Atlas Copco — Annual Report (ESEF) 2022

Mar 22, 2023

Atlas Copco Annual Report 2022

Atlas Copco is the home of industrial ideas. We develop smart, sustainable and highly efficient solutions that empower our customers to grow and drive society forward. We do it with people, profit and planet in mind, and with the highest business integrity. Our innovative products, solutions, and services are demanded by every type of industry. They enable everything from industrial automation to reliable medical air solutions. This annual report reflects Atlas Copco’s mission of creating sustainable, profitable growth. It integrates financial, sustainability, and governance information to describe the Group in a comprehensive and cohesive manner.

Introduction 1

Summary of 2022 2

A decentralized group with four business areas 3

President and CEO

This is Atlas Copco 5

This is Atlas Copco – Home of Industrial ideas 6

Our targets 7

This is how we do business 11

Creating lasting value for all stakeholders

The year in review 13

The year in review (Administration report) 21

Business area: Compressor Technique 24

Business area: Vacuum Technique 27

Business area: Industrial Technique 30

Business area: Power Technique 33

A sustainable approach to delivering value 34

Products and service 37

People 39

Safety and wellbeing 40

Ethics 42

Environment 44

Risks, risk management and opportunities 49

The Atlas Copco share

Governance 51

Corporate governance

Financials 61

Financial statements (Group) 66

Notes (Group) 108

Financial statements (Parent) 110

Notes (Parent)

Other information 121

Signatures of the Board of Directors 122

Audit report 125

Financial definitions 126

Sustainability notes 135

EU Taxonomy regulation disclosures 139

GRI content index 146

Auditor’s Limited Assurance Report on Atlas Copco AB’s sustainability report 147

Four years in summary 148

Contact information

Statutory sustainability report and external review

Atlas Copco reports on its sustainability work for 2022 in accordance with the GRI Standards, which together with the EU Taxonomy regulation disclosures, on pages 135–137, also constitutes the Group’s statutory sustainability report. Ernst & Young have expressed their opinion that a statutory sustainability report has been prepared according to the Swedish Annual Accounts Act, and they have performed a limited review of the sustainability report according to GRI, see page 146. More information can be found at: www.atlascopcogroup.com.

Notice

The amounts in the report are presented in MSEK unless otherwise indicated and numbers in parentheses represent comparative figures for the preceding year. The figures presented in this report refer to continuing operations unless otherwise stated.

Forward-looking statements

Some statements in this report are forward-looking, and the actual outcomes could be materially different. In addition to the factors explicitly discussed, others could have a material effect on the actual outcomes. Such factors include, but are not limited to, general business conditions, fluctuations in exchange rates and interest rates, political developments, the impact and pricing of competing products, product development, commercialization and technological difficulties, supply-chain interruptions, and major customer credit losses.

Atlas Copco AB is a public company. Atlas Copco AB and its subsidiaries are sometimes referred to as the Atlas Copco Group, the Group, the company, or Atlas Copco. Atlas Copco AB is also sometimes referred to as Atlas Copco or the company. Any mentioning of the Board of Directors or the Board refers to the Board of Directors of Atlas Copco AB.

The audited annual accounts and consolidated accounts can be found on pages 13–39, 44–48 and 61–121, excluding the quarterly data on page 80. The corporate governance report examined by the auditors can be found on pages 51–60. Sustainability information that has been reviewed by the auditors can be found on pages 5–12, 33–43 and 126–145, excluding the taxonomy report on pages 135–137.

A solar-powered LED light tower, which enables users to reduce CO₂ emissions. The light tower delivers efficient, high performance giving workers good visibility while increasing sites to comply with emission and noise regulations.

Atlas Copco 2022

Record orders, revenues and operating profit

	2022	2021	2020	2019	2018
Orders received, MSEK	158 092	129 545	100 554	106 104	103 756
Revenues, MSEK	141 325	110 912	99 787	103 756	100 140
EBITDA, % of revenues	25.9	26.2	24.4	25.6	25.6
EBITA ¹), % of revenues	22.6	22.6	20.5	22.1	21.8
Operating profit, % of revenues	21.4	21.2	19.2	21.1	20.8
Adjusted operating profit, % of revenues	21.3	21.9	20.0	21.9	21.5
Profit before tax, % of revenues	21.3	21.1	18.9	20.8	20.5
Profit for the year, MSEK	23 482	18 134	14 783	16 543	16 386
Basic earnings per share, SEK	4.82	3.72 ²)	3.04 ²)	3.40 ²)	3.37 ²)
Diluted earnings per share, SEK	4.81	3.71 ²)	3.04 ²)	3.40 ²)	3.37 ²)

1) Operating profit excluding amortization of intangibles related to acquisitions.
2) Adjusted for share split.

Operating margin: 21.4% (21.2)
Operating cash flow: MSEK 17 099 (19 378)
Revenues: MSEK 141 325 +27%
Return on capital employed: 29% (27)
Dividend/earnings per share, average ³) including discontinued operations

Dividend policy history

• –2003: 30–40% of earnings
• 2003–2011: 40–50% of earnings
• 2011–: about 50% of earnings

3) Dividend for the fiscal year 2022 is based on the proposal from the Board of Directors.

Introduction

Summary of 2022

A decentralized group with four business areas

President and CEO

This is Atlas Copco

The year in review

Financials

Other information

SUMMARY OF 2022

A decentralized group with four business areas

The Atlas Copco Group is a world-leading provider of sustainable productivity solutions, demanded by all types of industries, enabling everything from industrial automation to reliable medical air solutions. The Group offers innovative compressors, air treatment systems, vacuum solutions, industrial power tools and assembly systems, machine vision, and power and flow solutions. Atlas Copco develops products and services focused on productivity, energy efficiency, safety and ergonomics, supported by insights from connected products. The company was founded in 1873, is based in Nacka, Sweden, and has a global reach spanning more than 180 countries. In 2022, Atlas Copco had revenues of BSEK 141 and about 49,000 employees at year end.# Atlas Copco 2022

A DECENTRALIZED GROUP WITH FOUR BUSINESS AREAS

Introduction

Summary of 2022

A decentralized group with four business areas

President and CEO

This is Atlas Copco

The year in review

Financials

Other information

Continuing to shape the future

We can look back at yet another year with record orders, revenues and operating profit. This is the result of our continuous focus on improving our customers’ technologies and processes, and on driving development forward. Looking ahead, we will continue to work together with our customers to develop new products and solutions to their challenges, but also to the challenges society faces.

Mats Rahmström, President and CEO of the Atlas Copco Group, how would you summarize the year?

It was a year with record orders, revenues and operating profit. Orders received in 2022 increased 22 percent to MSEK 158,092 (129,545). Revenues also reached a new record with an increase of 27 percent to MSEK 141,325 (110,912). During the year we have faced an increased uncertainty in the world around us. We also continued to experience increased costs related to constraints in the supply chain and Covid-19, which affected the margin negatively. Still, our employees have made fantastic efforts and I believe that we have shown that we have the ability to handle change and quickly adapt on all levels in the company to support our customers. Our results are the effect of our focus on delivering value to our customers and continuously investing in people and innovation. We also entered into new growth platforms and continued our investments in R&D, which amounted to 4 percent of total revenues, or MSEK 5,153.

Last year, the Group announced that it had set science-based targets to reduce emissions in line with the Paris Agreement. How has this affected the organization?

We believe that all parts of our organization have a role to play in this, and we have set two ambitious science-based targets to reduce emissions in all parts of the value chain. As a leading and global supplier, I’m proud of our efforts to make a positive impact by reducing emissions through our operations, transportation methods and product design. For Scope 1 and 2, direct emissions from owned or controlled sources and indirect emissions from the generation of purchased energy we are well in line with our targets. For Scope 3, the use phase of our products, we have not reached this year’s target. The reason for this is in part due to increased sales but also to the fact that the availability of renewable energy is lower than we had expected. An increasing share of our products are designed to be powered by electricity and if our customers use renewable energy to power them, the climate impact drops dramatically. The growing focus on battling climate change brings new expectations on us as a company. Customers, investors, and society expect us to build our business in a sustainable way, and to generate long-term value with people, planet and profit in mind. Environmental performance is also a key factor for job seekers and employees, who increasingly value working for a company that makes a positive difference. This development is a challenge, but it also gives rise to new needs, new markets, and new business opportunities. We have a long tradition of focusing on our customers’ needs and today this includes helping them improve their climate performance. We innovate and develop efficient and low-carbon products, but we can also guide and support our customers on their climate journey. There are also plenty of everyday actions that we can all carry out, regardless of our job role or place of work. Last year, to raise awareness, we arranged a global climate event for all employees.

In terms of technology and new products, what role can Atlas Copco play to enable the transformation to a low carbon society?

When we develop products and services, we always focus on customer value and how we can improve our customers’ productivity and processes. More than 90 percent of the emissions from our value chain are generated when our products are used by our customers. Since our products are found all over the world and in all industries, we have a real opportunity to enable a reduction of greenhouse gas emissions on a global scale. For some applications there is not yet an alternative to fossil fuels, and there we focus on energy efficiency so that we can offer more sustainable products for every application.

The Group set a new record with 30 completed acquisitions during the year, why is that?

Acquisitions are an important part of our strategy for growth. The combination of organic growth and successful acquisitions has shaped us into the Group we are today, and we continue to look for new technologies and segments that complement our current offering. This year, in addition to the acquisitions within the industrial pump segment, we have for example acquired the company Montana Instruments Corporation. They provide cryostat solutions for customers involved in physics research and low temperature technology solutions. This will bring an additional channel into quantum technology related markets where commercial applications are starting to grow. Another interesting area where we have made an acquisition is on-site gas generation that reduces the carbon footprint by avoiding transportation of gases. We have also strengthened our portfolio within smart manufacturing through the acquisition of a manufacturer of camera-based tracking systems.

FOR THE FULL LIST OF ACQUISITIONS, PLEASE SEE PAGE 73

How do you evaluate potential acquisitions?

We always start by looking at global trends that will affect our customers’ processes and needs. We also evaluate the company’s stand-alone potential and if there are synergies that can be realized. We want to work with the very best, and this applies also to the companies and people that we welcome to our Group. Therefore each division is responsible for looking for companies with leading, differentiated technologies and application knowledge, and with the same customer focus as we have. For an acquisition to be successful, we also need to acquire companies with a culture of interaction, innovation and commitment that matches our own.

Two of the acquisitions, LEWA and Wangen, were in a new segment. What is the reason for building a presence within industrial pumps?

Both companies have products that are used in industries where we already have a strong presence today, but with different technologies.

When we develop products and services, we always focus on customer value and how we can improve our customers’ productivity and processes

Compressor Technique

Page 21

The Compressor Technique business area provides compressed air solutions; industrial compressors, gas and process compressors and expanders, air and gas treatment equipment, air management systems, and service through a global network.

Orders received: MSEK 69 834
Revenues: MSEK 61 058
Operating margin: 23.6%

Revenues by region
Asia/Oceania, 33 %
North America, 23%
Africa/ Middle East, 7%
Europe, 31%
South America, 6%

Vacuum Technique

Page 24

The Vacuum Technique business area provides vacuum products, exhaust management systems, valves and related products, and service through a global network.

Orders received: MSEK 41 213
Revenues: MSEK 38 941
Operating margin: 21.6%

Revenues by region
Asia/Oceania, 31%
North America, 32%
Africa/ Middle East, 2%
Europe, 33%
South America, 2%

Industrial Technique

Page 27

The Industrial Technique business area provides industrial power tools, assembly and machine vision solutions, quality assurance products, software, and service through a global network.

Orders received: MSEK 26 070
Revenues: MSEK 23 007
Operating margin: 20.0%

Revenues by region
Asia/Oceania, 61%
North America, 23%
Africa/ Middle East, 1%
Europe, 15%

Power Technique

Page 30

The Power Technique business area provides portable air and power, industrial and portable flow solutions through products such as mobile compressors, generators, light towers, industrial and portable pumps, along with a number of complementary products. It also offers specialty rental and provides service through a global network.

Orders received: MSEK 21 783
Revenues: MSEK 19 053
Operating margin: 18.5%

Revenues by region
Asia/Oceania, 18 %
North America, 28%
Africa/ Middle East, 9%
Europe, 37%
South America, 8%
Other, 18%

Orders received by customer category
General manufacturing, 25%
Construction, 15%
Service, 13%
Process industry, 24%
Automotive, 1%
Electronics, 4%
Other, 11 %

Orders received by customer category
General manufacturing, 21%
Construction, 2%
Service, 6%
Electronics, 4%
Automotive, 51%
Process industry, 5%
Other, 2%

Orders received by customer category
General manufacturing, 12%
Process industry, 23%
Electronics, 63%

Orders received by customer category
General manufacturing, 20%
Other, 17%
Construction, 39%
Service, 6%
Process industry, 18%

Revenues by region, Group

Asia/Oceania, 39%
North America, 25%
Africa/ Middle East, 5%
Europe, 27%
South America, 4%

Share of revenues, Group

Category	Percentage
Equipment	65%
Service	35%

Share of revenues

Category	Percentage
Equipment	73%
Service	27%

Share of revenues

Category	Percentage
Equipment	56%
Service (Specialty Rental)	14%
Service	30%

Share of revenues

Category	Percentage
Equipment	78%
Service	22%

Orders received by customer category, Group

Category	Percentage
Other	12%
General manufacturing	20%
Construction	12%
Service	8%
Process industry	20%
Electronics	19%
Automotive	9%

Share of revenues

Category	Percentage
Equipment	57%
Service	43%

Atlas Copco 2022 2

PRESIDENT AND CEO

Introduction

Summary of 2022

A decentralized group with four business areas

President and CEO

This is Atlas Copco

The year in review

Financials

Other information

When we develop products and services, we always focus on customer value and how we can improve our customers’ productivity and processes

Atlas Copco 2022 3# This is Atlas Copco – Home of Industrial Ideas

Wangen is a German manufacturer of progressive cavity pumps used for transferring fluids mainly in the biogas and wastewater sectors. LEWA is a leading manufacturer of diaphragm metering pumps, process pumps and complete metering systems. Industrial pumps is a segment that we have identified as a strategic fit for the Group and both companies have leading differentiated technologies and strong aftermarket businesses. They will create a solid foundation for further growth in new industrial pump segments.

We are experiencing increased geopolitical tensions. As a global player, how does this affect the Group? With customers in more than 180 countries we want to locate everything from product development to marketing and production as close to our customers as possible. With the challenges in the supply chain that started with the Covid-19 pandemic, and that more recently have been affected by increased geopolitical tensions and protectionism, we have experienced long lead times and problems with delivering to our customers on time. Dual sourcing and local suppliers are important ways to shorten lead times and we have worked very hard to increase our capabilities to deliver. For us, free trade is important, and as a global Group we also believe it is important to work for an inclusive culture where also people can move across borders and share ideas and develop their careers.

Since the beginning of the year, we have experienced a very severe and challenging situation due to the war in Ukraine. We have colleagues in both Ukraine and Russia, and our primary focus has been to ensure their safety. As of March 5th, 2022, and until further notice, we are taking no new orders for capital equipment for delivery to Russia. The only exemption is orders for humanitarian purposes, e.g. medical equipment. We have also increased our focus on trade compliance to ensure that we follow all applicable international trade and export controls, economic sanctions, and embargos.

Are there any other initiatives you would like to highlight? I am proud to say that at Atlas Copco we have a strong culture of continuous learning. Two years ago, we launched our first global learning week across the Group and last year we repeated the initiative. There is a saying that you should hire for attitude and train for skills. As an employer we can provide the tools and opportunities to learn, but within Atlas Copco each employee is responsible for his or her career and development. Continuous learning is one way to accomplish this and it is also a key part of personal development.

Another important initiative is our new Code of Conduct and ethics training for all employees. The Code of Conduct replaces our former Business Code of Practice and covers additional topics including modern slavery; risk management; anti-money laundering; travel; data protection and privacy; and circularity. The document has also been redesigned to make it easier to find our stance on all topics covered.

We are also taking the next steps on our digitalization journey. One of the most interesting developments in industrial manufacturing is the introduction of so-called digital twins. A digital twin is a digital original of a product that helps predict and analyze behavior and performance, long before the physical twin exists as an actual product or solution. Digital drawings have been in place for a long time, but a digital twin can be used to test specific conditions or compare performance in different operating conditions. We believe this will revolutionize how we develop, manufacture and service our products going forward and bring great customer value in the shape of forecasts, quality control and efficiency gains.

Looking ahead, what do you see the coming year? I would like to start with a few words on the past. 2023 marks the 150th anniversary for the Group! In 1873 the world was a very different place, and it is quite amazing that we have not only evolved into a global Group present in so many industries, but also how we continue to build for the future. Together with our customers, and by always focusing on what brings them value, we develop new products that meet the ever-increasing standards we set for ourselves: on how we use natural resources, on safety, ergonomics, and productivity. I would like to highlight our people who every day look for better ways and continue to work together with our customers to develop new products and find new solutions to their challenges, but also to the challenges society faces. During 2023 we will celebrate our past, but we will also focus on how we continue to shape the future. We are fully committed to being part of the solution for a better tomorrow and continue to build on our legacy of innovation, doing business in an ethical way and always having the customer in focus.

Mats Rahmström, President and CEO
Nacka, Sweden, January 2023

Atlas Copco 2022 | 4

PRESIDENT AND CEO

This is Atlas Copco – Home of Industrial Ideas

• DIVERSIFIED – Diverse customer base – Sales in Asia/Oceania, Americas, and EMEA – Production in Europe, Asia and Americas
• AGILE – Outsourced production model, about 75% of production cost of equipment is purchased components – Flexible workforce – Continuous scenario planning – Leadership model with clear accountability – Transparent organization with strong follow up
• RESILIENT – 35% of sales from the service business – Asset-light operations

To succeed in our mission, Atlas Copco strives for a leading position in selected markets and segments. This is achieved through innovations and by delivering leading differentiated technology. With products and services critical to the customers’ operations, Atlas Copco strives to support customers in their success. To support profitable growth over a business cycle, the Group aims to have an agile balance sheet and focuses on markets with high service potential.

• SERVICE
  Increase the service offer by giving our customers new insights and peace of mind, more and more based on customer data and real-time insights.
• INNOVATION
  Invest in research and development to develop new solutions that improve our customers’ performance. Connectivity and data-driven insights are key drivers in this.
• PRESENCE
  Increase market presence by expanding into selected markets, segments, and technologies. Whether we sell directly or indirectly, and under which brand, depends on the customer and market.
• OPERATIONAL EXCELLENCE
  Continuously strive for improved operational efficiency with responsible use of resources, including developing top-quality and highly efficient products and services.
• PEOPLE
  Rely on competent people who are passionate about their jobs, performance, and committed to deliver customer value. Attract resourceful people and empower them to grow.

Our industrial ideas empower our customers to grow and drive society forward. This is how we create a better tomorrow. We are convinced that leading products, together with a decentralized organization with full accountability for individuals and teams make our customers, and our company, future-proof. Our vision is to become and remain First in Mind—First in Choice of our customers and other stakeholders. Our mission is to achieve sustainable, profitable growth. This means that we must create lasting results with responsible use of resources and with the highest business integrity.

Strategy and fundamentals for growth

• Leading position in selected end markets
• Products critical to the customers’ operations
• Leading differentiated technology
• Leading service offer

Atlas Copco 2022 | 5

THIS IS ATLAS COPCO

Introduction

• This is Atlas Copco – Home of Industrial ideas

Our targets

This is how we do business

• Creating lasting value for all stakeholders
• Contributing to the UN Sustainable Development Goals

The year in review

Financials

Other information

Atlas Copco sets ambitious targets to deliver sustainable, profitable growth. The targets have different time horizons: annual, three-year, over a business cycle, and by 2030 for the more long-term ambitions. Sustainability plays a central role in Atlas Copco’s vision and is an integral part of the Group’s mission. An integrated sustainable strategy, backed by ambitious targets, helps the company deliver greater value to all stakeholders in a way that is economically, environmentally and socially responsible.

	3 years	5 years	10 years	Goal	Goal %	MSEK	%	%
Annual revenue growth rate, average 1)
Capital employed and return 1)
Capital employed, MSEK						30 000	60 000	90 000
Return on capital employed, %						0	10	20
						40	50	60
Our targets
Dividend/earnings per share, average 2)
	3 years	5 years	10 years	Goal	Goal %	MSEK	%	%
						30 000	60 000	90 000
						0	10	20
						40	50	60
Dividend policy history
–2003						30–40% of earnings
2003–2011						40–50% of earnings
2011–						about 50% of earnings

• 1) Figures for the years between 2013 and 2017 are best estimated numbers, as the effects of the distribution of Epiroc and restatements for IFRS 15 are not fully reconciled.
• 2) Dividend for the fiscal year 2022 is based on the proposal from the Board of Directors.
• FINANCIAL
• Revenue growth measured over a business cycle Target: 8% per annum
• Sustained high return on capital employed by constantly striving for operational excellence and generating growth
• Earnings as dividends to shareholders Target: about 50%# PEOPLE
  | | 2022 | 2021 | 2020 | Target |
  | :-------------------------------------------------------------------- | :----- | :----- | :----- | :---------------------------------------------------- |
  | Female employees, at year end | 21.6% | 20.9% | 20.0% | 30% by 2030 |
  | Employees agree that they feel a sense of belonging at the company 1) | – | – | – | Above the global benchmark and a continuous increase |
  | Employees agree we have a work culture of respect, fairness and openness 1) | – | 76 | – | – |
  | Employees agree there is opportunity to learn and grow in the company 1) | – | 73 | – | – |

ETHICS

	2022	2021	2020	Target
Employees sign the Group’s Code of Conduct 3) compliance statement annually	99%	98%	99%	100%
New employees participate in the Group’s ethics training within 12 months of joining the company, starting 2023	2)	–	–	–
Employees participate in the Group’s biennial ethics training, starting 2023	2)	–	–	–
Significant suppliers confirm compliance with the Group’s Code of Conduct 3)	93%	93%	93%	100%
Significant distributors confirm compliance with the Group’s Code of Conduct 3)	92%	87%	84%	100%

SAFETY & WELLBEING

	2022	2021	2020	Target
Employees agree that the company takes a genuine interest in their wellbeing 1)	–	73	–	Continuous increase
Balanced safety pyramid = more reports of risk observations than near misses, more reports of near misses than minor injuries, and more or equal reports of minor injuries relative to recordable injuries 4)	Yes	Yes	Yes	A balanced safety pyramid

CLIMATE & ENVIRONMENT

	2022	2021	2020	Target
Reduction in line with the 1.5 degree warming trajectory in CO 2 e 5) emissions (tonnes) from scopes 1 & 2, compared to the baseline 2019	–33%	–17%	–2%	–46% by 2030
Reduction in line with the well-below 2 degrees warming trajectory in CO 2 e 5) emissions (tonnes) from scope 3, compared to the baseline 2019	+29%	+5%	+1%	–28% by 2030
Significant direct suppliers with an approved environmental management system	31%	31%	30%	Continuous increase
Water consumption (m 3 ) in relation to cost of sales 6)	8.4	–	–	Continuous decrease
Reused, recycled or recovered waste from internal operations 6)	92%	–	–	100% by 2030

PRODUCTS & SERVICE

	2022	2021	2020	Target
Projects for new and redesigned products with targets for reduced carbon impact	97%	98%	–	100%
Group-common methodology for assessing the circularity of new or redesigned products	–	–	–	In place by 2024

1) Measured every two years through the employee survey.
2) First measurement will be done in 2023.
3) Previously referred to as the Business Code of Practice.
4) Risk observations are included in the safety pyramid as of 2021.
5) CO 2 e stands for carbon dioxide equivalent.
6) New and extended scope from 2022, including all operations.

Atlas Copco 2022 6

THIS IS ATLAS COPCO

Introduction

This is Atlas Copco

This is Atlas Copco – Home of Industrial ideas

• Our targets
• This is how we do business
• Creating lasting value for all stakeholders
• Contributing to the UN Sustainable Development Goals
• The year in review
• Financials
• Other information

This is how we do business

Atlas Copco is characterized by focused businesses in selected market segments, high customer focus through a decentralized organization, global presence, a stable service business, professional people, and an asset-light and flexible manufacturing setup. By providing professional service, technical competence, application knowledge and digital capabilities the Group builds close customer relationships through direct and indirect channels.

Power Technique, 13%	Compressor Technique, 43%	Vacuum Technique, 28%	Industrial Technique, 16%
Share of revenues by business area

Equipment, 65%	Service, 35%
Share of revenues

Other, 12%	General manufacturing, 20%	Construction, 12%	Service, 8%	Process industry, 20%	Electronics, 19%	Automotive, 9%
Orders received by customer category						:-------------

Sales and service

Atlas Copco’s ambition is to build close relationships with customers and help them increase their productivity in a sustainable way. Customer engagement, sales, and service take place through direct and indirect channels (mainly distributors), online as well as offline, to maximize market presence. Digital capabilities and interaction are essential to supporting customers and creating business opportunities. Consequently, we continuously develop our teams to ensure they are equipped with the right competencies to make it easy to do business with us. Atlas Copco aims at always being available to our customers when they need us, wherever we can support them best. The Group has a global reach with sales in more than 180 countries. Equipment sales are performed by engineers with strong application knowledge and the ambition to offer the best solution for specific applications. Service and maintenance performed by skilled technicians are an integral part of our offer. Service is the responsibility of dedicated divisions in each business area. This includes the development of service products, sales and marketing, technical support, and service delivery, all supported by data analysis from connected equipment.

Stable service business

35% of the Group’s revenues come from service (spare parts, maintenance, repairs, consumables, accessories, and specialty rental), often generated from service contracts. An increased amount of connected equipment gives additional opportunities to support the service business in developing value for our customers. The service business provides a strong base as revenues from service are more stable than equipment sales.

75% Global reach with local presence

Atlas Copco has a global reach with sales in more than 180 countries. Sales and service are performed by employees with strong application and process knowledge. About 75% of the production cost of equipment represents purchased components.

Increase customer value

Customer focus is a guiding principle for Atlas Copco. Surveys are conducted regularly to learn from customers’ experience and opinions about their interaction with Atlas Copco. Customers are often also engaged in feedback discussions to improve our products and services. A number of key performance indicators have been established, which are continuously followed up to ensure improved customer satisfaction.

Manufacturing and logistics

We strive to have manufacturing close to where our customers are located. As a result, our production facilities are located in Europe, Asia, and the Americas. Our philosophy is to manufacture those components critical to the equipment’s performance inhouse. For other components, we leverage the capacity and competence of our business partners. Flexible purchasing and logistics are of great importance. Approximately 75% of the production cost of equipment represents purchased components, and about 25% are internally manufactured core components, assembly costs, and overhead. Equipment represents about 65% of revenues, and manufacturing and logistics are organized to be able to quickly adapt to changes in demand. Manufacturing of equipment is based primarily on customer orders, while only some standard, high-volume equipment is manufactured based on projected demand. The assembly of equipment is generally carried out in Atlas Copco’s own facilities, and we take responsibility for the products’ functionality and quality. In order to optimize production flows the assembly is typically lean, and the final product is generally shipped directly to the end user.

Atlas Copco 2022 7

THIS IS ATLAS COPCO

Introduction

This is Atlas Copco

This is Atlas Copco – Home of Industrial ideas

• Our targets
• This is how we do business
• Creating lasting value for all stakeholders
• Contributing to the UN Sustainable Development Goals
• The year in review
• Financials
• Other information

This is how we do business, continued

The organization works continuously to efficiently use human, natural, and capital resources while ensuring the highest quality.

Innovation

Atlas Copco believes that there is always a better way of doing things. Innovation and product development are of greatest importance, and products are designed internally. Innovation will improve customer value and strengthen customer relationships, the brand, and financial performance. Research and development expenditures correspond to about 4% of total revenues. The fundamental objective is to design, and efficiently produce, new or improved products that provide sustainable and tangible benefits for customers in terms of productivity, energy efficiency, and/or lower life-cycle cost. New hardware and software are developed by skilled engineers in the divisions. Atlas Copco protects its technical innovations with patents. Innovation also includes improved processes to optimize the flow and utilization of assets and information. Overcapacities and inefficiencies must always be challenged.

Investments in fixed assets and working capital

Our manufacturing philosophy results in a moderate need for investments in property, plant and equipment, which can be adapted to short and medium-term changes in demand. Most investments relate to machining equipment for core manufacturing activities and to production facilities, primarily for core component manufacturing and assembly operations. The working capital requirements are affected by the relatively high share of sales through own customer centers, which affects the amount of inventory and receivables. In an improving business climate with higher volumes, more working capital will be tied up. If the business climate deteriorates, working capital will be released.

Acquisitions

Acquisitions are primarily made in, or very close to, existing core businesses aiming to grow existing businesses or create new platforms for growth. All divisions are required to map and evaluate businesses that are adjacent, and may offer tangible synergies to existing businesses. All acquired businesses are expected to contribute positively to economic value added.# THIS IS ATLAS COPCO

Introduction

This is Atlas Copco
This is Atlas Copco – Home of Industrial ideas
Our targets
• This is how we do business
Creating lasting value for all stakeholders
Contributing to the UN Sustainable Development Goals
The year in review
Financials
Other information

Atlas Copco’s organization is based on the principle of decentralized responsibilities and authorities

STRUCTURE AND GOVERNANCE

Atlas Copco’s organization is based on the principle of decentralized responsibilities and authorities (see organization chart to the right). The organization consists of both operating and legal units. Each operating unit has a business board reflecting the Group’s operational structure. The duty of the business board is to serve in an advisory and decision-making capacity concerning strategic and operative issues. It also ensures the implementation of controls and assessments. Each legal company has a legal board focusing on compliance and reflecting the legal structure of the Group.

The Board of Directors is responsible for the organization and management of the Group, regularly assessing the Group’s financial situation and financial, legal, social and environmental risks, and ensuring that the organization is designed for satisfactory control.

The President and CEO is responsible for the daily management of the Group following the Board’s guidelines and instructions. The President and CEO is also responsible for ensuring that the organization works towards achieving the targets for sustainable, profitable growth. The President and CEO leads the Group Management, which also consists of the business area presidents and four functional heads.

The business areas are responsible for developing their respective operations by implementing and following up on strategies and objectives to achieve sustainable, profitable growth. The divisions are separate operational units, responsible for delivering results in line with the strategies and objectives set by the business area. Each division has global responsibility for a specific product or service offering. A division can include one or more product companies (units responsible for product development, manufacturing and product marketing), distribution centers, and several customer centers (units responsible for customer contacts, sales and service) dedicated or shared with other divisions. Regional holding functions are established worldwide to support the divisional structure of the Group and to represent Group Management.

As of January 1, 2023

The sharing of resources and infrastructure/service providers
Common processes and shared best practices gathered in the handbook of policies and guidelines
The Way We Do Things
A common leadership model
An internal job market
One Group Treasury
A shared purpose, vision and a common identity
Shared goals and strategic pillars for growth
The corporate culture and the core values: interaction, commitment, and innovation
The sharing of brand names and trademarks

The Atlas Copco Group is unified and strengthened through:

GROUP MANAGEMENT
BOARD OF DIRECTORS
PRESIDENT AND CEO

Divisions generally conduct business through product companies, distribution centers and customer centers.

COMPRESSOR TECHNIQUE

Divisions
* Compressor Technique Service
* Industrial Air
* Oil-free Air
* Professional Air
* Gas and Process
* Medical Gas Solutions
* Airtec

VACUUM TECHNIQUE

Divisions
* Vacuum Technique Service
* Semiconductor Service
* Semiconductor
* Semiconductor Chamber Solutions
* Scientific Vacuum
* Industrial Vacuum

INDUSTRIAL TECHNIQUE

Divisions
* Industrial Technique Service
* Motor Vehicle Industry
* Tools and Assembly Systems
* General Industry
* Tools and Assembly Systems Chicago Pneumatic Tools
* Industrial Assembly Solutions
* Machine Vision Solutions

POWER TECHNIQUE

Divisions
* Power Technique Service
* Specialty Rental
* Portable Air
* Power and Flow

This is how we do business, continued
Atlas Copco 2022
9

THIS IS ATLAS COPCO

Introduction

This is Atlas Copco
This is Atlas Copco – Home of Industrial ideas
Our targets
• This is how we do business
Creating lasting value for all stakeholders
Contributing to the UN Sustainable Development Goals
The year in review
Financials
Other information

Creating lasting value for all stakeholders

Atlas Copco’s vision is to become and remain First in Mind—First in Choice of our customers and other principal stakeholders. The Group aims to continuously deliver sustainable, profitable growth with an increased positive impact on society and the environment. Below, we illustrate how we, with a responsible use of resources – human, natural and capital – create value for customers, employees, business partners, shareholders, as well as for society and the environment.

The resources we put in	Atlas Copco	The value we create *
Investments in product development, including capitalized expenditures.

AGILE AND RESILIENT OPERATIONAL SETUP

RESILIENCE DETERIORATING BUSINESS CLIMATE

Atlas Copco can:
– reduce variable costs
– reduce working capital

IMPROVING BUSINESS CLIMATE

Atlas Copco can:
– add needed resources
– add working capital
– add small incremental investments

Time	Volume/ Profits	Asset-light operations
		Profitable aftermarket business
Atlas Copco has organized its manufacturing and logistics to be able to quickly adapt to changes in equipment demand. 4% of total revenues.

Atlas Copco 2022
8

This is how we do business

INTERACTION

We interact and develop close relationships with customers, internally and externally, as well as with other stakeholders. This takes place in many ways: physically, online or indirectly through business partners. We always look for what is best for a specific target group.

INNOVATION

Our innovative spirit is reflected in everything we do. Our customers expect the best from Atlas Copco and our objective is to consistently deliver high-quality products and service that increase customers’ productivity and competitiveness.

COMMITMENT

We operate worldwide with a long-term commitment to our customers in each country and market served. We keep our promises and always strive to exceed high expectations.

LEADERSHIP AND PEOPLE

In Atlas Copco, leadership is defined as the ability to create lasting results through people. Atlas Copco believes that competent and committed leaders are crucial to achieving sustainable, profitable growth. Freedom to act and accountability are guiding principles. All leaders are given a mission statement from their manager, outlining long-term expectations and goals in both quantitative and qualitative terms. The timeframe of the mission is typically three to five years. Based on the mission statement, the leader is expected to develop a vision, and clarify how the mission will be achieved, including the strategies, organization and people needed to make it happen.

Atlas Copco’s performance is closely related to how the Group succeeds in being a good employer, attracting and developing resourceful and motivated people. With a global business conducted through numerous companies, we work with continuous competence development, knowledge sharing, while embedding our core values: interaction, commitment, and innovation, across all people processes.

OUR CORE VALUES reflect how we behave internally and in relation to external stakeholders.

ATLAS COPCO’S CODE OF CONDUCT

Internal policy documents related to business ethics and social and environmental performance are summarized in Atlas Copco’s Code of Conduct. All employees in Group companies, as well as our business partners, are expected to adhere to these policies. All employees are also required to annually sign a compliance statement and participate in a biennial ethics training.

In Atlas Copco, leadership is defined as the ability to create lasting results. Atlas Copco has a strong culture of growing talent by encouraging employees to take account- ability for their own career and competence development. The Group enables and encourages internal mobility and growth by offering continuous learning activities and an internal job market. With the ambition to develop individuals and teams to reach their full potential, Atlas Copco offers accessible tools and targeted learning content, both digital and classroom courses and programs, to all employees. If Atlas Copco needs to adapt its capacity in a deteriorating business climate, the first action is to stop recruitment. Layoffs are the last resort.

PROCESSES

Group-wide strategies, processes, principles, guidelines, and shared best practices are gathered in the handbook of policies and guidelines The Way We Do Things, which is available to all employees. Although most of the processes are self-explanatory, managers are provided regular training in their implementation. Wherever Atlas Copco’s employees are located, they are expected to work in accordance with the provided processes, principles and guidelines. The handbook covers governance, safety, health, environment and quality, accounting and business control, treasury, tax, audit and internal control, information technology, people, culture, legal, communications and branding, risk, crisis management, administrative services, insurance, standardization, and acquisitions.

This is how we do business, continued
Atlas Copco 2022
10

THIS IS ATLAS COPCO

Introduction

This is Atlas Copco
This is Atlas Copco – Home of Industrial ideas
Our targets
• This is how we do business
Creating lasting value for all stakeholders
Contributing to the UN Sustainable Development Goals
The year in review
Financials
Other information

Creating lasting value for all stakeholders

Atlas Copco’s vision is to become and remain First in Mind—First in Choice of our customers and other principal stakeholders. The Group aims to continuously deliver sustainable, profitable growth with an increased positive impact on society and the environment. Below, we illustrate how we, with a responsible use of resources – human, natural and capital – create value for customers, employees, business partners, shareholders, as well as for society and the environment.

The resources we put in	Atlas Copco	The value we create *
Investments in product development, including capitalized expenditures.# CUSTOMERS
– Increased productivity
– Increased safety and ergonomics in working environment
– Energy savings
– Decreased total cost of ownership

SOCIETY/ ENVIRONMENT

– 99% of employees have signed the Code of Conduct
– 31% reduced CO2 emissions from energy in operations
– Employment for 49 000 employees in 71 countries at year end

SHAREHOLDERS

– 29% return on capital employed
– MSEK 17 099 operating cash flow
– 17% annual total return A-share, 10 year

BUSINESS PARTNERS

– More than 6 000 significant suppliers
– Leverage competence
– Market access
– Long-term reliable partner
– Over 900 suppliers audited on safety, health, environment and ethics

EMPLOYEES

– Employees agree that there is opportunity to learn and grow in the company (73 on a scale 1–100, in 2021) *
– Employees agree that Atlas Copco has a work culture of respect, fairness and openness (76 on a scale 1–100, in 2021) *

NATURAL RESOURCES

– 518 GWh total energy use
– 58% renewable energy of total GWh energy used in operations
– 75% of production cost of equipment is purchased components

HUMAN RESOURCES

– 45 800 employees, on average
– Employees in 71 countries
– 4,500 R&D engineers generating industrial ideas and innovations

FINANCIAL RESOURCES

– Average capital employed MSEK 106 054
– MSEK 5 153 investments in innovation*

Common vision, mission and strategy
Innovations for customers’ success
Close customer relationships with application knowledge and professional service
Sustainability priorities
Core values
Decentralized leadership model
Agile setup and asset-light operations

• The employee survey is conducted every two years.

Atlas Copco 2022 11

THIS IS ATLAS COPCO

Introduction

This is Atlas Copco

This is Atlas Copco – Home of Industrial ideas

• Our targets
• This is how we do business
• Creating lasting value for all stakeholders
• Contributing to the UN Sustainable Development Goals
• The year in review
• Financials
• Other information

Contributing to the UN Sustainable Development Goals

The UN Sustainable Development Goals are a call for action to promote prosperity while protecting the planet. The goals recognize that ending poverty must go hand-in-hand with strategies that build economic growth and address a range of social needs, while tackling climate change and protecting the environment. Atlas Copco endorses all 17 Sustainable Development Goals and contributes directly to the eight ones described below.

Gender equality

Increasing diversity and ensuring inclusion

Atlas Copco promotes inclusion and diversity and strives to improve gender balance at all levels in the Group. The business area presidents and the CEO have established taskforces. See pages 37–38.

Clean water and sanitation

Working to reduce water consumption

Atlas Copco entities carry out local activities targeting water consumption. Since 1984, Atlas Copco has supported the employee-driven initiative “Water for All”. Until 2022, more than two million people have gained access to clean water and improved sanitation. See page 43.

Affordable and clean energy

Reducing CO2 emissions from our operations and value chain

Atlas Copco undertakes a range of activities to reduce CO2 emissions from energy in operations and transport of goods, such as installing solar panels, buying renewable electricity and from improved logistics to avoid air freight. See pages 42–43.

Responsible consumption and production

Making production as efficient as possible and reducing waste

Atlas Copco seeks to decrease the total waste produced. Chemical handling follows strict protocols. Components that contain conflict minerals are not accepted and Atlas Copco monitors and screens its supply chain. See pages 41–42.

Climate action

Cutting greenhouse gas emissions

We have set science-based targets to be a part of the solution to global warming and climate change. Our largest impact comes from the use of our products, and we provide solutions to reduce our customers’ energy consumption and carbon emissions. We also work to lower our own energy consumption, switch to renewable energy and choosing transportation methods that minimize climate impact. See pages 34–36 and 42–43.

See pages 33–43 for more information on how Atlas Copco contributes to the achievement of the UN Sustainable Development Goals.

Decent work and economic growth

Focusing on ethics, safety and wellbeing – for employees and business partners

Atlas Copco requires all business partners to comply with the Code of Conduct. Child labor or modern slavery is not tolerated and compliance is assessed and audited. Atlas Copco ensures the right to collective bargaining and expects the same from our business partners. See pages 39 – 41.

Industry, innovation and infrastructure

Continuously increasing the energy efficiency of products and service

Energy efficiency in our products and service is a key selling point for Atlas Copco. The main environmental impact comes from our customers’ use of our products. All projects for new and redesigned products must assess the environmental impact of the product. Products are developed with a life-cycle perspective. See pages 34–36.

Peace, justice and strong institutions

Zero tolerance for corruption

Atlas Copco requires all employees to sign their compliance with our Code of Conduct and to take trainings in how to handle ethical dilemmas. Business partners are expected to confirm their compliance with criteria based on our Code of Conduct. See pages 41–42.

Atlas Copco 2022 12

THIS IS ATLAS COPCO

Introduction

This is Atlas Copco

This is Atlas Copco – Home of Industrial ideas

• Our targets
• This is how we do business
• Creating lasting value for all stakeholders
• Contributing to the UN Sustainable Development Goals
• The year in review
• Financials
• Other information

The year in review

Market review and demand

The overall demand for Atlas Copco’s equipment and services increased in 2022. In comparable currencies, the Group’s order intake for equipment increased by 9% and the service part, including the specialty rental business, grew by 15%, with positive development in all business areas and regions.

Order volumes for compressors increased significantly, supported by increased demand from customer segments contributing to the transition to a low-carbon society, such as the production of batteries for electric cars, solar panels, LNG, and hydrogen applications. Solid order growth was achieved for industrial compressors and for gas and process compressors in particular, especially in North America and Asia.

The demand for vacuum equipment was high even though the demand from the semiconductor and flat panel display industry decreased sharply during the latter half of the year. This resulted in overall reduced order volumes. However, the order volumes for equipment for industrial and scientific vacuum applications increased considerably.

Order volumes for industrial assembly and vision solutions increased significantly, primarily as an effect of the automotive industry’s investments in the transition to electric vehicle production, most noticeably in North America and Asia. Order volumes to the general industry also grew.

The order intake for power equipment, such as portable compressors, generators and pumps, increased sharply, primarily driven by increased demand from equipment rental companies during the first half of the year. The demand was strong also during the second half of the year, both from equipment rental companies and end users.

In total, the Group’s order intake increased by 22% to a record MSEK 158 092 (129 545), corresponding to an organic growth of 8%. Currency had a positive effect of 11% and acquisitions contributed with 3%. See further information in the business area sections on pages 20–32.

North America

The order intake in North America increased 16% in local currencies. Strong order growth was achieved for industrial compressors and for gas and process compressors in particular. The order intake also increased strongly for power equipment, such as portable compressors, generators, and pumps, supported by an increased demand primarily from equipment rental companies. Order volumes also increased for industrial assembly and vision solutions, mainly due to customers’ increased investments in the production of electric vehicles. The order intake for vacuum equipment decreased due to lower demand from the semiconductor industry. Order volumes for service increased in all business areas. In total, North America accounted for 27% (24) of orders received.

South America

Orders received in South America increased 17% in local currencies. The increased order volumes were primarily driven by increased demand for industrial compressors and power equipment, such as portable compressors. Growth was also achieved for industrial assembly solutions, and order intake for service increased in most business areas. In total, South America accounted for 4% (4) of orders received.

Europe

The order intake in Europe increased 13% in local currencies. Solid order growth was achieved in all business areas, supported by increased demand for most product groups. The order growth was particularly noticeable for gas and process compressors, vacuum equipment, and industrial assembly solutions. The last was supported by increased customer investments in the production of electric vehicles. The order intake for the service business increased markedly with growth in all business areas. In total, Europe accounted for 27% (28) of orders received.

Africa/Middle East

Orders received increased 17% in Africa/Middle East in local currencies. This was driven by higher demand for industrial compressors, gas and process compressors, and power equipment, such as portable compressors, generators, and pumps. Order volumes for service also grew in most business areas. In total, Africa/Middle East accounted for 4% (4) of orders received.

Asia/Oceania

The order intake in local currencies in Asia/Oceania increased by 5%.# Atlas Copco 2022

13 THE YEAR IN REVIEW

Introduction

This is Atlas Copco

The year in review

• Administration report
• Business areas
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
  • Board of Directors
  • Group Management
  • Internal control over nancial reporting
• Financials
• Other information

Financial targets – growth and return development

Annual revenue growth rate, average (FX adjusted)

1) The Group’s goal for annual revenue growth is 8%, measured over a business cycle. At the same time, the ambition is to grow faster than the most important competitors. Growth should primarily be organic, supported by selective acquisitions. Atlas Copco aims to have a strong and cost-ecient nancing of the business. The priority for the use of capital is to develop and grow the business. The strong protability and cash generation allow the Group to do that while at the same time maintaining the ambition to distribute about 50% of earnings as dividends to shareholders.

Dividend/earnings per share, average

2) including discontinued operations

Capital employed and return

The Group’s goal is to deliver sustained high return on capital employed, by constantly striving for operational excellence and generating growth.

1) Figures for the years between 2013 and 2017 are best estimated numbers, as the eects of the distribution of Epiroc and restatements for IFRS 15 are not fully reconciled.

Metric	3 years	5 years	10 years	Goal
Annual revenue growth rate, avg (%)	2	4	6	8

Metric	2022	2021	2020	2019	2018
Orders received, MSEK	158,092	129,545	114,090	113,839	109,540
Revenues, MSEK	141,325	110,912	104,044	100,748	93,453
Operating margin, %	21.4	21.2	21.3	21.7	22.3

Metric	3 years	5 years	10 years	Goal
Dividend/earnings per share, avg (%)	30	40	50	~50

Dividend policy history

• –2003: 30–40% of earnings
• 2003–2011: 40–50% of earnings
• 2011–: about 50% of earnings

2) Dividend for the scal year 2022 is based on the proposal from the Board of Directors.

Orders received by region and order development in local currency

Region	Share: 27%	Change: +16%
North America	Share: 4%	Change: +17%
South America	Share: 27%	Change: +13%
Europe	Share: 4%	Change: +17%
Africa/ Middle East	Share: 38%	Change: +5%
Asia/ Oceania

Atlas Copco 2022

14 THE YEAR IN REVIEW

Introduction

This is Atlas Copco

The year in review

• Administration report
• Business areas
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
  • Board of Directors
  • Group Management
  • Internal control over nancial reporting
• Financials
• Other information

Revenues and return

Revenues

The Group’s revenues increased 27% to a record MSEK 141325 (110912), corresponding to a 12% organic increase. Currency had a positive eect of 12%, and acquisitions contributed with 3% during the year. The Group’s goal is to achieve an annual revenue growth of 8% over a business cycle. For the period 2013–2022, the average annual revenue growth has been 8%*.

Operating prot

The operating prot also reached a record of MSEK 30216 (23559) corresponding to a margin of 21.4% (21.2). Items aecting comparability were a change in provision for share-related long-term incentive programs, reported in Common Group Items, of MSEK 151 (–687). The adjusted operating prot increased 24% to MSEK 30065 (24246) corresponding to a margin of 21.3% (21.9). See the sales and prot bridge below.

The operating prot for the Compressor Technique business area increased by 21% to MSEK 14425 (11874), corresponding to a margin of 23.6% (23.9). The margin was positively aected by currency and higher organic revenue volumes. In contrast, increased costs related to Covid-19, primarily in the rst half of the year, supply chain constraints and consequent ineciencies in factories had a negative eect on the operating margin.

The operating prot for the Vacuum Technique business area increased 19% to MSEK 8407 (7066), corresponding to a margin of 21.6% (24.2). The main explanations for the lower margin were higher costs related to supply chain constraints, ineciencies in factories, and costs associated with Covid-19. The last was primarily during the rst half of the year.

The operating prot for the Industrial Technique business area increased 16% to MSEK 4597 (3976), and the operating margin reached 20.0% (20.5). Increased costs related to supply chain con- straints, Covid-19 in the rst half of the year, and stock adjustments and provisions, aected the margin negatively. Currency had a posi- tive eect on the operating margin.

The operating prot for the Power Technique business area increased 66% to a record MSEK 3525 (2121), corresponding to a margin of 18.5% (16.0). The main explanation for the higher operat- ing margin was increased organic revenue volumes. Costs related to supply chain constraints, and Covid-19 in the rst half of the year, aected the margin negatively. Currency had a small positive eect on the operating margin.

Net costs for common Group items and eliminations were MSEK –738 (–1478). The decrease was primarily due to lower costs related to share-related long-term incentive programs, which were MSEK 151 (– 687).

* Currency adjusted. Figures for the years 2013–2017 are best estimated numbers, as the eects of the distribution of Epiroc and restatements for IFRS 15 are not fully reconciled.

Bridge – revenues and operating prot, MSEK

Item	2021 Revenues	Volume, price, mix and other	Currency	Acquisitions	Items affecting comparability	Share-based long-term incentive programs	2022 Revenues
Revenues	110,912	13,558	13,425	3,430	–	–	141,325
Operating prot	23,559	1,109	4,495	215	0	838	30,216
Eect on margin, %	21.2						21.4

Sales bridge, Atlas Copco Group

Metric	2021, MSEK	Structural change, %	Currency, %	Organic *, %	Total, %	2022, MSEK
Orders received	129,545	+3	+11	+8	+22	158,092
Revenues	110,912	+3	+12	+12	+27	141,325

* Volume, price and mix.

Sales bridge

Compressor Technique

Metric	2021, MSEK	Structural change, %	Currency, %	Organic*, %	Total, %	2022, MSEK
Orders received	55,012	+2	+11	+14	+27	69,834
Revenues	49,657	+2	+11	+10	+23	61,058

Vacuum Technique

Metric	2021, MSEK	Structural change, %	Currency, %	Organic*, %	Total, %	2022, MSEK
Orders received	39,529	+1	+11	–8	+4	41,213
Revenues	29,219	+2	+15	+16	+33	38,941

Industrial Technique

Metric	2021, MSEK	Structural change, %	Currency, %	Organic*, %	Total, %	2022, MSEK
Orders received	20,545	–1	+10	+17	+27	26,070
Revenues	19,421	+0	+10	+8	+18	23,007

Power Technique

Metric	2021, MSEK	Structural change, %	Currency, %	Organic*, %	Total, %	2022, MSEK
Orders received	15,155	+13	+13	+18	+44	21,783
Revenues	13,234	+15	+13	+16	+44	19,053

* Volume, price and mix.

Metric	2022	2021	2020	2019	2018
Orders received, MSEK	158,092	129,545	114,090	113,839	109,540
Revenues, MSEK	141,325	110,912	104,044	100,748	93,453
Operating margin, %	21.4	21.2	21.3	21.7	22.3

Metric	2020	2019	2018	2017*
MSEK	104,044	100,748	93,453	81,276

Metric	0	20000	40000	60000	80000	100000	120000
MSEK
2020
2019
2018
2017*

Metric	0	10	20	30	40	%
Orders received, %
Revenues, %
Operating margin, %

Introduction

This is Atlas Copco: The Year in Review
* Administration report
* Business areas
* Sustainable approach to delivering value
* Risks, risk management and opportunities
* The Atlas Copco share
* Corporate Governance
* Board of Directors
* Group Management
* Internal control over financial reporting
* Financials
* Other information

Revenues and operating profit, MSEK

	2022	2021	2022	2021	2022	2021	2022	2021	2022	2021
Compressor Technique	61 058	49 657	14 425	11 874	23.6	23.9	82	93	897	620
Vacuum Technique	38 941	29 219	8 407	7 066	21.6	24.2	24	25	2 099	993
Industrial Technique	23 007	19 421	4 597	3 976	20.0	20.5	17	16	518	269
Power Technique	19 053	13 234	3 525	2 121	18.5	16.0	25	27	1 009	571
Common Group functions/eliminations	–734	–619	–738	–1 478	25	27
Total Group	141 325	110 912	30 216	23 559	21.4	21.2	29	27	4 548	2 480

1) Excluding right-of-use assets.

Depreciation and EBITDA

Depreciation, amortization and impairment costs were MSEK 6,347 (5,466) and earnings before depreciation and amortization, EBITDA, reached MSEK 36,549 (29,025), corresponding to a margin of 25.9% (26.2).

Net financial items

The Group’s net financial items decreased to MSEK –172 (–149). The net interest expense was MSEK –166 (–234). Other financial items were MSEK –6 (85). See notes 8 and 27.

Profit before tax

Profit before tax increased 28% to MSEK 30,044 (23,410). Excluding items affecting comparability, profit before tax was MSEK 29,893 (24,097), corresponding to margin of 21.2% (21.7).

Taxes

Taxes for the year amounted to MSEK 6,562 (5,276), corresponding to an effective tax rate of 21.8% (22.5) in relation to profit before tax. The main reason for the lower tax rate is positive outcome of a tax litigation. In addition, a deduction of rolled forward interest costs from previous years has been made in Sweden. See note 9.

Profit and earnings per share

Profit for the year increased 29% to MSEK 23,482 (18,134). This corresponds to basic and diluted earnings per share of SEK 4.82 (3.72, adjusted for share split) and SEK 4.81 (3.71, adjusted for share split) respectively.

Depreciation, amortization and impairment, MSEK

	2022	2021
Rental equipment	779	707
Other property, plant and equipment	1 561	1 361
Right-of-use assets	1 330	1 147
Intangible assets	2 677	2 251
Total	6 347	5 466

Key financial data, MSEK

	2022	2021	Change, %
Orders received	158 092	129 545	22
Revenues	141 325	110 912	27
EBITDA	36 549	29 025
– in % of revenues	25.9	26.2
EBITA 1)	31 956	25 015
– in % of revenues	22.6	22.6
Operating profit	30 216	23 559	28
– in % of revenues	21.4	21.2
Adjusted operating profit	30 065	24 246	24
– in % of revenues	21.3	21.9
Profit before tax	30 044	23 410	28
– in % of revenues	21.3	21.1
Profit for the year	23 482	18 134	29
Basic earnings per share, SEK	4.82	3.72	2)
Diluted earnings per share, SEK	4.81	3.71	2)

1) Operating profit excluding amortization of intangibles related to acquisitions.
2) Adjusted for share split.

Revenues and return, continued

Balance sheet

The Group’s total assets increased 26% to MSEK 172,301 (136,683). Cash, cash equivalents and other current financial assets decreased to MSEK 12,143 (19,837), as a net effect of operational cash generation (see next page), dividend to shareholders MSEK –9,250, redemption of shares MSEK –9,732 and acquisitions MSEK –10,591.

Working capital ratios

The ratio of inventories to revenues at year end increased to 19.3% (16.0), and trade receivables to 21.2% (19.8). Trade payables were 13.5% (13.7).

Capital turnover

The capital turnover ratio was 0.91 (0.88) and the capital employed turnover ratio was 1.33 (1.27).

Equity

At year end, Group equity including non-controlling interests was MSEK 80,026 (67,634), corresponding to 46% (49) of total assets. Equity per share was SEK 16 (14). Atlas Copco’s market capitalization at year end was BSEK 587 (733), a decrease of 20%. The information related to public takeover bids is the same as for the Parent Company and described on page 19. Total comprehensive income for the year was MSEK 31,854 (23,025). See page 62 and note 10. Shareholders’ transactions include dividends and redemption of shares totaling MSEK –18,982 (–8,889), sales and repurchases of own shares of net MSEK 483 (–1,034), and share-based payments of net MSEK –41 (–234). See page 64 and note 20.

Return on capital employed and return on equity

Return on capital employed reached 29% (27) and the return on equity was 32% (30). The Group uses a weighted average cost of capital (WACC) of 8% (8) after tax as an investment and overall performance benchmark.

Revenues and return, continued

Balance sheet in summary, MSEK

	Dec 31, 2022	Dec 31, 2021
Intangible assets	67 067	50 348
Rental equipment	2 689	2 342
Other property, plant and equipment	12 720	8 991
Right-of-use assets	4 752	3 244
Other fixed assets	4 861	3 752
Inventories	27 219	17 801
Receivables	40 849	30 363
Current financial assets	889	847
Cash and cash equivalents	11 254	18 990
Assets classified as held for sale	1 5
Total assets	172 301	136 683
Total equity	80 026	67 634
Interest-bearing liabilities	38 713	27 988
Non-interest-bearing liabilities	53 562	41 061
Total equity and liabilities	172 301	136 683

Equity, MSEK

	2022	2021
Opening balance	67 634	53 534
Profit for the year	23 482	18 134
Other comprehensive income for the year	8 372	4 891
Shareholders’ transactions	–18 982	–8 889
Change of non-controlling interests	44	–836
Acquisition and divestment of own shares	–483	1 034
Share-based payments, equity settled	–41	–234
Closing balance	80 026	67 634

Equity attributable to:
– owners of the parent: 79,976 (67,633)
– non-controlling interests: 50 (1)

Interest-bearing debt and net indebtedness

Total interest-bearing debt was MSEK 38,713 (27,988), whereof MSEK 2,380 (3,114) in post-employment benefits. The Group has an average maturity of 4.0 years on interest-bearing liabilities. See notes 21 and 23 for additional information. The Group’s net indebtedness, amounted to MSEK 26,570 (8,151) at year end. The net debt/EBITDA ratio was 0.7 (0.3) and the debt/equity ratio was 33% (12).

Credit rating

Atlas Copco’s long-term and short-term debt is rated by Standard & Poor’s and Fitch with the long-/short-term rating A+/A-1 and A+/F1+, respectively.

Operating cash flow and investments

Operating cash surplus was MSEK 36,978 (28,952). Cash flows from financial items were MSEK –714 (459). Net pension funding and payments were MSEK –419 (–330). The working capital increased by MSEK 7,415 (increase of 244), primarily due to increased inventories in response to supply chain constraints. Net investments in rental equipment were MSEK 808 (474). Gross investments in property, plant and equipment increased to MSEK 3,660 (1,970). In 2022, Compressor Technique made notable investments in production, and research and development facilities in Belgium. Vacuum Technique invested in a service technology center in China, new distribution centers in South Korea and Japan, a manufacturing facility in South Korea, a remanufacturing and assembly facility in the USA, and a cryopump manufacturing and R&D facility in the USA. Industrial technique invested in new machining equipment in its production facility in Sweden, a new innovation center for battery production and electronics in Germany, and a new production and R&D facility in China. Power Technique invested in a new logistic center in the USA. Cash received from sale of property, plant and equipment equaled to MSEK 99 (93). Net investments in intangible assets, mainly related to capitalization of product development expenditures, were MSEK 1,371 (1,389). Net investments in other assets were MSEK 20 (–514). In total, the operating cash flow reached MSEK 17,099 (19,378).

Cash flow from structural changes

The net cash flow from structural changes, i.e. acquisitions and divestments, amounted to MSEK –10,591 (–2,341). See also note 2.

Cash flow from financing

Dividends paid amounted to MSEK –9,250 (–8,889) and the mandatory redemption was MSEK –9,732. Sales and repurchases of own shares resulted in a net of MSEK –483 (1,034), all related to hedging or deliveries of shares for the long-term incentive plans described on page 92. Change in interest-bearing liabilities was MSEK 4,814 (–1,645).

Employees

In 2022, the average number of employees in the Group increased by 4,509 to 45,781. At year end, the number of employees was 48,951 (42,862), and the number of consultants/external workforce was 3,834 (3,762). For comparable units, the total workforce increased by 3,394. See also note 5.# Calculation of operating cash ow, MSEK

	2022	2021
Operating cash surplus	36 978	28 952
Net nancial items	–714	459
Taxes paid	–6 245	–5 211
Pension funding	–419	–330
Change in working capital	–7 415	–244
Increase in rental equipment, net	–808	–474
Cash ows from operating activities	21 377	23 152
Investments of property, plant and equipment, net	–3 561	–1 877
Other investments, net	–1 351	–1 356
Cash ow from investments	–4 912	–3 233
Adjustment for currency hedges of loans	634	–541
Operating cash ow	17 099	19 378

Average number of employees

	2022	2021
Atlas Copco Group	45 781	41 272
– Sweden	1 474	1 402
– Outside Sweden	44 307	39 870
Business areas
– Compressor Technique	20 044	18 785
– Vacuum Technique	10 929	8 961
– Industrial Technique	9 162	8 745
– Power Technique	4 810	3 973
– Common Group functions	836	808

Atlas Copco 2022 18

THE YEAR IN REVIEW

Introduction

This is Atlas Copco

The year in review

• Administration report
• Business areas
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over nancial reporting
• Financials
• Other information

Atlas Copco AB is the ultimate Parent Company of the Atlas Copco Group and is headquartered in Nacka, Sweden.

Earnings

Prot before tax amounted to MSEK 32753 (5515) and prot for the year amounted to MSEK 32433 (5176). The dierence between the years is mainly due to increased dividends from Group Companies.

Financing

The total assets of the Parent Company were MSEK 184774 (173859). At year end 2022, cash and cash equivalents amounted to MSEK 0 (0) and interest-bearing liabilities amounted to MSEK 21 393 (23121). Equity represented 88% (86) of total assets and non-restricted equity totaled MSEK 156 517 (143591).

Employees

The average number of employees in the Parent Company was 110 (107).

Remuneration

Principles for remuneration, fees and other remuneration paid to the Board of Directors, the President and CEO, and other members of Group Management, other statistics and the guidelines regarding remuneration and benets to Group Management as approved by the Annual General Meeting are specied in note 5.

Financial risks, risks and factors of uncertainty

Atlas Copco is subject to currency risks, interest rate risks and other nancial risks. Atlas Copco has adopted a policy to control the nan- cial risks to which Atlas Copco AB and other Group companies are exposed. A nancial risk management committee meets regularly to make decisions about how to manage these risks. See also Risks, risk management and opportunities on pages 44–48.

Appropriation of prot

The Board of Directors proposes to the Annual General Meeting 2023 a dividend of SEK 2.30 (1.90, adjusted for share split) per share to be paid for the 2022 scal year. Excluding shares currently held by the Company, the proposed dividend corresponds to a total of MSEK 11197 (9258). In order to facilitate a more ecient cash management, the dividend is proposed to be paid in two equal installments, the rst with record date May 2, 2023, and the second with record date October 20, 2023.

	SEK
Retained earnings including reserve for fair value	124 083 709 433
Prot for the year	32 433 451 449
The Board of Directors proposes that these earnings be appropriated as follows:
To the shareholders, a dividend of SEK 2.30 per share	11 197 221 020
To be retained in the business	145 319 939 862
Total	156 517 160 882

Parent Company Shares and share capital

At year end, Atlas Copco’s share capital totaled MSEK 786 (786) and a total number of 4 918 452 416 shares divided into 3357576384 class A shares and 1560876032 class B shares were issued. Net of 50095451 class A shares and 0 class B shares held by Atlas Copco, 4868356965 shares were outstanding. Class A shares entitle the owner to one vote while class B shares entitle the owner to one tenth of a vote. Class A shares and class B shares carry equal rights to a part of the Company’s assets and prot.

