic has a well-developed network of 94 workshops throughout Russia and Kazakhstan, divided
into eight regions.
It is critical for dealers of construction equipment to be close to their customers:
1. The equipments are often difcult or impossible to move to a workshop. Instead,
the dealers’ mechanics usually have to go to the customer sites where the
machines are operating.
2. Since the construction equipment is so important for the production process
and idle machines imply large opportunity costs and reduced protability for the
customer, it is crucial that the dealer’s mechanics have good access to spare
parts and can be on site rapidly to ensure machine uptime.
This means that proximity to customers, a large number of facilities and good
access to spare parts are important success factors. Ferronordic’s goal is to
always have more than 90 percent of all spare parts available at all workshops.
The network facilities vary from simple workshops and sales ofces to purpose-
built service stations for both construction equipments and trucks. Mobile service
units and on-site workshops at big customer production sites complement the
network.
(94) Ferronordic outlets in Russia and
Kazakhstan as of December 2021.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
32
FERRONORDIC ANNUAL REPORT 2021
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
Region No. of outlets Description
Central 16
The area around Moscow and Russia’s most densely populated region with 39 million inhabitants and the headquarters of many of Russia’s larger
companies.
Northwest 15 The area around St. Petersburg.14 million inhabitants.
South 7 The Federal Districts of the South and the North Caucasus. 24 million inhabitants.
Volga 10 The central parts of Russia. 30 million inhabitants.
Urals 11 Geographically large region with large natural resources. 12 million inhabitants.
Siberia 12 To the surface a very large region with many natural resources but poorly developed infra-structure. 19 million inhabitants.
Far East 16 To the surface a very large region with many natural resources but low population density. 6 million inhabitants.
Kazakhstan 7 The world’s ninth largest country by area. 19 million inhabitants.
33
FERRONORDIC ANNUAL REPORT 2021
Germany
The operations in Germany consist of sales and rental of new trucks from Volvo
Trucks and Renault Trucks, sales of used trucks and service and support of trucks
and light commercial vehicles.
Ferronordic has been in the German market since January 2020 when
Ferronordic became a dealer of Volvo and Renault Trucks in an area corresponding
to about 20 percent of the German truck market. At the start in Germany, the
Company took over nine of Volvo’s workshops and two workshops from a smaller
dealer in Ferronordic’s sales area. The workshops are located in some of Germany’s
largest cities; Hanover, Leipzig, Dresden and Frankfurt.
In 2021, Ferronordic acquired ve new workshops in Fulda, Limburg, Nord-
hausen, Bergstrasse and Bingen. Today, Ferronordic has 14 workshops and
284 employees in Germany.
Sales and rental of trucks
Ferronordic sells and offers rental of new trucks from Volvo Trucks and Renault
Trucks with focus on heavy and medium-duty trucks. The trucks are employed in
transports and logistics as well as in customers’ own operations on construction
sites and mines. The range also includes trucks for local and regional distribution
as well as municipal services such as waste management.
The segment also includes sales of used trucks.
Ferronordic’s sales of new trucks in units grew by 29 percent in 2021 to 800,
including light commercial vehicles. Sales increased in all weight segments. In
terms of revenue, sales of new trucks increased by 30 percent and amounted to
SEK 781 m.
In the coming years, sales of electric trucks are expected to increase sig-
nicantly. Together with digitisation, electrication also creates completely new
business opportunities where Ferronordic can take greater overall responsibility
of the service offering. At the end of 2021, Ferronordic ordered 32 all-electric
medium-duty trucks, of which 11 from Volvo and 21 from Renault. The trucks will
be used as demo vehicles for promotional purposes and will be sold and rented
out to customers.
Sales of used trucks in units increased six times from a relatively low level
in 2020. In terms of revenue, sales of used trucks amounted to SEK 127 m, an
increase of 342 percent compared with the previous year. Ferronordic sees mean-
ingful potential for the used trucks business to complement its product portfolio.
Aftermarket sales
Ferronordic offers maintenance and repairs of trucks. The work is often carried
out within the framework of different types of service agreements to meet each
customer’s needs.
In 2021, aftermarket sales increased by 36 percent and amounted to SEK
365 m. A contributing factor behind the positive development is the acquisitions
of workshops that Ferronordic made in 2021. The organic growth amounted to
2021 2020
Units of new machines and trucks 800 619
Units of used machines and trucks 241 34
Revenue, SEK m 1,368 983
Gross prot, SEK m 149 84
Operating prot, SEK m -71 -66
Gross margin, % 10.9 8.5
Operating margin, % -5.2 -6.7
SG&A/Revenue LTM, % 15.9 15.1
0
300
600
900
1,200
1,500
20212020
Revenue, SEK m
Truck sales
Aftermarket sales
Other income
%
27
66
7
Net sales by activity
0
200
400
600
800
20212020
Units of trucks sold
Segment 2021 2020
Rigid trucks 190 136
Tractor trucks 570 462
Light commercial vehicles 40 21
Total 800 619
New cars 48 61
-80
-60
-40
-20
0
20212020
Operating profit and
operating margin
-8
-7
-6
-5
-4
SEK m %
Operating profit
Operating margin
9 percent, while the workshops acquired through the year contributed 36 percent
of the growth. As a percentage of revenue, 19 percent came from sales within the
framework of service agreements.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
34
FERRONORDIC ANNUAL REPORT 2021
Sales of new trucks 2021
Type of product Number of sold units Description
Volvo FH16
14
The most powerful truck in the Volvo Trucks product portfolio. Suitable for a variety of applications including
long haul, timber transport, heavy haulage and construction. Available with an electric engine.
Volvo FH
558
Long haul and regional haul truck mainly used in transportation and logistics. Usually comes as a semitrailer
tractor, and also as a rigid for long and regional haul. The Volvo FH also comes with a liqueed gas (LNG)
engine. Available with an electric engine.
Volvo FMX
26
Volvo Trucks’ most robust construction truck. Typical areas of use are building and construction transport, as
well as mining and quarry transport. Available with an electric engine.
Volvo FM
69
Versatile truck, suitable for a variety of purposes, including long haul, regional haul, building and construction.
Available with an electric engine.
Volvo FE
5
Medium-duty truck used for distribution, light construction, utilities and refrigerated transport. Available with
an electric engine.
Volvo FL
17
The smallest truck in Volvo Trucks product range. Used for local and regional distribution, refuse collection,
light construction, and as a small format tractor. Also available with an electric engine.
Renault T
57
Renault truck for the long haul and regional haul. Also used in distribution transport and building and
construction transport.
Renault D
10
Used widely in household and industrial waste collection, cleaning and sanitary services, reghting and
rescue services. Available with an electric engine.
Renault C
3
A versatile truck usually used for material transports in construction and civil engineering.
Renault K
1
Complementary truck for Renault C model. A heavy truck suitable for quarries, logging and various construc-
tion sites.
Renault Master
40
Light commercial vehicles that carry out a variety of transport assignments, including mobile workshops,
freight transport and postal and courier services. Available with electric engine.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
35
FERRONORDIC ANNUAL REPORT 2021
Service network
Ferronordic has 14 workshops in an area that represents 20 percent of the German truck market
(based on registrations). The strategy is to continue to expand and improve the Company’s network and
organisation to increase the market share for Volvo Trucks and Renault Trucks as well as to increase
Ferronordic’s share of the total aftermarket in its sales area.
The need for a dense network of workshops is partly the same as in construction
equipment. Trucks are central to customers’ operations and any unplanned down-
time quickly lead to a deterioration in the protability of Ferronordic’s customers.
Proximity to customers, a large number of workshops and good access to spare
parts are therefore important success factors.
Most of the workshops are located in larger cities or at junctions along the
Autobahn and maintain a high and uniform standard in terms of quality, treatment
and environment.
Region
No. of
workshops
Description
West 7
Includes Frankfurt, which is the main city in Rhine-
Main metropolitan region, Fulda, Limburg, Bingen,
Bergstrasse, Kassel and Haiger.
East 5
Includes fast-growing cities such as Dresden and
Leipzig as well as Bautzen, Dessau and Görschen.
North 3
Includes Hannover, which is the largest city in
Braunschweig-Göttingen-Wolfsburg metropolitan
region, Nordhausen and Magdeburg.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
Market outlook
Sustainability The share
Corporate
governance
Formal
annual report
Introduction
(15) Ferronordic outlets in
Germany as of January
2022.
36
FERRONORDIC ANNUAL REPORT 2021
Brands
Ferronordic is a provider of premium
service, products, and customised
solutions. This puts high demands on
the Company’s choice of partners.
The products Ferronordic offers should always be a world leader
in safety, quality and productivity in order to best contribute to the
customer’s business and have the least possible negative impact
on the environ ment. The core of the offer is construction equipment
and trucks from the Volvo Group, which are supplemented with other
leading brands when needed.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
Market outlook Sustainability The share
Corporate
governance
Formal
annual report
Introduction
37
FERRONORDIC ANNUAL REPORT 2021
Brand Descpription
Volvo Construction Equipment
Prole: Swedish Volvo CE is a leading manufacturer of construction equipment in the premium segment and one of the largest companies in the industry and the strongest
brand for construction equipment in Russia. The company is part of the Volvo Group.
Business: Ferronordic is an authorised dealer (including aftermarket) for Volvo CE throughout Russia and in Kazakhstan.
Offer: A wide range of machines in different sizes segments and categories.
Sales 2021: 1,062 new machines.
Volvo Trucks
Prole: Swedish Volvo Trucks is one of the world’s largest truck manufacturers with customers in more than 140 countries. Volvo Trucks is a leader in areas such as quality,
safety and environment. The company is part of the Volvo Group.
Business: Ferronordic is an authorised dealer for Volvo Trucks in an area corresponding to 20 percent of the German truck market and an aftermarket dealer for Volvo
Trucks in certain parts of Russia.
Offer: A wide range of trucks in different sizes and categories.
Sales 2021: 689 new trucks.
Renault Trucks
Prole: French Renault Trucks is one of the world’s leading truck manufacturers with customers in more than 150 countries. The company is owned by the Volvo Group.
Business: Ferronordic is an authorised dealer for Renault Trucks in an area corresponding to 20 percent of the German truck market and an aftermarket dealer for Renault
Trucks in certain parts of Russia..
Offer: A wide range of trucks of different sizes segments and categories.
Sales 2021: 111 new trucks including 40 light commercial vehicles.
Dressta
Prole: Polish Dressta is a global manufacturer of construction equipment with focus on machines for the most demanding environments such as mining, oil and gas extraction.
Business: Ferronordic is the ofcial dealer of Dressta bulldozers and pipelayers throughout Russia. Dressta bulldozers are often used side by side with Volvo CE products.
Offer: Bulldozers and pipelayers.
Sales 2021: 20 bulldozers.
Mecalac
Prole: French Mecalac is a leading manufacturer of backhoe loaders, compact wheel loaders and other compact machines.
Business: Ferronordic is the ofcial dealer of backhoe loaders from Mecalac throughout Russia and Kazakhstan.
Offer: Backhoe loaders and compact equipment.
Sales 2021: 119 backhoe loaders and 2 compact wheel loaders.
Rottne
Prole: Swedish Rottne is a leading manufacturer of forwarders and harvesters for the forest industry. As part of the collaboration with Ferronordic, Rottne has developed a
new series of products for the Russian market, equipped with engines from Volvo Penta.
Business: Ferronordic is the ofcial distributor of Rottne forestry machines throughout Russia.
Offer: Forwarders and harvesters.
Sales 2021: 25 forwarders and harvesters.
Sandvik
Prole: Swedish Sandvik is a premium brand and a global leading manufacturer of mobile crushers and screensThe products are used in, among other things, open pit mining,
mining and recycling.
Business: Ferronordic is the ofcial distributor of mobile crushing and sorting plants throughout Russia.
Offer: Mobile crushers and screens.
Sales 2021: 3 mobile crushers and screens.
Ferronordic
Business: Ferronordic sells diesel generators (gensets) through its own brand. The generators are powered by engines from Volvo Penta.
Offer: Diesel generators.
Sales 2021: 15 diesel generators.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
Market outlook Sustainability The share
Corporate
governance
Formal
annual report
Introduction
38
FERRONORDIC ANNUAL REPORT 2021
Connectivity increases operational reliability
and efciency
Ferronordic’s services and products are often integrated into and directly crucial to customers’ operations.
Efciency and reliability are therefore of central importance and places high demands on Ferronordic’s
aftermarket offering.
Through digital technology and connected machines, Ferronordic provides service
and spare parts based on real-time data from the machines. Together with the
accumulated experience of Ferronordic’s mechanics and salespeople, as well as
the Company’s knowledge of its customers and their operations, this minimises the
risk of unforeseen and costly downtime.
Ferronordic has further developed the connection between customer knowledge
and machine data by creating its own system for digital sales support, both for
machine sales and aftermarket. Thanks to the Company’s self-developed “rule
engine”, based on know-how and experience, the signals from the machines’ tele-
matics systems are used to create automatic predictive and preventive service and
sales offers to customers.
So far, digital sales support is only available in the operations in Russia/CIS.
Ferronordic believes that the system is relatively unique among dealers, not only
in Russia, and that it therefore has a great potential on other markets as well as
products - including the Company’s growing aftermarket business for trucks in both
Russia and Germany.
Telematics system
The telematics systems (e.g. Volvo CE’s CareTrack) monitor how the machines are
used and send signals about engine hours, fuel consumption, geolocation etc.
Rule engine
The signals of the telematics systems ow through the rule engine and are auto-
matically converted into “sales leads” and concrete customer offers.
Customer offer
The sales people get a notication with a recommendation of products/services
based on output from the rules engine. The data is also collected in Ferronordic’s
CRM system.
Sales measure
Responsible salespeople contact customers and present the offers.
Follow-up
Customer offers generated by the rule engine are monitored continuously and
updated systematically to ensure that they are effective and result in increased
productivity and customer value.
Operations
Operations
Russia/CIS
Germany
Brands
Digital platform
Market outlook Sustainability The share
Corporate
governance
Formal
annual report
Introduction
Sustainability
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
40
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
For Ferronordic, sustainability involves creating long-term value for all stakeholders
of the Company. Ferronordic sees no long-term contradiction between sustainability
and protability, rather the opposite. Demand for sustainable and environmentally
friendly business solutions is steadily increasing and companies that can take the
lead in that development and help their customers meet their objectives will gain
competitive advantages. Ferronordic works with partners and manufacturers who
are focused on developing sustainable businesses and with customers who strive
for resource efciency and minimised environmental impact.
Sustainability is a central part of Ferronordic’s strategy. It applies to everything
the Company does, from culture to processes and operations. Sustainability is an
essential part of Ferronordic’s efforts to constantly improve and make its business
more efcient and resilient.
A new strategy for sustainability
Sustainable development is necessary for the prosperity of the world - globally as well as nationally and
locally. Sustainability is about employing and building natural, human and technological resources in a
way that meets the needs of the present without compromising the ability of future generations to meet
their own needs.
A new sustainability strategy
In 2021, Ferronordic took further steps to deepen its sustainability work and to
raise its ambitions. An extended materiality analysis was initiated and in-depth
interviews were conducted with a number of stakeholders.
An important basis for the new strategy is greater emphasis on system
thinking, which helps Ferronordic to understand how the Company’s operations
are connected to society, the planet and its inhabitants. One way to visualise these
relationships is to study Ferronordic’s value chain to identify risks and opportunities
and what positive or negative impact the business can have on the environment.
The illustration shows Ferronordic’s journey from a linear to a circular approach.
EXTRACTING
RAW MATERIAL
PARTS
SUPPLY
MANU-
FACTURING DISTRIBUTION
USER
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INCINERATION, LANDFILL
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41
FERRONORDIC ANNUAL REPORT 2021
Ferronordic’s sustainability work is based on international, national and local laws
and standards. In 2021, a comprehensive survey was conducted which resulted in
updates of several processes, policies and guidelines to ensure that the Company
complies with international frameworks. Among the policies that were updated are:
• Human Rights Policy
• Environmental Policy
• Equality, Diversity and Non-Discrimination Policy
The review of the Company’s policies are based on standards, declarations and
guidelines sush as:
• UN Global Compact
• UN Global Development Goals (SDGs)
• ILO Basic Conventions
• UN Declaration of Human Rights
• OECD Guidelines for Multinational Enterprises
The new policies will ensure that Ferronordic’s commitments are known to all em-
ployees and that all units within the organisation always work in accordance with
these principles. Ferronordic also has a code of conduct and an anti-corruption
policy.
UN Sustainable Development Goals
The UN Sustainable Development Goals (SDGs) serve to develop shared know-
ledge, facilitate cooperation, produce, and harmonise regulation and drive techno-
logical development, which ultimately leads to impact and change.
Ferronordic is committed to all 17 goals, all of which have some connection
to the Company’s operations. The focus is on the goals where the Company’s
business activities can have the biggest immediate impact and the biggest effect
on positive long-term trends.
In line with international standards
6
13 14 15
• Clean water and
sanitation
• Climate action
• Life below water
• Life on land
3 8 10 165
• Good health and
well-being
• Gender equality
• Decent work and
economic growth
• Reduced inequality
• Peace and justice
strong institutions
5 11 12 17
• Gender equality
• Sustainable cities
and communities
• Responsible
consumption and
production
• Partnerships to
achieve the goal
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
42
FERRONORDIC ANNUAL REPORT 2021
It should be noted that the analysis underlying this sustainability report was carried
out before the ongoing conict in Ukraine.
Stakeholder dialogue
The materiality analysis is based on an ongoing stakeholder dialogue consisting of
surveys, in-depth interviews, investor meetings, conversations with customers and
employee surveys. In addition, customer feedback and complaints are handled in
a structured way to contribute and increase knowledge and improvements. Other
important groups participating in the dialogue are suppliers and partners, as well
as authorities, municipalities and non-prot organisations.
Stakeholder dialogue and materiality analysis
The starting point for Ferronordic’s sustainability work is to identify risks and opportunities and to prioritise.
This is necessary to be able to take relevant measures and use its resources efciently, as well as to
meet stakeholders’ expectations. Ferronordic therefore uses a materiality analysis, based on double
materiality, as a tool in its sustainability work.
Impact assessment
An important part of the materiality analysis is understanding Ferronordic’s impact
on the environment, climate, society and people. As a basis for this work, Ferronordic
has taken part of internal and external surveys, current and future regulations and
standards, as well as risk analyses at country and industry level. The Company
has also studied how similar companies assess and report their impact on the
environment. Together with the stakeholder dialogue, this provides a coherent
picture of Ferronordic’s impact and thus also on what the Company should focus
on regarding its sustainability work.
Impact created by Ferronordic
Importance to stakeholders
A. Reduced carbon dioxide emissions
B. Health & Safety
C. Anti-corruption & Ethics
D. A green customer offer
E. Diversity & equal opportunities
F. Recycling
G. Responsibility for the supply chain
H. Training and development of staff
and organization
3.0 3.5 4.0 4.5 5.0
3.0
3.5
4.0
4.5
5.0
H
G
F
D
A
E
C
B
The materiality analysis deepens the understanding of
Ferronordic’s impact on its environment at the same
time as it conrms the Company’s previous focus on
sustainability. Thus, it also provides an opportunity to
further increase its ambitions. Based on the materiality
analysis, Ferronordic should primarily focus on the
following sustainability aspects:
A. Reduced carbon dioxide emissions
B. Health and safety
C. Anti-corruption and ethics
D. A green customer offer
E. Diversity and equal opportunities
F. Recycling
G. Responsibility for the supply chain
H. Training and development of staff and organisation
As a result, Ferronordic has
launched a new sustainability
ambition with three focus areas:
• Planet rst
• Fair workplace
• Sustainable offerings
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
43
FERRONORDIC ANNUAL REPORT 2021
Volvo, Sandvik and Ferronordic’s other partners have high ambitions in
terms of sustainability. An environmental perspective therefore exists
all the way from production, use, maintenance and repair, to reuse and
recycling.
In 2021, Ferronordic updated its car policy in Germany to support
electric vehicles. The employees were also offered charging infrastruc-
ture. The goal is to increase the proportion of electric vehicles in the
Company’s operations in relation to the proportion that runs on fossil
fuels.
During the year, Ferronordic also measured its carbon footprint in
cases where data were available. The mapping covered electricity use,
fuel consumption and business travel. Additional data will be collected
and added over time.
Towards the end of the year, Ferronordic acquired a renewable
energy certicate for the German operations. In 2022, the certicate will
be used for 9 of 14 workshops. Other German workshops will follow suit
as current electricity contract expires. The nine workshops account for
approximately 65 percent of the electricity use in the German operations.
By the end of 2022, the goal is for all workshops in Germany to use
100 percent renewable energy.
During the year, Ferronordic also began to map its carbon footprint
throughout the value chain. The information is initially limited to some
emission categories but will gradually be complemented with additional
data. The information on electricity consumption is in most cases based
on estimates as electricity is often included in the rent. In cases where
Ferronordic owns the facilities, the information from the electricity bills is
used. Based on this, the Company’s carbon footprint has been calculated
using emission factors from the International Energy Agency (IEA). Busi-
ness travel data come from the Company’s travel agencies.
An important part of Ferronordic’s sustainability work is the Company’s
centre for machine and component rebuild. By restoring older equipment
and selling it with new guarantees, Ferronordic enables better resource
Planet rst
Electricity consumption 2021 2020 2019
Electricity, MWh
*
3,250 2,501 2,123
Electricity rate
**
3,19 - -
Renewable energy share, % 0 0 0
*
2019 data refer only to Russia. The 2020 data refer to Russia and Germany.
The 2021 data also refer to Kazakhstan.
**
MWh/revenue. Applies to Germany only.
Tons of CO
2
eq- emissions
by source 2021 2020 2019
Electricity
*
1,184 882 754
Fuel
**
65,253 36,057 32,879
Business travel
***
878 385 1,115
Total 67,314 37,324 34,747
*
Includes Russia 2019, Russia and Germany 2020 and Russia, Germany and
Kazakhstan 2021.
**
Excluding car data from Germany. The increase is mainly due to increased busi-
ness volumes in contracting services.
***
Excluding Germany 2019 and 2020 and domestic travel in Russia. In addition,
strongly affected by the pandemic.
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
44
FERRONORDIC ANNUAL REPORT 2021
Rebuilt categories 2021 2020
Articulated haulers 16 3
Engines 38 15
Gearboxes 50 19
Other components 158 45
7
2610
9
%
Incineration
Tires
Metal
LED batteries
Paper
Glass
Oil
Plastic
Carton
Wood
Electronic waste
*
Fluorescent lamps
*
28
10
1
7
1
1
Waste per category
*
Electronic waste and flourescent lamps are less than 0.5 percent.
utilisation. The business includes repairing machines, manufacturing new
components and recycling metal and parts of machines that can no longer
be restored to usable condition. The facility was launched in December
2019, and its capacity was expanded during both 2020 and 2021.
For material that cannot be given a second life, the goal is to increase
the proportion of recycling and reduce the proportion that goes to inciner-
ation or landll. Ferronordic will therefore develop its systems to ensure
reliable data on the proportion of materials recycled in all markets to im-
prove resource efciency. The information regarding waste generation in
the Company’s markets shows that the largest categories consist of mixed
waste for incineration and used tires, oils and metals. Current data, which
is not yet complete, provides an overview of which waste categories
Ferronordic should focus on in order to increase the proportion of recycling.
As can be seen from the diagram, used tires make up a signicant
part of Ferronordic’s total waste. Most of these tires are used in contract-
ing services in projects in difcult conditions and remote parts of Russia,
which poses major challenges in terms of waste management and recycling.
In the coming years, this category will therefore be prioritised when it
comes to investment in waste management.
FERRONORDIC ANNUAL REPORT 2021
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
45
FERRONORDIC ANNUAL REPORT 2021
Health and safety are core aspects of Ferronordic. Many of the Compa-
ny’s employees work in challenging and sometimes extreme conditions.
Such work is associated with risks related to health and safety. It is
Ferronordic’s responsibility to ensure that working conditions are as safe
as possible. The goal is of course zero injuries.
Ferronordic works systematically and proactively with the work envi-
ronment of its employees. This includes, among other things, preventive
checks at the Company’s facilities and reporting of all incidents. This
identies deviations that could have led to accidents if they had not been
noticed. This in turn helps to increase awareness of health and safety
and to remind each employee of the importance of safety routines. In
2022 the incident reporting system implemented in Russia will also be
introduced in Germany and Kazakhstan.
The transport industry is being transformed at a fast pace. Although it
may take several years from the time a decision is made until the actual
shift takes place, the technical conditions and business models are
changing. For Ferronordic to remain relevant, innovation is a key factor
and in order to be innovative, the employees constantly need to perform
at their best, which in turn requires a diversity of skills and backgrounds
as well as good working conditions. In 2021, Ferronordic introduced a
new diversity KPI in order to focus management’s attention and measure
developments in this area.
Ferronordic’s activities and projects cover a wide range of environ-
ments and conditions. From large cities to remote mountainous regions.
While Ferronordic creates jobs in sparsely populated areas, it also brings
challenges in terms of retaining employees in the long term. Ferronordic
therefore prioritises its HR function and works with a wide range of tools
to improve employee satisfaction and maintain diversity.
Diversity 2021 2020 2019
Women in Board, % 29 17 17
Women in management, % 32 28 -
Total women employee, % 12 10 13
Diversity, %
1)
21 - -
Employee engagement, %
2)
77.2 - -
1)
Calculated as 361 employees of diverse backgrounds/1,712 average total
headcount.
2)
Gallup Q12 employee satisfaction survey methodology.
