Commissioned Equity Research • 27 November 2018

Consumer Goods Elanders Sweden

KEY DATA Compounding growth

Stock country Sweden Bloomberg ELANB SS We see an inflection point for niche supply chain solutions provider Reuters ELANb.ST Elanders, where we expect the company to shake off a couple of weak Share price (close) SEK 90.30 quarters. We expect strong earnings growth for Q4 2018 and for 2019, Free Float 50% Market cap. (bn) EUR 0.31/SEK 3.19 driven by price increases in unprofitable customer contracts as well as the Website www.elanders.com phase-out of some acquired low-margin business in Supply Chain Next report date Solutions. These actions should drive solid earnings growth – we expect a CAGR of 22% for 2017-20. PERFORMANCE Acquisitions transformed the company 120 Elanders has a strong market position as one of the leading niche supply 105 chain management players in Europe. Since the acquisitions of Mentor 90 Media (2014) and LGI (2016), the company has transformed its business 75 from printing – a market with negative underlying growth – to the growing 60 supply chain market, largely driven by the trend of customers outsourcing 45 to focus better on core operations. Elanders could also be defined as a

Nov15 Nov16 Nov17 Nov18 consolidator, having closed 13 acquisitions in the past eight years. The majority of its most recent acquisitions are bolt-ons, strengthening its Elanders Source: Thomson Reuters Sweden OMX Stockholm All-Share (Rebased) position as the leading niche supply chain management provider. There are plenty of targets for the company to continue its consolidation journey, specifically in the fragmented European supply chain management market. VALUATION APPROACH The main near-term constraint, in our view, is the company's lack of firepower.

Earnings growth Elanders came close to reporting earnings growth CAGR of 60% for SEK SEK 2011-17, driven by the Supply Chain segment as well as acquisitions. In 2017, 89 112 however, the company reported an EBIT decline of 13%. The negative growth was driven by three customer contracts that had unfavourable EV/EBIT 2019EEV/EBIT terms and thus burdened earnings. In the Q3 2018 report, management resolved the profitability issue within Supply Chain Solutions and the 50 100 150 higher costs began to fade away. Additionally, phasing out low-margin Source: Nordea estimates freight and transportation contracts should support an estimated EBIT CAGR of 22% for 2017-20.

ESTIMATE CHANGES Valuation Year 2018E 2019E 2020E Elanders trades at ~9x 2019E EBIT, corresponding to a discount of ~30% Sales n.a. n.a. n.a. versus logistics peers and ~13% versus printing peers. Our equity value EBIT (adj) n.a. n.a. n.a. range is based on SOTP and implies a high EV/EBIT multiple of 10.7x and a Source: Nordea estimates low of 9.3x for 2019E, generating a range of SEK 89-112 per share.

SUMMARY TABLE - KEY FIGURES Nordea Markets - Analysts Carl Ragnerstam SEKm 2014 2015 2016 2017 2018E 2019E 2020E Analyst Total revenue 3,730 4,237 6,285 9,342 10,726 11,304 11,722 EBITDA (adj) 335 444 557 589 742 833 875 Dan Johansson EBIT (adj) 217 309 385 334 473 558 604 Analyst EBIT (adj) margin 5.8% 7.3% 6.1% 3.6% 4.4% 4.9% 5.2% EPS (adj) 6.53 7.93 10.25 7.61 9.43 10.96 11.83 EPS (adj) growth 49.4% 21.5% 29.2% -25.8% 24.0% 16.2% 7.9% DPS (ord) 1.10 2.20 2.60 3.60 3.80 4.00 4.20 EV/Sales 0.5 0.6 0.9 0.6 0.5 0.5 0.4 EV/EBIT (adj) 8.3 8.2 13.9 16.7 11.8 9.5 8.2 P/E (adj) 5.5 8.0 10.4 10.8 9.6 8.2 7.6 P/BV 0.7 1.2 1.3 1.2 1.2 1.1 1.0 Dividend yield (ord) 3.1% 3.5% 2.4% 4.4% 4.2% 4.4% 4.7% FCF Yield bef acq & disp 13.1% 12.5% 7.0% -9.0% 12.7% 13.6% 14.8% Net debt 895 738 2,223 2,665 2,387 2,089 1,758 Net debt/EBITDA 3.1 1.7 4.3 4.7 3.2 2.5 2.0 ROIC after tax 7.1% 9.0% 7.3% 4.5% 6.1% 7.2% 7.9% Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 27 November 2018 Elanders Contents

Factors to consider when investing in Elanders 3

Risk factors 6

Valuation 8

Company overview 12

Executive management 17

Board of directors 19

Major shareholders 21

Financial targets 22

Supply Chain Solutions 24

From 2.0 to 4.0 31

Print & Packaging Solutions 42

Printing & Packaging Market 46 e-Commerce Solutions 49

P&L discussion 52

Balance sheet discussion 56

M&A 58

Cash flow 60

Sustainability 62

Peer description 64

Detailed annual estimates 67

Detailed quarterly estimates 69

Reported numbers and forecasts 71

Disclaimer and legal disclosures 74

Marketing material commissioned by Elanders 2 27 November 2018 Elanders Factors to consider when investing in Elanders

Elanders has a strong market position as one of the leading niche supply chain management players in Europe. Since the acquisitions of Mentor Media and LGI, the company has turned the business from one with slow underlying growth into one with high exposure to the growing supply chain market, driven in large part by the trend of customers outsourcing supply-chain operations to focus on their core operations. We see several long-term and short-term triggers, including an earnings rebound with an estimated EBIT CAGR 2017-20 of 22% and a continuation of the solid M&A track record.

Organic growth and margin improvements As indicated in our market Elanders has a strong market position as one of the leading niche supply chain study, customers need to management players in Europe. Since the acquisition of Mentor Media and LGI, the increase their supply chain company has turned the business from a market with slow underlying growth into one investments with high exposure to the solidly growing supply chain market, driven by the outsourcing trend. As indicated in our market study, customers need to increase their supply chain investments to keep up with fast-changing customer demands and the digital transformation.

New major customer contracts For the past five quarters, Elanders has reported organic growth of 7-12%, partly driven indicate that Elanders has a by new customer contracts and partly by overall momentum. Last year, Elanders won a competitive and flexible couple of new major customer contracts, including one at a leading European offering automotive manufacturer and another at a famous football club. This indicates that Elanders has a competitive and flexible customer offering. We expect the new customer contracts to boost the organic growth in the current year as well as in 2019. We estimate a 2017-20 sales CAGR of 8.0%, most of which is organic.

ORGANIC GROWTH 2015-20, %

10.0% 8.9% 9.0%

8.0% 7.0% 6.6%

6.0%

5.0% 4.5% 3.7% 4.0%

3.0% 2.4% 2.0% 1.1% 1.0% 0.0% 2015 2016 2017 2018E 2019E 2020E

Source: Company data and Nordea estimates The profitability issue for Elanders came close to reporting an earnings growth CAGR of 60% for 2011-17, driven certain contracts is resolved by the Supply Chain Solutions segment as well as acquisitions. However, in 2017, the and the high costs should fade company met disruption in its earnings trend and posted an EBIT decline of 13%. The negative growth was driven by three customer contracts that had unfavourable terms and thus burdened earnings. In the Q3 2018 report, management stated that it had resolved the profitability issue for these contracts and the higher costs should begin to fade. This, plus phasing out low-margin freight and transportation contracts, should drive the estimated EBIT CAGR of 22% for 2017-20.

Marketing material commissioned by Elanders 3 27 November 2018 Elanders

ELANDERS NET SALES AND ADJ EBIT MARGIN, SEKm ELANDERS EBIT, SEKm 2010-20 700 14,000 8.0% 7.0% 600 12,000 6.0% 500 10,000 5.0% 400 8,000 4.0% 3.0% 300 6,000 2.0% 200 4,000 1.0% 0.0% 100 2,000 -1.0% 0 0 -2.0% -100

Net sales Adj. EBIT margin Source: Company data and Nordea estimates Source: Company data and Nordea estimates

Solid acquisition track record Assuming a leverage ratio of Elanders could be defined as a consolidator, or at least a frequent acquirer, having 3.0x for 2019, we calculate that closed 13 acquisitions in the past eight years. The majority of its most recent the acquisition headroom acquisitions are small to medium-sized companies, helping Elanders strengthen its would total around SEK 400m position as a leading niche supply chain management company. In our view, the most noticeable deals have been its large transformational acquisitions, including Mentor Media in 2014 (with sales of SEK 1,200m) and LGI in 2016 (with sales of SEK 4,100m, which almost doubled the company). We believe that management is determined to continue its acquisition pace with bolt-on acquisitions for its Supply Chain Solutions business area, although we do not exclude the possibility of minor acquisitions in Print & Packaging. There are plenty of targets, specifically in the fragmented European supply chain management market. The main constraint, in our view, is the company's lack of firepower. Elanders' net debt/EBITDA is high given the nature of the business and its exposure to a cyclical end market. For 2019, we expect net debt/EBITDA to drop to a more acceptable 2.5x, although this is still some distance from the company's financial objectives (0-2x). When assuming a ratio of 3.0x for 2019, we calculate that the acquisition headroom would total around SEK 400m.

The potential divestment of e-Commerce Solutions could bring in SEK 100-200m and thereby strengthen the balance sheet. The other possibility for Elanders would be to use the capital market to finance the acquisition, if it comes across the right target.

Long-term active shareholders Active ownership supports the Since 1997, Elanders' largest shareholder is the company's Chairman of the Board, Carl company's long-term strategy Bennet, through his enterprise Carl Bennet AB. He holds 50% of the capital and 66% of and ensures healthy and the votes. We believe that a capital-rich active shareholder constitutes the backbone of sustainable capital allocation Elanders. Through his board engagement, Mr Bennet has steered Elanders into an attractive niche, the global supply chain space. In addition, we believe that a strong active shareholder ensures Elanders' ability to use the capital market in order to finance acquisitions if necessary, as it did in 2010, 2012, 2014 and 2016. We also believe that Mr Bennet's active ownership supports the company's long-term strategy and ensures healthy and sustainable capital allocation.

Short-term positive fundamentals The trend of high earnings Elanders has several short-term positive fundamental trends including earnings growth should continue in the growth. In the Q3 2018 report, Elanders reported EBIT growth exceeding 100% y/y fourth quarter after four quarters of negative or flattish growth. We estimate that the trend of very high earnings growth should continue in the fourth quarter as well as into H1 2019. For Q4 2018 we estimate an adjusted EBIT of SEK 167m, corresponding to y/y growth of 94% and a margin expansion of 247 bp to 5.8% (3.3%). We also estimate continued solid organic growth in the coming quarters despite disturbances in the automotive business from the WLTP implementations.

Marketing material commissioned by Elanders 4 27 November 2018 Elanders

ELANDERS: EBIT BRIDGE Q4 2018, SEKm ELANDERS: SEGMENT ORGANIC GROWTH Q1-Q4 2018, %

20%

15%

10%

5%

0%

-5% Q1 18 Q2 18 Q3 18 Q4 18E Supply Chain Solutions Print & Packaging Solutions e-Commerce Solutions

Source: Company data and Nordea estimates Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 5 27 November 2018 Elanders Risk factors

Below, we provide an overview of the various risks that we believe Elanders may encounter in its operations that could affect its financial performance. It does not cover all of the risks that the company may face, but rather those we find most relevant. The risks are divided into two categories: macroeconomic risks and company-specific risks.

Macroeconomic risks Nominal interest rates The current low interest rate Elanders is exposed to fluctuations in interest rates as a portion of its debt bears environment may shift in the interest at a floating rate. Interest rates are extremely low at present, but there is room future to drive up Elanders' for rates to rise in the future and increase the company's interest expenses. In turn, this interest expenses would reduce the cash flows available for capital expenditures and hinder Elanders' ability to make debt payments. According to Elanders' 2017 annual report, a change in market interest rates by one percentage unit affects the company's profit after tax by SEK 19m.

Currency risk The company is exposed to currency risk through both transaction exposure and translation exposure. As the company reports in SEK, its biggest currency exposure is from foreign subsidiaries and primarily in EUR, USD and Chinese yuan. Below, we present a table showing Elanders' own estimates of how changes in EUR and USD would have affected net sales and operating results in 2017.

POSITIVE/NEGATIVE 10% CHANGE IN EXCHANGE RATES AS OF 2017 Estimated effect on net Estimated effect on operating Elanders' largest currency risk MSEK sales results is against the EUR followed by EUR +/- 577 +/- 11 the USD USD +/- 281 +/- 16

Source: Company data and Nordea Sluggish economy Elanders is exposed to the Elanders is mostly affected by a potential downturn in the economy through its development of the global automotive and consumer electronics markets. The other end markets, namely economy mostly through its cosmetics, pharmaceuticals and the public sector, are less affected by the prevailing exposure to the automotive economic situation. As such, a risk for Elanders involves the possibility that the and electronics sectors economy sours, leading to worsening conditions within the automotive and consumer electronics sectors and thus decreased demand for Elanders' services.

Financing risk The company's ability to To properly run its operations, Elanders needs financing from credit institutions. The obtain financing depends company's ability to obtain financing depends primarily on two factors - the general primarily on two factors - the availability of capital and the company's credit rating. The company currently has credit general availability of capital agreements with two Swedish banks expiring in July 2019. Hence, the risk of and the company's credit refinancing exists and the company needs to find new agreements with favourable rating. terms.

Credit, market and counterparty risk Elanders is exposed to credit, Credit risk is the risk that one of Elanders' obligors is unable to meet its financial market and counterparty risk obligations, which might result in a loss of revenues and financial distress. Currently, Elanders' account receivables are concentrated in a few larger clients, increasing the risk. Market risk relates to the company investing its excess liquidity in financial assets, with the risk of the asset value decreasing due to unfavourable market movements. Counterparty risk arises when Elanders trades derivative instruments, particularly foreign exchange derivatives, and takes on the risk of price fluctuation in the derivative's underlying asset, which might result in Elanders' counterparties not being able to meet their payment obligations. Elanders reports its assets relating to market and counterparty risk under the line item "Other current assets". At the end of Q2 2018, they amounted to approximately SEK 585m.

Marketing material commissioned by Elanders 6 27 November 2018 Elanders

Company-specific risks Price pressure in the print and packaging industry Elanders is exposed to the risk The printing and packaging industry is currently in a long transitional period as a result of continued price and demand of the digital revolution. Printing services are used less today than in the past and the decline in the print and price pressure in the industry is striking, leading to a margin contraction. The most packaging industry alarming risk for Elanders is a continuation of the price pressure and the move from printing services.

Competition Along with the increase of the The industries in which the company operates, across all three areas of business, are size of the third-party logistics characterised by fierce competition. Although the market for third-party logistics market is the rise of the providers has been growing over the past few years, so has the number of companies number of competitors competing in the market. For instance, in the German market, which is also the biggest market for Elanders, companies such as Deutsche Post have started to offer supply chain solutions. There is a risk that the competition in the supply chain solutions market will intensify, and it is important that Elanders continues to have a solid customer offering to stay competitive.

Stretched balance sheet Elanders' high leverage might Elanders has a significant amount of outstanding debt with substantial debt service impact its ability to meet its requirements. Its significant level of leverage could have a number of consequences on payment obligations its business and operations, among them:

 Making it more difficult for Elanders to tisfysa its obligations with respect to debt and liabilities  Requiring the company to put aside a material portion of its cash flow from operations to pay its debt, thereby limiting its ability to use its cash flow to fund growth  Reducing the company's resilience to a downturn in its businesses or in the general economy  Negatively impacting the credit terms with Elanders' creditors  Limiting the company's ability to make strategic acquisitions or to borrow additional funds.

These or other consequences could materially hurt Elanders' ability to satisfy its debt obligations. The company may not be able to generate an adequate amount of cash flow from operations or obtain enough capital to pay its debt or fund its planned capital expenditures. The company's net debt/EBITDA was 4x for 2016 and 4.5x for 2017.

Acquisitions and procurement ability Elanders growth strategy relies Apart from organic growth, Elanders relies to a large extent on strategic acquisitions as on its ability to find suitable part of its growth strategy. The company's ability to continue to make strategic acquisition targets and to raise acquisitions will depend on its ability to identify suitable targets and to secure the adequate funds to finance its necessary financing. Elanders may not be able to raise the required funds on acquisitions satisfactory terms, if at all. Additionally, while the company has not encountered troubles in the past with identifying suitable acquisition opportunities, it may in the future be unable to identify suitable targets, which could hinder its ability to grow its business.

Additionally, acquisitions pose significant risks, including the overvaluation of a target or the assumption of unexpected liabilities, and expanding into markets where the company has limited or no experience and where competitive and pricing pressures may be substantial poses additional risks.

The integration of an acquired business and its systems, operations and personnel, especially in terms of businesses operating in adjacent markets, could be more difficult and time-consuming than anticipated, leading to increased operating costs, the loss of key employees and customers, and a failure to realise anticipated operating savings.

Customer concentration Elanders has a relatively high According to the company, Elanders' ten largest customers accounted for customer concentration approximately 56% of net sales in 2017, with the largest customer being 15%. In our view, this shows that Elanders has a relatively high customer concentration.

Marketing material commissioned by Elanders 7 27 November 2018 Elanders Valuation

Based on an SOTP relative valuation approach, we derive a fair value of SEK 89-112 for Elanders' share price. We base our valuation on two different peer groups: printing and logistics. Moreover, we derive our SOTP fair value range based on an EV/EBIT multiple between 9.3-10.7x, where 85% of the value comes from the Supply Chain Solutions segment, since it now accounts for approximately 75% of Elanders' revenues and we believe it will remain important to Elanders going forward.

HISTORICAL EV/EBIT MULTIPLE, 2006-20E

16.0 x 40%

14.0 x 30%

Elanders' historical EV/EBIT 12.0 x 20% has been stable around 10x, 10.0 x 10% whereas its EV/EBIT relative 8.0 x 0% Nordic capital goods has been decreasing. 6.0 x -10%

4.0 x -20%

2.0 x -30%

0.0 x -40% Jul-10 Jul-15 Oct-11 Oct-06 Jan-08 Jun-08 Apr-09 Jan-13 Jun-13 Apr-14 Oct-16 Jan-18 Jun-18 Mar-12 Mar-07 Feb-10 Feb-15 Mar-17 Aug-07 Nov-08 Sep-09 Dec-10 Aug-12 Nov-13 Sep-14 Dec-15 Aug-17 May-11 May-16 Elanders 12m rolling EV/EBIT Elanders EV/EBIT relative to Nordic cap goods

Source: Thomson Reuters and Nordea estimates

ELANDERS 12M ROLLING EV/EBIT VS HISTORICAL AVERAGE

16.0 x

14.0 x

12.0 x

10.0 x

8.0 x

6.0 x

4.0 x

2.0 x

0.0 x Jul-08 Jul-13 Apr-07 Oct-09 Apr-12 Oct-14 Apr-17 Jan-06 Jun-06 Jan-11 Jun-11 Jan-16 Jun-16 Feb-08 Mar-10 Feb-13 Mar-15 Feb-18 Nov-11 Nov-06 Sep-07 Dec-08 Aug-10 Sep-12 Dec-13 Aug-15 Nov-16 Sep-17 May-09 May-14 Historical average Elanders 12m rolling EV/EBIT

Source: Thomson Reuters and Nordea estimates The Elanders share trades at a As can be seen in the chart above, Elanders is traded at 11.8x 2018E adjusted EBIT and five-year average EV/EBIT of 9.4x 2019E, a slight discount versus its five-year historical average. When examining the 12.5x multiple for the current year, one should take into account that profitability is negatively impacted by the automotive customer contract won in mid-2017. When applying a shorter time range of around five years (2013) instead of 12 years (2006) – thereby consider Elanders' change in business model from traditional printing to an integrated supply chain solutions provider – the company trades at an average EV/ EBIT multiple of 11.8x, ie a 10% discount versus its five-year average.

Marketing material commissioned by Elanders 8 27 November 2018 Elanders

Peer groups We have based our valuation In accordance with our SOTP valuation approach, we have chosen two peer groups approach on three different with relevance to Elanders' diversified segments. The first peer group, printing, is peer groups; printing, digital divided into two subcategories, packaging and traditional printing; both are relevant to supply chain, and logistics. Elanders, which has a 30% exposure toward the former and a 70% exposure toward the latter. By assessing the sub segments within the printing peer group, we find a substantial margin and valuation spread between them, and we favour the packaging- related companies like Huhtamaki, Amcor and Sealed Air. The peer group trades at a median EBIT multiple of 10.7x.

We have chosen two different For Elanders' Supply Chain segment, which represents almost 75% of group sales, we groups for supply chain peers had trouble finding key peers with a global integrated supply-chain operation. Instead, to facilitate the valuation. we have chosen to use a combined peer group to acknowledge Elanders' logistics business as well as its value-added and integrated supply-chain services. The first part of our supply-chain peer group consists of companies that handle traditional logistics, including freight and warehousing. Most are large former postal services companies that generally have moved up in the value chain toward more complex and value- added services; consequently, they are indirect competitors to Elanders. The second part of our peer group is within the field of niche supply-chain management services and includes companies like Wincanton and Xpediator. The combined peer group trades at 15.7x EBIT 2018 and 13.0x 2019.

