Empowering movement 2020 ANNUAL REPORT Contents This is Arjo 1 Invest in Arjo 3 A year in the shadow of the pandemic 4 Other key events 2020 6 CEO comments 8 Key performance measures and financial targets 11 Arjo’s strategy Strategy 2018–2020 12 New strategy for 2021–2030 14 Solutions for healthcare’s challenges 18 Outcome-based programs 20 Rehabilitation 24 Pressure injuries and venous leg ulcers 26 Our offering in brief 28 Sustainability Report 30 Arjo Sustainability Framework 2030 33 Governance process 38 Goals, activities and status 40 Goals and outcome 2018–2020 45 The share 48 Annual Report 50 Directors’ Report 51 Corporate Governance Report 57 Board of Directors 62 Arjo Management Team 64 Annual remuneration report 66 Proposed appropriation of profit 68 Consolidated financial statements 69 Notes for the Group 75 Parent Company financial statements 102 Parent Company notes 105 Auditor’s report 110 Other information Multi-year overview 113 Origin of key performance measures 117 Group companies 122 Definitions 124 Other information 125 The formal Annual Report comprises pages 51–112. The statutory sustainability report and the sustain- ability report are presented on pages 30–45. The official audited version of the Annual Report is the Swedish version © 2020 Arjo. All rights reserved. ARTICLE NAME Mobility drives healthier outcomes There is a clear connection between mobility and people’s physical and mental well-being. Creating the best opportunities for mobility is therefore at the very core of providing high-quality care. We have seen how empowering movement can quickly improve both clinical and financial outcomes. As a leading specialist in the field, we work continuously to promote mobility – with the aim of creating better results for patients, caregivers and the entire healthcare system. Arjo’s journey began with the entrepreneur and founder, as well as work-related injuries among staff. Our products Arne Johansson, in 1957. When he understood the burden and solutions are designed to promote a safe and dignified his wife experienced as a nurse, he had found his mission experience through patient handling, medical beds, per- in life. He decided to develop equipment that would make sonal hygiene, disinfection, diagnostics, and the prevention it safer to move patients, and support the healthcare of pressure injuries and venous thromboembolism. professionals taking care of them. The first Arjo products saw the light of day, followed by many, many more. Today, As a Mobility Outcome Partner for healthcare, we offer our solutions help improve patient mobility in care settings solutions where we, together with our customers, assess the around the world, and drive healthier outcomes for unique needs of each care setting. Arjo develops tailored everyone involved. programs that, in addition to the right equipment, also ensure the right skills and work methods for staff. Working The power of movement closely with customers, we assume responsibility for For more than 60 years, we have had a close cooperation creating a change in care practices to achieve improved with healthcare providers, giving us an in-depth under- clinical and financial outcomes. Based on this holistic standing of their daily challenges. Together, we strive to approach, we are addressing a market that is ten times minimize patient challenges such as loss of muscle strength, larger than the market in which we currently operate. blood clots, pressure injuries, falls, anxiety and depression, >6,000 >100 9,078 Employees globally Number of countries Net sales, SEK M where Arjo sells products and services 2020 ANNUAL REPORT 1 INVEST IN ARJO “It is very important to keep moving and to be able to move on my own.” PETER GENYN · PARALYMPIC GOLD MEDALIST · BELGIUM 2 2020 ANNUAL REPORT INVEST IN ARJO Five reasons to invest in Arjo Contributing to a sustainable future – for healthcare, society and the environment The core of our business is to contribute to a sustainable healthcare system, using the right care skills, equipment and care settings. We take a holistic responsibility for reducing our environmental impact and ensuring a high level of business ethics. Active on a market with attractive, long-term growth potential The growing and aging global population leads to a continuously increasing need for healthcare. Arjo’s addressable market is now growing an average of 3% per year. By offering outcome - based solutions that go beyond the actual product and by entering new areas, such as leg ulcer treatment, we cater to a far broader market with greater growth potential moving forward. Global presence with leading market positions in both acute and long-term care Arjo’s products and services are sold in more than 100 countries. With more than 60 years of experience, we are one of the market leaders. Profitable growth and strong cash flow Since the listing in 2017, Arjo has reported average annual organic sales growth of 3.6%. In the same period, reported annual EBITDA growth was at an average just over 13%. At the end of 2020, cash flow from operations amounted to SEK 2,267 M, an increase of more than SEK 1 billion compared to year-end 2019. Strong potential for the future – Arjo is well-positioned to become a leader in outcome-based solutions Arjo’s operations feature a long history of clinical know-how and an in-depth understanding of customer needs. Following the new strategy, the Group is moving away from selling products to increasingly offering outcome-based solutions. Arjo will continue to invest in geographic expansion, new technology and new business models, while continuing to enhance operational efficiency. 