Health & Safety 2021 2020 2019
Hours training total 61,027 49,761 56,954
Hours training/employee 34,1 33,9 47,9
Safety hours training total 6,810 4,282 9,344
Sick days/employee
*
5,9 4,9 2,6
Near-miss
**
129 48 169
Minor injuries
***
24 1 1
Major injuries 5 3 4
Fatalities 0 0 0
LTIFR Germany 3,87 - -
LTIFR Russia 2 - -
*
The increase is mainly due to the pandemic.
**
Refers only to Russia and Kazakhstan. The changes between the years are
mainly due to the pandemic.
***
Minor and serious occupational accidents from 2021 also include Germany.
Fair workplace
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
46
FERRONORDIC ANNUAL REPORT 2021
Anti-corruption
Since its start, Ferronordic has put signicant efforts into measures to
ght corruption and develop a culture of strong business integrity.
An important area is procurement, where a policy stipulates rules
with different threshold values and ensures that decisions are made by at
least two people of relevant level and competence. Ferronordic also runs
an annual anti-corruption training that is mandatory for all employees
in all markets.
To make it easier for employees to report signs of identied inaccu-
racies, Ferronordic has a whistleblower function where employees can
report any suspicious activity anonymously.
Ferronordic’s code of conduct is available in all relevant languages
and for all employees. The Company operates under the Swedish Code
of Corporate Governance and sustainability is a standing item at man-
agement group and Board meetings.
Responsibility for the supply chain
Ferronordic’s supply chain is associated with risks and opportunities
related to sustainability. The largest part of the supply chain consists of
manufacturers of trucks, heavy vehicles and construction equipment.
Ferronordic has a close relationship with these stakeholders, which facil-
itates the understanding of the importance of our environmental footprint.
Ferronordic only works with premium manufacturers who have long
since been working to reduce their impact on the environment. This work
and the close cooperation with its partners help Ferronordic to reduce its
footprint in the supply chain.
Ferronordic’s Rebuild Centre is certied according to the work
environment management system ISO 45001. Parts of the activities in
Russia are certied according to the quality management system ISO
9001 and the environmental management system ISO 14001. In 2022,
the Company intends to expand its quality and environmental manage-
ment systems throughout Russia and introduce them in Germany and
Kazakhstan.
ISO-certications 9001 14001 45001
Russia Yes Yes Yes
Kazakhstan 2022 2022 -
Germany 2022 2022 -
Anti-corruption and compliance 2021 2020 2019
Percentage of employees who have
completed anti-corruption training,%
100 100 100
Number of training hours in
anti-corruption/employee
1,08 1,06 1,04
Reported whistleblower incidents 1,930 1,556 1,239
Whistleblower incidents which led to action 1 0 1
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
47
FERRONORDIC ANNUAL REPORT 2021
The impact of customers
Customers are at the centre of all Ferronordic’s operations. Ferronordic
and its customers are part of each other’s value chains. Ferronordic
strives not only to meet customers’ needs, but also to support their
sustainability work. This means that Ferronordic always strives to offer
the product that has the least environmental impact. The Company also
offers support in extending the product life cycle through maintenance,
repair and remanufacturing. At the end of the product’s life, Ferronordic
ensures that resources that can no longer be used by customers are
recycled when possible or responsibly disposed.
Possibility
The transport industry is undergoing an enormous transformation with
new types of fuels such as biodiesel, ethanol, fuel cell technology,
biogas and electricity. This transformation requires large infrastructure
investments, which means that most fuel types will likely be available for
a number of years. Through its strategic partnerships, Ferronordic can
offer solutions that provide a low environmental impact and t the needs
of the customers’ operations. In addition, the transformation can lead to
new partnerships and solutions for transport, freight and construction
industries.
Ferronordic’s products and services are often linked to critical
infrastructure projects, which means that there are strict requirements
on quality and sustainability. Both public and private actors are placing
ever higher demands on the reduction of CO
2
emissions, the protection
of human rights and biodiversity. This is an advantage for companies
that conduct active sustainability work, which is an integral part of all
Ferronordic’s business activities.
Circular offering
Ferronordic’s business model includes maintaining, repairing and
renovating machines and components that customers buy or currently
operate. This is good resource management that supports improved
nancial performance and reduced environmental impact for the cus-
tomers. Ferronordic’s IT solutions also make it possible to plan service
and maintenance efciently and thereby reduce the risk of unplanned
downtime, which is associated with resource waste, additional costs and
loss of revenue for customers.
Ferronordic also offers training in how to use machines and other
equipment in an efcient way to minimise environmental impact. In order
to drive incremental improvements in its own environmental perfor-
mance, Ferronordic has established KPIs and will develop long-term
targets for sustainable customer offerings. The KPIs include training on
how to use the machines in an environmentally sustainable way, sales
of remanufactured and rebuild units and sales of electric vehicles. These
KPIs are designed to include more products and services over time.
Sustainable offer
Sustainable offerings KPI 2021 Target 2022
Share of total sales, % 0.95 6
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
48
FERRONORDIC ANNUAL REPORT 2021
Sustainability risks
Risk mapping
In order to identify and calibrate sustainability risks, Ferronordic carried out a
renewed risk survey in 2021 on the industries and countries in which it operates.
The majority of the survey was carried out with internal resources, but it was also
complemented by an external consulting rm which ensured that no risks were
overlooked or underestimated. The mapping of sustainability risks is naturally
linked to Ferronordic’s overall process for risk management.
Risk management (including areas of sustainability)
Ferronordic’s risk review and management process is performed by Ferronordic’s
internal audit and control. Business managers and area experts work with the
Ferronordic’s risk ofcer to identify, describe and manage risks. The level of risk
and the implementation of the controls are reported by the employees responsible
for the relevant risks. The risks and controls are reviewed on an annual basis.
These risks are reported to Ferronordic’s management team on a quarterly
basis. As a result of the ESG risk mapping, the ESG risks area was expanded
during the year. The Group’s risk management process currently includes Russia,
Kazakhstan and Sweden. In 2022, Germany will also be included in the group
process as part of the overall onboarding plan.
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
49
FERRONORDIC ANNUAL REPORT 2021
Mapping of the value chain’s climate footprint
In 2022, Ferronordic intends to continue the mapping of the Company’s CO
2
foot-
print throughout the value chain. The work will initially focus on procuring consist-
ent data for purchased products and logistics, both of which are sources of CO
2
emissions.
Preparations for due diligence on human rights
Awareness of human rights is increasing among companies worldwide. The issue
is central to both consumers and interest groups. Focus is mainly on the supply
chain, where the biggest challenges are. More regulations are also expected at
the national and EU levels to ensure that companies adequately deal with human
rights issues.
Outlook for 2022
In 2021, Ferronordic began identifying and resolving gaps in the Company’s pro-
curement process. The Company reviews the sustainability obligations associated
with procurement. The procurement policy and the procurement process are areas
that will be further developed in 2022. Ferronordic will also review other parts of
the value chain where there are risks linked to human rights.
Impact assessment of climate change
Even though people and companies are working to reduce their environmental
impact and limit climate change, there is still a need to prepare for a warmer and
less predictable climate. In 2022, Ferronordic intends to continue an in-depth
impact assessment of climate change to understand to what extent it will be affected
and how it can mitigate the effects of climate change.
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
50
FERRONORDIC ANNUAL REPORT 2021
This report contains Ferronordic’s rst reporting under the EU Taxonomy Regu-
lation. The review of relevant economic activities within Ferronordic was carried
out by mapping the Company’s turnover against the NACE codes for classica-
tion of economic activities. The work was led by the nance department and the
verication of the NACE codes was done together with Ferronordic’s sustainability
department. The taxonomy criteria were studied both to understand the aim of the
framework and to identify applicable categories of activity.
As a result of the review, it was decided which nancial activities Ferronordic
will include in the taxonomy reporting. Capital and operational expenditures were
determined by cross-checking the Disclosures Delegated Act against Ferronordic’s
accounting entries. The KPIs in the table below include the economic activities
that fall into the two categories of manufacturing of low-carbon technologies for
transport and freight transport services by road.
The review shows that Ferronordic can have an impact on climate change in
its markets. The Company also concludes that its activities related to the circular
economy may be included in the taxonomy in the next wave. However, conditions
in Ferronordic’s markets mean that it may be difcult and take time to reach
100 percent.
Although the reporting obligation for 2021 does not include a taxonomy adjust-
ment declaration, Ferronordic was also reviewed on the basis of the “Do no harm”
criteria. The Company’s human rights policy was therefore evaluated to examine
Ferronordic’s approach to human rights with internal and external parties, and the
entire value chain. The risk mapping process also supported the effort to provide
an overview of risks and to reduce such risks. Further work is needed to identify
the full potential impact of the Company’s operations regarding human rights.
One of the main goals of EU Taxonomy is to prevent ‘green washing’. Fer-
ronordic respects this and has taken a conservative approach when reporting the
taxonomy-eligible gures, thus not including items that are not specically men-
tioned in the taxonomy. As part of Ferronordic’s mapping of the taxonomy against
its economic activities, the Company identied two eligible economic activities
generating external turnover in:
• Freight transport services by road
• Manufacture of low carbon technologies for transport
To estimate the proportion of taxonomy eligible activities, Ferronordic included the
IFRS based accounting amounts related to such activities in the revenue, capital
and operational expenditure numerators, against the corresponding total revenue,
capital and operational expenditure amounts in the denominators.
EU taxonomy eligibility
Proportion
of revenue, %
Proportion capital
expenditures, %
Proporation of operational
expenditures, %
A. Taxonomy eligible activities
- Freight transport services by road 0.1 7 1.3
- Manufacture of low carbon techno logies for transport 0 0 0
B. Taxonomy non-eligible activities 99.9 93 98.7
Total (A+B) 100 100 100
Taxonomy
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
51
FERRONORDIC ANNUAL REPORT 2021
KPI index
Indicator Market Unit 2019 2020 2021 2021 vs. 2020 YoY
Number of Board members Group # 6 6 7 17%
Number of Board meetings per year Group # 10 14 9 -36%
Board meeting attendance Group # 93% 98% 100% 2%
Women members of Board Group % 17% 17% 29% 71%
Nationalities present in Board Group # 1 1 1 0%
Independent members of Board Group % 4 4 5 25%
Electricity consumption Group MWh 2,123 2,501 3,250 30%
Fuel consumption Group 1,000 l 12,894 14,140 25,589 81%
Flight miles Group 1,000 km 9,980 3,549 8,034 126%
CO
2
emissions related to ights Group tons 1 115 385 878 128%
Lost Time Injury Frequency Rate Ru/CIS # 2
Accidents at work (minor) Group 1 1 24 2300%
Accidents at work (major) Group 4 3 5 67%
Personal protective equipment Ru/CIS MRUB 28.2 27.1 42.8 58%
ISO 45001:2018 Certication Ru/CIS Y/N Y Y Y
Internal HSE inspections Ru/CIS # 52 15 72 380%
Number of violations discovered Ru/CIS # 618 315 855 171%
Number of violations closed on time Ru/CIS % 60 67 1 -99%
Safety walks Ru/CIS # 1,480 655 1,104 69%
Near-miss Ru/CIS # 169 48 129 169%
Closed Near-miss reportings Ru/CIS % 0 -1 1 -203%
Near-miss frequency rate Ru/CIS # , , 9
Safety training Group hrs 6,810 4,282 9,344 118%
Anti-corruption training Group hrs 1,239 1,556 1,930 24%
Anti-corruption training/employee Group hrs/# 1.04 1.06 1.08 2%
Number of employees at end of year, Group Group # 12 17 42%
Employee turnover in Group % 13% 15% 14% -7%
Average age of employees at end of year Group # 37 39 39 0%
Proportion of male/female employees Group % 13% 10% 13% 30%
Proportion of male/female employees in executive management Group % 11% 16% 15% -6%
Proportion of male/female employees in management Group % 11% 17% 20% 18%
Nationalities in workforce Group # 7 19 20 5%
% of vacancies announced internally in year Group % 88% 93% 93% 0%
% of vacancies lled internally in year Group % 60% 20% 25% 25%
Number of internal promotions made in year Group % 268 187 273 46%
Number of training hours provided in year Group hrs 56,954 49,761 61,027 23%
Total training hours per Employee Group h/# 48 34 34 1%
Work-related serious accidents or fatalities in year Group # 4.0 3.0 5.0 67%
Number of sick-days in year Group # 3,097 7,189 10,502 46%
Average number of sick-days per employee Group # 2.6 4.9 5.9 20%
Number of partners that signed Code of Conduct Group # 4
Number of partners that signed policy on Human Rights Group # 4
Sustainability
Sustainability
A new strategy
International standards
Stakeholder dialogue and
materiality analysis
Planet rst
Fair workplace
Sustainable offer
Sustainability risks
Outlook for 2022
Taxonomy
KPI index
Introduction
Operations The share
Corporate
governance
Formal
annual report
Market outlook
The share
The share
The share
The Ferronordic share
53
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Corporate
governance
Formal
annual report
Market outlook
Sustainability
Ferronordic’s shares have been listed on Nasdaq Stockholm since October 2017.
On 31 December 2021, the share price was SEK 337, which is an increase of
114 percent compared to the previous year. This corresponds to an increase in the
market capitalisation of the Company to SEK 4,897 m (2,287). The listing refers to
all shares in Ferronordic AB (publ), which is the Parent company of the Group. The
shares are traded in the Mid Cap segment and belong to the Industrial Goods and
Services sector. The ticker is FNM and the ISIN-code is SE0005468717.
Turnover and stock price development
In 2021, 9,267,690 shares (8,907,867) were traded at a total value of SEK 2,271 m
(1,199). The average turnover was 36,631 shares (35,348) for SEK 9 m (4.8) per
trading day. All listed shares were traded on Nasdaq Stockholm.
Share capital
Ferronordic has only one class of shares: ordinary shares. The number of shares
on 31 December 2021 was 14,532,434. Each share carries one voting right at the
Annual General Meeting. At the end of the year, Ferronordic owned 0 shares (0).
Dividend policy and dividend
In February 2021, the Board adopted a new dividend policy. According to this policy,
Ferronordic’s ambition is to distribute at least 50 percent of the net prot if the
net debt / EBITDA is less than 1.0 x (after the dividend) and to distribute at least
25 percent of the net prot if the net debt/EBITDA is more than 1.0 x. In addition,
the Board considers other factors when the level of dividend is proposed, including
legal requirements, the Articles of Association, the Group’s expansion opportunities,
the Company’s nancial position and investment needs.
Ferronordic has not received any conditional state aid in connection with the
Covid pandemic.
Ferronordic paid dividends during both 2020 and 2021 for 2019 and 2020
results, respectively.
Due to the conict in Ukraine, the ensuing sanctions and restrictions imposed
on Russia in February and March 2022 and the resulting uncertain outlook, the
Board proposes that the 2022 Annual General Meeting resolves not to pay dividends.
Ownership
On 31 December 2021, the number of shareholders amounted to 9,611 (4,999).
Foreign ownership amounted to 29 percent (21).
Among the ten largest shareholders, a few changes took place in 2021.
Nordnet and Carnegie Fonder increased their holdings while Norges Bank IM and
Per Arwidsson and related parties decreased their positions. Other changes are of
a minor nature.
The Ferronordic share
Data per share 2021 2020 2019 2018 2017
Operating prot, SEK 33.2 22.6 24.6 18.8 12.9
- after full dilution, SEK 33.1 22.6 24.6 18.8 12.9
Prot, SEK 23.3 15.3 17.3 13.2 8.1
- after full dilution, SEK 23.3 15.3 17.3 13.2 8.1
Operating cash ow, SEK 31.5 47.7 -22.7 10.4 10.2
- after full dilution, SEK 31.5 47.7 -22.7 10.4 10.2
Equity, SEK 75.8 55.5 61.3 45.1 42.1
- after full dilution, SEK 75.5 55.5 61.3 45.1 42.1
Stock price by year end, SEK 337 157 163 127 151
Highest share price, SEK 359 173 167 163 180
Lowest share price, SEK 154 73 125 113 145
Dividend, SEK
1)
- 7.5 4.3 3.8 1.7
1)
The Board’s proposal 2021.
Signicant shareholders as at end of 2021
*
Shareholders
Number of
shares
Share of capital
and votes, %
Skandinavkonsult i Stockholm AB** 2,260,774 15.6
Lars Corneliusson (direct and through companies) 1,047,249 7.2
Per Arwidsson and related entities 812,961 5.6
Avanza Pension 756,741 5.2
Swedbank Robur 721,053 5.0
Unionen 575,000 4.0
Altocumulus 493,381 3.4
East Capital AB 434,942 3.0
Investor AM BVBA 420,955 2.9
Norges Bank IM 340,900 2.3
Other shareholders 6,668,478 45.9
Total 14,532,434 100.0
* Euroclear 31 december 2021.
** Associated person of Håkan Eriksson.
54
FERRONORDIC ANNUAL REPORT 2021
Share-based incentive program
On 12 May 2021, the Annual General Meeting resolved on an incentive program
for senior executives. The program is intended to create long-term incentives
and align the interests of management and shareholders. According to the
program, Ferronordic is permitted to issue up to 392,768 warrants and distribute
these among approximately 30 people in the management of the Group and its
subsidiaries. Each warrant entitles the participant to subscribe for one share in the
Company not earlier than three years after the warrant has been issued.
On 28 May 28 2021, the Company issued 364,500 warrants to 27 senior
executives and participants as part of the incentive program. In line with the pro-
gram design, the participants received cash compensation from the Group which,
after tax, covered 80 percent of the cost of acquiring the warrants. The remaining
20 percent was funded by the participants themselves.
Subscription of shares will take place against cash payment to the Company
of an exercise price corresponding to 135 percent of the volume-weighted average
share price during the ten trading days immediately preceding the valuation date
of the warrants (28 May, 2021). In the event of a full allotment and a full subscrip-
tion, the Group’s equity would increase by approximately SEK 130 m. Participation
in the program and subscription of shares requires the participants to remain
employees of the Company or its subsidiaries for the duration of the program.
A similar program was launched in 2020. On 27 November 2020, the
Company issued 332,000 warrants to 24 senior executives and participants in the
incentive program. The total number of outstanding warrants on 31 December
2021 was 696,500.
It is the Board’s intention to repeat the 2021 warrant program for the management
team in 2022. However, each year’s program is independent of previous programs
and will be presented at Ferronordic’s Annual General Meeting. The cumulative
potential dilution of the programs over three years, if fully implemented, shall not
exceed 8.75%. The Board will present the long-term incentive program for 2022 in
the notice convening the Annual General Meeting 2022.
Share capital development
Year Measure
Number of
ordinary shares
Number of ordinary
shares, of series 2
Number of A-
preference shares
Number of B-
prefer ence shares
Change in
share capital SEK
Total share
capital, SEK
2008 New share issue 11,000 - - - 98,211 98,211
2010 New share issue 89,000 - - - 794,619 892,839
2013 Share split (100:1) 9,900,000 - - - - 892,839
2013 New share issue - - 500,000 - 44,641 937,471
2017 Conversion - - -366,544 366,544 - 937,471
2017 New share issue 1,333,333 - - - 119,044 1,056,515
2017
Redemption and new
share issue
- 3,199,101 - -366,544 252,899 1,309,414
2017 Redemtion of shares - - -66,728 - -5,958 1,303,456
2017 Conversion 3,199,101 -3,199,101 - - - 1,303,456
2018 Redemtion of shares - - -66,728 - -5,958 1,297,499
Outstanding shares 31 December 2021 14,532,434 - - - 1,297,499
01-04 02-04 03-04 04-04 05-04 06-04 07-04 08-04 09-04 10-04 11-04 12-04
0
50
100
150
200
250
300
350
400
0
1,200
1,400
1,000
800
600
400
200
Ferronordic & OMXSPI 2021
Volume per month/1,000 Ferronordic OMXSPI
The share
The share
The Ferronordic share
Introduction
Operations
Corporate
governance
Formal
annual report
Market outlook
Sustainability
Corporate governance
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
56
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
Corporate governance report
Ferronordic AB (publ) is a Swedish public company domiciled in Stockholm. The
Company’s shares have been listed on Nasdaq Stockholm since October 2017.
Ferronordic applies the Swedish Code of Corporate Governance (the Code).
It is the Board’s opinion that Ferronordic in 2021 has complied with the Code in all
respects and therefore has no deviations to report or explain.
This corporate governance report is not included in the formal annual report
but has nevertheless been reviewed by the Company’s auditors.
Control structure
Ferronordic has a clear framework for corporate governance. The purpose is
to achieve effective and efcient governance and to maintain and develop a
trusting relationship with the Company’s stakeholders. Shareholders exercise
their inuence by participating and voting at the general meeting. Management
and responsibilities are divided between the Board and the CEO in accordance
with Swedish legislation, the Code, Nasdaq Stockholm’s listing requirements and
internal instructions and policy documents.
Shareholders
Information about Ferronordic’s share capital and owners can be found on pages
53–54.
General Meeting
The Annual General Meeting is the Company’s highest decision-making body
through which the shareholders exercise their right to make decisions regarding
the Company’s affairs.
The Annual General Meeting shall be held during the rst half of the year after
the end of each nancial year. The Annual General Meeting makes resolutions
regarding dividends, the election of the Board members, the election of auditors
and other matters required by the Swedish Companies Act, the Articles of Association
and the Code.
Notice convening a general meeting is published in the Swedish ofcial
gazette, Post- och Inrikes Tidningar, and on the Company’s website. The fact that
a notice has been issued is also announced in Dagens Industri. Notices are also
communicated to the market through press releases. All shareholders are entitled
to participate in the Annual General Meeting, either in person or by proxy, provided
that they are recorded in the share register ve working days prior to the Annual
General Meeting and have given notice of their participation.
All shareholders are entitled to have an item dealt with at the Annual General
Meeting, provided that they inform the Board in writing early enough so that the
item can be included in the notice. At the Annual General Meeting, shareholders
also have the opportunity to ask questions to the Board and the management.
Shareholders
General Meeting
The Board of Directors
CEO
Management
group
Auditors
Audit Committee
Group functions
Remuneration Committee
Nomination Committee
Business segment
Germany
Business segment
Russia/CIS
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
57
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
Annual General Meeting 2021
The Annual General Meeting took place on 12 May 2021 and was held without
physical presence of the participants in accordance with the Act on temporary
exemptions to facilitate the execution of general meetings and other associations
(SFS 2020:198). At the meeting, 39 percent of the shares and votes were repre-
sented in person or by proxy.
The Annual General Meeting made the following resolutions:
• to approve annual and consolidated accounts
• a dividend payment of SEK 7.50 per share, i.e. a total of SEK 108,993,255
• to discharge the Board members and the CEO from liability
• to determine the remuneration of the Chairman of the Board, Board members
and the auditor
• to elect Annette Brodin Rampe, Lars Corneliusson, Erik Eberhardson,
Håkan Eriksson and Staffan Jufors (all re-elected) and Aurore Belfrage and
Niklas Florén (both new-elected) Board members
• to elect Staffan Jufors (re-election) as Chairman of the Board
• to elect KPMG AB (re-election) as auditor
• to approve the Nomination Committee’s proposal for principles for the Company’s
Nomination Committee
• to adopt guidelines for remuneration to senior executives
• to approve the incentive program for the Company’s management proposed by
the Board, including the issuance of warrants
Minutes and other documents from the Annual General Meeting are available at
the Company’s website www.ferronordic.com.
Annual General Meeting 2022
Ferronordic AB’s Annual General Meeting 2022 will take place on 12 May 2022
and will be held without physical participation in accordance with the temporary
legislation. Further information is available at the Company’s website
www.ferronordic.com.
Nomination Committee
At the 2021 Annual General Meeting, the following principles were established
regarding the Nomination Committee’s appointment and composition:
• The Nomination Committee shall consist of four members.
• At the end of the third quarter, the Chairman of the Board shall contact the four
largest shareholders and encourage them to appoint their respective representa-
tives to the Nomination Committee.
• Shareholders who are employees of the Group shall in this respect be regarded
as one shareholder.
If a member of the Nomination Committee resigns, the shareholder who appointed
the resigning member shall be asked to appoint a new member. The Chairman
of the Nomination Committee shall, unless the Nomination Committee decides
otherwise, be the member appointed by the largest shareholder. The Nomination
Committee shall act in the interests of all shareholders. Its duties also include
evaluating the composition and work of the Board and submitting proposals for the
Annual General Meeting regarding:
• election of chairman for the AGM
• decision on the number of Board members
• election of the Board and the Chairman of the Board
• election of auditor (in collaboration with the Board’s audit committee)
• remuneration of Board members, Board committees and auditors
• determination of principles regarding the Nomination Committee for the next
Annual General Meeting
The Nomination Committee’s mandate applies until a new Nomination Committee
has been constituted. In case of material ownership changes during the mandate
period, the Nomination Committee shall ensure that a new large shareholder is
represented in the Nomination Committee.
The composition of the Nomination Committee shall be announced no later
than six months prior to the Annual General Meeting. The members of the Nomi-
nation Committee receive no compensation from the Company but are entitled to
reimbursement for reasonable expenses.
Prior to the 2021 Annual General Meeting, the Nomination Committee consisted
of Jörgen Olsson (Chairman), representing Skandinavkonsult i Stockholm AB,
Peter Zonabend, representing Per Arwidsson and related parties, Anders Blomqvist,
representing shareholders employed by the Group, and Caroline Sjösten, repre-
senting Swedbank Robur.
The Nominations Committee for the 2022 Annual General Meeting consists of the
following persons:
• Jörgen Olsson (chairman), representing Skandinavkonsult i Stockholm AB
• Peter Zonabend, representing Per Arwidsson and related parties
• Anders Blomqvist, representing shareholders employed by the Group
• Caroline Sjösten, representing Swedbank Robur
All members are independent of the company and management.
The proposals of the nomination committee will be made public in connection
with the notice of the Annual General Meeting, at the latest.