Investor AB is the single largest shareholder in Atlas Copco AB. At year end 2022, Investor AB held a total of 836131135 shares, representing 22.3% of the votes and 17.0% of the capital. There are no restrictions prohibiting the right to transfer shares of the Company, nor is the Company aware of any such agreements. In addition, the Company is not party to any material agreement that enters into force or is changed or ceases to be valid if the control of the Company is changed as a result of a public takeover bid. There is no limitation to the number of votes that can be cast at a General Meeting of shareholders. As prescribed by the Articles of Association, the General Meeting has sole authority for the election of Board members and there are no other rules relating to the election or dismissal of Board members or changes in the Articles of Association. Correspondingly, there are no agreements with Board members or employees regarding com- pensation in case of changes of current position reecting a public takeover bid.

Statutory sustainability report

Atlas Copco AB has prepared a sustainability report in accordance with the Global Reporting Initiative’s guidelines (GRI Standards) which, in combination with the EU Taxonomy regulation disclosures on pages 135–137, also constitutes Atlas Copco AB’s statutory sus- tainability report and encompasses all its subsidiaries. The sustain- ability report has been prepared in accordance with the disclosure requirements set out in the Swedish Annual Accounts Act, chapter 6, paragraph 11. The scope and content of the sustainability report are dened on page 138.

Atlas Copco 2022 19

THE YEAR IN REVIEW

Introduction

This is Atlas Copco

The year in review

• Administration report
• Business areas
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over nancial reporting
• Financials
• Other information

Introduction

This is Atlas Copco

The year in review

• Administration report
  • Business areas
    • Compressor Technique
    • Vacuum Technique
    • Industrial Technique
    • Power Technique
  • Sustainable approach to delivering value
  • Risks, risk management and opportunities
  • The Atlas Copco share
  • Corporate Governance
  • Board of Directors
  • Group Management
  • Internal control over nancial reporting
  • Financials
  • Other information

Business areas

The Atlas Copco Group is a world-leading provider of sustainable productivity solutions. The Group oroup offers customers innovative compressors, air treatment systems, vacuum solutions, industrial power tools and assembly systems, machine vision, and power and ow sod flow solutions. Atlas Copco’s four business areas are responsible for developing their respective operations by implementing and following up on strategies and objectives to achieve sustainable, protfitable growth.

Key gures, MSEK

	2022	2021	Change, %
Orders received	69 834	55 012	27%
Revenues	61 058	49 657	23%
EBITA*	14 882	12 205
– as a percentage of revenue	24.4	24.6
Operating prot	14 425	11 874	21%
Operating margin, %	23.6	23.9
Return on capital employed, %	82	93
Investments	897	620
Average number of employees	20 044	18 785

• Operating prot excluding amortization of intangibles related to acquisitions.

Key gures, MSEK

	2022	2021	Change, %
Orders received	41 213	39 529	4%
Revenues	38 941	29 219	33%
EBITA*	9 019	7 569
– as a percentage of revenue	23.2	25.9
Operating prot	8 407	7 066	19%
Operating margin, %	21.6	24.2
Return on capital employed, %	24	25
Investments	2 099	993
Average number of employees	10 929	8 961

• Operating prot excluding amortization of intangibles related to acquisitions.

Key gures, MSEK

	2022	2021	Change, %
Orders received	26 070	20 545	27%
Revenues	23 007	19 421	18%
EBITA*	5 127	4 538
– as a percentage of revenue	22.3	23.4
Operating prot	4 597	3 976	16%
Operating margin, %	20.0	20.5
Return on capital employed, %	17	16
Investments	518	269
Average number of employees	9 162	8 745

• Operating prot excluding amortization of intangibles related to acquisitions.

Key gures, MSEK

	2022	2021	Change, %
Orders received	21 783	15 155	44%
Revenues	19 053	13 234	44%
EBITA*	3 666	2 182
– as a percentage of revenue	19.2	16.5
Operating prot	3 525	2 121	66%
Operating margin, %	18.5	16
Return on capital employed, %	25	27
Investments	1 009	571
Average number of employees	4 810	3 973

• Operating prot excluding amortization of intangibles related to acquisitions.

The Compressor Technique business area provides compressed air solutions: industrial compressors, gas and process compressors and expanders, air and gas treatment equipment, and air management systems. The business area has a global service network and innovates for sustainable productivity mainly for the manufacturing and process industries.

Compressor Technique, page 21

The Vacuum Technique business area provides vacuum products, exhaust management systems, valves and related products. The main markets served are semi conductor and scientic, as well as a wide range of industrial segments including chemical process industries, food packaging and paper handling. The business area has a global service network and innovates for sustainable productivity in order to further improve its customers’ performance.

Vacuum Technique, page 24

The Industrial Technique business area provides industrial power tools, assembly technologies, machine vision solutions, quality assurance products, software and service through a global net- work. The business area innovates for sustainable productivity for customers in the automotive and general industries.

Industrial Technique, page 27

The Power Technique business area provides portable air and power, industrial and portable ow solutions through products such as mobile compressors, generators, light towers, industrial and portable pumps, along with a number of complementary products.

Power Technique, page 30# Atlas Copco 2022 20 THE YEAR IN REVIEW

Compressor Technique

The demand for the business area’s equipment and service was strong, and order volumes increased signicantly. The increased order intake was supported by solid demand in all regions. 18 acquisitions were completed during the year, and continued investments were made in product development, online and oine market presence, and service. The business area also intensied its focus on developing solutions for customer segments contributing to a low-carbon society.

Market development

The demand for equipment and service was strong, and order volumes increased markedly throughout the year. In total, the order intake increased 14% organically. Order volumes for the service business increased noticeably, with solid order growth in all regions. The increased order intake was gen- erated by a higher demand for spare parts, repair, maintenance, and service contracts, the latter supported by an increased number of connected products in the market. The order intake for equipment increased sig- nicantly, supported by increased demand in all regions, especially in North America and Asia. Customer segments contributing to the transition to a low-carbon society, such as the production of batteries for electric cars, solar panels, LNG, and hydrogen applications, particularly supported the growth in order intake. The order intake for large industrial compressors grew more than orders for small and medium-sized compressors, particularly during the second half of the year. Order volumes for gas and process compressors increased signi- cantly, with strong growth in all regions, particu- larly in North America.

Market presence and organizational development

The business area strengthened its market posi- tion with the launch of several new innovative products during the year. The product portfo- lio was expanded in particular for applications related to the energy transition, such as compres- sion and liquication of hydrogen and LNG. The service oer was also further developed through continued focus on connectivity and data analytics.

Sales bridge	2021, MSEK	Structural change, %	Currency, %	Organic*, %	Total, %	2022, MSEK
Orders received	55 012	+2	+11	+14	+27	69 834
Revenues	49 657	+2	+11	+10	+23	61 058

• Volume, price and mix

	Revenues, MSEK	Operating prot margin	Return on capital employed
2022	61 058	23.6%	82%
2021	49 657	23.9%	93%
2020
2019
2018

Resources were added in research and develop- ment and market presence, primarily through the development of digital channels. While the busi- ness grew signicantly, the busi- ness area managed to lower its environmental footprint from operations, as a result of a further increased use of renewable energy. The business area also supported its customers’ sustainability eorts through an increased installed base of energy ecient products. The business area continued to develop its main European site in Antwerp, Belgium, through investments in its production and research and development facilities. The business area also increased its presence in targeted markets and customer segments through several acquisitions, see below. The business area made in total 18 acquisitions in 2022:

• Oxymat A/S, a Danish manufacturer of on-site gas generation equipment with 146 employees and revenues of about MSEK 411.
• SCB S.r.l., an Italian condensate management manufacturer with 16 employees and revenues of MSEK 51.
• Aircel, LLC., a US-based provider of air treatment and air purication solutions with 19 employees and revenues of about MSEK 55.
• The assets in Suzhou Since Gas System Co., Ltd., a Chinese manufacturer of on-site gas genera- tion with 80 employees and revenues of about MSEK 93.
• Shandong Meditech Medical Technology Co., Ltd., a Chinese manufacturer of medical oxygen solutions with 70 employees and revenues of about MSEK 114.

The following acquisitions were also made:

• CAS Products Ltd, a British distributor.
• Associated Compressor Engineers Ltd (ACE), a UK-based distributor.
• Bireme Group, a Singapore-based distributor
• FITEC S.A.S., a French distributor.
• Glaston Compressor Services Ltd., a UK-based distributor.
• The operating assets of Compressed Air Products, Inc., a US-based distributor.
• DF-Druckluft-Fachhandel GmbH, a German company specialized in online sales.
• Mesa, a US-based distributor.
• Vector Sp. z o.o., a Polish-based distributor.
• Precision Pneumatics Ltd, UK-based distributor.
• Wearside Pneumatics Ltd, UK-based distributor.
• Entreprises Larry Inc., a Canadian distributor.
• The operating assets of Northeast Compressor, a US-based distributor.

For more information see page 73.

Revenues, prots and returns

Revenues reached MSEK 61058 (49657), an organic increase of 10%. The operating prot increased by 21% to MSEK 14425 (11874), corresponding to a margin of 23.6% (23.9). The margin was positively aected by currency and higher organic revenue volumes. In contrast, increased costs related to Covid-19, primarily in the rst half of the year, supply chain constraints and consequent ineciencies in factories had a neg- ative eect on the operating margin. Return on capital employed was 82% (93).

Atlas Copco 2022 21 THE YEAR IN REVIEW – COMPRESSOR TECHNIQUE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
  • Compressor Technique
  • Vacuum Technique
  • Industrial Technique
  • Power Technique
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
  • Board of Directors
  • Group Management
• Internal control over nancial reporting
• Financials
• Other information

The market

The global market for compressed air equipment, air and gas treatment equipment, and related services is characterized by a diversied customer base. The customers request solutions that are reliable, productive, ecient, and suited to spe- cific applications. Customers are also increasingly looking for partners to support their sustainability ambitions. Compressors are used in a broad spectrum of applications. Clean, dry, and oil-free air is needed in industrial processes, e.g. the food, pharma- ceutical, electronics, and textile industries. Com- pressors are used in wastewater treatment, and increasingly in applications contributing to the transition to a low-carbon society, such as green hydrogen, LNG, and batteries for electric vehicles. Compressed air is also used in automation and in sectors as diversied as hospitals, and in high-speed trains. Blowers are used in applications where there is a need for a consistent ow of low- pressure air, for example in waste water treatment, and conveying. Gas and process compressors and expanders are supplied to various process industries, such as air separation plants, power utilities, chemical and petro chemical plants, and liqueed natural gas applications. Stationary industrial air compressors and asso- ciated air-treatment products, spare parts and service represent about 90% of sales. Large gas and process compressors, including related service, represent about 10%.

Other, 18%	General manu- facturing, 25%	Construction, 15%	Service, 13%	Process industry, 24%	Automotive, 1%	Electronics, 4%
Orders received by customer category

Asia/Oceania, 33 %	North America, 23%	Africa/ Middle East, 7%	Europe, 31%	South America, 6%
Revenues by region

Service, 57%	Equipment, 43%
Share of revenues

Market trends

• Increased focus on energy eciency, energy recovery, and the reduction of CO 2 emissions
• Accelerated investments in market segments contributing to a low carbon society
• Focus on total solution and total life- cycle cost
• The combination of cloud technology, big data and machine learning increases the demand for data-driven service solutions
• New applications for compressed air

Demand drivers

• Industrial production
• Transition to a low-carbon society
• Energy costs
• The need for decreased CO 2 emissions drives demand for more energy-ecient machinery

Vision and strategy

The vision is to be First in Mind—First in Choice as a supplier of compressed air and gas solutions by being interactive, committed and innovative, and by oering the best value to customers. The strat- egy is to further develop Atlas Copco’s leading position in selected niches and growing the busi- ness in a way that is economically, environmen- tally and socially responsible. This should be done by capitalizing on the strong global market pres- ence, improving market penetration in mature and developing markets, and continuously devel- oping improved products and solutions to satisfy customer demands. The presence is enhanced by utilizing several commercial brands. Key strategies include growing the service business as well as developing businesses within focused areas such as air-treatment equipment, blowers, and com- pressor solutions for trains, ships, and hospitals. By oering the most energy-ecient products, the business aims to contribute to a better tomor- row and to support customers in meeting their sustainability ambitions. The business area is actively looking at acquir- ing complementary businesses.# THE YEAR IN REVIEW – COMPRESSOR TECHNIQUE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
  • Compressor Technique
  • Vacuum Technique
  • Industrial Technique
  • Power Technique
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over nancial reporting
• Financials
• Other information

Compressor Technique

Products and applications

Piston compressors

Piston compressors are available as oil-injected and oil-free. They are used in general industrial applications as well as specialized applications.

Oil-free tooth and scroll compressors

Oil-free tooth and scroll compressors are used in industrial and medical applications with a demand for high-quality oil-free air. Some models are available as WorkPlace AirSystem with integrated dryers, as well as with energy-ecient variable speed drive (VSD).

Rotary screw compressors

Rotary screw compressors are available as oil- injected and oil-free. They are used in numerous industrial applications and can feature the Work- Place AirSystem with integrated dryers, as well as the energy-ecient variable speed drive (VSD) technology and energy recovery kits.

Oil-free blowers

Oil-free blowers are available with dierent tech- nologies: rotary lobe blowers, rotary screw blow- ers and centrifugal blowers. Blowers are used in process industry applications with a demand for a consistent ow of low-pressure air, for example in wastewater treatment and conveying.

Oil-free centrifugal compressors

Oil-free centrifugal compressors are used in industrial applications that require constant, large volumes of oil-free air. They are also called turbo compressors.

Gas and process compressors, expanders and pumps

Gas and process compressors, expanders and pumps are primarily supplied to the energy indus- tries (including oil and gas, conventional and renewable power generation, hydrogen etc.), as well as industrial gases. The main equipment solu- tions are single- and multi-stage centrifugal com- pressors, expanders and pumps, complemented by oil-free gas screw compressors used by the Marine and LNG carrier industry.

Air and gas treatment equipment and medical air solutions

Dryers, coolers, gas puriers and lters are sup- plied to produce the right quality of compressed air or gas. In addition, the oering includes solu- tions for medical air, oxygen and nitrogen genera- tion as well as systems for biogas upgrading.

Principal product development and manufacturing units are located in: Belgium, the United States, China, India, Germany and Italy.

INNOVATIONS DURING 2022

Several new products were intro- duced during the year, including:
- Atlas Copco inPASS, a new range of compressed air lters that help cus- tomers to optimize the air quality and protect equipment in production.
- BD 360 + –1260 + (ZP), a new range of desiccant dryers oering increased ow, higher energy eciency and hence lower CO 2 emissions.
- ZT30–50VSD + , a new range of oil- free tooth compressors oering com- pact design, low noise, and 15% more energy eciency compared to the previous generation.
- H2P reciprocating hydrogen compressor developed mainly for pipeline injection and storage applications oering high energy eciency and exibility due to modular design.

MANAGEMENT

• Gas and Process, President Robert Radimeczky
• Compressor Technique, January 1, 2023
  • Business Area President Vagner Rego
  • Compressor Technique Service, President Dirk Beyts
  • Industrial Air, President Joeri Ooms
  • Oil-free Air, President Philippe Ernens
  • Professional Air, President Alain Lefranc
  • Medical Gas Solutions, President Ben Van Hove
  • Airtec, President Wouter Ceulemans

Strategic activities

• Intensify focus on research and development
• Increase focus on digitalization and connected products
• Increase market coverage, through digital and physical presence, and improve presence in tar- geted markets/segments
• Develop new sustainable products and solu- tions oering better value and improved energy eciency to customers
• Activities supporting customers to meet their sustainability ambitions
• Extend the product and service oering at current customers and adjacent segments and applications
• Perform more service on a higher share of the installed base of equipment
• Increase operational eciency
• Invest in people and competence development
• Acquire complementary businesses

Competition

Compressor Technique’s principal competitors in the market for industrial compressors and air treatment equipment are Ingersoll Rand, Kaeser, Hitachi, and Parker Hannin. There are also numerous regional and local competitors, for example, in China. In the market for gas and process compressors and expanders, the main competitors are Siemens and MAN Turbo.

Market position

A leading market position globally in most of its operations.

Atlas Copco 2022 22

THE YEAR IN REVIEW – COMPRESSOR TECHNIQUE

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
• Compressor Technique
• Vacuum Technique
• Industrial Technique
• Power Technique
Sustainable approach to delivering value
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

Vacuum Technique

The market for vacuum equipment and related service was strong, although the demand from the semiconductor industry decreased during the latter half of the year, resulting in an overall decrease in order intake. The business area made several acquisitions, intensied its focus on innovation, and made further investments in operations to better support customers’ need for equipment and services.

Market development

The overall demand for vacuum equipment and services remained high even if the demand from the semiconductor and at panel display indus- try decreased sharply during the latter half of the year, resulting in an overall order decrease of 8% organically. The service business achieved solid order growth, supported by increased demand from the semiconductor industry and industrial customers. The order intake increased in all major regions. Order volumes for equipment, however, decreased as a result of a markedly weakened demand from the semiconductor and at panel display industry during the third and fourth quar- ters. This was primarily driven by lower invest- ment levels by memory manufacturers. The order intake decreased signicantly in all regions except Europe, where order volumes increased. Order volumes for equipment to industrial and scientic vacuum applications increased considerably with solid growth in all regions.

Market presence and organizational development

The business area continued to focus on inno- vation with further investments in research and development. Several new innovative prod- ucts were introduced, targeting both the semi- conductor and at panel display market, and the industrial and scientic vacuum market. The mar- ket presence was strengthened, and the product oering was expanded as a result of several acqui- sitions during the year. Resources were also added in sales and marketing, particularly aimed at the industrial and scientic vacuum market. The business area supported customers in reducing their environmental footprint through increased delivery of energy-ecient products. To reduce the environmental footprint of its own operations, the business area increased the share of renewable energy contracts, particularly in China and South Korea. Continued eorts were made to strengthen the business area’s digital capabilities, and to service and support customers through connec- tivity. One example was the further development and rollout of the remote monitoring systems for vacuum pumps Edcentra and GENIUS Instant Insights™. Several investments were made in operations in order to increase the presence and closeness to customers. For example, the business area invested in a service technology center in Lang- fang, China, in new distribution centers in South Korea and Japan, a manufacturing facility in Asan City, South Korea, a remanufacturing and assem- bly facility in Chandler, USA, and in a cryopump manufacturing and R&D facility in Haverhill, USA. The business area made in total eight acquisitions in 2022:
- HHV Pumps Pvt. Ltd., an Indian vacuum pump provider with 151 employees and revenues of approximately MSEK 53.
- National Vacuum Equipment Inc., a US manu- facturer of mobile vacuum pumps and packages with 100 employees and revenues of approxi- mately MSEK 223.

Sales bridge	2021, MSEK	2022, MSEK	Structural change, %	Currency, %	Organic*, %	Total, %
Orders received	39 529	41 213	+1	+11	–8	+4
Revenues	29 219	38 941	+2	+15	+16	+33

• Volume, price and mix

	2022, MSEK	2021:
Revenues	38 941	29 219
Operating prot margin	21.6%	24.2%
Return on capital employed	24%	25%

	2022	2021	2020	2019	2018
Orders received, MSEK
Revenues, MSEK
Operating margin, %

0 12 000 24 000 36 000 48 000 60 000
2022 2021 2020 2019 2018
0 5 10 15 20 25
MSEK %
Orders received, revenues and operating margin

Atlas Copco 2022 23

THE YEAR IN REVIEW – COMPRESSOR TECHNIQUE

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
• Compressor Technique
• Vacuum Technique
• Industrial Technique
• Power Technique
Sustainable approach to delivering value
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
Compressor Technique
• Vacuum Technique
• Industrial Technique
• Power Technique
Sustainable approach to delivering value
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information# THE YEAR IN REVIEW – VACUUM TECHNIQUE

Introduction

This is Atlas Copco The year in review Administration report Business areas Compressor Technique • Vacuum Technique Industrial Technique Power Technique Sustainable approach to delivering value Risks, risk management and opportunities The Atlas Copco share Corporate Governance Board of Directors Group Management Internal control over nancial reporting Financials Other information

The market

Vacuum and abatement solutions are required in a number of applications where the pressure needs to be below atmospheric pressure and/or the environment needs to be clean. The Vacuum Technique business area sells prod- ucts, systems and services across several targeted market sectors. The market can be categorized into semicon- ductor, industrial vacuum and scientic vacuum. However, each of these sectors contains several sub-sectors and specic applications.

Vacuum products include a broad range of dry pumps, turbomolecular pumps and other vacuum pumps. These are used to create highly controlled, low-pressure, particle-free environ- ments in a diverse set of manufacturing processes. Such processes include semiconductor, at panel display, LED and solar, glass and optical coating, scientic instruments used in life sciences, research institutes focused on renewable energy, high-energy lasers and nanotechnology, pharma- ceuticals, heat treatment, lithium-ion batteries, and food processing and packaging.

Abatement systems include stand-alone and customized solutions which integrate vacuum and exhaust management technologies. Abatement is required both to prevent adverse chemical re - actions within production processes and to com- ply with strict regulatory emission controls. The business area also provides value-added services including equipment monitoring, eld and on-site servicing, remanufacturing, service upgrades and provision of spare parts and oils.

Orders received by customer category

Category	Share
Electronics	63%
Process industry	23%
General manu-
facturing,	12%
Other,	2%

Revenues by region

Region	Share
Asia/Oceania,	61%
Europe,	15%
North America,	23%
Africa/
Middle East,	1%

Share of revenues

Category	Share
Equipment,	78%
Service,	22%

Market trends

• Increased use of demanding materials and extreme working temperatures in processes for semiconductor and industrial production
• Focus on energy-eciency
• Stricter regulatory emission standards
• Increased demand for digitally supported service oers
• Focus on total solutions and total life-cycle cost
• Focus on circularity as a sustainability solution

Demand drivers

• Industrial production
• Manufacturing of semiconductors, research and development equipment, lithium-ion batteries, at panel display and solar energy products
• Demand for energy-ecient vacuum pumps
• Increase in vacuum requirements to support new production processes

Vision and strategy

The vision is to be First in Mind—First in Choice for vacuum and abatement solutions. The strategy focuses on technology leadership, market leadership and agility, to support growth. This is done by focusing on product research and development programs together with deployment of highly innovative products and services. Continued execution of market leadership will be done by an organization focused on agility, growing market share in our traditional heartlands and further expansion of the geographical footprint. Additionally, the business area has a strong focus on developing the service business and an ecient and exible global operations footprint.

Strategic activities

• Increase market coverage and improve presence in targeted markets and segments
• Fast introduction of highly innovative products and services oering better value and improved energy eciency
• Increased market penetration and coverage through brand portfolio management
• Perform more service on a higher share of the installed base of equipment
• Invest in service presence close to customers
• Increase organizations’ agility and operational eciency
• Invest in people and competence development
• Grow through strategically attractive acquisitions

Competition

Vacuum Technique’s principal competitors are:

Semiconductor market: DAS Environmental Expert, Ebara, Kashiyama, Pfeier Vacuum, Shimadzu Corporation.

Industrial and scientic market: Ingersoll Rand, Pfeier Vacuum, and Busch.

Market position

A global market leader for vacuum and abatement solutions.

Vacuum Technique: Products and applications

Oil-sealed rotary vane vacuum pumps

The latest generation of oil-sealed rotary vane pumps has been rened to produce a better qual- ity of vacuum while extending the pressure range over which the pump can operate. They are used in a wide variety of industrial, and research and development applications.

Dry vacuum pumps

Dry pumps are oil-free pumping mechanisms to create vacuum environments. They use no lubri- cants within the pumping mechanism and have a series of available monitoring and control options. Dry pumps are used extensively in many semicon- ductor applications, as well as in industrial pro- cesses such as metallurgy, coating, drying, mobile applications and solar. They are also used in scien- tic instruments such as scanning electron micro- scopes.

Turbomolecular pumps

In turbomolecular pumps, or turbo pumps, a turbine rotor spins rapidly to create vacuum. The dening feature of a turbo pump is the high rota- tional speed. These pumps are typically used in conjunction with primary wet or dry pumps. They are commonly used in semiconductor appli- cations, research and development, industrial applications and high energy physics.

Liquid ring vacuum pumps

Liquid ring pumps are equipped with a xed blade impeller. As the impeller rotates, the liquid forms a ring around the circumference of the casing. Stan- dard liquid ring vacuum solutions are perfect for use in humid, dusty and dirty environments com- monly found in industrial processes, including food and beverage, mining, chemicals, oil, steel, cement, plastics and textiles.

• Dry vacuum pump for analysis applications and research laboratories
• Integrated abatement system used in the semiconductor industry

Cryogenic pump

The Vacuum Technique business area oers an extensive range of vacuum and abatement solutions to the market.

Abatement and integrated systems

Abatement systems are used to manage gases and other process by products from dry pump exhaust. Abatement is required to prevent adverse chemical reactions with production pro- cesses and to comply with strict regulatory emis- sion controls. Abatement and integrated systems are primarily used in semiconductor, at panel display, solar and LED applications.

Cryogenic pumps

Cryogenic pumps create vacuum by condens- ing (freezing) gas onto special arrays of cryogen- ically cooled surfaces within the pump envelope. The temperature of the surfaces can be below 20K/–250°C to enable the capture of most gas species. Cryogenic pumps are used in a spectrum of high-technology research applications as well as in manufacturing of semiconductor, at panel and optical devices.

Principal product development and manufacturing units are located in: The United States, Mexico, the United Kingdom, Czech Republic, Germany, South Korea, China and Japan.

INNOVATIONS DURING 2022

Several new products were introduced during the year, including:

• A new generation variable speed drive oil-injected vacuum pumps, GHS 1402 2002VSD+, targeting industrial vacuum applications and oering optimal oil separation and a small footprint.
• A new cryogenic pump, the Edwards CTI On-Board® IS 320F XVS, oering high performance and solid vacuum consistency while providing real-time system informa- tion for optimum temperature control.
• A new module for integrated vacuum and abatement systems, the Hydrogen Dilution (H2D), providing signicantly lower energy consumption and lower carbon footprint compared to other solutions in semiconductor processes.
• A new innovation for improved abatement product performance, the Porous Head Technology, available for both new equip- ment and service upgrades, oering increased eciency and abatement uptime for customers.

Revenues, prots and returns

Revenues increased 33% to MSEK 38941 (29219), corresponding to a 16% organic increase. The operating prot increased 19% to MSEK 8407 (7066), corresponding to a margin of 21.6% (24.2). The main explanations for the lower mar- gin were higher costs related to supply chain constraints, ineciencies in factories, and costs associated with Covid-19. The last was primarily during the rst half of the year. Return on capital employed was 24% (25).# MANAGEMENT

Vacuum Technique

January 1, 2023

• Business Area President: Geert Follens
• Vacuum Technique Service, President: Eckart Roettger
• Semiconductor Service, President: Troy Metcalf
• Semiconductor, President: Kate Wilson
• Semiconductor Chamber Solutions, President: Martin Tollner
• Scientific Vacuum, President: Carl Brockmeyer
• Industrial Vacuum, President: Koen Lauwers

Atlas Copco 2022

THE YEAR IN REVIEW – VACUUM TECHNIQUE

Industrial Technique

The demand for equipment and service was strong, and order volumes to automotive and general industry customers increased in all regions. Several new products were introduced to the market, investments were made in research and development and in digital presence. The focus on how to support customers in reducing their environmental footprint was also intensified.

Market development

The overall demand for equipment and services increased markedly, supported by increased investment activity in both the automotive and general industry. In total, the order intake increased 17% organically. Order volumes for the service business increased with solid growth in all regions. The demand for industrial assembly and vision solutions to the automotive industry increased significantly, and the order intake increased in all regions. The strong order growth was primarily driven by customers’ increased investments in electric vehicle production. Order volumes for industrial assembly and vision solutions to the general industry increased, supported by an increased demand from most customer segments, and growth in all regions.

Market presence and organizational development

The business area continued to invest in innovation and further strengthened its product portfolio by introducing several new products to the market during the year. The service offering was strengthened through the rollout of a cloud-based data analytics offer, enabling customers to optimize their processes and equipment maintenance. The business area also intensified its focus on reducing the environmental footprint by, for example, an increased use of recycled material in new products and through the launch of a new activity concept helping customers in their sustainability ambitions and to reduce their CO 2 emissions.

Sales bridge	2021, MSEK	2022, MSEK
Orders received	20 545	26 070
Revenues	19 421	23 007
Structural change, %	–1	+0
Currency, %	+11	+10
Organic*, %	+17	+8
Total, %	+27	+18

* Volume, price and mix

Revenues, MSEK
2022: 23 007	2021: 19 421

Operating profit margin	20.0%
2021: 20.5%

Return on capital employed	17%
2021: 16%

Investments were made in new machining equipment in the production facility in Tierp, Sweden, in a new innovation center for battery production and electronics in Neustadt, Germany, and a new production and R&D facility in Shanghai, China. The business area made one acquisition in 2022: Soft2tec GmbH, a German company specialized in camera-based tracking systems used for operator guidance, with 38 employees and revenues of approximately MSEK 20. For more information see page 73.

Revenues, profits and returns

Revenues increased 18% to 23 007 (19 421), corresponding to an 8% organic increase. The operating profit increased 16% to MSEK 4 597 (3 976), and the operating margin reached 20.0% (20.5). Increased costs related to supply chain constraints, Covid-19 in the first half of the year, and stock adjustments and provisions, affected the margin negatively. Currency had a positive effect on the operating margin. Return on capital employed was 17% (16).

Atlas Copco 2022

THE YEAR IN REVIEW – INDUSTRIAL TECHNIQUE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
  • Compressor Technique
  • Vacuum Technique
  • Industrial Technique
  • Power Technique
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over financial reporting
• Financials
• Other information

The market

The global market for industrial power tools and assembly systems with related services has a large number of participants with a wide range of products in different applications such as assembly of parts, drilling and material removal. Customers are found in industries such as the automotive industry, off-highway vehicles, the electronics industry, aerospace, appliances, the energy sector, and general industrial manufacturing. In particular, the business area has been successful in developing advanced electric industrial tools and systems that assist customers in achieving fastening according to their specifications and minimizing errors and interruptions in production. With an increasing demand for electric cars, battery production, and a growing use of lighter materials, the automotive industry looks to innovative assembly solutions. The market demands new assembly technologies such as dispensing of adhesives and sealants and self-pierce riveting. The market for machine vision becomes increasingly important, driven by a growing demand for automation, quality and productivity in industrial production. Machine vision solutions are used in discrete production, such as the automotive industry, and in continuous processes production, such as metal and paper production, advanced material manufacturing, and solar panels.

• Other, 11%
• General manufacturing, 21%
• Construction, 2%
• Service, 6%
• Electronics, 4%
• Automotive, 51%

• Process industry, 5%

• Asia/Oceania, 31%

• North America, 32%
• Africa/Middle East, 2%
• Europe, 33%

• South America, 2%

• Equipment, 73%

• Service, 27%

Market trends

• Automation in customers’ production
• Digitalization and demand for connectivity in production
• Increased customer focus on reducing CO 2 emissions
• Increased demand for electric vehicles
• Higher requirements for productivity, flexibility and ergonomics, and increased demand for in-line quality control
• Increased focus on renewable energy and storage
• Use of light-weight material in transportation-related industries

Demand drivers

• Capital expenditure for automotive and general industrial production
• Increased production capacity
• Customer investments in new production lines for new products
• Customer investments in more efficient production
• Operational expenditure in automotive and general industry, e.g. quality assurance and flexible automation
• Investments in customer segments’ contribution to transformation to a low-carbon society

Vision and strategy

The vision is to be First in Mind—First in Choice as a supplier of industrial power tools, joining and dispensing solutions, machine vision, and related services. The strategy is to continue to grow the business profitably by building on technological leadership and continuously offering products and services that improve customers’ productivity, flexibility, quality, energy efficiency, safety, and ergonomics. Key strategic initiatives include adjusting the product offer to meet increased automation in customers’ production processes, and providing additional service, know-how and training. The business area is also increasing its presence in targeted geographical markets. The presence is enhanced by a brand portfolio strategy. The business area is actively looking at acquiring complementary businesses. Growth should be achieved in a way that is economically, environmentally and socially responsible.

Strategic activities

• Increase market coverage and improve presence in targeted markets/segments
• Develop new innovative products and solutions, offering increased quality and productivity, and improved ergonomics
• Develop products helping customers to reduce their environmental impact
• Further increased focus on automation and digitalization, through connected products and solutions, to support customers’ productivity and flexibility
• Increase the share of proactive services and the share of service on the installed base
• Increase operational efficiency
• Invest in people and competence development
• Acquire complementary businesses and integrate them successfully

Competition

Industrial Technique’s principal competitors are:

• Industrial tools business: Apex Tool Group, Ingersoll Rand, ESTIC, and Bosch, as well as several local and regional competitors.
• Adhesive and sealant equipment: Nordson, Graco, Viscotec, BD Tronic, and Dürr.
• Self-pierce riveting: Stanley Black & Decker, and Böllhoff.
• Machine vision: Zeiss, ISV, Coherix, Ametek, and Dr. Schenk.

Market position

A leading market position globally in most of its operations.

Atlas Copco 2022

THE YEAR IN REVIEW – INDUSTRIAL TECHNIQUE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
  • Compressor Technique
  • Vacuum Technique
  • Industrial Technique
  • Power Technique
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over financial reporting
• Financials
• Other information

Industrial Technique: Products and applications

Industrial assembly tools and solutions

Advanced assembly tools and systems are used in the automotive industry and general industrial production such as aerospace, off-highway, and electronics. The business area provides a broad range of pneumatic, hydraulic and electric assembly tools, control systems, and associated software for safety-critical tightening. These systems generally allow customers to collect, record, and process assembly data in their production.# THE YEAR IN REVIEW – INDUSTRIAL TECHNIQUE

Self-pierce riveting solutions, adhesive dispensing and ow drill fastening equipment. Self-pierce rivets, adhesive, and ow-drill fasten- ers are primarily used in the automotive indus- try driven by increased use of light materials in car manufacturing. The business area oers self- pierce riveting tools and rivets, dispensing equip- ment for adhesives and sealants, as well as ow- drill fastening equipment.

• Adhesive dispensing system with an integrated vision system
• Vision system for quality control
• Handheld battery tool for assembly applications

The Industrial Technique business area oers the most extensive range of industrial power tools, assembly systems, and machine vision solutions on the market.

MANAGEMENT

Industrial Technique, January 1, 2023

INNOVATIONS DURING 2022

Several new products were introduced during the year, including:

• A new screw feeding system, based on standardized modules for tailor-made design, that will support customers to improve quality, uptime, and productivity in production.
• The ILS 2.0, a new positioning system for Atlas Copco’s battery assembly tools using machine vision technology to track tool position generating increased production quality and remained exibility.
• The STRwrench, a new handheld torque wrench with connectivity features, supporting customers to increase exibility and reduce errors in their production.

• A new high-performance dispenser, the DosP DP2001, supporting customers in reducing process times when applying sealants, adhesives, or potting materials in customers’ production.

• Business Area President: Henrik Elmin

• Industrial Technique Service, President: Håkan Andersson
• Motor Vehicle Industry Tools and Assembly Systems, President: Lars Eklöf
• General Industry Tools and Assembly Systems, President: Carl von Schantz
• Chicago Pneumatic Tools, President: Ivo Maltir
• Industrial Assembly Solutions, President: Berthold Peters
• Machine Vision Solutions, President: Tomas Lundin

Material removal tools, drills and other pneumatic products

Pneumatic and electric industrial grinders, drills and percussive tools are used in several industrial applications, for example in metal fabrication and aerospace production. The business area also oers airline infrastructure for optimization of pneumatic tools, and air motors that are used as drive units in various industries and applications.

Machine vision solutions

Machine vision is a key technology for industrial automation and digital manufacturing. The oer is focused on quality control of surface inspection and 3D vision systems for in-line metrology, qual- ity control, and robot guidance. The combination of high-performance cameras, illumination, and vision and analytics software, allows customers in a broad range of industries to improve quality and automate production.

Principal product development and manufacturing units are located in: Sweden, Germany, Hungary, the United Kingdom, France, China, Japan, and the United States.

Atlas Copco 2022 | 29

THE YEAR IN REVIEW – POWER TECHNIQUE

Introduction

This is Atlas Copco | The year in review | Administration report | Business areas | Compressor Technique | Vacuum Technique | Industrial Technique | • Power Technique | Sustainable approach to delivering value | Risks, risk management and opportunities | The Atlas Copco share | Corporate Governance | Board of Directors | Group Management | Internal control over nancial reporting | Financials | Other information

Introduction

This is Atlas Copco | The year in review | Administration report | Business areas | Compressor Technique | Vacuum Technique | Industrial Technique | • Power Technique | Sustainable approach to delivering value | Risks, risk management and opportunities | The Atlas Copco share | Corporate Governance | Board of Directors | Group Management | Internal control over nancial reporting | Financials | Other information

Power Technique

The demand for equipment, service, and specialty rental solutions was strong, and signicant order growth was achieved in most regions. The business area continued to invest in research and development, digital capabilities, and solutions that can reduce customers’ environmental footprint. In addition, through the acquisition of Lewa GmbH, the product oer for the industrial pump market was strengthened signicantly.

Market development

The overall demand for equipment, service and specialty rental solutions increased signi- cantly. Order volumes increased strongly in all regions, except Asia, where they were essentially unchanged. In total, the order intake increased 18% organically. Order volumes for the specialty rental business increased noticeably throughout the year, sup- ported by increased demand in all regions, particularly in North America. The demand for service also increased, and solid order growth was achieved in all regions. Equipment orders increased sharply, driven primarily by an increased demand from equip- ment rental companies in the rst half of the year. Demand was also strong during the second half of the year, both from equipment rental companies and end users. Order volumes increased for porta- ble compressors and power and ow equipment, such as generators and pumps.

Market presence and organizational development

During the year, the business area continued to invest in innovation and market presence in tar- geted markets and segments. One example of increased geographical presence was the opening of three new rental depots for the Specialty Rental business. Several new innovative products were intro- duced during the year. Through the acquisition of Lewa GmbH, the product oer for the industrial pump market was signicantly strengthened.

Sales bridge

	Orders received	Revenues
2021, MSEK	15 155	13 234
Structural change, %	+13	+15
Currency, %	+13	+13
Organic*, %	+18	+16
Total, %	+44	+44
2022, MSEK	21 783	19 053

* Volume, price and mix

Revenues, MSEK

	2022	2021
Revenues, MSEK	19 053	13 234

Operating profit margin

• 18.5% (2021: 16.0%)

Return on capital employed

• 25% (2021: 27%)

• Orders received, MSEK
• Revenues, MSEK
• Operating margin, %

Thanks to an increased number of connected products oered to the market, the ability to sup- port and provide service to customers increased further during the year. To support the Specialty Rental business, investments were also made in a new ERP and CRM system. The continued investment in eco fuel (HVO) for equipment testing is one example of how the business area further reduced the environmental footprint in its own operations. The further rede- sign of products to be electrically powered is an example of how the business area works to sup- port customers in their sustainability ambitions.

The business area made three acquisitions in 2022:

• Pumpenfabrik Wangen GmbH: a German manufacturer of progressive cavity pumps used for transferring uids mainly in the bio- gas and wastewater sectors. The company had 265 employees and annual revenues of about MSEK466.
• LEWA GmbH and subsidiaries: a German manu- facturer of diaphragm metering pumps, process pumps and complete metering systems, with around 1 200 employees and annual revenues of about MSEK 2400.
• Geveke B.V. and subsidiaries: a company that distributes compressors and engineers advanced and complex process pump installa- tions, with 173 employees and annual revenues of about MSEK 648.

For more information see page 73.

Revenues, profits and returns

Revenues increased 44% to MSEK 19053 (13234), corresponding to a 16% organic increase. The operating prot increased 66% to a record MSEK 3525 (2121), corresponding to a margin of 18.5% (16.0). The main explanation for the higher oper- ating margin was increased organic revenue vol- umes. Costs related to supply chain constraints, and Covid-19 in the rst half of the year, aected the margin negatively. Currency had a small positive eect on the operating margin. Return on capital employed was 25% (27).

Atlas Copco 2022 | 30

THE YEAR IN REVIEW – POWER TECHNIQUE

Introduction

This is Atlas Copco | The year in review | Administration report | Business areas | Compressor Technique | Vacuum Technique | Industrial Technique | • Power Technique | Sustainable approach to delivering value | Risks, risk management and opportunities | The Atlas Copco share | Corporate Governance | Board of Directors | Group Management | Internal control over nancial reporting | Financials | Other information

The market

The market for portable air, power and ow, and industrial ow solutions includes a large number of participants oering a comprehensive product range for dierent applications. The Power Technique business area focuses on a selected number of applications. Multiple segments are served by the business area’s oering. General and civil engineering con- tractors, often involved in infrastructure projects, demand light construction tools. Mobile compres- sors, generators, energy storage systems, light towers, and pumps provide reliable power for tools and applications in the construction sector. In addition, the business area focuses on a number of industrial ow applications through its meter- ing and dosing pump product oer, and tempo- rary air, power, steam, and nitrogen are oered to the specialty rental market.# THE YEAR IN REVIEW – POWER TECHNIQUE

Market trends

• Higher requirements regarding productivity, flexibility and ergonomics
• Increased customer focus on reducing CO 2 emissions
• Increased customer focus on safety
• Equipment connectivity
• Increased demand for service support/ contracts

Demand drivers
* Infrastructure growth
* Investment in products that contribute to the transformation to a low-carbon society
* Industrial production
* Emergency relief efforts
* Engine regulations

Vision and strategy

The vision is to be the First in Mind—First in Choice provider of power and flow solutions for sustainable productivity. The strategy is to grow by developing Atlas Copco’s market position and presence as a global supplier within portable compressors, pumps, generators, and industrial pumps, as well as light towers, along with a range of complementary, market specific, niche products, such as high-pressure boosters. The strategy also includes further development of specialty-rental services and of the service business; increasing revenues by offering more services to more customers. Growth should be achieved in a way that is economically, environmentally and socially responsible.

Strategic activities
* Increase market coverage and improve presence in targeted markets/segments
* Capture sales and service synergies
* Develop new sustainable products and solutions offering enhanced productivity, safety and reduced environmental impact
* Invest in design, development and production capacity in growth markets
* Develop more competitive offerings with different value propositions
* Perform more service on a higher share of the installed base of machines
* Develop the service business
* Increase operational efficiency
* Invest in employees and competence development
* Acquire complementary businesses and integrate them successfully

Competition

Power Technique’s principal competitors include:

The portable power market: Doosan, Generac, Kaeser, and Sullair. In addition, there are a large number of local and regional competitors.
The industrial pump market: Milton Roy, and Bran+Luebbe

Market position

A leading or strong market position globally in most of its operations.

Orders received by customer category

Category	Share of revenues
General manufacturing	20%
Other	17%
Construction	39%
Service	6%
Process industry	18%

Revenues by region

Region	Share of revenues
Asia/Oceania	18%
North America	28%
Africa/Middle East	9%
Europe	37%
South America	8%

Category	Share of revenues
Equipment	56%
Service	14%
Service (Specialty Rental)	30%

Atlas Copco 2022 31
THE YEAR IN REVIEW – POWER TECHNIQUE

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
* Compressor Technique
* Vacuum Technique
* Industrial Technique
* Power Technique
Sustainable approach to delivering value
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

Power Technique: Products and applications

Industrial flow

Positive displacement electric pumps are used in a broad range of different industries.

Portable power

Portable generators fulfill a temporary need for electricity, primarily in construction applications. Other common applications are power supply for events, emergency power and power in remote locations. Lighting towers provide light for safe operations 24/7.

Portable flow

Portable electric and diesel-driven pumps as well as submersible electric pumps, primarily for water.

• Portable pump
• Diaphragm metering pump for industrial use

The Power Technique business area offers a range of products across multiple industries including, industrial manufacturing, civil engineering, demolition, and exploration drilling.

MANAGEMENT
Power Technique, January 1, 2023

INNOVATIONS DURING 2022

Several new products were introduced during the year, including:

• A new pump range for dewatering and industrial applications, PAC F/H, offering high pumping performance and low environmental footprint thanks to an electrical motor.
• A new drainage pump, the WEDA D95, suitable for harsh conditions targeting applications such as general dewatering, mining, and tunneling.
• A new portable oil-free compressor for the specialty rental business, the PTE900 VSD offering efficient air flow in a compact design and is developed to perform in demanding environments.

• A new range of portable compressors, the X-AIR+ GIV, which offers reduced fuel consumption by up to 15% compared to previous models.

• Portable electric compressor

Principal product development and manufacturing units are located in: Belgium, Germany, Spain, the United States, China and India.

Business Area President
Andrew Walker

Power Technique Service, President
Stefaan Vertriest

Specialty Rental, President
Tim Last

Portable Air, President
Bert Derom

Power and Flow, President
Mikael Andersson

Portable air

Portable oil-injected compressors are primarily used in construction applications where compressed air is used as a power source for equipment, such as pneumatic breakers and rock drills. Portable oil-free compressors are rented by customers to meet a temporary need for oil-free air, primarily in industrial applications. Electric portable air compressors generate less noise than compressors with combustion engines and are ideal for low-noise and emission zones or indoor applications.

Construction and demolition tools

Hydraulic, pneumatic and gasoline-powered breakers and drills used in construction, demolition and mining businesses.

Atlas Copco 2022 32
THE YEAR IN REVIEW – POWER TECHNIQUE

A sustainable approach to delivering lasting value

At Atlas Copco, we are committed to being part of the solution for a better tomorrow. By integrating sustainability into everything we do and by acting in an ethical way in all our operations and markets, we bring value to both our customers and society as a whole. Since 1873, our industrial ideas have empowered our customers to grow and drive society forward. We provide safe, reliable and energy efficient solutions to customers in a wide range of industries including manufacturing, construction, pharmaceutical, automotive and electronics.

Climate change is high on both our own and many of our customers’ agendas. Our drive to innovate with a lifecycle perspective supports the development of highly energy-efficient products with reduced climate impact. Many of our technologies and solutions are also used in industries and applications that are at the center of the transformation to a low-carbon society. They are critical in existing low-carbon technologies like electric vehicles and solar power, and are also part of emerging technologies for energy production, energy storage, carbon capture, smart manufacturing, and more.

Sustainability focus areas

Sustainability is embedded in everything we do, and we are committed to contribute to a sustainable development. This means that we take responsibility for managing the environmental, economic and social impacts of our operations and from our value chain. We focus our efforts in the areas where we have identified our largest impact and where we deliver value for our key stakeholders. These are: products and service, people, safety and wellbeing, ethics, and climate and the environment. Working systematically in these areas helps us reach our mission of achieving sustainable, profitable growth while at the same time mitigating risks to our company and realizing business opportunities.

New targets from 2022 onwards

Through the materiality analysis we conducted in 2021, we concluded that the climate, and related sustainability issues such as carbon impact and a lifecycle approach to product development, is gaining increased attention. Diversity and inclusion as well as talent development are also areas where we see an opportunity for further progress, and where our stakeholders would like to see us focus our resources and efforts. Based on this input we revised the sustainability targets against which we measure our progress starting in 2022. These include science-based targets to reduce our greenhouse gas emissions, throughout the value-chain, in line with the Paris Agreement. Read more about our sustainability work and the progress we make in the following sections, and in the sustainability notes on pages 126 –145.

• Sustainability is embedded in everything we do
• PRODUCTS AND SERVICE page 34
• PEOPLE page 37
• SAFETY AND WELLBEING page 39
• ETHICS page 40
• CLIMATE AND ENVIRONMENT page 42

Atlas Copco 2022 33
THE YEAR IN REVIEW – SUSTAINABILITY

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
* Sustainable approach to delivering value
* Products and service
* People
* Safety and wellbeing
* Ethics
* Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

Atlas Copco is a leader in developing innovative technologies and we continuously launch products, solutions and services that set new industry standards. We always innovate with a clear purpose in mind, in areas where we believe we can make a difference to our customers, the environment and to society as a whole. Atlas Copco’s products and services are developed to contribute to our customers’ sustainability ambitions by optimizing their productivity, energy efficiency, ergonomics and safety. Our technologies and products are also found in several industries that are key in the transformation to a low-carbon society. We develop leading technologies to customers in segments such as battery manufacturing, hydrogen, wind power and solar energy, and are well positioned to be a part in enabling this transformation.

Products in use generate most emissions
More than 90% of the CO 2 emissions from Atlas Copco’s value chain are generated when the customers use our products.# THE YEAR IN REVIEW – SUSTAINABILITY: PRODUCTS AND SERVICE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
• Sustainable approach to delivering value
  • Products and service
  • People
  • Safety and wellbeing
  • Ethics
  • Environment
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
  • Board of Directors
  • Group Management
  • Internal control over financial reporting
• Financials
• Other information

Products and Service

We have our biggest impact and therefore focus on developing products and solutions that are more energy efficient than their predecessors and with a lower carbon footprint over their entire lifecycle. In 2021, we raised our ambitions in this area by committing to reducing our greenhouse gas emissions in line with the Paris Agreement. As part of this commitment we will reduce our indirect emissions (scope 3), including the emissions when our products are in use, in line with keeping the average global temperature rise well below 2-degrees. We measure our progress against the new targets starting 2022.

Innovating for a better tomorrow

At Atlas Copco, we always innovate with a clear purpose and in response to real challenges that our customers are facing. Developing highly efficient and sustainable products that meet the needs of our customers, the society and the planet is the biggest contribution we can make to a sustainable future.

Vacuum, machine vision and abatement solutions, for example, are essential in solar panel manufacturing. Vacuum pumps are needed in the production of the silicon wafers and photovoltaic cells that capture the sunlight and convert it into energy. The panel surface must be flawless in order to efficiently capture the energy. Atlas Copco develops optical inspection systems for complete control of the panels, which helps improve their efficiency and throughput.

In wind energy, Atlas Copco’s industrial tools, such as grinders, wrenches and tensioners, are used in building the turbines, and our generators are used to start them up. Recovering and storing energy generated by renewable sources presents a substantial challenge. This is an area where Atlas Copco has the technology and expertise to take a leading position.

One example is the ZenergiZe battery-powered energy storage system that can be combined with renewable sources of energy for immediate or later use. It captures the energy and stores it for delivery at any given time. Its intelligent control system then manages the energy offer and demand to increase the efficiency of hybrid power solutions.

Harming greenhouse gases in industrial processes is another technology with positive environmental effect. The Halogenated Drug Recovery (HDR), for example, is a solution for hospitals, that captures halogenated (anesthetic) drugs via a centralized system into tanks, where they are safely stored for final conversion into a substance with minimum environmental impact. In 2022, Atlas Copco’s installed base of abatement products removed around 20 million tonnes of CO2e emissions at customers’ facilities. Our partnerships in recycling technologies for customers’ process gases can further reduce their carbon footprint.

Increasing uptime and productivity

Increased connectivity and big data help transform the efficiency of many industrial processes. We support our customers in optimizing their production performance by monitoring and collecting real-time data from the equipment to minimize downtime, predict maintenance needs and suggest energy-saving measures. One example is the Smart Link data-monitoring system for compressors. A growing number of compressors are connected globally, enabling continuous status monitoring and predictive maintenance.

Enabling the transition to renewable energy

Increasing the access to renewable energy will be key in reaching a low-carbon society. Many of the technologies in this sector are closely related to Atlas Copco’s products and solutions in vacuum technology, compressor technology, energy storage and supply, as well as in industrial production and inspection.

Designing with a lifecycle perspective

Atlas Copco takes a lifecycle approach to innovation. In 2020, we adopted a Group-standard for how to, during the design phase, measure a product’s carbon footprint throughout its lifecycle. The Product Carbon footprint tool assesses the carbon impact of different aspects, from choice of materials, to product use, as well as from the product’s recycling and disposal. All projects for new or redesigned products must have targets for reduced carbon impact. In 2022, 97 percent of projects had such reduction targets.

Reducing our customers’ footprint

Customers request equipment, solutions and services that increase productivity and lower their carbon footprint. Energy efficiency is at the core of the innovations in many of Atlas Copco’s products and even higher gains are possible through the support we provide on how to use our products and through our service offer. As the majority of our products run on electricity, the impact from the use-phase of our products, and consequently their value-chain footprint, is affected by the availability of renewable energy which differ between countries and regions.

One of Atlas Copco’s most well-known and groundbreaking innovations is the VSD (variable speed drive) technology used in compressors. This is an example of an innovative technology that helps customers optimize their energy efficiency, while reducing both CO2 emissions and costs. The VSD-technology is available in generators and pumps, as well as in stationary and portable compressors. Atlas Copco’s abatement systems that remove highly potent and harming greenhouse gases in industrial processes.

Innovating for a better tomorrow, continued

Energy storage systems

Energy storage systems are mobile units that use long-life lithium-ion batteries to store and deliver energy at any given point. As a standalone solution when using renewable energy sources, they offer a silent, low-carbon solution with no fuel consumption. They are also ideal for low emissions and noise-restrictive applications, such as metropolitan construction sites, events, telecom, mining, large power plants and offshore. When operated in hybrid mode, connected with a power generator or any other power source, energy storage systems bring high levels of efficiency while minimizing costs and reducing the environmental impact. Instead of a rather large standalone power generator, having an energy storage system involved in the solution enables operators to choose a smaller-sized generator. This hybrid solution optimizes the performance level, especially when dealing with unpredictable loads, extending the unit’s working life. An energy storage system working together with a last-generation power generator can save up to 80% in fuel costs compared with an oversized traditional generator. Consequently, during the solution’s lifetime, CO2 emissions are reduced by 30 metric tons.

New battery tool drives smart assembly

The global assembly industry is continuing its transformation becoming more efficient, integrated, and focusing on sustainability. Tensor ITB-P will offer the opportunity to cover more applications thanks to the pistol grip shape and increased ergonomics. The Tensor ITB-P is a cordless tool, which shares an integrated controller platform that manages the tool and real time integration to a production system. Substituting the traditional setup of one battery tool and one physical controller box with the Tensor ITB-P, can reduce the lifecycle carbon impact by 87 percent per year. Firstly, the setup with an integrated controller eliminates the environmental impact in the supply chain from producing and transporting physical controllers. Secondly, Tensor ITB-P consumes less power while in use, reducing both carbon footprint and costs for customers. The size reduction of ITB-P benefits the operators with lighter tool but is also reducing by 50 percent, the number of battery cells used per tool compared to previous generation of tools. By replacing traditional systems, a tool and a separate controller, with the Tensor ITB-P, savings can amount to around 1,250 metric tons of CO2 emissions per year. This is based on an estimation of replacement of traditional systems the coming two years. The savings correspond to the equivalent of around 270 gasoline-powered passenger cars driven for one year in the US.

Savings can amount to around 1,250 metric tons of CO2 emissions per year in fuel cost savings 80%

Our service supports circularity and optimizes customers’ investments

Through a strong service offering we ensure that our customers get the most out of each investment. Our service divisions ensure the repair and reuse of products, extending their useful life and minimizing waste. They also provide support on how to optimally use the products, which enables energy-efficiency gains. The iXM Hybrid upgrade service product is an example of an offering where customers can return their current pump to their local Atlas Copco service technology center, where it is converted to use a low power mechanism, thus reducing the pump’s CO2 emissions. Many of Atlas Copco’s products are also designed so they can be returned, refurbished and resold. This contributes to increased circularity and such used equipment meet the same high standards as when they were new in terms of quality, performance and energy efficiency. Furthermore, some Atlas Copco units accept contaminated products, which otherwise would be disposed of as hazardous waste, and return them to full operation.

Key performance indicators

Products and Service	Target	2022	2021
Projects for new or redesigned products with goals for reduced carbon impact	100%	97%	98%
A Group common methodology for assessing the circularity of new or redesigned products	In place by 2024

Atlas Copco 2022 34 THE YEAR IN REVIEW – SUSTAINABILITY: PRODUCTS AND SERVICE# Atlas Copco 2022 – THE YEAR IN REVIEW – SUSTAINABILITY: PRODUCTS AND SERVICE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
• Sustainable approach to delivering value
  • Products and service
  • People
  • Safety and wellbeing
  • Ethics
  • Environment
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over financial reporting
• Financials
• Other information

Innovating for a better tomorrow, continued

Our semiconductor customers use EUV (extreme ultraviolet) lithography technology to develop increasingly intricate chips that are used for a wide range of applications from cars and phones to flat panel display and LED lights. This technology requires highly controlled, low-pressure, particle-free environments. Our semiconductor division is currently deploying a third generation EUV system which combines the latest pumps and new H2D (hydrogen dilution) abatement solution. This system is more energy efficient compared with first generation and helps our semiconductor customer to avoid releasing toxic gases into the atmosphere.

A new smart compressor … Reducing environmental impact in semiconductor manufacturing

The third generation of Variable Speed Drive (VSD) compressors, GA VSD S , is designed for sustainable innovation thanks to its unrivaled energy efficiency compared to the previous generation. This makes the GA VSD S a significantly more energy efficient compressor with lower carbon inpact. Since Atlas Copco introduced the VSD technology more than two decades ago, we have continued to innovate in this technology. The result, the GA VSD S , is the most efficient rotary screw compressor Atlas Copco ever built. With energy savings up to 60 percent compared to fixed-speed compressors, it has a significant impact on lowering the energy consumption and the environmental footprint of our customers.

In 2022, the Atlas Copco Group had 9 500 patents, linked to around 2 600 inventions. The GA VSD S is our first compressor with smart features, such as the Smart Temperature Control (STC) system, which optimizes performance for any application. The GA VSD S also comes with the new Boost Flow Mode, which allows for exceeding the compressor’s maximum capacity to ensure continuity in our customers’ production.

One GA VSD S compressor unit saves 305 metric tons of CO 2 over its lifetime compared to our current fixed speed compressor. If all 22 to 37 kW fixed-speed compressors worldwide upgraded to this technology, an estimated 125 million metric tons of CO 2 could be saved over the lifetime of the compressors. This is the equivalent of 27 million gasoline-powered passenger cars driven for a year in the US.

Tests have demonstrated a nearly 50% reduction in energy consumption, which represents a saving of around 535 metric tons of CO 2 e by system per year, the equivalent of 115 gasoline-powered passenger cars driven for one year in the US.

The embedded H2D technology uses hydrogen to dilute toxic gases produced in the manufacturing process. This fuel-free abatement solution delivers savings of 65 percent on energy consumption, and reduces use of resources including water, nitrogen, and compressed air.

50% reduction in energy consumption

Tests demonstrate nearly ... with energy savings up to 60%

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Atlas Copco 2022 – THE YEAR IN REVIEW – SUSTAINABILITY: PEOPLE

Introduction

This is Atlas Copco

• The year in review
• Administration report
• Business areas
• Sustainable approach to delivering value
  • Products and service
  • People
  • Safety and wellbeing
  • Ethics
  • Environment
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
• Board of Directors
• Group Management
• Internal control over financial reporting
• Financials
• Other information

Attracting and growing passionate people

Atlas Copco’s ambition is to be the most attractive employer in our industry and main markets. We nurture our culture and enable the full potential of our people so they can deliver world-class solutions to our customers every day. As a world-leading provider of innovative productivity solutions, we aim to be First in Mind—First in Choice as an employer in order to achieve sustainable business success. This is only possible through attracting and growing passionate people with a commitment to lifelong learning.

Every employee is critical to our success

Atlas Copco has developed a talent framework based on a common set of competencies, rooted in our core values and beliefs, identified as being the most critical to our business success. The talent framework is relevant to all employees and breaks down the competencies into behaviors that drive real change in employee performance. It provides a common language that helps strengthen our people practices and processes and emphasizes our belief that every employee has a critical role in driving the Group’s success.

Developing passionate people

Atlas Copco has a strong culture of growing talent by encouraging our employees to take accountability for their own development. Our ambition is to learn with and from each other every day. To help us do that, we create personalized and interactive learning opportunities to drive upskilling for business and personal success. Subject matter experts are recognized to support the Group with knowledge transfer, fostering collaboration and peer-to-peer learning. We encourage curiosity and enable learning through continuous feedback and coaching. The Group’s process for performance and development dialogues is designed to increase the quality and frequency of feedback and development dialogues, holding leaders accountable for growing people through ongoing coaching. Atlas Copco’s learning management system is another key enabler for continuous learning. It provides access to an extensive library of learning content, personalized and packaged to address specific subjects, functions or roles.

Developing future-proof leaders

Developing future-proof leaders is another pillar of Atlas Copco’s people philosophy. We strive to develop leaders who coach and develop teams and individuals to reach their full potential through inclusion, collaboration, and trust. We define leadership as the ability to create lasting results. Our leadership portfolio offers personalized learning through a modular set-up. Each module focuses on a specific skill mapped against the competencies in our talent framework. During the year, new modules were designed focusing on building leadership resilience and a growth mindset. We also focused on strengthening the pipeline of senior leaders in the Group by investing in targeted competence development for this group.

Attracting talent

To ensure a strong and diverse internal and external pipeline of candidates for available job positions, Atlas Copco seeks to proactively attract talent from the entire pool of qualified candidates. Targeted employer branding activities and data-driven recruitment practices using global sourcing tools, competency-based interviews and assessment solutions, enable more informed decisions. In 2022, we invested in educating our internal recruiting specialists in the areas of data-driven and inclusive recruitment, including focus on driving awareness about bias in the recruitment process and how to write more inclusive job ads to attract a more diverse pool of candidates.

The biggest diversity gap across the Group is within gender balance. We address this through a target of 30% women in the Group by 2030. In 2022, progress was made towards a better gender balance with 21.6% (20.9) women in the workforce by year end.

Committed to diversity and inclusion

We strongly believe that diversity and inclusion promotes innovation, strengthens employee engagement and leads to better decision making. Our diversity and inclusion statement, “Diverse by nature and inclusive by choice”, is used in all job ads as well as in internal and external communication to show our commitment in this area. To drive awareness about the impact of bias in the workplace, learning content and guides to stimulate team discussions, were developed and rolled out globally in 2022. Our Diversity and Inclusion Council, chaired by President and CEO Mats Rahmström, includes representatives from all business areas. The council meets regularly to follow up on action plans and results in the operations.

