Staffan Dahlström om 2020. VD-anförande för HMS Aktieägare.

Hello HMS shareholders! Also this year, we have a very special situation with Corona stopping us from meeting at the Annual General Shareholders' meeting here in Halmstad. And therefore, we'll do this digitally instead. 2020 was a very special year for many of us. For HMS, it meant a digital transition, and it has actually been pretty OK for us and our customers. Our customers can be found in industries which make toilet paper, brew beer, and make chemical products. For many of them, business has, all things considered, been pretty OK. We have been working on our digital transition and we, and our customers think it has worked pretty well with digital meetings. In fact, we see record levels in the number of new leads and the interest in our products and services is still strong.

During 2020, we have spent a lot of time internally on refining our strategy going forward. We have now presented our 2025 plan, where we look at our market — our 'Playing Field.' We categorize this into three main areas. We have 'Control Centric' applications. This is our classic market with real-time communication in industrial applications. Here, we're dealing with real-time and high performance. This is 70% of our turnover. Next, we have information-centric applications, which is all about getting data from machines up to IT-systems. Trends like Industrial Internet of Things drive this and it is about 20% of our turnover today. And finally, we have Infrastructure, where we have several initiatives, for example 5G which is a future technology for us. This shapes our playing field within industrial automation and building automation. This is where we have our market. We have defined our main targets. First, and most important is our environmental target. We want to be CO2 net positive already in 2025. Here, we work a lot with our internal processes to reach zero, but also in our supply chain and towards our customers. There is a lot to do here. We work to get happy and loyal customers and the way to get this is good staff — happy and high performing employees. Here, we measure customer satisfaction and employee satisfaction in what is called NPS - Net Promoter Score. We want to be above 25 from our staff and customers. An ambitious goal. Finally, we also want to focus on growth and profitability. We are engineers so we say 'π billion in turnover 2025' — more than 3.14 billion SEK in 2025. Plus a retained profitability of 20% operating margin. We believe that this growth comes partly from a continued organic growth, but also equally from our M&A agenda.

[GEOGRAPHICAL MARKETS] If we look at 2020, it has been a mixed picture where markets such as Central Europe with Germany has had a tough year with many challenges. While other markets such as North America has been pretty OK. What has been very good for us however, is the amazing development we've seen in China. We have almost doubled our sales in China during this pandemic year. This is mainly driven from initiatives in the environmental area, we have a lot of customers within wind power, and also within batteries for electric vehicles, etc. So a very mixed picture and maybe it has been an advantage for us being an international company on many markets. Some have done well and others worse but summed up, this adds to a decrease of -5%. We are not satisfied of course, but we have still managed to do pretty well during these difficult times.

Other important things that we have focused on internally is product development. 5G is coming, maybe not tomorrow, but in a few years in our industry. Here, we are an early adopter and we have, together with Ericsson, launched a number of products. We see a great interest in the automotive industry in Germany where 5G is the new wireless network of choice for the future. We now see the first installations and this is a very exciting market, but it will take a couple of years before this becomes standard in factories. Right now, we are working with proof-of-concepts. We are also very happy about the new addition to the HMS family — our Dutch friends at Procentec. Procentec works with products for checking how the network is doing in a factory, i.e., Diagnostics. The advantage of this is that it is possible to predict any problems. Because what is costing our customers a lot of money is unplanned downtime. This means that an entire factory stops working because there is an issue with the communication. With Procentec products, it is possible to monitor the networks and find the problems before the network goes down. Here, we see a very exciting market and a very good addition to what we are doing. So we have used a lot of the time during 2020, to develop our business and our products internally to be ready for an exciting future.

[FINANCIAL RESULTS] Summing up, 2020 has been a mix of strong markets like China and other weaker markets. We reach a turnover of 1467 MSEK — somewhat weaker than 2019. At the same time, we have lowered our costs and increased efficiency. Some of these costs are decreased travelling, and exhibitions, but we have also made efficiency savings. This produces a record result for us: 288 MSEK — an operating margin of almost 20% — a fantastic result. Something that we have worked a lot with during the year is to strengthen our gross margin for the long term by increasing efficiency in our production, look over our product offerings, increasing our gross margin by 1% during these pretty harsh market conditions. So all in all, we are pretty happy with the financial results of 2020.

We now put the challenging 2020 behind us and look forward. I must admit that we were a bit concerned mid last year. But quarter two and three were much better and now, things are actually looking pretty good. We see our industrial customers being stable and this is a market that is pretty good to be in. So the year that has passed, 2020, has been eventful, but if we look at the whole picture, we are pretty pleased with how we have managed this challenging market and the situation which we were not prepared for at all.

With that, I would like to extend a big thank you to our co-workers around the world. Going from office work to home office, almost overnight — working in a new digital environment — all this has worked very well. But that is due to the fact that we have amazing colleagues who have embraced these new ways of working. So a big thanks to you all. And also a big thank you to our customers, suppliers and shareholders, which we miss. We don't have these face-to-face meetings right now, but we look forward to meeting you soon and hopefully the next Shareholders' Meeting can be here in Halmstad. So we are excited for future growth and we believe that our business is well suited for the current trends of digitalization and automation. And I think that the Corona pandemic, which we are now hopefully seeing the end of, has actually given our business strength going forward. And we are very positive for the coming years. Thank you! Read more in the HMS Annual Report 2020, hot off the press. Or on www.hms-networks.com.