The Board of Directors
The Board is responsible for the Company’s organisation and the management of
the Company’s operations.
The Board’s tasks include:
• establishing goals and determine the Company’s strategy
• appointing, evaluating and, if necessary, dismissing the CEO
• ensuring that there are effective systems to follow-up and control the Company’s
operations
• ensuring that there is sufcient control over the Company’s compliance with laws
and other regulations
• ensure that the Company’s information disclosure is characterised by transparency
and is correct, relevant and reliable
Corporate
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Corporate governance
Corporate governance report
Board of directors
Management and auditors
58
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
The Chairman of the Board ensures that the Board’s work is conducted efciently
and that the Board fulls its obligations.
In accordance with the Code, the Board evaluates its work each year through
a systematic and structured process consisting of a questionnaire completed
anonymously by each member. The results are compiled by the Board’s secretary
and presented to the entire Board. The result is discussed and additional comments
are added. The results of the evaluation are documented and presented to the
Nomination Committee.
Composition and work in 2021
Since the 2021 Annual General Meeting, the Board has consisted of seven
members without deputies, all elected at the 2021 Annual General Meeting for the
period up to the 2022 Annual General Meeting.
Detailed information about the Board members, including their shareholdings
and other positions, can be found on pages 61–62.
According to the Code, a majority of the Board shall be independent in relation
to the Company and the management, and at least two of the Board members who
are independent of the Company and the management shall also be independent
from the Company’s major shareholders. The Board meets these requirements as
six out of seven Board members are independent from the Company and manage-
ment as well as major shareholders.
Board members, independence, number of meetings and attendance
Elected
year
Independent of
the Company
and company
management
Independent
of major
owners
Total number
of meetings
Annette Brodin Rampe 2017 Yes Yes 9/9
Magnus Brännström 2011 Yes Yes 3/3
Lars Corneliusson 2011 No No 9/9
Erik Eberhardson 2010 Yes Yes 9/9
Håkan Eriksson 2016 Yes No 9/9
Staffan Jufors 2017 Yes Yes 9/9
Aurore Belfrage 2021 Yes Yes 6/9
Niklas Florén 2021 Yes Yes 6/9
The Group’s CFO and General Counsel attend the Board’s meetings, but without
voting rights. The General Counsel is also the Secretary of the Board.
In 2021, the Board held nine meetings. Over the year, the Board devoted particular
focus to the following:
• The Group’s earnings and nancial position
• Interim reports
• The development of the Russian and German economies and their impact on the
market and the Group’s nances
• Corporate governance, risk management and internal control
• Strategy issues and business development, in particular the Group’s expansion
to Germany.
• Financial matters and ESG matters
• The Board continuously evaluates the work of the CEO. At least once per year,
the Board discusses the evaluation of the CEO’s work without the presence of
the CEO or anyone else from the management.
As resolved at the 2021 Annual General Meeting, the remuneration of the Board
amounted to SEK 2.8 m, of which SEK 800,000 was paid to the Chairman and
SEK 400,000 to each of the other directors, except for Lars Corneliusson, who was
employed by the Group. No additional compensation was paid for committee work.
Audit Committee
The Audit Committee shall ensure the quality of the nancial statements, maintain
ongoing contacts with the auditors, monitor the auditors’ independence and object-
ivity, prepare the election of the auditors (in collaboration with the Nomination
Committee), monitor the internal control within the Group as well as dealing with
other related matters.
In 2021, the Audit Committee consisted of the following members:
• Annette Brodin Rampe
• Magnus Brännström (until the Annual General Meeting 2021)
• Håkan Eriksson (Chairman)
• Niklas Floren (newly elected at the 2021 Annual General Meeting)
• Staffan Jufors
All members of the Audit Committee are independent of the Company and the
management. Except for Håkan Eriksson, all members are also independent of the
Company’s major shareholders. The members are deemed to have appropriate
knowledge and experience of matters relating to executive remuneration.
In 2021, the Audit Committee held four meetings. The Audit Committee
convenes regularly to review drafts of the Group’s interim reports and make
recommendations to the Board, as well as sort out any matters before the reports
are prepared by the Board. The Group’s CFO and General Counsel are usually
present at these meetings.
Remuneration Committee
The Remuneration Committee prepares matters concerning remuneration
principles, remuneration and other terms of employment, including share-related
incentive programs for the CEO and other senior executives. The committee also
monitors and evaluates ongoing and during the year completed programs for
variable remuneration for management and the application of these guidelines.
The follow-up assignment also includes following up and evaluating current remu-
neration structures and remuneration levels in the Group.
In 2021, the Remuneration Committee consisted of the following members:
• Aurore Belfrage (newly elected at the 2021 Annual General Meeting)
• Annette Brodin Rampe
• Magnus Brännström (until the Annual General Meeting 2021)
• Håkan Eriksson
• Staffan Jufors (Chairman)
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
59
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
All members are independent to the Company and the management. Except for
Håkan Eriksson, all members are also independent to the Company’s major share-
holders. The members are judged to have the required knowledge and experience
in matters of remuneration to senior executives.
In 2021, the Remuneration Committee held one formal meeting. In addition,
the committee had continuous discussions by email and telephone in connection
with the Board’s meetings.
CEO and management
The Chief Executive Ofcer (CEO) is appointed by the Board and is responsible
for the day-to-day management of the Group. In addition, the CEO has a man-
agement group that in 2021 consisted of nine people. The management convenes
on a regular basis and deals with the Group’s nancial development, Group-wide
development projects, business development, leadership, recruitment and other
strategic issues. In 2021, the management consisted of:
• Lars Corneliusson, CEO
• Nadia Semiletova, Human Resources Manager
• Erik Danemar, Chief Financial Ofcer (Group) and Head of Investor Relations
• Dan Eliasson, General Counsel
• Henrik Carlborg, Head of Business Development
• Ceren Wende, Marketing and Communications Manager
• Onur Gucum, Commercial Manager
• Anton Zhelyapov, Head of Rental, Used and Trucks business
• Martin Bauknecht, Managing Director Germany
Information about management, including age, relevant education and shareholdings
can be found on pages 63–64.
For certain matters, executive management is supplemented by the regional
managing directors and certain other Group functions (Extended Management
Team).
The Group has established functions that are responsible for Group-wide
activities, such as nancial reporting, treasury, IT, communications, legal, HR,
purchasing, logistics, real estate, etc.
In 2021, Ferronordic’s operations in Russia/CIS were divided into eight regions:
• Northwest (based in St. Petersburg)
• Central (with a hub in Moscow)
• Volga (with a hub in Kazan)
• South (with a hub in Krasnodar)
• Ural (with a hub in Yekaterinburg)
• Siberia (with a hub in Krasnoyarsk)
• Far East (with a hub in Khabarovsk)
• Kazakhstan (with a hub in Almaty).
Ferronordic’s operations in Germany are divided into three regions:
• Region North (with a hub in Hanover)
• Region East (with a hub in Dresden)
• Region West (with a hub in Frankfurt)
Each region has its own manager with responsibility for the operations in the
region as well as coordination and implementation of group-wide policies and
processes. Each region also has a regional board consisting of parts of the
management and the relevant regional manager.
Remuneration to senior executives
The 2021 Annual General Meeting approved the following guidelines for remunera-
tion to the Company’s senior executives:
• Remuneration to management shall be based on current market conditions in the
markets in which Ferronordic operates and in the function in which the individual
management person operates. In addition, remuneration shall be competitive to
enable Ferronordic to attract and retain competent senior executives.
• Fixed remuneration is determined individually based on the criteria stated above
and the individual executive’s area of responsibility and performance. For senior
executives living abroad with a salary in rubles, the xed remuneration can be
adjusted to reect exchange rate changes.
• Management may, in addition to xed remuneration, receive variable remuner-
ation, which must be paid upon fulllment of predetermined and measurable
performance criteria, primarily based on the development for the entire Group
or the development for the part of the Group for which the person in question is
responsible. The variable remuneration for both the CEO and other management
personnel may not exceed 100 percent of the xed remuneration.
• Management is entitled to customary non-monetary benets, such as company
cars and health insurance. In addition to these benets, company housing and
other benets can also be offered in individual cases, such as compensation for
housing and school for executives living abroad.
• In addition to the pension benets to which management is entitled by law, senior
executives may be offered pension benets that are competitive in the country
where the person in question is or has resided or to which the person has a sig-
nicant connection. Pension plans must be premium-based without a guaranteed
pension level.
• Severance pay shall not exceed 12 months’ salary.
Remuneration to the CEO and other members of the management is described in
Note 29.
The Board may deviate from these guidelines if there are special reasons for
doing so in an individual case.
Remuneration already decided for the management that has not fallen due at
the 2021 Annual General Meeting falls within the framework of the guidelines.
Auditors
The Company’s annual report and the Board and CEO’s management are reviewed
by the Company’s auditor. The audit results in a report to the Audit Committee,
where the auditor attends at least two meetings per year and in an audit report
submitted after the end of the nancial year to the Annual General Meeting.
The Company’s auditor is elected at the Annual General Meeting. The current
auditor is KPMG AB, re-elected at the 2021 Annual General Meeting for the period
until the next Annual General Meeting. The authorised public accountant Mats
Corporate
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Corporate governance
Corporate governance report
Board of directors
Management and auditors
60
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
Kåvik is the auditor-in-charge. In addition to its assignment as auditor, KPMG has
assisted Ferronordic in assignments regarding tax and accounting matters.
The compensation paid to KPMG is described in Note 30.
Report on internal control
According to the Swedish Companies Act and the Code, the Board is responsible for
ensuring that the Company has good internal control. The Board shall also ensure
that the Company has formalised routines to ensure that established principles for
nancial reporting and internal control are complied with and that the Company’s
nancial reports are prepared in accordance with law, applicable accounting stand-
ards and other requirements for listed companies.
Control environment
The control environment constitutes the basis for the internal control as well as
the corporate culture that exists within the Group and within which the Group’s
managers and employees are operating. The control environment is built around
the Group’s policies and procedures, as well as the Group’s divisions of responsi-
bilities and authorities.
The Group’s Code of Conduct is an important document that aims to ensure
that the organisation is characterised by integrity and good morals and ethics. Im-
portant documents for internal control over nancial reporting include the Group’s
nancial handbook, with instructions for accounting and reporting, and the Group’s
nancial policy. The Group’s responsibility and authority structure is established in
the Board’s instructions to the CEO and in the Group’s signature policy, including
authorisation and approval levels for different areas. The Group’s insider policy
regarding insider matters and the Group’s information policy regarding external
communication and press releases are other important policies and guidelines that
aim to ensure proper internal control.
Risk assessment
Ferronordic has established an annual process for reviewing and assessing the
Group’s risks relating to nancial reporting. The risk assessment also includes
risks related to fraud and other irregularities, as well as the risk of loss or misap-
propriation of assets. Identied risks are prioritised and actions to manage and
mitigate the identied risks are established.
The risk assessment also forms the basis for the Board’s annual plan for
internal audit, through which risks related to nancial reporting are evaluated on an
ongoing basis. Based on the risk assessment, the Group’s rules are evaluated
continuously. The Board is updated continuously on material risks as well as
actions planned or taken to manage and mitigate such risks.
Control activities
The purpose of the control activities is to identify and prevent errors and guarantee
the quality of nancial reporting.
Based on the risk assessment, various control activities have been estab-
lished. These aim to ensure that the requirements on the external nancial
reporting are fullled. The activities are both manual and automatic and include
e.g. reviews and approvals of various types of transactions, analysis of key gures,
verication of accounts and checklists and the application of controls for nancial
information in the IT systems used for the nancial reporting. In addition, the
Board and its audit committee, as well as management and the Group’s internal
audit function, constitute the general control bodies that carry out various control
measures.
Information and communication
The annual report, year-end report, interim reports and current information are
prepared in accordance with law and practice. The provision of information shall be
reliable and characterised by transparency and openness.
Information on the policies and procedures regarding nancial reporting is
given to all relevant employees at the beginning of their employment. Subsequent
updates of applicable policies and procedures are communicated on an ongoing
basis to all relevant employees. Policies and procedures regarding nancial
reporting are also available on the Group’s intranet, available to all employees.
The Board regularly receives nancial updates and reports. Financial information
can only be communicated by the CEO or CFO.
Monitoring
All process descriptions, policies and control documents are updated as needed.
In addition, all policies are reviewed once a year.
The Company’s nancial development is reviewed at every Board meeting.
All interim reports, the annual report and the administration report are also
reviewed and approved by the Board before they are made public. The efciency
of the assessment and management of risks are followed up at various levels
within the Group, including during the management group’s meetings and regional
board meetings as well as within the internal audit process. The monitoring
includes both formal and informal processes, e.g. comparisons between result and
budget, monthly reviews of overdue accounts receivable etc.
Internal audit
Ferronordic has established an internal audit function. The role of the internal audit
function is to independently and objectively assess and improve the efciency of
Ferronordic’s internal control, risk management and governance processes. The
head of internal audit reports functionally to the audit committee and administra-
tively to the CEO. The internal audit function carries out regular reviews based on
an annual internal audit plan, established by the Board based on the Group’s risk
assessment.
Stockholm, April 2022
The Board of Directors
61
FERRONORDIC ANNUAL REPORT 2021
Staffan Jufors Annette Brodin Rampe Lars Corneliusson Erik Eberhardson
Function Chairman of the Board, Chairman of the
Remuneration Committee and member of
the Audit Committee.
Board member and member of the
Remuneration- and Audit Committee.
Board member Board member
Nationality/born Swedish citizen. Born 1951. Swedish citizen. Born 1962. Swedish citizen. Born 1967. Swedish citizen. Born 1970.
Member since 2017 2017 2011 2010
Education Master’s degree in business administration. Master’s degree in industrial chemistry. Msc. in Business Administration. B.Sc. in Business Administration. Studies in
Applied Physics.
Other assignments Board member of the Nordens Ark
foundation.
CEO of ImagineCare AB, Board member of
Poolia AB and Episurf Medical AB.
President of Scandsib Group. Board member
of the Stockholm School of Economics in
Russia. COB of IMZ Avtokran. Founding
shareholder of NECST Motors East Africa
Ltd. COB of Emune AB.
Previous assignments
and positions
CEO of Volvo Trucks, CEO of Volvo Penta
and board member of Akelius Residential
Property AB, ÅF AB, Uniex AB and
Haldex AB.
CEO of the International English School.
Board member of Peab AB, HerCare AB,
Enströmgruppen AB and Stillfront Group AB.
Managing Director of CJSC Volvo Vostok
and Head of Volvo Trucks Russia.
CEO of Ferronordic. Chairman and CEO of
OJSC GAZ. Head of Volvo CE Russia.
Shares in Ferronordic 60,747 shares. - 926,590 shares and 66,000 warrants
(through companies).
-
The Board
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
62
FERRONORDIC ANNUAL REPORT 2021
Håkan Eriksson Aurore Belfrage Niklas Florén
Function Board member, chairman of audit committee
and member of the remuneration committee.
Board member Board member and member of the Audit
Committee.
Nationality/born Swedish citizen. Born 1962. Swedish citizen. Born 1979. Swedish citizen. Born 1974.
Member since 2016 2021 2021
Education M.Sc. in Business Administration. Master of Business Administration. M.Sc. in Computer Science and Engineering.
Other assignments Managing director of Planch AB, Board
member of Skandinavkonsult i Stockholm AB,
Skandinavkonsult Holding i Stockholm AB,
Nivika Fastigheter AB, DWG Sweden AB
and Winender AB.
Several board assignments (incl. My Tele-
scope, Bubbleroom and Startup Sweden)
and roles as investors in start-up compa-
nies in the technology sector.
COO for Wireless Car.
Previous assignments
and positions
Board chairman and CEO of Kapitalkredit
Sverige AB and board chairman of
ClearCar AB.
Head of early stage EQT Ventures, co-
founder Wrapp, columnist SvD Näringsliv.
Several positions within Sigma IT &
Management and Volvo IT.
Shares in Ferronordic 2,100,000 shares (through companies). - 50 shares
The board, cont.
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
Introduction
Operations
Formal
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Market outlook
Sustainability The share
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FERRONORDIC ANNUAL REPORT 2021
Management and auditors
Lars Corneliusson Nadia Semiletova Henrik Carlborg Erik Danemar Dan Eliasson
Function President and CEO. Human Resources Director. Business Development Director. Group CFO and Head of Investor
Relations.
General Counsel.
Nationality/born Swedish citizen. Born 1967. Russian citizen. Born 1979. Swedish citizen. Born 1975. Swedish citizen. Born 1976. Swedish citizen. Born 1971.
Education Msc. in Business Administration. Studies in Organisational Man-
agement.
LL.M. MBA (LBS) and BAs in Economics
& Management and International
Business.
Master’s degree in law and
nancing.
Previous positions Managing Director of CJSC Volvo
Vostok and Head of Volvo Trucks
Russia.
Leading positions at British Petrol
and Shell.
Lawyer with a focus on acquisi-
tions at various law rms. Partner
Hannes Snellman Advokatbyrå.
Senior positions for EF Education
First, Black Earth Farming and
Deutsche Bank in Russia.
Associate Lawyer at Linklaters.
Senior positions for Nordea, Swed-
bank, Ikea and Catella in Russia.
Shares in Ferronordic 926,590 shares and 66,000 war-
rants (through companies).
3,770 shares and 32,500 warrants
(through companies).
137,000 shares and 32,500 war-
rants (through companies).
30,000 shares and 32,500 warrants. 26,597 shares and 32,500 warrants.
Employed since 2011 2010 2013 2019 2020
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
64
FERRONORDIC ANNUAL REPORT 2021
Onur Gucum Anton Zhelyapov Ceren Wende Martin Bauknecht
Function Commercial Director. Director of rental and used business. Marketing & Communications
Director.
Managing Director Germany.
Nationality/born Turkish citizen. Born 1973. Belarusian citizen. Born 1977. German citizen. Born 1984. German citizen. Born 1978.
Education B.Sc. in Economics and
Mathematics.
MBA at Stockholm School of
Economics
Master’s degree in political science
and history.
Degree in Economics and Business
Administration.
Previous positions COO of Zeppelin caterpillar in
Russia and various positions within
the Volvo Group.
Various positions at Volvo Trucks. Marketing and communications
positions within Volvo Trucks,
Siemens and Ogilvy Public Rela-
tions.
CEO of ZG Raiffeisen Technik
GmbH and various positions within
MAN Truck & Bus and Mercedes-
Benz.
Shares in Ferronordic 17,000 warrants (through
companies).
768 shares and 32,500 warrants
(through companies).
254 shares and 21,500 warrants. 5 000 shares and 15,500 warrants.
Employed since 2012 2015 2020 2021
Auditor
At the AGM 2020, KPMG was
re-elected as the Company’s
auditor with Mats Kåvik (born 1962)
as auditor-in-charge and without a
deputy auditor, for a term of ofce
until the next AGM. Mats Kåvik is
an authorised public accountant
and a member of FAR (the profes-
sional institute for authorised public
accountants in Sweden).
Management and auditors, cont.
Corporate
governance
Corporate governance
Corporate governance report
Board of directors
Management and auditors
Introduction
Operations
Formal
annual report
Market outlook
Sustainability The share
Formal annual report
Formal
annual report
Formal annual report
Directors’ report
Risks and uncertainties
Financial reports
Notes
Board signatures
Auditor’s report
66
FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
The Board of Directors of Ferronordic AB (publ), corporate registration number
556748-7953 (the “Parent Company”), hereby presents its annual report and
consolidated nancial statements for the nancial year 2021. Unless otherwise
stated, all amounts are indicated in SEK m (SEK m). Amounts in brackets refer to
the nancial year 2020, unless otherwise stated.
This annual report has been prepared in the midst of an ongoing conict in
Ukraine. This makes all forecasts and other predictions about the Russian market
and the Company’s operations there very uncertain. Ferronordic has therefore in
this report chosen to refrain as far as possible from forward-looking statements.
The business
The Parent Company (together with its subsidiaries referred to as the “Group” or
“Ferronordic”) is a Swedish public limited liability company with its seat in Stockholm.
The Parent Company is the holding company of the Group and provides nancing,
support and management services for the Group’s operational companies. To a
certain extent, the Parent Company purchases goods that are resold to the subsid-
iaries. The Parent Company is also the holder of the ”Ferronordic” trademark.
The Group was created in 2010 to acquire and operate Volvo CE’s distribution
business in Russia. In connection therewith, the Group was appointed the ofcial
dealer for Volvo CE in all of Russia. Since then, the Group’s business has expanded
in several stages. In 2019, a geographical expansion began when Ferronordic
became the ofcial dealer for Volvo CE and Mecalac in Kazakhstan. The biggest
change to date took place in 2020 when Ferronordic became the ofcial dealer for
Directors’ report
Volvo Trucks and Renault Trucks in parts of Germany. The latest addition to the
Group’s offering is mobile and stationary crusher and screens from Sandvik for
the Russian market. Since 2020, the Group recognises two reportable operating
segments: Russia/CIS and Germany (see also Note 3 on page 85).
The operations consist of selling new and used construction equipment and
trucks, spare parts and attachments and providing service of equipment, technical
support and other professional services. The Group also provides contracting
services, where the Group owns and services equipment and employs operators to
carry out work for customers and where compensation is typically calculated based
on the volume and distance of transported earth and rock.
Ferronordic’s customers of construction equipment in Russia and Kazakhstan
operate in a number of different industries, such as the construction industry, the
mining and the forestry industries. Ferronordic’s customers in Germany include
transport operators and logistics companies of various sizes, operating in a wide
range of segments including long-haul transport, construction, last-mile delivery
and communal services.
Net sales and results
In 2021, unit sales of new construction equipment in Russia/CIS increased by
13 percent to 1,246 (1,102). At the same time, the market grew by 47 percent.
In Germany, Ferronordic’s sales of new trucks and light commercial vehicles
increased by 29 percent to 800 (619), while the market grew by 10 percent.
0
500
1000
1,500
2,000
Q1 Q2
Q3 Q4
2018
Revenue, SEK m
2019 2020 2021
0
100
200
300
400
500
600
Q1 Q2
Q3 Q4
2018
New units delivered
2019 2020
2021
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FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Net sales
The Group’s net sales increased by 34 percent to SEK 6,212 m (4,635). Machine
and truck sales increased by 31 percent while aftermarket sales (spare parts and
service) increased by 24 percent. Net sales in contracting services increased by
83 percent and other income, mainly rental operations and sales of passenger
cars, increased by 12 percent.
Net sales in Russia/CIS increased by 44 percent in RUB and by 33 percent
in SEK to SEK 4,844 m (3,652), mainly as an effect of a good product mix with a
higher average price and strong growth in the aftermarket and contracting services.
In Germany, net sales increased by 39 percent to SEK 1,368 m (983), mainly due
to strong truck and aftermarket sales.
Gross prot and operating prot
Gross prot for the year amounted to SEK 1,111 m (797), an increase of 39 per-
cent. The gross margin increased from 17.2 to 17.9 percent, mainly due to a good
product mix and a larger part of sales from contracting services.
Selling and administrative expenses increased by 27 percent but decreased
as a share of net sales to 9.9 percent (10.4), mainly due to higher net sales.
Other costs were higher in 2021 than in 2020, partly due to higher acquisition and
restructuring costs in Germany.
Operating prot increased by 47 percent from the previous year to SEK 483 m
(328). The increase was mainly due to higher net sales and a better gross margin.
Result before income tax
Net nancing costs decreased and result before income tax increased by 63 per-
cent to SEK 451 m (276).
Result for the year
Prot for the year increased by 53 percent to SEK 339 m (222), despite higher tax.
Earnings per share
Earnings per share before dilution amounted to SEK 23.33 (15.25). After dilution,
earnings per share were SEK 23.26 (15.25).
Cash ow and investments
Cash ow from operating activities after changes in working capital, nancial
expenses and taxes decreased to SEK 457 m (693). The decrease was mainly
due to a larger reduction in working capital in 2020.
Cash ow from investing activities amounted to SEK -370 m (-47), mainly due
to investments in machinery for contracting services in Russia and acquisitions of
workshops in Germany.
The Group’s cash ows resulted in a net debt position, which at the end of
2021 amounted to SEK 198 m (-20).
Financial position
Cash and cash equivalents on 31 December 2021 amounted to SEK 768 m (604).
The stronger nancial position was a result of positive cash ows from operating
activities, which covered increased investments.
Interest-bearing liabilities (including nancial leasing) amounted to SEK 966 m
(583). The increase was mainly due to increased leasing commitments in contracting
services in Russia and increased loans to nance Ferronordic’s development of
the operations in Germany.
Tangible xed assets increased by SEK 499 m (194). This was mainly a result of
investments in machinery in contracting services in Russia and acquisitions of
workshops in Germany.
Equity on 31 December 2021 amounted to SEK 1,101 m (806). The increase
was mainly due to a positive result and only partly offset by a dividend payment.
0
30
60
90
120
150
Q1 Q2
Q3 Q4
2018
Results from operating activities, SEK m
2019 2020 2021
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FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Financial objectives and dividend policy
Ferronordic’s nancial objectives should be aligned with and support its strategic
objectives, which are:
• Leadership in the market for construction equipment and trucks
• Geographical expansion
• Expansion into related business areas
• Expansion and development of contracting services
• Industry leading digital service and sales platforms
• An aftermarket absorption rate of at least 1.0 x
By executing this strategy, Ferronordic has become a more mature and diversied
business. It operates in several markets and with a broader offering. The Company
has developed vertically by investing in a center for machine and component
rebuild, expanding its rental and secondary market business and by signicantly
expanding its contracting services business. The Group has developed a digital
service and sales platform to support its service organisation and its customers.