PEER VALUATION TABLE PRINTING PEERS Mcap Mcap Price Sales growth (%) EBIT margin (%) P/E (x) EV/EBIT (x) Printing Peers LC EURm Local 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E Huhtamaki 2,793 2,793 25.77 3.4% 7.3% 5.0% 7.6% 8.5% 9.0% 15.4 13.2 11.8 14.8 12.0 10.6 Amcor 15,623 9966 13.49 -1% 1% 4% 12% 12% 12% 15.7 15.2 14.0 14.0 13.5 12.4 Sealed Air 5,878 5,184 37 7% 3% 4% 15% 15% 16% 15.4 13.9 12.5 12.3 12.2 11.3 Mondi 8,499 9,602 1,740 5% 4% 2% 17% 17% 17% 11.0 10.5 10.0 9.8 9.2 8.8 Graphic Packaging 3,653 3,221 12 37% 5% 4% 9% 9% 10% 15.2 13.2 11.5 12.9 10.6 9.2 Orell Fuessli 182 161 93 -4% -14% -7% 5% 6% 5% n.a 15.8 20.6 9.8 8.5 11.1 Poligrafica S Faustino 7 7 6 n/a 5% 5% 2% 3% 3% 6.3 4.9 4.1 10.6 7.8 7.3 Multi-color corp 922 813 45 39% 39% 2% 11% 11% 11% 12.1 10.5 9.9 21.1 14.0 13.2 Transcontinental 1,848 1,231 21 24% 23% -1% 13% 12% 13% 8.3 7.8 7.3 12.1 10.7 9.2 RR Donnelley 425 375 6 -1% -2% 3% 4% 4% 4% 7.5 6.4 5.0 10.2 9.0 7.6 Ennis 508 448 19 5% 6% 1% 13% 12% 12% 15.6 13.7 14.4 0.0 12.1 13.1 LSC Communications 327 289 10 8% -2% n/a 2% 4% n/a 7.1 5.6 8.5 17.5 7.2 0.0

Elanders 2,924 287 90 14.8% 5.4% 3.7% 4.4% 4.9% 5.2% 9.6 8.2 7.6 11.7 9.4 8.1

Median 1,022 20 5% 4% 2.6% 9.8% 10.2% 11.1% 12.1 11.8 10.8 12.2 10.7 9.9 Average 2,841 169 11% 6% 1.9% 9.2% 9.6% 10.1% 11.8 10.9 10.8 12.1 10.6 9.5

Discount (-)/Premium(+) Median 9.9% 1.1% 1.1% -5.4% -5.2% -5.9% -21% -30% -29% -4% -12% -18% Discount (-)/Premium(+) Average 3.7% -0.8% 1.8% -4.8% -4.6% -5.0% -19% -24% -29% -3% -11% -14%

Source: Thomson Reuters and Nordea estimates The print and packaging peer group trades at EV/EBIT 12.2x current year and 10.7x 2019 with a median EBIT margin of 9.8 and 10.2%. Elanders trades at 11.7x EBIT current year and 9.4x 2019, corresponding to a discount of 4% and 12%. One should consider that Elanders' Print and Packaging margin is significantly below the peer group median.

PEER VALUATION TABLE LOGISTICS SUPPLIERS Mcap Mcap Price Sales growth (%) EBIT margin (%) P/E (x) EV/EBIT (x) Logistics suppliers LC EURm Local 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E Deutsche Post 34,412 34,412 28 2% 4% 4% 5% 7% 7% 16.0 12.3 10.9 15.6 12.0 10.4 DSV 97,231 13,028 514 5% 5% 4% 7% 7% 8% 23.2 20.9 18.9 18.3 16.2 14.7 XPO Logistics 9,173 8,089 72 16% 8% 7% 5% 5% 6% 21.7 16.8 13.5 20.4 13.9 10.9 Bpost 2,028 2,028 10 30% 0% 2% 11% 10% 11% 7.4 7.5 6.9 6.5 6.9 7.0 Kuehne und Nagel 16,699 14,777 139 3% 6% 5% 5% 5% 5% 21.1 19.5 18.2 16.3 15.0 13.9 United Parcel Service 93,389 82,353 109 11% 6% 5% 10% 11% 11% 15.0 13.9 12.8 15.7 13.9 12.9 Wincanton 303 342 242 4% 1% 3% 4% 5% 5% 7.6 7.5 7.2 6.1 5.6 5.4 Xpediator 61 69 46 50% 17% 6% 4% 5% 5% 10.2 8.8 7.9 11.5 9.3 8.6

Elanders 2,924 287 90 15% 5.4% 3.7% 4.4% 4.9% 5.2% 9.6 8.2 7.6 11.7 9.4 8.1

Median 12,936 10,559 90 7.9% 5.3% 4.5% 4.9% 6.0% 6.6% 15.5 13.1 11.8 15.7 13.0 10.7 Average 31,662 19,387 145 14.9% 5.8% 4.6% 6.4% 6.8% 7.1% 15.3 13.4 12.0 13.8 11.6 10.5

Discount (-)/Premium(+) Median 6.9% 0.1% -0.8% -0.5% -1.0% -1.4% -38% -37% -35% -25% -27% -24% Discount (-)/Premium(+) Average -0.1% -0.5% -0.9% -2.0% -1.9% -1.9% -37% -38% -37% -15% -19% -22%

Source: Thomson Reuters and Nordea estimates

Marketing material commissioned by Elanders 9 27 November 2018 Elanders

The supply-chain management peer group trades at EV/EBIT 15.7x current year and 13.0x 2019 with a median EBIT margin of 4.9 and 6.0%. Elanders trades at 11.7x EBIT current year and 9.4x 2019, corresponding to a discount of 25% and 27%. It's notable that the peer group, to a certain extent, consists of market leading freight companies with monopoly positions within their home markets; this is reflected in the market cap. Key peers include Wincanton and Xpediator, with market caps similar to Elanders.

VALUATION APPROACH, SOTP SOTP Sales, SEKm EBIT, SEKm EBIT-margin, (%) EV/EBIT, 19'E (x) EV/S EV, SEKm Per share, SEK Segment 18'E 19'E 18'E 19'E 18'E 19'E Low High 19'E Low High Low High Supply Chain Solutions 8,078 8,604 365 461 4.5% 5.4% 9.5x 11.0x 0.51 4,382 5,074 124 144 Print & Packaging Solutions 2,529 2,588 122 123 4.8% 4.7% 8.0x 9.0x 0.38 983 1,106 28 31 e-Commerce Solutions 215 217 8 9 3.9% 4.3% 15.0x 17.0x 0.64 140 158 4.0 4.5 Eliminations/group functions -97 -105 -21 -29 n.a n.a 9.5x 10.5x n.a -273 -301 -7.7 -8.5 Group 10,726 11,304 474 565 4.4% 5.0% 9.3x 10.7x 0.46 5,233 6,037 148 171

Net debt 2,089 59

Equity value 2019E 3,144 3,949 89 112 Upside to value range 0% 25%

Number of shares 35.4

EV/EBIT, 19'E (x) EV/S EBIT-margin, (%) Implied EV/EBIT discount/premium Peer groups 19'E 19'E 18'E 19'E Low High Comments Logistics supplier peers 13 0.70 4.9% 6.0% -27% -15% Logistics focused supply chain management companies Print & Packaging peer group 10.7 1.15 4.4% 4.9% -25% -15% Consiting of both traditional printing and packaging peers e-Commerce peer group n.a 0.8 n.a n.a n.a n.a M&A transaction approach

Key peers Huhtamaki 12.0 1.02 7.6% 8.5% -33% -25% Fair discount given Huhtamakis higher exposure towards packaging Multi-color corp 14.0 1.55 11.1% 11.0% -43% -36% Exposure towards more stable label market. High leverage RR Donnelley 9.0 0.37 3.7% 4.1% -11% 0% Key peer to Elanders printing business, less exposure to packaging Manhattan Associates 27.3 5.84 26.5% 21.2% -65% -60% Supply chain solution software with high portion of recurring revenues Kinaxis 37.8 8.18 21.6% 23.1% -75% -71% Cloud-based subscription software for supply chain operations Kuehne und Nagel 15.0 1.44 4.5% 4.7% -36% -26% Logistics service company, low growth and somewhat weak earnings Deutsche Post 12.0 0.75 5.2% 6.6% -21% -8% German-based postal services, entering more complex solutions Wincanton 5.6 0.43 4.4% 4.7% 69% 96% Basic transport business with low portion of value added services Xpediator 9.3 0.44 4.4% 4.6% 2% 18% Freight management services less integrated solutions

Source: Thomson Reuters and Nordea estimates We apply a SOTP valuation Due to Elanders' diversified segmentation, we find a SOTP valuation approach approach, which is suitable applicable. For the Supply Chain Solutions segment, we have applied an EV/EBIT considering Elanders' multiple range of 9.3-10.7x 2019 which we believe is fair and corresponds to a discount diversified segments. toward supply chain peers of 15-27%. We believe that the segment should be traded with a discount to the median peer group multiple due to size and market positioning, where the traditional logistics players have a monopoly positioning their home markets to some extent. Further, we believe that the customer concentration segment could make the company vulnerable as the cyclical end market tends to fluctuate. The implied equity value for the segment amounts to SEK 124-144 per share.

We find a EV/EBIT multiple of For the Printing and Packaging segment we have applied a EV/EBIT multiple of 8-9x 8-9x, corresponding to a corresponding to a discount against the peer group of 15-25%, and 0-11% against the discount of 15-25%, for the key peer, RR Donnelley. The segment should be traded with a discount toward the peer Printing and Packaging group due to its high portion of traditional printing (offset) while its packaging segment justifiable due to business only accounts for approximately 30% of segment sales. Nevertheless, Elanders' high exposure Elanders has in recent years, increased its exposure toward the packaging industry, towards traditional printing. predominantly via acquisitions, and we believe that management will continue to increase the exposure going forward. The applied multiples correspond to an equity value of SEK 28-31 per share.

Marketing material commissioned by Elanders 10 27 November 2018 Elanders

We believe Elanders will divest The e-Commerce Solutions segment represents almost 5% of group revenues and has, its e-commerce business in the since 2017, been undergoing a strategic review. We believe that management is future due to its small portion determined to divest the segment due to its small size and the fact that it has limited of group sales as well as synergies with the company's overall focus areas. When examining the photobook limited synergy potential with market, we notice that there is ongoing consolidation, especially in Europe, driven by other business segments. private equity, among others. E-Commerce Solutions experienced some headwinds during 2017 which negatively affected Elanders' ability to divest the segment, at least to its expected valuation. One should consider e-Commerce's low working capital needs which implies solid cash flows. If not divested, the segment could be integrated in the Print and Packaging segment. Due to the lack of suitable peers, we consider a transaction-based multiple approach appropriate. When examining the last 20 transactions we can see that the average EV/S multiple paid was 0.8x (Lifetouch at 1.0x and Druck.at Druck- und Handels at 0.7x) which is somewhat similar to Elanders' segment. The segment consists of strong brands, but the earnings volatility should negatively affect the valuation. We take a defensive stand by applying an EV/S multiple of 0.65-0.74x to get an equity value of SEK 140-158m.

VALUATION BRIDGE LOW RANGE, SEK VALUATION BRIDGE HIGH RANGE, SEK

Source: Nordea estimates Source: Nordea estimates

Marketing material commissioned by Elanders 11 27 November 2018 Elanders Company overview

Founded in 1908, Elanders is a global supplier of integrated solutions in its three core business areas: supply chain management, print & packaging and e-commerce. The company's initial focus area was print & packaging, but it has pivoted towards the other segments following the downward trend in the printing industry. In 2017, Elanders had a turnover of approximately SEK 9.3bn, generated an EBITA margin of 4.0% and employed 6,997 staff.

Company history Elanders was founded in 1908 The company was founded in 1908 by Otto Elander, Nils Hellner and Emil Ekström and as a typeset and printing received an extensive contract with the Royal Board of Telecommunications to typeset company and print the Swedish National Directory. Through the acquisition of Egnell & Co in 1945, Elanders obtained vital assets for speeding up its printing plant. Elanders has been a pioneer in the printing industry. In 1971 it was among the first companies to use computerised photo typesetting and in 1982 the company established Elanders Electronic Printing, allowing customers to put their information on a magnetic band or send it via the telephone lines.

Elanders was listed on the In 1989, Elanders was listed on the Stockholm Stock Exchange and during that year it Stockholm Stock Exchange in also became one of the largest directory printers in Europe. The digital revolution 1989 started to impact the company's operations in 1994 when the demand for multimedia started to evolve. Under its new owner, Carl Bennet, Elanders had an acquisition- intense period and acquired eleven companies in Sweden between 1997 and 2000.

Elanders entered into the As the digital revolution intensified in the 2000s and the demand for printing services supply chain management started to decline, Elanders changed direction. In 2012-13, the company made strategic industry in 2014 through its acquisitions in e-commerce and Web2Business, adding strong brands to its portfolio acquisition of Mentor Media and broadening its customer base. In 2014, it entered the supply chain management Ltd industry by acquiring the Singaporean company Mentor Media Ltd. This added another 1,700 employees to Elanders' existing 1,900 staff. Elanders then made its biggest acquisition, of the German supply chain management company Logistics Group International GmbH (LGI). The company is one of the leading players in Industrial Contract Logistics in Germany and has operations in Europe and the US.

Today, Elanders has become a global service company with businesses on four continents focused on the core segments: supply chain management, print & packaging and e-commerce.

ELANDERS TIMELINE 1908-2017

1908 1971 1982 1989 1997

Elanders was founded by One of the first The company established Elanders is listed on the Carl Bennet takes over as Oo Elander, Nils Hellner companies in the Elanders Electronic Stockholm Stock the new majority and Emil Ekström industry to use Prinng Exchange on 9 January shareholder of the computerised photo company typeseng

2005 2007 2008 2010 2012

Elanders follows its Elanders acquired Elanders expands into The German‐based Acquires Deutsche customer Sony Ericsson Sommer Corporate the US and acquired Seiz Printpack is acquired Online Medien and to China Media Prinng. Fotokasten

2013 2014 2015 2016 2017

Elanders acquires Acquires the Singapore‐ Acquision of the Acquires the supply chain Acquires the UK‐based McNaughtan’s Printers based company Mentor German packaging management company company Spreckley Limited in Scotland Media company Schmid Druck LGI Logiscs Group Limited Acquires Hong ‐Kong based Asiapack Limited

Source: Company data

Marketing material commissioned by Elanders 12 27 November 2018 Elanders

Elanders has grown Elanders has had substantial sales growth over the last few years thanks to the significantly over the past aggressive M&A strategy. In terms of earnings progression, both the company's EBITDA years, mainly through margin and EBIT margin have decreased during the period 2013-17 and stood at 6.0% acquisitions and 3.3% respectively in 2017. The aggressive M&A strategy has increased Elanders' leverage, with the net debt/EBITDA ratio at 4.5x as of 2017.

NET SALES, SEKm ADJ EBIT AND ADJ EBIT MARGIN, SEKm AND %

10,000 450 8% 9,000 400 7% 8,000 350 6% 7,000 300 5% 6,000 250 4% 5,000 200 3% 4,000 150 2% 3,000 100 1% 2,000 50 0% 1,000 0 -1% 0 -50 -2% 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 Adj. EBIT Adj. EBIT margin

Source: Company data and Nordea Source: Company data and Nordea

ADJ EBIT AND ADJ EBIT MARGIN R-12, SEKm and % LEVERAGE, NET DEBT/EBITDA, X 500 8% 10x 450 7% 9x 400 6% 8x 350 7x 5% 300 6x 250 4% 5x 200 3% 4x 150 2% 3x 100 50 1% 2x 0 0% 1x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0x 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 2010 2011 2012 2013 2014 2015 2016 2017 Adj. EBIT Adj. EBIT margin

Source: Company data and Nordea Source: Company data and Nordea

Business description Elanders' offering has Elanders' offering has expanded greatly over the years and now comprises a wide expanded greatly in recent range of services and solutions aimed at helping customers focus on their core years. Today it offers its business. The company offers its services both as standalone products or as complete services as both standalone end-to-end solutions and include everything from customer's components, products and end-to-end warehousing and printing to production and configuration. Elanders also offers solutions lifecycle services.

The company has approximately 7,000 employees in 20 countries across the world with its HQ located in Gothenburg, Sweden. It is well-diversified geographically, which is evident when looking at its sales distribution in the chart below.

Marketing material commissioned by Elanders 13 27 November 2018 Elanders

GEOGRAPHICAL SALES SPLIT IN 2017 Other countries Netherlands 9% Poland 1% Hungary2% Germany is by far Elanders' 3% biggest market United Kingdom 4% Germany Sweden 41% 5%

Switzerland 6%

USA 7%

China 8% Singapore 14%

Source: Company data and Nordea

The company's biggest market is by far Germany due to its recent acquisition of LGI within supply chain management solutions. Other key markets for Elanders include Singapore, China and USA as well as Sweden as it is the company's home market.

Business segments Elanders' business is divided into three core areas: supply chain solutions, print & packaging solutions and e-commerce solutions. Supply chain is by far the company's biggest area of business, accounting for approximately 75% of Elanders' net sales in 2017. It generated an EBIT margin of around 4%. Printing & packaging represented 24% of the total revenue in 2017 and reached an EBIT margin of roughly 5%. The smallest segment, e-commerce, only accounted for 2% of the sales in 2017 and showed a slightly negative EBIT margin.

NET SALES PER BUSINESS SEGMENT IN 2017

Supply chain solutions is Elanders' biggest business segment, amounting to roughly 75% of the group's total sales

Supply Chain Solutions Print & Packaging Solutions e-Commerce Solutions

Source: Company data and Nordea

Marketing material commissioned by Elanders 14 27 November 2018 Elanders

Supply chain management Printing & packaging e-Commerce Elanders offers its customers Through this segment, Elanders offer Through a number of acquisitions, comprehensive solutions for the graphic services such as printing Elanders has become one of the entire supply chain. The offering manuals, labels and packaging for its leading companies in Germany in includes services such as taking customers' components and online sales of personalised photo orders, procurement, purchasing products. As Printing & packaging products. The company offers its components, warehousing, was the first line of business for the photo products under the fotokasten, manufacturing, configuration, quality company when it was founded, myphotobook and dlolm brands. The control and delivery. Additionally, the Elanders has extensive experience in first two brands are predominantly company provides services such as the field and has become one of the focused on consumers with product handling of payment flows, leading players. portfolios that include photo books, synchronization of purchasing and calendars, gifts and home warehousing as well as after-sales Elanders not only offers accessories. services. comprehensive solutions including printing and packaging, but also Through dlolm, Elanders offers white The company also helps its other related services such as kitting label solutions allowing other customers with industrial services and packing for just-in-time or companies to sell Elanders' photo such as installations, updating, test sequence deliveries. products under their own brands. unloading and reloading products as Elanders takes care of the entire well as packaging services. order flow, the production process and the delivery, while the customer According to management, is responsible for marketing and customers choose to outsource these sales of the products. services to turn overhead costs into variable costs and to avoid tying up capital in plants, staff and various kinds of service obligations. Many of Elanders' facilities in Europe, Asia and the US serve several customers from the same plant, leading to greater capacity utilization and efficiency.

Customers and end-markets Elanders has a broad customer base. Its major customers are active in the automotive, electronics, fashion & lifestyle, industrial and health care & life science sectors. The biggest customer segment for Elanders is Electronics (39%), followed by Automotive (28%) and Industrial (17%).

NET SALES PER MAJOR CUSTOMER SEGMENT IN 2017

Industrial 17% Elanders' biggest customer Automotive segment is Electronics followed 28% by Automotive, accounting for Health Care & Life Science 39% and 28% of net sales in 5% 2017, respectively

Fashion & Lifestyle 11%

Electronics 39%

Source: Company data and Nordea

Within the Automotive industry, Elanders has a strong position because the majority of its customers are premium brands. The company primarily provides help with production logistics. The Electronics industry is characterized by sensitive technology requiring special handling. Elanders helps its customers with services such as quality control, assembly and after-market sales. Customers within Fashion & Lifestyle usually seek a partner that is responsible for everything from quality control in production to managing the entire supply chain. Health Care & Life Science is a small segment for

Marketing material commissioned by Elanders 15 27 November 2018 Elanders

Elanders. Nevertheless, in this sector, Elanders offers its customers services such as delivery of consumables and the service and repair of medical equipment. Within the Industrial segment, Elanders' pivotal focus involves handling everything from small products to large, complex constructions and solutions.

Employees The company's employee base is today almost 7,000 people. Half are in Germany and the other half are scattered worldwide.

FTE DEVELOPMENT GEOGRAPHICAL EMPLOYEE SPLIT IN 2017

8,000 Others 6,997 9% 7,000 6,444 Sweden 4% USA 6,000 4% 5,000 Hungary 4% 4,000 3,320 3,177 Poland 4% Germany 3,000 Czech 50% 1,898 Republic 2,000 5% 1,000 Singapore 8% 0 2013 2014 2015 2016 2017 China 12%

Source: Company data and Nordea Source: Company data and Nordea

Elanders' FTEs doubled in 2016 The number of employees has increased significantly over the years and more than after the LGI acquisition doubled in 2016 due to the acquisition of the German-based company LGI. This also explains the large share of employees working in Germany. The second-largest country in terms of share of employees is China, followed by Singapore.

Company outlook and strategy Elanders will focus on its global The company will continue to invest in its global supply chain solution offering, supply chain offering in the focusing on establishing a global presence with global customers as this is where the future company sees the greatest opportunities. As an example, Elanders started a logistics unit in Borås in Sweden during 2017. This strategy fits the global trend of companies centralising their purchasing processes and requesting local deliveries. According to the company's CEO Magnus Nilsson, Elanders' focus going forward will be on selling a larger portion of services where they take responsibility for their customers' value chain. Moreover, the ongoing shutdown of Elanders' last offset operation in Sweden is completed, and around 70 employees have been given notice. This should lead to a reduction in investment needs for Print & packaging solutions.

Marketing material commissioned by Elanders 16 27 November 2018 Elanders Executive management

Since 2009, Magnus Nilsson has been Elanders' CEO. He has been at Elanders since 1999 in various capacities, including production director and MD in different countries such as Hungary, Sweden and China. He has extensive experience of the graphics industry, where he has been active since 1987. Elanders' Chairman of the Board is Carl Bennet, who is also the largest shareholder in the company. He was elected as Chairman in 1997 and has an impressive career; besides being the Chairman of Elanders, Mr Bennet also holds positions such as Chairman of Getinge AB and Lifco AB, CEO of Carl Bennet AB as well as member of the board of Arjo AB, Holmen AB and L E Lundbergföretagen AB.

Magnus Nilsson, President & CEO Mr Nilsson has been CEO of Elanders since June 2009. He joined Elanders in 1999 and was appointed head of production in Hungary in 2002. Mr Nilsson continued as MD for Elanders Berlings Skogs between 2003 and 2005 and MD for Elanders in China until he was appointed CEO in 2009. Prior to joining Elanders, Mr Nilsson worked at other companies in the graphics industry since 1987. He was educated in Graphic Technology, Design, Business Administration and Marketing.

Mr Nilsson owns 73,577 B-shares in Elanders.

Source: Company data Andréas Wikner, Group CFO Mr Wikner joined Elanders in 2007 as Group Reporting Manager. He became CFO in October 2010. Prior to joining Elanders, Mr Wikner worked as an auditor at Deloitte and Arthur Andersen. He has a Master of Science in Business Administration from Gothenburg School of Economics and Commercial Law.

Mr Wikner possesses 4,664 B-shares.

Source: Company data Dr Andreas Bunz, President of Supply Chain Solutions (LGI) Dr Bunz joined Elanders in connection with the acquisition of LGI Logistics Group International in 2016. Dr. Bunz has been the CEO of LGI Logistics Group for 22 years and has over 30 years of experience within Supply Chain Management and Transportation Logistics. He has a Diploma in Business Management and a PhD from Stuttgart University.

Dr Bunz has no shares in Elanders.