PEOPLE

Key performance indicators	Target	2022	2021	2020	Comment
Employees feel a sense of belonging in the company	1) Above	–	–	–	Will first be measured in 2023.
Employees agree there is opportunity to learn and grow in the company	1) Above	73	–	–	Measured through the employee survey which is conducted every two years.
Employees agree there is a work culture of respect, fairness and openness	1) Above	76	–	–
Share of female employees, by year end	30% by 2030	21.6%	20.9%	20.0%

1) Scores are based on a scale 0–100 where 0 is “strongly disagree” and 100 is “strongly agree”.# THE YEAR IN REVIEW – SUSTAINABILITY: PEOPLE

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
Products and service
• People
Safety and wellbeing
Ethics
Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

People

The work is mainly driven by business area task forces and ambassadors in each operational entity. Developing and strengthening our culture Our culture is characterized by a commitment to people, customers, solutions, and innovation. We believe that there is always a better way of doing things and advocate freedom with accountability. Attracting and growing passionate people, continued Enabling mobility through increased transparency One of our most important priorities is professional de- velopment through internal mobility. Our talent review process gives us a good overview of the performance and potential of our people. This helps us identify business critical roles across levels in the organization, securing a strong pipeline for these roles. In 2022, we introduced a new digital solution for the talent review process. The solution enables a more transparent and exible data collection and output, helping us make more informed and data driven talent development decisions. People analytics – powering people decisions In 2022, people analytics dashboards were rolled out to our HR community, designed to enable better decision making in all aspects of our people strategy, through prescriptive and predictive analysis. The dashboards focus on recruitment, retention, diversity, and learning & development, and have been developed based on master data in our HR and learning management systems. The dashboards aim to analyze the eciency, impact and eectiveness of our people processes. A better balance Service has traditionally been a male-dominated area within Atlas Copco, but the Compressor Technique Service division has managed to break the trend. After three years of focused eorts, the division now has 65 female service technicians and ve female Business Line Managers. To succeed, a change of mindset has been neces- sary. Creating awareness about why diversity and inclusion matters and that it is not about reaching a target, but rather about future business survival, has been a critical starting point. The customer centers have worked to become more attractive as employ- ers by including diversity in their talent acquisition and management plans. Employees have also been trained to avoid bias and to break old perceptions of what a service technician should be like. The nal fac- tor has been to get the buy-in from all involved parties to ensure a respect ful and inclusive environment. The division and the customer centers have also implemented actions, like gender neutral ads and social media campaigns. One Group, one culture In 2022, we launched a new edition of The Book about the Atlas Copco Group. It describes our com- mon strategy, values and beliefs, and how we work to fulll our purpose. The launch was followed by workshops across the Group, enabling discussions about our strategy, values, behaviors and how we do business. Several activities are carried out to support and develop our culture such as recurring workshops for employees on company values, strategy and guidelines. Atlas Copco conducts a global employee sur- vey every two years. The survey brings import- ant insights in four areas: employee engage- ment, Group culture, safety and leadership. Our most recent survey, in 2021, showed that our over- all results were above the global benchmark. The results of the survey are followed up in manda- tory workshops lead by our managers, where con- crete actions are shaped to further strengthen our culture. The next survey will be conducted in 2023. Supporting employees’ wellbeing is another critical component to our success. In 2022, we established and rolled out a new global wellbeing framework, designed to provide a common struc- ture to addressing the subject and facilitate initia- tives across the Group. Read more on page 39. We strongly believe that diversity and inclusion promotes innovation, strengthens employee engagement and leads to better decision making.

Atlas Copco 2022 38

SAFETY AND WELLBEING

Committed to safety and wellbeing

We are committed to ensuring that our employees and others aected by our operations work in a way that contributes to their safety and wellbeing. Transparent reporting is encouraged and helps build awareness of risks and safe behavior preventing injuries in the workforce.

Key performance indicators

	Target	2022	2021	2020	Comment
A balanced safety pyramid 1)	Yes	Yes	Yes	Yes	Yes
Employees agree that the company takes a genuine interest in their wellbeing	Continuous increase	–	73	–	The employee survey is conducted every two years. 1) Risk observations are included in the safety pyramid as of 2021.
					2) Scores based on scale 0–100 where 0 is “strongly disagree” and 100 is “strongly agree”.

Introducing a Group-wide wellbeing framework

Wellbeing is dened as a sustainable state of feeling good and func- tioning well in our lives and in our work. Our employees’ wellbeing is a critical part of Atlas Copco’s culture and key to achieving business success. During the year, Atlas Copco introduced a Group-wide wellbeing framework to help our leaders better understand the wellbeing needs of their employees and how to support those needs. The framework is designed to establish a common language about wellbeing and to help facilitate dierent wellbeing initiatives. The framework is made up of four areas; sense of purpose, social connectedness, physical wellbeing and mental wellbeing. The areas are connected, and actions taken to address one will likely have an impact on another. A complementing Wellbeing Guide is available that explains each wellbeing area including its key components, and respective drivers and threats. The guide also includes reference materials, such as play- lists available on Learning Link, books and blogs. Furthermore, the guide includes examples of initiatives on an individual, team and/or operation level.

Safety and wellbeing are core priorities

at Atlas Copco. We pursue this by engaging everyone in eliminating haz- ards, reducing occupational health and safety risks and in promoting the immediate reporting of near-misses, incidents and risk observations.

Robust safety standards in place

We are committed to providing a safe and healthy working environ- ment for all our employees in all operations. The global SHEQ policy (safety, health, environment and quality) ensures that there are robust standards for safety and wellbeing in the workplace. We seek to reinforce a culture and behaviors that contribute to the safety and wellbeing of our people and others aected by our operations, including contractors. This includes risk assessments and safety pro- cedures, training, good environment within and around the work- place, appropriate follow-up procedures, and transparent reporting. The Group’s Safety, Health, Environment and Quality council over- sees the work and supports the organization with the development of policies, processes and best practice sharing. Since Atlas Copco is highly decentralized, there may be regional and local policies and practices that complement Group processes. All divisions set targets and make action plans to enhance awareness and improve behaviors, policies and processes. All companies in the Group must have an Atlas Copco veried Safety, Health, Environ- ment and Quality management system which is documented, imple- mented and maintained on an ongoing basis. Annual Safety Days have been arranged in the Group since 2014.

Following up our progress

Progress is measured by continuous safety reporting and follow-up, and in the employee engagement survey every two years. The tar- get is that an increasing part of employees should agree that Atlas Copco takes a genuine interest in their wellbeing. The results from the 2021 employee survey conrm this. To further strengthen the safety work Atlas Copco measures prog- ress by using a safety pyramid, with the target that the pyramid should be balanced. This means that more reports of risk observa- tions than near misses, more near misses than minor injuries, and more or equal reports of minor injuries relative to recordable inju- ries are reported. The approach supports transparent reporting, risk awareness and encourages safe behavior to decrease risks and ulti- mately prevent workforce injuries. In 2022, the result was in line with this target. Read more on page 132.

Award to mental wellbeing program

Atlas Copco’s Safety and Health Award 2022 was presented to the Semi- conductor Service Division, Global Field Service Teams for their i-act mental wellbeing management training program. The i-act training program is developed to support managers to pro- actively improve workplace wellbeing as well as reactively support employ- ees who may experience wellbeing or mental health issues at work. The pro- gram has become mandatory for all line managers in the Vacuum Technique business area and a global network of 25 i-act instructors has been created to deliver the course to all managers in local language.# Atlas Copco 2022 39

THE YEAR IN REVIEW – SUSTAINABILITY: SAFETY AND WELLBEING

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
Products and service
People
• Safety and wellbeing
Ethics
Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
• Sustainable approach to delivering value
Products and service
People
Safety and wellbeing
• Ethics
Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

Doing the right things in the right way

Acting with integrity throughout the value chain is more than just a matter of respecting laws and regulations – it is a vital part of Atlas Copco’s culture. We have an unwavering commitment to the highest ethical standards, including zero tolerance for human rights abuses and all sorts of corruption. Atlas Copco aims to earn the trust of everyone impacted by our operations, by building relation- ships based on integrity, fairness and respect. We expect the same high standards from our business partners and work continuously to assess and reduce the risks asso- ciated with our value chain.

Our ability to ensure that the highest ethical standards are applied depends on the values and behavior of our people and business partners. Therefore, we put signicant weight on communication, training and monitoring to ensure awareness and adherence to our values and principles. We also strongly encourage the reporting of any potential misconduct through SpeakUp – our external whistle- blowing system. This helps protect our values, the company, our brand and each other.

Code of Conduct updated

Atlas Copco’s Code of Conduct sets out the fundamental ethical values and principles of conduct which apply to all employees, busi- ness partners and the Board of Directors. In 2022, the content of the Code of Conduct was thorougly updated to reect changing stake- holder expectations with new topics including modern slavery, risk management, circularity, data protection and privacy, among others.

Training for employees worldwide

To make sure every employee is aware of the Code of Conduct and what is expected of them, all employees are required to complete a leader- led ethics training every two years. The new training will be rolled out in 2023 instead of 2022 as previously communicated. Every employee is also required to annually sign a Code of Conduct compliance statement. By the end of 2022, 99% of our employees had signed the statement. New employees are required to participate in the ethics training within 12 months of joining Atlas Copco. Performance against these targets will be followed up annually.

Encouraging reporting of misconduct

To be able to uphold our ethical standards it is important that we are made aware of any suspected breaches of laws or the Code of Conduct. The whistleblowing solution, SpeakUp, is a channel for employees or other stakeholders to raise concerns. Through the sys- tem anyone can anonymously report potential misconduct in their own language by a voice or text message. The system is operated by an external third party and open 24 hours a day, 7 days a week.

The Code of Conduct includes a non-retaliation policy clearly stat- ing that employees are encouraged to speak up about perceived misconduct, and this will never lead to adverse consequences for the individual, even if it results in the loss of business for Atlas Copco.

A responsible value-chain approach

Working with business partners who share Atlas Copco’s respect for human rights and high standards for safety, quality, ethical behavior and resource eciency is central to eciently manage risks and to enhance productivity along the value chain. Atlas Copco’s Code of Conduct is the backbone of the responsible value-chain process, reinforced by a signed commitment by signif- icant suppliers and distributors to follow it, screening and regular on-site audits, customer sustainability assessments and targeted training.

Sustainable sourcing practices

Atlas Copco has a large international supplier base, which presents signicant challenges as risks can vary greatly between countries. We use a risk-based approach and prioritize evaluating signicant sup- pliers who represent the bulk of the purchase value or who operate in markets with high corruption or human-rights risk. Signicant suppliers are evaluated on parameters such as price, quality and reliability as well as key environmental, social and ethical aspects, including human rights. The parameters are based on the UN Global Compact and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. On-site visits are made to ensure compliance. See page 133.

All signicant business partners must commit to our Code of Con- duct by signing a Business Partner Criteria document. The document has been translated into more than 30 languages and is available on the Group’s website. At the end of 2022, 93% of our signicant suppliers had signed the compliance statement.

Distributors and agents

Atlas Copco also requires that all signicant distributors commit to our Code of Conduct by signing the Business Partner Criteria docu- ment. Distributors who represent the bulk of the sales value or who operate in high-risk markets are prioritized. At the end of 2022, 92% of our signicant distributors had signed the statement.

Sales compliance process

When relevant, we partner with customers to address risks in the value chain.

ETHICS

Key performance indicators

	Target	2022	2021	2020
Employees sign the Group’s Code of Conduct compliance statement	100%	99%	98%	99%
Employees complete the biennial ethics training 1)	100%	–	–	–
New employees participate in the ethics training within 12 months 1)	100%	–	–	–
Signicant suppliers sign the Code of Conduct compliance statement	100%	93%	93%	93%
Signicant distributors sign the Code of Conduct compliance statement	100%	92%	87%	84%

1) First measurement will be done in 2023 when the new training is launched.

Zero tolerance against corruption

Atlas Copco does not tolerate bribery or corruption in any form, directly or through third parties. Firm actions will be taken on any violation of the zero tolerance rule. It applies to all employees as well as to the Board of Directors and to all business dealings and transac- tions in all countries where Atlas Copco operates. Corruption or facilitation payments are never acceptable in order to secure a sale. This rule strengthens the brand and contributes to fair market competition. There are no negative consequences, such as demotion or other reprisals, for refusing to receive or pay bribes or for reporting violations of our Code of Conduct.

Atlas Copco 2022 40

THE YEAR IN REVIEW – SUSTAINABILITY: ETHICS

HUMAN RIGHTS IN THE VALUE CHAIN

Atlas Copco’s Code of Conduct endorses the UN International Bill of Human Rights and guides our employees in working with issues relating to ethical behavior, including human rights.

HUMAN RIGHTS RISKS

Business partners
Business partners not complying with labor standards, including working hours, forced/bonded or under-age labor and the freedom of association.
Occurrence of conict minerals in sourced products.

Atlas Copco’s own operations
Risks of violations including poor working conditions and discrimina- tion in the workforce.
Operations in countries with high risks of human rights abuse, including corruption and limited freedom of association.

Customers
Environmental impact and unsafe use of products, including sub- stances with potential health impact, and risks of mismanaging customer integrity.

Risks related to local com- munities, such as land rights.

Community
Risks of corruption and unethical tax planning, impeding fair competition and depriving people of their rights to critical societal functions such as healthcare and education.

POLICIES

Business partners
Atlas Copco has integrated the UN Global Compact principles into business partner evaluation and management. Read more on pages128–129 and 133.

Atlas Copco’s own operations
Group targets and policies aim to create safe, healthy and fair working environments. The human rights statement and Code of Conduct. Read more on pages 128–129.

Customers
Product safety and environmental standards. The Group is strengthen- ing its approach by implementing the UN Guiding Principles on Busi- ness and Human Rights. Read more on pages 128–129 and 133.

Community
The Code of Conduct is the main policy document on anti-corruption. The Group’s tax policy is available on the corporate website.

ACTIVITIES

Business partners
Prohibiting child labor and forced labor, promoting adherence to inter- national guidelines on working condi- tions, environmental management and freedom of association. Respon- sible sourcing practices, which covers the occurrence of conict minerals.

Atlas Copco’s own operations
Ensuring fair labor conditions, non- discrimination in the workplace and the right to join trade unions. Training for all employees in the Code of Conduct, including issues of working conditions, labor rights and discrimination.

Customers
Product safety, minimizing environ- mental impact through usage of products, security concerns and issues related to community reloca- tion. Customer assessment tool and Compliance Board oversight of policy implementation.

Community
Community engagement activities increase access to health, education and safe develop ment of children and vulnerable groups, as well as disaster relief. Training for all employees in the Code of Conduct, including on corruption.# Atlas Copco 2022

THE YEAR IN REVIEW – SUSTAINABILITY: ETHICS

Atlas Copco’s customer assessment tool is used to identify and evaluate potential environmental, labor, human rights and corruption risks. The assessment is complemented by in-depth dialogue and field visits. General managers, and ultimately the divisional presidents, are responsible for the implementation of Atlas Copco’s policies and guidelines and making sales decisions. The Group’s Chief Legal Officer supports the organization on trade compliance matters, including sanctions and export control. Since the beginning of March 2022, Atlas Copco has paused all new orders for equipment to Russia, except equipment that is used for humanitarian purposes, such as hospitals.

Approach to human rights

Atlas Copco is committed to the UN Guiding Principles for Business and Human Rights and have an ongoing process to identify, prevent and mitigate the impact of our business on human rights. We work throughout the value chain covering the rights of individuals and groups who may be impacted by our activities or business relationships, see the table to the right. Atlas Copco’s Compliance Board oversees the implementation of and compliance with the Code of Conduct and our commitment to the UN Guiding Principles.

Doing the right things in the right way, continued

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
• Sustainable approach to delivering value
Products and service
People
Safety and wellbeing
• Ethics
Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

Fighting corruption is a central aspect to promoting human rights, since corruption can undermine a government’s ability to fulfill its human rights obligations. In markets where the legal and political system is a challenge, bilateral engagement with civil society is crucial to successfully escalate human rights issues. Through memberships in local business associations and in cooperation with other actors, we collaborate to further Atlas Copco’s values within this area.

Atlas Copco 2022 41

THE YEAR IN REVIEW – SUSTAINABILITY: THE ENVIRONMENT

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
• Sustainable approach to delivering value
Products and service
People
Safety and wellbeing
Ethics
• Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

Optimizing our environmental performance

Atlas Copco is committed to continuously improving our environmental performance and to being part of the solution for a better tomorrow. We improve the energy efficiency of our products and our operations, while also managing our water use and waste. We have adopted science-based targets for the reduction of greenhouse gas emissions, throughout the whole value chain. Climate change presents a huge threat to society and in 2021, we significantly raised our ambitions by committing to reducing the greenhouse gas emissions throughout our value chain in line with the goals of the Paris Agreement. For Atlas Copco’s own operations, this means that we aim to reduce emissions in line with keeping the global temperature rise below 1.5 degrees. We will also reduce the emissions from our value chain in line with keeping the temperature rise well below 2-degrees. The targets have been validated by the Science Based Targets initiative and have been implemented during 2022. The absolute majority of Atlas Copco’s impact is generated when our customers use our products. Therefore we continue to develop energy-efficient products with a lower carbon footprint over their entire lifecycle. Read more on pages 34–36.

Reducing emissions in our own operations

In our efforts to reduce the impact of emissions from our own operations, we focus on energy-saving measures and on increasing the use of renewable energy, for example by using biofuels in portable compressor testing and installing solar panels. In 2022, the CO2 emissions from our own operations were 33% lower than in the baseline year, 2019. Addressing emissions from our company vehicles provides further opportunity for reductions. An increased share of renewable electricity was the main driver for the lower emissions and some larger facilities switched to renewable energy during the year. In 2022, the share of renewable energy used in the Group was 58%. However, in some markets, the availability of renewable energy poses a challenge to our ability to increase this share further.

Reducing emissions in our value chain

Our main climate impact comes from when customers use our products. Electrifying the product fleet and increasing products’ energy efficiency will be our main focus in order to reduce our scope 3 emissions. Logistics planning, switching to low carbon transport modes and collaborating with transport partners are other priorities. In 2022, the absolute emissions in scope 3 were 29% higher than in the baseline year. The main reason for this was increased sales, but the availability of renewable energy to our customers has also been lower than we expected.

Waste management

Reducing waste is important to decrease the total environmental impact from our production and increase circularity. Most of our waste is constituted by scrap metal and the vast majority is reused or recycled. This share has been consistently high for many years. Our new target is that by 2030, we shall reuse, recycle or recover 100% of all our waste. This target is closely related to circularity, keeping materials in a loop of re-use.

Water management

Atlas Copco’s overall water consumption is relatively low due to our focus on assembly rather than on other resource-intensive activities. Nevertheless, we seek to decrease our use of water and to increase its reuse and circulation. Innovative product design and improved processes also contribute to reducing our customers’ water use.

THE ENVIRONMENT

Key performance indicators	Target 2022	2021	2020
Reduction in CO₂e ¹) emissions (tonnes) from scopes 1 and 2, compared to the baseline 2019	–46% by 2030 ²⁾	–33%	–17%
Reduction in CO₂e ¹) emissions (tonnes) from scope 3, compared to the baseline 2019	–28% by 2030 ³⁾	+29%	+5%
Significant direct suppliers with an approved Environmental Management System	Continuous increase	31%	31%
Water consumption (m ³)/in relation to cost of sales ⁴⁾	Continuous decrease	8.4	–
Reused, recycled or recovered waste from internal operations ⁴⁾	100% by 2030	92%	–

¹⁾ CO₂e means carbon dioxide equivalent.
²⁾ In line with the 1.5 degree warming trajectory.
³⁾ In line with the 2.0 degree warming trajectory.
⁴⁾ New and extended scope from 2022, including all operations.

Value-chain impact assessment

In 2021, the value chain impact assessment was conducted by calculating typical product CO₂ emissions in both the embodied impact, in purchased material and by estimating the ‘in-use’ phase. The Group Carbon Product Footprint tool was developed for this purpose. All business areas completed the calculations of product-related and non-product related emissions according to the Greenhouse Gas protocol, and the results were consolidated to Group-level. The scope 1, 2 and 3 CO₂e emissions for 2019, 2020 and 2021 have been recalculated based on the results from the value chain impact assessment.

Environmental risks in the supply chain

Atlas Copco recognizes the importance of managing environmental risks throughout the value chain. By committing to the business partner criteria our suppliers take responsibility to minimize the environmental impact of products and services during manufacturing, distribution, and usage, as well as after disposal. Screening and audits are part of the Group’s supplier management system. We work with tier-one suppliers using the business partner criteria and, if needed, we develop action plans together to enhance the environmental management of certain suppliers. To further reduce our impact along the value chain, we measure the percentage of significant direct suppliers that have an approved environmental management system. In 2022, 31% of these suppliers met this requirement. Read more on page 130.

Environmental performance has long been in focus for Atlas Copco’s plant in Tierp, Sweden. Energy-saving measures and transitioning to renewable energy sources have been two priority areas, and 98 percent of the waste from scrap is being recycled. Going forward, the strategy is to focus on reuse and circularity. In the plant’s component workshop, steel bars are used as raw material. The end pieces of these bars have previously been sent to recycling as scrap. Following a suggestion from an employee, a project was set up in 2020 to investigate whether the end pieces could instead be used as raw material in the socket and bit production. Two years later, approximately one third of the bar material used to produce sockets and bits come from recycled end bits and both steel and brass bits are reused instead of recycled. Apart from saving CO₂ emissions and material cost, the project has other positive effects. The ready-cut end pieces reduce the need for sawing which saves work time, energy and machinery. The need for transport of both raw material and waste has also been reduced. The new routine has led to an increased awareness of raw material usage and waste and has resulted in other initiatives, such as reusing scrapped plastic trays used for internal transport of components.

Water for All: Employee community engagement

Water for All is the main community engagement initiative of both Atlas Copco and Epiroc. The numbers convey Water for All’s global achievements in 2022 including both companies.

Atlas Copco 2022 42

THE YEAR IN REVIEW – SUSTAINABILITY: THE ENVIRONMENT# THE YEAR IN REVIEW – SUSTAINABILITY: THE ENVIRONMENT

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
• Sustainable approach to delivering value
Products and service
People
Safety and wellbeing
Ethics
• Environment
Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

Global climate event

Atlas Copco has committed to science-based targets to reduce our greenhouse gas emissions in line with the Paris Agreement. It will take everyone’s commitment, creativity and expertise to reach the targets. To raise awareness, all employees were invited to a global climate event in November 2022.

Atlas Copco 2022 43

THE YEAR IN REVIEW – RISKS, RISK MANAGEMENT AND OPPORTUNITIES

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
• Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

Risks, risk management and opportunities

All business activities involve risks, therefore there is a need for a structured and proactive approach to manage the company’s risks, both locally and centrally within the organization. Well-managed risks can create opportunities and add value to the business while risks that are not well-managed can cause incidents and losses. Atlas Copco’s global and diversied business towards many cus- tomer segments results in a variety of risks and opportunities, geo- graphically and operationally. Thus, the ability to identify, analyze and manage risks is crucial for eective governance and control of the business. The aim is to achieve Group targets with a high risk awareness and well-managed risk taking, in line with the strategy and within the frame of the handbook of policies and guidelines The Way We Do Things. Atlas Copco sees the benets of an ecient risk management both from risk reduction and business opportunity perspectives, which can lead to good business growth.

Atlas Copco’s risk management approach follows the Group’s decentralized structure. Local companies are responsible for their own risk management, which is monitored and followed up regu- larly, e.g. at local board meetings. Group functions for legal, insur- ance, sustainability, treasury, tax, controlling and accounting, pro- vide policies, guidelines and instructions regarding risk manage- ment. This is regularly audited by internal and external audits. Exam- ples of risks and how they are handled in Atlas Copco are shown in the table in this section.

Insurance

The Group Insurance Program is provided by the inhouse insurance company Industria Insurance Company Ltd. which retains part of the risk exposure for the following insurance lines; property damage, business interruption, transport, and general and product liability. Financial lines insurance and business travel insurance are managed by the Group’s Insurance and Risk Management department. How- ever, Industria is not the insurer for these two lines. Insurance capac- ity is purchased from leading insurers and reinsurers by way of using international insurance brokers. Claims management services are partly purchased on a global basis from leading providers. Insurance policies are issued on a local basis to ensure compliance with local insurance laws where required.

Loss prevention

The main purpose of Atlas Copco’s loss prevention process is to prevent potential property losses and business interruptions. Atlas Copco’s Loss Prevention Standard stipulates Group requirements in regards of loss prevention for product companies and distribution centers, including areas like: construction, safety systems, loss pre- vention procedures and plans that need to be prepared. To ensure alignment with the standard and to support sites’ understanding of how the standard applies to each site, around 25 risk surveys are per- formed annually. The results from the risk surveys are consolidated and reported to Group Management.

Enterprise risk management

Atlas Copco has developed an enterprise risk management process to map strategic risks. The methodology used is applied on divisions, which is the highest operational level in the Group. Annual work- shops are held by each divisional management team where risks are identied, analyzed, evaluated/re-evaluated and managed to ensure a structured and proactive approach to risks exposing Atlas Copco. The ownership of managing the risks raised in this process lies within each division, while the Insurance and Risk Management department manages the overall process, moderates the sessions and consolidates the results on business area and Group levels. This hands-on approach is also in line with Atlas Copco’s decentralized structure.

---

ATLAS COPCO Enterprise Risk Management process

Risk identication	Risk analysis	Risk evaluation	Risk management	Monitor and re-evaluate
Risk process

---

In Atlas Copco, Enterprise Risk Management is not seen as a project but as a continuous process. The risk environment changes over time and it is therefore necessary to continuously revisit, update and identify new risks. The dened framework is described in the picture above.

Atlas Copco 2022 44

RISK CONTEXT

MITIGATING ACTIVITIES	OPPORTUNITIES
LEGAL Atlas Copco’s business operations are aected by numerous laws, regulations and trade sanctions as well as commercial and nancial agreements with customers, suppliers and other counterparties, and also by licenses, patents and other intangible property rights.	• Inhouse lawyers on ve continents support Group companies with advice on laws and regulations, including compliance, as well as support with contract reviews. Proactive training is also done. • A yearly legal risk survey of all companies in the Group is performed in addition to conti- nuous follow-up of the legal risk exposure. The result of the survey is compiled, analyzed and reported to the Board and the auditors. • A separate central function, Group Compliance, is in place. It is responsible for aligning and coordinating the compliance organization which, in line with Atlas Copco’s decen- tralized structure, is hosted in the business areas and divisions.
FINANCIAL Changes in exchange rates can adversely aect Group earnings when revenues from sales and costs for production and sourcing are denominated in dierent currencies (transaction risks). An adverse eect on Group earnings can also occur when earnings of foreign subsidiaries are translated into SEK and on the value of the Group equity when the net assets of foreign subsidiaries are translated into SEK (translation risks). Atlas Copco’s net interest cost is aected by changes in market interest rates. Funding risk refers to the risk that the Group and its subsidiaries do not have access to nancing on acceptable terms. As in any business, there can be a credit risk linked to our customers’ abilities to pay.	• A Financial Risk Management Committee meets regularly to manage nancial risks. • Atlas Copco Financial Solutions is responsible for these risks and supports Group companies to implement nancial policies and guidelines. • The Group’s operations continuously monitor relevant exchange rates and try to oset negative changes by adjusting sales prices and costs. • Translation risks are partially hedged by borrowings in foreign currency and nancial derivatives. • The Group’s Financial Risk Policy stipulates that a minimum amount of standby credit facilities should exist and that a minimum average time to maturity for the external debt is set. • Stringent credit policies are applied and there is no major concentration of credit risk. The provision for bad debt is based on historical loss levels and up-to-date information and is deemed sucient.

REPORTING (INCLUDING TAX)

The risk related to the communication of nancial information to the capital market is that the reports do not give a fair view of the Group’s true nancial position and results of operations. Reporting errors could result in management drawing the wrong conclusions. However, with many small entities, the material impact is low. Taxes is an area with increased focus, especially transfer pricing risks but also new tax rules and regulations. Estimations sometimes form a portion of the sustainability data which is reported, and thus by its nature the numbers presented may not be representative of the Group’s impact.

• Atlas Copco subsidiaries report their nancial statements regularly in accordance with International Financial Reporting Standards (IFRS). The Group’s consolidated nancial statements, based on those reports, are prepared in accordance with IFRS and applica- ble parts of the Annual Accounts Act as stated in RFR 1 “Supplementary Rules for Groups”.
• The Group’s operational and legal consolidated results are based on the same num- bers and system. These are analyzed by divisional, business area, Group Management and corporate functions before being published externally.
• The Group has procedures in place to ensure compliance with Group instructions, standards, laws and regulations, for example internal and external audits.
• Group Tax monitors and ensures compliance with local tax rules. Transfer pricing poli- cies and agreements are implemented in operations and regularly updated. Quarterly updates on tax are presented to the Board and Group Management.
• Atlas Copco reports sustainability information according to GRI Standards and works with training to improve reporting practices. Integrated reporting provides a better understanding of business risks and opportunities which in turn allows for improved decision making. It also allows the company to identify opportunities for business synergies. Addressing reporting risks increases trans parency and improves the potential to represent the business fairly and accurately. Improved reporting results in improved business insights and risk management, especially when the data has been integrated to highlight interdependencies. Ecient and consistent reporting based on clear standards and principles creates transparency, supports decision making and drawing the right conclusions. Increased reporting requirements on taxes improves transparency.

CORRUPTION AND FRAUD

Corruption and bribery exist in many markets where Atlas Copco conducts business. Fraud or criminal deception intended to result in nancial or personal gain, is always present in global operations.

• Zero-tolerance policy on bribery and corruption, including facilitation payments.
• Internal control routines aimed at preventing and detecting deviations. The Internal Audit function is established to ensure compliance with the Group’s corporate gover- nance, internal control and risk management policies.
• Control self-assessment tool to analyze internal control processes.
• Training in the Code of Conduct and signing compliance to the Code for all employees and signicant business partners.
• The global Group misconduct reporting system to report violations anonymously.
• The Group supports fair competition and forbids discussions or agreements with competitors concerning pricing or market sharing. By ghting against corruption and fraud, Atlas Copco has the opportunity to work with industry peers to inuence international market practices. Refusing to pay bribes may cause temporary delays and setbacks; however it reduces costs in both the long and short run, builds opportunities to improve operational eciencies and creates more stability in society and in markets where the Group operates. Working against corruption and fraud improves Atlas Copco’s credibility and transparency and creates more ways to improve stakeholder relations.

Examples of risks and how they are handled by Atlas Copco

Atlas Copco 2022 45

THE YEAR IN REVIEW – RISKS, RISK MANAGEMENT AND OPPORTUNITIES

Introduction

This is Atlas Copco

The year in review

Administration report

Business areas

Sustainable approach to delivering value

• Risks, risk management and opportunities

The Atlas Copco share

Corporate Governance

Board of Directors

Group Management

Internal control over nancial reporting

Financials

Other information

| RISK CONTEXT | MITIGATING ACTIVITIES # THE YEAR IN REVIEW – RISKS, RISK MANAGEMENT AND OPPORTUNITIES

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
• Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

RISK CONTEXT MITIGATING ACTIVITIES OPPORTUNITIES

REPUTATION

The Group’s reputation is a valuable asset which may be aected in part through the Group’s operations or actions and in part through the actions of external stakeholders. Products must deliver on the brand promise and be of high quality, safe and have a low negative impact on the environment when used by the customer. There is potential for reputational risk from non-compliance to product labeling standards or if there are cases of false advertising. Unsatised employees may potentially detract the Atlas Copco brand.

• All Atlas Copco products are tested and quality assured. Product labeling is monitored and there are regular communications trainings.
• The Group actively engages in stakeholder dialogue.
• Compulsory training in the Code of Conduct includes the yearly signing of a compliance statement.
• A clear and well known corporate identity and brand management.
• An employee survey is carried out every two years and followed up actively.
• Brand positioning.

Stakeholder engagement not only mitigates reputational risks in certain cases but it also presents opportunities to increase aware- ness and credibility of Atlas Copco’s brand through improvements and innovations. Delivering tested and quality-assured products improves customer satisfaction and promotes repeat business. Attract and develop employees who adhere to the Code of Conduct.

PRODUCTION

Core component manufacturing is concentrated to a few locations and if there are interruptions or lack of capacity in these locations, this may have an eect on deliveries or on the quality of products. Production facilities could also have a risk of damaging the environ- ment through their operations, e.g. through hazardous waste and emissions. Atlas Copco is directly and indirectly exposed to raw material prices. Atlas Copco primarily distributes products and services directly to the end customer. If the distribution is not ecient, it may impact customer satisfaction, sales and prots. Damages and losses during the course of distribution can be costly. Some sales are made indirectly through distributors and rental companies and their performance may have a negative eect on sales. The distribution of products results in CO 2 emissions from transport.

• Manufacturing units continuously monitor the production process, test the safety and quality of products, make risk assessments, and train employees.
• Atlas Copco has an internal Loss Prevention Standard to ensure high level of protection.
• Production units have developed business continuity plans.
• Ambition to certify all manufacturing units in accordance with the ISO 14001 standard.
• Physical distribution of products is concentrated to a number of distribution centers and their delivery eciency is continuously monitored.
• Resources are allocated to training and development of the service organization.
• As indirect sales are local/regional, the negative impact of poor performance is limited.
• Increased focus on safer and more eective transports to reduce losses, costs and total emissions per transport.

Continued opportunities to extensively promote operational excellence to streamline production, minimize ineciencies and maintain a high exibility in the production process. Continue to strengthen the relationship with customers through timely deliveries of products and services. Transport eciencies and safe transports can save the customers time and cost while reducing the environ mental impact of their own operations. Reduce fuel costs and resource requirements which improves business agility for the Group.

SUPPLY CHAIN

Atlas Copco and its business partners, such as suppliers, subcon- tractors and joint venture partners, must share the same values as expressed in the Group’s Code of Conduct regarding issues such as human rights standards and principles of ethical conduct. The availability of many components is dependent on suppliers and if they have interruptions or lack capacity, this may aect deliveries. Using a large number of suppliers gives rise to the risk that prod- ucts contain components which are not sustainably produced, e.g. hazardous substances or electronic components containing conict minerals, or components with a large carbon footprint.

• Business partners are selected and evaluated based on objective factors including quality, delivery, price, and reliability, as well as on social/environmental responsibility.
• Signicant direct suppliers are required to have an approved environmental manage- ment system.
• The presence of conict minerals in Atlas Copco’s value chain is investigated and eradicated.
• Establishment of a global network of sub-suppliers, to prevent supplier dependency.
• E-learning for business partners (suppliers and distributors) to raise awareness of the Code of Conduct, including the requirement for signicant business partner to sign and follow the Code of Conduct.
• Action plans developed together with suppliers to deal with shortcomings and deviations.
• Atlas Copco maintains lists of substances that are prohibited or restricted due to their potential negative impact on health or the environment. Compliance with these lists is part of the business partner criteria.

Further increase business agility and reduce costs by improving supplier inventory management in response to changes in demand. Continue to be a preferred business partner and promote eciency, sustainability and safety. Good supplier relations help to improve Atlas Copco’s competitive position. Strengthen customer relationships by supporting customers impacted by the Dodd Frank legislation on conict minerals. Promote human rights and work towards improving labor conditions, reducing corruption and conicts.

EMPLOYEE

Atlas Copco must have access to and attract skilled and motivated employees and safeguard the availability of competent managers to achieve established strategic and operational objectives.

• The competence mapping and plan secure access to people with the right expertise at the right time. Recruitment can be both external and internal. Internal recruitment and job rotation are facilitated by the Internal job market.
• Salaries and other conditions are adapted to the market and linked to business priorities. Atlas Copco strives to maintain good relationships with unions.

Motivated and skilled employees and managers are crucial to achieve or exceed business goals and objectives.

Examples of risks and how they are handled by Atlas Copco, continued

Atlas Copco 2022 47
THE YEAR IN REVIEW – RISKS, RISK MANAGEMENT AND OPPORTUNITIES

Introduction
This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
• Risks, risk management and opportunities
The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over nancial reporting
Financials
Other information

RISK CONTEXT MITIGATING ACTIVITIES OPPORTUNITIES

INFORMATION TECHNOLOGY (IT)

Atlas Copco relies on IT systems in its day-to-day operations. Disruptions or faults in critical systems have a direct impact on production. Errors in the handling of nancial systems can aect the company’s reporting of results. Theft or modication of intellectual property constitutes a risk to our products and future business success. Cyber security risks are increasing in importance and can have a major impact on Atlas Copco operations. The General Data Protection Regulation (GDPR) impacts the han- dling of personal data. Failure to comply may result in substantial nes and reputational damage.

• Atlas Copco has a global IT Security policy, including quality-assurance procedures that govern IT operations. Information security is monitored through IT Security audits and cyber-risk assessments. Standardized processes are in place for the implementa- tion of new systems, changes to existing systems and daily operations. The system landscape is based on well-proven technologies.
• IT Security tracks globally major downloads of les. Screening of business partners/ consultants working in our systems.
• Cyber security is regularly discussed, addressed and invested in by the IT Security function. By performing cyber-risk assessments, awareness of cyber security risks increases the readiness to quickly detect and respond to any attacks.
• A privacy- and data compliance council tracks the essential activities to ensure compliance with the regulation.
• Increased focus on secure development process for our product software.

Stable IT systems, secure IT environment and standardized pro- cesses increase eciencies and reduce costs.# THE YEAR IN REVIEW – RISKS, RISK MANAGEMENT AND OPPORTUNITIES

Quick action on major download of product development files minimizes the potential damage. Quick action to address a cyber-attack gives opportunity to stable work environment and business continuity. As the approach has been global, Atlas Copco is well prepared to face future data privacy initiatives in all regions or continents.

ACQUISITIONS AND DIVESTMENTS

When making acquisitions, there are risks related to the selection and valuation of the potential targets as well as the process of acquiring them. Integrating acquired businesses may also be a complex and demanding process. There is no guarantee for an acquisition to be successful even if all steps are done properly. Annual impairment tests are made on acquired goodwill. If the carrying values are not deemed justified in such tests, it can result in a write-down, affecting the Group’s result. Acquisitions and divestments can impact local communities and/or the environment, directly or indirectly.

• The Group’s Acquisitions Process Council has established a process for acquisitions. The process is continually updated and improved to address and mitigate risks. The Council also provides training and supports business units prior to, during and after an acquisition. Before any acquisition is completed, a detailed due diligence will be performed in order to evaluate the risks involved.
• Atlas Copco guidelines and policies are applied to assess and manage the environmental and social impact of operations in the affected communities after an acquisition is completed. Acquisitions bring possibilities to enter new markets, segments, new technologies, new clients, increase revenues, etc. Identifying the obstacles to integration can allow Atlas Copco to improve the process through methods such as job rotation, training or teambuilding exercises. This would not only result in a smoother process but also lower operational costs by decreasing downtime and allowing newly acquired companies to become even more productive and efficient.

PRODUCT DEVELOPMENT

One of the challenges for Atlas Copco’s long-term growth and profitability is to continuously develop innovative, sustainable products that consume less resources over the entire life cycle. Atlas Copco’s product offering is also affected by national and regional legislation on issues such as emissions, noise, vibrations, recycling, etc. However, there may be increased risk of competition in emerging markets where low-cost products are not affected to the same extent by such rules.

• Continuous investments in research and development to develop products in line with customer demand and expectations, even during economic downturns.
• Designing products with a life-cycle perspective and measurable efficiency targets for the main product categories in each division.
• Designing products with reduced emissions, vibrations or noise, and increased recycling potential to meet legal requirements.

Substantial opportunities to strengthen the competitive edge by innovating high-quality, sustainable products and creating an integrated value proposition for customers.

Examples of risks and how they are handled by Atlas Copco, continued

Atlas Copco 2022 48

THE YEAR IN REVIEW – RISKS, RISK MANAGEMENT AND OPPORTUNITIES

Share price development and returns

In 2022, the price of the A share decreased 21.3% to SEK 123.1 (156.5) and the B share decreased 16.5% to SEK 111.1 (133.1). The annual total return on the Atlas Copco A share, equal to dividend, redemption and the change in the share price, including the distribution of Epiroc AB, was on average 17% for the past ten years and 17% for the past five years. The corresponding total return for Nasdaq Stockholm was 13% and 11%, respectively.

Trading and market capitalization

The Atlas Copco shares are listed on Nasdaq Stockholm, which represented 23.0% of the total trading of the A share (37.3% of the B share) in 2022. Other markets, so called Multilateral Trading Facilities (MTF), e.g. CBOE accounted for 40.3% (36.9% of the B share), and the remaining 36.7% (25.8% of the B share) were traded outside public markets, for example through over-the-counter trading. The market capitalization at year end 2022 was MSEK 586,731 (732,967) and the company represented 6.3% (5.9) of the total market value of Nasdaq Stockholm. Atlas Copco was the second (fifth) most traded share in 2022 by total turnover.

The Atlas Copco share A program for American Depositary Receipts (ADRs) was established in the United States in 1990. One ADR corresponds to one share. The depositary bank is Citibank N.A. At year end 2022, there were 109,162,008 ADRs outstanding, of which 101,646,798 represented A shares and 7,515,210 represented B shares.

Share split and mandatory redemption of shares

During the second quarter 2022 the share split resolved by the Annual General Meeting on April 26, 2022 whereby each share was divided into four (4) ordinary shares and one (1) redemption share, was concluded. For further information, see atlascopcogroup.com/en/investor-relations/atlas-copco-share/redemption-of-shares

Personnel stock option program and repurchase of own shares

The Board of Directors will propose to the Annual General Meeting 2023 a similar performance-based long-term incentive program as in previous years. The intention is to cover the plan through the repurchase of the company’s own shares. The company’s holding of own shares on December 31, 2022 appears in the table to the right.

SHARE INFORMATION	2022-12-31	A share	B share
Nasdaq Stockholm		ATCO A	ATCO B
ISIN code		SE0017486889	SE0017486897
ADR		ATLKY.OTC	ATLCY.OTC
Total number of shares		3 357 576 384	1 560 876 032
% of votes		95.6	4.4
% of capital		68.3	31.7
Whereof shares held by Atlas Copco		50 095 451	0
% of votes		1.4	0.0
% of capital		1.0	0.0

| | | | | | | | | | | |
| :------------------------------------ | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Ordinary dividend per share, SEK | | | | | | | | | | |
| Earnings per share, SEK | | | | | | | | | | |
| * Proposed by the Board of Directors | | | | | | | | | | |
| SEK | 0 | 5 | 10 | 15 | 20 | 25 | | | | |
| | 2021 | 2020*| 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 |
| | 12.00| 15.00| | | | | | | | | |

Dividend and redemption per share, SEK	Extraordinary items, SEK	Earnings per share, SEK	Ordinary dividend per share, SEK	Distribution of Epiroc AB on June 18, 2018
SEK	0	1	2	3
	2022 2)	2021	2020	2019
	3.00	3.75	3.90

1) Dividend and redemption per share, SEK
2) Extraordinary items, SEK
3) Earnings per share, SEK
4) Ordinary dividend per share, SEK
5) Distribution of Epiroc AB on June 18, 2018
* Proposed by the Board of Directors.
Distribution of Epiroc AB on June 18, 2018

SEK	0	50	100	150	200	250	300	350	400	450
	2019	2018	2017	2016	2015

Highest–lowest share price, A share
General index (OMXS)
Industrials index (OMXSI)

0	100000	200000	300000	400000	500000	600000	700000	800000	900000
	2022	2021	2020	2019	2018

Number of shares, December 31, 2022	% of shareholders	% of capital
1–500	57.5	0.2
501–2 000	21.6	0.6
2 001–10 000	15.5	1.7
10 001–50 000	4.2	2.0
50 001–100 000	0.5	0.7
>100 000	0.7	94.8
Total	100.0	100.0

SHAREHOLDERS BY COUNTRY

December 31, 2022, percent of capital

Other, 14%
Sweden, 47%
The United Kingdom, 8%
The United States, 32%

Other, 13%
Sweden, 50%
The United Kingdom, 7%
The United States, 30%

SHARE ISSUES

	MSEK	Amount distributed, MSEK
2011 Split 2:1
Share redemption 2)	1,229,613,104 shares at SEK 5	–393.0
Bonus issue	No new shares issued	393.0
2015 Split 2:1
Share redemption 3)	1,229,613,104 shares at SEK 6	–393.0
Bonus issue	No new shares issued	393.0
2018 Split 2:1
Share redemption 4)	1,229,613,104 shares at SEK 8	–393.0
Bonus issue	No new shares issued	393.0
2022 Split 4 ordinary shares and 1 redemption share
Share redemption 5)	1,229,613,104 shares at SEK 8	–157.0
Bonus issue	No new shares issued	157.0

IMPORTANT DATES

2023
* April 27 First quarter results
* April 27 Annual General Meeting
* April 27 * Shares trade excluding right to dividend of SEK 1.15
* May 5 * Dividend payment date (preliminary)
* July 19 Second quarter results
* October 25 Third quarter results
* October 18 * Shares trade excluding right to dividend of SEK 1.15
* October 25 * Dividend payment date (preliminary)

2024
* January 25 Fourth quarter results 2023

* Board of Directors proposal to the Annual General Meeting. The record date is the first trading day after shares trade excluding the right to dividend.

• More information – More data per share can be found on page 147 in the four-year summary.
• For more information on distribution of shares, option programs and repurchase of own shares, see notes 5, 20 and 23.
• Detailed information on the share and debt can be found on www.atlascopcogroup.com/investor-relations

OWNERSHIP CATEGORY

December 31, 2022

	% of capital
Shareholders domiciled abroad (legal entities and individuals)	50.5
Swedish financial companies	38.6
Swedish individuals	4.7
Other Swedish legal entities	2.2
Swedish social insurance funds	2.7
Swedish trade organizations	1.0
Swedish government and municipals	0.3
Total	100.0

The Atlas Copco share, continued
1) For more information please visit www.atlascopcogroup.com/investor-relations.
2) 1,213,493,751 shares net of shares held by Atlas Copco.
3) 1,217,444,513 shares net of shares held by Atlas Copco.
4) 1,213,080,695 shares net of shares held by Atlas Copco.
5) 4,865,921,644 shares net of shares held by Atlas Copco as of May 13, 2022.

Atlas Copco 2022 50

THE YEAR IN REVIEW – THE ATLAS COPCO SHARE

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
Risks, risk management and opportunities
• The Atlas Copco share
Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
Risks, risk management and opportunities
The Atlas Copco share
• Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

Atlas Copco AB is incorporated under the laws of Sweden with a public listing at Nasdaq Stockholm AB (Nasdaq Stockholm). Atlas Copco is governed by Swedish legislation and regulations, primarily the Swedish Companies Act, but also the rules of Nasdaq Stockholm, the Swedish Corporate Governance Code (the Code), the Articles of Association and other relevant rules. Atlas Copco does not report any deviations from the Code for the financial year 2022. The corporate governance report has been examined by the auditors, see page 124.

Corporate governance

In the corporate governance report, Atlas Copco presents how applicable rules are implemented in efficient control systems to achieve long-term growth. Good corporate governance is not only about following applicable rules, it is also about doing what is right. The objective is to find the right balance between risk and control in a decentralized management model. The goal is sustainability in productivity and profitability, as well as in governance.

Atlas Copco is a truly global industrial company, which creates lasting value and empowers customers to drive society forward in over 180 countries. Through energy-efficient products that save carbon emissions, and by implementing values and processes with respect for people and the planet, Atlas Copco can contribute to a better tomorrow. As a leading industrial innovator and global supplier, Atlas Copco can play a role in combating climate change. The commitment to reduce greenhouse gas emissions in line with the goals of the Paris Agreement, and by setting Science-based targets, the Group shows its ambition to be part of the transformation to a low-carbon society.

The Atlas Copco Code of Conduct is the most important instrument to make sure the company always acts with the highest ethical standards and integrity. The main international ethical standards supported by Atlas Copco are the International Bill of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the OECD Guidelines for Multinational Companies and the UN Global Compact. Atlas Copco is a member of the UN Global Compact since 2008.

Meetings of the Board and the Nomination Committee during 2022

BOARD OF DIRECTORS’ MEETINGS AND ACTIVITIES	NOMINATION COMMITTEE MEETINGS
Preliminary full-year 2021 results, the annual audit and review of Power Technique	First-quarter results meeting and review of Vacuum Technique
Q1	Q2
Meeting per capsulam	Nomination Committee meeting

The following information is available at www.atlascopcogroup.com
* Atlas Copco’s Articles of Association
* The Code of Conduct
* Corporate governance reports since 2004 (as a part of the annual report)
* Information on Atlas Copco’s Annual General Meeting

The annual signing of the Code of Conduct, together with training, supports Atlas Copco’s employees to identify and handle ethical dilemmas and strengthens the awareness of Atlas Copco’s values and guidelines. Atlas Copco also requests that significant business partners commit to comply with the Code of Conduct. This is further supported by the third party operated system, SpeakUp, providing a channel for anonymous reporting of suspected ethical misconduct. To safeguard the Group’s reputation, Atlas Copco relies on solid governance and the leaders’ ability to defend values, including of course, internal and external control and audits.

Hans Stråberg

Chair since 2014

Comment from the Chair

Atlas Copco 2022 51

THE YEAR IN REVIEW – CORPORATE GOVERNANCE

Introduction

This is Atlas Copco
The year in review
Administration report
Business areas
Sustainable approach to delivering value
Risks, risk management and opportunities
The Atlas Copco share
• Corporate Governance
Board of Directors
Group Management
Internal control over financial reporting
Financials
Other information

1. Shareholders
   At the end of 2022, Atlas Copco had 115,459 (87,923) shareholders. The ten largest shareholders registered directly or as a group with Euroclear Sweden, the Swedish Central Securities Depository, by voting rights, accounted for 35% (34) of the voting rights and 32% (31) of the capital. Swedish investors held 50% (47) of the capital and represented 47% (44) of the voting rights. The largest shareholder is Investor AB, holding 17.0% of capital and 22.3% of votes. More information on Atlas Copco’s shareholders can be found on pages 49–50.

2. General Meeting
   The General Meeting is Atlas Copco’s supreme decision-making body in which all shareholders are entitled to take part. Anyone registered in the shareholders’ register who have given due notification to the Company of their intention to attend, may join the meeting and vote for their total shareholdings. Atlas Copco encourages all shareholders to vote at the General Meeting and shareholders who cannot participate in person may be represented by proxy holders or vote by mail. A shareholder or a proxy holder may be accompanied by two assistants and a proxy form can be found prior to the General Meeting at www.atlascopcogroup.com/agm. The Annual General Meeting (AGM) 2022 was held on April 26, 2022 in Solna, Sweden. The Company also offered shareholders the possibility to exercise their voting rights by mail voting. 59% of the total number of votes in the Company and 60% of the shares were represented. Decisions at the AGM 2022 included:

   • Adoption of the income statements and balance sheets of Atlas Copco AB and the Group for 2021.
   • Discharge of liability of the Company’s affairs during the 2021 financial year for the President and CEO and the Board of Directors.
3. Adoption of the Board’s proposal for profit distribution with a dividend of SEK 7.60 per share to be paid in two installments. The first installment amount will be SEK 3.80 per share and the second installment amount will be SEK 0.95 per share (in accordance with the Annual General Meeting’s resolution on share split and redemption).
4. A share split in four (4) ordinary and one (1) mandatory redemption share. The redemption share was automatically redeemed resulting in an extra distribution to the shareholders of SEK 8 per share.
   • Amendment of the Articles of Association.
   • That the number of directors elected by the AGM for a term ending at the next AGM would be eight directors and no alternates.* Election of the Board of Directors.
5. A resolution of the Board of Directors’ fee.
6. Approval of the remuneration report for 2021.
7. Approval of the reported scope and principals for a performance based employee stock option plan for 2022 including mandate for the Board to decide upon repurchase and sales of Atlas Copco shares to hedge the plan and previous similar plans.
8. Election of Ernst & Young AB as auditing company up to and including the Annual General Meeting 2023.

Annual General Meeting 2023

The Annual General Meeting will be held on April 27, 2023. Shareholders who wish to contact the Nomination Committee or have a matter addressed by the Board of Directors at the AGM may submit their proposals by ordinary mail or e-mail to: Atlas Copco AB, Attn: Chief Legal Officer, SE-105 23 Stockholm, Sweden, nominations@atlascopco.com or board@atlascopco.com Proposals have to be received by the Board of Directors and the Nomination Committee respectively, no later than seven weeks prior to the AGM to be included in the notice to the AGM and the agenda.

• Business areas and divisions
• General Meeting
• Board of Directors
• Shareholders
• Group Management
• Nomination Committee
• Remuneration Committee
• Audit Committee
• Internal Audit and Assurance
• Auditor

	2022 1)	2021 2)	2020 3)	2019	2018
AGM, votes, %
EGM, votes, %
Number Shareholders and proxy holders, number

General Meeting Attendance

	2020*	2019	2018	2017	2016
AGM, votes, %
EGM, votes, %
Number Shareholders and proxy holders, number

1) AGM 2022, mail voting was available.
2) AGM 2021, due to Covid-19 only mail voting, no physical attendance.
3) AGM 2020, due to Covid-19 mail voting was available and recommended. EGM 2020, due to Covid-19 only mail voting, no physical attendance.

Corporate governance, continued

Atlas Copco 2022 52

THE YEAR IN REVIEW – CORPORATE GOVERNANCE

• Introduction
• This is Atlas Copco
• The year in review
• Administration report
• Business areas
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
  • Board of Directors
  • Group Management
• Internal control over financial reporting
• Financials
• Other information

3. Nomination Committee

The Nomination Committee aims to propose a Board with a broad and complementary experience from a number of important industries and markets. Experience from the manufacturing industry with international coverage is viewed as especially valuable. The committee also considers factors such as diversity, gender balance, potential conflicts of interest etc. The Nomination Committee’s diversity policy is based on section 4.1 in the Corporate Governance Code. The eight Board members elected by the shareholders have backgrounds from various industries. As proposed to the AGM 2022, two of the seven non-executive members are women. One member is born in the 1940’s, three in the 1950’s, two in the 1960’s, and one is born in the 1970’s. The Board members are of two different nationalities, from Germany and a majority of the Board members coming from Sweden. Increasing the diversity of the Board of Directors with regard to gender is a priority for the Nomination Committee.

Based on the findings of the Chair of the Board, the Nomination Committee annually evaluates the work of the Board. Further to that, the Nomination Committee proposes the Chair to the Annual General Meeting, prepares a proposal regarding number and names of Board members, including Chair and a proposal for remuneration to the Chair and other Board members not employed by the Company, as well as a proposal for remuneration for Board committee work. Finally, the Nomination Committee proposes an audit company including remuneration for the audit. The proposals and the Nomination Committee’s statement will be published at the latest with the notice to the AGM 2023.

In view of the Nomination Committee’s strive to reach gender balance, for example in case of equal competence, the candidate that will lead to improved gender balance should be proposed.

In compliance with the Swedish Corporate Governance Code and the procedures adopted by the AGM 2016, the representatives of the four largest shareholders, directly registered or ownership grouped as listed in the shareholders’ register as of August 31, 2022, together with the Chair of the Board shall form the Nomination Committee. The members of the Nomination Committee for the AGM 2023 were announced on September 15, 2022, and represented approximately 30% of all votes in the Company. The members of the Nomination Committee receive no compensation for their work in the committee.

Nomination Committee members for the AGM 2023:

• Petra Hedengran, Investor AB, Chair of the Nomination Committee;
• Jan Andersson, Swedbank Robur funds;
• Mikael Wiberg, Alecta;
• Helen Fasth Gillstedt, Handelsbanken Fonder AB; and
• Hans Stråberg, Atlas Copco AB, Chair of the Board.

4. Board of Directors

The Board of Directors is responsible for the overall organization, administration and management of Atlas Copco in the best interest of the Company and its shareholders. The Board is responsible for following applicable rules and implementing efficient control systems in the decentralized organization. An efficient control system offers the correct balance between risk and control. The long-term goals are regularly evaluated by the Board based on the Group’s financial situation and financial, legal, social and environmental risks. The mission is to achieve a sustainable and profitable development of the Group.

Board of Directors’ members

At the end of 2022 the Board of Directors consisted of eight elected members, including the President and CEO. The Board also had two employee representatives, each with one personal deputy. Atlas Copco fulfilled the 2022 requirements of Nasdaq Stockholm and the rules of the Swedish Corporate Governance Code regarding independency of board members.

The Board of Directors’ work

The Board continuously addresses the Group’s strategic direction, financial performance, and methods to maintain sustainable profitability. They also continuously ensure that efficient control systems are in place. The Board is regularly updated, informed and educated on topics related to sustainability, such as opportunities related to new segments and technologies, new regulations and the Group’s non-financial targets. The Board also follows up on the compliance of the Code of Conduct as well as on the Group’s whistleblowing solution, SpeakUp. Besides the general distribution of responsibilities that apply, in accordance with the Swedish Companies Act and the Code, the Board and its committees (Audit Committee, Remuneration Committee and others) annually review and adopt “The Rules of Procedure” and “The Written Instructions”, the documents that govern the Board’s work and the distribution of tasks between the Board, the committees and the President, as well as the Company’s reporting processes.

The Board held seven meetings in 2022. Four were physical meetings, of which three were held at Atlas Copco AB in Nacka and one in Frankfurt. Two meetings were held virtually at Atlas Copco AB in Nacka and one per capsulam. The attendance at Board meetings is presented on page 55–56.

The Board continuously evaluates the performance of the President and CEO, Mats Rahmström. For the Annual Audit, the Company’s principal auditor, Erik Sandström, Ernst & Young AB, reported his observations to the Board. The Board also had a separate session with the auditor where members of Group Management were not present.

Evaluation of the Board of Directors’ work

The annual evaluation of the Board of Directors’ work, including the Board’s committees (Audit Committee, Remuneration Committee and others) was conducted by the Chair of the Board, Hans Stråberg. He evaluated the Board’s working procedures, competence and composition, including the background, experience and diversity of Board members. His findings were presented to the Nomination Committee.

Remuneration to the Board of Directors

Remuneration and fees are based on the work performed by the Board. The AGM 2022 decided to adopt the Nomination Committee’s proposal for remuneration to the Chair and other Board members not employed by the Company, and the proposed remuneration for committee work. See also note 5.

• The Chair was granted an amount of SEK 3,100,000.
• Each of the other Board members not employed by the Company was granted SEK 1,000,000.
• An amount of SEK 350,000 was granted to the Chair of the Audit Committee and SEK 220,000 to each of the other members of this committee.
• An amount of SEK 135,000 was granted to the Chair of the Remuneration Committee and SEK 100,000 to each of the other members of this committee.
• An amount of SEK 100,000 was granted to each non-executive director who, in addition, participates in committee work decided upon by the Board.
• The meeting further resolved that 50% of the director’s Board fee could be received in the form of synthetic shares.

Corporate governance, continued

Atlas Copco 2022 53

THE YEAR IN REVIEW – CORPORATE GOVERNANCE

• Introduction
• This is Atlas Copco
• The year in review
• Administration report
• Business areas
• Sustainable approach to delivering value
• Risks, risk management and opportunities
• The Atlas Copco share
• Corporate Governance
  • Board of Directors
  • Group Management
• Internal control over financial reporting
• Financials
• Other information

5. Audit Committee

The Audit Committee is elected by the Board at the statutory Board meeting after the Annual General Meeting and until the statutory Board meeting the following year. The work of the Audit Committee is directed by the Audit Committee Charter, which is reviewed and approved annually by the Board.# The Chair of the committee has the accounting competence required by the Swedish Companies Act and two of the members are independent from the Company and its main shareholder.
The Audit Committee’s primary task is to support the Board of Directors in fulfilling its responsibilities in the areas of audit and internal control, accounting, financial reporting and risk management as well as to supervise the financial structure and operations of the Group and approve financial guarantees and new legal entities, delegated by the Board. The Audit Committee work further includes reviewing internal audit procedures, monitoring the external auditor, considering any inspection findings, review and monitor the independence of the external auditor, and assist the Nomination Committee in the selection of the auditor. During the year, the committee convened five times. All members were present at these meetings. All meetings of the Audit Committee have been reported to the Board of Directors and the corresponding Minutes have been distributed to the Board. The Audit Committee members during 2022 were Anna Ohlsson-Leijon, Chair, Johan Forssell, Hans Stråberg and Staffan Bohman until the meeting in April.

6. Remuneration Committee

The Remuneration Committee is elected by the Board at the statutory Board meeting after the Annual General Meeting and until the statutory Board meeting the following year. The work of the Remuneration Committee is directed by the Remuneration Committee Charter, which is reviewed and approved annually by the Board. The Remuneration Committee’s primary task is to propose to the Board the remuneration to the President and CEO and a long-term incentive plan for key employees. The purpose of a long-term incentive plan is to align the interests of key personnel with those of the shareholders. The guidelines for executive remuneration in Atlas Copco aim to establish principles for fair and consistent remuneration with respect to compensation, benefits, and termination. The base salary is based on competence, area of responsibility, experience and performance, while the variable compensation is linked to predetermined and measurable criteria which can be financial or non-financial. The guidelines for executive remuneration are reviewed annually and the Annual General Meeting 2020 approved the guidelines for remuneration. See also note 5. The Remuneration Committee had three meetings in 2022. All members were present. During the year, the Remuneration Committee also supported the President and CEO in determining remuneration to the other members of Group Management. All meetings of the Remuneration Committee have been reported to the Board and the corresponding Minutes have been distributed to the Board. The Remuneration Committee members during 2022 were Hans Stråberg, Chair, Peter Wallenberg Jr, and Staffan Bohman.

7. Auditor

The task of the external auditor is to examine Atlas Copco’s consolidated accounts and annual report, as well as to review the Board and the CEO’s management of the Company. At the AGM 2022 the audit firm Ernst & Young AB, Sweden, was elected external auditor up to and including the AGM 2023 in compliance with a proposal from the Nomination Committee. The principal auditor is Erik Sandström, Authorized Public Accountant at Ernst & Young AB. At the AGM 2022, Erik Sandström referred to the auditor’s report for the Company and the Group in the annual report and explained the process applied when performing the audit. He also recommended adoption of the presented income statements and balance sheets, discharge of liability for the President and CEO and the Board of Directors, and adoption of the proposed distribution of profits.

8. Internal Audit and Assurance

Internal Audit and Assurance aims to provide independent and objective assurance on internal control by conducting internal audits. It reports five times per year to the Audit Committee. Read more on pages 59–60.

9. Group Management

Besides the President and CEO, the Group Management consists of four business area presidents and four senior vice presidents responsible for the main Group functions; Corporate Communications, Human Resources, Controlling and Finance, and Legal. The President and CEO is responsible for the ongoing management of the Group following the Board’s guidelines and instructions.

Remuneration to Group Management

The guidelines for executive remuneration in Atlas Copco are reviewed annually by the Board of Directors and presented to the AGM for approval at least every four years. In 2020, the AGM decided to adopt the Board’s proposal. The remuneration shall consist of base salary, variable compensation, possible long-term incentives (personnel options), pension benefits and other benefits. The variable compensation is limited to a maximum percentage of the base salary and is linked to predetermined and measurable criteria which can be financial or non-financial. Non-financial criteria for 2022 has been to reduce the Group’s CO 2 emissions. No fees are paid for board memberships in Group companies. Based on the guidelines for executive remuneration the Board of Directors annually proposes a Remuneration Report to the AGM for approval. In 2022, the AGM decided to approve the Remuneration Report for 2021.