Ferronordic has the potential to continue to grow with signicant contributions from
contracting services and Germany. As contracting services and leasing tie up more
capital in machinery and as network infrastructure in Germany is owned or leased
for long periods, Ferronordic’s business model becomes more asset and capital
intensive.
Ferronordic’s nancial targets:
• Doubled revenue in its current markets from 2020 to 2025
• Operating margin above 7 percent
• Net debt / EBITDA below 3.0 times (over a business cycle)
According to the dividend policy, the ambition should be to pay at least 50 percent
of the net income if the net debt/EBITDA is less than 1.0 x (after the dividend) and
to pay at least 25 percent if the net debt/EBITDA is more than 1.0x. The Board will
take several factors into account when proposing dividend levels, including legal
requirements, the Articles of Association, the Group’s expansion opportunities, its
nancial position and other investment needs.
These goals currently remain xed but may be revised as a consequence of
the current conict in Ukraine, its impact on Ferronordic and its partners’ operations
in Russia.
Dividend
At the 2021 Annual General Meeting, a dividend of SEK 7.50 per share was decided,
corresponding to a total dividend of SEK 108,993,255. Due to the conict in
Ukraine and the uncertain outlook at the beginning of 2022, it is proposed that the
2022 Annual General Meeting resolves not to pay dividends.
Changed credit facilities
As a result of strong cash ows in Russia/CIS in 2021, all outstanding credit facili-
ties in Russia/CIS were repaid. At the beginning of 2022, Ferronordic opened new
credit facilities of RUB 2bn for working capital purposes.
Employees
At the end of 2021, the number of full-time equivalent employees in the Group
was 1,791 (1,469), of which 1,495 (1,200) operated in Russia/CIS, 284 (257) in
Germany and 12 (12) had various Group functions. The increased number of
employees in Russia/CIS was a result of more employees in contracting services
and in the machine and component rebuild centre, but fewer employees in support
and administrative functions. In Germany, the increase mainly consisted of me-
chanics and employees who were part of Ferronordic’s acquisitions of workshops
during the year.
Policy on remuneration for senior executives
Remuneration to the CEO and other members of the management is described in
more detail in the Corporate Governance Report and in Note 29.
The Company’s remuneration committee handles policies and matters con-
cerning the remuneration of the Company’s senior executive management. The
AGM adopts policies for remuneration to senior executives as and when needed
but not less frequent than every four years.
The basic principles imply that remuneration to the Company’s executives
shall be based on market terms in the markets where Ferronordic operates and the
environment in which the individual executive operates. In addition, remuneration
shall be competitive in order to enable Ferronordic to attract and retain competent
executives.
Fixed salaries
Fixed salaries are established individually based on the criteria specied above, as
well as the individual executive’s areas of responsibility and performance.
Variable salaries
Executives may receive variable salaries in addition to xed salaries. Variable
salaries shall be paid upon fulllment of predetermined and measurable perfor-
mance criteria, primarily based on the development of the Group as a whole or the
development of the part of the Group for which the individual is responsible.
Other benets
The Company may offer its senior executives other customary benets such as
pension plans, company cars, health insurances and allowances for expatriated
executives.
Severance pay shall not exceed 12 months’ salary.
The guidelines proposed for 2022 are the same as those that applied for 2021.
Outlook
As a result of the military conict in Ukraine and the subsequent sanctions against
Russia and the Russian counter-sanctions, the prospects for Ferronordic’s oper-
ations in Russia have deteriorated signicantly. Some of our suppliers, especially
the Volvo Group and Sandvik, have informed that they are temporarily stopping
sales to Russia. If the delivery disruption to Russia continues, it could have a
signicant impact on our revenues, earnings and cash ows. In addition, it is likely
that the negative impact on the Russian economy and industry will be signicant.
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FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Operations in Kazakhstan continue but are a smaller part of sales and may also be
negatively affected by the deteriorating situation in Russia. In Germany, we believe
that a recovery from the pandemic will lead to increased demand for trucks and
service. However, the strained geopolitical situation may also affect the German
economy and market. In a longer perspective, we believe that the underlying fun-
damentals and business opportunities in the German market are strong.
Shares and shareholders
Please see the section Shares and shareholders on page 53–54.
The work of the board
Please see the Corporate Governance Report on page 56–60.
Parent company
In 2021, the revenue of the Parent Company increased to SEK 239 m (116),
mainly due to higher sales of machines from the Parent company to its subsidi-
aries. Sales and administrative expenses amounted to SEK -39 m (SEK -30 m),
mainly due to professional services, travel and staff changes. The result amounted
to SEK 427 m (-2), mainly as a result of higher nancial income from Ferronordic’s
subsidiaries in Russia/CIS in the form of dividends.
Events subsequent to the reporting date
In February and March 2022, the EU, the US and other countries imposed addi-
tional sanctions against Russia, including further export restrictions, suspension
of selected banks from SWIFT and measures to prevent the Russian central bank
from using their international reserves. In April, these countries extended their
sanctions against Russia and the EU introduced broader export restrictions.
Based on Ferronordic’s preliminary assessment of the legal documents
issued so far, some of the products and services that Ferronordic offers in Russia
are subjects to the new export restrictions. Ferronordic has thus discontinued
the sales of such products and services and will continue to limit its activities in
accordance with existing sanctions as new ones enter into force. This will have a
negative effect on the Company’s revenues, earnings and cash ows in Russia.
Some of Ferronordic’s suppliers, in particular the Volvo Group, have informed
that they are temporarily stopping sales to Russia. To Ferronordics understand-
ing, this is partly related to the new export restrictions that need to be analysed
thoroughly. If the delivery disruption to Russia continues, it could have a signicant
impact on revenues and cash ows. In addition, transport and logistics to, from and
within Russia are considerably limited. To the extent that products are not affected
by export restrictions, Ferronordic continues to sell products from its inventory and
from partners who continue to deliver. Due to the new situation, the outlook for
Russia and Ferronordic’s operations in Russia are very uncertain.
As regards payments, Ferronordic can currently still make payments both do-
mestically in Russia and internationally to and from Russia. The Russian ruble has
devaluated signicantly and Ferronordic expects the ruble to remain volatile. The
Russian Central Bank has also signicantly increased the reference interest rate.
Ferronordic’s main outstanding payables for purchased machines and spare parts
are, however, denominated in rubles. This means that when it comes to currently
outstanding payables, Ferronordic is not signicantly affected by a potential further
devaluation. The funding costs in Ferronordic’s local credit facilities are however
based on the Central Bank key rate and would therefore, if and when utilised,
reect the higher interest rate level. The broader impact of the volatile market
conditions on the demand for Ferronordic’s products and services in Russia is at
this point highly uncertain
The situation in Russia has no direct impact on our operations in Kazakhstan
and Germany, which continues as before.
In January, Ferronordic opened two revolving credit facilities in total 2 RUB bn
at Sberbank. The facilities will function as local nancing alternatives for working
capital purposes.
At the end of December, Ferronordic’s operations in contracting services were
negatively affected by severe weather and operating conditions in Norilsk and
Siberia. These production disruptions continued during the rst quarter of 2022.
Proposed allocation of prot
Considering the uncertain outlook, the Board proposes that the 2022 Annual
General Meeting resolves not to pay dividends.
The following amount is available for
allocation by the Annual General Meeting (SEK) 502,360,622
Dividend on shares 0
Amount carried forward 502,360,622
of which the following to the Share Premium fund 630,025,300
Total 502,360,622
Sustainability report
The Group’s sustainability report can be found on pages 39–51.
Alternative performance measurements
Denitions of alternative performance measurements are described on page 22 of
the 2021 Year-End Report.
70
FERRONORDIC ANNUAL REPORT 2021
Risks and uncertainties
The Group is exposed to various types of operational and nancial risks. Operational risks are associated
with the Group’s daily operations and relate to, inter alia, changes in business cycles, procurement,
capacity utilisation and price risks. Business risks also include supply and demand disruptions. Financial
risks are associated with the amount of capital tied up and the Group’s long- and short-term capital
requirements, but also changes in interest rate and exchange rate movements in the currencies to
which the Group is exposed and credit risks to the Group’s customers.
Risk management
The management of operational risks consists of a large number of daily routines
and standardised processes that are regulated in policy documents, for example
regarding the purchase of machines and parts, approvals of discounts and buy-
back offers and tendering for larger purchases.
Financial risks and credit risks are managed centrally to effectively consoli-
date and balance the Group’s total risk exposure. To the greatest extent possible,
the Group uses natural hedging to reduce currency risks both in terms of matching
cash ows and balance sheet exposures across the Group. In the Russian oper-
ations, the majority of both accounts receivable and accounts payable are thus in
rubles. Where possible, the Group also procures different types of insurance.
The Group’s risk management processes have been developed over time and
are continuously evaluated and improved. It is important that the Group’s employees
consistently follow current routines and processes to ensure that operational risks
are managed efciently. The Group conducts an annual risk review to evaluate how
risks have changed, to develop a culture of risk awareness and to improve risk
management.
Operational risks
Political environment and sanctions
A large part of the Group’s operations is connected to Russia where the political
conditions have historically been volatile. In recent decades, political trends have
been inconsistent in certain respects and the Russian government has at times
been unstable.
The Russian political system can be vulnerable to new political trends. Changes
in government policy and legislative work are less foreseeable in Russia than in
many Western countries and can disrupt or prevent political, economic and regulatory
reforms. Similar risks also exist in Kazakhstan.
In February 2022, Russia launched military operations in Ukraine. As a result
of the ensuing military conict, the United States, the European Union and other
Western countries decided to impose extensive economic sanctions on Russia.
Sanctions include stricter export restrictions, the suspension of selected banks
from SWIFT, measures to prevent the Russian central bank’s access to its
reserves abroad, and sanctions against certain individuals and organisations.
In connection to this, many American and European companies withdrew from
the Russian market. Some of our suppliers, especially the Volvo Group and Sandvik,
have announced that they are temporarily suspending the sale of machines, com-
ponents and spare parts to Russia. In addition, the conditions for logistics to and
within Russia have been negatively affected.
The payment system is subject to severe disruptions, but at present Ferronordic
can still make payments both domestically in Russia and internationally to and
from Russia. Russia, in turn, has imposed counter-sanctions, including restrictions
on the sale of Russian assets by foreign investors, a temporary ban on certain
dividends and interest payments on Russian securities for the benet of foreign
investors, and export restrictions on certain products and commodities.
Russia’s economy and industries are under severe pressure and the ability
to make large investments may be adversely affected. The Russian ruble has
weakened considerably and the Russian central bank has sharply raised its policy
rate. These factors can lead to higher ination, increased capital costs and higher
expenditure levels.
The situation is constantly changing and it is difcult to determine how long
the prevailing conditions will continue. As a result, the conditions for conducting
business in Russia have become very difcult and the risks have increased signi-
cantly. Given the unstable situation and the changes in the business environment,
there are considerable uncertainties which can have signicant negative direct and
indirect impact on Ferronordic’s operations and nancial position.
Increased protectionism
Against the backdrop of sanctions and the more challenging economic conditions,
there have been signs of increased protectionism in Russia. This trend can be
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Market outlook Sustainability The share
Corporate
governance
71
FERRONORDIC ANNUAL REPORT 2021
expected to continue as a result of the current conict and the sanctions against
Russia. As early as 2014, the Russian government introduced a decree that pre-
vents state and municipal organisations from buying foreign construction machinery
if there are Russian produced equivalents. The decree has had only a limited
impact on the Group’s operations, but similar and more comprehensive regula-
tions can be introduced in response to sanctions and as part of an economic and
industrial economic policy and have a signicant negative impact on the Group’s
operations, nancial position and results.
Russia has also warned that assets of companies that choose to leave Russia
may be administered by Russian authorities to reduce negative effects on Russian
business and employment. Rules and regulations for such administration can leave
wide scope for different interpretations and entail signicant risks for companies
operating in Russia.
Legal system and legal procedures
The legal systems of Russia and Kazakhstan are relatively unstable. Many laws
and regulations are relatively new. Some of these contain ambiguous wording and
their application can be interpreted in different ways. In addition, there are often
discrepancies between laws and regulations at different levels.
Lack of legal or administrative guidance to interpret applicable rules, lack of
legal precedents, relatively unstable and immature legal systems, lack of inde-
pendence vis-à-vis political and commercial interests, relatively untested application
of recently adopted legislation and its impact on complex commercial agreements,
corruption in the legal system, gaps in the legal regulatory environment due to
delays in or lack of implementation of legislation, and undeveloped bankruptcy
proceedings can all affect the Group’s ability to protect and enforce its legal rights,
as well as to protect itself against legal claims.
Corruption
Media have reported on widespread corruption in Russia and Kazakhstan. Media
reports have also described cases where government ofcials have initiated targeted
investigations and prosecutions to promote the interests of the government or
certain individuals or companies.
Ferronordic adheres to the Group’s code of conduct and to strict standards of
business ethics. The Group has procedures to counter risks of corruption, cases
of illegal activity, demands from corrupt ofcials, allegations that the Group or its
management has been involved in corruption or illegal activities and biased articles
and negative publicity. Notwithstanding such procedures, corruption and unethical
behaviour can have adverse negative effect on the Group’s operations, earnings
and nancial position.
Environmental risks
Environmental legislation may impose obligations or nes on property owners
and business operators that violate certain standards or cause certain harm to
the environment. Ferronordic strives to be a leader and set the standards in terms
of sustainability and minimising ecological footprint. No guarantees can however
be given that the Group’s properties do not contain undetected pollution or that
authorities could claim that its operations conict with licenses or environmental
regulations. New and changing regulation could result in the Group’s properties (or
properties that have previously been owned or operated by the Group) being sub-
jected to stricter audits than previously. Ferronordic may become subject of claims
for damages regarding environmental liability. An unfavourable outcome of such
proceedings may result in civil, administrative or criminal law liability for the Group
or its executives. Changes to laws and their application regarding the environment,
health and safety may entail costs and obligations and have adverse negative
effect on the Group’s operations, earnings and nancial position.
Tax system
For information on risks associated with the Russian and Kazakh tax systems,
please see Note 25.
Variations in economic activity
The Group’s products are to a large extent used in connection with construction
and industrial operations. An economic downturn, and in particular a weakened
development in the road and construction industry or reduced industrial activity
could consequently lead to a signicant reduction in demand for the Group’s
products.
Furthermore, the Group’s market is affected by changes in the price of com-
modities as well as the market for extraction and processing of natural resources.
Declining commodity prices or a weaker market for natural resources could there-
fore have an adverse effect on the Group’s operations.
The Group’s business could also be adversely affected (either temporarily
or in the long term) by a decline in customers’ expenditure and investment levels,
unfavourable credit markets that negatively affect end customers’ nancing oppor-
tunities, reduced investments in infrastructure projects at local and federal level,
increased costs for building materials, as well as increased interest rates. Down-
turns in the construction and industrial sectors as a result of the above-mentioned
or other factors may have an adverse impact on the Group’s business, earnings
and nancial position. Demand for spare parts and service is less sensitive to the
economic cycle than machine sales. The new and far-reaching sanctions imposed
on Russia following the conict in Ukraine and Russia’s counter-sanctions have
created signicant economic uncertainty and intensied such risks.
Since the outbreak of the Covid-19 pandemic, authorities have issued
recommendations and regulations to restrict mobility and social contacts to limit
the spread of the virus, which has had an adverse effect on the Group’s business.
Companies, including Ferronordic’s suppliers, competitors and customers, have taken
measures to adapt to an uncertain business environment. Extensive vaccination
programs have reduced such risks, but vaccination levels in Russia and Kazakhstan
are lower than in many other countries, which increases the risk of new outbreaks.
The path of the virus and measures to stop it cannot be predicted and Ferronordic
cannot rule out further disruptions on the supply or demand side of the Group’s
business.
Capacity utilisation
The Group has continuously expanded its network and infrastructure. An unfore-
seen decline in capacity utilisation, e.g. as a result of economic downturn, discon-
tinuation of certain products etc., generally results in decreased sales which in the
short term cannot be offset by a corresponding cost reduction.
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FERRONORDIC ANNUAL REPORT 2021
The collaboration with Volvo
Sales of Volvo products accounts for the absolute majority of Ferronordic’s sales.
Ferronordic is thus highly dependent on maintaining good relations with the Volvo
Group. A deterioration in such relations could have a signicant adverse effect on
Ferronordic’s business. In the current situation, Volvo, like many other companies,
has completely suspended sales of products and services to Russia.
Dependence on suppliers
The Group is dependent on strategic decisions taken by its suppliers, including
the launch of new products or the discontinuation of existing products, which
could affect the Group’s product range and sales. Volvo’s and Sandvik’s decision
to temporarily suspend deliveries to Russia could, if the situation persists, have a
signicant adverse impact on the Group’s business, nancial position and result.
Dependence on key employees
The Group is dependent on its ability to identify, recruit and retain qualied exec-
utives and other key employees. The Group’s ability to recruit and retain qualied
personnel is dependent on a number of external factors. Should key employees
leave the Group due to retirement, acceptance of employment with a competitor
or for any other reason, this may result in a loss of important know-how and expe-
rience which may be difcult to replace, and which may delay or adversely impact
the Group’s ability to implement its business plan and strategy. Inability to recruit
or retain such executives and other key employees could thus have an adverse
impact on the Group’s business, result and nancial position.
Price risk
The prices that Ferronordic pays for products from Volvo and other suppliers are
important for the Group’s protability and competitiveness. Too high prices may
result in loss of sales, lost market share and/or signicantly decreased protability.
The Group strives to manage this price risk by, together with its suppliers, contin-
uously monitoring the development of price positioning and market shares, and
continuously adjusting the prices that the Group pays for machines and parts.
Insurance coverage
The insurance markets in Russia and Kazakhstan are underdeveloped. Several
types of insurance that are common in other countries are not available or cannot
be procured at a reasonable cost. The Group holds insurance against some, but
not all, risks relevant to its operations. Hence, there is a risk that loss of assets or
claims against the Group may not be covered by the Group’s insurance.
Financial risks
For information about nancial risks, please see Note 22.
Material disputes
No material disputes took place during the year.
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SEK m Note 2021 2020
Revenue 6 6,212 4,635
Cost of sales -5,101 -3,837
Gross prot 1,111 797
Selling expenses 7 -256 -219
General and administrative expenses 7 -358 -264
Other income 8 12 24
Other expenses 8 -27 -11
Operating prot 483 328
Finance income 9 23 12
Finance costs 9 -49 -59
Net foreign exchange gains/(-losses) (net) -5 -5
Result before income tax 451 276
Income tax 10 -112 -54
Result for the year 339 222
Other comprehensive income
Items that are or may be reclassied to prot or loss:
Foreign currency translation difference for foreign operations 60 -247
Other comprehensive income for the year, net of income tax 60 -247
Total comprehensive income for the year 399 -25
Earnings per share
Basic earnings per share (SEK) 31 23.33 15.25
Consolidated statement of comprehensive income
The consolidated statement of comprehensive income forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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FERRONORDIC ANNUAL REPORT 2021
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SEK m Note 31 December 2021 31 December 2020
ASSETS
Non-current assets
Property, plant, and equipment 11 1,006 507
Intangible assets 12 81 8
Deferred tax assets 13 105 65
Total non-current assets 1,192 579
Current assets
Inventories 14 1,432 1,014
Trade and other receivables 15 535 393
Prepayments 46 37
Cash and cash equivalents 16 768 604
Total current assets 2,781 2,048
TOTAL ASSETS 3,973 2,628
Consolidated statement of nancial position
The consolidated statement of nancial position forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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FERRONORDIC ANNUAL REPORT 2021
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Consolidated statement of nancial position, cont.
SEK m Note 31 December 2021 31 December 2020
EQUITY AND LIABILITIES
Equity 17
Share capital 1 1
Additional paid in capital 620 615
Translation reserve -309 -369
Retained earnings 789 559
TOTAL EQUITY 1,101 806
Non-current liabilities
Borrowings 18 490 351
Deferred income 19 22 1
Deferred tax liabilities 13 7 5
Long-term lease liabilities 18 97 71
Total non-current liabilities 617 428
Current liabilities
Borrowings 18 317 84
Trade and other payables 21 1,809 1,188
Deferred income 19 28 19
Provisions 20 39 26
Short-term lease liabilities 18 62 77
Total current liabilities 2,255 1,393
TOTAL LIABILITIES 2,872 1,821
TOTAL EQUITY AND LIABILITIES 3,973 2,628
The consolidated statement of nancial position forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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FERRONORDIC ANNUAL REPORT 2021
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Attributable to the Parent Company’s equity holders
SEK m Note
Share
capital
Additional paid
in capital
Retained
earnings
Translation
reserve Total equity
Balance 1 January 2021 1 615 559 -369 806
Total comprehensive income for the year
Result for the year 0 0 339 0 339
Other comprehensive income
Foreign exchange differences 0 0 0 60 60
Total comprehensive income for the year - - 339 60 399
Contribution by and distribution to owners
Dividends on shares 17 0 0 -109 0 -109
Warrant issue 0 5 0 0 5
Total contributions and distributions - 5 -109 0 -104
Balance 31 December 2021 1 620 789 -309 1,101
Consolidated statement of changes in equity
The consolidated statement of changes in equity forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
Attributable to the Parent Company’s equity holders
SEK m Note
Share
capital
Additional paid
in capital
Retained
earnings
Translation
reserve Total equity
Balance 1 January 2020 1 612 399 -122 890
Total comprehensive income for the year
Result for the year 0 0 222 0 222
Other comprehensive income
Foreign exchange differences 0 0 0 -247 -247
Total comprehensive income for the year - - 222 -247 -25
Contribution by and distribution to owners
Dividends on shares 17 0 0 -62 0 -62
Warrant issue 0 3 0 0 3
Total contributions and distributions 0 3 -62 0 -59
Balance 31 December 2020 1 615 559 -369 806
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SEK m Note 2021 2020
Cash ows from operating activities
Result before income tax 451 276
Adjustments for:
Depreciation and amortisation 11, 12 215 176
Impairment (reversed impairment) of trade receivables 8 10 1
Loss (gain on disposal of property, plant, and equipment) 0 1
Finance costs 9 49 59
Finance income 9 -23 -12
Net foreign exchange losses (gains) (net) 5 5
Cash from operating activities before changes in
working capital and provisions
Change in inventories -381 -93
Change in trade and other receivables 19 -175
Change in prepayments -5 36
Change in trade and other payables 336 543
Change in provisions 2 8
Change in deferred income 4 -3
Cash ows from operations before interest paid and tax paid 683 823
Income tax paid -170 -71
Interest paid -55 -59
Cash ows from operating activities 457 693
Consolidated statement of cash ows
The consolidated statement of cash ows forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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Consolidated statement of cash ows, cont.
SEK m Note 2021 2020
Cash ows from investing activities
Proceeds from sale of property, plant and equipment 8 3
Interest received 23 12
Acquisition of property, plant and equipment -247 -60
Acquisition of intangible assets -1 -2
Acquisition of business 32 -153 0
Cash ows from investing activities -370 -47
Cash ows from nancing activities
Dividends -109 -62
Proceeds from borrowings 371 466
Repayment of loans -118 -869
Leasing nancing paid -81 -114
Warrant issue 1 0
Cash ows from nancing activities 64 -578
Net change in cash and cash equivalents 151 68
Cash and cash equivalents at start of the year 604 519
Effect of exchange rate uctuations on cash and cash equivalents 13 16
Cash and cash equivalents at year-end 16 768 604
The consolidated statement of cash ows forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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FERRONORDIC ANNUAL REPORT 2021
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SEK m Note 2021 2020
Revenue 239 116
Other income 2 2
Cost of sales -203 -96
Gross prot 37 22
Administrative expenses 7 -39 -30
Operating prot -2 -8
Finance income 9 433 13
Finance costs 9 -2 -1
Net foreign exchange gains/(-losses) (net) -1 -9
Result before income tax 427 -5
Income tax 10 0 3
Result for the year 427 -2
Parent company income statement
The income statement forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
Parent company statement of comprehensive income
SEK m Note 2021 2020
Result for the year 427 -2
Total comprehensive income for the year 427 -2
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SEK m Note 31 December 2021 31 December 2020
ASSETS
Non-current assets
Intangible assets 12 1 1
Financial assets
Holdings in group companies 26, 28 175 164
Loans to group companies 26 149 3
Deferred tax assets 13 20 20
Total nancial assets 345 187
Total non-current assets 345 187
Current assets
Trade and other receivables 15 63 36
Prepayments 0 1
Cash and cash equivalents 16 241 17
Total current assets 304 54
TOTAL ASSETS 649 241
Parent company balance sheet
The balance sheet forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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Parent company balance sheet, cont.
SEK m Note 31 December 2021 31 December 2020
EQUITY AND LIABILITIES
Equity 17
Restricted equity
Share capital 1 1
Unrestricted Equity
Share Premium Reserve 630 625
Retained earnings -555 -444
Result for the year 427 -2
TOTAL EQUITY 504 180
Non-current liabilities
Borrowings 31 0
Total current liabilities 31 0
Current liabilities
Borrowings 0 33
Trade and other payables 21 115 28
Total current liabilities 115 61
TOTAL LIABILITIES 145 61
TOTAL EQUITY AND LIABILITIES 649 241
The balance sheet forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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SEK m Note Share capital
Share premium
reserve Retained earnings Total equity
Balance 1 January 2021 1 625 -446 180
Total comprehensive income for the year
Result for the year - - 427 427
Total comprehensive income for the year - - 427 427
Contribution by and distribution to owners
Dividends on shares 17 - - -109 -109
Warrant issue - 5 - 5
Total contributions and distributions - 5 -109 -104
Balance 31 December 2021 1 630 -128 504
Parent company statement of changes in equity
The statement of changes in equity forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
SEK m Note Share capital
Share premium
reserve Retained earnings Total equity
Balance 1 January 2020 1 622 -382 241
Total comprehensive income for the year
Result for the year - - -2 -2
Total comprehensive income for the year - - -2 -2
Contribution by and distribution to owners
Dividends on shares 17 - - -62 -62
Warrant issue - 3 - 3
Total contributions and distributions - 3 -62 -59
Balance 31 December 2020 1 625 -446 180
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SEK m Note 2021 2020
Cash ows from operating activities
Result before income tax 427 -5
Adjustments for:
Depreciation and amortisation 11, 12 0 0
Finance costs 9 2 1
Finance income 9 -433 -13
Net foreign exchange losses (gains) (net) 1 9
Cash from operating activities before changes in
working capital and provisions
-2 -8
Change in trade and other receivables -29 49
Change in prepayments 0 0
Change in trade and other payables 87 -32
Cash ows from operations before income tax and interest paid 57 9
Interest paid -2 0
Cash ows from operating activities 54 9
Parent company statement of cash ows
The statement of cash ows forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
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Parent company statement of cash ows, cont.