Source: Company data

Marketing material commissioned by Elanders 17 27 November 2018 Elanders

Eckhard Busch, Senior Vice President of Supply Chain Solutions (LGI) Mr Busch joined Elanders in the acquisition of LGI in 2016 where he had held positions such as Member of LGI's Executive Committee and Managing Director (COO). He has a diploma in Industrial Engineering from Karlsruhe Institute of Technology.

Mr Busch does not own any shares in Elanders.

Source: Company data Kok Khoon Lim, President of Supply Chain Solutions (Mentor Media) Mr Lim joined Elanders through the acquisition of Mentor Media in 2014, where he was the CEO of the company. He has more than 30 years of experience at companies such as Hewlett Packard, Philips and Wearnes Group, where he held positions such as General Manager, Vice President, Chief Technology Officer and Managing Director. He has a bachelor degree in Electrical & Electronics Engineering and a Master of Science in Industrial Engineering.

Mr Lim has no shares in Elanders.

Source: Company data Peter Sommer, President of Print & Packaging Solutions Mr Sommer has been employed at Elanders since 2007, when Sommer Corporate Media was acquired. He is the sole founder of Sommer Corporate Media and educated as a graphic engineer.

Mr Sommer owns 170,666 B-shares.

Source: Company data Kevin Rogers, Senior Vice President of Print & Packaging Solutions Mr Rogers joined Elanders in 1999 in connection with the acquisition of Hindson Print, where he was digital print manager. He has more than 25 years of experience in digital print technologies, sales and marketing strategy, optimising workflow and effective leadership. His education involves Mathematics, English, IT and Production planning.

Mr Rogers has no shares in Elanders.

Source: Company data

Marketing material commissioned by Elanders 18 27 November 2018 Elanders Board of directors

Elanders' board of directors consists of 11 people. The company's CEO, Magnus Nilsson, is on the board of directors. We introduce the other 10 members below.

Carl Bennet, Chairman of the Board Mr Bennet has been Chairman since 1997. His appointments on the Elanders board include serving as chairman of the nomination committee and the remuneration committee. Other appointments include CEO of Carl Bennet AB, Chairman of the board of Getinge AB and Lifco AB as well as member of the board of Arjo AB, Holmen AB and L E Lundbergföretagen AB. Mr Bennet was previously President and CEO of Getinge AB.

Mr Bennet owns 1,814,813 A-shares and 15,903,596 B-shares.

Source: Company data Johan Stern, Deputy Chairman of the Board Mr Stern is chairman of the audit committee and member of the remuneration committee. Other appointments include Chairman of the Board of HealthInvest Partners AB, Fädriften Invest AB and Rolling Optics AB. He is also member of the board at companies such as Carl Bennet AB, Getinge AB, Lifco AB and RP Ventures AB. He has previously been active within SEB, both in Sweden and in the USA.

Mr Stern possesses 107,000 B-shares.

Source: Company data Pam Fredman, Member of the Board Ms Fredman is a member of the remuneration committee and holds other appointments such as member of the board of Sahlgrenska Science Park AB. Ms Fredman has previously been Vice-Chancellor for Gothenburg University.

Ms Fredman owns 1,609 B-shares.

Source: Company data Dan Frohm, Member of the Board Mr Frohm is also member of the audit committee and has other appointments including member of the board of Carl Bennet AB and Getinge AB. He has been a management consultant at Applied Value LLC in New York prior to joining the board of directors at Elanders.

Mr Frohm has 23,676 B-shares.

Source: Company data Erik Gabrielson, Member of the Board Mr Gabrielson is a member of the remuneration committee and is also lawyer and partner of the law firm Vinge as well as Chairman of the Board of Eldan Recycling A/S and member of the board at Carl Bennet AB.

Mr Gabrielson does not own any shares in Elanders.

Source: Company data

Marketing material commissioned by Elanders 19 27 November 2018 Elanders

Linus Karlsson, Member of the Board Mr Karlsson is a member of the remuneration committee. He is also Global Chief Creative Officer of CP+B and member of the board of the World Childhood Foundation USA. He has previously had jobs including Creative Chairman at McCann Global Brands.

Mr Karlsson does not possess any shares in Elanders.

Source: Company data Cecilia Lager, Member of the Board Ms Lager is member of the audit committee and has other appointments such as Chairman of the Board of Navigera AB, member of the board of Altor Fund Manager AB, Capacent Holding AB, Cinnober Financial Technology AB, Collector AB and Evolution Gaming AB. Previous appointments include CEO of SEB Funds, Marketing Director at Alecta and member of the board at Eniro AB, Intellecta AB and Knowit AB.

Ms Lager holds 37,521 B-shares.

Source: Company data Anne Lenerius, Member of the Board In addition to being a member of the audit committee, Ms Lenerius was also the CFO of Carl Bennet AB. She has had previous appointments such as Group Controller at Ernström Holding AB and Finance Manager at JMS/Q Systemhydraulik AB.

Ms Lenerius has 6,892 B-shares.

Source: Company data Caroline Sundewall, Member of the Board Ms Sundewall is a member of the audit committee as well as Chairman of the Board at the Streber Cup Foundation and member of the board at Cramo, Hemfosa and Mertzig Asset Management. Previous appointments include Chairman of the Board of Cloetta and Svolder as well as member of the board at TeliaSonera, Electrolux, Lifco and Haldex.

Ms Sundewall possesses 6,666 B-shares.

Source: Company data Marcus Olsson, Employee representative

Mr Olsson holds no shares in Elanders.

Source: Company data

Marketing material commissioned by Elanders 20 27 November 2018 Elanders Major shareholders

Elanders' largest shareholder is the company's Chairman of the Board, Carl Bennet, through his enterprise Carl Bennet AB. He holds 1,814,813 A-shares and 15,903,596 B-shares. The ten largest shareholders together account for 81.7% of the total capital and 87.6% of the votes as of 6 September 2018. In our view, the shareholders list comprises impressive investors, including both Swedish and international well-renowned funds.

ELANDERS TOP 10 SHAREHOLDERS AS OF SEPTEMBER 2018 # Owner Class A Class B Value, SEKm Capital, % Votes, % 1 Carl Bennet 1,814,813 15,903,596 1,579 50.2% 65.9% 2 Carnegie Fonder 0 3,015,174 268 8.5% 5.8% 3 Didner & Gerge Fonder 0 2,536,000 226 7.2% 4.9% 4 Lannebo Fonder 0 2,525,979 224 7.1% 4.9% 5 Fjärde AP-fonden 0 1,154,737 103 3.3% 2.2% 6 Protector Forsikring 0 634,573 52 1.7% 1.1% 7 Tredje AP-Fonden 0 423,220 37 1.2% 0.8% 8 Canaccord Genuity Wealth 0 323,000 29 0.9% 0.6% 9 Dan Olsson 0 297,352 27 0.8% 0.7% 10 Per Anders Bendt 0 222,500 20 0.6% 0.4%

Source: Holdings database

Marketing material commissioned by Elanders 21 27 November 2018 Elanders Financial targets

Elanders revised its financial targets in 2017; we believe this was most likely to align them with the new business structure after the LGI acquisition in 2016. While we find the top-line growth objectives within reach, we expect Elanders to fall short of its return on capital employed and EBITA margin targets.

ELANDERS' FINANCIAL OBJECTIVES VS OUR ESTIMATES

Financial objecƟves Previous financial New financial objecƟves Nordea esƟmates objecƟves

• Top‐line growth • Net sales growth of at • Net sales growth of 3‐ • We esmate that the least 10% per year, of 5% annually growth target will be which at least 5% met organic

• EBIT margin (%) • Operang margin • EBITA margin of at • Elanders will fall short (EBIT) of at least 7% least 7% on the EBITA margin target • Leverage • Debt/equity rao of • ND/EBITDA of < 3x • Elanders will meet its at least 30% target already in 2019

• ROCE • Return on capital • Return on capital • Elanders will meet its employed of at least employed of at least ROCE target 10% 10%

Source: Company data and Nordea estimates

Elanders changed its financial In 2017, Elanders announced its new financial objectives, most likely owing to the new targets in 2017, most likely to business structure after its acquisition of LGI in 2016. The most significant difference align them better with its new was that Elanders lowered its target for net sales growth from 10% per year (of which business structure 5% organically) to 3-5% annually. In addition, the company changed its target profitability metric from the operating margin (EBIT margin) to the EBITA margin, with the new measurement excluding the amortisation of intangible assets in relation to acquisitions to allow for a more comparable ratio.

The company also changed its target metric for leverage from a debt/equity ratio of 30% to net debt/EBITDA multiple of <3x.

ELANDERS: EBITA MARGIN VS ITS TARGET OF AT LEAST 7%

8.0%

7.0%

6.0% 5.5% 5.6% 5.0% 5.0% 4.0% 4.0%

3.0%

2.0%

1.0%

0.0% 2017 2018E 2019E 2020E Adj EBITA margin (NDA estimates) Objectives (>7%)

Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 22 27 November 2018 Elanders

We estimate that Elanders will We believe that Elanders' profitability target of an EBITA margin of at least 7% over a reach an EBITA margin of 5.6% business cycle is too optimistic given its current business model. We estimate that the in 2020, more than 150 bp company should reach an EBITA margin of 5.5% in 2019 and 5.6% in 2020, which is below its financial target of 7% around 150 bp below its financial objective, even in a favourable economic cycle with the automotive market at a record high. We highlight that Elanders has achieved an EBITA margin of greater than 7% only twice (11% in 2007 and 7.4% in 2015); both cases occurred before the acquisition of LGI, which we expect to be margin-dilutive in the short to medium term.

Nevertheless, we expect Elanders to reach its top-line target of an annual growth rate of 3-5% as well as its targeted net debt/EBITDA of < 3x. We believe the growth rate should easily be reached organically, as LGI has a long history of strong growth; moreover, we do not rule out the possibility of top-line growth being boosted by further bolt-on acquisitions.

Marketing material commissioned by Elanders 23 27 November 2018 Elanders Supply Chain Solutions

Supply Chain Solutions' importance to Elanders is increasing and we expect it to account for 74% of group sales and 66% of EBIT at the end of 2018. During 2017, the segment had a weak development, burdening EBIT due to new, less profitable customer contracts. We believe this trend will turn around in the coming quarters and that the focus for the segment going forward will be on value-added services.

SUPPLY CHAIN SOLUTION AS % OF GROUP SALES, 2018E SUPPLY CHAIN SOLUTIONS AS % OF GROUP EBIT, 2018E

e- e- Commerce Commerce Supply Solutions Supply Solutions Chain 2% Chain 1% Solutions Solutions 75% 74%

Print & Print & Packaging Packaging Solutions Solutions 23% 25%

Source: Nordea estimates Source: Nordea estimates

Solid underlying growth, partly Supply Chain Solutions is a reasonably new segment to the Elanders group. The driven by mega trends segment was established by the acquisition of the Asian company Mentor Media in 2014 and LGI in 2016. Both acquisitions piloted Elanders towards an industry with solid underlying growth, partly driven by mega trends.

As of Q3 2018 the segment represented 75% of group sales and a somewhat lower proportion of EBIT (74%). With strong organic growth and an improved profitability focus, mainly within LGI, we expect the segment to continue to gain market shares.

MAIN REVENUE STREAMS AS % OF SEGMENT SALES, Q3 2018 CUSTOMER SEGMENT AS % OF SEGMENT SALES (%), Q3 2018 Automotive Sourcing and 25% procurement services Other 31% work/service Other s 3% 4% Industrial 10% Freight and Health Care Electronics transportatio & Life 44% Other n services Science contract 32% 2% logistics Fashion & services Lifestyle 33% 16%

Source: Company data Source: Company data

The electronics customer When dividing the net sales according to end market we can conclude that Electronics segment is by far the biggest is by far the largest, representing around 44% of revenue, followed by Automotive and for Elanders, accounting for Fashion & Lifestyle at 25% and 16% respectively. Supply Chain Solutions also has some 40% of group sales exposure to the Health Care and Industrial segments. The high exposure to Electronics could to some extent be explained by the fact that LGI is an offshoot from Hewlett Packard Germany and that Mentor Media is specialised in value-added services for companies in the electronics and computer industry with a focus on product and component flows.

Marketing material commissioned by Elanders 24 27 November 2018 Elanders

We believe that management is Due to the short period of customer segment reporting, it is hard to draw any satisfied with the customer conclusions, but we believe that the company has realised significant growth within all segment distribution and that segments and especially within Automotive and Fashion & Lifestyle. Due to the more focus will be put on the cyclicality of the Automotive segment and industry trends, we believe that Fashion & Lifestyle industry management is satisfied with the current exposure to the industry and more attention going forward will be paid to the fast-growing Fashion & Lifestyle industry. Since Q1 2018 Elanders has reported its main revenue streams according to the following categories.

Sourcing & procurement services Sourcing & procurement services represented around 30% of Supply Chain Solutions' sales as of Q3 2018 and the majority of revenue derives from Mentor Media. We estimate that margins at Mentor Media are slightly above the segment average (4-5%).

Freight and transportation services Freight and transportation Freight and transportation services represented around 30% of segment sales as of Q3 services account for 35% of 2018. The majority (80-90%) of revenue derives from LGI. The services include freight Supply Chain Solutions' sales forwarding, where we estimate that margins are 2-4%. We believe that management and we believe that will continue to divest parts of this business in order to improve profitability. Freight management will continue to and transportation services are often combined with other services by the customers, divest part of this business to and we estimate that only 15% of the customers solely use freight services. This could improve profitability potentially constrain Elanders from divesting the business without affecting its relationships and position as a complete solution supplier to the customer.

Other contract logistics services Other contract logistics services Other contract logistics services represent ~30% of the segment's sales, with ~70% represent 30% of Supply Chain deriving from LGI and 30% from Mentor Media. We estimate that this service has high Solutions' sales profitability with margins significantly above the segment average.

Other work/services Other work/services represent 5% of segment sales and comprise various services that cannot be reported in the other streams.

MENTOR MEDIA LGI ITG

Source: Company data Source: Company data

Source: Company data  Acquired by Elanders in 2014 and  Acquired by Elanders in 2016 and  Acquired by LGI in 2013 and has has net sales of SEK ~2bn. has net sales of more than SEK net sales of over EUR 150m with  Founded in 1984 as an Asian 4bn. 12 own locations and seven subsidiary of Mentor Graphics  Founded by Hewlett Packard and logistics centres worldwide, with and engaged in design spun off in 1995, LGI has a strong a high concentration in Germany. automation for electronics footprint in the German industrial  ITG's service portfolios include manufacturing. logistics market. worldwide air & sea freight, and  The company is specialised in  LGI has more than 45 facilities European land transport. value-added services to worldwide, with a higher  ITG also offers a wide range of companies in the electronics and concentration in Europe. LGI value-added services including computer industries. It focuses specialises in value-added textile finishing and handling of especially on product and services to customers in returns. Customers are primarily component flows with very short Automotive, Electronics, Fashion within the Fashion & Lifestyle lead times and comprehensive & Lifestyle and Healthcare & Life industry. statistics reporting to customers. Science. 35% exposure to Automotive and 15% to Electronics.

Elanders' supply chain management services are operated under three separate brands, similar to a multi-brand strategy: LGI, Mentor Media and ITG as described above.

Marketing material commissioned by Elanders 25 27 November 2018 Elanders

ELANDERS SERVICES PORTFOLIO Supply Chain management

Procuremement Production Distribution After Sales Reverse Logistics Logistics Logistics Logistics Logistics

Reverse Supply Chain Management

Customers Services Operations High Efficiency Operations Operations Efficiency High

Integrated solutions Worldwide Transport- & Storage Network flexible + standardised Automotive

Electronics Operating System (LOS) based on Lean Contract Logistics Transportation Road, Air, Sea principles Industrial High-end IT solutions IT as enabler for Value Added Services Customs & Foreign Trade Health Care & Life Science logistics Inhouse support

Core industry focus Fashion & Lifestyle Temp work flexible IT Training Academy Dynamic Corporate Culture Personel Concepts

Source: Company data Elanders' supply chain portfolio comprises a variety of services, most of which are well integrated with the customer. As the matrix above shows, Elanders has complete offerings to the Automotive, Electronics, Industrial, Health Care and Fashion & Lifestyle customer segments where the company offers several value-added services as well as road, sea and air transportation. Elanders also provides its customers with operation systems and other IT solutions for logistics.

High inflow of new customer contracts Since 2017, Elanders has announced three new large customer contracts. Among the new contracts, we find worldwide distribution for a large international football club with a complete Autostore solution, a major automotive manufacturer (upper premium segment), a leading electronics corporation and a power equipment manufacturer. The combined order value per annum amounts to SEK ~260m, implying a growth rate of 4%.

Large international football Leading electronics corporation Handheld power equipment club manufacturer Contract value (NDA estimate): Contract value (NDA estimate): EUR 11m Contract value (NDA estimate): EUR 6m Space: 50,000 m2 EUR 0.5m Space: 6,000 m2 Employees: 140 Space: n.a Employees: 40 Other: Operations started in early Q2 Employees: n.a Other: Installation of a state-of-the- with a steady ramp-up. Other: Development of an online art Autostore with operations platform for merchandising products starting in mid-Q4 2018. Also including order management, expected to have a steady ramp-up. financial services, customer service, web shop operation, content management etc.

Elanders' offering is moving When examining the contracts and services, we conclude that Elanders is moving in towards value-added services the right direction regarding value-added services, which over time should positively affect margins. In addition, the number of major contracts won with well-renowned customers indicates that Elanders has a competitive services offering suitable for a variety of industries.

Marketing material commissioned by Elanders 26 27 November 2018 Elanders

ITG CUSTOMER CASE

Front-end Back-end

Webshop Webshop Financial Data Warehousing/ Development Online marketing management + Customer care Distribution services management Logistics Techn. Setup operations

Technical setup/ Content Carrier SEO /SEA Customer Service** Risk Management** SKU Masterdata* Inbound & Storing* Hosting** Development Management**

Development Customer International Carrier Affiliate Marketing Content Production Payment** Customer data* Sorting* Design** Clearance** Solutions**

Development Content Debitor Data Financial Customer Banner Campaigns Customer Dialog** Pick & Pack* Features** Management* Management** Services** Clearance*

Partner Claim Return Social Marketing Data logistics* Management* Management** Management*

Newsletter Clearing, Claims & Cashing including Controlling and VAS* marketing Risk management refund** Reporting*

After sales / Commercial Reporting E-commerce fulfillment 4 PL Partnermanagement E-commerce advanced

Source: Nordea estimates * Services provided by ITG ** Services provided by ITG & Partner

Customer case walkthrough (handheld power equipment manufacturer) We expect Supply Chain In the matrix above, we map the services and integrated solutions that Elanders (ITG) Solutions to offer more provides within the power equipment industry. The customer case is not representative integrated solutions, with of the whole Supply Chain Solutions segment, but we believe that Elanders will move margins 200-400 bp higher increasingly in this direction in order to increase its value-add and stickiness. We than the segment average estimate that margins for these types of contracts are ~150-350 bp higher than the segment average.

Together with its partners, ITG is able to offer the customer a complete solution for the both front- and back-end, ranging from setting up a web shop, web shop management to financial services, logistics and distribution of the products.

NEW PASSENGER CAR REGISTRATIONS BY MERCEDES, R-12M, NEW PASSENGER CAR REGISTRATIONS BY MERCEDES R-12, % '000 CHANGE Y/Y

1000 20% 900 15% 800 10% 700 600 5% 500 0% 400 -5% 300 -10% 200 -15% 100 0 -20%

Source: ACEA * chart ends July 2018 Source: ACEA * chart ends July 2018

Daimler one of the largest customers Daimler is the business We estimate that Daimler is Elanders' largest customer, representing ~10% of group segment's biggest customer sales. The Daimler sales consist of several independent contracts, which minimises the customer concentration risk, although Elanders is undoubtedly dependent on solid orders from its largest customer. The contracts are based on call-off volumes.

One example of Elanders' contracts with Daimler includes preassembling modules for some of the Mercedes cars, including the Mercedes E-Class. Elanders assembles a front module and a display module used in the dashboard. The E-class model is just one of several Daimler contracts held by Elanders.

Marketing material commissioned by Elanders 27 27 November 2018 Elanders

We expect the car registration The number of Mercedes passenger car registrations reached a peak in 2017, flattened slowdown to persist out during the start of 2018 and turned down by 8% and 18% y/y in June and July throughout the year due to the respectively. We expect the slowdown to persist throughout the current year, owing to new WLTP emissions test the new WLTP emissions test standard in Europe. The new standard demands car- standard in Europe makers not only to test each model but also each version within the model range; ie including different engines, gearboxes and tyre sizes. The test is time-consuming and each test takes around 48 hours, resulting in any model that has not been certified by 1 September not being able to be sold. The more granular testing method will most likely cause temporary restrictions in the availability of vehicles, as well as higher inventory levels.

MERCEDES E-CLASS EUROPEAN SALES, CHANGE Y/Y (%)

70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30%

Source: ACEA, Daimler, Carsalesbase Short-term car market turbulence has a limited impact We estimate that the The Mercedes Benz E-class car sales in Europe have followed the same pattern as for temporary slowdown in car all Mercedes models, with significant slowdowns of 15%, 17% and 12% y/y in May, June sales will have a limited impact and August, respectively. We believe that the temporary slowdown had a limited effect on Q3. Backing this thesis, Supply Chain Solutions reported strong organic growth of 7% y/y in Q3. Although the Automotive segment reported sequential revenue growth of 2% including FX, excluding FX we estimate that organic growth from the automotive industry was flattish in Q3.

For the European automotive industry measured by car production, we forecast a slowdown in 2018, due to WLTP and bottlenecks. Our estimate for 2018 is in line with the outlook cuts communicated by several large automotive manufacturers. For 2019 we estimate y/y growth of 1.3%, mainly a rebound from the turbulent 2018.

DAIMLER SALES DROP IMPACT ON ELANDERS' REVENUE, % Daimler sales change y/y -3% -6% -9% -12% -15% -18% -21% -24% 10% -0.3% -0.6% -0.9% -1.2% -1.5% -1.8% -2.1% -2.4% 12% -0.4% -0.7% -1.1% -1.4% -1.8% -2.2% -2.5% -2.9% 14% -0.4% -0.8% -1.3% -1.7% -2.1% -2.5% -2.9% -3.4% 16% -0.5% -1.0% -1.4% -1.9% -2.4% -2.9% -3.4% -3.8%

exposure 18% -0.5% -1.1% -1.6% -2.2% -2.7% -3.2% -3.8% -4.3% 20% -0.6% -1.2% -1.8% -2.4% -3.0% -3.6% -4.2% -4.8% Estimated Daimer 22% -0.7% -1.3% -2.0% -2.6% -3.3% -4.0% -4.6% -5.3%

Source: Nordea estimates

The matrix above shows Elanders' top-line growth sensitivity to the Daimler contract. When applying a 16% group exposure we conclude that a 3-24% drop in Daimler sales would have a 0.5-3.8% negative impact on group sales.