Statement of materiality and significant audiences

Atlas Copco is registered in Sweden and is legally governed by the Swedish Companies Act (2005:551). This act requires that the Board of Directors governs the Company to be profitable and create value for its shareholders. However, Atlas Copco recognizes going beyond this, extending it to integrating sustainability into its business creating long-term value for all stakeholders, which is ultimately in the best interest of the Company, the shareholders and society. The significant stakeholder audience, as outlined in Atlas Copco’s Code of Conduct, includes representatives of society, employees, customers, business partners and shareholders. The Code of Conduct is the central guiding policy for Atlas Copco, and is owned by the Board of Directors. Its commitment goes beyond the requirements of legal compliance, to supporting voluntary international ethical guidelines. These include the United Nations International Bill of Human Rights, International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the ten principles of the United Nations Global Compact, and OECD’s Guidelines for Multinational Enterprises. Atlas Copco has employed a stakeholder-driven approach in order to identify the most material environmental, human rights, labor and ethical aspects of its business. These priorities guide how the Group develops and drives its business strategy, as well as its roadmap to support the UN Sustainable Development Goals. The strategy and fundamentals for growth together with the Group targets presented on page 6 aim at continuously delivering sustainable, profitable growth for the Group. This means an increased economic value creation and, simultaneously, a positive impact on society and the environment, thus creating shared value. Atlas Copco monitors and voluntarily discloses the progress on these material financial and non-financial aspects, through an externally assured, integrated annual report. In addition to the Annual General Meeting, Atlas Copco also creates engagement opportunities so that non-shareholders can address the Group in various stakeholder dialogues.

Atlas Copco 2022 54

THE YEAR IN REVIEW – CORPORATE GOVERNANCE

Introduction

This is Atlas Copco

The year in review

Administration report

Business areas

Sustainable approach to delivering value

Risks, risk management and opportunities

The Atlas Copco share

Corporate Governance

• Board of Directors
• Group Management
• Internal control over financial reporting
• Financials
• Other information

Name	Position, year of birth	Education	Nationality / Elected	External memberships	Principal work experience and other information
Hans Stråberg	Chair since 2014, born 1957	M.Sc. in Mechanical Engineering, Chalmers University of Technology, Gothenburg. MBA from the Henley Management College, United Kingdom.	Swedish / 2013	Chair of AB SKF, Roxtec AB, CTEK AB and Anocca AB. Board member of Investor AB and Mellby Gård AB. Member of The Royal Swedish Academy of Engineering Sciences.	President and CEO for AB Electrolux. Various executive positions in the Electrolux Group based in Sweden and the U.S. EU Co-Chair TABD, Trans-Atlantic Business Dialogue.
Mats Rahmström	Board member, President and CEO, born 1965	B.Sc. in Economics and Business Administration, Stockholm School of Economics and Stanford Executive Program, United States.	Swedish / 2017	Chair of Piab AB. Board member of Wärtsilä Oyj Abp, Finland. Member of The Royal Swedish Academy of Engineering Sciences.	President and CEO of Atlas Copco AB*. President of the Atlas Copco Tools and Assembly Systems General Industry division. Before he was appointed President and CEO he was Business Area President for Industrial Technique.
Staffan Bohman	Board member, born 1949	Executive Management, Stockholm School of Economics.	Swedish / 2003	Chair of AB Electrolux, The German-Swedish Chamber of Commerce, and The Research Institute of Industrial Economics. Member of The Royal Swedish Academy of Engineering Sciences.	CEO of Sapa AB, Gränges AB and DeLaval AB. President of Volvo Penta*. Senior Vice President of Volvo Trucks Europe, Senior Vice President of Volvo Trucks International and CEO of Trans Atlantic AB.
Heléne Mellquist	Board member, born 1964	Bachelor in International Business studies, University of Gothenburg.	Swedish / 2022	Board member of Thule Group AB.	# THE YEAR IN REVIEW – CORPORATE GOVERNANCE

Introduction

This is Atlas Copco

The year in review

Administration report

Business areas

Sustainable approach to delivering value

Risks, risk management and opportunities

The Atlas Copco share

Corporate Governance

* Board of Directors
* Group Management
* Internal control over nancial reporting

Financials

Other information

Board of Directors

Name	Position	Year of birth	Nationality	Elected	Attendance Board meetings	Annual General Meeting	Independence To Atlas Copco and its management	Independence To major shareholders	Fees and holdings Total fees 2022, KSEK 1)	Holdings in Atlas Copco AB 2)
Johan Forssell	Board member	1971	Swedish	2008	7 of 7	Yes	Yes	No 5)	1 196	44 000 class B shares, 23 931 synthetic shares
Anna Ohlsson-Leijon	Board member	1968	Swedish	2020	7 of 7	Yes	Yes	Yes	1 324	1 400 class B shares, 7 898 synthetic shares
Gordon Riske	Board member	1957	American / German	2020	7 of 7	Yes	Yes	Yes	978	12 484 synthetic shares
Peter Wallenberg Jr	Board member	1959	Swedish	2012	7 of 7	Yes	Yes	No 6)	1 077	666 668 class A shares, 23 931 synthetic shares

Education
* M.Sc. in Economics and Business Administration, Stockholm School of Economics.
* B.Sc. in Business Administration and Economics from Linköping University.
* MBA programme at GSBA, Zurich, Switzerland, in collaboration with the State University of New York, United States, and BBA, Oekreal School of Business, Zurich, Switzerland.
* BSBA Hotel Administration, University of Denver, United States, and International Bachaloria, American School, Leysin, Switzerland.

External memberships
* Board member of EQT AB, Investor AB, Patricia Industries AB, Wärtsilä Oyj Abp, Finland, Epiroc AB, Confederation of Swedish Enterprise and Stockholm School of Economics. Member of The Royal Swedish Academy of Engineering Sciences.
* Board member of Schneider Electric. Chair of the MTU Aero Engines, AG Munich, Germany and Sunlight Group SA, Athens, Greece. Member of the Executive Board for the non-prot Hertie-Stiftung GmbH, Frankfurt, Germany, and a Non-Executive Director at Weichai Power Co., Ltd., Weifang, China.
* Chair of Knut and Alice Wallenberg Foundation, Wallenberg Foundations AB and FAM Förvaltning AB (The Grand Group). Board member of Scania.

Principal work experience and other information
* President and CEO of Investor AB.
* Managing Director, Head of Core Investments and member of the management group of Investor AB.
* Head of Commercial & Consumer Journey and Executive Vice President at AB Electrolux.
* Head of Business Area Europe and CFO of AB Electrolux. Other senior positions within Electrolux, including CFO of Electrolux Appliances EMEA and Head of Electrolux’s Corporate Control & Services department. CFO of Kimoda. Various positions within PricewaterhouseCoopers.
* CEO of KION Group AG, Germany. Chairman of the Management Board of Linde Material Handling GmbH, Germany, Chairman of the Management Board of Deutz AG, Germany, Managing Director of KUKA Roboter GmbH, Germany, and manage- ment positions at KUKA Schweiß anlagen & Robot- er GmbH, Germany and KUKA Welding Systems & Robot Corporation, U.S.
* President and CEO of The Grand Hotel Holdings, General Manager, The Grand Hotel, President Hotel Division Stockholm-Saltsjön.

REFERENCES: All educational institutions and companies are based in Sweden, unless otherwise stated.
1) See more information on the calculation of fees in note 5.
2) Holdings as per end 2022, including those of close relatives or legal entities and grant for 2022.
3) President and CEO of Atlas Copco AB.
4) Board member in a company, which is a larger owner (Investor AB).
5) President and CEO of a company, which is a larger owner (Investor AB).
6) Board member of an indirect owner of Atlas Copco AB.
7) Full attendance since their election at the Annual General Meeting in April 2022.
* Current position.

Board members appointed by the unions

Name	Position	Year of birth	Nationality	Elected	Attendance Board meetings
Benny Larsson	Board member	1972	Swedish	2018	7 of 7
Mikael Bergstedt	Board member	1960	Swedish	2004	6 of 7
Thomas Nilsson	Deputy to Benny Larsson	1972	Swedish	2021	7 of 7
Helena Hemström	Deputy to Mikael Bergstedt	1969	Swedish	2021	7 of 7

REFERENCES: All educational institutions and companies are based in Sweden, unless otherwise stated.
1) See more information on the calculation of fees in note 5.
2) Holdings as per end 2022, including those of close relatives or legal entities and grant for 2022.
3) President and CEO of Atlas Copco AB.
4) Board member in a company, which is a larger owner (Investor AB).
5) President and CEO of a company, which is a larger owner (Investor AB).
6) Board member of an indirect owner of Atlas Copco AB.
7) Full attendance since their election at the Annual General Meeting in April 2022.
* Current position.

Group Management

Besides the President and CEO, Group Management consists of four business area executives and four executives responsible for the main Group functions; Corporate Communications, Human Resources, Controlling and Finance, and Legal.

Mats Rahmström
Mats Rahmström has held positions in sales, service, marketing and general management within the Industrial Technique business area. He has been President of the Atlas Copco Tools and Assembly Systems General Industry division. Before he was appointed President and CEO he was Business Area President for Industrial Technique.
* Position: President and CEO
* Year of birth: 1965
* Education: MBA from the Henley Management College, United Kingdom.
* Nationality: Swedish
* Employed/In current position since: 1988/2017
* External memberships: Chair of Piab AB. Board member of Wärtsilä Oyj Abp, Finland. Member of The Royal Swedish Academy of Engineering Sciences.
* Holdings in Atlas Copco AB 1): 58 348 class A shares, 50 240 class B shares, 1 360 141 employee stock options

Vagner Rego
Vagner Rego joined Atlas Copco as a trainee engineer in São Paulo State, Brazil, and was later appointed Business Line Manager for Compressor Technique Service. He later be- came Vice President Marketing and Sales for the Compressor Technique Service division in Belgium. Before he was appointed President of the Compressor Technique Service division, he was General Manager for Construction Technique’s customer center in Brazil.
* Position: Senior Executive Vice President and Business Area President Compressor Technique
* Year of birth: 1972
* Education: Mechanical engineering from Mackenzie University and an MBA from Ibmec Business School, both in Brazil.
* Nationality: Brazilian
* Employed/In current position since: 1996/2017
* Holdings in Atlas Copco AB 1): 17 272 class A shares, 429 936 employee stock options

Geert Follens
Geert Follens has held positions in purchasing, supply chain and general management. He has served as General Manager of Atlas Copco Compressor Technique’s customer center in the United Kingdom. Before he became President of the Vacuum Solutions division he was rst President of the Portable Energy division and then of the Industrial Air division.
* Position: Senior Executive Vice President and Business Area President Vacuum Technique
* Year of birth: 1959
* Education: M. Sc. in Electromechanical Engineering and a post-graduate degree in Business Economics from the University of Leuven, Belgium.
* Nationality: Belgian
* Employed/In current position since: 1995/2017
* External memberships: Board member of AB SKF.
* Holdings in Atlas Copco AB 1): 18 792 class A shares, 310 064 employee stock options

Henrik Elmin
Henrik Elmin joined Atlas Copco as General Manager for Atlas Copco Tools Customer Center Nordic in the Industrial Technique business area. He was later appointed President of the General Industry Tools and Assembly Systems division. Before his current position he was President of the Industrial Technique Service division.
* Position: Senior Executive Vice President and Business Area President Industrial Technique
* Year of birth: 1970
* Education: M.Sc. in Mechanical Engineering from Lund Institute of Technology and an MBA from INSEAD, France.
* Nationality: Swedish
* Employed/In current position since: 2007/2017
* Holdings in Atlas Copco AB 1): 16 240 class A shares, 427 192 employee stock options

Andrew Walker
Andrew Walker has held several dierent management positions in markets including the United Kingdom, Ireland, Belgium and the United States. Before his current position, he was President of the Service division within Compressor Technique.
* Position: Senior Executive Vice President and Business Area President Power Technique
* Year of birth: 1961
* Education: M.Sc. in Industrial Engineering and an MBA, both from University College Dublin, Ireland.

1) Holdings as per end 2022 including those held by related natural or legal persons. See note 23 for more information on the option programs and matching shares. All educational institutions and companies are based in Sweden, unless otherwise indicated.# THE YEAR IN REVIEW – CORPORATE GOVERNANCE

Introduction

This is Atlas Copco

The year in review

Administration report

Business areas

Sustainable approach to delivering value

Risks, risk management and opportunities

The Atlas Copco share

Corporate Governance

Board of Directors

Group Management

Internal control over nancial reporting

Financials

Other information

Eva Klasén

Eva Klasén joined Atlas Copco in 2000 as Assistant Corporate Counsel and has since then held several positions in the legal functions in both Sweden and China. She has been supporting several M&A projects, setting up the legal department in China and also being the General Counsel for EMEA, leading the team of lawyers in the area. Before her current position she was Vice President, Deputy Chief Legal Officer at Atlas Copco AB.

Position: Senior Vice President, Chief Legal Officer
Year of birth: 1975
Education: Master of Law from Lund University.
Nationality: Swedish
Employed/In current position since: 2000/2022

Holdings in Atlas Copco AB 1)
* 3 332 class A shares
* 92 675 employee stock options

Peter Kinnart

Peter Kinnart started his career at Atlas Copco as business controller at Airpower in Antwerp. He has held several management positions within different areas at Atlas Copco in Belgium, Germany, Spain and Switzerland. Prior to his current position, he was Vice President Business Control at Atlas Copco’s Business Area Compressor Technique.

Position: Senior Vice President, Chief Financial Officer
Year of birth: 1969
Education: Master in Applied Economic Science and a Master in Commercial Engineering from the University of Antwerp (UFSIA), Belgium.
Nationality: Belgian
Employed/In current position since: 1993/2021

Holdings in Atlas Copco AB 1)
* 6 800 class A shares
* 234 967 employee stock options

Sara Hägg Liljedal

Sara Hägg Liljedal began her career as a journalist working for different Swedish media. Between 2007 and 2013 she worked as Press Secretary for the Speaker of the Swedish Parliament. She has also held roles as a Press and PR Manager for Swedish investment services companies Swedbank Robur and Skandia. Before she was appointed Senior Vice President, Chief Communications Officer, she was Media Relations Manager for the Atlas Copco Group.

Position: Senior Vice President, Chief Communications Officer
Year of birth: 1980
Education: BA in Journalism from Stockholm University.
Nationality: Swedish
Employed/In current position since: 2018/2022

Holdings in Atlas Copco AB 1)
* 1 936 class A shares
* 240 class B shares
* 18 744 employee stock options

Cecilia Sandberg

Cecilia Sandberg began her career as Human Resources consultant for a travel agency. From 1999 to 2007 she held different Human Resources roles at Scandinavian Airlines and AstraZeneca. Between 2007 and 2015 she was Vice President Human Resources for Atlas Copco’s Industrial Technique business area. Before she started her current position she was Senior Vice President Human Resources at Permobil.

Position: Senior Vice President, Chief Human Resources Officer
Year of birth: 1968
Education: B.Sc. in Human Resources and a M.Sc. in Sociology from Stockholm University.
Nationality: Swedish
Employed/In current position since: 2017/2017

Holdings in Atlas Copco AB 1)
* 12 752 class A shares
* 600 class B shares
* 174 135 employee stock options

---

Group Management, continued

1) Holdings as per end 2022, including those held by related natural or legal persons. See note 23 for more information on the option programs and matching shares. All educational institutions and companies are based in Sweden, unless otherwise indicated.

---

Introduction

This is Atlas Copco

The year in review

Administration report

Business areas

Sustainable approach to delivering value

Risks, risk management and opportunities

The Atlas Copco share

Corporate Governance

Board of Directors

Group Management

Internal control over nancial reporting

Financials

Other information

Internal control over nancial reporting

This section includes a description of Atlas Copco’s system of internal controls over nancial reporting in accordance with the requirements set forth in the Swedish Code of Corporate Governance and as stipulated by the Swedish Companies Act.

1 Risk assessment

The company applies different processes to assess and identify the main risks relating to nancial reporting misstatements. The risk assessments are regularly performed to identify new risks and follow up that internal control is adequate to address the identied risks. The key risk areas for the nancial reporting and control activi- ties that are in place to manage the risks are presented in the table on the next page.

The purpose of well-developed internal controls over nancial reporting is to ensure correct and reliable nancial statements and disclosures. The basis for the internal control is dened by the overall control environment. The Board of Directors is responsible for establishing an ecient system for internal control and governs the work through the Audit Committee and CEO. Group Management sets the tone for the organization, inuencing the control consciousness of employees. One key success factor for a strong control environ- ment lies in ensuring that the organizational structure, decision hierarchy, corporate values in terms of ethics and integrity as well as authority to act, are clearly dened and communicated through guiding documents such as internal policies, guidelines, manuals, and codes. The nancial reporting accounting policies and guidelines are issued by Group Management to all subsidiaries, which are followed up with newsletters and conference calls. Trainings are also held for complex accounting areas and new accounting policies. The policies and guide- lines detail the appropriate accounting for key risk areas such as revenues, trade receivables, including bad debt provisions, inventory costing and obsolescence, accounting for income taxes (current and deferred), nancial instruments and business acquisitions.

The internal control process is based on a control framework that creates structure for the other four components of the process – risk assessment, control activities, information and communication as well as monitoring. The starting point of the process is the frame- work for internal control issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), www.coso.org.

ATLAS COPCO’S INTERNAL CONTROL SYSTEM

Control environment	1
Risk assessment	2
Control activities (see next page)	4
Monitoring (see next page)	3
Information and commu-nication (see next page)

---

KEY FINANCIAL REPORTING RISKS

• Revenues are not recognized in the appropriate accounting period
• Trade receivables are not appropriately valued
• Inventory is not appropriately valued at the lower of cost or net realizable value
• Income taxes are not accounted for in accordance with applicable tax legislation
• Business acquisitions and associated goodwill as well as intangible assets are not appropriately accounted for

2 Control activities to manage key nancial reporting risks

| | # Reporting instructions and accounting guidelines

Reporting instructions and accounting guidelines are communicated to personnel concerned through the financial reporting accounting policies and guidelines, which are included in the handbook of policies and guidelines The Way We Do Things, and supported by, for example, training programs for different categories of employees. A common Group reporting system is used to report and consolidate all financial information.

Monitoring

Examples of monitoring activities for the financial reporting include:

• Management at divisional, business area and Group level regularly reviews the financial information and assess compliance to Group policies.
• The Audit Committee and the Board of Directors regularly review reports on financial performance of the Group, by business area and geography.
• The internal audit process aims to provide independent and objective assurance on internal control. Furthermore, the process aims to serve as a tool for employee professional development and to identify and recommend leading practices within the Group. Internal audits are annually planned or initiated by the Group internal audit function with a risk-based approach. Internal audits are conducted under leadership of Group internal audit staff with audit team members having diverse functional competencies but always with expertise in accounting and controlling. The results of the internal audits undertaken are regularly reported to the Audit Committee and to Group Management.
• A control self-assessment (CSA) is performed primarily to support local unit managers to evaluate the status of their control routines and to address areas for improvement. One of the areas in the CSA is internal control, which includes internal control over financial reporting. Other areas include legal matters, communication and branding, and the Code of Conduct.
• The Group has an independent whistleblowing system where employees and other stakeholders can anonymously report on behavior or actions that are possible violations of laws or of Group policies, including violations of accounting and financial reporting guidelines and policies. The reporting system also includes perceived cases of human rights violation, discrimination or corruption. The reports are treated confidentially and the person reporting is guaranteed anonymity via an independent third-party service provider. More information about the system can be found on page 129.
• In the compliance process, all managers and all employees are requested to sign a statement confirming understanding and compliance to financial policies, the Code of Conduct and applicable laws and regulations.

Internal control over financial reporting, continued
Atlas Copco 2022 60

THE YEAR IN REVIEW – CORPORATE GOVERNANCE

Financial statements and notes

MSEK unless otherwise stated

ATLAS COPCO GROUP

Page
62	Consolidated income statement
62	Consolidated statement of comprehensive income
63	Consolidated balance sheet
64	Consolidated statement of changes in equity
65	Consolidated statement of cash flows
66	Note 1 Significant accounting principles, critical accounting estimates and judgements
73	2 Acquisitions
76	3 Assets held for sale and divestments
77	4 Segment information
80	5 Employees and personnel expenses
84	6 Remuneration to auditors
84	7 Other operating income and expenses
84	8 Financial income and expenses
84	9 Taxes
86	10 Other comprehensive income
86	11 Earnings per share
87	12 Intangible assets
89	13 Property, plant and equipment
90	14 Investments in associated companies and joint ventures
90	15 Other financial assets
91	16 Inventories
91	17 Trade receivables
91	18 Other receivables
91	19 Cash and cash equivalents
92	20 Equity
93	21 Borrowings
95	22 Leases
97	23 Employee benefits
102	24 Other liabilities
102	25 Provisions
102	26 Assets pledged and contingent liabilities
103	27 Financial exposure and principles for control of financial risks
107	28 Related parties

PARENT COMPANY

Page
108	Income statement
108	Statement of comprehensive income
108	Balance sheet
109	Statement of changes in equity
109	Statement of cash flows
110	Note A1 Significant accounting principles
111	A2 Employees and personnel expenses and remuneration to auditors
111	A3 Other operating income and expenses
111	A4 Financial income and expenses
112	A5 Appropriations
112	A6 Income tax
112	A7 Intangible assets
112	A8 Property, plant and equipment
113	A9 Deferred tax assets and liabilities
113	A10 Shares in Group companies
113	A11 Other financial assets
113	A12 Other receivables
113	A13 Cash and cash equivalents
113	A14 Equity
114	A15 Post-employment benefits
115	A16 Other provisions
115	A17 Borrowings
116	A18 Other liabilities
116	A19 Financial exposure and principles for control of financial risks
116	A20 Assets pledged and contingent liabilities
117	A21 Directly owned subsidiaries
118	A22 Related parties

Atlas Copco 2022 61

Introduction

This is Atlas Copco
The year in review • Financials

Group

Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes
Parent company
Other information

Consolidated income statement

For the year ended December 31
Amounts in MSEK

Note	2022	2021
4	141 325	110 912
	–81 941	–64 383
	59 384	46 529
	–15 629	–12 178
	–7 961	–7 283
	–5 389	–4 125
7	536	781
7	–754	–201
14	29	36
4, 5, 6, 16	30 216	23 559
8	343	243
8	–515	–392
	–172	–149
	30 044	23 410
9	–6 562	–5 276
	23 482	18 134
	23 477	18 130
	5	4
11	4.82	3.72
11	4.81	3.71

1) Earnings per share are adjusted for share split.

Consolidated statement of comprehensive income

Consolidated income statement
For the year ended December 31
Amounts in MSEK

	Note	2022	2021
Profit for the year		23 482	18 134
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans	1	1 550	808
Income tax relating to items that will not be reclassified		–420	–160
		1 130	648
Items that may be reclassified subsequently to profit or loss
Translation differences:
– on foreign operations		8 112	4 571
Hedge of net investments in foreign operations		–1 328	–342
Cash flow hedges	13	–102
Income tax relating to items that may be reclassified		445	116
		7 242	4 243
Other comprehensive income for the year, net of tax	10	8 372	4 891
Total comprehensive income for the year		31 854	23 025
Total comprehensive income attributable to:
– owners of the parent		31 849	23 018
– non-controlling interests		5	7

Atlas Copco 2022 62

FINANCIAL STATEMENTS

Introduction
This is Atlas Copco
The year in review • Financials

Group

Consolidated income statement	Consolidated statement of cash flows
Consolidated statement of comprehensive income	Notes
Consolidated balance sheet	Parent company
Consolidated statement of changes in equity	Other information

Consolidated balance sheet

Amounts in MSEK

	Note	Dec. 31, 2022	Dec. 31, 2021
ASSETS
Non-current assets
Intangible assets	12	67 067	50 348
Rental equipment	13	2 689	2 342
Other property, plant and equipment	13	12 720	8 991
Right-of-use assets	22	4 752	3 244
Investments in associated companies and joint ventures	14	939	931
Other financial assets	15	1 668	965
Other receivables		61	66
Deferred tax assets	9	2 193	1 790
Total non-current assets		92 089	68 677
Current assets
Inventories	16	27 219	17 801
Trade receivables	17	29 910	21 954
Income tax receivables		908	990
Other receivables	18	10 031	7 419
Other financial assets	15	889	847
Cash and cash equivalents	19	11 254	18 990
Assets classified as held for sale	3	1	5
Total current assets		80 212	68 006
TOTAL ASSETS		172 301	136 683

Amounts in MSEK

	Note	Dec. 31, 2022	Dec. 31, 2021
EQUITY
Page 64
Share capital		786	786
Other paid-in capital		8 695	8 557
Reserves	14	450	7 208
Retained earnings		56 045	51 082
Total equity attributable to owners of the parent		79 976	67 633
Non-controlling interests	50	1
TOTAL EQUITY		80 026	67 634
LIABILITIES
Non-current liabilities
Borrowings	21	23 770	20 893
Post-employment benefits	23	2 380	3 114
Other liabilities		445	328
Provisions	25	1 477	1 686
Deferred tax liabilities	9	2 745	2 225
Total non-current liabilities		30 817	28 246
Current liabilities
Borrowings	21	12 563	3 981
Trade payables		19 145	15 159
Income tax liabilities		2 603	1 893
Other liabilities	24	25 394	18 144
Provisions	25	1 753	1 626
Total current liabilities		61 458	40 803
TOTAL EQUITY AND LIABILITIES		172 301	136 683

Information concerning assets pledged and contingent liabilities is disclosed in note 26.

Atlas Copco 2022 63

FINANCIAL STATEMENTS

Introduction
This is Atlas Copco
The year in review • Financials

Group

Consolidated income statement	Consolidated statement of cash flows
Consolidated statement of comprehensive income	Notes
Consolidated balance sheet	Parent company
Consolidated statement of changes in equity	Other information

Consolidated statement of changes in equity

2022
Equity attributable to owners of the parent

Amounts in MSEK

	Share capital	Other paid-in capital	Hedging reserve	Translation reserve	Retained earnings	Total	Non-controlling interests	Total equity
Opening balance, Jan. 1

Atlas Copco 2022 64
FINANCIAL STATEMENTS
Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes
Parent company
Other information

Consolidated statement of cash flows

For the year ended December 31
Amounts in MSEK | Note | 2022 | 2021
---|---|---|---
Cash flows from operating activities | | |
Operating profit | 30 | 216 | 23 559
Adjustments for: | | |
Depreciation, amortization and impairment | 12, 13, 22 | 6 333 | 5 466
Capital gain/loss and other non-cash items | | 429 | –73
Operating cash surplus | | 36 978 | 28 952
Net financial items received/paid | | –714 | 459
Taxes paid | | –6 245 | –5 211
Pension funding and payment of pension to employees | | –419 | –330
Cash flow before change in working capital | | 29 600 | 23 870
Change in: | | |
Inventories | | –6 355 | –3 381
Operating receivables | | –6 645 | –2 786
Operating liabilities | | 5 585 | 5 923
Change in working capital | | –7 415 | –244
Increase in rental equipment | | –884 | –510
Sale of rental equipment | | 76 | 36
Net cash from operating activities | | 21 377 | 23 152

For the year ended December 31
Amounts in MSEK | Note | 2022 | 2021
---|---|---|---
Cash flows from investing activities | | |
Investments in other property, plant and equipment | 13 | –3 660 | –1 970
Sale of other property, plant and equipment | | 99 | 93
Investments in intangible assets | 12 | –1 371 | –1 389
Acquisition of subsidiaries | 2 | –10 591 | –2 334
Divestment of subsidiaries | 3 | – | –7
Investment in other financial assets, net | 20 | – | 514
Net cash from investing activities | | –15 503 | –6 121

Cash flows from financing activities | | |
Ordinary dividend | | –9 250 | –8 889
Redemption of shares | | –9 732 | –
Acquisition of non-controlling interest | | – | –823
Repurchase of own shares | | –864 | –416
Divestment of own shares | | 381 | 1 450
Borrowings | 11 | 373 | 1 471
Repayment of borrowings | | –5 133 | –1 522
Settlement of CSA ¹ | | –24 | –440
Payment of lease liabilities | 22 | –1 402 | –1 154
Net cash from financing activities | | –14 651 | –10 323

Net cash flow for the year | | –8 777 | 6 708
Cash and cash equivalents, Jan. 1 | | 18 990 | 11 655
Net cash flow for the year | | –8 777 | 6 708
Exchange-rate difference in cash and cash equivalents | | 1 041 | 627
Cash and cash equivalents, Dec. 31 | | 11 254 | 18 990

¹) Credit Support Annex, see note 27.

Atlas Copco 2022 65
FINANCIAL STATEMENTS
Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes
Parent company
Other information

1. Significant accounting principles, critical accounting estimates and judgements

SIGNIFICANT ACCOUNTING PRINCIPLES

The consolidated financial statements comprise Atlas Copco AB, the Parent Company (“the Company”), and its subsidiaries (together “the Group” or Atlas Copco) and the Group’s interest in associated companies and joint ventures. Atlas Copco AB is headquartered in Nacka, Sweden.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. The statements are also prepared in accordance with the Swedish recommendation RFR 1 “Supplementary Accounting Rules for Groups” and applicable statements issued by the Swedish Financial Reporting Board. These require certain additional disclosures for Swedish consolidated financial statements prepared in accordance with IFRS.

The accounting principles set out below have been consistently applied to all periods presented, unless otherwise stated, and for all entities included in the consolidated financial statements. The exception to this is IAS 29 Financial Reporting in Hyperinflationary Economies, which has been applied for the first time to operations in Türkiye, for further information please see paragraph, Hyperinflation in Türkiye.

The annual report for the Group and for Atlas Copco AB, including financial statements, was approved for issuance on March 3, 2023. The balance sheets and income statements are subject to approval by the Annual General Meeting of the shareholders on April 27, 2023.

Basis of consolidation

The consolidated financial statements have been prepared in accordance with the acquisition method. Accordingly, business combinations are seen as if the Group directly acquires the assets and assumes the liabilities of the entity acquired.

The consolidated income statements and balance sheets of the Group include all entities in which the Company, directly or indirectly, has control. Control exists when the Company has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to use its power to affect its returns. Generally, control and hence consolidation is based on ownership. In a few exceptions, consolidation is based on agreements that give the Group control over an entity. See note A22 for information on the Group’s subsidiaries.

Intra-group balances and internal income and expense arising from intra-group transactions are fully eliminated in preparing the consolidated financial statements. Gains and losses arising from intra-group transactions that are recognized in assets, such as inventory and fixed assets, are eliminated in full, but losses only to the extent that there is no evidence of impairment.

Business combinations

At the acquisition date, i.e. the date on which control is obtained, each identifiable asset acquired and liability assumed is recognized at its acquisition-date fair value. The consideration transferred, measured at fair value, includes assets transferred by the Group, liabilities to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Any subsequent change in such fair value is recognized in profit or loss, unless the contingent consideration is classified as equity. Transactions costs that the Group incur in connection with a business combination are expensed as incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the Group’s previously held equity interest in the acquiree (if any) over the net of acquisition-date fair value amounts of the identifiable assets acquired and liabilities assumed.

Non-controlling interest is initially measured either

• at fair value, or
• at the non-controlling interest’s proportionate share of the fair value of identifiable net assets.

Subsequent profit or loss attributable to the non-controlling interest is allocated to the non-controlling interest, even if it puts the non-controlling interest in a deficit position. Acquisitions of non-controlling interests are recognized as a transaction between equity attributable to owners of the parent and non-controlling interests. The difference between consideration paid and the proportionate share of net assets acquired is recognized in equity. For details on the acquisitions made during the year, see note 2.

Associated companies and joint ventures

An associate is an entity in which the Group has significant influence, but not control, over financial and operating policies. When the Group holds 20–50% of the voting power, it is presumed that significant influence exists, unless otherwise demonstrated.

A joint venture is an entity over which the Group has joint control, through contractual agreements with one or more parties. Investments in associated companies and joint ventures are reported according to the equity method. This means that the carrying value of interests in an associate or joint venture corresponds to the Group’s share of reported equity of the associate or joint venture, plus any goodwill, and any other remaining fair value adjustments recognized at acquisition date.

Amounts in MSEK	Share capital	Other paid-in capital	Hedging reserve	Translation reserve	Retained earnings	Total	Non-controlling interests	Total equity
Opening balance, Jan. 1	786	7 855	59	2 854	41 661	53 215	319	53 534
Profit for the year					18 130	18 130	4	18 134
Other comprehensive income for the year			–83	4 323		4 240	3 491	7 731
Transfer of reserves			55	–55	–	–	–	–
Total comprehensive income for the year			–28	4 268	18 130	22 370	3 495	25 865
Dividend					–8 889	–8 889	–	–8 889
Acquisition of series A shares					–416	–416	–	–416
Divestment of series A shares					702	702	748	1 450
Change of non-controlling interests							–511	–511
Share-based payment, equity settled:
– expense during the year					212	212	–	212
– exercise option					–446	–446	–	–446
Closing balance, Dec. 31	786	8 557	31	7 122	50 192	66 688	3 003	69 691

2021
Equity attributable to owners of the parent
Amounts in MSEK | Share capital | Other paid-in capital | Hedging reserve | Translation reserve | Retained earnings | Total | Non-controlling interests | Total equity
---|---|---|---|---|---|---|---|---
Opening balance, Jan. 1 | 786 | 8 557 | –24 | 7 232 | 51 082 | 67 633 | 1 67 634 | 67 634
Profit for the year | | | | | 23 477 | 23 477 | 5 | 23 482
Other comprehensive income for the year | | | 10 7 | 232 | 1 130 | 8 372 | 8 372 | 10 732
Total comprehensive income for the year | | | 10 7 | 232 | 1 130 | 31 849 | 5 | 31 854
Dividend | | | | | –9 250 | –9 250 | –9 250 | –9 250
Redemption of shares | | | | | –157 | –157 | –9 575 | –9 732
Increase of share capital through bonus issue | 157 | –157 | – | – | – | – | – | –
Acquisition of series A shares | | | | | –864 | –864 | –864 | –864
Divestment of series A shares | | | | | 138 | 138 | 243 | 381
Change of non-controlling interests | | | | | | | 44 | 44
Share-based payment, equity settled: | | | | | | | |
– expense during the year | | | | | 89 | 89 | 89 | 89
– exercise option | | | | | –130 | –130 | –130 | –130
Closing balance, Dec. 31 | 786 | 8 695 | –14 | 14 464 | 56 045 | 79 976 | 50 80 026 | 79 976# Share of profit in associated companies and joint ventures

“Share of profit in associated companies and joint ventures”, included in the income statement, comprises the Group’s share of the associate’s and joint venture’s income after tax adjusted for any amortization and depreciation, impairment losses, and other adjustments arising from any remaining fair value adjustments recognized at acquisition date. Dividends received from an associated company or joint venture reduce the carrying value of the investment. Unrealized gains and losses arising from transactions with an associate or a joint venture are eliminated to the extent of the Group’s interest, but losses only to the extent that there is no evidence of impairment of the asset. When the Group’s share of losses in an associate or a joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognize further losses unless the Group has incurred obligations or made payments on behalf of the associate.

Functional currency and foreign currency translation

The consolidated financial statements are presented in Swedish krona (SEK), which is the functional currency for Atlas Copco AB and also the presentation currency for the Group’s financial reporting. Unless otherwise stated, the amounts presented are in millions Swedish krona (MSEK). Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Non-monetary items carried at historical cost are reported using the exchange rate at the date of the transaction and non-monetary items carried at fair value are reported at the rate that existed when the fair values were determined. Tangible and intangible assets, inventory and advanced payments are examples of non-monetary items. Receivables and liabilities and other monetary items denominated in foreign currencies are translated using the foreign exchange rate at the balance sheet date. The exchange rate gains and losses related to receivables and payables and other operating receivables and liabilities are included in “Other operating income and expenses” and foreign exchange rate gains and losses attributable to other financial assets and liabilities are included in “Financial income and expenses”.

Exchange rate differences on translation to functional currency are reported in “Other comprehensive income” in the following cases:
* translation of a financial liability designated as a hedge of the net investment in a foreign operation,
* translation of intra-group receivables from, or liabilities to, a foreign operation that in substance is part of the net investment in the foreign operation,
* cash flow hedges of foreign currency to the extent that the hedge is effective.

In the consolidation, the balance sheets of foreign subsidiaries are translated to SEK using exchange rates at the end of the reporting period and the income statements are translated at the average rates for the reporting period. Foreign exchange differences arising on such translation are recognized in “Other comprehensive income” and are accumulated in the currency translation reserve in equity. Exchange rates for major currencies that have been used for the consolidated financial statements are shown in note 27.

Hyperinflation in Türkiye

During 2022, Türkiye has been considered a hyperinflated economy. Therefore, Atlas Copco has adopted IAS 29 Financial Reporting in Hyperinflationary Economies for the operations in Türkiye. This means that during 2022, the income statement and non-monetary items in the balance sheet for all Turkish subsidiaries within the Group have been restated for hyperinflation impact. The index used by Atlas Copco for the remeasurement to hyperinflation of the income statements and non-monetary items in the balance sheet is the consumer price index with base period 2005 from the Turkish statistical institute. The income statement for all Turkish subsidiaries have been recalculated using the exchange rate on the balance sheet date. The Net Monetary gain or loss is recognized in the income statement within Financial items. The hyperinflation adjustment related to periods prior to 2022 is recognized in the translation reserve within Equity. The hyperinflation impact has been excluded in the statement of cash flows.

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, and for which discrete financial information is available. The operating results of all operating segments are reviewed regularly by the Group’s President and CEO, the chief operating decision maker, to make decisions about allocation of resources to the segments and also to assess their performance. See note 4 for additional information.

Revenue recognition

Revenue is recognized at an amount that reflects the expected and entitled consideration for transferring goods and/or services to customers when control has passed to the customer.

Goods sold

Revenue from goods sold are recognized at one point in time when control of the good has been transferred to the customer. This occurs for example when the Group has a present right to payment for the good, the customer has legal title of the good, the good has been delivered to the customer and/or the customer has the significant risks and rewards of the ownership of the good. When the goods sold are highly customized and an enforceable right to payment is present, revenue is recognized over time using the proportion of Atlas Copco 2022 66 FINANCIAL STATEMENTS – NOTES Introduction This is Atlas Copco The year in review • Financials Group Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash flows • Notes Parent company Other information cost incurred to date compared to estimated total cost to measure the progress towards complete satisfaction of that performance obligation and thereby transferring the control of the good to the customer.

Installation services are sold together with the good or separately. The Group assesses the contract at inception, and the installation service is either considered as part of the performance obligation of the sale of the good or as a separate performance obligation. The installation service is a separate performance obligation when the customer can benefit from the service either on its own or together with other resources readily available and the promise to transfer the service to the customer is separately identifiable from other promises in the contract. For buy-back commitments where the buy-back price is lower than the original selling price but there is an economic incentive for the customer to use the buy-back commitment option, the transaction is accounted for as a lease.

Variable consideration

Some contracts with customers provide a right of return, trade discounts or volume rebates. If revenue cannot be reliably measured, the Group defers revenue until the uncertainty is resolved. Such liabilities are estimated at contract inception and updated thereafter.

Rights of return

When a contract with a customer provides a right to return the good within a specified period, the Group accounts for the right of return using the expected value method. The amount of revenue related to the expected returns is deferred and recognized in the statement of financial position within “Other liabilities”. A corresponding adjustment is made to the cost of sales and recognized in the statement of financial position within “Inventories”.

Rendering of service

Revenue from service is recognized over time by reference to the progress towards satisfaction of each performance obligation. The progress towards satisfaction of each performance obligation is measured by the proportion of cost incurred to date compared to estimated total cost of each performance obligation. Where the outcome of a service contract cannot be estimated reliably, revenue is recognized to the extent of cost incurred that are expected to be recoverable. When it is probable that total contract costs will exceed total revenue, the expected loss is recognized as an expense immediately. When the value of the service performed to the customer corresponds directly to the right to invoice for that service, revenue is recognized to the amount invoiced.

Specialty rental

Income from specialty rental is recognized on a straight-line basis over the rental period. The specialty rental business is considered to be a service as this includes a complete solution to the customers to fulfill the customer needs. Sale of equipment from the specialty rental business is recognized as revenue when the control of the asset has been transferred to the buyer. Indicators of transfer of control is explained under “Goods sold” see page 66. The carrying value of the specialty rental equipment sold is recognized as cost of sales. Investments in and sales of specialty rental equipment are included in cash flows from operating activities.

Contract assets and contract liabilities

The timing of revenue recognition, billings and cash collections results in billed account receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) in the consolidated balance sheet. Billing occurs either as work progresses in accordance with agreed-upon contractual terms, upon achievement of contractual milestones or when the control of the goods has been transferred to the customer.# Consolidated Financial Statements – Notes

Introduction

This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

Accounting Policies

Contract liabilities and contract assets

The Group sometimes receives advances or deposits from customers, before revenue is recognized, resulting in contract liabilities. These contract assets and contract liabilities are reported in the consolidated balance sheet, in “Other receivables” or “Other liabilities”, on a contract-by-contract basis at the end of each reporting period. Payment terms range from contract to contract and are dependent upon the agreement with the customer.

Practical expedients

The Group has elected to apply the following practical expedients:
For the disclosure of the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period, the Group does not disclose the value related to the following expedients:
* the performance obligation that is part of the contract that has an original expected duration of one year or less, and
* the entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date.

For incremental cost of obtaining the contract, the Group uses the practical expedient of recognizing the incremental cost as an expense if the amortization period of the asset, that otherwise would have been recognized, is one year or less.

Other operating income and expenses

Gains and losses on disposals of an item of non-current tangible and intangible assets are determined by comparing the proceeds from disposal with the carrying amount. See note 7 for additional information.

Government grants

Government grants are recognized when there is reasonable assurance that the Group will comply with the conditions attached to the grants and that the grants will be received. Government grants related to expenses are recognized in the income statement as a deduction of the associated expenses. If the grants cannot be allocated to an associated expense, government grants are recognized in “Other operating income”. Government grants related to assets are recognized as a deduction in arriving at the carrying amount of the asset and recognized as revenue over the useful life of the asset through a reduction of the depreciation expense. See note 7 for additional information.

Financial income and expenses

Interest income and interest expenses are recognized in profit or loss using the effective interest rate method. Dividend income is recognized in profit or loss on the date that the Group’s right to receive payment is established. See note 8 for additional information.

Income taxes

Income taxes include both current and deferred taxes. Income taxes are reported in profit or loss unless the underlying transaction is reported in “Other comprehensive income” or in “Equity”, in which case the corresponding tax is reported according to the same principle. A current tax liability or asset is recognized for the estimated taxes payable or refundable for the current year or prior years. Deferred tax is recognized using the balance sheet liability method. The calculation of deferred taxes is based on differences between the values reported in the balance sheet and their valuation for taxation, which are referred to as temporary differences, and the carry forward of unused tax losses and tax credits. Temporary differences attributable to the following assets and liabilities are not provided for:
* the initial recognition of goodwill,
* the initial recognition (other than in business combinations) of assets or liabilities that affect neither accounting nor taxable profit,
* differences related to investments in subsidiaries, associated companies and joint ventures to the extent that they will probably not reverse in the foreseeable future, and for which the Company is able to control the timing of the reversal of the temporary differences.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. In the calculation of deferred taxes, enacted or substantively enacted tax rates are used for the individual tax jurisdictions. Current and deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. For details regarding taxes, see note 9.

Earnings per share

Basic earnings per share are calculated based on the profit for the year attributable to owners of the parent and the basic weighted average number of shares outstanding. Diluted earnings per share are calculated based on the profit for the year attributable to owners of the parent and the diluted weighted average number of shares outstanding. Dilutive effects arise from stock options that are settled in shares in the share-based incentive programs. Stock options have a dilutive effect when the average share price during the period exceeds the exercise price of the options. When calculating the dilutive effect, the exercise price is adjusted by the value of future services related to the options. See note 11 for more details.

Intangible assets

Goodwill

Goodwill is recognized at cost, as established at the date of acquisition of a business (see “Business combinations”), less accumulated impairment losses, if any. Goodwill is allocated to the cash-generating units (CGU) that are expected to benefit from the synergies of the business combination. Impairment testing is made at least annually and whenever the need is indicated. The impairment test is performed at the level on which goodwill is monitored for internal management purposes. The four business areas of Atlas Copco’s operations have been identified as CGUs. Goodwill is reported as an intangible asset with indefinite useful life.

Technology-based intangible assets

Expenditure on research activities is expensed as incurred. Research projects acquired as part of business combinations are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, these research projects are carried at cost less amortization and impairment losses. Expenditure on development activities are expensed as incurred unless the activities meet the criteria for being capitalized i.e.:
* the product or process being developed is estimated to be technically and commercially feasible, and
* the Group has the intent and ability to complete and sell or use the product or process.

The expenditure capitalized includes the cost of materials, direct labor, and other costs directly attributable to the project. Capitalized development expenditure is carried at cost less accumulated amortization and impairment losses. Amortization and impairment related to research and development expenditure for 2022 amounted to 1 294 (1 058). This has been reported as part of research and development costs in the income statement since the Group follows up on the research and development function as a whole.

Trademarks

Trademarks acquired by the Group are capitalized based on their fair value at the time of acquisition. Certain trademarks are estimated to have an indefinite useful life and are carried at cost less accumulated impairment losses. They are tested at least annually for impairment. Other trademarks, which have finite useful lives, are carried at cost less accumulated amortization and impairment losses.

Marketing and customer related intangible assets

Acquired marketing and customer related intangibles are capitalized based on their fair value at the time of acquisition and are carried at cost less accumulated amortization and impairment losses.

Other intangible assets

Acquired intangible assets relating to contract-based rights, such as licenses or franchise agreements, are capitalized based on their fair value at the time of acquisition and carried at cost less accumulated amortization and impairment losses. Expenditure on internally generated goodwill, trademarks and similar items is expensed as incurred. Changes in the Group’s intangible assets during the year are described in note 12.

Property, plant and equipment

Items of property, plant and equipment are carried at cost less accumulated depreciation and impairment losses. Cost of an item of property, plant and equipment comprises purchase price, import duties, and any cost directly attributable to bringing the asset to the location and condition for use. The cost also includes dismantlement and removal of the asset in the future if applicable. Borrowing cost for assets that need a substantial period of time to get ready for their intended use are included in the cost value until the assets are substantially ready for their use or sale and are thereafter depreciated over the useful life of the asset. The Group capitalizes costs on initial recognition and on replacement of significant parts of property, plant and equipment if it is probable that the future economic benefits embodied will flow to the Group and the cost can be measured reliably. All other costs are recognized as an expense in profit or loss when incurred. Changes in the Group’s property, plant and equipment during the year are described in note 13.

1. Atlas Copco 2022 67 FINANCIAL STATEMENTS – NOTES# Significant accounting principles, critical accounting estimates and judgements, continued

Rental equipment

The rental fleet is comprised of diesel and electric powered air compressors, generators, air dryers, and to a lesser extent general construction equipment. Rental equipment is initially recognized at cost and is depreciated over the estimated useful lives of the equipment. Rental equipment is depreciated to a residual value estimated at 0–10% of cost.

Depreciation and amortization

Depreciation and amortization are calculated based on cost using the straight-line method over the estimated useful life of the asset. Parts of property, plant and equipment with a cost that is significant in relation to the total cost of the item are depreciated separately when the useful lives of the parts do not coincide with the useful lives of other parts of the item. The following useful lives are used for depreciation and amortization:

	Years
Technology-based intangible assets	3–15
Trademarks with infinite lives	5–15
Marketing and customer related intangible assets	5–15
Buildings	25–50
Machinery and equipment	3–10
Vehicles	4–5
Computer hardware and software	3–10
Rental equipment	3–8

The useful lives and residual values are reassessed annually. Land, assets under construction, goodwill, and trademarks with indefinite lives are not depreciated or amortized.

Leases

Group as lessee

Recognition of a lease

Upon initiation, contracts are assessed by the Group to determine whether a contract is, or contains a lease. If the contract conveys the right to control the use of an identified asset for a certain period of time in exchange for consideration, then it is or contains a lease. The right to control the use of an identifiable asset is assessed by the Group based upon if there is an identifiable asset, if the Group has the right to obtain substantially all economic benefits from the use of the asset and if the Group has the right to steer the use of the asset. The Group has elected to separate the non-lease components and apply a number of practical expedients with regard to short-term leases and leases for which the underlying asset is of low value. In cases where the Group acts as an intermediate lessor, it accounts for its interests in the head-lease and the sub-lease separately.

Measurement of a right-of-use asset and lease liability

Right-of-use asset

On commencement date, the Group measures the right-of-use asset at cost, which includes the following: the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, less any lease incentives received and any initial direct costs incurred by the Group as well as an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the lease contract. Cost for dismantling, removing or restoring the site on which it is located and/or the underlying asset is only recognized when the Group incurs an obligation to do so. The right-of-use asset is depreciated over the lease term, using the straight-line method. Changes in the Group’s right-of-use asset during the year is described in note 22.

Lease liability

On commencement date, the lease liability is measured at the present value of the unpaid lease payments, discounted using the interest rate implicit in the lease, or if the rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments included in the lease liability comprise of fixed payments, variable lease payments that depend on an index or a rate, amounts to be paid under a residual value guarantee and lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option as well as penalties for early termination of a lease, if the Group is reasonably certain to terminate early. If there is a purchase option present, this will be included if the Group is reasonably certain to exercise the option. The lease liability is measured at amortized cost by using the effective interest rate method. For additional information see note 21.

Short-term leases and leases for which the underlying asset is of low value

The Group has elected to apply recognition exemptions for short-term leases and leases for which the underlying asset is of low value, for example office equipment such as printers and computers. Lease payments associated with those leases are recognized as an expense on a straight-line basis over the lease term.

Group as a lessor

At inception of a lease contract, the Group assesses whether the lease is a finance lease or an operating lease. If the lease transfers substantially all of the risks and rewards incidental to ownership of the asset, it is considered to be a finance lease; if not, it is an operating lease. Under finance leases where the Group acts as lessor, the transaction is recognized as a sale and a lease receivable, comprising the future minimum lease payments and any residual value guaranteed to the Group. Lease payments are recognized as repayment of the lease receivable and interest income. In cases where the Group acts as a lessor under an operating lease, the lease payments are included in profit or loss on a straight-line basis over the term of the lease. In cases where the Group acts as an intermediate lessor, it accounts for its interests in the head-lease and the sub-lease separately. The Group assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head-lease.

Impairment of non-financial asset

The carrying values of the Group’s non-financial assets are reviewed at least at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the Group estimates the recoverable amount of the asset. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit (CGU) exceeds its recoverable amount (i.e. the greater of fair value less costs to sell and value in use). In assessing the value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of assessing impairment, assets are grouped in CGUs, which are the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment losses are recognized in profit or loss. An impairment loss related to goodwill is not reversed. In respect of other assets, impairment losses in prior periods are reviewed for possible reversal of the impairment at each reporting date.

Inventories

Inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recognized according to the first-in, first-out principle and includes the cost of acquiring inventories and bringing them to their existing location and condition. Inventories manufactured by the Group and work in progress include an appropriate share of production overheads based on normal operating capacity. Inventories are reported net of deductions for obsolescence and internal profits arising in connection with deliveries from the production companies to the customer centers. See note 16 for additional information.

Equity

Shares issued by the company are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effect. When Atlas Copco shares are repurchased, the amount of the consideration paid is recognized as a deduction from equity net of any tax effect. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or subsequently reissued, the amount received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is transferred to or from Other paid-in capital.

Supply chain financing

The Group and Banks, with close relations to Atlas Copco, offer suppliers the opportunity to use a supply chain financing scheme (SCF) which allows them to be paid earlier than the invoice due date. The Group evaluates supplier arrangements against a number of indicators to assess if the payable continues to hold characteristics of a trade payable or should be classified as borrowings; these indicators include whether the payment terms exceed customary payment terms in the industry. These transactions have been recognized as either “Account payables” or “Borrowings” in the Group’s balance sheet and as “Change in operating liabilities” or change in “Borrowings” or “Repayment of borrowings” in the statement of cash flows.

Provisions

Provisions are recognized:
* when the Group has a legal or constructive obligation as a result of a past event,
* it is probable that the Group will have to settle the obligation, and
* the amount of the obligation can be estimated reliably.The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, the provision is determined by discounting the expected future cash flowed future cash flows of estimated expenditures. Provisions for product warranties are recognized as cost of sales at the time the products are sold based on the estimated cost using historical data for level of repairs and replacements. A restructuring provision is recognized when the Group has approved a detailed and formal restructuring plan and the restructuring has either commenced or been announced publicly. Present obligations arising under onerous contracts are recognized as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Before a provision is established, the Group recognizes any impairment loss on the asset associated with the contract. For details on provisions see note 25.

Post-employment benefits

Post-employment benefit plans are classified either as defined contribution or defined benefit plans. Under a defined contribution plan, the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts if the fund does not hold sufficient assets to pay all employee benefits. Contributions to defined contributions plans are expensed when employees provide services entitling them to the contribution.

Other post-employment benefit plans are defined benefit plans and it is the Group’s obligation to provide agreed benefits to current and former employees. The net obligation of defined benefit plans is calculated by estimating the amount of future benefits that employees have earned in return for their services in current and prior periods. The amount is discounted to determine its present value and the fair values of any plan assets are deducted. Funded plans with net assets, i.e. plans with assets exceeding the commitments, are reported as financial non-current assets. The cost for defined benefit plans is calculated using the Projected Unit Credit Method, which distributes the cost over the employee’s service period. The calculation is performed annually by independent actuaries using actuarial assumptions such as employee turnover, mortality, future increase in salaries and medical cost. Changes in actuarial assumptions, experience adjustments of obligations and changes in fair value of plan assets result in remeasurements and are recognized in “Other comprehensive income”. Each quarter a remeasurement is performed to adjust the present value of pension liabilities and the fair value of pension assets against “Other comprehensive income”. Net interest on defined benefit obligations and plan assets is reported as “Interest income” or “Interest expense”. See note 23 for additional information.

Share-based compensation

The Group has share-based incentive programs, consisting of share options and share appreciation rights, which have been offered to certain employees based on position and performance. Additionally, the Board is offered synthetic shares. The fair value of share options that can only be settled in shares (equity-settled) is recognized as an employee expense with a corresponding increase in equity. The fair value, measured at grant date using the Black-Scholes formula, is recognized as an expense over the vesting period. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest. The fair value of the share appreciation rights, synthetic shares is recognized in accordance with principles for cash-settled share-based payments. The value is recognized as an employee expense with a corresponding increase in liabilities. The fair value, measured at grant date and remeasured at each reporting date using the Black-Scholes formula, is accrued and recognized as an expense over the vesting period. Changes in fair value are, during the vesting period and after the vesting period until settlement, recognized in profit or loss as an employee expense. The accumulated expense recognized equals the cash amount paid at settlement. Social security charges are paid in cash and are accounted for in consistence with the principles for cash-settled share-based payments, regardless of whether they are related to equity- or cash-settled share-based payments. See note 23 for additional information.

Financial assets and liabilities – Financial instruments

Recognition and derecognition

Financial assets and liabilities are recognized when the Group becomes a party to the contractual provision of the instrument. Transactions of financial assets are accounted for at trade date, which is the day when the Group contractually commits to acquire or dispose of the assets. Trade receivables are recognized on issuance of invoices. Liabilities are recognized when the other party has performed and there is a contractual obligation to pay. Derecognition, fully or partially, of a financial asset occurs when the rights in the contract have been realized or matured, or when the Group no longer has control over it. A financial liability is derecognized, fully or partially, when the obligation specified in the contract is discharged or otherwise expires. A financial asset and a financial liability are offset and the net amount presented in the balance sheet when there is a legal right to offset the recognized amounts and there is an intention to either settle on a net basis or to realize the asset and settle the liability simultaneously. Gains and losses from derecognition and modifications are recognized in profit or loss.

Measurement of financial instruments

Financial instruments are classified at initial recognition. The classification decides the measurement of the instruments.

Classification and measurement of financial assets

• Equity instruments: are classified at fair value through profit or loss (FVTPL).
• Derivative instruments: are classified at FVTPL, unless they are classified as a hedging instrument and the effective part of the hedge is recognized in “Other comprehensive income”.
• Debt instruments: the classification of financial assets that are debt instruments, including hybrid contracts, is based on the Group’s business model for managing the assets and the asset’s contractual cash flow characteristics. The instruments are classified at:
  • amortized cost,
  • fair value through “Other comprehensive income” (FVOCI), or
  • fair value through profit or loss (FVTPL).

Financial assets at amortized cost are at initial recognition measured at fair value including transaction costs. After initial recognition, they are measured at amortized cost using the effective interest rate method. Assets classified at amortized cost are held under the business model of collecting the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The assets are subject to a loss allowance for expected credit losses.

Fair value through “Other comprehensive income” (FVOCI) are assets held under the business model of both selling and collecting the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial instruments in this category are recognized at fair value at initial recognition and changes in fair value are recognized in “Other comprehensive income” (OCI) until derecognition, when the amounts in OCI are reclassified to profit or loss. The assets are subject to a loss allowance for expected credit losses.

Fair value through profit or loss (FVTPL) are all other debt instruments that are not measured at amortized cost or FVOCI. Financial instruments in this category are recognized at fair value at initial recognition and changes in fair value are recognized in profit or loss.

Classification and measurement of financial liabilities

Financial liabilities are classified at amortized cost, except derivatives. Financial liabilities at amortized cost are at initial recognition measured at fair value including transaction costs. After initial recognition, they are measured at the effective interest rate method. Derivatives are classified at FVTPL, unless they are classified as a hedging instrument and the effective part of the hedge is recognized in “Other comprehensive income”.

Fair value for financial assets and financial liabilities is determined in the manner described in note 27.

Impairment of financial assets

Financial assets, except those classified at fair value through profit and loss (FVTPL), are subject to impairment for expected credit losses.

Atlas Copco 2022 69

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
  • Parent company
• Other information# In addition, the impairment model applies to contract assets, loan commitments and nd finan- cial guarantees that are not measured at FVTPL.

The IFRS 9 expected credit loss (ECL) model is forward looking and a loss allowance is recognized when there is an exposure to credit risk, usually at rt first recognition of an asset or receivable. The ECL reL reflects the present value of all cash shortfalls related to default events either over the following 12 months or over the expected life of a naa financial instrument, depending on the type of asset and on the credit dete- rioration from inception. The ECL reec reflects an unbiased, probability-weighted outcome that considers multiple scenarios based on reasonable and support- able forecasts.

The simpliified model is applied on trade receivables, lease receivables, con- tract assets and certain other nancial receivabs and certain other financial receivables. A loss allowance is recog- nized over the expected lifetime of the receivable or asset.

For other items sub- ject to ECL, the impairment model with a three-stage approach is applied. Ini- tially, and at each reporting date, a loss allowance will be recognized for the following 12 months, or a shorter time period depending on the time to matu- rity (stage 1). If it has been a signinificant increase in credit risk since origination, a loss allowance will be recognized for the remaining lifetime of the asset (stage 2). For assets that are considered as credit impaired, allowance for credit losses will continue to capture the lifetime expected credit losses (stage 3). For credit impaired receivables and assets, the interest revenue is calculated based on the carrying amount of the asset, net of the loss allowance, rather than its gross carrying amount as in previous stages.

In the respective model applied, the measurement of ECL is based on dieffer- ent methods for dierent credit different credit risk exposures.

• For trade receivables, contract assets and certain other er financial receivables, the method is based on historical loss rates in combination with forward looking considerations.
• Lease receiv- ables, certain other nancial receivabtain other financial receivables and cash and cash equivalent are impaired by a rating method, where ECL is measured by the product of the probability of default, loss given default, and exposure at default. Both external credit agencies rating and internally developed rating methods are applied.

1. Signiificant accounting principles, critical accounting estimates and judgements, continued

The measurement of ECL considers potential collaterals and other credit enhancements in the form of guarantees. The ne financial assets are presented in the he financial statements at amortized cost, i.e. net of gross carrying amount and the loss allowance. Changes in the loss allowance is recognized in proofit or loss, as impairment losses within the line cost of sales.

Derivatives and hedge accounting

Derivatives are initially recognized at fair value on the date a derivative con- tract is entered into and are subsequently measured at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item hedged.

Changes in fair value for derivatives that do not fulll tfill the criteria for hedge accounting are recognized as operating or g or financial transactions based on the purpose of the use of the derivative. Interest payments for interest rate swaps are recognized as interest income or expense, whereas changes in fair value of future payments are presented as gains or losses from nom financial instruments.

IFRS 9 Hedge accounting is applied.

In order to qualify for hedge accounting the hedging relationship must be:

• formally identied and designated,formally identified and designated,
• expected to fullfil the ee effectiveness requirements, and
• documented.

The Group assesses, evaluates, and documents es effectiveness both at hedge inception and on an ongoing basis. Hedge eeffectiveness is assessed by an anal- ysis of the economic relationship between the hedged item and the hedging instrument, and the eeffect of credit risk must not dominate the value changes’ that result from that economic relationship. Further, the hedge ratio, as denfined in the Group´s risk management strategy, must be the same in the hedging relationship as in the actually hedge performed.

Cash ow hsh flow hedges:

Changes in the fair value of the hedging instrument are rec- ognized in “Other comprehensive income” to the extent that the hedge is eeffective and the accumulated changes in fair value are recognized as a sepa- rate component in equity. Gains or losses relating to the ineffective part of hedges are recognized immediately in prorofit or loss. The amount recognized in equity through “Other comprehensive income” is reversed to prorofit or loss in the same period in which the hedged item am affects prot ofit or loss. When the hedged forecast transaction results in the recognition of a non--financial asset or a non-nafinancial liability, the amount previously rec- ognized in other comprehensive income and accumulated in equity is trans- ferred from equity and included in the initial measurement of the cost of the non-nancial asset or liabilitfinancial asset or liability.

The Group uses foreign currency forwards to hedge part of the future cash owh flows from forecasted transactions in foreign currencies. Interest rate swaps can also be used as cash sh flow hedges for hedg- ing interest on borrowings with variable interest.

Hedge of net investments in foreign operations:

The Group hedges a substan- tial part of net investments in foreign operations. Changes in the value of the hedge instrument relating to the eeffective portion of the hedge are recog- nized in “Other comprehensive income” and accumulated in equity. Gains or losses relating to the ineeffective portion are recognized immediately in prorofit or loss. On divestment of foreign operations, the gain or loss accumulated in equity is recycled through proofit or loss, increasing or decreasing the prorofit or loss on the divestment. The Group uses loans and forward contracts as hedging instruments.

Accounting for discontinuation of hedges:

Hedge accounting may not be voluntarily discontinued. Hedge accounting is discontinued:

• when the hedging instrument expires or is sold, terminated, or exercised,
• when there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk dominates the value changes that result from the economic relationship, or
• when the hedge accounting no longer meets the risk management objectives.

For cash sh flow hedges, any gain or loss recognized in “Other comprehensive income” and accumulated in equity at the time of hedge discontinuation remains in equity and is recognized when the forecast transaction is ultimately recognized in prorofit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in prot ofit or loss. For net investment hedges, any gain and loss recognized in “Other comprehensive income” and accumulated in equity at the time of hedge dis- continuation remains in equity until divestment of foreign operations, when the gain or loss accumulated in equity is recycled through prorofit or loss.