SEK m Note 2021 2020
Cash ows from investing activities
Repayment of loan by subsidiary 3 0
Interest received 2 0
Dividend from subsidiary 429 11
Loan to subsidiary -147 -12
Contributions to subsidiaries -11 -5
Cash ows from investing activities 276 -5
Cash ows from nancing activities
Repayment of loans to subsidiaries -33 0
Loans from subsidiaries 0 33
Loans received 31 0
Dividend -109 -62
Warrant issue 5 3
Cash ows from nancing activities -106 -26
Net increase/(decrease) in cash and cash equivalents 224 -23
Cash and cash equivalents at start of year 17 39
Effect of exchange rate uctuations on cash and cash equivalents - -
Cash and cash equivalents at year-end 16 241 17
The statement of cash ows forms part of the consolidated nancial statements and shall be read together with the Notes thereto.
85
Notes
Content of notes
Note Page
1. General information 86
2. Basis of preparation 86
3. Changed accounting policies 86
4.Signicantaccountingpolicies 87
5. Determination of fair value 90
6. Segment reporting and revenue 91
7. Selling, general and administrative expenses 92
8. Other expenses 93
9.Financeincomeandnancecosts 93
10. Income taxes 94
11. Property, plant, and equipment 95
12. Intangible assets 98
13. Deferred tax assets and liabilities 99
14. Inventories 102
15. Trade and other receivables 102
16. Cash and cash equivalents 102
17. Capital and reserves 103
18. Borrowings 104
19. Deferred income 106
20. Provisions 106
21. Trade and other payables 107
22. Financial instruments and risk management 107
23. Leases 112
24. Capital commitments 112
25. Contingencies 112
26. Related party transactions 113
27. Events subsequent to the reporting date 114
28. Interest in group companies 115
29. Employees, board and management 115
30. Auditors’ fees and expenses 118
31. Earnings per share 118
32. Acquisition of subsidiaries 119
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Notes
NOTE 1 General information
The Parent Company together with its subsidiaries comprise the “Group” or “Ferro-
nordic”. The shares in Ferronordic AB (publ) are listed on Nasdaq Stockholm.
http://www.ferronordic.com/
Rock Processing Solutions, Rottne, Dressta, Mecalac and certain other brands
in all of Russia . It is aftermarket partner of Volvo Trucks and Renault Trucks in
part of Russia. It is the dealer for Volvo Construction Equipment and Mecalac
in Kazakhstan. Ferronordic is also dealer of Volvo Trucks and Renault Trucks in
parts of Germany . The company also offers contracting services where it owns
and operates equipment to carry out works for customers. Ferronordic began its
operations in 2010 and now has approx. 100 outlets and approx. 1,800 employees.
Ferronordic’s vision is to be regarded as the leading service and sales company in
its markets.
NOTE 2 Basis for preparation
Ferronordic’s nancial statements are prepared in accordance with the Interna-
tional Financial Reporting Standards (IFRS) issued by the International Financial
Standards Board (IASB) as well as the interpretations of the IFRS Interpreta-
tions Committee, as adopted by the European Union. RFR 1 on Supplementary
Accounting Rules for Groups, issued by the Swedish Financial Reporting Board, is
applied. The annual accounts of the Parent Company are prepared in accordance
with the Swedish Annual Accounts Act and RFR 2, Accounting for Legal Entities,
issued by the Swedish Financial Reporting Board.
Basis of measurement
The nancial statements of the Group are prepared on the basis of historical cost.
Functional and presentation currency
Items included in the various units of the Group are valued in each Group com-
pany’s functional currency. The functional currency for the Parent Company is the
Swedish krona (SEK). The functional currency for all Group companies in Russia
is the Russian rouble (RUB). The functional currency for the Group company in
Kazakhstan is the Kazakh tenge (KZT). The functional currency of the Group com-
panies in Germany is the euro (EUR).
The Group and the Parent Company have selected SEK as presentation currency.
Except if otherwise noted, all amounts have been rounded to the nearest thou-
sand.
Estimates and judgments
The preparation of the Group’s nancial statements in conformity with IFRS
requires management to make various estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from those estimates and assump-
tions. Estimates and assumptions are reviewed on an ongoing basis. Changes in
estimations and assumptions are recognised in the period when they occur and in
future periods affected by the changes. The judgments that have the most signi-
cant effect on the amounts recognised in the Group’s nancial statements are set
out in Note 4 (useful life and the residual value of property, plant, and equipment;
recognition of deferred tax assets; obsolescence provisions in relation to invento-
ries), Note 20 (recognition and measurement of provisions and contingencies) and
Note 22 (allowance for expected credit losses).
NOTE 3 Changed accounting policies
No signicant changes in accounting policies occurred in 2021.
Note 2, Basis for preparation, cont.
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NOTE 4 Signicant accounting policies
The accounting policies set out below have been applied consistently by all Group
companies for all periods presented.
Business combinations
The Group accounts for business combinations using the acquisition method when
control is passed over to the Group. The consideration transferred in the acqui-
sition, as well as the identiable net assets acquired, are measured at fair value.
Any goodwill that arises is tested annually for impairment. Transaction costs are
expensed as incurred.
A contingent consideration is measured at fair value at the date of acquisition.
Subsidiaries
Subsidiaries are entities controlled by the Group. The nancial statements of the
subsidiaries are included in the consolidated nancial statements from the date
when the Group obtains control over the entity until the date when the Group ceas-
es control over the entity.
Elimination of intra-group transactions
Intra-group balances and transactions (and unrealised income and expenses aris-
ing from such transactions) are eliminated in the consolidated nancial statements.
Unrealised losses are eliminated in the same way as unrealised gains, unless
there is a need for impairment.
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the
exchange rate on the transaction date.
Monetary assets and liabilities in foreign currencies are translated to the
functional currency at the exchange rate on the reporting date.
Foreign currency gains or losses on monetary items comprise the difference
between amortised cost in the functional currency at the beginning of the period,
adjusted for effective interest and payments during the period, and the amortised
cost in foreign currency translated at the exchange rate at the end of the reporting
period.
Non-monetary items in foreign currencies that are measured that are meas-
ured on the basis of historical cost are translated to the functional currency at the
exchange rate at the date of the transaction.
Foreign currency differences are recognised in prot or loss.
Foreign operations
Assets and liabilities of foreign operations are translated to SEK at the exchange
rates on the reporting date. Income and expenses of foreign operations are trans-
lated to SEK at the exchange rate on the transaction date.
Foreign currency differences on the balance sheet are recognised in other
comprehensive income and included in the translation reserve in equity.
If the Group’s control, signicant inuence or joint control over a foreign operation is
lost, the accumulated translation reserve related to that foreign operation is reclas-
sied to prot or loss as part of the gain or loss on disposal. If the Group disposes
of only part of its interest in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the accumulated amount is reattributed
to non-controlling interests.
Foreign exchange gains and losses arising from receivables or payables to
a foreign operation which are not expected to be settled in the foreseeable future
form part of net investment in foreign operations and are recognised in other com-
prehensive income and presented in the translation reserve in equity.
Financial instruments
Financial instruments within Ferronordic are nancial assets and nancial liabilities
which all, except for contingent consideration, are measured at amortised cost.
Except for trade receivables, which are recognised when they originate, all
nancial assets and nancial liabilities are recognised when Ferronordic be c omes
bound by the provisions of the relevant instrument.
Trade receivables are initially recognised at the transaction price. Other nan-
cial assets and nancial liabilities are initially recognised at fair value, plus transac-
tion costs directly attributable to the acquisition or issue of the relevant instrument.
A nancial asset is measured at amortised cost if it meets both of the following
conditions and if it is not designated as at fair value through prot or loss (“FVTPL”):
• the asset is held within a business model whose objective is to hold assets in
order to collect contractual cash ows; and
• the contractual terms of the nancial asset give rise on specied dates to cash
ows that are solely payments of principal and interest on the principal amount
outstanding.
Financial assets are derecognised when the rights to the cash ows from the assets
expire, or when the rights to receive the cash ows, and substantially all risks
and rewards of ownership of the assets, are transferred. Financial liabilities (or a
part thereof) are derecognised when the obligations specied in the contract are
discharged or cancelled or expire.
The gross carrying amount of a nancial asset is written off when the Group
has no reasonable expectations of recovering a nancial asset in its entirety or a
portion thereof.
Financial assets are measured at amortised cost using the effective interest
method, less any impairment losses. Interest income, foreign exchange gains
and losses and impairment are recognised in prot or loss. Any gain or loss on
derecognition is recognised in prot or loss.
Financial liabilities, except for contingent consideration, are subsequently
measured at amortised cost using the effective interest method. Interest expense
and foreign exchange gains and losses are recognised in prot or loss. Any gain or
loss on derecognition is also recognised in prot or loss.
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Share capital
Shares in the Parent Company are classied as equity since their holders cannot
demand dividends and the shares do not entail obligations on the Group to deliver
cash or other assets. Costs that are directly attributable to the issue of shares and
share options are recognised as a deduction from equity, net of any tax effects. Div-
idends are recognised as equity distri butions when they are approved by the general
meeting of shareholders.
Property, plant and equipment
Except for land, property, plant, and equipment is recognised at cost less accu-
mulated depreciation and impairment losses. Cost includes expenditures that are
directly attributable to the acquisition of the asset.
The cost of self- constructed assets includes the cost of materials and directly
attributable labour costs, other costs directly attributable to bringing the asset to
a working condition, the cost of dismantling and removing the items and restoring
the site on which they are located, and capitalised borrowing costs. Software that
is integral to the functionality of the related equipment is capitalised as part of that
equipment.
Components of an item of property, plant and equipment with different useful
lives are accounted for as separate items.
Gains or losses on disposals of property, plant and equipment are determined
by comparing the proceeds from the disposal of the asset with the asset’s carrying
amount and are recognised net within other income/ other expenses in prot or loss.
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is
recognised in the asset’s carrying amount if it is probable that the future economic
benets of the asset will ow to the Group and the cost can be measured reliably.
The carrying amount of the replaced component is derecognised.
Costs of the day-to-day servicing of property, plant and equipment are recog-
nised in prot or loss as incurred.
Depreciation
Depreciation of property, plant and equipment is based on the cost of the asset
less its residual value.
Depreciation is recognised in prot or loss on a straight-line basis over the
useful life of each individual asset or group of assets. This reects how the Group
is expected to consume the future economic benets of the assets. Land is not
depreciated.
The estimated useful life of certain signicant items of property, plant and equipment
• buildings 2–45 years
• machinery and equipment 2–16 years
• contracting services machines 3 years
• rental machines 3 years
• ofce equipment 2–10 years
• cars 3–7 years
• rental trucks 5 years
The residual value for machines in contracting services and machines and trucks
in rental is 25% of the cost of the assets. For all other property, plant and equip-
ment, the residual value is zero.
Depreciation methods, useful lives and residual values are reviewed at the
end of each nancial year and adjusted if appropriate.
Intangible assets
Intangible assets acquired by the Group with nite useful lives are measured at
cost less accumulated amortisation and accumulated impairment losses.
Subsequent expenditures are capitalised only if they increase the economic
benets of the asset. Other expenditures, including expenditures on internally gen-
erated goodwill and brands, are recognised in prot or loss when incurred.
Amortisation
Amortisation of intangible assets is based on the cost of the asset less its residual
value. Estimated useful lives of the Group’s intangible assets:
• software and software licenses 2–5 years
Amortisation methods, useful lives and residual values are reviewed at the end of
each nancial year and adjusted if appropriate.
Leases
Leases
As of 1 January 2019, new leases are accounted for according to IFRS 16. This
means that leases are reported as right-of-use assets and corresponding lease
liabilities on the commencement day of the lease. Each lease payment is divided
between a repayment of the lease liability and an interest expense. The inter-
est expense is distributed over the lease term so that each accounting period is
expensed with an amount corresponding to a xed interest rate for the liability
recognised during the respective period. The right-of-use asset is depreciated on
a straight-line basis over the shorter of the asset’s useful life and the length of
the lease. Liabilities arising from leases are initially recognised at present value,
discounted at the implicit interest rate if that rate can be determined, and otherwise
at the Group’s incremental borrowing rate. Lease liabilities include xed payments
and variable lease payments depending on an index or a rate, initially measured
using the index or rate as at the commencement date. The incremental borrow-
ing rate is decided based on contract length and contract transaction currency.
Payments for short-term contracts and leases of low value are expensed on a
straight-line basis in the income statement. In respect of some short-term contracts
the Group has a high degree of certainty that the possibility to extend the contract
will be used for a longer period (at least three years) due to economic or other
reasons. Leases under such contracts are reported as right-of-use assets and
corresponding lease liabilities. Short-term contracts are contracts with a lease term
of 12 months or less. Contracts of low value include various IT-equipment and
smaller ofce furniture.
Note 4, Signicant accounting policies, cont.
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Inventories
Inventories are measured at the lower of cost and net realisable value. The cost
of inventories is based on the rst-in rst-out principle, and includes expenditure
incurred in acquiring the inventories, production or conversion costs and other
costs incurred in bringing them to their existing location and condition. Each
machine and truck in inventory has specically identied cost.
The net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Impairment
Financial instruments
The Group uses a matrix of loss rates to measure its expected credit losses of
trade and other receivables. Loss rates are calculated as the probability of a
loss for each group of receivables, based on the period of delinquency within the
Group’s different revenue types (i.e. equipment sales, aftermarket sales, contract-
ing services and other revenue). Loss rates are calculated as a proportion of actual
average losses to the average amount of receivables for a given revenue type
and category of ageing during the twelve months period preceding the reporting
date (the Group considers this sufcient to determine whether a loss is likely to
happen).
Non-nancial assets
Except for inventories and deferred tax assets (please see corresponding sections
on the accounting for these items), the carrying amounts of the Group’s non-nan-
cial assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If such indication exists, the asset’s recoverable amount
is estimated.
Assets that cannot be tested individually are grouped together into the
smallest group of assets that generates cash inows from continuing use that are
largely independent of the cash inows of other assets or cash-generating unit.
The recoverable amount is the higher of an asset’s value in use and its fair
value, less selling costs. In assessing the value in use, the estimated future cash
ows are discounted to their present value using a discount rate that reects cur-
rent market assessments of the present value and the risks specic to the asset.
An impairment loss is recognised in prot and loss if the carrying amount
exceeds the estimated recoverable amount.
Employee related liabilities
Termination costs
Termination costs are recognised as an expense when the Group becomes com-
mitted to either terminate an employment before the normal retirement date, or to
provide termination benets as a result of an offer made to encourage voluntary
resignation. Termination benets for voluntary resignations are recognised as
expenses provided that the Group has made such an offer, it is probable that the
offer will be accepted, and the number of acceptances can be estimated reliably.
Benets that are payable for more than 12 months after the reporting date are
discounted to present value.
Salaries and other short-term benets
Obligations related to salaries and other short-term employee benets are meas-
ured on an undiscounted basis and are expensed as incurred. Liabilities related to
short-term cash bonus plans (e.g. bonuses to sales personnel & vacation balances)
are recognised when the Group becomes obligated to pay the bonus, and the
bonus amount can be estimated reliably.
Dened contribution plans
Obligations for contributions to dened contribution plans (e.g. the Russian State
Pension Fund) are recognised as employee benet expenses in prot or loss in the
periods during which related services are rendered.
Share-based payments
The fair value of options granted is reported as a personnel cost with a corre-
sponding increase in equity over the vesting period for the options. The amount
reported as an expense is adjusted to reect the number of options for which related
service terms and non-market terms are expected to be met so that the amount
nally reported is based on the number of options that meet related service terms
and non-market terms at the time of vesting.
Warranties
The Group provides warranties on new machines and components. The Group’s
suppliers reimburse the Group for costs incurred as a result of these warranties at
agreed rates and amounts. Both the gross provision amount for the warranties and
the related receivable from the suppliers are recorded. Provisions for warranties
are based on historical data and recognised when the relevant products are sold.
The Group also offers extended warranties for an additional charge. When ex-
tended warranties are sold to customers, the Group also purchases a correspond-
ing extended warranty from the relevant supplier. These are recognised as other
receivables and amortised to prot and loss evenly during the contract term.
Revenue
Ferronordic categorises revenue as equipment sales, aftermarket sales (parts and
service), contracting services, and other revenue. Revenue is recognised when
control has been transferred from Ferronordic to the customer. Control refers to the
customers’ ability to use machines, spare parts or services in its operations and to
obtain the associated cash ows.
Equipment sales includes sales of new and used construction machines,
trucks, light commercial vehicles and attachments. Control over the equipment
typically transfers to the customer upon delivery, i.e. when the equipment has been
accepted by the customer and the equipment has been physically transferred
(although in some cases Ferronordic may allow that the equipment is stored at its
premises until it can be moved to the customer). If the equipment is transferred
at the customer’s premises but the customer does not accept the equipment, no
revenue is recognised and the equipment is instead considered to be stored at the
customer’s premises. The revenue for each unit of equipment sold is specied in
the relevant sales contract.
Note 4, Signicant accounting policies, cont.
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Aftermarket sales includes sales of spare parts, service (maintenance and repairs)
and other aftermarket service (e.g. extended warranties). As for parts sales, control
transfers to the customer upon delivery, i.e. when the part has been transferred
to and accepted by the customer. As for service sales, control transfers when
Ferronordic incurs the associated cost to deliver the service and the customer can
benet from the use thereof. As most services rendered are short-term repairs,
this typically occurs when the rendered services are completed. Sales of extended
warranty contracts is recognised evenly during the contract period. The revenue
for each transaction of parts or service sales is specied in the relevant contract or
in the individual specication signed by the customer.
In contracting services control transfers to the customer when the customer
can benet from the use of the rendered service, i.e. when the transported material
(e.g. earth or rock) has been physically delivered to and accepted by the customer.
Revenue is measured as the volume of contracted units that are delivered and
conrmed by the customer, multiplied by the price per volume of unit agreed (e.g.
cubic meter, distance moved or surface prepared).
Other revenue mainly consists of rental revenue and car sales.
The Group does not have signicant contract assets from contracts with
customers. Information on receivables from contracts with customers is presented
in Note 15. Information on contract liabilities from contracts with customers is
presented in Note 21.
Disaggregation of revenue is presented in Note 6.
Finance income and costs
Finance income consists of interest income and dividends received. Interest
income is recognised as it accrues, using the effective interest method.
Finance costs consist of interest expense on borrowings and leases. Borrowing
costs directly attributable to the acquisition, construction or production of property,
plant and equipment are capitalised to the cost of the asset. Other borrowing costs
are recognised in prot or loss using the effective interest method.
Currency gains and losses are reported on a net basis, depending on the
currency movements (net gain or net loss).
Income taxes
Income tax consists of current and deferred tax and is recognised in prot or loss
(unless the tax relates to a business combination or items recognised directly in
equity or other comprehensive income).
Current tax is the expected tax payable on the taxable result for the period,
using applicable tax rates, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for nancial reporting purposes and the
amounts used for taxation purposes. Deferred tax is based on the tax rates that
are expected to be applied to the temporary differences when they are reversed,
based on the laws that have been enacted or substantively enacted by the report-
ing date.
Deferred tax assets and deferred tax liabilities are only offset if the Group has
a right to offset current tax assets and tax liabilities and the tax assets and tax
liabilities relate to income taxes levied by the same tax authority on the same legal
entity.
In Russia, Kazakhstan and Germany, the tax losses and current tax assets
of one Group company cannot be offset against taxable prots and current tax
liabilities of other Group companies.
Unused tax losses, tax credits and deductible temporary differences are
recognised as deferred tax assets if it is probable that there will be taxable prots
available in the future against which the assets can be utilised. Deferred tax assets
are reviewed at each reporting date and reduced to the extent it is no longer probable
that the relevant tax benet will be realised.
Standards and interpretations not yet adopted
There are no new or revised accounting standards or interpretations that have
been published which are effective from 2021 and later that are considered to have
a material impact on the Group’s nancial statements.
Information about the Parent Company
Parent Company accounting principles
The annual accounts of the Parent Company are prepared in accordance with the
Swedish Annual Accounts Act and RFR 2, Accounting for Legal Entities, as issued
by the Swedish Financial Reporting Board. According to RFR 2, the Parent Com-
pany’s annual accounts shall be prepared by applying all IFRS statements adopted
by the EU insofar as this is possible under the Swedish Annual Accounts Act and
with regard to the relationship between accounting and taxation. The stated ac-
counting policies have been applied consistently for all periods presented.
Differences between the accounting policies applied for the Group and
the Parent Company
The Parent Company’s income statement and balance sheet are presented
according to the structure following from the Swedish Annual Accounts Act.
For the Parent Company, holdings in subsidiaries are recognised at cost (less
potential impairment losses). Expenses attributable to business combinations are
included in the cost.
The Parent Company does not apply IFRS 9 Financial Instruments. However,
parts of the principles in IFRS 9 are still applicable - such as principles regarding
impairment, recognition/derecognition and the effective interest rate method for
interest income and interest expenses.
In the Parent Company, nancial xed assets are valued at acquisition cost
less any impairment and nancial current assets according to the lower of acqui-
sition cost and fair value less cost to sell. IFRS 9’s impairment rules are applied to
nancial assets that are reported at amortised cost.
The Parent Company classies all leases as operating leases.
Shareholders´ contributions are recognised in the Parent Company’s balance
sheet as an increase of the carrying value in the shares.
Note 4, Signicant accounting policies, cont.
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NOTE 6 Segment reporting and revenue
a) Segment reporting and disaggregation of revenue:
The Group recognises two separate reportable segments: Russia/CIS and Germany.
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker (CODM). The chief operating
decision-maker, who is responsible for allocating resources and assessing nancial
performance of the operating segments, has been identied as the Group Execu-
tive Management Team.
The segments are partly managed separately due to differences in markets,
logistics, supply chains, products, customers and marketing strategies. For each
segment, the Group’s management reviews internal reports on at least a monthly
basis. Russia/CIS comprises of sales of new and used construction and other
equipment, aftermarket sales, rental, contracting services and other services in
Russia and CIS (the Commonwealth of Independent States) and currently only
in Russia and Kazakhstan. Germany comprises of sales of new and used trucks,
aftermarket sales, rental and other services in Germany. Group overhead costs,
such as Group executive management costs, are allocated between the seg-
ments using principles set forth by the chief operating decision-maker (CODM).
Information regarding the results of each segment is included in this report. The
performance of each segment is mainly evaluated based on revenue, gross prot,
EBITDA, operating prot and operating margin, as included in internal manage-
ment reports that are reviewed by the Group’s Executive Management Team. The
Group had no inter-segment revenues during the periods presented.
SEK m
Russia/CIS
2021
Russia/CIS
2020
Germany
2021
Germany
2020
Total
2021
Total
2020
External revenue 4,844 3,652 1,368 983 6,212 4,635
Equipment and truck sales 2,934 2,306 909 629 3,843 2,934
Aftermarket sales 1,042 864 365 269 1,407 1,133
Contracting services 842 461 0 0 842 461
Other revenue 25 21 94 85 119 106
Gross prot 961 714 149 84 1,111 797
EBITDA 713 533 -15 -29 698 504
Depreciation and amortisation -159 -138 -56 -37 -215 -176
Operating prot 553 394 -71 -66 483 328
Finance items -31 -53
Prot (loss) before tax 451 276
Result for the period 339 222
NOTE 5 Determination of fair value
To measure the fair value of an item, the Group uses market observable data as
far as possible. Fair values are categorised into different levels as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical items
• Level 2: other observable inputs, either directly (i.e. prices) or indirectly (i.e.
derived from prices)
• Level 3: other inputs that are not based on observable market data (unobservable
inputs)
If the fair value measurement can be categorised at different levels, the measure-
ment is categorised entirely at the lowest level that is used for the measurement.
Changes in levels are recognised at the end of the period when the changes
occurred.
Fair values of borrowings and nance leases are calculated based on the present
value of future cash ows from principal and interest, discounted at the market rate
of interest at the reporting date (level 2).
For leases, the market rate of interest is determined by reference to similar lease
agreements.
The Group does not disclose the fair values of short-term receivables and
payables since it reasonably can be assumed that the carrying amounts are the
same as the fair values.
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Number of units sold
Russia/CIS
2021
Russia/CIS
2020
Germany
2021
Germany
2020
Total
2021
Total
2020
New units 1,246 1,102 800 619 2,046 1,721
Used units 328 269 241 34 569 303
Total units 1,574 1,371 1,041 653 2,615 2,024
In Russia/CIS, equipment and trucks sales include sales of new and used con-
struction equipment, used trucks, attachments and diesel generators. Aftermarket
sales include sales of service and parts. Contracting services include only revenue
from contracting services operations. Other revenue consists mainly of rental
revenue.