Marketing material commissioned by Elanders 28 27 November 2018 Elanders

SUPPLY CHAIN SOLUTIONS' NET SALES 2014-20E, SEKm GROWTH PER DRIVER 2015-20E, (%)

10,000 9,034 100% 8,645 9,000 8,086 90% 8,000 80% 7,007 7,000 70% 6,000 60% 5,000 50% 3,999 40% 4,000 30% 3,000 2,048 20% 2,000 1,525 10% 1,000 0% 0 2015 2016 2017 2018E 2019E 2020E 2014 2015 2016 2017 2018E 2019E 2020E Volume Structural FX

Source: Company data and Nordea estimates Source: Company data and Nordea estimates

Top-line growth, organically The segment has a track record of strong top-line growth, organically as well as via and via acquisitions, has acquisitions, with a CAGR for 2014-17 of ~70%. Despite some short-term uncertainty in characterised the business the Automotive industry, we expect the organic growth to persist and we estimate a segment sales CAGR for 2017-20 of 8.1%, with the majority coming organically. The organic growth should primarily be a function of new customer contracts boosting sales in 2018 and 2019, with underlying market growth of 3-4%. We have not included acquisitions in our estimates.

Supply Chain Solutions has enjoyed tailwind from favourable FX movements caused by a strong EUR/SEK and USD/SEK. It has approximately 70% of its sales exposure in EUR and 30% in USD. The current FX movements suggest a 5.1% top-line tailwind in 2018 and 2.0% in 2019.

ADJ EBIT AND EBIT Y/Y GROWTH, SEKm AND % EBIT BRIDGE 2017-20, SEKm

600 80% 70% 500 60% 400 50% 40% 300 30% 200 20% 10% 100 0% 0 -10% 2015 2016 2017 2018E 2019E 2020E Adj. EBIT % change y/y

Source: Company data and Nordea estimates Source: Nordea estimates

Weak 2017, burdened by new contracts The profitability has not been While Supply Chain Solutions has realised strong top-line growth, its profitability has able to keep up with the top- not developed in line and has been rather flattish since 2016. The weak EBIT line growth development is a function of a few factors: in 2017, Elanders entered three new contracts which hurt the operating profit. We estimate that the contract with the most negative impact was to a customer within the automotive industry. We believe that the contract had annual sales of SEK ~100m with a negative EBIT contribution of SEK ~70m in 2017. Management communicated that price increases were implemented in Q2 and should gradually lift the profitability. However, some negative effects will persist until year-end, and we estimate them to around SEK 10m in H2. In addition, amortisation of acquisition-related intangible asset related to Mentor Media and LGI lowered EBIT by SEK 24m in 2016 and SEK 49m in 2017. Amortisation from Mentor Media will fade out at the end of 2018, while LGI's amortisation will continue to have an effect for eight more years.

Strong expected EBIT growth, partly FX driven We expect the negative effect of the new contracts will continue to fade in Q3 2018, and together with a positive drop-though and FX drive strong EBIT growth. We estimate an EBIT CAGR for 2017-20 of 26%. FX should continue to provide tailwind for the segment, driven by

Marketing material commissioned by Elanders 29 27 November 2018 Elanders

the EUR/SEK and USD/SEK appreciation. We estimate the impacts of translation and transaction to ~8% in 2018 and 4% in 2019.

SUPPLY CHAIN SOLUTIONS' ADJ EBIT MARGIN AND % CHANGE Y/Y

8% 200 7.3% 150 7% 100 6% 6.1% 50 5% 0 4.9% 5.2% 3.6% 4% 4.4% -50 -100 3% -150 2% -200 1% -250 0% -300 2015 2016 2017 2018E 2019E 2020E Change y/y in bps Adj. EBIT margin (%)

Source: Company data and Nordea estimates

We believe the operating The operating margin fell by 370 bp between 2015 and 2017, due to the margin-dilutive margin will recover as a result acquisition of LGI and amortisation of acquisition-related intangible assets. We of the downsizing of the less estimate that margins reached rock-bottom in 2017 and that the margin pick-up in Q3 profitable freight and 2018 was a result of price increases for new customer contracts where losses started to transportation services, among successively decrease in Q2 2018. In addition, we believe that management will other things continue to push LGI to change focus from growth to profitability; ie turn down less profitable contracts. We also estimate that Elanders will divest or phase out LGI's freight and transportation services business with margins of 1-3%. Approximately 15% of the customers within freight and transportation services only use this service and it could therefore be easier to phase the business out to increase margins.

Assuming that ~15% of the freighting business is divested, corresponding to revenue of SEK 560m with a margin of 1.5%, on average this would boost Supply Chain Solutions' EBIT margin by at least 20 bp.

COMPETITOR MARGIN DEVELOPMENT 2015-17, %

9.0%

8.0% 7.7%

7.0% 6.5% 6.0% 6.1% 6.2% 6.0% 5.8% 5.1% 4.9% 5.0% 4.6% 4.1% 4.2% 4.2% 3.8% 4.0% 3.7%

3.0% 2.4% 2.5% 2.0% 2.0%

1.0% 0.4% 0.0% 0.0% 0.0% 0.0% 2015 2016 2017 Fiege BLG Group7 Elanders Deutsche Post DSV Kuehne Nagel Average

Source: Thomson Reuters and Nordea estimates

Moving towards more value-added services As the chart above indicated, Elanders significantly underperforms the selected peer companies, both listed and private ones. We believe Elanders' business is most similar to Fiege, BLG and Group7, while Deutsche Post, DSV and Kuehne + Nagel are former postal services and general logistics giants. With the focus on value-added services, phasing out the less profitable services and increasing the profitability of the new customer contracts, Elanders should be able to outperform its key competitors in terms of profitability.

Marketing material commissioned by Elanders 30 27 November 2018 Elanders From 2.0 to 4.0

With a growing global market for third-party logistics and industry 4.0 ramping up, which is expected to disrupt the view of the traditional supply chain, we believe that Elanders is well- positioned to expand its supply chain solutions business and increase its market share.

Supply chain management basics At its core, supply chain The definition of a supply chain offering is generally vague and could comprise several management is the act of industry-specific services. At its core, supply chain management is the act of overseeing overseeing and managing a and managing a supply chain to ensure it is operating as efficiently as possible. This supply chain to ensure it is means, amongst other things, ensuring that all suppliers and manufacturers are operating as efficiently as maintaining the desired quality of production and that both camps are engaged in possible ethical business practices.

Below we illustrate the most general and basic supply chain services included in all the major players' offerings.

THE TRADITIONAL SUPPLY CHAIN

Source: Nordea

The traditional supply chain model visualised above starts at the raw material manufacturer and ends with returns of goods for repair if needed. Between these we find several services, including inbound transport, production flows, value-added services, warehousing and distribution.

Marketing material commissioned by Elanders 31 27 November 2018 Elanders

SUMMARY OF THE SUPPLY CHAIN STEPS Supply chain step Description Planning Supply chain planning can have a direct impact on a company's profitability. As such, it may be useful for companies to seek assistance with creating efficient planning processes. For instance, if a company misjudges the quantity of raw materials and buys too much, it could find itself needing to hold a sale to empty its stocks, or vice versa. Elanders offers services that can provide support in the planning process, such as global ordering solutions.

Sourcing The sourcing part of the supply chain, often referred to as inbound logistics, involves transportation, storage and delivery of goods or materials for use. It also includes procurement of raw materials, including purchasing and quality control. It is a vital part of the supply chain, allowing for materials to be received as quickly as possible and then moved to production, assembly or inventories. Several sourcing strategies exist: single sourcing (a company uses only one supplier), multi-sourcing (a company uses several suppliers), outsourcing (a company obtains goods/services by contract from an outside supplier) and insourcing (a company develops the goods/services internally). Elanders offers services related to sourcing, such as assistance with purchasing, order handling and quality control.

Manufacturing Traditional manufacturing can generally be categorised into three main production methods: batch production, job production and flow production. In batch production, the object in question is produced in stages via several workstations and often in different batches. Job production, also known as one-off production, usually involves production of small and customised quantities of a product. Flow production, also known as mass production, is focused on the production of standardised products in large quantities, typically by using assembly lines. Manufacturing services offered by Elanders include assembly and testing, as well as configuration and localisation.

Storing (warehousing) The warehouse is an integral part of the supply chain, as goods and materials are entering and exiting constantly. Warehousing, or inventory management, is important for production companies because there costs associated with holding inventory. As such, companies strive to have high inventory turnover, as that implies that goods are not piling up in a warehouse for long periods of time. Among other things, Elanders helps companies with their inventory strategies and inventory optimisation.

Distribution The ways in which a company delivers its products to its customers varies across industries; some deliver directly, while others use intermediaries and resellers. In any case, ensuring that a proper distribution strategy is in place and suits the customer's demands is essential. Elanders offers local and global distribution services.

Returns management Returns, or reverse logistics, have become an integrated part of the supply chain, boosted by the fast growing e-commerce industry. It is likely that this trend will continue in the future as well. Elanders has a broad portfolio of services in returns management, ranging from aftermarket programmes to distribution of replacements.

Source: Nordea Warehousing – A supply chain necessity Warehousing knowledge is In order to meet fluctuations in demand, having a buffer inventory is essential. In essential for anyone involved in addition, a warehouse can also be used to store investment assets, such as supply chain operations or commodities or metals, which can be sold when the market price is more favourable. management Because it is so critical, warehousing knowledge is an essential for anyone involved in supply chain operations or management. Therefore, overseeing it, externally or internally, to ensure it is streamlined and efficient is vital.

To illustrate the importance of having a streamlined inventory management process in place, we have analysed the profitability of the top-10 companies of the MSCI Capital Goods World Index (weight>30%) based on their inventory turnover, measured as cost of goods sold (COGS) divided by the average number of inventory days. The companies with above-median inventory turnover, ie above 4.39 times the COGS, have shown a higher and more stable development in their EBITDA margins during 2013-2017. This further strengthens our view that it is vital for companies to continually work on their inventory management, something that Elanders can help with.

Marketing material commissioned by Elanders 32 27 November 2018 Elanders

EBITDA MARGIN FOR TOP-10 MSCI CAPITAL GOODS WORLD INDEX COMPANIES 2013-2017 ACCORDING TO MEDIAN INVENTORY TURNOVER

18% Median I/T: 4.39

17%

16%

margin % 15% -

14% EBITDA

13%

12% 2013 2014 2015 2016 2017 Below median Above median

Source: Thomson Reuters and Nordea

Just-in-time Elanders has helped a global In contrast to the conventional manufacturing methods, which usually entail an car manufacturer reduce inventory filled with stock, just-in-time (JIT) is a method where the production is overall costs by using Just-in- triggered by demand, making owning an inventory close to redundant. One of the main time benefits of JIT is that it tackles the issues associated with overproduction and waiting. Other benefits include a reduction in labour costs, space reduction and quality improvements. The risk lies in that there is usually a dependency on a few suppliers. JIT was originally developed in Japan during the 1960s and 1970s, where the main player was Toyota. Today, JIT is used in other countries and industries as well, although the automotive industry is the most prominent one. A practical example of JIT is when Elanders helped a global car manufacturer to produce owner's manuals by producing against forecast, managing the inventory and delivering according to actual demand, essentially creating a global JIT system and reducing costs for the company.

Distribution impacts the logistics performance Companies with a proper The way a company's distribution channels work affect its performance. As an example, distribution strategy have the the American productivity and quality centre (APQC) found that companies that lowest number of delivery days implement a proper distribution strategy have shorter customer order cycles, ie the number of days it takes from the customer making the order until the customer receives it. They found that companies with an extensive distribution implementation require two days from purchase to delivery, whereas companies with a somewhat implemented distribution strategy require 10 days, and companies with no implemented strategy require 14 days.

DISTRIBUTION STRATEGY, MEDIAN NUMBER OF DAYS FROM ORDER TO DELIVERY

Extensive implementation 2

Some implementation 10

No implementation 14

0246810121416 Days

Source: APQC and Nordea

Marketing material commissioned by Elanders 33 27 November 2018 Elanders

Elanders helps one of its clients The way a company delivers to its customers is not only about speed and money; with transporting 3D-printers another vital part is to secure that the commodity gets delivered in one piece. weighing up to one tonne and Depending on the industry in which a company operates, the goods it needs to freight being more than three metres may vary greatly in weight and size. For instance, Elanders helps one of its long Singaporean clients to distribute 3D-printers that weigh almost a tonne and can be more than three metres long: due to the risk of losing a high value item in distribution, it might be worthwhile hiring an expert.

Returns are here to stay Statista estimates that the value of return deliveries in the US will increase to USD 550bn by 2020, representing a 75.2% increase compared to four years earlier.

Reverse logistics can result in It is therefore important for companies to have a well functioning returns management cost saving for companies. process in place. Often, reverse logistics is viewed by companies as a cost when in fact Elanders helped one of its it might be something that can contribute to cost reductions. For instance, reusing client achieve a 50% recovery materials or recycling might result in reduced costs for companies. Additionally, having of assets rate, enabling it to a well-functioning returns management strategy in place might help build stronger reduce its costs customer relationships and reduce a company's environmental impact. One example is refurbishing computers or servers. Elanders did this for one of its customers, where it developed a system that collected all the used servers globally, refurbished them and then sent them back. The result was a 50% recovery of assets, reducing both costs for the client as well as having a smaller impact on the environment

Outsourcing More companies utilise supply It is becoming more common for companies to outsource the entire or part of their chain outsourcing as they see supply chain to an external organisation, boding well for Elanders, as roughly 75% of its the potential benefits of it: an revenue is generated from supply chain solutions. There are several benefits in relation overall reduction in costs, to supply chain outsourcing, including a reduction in overall costs, increased increased organisational organisational flexibility, companies being able to focus on their core competencies and flexibility, time to focus on the business, and meeting customer demands. In addition, outsourcing the supply chain core business, etc allows companies to work on and find solutions to other challenges and problems they are facing.

The market for third-party Global revenue for third-party logistics providers (3PLs) was USD 802bn in 2016, logistics is growing increasing by USD 261bn during 2010-2016, corresponding to a CAGR of roughly 5%. The largest growth (USD 147bn) has been in the Asia Pacific region, followed by the North American region (USD 51bn). A slight decrease was observed in 2014-2015, mainly due to lower revenues in South America and Europe relating to declining economic activity in these regions, but growth turned positive again in 2015-2016. The biggest outsourcing service is, according to a study made by Capgemini, domestic transportation, where 83% of shipping companies outsource it. This is also the biggest revenue stream for Elanders' supply chain solution segment, where its freight and transportation services account for approximately a third of the revenue stream from this segment. Moreover, 66% and 63% of the survey's respondents outsource their warehousing operations and international transportation, respectively.

EVOLUTION OF GLOBAL 3PL REVENUES 2010-2016, USDbn

900 834 25% 809 788 802 800 20% The global market for third- 677 700 616 party logistics had a CAGR of 15% 5% in 2010-2016 600 542 500 10%

400 USDbn 5% 300 0% 200 -5% 100

0 -10% 2010 2011 2012 2013 2014 2015 2016 Asia Pacific Europe North America South America Other Regions % Growth y/y

Source: C. John Langley, Jr., Ph.D., Capgemini and Nordea

Marketing material commissioned by Elanders 34 27 November 2018 Elanders

OUTSOURCING RATE TO 3PLS FOR SHIPPERS, SPLIT BY SUPPLY CHAIN CATEGORY

Fleet management 10% LLP (Lead Logistics Provider) / 4PL services 11% Cutomer service 11% The biggest segment for third- Supply chain consultancy services provided by… 15% party logistics is domestic Inventory management 17% Service parts logistics 18% transportation, followed by Order management and fulfillment 20% warehousing and international Transportation planning and management 25% transportation IT services 27% Product labeling and management 29% Cross-docking 29% Reverse logistics 31% Freight bill auditing and payment 34% Freight forwarding 46% Customs brokerage 46% International transportation 63% Warehousing 66% Domestic transportation 83% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Share %

Source: C. John Langley, Jr., Ph.D., Capgemini and Nordea

Part of the reason why revenues for 3PLs have grown strongly in recent years can be explained by the healthy world economy, but also by changing customer demands and technological advances. The digitalisation of the global economy, often referred to as "industry 4.0", is well underway. We believe that new technologies such as warehouse robotics, additive manufacturing and big data will disrupt the market for 3PLs significantly in the coming years, and the providers that are able to meet these new customer demands will gain a big competitive advantage in the industry.

Industry 4.0 – the future supply chain The current way the supply As the world economy evolves, so does the supply chain. With global trends such as chain operates globally is urbanisation, climate change, digitalisation and ever changing customer demands, to changing, mainly owing to mention a few, the current supply chain must adapt quickly to new circumstances. We digitalisation believe that Elanders is well-positioned in this sense, since it has managed to build up a global presence and expertise in the supply chain area. Businesses have now entered into the age called "industry 4.0" and with it so has the future supply chain. Industry 4.0 is driven by digitalisation: preceded by industry 3.0, driven by digital computers, industry 2.0 by electrification, and industry 1.0, driven by steam and water power. In particular, we believe that robotics and automation, additive manufacturing (3D printing) and big data will have a big impact on the future supply chain, and here we also see potential for Elanders to grow.

THE ROAD TO INDUSTRY 4.0

Source: PwC and Nordea Robotics and automation The market for autonomous The market for autonomous robots is growing rapidly and particularly within supply robots is growing and in chain operations. The Boston Consulting Group (BCG) estimated in 2014 that the global particular within supply chain robotics market would amount to roughly USD 67bn by 2025, corresponding to a CAGR operations of 9%. However, as a result of increased demand stemming from the consumer and commercial segments, it revised its estimates in 2017 to approximately USD 87bn, driving up the CAGR to 12%. Elanders' business has responded to this increase by, for instance, participating in warehouse robotics projects.

Robots are also becoming more sophisticated than they were just a couple of years ago, with advances in artificial intelligence technology enabling them to be responsive with minimal human feedback. Additionally, facial and audio recognition are being integrated into robots, which might enable them to better understand requests from humans.

Marketing material commissioned by Elanders 35 27 November 2018 Elanders

EVOLUTION OF THE GLOBAL ROBOTICS MARKET 2000-2025E, USDbn

100 87

We expect the global robotics 80 market to have a CAGR of 12% up until 2025 60

43 40 27

20 16 11 8

0 2000 2005 2010 2015 2020 2025 Industrial Commercial Military Consumer

Source: Company data and Nordea estimates

Looking at the geographical distribution of robot manufacturers, as indicated by the ROBO global robotics and automation index, it is clear that the majority of robotics activity takes places in either the US or Asia. It is noteworthy that the third largest market is Germany, accounting for 8% of distribution, which is also Elanders' biggest market measured by top line, which might enable the company to integrate more robotics in its services. The ROBO index has increased by 49% in the past three years, showing that investors are picking up interest within the area at a similar pace to the market growth.

GEOGRAPHICAL BREAKDOWN OF THE ROBO INDEX 2018 EVOLUTION OF ROBO INDEX 2015-2018

190

United States 44% 170

Others 7% 150 Israel United Kingdom 2% 2% Sweden 130 2% France 2% Switzerland Japan 110 4% 23% Taiwan, Province of Germany 90 China 8% 6% 70 Source: Robo Global and Nordea 2015 2016 2017 2018 ROBO UCITS Index (rebased)

Source: Thomson Reuters In conjunction with the rapid market growth, the unit cost per robot has also declined sharply. In 1996 the unit cost per industrial robot was roughly USD 120,000 compared with today's price of below USD 30,000. We believe that costs will continue to fall, which might facilitate the integration of robotics into industry 4.0.

Marketing material commissioned by Elanders 36 27 November 2018 Elanders

UNIT COST PER INDUSTRIAL ROBOT 1996-2017, USD '000

140

120

Production costs for industrial 100 robots have shown a sharp decline since 1996 80 USDt 60

40

20

0 1996 1998 2000 2001 2003 2005 2007 2009 2010 2012 2014 2015 2017 Unit cost (USDt)

Source: ARK Investment Management LLC and Nordea

Autonomous robots in the supply chain It has become easier to Robots have historically been difficult to integrate into supply chain operations. integrate autonomous robots However, today's technological advancements within the area are changing this and into the supply chain in recent we see no indications that this trend will not continue in the future. Furthermore, our years, and there are several view is not that robots will replace humans in the supply chain operations, but rather benefits with supply chain that they will enhance human labour by letting robots do tasks that humans should robotics not, cannot or do not want to do. There are several other potential benefits with integrating autonomous robots into a supply chain, such as reduced direct and indirect operational costs, reduced labour costs and increased productivity, the ability to ramp up production in seasonal demand peaks etc. In Elanders' case, we see potential for the company to continue partnering up with robotics suppliers and integrating them into its service offering, with the potential to build an industry niche in this area.

VALUE POTENTIALS WITH INTEGRATING ROBOTS TO THE SUPPLY CHAIN Value potential Rationale Reduced labour costs and increased productivity Robots can work around the clock, increasing the productivity and decreasing labour cost Increased employee safety Robots can take on tasks that put humans at risk, such as lifting and transporting heavy objects Helps meeting production peaks Seasonal production peaks can easier be met by utilising robots Improved output quality Robots can help mitigate the number of human errors in a production process that might come from fatigue or stress Humans and robot interaction Humans can work together with robots, training them and essentially working side by side Achieving production efficiencies Robots that can perform more than one work task can help companies achieve efficiencies in the supply chain process Reduced direct and indirect operational expenses Expenses relating to heating, electricity or injury claims can be reduced by using robots

Source: Nordea and Deloitte

Marketing material commissioned by Elanders 37 27 November 2018 Elanders

THE ROBOT TORU Case: Warehouse robotics – Robotics at Elanders Elanders is currently engaged in an innovative robotics project. Together with a robot producer and a software company, it has developed an autonomous robot supply chain solution for one of its clients. To achieve this, the robot was connected to a warehouse management system (WMS) which consolidates orders and creates pack lists that are then sent to the robot, called Toru, which moves autonomously around the warehouse. The robot is particularly suitable in the e-commerce business since orders are usually placed during weekends and holidays. The company can then use the robot to pick and place the order to the packaging station, instead of having their employees work during weekends, holidays or during inconvenient hours in the evening or night, reducing the company's labour costs.