Assets held for sale

Assets are classiefied as held for sale if their value, within one year, will be recovered through a sale and not through continued use in the operations. On the reclassicOn the reclassification date, assets and liabilities are measured at the lower of fair value less selling expenses and the carrying amount. Gains and losses recognized on remeasurement and disposal are reported in prot or loss. In ted in profit or loss. In the balance sheet assets held for sale and associated liabilities are reported separately, the comparative period is not aeffected.

Contingent liabilities

A contingent liability is a possible obligation or a present obligation that arises from past events that is not reported as a liability or provision, due either to that it is not probable that an outoflow of resources will be required to settle the obli- gation or that a sucfficiently reliable calculation of the amount cannot be made.

New or amended accounting standards in 2022

The following new or amended IFRS standards have been applied by the Group from 2022, with no, or no material impact on the Group.

Reference to the Conceptual Framework (Amendment to IFRS 3)

The amendments mainly relate to updated references in IFRS 3 as a conse- quence of previous amendments in the Conceptual Framework. Further, a new exception is introduced for obligations and contingent liabilities within the scope of IAS 37 and IFRIC 21. Finally, the amendment adds an explicit statement that an acquirer should not recognize any contingent assets acquired in a business combination.

Proceeds before Intended Use (Amendment to IAS 16)

The amendments clarify that any proceeds from selling items produced before the property, plant and equipment is available for use, shall not be deducted from the cost of that property, plant and equipment. Consequently, an entity recognizes such sales proceeds and related costs in prot ofit or loss. The amendments also clarify the meaning of ‘testing whether an asset is function- ing properly’ and that IAS 2 Inventories is applicable for measuring those costs to proceed.# Atlas Copco 2022

70 FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco The year in review

• Group
  • Consolidated income statement
  • Consolidated statement of comprehensive income
  • Consolidated balance sheet
  • Consolidated statement of changes in equity
  • Consolidated statement of cash flows
• Parent company
• Other information

Cost of Fulfilling a Contract (Amendment to IAS 37)

The amendments specify that the ‘cost of fulfilling’ a contract comprises both incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling that contract. The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of annual reporting period 2022.

Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)

The amendment to IFRS 9 clarify which liabilities that shall be included in applying the ‘10 percent test’ to assess whether to derecognize a financial liability. The amendment to illustrative example 13 accompanying IFRS 16 removes the text related to reimbursement of leasehold improvements. The other Annual Improvements related to IFRS 1 and IAS 41 do not have any impact on the Group.

New or amended accounting standards effective after 2022

The following standards, interpretations, and amendments have been issued but were not effective as of December 31, 2022, and in some cases had not been adopted by the EU. The Group has not applied the new standards, interpretations or amendments. The current assessment is that these amendments will have no or no material effect on the Group.

IFRS 17 Insurance Contracts (including amendments)

IFRS 17 establishes the principles for the recognition, measurement, presentation, and disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts. Some contracts that have not been within the scope of IFRS 4, may be applicable within the scope of IFRS 17 and the Group has therefore investigated the possible effects of IFRS 17. The Group has a wholly owned captive. The reinsurance contracts that the captive holds with the third-party reinsurer are not reinsurance contracts according to the definition within IFRS 17. Instead, the Group is the policyholder in that relationship. Hence, the contracts are not in scope of IFRS 17.

IFRS 17 also outlines that some fixed fee service contracts can meet the definition of insurance contracts. Since the specified conditions related to the Group’s fixed fee service contracts are met, the Group will apply IFRS 15 instead of IFRS 17 for these contracts.

IFRS 17 is effective for annual reporting periods beginning on or after January 1, 2023.

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

The amendments change the requirements in IAS 1 regarding disclosure of accounting policies. The amendments replace the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of financial statements make on the basis of those financial statements.

Amendments to IAS 1 also clarify that accounting policy information that relates to immaterial transactions, events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial.

Further, the guidance and examples have been developed to explain and demonstrate the application of the materiality criteria on disclosures of accounting policy information described in IFRS Practice Statement 2. The amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023. The amendments to IFRS Practice Statement 2 do not contain an effective date or transition requirements.

Definition of Accounting Estimates (Amendment to IAS 8)

The amendments to IAS 8 include a change to the definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The definition of a change in accounting estimates was deleted and the concept of changes in accounting estimates in the standard has been clarified. The amendments are effective for annual periods beginning on or after January 1, 2023.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12)

The amendments introduce an exception from the initial recognition of deferred tax for a transaction that gives rise to an asset or a liability if certain criteria are met. The amendments clarify that the exception is not applicable for transactions that give rise to both an asset and a liability. This may for example arise upon recognition of a lease liability and the corresponding right-of-use asset applying IFRS 16 at the commencement date of a lease. Another example when the exception is not applicable may be provisions for estimated future costs of dismantling, removal and restoration, recognized as part of Property, plant and equipment. The amendments are applied retrospectively for annual periods beginning on or after January 1, 2023.

Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)

The amendment to IFRS 16 Leases specifies requirements for seller-lessees to measure the lease liability arising in a sale and leaseback transaction in a way that it does not recognize any amount of the gain or loss that relates to the right of use retained. The amendment does not change the accounting for leases unrelated to sale and leaseback transactions. The amendment is effective for annual periods beginning on or after January 1, 2024.

Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendment to IAS 1)

The amendments to IAS 1 affect the presentation of liabilities as current or non-current in the statement of financial position. The classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. The classification is unaffected by expectations about whether an entity will or will not exercise its right to defer settlement of a liability.

In October 2022, the IASB issued further amendments to IAS 1 related to non-current liabilities with covenants, to clarify how conditions which an entity must comply with twelve months after the reporting period affect the classification of a liability. The amendments are effective for annual periods beginning on or after January 1, 2024.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial reports requires management’s judgement and the use of estimates and assumptions that affects the amounts reported in the consolidated financial statements. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the prevailing circumstances. Actual result may differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Changes in accounting estimates are recognized in the period which they are revised in and in any future periods affected.

The estimates and the judgements which, in the opinion of management, are significant to the underlying amounts included in the financial reports and for which there is a significant risk that future events or new information could entail a change in those estimates or judgements are as follows:

Revenue recognition

Key sources of estimation uncertainty

Revenue for services and for highly customized goods where an enforceable right of payment is present is recognized over time in profit or loss by reference to the progress towards satisfaction of the performance obligation at the balance sheet date. The progress towards satisfaction is determined by the proportion of cost incurred to date compared to the estimated total cost of each performance obligation. There is always an uncertainty if the total estimated expenditure is correctly calculated, and if the expenditure incurred reflects accurately the actual costs incurred, which means that there is uncertainty in the estimates of the degree of completion of the work performed. Management has assessed this method of determining the progress towards satisfaction of the performance obligation as most suitable as it reflects the progression of work performed, and the enforceable right of payment from the customer as the costs are incurred on the performance obligations.

Revenue for goods sold is recognized in profit or loss at one point in time when control of the good has been transferred to the customer.# Accounting Judgement

Management’s judgement is used, for instance, when assessing:

• the degree of progress towards satisfaction of the performance obligations and the estimated total costs for such contracts when revenue is recognized over time, to determine the revenue and cost to be recognized in the current period, and whether any losses need to be recognized.
• if the control has been transferred to the customer (for example the Group has a present right to payment for the good, the customer has legal title of the good, the good has been delivered to the customer and/or the customer has the significant risks and rewards of the ownership of the good), to determine if revenue and cost should be recognized in the current period.
• the transaction price of each performance obligation when a contract includes more than one performance obligation, to determine the revenue and cost to be recognized in the current period.
• certain contracts which include a right of return and/or volume rebates that give rise to variable consideration, variable consideration is assessed to identify possible constraints.
• the customer credit risk (i.e. the risk that the customer will not meet the payment obligation), to determine and justify the revenue recognized in the current period.

Atlas Copco 2022 71

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
  • Parent company
  • Other information

Impairment of goodwill, other intangible assets and other long-lived assets

Key sources of estimation uncertainty

Goodwill and certain trademarks are not amortized but are subject to annual tests for impairment. Other intangible assets and other long-lived assets are amortized or depreciated based on management’s estimates of the period that the assets will generate revenue but are also reviewed regularly for indications of impairment. The impairment tests are based on a review of the recoverable amount, which is estimated based on management’s projections of future cash flows using internal business plans and forecasts.

Accounting judgement

Asset impairment requires management’s judgement, particularly in assessing:

• whether an event has occurred that may affect asset values.
• whether the carrying value of an asset can be supported by the net present value of future cash flows, which are estimated based upon the continued use of the asset in the business.
• the appropriate assumptions to be applied in preparing cash flow projections.
• the discounting of these cash flows.

Changing the assumptions selected by management to determine the level, if any, of impairment could affect the financial position and results of operation. See note 12.

Deferred taxes

Key sources of estimation uncertainty

Deferred tax assets are recognized for temporary differences between the carrying amounts for financial reporting purposes of assets and liabilities and the amounts used for taxation purposes and for tax loss carry-forwards. The Group recognizes deferred tax assets based upon management’s estimates of future taxable profit in different tax jurisdictions. The actual results may differ from these estimates, due to change in the business climate and change in tax legislation. See note 9.

Inventory

Accounting judgement

The Group values inventory at the lower of historical cost, based on the first-in, first-out basis, and net realizable value. The calculation of net realizable value involves management’s judgement on the estimated sales prices, over-stock articles, outdated articles, damaged goods, and selling costs. If the estimated net realizable value is lower than cost, a valuation allowance is established for inventory obsolescence. See note 16 for additional information.

Leases

Key sources of estimation uncertainty

When the Group cannot readily determine the interest rate implicit in the lease, it uses incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over similar terms which requires estimations when no observable rates are available. The Group estimates the IBR by using market interest rates and adjusting with entity specific estimates such as currency and country risk.

Accounting judgement

The Group has several lease contracts that include extension options. The Group applies judgement in evaluating the lease term, it considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. For leases of premises, the following factors are normally the most relevant:

• if any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend.
• otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.

The renewal periods for leases of offices and warehouse premises with extension options exceeding 10 to 15 years are not included as part of the lease term as these are not reasonably certain to be exercised. In addition, renewal options for leases of motor vehicles are not part of the lease term because the Group typically leases motor vehicles for not more than three to five years and, hence, is not exercising any renewal options. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise the option to renew. Refer to note 22 for information on potential future rental payments relating to extension options that are not included in the lease term.

Trade and financial receivables

Key sources of estimation uncertainty:

The Group measure the expected credit losses on financial assets classified at amortized cost including trade and financial receivables, lease receivables and contract assets. The expected credit losses for trade receivables and contract assets are an assessment of specific loss provisions corresponding to individually significant exposures as well as historical loss rates in combination with forward looking considerations. The expected credit losses for lease receivables and financial receivables are an assessment that reflects an unbiased, probability-weighted outcome based on reasonable and supportable forecasts.

Accounting judgement:

Management’s judgement considers rapidly changing market conditions. An overlay control is performed to ensure that an adequate loss allowance is recognized. Additional information is included in section “Credit risk” in note 27.

Pension and other post-employment benefit valuation assumptions

Key sources of estimation uncertainty

Pensions and other post-employment obligations are dependent on the assumptions established by management and used by actuaries in calculating such amounts. The key assumptions include discount rates, inflation, future salary increases, mortality rates, and healthcare-cost trend rates. The actuarial assumptions are reviewed on an annual basis and are changed when it is deemed appropriate. See note 23 for additional information regarding assumptions used in the calculation of pension and post-employment obligations.

Legal proceedings and tax claims

Accounting judgement

Atlas Copco recognizes a liability when the Group has an obligation from a past event involving the transfer of economic benefits and when a reasonable estimate can be made of what the transfer might be. The Group reviews outstanding legal cases regularly in order to assess the need for provisions in the financial statements. These reviews consider the factors of the specific case by internal legal counsel and through the use of outside legal counsel and advisors when necessary. The financial statements may be affected to the extent that management’s assessments of the factors considered are not consistent with the actual outcome. Additionally, the legal entities of the Group are frequently subject to audits by tax authorities in accordance with standard practice in the countries where the Group operates. In instances where the tax authorities have a different view on how to interpret the tax legislation, the Group makes estimates as to the likelihood of the outcome of the dispute, as well as estimates of potential claims. The actual results may differ from these estimates.

Warranty provisions

Key sources of estimation uncertainty

Provisions for product warranties should cover future commitments for the sales volumes already realized. Warranty provisions are complex accounting estimates due to the variety of variables which are included in the calculations. The calculation methods are based on the type of products sold and historical data for level of repairs and replacements. The underlying estimates for calculating the provision are reviewed at least quarterly as well as when new products are introduced or when other changes occur which may affect the calculation. See note 25.

Acquisitions

Key sources of estimation uncertainty

The Group performs purchase price allocations related to business combinations.# 2. Acquisitions

Purchase prices are allocated to the underlying acquired assets and liabilities based on their estimated fair value at the time of the acquisition. Fair value is commonly based on valuation models. The valuation methods rely on various assumptions, such as estimated future cash flows, remaining economic useful life, etc. The determination of the fair value requires the Group to apply assumptions and estimates. These can vary from the actual outcomes. See note 2.

Atlas Copco 2022 72

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials
  • Group Consolidated income statement
  • Consolidated statement of comprehensive income
  • Consolidated balance sheet
  • Consolidated statement of changes in equity
  • Consolidated statement of cash flows
• Notes
• Parent company
• Other information

2. Acquisitions

The following summarizes the acquisitions during 2022 and 2021:

Acquisition date	Country	Business area	Revenues 1)	Number of employees 1)
2022 Dec. 5	China	Compressor Technique	114	70
2022 Dec. 2	China	Compressor Technique	93	80
2022 Nov. 21	U.S.A.	Vacuum Technique	106	38
2022 Nov. 11	U.S.A.	Compressor Technique 2)	6
2022 Nov. 9	Canada	Compressor Technique 2)	65
2022 Nov. 2	United Kingdom	Compressor Technique 2)	26
2022 Nov. 2	United Kingdom	Compressor Technique 2)	19
2022 Nov. 2	China	Vacuum Technique	102	100
2022 Nov. 2	U.S.A.	Compressor Technique	55	19
2022 Oct. 17	Poland	Compressor Technique 2)	23
2022 Oct. 4	U.S.A.	Compressor Technique 2)	19
2022 Sep. 5	Germany	Compressor Technique 2)	39
2022 Sep. 2	Denmark	Compressor Technique	411	146
2022 Aug. 1	Germany	Power Technique	2	400
2022 Aug. 1	Netherlands	Power Technique	648	173
2022 Jul. 29	U.S.A.	Compressor Technique 2)	20
2022 Jul. 27	United Kingdom	Compressor Technique 2)	26
2022 Jul. 18	U.S.A.	Vacuum Technique	351	185
2022 Jul. 8	Canada	Vacuum Technique 2)	10
2022 Jul. 5	France	Compressor Technique 2)	8
2022 Jul. 4	U.S.A.	Vacuum Technique	223	100
2022 Jul. 4	Singapore	Compressor Technique 2)	20
2022 Jun. 13	U.S.A.	Vacuum Technique	0.6	4
2022 Jun. 8	United Kingdom	Compressor Technique 2)	12
2022 Jun. 2	Türkiye	Vacuum Technique 2)	8
2022 Jun. 1	United Kingdom	Compressor Technique 2)	12
2022 Apr. 5	Germany	Power Technique	466	265
2022 Mar. 2	Italy	Compressor Technique	51	16
2022 Jan. 24	Germany	Industrial Technique	20	38
2022 Jan. 21	India	Vacuum Technique	53	151
2021 Dec. 10	Ireland	Vacuum Technique 2)	11
2021 Nov. 9	Italy	Compressor Technique 2)	19
2021 Oct. 19	Germany	Vacuum Technique 2)	4
2021 Sep. 28	France	Compressor Technique 2)	8
2021 Aug. 31	Germany	Industrial Technique	5	10
2021 Aug. 5	Canada	Compressor Technique	385	110
2021 Jun. 24	United Kingdom	Compressor Technique 2)	16
2021 Jun. 14	U.S.A.	Compressor Technique 2)	30
2021 May 31	Germany	Vacuum Technique	41	14
2021 May 25	U.S.A.	Compressor Technique	23	6

With exception of the acquisition of Eco Steam and Heating Solutions in 2021, all acquisitions were made through the purchase of 100% of shares and voting rights or through the purchase of the net assets of the acquired operations. The Group received control over the operations upon the date of closing the acquisition. In the case of Eco Steam and Heating Solutions in 2021, the majority of the shares were acquired, and the terms of the transaction provide Atlas Copco a present ownership interest in the remaining shares. Non-controlling interest has therefore not been recognized. No equity instruments have been issued in connection with the acquisitions. All acquisitions have been accounted for using the acquisition method. The amounts presented in the following tables detail the recognized amounts aggregated by business area, as the relative amounts of the individual acquisitions are not considered significant, except for LEWA which is disclosed separately. The fair values related to intangible assets other than goodwill are amortized over 5–15 years. For more information about the valuation of contingent consideration, see note 27. The Group is in the process of reviewing the final values for certain of the recently acquired businesses. No adjustments are expected to be material. Adjustments related to the acquisitions made in 2021 are included in the following tables.

1) Annual revenues and number of employees at the time of acquisition.
2) Former distributor of Atlas Copco products. No revenues are disclosed for former Atlas Copco distributors.

Atlas Copco 2022 73

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials
  • Group Consolidated income statement
  • Consolidated statement of comprehensive income
  • Consolidated balance sheet
  • Consolidated statement of changes in equity
  • Consolidated statement of cash flows
• Notes
• Parent company
• Other information

2. Acquisitions, continued

The following summarizes the acquisitions during 2022 and 2021, continued

Acquisition date	Country	Business area	Revenues 1)	Number of employees 1)
2021 May 10	U.S.A.	Compressor Technique 2)	15
2021 May 3	Netherlands	Power Technique	198	23
2021 Apr. 7	Spain	Vacuum Technique 2)	10
2021 Mar. 3	United Kingdom	Compressor Technique 2)	18
2021 Jan. 26	Italy	Compressor Technique 2)	21
2021 Jan. 7	Germany	Vacuum Technique 2)	15
2021 Jan. 5	Germany	Compressor Technique 2)	10

Compressor Technique

	2022	2021
Intangible assets	996	881 881
Property, plant and equipment 1)	180	147 147
Other assets	602	240 240
Cash and cash equivalents	148	72 72
Interest-bearing liabilities and borrowings	–205	–84 –84
Other liabilities and provisions	–549	–419 –419
Net identifiable assets	1 172	837 837
Goodwill	814	1 075
Total consideration	1 986	1 912 1 912
Deferred consideration	–65	–1 –1
Cash and cash equivalents acquired	–148	–72 –72
Net cash outflow	1 773	1 839 1 839

1) Includes right-of-use assets.

In March, the Compressor Technique business area acquired SCB S.r.l., an Italian manufacturer that develops, produces and distributes electronic condensate drains for the industrial market. Atlas Copco has a long history of working with SCB and see many possibilities for accelerated growth in this area going forward. Intangible assets of 24 and goodwill of 32 were recorded on the purchase. The goodwill is not deductible for tax purposes.

In September, Oxymat A/S, a Danish supplier of on-site oxygen and nitrogen solutions was acquired. Oxymat is a strong brand with a global presence in on-site nitrogen and oxygen markets. Their product portfolio and knowledge in industrial gas generation make them a good fit for Atlas Copco. Additionally in September, DF-Druckluft-Fachhandel GmbH, a German company specialized in online sales of compressed air solutions, was acquired to increase Atlas Copco’s market share in the online business as well as strengthen service to customers in the region. Intangible assets of 136 and goodwill of 469 were recorded for Oxymat A/S and intangible assets of 185 and goodwill of 18 for DF-Druckluft-Fachhandel GmbH. The goodwill is not deductible for tax purposes.

In November, Aircel, LLC., a US-based provider of air treatment and air purification solutions was acquired. Aircel is a reputable company in the air treatment and air purification market and their expertise and product portfolio will increase Atlas Copco’s market presence and further accelerate the business development in North America. Intangible assets of 35 and goodwill of 15 were recorded on the purchase. The goodwill is deductible for tax purposes.

Finally, in December, the assets in Suzhou Since Gas System Co., Ltd, a manufacturer of on-site gas generation equipment and Shandong Meditech Medical Technology Co., Ltd, a manufacturer of onsite oxygen solutions for the healthcare market, were acquired. Both companies are based in China and will strengthen Atlas Copco’s presence in one of the world’s largest oxygen markets. Intangible assets of 17 and goodwill of 3 were recorded for Suzhou Since Gas System Co., Ltd and intangible assets of 72 and goodwill of 50 for Shandong Meditech Medical Technology Co., Ltd. The goodwill is not deductible for tax purposes.

In addition, the business area acquired twelve distributors during the year. CAS Products Ltd (CAS), Associated Compressor Engineers Ltd (ACE), Glaston Compressor Services Ltd, Wearside Pneumatics Ltd and Precision Pneumatics Ltd are based in the United Kingdom. In the US, the operating assets of Compressed Air Products, Inc. (CAP), Mesa Equipment & Supply Company and Northeast Compressor were acquired. Finally, Singapore-based Bireme Group, French FITEC S.A.S., Polish Vector Sp. z o.o and Canadian Entreprises Larry Inc, were acquired.# 2. Acquisitions, continued

The acquisitions are expected to increase Atlas Copco’s presence in their respective markets. In total, intangible assets of 450 and goodwill of 67 were recorded on the purchases. Minor adjustments were made in the year related to the acquisitions in 2021. The acquisition of Shandong Meditech Medical Technology includes a possible contingent consideration dependent on revenues in the first year after the acquisition. Since the targets are not expected to be reached, fair value is considered to be 0.

Vacuum Technique

Recognized values	2022	2021
Intangible assets	848	118
Property, plant and equipment 1)	167	118
Other assets	491	32
Cash and cash equivalents	27	22
Interest-bearing liabilities and borrowings	–124	–18
Other liabilities and provisions	–301	–57
Net identifiable assets	1 108	115
Goodwill	929	–
Total consideration	2 037	115
Deferred consideration	–204	–31
Cash and cash equivalents acquired	–27	–22
Net cash outflow	1 806	62

1) Includes right-of-use assets.

In January, the Vacuum Technique business area acquired HHV Pumps Pvt. Ltd, based in India. The company designs and manufactures vacuum pumps and systems for applications used in a wide range of industries. HHV Pumps has a strong reputation and through this acquisition Atlas Copco will strengthen the market presence as well as capabilities for local manufacturing. Intangible assets of 53 and goodwill of 70 were recorded on the purchase. The goodwill is not deductible for tax purposes.

In June, a Turkish vacuum distributor and service provider, Tekser, was acquired to increase Atlas Copco’s presence in the local market. Additionally in June, a US-based provider of semiconductor subfab solutions, Qolibri Inc., was acquired. This acquisition was made to help improve Atlas Copco’s customers’ sustainability by extending the uptime of vacuum and abatement solutions. Intangible assets of 34 were recorded for Tekser and intangible assets of 78 and goodwill of 25 for Qolibri Inc. The goodwill is not deductible for tax purposes.

In July, Les pompes à vide TECHNI-V-AC inc, a Canadian vacuum distributor and service provider was acquired to develop additional business in the Canadian market. Intangible assets of 2 were recorded on the purchase. Additionally, US-based, National Vacuum Equipment Inc. and Ceres Technologies, Inc were acquired in July and Montana Instruments Corporation in November.

1) Annual revenues and number of employees at the time of acquisition.
2) Former distributor of Atlas Copco products. No revenues are disclosed for former Atlas Copco distributors.

National Vacuum Equipment Inc. is a leading manufacturer of mobile vacuum pumps and packages. The acquisition will add to Atlas Copco´s vacuum solutions portfolio. Ceres Technologies Inc. is a manufacturer and designer of gas and vapor delivery equipment for the semiconductor industry. Ceres provides critical sub systems for process tools that are complementary to Edwards’ vacuum and abatement solutions for the semiconductor industry. This acquisition will allow Atlas Copco to expand the liquid chemical dispense offer globally through additional technology and know-how. The Ceres acquisition is also a valuable step forward in responding to the increased need to recycle and reuse gases in semiconductor process technology and improve sustainability in line with the industry’s environmental objectives. Montana Instruments Corporation provides cryostat solutions for customers involved in physics research and low temperature technology solutions. This acquisition will allow Atlas Copco to further extend the existing presence in the cryogenic markets and with the R&D customers.

Intangible assets of 412 and goodwill of 428 were recorded for National Vacuum Equipment Inc, intangible assets of 65 and goodwill of 112 for Ceres Technologies, Inc and intangible assets of 119 and goodwill of 210 for Montana Instruments Corporation. For Montana Instruments Corporation, the goodwill is not deductible for tax purposes. For, National Vacuum Equipment Inc. and Ceres Technologies, Inc, the goodwill is deductible for tax purposes.

Finally, in November, the assets of Shandong Jinggong Pump Co., Ltd, a Chinese manufacturer of industrial vacuum pumps and systems were acquired. The acquisition is in line with Atlas Copco’s local-for-local strategy and adds an experienced manufacturing and machining company in China. Intangible assets of 84 and goodwill of 84 were recorded on the purchase. The goodwill is not deductible for tax purposes.

Total consideration includes contingent consideration with a fair value of 158 related to the acquisitions of Qolibri, HHV and National Vacuum Equipment. For Qolibri, contingent consideration to be paid is dependent on revenues in the first five years after the acquisition. The fair value has been calculated based on expected revenues during this time period. For the latter two, contingent consideration is dependent on revenues and EBITDA the first year after the acquisition. The fair value has been calculated based on the assumption that the maximum amount will be paid. Also the acquisition of Montana Instruments includes a possible contingent consideration dependent on revenues in the first year after the acquisition. Since the targets are not expected to be reached, fair value is considered to be 0.

Industrial Technique

Recognized values	2022	2021
Intangible assets	30	43
Property, plant and equipment 1)	2	14
Other assets	–426	–245
Cash and cash equivalents	6	–
Interest-bearing liabilities and borrowings	–11	–
Other liabilities and provisions	85	81
Net identifiable assets	–314	–107
Non-controlling interests	–	13
Goodwill	417	111
Total consideration	103	17
Deferred consideration	–35	–8
Cash and cash equivalents acquired	–6	–
Net cash outflow	62	9

1) Includes right-of-use assets.

In January, the Industrial Technique business area acquired Soft2tec GmbH based in Germany. The company manufactures and delivers camera-based tracking systems used for operator guidance in the automotive, aerospace and general industries. The products increase quality in production and are sold under the brand name Nexonar. Intangible assets of 30 and goodwill of 77 were recorded on the purchase. The goodwill is not deductible for tax purposes. Total consideration includes contingent consideration with a fair value of 46 related to the Soft2tec acquisition. Contingent consideration to be paid is dependent on revenues the first three years after the acquisition. The fair value has been calculated based on the assumption that the maximum amount will be paid.

The table above also includes an adjustment related to prior years’ acquisitions with an effect on goodwill of 340.

Power Technique

Recognized values	2022	2021
Intangible assets	1 903	107
Property, plant and equipment 1)	822	271
Other assets	1 576	35
Cash and cash equivalents	1 047	73
Interest-bearing liabilities and borrowings	–1 522	–122
Other liabilities and provisions	–1 463	–51
Net identifiable assets	2 363	313
Non-controlling interests	–44	–
Goodwill	5 678	232
Total consideration	7 997	545
Deferred consideration	–	–48
Cash and cash equivalents acquired	–1 047	–73
Net cash outflow	6 950	424

1) Includes right-of-use assets.

In April, the Power Technique business area acquired Pumpenfabrik Wangen GmbH, a German industrial pump manufacturer. Pumpenfabrik Wangen has leading differentiated technology with a strong aftermarket business and will create a solid foundation for further growth in new industrial pump segments. Intangible assets of 538 and goodwill of 1 570 were recorded on the purchase. The goodwill is not deductible for tax purposes.

In August, LEWA GmbH and subsidiaries, and Geveke B.V. and subsidiaries were acquired. LEWA is a leading manufacturer of diaphragm metering pumps, process pumps and complete metering systems. The company is based in Germany and offers industry-specific high-quality pump solutions for a wide range of industries. Through this acquisition, Atlas Copco is building its presence and technology offering within positive displacement pumps. Geveke is headquartered in the Netherlands and distributes compressors and engineers advanced and complex process pump installations. The main part of the acquired business has its base in the Power Technique business area while a smaller part belongs to the Compressor Technique business area. Geveke has strong engineering capability, providing complete industrial pump solutions from concept to commissioning. Intangible assets of 1 224 and goodwill of 3 727 were recorded for LEWA and intangible assets of 125 and goodwill of 393 for Geveke. The goodwill is not deductible for tax purposes.

Minor adjustments were made in the year related to the acquisitions in 2021.# Acquisitions, continued

Contribution from businesses acquired in 2022 and 2021 by business area

Business Area	Compressor Technique	Vacuum Technique	Industrial Technique	Power Technique	Group
2022	2021	2022	2021	2022	2021
Contribution from date of control
Revenues	465	275	551	87	66
Operating profit	–11	–26	49	–2	5
Profit for the year	205	–11
Contribution if the acquisition had occurred on Jan. 1
Revenues	1 660	611	1 275	130	71
Operating profit	4	0	116	–1	6
Profit for the year	444	22

1) From the date of control, LEWA had revenues of MSEK 469 and operating profit of MSEK 56 corresponding to an operating margin of 11.9%, including negative purchase price allocation effects of MSEK 22.

Total fair value of acquired assets and liabilities

Group	Recognized values 2022	of which LEWA 2)	2021
Intangible assets	3 777	1 223	1 149
Property, plant and equipment 1)	1 171	665	450
Other non-current assets	9	1	21
Inventories	1 140	489	–83
Trade receivables 3)	918	466	102
Other current assets	176	305	22
Cash and cash equivalents	1 228	921	167
Interest-bearing liabilities and borrowings	–1 862	–130	–224
Other liabilities and provisions	–1 571	–820	–273
Deferred tax assets/liabilities, net	–657	–336	–173
Net identifiable assets	4 329	2 784	1 158
Non-controlling interests	–44	–44	13
Goodwill	7 838	3 728	1 418
Total consideration	12 123	6 468	2 589
Deferred consideration	–304	–	–88
Cash and cash equivalents acquired	–1 228	–921	–167
Net cash outflow	10 591	5 547	2 334

1) Includes right-of-use assets.
2) LEWA refers to the acquisition of LEWA GmbH and subsidiaries.
3) The gross amount is 1 017 (146) of which 99 (44) is expected to be uncollectible.

3. Assets held for sale and divestments

Assets held for sale

	2022	2021
Property, plant and equipment	1	5
Net carrying value	1	5

Divestments

No divestments have taken place during 2022. In December 2021, the CMM (Coordinate Measuring Machine) part of the Perceptron business (acquired in December 2020) was divested.

Carrying value of divested assets and liabilities

	2022	2021
Property, plant and equipment 1)	–	14
Inventories	–	18
Trade receivables	–	17
Other current assets	–	3
Cash and cash equivalents	–	7
Interest bearing liabilities and borrowings	–	–4
Other liabilities and provisions	–	–27
Net identifiable assets	–	28

1) Includes right-of-use assets.

The goodwill recognized on acquisitions is primarily related to assets that cannot be fully recognized on the balance sheet. These include, but are not limited to, future growth, market presence, additional customers, technology progress, personnel etc. Please also see information on the previous pages. The total consideration for all acquisitions was 12,123 (2,589). Deferred consideration includes both deferred consideration not yet paid for acquisitions made in 2022 and settlement of deferred consideration for acquisitions made in prior years. For all acquisitions, the net cash outflow totaled 10,591 (2,334) after deducting cash and cash equivalents acquired of 1,228 (167). Acquisition-related costs amounted to 81 (25) and were included in the “Administrative expenses”. Costs related to acquisitions finalized in 2022 were included in the income statements for 2021 and 2022.

Atlas Copco 2022 76

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials

Group

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated statement of cash flows

• Notes

Parent company

Other information

	Compressor Technique	Vacuum Technique	Industrial Technique	Power Technique	Common Group functions	Eliminations	Group
2022
Revenues from external customers	60 544	38 917	22 963	18 901	–	–	141 325
Inter-segment revenues	514	24	44	152	–	–734	–
Total revenues	61 058	38 941	23 007	19 053	–	–734	141 325
of which equipment	57%	78%	73%	56%	–	–	65%
of which service 1)	43%	22%	27%	44%	–	–	35%
Operating profit	14 425	8 407	4 597	3 525	–755	17	30 216
of which share of profit in associated companies and joint ventures	1	23	5	–	–	–	29
Net financial items	–172
Income tax expense	–6 562
Profit for the year	23 482
Non-cash expenses
Depreciation/amortization	1 768	1 593	1 385	1 340	231	–33	6 284
Impairment	–	12	36	7	8	–	63
Other non-cash expenses	373	167	–14	28	–284	–	270
Segment assets	44 771	47 875	33 948	25 486	4 434	–1 836	154 678
of which goodwill	7 132	14 683	14 884	7 600	–	–	44 299
Investments in associated companies and joint ventures	–	800	139	–	–	–	939
Unallocated assets	16 684
Total assets	44 771	48 675	34 087	25 486	4 434	–1 836	172 301
Segment liabilities	25 521	9 332	6 583	5 470	2 628	–1 724	47 810
Unallocated liabilities	44 465
Total liabilities	25 521	9 332	6 583	5 470	2 628	–1 724	92 275
Capital expenditures
Property, plant and equipment	1 754	2 397	696	1 330	673	–24	6 826
of which right-of-use assets	857	298	178	321	624	–	2 278
Intangible assets	289	393	517	159	13	–	1 371
Total capital expenditures	2 043	2 790	1 213	1 489	686	–24	8 197
Goodwill acquired	814	929	417	5	–	–	7 838

1) Including spare parts, consumables, accessories and rental.

Items affecting comparability in Operating profit	Compressor Technique	Vacuum Technique	Industrial Technique	Power Technique	Common Group functions	Eliminations	Group
2022					151		151
1) Refers to a change in provision for share-related long-term incentive programs.

4. Segment information

Atlas Copco 2022 77

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials

Group

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated statement of cash flows

• Notes

Parent company

Other information

4. Segment information, continued

	Compressor Technique	Vacuum Technique	Industrial Technique	Power Technique	Common Group functions	Eliminations	Group
2021
Revenues from external customers	49 216	29 200	19 390	13 106	–	–	110 912
Inter-segment revenues	441	19	31	128	–	–619	–
Total revenues	49 657	29 219	19 421	13 234	–	–619	110 912
of which equipment	57%	76%	73%	57%	–	–	65%
of which service 1)	43%	24%	27%	43%	–	–	35%
Operating profit	11 874	7 066	3 976	2 121	–1 486	8	23 559
of which share of profit in associated companies and joint ventures	0	30	6	–	–	–	36
Net financial items	–149
Income tax expense	–5 276
Profit for the year	18 134
Non-cash expenses
Depreciation/amortization	1 434	1 283	1 315	1 101	237	–32	5 338
Impairment	15	36	71	8	–2	–	128
Other non-cash expenses	–119	32	–228	34	281	–	–
Segment assets	33 164	36 463	29 423	11 230	3 329	–1 241	112 368
of which goodwill	5 580	12 047	13 124	1 362	–	–	32 113
Investments in associated companies and joint ventures	1 801	128	–	1	–	–	931
Unallocated assets	23 384
Total assets	33 165	37 264	29 551	11 230	3 330	–1 241	136 683
Segment liabilities	19 172	7 326	5 287	3 353	2 619	–1 139	36 618
Unallocated liabilities	32 431
Total liabilities	19 172	7 326	5 287	3 353	2 619	–1 139	69 049
Capital expenditures
Property, plant and equipment	1 082	1 181	427	703	130	–26	3 497
of which right-of-use assets	462	188	158	132	77	–	1 017
Intangible assets	191	473	527	141	57	–	1 389
Total capital expenditures	1 273	1 654	954	844	187	–26	4 886
Goodwill acquired	1 075	–	111	232	–	–	1 418

1) Including spare parts, consumables, accessories and rental.

Items affecting comparability in Operating profit	Compressor Technique	Vacuum Technique	Industrial Technique	Power Technique	Common Group functions	Eliminations	Group
2021					–687		–687
1) Refers to a change in provision for share-related long-term incentive programs.

Atlas Copco 2022 78

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

The year in review

• Financials

Group

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated statement of cash flows

• Notes

Parent company

Other information

The Group is organized in separate and focused but still integrated business areas, each operating through divisions. The business areas offer different products and services to different customer groups. They are also the basis for management and internal reporting and are regularly reviewed by the Group’s President and CEO, the chief operating decision maker. The chief operating decision maker uses more than one measure of the operating segments’ profit or loss to assess performance and allocate resources. The operating profit of the business areas is the primary profit measure used by the chief operating decision maker, and is reconciled to the consolidated operating profit in the tables on the previous pages. Items affecting comparability are included in a separate table since the chief operating decision maker reviews also these as part of allocating resources to the different business areas. All business areas are managed on a worldwide basis and their role is to develop, implement and follow up the objectives and strategies within their respective business. See pages 20–32 for a description of the business areas. Common group functions, i.e. functions which serve all business areas or the Group as a whole, are not considered a segment. The accounting principles for the segments are the same as those described in note 1.# Atlas Copco 2022

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash ows
• Notes
Parent company
Other information

4. Segment information, continued

Inter-segment pricing is determined on a commercial basis. Segment assets are comprised of property, plant and equipment, right-of-use assets, intangible assets, other non-current receivables, inventories, and current receivables. Segment liabilities include the sum of non-interest-bearing liabilities such as operating liabilities, other provisions, and other non-current liabilities. Capital expenditure includes property, plant and equipment, and intangible assets, but excludes the effect of goodwill, intangible assets and property, plant and equipment through acquisitions.

Geographic distribution

	2022 Compressor Technique, %	2022 Vacuum Technique, %	2022 Industrial Technique, %	2022 Power Technique, %	2022 Group, %	2021 Compressor Technique, %	2021 Vacuum Technique, %	2021 Industrial Technique, %	2021 Power Technique, %	2021 Group, %
Orders received
North America	25	24	32	32	27	21	21	31	29	24
South America	5	–	2	7	4	5	–	2	7	4
Europe	29	16	33	36	27	34	14	36	36	28
Africa/Middle East	7	1	1	8	4	7	1	2	8	4
Asia/Oceania	34	59	32	17	38	33	64	29	20	40
Revenues
North America	23	23	32	28	25	21	21	31	27	23
South America	6	–	2	8	4	5	–	3	8	4
Europe	31	15	33	37	27	34	13	36	36	29
Africa/Middle East	7	1	2	9	5	6	1	1	8	4
Asia/Oceania	33	61	31	18	39	34	65	29	21	40

By geographic area/country

	Revenues 2022	Revenues 2021	Non-current assets 2022	Non-current assets 2021
North America
U.S.A.	31 294	22 317	16 323	12 481
Other countries	4 744	3 678	2 465	2 115
Total North America	36 038	25 995	18 788	14 596
South America
Brazil	3 665	2 449	663	435
Other countries	2 197	1 793	188	128
Total South America	5 862	4 242	851	563
Europe
Belgium	1 257	1 087	3 058	2 501
France	3 800	3 272	693	565
Germany	8 076	6 468	31 462	20 964
Italy	3 560	2 955	2 303	2 103
Sweden	1 898	1 558	1 657	1 235
United Kingdom	3 255	2 835	15 507	13 743
Other countries	16 709	13 646	4 214	2 343
Total Europe	38 555	31 821	58 894	43 454
Africa/Middle East
South Africa	844	710	137	79
Other countries	5 524	4 178	440	319
Total Africa/Middle East	6 368	4 888	577	398
Asia/Oceania
Greater China	31 914	25 544	3 493	2 667
India	4 883	3 930	507	289
Japan	2 793	2 485	608	568
South Korea	6 816	6 024	2 806	1 818
Other countries	8 096	5 983	704	572
Total Asia/Oceania	54 502	43 966	8 118	5 914
Total	141 325	110 912	87 228	64 925

Geographical information: The revenues presented are based on the location of the customers while non-current assets are based on the geographical location of the assets. These assets include non-current assets other than financial instruments, investments in associated companies and joint ventures, deferred tax assets, and post-employment benefit assets.

Atlas Copco 2022 79

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash ows
• Notes
Parent company
Other information

4. Segment information, continued

Quarterly data, Revenues by business area

	Revenues 2022				Revenues 2021
	1	2	3	4	1	2	3	4
Compressor Technique	13 305	14 291	16 377	17 085	11 522	12 212	12 792	13 131
– of which external	13 169	14 174	16 244	16 957	11 423	12 099	12 677	13 017
– of which internal	136	117	133	128	99	113	115	114
Vacuum Technique	8 179	9 335	10 781	10 646	6 808	7 220	7 249	7 942
– of which external	8 173	9 332	10 773	10 639	6 804	7 214	7 245	7 937
– of which internal	6	3	8	7	4	6	4	5
Industrial Technique	5 083	5 405	5 911	6 608	4 713	4 880	4 630	5 198
– of which external	5 072	5 396	5 900	6 595	4 705	4 873	4 622	5 190
– of which internal	11	9	11	13	8	7	8	8
Power Technique	3 702	4 247	5 207	5 897	3 121	3 377	3 312	3 424
– of which external	3 672	4 209	5 157	5 863	3 089	3 348	3 280	3 389
– of which internal	30	38	50	34	32	29	32	35
Common Group functions/eliminations	–183	–167	–202	–182	–143	–155	–159	–162
Total	30 086	33 111	38 074	40 054	26 021	27 534	27 824	29 533

Quarterly data, Operating profit by business area

	Operating profit 2022				Operating profit 2021
	1	2	3	4	1	2	3	4
Compressor Technique	3 170	3 266	3 963	4 026	2 730	2 916	3 087	3 141
in % of revenues	23.8%	22.9%	24.2%	23.6%	23.7%	23.9%	24.1%	23.9%
Vacuum Technique	1 859	2 123	2 484	1 941	1 695	1 789	1 748	1 834
in % of revenues	22.7%	22.7%	23.0%	18.2%	24.9%	24.8%	24.1%	23.1%
Industrial Technique	1 065	1 077	1 267	1 188	917	981	958	1 120
in % of revenues	21.0%	19.9%	21.4%	18.0%	19.5%	20.1%	20.7%	21.5%
Power Technique	664	807	983	1 071	476	539	548	558
in % of revenues	17.9%	19.0%	18.9%	18.2%	15.3%	16.0%	16.5%	16.3%
Common Group functions/eliminations	–9	–6	–319	–416	–431	–301	–341	–405
Operating profit	6 749	7 279	8 378	7 810	5 387	5 924	6 000	6 248
in % of revenues	22.4%	22.0%	22.0%	19.5%	20.7%	21.5%	21.6%	21.2%
Net financial items	–78	26	70	–190	–44	–52	–55	2
Profit before tax	6 671	7 305	8 448	7 620	5 343	5 872	5 945	6 250
in % of revenues	22.2%	22.1%	22.2%	19.0%	20.5%	21.3%	21.4%	21.2%

Average number of employees

	2022 Women	2022 Men	2022 Total	2021 Women	2021 Men	2021 Total
Parent Company
Sweden	67	43	110	64	43	107
Subsidiaries
North America	1 549	5 641	7 190	1 257	4 977	6 234
South America	492	1 582	2 074	436	1 491	1 927
Europe	4 401	16 115	20 516	3 873	14 941	18 814
– of which Sweden	308	1 056	1 364	286	1 009	1 295
Africa/Middle East	230	970	1 200	207	882	1 089
Asia/Oceania	3 016	11 675	14 691	2 599	10 502	13 101
Total in subsidiaries	9 688	35 983	45 671	8 372	32 793	41 165
Total	9 755	36 026	45 781	8 436	32 836	41 272

5. Employees and personnel expenses

Females in the Board of Directors and Group Management, %

	Dec. 31, 2022	Dec. 31, 2021
Parent Company Board of Directors 1)	22	22
Group Management	33	13

1) Which excludes President and CEO, includes employee representatives but excludes employee representatives’ alternate members.

Remuneration and other benefits

Group

	2022 (KSEK)	2021 (KSEK)
Salaries and other remuneration	27 201	21 954
Contractual pension benefits	1 547	1 286
Other social costs	4 832	3 911
Total	33 580	27 151

Pension obligations to Board members and Group Management 1)

	2022	2021
	4	5

1) Refers to former members of Group Management.

Atlas Copco 2022 80

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash ows
• Notes
Parent company
Other information

5. Employees and personnel expenses, continued

Remuneration and other benefits to the Board, KSEK

	2022 Fee	Value of synthetic shares at grant date	Number of synthetic shares at grant date	Other fees 1)	Total fees incl. value of synthetic shares at grant date	Effect of vesting and change in stock price 2)	Total expense recognized 3)
Chair: Hans Stråberg	1 488	1 550	3 565	451	3 489	–1 414	2 075
Other members of the Board: Staffan Bohman	581	500	1 150	251	1 332	–370	962
Tina Donikowski 4)	206	–	–	–	206	–298	–92
Johan Forssell	478	500	1 150	218	1 196	–451	745
Heléne Mellquist 5)	375	500	1 150	–	875	–72	803
Anna Ohlsson-Leijon	478	500	1 150	346	1 324	–34	1 290
Gordon Riske	478	500	1 150	–	978	–153	825
Peter Wallenberg Jr	478	500	1 150	99	1 077	–451	626
Other members of the Board previous year					–298		–298
Employee representatives (4) 6)	86	–	–	–	86	–	86
Total	4 648	4 550	10 465	1 365	10 563	–3 541	7 022

1) Refers to fees for membership in board committees.
2) Refers to synthetic shares received in 2018–2022.
3) Provision for synthetic shares as at December 31, 2022 amounted to MSEK 22 (25).
4) Tina Donikowski left the Board at the Annual Meeting 2022.
5) Heléne Mellquist was elected board member at the Annual General Meeting 2022.
6) Employee representatives receive compensation to prepare for their participation in board meetings.

Remuneration and other benefits to the Board, KSEK

	2021 Fee	Value of synthetic shares at grant date	Number of synthetic shares at grant date	Other fees 1)	Total fees incl. value of synthetic shares at grant date	Effect of vesting and change in stock price 2)	Total expense recognized 3)
Chair: Hans Stråberg	1 266	1 300	2 505	436	3 002	2 748	5 750
Other members of the Board: Staffan Bohman	804	–	–	479	1 283	572	1 855
Tina Donikowski	804	–	–	–	804	878	1 682
Johan Forssell	402	413	795	208	1 023	1 180	2 203
Anna Ohlsson-Leijon	494	413	795	253	1 160	–41	1 119
Gordon Riske	402	413	795	–	815	303	1 118
Peter Wallenberg Jr	402	413	795	94	909	1 180	2 089
Other members of the Board previous year					878		878
Employee representatives (4) 4)	73	–	–	–	73	–	73
Total	4 647	2 952	5 685	1 470	9 069	7 698	16 767

1) Refers to fees for membership in board committees.
2) Refers to synthetic shares received in 2017–2021.
3) Provision for synthetic shares as at December 31, 2021 amounted to MSEK 25 (18).
4) Employee representatives receive compensation to prepare for their participation in board meetings.

Atlas Copco 2022 81

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash ows
• Notes
Parent company
Other information

5. Employees and personnel expenses, continued

Remuneration and other benefits to Group Management, KSEK

	Base salary	Variable compensation 2)	Other benefits 3)	Pension fees	Total, excl.
2022

Remuneration and other benefits to Group Management, KSEK

	Base salary	Variable compensation 2)	Other benetfits 3)	Pension fees	Total, excl. recognized costs for share based payments	Recognized costs for share based payments 4)	Total expense recognized
2022
President and CEO Mats Rahmström 1)	19 500	14 820	406	6 836	41 562	5 052	46 614
Other members of Group Management (8 positions)	28 979	15 055	7 153	8 430	59 617	3 566	63 183
Total	48 479	29 875	7 559	15 266	101 179	8 618	109 797
Total remuneration and other benefits to the Board and Group Management	116 819

1) Further details on the President and CEO remuneration is part of the Remuneration Report that will be published in connection with the notice to the Annual General Meeting.
2) Refers to variable compensation earned in 2022 to be paid in 2023, based on actual base salary entitlement.
3) Refers to vacation pay, company car, medical insurance, and other benefits.
4) Refers to stock options and SARs received in 2016–2022 and includes recognized costs due to change in stock price and vesting period, see also note 23.

2021 Remuneration and other benefits to Group Management, KSEK

	Base salary	Variable compensation 2)	Other benetfits 3)	Pension fees	Total, excl. recognized costs for share based payments	Recognized costs for share based payments 4)	Total expense recognized
President and CEO Mats Rahmström 1)	16 500	13 200	445	5 795	35 940	7 758	43 698
Other members of Group Management (8 positions)	30 843	14 931	11 105	11 095	67 974	15 383	83 357
Total	47 343	28 131	11 550	16 890	103 914	23 141	127 055
Total remuneration and other benefits to the Board and Group Management	143 822

1) Further details on the President and CEO remuneration is part of the Remuneration Report that will be published in connection with the notice to the Annual General Meeting.
2) Refers to variable compensation earned in 2021 to be paid in 2022, based on actual base salary entitlement.
3) Refers to vacation pay, company car, medical insurance, and other benefits.
4) Refers to stock options and SARs received in 2016–2021 and includes recognized costs due to change in stock price and vesting period, see also note 23.

Guidelines for remuneration and other fees for members of the Board, the President and CEO, and other members of Group Management

The guidelines for remuneration to the Board and Group Management are approved at the Annual General Meeting of the shareholders. The guidelines approved by the 2020 meeting are described in the following paragraphs.

Board members

Remuneration and fees are based on the work performed by the Board. The remuneration and fees approved for 2022 are detailed in the table on the pre- vious page. The remuneration to the President and CEO, who is a member of Group Management, is described in the following sections and in the Remu- neration Report. The Annual General Meeting decided that each board member can elect to receive 50% of the 2022 gross fee before tax, excluding other committee fees, in the form of synthetic shares and the remaining part in cash. The number of synthetic shares is based upon an average end price of series A shares during ten trading days following the release of the re first quarterly interim report for 2022. The share rights are earned 25% per quarter as long as the member remains on the Board. After ter five years, the synthetic shares give the right to receive a cash payment per synthetic share based upon an average price for series A shares during ten trading days following the release of the re first quar- terly interim report of the year of payment. The board members will receive divi- dends on series A shares until payment date in the form of new synthetic shares. If a board member resigns from his or her position before the stipulated pay- ment date as stated above, the board member has the right to request a pre- payment. The prepayment will be made twelve months after the date when the board member resigned or otherwise the original payment date is valid.

Status end of year

Seven board members accepted the right to receive synthetic shares. The number and costs at grant date and at the end of the he financial year are disclosed by board member in the table on the previous page.

Remuneration and other committees 2022

The board has three committees:

• Remuneration committee consisting of Hans Stråberg (Chair), Peter Wallenberg Jr and Staaffan Bohman. The committee proposed compensa- tion to the President and CEO for approval by the Board. The committee also supported the President and CEO in determining the compensation to the other members of Group Management.
• Audit committee consisting of Anna Ohlsson-Leijon (Chair), Staaffan Bohman (until April 22, 2022), Johan Forssell and Hans Stråberg.
• Repurchase committee consisting of Staan Bohman (Chair)ffan Bohman (Chair) and Hans Stråberg.

Group Management

Group Management consists of the President and CEO and eight other mem - bers of the Executive Committee. The compensation to Group Management Atlas Copco 2022 82 FINANCIAL STATEMENTS – NOTES Introduction This is Atlas Copco The year in review • Financials Group Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash ows • Notes Parent company Other information 5. Employees and personnel expenses, continued shall consist of base salary, variable compensation, possible long-term incentive (personnel stock options), pension benets and other benets. ), pension benefits and other benefits. The following describes the various guidelines in determining the amount of remuneration:

• Base salary is based on competence, area of responsibility, experience and performance.
• Variable compensation is linked to predetermined and measurable criteria which can be n be financial or non--financial. Non-nafinancial criteria for 2022 has been to reduce the Group’s greenhouse gas emissions in line with the Group’s science-based targets. The variable compensation is maximized to 80% of the base salary for the President and CEO, 60% for Business Area Presidents, and 50% for other members of Group Management.
• Performance-based personnel stock option program for 2022, see note 23.
• Pension benetfits are paid in accordance with a denfined contribution plan with premiums set in line with Atlas Copco Group Pension Policy for Swedish Executives and Atlas Copco terms and conditions for expatriate employments.
• Other beneefits consist of company car and medical insurance.
• For the expatriates, certain benefits are paid in compliance with the Atlas Copco terms and conditions for expatriate employment.
• A mutual notice of termination of employment of six months shall apply.

The Board may resolve to deviate from the guidelines, in whole or in part, if in a speciific case there are special reasons for the deviation and the Board deems deviation is needed to serve the company’s long-term interests or to ensure the company’s na’s financial viability. No fees are paid to Group Management for board memberships in Group companies.

President and CEO

The variable compensation can give a maximum of 80% of the base salary. The variable compensation is not included in the basis for pension benefits. According to an agreement, the President and CEO has the option to receive variable compensation in the form of cash payment or as a pension contribu- tion. The President and CEO is a member of the Atlas Copco Group Pension Policy for Swedish Executives, which is a denfined contribution plan. The contri- bution is age related and is up to a maximum of 35% of the base salary. These pension plans are vested. In addition, premiums for private health insurance are added. The retirement age of the President and CEO is set at the age of 65.

Other members of Group Management

The variable compensation is not included in the basis for pension benefits. Members of Group Management have dened contribution pension planve defined contribution pension plans, with contribution up to a maximum of 35% of the base salary according to age. These pension plans are vested. The retirement age is 65, unless there is an agreement between the company and the individual on a longer employment.

Workforce prole

Atlas Copco strives to grow local leaders where it operates. The geo graphical spread of employees and senior managers is in continuous development. As a customer-focused company, 49% (51) of all employees work in marketing, sales or service.

Geographical spread of employees as at Dec. 31, 2022, %

	Employees	Nationality of senior managers
North America	16	11
South America	4	4
Europe	45	71
Africa/Middle East	3	3
Asia/Oceania	32	11
Total	100	100

Employees by professional category, %

	2022	2021
Production	26	24
Marketing	8	8
Sales and support	14	14
Service	27	29
Administration	16	16
Research & development	9	9
Total	100	100

Termination of employment

The President and CEO is entitled to a severance pay of twelve months if the Company terminates the employment and a further twelve months if other employment is not available. Other members of Group Management are entitled to severance pay if the Company terminates their employment. The amount of severance pay is dependent on the length of employment with the Company and the age of the executive, but is never less than 12 months and never more than 24 months’ salary. Any income that the President and CEO and other members of Group Man- agement receives from employment or other business activity, whilst sever- ance pay is being paid, will reduce the amount of severance pay accordingly. Severance pay for the President and CEO and other members of Group Man- agement is calculated only on the base salary and does not include variable compensation. Severance pay cannot be elected by the employee, but will only be paid if employment is terminated by the Company.Stock options/share appreciation rights, holdings for Group Management – year end
The stock options/share appreciations rights holdings as at December 31 are detailed below:

Stock options/share appreciations rights holdings as at Dec. 31, 2022
| Grant Year | President and CEO | Other members of Group Management |
|---|---|---|
| 2016 | – | 83 479 |
| 2017 | – | 341 169 |
| 2018 | 123 774 | 444 995 |
| 2019 | 765 254 | 765 075 |
| 2020 | 18 242 | 24 463 |
| 2021 | 452 871 | 508 494 |
| 2022 2) | 457 184 | 509 076 |
| Total | 1 817 325 | 2 676 751 |

1) The numbers have been adjusted for the effect of the distribution of Epiroc. See note 23 for additional information.
2) Estimated grants for the 2022 stock option program including matching options.

Atlas Copco 2022 83

FINANCIAL STATEMENTS – NOTES

Introduction

• This is Atlas Copco
• The year in review
• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
  • Parent company
  • Other information

6. Remuneration to auditors

Audit fees and other services

	2022	2021
Ernst & Young
Audit fee	87	67
Other services, tax	3	3
Other services, other	1	1
Other audit firms
Audit fee	20	15
Other services, tax	4	4
Other services, other	2	1
Total	117	91

Audit fee refers to audit of the financial statements and the accounting records. For the Parent Company, this also includes the administration of the business by the Board of Directors and the President and CEO. Tax services include mostly tax consultancy services. Other services essentially comprise consultancy services, such as due diligence services in connection with acquisitions, investigations and similar. At the Annual General Meeting 2022, Ernst & Young was re-elected as auditor for the Group up to and including the Annual General Meeting 2023.

Additional information on costs by nature

Cost of goods sold includes expenses for inventories, see note 16, warranty costs and transportation costs. Salaries, remunerations and employer contributions amounted to 33 580 (27 151) whereof expenses for post-employment benefits amounted to 1 547 (1 286). See note 5 for further details.

Government grants of 243 (210) have been deducted in the related expenses or included in other operating income. Government grants related to assets have been recognized as a deduction when establishing the carrying amount of the asset. Therefore, the government grants are reported as income over the useful life of the asset through a reduction in depreciation expense. The remaining value of these grants, at the end of 2022, amounted to 117 (34).

Included in the operating profit are exchange rate changes on payables and receivables, and the effects from currency hedging. The operating profit also includes –658 (–109) of realized foreign exchange hedging result, which were previously recognized in equity.

Amortization, depreciation and impairment charge for the year amounted to 6 347 (5 466). See note 12, 13 and 22 for further details.

Costs for research and development amounted to 5 389 (4 125).

8. Financial income and expenses

Financial income and expenses	2022	2021
Interest income:
– cash and cash equivalents	108	22
– derivatives	165	136
Capital gain:
– other assets	6	51
Change in fair value
– other assets	37	29
Foreign exchange gain, net	27	5
Financial income	343	243
Interest expenses:
– borrowings	–394	–348
– pension provisions, net	–30	–34
– deferred considerations	–15	–10
Change in fair value
– other liabilities and borrowings	–22	–
Impairment loss	–54	–
Financial expenses	–515	–392
Financial expenses, net	–172	–149

Foreign exchange gain/loss, net includes foreign exchange gains of 712 (545) on financial assets at fair value through profit or loss and foreign exchange losses of –685 (–540) on other liabilities.

7. Other operating income and expenses

Other operating income

	2022	2021
Commissions received	16	12
Income from insurance operations	138	135
Capital gain on asset held for sale	2	–
Capital gain on sale of property, plant and equipment	59	51
Exchange-rate differences, net	–	392
Other operating income	215	590
Total	415	1 180

Other operating expenses

	2022	2021
Capital loss on sale of property, plant and equipment	–35	–22
Capital loss on divestment of business	–	–28
Exchange-rate differences, net	–574	–
Other operating expenses	–609	–50
Total	–609	–50

7. Other operating income and expenses, continued

9. Taxes

Income tax expense

	2022	2021
Current taxes	–7 262	–5 372
Deferred taxes	700	96
Total	–6 562	–5 276

The following is a reconciliation of the companies’ weighted average tax based on the nominal tax for the country as compared to the actual tax charge:

	2022	2021
Profit before tax	30 044	23 410
Weighted average tax based on national rates	–6 927	–5 481
in %	23.1	23.4
Tax effect of:
– non-deductible expenses	–278	–268
– withholding and other taxes on dividends	–349	–322
– tax-exempt income	893	686
Adjustments from prior years:
– current taxes	146	216
– deferred taxes	–45	–60
Effects of tax losses/credits utilized	8	22
Change in tax rate, deferred tax	10	–151
Tax losses not recognized	20	163
Other items	–40	–81
Income tax expense	–6 562	–5 276
Effective tax in %	21.8	22.5

The effective tax rate was 21.8% (22.5). Withholding and other taxes on dividends of –349 (–322) relate to provisions on retained earnings in countries where Atlas Copco incur withholding and other taxes on dividends. Tax-exempt income of 893 (686) refers to income that is not subject to taxation or subject to reduced taxation under local law in various countries. Adjustments from prior years – current tax includes the net from tax issues, tax disputes and also one-time positive tax effects in different countries and amounted to 146 (216). In 2022, effects of income tax rate changes have affected the result with 10 (–151).

Atlas Copco 2022 84

FINANCIAL STATEMENTS – NOTES

Introduction

• This is Atlas Copco
• The year in review
• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
  • Parent company
  • Other information

9. Taxes, continued

European Commission’s decision on Belgium’s tax rulings

On January 11, 2016, the European Commission announced its decision that Belgian tax rulings granted to companies regarding “Excess Profit” shall be considered as illegal state aid and that unpaid taxes shall be reclaimed by the Belgian state. Atlas Copco had such tax ruling since 2010. Following the European Commission decision, Atlas Copco has paid, in total MEUR 313 (MSEK 2 952). During 2015, Atlas Copco made a provision of MEUR 300 (MSEK 2 802) and paid MEUR 239 (MSEK 2 250) in 2016. In the second quarter of 2017, Atlas Copco paid the remaining amount of MEUR 68 (MSEK 655). During 2017, MEUR 13 (MSEK 125) was expensed as an interest cost. The Belgian government, as well as Atlas Copco, appealed the decision to the General Court of the European Union (EGC) in Luxembourg and on February 14, 2019, the EGC annulled the decision taken by the European Commission on January 11, 2016. On May 3, 2019, the European Commission appealed the EGC’s annulment. Following a decision by the European Court of Justice in 2021, the annulment was incorrect, and the case has again been referred to the General Court for judgement.

In September 2020, the European Commission also published individual opening decision stating that the specific decisions granted by Belgium between 2005 and 2014 regarding tax rulings granted to multinationals regarding “Excess Profit” violated the EU rules for state aid. One of these individual decisions concerns Atlas Copco. It is likely several years before final decisions are made.

The following table reconciles the net asset balance of deferred taxes at the beginning of the year to the net asset at the end of the year:

Change in deferred taxes

	2022	2021
Opening balance net, Jan. 1	–435	–252
Business acquisitions	–657	–173
Charges to profit for the year	700	96
Tax on amounts recorded to other comprehensive income	–65	–90
Translation differences	–95	–16
Closing balance net, Dec. 31	–552	–435

The deferred tax assets and liabilities recognized in the balance sheet are attributable to the following:

Deferred tax assets and liabilities

	2022		2021
	Assets	Liabilities	Net balance	Assets
Intangible assets	595	5	590	460
Property, plant and equipment 1)	250	1 115	–865	222
Other financial assets	43	227	–184	33
Inventories	2	525	–523	1
Current receivables	321	364	–43	169
Operating liabilities	979	29	950	821
Provisions	340	10	330	344
Post-employment benefits	509	24	485	788
Borrowings 1)	1 140	21	1 119	598
Loss/credit carry-forwards	194	–	194	233
Other items 2)	22	448	–426	3
Deferred tax assets/liabilities	6 918	7 470	–552	5 376
Netting of assets/liabilities	–4 725		–4 725	–3 586
Net deferred tax balances	2 193	2 745	–552	1 790

1) The gross amount of deferred tax assets and liabilities relating to right-of-use assets and lease liabilities are included in Property, plant and equipment and Borrowings. The net amount of these items is not material.
2) Other items primarily include tax deductions which are not related to specific balance sheet items.