In Germany, equipment and trucks sales include sales of new Volvo and Renault
trucks, Renault light commercial vehicles and used trucks. Aftermarket sales
include sales of service and parts. Other revenue consists mainly of rental revenue
and sales of passenger cars.
Note 6, Segment reporting and revenue, cont.
SEK m
Russia/CIS
2021
Russia/CIS
2020
Germany
2021
Germany
2020
Intersegment
2021
Intersegment
2020
Total
2021
Total
2020
Deferred tax assets 61 46 44 19 0 0 105 65
Intersegment contributions and loans 134 8 0 0 -134 -8 0 0
Other non-current assets* 645 328 441 187 0 0 1,087 515
Total assets 3,213 2,172 895 464 -134 -8 3,973 2,628
Additions to non-current assets
*
466 108 319 38 - - 784 146
*
Except for nancial instruments and deferred tax assets
Revenue by country
SEK m 2021 2020
Russia 4,700 3,556
Kazakhstan 143 96
Germany 1,368 983
Total 6,212 4,635
Other non-current assets by country
SEK m 2021 2020
Russia 637 319
Kazakhstan 8 9
Germany 441 187
Intersegment 134 8
Total 1,221 523
In 2020, attachments from one manufacturer (SP Maskiner) were included in new
unit sales. This has been corrected in this report. As a result, the number of new
units sold in 2020 decreased by 4 from 1,106 to 1,102 in Russia/CIS. In 2020 an
incorrect number of new units sold in Germany was reported, the number should
be 619, instead of 631.
No customer represented more than 7% of the revenue in 2021 (6% in 2020).
Select balance sheet items by country as of 31 December 2021
2021 2020
SEK m Russia Sweden Kazakhstan Germany Total Russia Sweden Kazakhstan Germany Total
Cash and cash equivalents 418 242 31 78 768 484 29 20 71 604
Trade and other receivables 315 0 38 181 535 303 0 23 67 393
Inventory and prepayments 1,279 0 50 150 1,478 918 0 26 107 1,051
Trade and other payables 1,369 115 91 234 1,809 1,047 26 46 68 1,188
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NOTE 8 Other income and expenses
SEK m 2021 2020
Other income 12 24
12 24
Other income in 2020 included a one-off customs duty recovery in the amount of
11m SEK and reversal of impairment of trade receivables in the amount of SEK 5m.
GROUP
SEK m 2021 2020
Bank services 0 2
Impairment of trade receivables 10 6
Sundry expenses 17 4
27 11
NOTE 9 Finance income and nance costs
GROUP
SEK m 2021 2020
Interest income on bank deposits 23 12
Finance income 23 12
Interest expense on lease obligation -11 -19
Interest expense on bank loans -30 -40
Other nance costs -8 0
Finance costs -49 -59
Net nance income/(costs) net -26 -47
No interest income or interest expenses relate to nancial instruments measured
at fair value through prot or loss.
PARENT COMPANY
SEK m 2021 2020
Interest income on loans to subsidiary 3 1
Dividends from subsidiary 429 11
Interest income on bank deposits 0 0
Interest income 433 13
Interest cost on loans from subsidiary -2 -1
Other nance costs 0 0
Interest costs -2 -1
Interest income (net) 430 12
NOTE 7 Selling, general and administrative expenses
Selling expenses
GROUP
SEK m 2021 2020
Personnel expenses 233 204
Depreciation 8 9
Other selling expenses 15 6
256 219
General and administrative expenses
GROUP
SEK m 2021 2020
Personnel expenses 213 154
Depreciation and amortisation 37 32
Rent 29 19
Other general and administrative expenses 78 58
358 264
PARENT COMPANY
SEK m 2021 2020
Personnel expenses 23 21
Other general and administrative expenses 16 9
39 30
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NOTE 10 Income taxes
The Parent Company is a tax resident of Sweden where the applicable tax rate for
2021 was 20.6% (21.4%).
The other Group companies that were operational in the presented periods
are tax residents of Russia, where the applicable tax rate for 2021 was 20% (same
as the previous year), Kazakhstan 20% and Germany 30% correspondingly.
Income tax is calculated separately for each Group entity by multiplying the appli-
cable tax rate with the taxable results for the period. The average tax rate of the
Group in 2021 was 24.9% (19.6%).
In 2021 the Group paid internal group dividends. The withholding tax on the
dividends is included in income tax at applicable tax rate in the reconciliation of
effective tax rate in the reconciliation of effective tax rate for the Group.
SEK m Group 2021 Group 2020 Parent Company 2021 Parent Company 2020
Current tax expense -147 -77 - -
Deferred tax benet / (expense) 35 23 - 3
Total income tax -112 -54 - 3
Reconciliation of effective tax rate:
GROUP
SEK m 2021 % 2020 %
Result for the year 339 222
Total income tax -112 -54
Result before tax 451 100 276 100
Income tax at applicable tax rate -110 -24.3 -51 -18.6
Revaluation of tax loss carryforwards - - 0 -
Non-deductible expenses -3 -0.6 -3 -0.9
-112 -24.9 -54 -19.6
PARENT COMPANY
SEK m 2021 % 2020 %
Result for the year 427 -2
Total income tax - 3
Result before tax 427 100 -5 100
Income tax at applicable tax rate -88 -20.7 1 -20.6
Dividends from subsidiary (non-taxable) 88 20.7 - -
Non-recognised tax-loss carryforwards 0 -0.1 - -
Revaluation of tax loss carryforwards 0 0 - 389.3
Other items 0 0 2 -38.9
0 0 3 -59.5
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NOTE 11 Property, plant and equipment
GROUP
SEK m Land Buildings
Machinery
and
equipment
Contracting
services
machines
Rental
machines
Ofce
equipment Cars
Under con-
struction
Right of use
assets related to
facilities rent Total
Cost
Balance 1 January 2021 26 93 67 236 134 16 123 6 116 818
Additions 16 15 14 0 91 3 63 5 73 279
Transfers from invento-ry 0 0 0 302 70 0 0 0 0 372
Acquisition of business 7 28 8 0 16 0 0 0 0 59
Disposals -3 0 -4 0 -29 -1 -17 0 0 -54
Transfers to inventory 0 0 0 -101 -17 0 0 0 0 -118
Transfers 0 2 0 0 0 0 0 -2 0 0
Translation difference 7 11 6 90 16 -1 13 -5 11 148
Balance 31 December 2021 54 148 91 527 280 17 182 4 200 1,504
Depreciation and
impairment losses
Balance 1 January 2021 2 23 41 90 28 9 60 5 54 312
Depreciation 0 10 11 80 55 2 28 0 29 215
Disposals 0 0 -3 0 -6 -1 -12 -5 0 -29
Transfers to inventory 0 0 0 -75 -18 0 0 0 0 -93
Translation difference 6 3 2 58 12 1 6 0 6 93
Balance 31 December 2021 8 35 50 152 71 11 82 0 88 498
Carrying amounts
1 January 2021 25 70 27 146 105 7 63 1 62 507
31 December 2021 46 113 41 375 209 6 101 4 112 1,006
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SEK m Land Buildings
Machinery
and
equipment
Contracting
services
machines
Rental
machines
Ofce
equipment Cars
Under con-
struction
Right of use
assets related to
facilities rent Total
Cost
Balance 1 January 2020 14 51 75 277 163 15 155 81 120 951
Additions 0 14 4 0 0 6 15 1 26 65
Transfers from inventory 0 0 0 53 56 0 0 0 0 108
Disposals 0 -1 -2 0 0 0 -5 -1 0 -9
Transfers to inventory 0 0 0 -14 -68 0 0 0 0 -82
Transfers 18 48 11 0 0 0 0 -77 0 0
Translation difference -6 -18 -20 -79 -18 -4 -41 4 -31 -214
Balance 31 December 2020 26 93 67 236 134 16 123 6 116 818
Depreciation and
impairment losses
Balance 1 January 2020 4 24 42 68 13 9 53 7 29 250
Depreciation 0 7 12 54 35 3 27 0 36 174
Disposals 0 -1 -1 0 0 0 -4 -1 0 -7
Transfers to inventory 0 0 0 -9 -14 0 0 0 0 -23
Translation difference -3 -7 -12 -24 -6 -3 -17 0 -12 -83
Balance 31 December 2020 2 23 41 90 28 9 60 5 54 312
Carrying amounts
1 January 2020 10 27 33 208 150 5 102 74 91 700
31 December 2020 25 70 27 146 105 7 63 1 62 507
Additions of machines in contracting services in Russia/CIS are reected in invest-
ment activities as outows when payment for the machines is made to the supplier.
These machines were initially purchased as inventory for equipment sales but then
transferred from inventories to property, plant and equipment.
Depreciation was allocated as follows:
• Cost of sales: SEK 170m (SEK 135m)
• Selling expenses: SEK 8m (SEK 9m)
• General and administrative expenses: SEK 34m (SEK 30m)
Note 11, Property, plant and equipment, cont.
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Right of use assets:
SEK m Rental machines
Contracting services
machines Cars
Right of use assets
related to facilities rent Total
Cost
Balance 1 January 2021 0 70 51 116 237
Additions 0 0 34 73 108
Disposals 0 0 0 0 0
Buy-out from lease 0 -40 -14 0 -54
Translation difference 0 8 -4 11 16
Balance 31 December 2021 0 39 68 200 307
Depreciation and impairment losses
Balance 1 January 2021 0 28 18 54 100
Depreciation 0 20 14 29 62
Disposals 0 0 0 0 0
Buy-out from lease 0 -25 -6 0 -31
Translation difference 0 3 -2 6 7
Balance 31 December 2021 0 26 23 88 138
Carrying amounts
1 January 2021 0 42 33 62 138
31 December 2021 0 13 44 112 169
SEK m Rental machines
Contracting services
machines Cars
Right of use assets
related to facilities rent Total
Cost
Balance 1 January 2020 5 96 87 120 308
Additions 0 0 10 31 41
Disposals 0 0 0 -5 -5
Buy-out from lease -5 0 -25 0 -31
Translation difference 0 -26 -20 -31 -77
Balance 31 December 2020 0 70 51 116 237
Depreciation and impairment losses
Balance 1 January 2020 2 14 21 29 66
Depreciation 1 20 14 39 74
Disposals 0 0 0 -2 -2
Buy-out from lease -3 0 -11 0 -14
Translation difference 0 -7 -6 -12 -24
Balance 31 December 2020 0 28 18 54 100
Carrying amounts
1 January 2020 3 81 66 91 242
31 December 2020 0 42 33 62 138
Note 11, Property, plant and equipment, cont.
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PARENT COMPANY
SEK m Ofce equipment
Cost
Balance 1 January 2021 0
Balance 31 December 2021 0
Depreciation and impairment losses
Balance 1 January 2021 0
Depreciation -
Balance 31 December 2021 0
Carrying amounts
Balance 31 December 2021 0
SEK m Ofce equipment
Cost
Balance 1 January 2020 0
Balance 31 December 2020 0
Depreciation and impairment losses
Balance 1 January 2020 0
Depreciation -
Balance 31 December 2020 0
Carrying amounts
Balance 31 December 2020 0
NOTE 12 Intangible assets
GROUP
SEK m
Software and soft-
ware licenses Goodwill Total
Cost
Balance 1 January 2021 9 3 12
Acquisitions – separately acquired 1 - 1
Business acquisition - 73 73
Disposals -4 - -4
Translation difference 3 1 5
Balance 31 December 2021 9 77 87
Amortisation
Balance 1 January 2021 3 - 3
Amortisation 3 - 3
Disposals -1 - -1
Translation difference 0 - 0
Balance 31 December 2021 6 - 6
Carrying amounts
31 December 2021 4 77 81
Amortisation of SEK 3m (SEK 2m) was recognised as general and administrative
expenses.
Based on impairment tests conducted by the Group no impairment of good-
will was recognised in 2021 (same as 2020).
Note 11, Property, plant and equipment, cont.
SEK m
Software and soft-
ware licenses Goodwill Total
Cost
Balance 1 January 2020 13 3 15
Acquisitions – separately acquired 2 - 2
Disposals -3 - -3
Translation difference -3 - -3
Balance 31 December 2020 9 3 12
Amortisation
Balance 1 January 2020 4 - 4
Amortisation 2 - 2
Disposals -1 - -1
Translation difference -1 - -1
Balance 31 December 2020 3 - 3
Carrying amounts
31 December 2020 6 3 8
99
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SEK m Software and software licenses
Balance 1 January 2020 1
Acquisitions -
Balance 31 December 2020 1
Amortisation
Balance 1 January 2020 0
Amortisation 0
Balance 31 December 2020 0
Carrying amounts
31 December 2020 1
Note 12, Intangible assets, cont.
NOTE 13 Deferred tax assets and liabilities
(a) Deferred tax assets and tax liabilities:
GROUP
31 December 2021
31 December 2020
SEK m Assets Liabilities Net Assets Liabilities Net
Property, plant and equipment - -7 -7 9 -4 5
Intangible assets - 0 0 - 0 0
Inventories 11 - 11 - 0 0
Trade and other receivables - -4 -4 - -1 -1
Prepayments 3 - 3 0 - 0
Provisions 8 - 8 0 - 0
Deferred income 4 - 4 3 - 3
Trade and other payables 14 - 14 11 - 11
Tax loss carryforwards 69 - 69 43 - 43
Tax assets/ (liabilities) 109 -11 98 65 -6 59
Set off of tax -4 4 - 0 0 -
Net tax assets/(liabilities) 105 -7 98 65 -5 59
PARENT COMPANY
SEK m Software and software licenses
Balance 1 January 2021 1
Acquisitions -
Balance 31 December 2021 1
Amortisation
Balance 1 January 2021 0
Amortisation 0
Balance 31 December 2021 0
Carrying amounts
31 December 2021
1
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PARENT COMPANY
31 December 2021
31 December 2020
SEK m Assets Liabilities Net Assets Liabilities Net
Tax loss carryforwards 20 - 20 20 - 20
Net tax assets/(liabilities) 20 - 20 20 - 20
Note 13, Deferred tax assets and liabilities, cont.
b) Changes in deferred tax:
GROUP
SEK m 1 January 2021
Recognised in
prot or loss
Effect of movement
in exchange rates 31 December 2021
Property, plant and equipment 4 -8 -3 -7
Intangible assets 0 0 0 0
Inventories 0 11 0 11
Trade and other receivables -1 -4 1 -4
Prepayments 0 1 2 3
Trade and other payables 11 5 -1 14
Provisions 0 5 3 8
Deferred income 3 0 1 4
Tax loss carryforwards 43 25 1 69
Net tax assets/(liabilities) 59 35 3 98
PARENT COMPANY
SEK m 1 January 2021
Recognised in
prot or loss
Recognised in
other comprehensive
income
Effect of
movement in
exchange rates 31 December 2021
Tax loss carryforwards 20 - - - 20
Net tax assets/(liabilities) 20 - - - 20
Starting from 2021, if prot before tax in the Parent company excluding dividend
from subsidiary is negative, no additional deferred tax asset is recognised in rela-
tion to this tax loss. The amount of such non-recognised tax loss carry-forwards
amounted to SEK 0.3m at the end of 2021 (0 at the end of 2020).
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GROUP
SEK m 1 January 2020
Recognised in
prot or loss
Effect of movement
in exchange rates 31 December 2020
Property, plant, and equipment -6 12 -1 4
Intangible assets -2 0 0 0
Inventories 6 -5 -1 0
Trade and other receivables 1 -2 0 -1
Prepayments 0 0 0 0
Trade and other payables 14 0 -4 11
Provisions 0 0 0 0
Deferred income 6 -2 -1 3
Tax loss carryforwards 24 20 -1 43
Net tax assets/(liabilities) 45 23 -8 59
PARENT COMPANY
SEK m 1 January 2020
Recognised in
prot or loss
Recognised in
other comprehensive
income
Effect of movement
in exchange rates
31 December
2020
Tax loss carryforwards 17 3 - - 20
Net tax assets/(liabilities) 17 3 - - 20
Note 13, Deferred tax assets and liabilities, cont.
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NOTE 14 Inventories
SEK m
Group
31 December 2021
Group
31 December 2020
Parent Company
31 December 2021
Parent Company
31 December 2020
Raw materials and consumables 7 20 - -
Work in progress 28 10 - -
Goods for resale 1,398 984 - -
1,432 1,014 - -
Inventories of SEK 4,250m (SEK 3,245m) were sold during the year and recognised as cost of sales. Write-down of inventories to net realisable value of SEK 2.0m
(SEK 7.0m) was recognised as cost of sales.
NOTE 15 Trade and other receivables
SEK m
Group
31 December 2021
Group
31 December 2020
Parent Company
31 December 2021
Parent Company
31 December 2020
Trade receivables 365 314 - -
Trade receivables due from subsidiaries - - 62 36
VAT receivable 20 4 0 0
Warranty claims 26 12 - -
Prepaid income tax 29 5 - -
Other receivables 94 59 1 0
535 393 63 36
Credit risks, currency risks and losses related to trade and other receivables are presented in Note 22 (Financial instruments and risk management).
NOTE 16 Cash and cash equivalents
SEK m
Group
31 December 2021
Group
31 December 2020
Parent Company
31 December 2021
Parent Company
31 December 2020
Bank balances 471 205 241 15
Call deposits 297 399 0 1
Cash and cash equivalents 768 604 241 17
Interest risk, currency risk and a sensitivity analysis for nancial assets and liabilities are presented in Note 22 (Financial instruments and risk management).
103
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NOTE 17 Capital and reserves
a) Share capital and additional paid-in capital
Shares
Number of shares 2021 2020
In issue 1 January 14,532,434 14,532,434
Issue of ordinary shares - -
Conversion of preference shares - -
Redemption of preference shares - -
In issue 31 December, fully paid 14,532,434 14,532,434
Par value per share, SEK 0.089 0.089
Each share carries one vote.
b) Translation reserve
The translation reserve comprises foreign currency differences arising out of the
translation of nancial information of foreign operations from functional currency
to presentation currency.
c) Dividends
At the general meeting on 12 May 2021, it was decided to pay dividends on
shares in an amount of SEK 7.5 per share, in total SEK 109m.
SEK m 2021 2020
Dividends paid on shares 109 62
Proposed allocation of prot
SEK 502,360,622 is available for distribution by the AGM. The Board proposes
that this amount be allocated as follows:
SEK
Dividend on shares 0
Amount carried forward 502,360,622
of which to the Share
Premium Reserve
630,025,300
Total amount allocated 502,360,622
Due to the uncertain situation related to the conict in Ukraine, the Board has
recommended that the AGM 2022 decides not to pay a dividend.
d) Share based incentive program
In 2020, the Board proposed to introduce a long-term incentive program for
Ferronordic’s (“the Company”) management and certain other senior employees.
The program is intended to provide long-term incentives and align the interests of
senior management and the shareholders. The program is designed to run over
a three year horizon and to be repeated three years in three rounds. The maxi-
mum potential dilution to the Company’s shareholders over the full program was
supposed to be approx. 2.5% per year and no more than 7.5% in total. While the
intention was to repeat the program over three years, each year’s program was
separate and required a separate approval by the AGM. As part of the program,
the Company would be allowed to issue up warrants to be distributed between
approximately 30 persons forming the senior management of the Company and
its subsidiaries. Each warrant would entitle the participant to subscribe for one
share of the Company at the earliest three years after the warrant was issued. The
subscription price was set equal to 135% of the volume-weighted average share
price during the 10 trading days immediately preceding the date of valuation of
the warrants. As per the program, the participants received a cash compensation
from the Group that, net of tax, covered 80% of the cost for acquiring the warrants
under the program. The remaining 20% of the cost for acquiring the warrants was
borne by the participants themselves. The warrants were acquired at fair value.
Subscription of shares would be done against cash payment to the Company at
the strike price. Participation in the program and subsequent subscription requires
that a participant remains an employee of the Company or its subsidiaries. Should
a participant terminate his employment before the end of the program, the Com-
pany reserves the right to repurchase 20% of the participant’s warrants at original
cost.
The EGM on 5 November 2020 approved the rst round of the long-term
incentive program. On 30 November 2020, the Company issued 332,000 warrants
to 24 management participants. 142,000 or 43% of these warrants were issued to
8 executives in the Group management. The market value of the warrants at the
time of transfer to the participants was determined by an independent nancial
advisor on the basis of the Black-Scholes option pricing model is estimated at
approximately as SEK 9.04. The valuation was based on a 10-day volume-weight-
ed average share price of SEK 152.75, a subscription price of SEK 206.21, a
volatility of 30%, an interest rate of -0.4% and an expected dividend yield of 3.1 %
(according to market estimates) and a dilution effect of approx 2.6%. In case of
full program retention and subsequent subscription, the Company’s equity would
increase with approximately SEK 71m.
The AGM on 12 May 2021 approved the second round of the long-term
incentive program. On 28 May 2021, the Company issued 364,500 warrants to 27
management participants. 140,500 or 39% of these warrants were issued to 8 ex-
ecutives in the Group management. The market value of the warrants at the time
of transfer to the participants was determined by an independent nancial advisor
on the basis of the Black-Scholes option pricing model is estimated at approxi-
mately as SEK 13.38. The valuation was based on a 10-day volume-weighted av-
erage share price of SEK 254.88, a subscription price of SEK 344.08, a volatility of
30%, an interest rate of -0.2% and an expected dividend yield of 4.1% (according
to market estimates) and a dilution effect of approx. 2.6%. In case of full program
retention and subsequent subscription, the Company’s equity would increase with
approximately SEK 130m.
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NOTE 18 Borrowings
a) Short-term borrowings
GROUP
31 December 2021
31 December 2020
SEK m
Outstanding
balance
Credit
facility limit
Outstanding
balance
Credit
facility limit
Current liabilities
Unsecured short-term
borrowings
317 870 84 637
317 870 84 637
b) Long-term borrowings
GROUP
31 December 2021
31 December 2020
SEK m
Outstanding
balance
Credit
facility limit
Outstanding
balance
Credit
facility limit
Non-current liabilities
Unsecured long-term
borrowings
490 490 351 352
490 490 351 352
PARENT COMPANY
SEK m 31 December 2021 31 December 2020
Loan from subsidiary - 33
- 33
PARENT COMPANY
SEK m 31 December 2021 31 December 2020
Loan Nordea 31 -
31 -
On 1 January 2021, Ferronordic Machines LLC had four credit facilities open with
two banks in Russia for a total of RUB 5bn (approx. SEK 608m as at 31 Decem-
ber 2021). These included a RUB 2bn (SEK 243m) and a RUB 1bn (SEK 122m)
facility with Sberbank and two RUB 1bn (SEK 122m) facilities with Bank Otkritie. At
the beginning of 2021, these facilities were unutilised. As part of the arrangement
of Ferronordic AB’s EUR 40m (approx. SEK 409m) working capital facility in April
2021 (see also below), Ferronordic agreed to reduce the local funding lines to
RUB 2bn (SEK 243m). As a result, in 2021, Ferronordic closed its old credit lines
with Sberbank but in 2022 arranged two new lines for RUB 1bn (SEK 122m) each
and with maturities in January and February 2024. The lines with Otkritie were
closed in November 2021 and February 2022.
Interest-bearing liabilities also include liabilities in the German operations amount-
ing to SEK 87m that were transferred from payables to borrowings, in 2021, mainly to
Volvo Financial Services. The liabilities mature when the trucks to which the payables
are related to are sold, but not later than 2023 (one and a half year after invoicingin-
ception). As such transfers were non-cash, they are not reected in cash ows.
In 2021, the Group used borrowings from Volvo Financial Services in the
Russian operations to nance machines in contracting services. In these trans-
actions the Group transfers title for the machines to Volvo Financial Services and
gets nancing in return. The outstanding amount of such borrowings at the end of
2021 was SEK 268m (SEK 74m). In the consolidated statement of cash ows, the
nancing received in these transactions was shown as increase in borrowings. The
maturity years for of the currently outstanding such contracts are 2022–2024.
In 2021, the Group used borrowings from Volvo Financial Services in the German
operations to nance machines in rental eet. In these transactions the Group
transfers title for the machines to Volvo Financial Services and gets nancing in re-
turn. The outstanding amount of such borrowings at the end of 2021 was SEK 68m
(SEK 32m). In the consolidated statement of cash ows, the nancing received in
these transactions was shown as increase in borrowings. The maturity years forof
the currently outstanding such contracts are 2022-2024.
At the end of 2021, the Group also had several outstanding credit and lease
obligations with different years of maturity in Germany, which in total amounted to
SEK 49m (SEK 25m in 2020).
On 30 April 2021, it was announced that Ferronordic and Nordea Bank had
agreed on a credit facility, consisting of a EUR 40m revolving credit facility and
a EUR 30m term loan. The facility is running for three years. The purpose of the
facility is partly to nance the Group’s working capital, and partly to nance the
group’s continued investments in Germany. The facility were also used to renance
the loan that was drawn from Nordea Bank in connection with Ferronordic’s estab-
lishment in Germany in December 2019.
The outstanding amount of the loan as at the end of 2021 was SEK 336m,
including SEK 31m drawn by the Parent company.
The loan from Nordea to the Parent company Ferronordic AB in the amount of
SEK 31m was repaid in February 2022.
The interest rate on the Group’s loans and borrowings in 2021 varied between
1–3% in the German operations to 9-11% in the Russian operations. As a result of
the geopolitical tensions and sanctions and countersanctions in the beginning of
2022, interest rates have increased sharply in Russia.