We see potential for Elanders to further expand within this area, as there will be a future demand for more efficient supply chain solutions to deal with costs and increased customer demand. Moreover, Germany, which is Elanders greatest market, is a market with established autonomous robotics manufacturers. We believe this will enable Elanders to continue participating in projects such as the one with the Toru robot.

Source: Company data and Nordea Additive manufacturing - 3D printing The 3D printing market is 3D printing technology, also known as additive manufacturing, has emerged as one of expected to grow by 30% y/y the most disruptive innovations to impact logistics and the global supply chain. The 3D up until 2022 and will most printing market is estimated to have a CAGR of 30.2% up until 2022, according to likely disrupt the global supply Knowledge Sourcing Intelligence LLP, going from USD 5.9bn in 2017 to USD 22.2bn in chains 2022. A market ramp-up such as this should not be ignored and it is likely that it will have an impact on several parts of the traditional supply chain. For instance, the sourcing and manufacturing steps might get merged, as 3D-printers will only require generic inputs, eliminating one step in the traditional supply chain.

Moreover, 3D printers come in different sizes, depending on what they are intended to print. As the 3D printing market continues to grow, so does the complexity and size of the printers. We believe this will increase the need for safe freight and distribution of these large machines, which is something that might benefit Elanders' distribution and freight services.

Case: Global deliveries – getting the 3D printers from A to B Elanders, through its subsidiary Mentor Media, runs a global distribution centre in its mega-hub in Singapore for 3D printers for one of its clients. The client demands short delivery times and a high level of service. Selling 3D printers is a complex business, with customers all over the world, and the fact that a 3D printer can weigh up to a tonne and be as long as three metres further complicates matters. The 3D printers are also very expensive and require very careful handling when freighted.

With the emergence of the 3D We believe Elanders can continue to develop its distribution and freight businesses, as printing market we believe the global demand for transporting high-value goods increases. A good starting point Elanders can expand its for expansion could be the mega-hub in Singapore, which according to Elanders can transportation business handle work from other customers as well. By using personnel for various jobs Elanders can streamline workflows, achieve economies of scale and quickly adapt resources according to varying customer demand.

Big data – a supply chain opportunity Collecting and storing big data Big data – huge or complex sets of data – is a phenomenon that has emerged in structurally in a database is parallel with the growing global digitalisation. The International Data Corporation going to create competitive (IDC) says the digital universe will grow to reach 44 zettabytes (44 trillion gigabytes) advantages for companies by 2020, doubling its size every two years. As the amount of data is growing, so is the complexity of storing and processing it. Managing and structuring this vast amount of data is, in our opinion, essential to stay competitive. Collecting and storing data structurally in a database is going to create competitive advantages for companies with a big supply chain, since it can be used within areas such as statistics, forecasting, optimisation and simulation. Moreover, data analytics will help companies improve integration, process quality and performance across the supply chain.

Marketing material commissioned by Elanders 38 27 November 2018 Elanders

OPPORTUNITIES FOR BIG DATA IN THE SUPPLY CHAIN Supply chain opportunities Description

Statistics Analyse historical data to find areas of improvement

Forecasting Using collected data to forecast

Optimisation Applying analytical methods and creating tools to optimise the supply chain flow

Simulation Using simulation to test and optimise data

Source: Nordea and Deloitte

Market research indicates the importance of supply chain efficiencies Our market research of companies with an extensive supply chain, conducted on the German and Nordic market, indicates that focus and capex relating to supply chain operations and management is increasing. We conducted the survey by telephone and email, and made several important findings:

When deciding upon respondent group, we decided to focus on producing companies with large supply chains and professionals working in companies' logistics departments or similar. We believe this is beneficial to the study's output since the replies were coming from respondents with in-depth knowledge about the current state of the supply chain market, as well as its future state. Out of the close-ended questions, the following indications were found:

 50% of the respondents have increased their supply chain capex and 8% have increased it greatly,  75% say they will increase their supply chain capex in the coming five years,  Roughly 20% of the respondents say that outsourcing their supply chains has improved their top lines,  Roughly 20% of the respondents say their working capital has largely decreased since they started outsourcing their supply chain.

As part of the survey, we also asked five open-ended questions. The following indications were found based on the provided answers:

 In general, the focus on supply chain management and operations has increased in the past five years,  E-commerce can be considered one of the drivers of the increased focus,  Robotics and automation have received more attention and are expected to be more in focus going forward.

Our study shows that there seems to be an increased awareness of supply chain operations and management, as well as the benefits of outsourcing. Moreover, e- commerce, robotics and automation are emerging as increasingly important areas within the supply chain area. We believe this might disrupt the market for supply chain operations and management in the coming years and could benefit Elanders, considering it is already involved in such projects.

Marketing material commissioned by Elanders 39 27 November 2018 Elanders

Q1: HOW HAS YOUR CAPEX SPENDING REGARDING SUPPLY Q2: HOW WILL YOUR CAPEX SPENDING REGARDING SUPPLY CHAIN CHANGED IN THE PAST FIVE YEARS? CHAIN CHANGE IN THE COMING FIVE YEARS? Largely Decreased Decreased Largely Unchanged decreased 17% 17% decreased 0% 17% 8% Largely increased Largely 0% increased Unchanged 8% 8%

Increased Increased 50% 75%

Source: Nordea estimates Source: Nordea estimates

Q3: HOW HAS OUTSOURCING YOUR SUPPLY CHAIN IMPACTED Q4: HOW HAS OUTSOURCING YOUR SUPPLY CHAIN IMPACTED YOUR TOP LINE? YOUR EBIT?

Largely Decreased Decreased Largely decreased 8% 8% decreased 8% 8% Largely increased 0% Largely increased 8% Increased 17% Increased 8% Unchanged Unchanged 67% 68%

Source: Nordea estimates Source: Nordea estimates

Q5: HOW HAS OUTSOURCING YOUR SUPPLY CHAIN IMPACTED YOUR WORKING CAPITAL Largely Worsened Largely decreased working increased 17% capital 0% 0% Improved working capital 8%

Unchanged 75%

Source: Nordea estimates

Marketing material commissioned by Elanders 40 27 November 2018 Elanders

Elanders' opportunity We believe Elanders has room With a growing market for 3PLs and industry 4.0 ramping up, we see room for Elanders to grow within the third-party to expand within the 3PL market. Despite the potential market increase for logistics market digitalisation and automation, 3PLs are not investing any marketable amounts in it. Approximately 70% of 3PLs are investing less than 5% of their capex in digitalisation and automation, according to a study by Capgemini. We believe Elanders could gain a head start by continuing to participate in innovation projects such as the one within warehouse robotics.

Furthermore, as the competition within various B2C and B2B industries intensifies, the demand put on companies to offer quality guarantees and free returns increases. To put it simply, the demand for companies to have a well functioning and sustainable reverse logistics and value recovery process is increasing.

SHARE OF CAPEX INVESTED IN DIGITALISATION AND AUTOMATION

40% 38%

35% 32% 29% 30% 28%

25%

20% 15% 15% 13% 10% 9% 10% 8% 4% 4% 3% 3% 3% 3% 5% 2%

0% N/A 0% 1-5% 6-10% 11-15% 16-20% 21-25% 25%+ 3PLs Shippers

Source: C. John Langley, Jr., Ph.D., Capgemini and Nordea

Marketing material commissioned by Elanders 41 27 November 2018 Elanders Print & Packaging Solutions

Elanders has been in the printing business for over 100 years and today the Print & Packaging Solutions segment accounts for ~24% of the group's sales and 32% of its EBIT. The segment's EBIT has been decreasing in recent years due to global price pressure and overcapacity. However, we believe that EBIT will recover in the short-term, mainly due to the emerging subscription market particularly in the US. In the long term, we expect the segment to have a smaller relevance to the group, mainly due to a shifted focus towards the fast-growing segment Supply Chain Solutions.

PRINT & PACKAGING AS % OF GROUP SALES PRINT & PACKAGING AS % OF GROUP EBIT

Supply e- e- Chain Commerce Commerce Supply Solutions Solutions Solutions 66% 2% Chain 2% Solutions 74%

Print & Packaging Solutions Print & 24% Packaging Solutions 32%

Source: Company data Source: Company data

Dilution is mainly an effect of Print & Packaging Solutions represents some 24% of group revenue and a larger strong top-line growth from the amount of EBIT (32%). In recent years, the segment has decreased as a percentage of supply chain business as well group revenues. The dilution is mainly an effect of strong top-line growth from the as bolt-on acquisitions supply chain business as well as bolt-on acquisitions. Over time, we expect this trend to persist as management phases out some business and the underlying market remains weak.

In order to adapt to the lower demand and the overcapacity, Elanders phased out part of its offset printing business from the headquarters in Mölnlycke to Borås, where the printing business has been converted into a modern logistics hub.

In October the company initiated a collaboration with a German packaging company, Edelman, to divest its last printing site in China with annual net sales of SEK 80m.

MAIN REVENUE STREAM AS % OF SEGMENT SALES, Q2 2018 CUSTOMER SEGMENTS AS % OF SEGMENT SALES, Q2 2018 Freight and transportation Other Automotive contract 25% Electronics services 1% Sourcing 12% logistics services and Fashion & 18% procurement Lifestyle services 17% 0% Other 12%

Health Care & Life Other Science work/services 13% 70% Industrial 32%

Source: Company data Source: Company data

Marketing material commissioned by Elanders 42 27 November 2018 Elanders

Elanders has become one of The company has been active in the traditional printing space for over 100 years and the leading players in Europe in supplies customers globally with innovative and cost-efficient solutions, including this space printing, packaging, and kitting and packing.

Historically, Elanders has focused on larger industrial customers and provided them with full-service solutions including the services mentioned above as well as other logistics. Through organic growth and minor acquisitions, Elanders has become one of the leading players in Europe in this space.

Looking at the end customers, Industrial contributes 32% of segment revenues and Automotive contributes 25% of segment revenues. The fast-growing Fashion & Lifestyle segment now accounts for 17%.

OFFSET PRINTER, HEIDELBERG DIGITAL PRINTER, HP INDIGO 10000 CUSTOM PACKAGING

Source: Mitsubishi Source: HP Source: Company data Offset print Digital printing Packaging solutions A commonly used printing technique. Rather than using plates, digital Amounts to approximately 30% of Plates made of aluminium are used printing uses data inputs to the segment. Elanders has invested to transfer an image onto a rubber determine where to apply toner ink in several niche areas to offer blanket and then rolling that image on a surface. It is suitable for lower complex packaging solutions, onto the paper. This technique is quantities than offset print. In packaging of luxury products and most suitable for large-scale printing addition, its variable data capability elements of personalised printing. quantities. makes it useful for projects where The business area was created by the each print requires a unique code, acquisition of Printpack in 2010. name, address etc.

Customer cases The Print & Packaging Solutions segment offers a wide variety of services within its niches. Below are customer cases in two very different industries, which show Elanders' capabilities and flexibility, allowing it to develop customer-specific solutions regardless of the industry or the geographical presence.

Marketing material commissioned by Elanders 43 27 November 2018 Elanders

CUSTOMER CASE: CONSTRUCTION EQUIPMENT CUSTOMER CASE: STORCK

Source: Company data Source: Company data

Manage a whole chain of products Send Merci online Elanders has a partnership with a global manufacturer of Storck has worked with Elanders for many years on construction equipment with production plants in eleven traditional packaging. This expanded in 2013, when Storck countries on four continents. The global footprint implies and Elanders developed an e-commerce partnership. such complications in the management of the product Storck launched the Merci online shop where customers supply chain as product information, packaging, are able to design their own personal Merci message, marketing material, education material, schematics and have it printed on a box of chocolate and send it directly digi-passes. to their chosen recipient. The website shows a range of sizes and other product options. For this customer, Elanders developed a global B2B e- commerce solution that made all products and materials An automated interface transfers each order directly to easy to access and order. In addition, Elanders handled all Elanders, which processes it in its Print Data Interface the customer's products worldwide. production system. Orders are processed at the Elanders location and delivered to the recipients in 48-72 hours.

PRINT & PACKAGING NET SALES 2014-20E, SEKm GROWTH BREAKDOWN 2014-20E, %

3,000 20% 2,620 2,526 2,581 2,500 15% 2,146 2,220 2,030 2,053 2,000 10%

5% 1,500 0% 1,000 -5% 500 -10% 0 2015 2016 2017 2018E 2019E 2020E 2014 2015 2016 2017 2018E 2019E 2020E Volume Structural FX

Source: Company data and Nordea estimates Source: Company data and Nordea estimates

Unboxing some growth opportunities We expect the segment to The market for traditional printing is sluggish due to both lower volumes and price report solid organic growth pressure – a result of overcapacity. Despite the weak market, we expect the segment to going forward driven by report solid organic growth rates going forward. In 2018, we estimate an organic subscription boxes growth rate of 10% followed by 3.5% in 2019. The organic growth should primarily be driven by the combined Print & Packaging and Supply Chain unit in the US. In 2017 the revenue from subscription boxes amounted to approximately SEK 150m and management guides that this amount should at least double in 2018. In Q3 management stated that revenue from these box programmes amounted to more than USD 30m, indicating conservatism in the estimates.

The boxes should reach 20% of Our estimate for the segment in 2018 implies revenue of SEK 2,526m, of which SEK segment sales in 2019 385m is from subscription boxes, corresponding to almost 15% of sales. For 2019 we believe that this ratio will remain flattish. We have included the divestment of the Asian printing business in our estimates, implying a structural decline of 0.5% in 2018 and 2.4% in 2019.

Marketing material commissioned by Elanders 44 27 November 2018 Elanders

ADJ EBIT AND % CHANGE Y/Y, SEKm EBIT BRIDGE 2017-20E, SEKm 160 70% 140 60% 120 50% 40% 100 30% 80 20% 60 10% 40 0% 20 -10% 0 -20% 2014 2015 2016 2017 2018E 2019E 2020E Adj. EBIT % change y/y

Source: Company data and Nordea estimates Source: Nordea estimates

We expect the low-margin After two years of declining operating profit, we expect growth to return, though not in subscription box business to the long term. The restructuring in combination with favourable FX and organic growth play out negatively on segment should drive EBIT growth of 11% y/y in 2018, while we expect 2019 to be flat. We margins in the long-term expect the low-margin subscription boxes to play out negatively on segment margins in the long term, as they represent a rising percentage of segment sales. This dilution effect will somewhat be offset by FX and volumes in 2019. We expect an EBIT CAGR of 10% for 2017-20.

ADJ EBIT MARGIN AND CHANGE Y/Y 2014-20E, BP

8% 150 6.7% 7% 5.9% 100 6% 5.6% 4.9% 4.8% 4.6% 4.7% 50 5%

4% 0

3% -50 2% -100 1%

0% -150 2014 2015 2016 2017 2018E 2019E 2020E Change y/y in bps Adj. EBIT margin (%)

Source: Company data and Nordea estimates

The EBIT margins in 2018 and We estimate an EBIT margin contraction of 11 bp in 2018 and 15 bp for 2019 to 4.8% 2019 will be positively and 4.6% respectively. The contraction will primarily be a function of the fast ramp-up impacted by FX of the subscription boxes. The EBIT margins in 2018 and 2019 will be positively impacted by FX, adding an estimated 37 bp in 2018 and 10 bp in 2019.

The future group structure The segment should have solid The Print & Packaging Solutions share of Elanders revenue has steadily decreased from cash flows to serve as a much- 55% in 2014 to 24% in 2018 and down to an estimated 21% in 2025. We believe needed cash cow to fund management will phase out some of this business due to market overcapacity and investments in profitable and pricing pressure, as the digitalisation mega-trend implies less paper usage. We have growing supply chain niches already seen some steps in this direction with the divestment of the Asian printing business and the relocation of operations from Mölnlycke to Borås to reduce the offset printing business and focus instead on logistics and digital printing. Looking a few years ahead, we foresee Print & Packaging Solutions being integrated into Supply Chain Solutions. With low expansionary needs and relatively little maintenance capex, the segment should have solid cash flows to become a much-needed cash cow, funding investments in profitable and growing supply chain niches. The consolidation and continual divestment will also enable management to focus on the core business, which now represents 75% of the group revenue.

Marketing material commissioned by Elanders 45 27 November 2018 Elanders Printing and packaging markets

The overall printing and packaging markets are decreasing as global demand shifts. One trend we have noticed in the printing and packaging markets is the mounting demand for personalised and tailored products or services. Elanders has prepared for this by including investing in inkjet printers to strengthen its digital printing offering and by producing packaging for subscription boxes. As a result, its packaging business has experienced significant top-line growth in the US market during 2017.

The printing market The printing market has in The printing market has witnessed tough price pressure and overcapacity in recent recent years been categorised years. However, we believe the global outlook for paper consumption is set to improve, by tough price pressure and mainly thanks to higher demand from emerging economies. For developed economies overcapacity such as Europe, we believe paper consumption will likely be reduced.

Digital vs offset printing Digital printing is expected to Digital printing will account for 17.4% of the value and 3.4% of the total volume of the account for 20% of the global printing market in 2020, according to Smithers Pira, up from roughly 13.9% and 2.5% printing market by 2022 today, respectively. Smithers Pira also expects the global printing market to be worth USD 188bn by the end of 2018, corresponding to a CAGR of 7.4% since 2013. The projected growth is mainly owing to the increasing demand for sustainable printing, the development of packaging and textile industries and a reduction in per unit cost of printing globally. Moreover, the growing digital printing market is taking market shares from the offset printing market, which is in decline. Taken as a whole, the printing market is actually weakening and we believe this trend will persist in the future.

OFFSET PRINTING LOSES MARKET SHARES TO DIGITAL...... RESULTING IN DIGITAL MARKET VALUE INCREASING

90% 60% 80% 50% 70% 60% 40% 50% 30% 40% 30% 20% 20% 10% 10% 0% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 20122013201420152016201720182019202020212022 Offset Other analogue Digital Offset Other analogue Digital

Source: Smithers Pira and Nordea Source: Smithers Pira and Nordea

The offset printing market is Offset printing is the most popular type of printing according to Smithers Pira research, decreasing in favour of digital and it forms the biggest part of Elanders' printing business with a market share of printing roughly 75% measured by volume and 40% measured by value. However, the offset printing market is shrinking as demand for digital printing increases. Moreover, offset printing is associated with high initial costs, and the cost per unit falls as more units are sold. This means that publishers have to order print books to get per unit prices down, but demand for printed books have declined along with the rise of the internet and e- books.

Elanders has started to focus Elanders has a long history of offset printing dating back to the company's founding in on digital printing instead of the early 1900s. However, along with many other major players, it has downsized its offset printing in recent years printing segment in response to the lower demand. To counter the decrease in offset printing, Elanders has started to focus on digital printing instead, such as inkjet. At present, Elanders is one of the few companies that can offer comprehensive global solutions that include printed matter, packaging and other related services such as kitting and packaging for just-in-time (JIT) or sequence deliveries.

Marketing material commissioned by Elanders 46 27 November 2018 Elanders

Demand for customisation and on-demand printing is rising Digital printing enables print-on-demand, ie more customised and smaller badges that can be produced quicker than traditional offset printing, and this is one of the reasons demand for digital printing is increasing. Part of this market segment growth is the increase of the inkjet printer market.

The inkjet is flying high The inkjet printing market is Inkjet printing is a type of computer printing that recreates a digital image by expected to show a CAGR of propelling droplets of ink onto paper, plastic or other substrates. In a declining printing 9.4% to 2023 market, inkjet printing is growing y/y and is expected to maintain a CAGR of 9.4% until 2023. This corresponds to a market size of USD 109bn, according to Smithers Pira. As previously mentioned, there is a growing demand for customised prints that can be printed on demand, fuelling demand for inkjets. Elanders has responded to this by investing in five inkjet printers. These inkjet printers can be used to create prints that are tailored to its customers' demand.

Case: Simplifying the mining instructions Elanders has helped one of its clients active in the mining industry to produce more concise owner's and service manuals. The client in question operates machinery that requires some significantly large manuals, potentially weighing over seven kilos. This creates a problem of manoeuvrability in confined spaces. Thanks to Elanders' global services and expertise, the company was able to produce a more concise version of the manual, including all necessary information and instructions that could be used in the field, and it was also able to produce it on-demand, thanks to digital printing.

The packaging market The global packaging market The global packaging market size amounts to roughly USD 850bn, where the US is the amounts to USD 850bn, where biggest market by far. Smithers Pira expects the market size to grow 3.5% y/y until almost half is from the US 2020, with sales reaching USD 997bn by 2020. The US accounts for almost half of the global packaging market, and the other big markets are Japan, China and Germany. The packaging sector is a relatively capital-intense sector, making it important for companies to forecast demand properly and make investments in machinery and equipment accordingly.

One of the explanations for the growing packaging market is the expansion of the subscription box market, which has experienced a staggering increase in the past years, particularly in the US. This has also been evident in Elanders' printing and packaging business, which has burgeoned in the US recently.

Marketing material commissioned by Elanders 47 27 November 2018 Elanders

Subscription e-commerce is gaining momentum The market for subscription Growth in the subscription e-commerce market has soared in recent years, with a boxes have been soaring in the growth rate of more than 100% y/y in the past five years. The market size reached past five years around USD 2.6bn in 2016, up from USD 57m in 2011. The business idea is that a customer subscribes to a product or basket of products that are sent on a predetermined basis, for instance monthly. There are several companies that exists today offering a wide range of subscriptions for beer and wine, child and baby items, contact lenses, cosmetics, feminine products and pet food, to mention a few.

15% of online shoppers utilise With the emerging subscription market comes an increased demand for boxes. A box subscriptions recent study conducted by McKinsey shows that 15% of online shoppers subscribe to a box of some sort. This has had a positive impact on Elanders' top line, where its printing and packaging business in the US went from USD 0m to USD 18m in revenues during 2017. We expect it to grow further in the coming years. We note that e- commerce subscriptions can be divided into three different categories;

 Replenishment – allows customers to automate the purchase of commodity items (razors or diapers)  Curation – the customer receives highly personalised items in areas such as apparel, beauty and food  Access – customers get access to offerings in food or apparel, for example

Out of the three categories, curation is by far the most popular one, with 55% of e- commerce subscribers using this service. This echoes the trend of customers looking for tailored and more personalised products or services, similar to the printing market.