2020 ANNUAL REPORT 3 ARTICLEA YEAR IN NAME THE SHADOW OF THE PANDEMIC A year in the shadow of the pandemic Looking back on 2020, we see a year unlike any other in modern times – where our lives and society were completely dominated by the pandemic. Healthcare around the world experienced extensive challenges, and everyone did their best to work together to find solutions to acute problems. For Arjo, it was a year in which we re-prioritized and coordinated our efforts to support the healthcare sector in specific areas related to Covid-19. The coronavirus pandemic has changed • Digital solutions for providing easy and safe “We can take many learnings healthcare significantly in a very short time. remote care were quickly implemented, from the year. Our ability to Major challenges arose in country after offering much appreciated alternatives for navigate the complex and country, and were managed through both both healthcare providers and patients. changing landscape, and established and entirely new actions, with commitment to support our the intent of saving lives and providing • A greater need for collaboration and shar- customers and thereby our high-quality healthcare. ing knowledge between healthcare facilities patients in this critical time, resulted in the formation of global work has elevated Arjo in many • Initially there was an urgent need for personal focused on clinical expertise in Covid-19. ways.” protective equipment and disposables, and PAUL LYON · PRESIDENT GLOBAL massive efforts were made to secure supply. • The increasingly high pressure situation for SALES, ARJO. healthcare professionals presented a need • Hospitals around the world were forced to to protect their safety and ensure reasonable rapidly change their entire infrastructure to working conditions. open more wards and manage the specific care and rehabilitation needs of Covid-19 patients. 4 2020 ANNUAL REPORT A YEAR IN THE SHADOW OF THEARTICLE PANDEMIC NAME Arjo geared up to support healthcare In 2020, we leveraged the agility and flexibility of our organization to meet the changing needs, and pooled our resources in the areas where the healthcare sector needed them the most. For example, our production units in “With automated solutions such as Poznan, Poland, and Suzhou, China, Arjo RotoProne®, we can provide care worked day and night to meet the for many patients in a safe way. it both higher global demand for medical frees up resources and provides oppor- beds and therapeutic mattresses. tunities for better care,” says Greg Margolin, DO, FCCM, Adult Intesivist The rising need for acute care also in the US. generated an increased interest in our rental solutions. Through these Support and equipment for solutions, we are able to offer our rehabilitation customers flexible access to a wide The high number of Covid-19 patients range of products, including medical resulted in a greater need for post-care beds, raising and standing aids, hygiene rehabilitation. Arjo’s standing, raising solutions and specialist care equipment. and walking aids coupled with the right skills and work methods help care New approach to training, professionals in supporting patients support and service struggling to improve mobility. Read Since physical meetings have not been more about how mobility is a key to possible, we developed a number of successful rehabilitation on pages 24–25. digital solutions, such as remote ser- vices and webinars on important Hygiene and infection control subjects such as critical care and in focus rehabilitation. Over 4,000 people took The pandemic brought a greater part in 14 webinars during the year. need for strict disinfection systems and a high level of infection control, Skills and solutions for setting new requirements for skills, improved care materials and equipment. Arjo offers A key insight gained from caring for a series of solutions: everything from seriously ill Covid-19 patients was that high-performance flusher-disinfectors prone positioning helped increase their to mattress covers with greater pro- oxygen intake, so the use of ventilators tection from disinfectant chemicals, could at times be avoided. However, and therapeutic surfaces that are without the necessary equipment, five easy to clean. people are needed to turn a patient, causing continuous disruptions and strain for personnel.