Deferred tax assets regarding tax loss carry-forwards are reported to the extent that realization of the related tax benefit through future taxable results is probable. At December 31, the Group had total tax loss carry-forwards of 2 404 (2 345), of which deferred tax assets were recognized for 934 (881).The tax value of reported tax loss carry-forwards totals 189 (231). There is no expiration date for utilization of the major part of the tax losses carry-forwards for which deferred tax assets have been recognized. Tax loss carry-forwards for which no deferred tax have been recognized expire in accordance with below table:

	2022	2021
Expires after 1–2 years	82	111
Expires after 3–4 years	31	69
Expires after 5–6 years	12	29
No expiry date	1,470	1,464
Total	1,595	1,673

Changes in temporary differences during the year that are recognized in the income statement are attributable to the following:

	2022	2021
Intangible assets	249	–75
Property, plant and equipment	–134	73
Other financial assets	8	–11
Inventories	635	178
Current receivables	–72	31
Operating liabilities	71	63
Provisions	–33	–6
Post-employment benefits	–11	–7
Borrowings	115	–4
Other items	–28	–84
Changes due to temporary differences	800	158
Loss/credit carry-forwards	–100	–62
Charges to profit for the year	700	96

Atlas Copco 2022 85

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information
Introduction
This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

10. Other comprehensive income

Other comprehensive income for the year

	Before tax	Tax	After tax	Before tax	Tax	After tax
Attributable to owners of the parent
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans	1,550	–420	1,130	808	–160	648
Items that may be reclassified subsequently to profit or loss
Translation differences:
– on foreign operations	8,112	174	8,286	4,568	26	4,594
Hedge of net investments in foreign operations	–1,328	273	–1,055	–342	71	–271
Cash flow hedges	13	–2	11	–102	19	–83
Total other comprehensive income	8,347	25	8,372	4,932	–44	4,888
Attributable to non-controlling interests
Translation differences on foreign operations	–	–	–	3	–	3
Total other comprehensive income	8,347	25	8,372	4,935	–44	4,891

11. Earnings per share

Amounts in SEK

	2022	2021 (1)	2022	2021 (1)
Basic earnings per share	4.82	3.72	4.81	3.71
Diluted earnings per share
Earnings per share

The calculation of earnings per share presented above is based on profits and number of shares as detailed below.

	2022	2021
Profit for the year attributable to owners of the parent	23,477	18,130

	2022	2021 (1)
Basic weighted average number of shares outstanding	4,868,350,241	4,870,932,992
Effect of employee stock options	7,577,524	11,149,822
Diluted weighted average number of shares outstanding	4,875,927,765	4,882,082,814

(1) Earnings per share and number of shares are adjusted for share split.

Potentially dilutive instruments

As of December 31, 2022, Atlas Copco had seven outstanding employee stock option programs. For the 2020 program, no options were issued as the EVA target for the Group was not met. The exercise price including adjustment for remaining vesting costs for the 2021 and 2022 programs exceeded the average share price for series A shares, SEK 117.86 per share. These programs are therefore considered anti-dilutive and not included in the calculation of diluted earnings per share. If the average share price, after adjustment with the above, exceeds the strike price in the future, these options will be dilutive, which is the case for the 2016, 2017, 2018 and 2019 programs.

Atlas Copco 2022 86

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information
Introduction
This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

12. Intangible assets

Impairment tests for cash-generating units with goodwill and for intangible assets with indefinite useful lives

Impairment tests (including sensitivity analyses) are performed as per September 30 each year and when there is an indication of impairment. Current goodwill is monitored for internal management purposes at business area level which also represents the Group’s operating segments. The goodwill has therefore been tested for impairment at business area level. The recoverable amounts of the cash generating units have been calculated as value-in-use based on management’s five-year forecast for net cash flows where the most significant assumptions are revenues, operating profits, working capital, and capital expenditures. All assumptions for the five-year forecast are estimated individually for each of the business areas based on their particular market position and the characteristics and development of their end-markets. The forecasts represent management’s assessment and are based on both external and internal sources. The perpetual growth for the period after five years is estimated at 2% (2). The Group’s average weighted cost of capital in 2022 was 8% (8) after tax (approximately 10.5% (10.5) before tax) and has been used in discounting the cash flows to determine the recoverable amounts. The business areas are all relatively diversified and have similar geographical coverage, similar organization and structure and, to a large extent, an industrial customer base. Specific risks, if any, have affected projected cash flows. The same discount rate has therefore been used for all business areas. All business areas are expected to generate a return well above the values to be tested, including sensitivity analyses/worst-case scenarios.

The following table presents the carrying value of goodwill and trademarks with indefinite useful lives allocated by business area:

	2022		2021
	Trademarks	Goodwill	Trademarks	Goodwill
Compressor Technique	–	7,132	–	5,580
Vacuum Technique	3,008	14,683	2,640	12,047
Industrial Technique	–	14,884	–	13,124
Power Technique	–	7,600	–	1,362
Total	3,008	44,299	2,640	32,113

The trade names of Edwards, Leybold, CTI and Polycold in the Vacuum Technique business area represent strong trade names that have been used for a long time in their industries. Management’s intention is that these trade names will be used for an indefinite period of time. Apart from the assessment of future customer demand and the profitability of the business, future marketing strategy decisions involving the trade names, can affect the carrying value of these intangible assets.

Amortization and impairment of intangible assets are recognized in the following line items in the income statement:

	2022		2021
	Internally generated	Acquired	Total	Internally generated
Cost of sales	32	43	75	41
Marketing expenses	20	1	21	15
Administrative expenses	110	47	157	94
Research and development expenses	670	624	1,294	498
Total	832	715	1,547	648

Impairment charges on intangible assets totaled 61 (104) of which 0 (8) was classified as cost of sales, 52 (64) was classified as research and development expenses, and 9 (32) as administrative expenses. Of the impairment charges, 19 (30) was due to capitalized development costs relating to projects discontinued.

Atlas Copco 2022 87

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information
Introduction
This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

Internally generated intangible assets

Acquired intangible assets

2022

	Product development	Other technology and contract based	Product development	Trademarks	Marketing and customer related	Other technology and contract based	Goodwill	Total
Cost
Opening balance, Jan. 1	6,720	1,774	610	4,866	11,226	8,506	32,144	65,846
Investments	1,049	209	–	–	8,105	–	1,371	10,734
Business acquisitions	–	–	14,447	1,977	1,339	7,838	11,615	37,216
Disposals	–186	–264	–	–30	–70	–27	–	–577
Reclassifications	–13	29	–4	–	–34	30	7	15
Translation differences	427	127	76	606	1,397	990	4,349	8,972
Closing balance, Dec. 31	7,997	1,875	696	5,889	14,504	10,943	44,338	86,242
Amortization and impairment losses
Opening balance, Jan. 1	3,620	1,128	101	1,418	5,305	3,895	31,115	46,582
Amortization for the period	615	157	10	160	977	697	–	2,616
Impairment charge for the period	52	8	–	–	–	1	–	61
Disposals	–176	–264	–	–30	–70	–27	–	-567
Reclassifications	–	1	–	–	–34	30	7	4
Translation differences	219	77	4	140	699	423	1,156	2,719
Closing balance, Dec. 31	4,330	1,107	115	1,688	6,877	5,019	39,190	47,779
Carrying amounts at Jan. 1	3,100	646	509	3,448	5,921	4,611	32,113	19,248
Carrying amounts at Dec. 31	3,667	768	581	4,201	7,627	5,924	44,299	38,463

Internally generated intangible assets

Acquired intangible assets

2021

	Product development	Other technology and contract based	Product development	Trademarks	Marketing and customer related	Other technology and contract based	Goodwill	Total
Cost
Opening balance, Jan. 1	6,720	1,774	610	4,866	11,226	8,506	32,144	65,846
Investments	1,049	209	–	–	8,105	–	1,371	10,734
Business acquisitions	–	–	14,447	1,977	1,339	7,838	11,615	37,216
Disposals	–186	–264	–	–30	–70	–27	–	–577
Reclassifications	–13	29	–4	–	–34	30	7	15
Translation differences	427	127	76	606	1,397	990	4,349	8,972
Closing balance, Dec. 31	7,997	1,875	696	5,889	14,504	10,943	44,338	86,242
Amortization and impairment losses
Opening balance, Jan. 1	3,620	1,128	101	1,418	5,305	3,895	31,115	46,582
Amortization for the period	615	157	10	160	977	697	–	2,616
Impairment charge for the period	52	8	–	–	–	1	–	61
Disposals	–176	–264	–	–30	–70	–27	–	-567
Reclassifications	–	1	–	–	–34	30	7	4
Translation differences	219	77	4	140	699	423	1,156	2,719
Closing balance, Dec. 31	4,330	1,107	115	1,688	6,877	5,019	39,190	47,779
Carrying amounts at Jan. 1	3,100	646	509	3,448	5,921	4,611	32,113	19,248
Carrying amounts at Dec. 31	3,667	768	581	4,201	7,627	5,924	44,299	38,463

Other technology and contract based intangible assets include computer software, patents, and contract based rights such as licenses and franchise agreements. Marketing and customer related intangible assets include Internet domain names, customer lists, customer contracts and relationships with customers. All intangible assets other than goodwill and trademarks with indefinite useful lives are amortized. For information regarding principles for amortization and impairment, see note 1. See note 2 for information on business acquisitions.

Atlas Copco 2022 88 FINANCIAL STATEMENTS – NOTES

Introduction

• This is Atlas Copco
• The year in review
  • Financials
    • Group
      • Consolidated income statement
      • Consolidated statement of comprehensive income
      • Consolidated balance sheet
      • Consolidated statement of changes in equity
      • Consolidated statement of cash flows
    • Notes
    • Parent company
    • Other information

---

2022

	Buildings and land	Machinery and equipment	Construction in progress and advances	Total	Rental equipment	Cost
Opening balance, Jan. 1	6 757	13 184	1 204	21 145	5 961
Investments	91	839	2 734	3 664	884
Business acquisitions	501	302	5 808	13
Disposals	–75	–499	–	–574	–314
Reclassifications	431	1 275	–1 668	38	–21
Translation differences	645	1 199	143	1 987	764
Closing balance, Dec. 31	8 350	16 300	2 418	27 068	7 287
Depreciation and impairment losses
Opening balance, Jan. 1	2 842	9 307	5	12 154	3 619
Depreciation for the period	278	1 283	–	1 561	775
Impairment charge for the period	–	–	–	–	4
Disposals	–52	–465	–	–517	–242
Reclassifications	32	16	–	48	–21
Translation differences	275	827	–	1 102	463
Closing balance, Dec. 31	3 375	10 968	5	14 348	4 598
Carrying amounts at Jan. 1	3 915	3 877	1 199	8 991	2 342
Carrying amounts at Dec. 31	4 975	5 332	2 413	12 720	2 689

---

2021

	Buildings and land	Machinery and equipment	Construction in progress and advances	Total	Rental equipment	Cost
Opening balance, Jan. 1	6 355	11 710	670	18 735	5 223
Investments	51	607	1 312	1 970	510
Business acquisitions	82	29	–	111	228
Divestment of business	–13	–1	–	–14	–
Disposals	–215	–444	–8	–667	–324
Reclassifications	145	671	–825	–9	–25
Translation differences	352	612	55	1 019	349
Closing balance, Dec. 31	6 757	13 184	1 204	21 145	5 961
Depreciation and impairment losses
Opening balance, Jan. 1	2 636	8 210	–	10 846	2 982
Depreciation for the period	247	1 087	–	1 334	707
Impairment charge for the period	3	19	5	27	–
Disposals	–181	–422	–	–603	–278
Reclassifications	–4	–	–	–4	–12
Translation differences	141	413	–	554	220
Closing balance, Dec. 31	2 842	9 307	5	12 154	3 619
Carrying amounts at Jan. 1	3 719	3 500	670	7 889	2 241
Carrying amounts at Dec. 31	3 915	3 877	1 199	8 991	2 342

---

13. Property, plant and equipment

For information regarding principles for depreciation and impairment, see note 1. See note 2 for information on business acquisitions.

---

Atlas Copco 2022 89 FINANCIAL STATEMENTS – NOTES

Introduction

• This is Atlas Copco
• The year in review
  • Financials
    • Group
      • Consolidated income statement
      • Consolidated statement of comprehensive income
      • Consolidated balance sheet
      • Consolidated statement of changes in equity
      • Consolidated statement of cash flows
    • Notes
    • Parent company
    • Other information

---

14. Investments in associated companies and joint ventures

	2022	2021
Accumulated capital participation
Opening balance, Jan. 1	931	931
Dividends	–40	–36
Profit for the year after income tax	29	36
Translation differences	19	0
Closing balance, Dec. 31	939	931

The tables below are based on the most recent financial reporting available from associated companies and joint ventures. ISRA Immobilie Berlin GmbH was sold during 2022 and is no longer an associated company within Atlas Copco.

---

2022 Summary of financial information for associated companies and joint ventures

Country	Assets 1)	Liabilities 1)	Equity 1)	Revenues 1)	Profit for the year 1)	Group’s share, % 2)	Carrying value Dec. 31
Associated companies
Qingdao Qianshao Pneumatic Tool Manufacturing Tech Ltd.	China	73	29	44	46	1	25
Reintube S.L.	Spain	9	4	5	13	1	47
Joint ventures
Toku-Hanbai Group	Japan	443	182	261	1 273	11	50
Ulvac Cryogenics Inc.	Japan	1 237	415	822	718	48	50
Total		939

1. Presented amounts for associated companies and joint ventures are for 100% of the company.
2. The Atlas Copco percentage share of each holding represents both ownership interest and voting power.

---

2021 Summary of financial information for associated companies and joint ventures

Country	Assets 1)	Liabilities 1)	Equity 1)	Revenues 1)	Profit for the year 1)	Group’s share, % 2)	Carrying value Dec. 31
Associated companies
Qingdao Qianshao Pneumatic Tool Manufacturing Tech Ltd.	China	59	18	41	31	–7	25
Reintube S.L.	Spain	9	5	4	14	0	47
ISRA Immobilie Berlin GmbH	Germany	74	80	–6	6	1	49.99
Joint ventures
Toku-Hanbai Group	Japan	419	183	236	883	16	50
Ulvac Cryogenics Inc.	Japan	1 260	430	830	716	59	50
Total		931

1. Presented amounts for associated companies and joint ventures are for 100% of the company.
2. The Atlas Copco percentage share of each holding represents both ownership interest and voting power.

---

The fair value of financial instruments under other financial assets corresponds to their carrying value.

---

2022

Non-current
Pension and other similar benefit assets (note 23)	1 423
Financial assets at fair value through OCI	16
Financial assets at fair value through profit or loss	86
Financial assets measured at amortized cost:
– lease receivables	67
– other financial receivables	91
Closing balance, Dec. 31	1 668
Current
Financial assets at fair value through profit or loss	591
Financial assets measured at amortized cost:
– lease receivables	27
– other financial receivables	271
Closing balance, Dec. 31	889

See note 22 for information on leases and note 27 for information on credit risk.

---

15. Other financial assets

---

Atlas Copco 2022 90 FINANCIAL STATEMENTS – NOTES

Introduction

• This is Atlas Copco
• The year in review
  • Financials
    • Group
      • Consolidated income statement
      • Consolidated statement of comprehensive income
      • Consolidated balance sheet
      • Consolidated statement of changes in equity
      • Consolidated statement of cash flows
    • Notes
    • Parent company
    • Other information

---

17. Trade receivables

The fair value for trade receivables corresponds to their carrying value. Trade receivables are measured at amortized cost.

	2022	2021
Expected credit losses, trade
Opening balance, Jan. 1	745	780
Business acquisitions and divestments	99	42
Provisions recognized for potential losses	367	268
Amounts used for established losses	–118	–172
Release of unnecessary provisions	–191	–222
Translation differences	74	49
Closing balance, Dec. 31	976	745

Trade receivables of 29 910 (21 954) are reported net of expected credit losses and other impairments amounting to 976 (745). Expected credit losses and impairment losses recognized in the income statement totaled 147 (–10). For credit risk information, see note 27.

---

16. Inventories

	2022	2021
Raw materials	5 260	3 052
Work in progress	5 524	3 553
Semi-finished goods	7 623	4 963
Finished goods	8 812	6 233
Closing balance, Dec. 31	27 219	17 801

Provisions for obsolescence and other write-downs of inventories recorded as cost of sales amounted to 560 (553). Reversals of write-downs which were recognized in earnings totaled 35 (71). Previous write-downs have been reversed as a result of improved market conditions in certain markets. Inventories recognized as expense amounted to 60 607 (46 717).

---

18. Other receivables

The fair value of financial instruments included in other receivables corresponds to their carrying value.

	2022	2021
Derivatives: – at fair value through profit or loss	34	9
Financial assets measured at amortized cost:
– other receivables	4 085	2 922
– contract assets	4 738	3 545
Prepaid expenses	1 174	943
Closing balance, Dec. 31	10 031	7 419

Other receivables consist primarily of VAT claims and advances to suppliers. Contract assets relate mainly to service and construction projects. Impairment losses recognized on contract assets were insignificant. Prepaid expenses include items such as insurance, IT and employee costs. See note 27 for information on the Group’s derivatives.

---

19. Cash and cash equivalents

The fair value of cash and cash equivalents corresponds to their carrying value. Cash and cash equivalents are measured at amortized cost.

	2022	2021
Cash	10 016	17 863
Cash equivalents	1 238	1 127
Closing balance, Dec.	11 254	18 990

Introduction

This is Atlas Copco
The year in review
• Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

20. Equity

	Shares outstanding		Total	Shares outstanding	Total
	A shares	B shares		A shares	B shares
Opening balance, Jan. 1	839 394 096	390 219 008	1 229 613 104	839 394 096	390 219 008
Share split	3 357 576 384	1 560 876 032	4 918 452 416	–	–
Redemption of shares	–799 996 017	–390 219 008	–1 190 215 025	–	–
Redemption of shares held by Atlas Copco	–39 398 079	–	–39 398 079	–	–
Total number of shares, Dec. 31	3 357 576 384	1 560 876 032	4 918 452 416	839 394 096	390 219 008
– of which held by Atlas Copco	–50 095 451	–	–50 095 451	–11 422 736	–
Total shares outstanding, Dec. 31	3 307 480 933	1 560 876 032	4 868 356 965	827 971 360	390 219 008

At December 31, 2022 Atlas Copco AB’s share capital amounted to SEK 786 008 190 distributed among 4 918 452 416 shares, each with a quota value of approximately SEK 0.16 (0.64). Series A shares entitle the holder to one voting right and series B shares entitle the holder to one-tenth of a voting right per share. In the below table the transactions for year 2022 shows the actual number of shares repurchased and divested. A share split was conducted during Q2 2022.

	2022	2021	2022	2021
Number of shares held by Atlas Copco
Opening balance, Jan. 1	11 422 736	13 420 451	13 420 451	3 386
Repurchase of A shares	1 870 000	1 270 000	600 000	700 000
Divestment of A shares	–2 595 364	–130 993	–2 464 371	–2 697 715
Share split	39 398 079	–	–	–
Closing balance, Dec. 31	50 095 451	11 422 736	11 422 736	4 007
Percentage of shares outstanding	1.0%	0.9%	0.9%	–

The 2022 AGM approved a mandate for the Board of Directors to repurchase and sell series A shares on Nasdaq Stockholm in order to fulfill the obligations under the performance stock option plan. The mandate is valid until the next AGM and allows:
• The purchase of not more than 3 000 000 series A shares, whereof a maximum 2 400 000 may be transferred to personnel stock option holders under the performance stock option plan 2022.
• The purchase of not more than 15 000 000 series A shares, later to be sold on the market in connection with payment to board members who have opted to receive synthetic shares as part of their board fee.
• The sale of not more than 15 000 series A shares to cover costs related to previously issued synthetic shares to board members.
• The sale of maximum 8 800 000 series A shares in order to cover the obligations under the performance stock option plans 2016, 2017, 2018 and 2019.

The 2021 AGM approved a mandate for the Board of Directors to repurchase and sell series A shares and series B shares on Nasdaq Stockholm in order to fulfill the obligations under the performance stock option plan. The mandate is valid until the next AGM and allows:
• The purchase of not more than 2 450 000 series A shares, whereof a maximum 2 000 000 may be transferred to personnel stock option holders under the performance stock option plan 2021.
• The purchase of not more than 15 000 series A shares, later to be sold on the market in connection with payment to board members who have opted to receive synthetic shares as part of their board fee.
• The sale of not more than 15 000 series A shares to cover costs related to previously issued synthetic shares to board members.
• The sale of maximum 6 800 000 series A and B shares in order to cover the obligations under the performance stock option plans 2016, 2017 and 2018.
• Repurchases and sales are subject to market conditions, regulatory restrictions, and the capital structure at any given time.

During 2022, 1 870 000 series A shares were repurchased while 2 595 364 series A shares were divested in accordance with mandates granted by the 2021 and 2022 AGM. Further information regarding repurchases and sales in accordance with AGM mandates is presented in the table above. The series A shares are held for possible delivery under the 2016–2022 personnel stock option programs. The series A shares held can be divested over time to cover costs related to the personnel stock option programs, including social insurance charges, cash settlements or performance of alternative incentive solutions in countries where allotment of employee stock options are unsuitable. The total number of shares of series A and series B held by Atlas Copco is presented in the table above.

Reserves

Consolidated equity includes certain reserves which are described below:
* Hedging reserve comprises the effective portion of net changes in fair value for certain cash flow hedging instruments.
* Translation reserve comprises all exchange differences arising from the translation of the financial statements of foreign operations, the translation of intra-group receivables from or liabilities to foreign operations that in substance are part of the net investment in the foreign operations, as well as from the translation of liabilities that hedge the company’s net investments in foreign operations.

Non-controlling interest amounts to 50 (1). In the third quarter of 2022, the Group acquired LEWA GmbH and subsidiaries. In one of the subsidiaries, LEWA Pumps Dalian Co. Ltd. there is non-controlling interest. Subsequent to this acquisition, there are six subsidiaries that have non-controlling interest. The non-controlling interests are not material to the Group.

Appropriation of profit

The Board of Directors proposes a dividend of SEK 2.30 (1.90 adjusted for share split) per share, totaling SEK 11 197 221 020 if shares held by the company on December 31, 2022 are excluded.

Retained earnings including reserve for fair value	124 083 709 433
Profit for the year	32 433 451 449
Total	156 517 160 882

The Board of Directors proposes that these earnings be appropriated as follows:

To the shareholders, a dividend of SEK 2.30 per share	11 197 221 020
To be retained in the business	145 319 939 862
Total	156 517 160 882

The proposed dividend for 2021 amounted of SEK 1.90 per share was approved by the AGM on April 26, 2022 and was paid accordingly by Atlas Copco AB. Total dividend paid amounted to SEK 9 250 490 688.

21. Borrowings

	2022	2021	2022	2021
Maturity
Repurchased nominal amount
Carrying amount
Fair value
Non-current
Medium Term Note Program MEUR 500 2023	MEUR 186	3 497	3 500	5 114
Medium Term Note Program MEUR 500 2026		5 568	5 063	5 114
Medium Term Note Program MEUR 300 2029		3 324	2 656	3 050
Medium Term Note Program MEUR 500 2032		5 513	4 316	–
Bilateral borrowings EIB MEUR 200 2022	MEUR 100	–	–	1 024
Bilateral borrowings NIB MEUR 200 2024		2 229	2 257	2 047
Bilateral borrowings EIB MEUR 200 2027		2 229	1 958	2 047
Bilateral borrowings EIB MEUR 100 2028		1 114	959	1 024
Other bank loans		283	282	167
Less current portion of long-term borrowings		–3 524	–3 527	–1 045
Total non-current bonds and loans		20 233	17 464	18 542
Lease liabilities		3 505	3 505	2 328
Other financial liabilities		32	32	23
Total non-current borrowings		23 770	21 001	21 199
Current
Current portion of long-term borrowings		3 524	3 527	1 045
Short-term loans		7 725	7 735	1 915
Lease liabilities		1 314	1 314	1 021
Total current borrowings		12 563	12 576	3 981
Closing balance, Dec. 31		36 333	33 577	25 161

The difference between carrying value and fair value relates to the measurement method as certain liabilities are reported at amortized cost and not at fair value. Changes in interest rates and credit margins create the difference between fair value and amortized cost. See additional information about the Group’s exposure to interest rate risk and foreign currency risk in note 27.

In February 2022, Atlas Copco issued a 10-year MEUR 500 public bond with a coupon of 0.75% and repurchased MEUR 186 of a MEUR 500 public bond with maturity February 2023. In December 2022, MEUR 100 of a maturing loan from the European Investment Bank (EIB) was repaid.## 21. Borrowings, continued

During the year, short-term bank facilities of MEUR 750 were put in place. MEUR 500 of these facilities were drawn at December 31. Short term loans include supply chain financing contracts with remaining payment terms exceeding 180 days. Atlas Copco’s long-term and short-term debt is rated by Standard & Poor’s and Fitch with the long-/short-term rating A+/A- and A+/F1+, respectively. The Group’s credit facilities are specified in the table below.

Credit facilities	Nominal amount	Maturity	Utilized
Commercial papers 1) 2)	MSEK 10 000	–	–
Credit-line MEUR 640	–	2026	–
Credit-line MEUR 1 000	–	2025	–
Equivalent in SEK MSEK 28	277

1) Interest is based on market conditions at the time when the facility is utilized. Maturity is set when the facility is utilized.
2) The maximum amounts available under these programs total MSEK 10 000 (14 095).

The Group’s short-term and long-term borrowings are distributed among the currencies detailed in the table below.

Currency	Local currency (millions)	MSEK	%	Local currency (millions)	MSEK	%
EUR	2 877	32 062	88	2 165	22 166	89
SEK	620	184	1	184	184	1
USD	110	1 153	3	81	734	3
Others	–	2 498	7	–	1 790	7
Total		36 333	100		24 874	100

The following table shows the maturity structure of the Group’s borrowings.

Maturity	Fixed	Floating 1)	Carrying amount	Fair value 2)
2023	4 024	8 539	12 563	12 577
2024	1 040	2 229	3 269	3 375
2025	697	–	697	697
2026	6 081	–	6 081	5 575
2027	2 618	–	2 618	2 347
2028	1 392	–	1 392	1 236
2029	3 547	–	3 547	2 860
2030	173	–	173	173
2031 and after	5 993	–	5 993	4 737
Total	25 565	10 768	36 333	33 577

1) Floating interest in the table corresponds to borrowings with fixings shorter or equal to six months.

Atlas Copco 2022
93
FINANCIAL STATEMENTS – NOTES

Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
• Notes
Parent company
Other information

21. Borrowings, continued

2022

	Cash changes	Non cash changes	Reconciliation of liabilities from financing activities									Closing balance, Dec. 31
			Opening balance, Jan. 1	Financing cash flows	Business acquisitions	Lease additions	Lease deductions	Business acquisitions and divestments	Change in fair value through P/L	Change in fair value through equity	FX change
Non-current
Non-current bonds and loans	18 542	3 409	–	–	–	27	14 587	541	–	2 887	–	20 233
Lease liabilities	2 328	–	–	1 397	–	35	252	28	–	223	–	3 505
Other financial liabilities	23	–	667	–	–	648	2	–	20	6	–	32
Total non-current liabilities	20 893	2 742	–	1 397	–	927	44	587	784	–3 569	–	23 770
Current
Current portion of long-term borrowings	1 045	–	1 118	–	–	9	700	2 286	–	–	–	3 524
Short-term loans	1 915	4 616	–	–	–	762	–	430	2	–	–	7 725
Lease liabilities	1 021	–	1 469 1)	–	883	–	72	117	56	–	97	681
Total current liabilities	3 981	2 029	–	883	–	72	888	56	700	529	–3 569	–
Total	24 874	4 771	–	2 280	–107	1 815	100	1 287	1 313	–	–	36 333

1) Includes paid interest on lease liabilities.

2021

	Cash changes	Non cash changes	Reconciliation of liabilities from financing activities									Closing balance, Dec. 31
			Opening balance, Jan. 1	Financing cash flows	Business acquisitions	Lease additions	Lease deductions	Business acquisitions and divestments	Change in fair value through P/L	Change in fair value through equity	FX change
Non-current
Non-current bonds and loans	19 250	–136	–	–	86	8	300	81	–	1 038	–9	18 542
Lease liabilities	2 400	–	–	447	–94	81	20	–	128	–654	–	2 328
Other financial liabilities	19	4	–4	–	2	1	–	1	–	–	–	23
Total non-current liabilities	21 669	–132	–4	447	–94	169	29	300	210	–1 692	–9	20 893
Current
Current portion of long-term borrowings	1	–14	–	–	–	–	–	–	–	–	–	1 045
Short-term loans	1 793	95	–	–	24	–	35	–20	–12	–	–	1 915
Lease liabilities	969	–	1 214 1)	–	565	–75	25	48	–	84	–1 692	–12
Total current liabilities	2 763	–1 133	–565	–75	49	48	–84	1 692	–12	–	24 874
Total	24 432	–1 265	–4	1 012	–169	218	77	300	294	–	–21	24 874

1) Includes paid interest on lease liabilities.

Cash flow from financing activities also includes net “Settlement of CSA” (Credit Support Annex) of MSEK –24 (–440) which is not included in the tables above.

Atlas Copco 2022
94
FINANCIAL STATEMENTS – NOTES

Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
• Notes
Parent company
Other information

Group as a lessee
Atlas Copco´s lease portfolio consists mainly of leased buildings such as offices and warehouses, vehicles and production equipment. There are several lease contracts with extension options and variable lease payments. Carrying amounts and movements of the right-of-use asset are presented in the tables below:

Right-of-use assets, 2022

	Buildings and land	Machinery and equipment	Rental equipment	Total
Cost
Opening balance, Jan. 1	4 117	1 776	34	5 927
Additions	1 679	599	–	2 278
Business acquisitions	311	39	–	350
Deductions	–401	–501	–23	–925
Reclassifications	–8	–	–	–8
Translation differences	411	173	2	586
Closing balance, Dec. 31	6 109	2 086	13	8 208
Depreciation and impairment losses
Opening balance, Jan. 1	1 738	920	25	2 683
Depreciation and impairment for the period	827	499	4	1 330
Deductions	–335	–461	–22	–818
Reclassifications	–4	–	–	–4
Translation differences	172	92	1	265
Closing balance, Dec. 31	2 398	1 050	8	3 456
Carrying amounts, Jan. 1	2 379	856	9	3 244
Carrying amounts, Dec. 31	3 711	1 036	5	4 752

Right-of-use assets, 2021

	Buildings and land	Machinery and equipment	Rental equipment	Total
Cost
Opening balance, Jan. 1	3 491	1 510	38	5 039
Additions	583	434	–	1 017
Business acquisitions and divestments	84	19	7	110
Deductions	–246	–245	–12	–503
Reclassifications	–11	–13	–	–24
Translation differences	216	71	1	288
Closing balance, Dec. 31	4 117	1 776	34	5 927
Depreciation and impairment losses
Opening balance, Jan. 1	1 080	674	24	1 778
Depreciation and impairment for the period	701	438	8	1 147
Divestments	–	–1	–	–1
Deductions	–109	–218	–7	–334
Reclassifications	–15	–8	–	–23
Translation differences	81	35	–	116
Closing balance, Dec. 31	1 738	920	25	2 683
Carrying amounts, Jan. 1	2 411	836	14	3 261
Carrying amounts, Dec. 31	2 379	856	9	3 244

22. Leases

The following amounts have been recognized in profit or loss:

Leasing in income statement	2022	2021
Depreciation and impairment expense on right-of-use assets	–1 330	–1 147
Interest expense on lease liabilities	–85	–68
Expense relating to leases of low value assets	–74	–53
Expense relating to short-term leases	–155	–105
Expense relating to variable lease payments	–24	–27
Income from subleasing right-of-use assets	6	8
Total amount recognized in profit or loss	–1 662	–1 392

For cash outflows related to leases, the principal payment amounts to 1 403 (1 154) and the interest portion of lease payments to 67 (60). The principal payment is recognized as cash flow from financing activities and the interest portion of the lease payment as cash flow from operating activities, net financial items paid. For further information, see consolidated statements of cash flow and note 21.

Lease contracts that include extension options are mainly related to premises, machinery and equipment. Management uses significant judgement in determining whether these extension options are reasonably certain to be exercised. Extension options reasonably certain to be exercised are included in the lease term. Future cash outflow relating to extension options expected not to be exercised amounts to 137 (175). For leases that have not yet commenced, the future cash outflow amounts to 86 (48). For carrying amounts and movements of lease liabilities related to the right-of-use assets, see note 21. The maturity analysis of lease liabilities is disclosed in note 27.

Atlas Copco 2022
95
FINANCIAL STATEMENTS – NOTES

Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
• Notes
Parent company
Other information

Group as a lessor
As a lessor, the Group has finance and operating lease contracts, see note 1 for further information.

Finance leases – lessor
Atlas Copco has equipment which is leased to customers under finance leases. Future payments to be received fall due as follows:

	2022	2021
	Gross investment	Present value of minimum lease payments
Less than one year	28	27
Between one and five years	64	60
More than five years	4	3
Total	96	90
Unearned finance income	–	2
Unguaranteed residual value	–	4
Total	96	96

Operating leases – lessor
Atlas Copco has equipment which is leased to customers under operating leases. Future payments for non-cancellable operating leasing contracts fall due as follows:

	2022	2021
Less than one year	117	117
Between one and five years	222	235
More than five years	52	47
Total	391	399

Contingent rent recognized as income amounted to 1 (1).

Atlas Copco 2022
96
FINANCIAL STATEMENTS – NOTES

23.# Employee benefits

Post-employment benefits

Atlas Copco provides post-employment defined benefit pensions and other long-term employee benefits in most of its major locations. The most significant countries in terms of size of plans are Belgium, Germany, Sweden, the United Kingdom and the United States. Some plans are funded in advance with certain assets or funds held separately from the Group for future benefit payment obligations. Other plans are unfunded and the benefits from those plans are paid by the Group as they fall due. The plans in Belgium cover early retirement, jubilee, and termination indemnity. These plans are unfunded. The plans in Germany cover pensions, early retirements and jubilee. The plans are funded. There are three defined benefit pension plans in Sweden. The ITP plan is a final salary pension plan covering the majority of white-collar employees in Sweden. Atlas Copco finances the benefits through a pension foundation. The second plan relates to a group of employees earning more than ten income base amounts that has opted out from the ITP plan. This plan is insured. The third defined benefit pension plan relates to former senior employees now retired. In Sweden, in addition to benefits relating to retirement pensions, Atlas Copco has obligations for family pensions for many of the Swedish employees, which are funded through a third-party insurer, Alecta. This plan is accounted for as a defined contribution plan as sufficient information for calculating the net pension obligation is not available. In the United Kingdom, there is a final salary pension plan. This plan is funded. In 2010, the plan was converted to a defined contribution plan for future services. In the United States, Atlas Copco provides a pension plan, a post-retirement medical plan, and a number of supplemental retirement pension benefits for executives. The pension plan is funded while the other plans are unfunded.

The Group identifies a number of risks in investments of pension plan assets. The main risks are interest rate risk, market risk, counterparty risk, liquidity and inflation risk, and currency risk. The Group is working on a regular basis to handle the risks and has a long-term investment horizon. The investment portfolio should be diversified, which means that multiple asset classes, markets and issuers should be utilized. An asset and liability management assessment should be conducted periodically. The study should include a number of elements. The most important elements are the duration of the assets and the timing of liabilities, the expected return of the assets, the expected development of liabilities, the forecasted cash flows and the impact of a shift in interest rates on the obligation.

The net obligations for post-employment benefits and other long-term employee benefits have been recorded in the balance sheet as follows:

	2022	2021
Financial assets (note 15)	–1 423	–781
Post-employment benefits	2 380	3 114
Other provisions (note 25)	93	91
Closing balance, net	1 050	2 424

The tables below show the Group’s obligations for post-employment benefits and other long-term employee benefits, the assumptions used to determine these obligations and the assets relating to these obligations for employee benefits, as well as the amounts recognized in the income statement and the balance sheet. The net amount recognized in the balance sheet amounted to 1 050 (2 424). The weighted average duration of the obligation is 12.5 (15.8) years.

Post-employment benefits

	2022	2021
	Funded pension plans	Unfunded pension plans
Present value of defined benefit obligations	8 017	1 428
Fair value of plan assets	–8 743	–
Present value of net obligations	–726	1 428
Effect of asset ceiling	175	–
Other long-term service obligations	–	–
Net amount recognized in the balance sheet	–551	1 428

Plan assets consist of the following:

	2022		2021
	Quoted market price	Unquoted market price	Total	Total
Debt instruments	863	274	1 137	1 152
Equity instruments	771	387	1 158	1 033
Property	1 040	831	1 871	1 758
Assets held by insurance companies	125	1 501	1 626	1 973
Cash	396	–	396	622
Investment funds	682	574	1 256	1 518
Derivatives	675	6	681	791
Others	287	425	712	824
Closing balance, Dec. 31	4 839	3 998	8 837	9 671

Atlas Copco 2022
97
FINANCIAL STATEMENTS – NOTES
Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
• Notes
Parent company
Other information

23. Employee benefits, continued

Movements in present value of the obligations for defined benefits

	2022	2021
Defined benefit obligations at Jan. 1	12 030	11 376
Current service cost	374	356
Past service cost	–10	–7
Interest expense (+)	168	141
Actuarial gains (–)/ losses (+) arising from experience adjustments	423	–11
Actuarial gains (–)/ losses (+) arising from financial assumptions	–3 540	215
Actuarial gains (–)/ losses (+) arising from demographic assumptions	–99	–46
Business acquisitions	62	3
Settlements	–	–24
Benefits paid from plan or company assets	–533	–544
Translation differences	792	571
Defined benefit obligations, Dec. 31	9 667	12 030

Remeasurements recognized in other comprehensive income amounted to –1 550 (–808) and –5 (–1) in profit and loss. The Group expects to pay 429 (384) in contributions to defined benefit plans in 2022.

Expenses recognized in the income statement

	2022	2021
Current service cost	374	356
Past service cost	–10	–7
Net interest cost	29	34
Employee contribution/ participant contribution	–16	–13
Remeasurement of other long-term benefits	–5	–1
Administrative expenses	15	10
Total	387	379

The total benefit expense for defined benefit plans amounted to 387 (379), whereof 358 (345) have been charged to operating expenses and 29 (34) to financial expenses. Expenses related to defined contribution plans amounted to 18 189 (941).

Defined benefit obligations for employee benefits by geographic areas

Plan assets allocated among the following geographic areas

Movements in plan assets

	2022	2021
Fair value of plan assets at Jan. 1	9 671	8 321
Business acquisitions	24	–
Interest income	139	107
Remeasurement – return on plan assets	–1 526	991
Settlements	–	–12
Employer contributions	188	100
Plan members contributions	16	13
Administrative expenses	–15	–14
Benefit paid by the plan	–274	–312
Translation differences	614	477
Fair value of plan assets, Dec. 31	8 837	9 671

Asset ceiling

	2022	2021
Asset ceiling at Jan. 1	25	–
Interests	1	–
Remeasurements – asset ceiling	135	24
Translation differences	14	1
Asset ceiling, Dec. 31	175	25

Principal actuarial assumptions at the balance sheet date (expressed as weighted averages in %)

	2022	2021
Discount rate
Europe	3.73	1.16
North America	5.41	2.71
Future salary increases
Europe	2.53	2.27
Medical cost trend rate
North America	4.50	6.22

The Group has identified discount rate, future salary increases, and mortality as the primary actuarial assumptions for determining defined benefit obligations. Changes in those actuarial assumptions affect the present value of the net obligation. The discount rate is determined by reference to market yields at the balance sheet date using, if available, high quality corporate bonds (AAA or AA) matching the duration of the pension obligations. In countries where corporate bonds are not available, government bonds are used to determine the discount rate. In Sweden in line with prior years, mortgage bonds are used for determining the discount rate. Atlas Copco’s mortality assumptions are set by country, based on the most recent mortality studies that are available. Where possible, generational mortality assumptions are used, meaning that they include expected improvements in life expectancy over time. The table below shows the sensitivity analysis for discount rate and increase in life expectancy and describes the potential effect on the present value of the defined pension obligation.# FINANCIAL STATEMENTS – NOTES

23. Employee benefits, benefits, continued

Share value based incentive programs

In 2016–2021, the Annual General Meeting decided on performance-based personnel stock option programs based on a proposal from the Board on an option program for the respective years. In 2022, the Annual General Meeting decided on a performance-based personnel stock option program for 2022 similar to the 2016–2021 programs.

Option programs 2016–2022

At the Annual General Meeting 2016–2022 respectively, it was decided to implement performance-based personnel stock option programs. The decision to grant options was made in April each year and the options were issued in March the following year (issue date). The number of options issued for each program year depended on the value creation in the Group, measured as Economic Value Added (EVA, defined as the sum of adjusted operating profit and interest income less tax expenses and cost of capital), for the respective program year. For the 2022 option program, the number of options varies on a linear basis within a preset EVA interval. The size of the plan and the limits of the interval have been established by the Board and have been approved by the Annual General Meeting and are compatible with the long-term business plan of the Group.

In connection to the issue, the exercise price was calculated as 110% of the average trading price for series A shares during a ten-day period following the date of the publishing of the fourth quarter report. The options were issued without compensation paid by the employee and the options remain the property of the employee only to the extent that they are exercisable at the time employment is terminated. The 2016–2022 programs have a term of seven years. The options in the 2016–2022 programs are not transferable and become exercisable at 100% three years after grant.

The 2016–2022 programs include a requirement for Group Management and division presidents to purchase Atlas Copco A shares for 10% of their gross base salary in order to be granted options. A lower amount of investment will reduce the number of options proportionately. Further, Group Management and division presidents who have invested in Atlas Copco A shares will have the right (a “matching option”) to purchase one share per each share purchased at a price equal to 75% of the average trading price for series A shares during a ten-day period following the date of the publishing of the fourth quarter report. This right applies from three years after grant until the expiration of the stock option program.

The Board had the right to decide to implement an alternative incentive solution (SARs) for key persons in such countries where the grant of personnel stock options was not feasible. The Black-Scholes model is used to calculate the fair value of the options/SARs in the programs at issue date. For the programs in 2021 and 2022, the fair value of the options/SARs was based on the following assumptions:

Key assumptions	2022 Program (Dec. 31, 2022)	2021 Program (at issue date) 3)
Expected exercise price	SEK 136/93 1)	SEK 590/402 1) 2)
Expected volatility	30%	30%
Expected options life (years)	4.3	4.1
Expected share price	SEK 124.06	SEK 467.20
Expected dividend (growth)	2.0 (6%)	7.6 (6%)
Risk free interest rate	1.9%	1.2%
Expected average grant value	SEK 24.41/40.39	SEK 64.40/122.00
Maximum number of options	9 421 164	1 920 585
– of which forfeited	–128 000	–16 668
Number of matching options	88 920	23 301

1) Matching options for Group Management and division presidents.
2) Actual.
3) Issue date was prior to share split in 2022.

The expected volatility has been determined by analyzing the historic development of the Atlas Copco A share price as well as other shares on the stock market. When determining the expected option life, assumptions have been made regarding the expected exercising behavior of different categories of optionees.

For the stock options in the 2016–2022 programs, the fair value is recognized as an expense over the following vesting periods:

Program	Vesting period	Exercise period
	From	To
2016	May 2016	April 2019
2017	May 2017	April 2020
2018	May 2018	April 2021
2019	May 2019	April 2022
2020 1)	N/a	N/a
2021	May 2021	April 2024
2022	May 2022	April 2025

1) No options issued as the EVA target for the Group was not met.

For the 2022 program, a new valuation of the fair value has been made and will be made at each reporting date until the issue date.

Timeline 2022 long term incentive program

Event	April 2022	May 2022	June 2022	February 2023	March 2023	May 1, 2025	April 30, 2029
Annual General Meeting	X
Information of grant		X
Group Management´s and division presidents’ own investments			X
Exercise price set				X
Issue of options					X
Plan expires							X
Vesting period						X
Options and matching options exercisable						X	X

For SARs and the options classified as cash-settled, the fair value is recognized as an expense over the same vesting period; the fair value is, however, remeasured at each reporting date and changes in the fair value after the end of the vesting period continue to be recognized as a personnel expense.

In accordance with IFRS 2, the expense in 2022 for all share-based incentive programs, excluding social costs, amounted to –27 (459) of which 89 (212) refer to equity-settled options. The related costs for social security contributions are accounted for in accordance with the statement from the Swedish Financial Reporting Board (UFR 7) and are reclassified as personnel expenses. In the balance sheet, the provision for share appreciation rights and stock options classified as cash-settled as of December 31 amounted to 221 (391).

Atlas Copco shares are held by the Parent Company in order to cover commitments under the programs 2016–2022, see also note 20.

Summary of share value based incentive programs

Program	Initial number of employees	Initial number of options	Additional number of options, share split and redemption	Expiration date	Exercise price, SEK	Type of share	Fair value at issue date 1)	Intrinsic value for vested SARs
Stock options
2016	256	7 279 231	22 388 660	Apr. 30, 23	56.48	A	66.70	–
2017	262	3 046 532	9 370 156	Apr. 30, 24	70.37	A	64.20	–
2018	269	2 401 107	7 384 959	Apr. 30, 25	64.77	A	58.70	–
2019	267	3 343 789	10 284 315	Apr. 30, 26	96.42	A	56.50	–
2021	289	1 694 091	5 210 460	Apr. 30, 28	144.76	A	64.40	–
Matching options
2016	27	41 048	126 238	Apr. 30, 23	38.61	A	106.20	–
2017	34	36 743	112 994	Apr. 30, 24	48.00	A	108.40	–
2018	29	41 616	127 983	Apr. 30, 25	44.16	A	92.80	–
2019	30	27 622	84 942	Apr. 30, 26	65.76	A	98.20	–
2020	31	28 840	88 989	Apr. 30, 27	87.59	A	176.43	–
2021	32	23 301	71 650	Apr. 30, 28	98.63	A	122.00	–
Share appreciation rights
2016	64	1 586 550	4 879 732	Apr. 30, 23	56.48	A	–	66.62
2017	61	606 994	1 866 920	Apr. 30, 24	70.37	A	–	52.73
2018	57	434 055	1 334 997	Apr. 30, 25	64.77	A	–	58.33
2019	62	652 550	2 007 002	Apr. 30, 26	96.42	A	–	26.68
2021	44	209 826	645 355	Apr. 30, 28	144.76	A	–	–

1) The numbers have not been adjusted for the effect of the distribution of Epiroc and the share splits in 2018 and 2022.

Number of options/rights 2022 1)

Program	Outstanding Jan. 1	Additional number of options, share split and redemption 2022	Exercised	Expired/ forfeited	Outstanding Dec. 31	– of which exercisable	Time to expiration, in months	Average stock price for exercised options, SEK
Stock options
2016	565 015	1 696 902	788 077	–	1 473 840	1 473 840	4	125
2017	723 529	2 120 070	198 033	–	2 645 566	2 645 566	16	112
2018	1 510 610	4 608 684	527 861	31 035	5 560 398	5 560 398	28	123
2019	3 374 947	10 295 410	967 930	42 896	12 659 531	12 659 531	40	121
2021	1 694 091	5 210 460	–	168 696	6 735 855	–	64	–
Matching options
2016	8 973	27 590	9 253	–	27 310	27 310	4	115
2017	14 161	43 533	15 597	–	42 097	42 097	16	84
2018	32 560	100 132	11 904	–	120 788	120 788	28	134
2019	26 945	82 860	8 179	–	101 626	101 626	40	131
2020	28 149	86 558	–	3 325	111 382	–	52	–
2021	23 301	71 650	–	–	94 951	–	64	–
Share appreciation rights
2016	348 764	955 936	416 912	–	887 788	887 788	4	128
2017	288 197	879 007	114 049	–	1 053 155	1 053 155	16	124
2018	157 206	483 487	5 591	–	635 102	635 102	28	105
2019	463 100	1 359 582	258 530	–	1 564 152	1 564 152	40	124
2021	209 826	645 355	–	–	855 181	–	64	–

1) All numbers have been adjusted for the effect of the distribution of Epiroc and the share splits in 2018 and 2022 in line with the method used by NASDAQ Stockholm to adjust exchange-traded options contracts.

Number of options/rights 2021 1)

Program	Outstanding Jan.
Stock options
2016	565 015
2017	723 529
2018	1 510 610
2019	3 374 947
2021	1 694 091
Matching options
2016	8 973
2017	14 161
2018	32 560
2019	26 945
2020	28 149
2021	23 301
Share appreciation rights
2016	348 764
2017	288 197
2018	157 206
2019	463 100
2021	209 826

1)# FINANCIAL STATEMENTS – NOTES

24. Other liabilities

Fair value of other liabilities corresponds to carrying value.

Other current liabilities	2022	2021
Derivatives:
– at fair value through profit and loss	205	163
– at fair value through OCI	82	59
Other financial liabilities:
– other liabilities	3,091	2,206
– accrued expenses	9,906	8,182
Prepaid income other	52	40
Contract liabilities:
– advances from customers	8,597	5,114
– deferred revenues construction contracts	925	429
– deferred revenues service contracts	2,536	1,951
Closing balance, Dec. 31	25,394	18,144

Accrued expenses include items such as social costs, vacation pay liability, accrued interest, and accrued operational expenses. See note 27 for information on the Group’s derivatives. The amounts included in contract liabilities at the beginning of the year have been recognized as revenue during the year except for 579 (447). The main reason for revenues not recognized during the year is that they are related to performance obligations that will be performed in future periods. As of the end of 2022, transaction price allocated to remaining performance obligations was 20,261 (14,296) and the majority will be recognized as revenue over the next three years. The transaction price does not include consideration that is constrained.

25. Provisions

	2022				2021
	Product warranty	Restructuring	Other	Total	Product warranty	Restructuring	Other	Total
Opening balance, Jan. 1	1,261	271	1,780	3,312	1,217	411	1,500	3,128
During the year:
– provisions made	1,409	80	437	1,926	1,219	100	926	2,245
– provisions used	–1,090	–113	–279	–1,482	–918	–242	–407	–1,567
– provisions reversed	–261	–117	–387	–765	–330	–12	–268	–610
Business acquisitions	40	–	16	56	–	–	–	–
Translation differences	113	16	54	183	73	4	27	104
Closing balance, Dec. 31	1,472	137	1,621	3,230	1,261	271	1,780	3,312
Non-current	257	33	1,187	1,477	224	100	1,362	1,686
Current	1,215	104	434	1,753	1,037	171	418	1,626
Total	1,472	137	1,621	3,230	1,261	271	1,780	3,312

	2022
	Product warranty	Restructuring	Other	Total
Less than one year	1,215	104	434	1,753
Between one and five years	245	28	946	1,219
More than five years	12	5	241	258
Total	1,472	137	1,621	3,230

Other provisions consist primarily of amounts related to share-based payments including social fees, other long-term employee benefits (see note 23), and asset restoration obligations.

26. Assets pledged and contingent liabilities

Assets pledged for debts to credit institutions and other commitments	2022	2021
Inventory	31	57
Endowment insurances	199	201
Total	230	258

Contingent liabilities	2022	2021
Notes discounted	8	7
Sureties and other contingent liabilities	259	252
Total	267	259

Sureties and other contingent liabilities relate primarily to pension commitments and commitments related to customer claims and various legal matters.

27. Financial exposure and principles for control of financial risks

FINANCIAL RISKS

The Group is exposed to various financial risks in its operations. These financial risks include: Funding and liquidity risk, Interest rate risk, Currency risk, Credit risk and Other market and price risks. The Board of Directors establishes the overall financial policies and monitors compliance with the policies. The Group’s Financial Risk Management Committee (FRMC) manages the Group’s financial risks within the mandate given by the Board of Directors. The members of the FRMC are the CEO, CFO and Group Treasurer. The FRMC meets on a quarterly basis or more often if circumstances require. Financial Solutions has the operational responsibility for financial risk management in the Group. Financial Solutions manages and controls financial risk exposures, ensures that appropriate financing is in place through loans and committed credit facilities, and manages the Group’s liquidity.

Funding and liquidity risk

Funding risk is the risk that the Group does not have access to adequate financing on acceptable terms at any given point in time. Liquidity risk is the risk that the Group does not have access to its funds, when needed, due to poor market liquidity.

Policy

The Group’s policy refers to Atlas Copco AB and Atlas Copco Finance DAC as external borrowings mainly have been held in these entities.

• The Group should maintain minimum MSEK 8,000 committed credit facilities to meet operational, strategic and rating objectives.
• The average tenor, time to maturity, of the Group’s external debt, shall be at least three years.
• No more than MSEK 8,000 of the Group’s external debt may mature within the next 12 months. In October 2022, the board approved to temporarily increase the amount to MSEK 12,000.
• Adequate funding at subsidiary level shall at all times be in place.

Status at year end

As per December 31, there were no deviations from the Group’s policy.

Funding and liquidity risk	2022	2021
Committed credit facilities	18,277	16,788
Cash and cash equivalents	11,254	18,990
Average tenor, years	4.0	4.1
Short-term external debt	3,524	1,024

The overall liquidity of the Group is strong considering the maturity profile of the external borrowings, the balance of cash and cash equivalent as of year end, and available back-up credit facilities from banks. Please refer to note 21 for information on utilized borrowings, maturity, and back-up facilities.

The following cash flow table shows the maturity structure of the Group’s financial liabilities. The figures shown are contractual undiscounted cash flows based on contracted date when the Group is liable to pay, including both interest and nominal amounts. The short-term assets are well matched with the short-term liabilities in terms of maturity. Furthermore, the Group has back-up facilities with maturity 2025 and 2026 to secure liquidity.

Financial instruments	Up to 1 year	1–3 years	4–5 years	Over 5 years
Bonds and loans	–	2,378	7,882	10,104
Lease liabilities	–	1,691	871	1,017
Other financial liabilities	3	3	11	15
Other liabilities	129	79	21	–
Non-current liabilities	132	4,151	8,785	11,136
Bonds and loans	7,927	–	–	–
Lease liabilities	1,331	–	–	–
Current portion of interest-bearing liabilities	3,524	–	–	–
Derivatives	287	–	–	–
Other accrued expenses	9,906	–	–	–
Trade payables	19,145	–	–	–
Other liabilities	3,091	–	–	–
Current financial liabilities	45,211	–	–	–
Financial liabilities	45,343	4,151	8,785	11,136

Financial Risk Management Committee (FRMC)

BOARD OF DIRECTORS ATLAS COPCO AB
Policies Decisions
Financial Solutions Asia and Pacific
Financial Solutions Europe, Middle East and Africa
Financial Solutions North America and South America
Execution and monitoring

Capital management

Atlas Copco defines capital as borrowings and equity, which at December 31 totaled MSEK 116,359 (92,508).# FINANCIAL STATEMENTS – NOTES

27. Financial exposure and principles for control of financial risks, continued

Interest rate risk

Interest rate risk is the risk that the Group is negatively affected by changes in the interest rate levels.

Policy
The Group’s policy states that the average interest duration (i.e. period for which interest rates are fixed) should be a minimum of 6 months and without a maximum limit.

Status at year end
The Group’s borrowings have a mix of fixed and floating rates. No interest rate swaps are used to convert interest. For more information about the Group’s borrowings, see note 21.

Interest risk	2022	2021
Effective interest rate on bonds and loans	1.2%	0.9%
Effective interest rate on lease liabilities	1.8%	2.0%
Duration (months)	46	45

27% of the Group’s bonds and loans have floating interest rates. A shift of one percentage point upward of all floating rates would impact the Group’s interest net with MSEK –78 (–31). Same shift downwards would impact the Group’s interest net with MSEK 78 (0). The book value of the Group’s bonds and loans are not exposed to market interest rate risk at year end as all bonds and loans are reported at amortized cost, compared to if borrowings were reported at fair value where cash flows are discounted using market interest rate.

Currency risk

The Group is present in various geographical markets and undertakes transactions denominated in foreign currencies and is consequently exposed to exchange rate fluctuations. The exposure occurs in relation to payments in foreign currency (transaction exposure) and when translating foreign subsidiaries’ balance sheets and income statements into SEK (translation exposure).

Transaction exposure risk

Transaction exposure risk is the risk that profitability is negatively affected by changes in exchange rates, affecting cash flows in foreign currencies in the operations. Due to the Group’s global presence, there are inflows and outflows in different currencies. As a normal part of business, net surpluses or deficits in specific currencies emerge. The values of these net positions fluctuate subject to changes in currency rates and, thus, render transaction exposure for the Group.

Policy
The Group’s policy states that exposure shall be reduced by matching in- and outflows of the same currencies. Business area and divisional management are responsible for maintaining readiness to adjust their operations (price and cost) to compensate for adverse currency movements. Based on the assumption that hedging does not have any significant effect on the Group’s long-term result, the policy recommends to leave transaction exposures unhedged on an ongoing basis. In general, business areas and divisions shall not hedge currency risks. The FRMC can decide to hedge part of the transaction exposure. Transactions shall then qualify for hedge accounting in accordance with IFRS and hedging beyond 18 months is not allowed. Financial transaction exposure is substantially hedged.

Status at year end
The Group has continued to manage transaction exposures primarily by matching in- and outflows in the same currencies. Graph 1 shows the net of in- and outflows per currency for currencies which have the largest surplus or deficit. The operational transaction exposure is defined as the net operational cash flow exposure and amounts to MSEK –5 091 (–4 678). The estimated amounts are based on the Group’s operational external payments from customers and to suppliers. The transaction exposure sensitivity analysis is based on the operational transaction exposure. It shows how the cash flow and profit before tax would theoretically be impacted by a five percentage point change in SEK, USD or EUR, against all other currencies. The analysis is based on the assumption that no hedging transaction has been undertaken and is done before any impact of offsetting price adjustments or similar measures. As an example, the net transaction exposure of in-and outflow payments in EUR is a deficit as shown in graph 1. A strengthening in the EUR currency rate against all other currencies with +5% would have a negative impact on the cash flow and profit before tax of MSEK –914, and a weakening would have a positive impact of MSEK 914.

GRAPH 1
Estimated operational transaction exposure in the Group’s most important currencies*

MSEK 2022
–20 000 –15 000 –10 000 –5 000 0 5 000 10 000 15 000 20 000
Other USD SEK PLN INR IDR GBP EUR CZK CNY CHF CAD BRL AUD

MSEK 2021
–20 000 –15 000 –10 000 –5 000 0 5 000 10 000 15 000 20 000
Other USD THB SEK RUB KRW INR GBP EUR CZK CNY CAD BRL AUD

• Without adjustments for onetime effects.

Outstanding derivative instruments related to transaction exposure

	2022	2021
	Nominal amount, net in transaction currency	Nominal amount, net in transaction currency
Foreign exchange forwards
GBP	73	269
USD	–96	–368

The FRMC has decided to hedge part of the GBP/USD transaction exposure with foreign exchange forward contracts. The net nominal amount are MGBP 73/MUSD –96 (MGBP 269/MUSD –368). All contracts mature within 3 months. The fair value of the outstanding contracts is MSEK –82 (–55).

Translation exposure risk

Translation exposure risk is the risk that the value of the Group’s net investments in foreign currencies is negatively affected by changes in exchange rates. The Group’s global presence creates currency effects when subsidiaries’ financial statements with functional currencies other than SEK are translated to SEK in the Group’s consolidated financial statements. Translation of subsidiaries’ profit affects the Group’s profit and balance sheet affect other comprehensive income. The translation exposure is measured as the net of assets and liabilities in a specific currency.

Policy
The Group’s policy states that translation exposure should be reduced by matching assets and liabilities in the same currencies. The FRMC can decide to hedge part or all remaining translation exposure. Any hedge of translation exposure shall qualify for hedge accounting in accordance with IFRS.

Status at year end
Graph 2 shows the Group’s sensitivity to currency translation effects when earnings of foreign subsidiaries are translated to SEK. A five percentage points upward change in SEK would impact the Group’s profit before tax with MSEK –1 380 (–1 110).

Transaction exposure sensitivity

	2022	2021
SEK exchange rate + 5%	–255	–234
USD exchange rate + 5%	980	682
EUR exchange rate + 5%	–914	–681

Credit risk

Credit risk can be divided into operational and financial credit risk. These risks are described further in the following sections.

Operational credit risk

Operational credit risk is the risk that the Group’s customers do not meet their payment obligations.

Policy
The Group’s operational credit risk policy is that business areas, divisions and individual business units are responsible for the commercial risks arising from their operations. The operational credit risk is measured as the net aggregate value of receivables on a customer.

Status at year end
The table below shows the total credit risk exposure related to assets classified as financial instruments as per December 31.

	2022	2021
Receivables at amortized cost:
– trade receivables	29 971	22 020
– lease receivables	94	101
– other financial receivables	362	290
– other receivables	3 314	2 560
– contract assets	4 738	3 545
– cash and cash equivalents	11 254	18 990
Financial assets at fair value through OCI	1	16
Financial assets at fair value through profit or loss	677	624
Derivatives	34	9
Total	50 445	48 155

Since the Group’s sales are dispersed among many customers, of whom no single customer represents a significant share of the Group’s commercial risk, the monitoring of commercial credit risks is primarily done at the business area, divisional or business unit level. Each business unit is required to have an approved commercial risk policy.

Provision for credit risks
The business units establish provisions for their expected credit losses in respect of trade and other receivables. The IFRS 9 expected credit loss (ECL) model is forward looking and a loss allowance is recognized when there is an exposure to credit risk.# 27. Financial exposure and principles for control of financial risks

For assets such as trade receivables, lease receivables, contract assets and certain other financial receivables, the simplified model is applied. The main components of this provision are specific loss provisions corresponding to individually significant exposures as well as historical loss rates in combination with forward looking considerations. Lease receivables, certain other financial receivables and cash and cash equivalents are impaired by a rating method, where ECL is measured by the product of the probability of default, loss given default, and exposure at default. At year end 2022, the provision for bad debt amounted to 3.2% (3.3) of gross total customer receivables. The following table presents the gross value of trade receivables, both current and non-current, by maturity, together with the related impairment provisions.

Trade receivables	2022		2021
	Gross	Impairment	Gross	Impairment
Not past due	23 722	5	17 837	12
Past due but not individually impaired
0–30 days	3 017	–	2 021	–
31–60 days	1 215	–	818	–
61–90 days	764	–	394	–
More than 90 days	1 892	–	1 408	–
Past due and individually impaired
0–30 days	4	1	2	1
31–60 days	3	2	3	1
61–90 days	3	3	13	4
More than 90 days	327	287	269	226
Collective impairment	–	678	–	501
Total	30 947	976	22 765	745

Based on historical default statistics and the diversified customer base, the credit risk is assessed to be limited. The gross amount of lease receivables amounted to 94 (101), of which 0 (0) have been impaired, and the gross amount of other financial receivables amounted to 364 (292), of which 2 (2) have been impaired. There are no significant amounts past due that have not been impaired.