50% OF ONLINE SHOPPERS HAVE A SUBSCRIPTION BOX SUBSCRIBERS VALUE CUSTOMISATION THE MOST Replenishm Boxes ent 15% 32%

Not a Access subscriber 13% 50%

Media 35%

Curation 55%

Source: Nordea and McKinsey Source: Nordea and McKinsey

Marketing material commissioned by Elanders 48 27 November 2018 Elanders e-Commerce Solutions

The e-Commerce Solutions segment accounts for just 2% of the group's sales and EBIT. The business is active in a highly competitive global market with large, strong brands such as Apple, Amazon and Fujifilm. At the same time, the market is fragmented and undergoing consolidation. e-Commerce Solutions faced some headwinds in 2017 with declining earnings, which now seem to have turned. We believe that management's primary ambition is to divest the business, as it represents a small part of group revenues and profits and has limited synergies with its focus areas. e-Commerce Solutions is At the end of 2017, the e-Commerce Solutions business segment had net sales of SEK characterised by massive 209m and adjusted EBIT of SEK -1m, corresponding to 2% of the group's net sales. e- seasonal variations, as the Commerce Solutions is characterised by significant seasonal variations, as the peak peak sales usually occur in Q4 sales usually occur in Q4 each year driven by the Christmas season. The business segment is currently under strategic overview and may not be part of Elanders in the future. e-COMMERCE AS % OF GROUP SALES e-COMMERCE SOLUTIONS AS % OF GROUP EBIT

e- e- Supply Commerce Commerce Chain Supply Solutions Solutions Solutions Chain 2% 2% 69% Solutions 74%

Print & Packaging Solutions Print & 24% Packaging Solutions 29%

Source: Company data Source: Company data The business segment This business segment consists of the brands fotokasten, myphotobook and Deutsche comprises three brands: Online Medien (dlolm). Fotokasten and myphotobook are primarily focused on fotokasten, myphotobook and consumers; myphotobook targets customers outside of Germany while fotokasten dlolm serves the German market. Fotokasten and myphotobook offer free software that allows customers to customise photo books or photo albums in four simple steps:

 Download the software  Start the program and choose product  Create and customise your own photo book or album  Put your product in your shopping basket and check out

DOM’s e-commerce solutions allow customers to choose from a broad range of photo products such as photo books, calendars, gifts and home accessories. The brand also offers so-called white label solutions allowing other companies to sell parts of Elanders’ photo product range under their own brand names. Elanders is responsible for the entire order flow, the production process and the delivery. The brand owner is responsible for marketing and sales.

Marketing material commissioned by Elanders 49 27 November 2018 Elanders

FOTOKASTEN MYPHOTOBOOK DEUTSCHE ONLINE MEDIEN

Source: Company data Source: Company data

Source: Company data  Acquired by Elanders in 2012  Acquired by Elanders in 2013  Acquired by Elanders in 2012  Net sales of SEK 150m when  Net sales of SEK 140m when  DOM is based out of Waiblingen, acquired in 2012 acquired in 2013 Germany and has around 60  Fotokasten is a strong and well-  Myphotobook was founded in employees known brand in the growing 2004 and is now a leading e-  DOM develops technical solutions German market offering commerce company in Europe for for digital photo and print services personalised photo products such personalised photo products and was one of the first as photo books and calendars to  The company offers services in companies to offer digital prints consumers Austria, Belgium, Denmark,  Since 2005, the company has Fotokasten has around 400,000 England, France, Germany, offered its services "white recurring customers and can, Ireland, Italy, Luxembourg, the labelled" for other companies during peak season, handle more Netherlands, Northern Ireland, tailored to their needs than 20,000 orders in one day Norway, Spain, Sweden and Switzerland

e-Commerce Solutions pointing towards a turnaround As Elanders has shifted its The business segment's portion of Elanders' top line and EBIT has decreased gradually strategy to focus on supply over the past five years, which is to be expected considering that Elanders has shifted chain solutions, the top line its business strategy towards supply chain solutions. The business segment's and EBIT for the segment has contribution to Elanders' EBIT has been declining not only due to decreased gradually been decreasing profitability for e-Commerce Solutions but also because of improved profitability in the rest of Elanders' business segments.

NET SALES LTM, SEKm AND % CHANGE Y/Y

300 40% 35% 250 30% 25% 200 20% 15% 150 10% 5% 100 0%

50 -5% -10% 0 -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18E Net sales R-12 % change y/y

Source: Company data and Nordea estimates

The LTM net sales stabilised The segment has reported negative organic sales growth for the past three years, with during 2018 and we expect it to sales declining from SEK 263m in 2014 to SEK 209m in 2017. The negative growth is a growth for the remainder of the function of lower marketing spending and tightening competition. Similar to online year retail companies, the photo book business is highly dependent on a constant, high level of marketing activities. Due to the relatively small size of the segment, we believe that management has to some extent neglected marketing and R&D spending, which may have led to lost market shares.

The net sales development on a LTM basis has been soft, with negative organic growth for almost 12 quarters in a row, although it has flattened out since the new management took over the business in mid-2017. The profitability weakness that started in 2014-15 also seems to have hit rock bottom in Q4 2017, with reported results improving y/y. Nevertheless, we estimate flattish organic growth for Q4 and 2019-20.

Marketing material commissioned by Elanders 50 27 November 2018 Elanders

LTM ADJ EBIT, SEKm, AND ADJ EBIT MARGIN, %

30 12%

25 10%

20 8%

15 6%

10 4%

5 2%

0 0%

-5 -2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18E Adj. EBIT R-12 Adj. EBIT margin R-12

Source: Company data and Nordea estimates

A one-off cost relating to The profitability trend turned in the right direction in Q1 2018, and losses have management had a large decreased over the first nine months of 2018. Q4 is the by far the largest quarter for impact on the segment's EBIT earnings. We expect 14% y/y growth in Q4 corresponding to an operating profit of SEK in 2017 19.4m (17.0m) and a margin of 18.6% (16.8%). For 2019 and 2020, we do not expect to see any material earnings growth.

Enhanced performance improves the odds of a divestment For some time, management has communicated that the segment is undergoing a strategic review and may be divested or integrated into Print & Packaging Solutions. The former should be considered more likely than the latter, especially after the weak earnings in 2017. Now that earnings seem to coming back, the likelihood of divestment should increase.

As mentioned earlier, the photo book industry is still fragmented in Europe and undergoing consolidation. This began in 2009, and since 2015 the number of transactions has increased significantly. The most frequent buyers are Shutterfly, Cimpress and private-equity player Gilde. Due to confidentiality agreements, we could only find nine transactions with financial information, of which five took place after 2014. This gives us a lack of comparable transactions to rely on when valuing the segment.

RELATED M&A TRANSACTIONS 2009-18 Ann. Date Target name Acquiror name EV EV/S EV/EBITDA 25/06/2018 Monalbumphoto Albelli (Gilde Buy Out) n.a n.a n.a 30/01/2018 Lifetouch Shutterfly USD 825m 1.0x n.a 08/09/2017 ReSnap Albumprinter (Gilde Buy Out) n.a n.a n.a 26/07/2017 Albelli Gilde Buy Out Partners n.a n.a n.a 26/07/2017 Albumprinter Gilde Buy Out Partners n.a n.a n.a 21/12/2015 Wirmanchendruck Cimpress n.a n.a n.a 31/07/2015 Fairprint Distribution Cimpress n.a n.a n.a 18/03/2015 Druck.at Druck- und Handels Cimpress USD 3.6m 0.7x 6.7x 17/11/2014 Groovebook Shutterfly USD 15m n.a n.a 18/06/2014 Fotoknudsen Albumprinter USD 0.02m n.a n.a 01/04/2014 Pixartprinting Vistaprint USD 175m n.a n.a 18/02/2014 People & Print Group Vistaprint n.a n.a n.a 29/08/2013 R&R Images Shutterfly n.a n.a n.a 30/04/2013 MyPublisher Shutterfly n.a n.a n.a 30/05/2012 Photoccino Shutterfly n.a n.a n.a 01/03/2012 Kodak Imaging Network Shutterfly n.a n.a n.a 24/10/2011 Albumprinter Vistaprint USD 90m n.a 10.8x 30/06/2011 Printbell Vistaprint USD 23m n.a n.a 21/03/2011 Tiny Prints Shutterfly USD 306m 3.1x n.a 09/10/2009 TinyPictures Shutterfly USD 1.3m n.a n.a

Source: Thomson Reuters and Nordea estimates

Marketing material commissioned by Elanders 51 27 November 2018 Elanders P&L discussion

We expect Elanders' net sales to reach SEK 12bn by 2020, driven by new customer contracts, underlying market growth in the Supply Chain Solutions segment, and increased sales of subscription boxes. Likewise, we project EBIT to reach SEK 600m by 2020. Of the significant growth in 2018E, 41% will mainly be driven by Supply Chain Solutions and increased operational leverage in this segment.

NET SALES, 2006-20E, SEKm

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E2019E2020E

Source: Company data and Nordea estimates We estimate a strong growth Between 2013 and 2017, the group reported a sales CAGR of 45%; in the period since trend in the coming years, with 2006, the CAGR has been over 15%. We also estimate revenue growth going forward, net sales reaching SEK 10bn in with sales breaking SEK 10bn in 2018 and SEK 11.6bn in 2020 (corresponding to a 2018 and SEK 11.6bn in 2020. CAGR of 8.3%). We believe that growth will be driven primarily by Supply Chain This will mainly be driven by Solutions and, to some extent, by the subscription box contract within the Print and the Supply Chain Solutions Packaging Solutions segment. segment As we highlighted earlier, we expect a turbulent second half for the automotive industry, driven by the newly implemented emission regulation standard for European passenger cars. We have taken this into account in our estimates, though the effect will be mitigated by new contracts.

ORGANIC GROWTH PER SEGMENT, (%) GROUP ORGANIC GROWTH, (%) 15% 10%

9.9% 10.2% 9% 10% 8.6% 8%

5.0% 7% 3.8% 4.5% 5% 6% 1.7% 1.5% 0.6% 5% 0% 4% -1.6% 3% -5% -2.5% 2% 1% -10% -8.2% 2017 2018E 2019E 2020E 0% 2015 2016 2017 2018E 2019E 2020E Supply Chain Solutions Print & Packaging Solutions Organic growth Financial target 3-5% e-Commerce Solutions

Source: Company data and Nordea estimates Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 52 27 November 2018 Elanders

We estimate significant organic We can clearly see that Supply Chain Solutions is driving the bulk of the organic growth in the Supply Chain growth, which looks set to be almost 10% this year and should be 5% in 2019E. This Solutions segment, driven by growth is based on new customer contracts, as well as market growth of 4%. New new customer contracts and contracts announced by the company should add annual sales of SEK 275m. In underlying market growth, and addition, despite an underlying falling market within printing, we expect the Print & to some extent the Print & Packaging Solutions segment to contribute solid organic growth of over 10% this year Packaging Solutions segment, and 4% in 2019. The high growth rate should primarily be driven by Elanders' owing to increased sales for subscription boxes in the US. The subscription box operation is a combined business subscription boxes between Supply Chain Solutions and Print & Packaging Solutions and could, over time, be reported under Supply Chain Solutions.

In 2017, Elanders revised its financial objectives, mainly regarding its revenue growth over a business cycle, from 10% including acquisitions to 3-5% on an organic basis. Our estimates show Elanders reaching the upper end of the guidance at around 4%.

SUPPLY CHAIN FX WEIGHT, (%) PRINT & PACKAGING FX WEIGHT, (%) E-COMMERCE FX WEIGHT, (%)

USD/ USD/ SEK SEK 30% 25% SEK/S EUR/SEK 40% EK CNY/ 1% SEK 7%

GBP/SEK 10% EUR/ SEK 100% EUR/ SEK/SEK SEK 18% 69%

Source: Nordea estimates Source: Nordea estimates Source: Nordea estimates In addition to solid organic In addition to solid organic growth, we expect all business segments to continue growth, we expect all realising significant FX tailwinds from the EUR/SEK and USD/SEK appreciation. All segments to continue segments have an overweight of EUR/SEK sales due to the company's strong footprint realising significant FX in Germany. tailwinds from the EUR/SEK and USD/SEK appreciation We estimate a positive FX effect on grouprevenue of 5% this year and 2% in 2019, while the impact on EBIT should be slightly larger, due to a combination of translation and transaction effects, especially the latter.

REVENUE AND EBIT IMPACT FROM FX Top-line effect 2016 2017 2018E 2019E 2020E Supply Chain Solutions 3% 1% 5% 2% 0% Print & Packaging Solutions 0% 0% 4% 2% 0% e-Commerce Solutions 2% 1% 5% 1% 0% Group 1% 0% 5% 2% 0%

EBIT impact Supply Chain Solutions 4% 1% 15% 7% 0% Print & Packaging Solutions 0% 0% 11% 5% 0% e-Commerce Solutions 4% 1% 17% 7% 0% Group 2% 1% 16% 7% 0%

Source: Nordea estimates

Marketing material commissioned by Elanders 53 27 November 2018 Elanders

Profit affected by new customer contracts – dilution set to fade from Q3 Since H1 2017, profit has been negatively affected by three customer contracts, which has been visible in Elanders' gross margin development since Q1 2017. Further, the Swedish Print & Packaging Solutions business, which has low capacity utilisation, has impacted profit negatively.

GROSS MARGIN, Q1 2016-Q4 2018E, (%)

25%

20%

15%

10%

5%

0% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18E

Source: Company data and Nordea estimates The gross margin has Elanders reported a gross margin contraction of some 350 bp from 15.9% in Q1 2017 to recovered from its decline since 12.4% in Q1 2018, but the margin has since recovered somewhat, reaching 13.6% in Q3. Q1 2018, and we expect it to The gross margin recovery can partly be explained by price increases that were continue to do so in Q4 2018 implemented to ensure healthy profitability in the three new contracts. The negative effects from the new contracts are likely to continue to hold back profit in Q4 2018 as well, though to a lesser extent than in previous quarters.

EBIT MARGIN DRIVERS, 2017-20E, BP EBIT BRIDGE, 2017-20E, SEKm 250

200

150

100

50

0

-50

-100 Gross margin SG&A Other operating Other operating income expenses

Source: Nordea estimates Source: Nordea estimates

Marketing material commissioned by Elanders 54 27 November 2018 Elanders

Solid operational leverage The SG&A we expect will be We expect operational leverage to be the largest EBIT driver going forward, as well as the main EBIT driver going some positive FX tailwind. SG&A as a percentage of sales came down from 20% to 11% forward in 2017. We expect this ratio to come down further to 9.4% in 2018 and 9.2% in 2020. The significantly lower SG&A than historically is attributable to the acquisition of Mentor Media and LGI. The incremental margin should amount to 10% this year and 14% in 2019E.

ADJUSTED EBIT GROWTH Y/Y, % ADJUSTED EBIT MARGIN VS CHANGE Y/Y, BP

70% 62% 8% 200 60% 7% 150 100 50% 42% 42% 6% 50 40% 33% 5% 0 30% 25% 18% 4% -50 20% 8% 3% -100 10% -150 2% 0% -200 -10% 1% -250 -20% -13% 0% -300 2013 2014 2015 2016 2017 2018E 2019E 2020E 2013 2014 2015 2016 2017 2018E 2019E 2020E Change y/y in BPS Adj. EBIT margin

Source: Company data and Nordea estimates Source: Company data and Nordea estimates Supply Chain Solutions will drive margins; Print & Packaging has peaked As a function of the EBIT Based on the EBIT drivers above, we expect EBIT growth of 42% for 2018 and 18% for drivers above, we expect 2019, driven by Supply Chain Solutions, while Print & Packaging Solutions has peaked. EBIT growth of 41% for 2018 Supply Chain Solutions should achieve margin expansion of 91 bp y/y this year and 87 and 18% for 2019, driven by bp in 2019, driven by operational leverage as well as price increases. Further, we Supply Chain Solutions, while forecast that management will continue to phase out or divest parts of the freight and Print and Packaging has transportation services, amounting to approximately 32% of the segment. The services peaked include freight forwarding, for which we estimate margins are in the low single digits. Freight and transportation services are often combined with other services by customers, and we estimate that only 15% of customers solely use freight services.

Assuming that some 15% of the freighting business were to be divested, corresponding to SEK 560m, with a margin of 1.5% on average, it would boost the EBIT margin by at least 20 bp for the segment and 15 bp for the group.

Meanwhile, Print & Packaging Solutions' margins might have peaked due to the underlying decline in the market, with overcapacity as well as price pressure. In addition, we estimate that the new fast-growing niche segment, subscription boxes, has lower profitability, which implies margin dilution for the segment.

ELANDERS: EBIT MARGIN VS PEERS, % PRIVATE LOGISTICS PEERS' EBIT MARGINS

12% 9.0% 8.0% 10% 7.0% 8% 6.0% 5.0% 6% 4.0% 4% 3.0% 2.0% 2% 1.0% 0% 0.0% 2017 2018E 2019E 2020E 2015 2016 2017 Printing Peers Logistics suppliers Elanders Fiege BLG Group7 Average Elanders

Source: Thomson Reuters and Nordea estimates Source: Nordea estimates

Marketing material commissioned by Elanders 55 27 November 2018 Elanders Balance sheet discussion

In our view, Elanders has a somewhat overcapitalised balance sheet. The company's historical acquisitions have contributed to a fairly substantial goodwill position, as well as a high level of interest-bearing debt, which led to increasing net debt/EBITDA during 2015-17. However, net debt/EBITDA declined during Q1-Q2 2018, and we expect this to continue over the coming quarters alongside organic growth and improved cash flow generation.

ELANDERS: BALANCE SHEET, Q3 2018, SEKm LONG-TERM VS SHORT-TERM LIABILITIES, Q3 2018, SEKm

10,000 6,000

8,000 4,000 6,000

4,000 2,000 2,000

0 0 Assets Equity & Liabilities Total long-term liabilities Total short-term liabilities Intangible assets PPE Interest-bearing short-term liabilities Other fixed assets Total current assets Non-interest-bearing short-term liabilities Total long-term liabilities Total short-term liabilities Interest-bearing long-term liabilities Equity Non-interest-bearing long-term liabilities

Source: Company data Source: Company data Elanders has a well-capitalised Elanders has a well-capitalised balance sheet. When examining the asset side, the balance sheet, where the majority is intangible assets of SEK 3.2bn, of which around 75% (or SEK 2.4bn) is assets are categorised as goodwill related to the acquisitions of Mentor Media in 2014 and LGI in 2016, as well as goodwill several acquisitions within Print & Packaging Solutions. The intangible assets with indefinite useful life are split among the segments (55% Supply Chain Solutions, 38% Print & Packaging Solutions and 7% e-Commerce Solutions). PPE only represents a fraction of the asset side, mainly as a function of leases.

The majority of the right side of The other side of the balance sheet is dominated by debt, both short- and long-term the balance sheet is short-term interest-bearing debt of around SEK 3.4bn. Due to the upcoming debt refinancing in liabilities, but we consider 2019, the bulk of the long-term interest-bearing debt was, in Q3, accounted as short- Elanders to have a strong term interest-bearing debt. The high portion of debt implies gearing of >100%. equity position NET WORKING CAPITAL (NWC) PARAMETERS, DAYS IN NWC AND NWC/SALES, SEKm INVENTORY, DAY SALES OUTSTANDING, DAYS PAYABLE OUTSTANDING 1,400 18% 16% 100 1,200 14% 90 1,000 12% 80 800 10% 70 8% 60 600 6% 50 400 4% 40 200 30 2% 20 0 0% 10 0 Q1 Q2Q3Q4 Q1Q2 Q3Q4Q1 Q2Q3 Q4Q1Q2 Q3Q4 Q1Q2Q3 NWC NWC/Sales (%) 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 Source: Company data and Nordea estimates DSI DSO DPO

Source: Company data and Nordea estimates Elanders has shown volatility in its net working capital since 2006, although there has been some degree of stabilisation at around 13% of sales since 2014. When examining NWC, we conclude that Elanders has had tailwind from some parameters, partly explained by the acquisition of LGI. Due to a couple of years with strong organic and acquired growth, and as we expect a somewhat lower growth and consolidation, we forecast somewhat lower NWC-to-sales ahead of around 11%.

Marketing material commissioned by Elanders 56 27 November 2018 Elanders

NET DEBT/EBITDA VS FINANCIAL TARGET, x

12x

10x Net debt/EBITDA decreased during Q1-Q2 2018; we believe 8x it will continue to do so until 2020 6x

4x

2x

0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E2019E2020E ND/EBITDA Financial target (0-2x) Median

Source: Company data and Nordea estimates Elanders' historical leverage, measured as net debt/EBITDA, has exceeded the current financial target of between 0x and 2x at times. That said, the ratio can exceed the target over limited periods. As of 2017, the ratio was over 4x; we note that the higher ratio was partly due to earnings being distorted by some disruption from three customer contracts. Furthermore, we estimate this ratio to contract to around 3.2x at the end of 2018 and to 2.5x at the end of 2019 owing to improved earnings and a NWC reduction.

Marketing material commissioned by Elanders 57 27 November 2018 Elanders M&A

Elanders has an extensive acquisition record dating back to 1997 when Carl Bennet became its largest shareholder. Elanders acquired 11 companies during 1997-2000 and completed 13 primarily bolt-on acquisitions during 2010-17. Taken together with soft earnings, the large number of acquisitions elevated Elanders' leverage, which could potentially limit the pace of its M&A ahead. With the year almost over, we regard any acquisitions in 2018 as unlikely, although we expect Elanders to lower its debt heading into 2019-20, which could create an opportunity for smaller bolt-on acquisitions.

The unknown compounder Elanders could be defined as a Elanders could be defined a compounder, or at least a frequent acquirer, having closed compounder, with over 13 13 acquisitions in the past eight years. The majority of its most recent acquisitions could completed acquisitions in the be defined as small to medium-sized (ie bolt-on acquisitions), with an enterprise value past eight years of around SEK 100m and helping Elanders to strengthen its position as a leading niche supply chain management company. In our view, the most noticeable deals have been its large transformational acquisitions, including Mentor Media in 2014 (with sales of SEK 1,200m) and LGI in 2016 (with sales of SEK 4,100m), which almost doubled the company. When examining past acquisitions, we also conclude that management has shifted its focus towards niche supply chain companies similar to Asiapack. In addition, management continues to acquire small print and packaging companies in specific niches with underlying growth, solid margins and with less exposure to competition. Two interesting niche acquisitions were Spreckley Limited, a UK-based company providing highly-specialised and customised packaging, points of sales and labels for the British market, and McNaughtans, specialised in labels and tube wraps for the single malt whisky market in Scotland.