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Future minimum lease payments (where Group is a lessee):
GROUP
31 December 2021
31 December 2020
SEK m
Future minimum
lease payments Interest
Present value
of minimum
lease payments
Future minimum
lease payments Interest
Present value
of minimum
lease payments
Less than one year 73 -11 62 93 -15 77
Between one and ve years 97 -10 87 77 -6 71
More than ve years 12 -2 10 0 0 0
182 -23 159 169 -21 148
d) Reconciliation of movements of liabilities to cash ows from nancing activities
GROUP
Liabilities
SEK m
Lease
liabilities
Borrow-
ings Total
Balance 1 January 2021 148 435 583
Changes in cash ows from nancing activities
Proceeds from borrowings 0 371 371
Repayment of loans 0 -118 -118
Leasing nancing paid -81 0 -81
Total -81 253 172
Other changes related to equity
Effect of changes in
foreign exchange rates
-16 18 1
Total -16 18 1
Other changes related to liabilities
New leases 108 0 108
Reclassication from payables 0 87 87
Business acquisition 0 14 14
Disposals 0 0 0
Total 108 101 209
Balance 31 December 2021 159 808 966
GROUP
Liabilities
SEK m
Lease
liabilities
Borrow-
ings Total
Balance 1 January 2020 268 845 1,112
Changes in cash ows from nancing activities
Proceeds from borrowings - 466 466
Repayment of loans - -869 -869
Leasing nancing paid -114 - -114
Total -114 -402 -516
Other changes related to equity
Effect of changes in
foreign exchange rates
-42 -7 -49
Total -42 -7 -49
Other changes related to liabilities
New leases 41 - 41
Disposals -5 -5
Total 36 - 36
Balance 31 December 2020 148 435 583
c) Lease liabilities
At the end of 2021, the Group had a lease limit from RB Leasing in the amount
of RUB 600m. In 2021, the limit with RB Leasing was partly used to nance cars
in the carpool. At the end of 2021, the Group had leases from Volvo Financial
Services and Raiffeisen Leasing which commenced in 2018-2019 and were used
to nance machines in contracting services.
The weighted-average rate applied for discounting lease payments when measur-
ing lease liabilities was 6.2% (8.7%).
The repayment of lease liabilities is reected in the consolidated statement of
cash ows as leasing nancing paid.
Note 18, Borrowings, cont.
106
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NOTE 19 Deferred income
SEK m
Group
31 December 2021
Group
31 December 2020
Parent Company
31 December 2021
Parent Company
31 December 2020
Deferred income short-term due to
lease back and buy back transaction
12 6 - -
Deferred income short-term
relating to service contracts
16 13 - -
Total 28 19 - -
SEK m
Group
31 December 2021
Group
31 December 2020
Parent Company
31 December 2021
Parent Company
31 December 2020
Deferred income long-term due to
lease back and buy back transaction
22 1 - -
Total 22 1 - -
NOTE 20 Provisions
GROUP
SEK m Warranties Other Total
Balance 1 January 2021 12 13 26
Provisions made 33 11 45
Business acquisition - 4 4
Provisions used -20 -18 -38
Translation difference 2 1 2
Balance 31 December 2021 27 12 39
Non-current - - -
Current 27 12 39
27 12 39
GROUP
SEK m Warranties Other Total
Balance 1 January 2020 17 6 22
Provisions made 21 9 30
Provisions used -21 -1 -21
Translation difference -4 -1 -5
Balance 31 December 2020 12 13 26
Non-current - - -
Current 12 13 26
12 13 26
Warranties on new machines and components
The Group’s suppliers provide warranties on new machines and new components,
which the Group extends to its customers. The suppliers also offer extended
warranties for an additional charge, which the Group offers its customers, also for
an additional charge. The suppliers compensate the Group for costs related to the
warranties at pre-agreed rates and amounts.
Both the gross provision amount of the standard warranties and the receivables
from the suppliers are recognised. Provisions for standard warranties are recog-
nised when the products that the warranties relate to are being sold. Warranty
provisions are based on historical data. Amounts of expected reimbursement as of
31 December 2021 and 31 December 2020, respectively, are disclosed in Note 15.
The increase in deferred income due to lease back and buy back transactions is related to new buy back transactions in Germany in 2021 of SEK 30m.
107
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NOTE 21 Trade and other payables
SEK m
Group
31 December 2021
Group
31 December 2020
Parent Company
31 December 2021
Parent Company
31 December 2020
Trade payables 1,416 947 103 18
Advances from customers 149 100 - -
Other payables and accrued expenses 176 91 11 9
Payables to subsidiaries - - - -
Income tax payable 1 1 - -
Other taxes payable 68 49 1 1
1,809 1,188 115 28
The Parent Company’s trade payables related to machines from Dressta, Rottne
and Mecalac, and machines and spare parts from Sandvik purchased by the Par-
ent Company and resold to its subsidiaries.
Currency and liquidity risks related to trade and other payables are disclosed
in Note 22.
Advances from customers of SEK 149m (SEK 100m) and deferred income relating
to service contracts of SEK 16m (SEK 14m) (see Note 19) relate to contract liabili-
ties under the contracts with customers.
Out of contract liabilities at the end of 2020, SEK 60m was recognised as
revenue during 2021 (SEK 32m in 2020).
NOTE 22 Financial instruments and risk management
The Group is exposed to various types of credit risk, liquidity risk and market risk.
The Group has established policies and procedures to identify, analyse and mini-
mise these risks, as well as to establish appropriate limits and control mechanisms
to monitor that these are adhered to. Employees are trained to understand the
risks at hand and the requirements of applicable policies and procedures. Policies
and procedures are reviewed regularly and amended to reect changed market
conditions or changes in the business.
The purpose of the Group’s policies and procedures is to develop a control
environment where employees understand their roles and obligations. The Board
also oversees how management monitors compliance with the Group’s policies
and procedures and reviews the adequacy of the risk management framework in
relation to relevant risks.
The Group’s internal auditor evaluates the Group’s risks, monitors that estab-
lished policies and procedures are complied with and suggests how the Group’s
control environment can be improved. The internal auditor reports to the Board’s
audit committee.
Credit risk
General
The Group to a certain extent sells products and services on credit and is thus
exposed to certain credit risk. The risk is inuenced mainly by the characteristics of
the individual customers, but management also considers the demographics of the
Group’s customer base as a whole, such as general default risk in the customers’
different industries.
At the end of 2021, the 20 largest trade receivables comprised 50% of the
total trade receivables (at the end of 2020 the corresponding gure was 46%).
To minimise credit risk, the Group rst and foremost strives to sell as much as
possible without credit.
For machine sales, customers are usually nanced by leasing companies that
purchase the machines from the Group in cash. For aftermarket sales, the Group
typically require payments in advance. However, there are cases where the Group
itself offers credits to its customers, both for machine sales and sales of parts and
services.
For machines, the Group can provide credits up to 12 months, but typically
with a relatively large down-payment and always with retention right or pledge to
the sold machines (in some cases, additional collateral can be requested, usually
in the form of sureties from the customers’ owners). To meet the customers’ nanc-
ing needs, the Group may also offer short-term rental agreements, also up to 12
months, where the Group retains ownership in the machine. Often the customer
then purchases the machine from the Group at the expiry of the rental agreement.
For sales of spare parts and service the Group typically does not require any
collateral, but in some cases, personal sureties are requested.
Credit approvals
The Group has a structured process for approving credits and settling credit limits
where all customers are screened and assessed individually by both the nance
and the security department before any credit is approved.
The credit review typically includes external ratings (when available) and the
use of credit databases. New credit and/or new limits are then referred to the
regional management and/or to the Group’s credit committee for approval,
depending on the size of the credit and the recommendation of the nance and
security departments.
108
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i) Exposure to credit risk
GROUP
SEK m Note
2021
Carrying amount
2020
Carrying amount
Trade receivables 15 365 314
Cash and cash equivalents 16 768 604
1,133 917
Cash and cash equivalents are held with banks, which are rated AA(RU) (ACRA),
BBB (Fitch), BBB- (S&P) in Russia and AA-, A- (S&P) in Sweden and Germany.
Expected credit losses from cash and cash equivalents were at 31 December 2021
considered not material and were thus not accounted for.
The credit risk in the periods presented by geographical region is:
SEK m Note
2021
Carrying amount
2020
Carrying amount
Russia 242 238
Kazakhstan 19 19
Germany 103 56
365 314
ii) Impairment of receivables
Ageing of trade receivables
GROUP
31 December 2021
SEK m
Gross
amount
Average loss
rate, % Impairment
Not past due 176 0.0 0
Past due 0–30 days 114 0.9 -1
Past due 31–120 days 55 3.6 -2
Overdue above 120 days 42 45.2 -19
387 -22
31 december 2020
SEK m
Gross
amount
Average loss
rate, % Impairment
Not past due 190 0.2 0
Past due 0-30 days 65 0.9 -1
Past due 31-120 days 52 2.3 -1
Overdue above 120 days 25 64.3 -16
332 -18
Movement in expected credit losses in respect of trade receivables
GROUP
SEK m 2021 2020
Balance 1 January -18 -25
Net change during the year -10 -1
Business acquisition - -
Amounts written off against trade
receivables
0 0
Translation differences 6 8
Balance 31 December -22 -18
Liquidity risk
The Group strives to maintain sufcient cash and cash equivalents to meet its oper-
ational needs and nancial commitments.
The Group’s treasury department monitors liquidity risk continuously and controls
that nancial liabilities are discharged on time, using a payment calendar tool. The treasury
department performs annual, monthly and daily planning to control cash ows.
Note 22, Financial instruments and risk management, cont.
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Maturities of nancial liabilities (including estimated interest payments)
GROUP
31 December 2021
SEK m
Carrying
amount
Contractual
cash ows 0–6 mths 6–12 mths 1–2 years 2–3 years 3–4 year 4–5 year
Over 5
years
Lease liabilities 159 182 48 25 41 31 18 7 12
Borrowings 808 872 190 162 227 292 0 0 0
Trade and other payables 1,141 1,141 1,141 - - - - - -
2,108 2,196 1,380 187 269 324 18 7 12
GROUP
31 December 2020
SEK m
Carrying
amount
Contractual
cash ows 0–6 mths 6–12 mths 1–2 years 2–3 years 3–4 year 4–5 year
Over
5 years
Lease liabilities 148 169 49 43 54 14 8 1 0
Borrowings 435 472 51 50 150 220 0 0 0
Trade and other payables 1,038 1,038 1,038 0 0 0 0 0 0
1,621 1,679 1,138 94 205 234 8 1 0
The cash ows presented are not expected to occur signicantly earlier or in amounts that differ signicantly. The amount of cash and cash equivalents is disclosed in
the credit risk section of this note and current available credit lines are disclosed in note 18 (Borrowings).
Currency risk
While most of the Group’s sales and purchases are made in RUB and KZT, the
Group is exposed to currency risk on purchases and borrowings that are denom-
inated in other currencies. These transactions primarily occur in EUR, USD, GBP
or SEK.
Interest on borrowings is denominated in the same currency as the borrowings.
In respect of other nancial assets and liabilities denominated in foreign currencies,
the policy is to minimise net exposure and to keep residual net exposure at an
acceptable level by buying or selling foreign currencies at spot rates when necessary
to address short-term imbalances. The Group uses forward exchange contracts to
a certain extent.
Exposure to currency risk related to change of rate of USD, EUR, SEK, GBP against RUB and KZT
SEK m
USD
2021
USD
2020
EUR
2021
EUR
2020
SEK
2021
SEK
2020
GBP
2021
GBP
2020
Cash and cash equivalents - - 20 80 8 5 22 14
Trade and other payables -4 -1 -35 15 -2 -2 -6 -12
Net exposure -4 -1 -15 95 5 2 15 3
Note 22, Financial instruments and risk management, cont.
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Sensitivity analysis
The Group is mainly exposed to movements in RUB, EUR, KZT, USD and GBP.
The Group considers the main currency risk to be related to its Russia/CIS segment.
A strengthening (weakening) of the RUB and KZT against other currencies
would at 31 December 2021 have increased (decreased) prot or loss before taxes
by the amounts shown below.
The analysis assumes that other variables, in particular interest rates, remain
unchanged. The analysis was performed on the same basis as for 2020.
A strengthening (weakening) of the RUB and KZT by 20% against SEK would
at 31 December 2021 have increased (decreased) foreign currency translation
difference for foreign operations in other comprehensive income by SEK 145m
(SEK 137m).
31 December 2021 Strengthening Weakening
USD (20% movement) 1 -1
EUR (20% movement) 3 -3
GBP (20% movement) -3 3
SEK (20% movement) -1 1
31 December 2020 Strengthening Weakening
USD (20% movement) 0 0
EUR (20% movement) -19 19
GBP (20% movement) -1 1
SEK (20% movement) 0 0
Interest rate risk
The Group seeks to borrow funds at variable interest rates and is therefore normally
exposed to interest rate risk during the term of its credit facilities. Part of the Group’s
borrowings is based on a xed interest rate. However, as is common in Russia,
most of the Group’s credit agreements allow the banks to increase interest rates in
case of exceptional changes in the key rate of the Russian Central Bank or excep-
tional economic circumstances.
Prole of interest-bearing nancial instruments at the reporting date:
The Group has xed rate borrowings and borrowings at rates calculated on the
basis of the variable central bank key rate in the country of borrowing. These instru-
ments are included in the table below.
GROUP
SEK m 31 December 2021 31 December 2020
Fixed rate instruments
Bank deposits 297 399
Borrowings -808 -435
Lease liabilities -159 -148
-670 -185
Fair value sensitivity analysis for xed rate instruments
The Group does not account for any xed rate nancial instruments at fair value
through prot or loss or as available-for-sale. A change in interest rates at the
reporting date would therefore not affect prot and loss or equity.
Carrying values and fair values
The carrying amounts of the Group’s nancial assets and liabilities as of
31 December 2021 approximate their fair values.
Capital management
Debt to capital ratio
GROUP
SEK m 31 December 2021 31 December 2020
Total liabilities 2,872 1,821
Cash and cash equivalents -768 -604
Net debt 2,104 1,218
Total equity 1,101 806
Debt to capital ratio 1.91 1.51
Applied exchange rates
IN SEK
Average rate
2021
Reporting date
spot rate 2021
Average rate
2020
Reporting date
spot rate 2020
EUR 10.1449 10.2269 10.4867 10.0375
GBP 11.8022 12.1790 11.7981 11.0873
RUB
(per 100)
11.6549 12.1603 12.8049 11.0561
USD 8.5815 9.0437 9.2037 8.1886
Note 22, Financial instruments and risk management, cont.
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Financial instruments subject to the above agreements
GROUP
SEK m Trade and other receivables Trade and other payables
31 December 2021
Gross amounts 82 1,015
Net amounts presented in the statement of nancial position 82 1,015
Amounts related to recognised nancial instruments that do not meet some or all of the offsetting criteria -24 -24
Net amount 58 991
SEK m Trade and other receivables Trade and other payables
31 December 2020
Gross amounts 35 825
Net amounts presented in the statement of nancial position 35 825
Amounts related to recognised nancial instruments that do not meet some or all of the offsetting criteria -25 -25
Net amount 9 799
The net amounts presented above are recognised in the statement of nancial position and form part of trade and other receivables and trade and other payables,
respectively. Other amounts included in these line items do not meet the criteria for offsetting and are not subject to the agreements described above.
The Group has no formal policy for capital management but seeks to maintain
a sufcient capital base for meeting its operational and strategic needs, and to
maintain the condence of market participants. This is achieved by efcient cash
management, constant monitoring of the Group’s revenues and prot, and a long-
term investment plan, mainly nanced by the Group’s operating cash ows.
Offsetting nancial assets and liabilities
The Group may enter into sales and purchase agreements with the same counterparty
in the normal course of business. The related amounts receivable and payable do
not always meet the criteria for offsetting in the statement of nancial position. This
may be because the Group lacks a currently legally enforceable right to offset the
recognised amounts or because the right to offset may be enforceable only on the
occurrence of certain future events. Under Russian law, an obligation can only be
offset against a similar claim if it is due, has no maturity or is payable on demand.
Note 22, Financial instruments and risk management, cont.
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NOTE 23 Leases
a) Leases as lessee
The Group rents premises and facilities used for workshops, warehouses and
ofces. Right-of-use assets under IFRS 16 related to these rental contracts are
presented in Note 11 (Property, plant and equipment). Interest expenses on lease
liabilities are disclosed in Note 9 (Financial expenses). The future minimum lease
payments are disclosed in Note 18 (Borrowings).
The table below summarises expenses relating to short-term leases and expenses
relating to variable lease payments not included in the measurement of lease
liabilities.
GROUP
SEK m 2021 2020
Short-term lease of premises and
facilities
10 9
Short-term lease of equipment 107 47
Variable lease payments 20 13
137 69
The Group had no signicant expenses relating to the lease of low value assets.
Cash outow for leases during 2021 amounted to SEK 229m (SEK 201m),
including short-term leases and expenses relating to variable lease payments. The
amount for 2020 was recalculated correspondingly.
The Group has an option to purchase one of its rented outlets for RUB 200m
(increased by the rate of Russian ination since the option became exercisable in
September 2017).
b) Leases as lessor
The Group to some extent makes short-term and long-term operating leases of
equipment to customers. The rental income during 2021 from such arrangements
amounted to SEK 119m (SEK 70m).
The table below shows maturity analysis of lease payments to be received after
the reporting date (not discounted):
GROUP
SEK m 31 December 2021 31 December 2020
Less than one year 10 6
1-5 years 52 51
62 57
NOTE 24 Capital commitments
At the reporting date the Group had no signicant capital commitments.
NOTE 25 Contingencies
Taxation contingencies
Signicant changes to the Russian and Kazakh tax systems have taken place in
recent years as previous legislation regarding important taxes (e.g. corporate
income tax, transfer pricing, taxing at source and VAT) has been gradually
replaced. The application of the legislation is, in many aspects, still unclear. The
application of established tax rules, such as existing double-taxation treaties, is
also subject to regular review. Furthermore, the Russian tax authorities can be
unpredictable in their interpretation of tax legislation and their enforcement and
collection of tax.
The current geopolitical tensions, sanctions and countersanctions do not
improve the situation. Technical violations of contradictory laws and edicts may
lead to severe penalties. In practice, the tax authorities often interpret legislation to
the disadvantage of the taxpayers, which thus are required to turn to the courts to
defend their positions. Consequently, the Group’s tax liability may come to signi-
cantly exceed the amounts which thus far have been booked, paid, or reported in
the Group’s nancial statements.
Additional tax liability, as well as unforeseen changes in Russian and Kazakh
tax legislation, could have an adverse effect on the Group’s business, result, and
nancial position.
The Covid-19 coronavirus pandemic has further increased uncertainty in the
business environment across Ferronordic’s markets.
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Transactions with other related parties
PARENT COMPANY
Revenue
2021
2020
SEK m Transaction value Outstanding balance Transaction value Outstanding balance
Services and other income:
Subsidiaries 30 9 18 8
Interest accrued:
Subsidiaries 3 - 1 -
Equipment sold
Subsidiaries 211 35 100 17
Dividends received:
Subsidiaries 429 - 11 -
673 43 131 25
Expenses
2021
2020
SEK m Transaction value Outstanding balance Transaction value Outstanding balance
Cost of sales:
Subsidiaries - - - -
NOTE 26 Related party transactions
Control relationships
The Group’s consolidated annual and interim nancial statements are publicly
available.
At the end of the year, members of management and the Board controlled
25 % of the shares and votes in the Parent Company (28% in 2020).
Transactions with employees
Except for regular salary payments and similar, there were no transactions be-
tween the Group and its employees during the year.
Remuneration to management is included in personnel costs and presented
in Note 29.
Other balances
SEK m 31 December 2021 31 December 2020
Contributions to subsidiaries 175 164
Loans to subsidiaries 149 3
Loans from subsidiaries - -33
Short-term loans to subsidiaries 19 11
343 145
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Services provided constitute compensation from subsidiaries to the Parent Company
for the usage of the Ferronordic trademark and compensation for sureties provided
by the Parent Company to secure the subsidiaries’ obligations. The outstanding
balance as at 31 December 2021 represents accrued royalties under an intra-
group trademark license agreement.
Interest accrued relates to loans from the Parent Company to its subsidiary in
Kazakhstan.
In 2021, equipment sold related to machines from Dressta, Rottne and Mecalac
and machines and parts from Sandvik purchased by the Parent Company and sold
to the subsidiaries in Russia.
Note 26, Related party transactions, cont.
NOTE 27 Events subsequent to the reporting date
In February and March 2022, the EU, the US and other countries imposed addi-
tional sanctions against Russia, including further export restrictions, suspension
of selected banks from SWIFT and measures to prevent the Russian central bank
from using their international reserves. In April, these countries extended their
sanctions against Russia and the EU introduced broader export restrictions.
Based on Ferronordic’s preliminary assessment of the legal documents
issued so far, some of the products and services that Ferronordic offers in Russia
are subjects to the new export restrictions. Ferronordic has thus discontinued
the sales of such products and services and will continue to limit its activities in
accordance with existing sanctions as new ones enter into force. This will have a
negative effect on the Company’s revenues, earnings and cash ows in Russia.
Some of Ferronordic’s suppliers, in particular the Volvo Group, have informed
that they are temporarily stopping sales to Russia. To Ferronordics understand-
ing, this is partly related to the new export restrictions that need to be analysed
thoroughly. If the delivery disruption to Russia continues, it could have a signicant
impact on revenues and cash ows. In addition, transport and logistics to, from and
within Russia are considerably limited. To the extent that products are not affected
by export restrictions, Ferronordic continues to sell products from its inventory and
from partners who continue to deliver. Due to the new situation, the outlook for
Russia and Ferronordic’s operations in Russia are very uncertain.
As regards payments, Ferronordic can currently still make payments both domes-
tically in Russia and internationally to and from Russia. The Russian ruble has
devaluated signicantly and Ferronordic expects the ruble to remain volatile. The
Russian Central Bank has also signicantly increased the reference interest rate.
Ferronordic’s main outstanding payables for purchased machines and spare parts
are, however, denominated in rubles. This means that when it comes to currently
outstanding payables, Ferronordic is not signicantly affected by a potential further
devaluation. The funding costs in Ferronordic’s local credit facilities are however
based on the Central Bank key rate and would therefore, if and when utilised,
reect the higher interest rate level. The broader impact of the volatile market
conditions on the demand for Ferronordic’s products and services in Russia is at
this point highly uncertain
The situation in Russia has no direct impact on our operations in Kazakhstan
and Germany, which continues as before.
In January, Ferronordic opened two revolving credit facilities in total 2 RUB bn
at Sberbank. The facilities will function as local nancing alternatives for working
capital purposes.
At the end of December, Ferronordic’s operations in contracting services were
negatively affected by severe weather and operating conditions in Norilsk and
Siberia. These production disruptions continued during the rst quarter of 2022.
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NOTE 28 Interests in group companies
As of 31 December 2021, the Group consists of the following legal entities:
2021
2020
Subsidiary
Corporate
identity number
Country of
incorporation
Ownership/
voting, % Carrying amount
Ownership/
voting, %
Carrying
amount
Ferronordic AB 556748-7953 Sweden Parent Company - Parent Company -
Ferronordic Machines LLC - Russia 100 138 100 138
Ferronordic Machines Arkhangelsk LLC Russia 100 13 100 13
Ferronordic Torgovaya Kompaniya LLC Russia 100 0 100 0
Ferronordic Torgoviy Dom LLC Russia 100 1 100 1
Ferronordic Kazakhstan LLP Kazakhstan 100 14 100 14
Ferronordic Torgoviy Dom Kazakhstan LLP Kazakhstan 100 0 - 0
Ferronordic Germany Holding AB Sweden 100 11 100 11
Ferronordic GmbH Germany 100 26 100 26
Ferronordic Immobilien GmbH Germany 100 1 100 1
Ferronordic Auto GmbH Germany 100 27 100 27
Ferronordic Charter GmbH Germany 100 11 100 11
243 242
NOTE 29 Employees, board and management
a) Number of employees (average)
2021 of which female, % 2020 of which female, %
Parent Company – Citizenship
Sweden 6 28 4 33
Germany 1 100 - -
Total in Parent Company 7 38 4 50
Subsidiaries – Citizenship
Russia 1,404 11 1,108 11
Sweden 4 0 2 0
Kazakhstan 32 25 28 25
Germany 252 20 256 15
Other 33 9 26 15
Total in subsidiaries 1,698 13 1,419 13
Total Group 1,705 13 1,423 13
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The personnel costs included in cost of sales in the subsidiaries amounted to
SEK 260m (SEK 179m).
The Parent Company’s personnel costs include remuneration to the members
of the Board.
The table below shows salaries and other remuneration (excluding pension
costs) distributed between the Parent Company and its subsidiaries and between
management and other employees.
The members of the Board and management in the Parent Company, the subsidi-
aries, and the Group in 2021 amounted to 11 (10), 8 (6) and 16 (16), respectively.
During 2021 and partly following the expansion to Germany and the change in
the Group’s corporate structure, the Group recruited new executives to the Parent
company and also transferred several executives from Group subsidiaries to the
Parent company.
b) Breakdown between men and women in management
Group
Female representation
Parent Company
Female representation
2021 2020 2021 2020
Board, % 17 17 17 17
Management, % 18 18 0 0
c) Personnel costs
2021
2020
SEK m
Salaries and
other remuneration
Social security
expenses
Salaries and
other remuneration
Social security
expenses
Parent Company 17 6 16 5
(of which pension costs) 1 1
Subsidiaries 567 87 417 95
(of which pension costs) 48 - 54
Total 583 93 433 100
of which pension costs 50 - 55
Note 29, Employees, board and management, cont.