GRAPH 2 Translation effect on profit before tax

The Group has hedged part of the translation exposure using loans and foreign exchange forward contracts. The hedges have reduced the exposure on net investments in EUR in the consolidated financial statements and the exchange rate risk related to net assets in subsidiaries. The hedges are designated as net investment hedges in the consolidated financial statements. The financial instruments shown in the table below are used to hedge EUR-denominated net assets.

Outstanding financial instruments related to translation exposure	2022		2021
	Effect in OCI	Nominal amount	Effect in OCI	Nominal amount
Derivatives – MSEK	–5	100	–5	100
Loans in EUR 1)
MSEK	–658	1 314	–993	–993
MEUR	1 600		1 600

1) In the balance sheet, loans designated as net investment hedges are reported at amortized cost and not at fair value. Most of the Group´s bonds and loans are designated as net investments hedges, and movements in currency rates are accounted for in other comprehensive income. A five percentage points upward change in EUR against SEK would affect other comprehensive income with MSEK 580 (689), see also note 1, Significant accounting principles, Financial assets and liabilities – financial instruments.

Atlas Copco 2022 105

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
* The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

Financial credit risk

Credit risk on financial transactions is the risk that the Group incurs losses as a result of non-payment by counterparts related to the Group’s investments, bank deposits or derivative transactions.

Policy

The Group’s financial credit risk is measured differently depending on transaction type; investment transactions or derivative transactions.

Investment transactions

Cash and cash equivalent may only be invested with a counterparty if the counter party rating is above a rating threshold. The threshold for cash and cash equivalent is set at A-/A3 (as rated by Standard & Poor’s, Fitch Ratings and Moody’s). Investments in structured financial products are not allowed, unless approved by the FRMC. Furthermore, counterparty exposure, tenor and liquidity of the investment are considered before any investment is made. A list of each approved counterparty and its maximum exposure limit is maintained and monitored.

Derivative transactions

Derivative transactions may only be undertaken with approved counterparts for which credit limits are established and with which ISDA (International Swaps and Derivatives Association) master agreements and CSA (Credit Support Annex) agreements are in force. Derivative transactions may only be entered into by Atlas Copco Financial Solutions or in rare cases by another subsidiary, but only with approval from the Group Treasurer. Atlas Copco primarily uses derivatives as hedging instruments and the policy allows only standardized (as opposed to structured) derivatives.

Status at year end

Investment transactions in form of cash and cash equivalents amounted to MSEK 11 254 (18 990) at year end. These consist of cash, short term bank deposits and investments in liquidity funds. At year end, the measured credit risk on derivatives, taking into account the market value and collaterals, amounted to MSEK 27 (29). The table below presents the reported value of the Group’s derivatives.

Outstanding derivative instruments	2022	2021
Assets	34	9
Liabilities	287	222

No financial assets or liabilities are offset in the balance sheet. The table below shows derivatives covered by master netting agreements.

Outstanding net position for derivative instruments	Gross	Offset in balance sheet	Net in balance sheet	Master netting agreement	Cash collateral	Net position
Assets Derivatives	34	–	34	–	270	17
Liabilities Derivatives	287	–	287	–	–	–

The positive net position in assets is due to the fact that the exchange of security is done on a weekly basis.

Other market and price risks

Commodity-price risk is the risk that the cost of direct and indirect materials could increase as underlying commodity prices rise in global markets. The Group is directly and indirectly exposed to raw material price fluctuations. Cost increases for raw materials and components often coincide with strong end-customer demand and are compensated for by increased market prices. Therefore, the Group does not hedge commodity-price risks.

Fair value of financial instruments

In Atlas Copco’s balance sheet, financial instruments are carried at fair value or at amortized cost. The fair value is established according to a fair value hierarchy. The hierarchy levels should reflect the extent to which fair value is based on observable market data or own assumptions. Below is a description of each level and valuation methods used for each financial instrument.

Level 1

In the Level 1 method, fair value is based on quoted (unadjusted) prices in active markets for identical assets or liabilities. A market is considered as active if quoted prices from an exchange, broker, industry group, pricing service, or supervisory body are readily and regularly available and those prices represent actual and regularly occurring market transactions at arm’s length.

Level 2

In the Level 2 method, fair value is based on models that utilize observable data for the asset or liability other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Such observable data may be market interest rates and yield curves.

Level 3

In the Level 3 method, fair value is based on a valuation model, whereby significant input is based on unobservable market data.

Valuation methods

• Derivatives
  Fair values of forward exchange contracts are calculated based on prevailing markets. Interest rate swaps are valued based on market rates and present value of future cash flows. Discounted cash flow models are used for the valuation.
• Interest-bearing liabilities
  Fair values are calculated based on market rates and present value of future cash flows.
• Finance leases and other financial receivables
  Fair values are calculated based on market rates for similar contracts and present value of future cash flows.

27. Financial exposure and principles for control of financial risks, continued

Atlas Copco 2022 106

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
* The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

27. Financial exposure and principles for control of financial risks, continued

The Group’s financial instruments by level

The carrying value for the Group’s financial instruments corresponds to fair value in all categories except for borrowings. See note 21 for additional information about the Group’s borrowings. The following table includes financial instruments at their fair value and by category.# Financial instruments by fair value hierarchy

	2022				2021
Fair value	Level 1	Level 2	Level 3	Fair value	Level 1	Level 2	Level 3
Financial assets	245,86	159	–	184,30	154	–
Other receivables	61	–	61	–	66	–	66	–
Non-current financial assets	306,86	220	–	250,30	220	–
Trade receivables	29,910	–	29,910	–	21,954	–	21,954	–
Financial assets	889,0	889	–	847,20	827	–
Other receivables	3,315	–	3,315	–	2,560	–	2,560	–
Derivatives	34	–	34	–	9	–	9	–
Contract assets	4,738	–	4,738	–	3,545	–	3,545	–
Current financial assets	38,886	0	38,886	–	28,915	20	28,895	–
Financial assets	39,192	86	39,106	–	29,165	50	29,115	–
Bonds and loans	17,491	15,535	1,956	–	18,848	13,528	5,320	–
Other financial liabilities	32	–	32	–	23	–	23	–
Other liabilities	230	–	104	126	174	–	100	74
Non-current financial liabilities	17,753	15,535	2,092	126	19,045	13,528	5,443	74
Current portion of long-term loans	3,500	–	3,500	–	1,026	–	1,026	–
Short-term loans	7,735	–	7,735	–	1,915	–	1,915	–
Derivatives	287	–	287	–	222	–	222	–
Other accrued expenses	9,906	–	9,906	–	8,182	–	8,182	–
Trade payables	19,145	–	19,145	–	15,159	–	15,159	–
Other liabilities	3,091	–	2,918	173	2,206	–	2,155	51
Current financial liabilities	43,664	–	43,491	173	28,710	–	28,659	51
Financial liabilities	61,417	15,535	45,583	299	47,755	13,528	34,102	125

Reconciliation of financial liabilities in Level 3

	Opening balance	Business acquisitions	Settlement	Discounting effect	Remeasurement	Translation differences	Closing balance
2022	125	208	–	–54	15	–17	22
Result related to liabilities, net							299
Contingent considerations							2

In other liabilities, MSEK (125) relate to contingent considerations for acquisitions. The fair value of these liabilities has been calculated based on the expected outcome of the targets set out in the contracts, given a discount rate of 10.5%. For information about changes due to acquisitions, see note 2.

Currency rates used in the financial statements

Currency	Code	Year-end rate 2022	Year-end rate 2021	Average rate 2022	Average rate 2021
Canada	1 CAD	7.72	7.07	7.73	6.82
China	1 CNY	1.50	1.42	1.50	1.33
EU	1 EUR	11.14	10.24	10.64	10.15
India	1 INR	0.13	0.12	0.13	0.12
South Korea	1 000 KRW	8.27	7.61	7.86	7.50
United Kingdom	1 GBP	12.63	12.19	12.47	11.77
U.S.A.	1 USD	10.46	9.05	10.08	8.57

28. Related parties

Relationships

The Group has related party relationships with the Company’s largest shareholder, its associates, joint ventures and with its Board members and Group Management. The Company’s largest shareholder, Investor AB, controls approximately 22% (22) of the voting rights in Atlas Copco. The subsidiaries that are directly owned by the Parent Company are presented in note A21 to the financial statements of the Parent Company. Holding companies and operating subsidiaries are listed in note A22. Information about associated companies and joint ventures is found in note 14. Information about Board members and Group Management is presented on pages 55–58.

Transactions and outstanding balances

The Group has not had any transactions with Investor AB during the year, other than dividends declared and has no outstanding balances with Investor AB. Investor AB has controlling or significant influence in companies with which Atlas Copco may have transactions within the normal course of business. Any such transactions are made on commercial terms. The Group has leasing agreements related to buildings owned by the Group’s German pension trust. These agreements are on market terms. “Lease liabilities” in the table below represents the outstanding balances over the lease term with the Group’s German pension trust. In addition, the Group sold various products and purchased goods through certain associated companies and joint ventures on terms generally similar to those prevailing with unrelated parties.

The following table summarizes the Group’s related party transactions with its associates, joint ventures and other related parties:

	2022	2021
Revenues	16,202	20,923
Goods purchased	29,232	23,923
Service purchased	101,90	90,90
At Dec. 31:
Trade receivables	9,25	25,25
Trade payables	16,14	14,14
Lease liabilities	340	227

Compensation to key management personnel

Compensation to the Board and to Group Management is disclosed in note 5.

Atlas Copco 2022 107

FINANCIAL STATEMENTS – NOTES

Introduction

• This is Atlas Copco
• The year in review
• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
• Parent company
• Other information

Financial statements, Parent Company

Income statement

For the year ended December 31

Amounts in MSEK

	Note	2022	2021
Administrative expenses	A2	–733	–764
Other operating income	A3	278	121
Other operating expenses	A3	–9	–1
Operating loss		–464	–644
Financial income	A4	30,613	3,858
Financial expenses	A4	–342	–394
Profit after financial items		29,807	2,820
Appropriations	A5	2,946	2,695
Profit before tax		32,753	5,515
Income tax	A6	–320	–339
Profit for the year		32,433	5,176

Balance sheet

As at December 31

Amounts in MSEK

	Note	2022	2021
ASSETS
Non-current assets
Intangible assets	A7	8	13
Tangible assets	A8	33	34
Financial assets:
Deferred tax assets	A9	55	63
Shares in Group companies	A10, A21	179,491	163,569
Other financial assets	A11	255	223
Total non-current assets		179,842	163,902
Current assets
Income tax receivables		461	610
Other receivables	A12	4,471	9,347
Cash and cash equivalents	A13	0	0
Total current assets		4,932	9,957
TOTAL ASSETS		184,774	173,859

As at December 31

Amounts in MSEK

	Note	2022	2021
EQUITY
Restricted equity
Share capital		786	786
Legal reserve		4,999	4,999
Total restricted equity		5,785	5,785
Non-restricted equity
Reserve for fair value		–1,180	–1,180
Retained earnings		125,264	139,595
Profit for the year		32,433	5,176
Total non-restricted equity		156,517	143,591
TOTAL EQUITY		162,302	149,376
PROVISIONS
Post-employment benefits	A15	203	205
Other provisions	A16	501	813
Total provisions		704	1,018
LIABILITIES
Non-current liabilities
Borrowings	A17	18,532	22,195
Total non-current liabilities		18,532	22,195
Current liabilities
Borrowings	A17	2,861	926
Other liabilities	A18	375	344
Total current liabilities		3,236	1,270
TOTAL EQUITY AND LIABILITIES		184,774	173,859

Statement of comprehensive income

For the year ended December 31

Amounts in MSEK

	Note	2022	2021
Profit for the year		32,433	5,176
Other comprehensive income for the year		–	–
Total comprehensive income for the year		32,433	5,176

Atlas Copco 2022 108

FINANCIAL STATEMENTS

Introduction

• This is Atlas Copco
• The year in review
• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
• Parent company
• Other information

Statement of changes in equity

MSEK unless otherwise stated	Share capital	Legal reserve	Reserve for fair value – translation reserve	Retained earnings	Total
Number of shares outstanding
Opening balance, Jan. 1, 2022	1,218,190,368	786	4,999	–1,180	144,771
Total comprehensive income for the year				32,433	32,433
Ordinary dividend				–9,250	–9,250
Share split	4,872,761	472	–	–	–
Redemption of shares	–1,223,320	239	–157	–9,575	–9,732
Increase of share capital through bonus issue	157	–157
Acquisition series A shares	–1,870,000	–864		–864	–864
Divestment series A shares	2,595,364	381		381	381
Share-based payment, equity settled:
– expense during the year				89	89
– exercise of options				–131	–131
Closing balance, Dec. 31, 2022	4,868,356,965	786	4,999	–1,180	157,697
Opening balance, Jan. 1, 2021	1,216,192,653	786	4,999	–1,180	147,684
Total comprehensive income for the year				5,176	5,176
Ordinary dividend				–8,889	–8,889
Acquisition series A shares	–700,000	–416		–416	–416
Divestment series A shares	2,697,715	1,451		1,451	1,451
Share-based payment, equity settled:
– expense during the year				212	212
– exercise of options				–447	–447
Closing balance, Dec. 31, 2021	1,218,190,368	786	4,999	–1,180	144,771

See note A14 for additional information.

Statement of cash flows

For the year ended December 31, MSEK

	2022	2021
Cash flows from operating activities
Operating loss	–464	–644
Adjustments for:
Depreciation	12,11
Capital gain/loss and other non-cash items	–686	–596
Operating cash deficit	–1,138	–1,229
Net financial items received	22,834	3,639
Group contributions received	2,695	88
Taxes paid	–309	–210
Cash flow before change in working capital	24,082	2,288
Change in Operating receivables	5,276	9,573
Operating liabilities	30	60
Change in working capital	5,306	9,633
Net cash from operating activities	29,388	11,921
For the year ended December 31, MSEK	2022	2021
Cash flow from investing activities
Investments in tangible assets	–6	–3
Investments in intangible assets	–	–5
Investments in subsidiaries	–8,186	–1,833
Repayments/investments in financial assets	–3	–2
Net cash from investing activities	–8,195	–1,843
Cash flow from financing activities
Dividends paid	–9,250	–8,889
Redemption of shares	–9,732	–
Repurchase and divestment of own shares	–483	1,034
Change in interest-bearing liabilities	–1,728	–2,231
Net cash from financing activities	–21,193	–10,086
Net cash flow for the year	0	–8
Cash and cash equivalents, Jan. 1	0	8
Net cash flow for the year	0	–8
Cash and cash equivalents, Dec. 31	0	0

Atlas Copco 2022 109

FINANCIAL STATEMENTS

Introduction

• This is Atlas Copco
• The year in review
• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
• Parent company
• Other information

Notes to the Parent Company financial statements

A1. Significant accounting principles

Atlas Copco AB is the ultimate Parent Company of the Atlas Copco Group and is headquartered in Nacka, Sweden.# FINANCIAL STATEMENTS – NOTES

Introduction

Its operations include administrative functions, holding company functions as well as parts of Atlas Copco Financial Solutions (Treasury). The financial statements of Atlas Copco AB have been prepared in accordance with the Swedish Annual Accounts Act and the recommendation RFR 2, “Accounting for Legal Entities”, hereafter referred to as “RFR 2”, issued by the Swedish Financial Reporting Board. In accordance with RFR 2, parent companies that issue consolidated financial statements according to International Financial Reporting Standards (IFRS), as endorsed by the European Union, shall present their financial statements in accordance with IFRS, to the extent these accounting principles comply with the Swedish Annual Accounts Act and may use exemptions from IFRS provided by RFR 2 due to Swedish accounting or tax legislation. The financial statements are presented in Swedish krona (SEK), rounded to the nearest million. The parent company’s accounting principles have been consistently applied to all periods presented unless otherwise stated. The financial statements are prepared using the same accounting principles as described in note 1 in the Group’s consolidated financial statements, except for those disclosed in the following sections. For discussion regarding accounting estimates and judgments, see page 71.

Subsidiaries

Participations in subsidiaries are accounted for by the Parent Company at his- torical cost. The carrying amounts of participations in subsidiaries are reviewed for impairment in accordance with IAS 36, Impairment of Assets. See the Group’s accounting policies, Impairment of financial assets, for further details. Transaction costs incurred in connection with a business combination are accounted for by the Parent Company as part of the acquisition costs and are not expensed.

Lease contracts

All lease contracts entered into by the Parent Company are expensed continuously on a straight-line basis over the lease term. Leases are not carried as assets, since the risk and rewards associated with ownership of the assets have not been transferred to the Parent Company.

Employee bene fits

Defined benefit plans

Dened benet plans are not accounted for in accordance with IAS 19. In the Parent Company dened benet plans are accounted for according to the Swedish law regarding pensions, ”Tryggandelagen” and regulations issued by the Swedish Financial Supervisory Board. The primary dierences as compared to IAS 19 are the way discount rates are xed, that the calculation of dened benet obligations is based on current salary levels, without consideration of future salary increases and that all actuarial gains and losses are included in prot or loss as they occur.

Share-based payments

The share-based payments that the Parent Company has granted to employ- ees in the Parent Company are accounted for using the same principle as described in note 1 in the Group’s consolidated nancial statements. The share-based payments that the Parent Company has granted to employees in subsidiaries are not accounted for as an employee expense in the Parent Company, but are recognized against Shares in Group companies. This vesting cost is accrued over the same period as in the Group and with a corre- sponding increase in equity for equity-settled programs and as a change in liabilities for cash-settled programs.

Financial guarantees

Financial guarantees issued by the Parent Company for the benet of subsid- iaries are not valued according to IFRS 9. They are reported as contingent liabil- ities, unless it becomes probable that the guarantees will lead to payments. In such case, provisions will be recorded.

Hedge accounting

Interest-bearing liabilities denominated in other currencies than SEK, used to hedge currency exposure from investments in shares of foreign subsidiaries are not translated using the foreign exchange rates on the reporting date, but measured based on the exchange rate the day that the hedging relation was established. Derivatives used to hedge investments in shares in foreign subsidiaries are recognized at fair value and changes therein are recognized in prot or loss. The corresponding fair value change on shares in subsidiaries is recognized in prot or loss, as fair value hedge accounting is applied.

Group and shareholders’ contributions

In Sweden, Group contributions are deductible for tax purposes but share- holders’ contributions are not. Group contributions are recognized as appro- priations in the income statement. Shareholders’ contributions are recognized as an increase of Shares in Group companies and tested for impairment.

Atlas Copco 2022
110
FINANCIAL STATEMENTS – NOTES

Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash ows
Notes
• Parent company
Other information

A2. Employees and personnel expenses and remuneration to auditors

Average number of employees

	2022			2021
	Women	Men	Total	Women	Men	Total
Sweden	67	43	110	64	43	107

Women in Atlas Copco Board and Management, %

	Dec. 31, 2022	Dec. 31, 2021
Board of Directors excl. employee representatives	22	22
Group Management	33	13

Salaries and other remunerations

	2022		2021
	Board members and Group Management 1)	Other employees	Board members and Group Management 1)	Other employees
Sweden	84	123	107	107
of which variable compensation	23	20

1) Includes 8 (7) board members who receive fees from Atlas Copco AB as well as the President and CEO and 5 (5) positions of the Group Management who are employed by and receive salary and other fees from the Company. For information regarding remuneration and other fees for members of the Board, the President and CEO, and other members of Group Management, see note 5 of the consolidated nad financial statements.

Pension benets and other social costs

	2022	2021
Pension benefits and other social costs
Contractual pension benets fContractual pension benefits for Board members and Group Management	12	12
Contractual pension benets fContractual pension benefits for other employees	25	23
Other social costs	64	79
Total	101	114
Pension obligations to former members of Group Management	4	5

Remuneration to auditors

Audit fees and consultancy fees for advice or assistance other than audit, were as follows:

	2022	2021
Ernst & Young
– audit fee	6	5
– other services, tax	0	0
– other services, other	0	1
Total	6	6

Audit fee refers to audit of the ne financial statements and the accounting records. For the Parent Company the audit also includes the administration of the business by the Board of Directors, the President and CEO. Tax services include tax compliance services. Other services essentially comprise consultancy services. At the Annual General Meeting Ernst & Young AB was re-elected as the company’s auditor until the end of the annual general meeting 2023.

A4. Financial income and expenses

	2022	2021
Interest income:
– cash and cash equivalents	1	0
– receivables from Group companies	38	9
– derivatives	–	0
Dividend income from Group companies	30 536	3 849
Capital gain	–	0
Change in fair value:
– other assets	31	–
Foreign exchange gain, net	7	0
Financial income	30 613	3 858
Interest expense:
– borrowings	–168	–189
– liabilities to Group companies	–101	–29
Change in fair value:
– other liabilities	–61	0
Foreign exchange loss, net	–4	–1
Impairment loss:
– write-down of shares in Group companies	–8	–175
Financial expenses	–342	–394
Financial income, net	30 271	3 464

Following table presents the net gain or loss by category of nancial instruments.

	2022	2021
Net gain/loss on
– loans and receivables, incl. bank deposits	–126	–181
– other assets	31	–
– other liabilities	–162	–29
Prot from shares in Group companies	30 528	3 674
Total	30 271	3 464

Prot from shares in Group companies mainly refers to dividend income from sub- sidiaries and capital gains from transfer of shares in subsidiaries. These transac- tions are eliminated in the Group accounts since they are internal. For further infor- mation about the hedges, see note 27 of the consolidated nancial statements.

A3. Other operating income and expense

	2022	2021
Commissions received	271	121
Other operating income	7	0
Total other operating income	278	121
Exchange-rate dierences, net	–9	–1
Other operating expense	–	0
Total other operating expense	–9	–1

Atlas Copco 2022
111
FINANCIAL STATEMENTS – NOTES

Introduction
This is Atlas Copco
The year in review
• Financials
Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash ows
Notes
• Parent company
Other information

A5. Appropriations

	2022	2021
Group contributions paid	–3	–9
Group contributions received	2 949	2 704
Total	2 946	2 695

A8. Property, plant and equipment

	2022		2021
	Buildings and land	Machinery and equipment	Total	Buildings and land
Accumulated cost
Opening balance, Jan. 1	48	68	116	46
Investments	0	6	6	2
Disposals	–	–14	–14	–
Closing balance, Dec. 31	48	60	108	48
Accumulated depreciation
Opening balance, Jan. 1	19	63	82	16
Depreciation for the year	3	4	7	3
Disposals	–	–14	–14	–
Closing balance, Dec. 31	22	53	75	19
Carrying amount
Opening balance, Jan. 1	29	5	34	30
Closing balance, Dec. 31	26	7	33	29

Buildings and land relates to improvements in leased properties. Depreciation is accounted for under administrative expenses in the Income Statement. The leasing costs for assets, such as rented premises, cars and oce equip- ment are reported among administrative expenses and amounted to 62 (58). Future payments for non-cancelable leasing contracts amounted to 611 (175) and fall due as follows in the table beside.## A6. Income tax

	2022	2021
Less than one year	65	59
Between one and ve years	258	116
More than ve years	288	–
Total	611	175

	2022	2021
Current tax	–312	–219
Deferred tax	–8	–120
Total	–320	–339

| Profit before taxes | 32 753 | 5 515 |
| The Swedish corporate tax rate, % | 20.6 | 20.6 |
| National tax based on profit before taxes | –6 747 | –1 137 |
| Tax eects of: | | |
| – non-deductible expenses | 70 | –39 |
| – tax exempt income | 6 290 | 793 |
| – deductible expenses, not recognized in Income statement | 3 | 26 |
| – deductible income, not recognized in Income statement | 7 | – |
| – tax nancial net | 26 | 48 |
| – controlled foreign company taxation | –27 | –24 |
| – adjustments from prior years | 58 | –6 |
| Total | –320 | –339 |

Effective tax in %: 1.0 (6.1)

The Parent Company’s eective tax rate of 1.0% (6.1) is primarily aected by non-taxable income such as dividends from Group companies.

A7. Intangible assets

Capitalized expenditures for computer programs

	2022	2021
Accumulated cost
Opening balance, Jan. 1	72	67
Investments	–	5
Disposals	–38	–
Closing balance, Dec. 31	34	72
Accumulated depreciation
Opening balance, Jan. 1	59	55
Depreciation for the year	5	4
Disposals	–38	–
Closing balance, Dec. 31	26	59
Carrying amount
Opening balance, Jan. 1	13	12
Closing balance, Dec. 31	8	13

A9. Deferred tax assets and liabilities

	Assets	Liabi lities	Net balance	Assets	Liabi lities	Net balance
Post-employment benefits	42	–	42	42	–	42
Other provisions	13	–	13	21	–	21
Total	55	–	55	63	–	63

The following reconciles the net balance of deferred taxes at the beginning of the year to that at the end of the year:

	2022	2021
Net opening balance, Jan. 1	63	183
Charges to prot for the year	–8	–120
Net closing balance, Dec. 31, net	55	63

A10. Shares in Group companies

	2022	2021
Accumulated cost
Opening balance, Jan. 1	243	324
Investments	3 282	808
Net investment hedge	450	128
Shareholders’ contribution	15 477	2 106
Closing balance, Dec. 31	259	254
Accumulated write-up
Opening balance, Jan. 1	600	600
Closing balance, Dec. 31	600	600
Accumulated write-down
Opening balance, Jan. 1	–80	355
Write-down	–8	–175
Closing balance, Dec. 31	–80	363
Total	179	491

For further information about Group companies, see note A21.

A11. Other nancial assets

	2022	2021
Endowment insurances	199	201
Financial assets measured at amortized cost:
– other nancial receivables	56	22
Closing balance, Dec. 31	255	223

Endowment insurances relate to dened contribution pension plans and are pledged to the pension beneciary (see note A15 and A20).

A12. Other receivables

	2022	2021
Receivables from Group companies	4 396	9 288
Financial assets measured at amortized cost:
– other receivables	17	16
Prepaid expenses and accrued income	58	43
Closing balance, Dec. 31	4 471	9 347

A13. Cash and cash equivalents

	2022	2021
Cash and cash equivalents measured at amortized cost:
– cash	0	0
Closing balance, Dec. 31	0	0

The Parent Company’s guaranteed, but unutilized, credit lines equaled 7133 (6 551).

A14. Equity

For information on share transactions and mandates approved by the Annual General Meeting and proposed dividend for 2022, see note 20 in the consoli- dated nancial statements.

Reserves

The Parent Company’s equity includes certain reserves which are described as follows:

Legal reserve

The legal reserve is a part of the restricted equity and is not available for distribution.

Reserve for fair value – Translation reserve

The reserve comprises translation of intragroup receivables from or liabilities to foreign operations that in substance are part of the net investment in the foreign operations, as well as cash ow hedges to convert variable interest rates to xed interest rates.

A15. Post-employment benets

	Dened contribution pension plans	Dened benet pension plans	Total	Dened contribution pension plans	Dened benet pension plans	Total
Opening balance, Jan. 1	201	4	205	183	5	188
Provision made	26	1	27	42	–	42
Provision used	–28	–1	–29	–24	–1	–25
Closing balance, Dec. 31	199	4	203	201	4	205

The Parent Company has endowment insurances of 199 (201) relating to dened contribution pension plans. The insurances are recognized as other nancial assets, and pledged to the pension beneciary.

Description of dened benet pension plans

The Parent Company has two dened benet pension plans. The ITP plan is a nal salary pension plan covering the majority of salaried employees in Atlas Copco AB which benets are secured through the Atlas Copco pension trust. The second plan relates to retired former senior employees. These pension arrangements are provided for.

	Funded pension	Unfunded pension	Total	Funded pension	Unfunded pension	Total
Dened benet obligations	172	4	176	150	5	155
Fair value of plan assets	–625	–	–625	–672	–	–672
Present value of net obligations	–453	4	–449	–522	5	–517
Not recognized surplus	453	–	453	522	–	522
Net amount recognized in balance sheet	0	4	4	–	5	5

	Funded pension	Unfunded pension	Total	Funded pension	Unfunded pension	Total
Dened benet obligations at Jan. 1	150	5	155	147	5	152
Service cost	4	0	4	4	–	4
Interest expense	4	0	4	5	–	5
Benets paid from plan	–8	–1	–9	–8	–1	–9
Other changes in obligations	22	0	22	2	1	3
Dened benet obligations at Dec. 31	172	4	176	150	5	155

	Funded pension	Unfunded pension	Total	Funded pension	Unfunded pension	Total
Fair value of plan assets at Jan. 1	672	–	672	460	–	460
Return on plan assets	–39	–	–39	220	–	220
Payments/Renumeration of plan assets	–8	–	–8	–8	–	–8
Fair value of plan assets at Dec. 31	625	–	625	672	–	672

	2022	2021
Pension commitments provided for in the balance sheet
Costs excluding interest	16	15
Total	16	15
Pension commitments provided for through insurance contracts
Service cost	25	23
Total	25	23
Net cost for pensions, excluding taxes	41	38
Special employer’s contribution	7	6
Total	48	44

Pension expenses excluding taxes for the year, included within administrative expenses amounted to 41 (38) of which the Board members and Group Management 12 (12) and others 29 (26).

The Parent Company’s share in plan assets fair value in the Atlas Copco pension trust amounts to 625 (672) and is allocated as follows:

	2022	2021
Equity securities	61	54
Bonds	38	50
Real estate	–	308
Alternative investments	260	212
Cash and cash equivalents	266	48
Total	625	672

The plan assets of the Atlas Copco pension trust are not included in the nancial assets of the Parent Company. The return on plan assets in the Atlas Copco pension trust amounted to –6.91% (47.7) inclusive of MSEK 8.1 (7.7) paid remuneration. The Parent Company adheres to the actuarial assumptions used by TheSwedish Pension Registration Institute (PRI) i.e. discount rate 2.9% (2.9). The Parent Company estimates MSEK 13 will be paid to dened benet pension plans during 2023.

A16. Other provisions

	2022	2021
Opening balance, Jan. 1	813	478
During the year:
– provisions made	–245	496
– provisions used	–67	–161
Closing balance, Dec. 31	501	813

Other provisions include primarily provisions for costs related to employee option programs accounted for in accordance with IFRS 2 and UFR 7.

A17. Borrowings

	Non-current	Current
	Carrying amount	Fair value
Medium Term Note Program MEUR 500 2023	2 861	3 500
Medium Term Note Program MEUR 500 2026	5 076	5 063
Bilateral borrowings EIB MEUR 200 2022	–	–
Bilateral borrowings NIB MEUR 200 2024	2 100	2 257
Bilateral borrowings EIB MEUR 200 2027	2 030	1 958
Bilateral borrowings EIB MEUR 100 2028	1 012	959
Non-current borrowings from Group companies	8 314	9 614
Less current portion of long-term borrowings	–2 861	–3 500
Total non-current borrowings	18 532	19 851
Current
Current portion of long-term borrowings	2 861	3 500
Total current borrowings	2 861	3 500
Closing balance, Dec. 31	21 393	23 351
Whereof external borrowings	13 079	13 737

The dierence between carrying value and fair value relates to the measurement method as certain liabilities are reported at amortized cost and not at fair value. Changes in interest rates and credit margins create the dierence between fair value and amortized cost. In 2022, Atlas Copco AB reduced its external borrowings. In February, MEUR 186 of a MEUR 500 public bond with maturity February 2023 was repurchased and in December MEUR 100 of a maturing EIB loan was repaid.

The following table shows the maturity structure of the Parent Company’s external borrowings.

Maturity	Fixed	Floating 1)	Carrying amount	Fair value
2023	2 861	–	2 861	3 500
2024	–	2 100	2 100	2 257
2026	5 076	–	5 076	5 063
2027	2 030	–	2 030	1 958
2028	1 012	–	1 012	959
Total	10 979	2 100	13 079	13 737

1) Floating interest in the table is borrowings with xings shorter or equal to six months.# FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco
The year in review
* Financials
* Group
* Consolidated income statement
* Consolidated statement of comprehensive income
* Consolidated balance sheet
* Consolidated statement of changes in equity
* Consolidated statement of cash flows
* Notes
* Parent company
* Other information

A18. Other liabilities

	2022	2021
Accounts payable	15	16
Liabilities to Group companies	90	64
Other financial liabilities:
– other liabilities	38	16
Accrued expenses and prepaid income	232	248
Closing balance, Dec. 31	375	344

Accrued expenses include items such as social costs, vacation pay liability, and accrued interest.

A19. Financial exposure and principles for control of financial risks

A20. Assets pledged and contingent liabilities

		2022	2021
Assets pledged for pension commitments
Endowment insurances		199	201
Total		199	201
Contingent liabilities
Sureties and other contingent liabilities:
– for external parties		3	4
– for Group companies		10 063	3 262
Total		10 066	3 266

Sureties and other contingent liabilities include bank and commercial guarantees and performance bonds. The increase compared to last year mainly derives from the issuance of an EMTN bond for the total amount of 5,572 MSEK and Parent Company Guarantees provided by Atlas Copco AB on behalf of its subsidiaries.

Parent Company borrowings
Atlas Copco AB had MSEK 13,079 (15,694) of external borrowings and MSEK 8,314 (7,427) of internal borrowings at December 31, 2022. Derivative instruments are used to manage the currency and interest rate risk in line with policies set by the Financial Risk Management Committee, see note 27 in the consolidated financial statements.

Hedge accounting
The Parent Company hedges shares in subsidiaries through loans of MEUR 2,392 (2,291) and derivatives of MEUR 0 (100). The deferral hedge accounting of the loans is based on a RFR 2 exemption. The derivative is an internal contract with Atlas Copco Finance DAC resulting with MSEK 0 (–4) to Receivables from Group companies in below table.

Financial credit risk
Credit risk on financial transactions is the risk that the Parent Company incurs losses as a result of non-payment by counterparts related to the Parent Company’s investments, bank deposits or derivative transactions. For further information regarding investment and derivative transactions, see note 27 of the consolidated financial statements.

The table below shows the actual exposure of financial instruments as per December 31.

	2022	2021
Cash and cash equivalents	0	0
Receivables from Group companies	4 396	9 288
Other	131	81
Total	4 527	9 369

Fair value hierarchy
Fair values are based on observable market prices or, in the case that such prices are not available, on observable inputs or other valuation techniques. Amounts shown in other notes are unrealized and will not necessarily be realized. For more information about fair value hierarchy, see note 27 of the consolidated financial statements.

There are no level 3 instruments in the Parent Company.

Valuation methods
* Derivatives
Fair values of forward exchange contracts are calculated based on prevailing markets. Interest rate swaps are valued based on market rates and present value of future cash flows.
* Interest-bearing liabilities
Fair values are calculated based on market rates and present value of future cash flows.

The Parent Company’s financial instruments by category
The carrying value for the Parent Company’s financial instruments corresponds to fair value in all categories except for borrowings. See A17 for additional information.

A21. Directly owned subsidiaries

	Number of shares	Percent held	Carrying value	Number of shares	Percent held	Carrying value
Directly owned product companies
Atlas Copco Airpower n.v., Wilrijk	76 416	100	46 744	76 415	100	46 806
Directly owned customer centers
AGRE Kompressoren GmbH, Steyr	200 000	100	7	000 000	100	7
ALUP Kompressoren AG, Oftringen	3 500	100	25	3 500	100	25
ALUP Kompressoren Polska sp. z.o.o., Janki	9 000	100	14	9 000	100	14
Atlas Copco (Cyprus) Ltd., Nicosia	99 998	100	0	99 998	100	0
Atlas Copco (India) Ltd., Pune	21 731 917	100	898	21 731 917	100	874
Atlas Copco (Ireland) Ltd., Dublin	250 000	100	28	250 000	100	28
Atlas Copco (Malaysia), Sdn. Bhd., Shah Alam	1 000 000	100	13	1 000 000	100	14
Atlas Copco (Philippines) Inc., Binan	677 980	100	69	677 980	100	69
Atlas Copco (Schweiz) AG, Studen	8 000	100	64	8 000	100	63
Atlas Copco (South East Asia) Pte.Ltd., Singapore	4 500 000	100	35	4 500 000	100	35
Atlas Copco (Thailand) Limited, Bangkok	1 0/100 1)	0	–	/100 1)		–
Atlas Copco Argentina S.A.C.I., Buenos Aires	5 120 025	93/100 1)	84	5 120 025	93/100 1)	84
Atlas Copco Brasil Ltda, Barueri	70 358 841	100	255	70 358 841	100	257
Atlas Copco Canada Inc., Toronto	6 946	100	2 185	6 946	100	2 185
Atlas Copco Chile SpA, Santiago	24 998	100	7	24 998	100	6
Atlas Copco Compressor AB, 556155-2794, Nacka	60 000	100	36	60 000	100	36
Atlas Copco Eastern Africa Limited, Nairobi	482 999	100	40	482 999	100	40
Atlas Copco Equipment Egypt S.A.E., Cairo	5 0/100 1)	5	5	0/100 1)		4
Atlas Copco GmbH, Vienna	1 100 43	1	100	1	100	43
Atlas Copco Indoeuropeiska AB, 556155-2760, Nacka	3 500	100	20	3 500	100	20
Atlas Copco KK, Tokyo	100 000	100	39	100 000	100	39
Atlas Copco Kompressorteknik A/S, Albertslund	4 000	100	5	4 000	100	5
Atlas Copco Maroc SA, Casablanca	3 960	99	6	3 960	99	6
Atlas Copco Polska Sp. z o.o., Warsaw	4 000	100	80	4 000	100	80
Atlas Copco Services Middle East OMC, Manama	500	100	24	500	100	27
	Number of shares	Percent held	Carrying value	Number of shares	Percent held	Carrying value
Atlas Copco Ukraine LLC, Kiev	10 000 000	100	3	10 000 000	100	3
Atlas Copco Venezuela SA, Valencia	1 592	100	9	25 812 000	100	0
Sociedade Atlas Copco Portugal Unipessoal Ld, Porto Salvo	1 100	15	1	1 100	15	1
Directly owned holding companies and others
AB Atlas Diesel, 556019-1610, Nacka	1000	100	0	1 000	100	0
Atlas Copco A/S, Langhus	2 500	100	45	2 500	100	44
Atlas Copco Beheer B.V., Zwijndrecht	15 712	100	76	15 712	100	84
Atlas Copco Finance Belgium BVBA, Wilrijk	1 0/100 1)	0	0	1 0/100 1)	0	0
Atlas Copco Finance DAC, Dublin	5 162 000 001	100	54 878	5 162 000 001	100	54 428
Atlas Copco France Holding S.A., Cergy Pontoise	278 255	100	321	278 255	100	341
Atlas Copco Holding GmbH, Essen	2 100	9	3 777	2 100	4	3 351
Atlas Copco Internationaal B.V., Zwijndrecht	10 002	100	27 455	10 002	100	27 455
Atlas Copco Järla Holding AB, 556062-0212, Nacka	95 000	100	716	95 000	100	716
Atlas Copco Nacka Holding AB, 556397-7452, Nacka	100 000	100	12	100 000	100	12
Atlas Copco Sickla Holding AB, 556309-5255, Nacka	1 000	100	35 590	1 000	100	25 084
Econus S A, Montevideo	21 582 605	100	17	21 582 605	100	17
Industria Försäkringsaktiebolag, Industria Insurance Company Ltd 516401-7930, Nacka	300 000	100	30	300 000	100	30
JSC Atlas Copco, Moscow	2 644	100	185	2 644	100	185
Oy Atlas Copco Ab, Vantaa	150	100	33	150	100	33
Power Tools Distribution n.v., Hoeselt	1 0/100 1)	3	1	0/100 1)	4	1
Saltus Industrial Technique AB, 559053-5455, Nacka	500	100	0	500	100	0
Carrying amount, Dec. 31			179 491			163 569

1) First figure: percentage held by Parent Company, second figure: percentage held by Atlas Copco Group.

A22. Related parties

Relationships
The Parent Company has related party relationships with its largest shareholder, its subsidiaries, its associates, its joint ventures and with its Board members and Group Management. The Parent Company’s largest shareholder, Investor AB, controls approximately 22% (22) of the voting rights in Atlas Copco AB. The subsidiaries that are directly owned by the Parent Company are presented in note A21 and all directly and indirectly owned operating subsidiaries are listed on the following pages. Information about Board members and Group Management is presented on pages 55–58.

Transactions and outstanding balances
The Group has not had any transactions with Investor AB during the year other than dividends declared and has no outstanding balances with Investor AB. Investor AB has controlling or significant influence in companies which Atlas Copco AB may have transactions with in the normal course of business. Any such transactions are made on commercial terms.

The following table summarizes the Parent Company’s transactions with Group companies:

	2022	2021
Revenues
Dividends	30 536	3 849
Group contribution	2 949	2 704
Interest income	38	9
Expenses
Group contribution	–3	–9
Interest expenses	–101	–29
Receivables	4 396	9 288
Liabilities	8 404	7 491
Guarantees	10 063	3 262

The following details directly and indirectly owned holding and operational subsidiaries (excluding branches), presented by country/area of incorporation.

Country/Area	Company	Location (City)
Algeria	SPA Atlas Copco Algérie	Algiers
Angola	Atlas Copco Angola Ltd	Luanda
Argentina	Atlas Copco Argentina S.A.C.I.	Buenos Aires
Australia	Atlas Copco Australia Pty Ltd	Blacktown
	Ausmedi Ausmedi International International Pty. Ltd.	Melbourne
	LEWA Australia PTY LTD	East Perth
	SCS Filtration Melbourne
	Walker Filtration Pty.
## Group
## Consolidated income statement
## Consolidated statement of comprehensive income
## Consolidated balance sheet
## Consolidated statement of changes in equity
## Consolidated statement of cash ows
## Notes

A22. Related parties, continued

Country/Area	Company	Location (City)
Austria	AGRE Kompressoren GmbH	Steyr
	Atlas Copco GmbH	Vienna
	LEWA Austria GmbH	Vienna
	Medgas-Technik medical systems GmbH	Leisach
Bahrain	Atlas Copco Services Middle East OMC	Manama
Bangladesh	Atlas Copco Bangladesh Ltd.	Dhaka
Belgium	Atlas Copco Airpower n.v.	Wilrijk
	Atlas Copco Belgium n.v.	Overijse
	Atlas Copco Finance Belgium bv	Wilrijk
	Atlas Copco Rental Europe n.v.	Boom
	Atlas Copco Support Services n.v.	Wilrijk
	Atlas Copco Vacuum Belgium nv	Estaimpuis
	EDMAC Europe n.v.	Wilrijk
	Geveke Compressor Technology nv	Vilvoorde
	Geveke Process Technology bv	Vilvoorde
	International Compressor Distribution n.v.	Wilrijk
	MultiAir BELUX nv	Deinze
	Power Tools Distribution n.v.	Hoeselt
Bolivia	Atlas Copco Bolivia S.A Compresores, Maquinaria y Servicio	Santa Cruz
Brazil	Atlas Copco Brasil Indústria e Comércio Ltda.	Barueri
	Atlas Copco Brasil Ltda.	Barueri
	Chicago Pneumatic Brasil Ltda.	Barueri
	Edwards Vacuo Ltda.	Sao Paulo
	ISRA VISION Comércio, Serviços, Importação e Exportação Ltda.	Sao Paulo
	Itubombas Locação, Comércio, Importação e Exportação Ltda.	Itu
	LEWA Brasil Equipamentos Ltda.	Sao Paulo
	Leybold do Brasil Ltda.	Jundiaí
	Perceptron do Brazil Ltda.	Sao Paulo
	Pressure Compressores Ltda.	Maringa
Bulgaria	Atlas Copco Bulgaria EOOD	SoaSofia
Canada	Atlas Copco Canada Inc.	Toronto
	Chicago Pneumatic Tool Co. Canada Ltd.	Toronto
	Class 1 Incorporated	Cambridge
	CPC Pumps International Inc.	Burlington
	Entreprises Larry Inc.	Montreal
	Les Pompes À Vide TECHNI-V-AC Inc.	Blainville
	Lucas Drive - 2352341 Ontario Inc.	Burlington
	Sutton Drive - 2485283 Ontario Inc.	Burlington
Chile	Atlas Copco Chile SpA	Santiago
China	Atlas Copco (Wuxi) Compressor Co., Ltd.	Wuxi
	Atlas Copco (Shanghai) Equipment Rental Co., Ltd.	Shanghai
	Atlas Copco Industrial Technique (Shanghai) Co., Ltd.	Shanghai
	Atlas Copco (China) Investment Co., Ltd.	Shanghai
	Atlas Copco (Shanghai) Process Equipment Co., Ltd.	Shanghai
	Atlas Copco (Shanghai) Trading Co., Ltd.	Shanghai
	Bolaite (Shanghai) Trading Co. Ltd.	Shanghai
	Bozhong (Shandong) Industrial Equipment Co., Ltd.	Zibo
	Chinco Vacuum Technique (Zibo) Co., Ltd.	Zibo
	CSK China Co. Ltd.	WuxiWuxi
	CSK Xian China Co. Ltd.	Xian
	Edmac (Shanghai) Trading Co., Ltd.	Shanghai
	Edwards Technologies Trading (Shanghai) Company Ltd.	Shanghai
	Edwards Technologies Vacuum Engineering (Qingdao) Company Ltd.	Qingdao
	Edwards Technologies Vacuum Engineering (Shanghai) Company Ltd.	Shanghai
	Edwards Technologies Vacuum Engineering (Xian) Company Ltd.	Xian
	Factory for Industrial Air Compressors (Jiangmen) Co., Ltd.	Jiangmen
	ISRA VISION (Shanghai) Co. Ltd.	Shanghai
	Jinan Meditech Equipment Installation Engineering Co., Ltd.	Jinan
	Kunshan Q-Tech Air System Technologies Ltd.	Kunshan
	LEWA (Dalian) Fluid Technology Co., Ltd.	Dalian
	LEWA Pumps Dalian Co. Ltd.	Dalian
	Leybold Equipment (Tianjin) Co., Ltd.	Tianjin
	Leybold (Tianjin) International Trade Co.Ltd.	Tianjin
	Linghein (Shanghai) Gas Technologies Co., Ltd.	Shanghai
	Liutech Machinery Equipment Co., Ltd.	Liuzhou
	Liuzhou Tech Machinery Co., Ltd.	Liuzhou
	Meditech (Shanghai) Gas Technology Co., Ltd.	Shanghai
	Perceptron Metrology Technology (Shanghai) Co.,Ltd.	Shanghai
	Q-Tech (Shanghai) Gas Equipment Co.,Ltd.	Shanghai
	Scheugenppflug Resin Metering Technologies co., Ltd.	Suzhou
	Shandong Meditech Technologyy Co.,Ltd.., Ltd.	Jinan
	Shanghai Beacon Medaes Medical Gas Engineering Consulting Co., Ltd.	Shanghai
	Shanghai Tooltec Industrial Tool Co., Ltd.	Shanghai
	Suzhou Since Gas Technology Co., Ltd.	Suzhou
	Wuxi Pneumatech Air/Gas Purity Equipment Co., Ltd.	Wuxi
	Wuxi Shengda Air/Gas Purity Equipment Co., Ltd.	Wuxi
Colombia	Atlas Copco Colombia Ltda	Bogota
Cyprus	Atlas Copco (Cyprus) Ltd.	Nicosia
Czech Republic	ALUP CZ spol. S.r.o	Breclav
	Atlas Copco s.r.o.	Prague
	Atlas Copco Services s.r.o.	Brno
	Edwards s.r.o.	Lutin
	Next Metrology Software s.r.o.	Prague
	Schneider Airsystems s.r.o.	Line
Denmark	Atlas Copco Kompressorteknik A/S	Albertslund
	Oxymat A/S	Helsinge
	Oxymat Ejendomme ApS	Helsinge
	Oxymat Services A/S	Helsinge
	RENO A/S	Give
Egypt	Atlas Copco Equipment Egypt S.A.E.	Cairo
	Atlas Copco Service Egypt	Cairo
Finland	Oy Atlas Copco Ab	Vantaa
	Oy Atlas Copco Kompressorit Ab	Vantaaa
	Oy Atlas Copco Tools Ab	Vantaafi
France	ABAC France S.A.S.	Valence
	Atlas Copco Applications Industrielles S.A.S.	Cergy Pontoise
	Atlas Copco Crépelle S.A.S.	Lille
	Atlas Copco France Holding S.A.	Cergy Pontoise
	Atlas Copco France SAS	Cergy Pontoise
	Edwards SAS	Herblay
	ETS Georges Renault S.A.S.	Saint-Herblain
	Exlair S.A.S.	Saint Ouen L’Aûmone
	FITEC	Tarnos
	LEWA France SAS	Neuville-sur-Oise
	Leybold France SAS	Bourg-Les-Valence
	MultiAir France S.A.S	Chambly
	Perceptron EURL	Montigny le Bretonneux
	Seti-Tec S.A.S.	Lognes
Germany	3D-Shape GmbH	Erlangen
	ALUP-Kompressoren GmbH ALUP-Kompressoren GmbH ¹	Reutlingen
	ARPUMA regel- und fördertechnische Geräte GmbH	Kerpen
	Atlas Copco Beteiligungs GmbH H ¹	Essen
	Atlas Copco Energas GmbH bH ¹	Cologne
	Atlas Copco Holding GmbH H ¹	Essen
	Atlas Copco IAS GmbH bH ¹	Bretten
	Atlas Copco Industry GmbH H ¹	Essen
	Atlas Copco Kompressoren und Drucklufttechnik GmbH  H ¹	Essen
	Atlas Copco Power Technique GmbH bH ¹	Essen
	Atlas Copco Tools Central Europe GmbH bH ¹	Essen
	Desoutter GmbH bH ¹	Maintal
	DF Druckluft-Fachhandel GmbH  GmbH ¹	Herrenberg
	Dipotec GmbH	Neustadt a.d. Donau
	Edwards GmbH	Kirchheim
	Ehrler & Beck Vakuum- und Drucklufttechnik GmbH  H ¹	Renningen
	GP Inspect GmbH	Neuried
	GP Solar GmbH	Neuried
	ISRA Immobilie Darmstadt GmbH H ¹	Darmstadt
	ISRA Immobilie Herten GmbH ISRA Immobilie Herten GmbH ¹	Darmstadt
	ISRA PARSYTEC GmbH bH ¹	Aachen
	ISRA SURFACE VISION GmbH H ¹	Herten
	ISRA VISION GmbH bH ¹	Darmstadt
	ISRA VISION Graphikon GmbH	Berlin
	ISRA VISION LASOR GmbH	Bielefeld
	ISRA VISION PARSYTEC AG C AG ¹	Aachen
	ISRA VISION POLYMETRIC GmbH	Darmstadt
	KDS Kompressoren- und Druckluftservice GmbH H ¹	Essen
	LEWA GmbH H ¹	Leonberg
	LEWA Deutschland GmbH H ¹	Leonberg
	Leybold Dresden GmbH	Dresden
	Leybold GmbH	Cologne
	Leybold Real Estate GmbH H ¹	Cologne
	Medgas-Technik GmbH Medical-Technology ology ¹	Berndroth
	metronom Automation GmbH metronom Automation GmbH ¹	Mainz
	nano-puricpurification solutions GmbH ation solutions GmbH ¹	Krefeld
	Perceptron GmbH	Munich
	P-Flow AcquiCo GmbH H ¹	Wangen I'm Allgau
	P-Flow HoldCo GmbH H ¹	Wangen I'm Allgau
	PMH Druckluft GmbH H ¹	Moers
	Pumpenfabrik Wangen GmbHPumpenfabrik Wangen GmbH¹	Wangen I'm Allgau
	QUISS Qualitäts-Inspektionssysteme und Service GmbH  H ¹	Puchheim
	Scheugenpug GmbH Scheugenpflug GmbH ¹	Neustadt a.d. Donau
	Schneider Druckluft GmbH Schneider Druckluft GmbH ¹	Reutlingen
	soft2tec GmbH H ¹	Russelsheim
	Synatec GmbH H ¹	Leinfelden-Echterdingen
	Vision Experts GmbH	Karlsruhe
Greece	Atlas Copco Hellas AE	Koropi
Hong Kong	Atlas Copco China/Hong Kong Ltd	Hong Kong
Hungary	Atlas Copco Hungary Kft	Szigetszentmiklós
India	Atlas Copco (India) Ltd.	Pune
	Edwards India PrivateLtd.te Ltd.	Pune
	HHV Pumps Private Limited	Bangalore
	ISRA VISION INDIA Private Limited	Mumbai
	LEWA Pumps India Pvt Ltd.	Chennai
	Leybold India Pvt Ltd.	Pune
	Perceptron Non-Contact Metrology Solutions Pvt Ltd.	Chennai
Indonesia	PT Atlas Copco Indonesia	Jakarta
Iraq	Atlas Copco Iraq LLCLC	Erbil
Ireland	Atlas Copco (Ireland) Ltd.	Dublin
	Atlas Copco Finance DAC	Dublin
	Edwards Vacuum Technology Irelandechnology Ireland Ltd	Dublin
Israel	Edwards Israel Vacuum Vacuum Ltd	Kiryat Gat
Italy	ABAC Aria Compressa S.r.l	Robassomero
	Atlas Copco BLM S.r.l.	Milan
	Atlas Copco Italia S.r.l.	Milan
	Ceccato Aria Compressa S.r.l	Vicenza
	Desoutter Industrial Tool SrL	Lissone
	DGM S.r.l.	Sovizzozo (VI)
	Edwardss S.r.l.	Milan
	Eurochiller S.r.l.	Castello d'Agogna (Pv)
	Fiac Professional Air Compressors S.r.l.	Bologna
	FIAC S.r.l.	Bologna
	LEWA Italy S.r.l.	Rho
	Leybold Italia S.r.l	Milan
	MultiAir Italia S.r.l	Cinisello Balsamo
	SCB S.r.l.	Villar San Costanzo
	STERI Srl	Torino
	Varisco S.r.l.	Padova
Japan	Atlas Copco KK	Tokyo
	Edwards JapanEdwards Japan Ltd	Chiba
	Fuji Industrial Technique Co., Ltd.	Osaka
	ISRA VISION JAPAN Co., Ltd	Yokohama
	Leybold Japan Co.Ltd.	Shin-Yokohama AK bldg Kohoku-Ku, Yokohama-Shi
Kazakhstan	Atlas Copco AirPower Central Asia LLP	Almaty
Kenya	Atlas Copco Eastern Africa Limited	Nairobi
Latvia	Atlas Copco Baltic SIA	Riga
Lebanon	Atlas Copco Levant S.A.L.	Beirut
Luxembourg	Atlas Copco Finance S.á.r.l.	Luxembourg
Malaysia	Atlas Copco (Malaysia) Sdn. Bhd.	Shah Alam
	Bireme group Malaysia SDN BHD	Johor Bahru
	Geveke Malaysia Snd. Bhd.	Shan Alam
	Geveke Oil & Gas Sdn. Bhd.	Shan Alam
	Vacuum Technique Malaysia Sdn. Bhd.	Puchong
Mexico	Atlas Copco Mexicana S.A. de C.V.	Tlalnepantla
	Desarrollos Técnologicos ACMSA S.A. de C.V.	Tlalnepantla
	Desoutter Tools Mexico SA de CV	Tlalnepantla
	ISRA VISION S. de R.L. de C.V.	Queretaro
	Vacuum Technique Mexico	Monterrey
Morocco	Atlas Copco Maroc SA	Casablanca
Myanmar	Atlas Copco Services Myanmar Co., Ltd.	Yangon
Netherlands	Alup Kompressoren BV	Oss
	Atlas Copco Beheer B.V.	Zwijndrecht
	Atlas Copco Internationaal B.V.	Zwijndrecht
	Creemers Compressors B.V.	Oss
	Eco Ketelservice Verhuur B.V.	Tilburg
	Eco Steam Trading & Consultancy B.V.	Tilburg
	E.K.S. Holding B.V.	Tilburg
	Geveke BV	Amsterdam
	Geveke Werktuigbouw BV	Amsterdam
	Leybold Nederland B.V.	Utrecht
	Perceptron B.V.	The Haghe
New Zealand	Atlas Copco (N.Z.) Ltd.	Auckland
	Exlair (NZ) Limited	Auckland
Nigeria	Atlas Copco Nigeria Ltd.	# Atlas Copco A/S

FINANCIAL STATEMENTS – NOTES

Introduction

This is Atlas Copco

• The year in review
• Financials
  • Group
    • Consolidated income statement
    • Consolidated statement of comprehensive income
    • Consolidated balance sheet
    • Consolidated statement of changes in equity
    • Consolidated statement of cash flows
  • Notes
• Parent company
• Other information

Country/Area	Company	Location (City)
Norway	Atlas Copco Kompressorteknikk A/S	Langhus
	Atlas Copco Tools A/S	Langhus
	Berema A/S	Langhus
Pakistan	Atlas Copco Pakistan (Private) Limited	Lahore
Peru	Atlas Copco Perú S.A.C.	Lima
Philippines	Atlas Copco (Philippines) Inc.	Binan
Poland	ALUP Kompressoren Polska sp. z.o.o.	Janki
	Atlas Copco Polska Sp. z o.o.	Warsaw
	Vector Sp. z o.o.	Tarnowo Podgórne
Portugal	Sociedade Atlas Copco de Portugal Unipessoal Lda	Porto Salvo
Romania	Atlas Copco Romania S.R.L.	Bucharest
	Scheugenpflug S.R.L.	Sibiu
Russia	ISRA VISION LLC	Moscow
	JSC Atlas Copco	Moscow
Serbia	Atlas Copco Srbija doo	Belgrade
Singapore	Atlas Copco (South East Asia) Pte. Ltd	Singapore
	Bireme Singapore Pte Ltd	Singapore
	Geveke International Pte Ltd	Singapore
	LEWA Singapore Pte. Ltd.	Singapore
	Leybold Singapore Pte Ltd	Singapore
	Vacuum Technique Singapore Pte Ltd	Singapore
Slovakia	Atlas Copco s.r.o	Bratislava
	ISRA VISION s.r.o.	Bratislava
	Oxymat Slovakia SrO	Vadovce
	Perceptron Slovensko s.r.o.	Bratislava
	Schneider Airsystems s.r.o.	Nitra
Slovenia	Atlas Copco d.o.o.	Trzin
South Africa	Atlas Copco Industrial South Africa (Pty) Ltd	Boksburg
	Rand Air South Africa (Pty) Ltd	Boksburg
South Korea	Atlas Copco Korea Co., Ltd.	Seongnam
	CP Tools Korea Co., Ltd.	Anyang
	CSK Inc.	Yongin
	Edwards Korea Ltd	Cheonan
	ISRA VISION Korea Co. Ltd	Seoul
	LEWA Korea Co., Ltd.	Seoul
	Leybold Korea Ltd	Bundang
Spain	Aire Comprimido Industrial Iberia, S.L.	Madrid
	Atlas Copco S.A.E.	Madrid
	Grupos Electrógenos Europa, S.A.	Zaragoza
	IBVC Vacuum, S.L.U.	Madrid
	LEWA Hispania S.L.	Madrid
	Leybold Hispanica S.A.	Cornellá de Llobregat
	Perceptron Iberica, S.L.	Barcelona
	Photonfocus Spain, S.L.	Barcelona

Country/Area	Company	Location (City)
Sweden	Atlas Copco Compressor AB	Nacka
	Atlas Copco Industrial Technique AB	Nacka
	Atlas Copco Järla Holding AB	Nacka
	Atlas Copco Nacka Holding AB	Nacka
	Atlas Copco Sickla Holding AB	Nacka
	Industria Försäkringsaktiebolag, Industria Insurance Company Ltd	Nacka
Switzerland	ALUP Kompressoren AG	Oftringen
	Atlas Copco (Schweiz) AG	Studen
	LEWA Switzerland AG	Reinach
	Leybold Schweiz AG	Steinhausen
	Medgas-Technik Schweiz AG	Sankt-Gallen
	Photonfocus AG	Lachen
Taiwan	Atlas Copco Taiwan Ltd.	Taoyuan
	CSKT Inc.	Jubei
	Edwards Technologies Ltd	Jhunan
	Leybold Taiwan Ltd	Zhubei
Thailand	Atlas Copco (Thailand) Limited	Bangkok
Türkiye	Atlas Copco Makinalari Imalat AS	Istanbul
	Chicago Pneumatic Endüstriyel Ürünler Ticaret A.Ş	Istanbul
	Dost Kompresör Endüstri Makinaları İmal Bakım ve Ticaret A.Ş	Istanbul
	Ekomak Endüstriyel Kompresör Makine Sanayi ve Ticaret A.Ş	Istanbul
	ISRA VISION Yapay Görme Ve Otomasyon San. Ve Tic. A.ş	Istanbul
	Multiair Endüstriyel Hava Ekipmanları Ticaret A.Ş.	Istanbul
	Tekser Endüstriyel Cihazlar Sanayi ve Ticaret A.Ş.	Istanbul
Ukraine	Atlas Copco Ukraine LLC	Kiev
United Arab Emirates	Atlas Copco Middle East FZE	Dubai
	LEWA Middle East FZE	Sharjah
	LEWA MIDDLE EAST FZE	Dubai
United Kingdom	Airow Compressors and Pneumatics Limited	Hemel Hempstead
	Airow Compressors and Pneumatics Limited	Warington
	Associated Compressor Engineers Limited	Stockport
	Atlas Copco IAS UK Limited	Flintshire
	Atlas Copco Ltd.	Hemel Hempstead
	Atlas Copco UK Holdings Ltd.	Hemel Hempstead
	BeaconMedaes Ltd	Staveley
	C.A.S products Limited	Bolton
	Cooper Freer Ltd	Leicester
	Cooper Freer Holdings Ltd	Leicester
	Edwards High Vacuum International Ltd.	Burgess Hill
	Edwards Ltd.	Burgess Hill
	Glaston Compressor Services Limited	Skelmersdale
	Isocool Limited	Braintree
	ISRA VISION Ltd.	London
	ISRA VISION PARSYTEC Ltd.	Eastleigh
	Leybold UK Ltd.	Chessington

Country/Area	Company	Location (City)
United Kingdom	Nano Purication Solutions Ltd	Newcastle
	Purication Solutions UK Limited	Gateshead
	Perceptron Metrology UK Ltd.	Birmingham
	Precision Pneumatics Ltd	Liverpool
	Tentec Ltd.	Birmingham
	Walker Filtration Ltd. UK	Washington
	Wearside Pneumatics Ltd	Newcastle
U.S.A	Air & Gas Solutions LLC	Charlotte
	Atlas Copco Compressors LLC	Rock Hill
	Atlas Copco Comptec LLC	Voorheesville
	Atlas Copco IAS LLC	Auburn Hills
	Atlas Copco Mati-Trench Company LLC	Santa Maria
	Atlas Copco North America LLC	Parsippany
	Atlas Copco Rental LLC	Laporte
	Atlas Copco Tools & Assembly Systems LLC	Auburn Hills
	Atlas Copco USA Holdings Inc.	Parsippany
	BeaconMedaes LLC	Rock Hill
	C H Spencer LLC	Salt Lake City
	Chicago Pneumatic International Inc.	Rock Hill
	Chicago Pneumatic Tool Company LLC	Rock Hill
	Dekker Vacuum Technologies Inc	Michigan City
	Edwards Semiconductor Solutions LLC	Saugerties
	Edwards Vacuum, LLC	Wilmington
	Henrob Corporation	New Hudson
	ISRA SURFACE VISION Inc.	Berkeley Lake
	ISRA VISION PARSYTEC Inc.	Berkeley Lake
	LEWA America, Inc.	Hollistone
	Leybold USA Inc.	Wilmington
	Mid-South Engine & Power Systems LLC	White Oak
	Montana Instruments Corporation	Bozeman
	Nowvac Inc.	Parsippany
	Perceptron Inc.	Plymouth
	Perceptron Global Inc.	Plymouth
	Perceptron Software Technology , Inc.	Plymouth
	Powerhouse Equipment & Engineering Co. Inc.	Delanco
	Power Technique North America LLC	Rock Hill
	Quincy Compressor LLC	Bay Minette
	Scheugenpflug Inc.	Kennesaw
	Vacuum Technique LLC	Michigan City
	Walker Filtration Inc. US	Erie
	Wangen America Inc.	Elk Grove Village
Venezuela	Atlas Copco Venezuela SA	Valencia
Vietnam	Atlas Copco Vietnam Company Ltd.	Hanoi
Zambia	Atlas Copco Industrial Zambia Limited	Kitwe

A22. Related parties, continued

SIGNATURES OF THE BOARD OF DIRECTORS

The Parent Company nancial statements have been prepared in accordance with generally accepted accounting principles in Sweden and the consolidated nancial statements have been prepared in accordance with International Accounting Standards as prescribed by the European Parliament and the Regulation (EC) No 1606/2002 dated July 19, 2002 on the application of International Accounting Standards. The Parent Company nancial statements and the consolidated nancial statements give a true and fair view of the Parent Company’s and the Group’s nancial position and results of operations. Our audit report was submitted on March 20, 2023, Ernst & Young AB Erik Sandström Authorized Public Accountant

Atlas Copco AB is required to publish information included in this annual report in accordance with the Swedish Securities Market Act. The information was made public on March 22, 2023.