ELANDERS' ACQUISITION HISTORY Date Target Country Segment Employees Net sales EBIT EV EV/EBIT EV/Sales 2017-08 Spreckley limited UK Print & Packaging Solutions 20 SEK 22m SEK 22m n.a. 1.0x 2017-10 Asiapack China Supply Chain Solutions 220 SEK 78m SEK 98.5m n.a. 1.3x 2016-07 LGI Germany Supply Chain Solutions 3,400 SEK 4128m SEK 250m SEK 2,434m 9.7x 0.6x 2015-12 Schmid Druck Germany Print & Packaging Solutions 75 SEK 81.6m SEK 14m SEK 43m 3.1x 0.5x 2014-01 Mentor Media Singapore Supply Chain Solutions 1,550 SEK 1,206m SEK 320m n.a. 0.3x 2013-08 Myphotobook Germany e-Commerce Solutions 70 SEK 139m SEK 90.3m n.a. 0.6x 2013-02 Mcnaughtan's Scotland Print & Packaging Solutions 0 SEK 20m SEK 30m n.a. 1.5x 2012-12 Midland Information US Print & Packaging Solutions 180 SEK 195m SEK 175m n.a. 0.9x 2012-03 Fotokasten Germany e-Commerce Solutions 35 SEK 150m SEK 15m SEK 79m 5.3x 0.5x 2012-03 Deutsche Online Medien Germany e-Commerce Solutions n.a. n.a. 2011-10 NRS Tryckeri Sweden Print & Packaging Solutions SEK 50m n.a. n.a. 2011-01 Fälth & Hässler Sweden Print & Packaging Solutions SEK 100m n.a. n.a. 2010-08 Printpack CW Germany Print & Packaging Solutions 44 SEK 100m SEK 25m n.a. 0.3x

Source: Company data and Nordea estimates

Short on firepower Main constraint for future We believe that management is determined to continue its acquisition pace with bolt- acquisitions is the lack of on acquisitions mainly related to its Supply Chain Solutions business area, although we firepower... do not exclude the possibility of minor acquisitions in Print & Packaging. There are plenty of targets, specifically in the fragmented European supply chain management market. The main constraint, in our view, is the company's lack of firepower. As of Q3 2018, Elanders' interest-bearing debt totalled SEK 3,510m with a cash position of SEK 509m, implying net debt of SEK 2,890m and net debt/EBITDA of 4.4x. We note that the ...assuming net debt/EBITDA of current leverage ratio is somewhat inflated as earnings are not normalised on a trailing 3.0x for 2019, we calculate that twelve month basis. When accounting for our expected normalised earnings in H2, we the acquisition headroom estimate the ratio to drop to 3.2x at year-end. Nevertheless, we find that Elanders' net would be around SEK 400m debt/EBITDA is high given the nature of the business and its exposure to a cyclical end market. For 2019, we expect net debt/EBITDA to drop to a more acceptable 2.5x, albeit still quite some distance from the company's financial objectives (0-2x). For limited periods, the leverage could exceed the financial target of 0-2x EBITDA. When assuming a ratio of 3.0x for 2019, we calculate that the acquisition headroom would total around SEK 400m.

Marketing material commissioned by Elanders 58 27 November 2018 Elanders

Looking at Elanders' shareholder structure, as well as the acquisition of Mentor Media and LGI, we believe that the company could consider a rights issue if it comes across the right target.

Value recovery could be one targeted industry Value recovery and reverse We believe that management is exploring the possibility of further expanding into logistics are part of LGI's value recovery and reverse logistics, as both of these segments are part of LGI's current current service portfolio and service portfolio and could therefore produce significant synergies. Value recovery can could produce significant involve services such as refurbishing and reselling equipment or materials. By synergies remarketing and reselling discarded consumer products, the provider helps its customers to receive a higher ROI on their initial IT investments.

Below, we list a few companies that we believe could be of interest for Elanders, given its current services.

POTENTIAL M&A TARGETS Target Country Revenues Employees Dynamic Lifecycle Innovations US n.a n.a Tekovery US n.a n.a PlanITROI US USD 16m 65 Reverse Logistics Group Germany EUR 137m n.a CoreCentric Solutions US USD 24m 250

Source: Nordea estimates

Marketing material commissioned by Elanders 59 27 November 2018 Elanders Cash flow discussion

Elanders reported weak free cash flow for 2017, partly due to high capex and partly to poor group profitability. We expect a pickup as early as 2018, however, thanks to lower net working capital and improved earnings. We estimate a FCF margin of some 4% up to 2020.

Future capex needs We believe Elanders' capex will come down from the fairly high levels seen in 2017 of almost SEK 200m or 2.1% of sales. Capex generally fluctuates depending on how many new contracts are won, the configuration of these contracts, and whether Elanders needs to make initial investments in setting up a unit for a long-term contract with minimum volumes. We expect that the major investments were taken in 2017 and that capex should come down to SEK 160m for 2018, corresponding to 1.5% of sales. From 2019 onwards, we factor in capex/sales of 1.5%, in line with the three-year average.

Dividends According to the company's dividend policy, the payout ratio should follow the long- term profit trend, on average representing 30-50% of net profit. Since 2011, the average payout ratio has been around 25%, but it was 38% in 2017. Despite high net debt/ EBITDA, we expect the board to propose an increase of SEK 0.2 per share, taking dividends to SEK 3.80 per share, or a payout ratio of 40%. We foresee the symbolically raised dividend as a sign of Elanders heading in the right direction in terms of both growth and profitability.

CASH FLOW BRIDGE FOR 2017-20E, SEKm NWC AND AS A PERCENTAGE OF SALES, SEKm

1,400 18% 1,200 16% 14% 1,000 12% 800 10% 600 8% 6% 400 4% 200 2% 0 0%

NWC NWC/Sales (%)

Source: Company data and Nordea estimates Source: Company data and Nordea estimates Net working capital has increased significantly in absolute terms, driven by the rapid organic expansion and acquisitions. At the same time, NWC/sales has remained impressively flattish at around 12%. We believe management will focus on consolidation and pushing down working capital. Guidance issued at the Q3 telephone conference was for NWC/sales to stay fairly consistent unless cash activities, such as factoring, are implemented, which we expect is likely.

FCF VS FCF MARGIN, SEKm CASH CONVERSION 600 6% 60% 500 5% 40% 400 4% 3% 300 20% 2% 200 1% 100 0% 0% 0 -1% -20% -100 -2% -200 -3% -40% -300 -4% 2013 2014 2015 2016 2017 2018E2019E 2020E -60% 2013 2014 2015 2016 2017 2018E 2019E 2020E Adj. FCF FCF margin (%)

Source: Company data and Nordea estimates Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 60 27 November 2018 Elanders

Free cash flow has historically been volatile, even adjusted for acquisition-related capex. The fluctuations primarily derive from changes in working capital and expansionary capex, which makes it difficult to estimate the company's underlying FCF margin and cash conversion. Given Elanders' strong growth since its acquisitions of Mentor Media and LGI, we see some room for improvement.

Marketing material commissioned by Elanders 61 27 November 2018 Elanders Sustainability

Elanders aims to incorporate sustainability strategies across the company's entire business model on every level, with the goal of diminishing its negative impact on the environment, improving its contributions to social development and acting as a responsible and respectful employer.

Environment and climate Since the acquisition of LGI in Since the acquisition of LGI in 2016, Elanders has approximately 265 trucks with 2016, Elanders has trailers, and transportation using the trucks has a direct impact on the environment. approximately 265 trucks with This includes air and noise pollution, acidification, over-fertilisation and greenhouse trailers gas emissions. Furthermore, manufacturing, heating, lighting and cooling in the company's facilities require energy, and this energy consumption also impacts the environment.

Elanders strictly follows legal According to the company, Elanders systematically works to reduce its impact on the requirements and compliance, environment. The company strictly follows legal requirements and compliance, including environmental including environmental standards such as ISO 9001 and ISO 14001. The company standards such as ISO 9001 writes in its sustainability report (2017) that it received an Environmental Impact Award and ISO 14001 from its main supplier of packaging material in the US. According to the supplier, the award recognises Elanders' commitment to actively look for environmentally friendly solutions, which have helped it to save water, reduce its carbon dioxide emissions and lower its energy consumption.

The company's Print & The company's Print & Packaging business has been able to demonstrate Packaging business has environmental improvements such as decreasing the use of paper (pivoting towards successfully decreased its use digital solutions), producing less hazardous waste as well as lower energy of paper and produce less consumption and greenhouse gas emissions. As paper and packaging are a major waste commodity within this business segment, Elanders tries to come up with solutions to minimise paper waste, such as producing on-demand, which leads to a reduction in unused materials, among other things. Additionally, there are different kinds of solvents used in printing production, which have a severe negative effect on the environment and workers' health. Elanders aims to eliminate the use of aromatic solvents and continuously monitors the solvents it uses.

Elanders has 265 trucks that Within the Supply Chain Solutions business area, Elanders has around 265 trucks that emitted 27 trillion metric obviously emit greenhouse gases. However, according to the company, it continuously tonnes of carbon dioxide in upgrades its fleet of trucks in order to lower carbon dioxide emissions. Elanders claims 2017 that in 2017, 95% of the trucks complied with the Euro 6 norm, which put the NOx emissions limit at 80mg/km. The company claims that this high standard, its effective motors and well-developed GPS systems have led to a substantial reduction in fuel consumptions. As of 2017, the company's average fuel consumption amounted to approximately 30 litres per 100 km.

CARBON DIOXIDE EMISSIONS, TONNES PERCENTAGE OF RENEWABLE ELECTRICITY

2017 2017 From transportation operations 27,282 All entities 30.5%

Source: Company data and Nordea Source: Company data and Nordea

Employees According to the company's Code of Conduct, all of the company's workplaces must be free from pollution, have solid conditions including temperature and hygienic standards. The company stresses the importance of low sick leave and work-related injuries and systematically works to reduce these. One goal management has is to lower absence due to illness. According to Elanders, in 2017 the absentee rate of all employees was 4.1%. Another aspect relating to employees concerns gender equality among the company's employees. Elanders' gender distribution among its employees is presented in the table below

Marketing material commissioned by Elanders 62 27 November 2018 Elanders

GENDER DISTRIBUTION AT ELANDERS, % 2017 2016 2015 Gender distribution % Men/Women Men/Women Men/Women All employees 64/36 60/40 53/47 Middle management 72/28 68/32 64/36 Group managment 100/0 100/0 100/0 Board 60/40 56/44 60/40

Source: Company data and Nordea

Social conditions and human rights Elanders works actively with Elanders works actively with Corporate Social Responsibility (CSR) and is engaged in CSR and is engaged in several several projects concerning social responsibility. Elanders' local units decide for social responsibility projects themselves which projects they want to be involved in. An example of such a project is called AtelierResonanzRaum, which aims to give cancer patients renewed vitality through art and music therapy. Elanders also supports an orphanage in Poland and The United Way of the Quad Cities, which offers educational support in the US.

In addition, the company champions human rights. An example of its successful work in this field is the SA8000 certification, a standard based on the UN Declaration of Human Rights, which one of its sites in Beijing received in 2017. The underlying purpose of the standard is to support and protect employees.

Marketing material commissioned by Elanders 63 27 November 2018 Elanders Peer description

This section provides a brief overview of Elanders' peer group.

Peer description Deutsche Post Based in Germany, Deutsche Post AG is active in the Postal Services industry. The company operates across four different segments: Supply Chain, Global Forwarding and Freight, Express, and Parcel Post (ecommerce). The services provided include transportation of goods, courier and express services, logistics solutions and business process outsourcing. Deutsche Post is active in Europe, the Americas, Asia-Pacific, the Middle East and Africa.

DSV Denmark-based DSV A/S provides transport and logistics in more than 70 countries. It is active across Europe, the Americas, Asia, Africa and Australia. DSV's business is split into three divisions: Road, Air & Sea, and Solutions. Road provides road freight services within Europe. Solutions offers logistics solutions across the entire supply chain. Air & Sea handles air and sea freight across the world. DSV also operates via DSV Swift, a group of African companies active in air and sea freight, as well as numerous subsidiaries.

XPO Logistics Headquartered in Greenwich, Connecticut, XPO Logistics is a global provider of transportation and logistics services. Transportation provides a wide range of services including freight brokerage, last mile, less than truckload and full truckload as well as forwarding services. Logistics offers a variety of logistics services, including value- added warehousing and distribution, highly engineered and customised solutions, cold chain solutions and other inventory solutions.

bpost Belgium-based bpost provides postal delivery services both domestically and internationally. The company offers delivery of mail, parcels and packages, along with market surveys, business databases, document services and direct marketing. Headquartered in Brussels, the company serves both business and residential customers through mass-market channels such as post offices or via bpost’s eShop.

Kuehne und Nagel Kuehne und Nagel International AG is a global provider of integrated logistics services. Together with its subsidiaries, the company operates land, sea and rail freight transportation businesses as well as warehousing and distribution facilities. It also provides related special services such as brokerage services for insurance coverage. Kuehne und Nagel is based in Switzerland.

United Parcel Service United Parcel Services, Inc is a package delivery company based in the US with global operations. It also provides less than truckload transportation and global supply chain management solutions. It operates through three segments: International Package, US Domestic Package, and Supply Chain & Freight. The wide range of services provided includes, amongst others, time-definite and guaranteed day delivery, air and ocean freight brokerage, distribution and post-sales.

Wincanton Based in the UK, Wincanton plc provides supply chain solutions through two segments: Retail & Consumer and Industrial & Transport. The company’s business involves the operation, design and procurement of automated storage systems and warehouses. Wincanton additionally provides fleet management services, including the planning, maintenance and operation of vehicle fleets and distribution networks.

Marketing material commissioned by Elanders 64 27 November 2018 Elanders

Xpediator UK-based Xpediator PLC provides a range of logistics services to customers worldwide. The services it offers include warehousing, pallet distribution, freight forwarding and management, and transport services. The company operates its transport services under the Affinity brand and its freight forwarding and logistics business under the Delamode brand.

Huhtamaki Huhtamaki Oyj is a Finland-based company engaged in packaging for food and drink. Operating segments are Europe-Asia-Oceania, North America, Flexible Packaging and Fiber Packaging. The product offering includes cups, plates and trays, as well as containers for fresh meats, fruits, dairy products, frozen foods, coffee, and detergents made of paper, moulded fibres, and plastics. The company sells globally and manufactures in more than 30 countries.

Amcor Amcor Limited is an Australia-based international integrated packaging company offering packaging and related services. Amcor primarily produces a wide range of packaging products including corrugated boxes, cartons, aluminium and steel cans, flexible plastic packaging, PET plastic bottles and jars, and multi-wall sacks. Amcor operates in more than 40 countries through 195 sites.

Sealed Air Sealed Air Corporation manufactures packaging and performance-based materials and equipment systems that serve food, industrial, medical and consumer applications. The company’s brand portfolio includes Cryovac brand food packaging solutions and Bubble Wrap brand cushioning, among others. Sealed Air serves customers in 122 countries with manufacturing in 94 facilities.

Mondi Mondi Ltd is a UK-based packaging and paper company engaged in managing forests and producing pulp, paper and compound plastics for industrial and consumer packaging. The company offers containerboard, sack kraft paper, speciality kraft paper, pulp, industrial bags, corrugated packaging, extrusion coatings, advanced films and components, consumer goods packaging, release liners, uncoated fine paper, pulp and newsprint.

Graphic Packaging Graphic Packaging Holding Company operates as an integrated provider of paperboard and integrated paperboard packaging solutions to multinational beverage and consumer products companies. The company manufactures folding cartons for frozen and non-frozen food and beverage products. Graphic Packaging operates globally in Europe, Asia, Pacific, Australia and New Zealand, Latin America and North America.

Orell Fuessli Orell Fuessli Holding AG is a Switzerland-based company engaged in banknote and security printing, industrial systems for the individualisation of security documents and branded products, and book retailing. The company operates in three segments: Division Atlantic Zeiser, Division Security Printing, and Division Book Retailing.

Poligrafica S Faustino Poligrafica S Faustino SpA is an Italy-based company primarily engaged in the provision of commercial printing services. The company is diversified into three operating segments: Graphic Products, Web Agency Services, and Commercial Area. The company offers printed forms, such as promotional items and business papers, self-adhesive labels and flexible packaging, industrial labels and wet glue labels. It is also involved in the provision of direct mailing services, email marketing, electronic procurement services and electronic document management services.

Marketing material commissioned by Elanders 65 27 November 2018 Elanders

Multi-Color Corp Multi-Color Corporation is a US-based company that produces printed labels for branded consumer products. The company manufactures labels for a variety of products including liquid detergents, fabric softeners, food products, liquid cleaners, anti-freeze and chewing gum. It operates in the North American, Latin American, EMEA and Asia-Pacific regions, with 70 manufacturing facilities in 26 countries.

Transcontinental Transcontinental Inc is a Canada-based printing company with operations in print, flexible packaging, publishing and digital media, both in Canada and the US. The company's segments include the Printing and Packaging Sector and the Media Sector. The company is engaged in commercial printing of flyers, direct marketing products, books, newspapers, magazines, catalogues, directories and door-to-door distribution of advertising material. Transcontinental has employees in Canada, the US and Mexico.

R.R. Donnelley & Sons R. R. Donnelley & Sons Company is a US-based company that offers commercial printing and information services. The company provides solutions that include commercial printing, direct mail, financial printing, print fulfilment, labels, forms, logistics, call centres, transactional print-and-mail, print management, online services, digital photography, colour services, and content and database management.

Ennis Ennis, Inc is a US-based company engaged in the apparel and printing business. The apparel segment manufactures and distributes t-shirts and other activewear. The printing segment manufactures and sells business forms, printed electronic media, presentation products, envelopes and other custom products. The Ennis network is made up of 38 unique brands, 50 sites across the US, 2,300 employees and 40,000 distributors.

LSC Communications LSC Communications, Inc is a US-based company that specialises in print and print- related services and office products. The company prints magazines, catalogues, retail inserts, books and directories, as well as offers note-taking, binder, tax and stock forms, envelopes and filing products. LSC Communications serves customers worldwide.

Marketing material commissioned by Elanders 66 27 November 2018 Elanders Detailed annual estimates

ELANDERS: ANNUAL SALES BRIDGE (SEKm) 2013 2014 2015 2016 2017 2018E 2019E 2020E Net sales Supply Chain Solutions 0 1,525 2,048 3,999 7,007 8,086 8,645 9,034 Print & Packaging Solutions 984 2,030 2,053 2,146 2,220 2,531 2,597 2,636 e-Commerce Solutions 148 263 236 226 209 216 219 213 Group functions 11 24 27 28 35 45 44 44 Eliminations -51 -112 -126 -112 -129 -142 -149 -152 Total sales 2,096 3,730 4,239 6,287 9,342 10,735 11,356 11,776

Sales bridge Volume n.a n.a 2% 1% 7% 9% 5% 4% Price/Mix n.a n.a 0% 0% 0% 0% 0% 0% Structural n.a n.a 0% 44% 42% 0% -1% 0% FX n.a n.a 14% 1% 0% 5% 2% 0% Other n.a n.a 0% 0% 0% 0% 0% 0% Total growth 9% 78% 14% 48% 49% 15% 6% 4%

Sales bridge Volume n.a n.a 77 63 405 828 480 423 Price/Mix n.an.a000000 Structural n.a n.a 0 1,885 2,624 43 -60 0 FX n.a n.a 506 62 28 459 201 0 Other n.an.a000000 Total growth n.a n.a 583 2,011 3,058 1,330 620 423

Source: Company data and Nordea estimates

ELANDERS: ANNUAL GROWTH PER SEGMENT (%) 2013 2014 2015 2016 2017 2018E 2019E 2020E Supply Chain Solutions Volume 0% 0% 14% 4% 10% 9% 5% 5% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 0% 0% 0% 88% 65% 1% 0% 0% FX 0% 0% 20% 3% 1% 5% 2% 0% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth 0% 0% 34% 95% 75% 15% 7% 5%

Print & Packaging Solutions Volume 0% 0% -5% -1% 2% 10% 3% 2% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 0% 0% 0% 4% 2% 0% -2% 0% FX 0% 0% 10% 0% 0% 4% 2% 0% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth n.a 106% 1% 5% 3% 14% 3% 2%

e-Commerce Solutions Volume 0% 0% -10% -7% -8% -2% 1% -3% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 0% 0% 0% 0% 0% 0% 0% 0% FX 0% 0% 0% 2% 1% 5% 1% 0% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth 0% 78% -10% -4% -8% 3% 1% -3%

Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 67 27 November 2018 Elanders

ELANDERS: ANNUAL EBIT PER SEGMENT (SEKm) 2013 2014 2015 2016 2017 2018E 2019E 2020E Supply Chain Solutions n.a 106 182 259 253 366 466 509 Print & Packaging Solutions n.a 71 122 127 93 122 124 128 e-Commerce Solutions n.a241820-681010 Group functions n.a -27 -30 -59 -32 -21 -29 -29 Group EBIT n.a 175 292 347 308 475 571 617

Adj. EBIT per segment annual Supply Chain Solutions n.a 106 182 264 258 366 466 509 Print & Packaging Solutions n.a 113 138 127 109 122 124 128 e-Commerce Solutions n.a241820-181010 Group functions n.a -27 -30 -25 -32 -21 -29 -29 Adj group EBIT n.a 217 308 386 334 475 571 617

EBIT margin per segment annual Supply Chain Solutions n.a7.0%8.9%6.5%3.6%4.5%5.4%5.6% Print & Packaging Solutions n.a3.5%5.9%5.9%4.2%4.8%4.8%4.8% e-Commerce Solutions n.a 9.1% 7.6% 8.8% -2.9% 3.9% 4.3% 4.5% EBIT margin n.a 4.7% 6.9% 5.5% 3.3% 4.4% 5.0% 5.2%

Adj. EBIT margin per segment annual Supply Chain Solutions n.a7.0%8.9%6.6%3.7%4.5%5.4%5.6% Print & Packaging Solutions n.a5.6%6.7%5.9%4.9%4.8%4.8%4.8% e-Commerce Solutions n.a 9.1% 7.6% 8.8% -0.5% 3.9% 4.3% 4.5% Adj EBIT margin n.a 5.8% 7.3% 6.1% 3.6% 4.4% 5.0% 5.2%

Source: Company data and Nordea estimates

ELANDERS: ANNUAL ESTIMATES (SEKm) 2013 2014 2015 2016 2017 2018E 2019E 2020E Net sales 2,096 3,730 4,237 6,285 9,342 10,735 11,356 11,776 Cost of goods sold -1,591 -2,898 -3,252 -5,091 -8,008 -9,306 -9,802 -10,139 Gross profit 505 833 984 1,194 1,334 1,430 1,553 1,637 Sales and administrative expenses -416 -680 -718 -881 -1,067 -1,010 -1,051 -1,089 Other operating income 50 33 52 100 79 85 85 87 Other operating expenses -9 -11 -25 -67 -38 -31 -27 -28 EBITDA 229 293 428 518 563 743 836 878 Depreciation -98 -118 -135 -172 -255 -269 -276 -271 EBITA 139 194 313 386 371 537 620 658 Amortisation of intangible acq related assets -8 -19 -20 -40 -63 -64 -60 -51 EBIT 131 175 293 346 308 473 560 607 Net financials -29 -35 -33 -44 -80 -93 -83 -84 PTP 101 140 260 302 228 380 477 522 Income tax -32 -52 -85 -82 -64 -134 -167 -183 Net profit 70 88 175 220 164 246 310 340 Earnings per share (SEK) 3.073.436.597.264.646.838.669.49