2021
2020
SEK m Board and management Other employees Board and management Other employees
Parent Company 16 1 15 0
(of which bonuses) 6 0 8 0
Subsidiaries 33 534 28 389
(of which bonuses) 14 199 11 103
Total 49 535 43 390
(of which bonuses) 19 199 19 103
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d) Remuneration to the Board
Remuneration paid to the Board in 2021 was xed and amounted to SEK 2.4m
(SEK 1.8m). At the AGM 2021, it was resolved that the remuneration to the Board
should be paid in an amount of SEK 2.4m. Of this amount, SEK 766,667 should
be paid to the chairman and SEK 383,333 to each of the other Board members,
except for Lars Corneliusson, who is employed by the Group. No additional remu-
neration is paid for work on the Board committees.
e) Remuneration to management
Remuneration to management consists of xed and variable salaries, with the
variable part based on achieved results and individual targets. Potential severance
pay to the CEO shall not exceed 12 months’ salary while severance pay for other
senior executives ranges from three to 12 months’ salary. The principles for remu-
neration to management, as adopted by the AGM, are described in the corporate
governance report. A long-term share-based incentive program was introduced for
senior management and repeated in 2021. For more information on this program,
please refer to Note 17, Capital and reserves.
The CEO’s remuneration in 2021 amounted to SEK 13,393,403
(SEK 11,830,864). The right to pension contributions amounted to 10% (13%) of
the xed gross salary.
Remuneration to the Board (SEK)
Name 2021 2020
Staffan Jufors 766,667 600,000
Aurore Belfrage 233,333 -
Magnus Brännström 25,000 300,000
Annette Brodin-Rampe 383,333 300,000
Lars Corneliusson - -
Erik Eberhardson 358,333 300,000
Håkan Eriksson 383,333 300,000
Niklas Florén 233,333 -
Total 2,383,333 1,800,000
Note 29, Employees, board and management, cont.
Remuneration to CEO and other executives
2021
2020
SEK CEO
Other
executives Total CEO
Other
executives Total
Fixed salary 6,963,574 19,427,665 26,391,238 5,767,004 16,027,066 21,794,070
Variable salary 5,720,884 14,415,725 20,136,609 5,323,559 13,674,795 18,998,354
Pension costs 708,945 339,888 1,048,833 740,301 153,902 894,203
Total 13,393,403 34,183,278 47,576,681 11,830,864 29,855,763 41,686,627
Management
Name 2021 2020
Martin Bauknecht From January -
Henrik Carlborg full year full year
Lars Corneliusson full year full year
Erik Danemar full year full year
Dan Eliasson full year from January
Onur Gucum full year full year
Nadia Semiletova full year full year
Ceren Wende full year from August
Anton Zhelyapov full year full year
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NOTE 30 Auditors’ fees and expenses
Group
Parent company
SEK m 2021 2020 2021 2020
KPMG
Audit assignments 3 3 2 2
Other assignments - 0 - 0
3 4 2 2
NOTE 31 Earnings per share
The calculation of earnings per share is based on the result attributable to holders
of shares and is thus calculated as the result for the year divided by the average
number of shares outstanding. Below is the calculation of basic and diluted earn-
ings per share for the Group. The dilutive effect on shares was due to the warrant
programs described in Note 27 Capital.
2021 2020
Result attributable to shareholders, SEK m 339 222
Average number of shares during the period
before dilution, thousand
14,532 14,532
Earnings per share before dilution, SEK 23.33 15.25
Dilution effect 47 0
Average number of shares during the period
after dilution, thousand
14,580 14,532
Earnings per share after dilution, SEK 23.26 15.25
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NOTE 32 Acquisition of subsidiaries
In line with Ferronordic’s strategy to expand and improve its service network in
Germany, the Group completed ve acquisitions in 2021.
On 28 December 2020, it was announced that Ferronordic had agreed to
acquire Truck Center Röhn GmbH (”TCR”), an authorised Volvo and Renault
Trucks workshop in Fulda, Hessen. In 2019, TCR generated revenue of ap-
prox. EUR 3.9 m (SEK 40 m) with an operating prot of approx. EUR 0.6 m
(SEK 6 m) and 15% operating margin. The purchase price amounted to EUR 4.2m
(SEK 43m), based on EUR 2.5 m (SEK 25 m) of expected net asset value and
EUR 1.7 m (SEK 17 m) of goodwill. The transaction was completed in January
2021. Ferronordic also agreed with the seller to build an additional workshop for
Ferronordic in Bad Hersfeld, Hessen.
On 4 February 2021, it was announced that Ferronordic had signed an agree-
ment to purchase the business of Bus und Truck Service GmbH, an authorised
Volvo and Renault Trucks workshop in Nordhausen in central Germany. Over
the last three years, Bus und Truck Service GmbH generated average revenue
of around EUR 1.5 m (SEK 15 m) per year, with an estimated adjusted operating
margin of approx. 10%. The transaction was structured as an asset deal, where
Ferronordic purchased inventories, tools and equipment from the seller. The real
estate was not included in the transaction and will be leased by Ferronordic. The
total purchase price amounted to EUR 0.65 m (SEK 6.6 m), of which EUR 0.45 m
(SEK 4.6 m) corresponded to the expected net value of the purchased assets and
EUR 0.2 m (SEK 2.0 m) is goodwill. The transaction was completed in May 2021.
On 3 March 2021, it was announced that Ferronordic had signed an agree-
ment to acquire Thomas Nutzfarzeuge GmbH (“Thomas”) and the related real
estate. Thomas is an authorised Volvo and Renault Trucks workshop in Limburg,
Hessen. During 2019 and 2020, Thomas had an average annual revenue of
EUR 4.8 m (SEK 49 m) with an average operating prot of approx. EUR 0.8 m
(SEK 8 m). The total investment including real estate amounted to EUR 6.4 m
(SEK 64 m). The purchase price for the shares in Thomas was approx. EUR
2.9 m (SEK 29 m), based on EUR 0.5 m (SEK 5 m) of expected net asset value
and EUR 2.4 m (SEK 24 m) of goodwill. In addition, Ferronordic paid EUR 3.5 m
(SEK 35 m) for the real estate. The transaction was completed in April 2021.
On 29 September, Ferronordic announced that it had signed an agreement
to acquire Truckservice Bergstrasse GmbH & Co KG, an authorised Volvo and
Renault Trucks workshop in Lorsch, Hessen. In 2019 and 2020, Bergstrasse
had an average revenue of approx. EUR 7.0 m (SEK 71 m) with an average
operating prot of approx. EUR 0.7 m (SEK 7 m). The purchase price amounted
to EUR 4.0 m (*SEK 41 m), based on net assets of EUR 0.8 m (*SEK 8 m) and
goodwill of EUR 3.2 million (*SEK 33 m). The property where the business is con-
ducted was not included in the transaction but will be leased for a period of at least
ve years. The expected purchase price for the shares in Bergstrasse amounted
to EUR 4.0 million (*SEK 41 m), based on net assets of EUR 0.8 m (*SEK 8 m)
and goodwill of EUR 3.2 m (*SEK 33 m). The transaction was completed in October
2021.
On 30 November, Ferronordic announced that it had acquired Truck Center
Krämer GmbH, an authorised Volvo and Renault Trucks workshop in Bingen,
Rhineland Pfalz. During 2019 and 2020, Truck Center Krämer had an average
annual revenue of approx. EUR 5.3 m (SEK 54 m) and an estimated normalised
operating margin of approx. 10%. The purchase price amounts to EUR 2.7 m
(SEK 28 m), based on expected net assets of EUR 0.9 m (SEK 9 m) and goodwill
of EUR 1.9 m (SEK 19 m). In addition, Ferronordic has acquired the property
where the operations in Bingen are conducted for a purchase price of EUR 3.7 m
(SEK 38 m). In all cases 100% of ownership in companies was acquired by
Ferronordic.
Amounts have been translated using the exchange rates from the date of
announcement.
The tables on page 120 detail the considerations paid, the net assets
acquired and the goodwill related to potential synergies and intangible assets
to Ferronordic in the integrations of the acquired workshops into Ferronordic’s
German operations.
The Group believes that the book value of the assets (including provisions)
acquired and liabilities assumed represent their fair value. The fair value of receiv-
ables at the date of acquisition was EUR 2.6 m (SEK 27 m), which is derived from
a gross amount EUR 2.6 m (SEK 27 m) as no provision for credit losses was rec-
ognised. The Group believes that the gross amount is an appropriate estimate of
cash ows expected to be collected. Most of the receivables are from customers.
Costs in the amount of EUR 0.6 m (SEK 6 m) related to the acquisitions have
been included in “general and administrative expenses” in the condensed consoli-
dated statement of comprehensive income.
Goodwill of EUR 8.9 m (SEK 91 m) was recognised in the acquisitions. Good-
will is not expected to be deductible for tax purposes.
The contribution of the acquired subsidiaries to the revenue and net result
from the time of acquisition up to the reporting date was approx. EUR 6.7 m and
EUR 0.7 m (SEK 68 m and SEK 7 m). The estimated revenue and net result of the
acquired entities before acquisition was EUR 10.4m and EUR 1.2 m (SEK 105 m
and SEK 12 m).
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FERRONORDIC ANNUAL REPORT 2021
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governance
Net cash outow
SEK m TCR Thomas
Bus and truck
service Truckservice TC Kramer Total
Cash consideration transferred 31 67 7 37 27 169
Cash acquired 6 3 0 3 4 16
Net cash outow 25 64 7 34 24 153
Note 32, Acquisition of subsidiaries, cont.
Goodwill
SEK m TCR Thomas
Bus and truck
service Truckservice TC Kramer Total
Consideration total 43 67 7 37 27 181
Fair value of net assets acquired 25 42 5 7 11 90
Goodwill 17 24 2 30 17 91
Net assets
SEK m TCR Thomas
Bus and truck
service Truckservice TC Kramer Total
Property, plant and equipment 8 45 0 4 2 59
Inventories 4 3 5 6 9 27
Trade and other receivables 11 5 0 5 7 27
Cash and cash equivalents 6 3 0 3 4 16
Borrowings -2 -5 0 -3 -6 -16
Trade and other payables 0 -6 0 -8 -5 -19
Provisions -2 -1 0 0 0 -4
Net assets 25 42 5 7 11 90
Consideration
SEK m TCR Thomas
Bus and truck
service Truckservice TC Kramer Total
Cash 31 67 7 37 27 169
Contingent consideration 12 0 0 0 0 12
Consideration total 43 67 7 37 27 181
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FERRONORDIC ANNUAL REPORT 2021
The Board of Directors and the Managing Director warrant that the annual accounts
have been prepared in accordance with generally accepted accounting principles
in Sweden and that the consolidated nancial statements have been prepared
in accordance with the international nancial reporting standards referred to in
regulation (EC) No 1606/2002 of the European Parliament and of the Council of
19 July 2002 on the application of international accounting standards. The annual
accounts and consolidated nancial statements give a true and fair view of the
Parent Company’s and Group’s nancial positions and results. The audit report
for the Parent Company and Group gives a true and fair overview of the devel-
Board signatures
opment of the Parent Company’s and Group’s activities, their nancial positions
and results, and describes signicant risks and uncertainties faced by the Parent
Company and the companies included in the Group.
The annual accounts and consolidated nancial statements were approved
for release by the Board of Directors on 12 April 2022. The consolidated statement
of comprehensive income and the consolidated statement of nancial position and
the Parent Company income statement and the Parent Company balance sheet
will be submitted for adoption at the Annual General Meeting on 12 May 2022.
Staffan Jufors Aurore Belfrage Annette Brodin Rampe
Chairman Director Director
Erik Eberhardson Håkan Eriksson Niklas Florén
Director Director Director
Lars Corneliusson
Director and CEO
Our audit report was submitted on 13 April 2022
KPMG AB
Mats Kåvik
Authorised Public Accountant
Stockholm, 12 April 2022
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Auditor’s report
To the general meeting of the shareholders of Ferronordic AB (publ), corp. id 556748-7953
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Report on the annual accounts and consolidated accounts
Opinions
We have audited the annual accounts and consolidated accounts of Ferronordic AB (publ) for the year 2021, except for the corporate governance statement on pages
56-60 and the sustainability report on pages 40-51. The annual accounts and consolidated accounts of the company are included on pages 40–51, 56–60 and 66–121 in
this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act, and present fairly, in all material respects, the nancial position
of the parent company as of 31 December 2021 and its nancial performance and cash ow for the year then ended in accordance with the Annual Accounts Act. The
consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the nancial position of the group as
of 31 December 2021 and their nancial performance and cash ow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as
adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 56–60 and sustainability report on pages
40–51. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the statement of
comprehensive income and statement of nancial position for the group.
Our opinions in this report on the the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to
the parent company’s audit committee in accordance with the Audit Regulation (537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional
ethics for accountants in Sweden and have otherwise fullled our ethical responsibilities in accordance 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 have been 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 sufcient and appropriate to provide a basis for our opinions.
Key Audit Matters
Key audit matters of the audit are those matters that, in our professional judgment, were of most signicance in our audit of the annual accounts and consolidated
accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated
accounts as a whole, but we do not provide a separate opinion on these matters.
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Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Valuation of inventory
See disclosure 14 and accounting principles on page 89 in the annual account and consolidated accounts for detailed information and description
of the matter.
Description of key audit matter
The consolidated statement of nancial position includes inventory amounting to
SEK 1,432m as at 31 December 2021. Inventory represents 36% of total assets.
Inventory mainly represents goods for resale with a mix of new and used
construction machines, spare parts and attachments. Inventories are measured at
the lower of cost and net realisable value. The cost of inventories is based on the
rst-in-rst-out method (FIFO). The net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of completion
and selling expenses.
The valuation of inventory is presented as a key audit matter as the valuation
contain several elements of estimates and judgements from management. This is
an effect of the general uncertainty in the Russian economy and due to variable
demand over time for construction equipment and spare parts within different
geographical areas and segments throughout Russia. There is therefore a risk that
the net realisable value of inventory could be lower than the book value and that a
write-down will have an impact on the reported result.
Response in the audit
We have assessed design and implementation of controls and processes imple-
mented by the group over valuation of inventory.
We have performed the following substantive audit procedures
• Review of Group’s model for inventory provision and assessment of the applica-
tion thereto
• Retrospective review of net realizable value of inventories estimated by the
Group as at previous reporting dates by comparing estimate to actual outcome;
• Reconciliation of write-down to net realisable value to supporting schedules and
testing of data for accuracy and completeness
• Analysis of sales with negative margin after the reporting date
• Inquiries to sales staff about possibility to sell items, which were without move-
ment for signicant period of time and discount relevant to sale these items;
• Attendence at inventory counts
We have also evaluated the completeness of the information in the annual report
and assessed whether they correspond to applied accounting principles.
Valuation of accounts receivables
See disclosure 15 and 22 and accounting principles on pages 87 and 89 in the annual account and consolidated accounts for detailed information
and description of the matter.
Description of key audit matter
Consolidated statement of nancial position includes accounts receivables
amounting to SEK 365m after provision for bad debts by SEK 22m as at 31 De-
cember 2021.
The Group performs regular assessments of outstanding accounts receiva-
bles and provision for bad debts.
The provision for bad debts is based upon an individual assessment of
customers ability to pay invoices and is also based upon the number of days of
outstanding receivables and payment history.
The valuation of accounts receivable is presented as a key audit matter as
the valuation contain several elements of estimates and judgments from man-
agement. This is one of the key areas of estimation uncertainty, because Russian
economic environment in general and construction industry, where signicant
portion of Group’s customers operate, are unstable. There is therefore a risk that
the recoverable amount could be lower than the book value and that a write-down
or provision will have an impact on the reported result.
Response in the audit
We have assessed design and implementation of controls and processes imple-
mented by the group over valuation of accounts receivable.
We have performed the following substantive audit procedures:
• We reviewed the Group’s analysis of the allowance for doubtful debts as at 31 De-
cember 2021 based on expected credit losses in accordance with the requirements
of IFRS 9. We also evaluated the historical result of creditprovisions and credit
losses to assess the reliability ofdoubtful debts at the reporting date
• Review of ageing list of receivables as at 31 December 2021 to verify its accuracy
and completeness;
• We examined signicant balances overdue more than 90 days at reporting date,
but not included in the provision and investigated reasons for non-inclusion.
• We have also considered effect of payments from customers received after year
end on valuation of trade receivables as at 31 December 2021
• Retrospective review of the provision recognised as at 31 December 2020 by com-
paring the amount of provision to actual outcome to obtain information regarding
the effectiveness of Group’s estimation process and identify potential bias
We have also evaluated the completeness of the information in the annual report
and assessed whether they correspond to applied accounting principles.
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Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Other Information than the annual accounts and consolidated accounts
This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-65. The other information comprises also
of the remuneration report which we obtained prior to the date of this auditor’s report.[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 and consolidated accounts, our responsibility is to read the information identied above and consider whether
the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise
obtained in the audit and assess whether the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the prepa-
ration of the annual accounts and consolidated accounts and that they give a fair
presentation in accordance with the Annual Accounts Act and, concerning the con-
solidated 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 is necessary to enable the preparation of annual accounts and
consolidated accounts that are free from material misstatement, whether due to
fraud or error.
In preparing the annual accounts and consolidated accounts The Board of
Directors and the Managing Director are responsible for the assessment of the
company’s and the group’s ability to continue as a going concern. They disclose,
as applicable, matters related to going concern and using the going concern basis
of accounting. The going concern basis of accounting is however not applied if the
Board of Directors and the Managing Director intend to liquidate the company, to
cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of Director’s
responsibilities and tasks in general, among other things oversee the company’s
nancial reporting process.
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Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about whether the annual
accounts and consolidated accounts as a whole are free from material misstate-
ment, whether due to fraud or error, and to issue an auditor’s report that includes
our opinions. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs and generally accepted
auditing standards in Sweden will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to inuence
the economic decisions of users taken on the basis of these annual accounts and
consolidated accounts.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the annual accounts
and consolidated accounts, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is
sufcient and appropriate to provide a basis for our opinions. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
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 that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the company’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonable-
ness of accounting estimates and related disclosures made by the Board of
Directors and the Managing Director.
• Conclude on the appropriateness of the Board of Directors’ and the Managing
Director’s, use of the going concern basis of accounting in preparing the annual
accounts and consolidated accounts. We also draw a conclusion, based on the
audit evidence obtained, as to whether any material uncertainty exists related
to events or conditions that may cast signicant doubt on the company’s and
the group’s ability to continue as a going concern. If we conclude that a material
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 ob-
tained up to the date of our auditor’s report. However, future events or conditions
may cause a company and a group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the annual accounts
and consolidated accounts, including the disclosures, and whether the annual
accounts and consolidated accounts represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufcient and appropriate audit evidence regarding the nancial informa-
tion of the entities or business activities within the group to express an opinion on
the consolidated accounts. We are responsible for the direction, supervision and
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 inform of signicant audit ndings during our
audit, including any signicant deciencies in internal control that we identied.
We must also provide the Board of Directors with a statement that 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, measures that have
been taken to eliminate the threats or related safeguards.
From the matters communicated with the Board of Directors, we determine
those matters that were of most signicance in the audit of the annual accounts
and consolidated accounts, including the most important assessed risks for ma-
terial 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.
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FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
Report on other legal and regulatory requirements
Auditor’s audit of the administration and the proposed appropriations of prot or loss
Opinions
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of
Ferronordic AB (publ) for the year 2021 and the proposed appropriations of the company’s prot or loss.
We recommend to the general meeting of shareholders that the prot be appropriated in accordance with the proposal in the statutory administration report and that
the members of the Board of Directors and the Managing Director be discharged from liability for the nancial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have
otherwise fullled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors is responsible for the proposal for appropriations of the
company’s prot or loss. At the proposal of a dividend, this includes an assess-
ment of whether the dividend is justiable considering the requirements which the
company’s and the group’s type of operations, size and risks place on the size of
the parent company’s and the group’s equity, consolidation requirements, liquidity
and position in general.
The Board of Directors is responsible for the company’s organization and the
administration of the company’s affairs. This includes among other things continuous
assessment of the company’s and the group’s nancial situation and ensuring that
the company’s organization is designed so that the accounting, management of
assets and the company’s nancial affairs otherwise are controlled in a reassuring
manner.
The Managing Director shall manage the ongoing administration according to
the Board of Directors’ guidelines and instructions and among other matters take
measures that are necessary to fulll the company’s accounting in accordance with
law and handle the management of assets in a reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and thereby our opinion
about discharge from liability, is to obtain audit evidence to assess with a reason-
able degree of assurance whether any member of the Board of Directors or the
Managing Director in any material respect:
• has undertaken any action or been guilty of any omission which can give rise to
liability to the company, or
• in any other way has acted in contravention of the Companies Act, the Annual
Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropriations of the company’s
prot or loss, and thereby our opinion about this, is to assess with reasonable de-
gree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with generally accepted auditing standards
in Sweden will always detect actions or omissions that can give rise to liability to
the company, or that the proposed appropriations of the company’s prot or loss
are not in accordance with the Companies Act.
As part of an audit in accordance with generally accepted auditing standards
in Sweden, we exercise professional judgment and maintain professional scepti-
cism throughout the audit. The examination of the administration and the proposed
appropriations of the company’s prot 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 and materiality. This means that we focus the
examination on such actions, areas and relationships that are material for the
operations and where deviations and violations would have particular importance
for the company’s situation. We examine and test decisions undertaken, support
for decisions, actions taken and other circumstances that are relevant to our
opinion concerning discharge from liability. As a basis for our opinion on the Board
of Directors’ proposed appropriations of the company’s prot or loss we examined
whether the proposal is in accordance with the Companies Act.
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Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
The auditor’s examination of the Esef report
Opinion
In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared
the annual accounts and consolidated accounts in a format that enables uniform electronic reporting (the Esef report) pursuant to Chapter 16, Section 4(a) of the Swedish
Securities Market Act (2007:528) for Ferronordic AB (publ) for year 2021.
Our examination and our opinion relate only to the statutory requirements.
In our opinion, the Esef report #[checksum] has been prepared in a format that, in all material respects, enables uniform electronic reporting.
Basis for Opinions
We have performed the examination in accordance with FAR’s recommendation RevR 18 Examination of the Esef report. Our responsibility under this recommendation
is described in more detail in the Auditors’ responsibility section. We are independent of Ferronordic AB (publ) in accordance with professional ethics for accountants in
Sweden and have otherwise fullled our ethical responsibilities in accordance with these requirements.
We believe that the evidence we have obtained is sufcient and appropriate to provide a basis for our opinion.
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the prepa-
ration of the Esef report in accordance with the Chapter 16, Section 4(a) of the
Swedish Securities Market Act (2007:528), and for such internal control that the
Board of Directors and the Managing Director determine is necessary to prepare
the Esef report without material misstatements, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to obtain reasonable assurance whether the Esef report is in
all material respects prepared in a format that meets the requirements of Chapter
16, Section 4(a) of the Swedish Securities Market Act (2007:528), based on the
procedures performed.
RevR 18 requires us to plan and execute procedures to achieve reasonable
assurance that the Esef report is prepared in a format that meets these require-
ments.
Reasonable assurance is a high level of assurance, but it is not a guarantee
that an engagement carried out according to RevR 18 and generally accepted
auditing standards in Sweden will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to inuence the
economic decisions of users taken on the basis of the Esef report.
The audit rm applies ISQC 1 Quality Control for Firms that Perform Audits
and Reviews of Financial Statements, and other Assurance and Related Services
Engagements and accordingly maintains a comprehensive system of quality
control, including documented policies and procedures regarding compliance with
professional ethical requirements, professional standards and legal and regulatory
requirements.
The examination involves obtaining evidence, through various procedures, that the
Esef report has been prepared in a format that enables uniform electronic reporting
of the annual accounts and consolidated accounts. The procedures selected
depend on the auditor’s judgment, including the assessment of the risks of material
misstatement in the report, whether due to fraud or error. In carrying out this risk
assessment, and in order to design procedures that are appropriate in the circum-
stances, the auditor considers those elements of internal control that are relevant
to the preparation of the Esef report by the Board of Directors and the Managing
Director, but not for the purpose of expressing an opinion on the effectiveness of
those internal controls. The examination also includes an evaluation of the appro-
priateness and reasonableness of the assumptions made by the Board of Directors
and the Managing Director.
The procedures mainly include a technical validation of the Esef report, i.e. if
the le containing the Esef report meets the technical specication set out in the
Commission’s Delegated Regulation (EU) 2019/815 and a reconciliation of the
Esef report with the audited annual accounts and consolidated accounts.
Furthermore, the procedures also include an assessment of whether the
Esef report has been marked with iXBRL which enables a fair and complete
machine-readable version of the consolidated statement of nancial performance,
nancial position, changes in equity and cash ow.
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FERRONORDIC ANNUAL REPORT 2021
Introduction
Operations
Market outlook
Sustainability The share
Corporate
governance
The auditor’s examination of the corporate governance statement
The Board of Directors is responsible for that the corporate governance statement on pages 56–60 has been prepared in accordance with the Annual Accounts Act.
Our examination of the corporate governance statement is conducted in accordance with FAR s auditing standard RevR 16 The auditor s examination of the corpo-
rate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with
sufcient basis for our opinions.
A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 of the Annual Accounts
Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in
accordance with the Annual Accounts Act.
The auditor’s opinion regarding the statutory sustainability report
The Board of Directors is responsible for the sustainability report on pages 40-51, and that it is prepared in accordance with the Annual Accounts Act.
Our examination has been conducted in accordance with FAR:s auditing standard RevR 12 The auditor’s opinion regarding the statutory sustainability report. This
means that our examination of the statutory sustainability report is 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 sufcient basis for our opinion.
A statutory sustainability report has been prepared.
KPMG AB, Box 382, 101 27, Stockholm, was appointed auditor of Ferronordic AB (publ) by the general meeting of the shareholders on the 12 May 2021. KPMG AB or
auditors operating at KPMG AB have been the company’s auditor since 2010.
Stockholm 13 April 2022
KPMG AB
Mats Kåvik
Authorised Public Accountant