Adj. EBITDA 232 335 444 557 589 743 836 878 Adj. EBITA 142 236 329 425 397 537 620 658 Adj. EBIT 134 217 309 385 334 473 560 607 Tax on EO -1 -16 -5 -11 -7 0 0 0 Adj. Net profit 72 114 186 248 183 246 310 340 Adj. EPS 3.07 4.54 6.59 8.41 5.14 6.82 8.66 9.49

Gross margin 24.1% 22.3% 23.2% 19.0% 14.3% 13.3% 13.7% 13.9% EBITDA margin 10.9% 7.8% 10.1% 8.2% 6.0% 6.9% 7.4% 7.5% EBITA margin 6.6% 5.2% 7.4% 6.1% 4.0% 5.0% 5.5% 5.6% EBIT margin 6.2% 4.7% 6.9% 5.5% 3.3% 4.4% 4.9% 5.2% Incremental margin 7.1% 2.7% 23.3% 2.6% -1.2% 11.8% 14.0% 11.1% Adj. EBITDA margin 11.1% 9.0% 10.5% 8.9% 6.3% 6.9% 7.4% 7.5% Adj. EBITA margin 6.8% 6.3% 7.8% 6.8% 4.2% 5.0% 5.5% 5.6% Adj. EBIT margin 6.4% 5.8% 7.3% 6.1% 3.6% 4.4% 4.9% 5.2% Adj. Incremental margin 19.3% 5.1% 18.2% 3.7% -1.7% 10.0% 14.0% 11.1%

Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 68 27 November 2018 Elanders Detailed quarterly estimates

ELANDERS: QUARTERLY SALES BRIDGE (SEKm) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18E Net sales Supply Chain Solutions 1,578 1,712 1,818 1,899 1,797 1,964 2,189 2,136 Print & Packaging Solutions 539 533 520 628 605 633 609 684 e-Commerce Solutions 39 33 36 101 39 34 39 104 Group functions 9 10 10 6 11 12 12 10 Eliminations -26 -24 -29 -50 -30 -30 -32 -50 Total sales 2,139 2,264 2,355 2,584 2,422 2,613 2,817 2,883

Sales bridge Volume 3% -1% 9% 10% 12% 11% 7% 6% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 109% 106% 18% 2% 1% 1% 1% -1% FX 3% 5% -2% -1% 0% 4% 9% 7% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth 114% 110% 25% 11% 13% 15% 20% 12%

Sales bridge Volume 30 -11 171 215 264 248 170 146 Price/Mix 00000000 Structural 1,089 1,147 344 44 20 19 22 -18 FX 31 53 -34 -22 -1 81 207 171 Other 00000000 Total growth 1,150 1,190 481 237 282 349 399 299

Source: Company data and Nordea estimates

ELANDERS: QUARTERLY GROWTH PER SEGMENT (%) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18E Supply Chain Solutions Volume 1% 2% 11% 14% 13% 10% 7% 6% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 236% 220% 25% 1% 1% 1% 1% 0% FX 5%7%-2%0%0%4%9%7% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth 242% 229% 34% 14% 14% 15% 20% 12%

Print & Packaging Solutions Volume 6% -3% 5% 0% 11% 15% 9% 7% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 0% 0% 1% 5% 1% 0% 0% -3% FX 1% 3% -2% -2% 0% 3% 8% 6% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth 5% 0% 4% 5% 12% 19% 17% 9%

e-Commerce Solutions Volume -12% -20% 0% -5% 0% 0% -1% -3% Price/Mix 0% 0% 0% 0% 0% 0% 0% 0% Structural 0% 0% 0% 0% 0% 0% 0% 0% FX 3% 2% 0% -1% 0% 3% 9% 6% Other 0% 0% 0% 0% 0% 0% 0% 0% Total growth -9% -18% 0% -6% 0% 3% 8% 3%

Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 69 27 November 2018 Elanders

ELANDERS: QUARTERLY EBIT PER SEGMENT (SEKm) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18E Supply Chain Solutions 68 84 59 42 41 82 123 120 Print & Packaging Solutions 362313333282338 e-Commerce Solutions -6 -6 -11 17 -3 -3 -5 19 Group functions -8 -8 -9 -7 -3 -7 -3 -8 Group EBIT 90 93 40 85 68 100 138 169

Adj. EBIT per segment quarterly Supply Chain Solutions 68 84 64 42 41 82 123 120 Print & Packaging Solutions 36 23 17 33 33 28 23 38 e-Commerce Solutions -6 -6 -6 17 -3 -3 -5 19 Group functions -8 -8 -9 -7 -3 -7 -3 -8 Adj group EBIT 90 93 66 85 68 100 138 169

EBIT margin per segment quarterly Supply Chain Solutions 4.3% 4.9% 3.2% 2.2% 2.3% 4.2% 5.6% 5.6% Print & Packaging Solutions 6.7% 4.3% 0.2% 5.3% 5.5% 4.4% 3.8% 5.5% e-Commerce Solutions -15.4% -18.2% -30.6% 16.8% -7.7% -8.8% -12.8% 18.6% EBIT margin 4.2% 4.1% 1.7% 3.3% 2.8% 3.8% 4.9% 5.9%

Adj. EBIT margin per segment quarterly Supply Chain Solutions 4.3% 4.9% 3.5% 2.2% 2.3% 4.2% 5.6% 5.6% Print & Packaging Solutions 6.7% 4.3% 3.3% 5.3% 5.5% 4.4% 3.8% 5.5% e-Commerce Solutions -15.4% -18.2% -16.7% 16.8% -7.7% -8.8% -12.8% 18.6% Adj EBIT margin 4.2% 4.1% 2.8% 3.3% 2.8% 3.8% 4.9% 5.9%

Source: Company data and Nordea estimates

ELANDERS: QUARTERLY ESTIMATES (SEKm) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18E Net sales 2,139 2,264 2,355 2,584 2,422 2,613 2,817 2,883 Cost of goods sold -1,798 -1,909 -2,061 -2,240 -2,122 -2,274 -2,435 -2,475 Gross profit 341 355 294 344 300 339 382 409 Sales and administrative expenses -269 -275 -258 -265 -251 -252 -259 -248 Other operating income 24 21 19 15 30 18 23 14 Other operating expenses -7 -8 -15 -8 -11 -5 -8 -7 EBITDA 152 156 104 151 135 168 206 234 Depreciation -48 -47 -49 -48 -51 -52 -68 -66 EBITA 104 109 55 103 84 116 154 183 Amortisation of intangible acq related assets -15 -16 -15 -17 -16 -16 -16 -16 EBIT 89 93 40 86 68 100 138 167 Net financials -21 -20 -20 -19 -22 -26 -24 -21 PTP 68 73 20 67 46 74 114 146 Income tax -16-19-6-23-12-32-39-51 Net profit 52 54 14 44 34 42 75 95 Earnings per share (SEK) 1.491.520.391.240.951.152.062.66

Adj. EBITDA 152 156 130 151 135 168 206 234 Adj. EBITA 104 109 81 103 84 116 154 183 Adj. EBIT 89 93 66 86 68 100 138 167 Tax on EO 00-800000 Adj. Net profit 52 54 32 44 34 42 75 95 Adj. EPS 1.47 1.53 0.91 1.22 0.93 1.16 2.06 2.66

Gross margin 15.9% 15.7% 12.5% 13.3% 12.4% 13.0% 13.6% 14.2% EBITDA margin 7.1% 6.9% 4.4% 5.8% 5.6% 6.4% 7.3% 8.1% EBITA margin 4.9% 4.8% 2.3% 4.0% 3.5% 4.4% 5.5% 6.4% EBIT margin 4.2% 4.1% 1.7% 3.3% 2.8% 3.8% 4.9% 5.8% Incremental margin 2.9% 2.3% -12.6% -15.0% -7.4% 2.0% 21.2% 27.1% Adj. EBITDA margin 7.1% 6.9% 5.5% 5.8% 5.6% 6.4% 7.3% 8.1% Adj. EBITA margin 4.9% 4.8% 3.4% 4.0% 3.5% 4.4% 5.5% 6.4% Adj. EBIT margin 4.2% 4.1% 2.8% 3.3% 2.8% 3.8% 4.9% 5.8% Adj. Incremental margin 2.9% 2.3% -12.6% -15.0% -7.4% 2.0% 21.2% 27.1%

Source: Company data and Nordea estimates

Marketing material commissioned by Elanders 70 27 November 2018 Elanders Reported numbers and forecasts

INCOME STATEMENT SEKm 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E Net revenue 1,706 1,839 1,924 2,096 3,730 4,237 6,285 9,342 10,726 11,304 11,722 Revenue growth -2.9% 7.8% 4.6% 8.9% 77.9% 13.6% 48.4% 48.6% 14.8% 5.4% 3.7% of which organic n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. of which FX n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. EBITDA 26 197 210 229 293 428 518 563 742 833 875 Depreciation and impairments PPE -103 -87 -91 -90 -99 -115 -132 -192 -205 -216 -220 EBITA -76 110 119 139 194 313 386 371 537 618 655 Amortisation and impairments 0 0 0 -8 -19 -20 -40 -63 -64 -60 -51 EBIT -76 110 119 131 175 293 346 308 473 558 604 of which associates 0 0 0 0 0 0 0 0 0 0 0 Associates excluded from EBIT 0 0 0 0 0 0 0 0 0 0 0 Net financials 0 0 0 0 0 0 0 0 0 0 0 Pre-tax profit -76 110 119 131 175 293 346 308 473 558 604 Reported taxes 21 -20 -49 -32 -52 -85 -82 -64 -134 -166 -182 Net profit from continued operations -55 90 70 99 123 208 264 244 339 391 422 Discontinued operations 0 0 0 0 0 0 0 0 0 0 0 Minority interests 0 0 0 0 0 0 0 -1 -5 -4 -4 Net profit to equity -55 90 70 99 123 208 264 243 334 387 418 EPS -4.32 4.47 3.13 4.24 4.86 7.37 8.93 6.87 9.43 10.96 11.83 DPS 0.00 0.50 0.60 0.80 1.10 2.20 2.60 3.60 3.80 4.00 4.20 of which ordinary 0.00 0.50 0.60 0.80 1.10 2.20 2.60 3.60 3.80 4.00 4.20 of which extraordinary 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Profit margin in percent EBITDA 1.5% 10.7% 10.9% 10.9% 7.8% 10.1% 8.2% 6.0% 6.9% 7.4% 7.5% EBITA -4.5% 6.0% 6.2% 6.6% 5.2% 7.4% 6.1% 4.0% 5.0% 5.5% 5.6% EBIT -4.5% 6.0% 6.2% 6.2% 4.7% 6.9% 5.5% 3.3% 4.4% 4.9% 5.2%

Adjusted earnings EBITDA (adj) 85 172 192 232 335 444 557 589 742 833 875 EBITA (adj) -17 85 101 142 236 329 425 397 537 618 655 EBIT (adj) -17 85 101 134 217 309 385 334 473 558 604 EPS (adj) 0.32 3.23 2.32 4.37 6.53 7.93 10.25 7.61 9.43 10.96 11.83

Adjusted profit margins in percent EBITDA (adj) 5.0% 9.3% 10.0% 11.1% 9.0% 10.5% 8.9% 6.3% 6.9% 7.4% 7.5% EBITA (adj) -1.0% 4.6% 5.2% 6.8% 6.3% 7.8% 6.8% 4.2% 5.0% 5.5% 5.6% EBIT (adj) -1.0% 4.6% 5.2% 6.4% 5.8% 7.3% 6.1% 3.6% 4.4% 4.9% 5.2%

Performance metrics CAGR last 5 years Net revenue n.a. -1.6% -1.1% -0.9% 16.3% 20.0% 27.9% 37.2% 38.6% 24.8% 22.6% EBITDA n.m. -3.6% -7.6% 13.4% 40.8% 74.7% 21.4% 21.9% 26.5% 23.3% 15.4% EBIT n.a. -5.0% -12.2% 52.2% n.m. n.m. 25.8% 21.1% 29.3% 26.1% 15.6% EPS n.a. -20.5% -32.3% 11.0% n.m. n.m. 14.8% 17.0% 17.3% 17.6% 9.9% DPS n.m. -27.5% -33.2% n.m. n.m. n.m. 39.1% 43.1% 36.6% 29.5% 13.8% Average last 5 years Average EBIT margin 2.7% 2.4% 1.3% 2.5% 4.0% 6.0% 5.8% 4.9% 4.6% 4.7% 4.6% Average EBITDA margin 7.7% 7.4% 6.4% 7.7% 8.4% 9.8% 9.2% 7.9% 7.4% 7.4% 7.2%

VALUATION RATIOS - ADJUSTED EARNINGS SEKm 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E P/E (adj) 76.2 4.7 8.3 5.0 5.5 8.0 10.4 10.8 9.6 8.2 7.6 EV/EBITDA (adj) 12.2 5.7 5.8 5.4 5.4 5.7 9.6 9.4 7.5 6.3 5.7 EV/EBITA (adj) n.m. 11.5 11.1 8.8 7.6 7.7 12.6 14.0 10.4 8.6 7.6 EV/EBIT (adj) n.m. 11.5 11.1 9.4 8.3 8.2 13.9 16.7 11.8 9.5 8.2

VALUATION RATIOS - REPORTED EARNINGS SEKm 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E P/E n.m. 3.4 6.1 5.2 7.3 8.6 11.9 11.9 9.6 8.2 7.6 EV/Sales 0.6 0.5 0.6 0.6 0.5 0.6 0.9 0.6 0.5 0.5 0.4 EV/EBITDA 39.7 5.0 5.3 5.5 6.1 5.9 10.4 9.9 7.5 6.3 5.7 EV/EBITA n.m. 8.9 9.4 9.0 9.3 8.1 13.9 15.0 10.4 8.6 7.6 EV/EBIT n.m. 8.9 9.4 9.6 10.3 8.6 15.5 18.1 11.8 9.5 8.2 Dividend yield (ord.) 0.0% 3.3% 3.1% 3.6% 3.1% 3.5% 2.4% 4.4% 4.2% 4.4% 4.7% FCF yield -40.7% 18.8% 4.2% -7.0% -14.9% 12.7% -50.2% -11.3% 12.7% 13.6% 14.8% Payout ratio 0.0% 11.2% 19.2% 18.9% 22.6% 29.9% 29.1% 52.4% 40.3% 36.5% 35.5%

Source: Company data and Nordea estimates

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BALANCE SHEET SEKm 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E Intangible assets 875 870 1,031 1,156 1,297 1,269 3,081 3,136 3,072 3,012 2,961 of which R&D 0 0 0 0 0 0 0 0 0 0 0 of which other intangibles 875 870 1,031 1,156 1,297 1,269 3,081 3,136 3,072 3,012 2,961 of which goodwill 0 0 0 0 0 0 0 0 0 0 0 Tangible assets 536 479 487 515 583 533 1,047 1,075 1,033 989 945 Shares associates 0 0 0 0 0 0 0 0 0 0 0 Interest bearing assets 0 0 0 0 0 0 0 0 0 0 0 Deferred tax assets 0 0 0 0 0 0 0 0 0 0 0 Other non-IB non-current assets 0 0 0 0 0 0 0 0 0 0 0 Other non-current assets 0 0 0 0 0 0 0 0 0 0 0 Total non-current assets 1,412 1,349 1,519 1,672 1,880 1,802 4,128 4,211 4,105 4,001 3,906 Inventory 119 126 116 107 254 266 295 390 450 475 492 Accounts receivable 365 385 393 387 844 825 1,396 1,795 2,038 2,148 2,227 Other current assets 67 64 66 82 136 139 312 333 382 403 418 Cash and bank 50 81 168 215 457 529 651 679 957 1,255 1,586 Total current assets 601 656 743 792 1,690 1,758 2,654 3,197 3,828 4,281 4,724 Assets held for sale 0 0 0 0 0 n.a. n.a. n.a. n.a. n.a. n.a. Total assets 2,012 2,005 2,261 2,464 3,570 3,560 6,782 7,408 7,932 8,282 8,630

Shareholders equity 819 880 954 1,039 1,348 1,488 2,411 2,453 2,659 2,912 3,189 Of which preferred stocks 0 0 0 0 0 0 0 0 0 0 0 Of which equity part of hybrid debt 0 0 0 0 0 0 0 0 0 0 0 Minority interest 0 0 0 0 0 0 0 0 5 9 13 Total Equity 819 880 954 1,039 1,348 1,488 2,411 2,453 2,664 2,921 3,202 Deferred tax 36 40 57 69 86 83 233 208 208 208 208 Long term interest bearing debt 435 36 47 432 25 20 2,646 2,504 2,504 2,504 2,504 Pension provisions 0 0 0 0 0 0 0 0 0 0 0 Other long-term provisions 0 0 0 0 0 0 0 0 0 0 0 Other long-term liabilities 0 0 0 0 0 0 0 0 0 0 0 Convertible debt 0 0 0 0 0 0 0 0 0 0 0 Shareholder debt 0 0 0 0 0 0 0 0 0 0 0 Hybrid debt 0 0 0 0 0 0 0 0 0 0 0 Total non-current liabilities 471 77 103 502 111 103 2,879 2,712 2,712 2,712 2,712 Short-term provisions 0 0 0 0 0 0 0 0 0 0 0 Accounts payable 375 328 395 402 784 722 1,263 1,403 1,716 1,809 1,876 Other current liabilities 0 0 0 0 0 0 0 0 0 0 0 Short term interest bearing debt 348 721 809 522 1,327 1,247 228 840 840 840 840 Total current liabilities 722 1,048 1,204 924 2,111 1,969 1,491 2,243 2,556 2,649 2,716 Liabilities for assets held for sale 0 0 0 0 0 0 0 0 0 0 0 Total liabilities and equity 2,012 2,005 2,261 2,464 3,570 3,560 6,781 7,408 7,932 8,282 8,630

Balance sheet and debt metrics Net debt 732 676 688 739 895 738 2,223 2,665 2,387 2,089 1,758 Working capital 176 247 180 175 449 507 740 1,115 1,155 1,217 1,262 Invested capital 1,588 1,596 1,699 1,847 2,329 2,309 4,868 5,326 5,259 5,218 5,168 Capital employed 1,290 956 1,057 1,540 1,459 1,591 5,291 5,165 5,376 5,633 5,914 ROE -6.9% 10.6% 7.6% 9.9% 10.3% 14.7% 13.5% 10.0% 13.0% 13.9% 13.7% ROIC -0.7% 3.6% 4.1% 5.1% 7.1% 9.0% 7.3% 4.5% 6.1% 7.2% 7.9% ROCE -5.9% 11.5% 11.2% 8.5% 12.0% 18.4% 6.5% 6.0% 8.8% 9.9% 10.2%

Net debt/EBITDA 27.8 3.4 3.3 3.2 3.1 1.7 4.3 4.7 3.2 2.5 2.0 Interest coverage n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. Equity ratio 40.7% 43.9% 42.2% 42.2% 37.8% 41.8% 35.6% 33.1% 33.5% 35.2% 37.0% Net gearing 89.4% 76.8% 72.2% 71.1% 66.4% 49.6% 92.2% 108.6% 89.6% 71.5% 54.9% Source: Company data and Nordea estimates

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CASH FLOW STATEMENT SEKm 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E EBITDA (adj) for associates 26 197 210 229 293 428 518 563 742 833 875 Paid taxes -8 -7 -23 -57 -61 -85 -104 -133 -134 -166 -182 Net financials 0 0 0 0 0 0 0 0 0 0 0 Change in provisions 0 0 0 0 0 0 0 0 0 0 0 Change in other LT non-IB 0 0 0 0 0 0 0 0 0 0 0 Cash flow to/from associates 0 0 0 0 0 0 0 0 0 0 0 Dividends paid to minorities 0 0 0 0 0 0 0 0 0 0 0 Other adj to reconcile to cash flow -12 -58 -19 -47 20 -67 -70 -75 0 0 0 Funds from operations (FFO) 6 132 168 125 251 276 344 355 608 667 693 Change in NWC -64 -48 47 3 -89 -8 -13 -419 -40 -62 -45 Cash flow from operations (CFO) -58 84 215 128 162 269 331 -64 568 605 648 Capital expenditure -69 -24 -71 -66 -44 -46 -112 -196 -163 -172 -176 Free cash flow before A&D -127 61 144 62 118 223 219 -260 405 433 472 Proceeds from sale of assets 0 -4 -126 -98 -252 4 -1,794 -67 0 0 0 Acquisitions 0 0 0 0 0 0 0 0 0 0 0 Free cash flow -127 57 18 -36 -134 227 -1,575 -327 405 433 472

Dividends paid 0 0 -10 -14 -18 -29 -58 -92 -127 -134 -141 Equity issues / buybacks 0 0 0 0 121 0 695 0 0 0 0 Net change in debt 102 -28 82 91 223 -125 1,029 462 0 0 0 Other financing adjustments 0 0 0 0 0 0 0 0 0 0 0 Other non-cash adjustments -4 2 -4 6 49 0 31 -15 0 0 0 Change in cash -29 31 87 47 241 72 122 28 278 298 331

Cash flow metrics Capex/D&A 67.5% 27.2% 77.9% 67.7% 37.1% 34.1% 65.1% 76.9% 60.5% 62.5% 64.9% Capex/Sales -4.1% -1.3% -3.7% -3.2% -1.2% -1.1% -1.8% -2.1% -1.5% -1.5% -1.5%

Key information Share price year end (/current) 25 15 19 22 36 63 106 82 90 90 90 Market cap. 312 302 428 514 899 1,787 3,140 2,899 3,193 3,193 3,193 Enterprise value 1,045 978 1,117 1,253 1,795 2,525 5,363 5,564 5,585 5,291 4,964 Diluted no. of shares, year-end (m) 12.7 20.1 22.3 23.4 25.2 28.2 29.6 35.4 35.4 35.4 35.4 Source: Company data and Nordea estimates

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Completion Date

27 Nov 2018, 00:48 CET

Nordea Bank Abp Nordea Bank Abp, filial i Sverige Nordea Danmark, Filial af Nordea Nordea Bank Abp, filial i Norge Bank Abp, Finland

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