Board member	President and CEO	Board member	Board member	Board member	Employee representative	Board member	Employee representative
Mats Rahmström	Gordon Riske	Peter Wallenberg Jr	Mikael Bergstedt	Benny Larsson

Nacka, March 3, 2023, Atlas Copco AB

Chair	Board member	Board member	Board member	Board member
Hans Stråberg	Staan Bohman	Johan Forssell	Heléne Mellquist	Anna Ohlsson-Leijon

The administration report for the Group and Parent Company provides a true and fair overview of the development of the Group’s and Parent Company’s business activities, nancial position and results of operations as well as the signicant risks and uncertainties which the Parent Company and its subsidiaries are exposed to. The Annual Report also contains the Group’s and Parent Company’s statutory sustainability report in accordance with the Swedish Annual Accounts Act, Chapter 6, Section 11, see page 19.

SIGNATURES OF THE BOARD OF DIRECTORS

• Introduction
• This is Atlas Copco
• The year in review
• Financials
• Other information
• Signatures of the Board of Directors
• Audit Report
• Financial denitions
• Sustainability notes
• Four years in summary
• Contacts

Audit report

To the general meeting of the shareholders of Atlas Copco AB (publ), corporate identity number 556014-2720

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Atlas Copco AB (publ) for the year 2022 except for the corporate governance statement on pages 51–60 and the quarterly data on page 80. The annual accounts and consolidated accounts of the company are included on pages 13–39, 44–48 and 61–121 in this document.

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the nancial position of the parent company as of December 31, 2022 and its nancial performance and cash ow for the year then ended in accordance with the Annual Accounts Act.

The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the nancial position of the group as of December 31, 2022 and their nancial performance and cash ow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act.

Our opinions do not cover the corporate governance statement on pages 51–60. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.# AUDIT REPORT

Introduction

We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group. Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company’s audit committee in accordance with the Audit Regulation (537/2014) Article 11.

Basis for Opinions

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

Key Audit Matters

Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Accounting for business combinations

Description
In the fiscal year 2022, Atlas Copco made 30 acquisitions for a total consideration of 12.1 billion SEK. The acquired assets and liabilities must be separately identified and valued at fair value at the date of the acquisition. For acquired assets and liabilities for which there is no active market management must apply valuation models and significant estimates in order to determine the fair value. Disclosures related to the group’s accounting principles, significant accounting estimates and judgements are provided in note 1 and note 2 contains disclosures related to the acquisitions made. Based on the significance of the acquisitions and the high degree of management estimate required to account for these matters, we have assessed the accounting for business combinations as a key audit matter in our audit.

How our audit addressed this key audit matter
As part of our audit we have evaluated the group’s processes related to the accounting of business combinations. We have reviewed the purchase agreements and audited the purchase price allocations for all significant acquisitions. With support from our internal valuation specialists, we have assessed the valuation models applied and the significant estimates used when accounting for the business combinations. The models and estimates have been tested by comparing them to historical outcome, future cash flow forecasts as well as external sources and established valuation techniques. Further we have performed sensitivity analyzes for significant estimates as well as benchmark comparisons. Finally, we have assessed the appropriateness of the disclosures provided in the annual report.

Valuation of goodwill

Description
At December 31, 2022, the total value of goodwill amounts to 44.3 billion SEK and is allocated to the group’s different cash generating units. Goodwill must be tested for impairment at least annually or whenever there are indicators of impairment. The test is carried out by comparing the recoverable amount to the carrying value. To calculate the recoverable amount management apply significant judgment and estimates regarding future cash flows, terminal growth rate and discount rates. The impairment tests for 2022 did not result in any impairment write off. Disclosures related to the group’s accounting principles, significant accounting estimates and judgements are provided in note 1 and disclosures related to goodwill and the impairment test performed are provided in note 12. Based on carrying value of the goodwill and the high degree of management estimate required to perform the impairment tests, we have assessed the accounting for the valuation of goodwill as a key audit matter in our audit.

How our audit addressed this key audit matter
In the audit, we have evaluated the group’s process for conducting impairment tests. Based on established criteria, we have examined how the group identifies cash-generating units. With support from our internal valuation specialists, we have evaluated the valuation methods used. We have assessed the reasonableness of assumptions, conducted sensitivity analysis, and compared them to historical outcomes as well as external sources and industry benchmarks. Finally, we have assessed the appropriateness of the disclosures provided in the annual report.

Revenue recognition

Description
The group recognize revenue from a wide range of geographical markets and the revenues are generated from product- and product related offerings ranging from equipment, service and rental to the customers. The appropriate timing of revenue recognition can vary from a point in time to recognition over time. Judgement may be required in assessing if control has been transferred to the customer and to determine the satisfaction of performance obligations. The group’s decentralized organization where revenues are generated from a large number of subsidiaries further increases the complexity of ensuring that the revenue recognition principles are consistently applied across the group. Disclosures related to the group’s accounting principles, critical accounting estimates and judgement are provided in note 1 and note 4 provides disclosures regarding revenue disaggregated by operating segment and geography. Based on the above, we have assessed the revenue recognition as a key audit matter in our audit.

How our audit addressed this key audit matter
In our audit we have assessed the group’s processes for revenue recognition. Further, we have reviewed the group’s accounting manual and assessed whether the policies for revenue recognition are in accordance with the applicable accounting standards. We have obtained an understanding of the different types of significant revenue contracts and evaluated the identified performance obligations and determinations made regarding when performance obligations are considered satisfied. In addition, we have performed detailed revenue transaction testing and revenue data analytical procedures to assess the revenue recognition. We have assessed the appropriateness of the disclosures provided in the annual report.

Accounting for income taxes

Description
Atlas Copco is a global group with subsidiaries world-wide. The accounting for income taxes requires adherence to local tax legislation which often can be complex and allow for different interpretations and judgement. The group’s subsidiaries are regularly subject to tax audits in which the local tax authorities might challenge the group’s interpretation of the local legislation. In instances where the tax authorities are of a different opinion of how to interpret the tax legislation the outcome is often dependent on negotiations with the local tax authorities or legal proceedings. In order to account for income taxes in these instances, management may have to apply significant Atlas Copco 2022 122 AUDIT REPORT Introduction This is Atlas Copco The year in review Financials Other information Signatures of the Board of Directors • Audit Report Financial definitions Sustainability notes Four years in summary Contacts estimates. Changes to these estimates can have a material effect on the income tax reported. Disclosures related to the group’s accounting principles, critical accounting estimates and judgement are provided in note 1 and disclosures related to taxes are provided in note 9. Based on the above, we have assessed accounting for income taxes as a key audit matter in our audit.

How our audit addressed this key audit matter
We have evaluated the group’s process for accounting for income taxes. We have reviewed communication between Atlas Copco and the tax authorities for significant uncertain income tax matters. Our internal tax specialists have been engaged to evaluate the assessments and interpretations made by the group. We have also assessed the reasonability of the accounting for these matters by comparisons to historical outcome in similar cases and by obtaining assessments from the group’s external tax advisors where appropriate. We have assessed the appropriateness of the disclosures provided in the annual report.

Other Information than the annual accounts and consolidated accounts

This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1–12, 40–43, 49–50 and 125–148. The Board of Directors and the Managing Director are responsible for this other information.# Audit Report

Report on Other Legal and Regulatory Requirements

Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Atlas Copco AB (publ) for the year 2021 and the proposed appropriations of the company’s profit or loss. We recommend to the general meeting of shareholders that the profit be appropriated (loss be dealt with) in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company’s and the group’s type of operations, size and risks place on the size of the parent company’s and the group’s equity, consolidation requirements, liquidity and position in general. The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes among other things continuous assessment of the company’s and the group’s financial situation and ensuring that the company’s organization is designed so that the accounting, management of assets and the company’s financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor’s Responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

• has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.

The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process.

Auditor’s Responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast significant doubt on the company’s and the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions.

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

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Atlas Copco 2022 123

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

Financial definitions

Sustainability notes

Four years in summary

Contacts# Audit Report

Our objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with a reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act.

As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional skepticism throughout the audit. The examination of the administration and the proposed appropriations of the company’s profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with a starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company’s situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability.

As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss, we examined the Board of Directors’ reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

The Auditor's Examination of the ESEF Report

Opinion

In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared the annual accounts and consolidated accounts in a format that enables uniform electronic reporting (the ESEF report) pursuant to Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528) for Atlas Copco AB for the financial year 2022. Our examination and our opinion relate only to the statutory requirements.

In our opinion, the ESEF report has been prepared in a format that, in all material respects, enables uniform electronic reporting.

Basis for Opinion

We have performed the examination in accordance with FAR’s recommendation RevR 18 Examination of the ESEF report. Our responsibility under this recommendation is described in more detail in the Auditors’ responsibility section. We are independent of Atlas Copco AB in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the ESEF report in accordance with Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), and for such internal control that the Board of Directors and the Managing Director determine is necessary to prepare the ESEF report without material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to obtain reasonable assurance whether the ESEF report is in all material respects prepared in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), based on the procedures performed. RevR 18 requires us to plan and execute procedures to achieve reasonable assurance that the ESEF report is prepared in a format that meets these requirements. Reasonable assurance is a high level of assurance, but it is not a guarantee that an engagement carried out according to RevR 18 and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the ESEF report.

The audit firm applies ISQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and other Assurance and Related Services Engagements and accordingly maintains a comprehensive system of quality control, including documented policies and procedures regarding compliance with professional ethical requirements, professional standards and legal and regulatory requirements.

The examination involves obtaining evidence, through various procedures, that the ESEF report has been prepared in a format that enables uniform electronic reporting of the annual and consolidated accounts. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design audit procedures that are appropriate in the circumstances, the auditor considers those elements of internal control that are relevant to the preparation of the ESEF report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the effectiveness of those internal controls.

The examination also includes an evaluation of the appropriateness and reasonableness of assumptions made by the Board of Directors and the Managing Director. The procedures mainly include a technical validation of the ESEF report, i.e., if the file containing the ESEF report meets the technical specification set out in the Commission’s Delegated Regulation (EU) 2019/815 and a reconciliation of the ESEF report with the audited annual accounts and consolidated accounts. Furthermore, the procedures also include an assessment of whether the ESEF report has been marked with iXBRL which enables a fair and complete machine-readable version of the consolidated statement of financial performance, financial position, changes in equity and cash flow.

The Auditor's Examination of the Corporate Governance Statement

The Board of Directors is responsible for that the corporate governance statement on pages 51–60 has been prepared in accordance with the Annual Accounts Act. Our examination of the corporate governance statement is conducted in accordance with FAR’s standard RevR 16 The Auditor’s Examination of the Corporate Governance Statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.

A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2–6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph of the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.

Ernst & Young AB with Erik Sandström as auditor in charge, Box 7850, 103 99 Stockholm, was appointed auditor of Atlas Copco AB by the general meeting of the shareholders on April 26, 2022 and has been the company’s auditor since April 23, 2020.

Stockholm, March 20, 2023

Ernst & Young AB
Erik Sandström
Authorized Public Accountant

Atlas Copco 2022

124

AUDIT REPORT

Introduction

• This is Atlas Copco
• The year in review
• Financials
• Other information
• Signatures of the Board of Directors
• Audit Report
• Financial definitions
• Sustainability notes
• Four years in summary
• Contacts

Financial Definitions

Reference is made in the Annual Report to a number of financial performance measures which are not defined according to IFRS. These performance measures provide complementary information and are used to help investors as well as Group Management analyze the company’s operations and facilitate an evaluation of the performance. Since not all companies calculate financial performance measures in the same manner, these are not always comparable with measures used by other companies. These financial performance measures should therefore not be regarded as a replacement for measures as defined according to IFRS.

Financial Definition	Description
Adjusted operating profit	Operating profit (earnings before interest and tax), excluding items affecting comparability.
Adjusted operating profit margin	Operating profit margin excl. items affecting comparability.
Average number of shares outstanding	The weighted average number of shares outstanding before or after dilution. Shares held by Atlas Copco are not included in the number of shares outstanding. The dilutive effects arise from the stock options that are settled in shares or that at the employees’ choice can be settled in shares or cash in the share-based incentive programs. The stock options have a dilutive effect when the average share price during the period exceeds the exercise price of the options.
Capital employed	Average total assets less non-interest-bearing liabilities/provisions. Capital employed for the business areas excludes cash, tax liabilities and tax receivables.
Capital employed turnover ratio	Revenues divided by average capital employed.
Capital turnover ratio	Revenues divided by average total assets.
Debt/equity ratio	Net indebtedness in relation to equity, including non-controlling interests.
Dividend yield	Dividend divided by the average share price quoted of the A-share.
Earnings per share	Profit for the period attributable to owners of the parent divided by the average number of shares outstanding.

EBITA – Earnings before Interest, Taxes, and Amortization
Operating profit plus amortization and impairment of intangibles related to acquisitions.

EBITA margin
EBITA as a percentage of revenues.

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization
Operating profit plus depreciation, amortization and impairment.

EBITDA margin
EBITDA as a percentage of revenues.

Equity/assets ratio
Equity including non-controlling interests, as a percentage of total assets.

Equity per share
Equity including non-controlling interests divided by the average number of shares outstanding.

Items affecting comparability
Restructuring costs, capital gains/losses, impairments, changes in provision for share-related long-term incentive program and other items with the character of affecting comparability.

Net cash flow
Change in cash and cash equivalents excluding currency exchange rate effects.

Net debt/EBITDA ratio
Net indebtedness in relation to EBITDA.

Net indebtedness/net cash position
Borrowings plus post-employment benefits minus cash and cash equivalents and other current financial assets, adjusted for the fair value of interest rate swaps.

Net interest expense
Interest expense less interest income.

Operating cash flow
Cash flow from operations and cash flow from investments, excluding company acquisitions/divestments and currency hedges of loans.

Operating cash surplus
Operating profit adding back depreciation, amortization and impairments as well as capital gains/losses and other non-cash items.

Operating profit
Revenues less all costs related to operations, but excluding net financial items and income tax expense.

Operating profit margin
Operating profit as a percentage of revenues.

Organic growth
Sales growth that excludes translation effects from exchange rate differences, and acquisitions/divestments.

Profit margin
Profit before tax as a percentage of revenues.

Return on capital employed (ROCE)
Profit before tax plus interest paid and foreign exchange differences (for business areas: operating profit) as a percentage of capital employed.

Return on equity
Profit for the period, attributable to owners of the parent as a percentage of average equity, excluding non-controlling interests.

Total return to shareholders
Share price performance including reinvested dividends and share redemptions.

Weighted average cost of capital (WACC)
$$ \frac{interest-bearing liabilities \times i + market capitalization \times r}{interest-bearing liabilities + market capitalization} $$
i: An estimated average risk-free interest rate of 4% plus a premium of 0.5%. An estimated standard tax rate has been applied.
r: An estimated average risk-free interest rate of 4% plus an equity risk premium of 5%.

• Atlas Copco has chosen to present the company’s alternative performance measures in accordance with the guidance by the European Securities and Markets Authority (ESMA) in a separate appendix. The appendix is published on www.atlascopcogroup.com/en/investor-relations/key-figures/financial-definitions

Atlas Copco 2022 125

FINANCIAL DEFINITIONS

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

• Financial definitions
• Sustainability notes

Four years in summary

Contacts

Sustainability notes

Atlas Copco’s sustainability report aims to provide stakeholders with relevant information about the Group’s economic, environmental and social impact. The sustainability notes include complementary information about our materiality assessment, stakeholder dialogue, governance, performance data and reporting principles.

Stakeholder dialogue

As a global Group, it is vital for Atlas Copco to ensure accountability for our actual and potential impact on the economy, environment and people. Engaging continually and systematically with key stakeholders helps us understand, prioritize and manage the impacts of our organization as well as the impacts along our value chain. The engagement is also crucial to proactively identify stakeholders’ concerns and expectations. Our methods of engagement with key stakeholder groups and the issues and concerns raised by them are presented in the table below. Read more about our risks and impacts along the value chain on page 128.

Stakeholder group	Key issues and concerns	Method of engagement
Customers	• Product safety • Product innovation • Product carbon impact • Product resource-efficiency and circularity	• Customer visits • Surveys and interviews • Customer events • Website
Investors, analysts, shareholders	• Growth and profitability • Risk management • Climate and environmental impact • Business ethics • Gender balance	• Investor interaction • Capital market days • Annual general meeting • Website • Financial reports and presentations
Employees	• Health and safety • Diversity and inclusion • Working conditions • Competence development • Compensation and benefits	• Yearly appraisal • Employee surveys • Work councils • Employee representatives on the Board
Society	• Climate and environmental impact • Social and environmental compliance • Human rights • Labor market issues	• Memberships in international collaborations and industry initiatives • Local engagement • Website • Surveys and interviews
Business partners	• Occupational health and safety • Labor conditions • Human rights • Business ethics • Climate and environmental impact	• Collaborations with suppliers • On-site evaluation and supplier audits • Surveys and interviews

Stakeholder dialogue 126

Materiality assessment and material sustainability issues 127

Sustainability impact and risks along the value chain 128

Sustainability governance 129

Human rights assessment 129

External initiatives and membership of associations 129

Economic performance 130

Anti-corruption 130

Environmental management systems 130

Energy consumption 130

Environmental compliance 130

Climate-related risks and opportunities 131

Value chain impact assessment 131

Employment 132

Occupational health and safety 132

Diversity and inclusion 132

Taxes 133

Responsibility throughout the value chain 133

Product responsibility 134

EU Taxonomy regulation disclosures 135

About the sustainability report 138

GRI content index 139

SASB index 143

Sustainability performance 144

Auditor’s Limited Assurance Report on Atlas Copco AB’s Sustainability Report and statement regarding the Statutory Sustainability Report 146

CONTENTS

Atlas Copco 2022 126

SUSTAINABILITY NOTES

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

• Financial definitions
• Sustainability notes

Four years in summary

Contacts

Value creators

These are topics that are central to long-term value creation. Managing these issues help position Atlas Copco as a leader within sustainability. Our ambitions are expressed through our targets.

Trust builders

Working with these topics help build trust in Atlas Copco’s business. Our ambition is to be transparent and to keep pace with stakeholder expectations.

Strategic enablers

These are topics that play a central role to deliver on Atlas Copco’s business strategy. Working with them should build and ensure business resilience.

Topics
– Business ethics and integrity – Occupational health, safety & wellbeing – Product quality and service – Life-cycle approach to product development – Product carbon impact	– Energy use and efficiency – Human rights – Responsible value chain – Data protection and privacy – Climate impact along the value chain	– Diversity and inclusion – Talent development and retention – Gender balance in leadership positions – Circular business models

Materiality assessment

A materiality assessment is conducted regularly to identify sustainability risks and opportunities as well as to define the Group’s most significant impact from a perspective of economic impacts, the environment and society, including human rights. In this process, the perspectives of key stakeholders are gained through surveys and interviews where they are asked to prioritize a set of pre-defined issues where Atlas Copco has actual or potential impact on society and the environment through our operations and business relationships. The stakeholders also help identify sustainability risks and opportunities that may affect Atlas Copco’s long-term value creation and business performance. The outcome of the materiality assessment is discussed in internal workshops involving a broad representation of experts and functions, including the specialist safety, health, environment and quality function. It is also reviewed by Group Management and the Board. Atlas Copco uses the materiality assessment, together with the UN Global Compact’s principles, the UN Sustainable Development Goals, and risk and opportunity assessments, in reviewing our sustainability ambitions and focus areas. It also forms the basis of the sustainability targets that apply from 2022 forward, as presented on page 6.

Material sustainability issues

Atlas Copco’s most recent materiality assessment was conducted in 2021. In relation to the previous materiality analysis, some issues were deemed to have become more material and a few less material. For example, stakeholders placed increased focus on diversity and inclusion, talent development and retention, and gender balance in leadership positions. Stakeholders also gave higher priority to issues relating to climate change, such as carbon impact, circular business models, and a life-cycle approach to product development. Water use, community engagement and taxes were identified as somewhat less material. See below the sustainability issues that were identified as most material in the 2021 materiality assessment. They have been categorized as topics that are central to our long-term value creation, to building trust in Atlas Copco and our business, and topics that are central in delivering on our strategy and building business resilience.# SUSTAINABILITY NOTES

Introduction

This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
• Sustainability notes
Four years in summary
Contacts

Atlas Copco has a large supplier base and purchased components account for about 75% of the product cost. The choice of suppliers is therefore of great importance for our impact from a social and environmental perspective. The collaboration with business partners and the business partner requirements aim to protect Atlas Copco from risks and promote better standards in society.

Atlas Copco’s operations is global with employees and manufacturing in a large number of countries. In some of these, there is a high risk of human rights violations, corruption, and non-compliance with laws and Atlas Copco’s policies. The impact of our own operations relates mainly to the manufacturing and transport of products, and employees’ working conditions, including their health and safety.

Atlas Copco’s customers demand innovative, high-quality products that are resource and energy efficient, safe and ergonomic. The main part of the products’ climate impact occurs when they are being used.

Sustainability impact and risks along the value chain

Understanding our sustainability impact and risks throughout the value chain helps us choose the right actions to handle them. The table below shows where our impacts occur, the corresponding risks and examples of how we work to minimize them. Read more about our climate-related risks and how we manage them on page 131.

| Risks | Mitigating activities # Sustainability

Enterprise Risk Management

The Enterprise Risk Management process, which is conducted annually on divisional level, and includes sustainability-related risks. The results are aggregated on business area and Group level. All employees are required to complete a leader-led ethics training every two years and to annually sign a Code of Conduct compliance statement. The Code of Conduct has been translated into more than 30 languages and is available on the Group’s website.

Management system standards

Atlas Copco strives for all major operating units to be triple-certified according to the standards ISO 9001 (quality management), ISO 14001 (environmental management) and ISO 45001 (occupational health and safety). All production units with more than 20 employees, and all customer centers and rental com- panies with more than 70 employees are to be triple-certified. By the end of 2022, the share of required units that were not triple-certified was 10% of the total number of operational units. The same measure for each individual certifi- cation was 6% for ISO 9001, 9% for ISO 14001 and 9% for ISO 45001. Some of the non-certified units are acquisitions still within the two-year timeframe to comply, or newly restructured units. Some units which are not yet triple- certified are in the process of becoming so, and a smaller portion has lacked the resources so far to commit to a triple certification.

Grievance mechanism

The Group promotes a culture of integrity through mutual respect, trust, and high ethical standards in all business interactions. Atlas Copco uses an external whistleblowing system called SpeakUp. The system may be used by employees or external stakeholders to report behavior or actions that are, or may be per- ceived as, violations of laws or the Code of Conduct. It is accessible all day, every day, offering anonymous reporting in more than 70 languages via a message function or local phone number. The Group’s legal department handles cases, initiates investigations and the SVP Chief Legal Officer informs the Board regu- larly about critical concerns (see number of reported cases on page 130).

Human rights assessment

Atlas Copco is a signatory of the UN Global Compact and committed to work- ing with the ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption. The Code of Conduct also supports the International Labour Organization Declaration on Fundamental Principles and Rights at Work, as well as the OECD’s Guidelines for Multinational Enterprises. The Group committed to the UN Guiding Principles for Business and Human Rights when it was launched in 2011. In accordance with the requirements, Atlas Copco has an ongoing process to identify, prevent, mitigate and account for the human rights impacts related to Atlas Copco’s business and business relations. The Group strives to work according to the UN Guiding Principles across the value chain, covering procurement, human resources, sales, marketing and other business processes. The Group’s commitment covers all individuals and stakeholders who may be impacted by our activities or business relationships. Human rights are monitored by the Compliance Board, which has two mem- bers of Group Management: the SVP Chief Legal Officer and the SVP Chief Communications Officer. The Compliance Board addresses training needs, impact assessment and the action points related to the implementation of the UN Guiding Principles. Human rights due diligence is carried out when deemed relevant for spe- cific markets, for instance when Atlas Copco enters a market that is perceived as presenting severe human rights risks. Atlas Copco’s whistleblowing system can be used to anonymously report perceived human rights violations. Atlas Copco’s human rights statement can be found at the Group’s website www.atlascopcogroup.com.

Training on human rights policies and procedures

Atlas Copco has developed human rights specific training in addition to train- ing in the Code of Conduct to increase employee awareness. The training is available to all employees through the Group’s intranet.

External initiatives and membership of associations

Atlas Copco is a signatory to the UN Global Compact, a strategic policy initia- tive for businesses that are committed to aligning their operations and strate- gies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption. Atlas Copco is also active in a number of international organizations and industry collaborations and initiatives, such as:

• The Stockholm Chamber of Commerce
• The International Council of Swedish Industry
• The Association of Swedish Engineering Industries
• Transparency International Sweden
• Pneurop – European Association of Manufacturers of Compressors, Vacuum Pumps, Pneumatic Tools and Air & Condensate Treatment Equipment
• The Responsible Minerals Initiative

While the general objectives of these organizations are in line with Atlas Copco’s interests, there may be differences of opinion regarding specific issues. The memberships do not indicate that Atlas Copco endorses all actions or policy statements made by the respective organization.

Atlas Copco 2022 129
SUSTAINABILITY NOTES

Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial denitions

Sustainability notes

Four years in summary

Contacts

ECONOMIC IMPACT

Economic performance

Direct economic value generated and distributed

Atlas Copco creates employment and financial stability through subcontract- ing manufacturing and other activities. The Group’s shareholders and credi- tors provide funds to finance the asset base that is used to create economic value. In return, these stakeholders receive dividend and interest. Atlas Copco contributes to economic development within the regions where we operate, through payments to pension funds and social security, and payment of taxes, social costs and other duties. Community investments amounted to MSEK 28 (31). Local purchasing (non-core) is encouraged in order to generate societal value in the communities where Atlas Copco operates, by creating job oppor- tunities as well as generating direct and indirect income. This is mostly carried out by local companies, which also decreases the environmental impact from transport.

Economic value	2022	2021
Direct economic value	142 233	111 972
Revenues	141 325	110 912
Economic value distributed
Operating costs	78 094	61 019
Employee wages and benets, including other social costs	33 580	27 151
Costs for providers of capital	9 765	9 281
Costs for direct taxes to governments	7 262	5 372
Economic value retained	13 532	9 149
– Redemption of shares	9 732

Anti-corruption

Atlas Copco has zero tolerance against corruption. The Code of Conduct is the Group’s central policy document, accessible to all employees. All employees are required to sign the compliance statement for adherence to the Code of Conduct, and participate in trainings. Division presidents have the ultimate responsibility for the adherence to the Group’s values and policies. Internal control is exercised through distribution of responsibility and internal audits. The Compliance Board oversees compliance with the Code of Conduct. Atlas Copco conducts internal audits of all operational entities using a risk- based approach. Each entity is normally audited at least every five years. All internal audits include an ethical review and an audit of risks related to corrup- tion. In 2022, 99 entities (19% of all entities) were audited and no significant risks related to corruption were identified during these audits.

Reported potential violations, number	2022
Fraud	13
Labor relations, including discrimination and harassment	245
Corruption & regulatory breach	28
Conicts of interest	7
Other	70
Total	363

During the year, there were a total of 363 reported potential violations through Atlas Copco´s whistleblowing solution, SpeakUp. In 45 cases no evi- dence of wrongdoing was found, in 51 cases evidence could confirm that no wrongdoing had occurred, in 5 cases disciplinary action, such as a written warning, were taken against one or several employees as a result of an investi- gation. In 30 cases weaknesses were found in internal processes which were improved as a result. Two cases were settled in court. The remaining cases are under active investigation. There were no significant fines or non-monetary sanctions for non- competitive behavior or for non-compliance with laws and/or regulations in the social and economic area during the year.

ENVIRONMENTAL IMPACT

Atlas Copco has integrated the most material environmental KPIs into its strategic work. This drives improvement and efficiency, while reducing our impact on the environment. Environmental performance is monitored and reported at unit level and aggregated to Group level. General managers are responsible for overseeing the implementation of divisional strategies and targets, including undertaking initiatives to increase the proportion of reused, recycled or recovered waste, reduce water consumption, to curb energy use and emissions as well as increase the proportion of renewable energy used.

Environmental management systems

To minimize the environmental impact and to secure that the precautionary approach is applied, Atlas Copco has the ambition to implement environmen- tal management systems (EMS) in all operations. All production units with more than 20 employees should be certified according to ISO 14001. Acquired product companies are normally certified within a two-year period. The share of significant direct suppliers with an approved EMS is also measured, and the target is that the share should increase year-by-year. An approved EMS is defined as ISO 14001, or fulfilled EMAS (EU Eco-Management and Audit Scheme) requirements.The significant supplier needs to be third-party certified for ISO 14001 or registered in accordance with EMAS and hold a valid certificate/registration. In 2022, 31% of the Group’s significant direct suppliers had an approved environmental management system according to this definition.

Energy consumption within the organization, all operations

Energy consumption*, MWh	2022
Direct energy, renewable	7 008
Direct energy, non-renewable	152 228
Indirect energy, renewable (incl. renewable of mix)	293 578
Indirect energy, non-renewable	65 092

• The calculation of indirect energy, i.e. energy purchased externally by the company, includes electricity (95%) and district heating (5%) used at the sites. Atlas Copco does not report cooling or steam separately. The calculation of direct energy, i.e. energy generated by the company for its own production or operation, comprises all fuels used on the sites, including diesel, oil, bio-fuel, gasoline, solar, geothermal, propane and natural gas.

Environmental compliance

Atlas Copco follows applicable environmental laws in all countries where the Group operates. Incidents or fines are reported for non-compliance with environmental legislation, as well as incidents involving chemical, oil or fuel spillages. In 2022, there was 1 (0) accident resulting in adverse environmental effects, related to an antifreeze spill at a production unit in the US. The Group’s total clean-up costs relating to adverse environmental effects amounted to KSEK 379 (0). Monetary sanctions for non-compliance in the Group amounted to KSEK 171 (0). Two Swedish operations, involving machining and assembly of components, require permits based on Swedish environmental regulations. The permits relate to areas such as use of cutting fluids, process oils and hydraulic oils, emissions to water and air, and noise pollution. None of the permits were under revision in 2022.

Atlas Copco 2022

130

SUSTAINABILITY NOTES

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

Financial definitions

• Sustainability notes

Four years in summary

Contacts

There are a growing number of voluntary reporting standards, initiatives and regulations concerning climate, such as the Taskforce on Climate-related Financial Disclosures (TCFD). Atlas Copco takes inspiration from the guidelines and seeks to develop our reporting continuously and address major areas of information sought.

Governance

The Board of Directors is responsible for Atlas Copco’s overall strategy, organization, administration and management. This includes climate-related risks and opportunities. The Board of Directors have approved the science-based targets that were adopted by Atlas Copco in 2021 and against which the Group’s climate-related work will be measured from 2022 onwards. Climate-related issues concern several functions and areas of expertise in the organization. At an operational level, risks and opportunities are governed by Group Management and the divisional presidents. Read more about corporate governance on pages 51–54.

Strategy

Atlas Copco assesses climate-related risks and opportunities that have an actual and potential impact on our business and strategy. The process for identification of risks and opportunities is centered at the divisions. The Group has identified and assessed the following market, regulatory and physical risks related to climate change:

• Market risks

Market shifts toward a low-carbon economy may impact the viability of certain sectors and products. Atlas Copco’s continuous work to increase the energy efficiency of our products helps mitigate these risks. This shift also represents an opportunity to continue developing more energy-efficient products and may give rise to new businesses and business models. For instance, an increased generation of renewable energy, such as solar panels and wind mills, and the surge in production of electrical vehicles, present opportunities since Atlas Copco provides products and services to these industries.

• Regulatory risks

Climate and energy policy will gradually be sharpened and favor companies that deliver energy-efficient products and comply with sustainable practices. Among the risks are increased energy prices and taxes, and regulations related to CO2 or other greenhouse-gas emissions. As the Group invests in innovative products via research and development, more strict regulations will likely offer opportunities for Atlas Copco.

• Physical risks

Changing weather patterns may pose a physical risk to operational units or suppliers in areas in risk of rising sea levels, water scarcity or violent storms that could result in disruptions in the production or logistics chain. The physical risk is assessed at site level and safety measures are taken if needed, as part of the loss prevention program. Atlas Copco has a global network of suppliers, which provides resilience to local or regional disruptions.

Risk management

Climate-related risks, such as physical risks for operational entities or market risks connected to products, and the related financial implications are assessed at the divisional level and, when deemed relevant, included in the annual Enterprise Risk Management process. An aggregated analysis of the identified risks is presented annually to Group Management. Read more about the risk management process on page 44.

Metrics and targets

Since 2021, Atlas Copco implements science-based targets covering the entire value-chain. Our greenhouse gas emission reduction targets are approved by the Science-based Target initiative as being aligned with the Paris Agreement. Read more about the targets and the progress made on pages 34–35, 42, 130 and 144.

CLIMATE-RELATED RISKS AND OPPORTUNITIES

Value chain impact assessment

In 2021, Atlas Copco conducted a value-chain impact assessment, which formed the baseline for our Science-Based targets and the starting point for our commitment to reduce the Group’s carbon dioxide equivalent emissions in line with the Paris agreement. A common Group methodology was used with 2019 as the baseline year. The direct climate impact from energy used by our entities (scope 1 and 2) was initially calculated by using actual data from the reporting entities and estimating the impact from remaining entities. In 2022, all entities have reported their actual carbon dioxide equivalent emissions from energy used in companies, and vehicles’ use. The performance on scope 1 and 2 is monitored and reported at unit level and aggregated to Group level.

To calculate the product-related value chain impact, as part of the scope 3 emissions, a Group-common tool has been developed – The Product Carbon Footprint tool (PCF). The tool is updated yearly and covers the material used in the product, the estimated service required, energy used at the production site as well as during the use phase based on an estimation of how the products are used by our customers. Considering the different characteristics of our products, the business areas’ plans and efforts to reduce the climate-impact of their products differ. However, they all have in common that the development and availability of renewable energy sources in customers’ markets will be critical to their ability to achieve the Group’s targets for scope 3 emissions.

Business area	Calculation method	Efforts to reduce products‘ climate impact
Compressor Technique	Scope 3 emissions have been calculated by applying the PCF tool to a set of reference products selected by the business area.	The scope 3 target will be achieved by improving the efficiency of our products and optimizing the compressor room by improved controls and variable speed.
Vacuum Technique	Scope 3 emissions have been calculated by applying the PCF tool methodology to the products sold to global markets. Estimations have been made regarding the electricity consumption by applying a standard load factor. Other aspects through the lifecycle of the products have been standardized including the lifecycle itself.	The scope 3 target will be achieved by improving product performance, integrating smart technology to optimize the energy required, and by leveraging our service teams to deploy product upgrades, which will extend product lifecycles.
Power Technique	Scope 3 emissions for the years 2019–2022 have been calculated manually based on a set of reference products selected by the business area. The emissions for 2022 have been extrapolated based on the previous year’s result and increase in cost of goods sold. A factor for reduction based on identified levers and their potential to reduce emissions has also been used.	The scope 3 target will be achieved by providing electrified alternatives for each product, improving fuel efficiency of the internal combustion engines, and stimulating customers’ and rental customers’ use of HVO by offering solutions to make HVO available on the construction sites.
Industrial Technique	Scope 3 emissions have been calculated by applying the PCF tool to a set of reference products selected by the business area.	The scope 3 target will be achieved by developing and providing electric alternatives for the pneumatic product ranges, improving energy efficiency in the current product range and optimizing use of the products by customers.

Our ambition is that the data we report should be as realistic as possible to reflect the products’ actual emissions. However, due to the complexity of the area and the number of assumptions and estimates underlying the calculations, we realize that the data is associated with significant uncertainties. We will therefore work gradually to develop and improve the quantification processes and tools we use over time, to increase their accuracy as far as practicable and minimize uncertainties.# Atlas Copco 2022 131

SUSTAINABILITY NOTES

Introduction

This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
* Sustainability notes
Four years in summary
Contacts

SOCIAL IMPACT

Employment

Information on employees and other workers

Atlas Copco is a significant employer on the global market. The Group reports the number of employees as full time equivalents (FTE) per geographical spread and per professional category, as well as divided between white-collar and blue-collar employees. For geographical spread of Atlas Copco employees and employees by professional category, see note 5, page 83.

Additional workforce by region, at year end, %
| | 2022 |
| --- | ---- |
| North America | 16 |
| South America | 1 |
| Europe | 47 |
| Africa/Middle East | 1 |
| Asia/Oceania | 35 |
| Total | 100 |

Additional workforce by professional category, at year end, %
| | 2022 |
| --------- | ---- |
| Production | 52 |
| Marketing | 15 |
| Service | 15 |
| Administration | 14 |
| Research & development | 17 |
| Total | 100 |

New employee hires and employee turnover

The total number and rate of external new employee hires in 2022 was 8 524 (6 524) which constitutes 18.6% (15.8) of the total average number of employees during the year. The percentage of externally recruited female employees was 27% (27). The total number of resignations was 3 667 (2 833), which constitutes 8.0% (6.9) of the total average number of employees during the year.

The Group’s KPIs for employee satisfaction and engagement measure how employees perceive the company culture and their opportunities to grow in the company. The targets for both KPIs are to be above and to continuously increase in relation to the employee engagement survey provider’s proprietary benchmark for global companies. The benchmark is based on anonymized data from the survey provider’s customer base with tens of millions of respondents in more than 150 countries, as well as input from industry panel studies to produce robust and unbiased normative data.

Freedom of association and collective bargaining

Atlas Copco views trade unions and employee representatives as a valuable support for its employees, and fosters relationships based on mutual respect and constructive dialogue. Labor practices and employee rights, such as collective bargaining, are covered in the Code of Conduct. In 2022, 29% (32) of all employees were covered by collective bargaining agreements.

As a decentralized organization, the engagement and dialogue with labor unions take place at a local level. In case of operational changes that may significantly affect employees or result in giving notice, the local laws and regulations as well as collective bargaining agreements are respected and complied to. The need for transition assistance programs is assessed at local level and the support provided through such programs are adapted to the situation at hand and to local market conditions. The Group’s internal job market is available to all employees and provides opportunities for internal mobility.

In countries where no independent labor unions exist, Atlas Copco has taken measures to establish forums for employer/employee relations, through environment and safety committees. Labor relations are followed up regularly on the operational level and reviewed by internal audit.

Significant suppliers’ compliance to our Code of Conduct, which is based on international guidelines and frameworks such as the UN Global Compact and the International Labour Organization Declaration on Fundamental Principles and Rights at Work, is audited regularly.

Occupational health and safety

Safety and wellbeing are key priorities for Atlas Copco due to the importance of a sound working environment to employees’ health and motivation, as well as to the Group’s productivity and competitiveness. The Group’s global Safety, Health and Environmental policy ensures that there are robust standards for safety and wellbeing in the workplace. Each division sets targets and makes action plans to increase awareness and improve behavior, policies and processes with the purpose of offering a safe and healthy work environment and to identify and address risks.

Targets and key performance indicators on safety and wellbeing are continuously monitored by local management and followed up by Group Management in connection with the quarterly reporting of sustainability data.

Occupational health and safety management system

Group companies must have an Atlas Copco-verified Safety, Health, Environment, and Quality management system, which is documented, implemented and updated on an ongoing basis. Customer companies and rental companies with more than 70 employees, and product companies with more than 20 employees shall be certified according to ISO 45001. The system involves regular risk assessments and follow-up on conditions and safety-related processes of both our own workplaces and those of contractors.

Employees covered by ISO 45001*, 2022
| | Number (FTE) | % |
| ----------------------------------- | ------------ | --- |
| Atlas Copco employees | 32 754 | 86 |
| Additional workforce | 2 650 | 86 |
| Total | 35 404 | 86 |

* Based on units required by Atlas Copco to be certified according to ISO 45001. The certificates are audited both internally and externally.

Work-related injuries

In order to decrease risks and prevent injuries in the workforce, Atlas Copco uses a safety pyramid for the Group’s reporting. The method supports transparent reporting, risk-averse behavior and behavior change. The definitions of different severity of incidents and injuries are aligned with international standards. The number and rate of incidents and injuries cannot be compared with the years before 2019, as this was the first year the reporting tool was used.

The Group’s safety-related target is to have a balanced safety pyramid. This means more reports of risk observations than near misses, more near misses than minor injuries, and more or equal reports of minor injuries relative to recordable injuries. See the results of the 2022 reporting in the table below and illustration above.

Over the last few years, the major hazards reported for high-consequence injuries have been slips and trips, lone working and manual handling of equipment. Examples of common injuries were cuts or other injuries from operating machines. Among the actions to mitigate hazards are awareness training and risk assessment of working environment, inspections, mechanical handling aids, and ensuring safe access to equipment.

Total recordable injuries, 2022
| | Per million working hours | Number |
| ------------------------------------ | ------------------------- | ------ |
| Recordable injuries, total workforce | 4.2 | 403 |
| Recordable injuries, Atlas Copco employees | 4.3 | 375 |
| Recordable injuries, additional workforce | 3.6 | 28 |
| Fatalities, total workforce | 0 | 0 |
| Fatalities, Atlas Copco employees | 0 | 0 |
| Fatalities, additional workforce | 0 | 0 |
| High-consequence injuries, total workforce | 0.04 | 4 |
| High-consequence injuries, Atlas Copco employees | 0.05 | 4 |
| High-consequence injuries, additional workforce | 0.0 | 0 |

Total recordable injuries Safety pyramid 2022
| | |
| ------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- |
| Total workforce, number | |
| Fatality | Work-related fatality (0) |
| High-consequence injury | Injury where recovery to pre-injury fitness takes longer than six months (4) |
| Other recordable injury | Injury resulting in absence from work, restricted work, medical treatment, loss of consciousness or significant injury diagnosed by a physician (399) |
| Minor injury | Minor injury requiring first aid treatment only (1 261) |
| Near miss | Event that did not result in an injury but had the potential to do so (6 800) |
| Risk observations | Observations of unsafe conditions that could cause harm/injury (110 473) |

Diversity and inclusion

Atlas Copco’s Diversity and Inclusion guideline states that we strive for diversity and inclusion in every aspect of our operations. Atlas Copco believes in having an inclusive culture, which means that all of our employees are treated fairly and with respect, are able to make a professional career, are seen and heard, and have the opportunity to thrive and grow. We provide equal opportunity to all applicants and employees and do not discriminate based on ethnicity, religion, gender, age, nationality, disability, sexual orientation or political opinion. The diversity and inclusion guideline covers all employees. Atlas Copco companies establish local diversity policies and guidelines in alignment with the Group policy, local laws and regulations, and local ambitions. Anti-harassment and non-discrimination are addressed in the Group’s mandatory ethics training.

The Diversity and Inclusion Council is chaired by President and CEO Mats Rahmström, and consists of representatives from all business areas, along with the corporate communications, human resources and accounting and controlling functions. The council meets regularly to follow up on action plans and results in the operations. Atlas Copco strives to increase the share of women in the organization, and the target is that by 2030, there should be 30% women in the Group. At year end 2022, the share of women in the workforce was 21.6% (20.9). The Board of Directors (excluding worker representatives) constituted of 6 men and 2 women (25% women) and Group Management were 7 men and 2 women (22% women).

Atlas Copco has managers on international assignments coming from 46 countries and working in 46. In 2022, a total of 80% (77%) of all senior managers were locally employed. 46 (42) nationalities were represented among the 631 (509) most senior managers in the Group.

Taxes

The Group recognizes the key role that tax plays in advancing economic development and considers it vital to combat corruption and support sound business practices in order to create most value for society.

Atlas Copco 2022 132

SUSTAINABILITY NOTES

Introduction

This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
* Sustainability notes
Four years in summary
Contacts# Atlas Copco believes in good corporate practice in the area of tax management, balancing the inter- ests of various stakeholders, including customers, investors as well as the gov- ernments and communities in the countries in which the Group operates. Atlas Copco does not engage in aggressive tax planning but instead takes care to pay the correct taxes in its countries of operation. Atlas Copco’s tax policy can be found at the Group’s website www.atlascopcogroup.com. See note 9 of the consolidated financial statements for the details of taxes paid, reported according to the international financial reporting standards.

Disclosing tax by country

Atlas Copco openly discloses the Group´s corporate income tax cost including the Group effective corporate tax rate in the annual report. The Group reports revenues, corporate tax costs and other key figures via country-by-country reporting to tax authorities globally. At present, there is no established international standard for publicly reporting taxes paid by country and the resulting data is therefore not compa- rable between different companies. Considering various initiatives on openly disclosing corporate tax costs, including the EU Directive on public country- by- country reporting, we expect corporate tax cost on regional or country level to be disclosed for the Atlas Copco Group within the coming years.

Responsibility throughout the value chain

Working with business partners who share Atlas Copco’s high standards regarding quality, business ethics, the environment and resource efficiency is necessary to effectively manage risks, and to enhance productivity in the value chain. The ambition is to work with suppliers and distributors who share these standards and who comply with the Code of Conduct.

Business partner	Role in the value chain	Primary responsible for risk management and compliance
Suppliers, subcontractors	Provide key parts as well as manufacturing services
Purchasing councils
Joint ventures	Partly owned companies that provide complementary products and services
Division presidents
Agents, distributors	Sell and distribute products to customers on the Group’s behalf
Marketing councils

Suppliers

Atlas Copco has a large international supplier base. Around 75% of product cost stems from purchased components. Atlas Copco’s purchasing strategies are decentralized to give the organization higher flexibility and to ensure the right competence. Purchasing councils oversee supply chain management at divisional level, and come together as a part of the Group purchasing council to develop central policies and tools that impact all operations. Local purchasing is encouraged.

Geographical spread of suppliers

• Asia/Oceania 41%
• North America 12%
• Europe 44 %
• S outh America 3%

Evaluation process

Suppliers are evaluated during and after selection by product companies, primarily by personnel in the purchasing function. Internal training on how to carry out supplier evaluations is published in the internal handbook of poli- cies and guidelines The Way We Do Things. The supplier evaluation process examines:

• Business partners’ record of governance, ethics and stance against corruption
• Labor issues: Rejection of forced, compulsory or child labor, elimination of discrimination, safeguarding employee health and safety, collective bargaining rights
• Environmental performance: Managing waste, minimizing emissions, and reducing the use of natural resources
• Human rights issues: Responsible sourcing and respect for human rights in operations

At times, self-assessment checklists are sent to suppliers and on-site evalua- tions are conducted regularly or when deemed necessary. These result in a report with concrete suggestions in the form of an action plan or improve- ments to be followed up on at an agreed time. Atlas Copco can provide experi- ence and know-how to suppliers who need support in order to comply with the minimum standards set forth in the business partner compliance docu- ment. However, suppliers who fail to meet the criteria and do not show a willingness to improve are rejected.

Suppliers´ commitment

	2022	2021
Signicant suppliers, number	6 214	5 580
Suppliers audited on safety, health, social, and environmental issues 1)	922	647
Suppliers approved (no need to follow up)	880	629
Suppliers conditionally approved (monitored)	41	18
Suppliers rejected (relationship ended) 2)	1	0
Suppliers asked on commitment to the Code of Conduct, number	6 029	5 421
Signicant suppliers that have conrmed their commitment to the Code, %	93	93

1) Audits are conducted by Atlas Copco teams directly at the suppliers’ sites.
2) Reasons for rejection relate to safety in the workplace, labor conditions, environment issues, or non compliance of laws. Suppliers are rejected if they do not meet Atlas Copco’s requirements and are not willing to improve. In 2022, one business partner was rejected due to environ mental, health and safety issues.

Definition of significant suppliers: All external suppliers of goods and services, direct and indirect, with a purchas- ing value above a set threshold, based on 12-month values from October previous year to September current year. For suppliers in countries with heightened risk for human rights violations, environmental risks or corruption etc., the purchasing threshold is lower (approximately 13% of set value).

Responsible sourcing of minerals

Responsible sourcing of minerals is essential to Atlas Copco and though the Group does not procure directly from smelters/refineries, some parts of the supply chain do. Atlas Copco is not in the scope of Dodd-Frank Act or the EU regulation 2017/821, but based on concerns of violations of human rights including forced labor, human trafficking and child labor, and to support our customers’ obligation to these Acts, the Group has measures to detect and prevent the use of conflict minerals in its supply chain. Atlas Copco requires its direct suppliers to commit to responsible sourcing of all minerals included in parts and products they sell to us. This commitment is exercised through minerals data collection and due diligence, implemented every year. Moreover, all our significant suppliers must sign the Code of Con- duct that includes an article on responsible sourcing requirements. The process is described in detail on the Group’s website www.atlascopcogroup.com. Atlas Copco has a comprehensive program to investigate the possible use of conflict minerals in components used in Atlas Copco products. The program ensures responsible sourcing of tin, tantalum, tungsten and gold. Cobalt was added to the program in 2020, and data collection and due diligence using the Responsible Minerals Initiative (RMI) guidelines and Cobalt Reporting Template (CRT) will be rolled out continuously. As a member of the RMI, Atlas Copco adheres to its guidelines by encourag- ing suppliers to source from smelters verified by a third party such as RMI’s Responsible Minerals Assurance Process (RMAP), and commits to transparency by submitting reporting templates to customers about smelters in the supply chain and collaborates with stakeholders.

Atlas Copco 2022 133 SUSTAINABILITY NOTES Introduction This is Atlas Copco The year in review Financials Other information Signatures of the Board of Directors Audit Report Financial denitions • Sustainability notes Four years in summary Contacts

Distributors

Atlas Copco has a large international distributor base. Atlas Copco’s sales strategies are set by the divisions on a global level and are tuned for local mar- ket needs by the customer centers. These sales strategies include the choice of sales channels and distributor management. The marketing councils ensure cross-divisional alignment and develop central policies and tools that impact all operations. Starting in 2019, the percentage of significant distributors that sign the Atlas Copco business criteria is measured as a Group KPI. In 2022, 92% of all significant distributors signed the business partner criteria. 100% of the significant distributors were asked to sign the criteria.

Definition of significant distributors: All external distributors, including agents and resellers with sales of the Group’s goods and services for a value above a set threshold, based on 12-month values from October previous year to September current year. For distributors, agents and resellers in countries with a heightened risk for human rights violations, environmental risks or corruption etc., the sales threshold is set to include all active distributors.

Product responsibility

Atlas Copco strives to follow all applicable laws and regulations regarding safety, health and environmental aspects, product information, safety infor- mation and labeling. The information required by the Group’s procedures for product and service information and labeling covers aspects such as sourcing of components, substances of concern, safe use and disposal of the product. Customer training is included when relevant, to secure safe handling of the products. In general, all electrically driven Atlas Copco products sold into the EU fall under the EU Waste Electrical and Electronic Equipment (WEEE) Directive. This includes compressors, vacuum pumps, handheld electric tools and monitoring control instruments. Atlas Copco is responsible for, and arranges with custom- ers, the correct disposal of products that fall under the directive. Atlas Copco maintains lists of substances which are either prohibited or must be declared due to their potential negative impact on health or the envi- ronment. Prohibited substances are not allowed in the Group’s products or processes. Items containing declarable substances are avoided or replaced whenever possible. Via a dedicated Atlas Copco communication platform all our suppliers can be swiftly informed about upcoming legislative changes.# SUSTAINABILITY NOTES

Introduction

This is Atlas Copco

• The year in review
• Financials
• Other information
• Signatures of the Board of Directors
• Audit Report
• Financial definitions
• Sustainability notes
• Four years in summary
• Contacts

Atlas Copco develops and offers a wide range of products for different end markets and applications. Atlas Copco strives to provide the most energy efficient products for each specific application to support its customers in minimizing their energy consumption and reducing their climate impact. Guidance from the EU issued in 2022 emphasizes that the term “eligibility” does not require adherence to any reporting criteria other than fulfilling the activity description for the products or services offered. Atlas Copco has therefore revised its conservative approach to eligibility of 2021 when only products with high likeliness of also becoming aligned were included. As a result, revenue eligibility has increased. During 2022, each business area has identified one pilot product to be assessed for revenue alignment rather than evaluating the entire product range of Atlas Copco. A comprehensive assessment to evaluate the taxonomy reporting criteria for Do No Significant Harm and Minimum Safeguards has been completed, including Group-wide reporting of relevant capital expenditures (CapEx) and operating expenditures (OpEx). Atlas Copco deems its existing policies and procedures overall adequate to conclude that no significant harm is caused to any environmental objective and that the company complies with the social aspects of conducting business in a responsible manner. However, recent EU taxonomy guidance, particularly in relation to the Minimum Safeguards, indicates a restrictive compliance interpretation. Therefore, Atlas Copco reports 0% alignment on all three KPIs. Atlas Copco follows the development closely and may adjust its reporting in the future.

Doing no significant harm

Taxonomy alignment requires positive contribution to at least one of the taxonomy environmental objectives while doing no significant harm to any of the other objectives. The taxonomy specifies specific criteria as to what constitutes doing harm and what type of assessment a company should perform to evaluate such potential harmdoing. Atlas Copco has assessed its operations against the taxonomy’s appendixes A, B, C and D as well as the requirements for not harming the transition to a circular economy. The conclusion is that no significant harm is done. Improvements may be implemented to certain existing policies and procedures. Atlas Copco is reporting 0% alignment and therefore no detailed review of each aspect of the criteria is shared at this stage.

Meeting the minimum safeguards

The EU taxonomy references adherence to the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labor Organization on Fundamental Principles and Rights at Work and the International Bill of Human Rights. Atlas Copco has assessed compliance against the Minimum Safeguards requirements. In principle, company policies align with the criteria, but as recent guidance from the EU particularly in relation to the Minimum Safeguards, indicates a restrictive compliance interpretation, Atlas Copco reports 0% alignment. For this reason, no detailed review of each aspect of the criteria is shared at this stage.

Revenue KPI

Based on the current EU taxonomy delegated act for climate change mitigation and climate change adaptation, Atlas Copco is eligible for climate change mitigation under section 3.6 with the activity description “Manufacture of technologies aimed at substantial greenhouse gas emission reductions in other sectors of the economy”. Atlas Copco defines eligibility as technologies which aim to enable substantial energy savings and/or other means to avoid, reduce, remove, or store greenhouse gas emissions compared to alternative technologies commonly used on the market. This includes products and services that:
1) prevent the venting of environmentally hazardous gases directly into the atmosphere, or
2) enable substantial energy savings compared to available technologies commonly used on the market by either use optimization, in and of themselves, by enabling the shift to electric/battery power, or by introducing new solutions on the market.

Following clarifications by the EU during 2022, eligible technologies now include:
* Energy efficient products and services which now or over time are expected to meet the alignment criteria.
* Products and services which are aimed at being phased out and replaced by aligned products.

In 2021, Atlas Copco included eligible revenues within customer segments referenced in the taxonomy where Atlas Copco products and solutions play a critical role in the manufacturing process. As there are no clear instructions how enabling activities shall be assessed, Atlas Copco only reports under the taxonomy section 3.6 in 2022. Atlas Copco follows the development closely and may adjust its reporting subject to clarification.

Eligible technologies

The mapping of eligible technologies is an ongoing process and may result in revisions in future reports as reporting practice develops. For the 2022 reporting the following have been included:

Within the Compressor Technique business area, a majority of products and solutions are eligible and developed with the aim to lower customers’ energy consumption. This is predominately done through energy efficient variable speed drive compressors but also fixed speed compressors are manufactured with the aim of offering energy efficiencies. Additional eligible products and solutions include e.g. on-site industrial gas generators, blowers, boosters, and dryers as well as optimizing service solutions such as installations for optimal air distribution.

Within the Vacuum Technique business area, abatement exhaust management solutions are eligible as they eliminate toxic and global warming gases which would otherwise create a climate impact. Also included as eligible are vacuum pump solutions which demonstrate market leading levels of energy efficiency achieved by initiatives such as e.g. high-performance power sources or IoT technology to optimize energy demand.

Within the Industrial Technique business area, a majority of products and solutions aim to reduce customers’ energy consumption and are therefore deemed eligible. This includes all products and solutions that support the transition from pneumatic to electric power, as well as use optimization of pneumatic products, making them as energy efficient as possible until replaced by an electrical option.

Within the Power Technique business area, all electric or battery-driven products are deemed eligible, supporting the shift from diesel to electric or battery power. This includes the electric rental fleet. Also diesel-driven products are considered eligible because when necessary infrastructure for electric solutions is lacking, diesel-driven machinery is required in the market for which Atlas Copco offers very energy efficient solutions. Still, the aim is to replace diesel-driven products with electric alternatives when possible. As a whole, a majority of the business area’s product and solutions are eligible for the Revenue KPI. Due to practical limitations, applicable to the rental fleet, only the electric rental fleet is included in the OpEx and CapEx reporting.

The taxonomy eligible revenues include both products and services. It excludes sales to oil and gas extraction industries. Sales to distributors and rental companies have been excluded. Both Compressor Technique and Power Technique have included revenues related to refurbishment, that is, improving energy efficiency through a circular business model.

Technical screening criteria assessment

The 3.6 section demands that emission savings are calculated in a certified tool and that these calculations need to be verified by a third party. In 2022, Atlas Copco has certified its existing product carbon footprint (PCF) tool against ISO 14067:2018. Each business area identified one pilot product to be assessed for alignment and an independent certification body has verified the life-cycle emission calculations of these pilot products. All pilot products passed the review and thereby the taxonomy’s technical screening criteria for alignment under section 3.6.

Result

Revenue eligibility is 60% which is higher than the previous year. Recent guidance from the EU, particularly in relation to the Minimum Safeguards, indicates a restrictive compliance interpretation. Therefore, Atlas Copco reports 0% alignment. Atlas Copco follows the development closely and may adjust its reporting in the future.

EU Taxonomy regulation disclosures

The European Union (EU) taxonomy aims to provide guidance and over time a comprehensive classification system for sustainability, structured into different economic activities that companies can perform.# SUSTAINABILITY NOTES

Introduction

It consists of six environmental objectives of which two are relevant for the financial year 2022: climate change mitigation and climate change adaptation.

Atlas Copco 2022 135

SUSTAINABILITY NOTES

Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
• Sustainability notes
Four years in summary
Contacts

CapEx KPI

The CapEx reporting has been extended and more clearly linked to the specific economic activities in the taxonomy compared to the previous year. Atlas Copco utilizes all types of taxonomy listed capital expenditure for the CapEx numerator, listed below:

• “CapEx related to assets or processes that are associated with taxonomy-aligned activities”: Used for investments in factories that enable production of products relating to taxonomy section 3.6.
• “A CapEx Plan to increase the proportion of taxonomy-aligned products”: Used for the reporting of R&D capital expenditure relating to taxonomy section 3.6.
• “The purchase of output of taxonomy-aligned products”: Used for taxonomy product additions into Atlas Copco’s hire fleet relating to taxonomy section 3.6.
• “Individual measures” to lower Atlas Copco’s own greenhouse gas emissions: Used for installations of energy efficiency equipment, installations of charging stations for electric vehicles, installations controlling building energy performance, installations of renewable energy technologies, and investments related to the company vehicle fleet (relating to taxonomy sections 6.5, 7.3, 7.4, 7.5, and 7.6).

The CapEx denominator used for the taxonomy KPI calculation consists of additions to tangible and intangible assets (including right of use assets) during the financial year, considered before depreciation, amortization, and any re-measurements, including those resulting from revaluations and impairments, and excluding fair value changes. The denominator also includes additions to tangible and intangible assets resulting from business combinations.

No significant climate change adaptation investments have been made during the year.

Result
CapEx eligibility is 7% which is in line with the previous year, however, both the numerator and the denominator value are significantly higher. Recent guidance from the EU, particularly in relation to the Minimum Safeguards, indicates a restrictive compliance interpretation. Therefore, Atlas Copco reports 0% alignment and 0 MSEK in regards to the CapEx plan to expand its proportion of taxonomy-aligned products within R&D (both for this reporting period and the full time period of the plan). Atlas Copco follows the development closely and may adjust its reporting in the future.

OpEx KPI

As of 2022, the OpEx numerator only includes OpEx that is material to the company business model, i.e. expenditures in R&D and the own hire fleet (relating to taxonomy section 3.6). The denominator however includes expenditures for R&D and hire fleet as well as maintenance costs for buildings, equipment, and own vehicle fleet.

Result
OpEx eligibility is 22% which is slightly higher than the previous year. Recent guidance from the EU, particularly in relation to the Minimum Safeguards, indicates a restrictive compliance interpretation. Therefore, Atlas Copco reports 0% alignment. Atlas Copco follows the development closely and may adjust its reporting in the future.

Concluding comments

An increased revenue eligibility is reported in 2022 in line with clarifications issued by the EU, allowing a less conservative approach to eligibility compared to 2021. The company has conducted a comprehensive assessment to evaluate and prepare for taxonomy alignment reporting. In principle, Atlas Copco company policies and procedures correspond with taxonomy requirements, however, as recent guidance from the EU, particularly in relation to the Minimum Safeguards, indicates a restrictive compliance interpretation Atlas Copco reports 0% alignment on all three KPIs. As the taxonomy reporting practice and guidelines develop, and as the scope evolves with four additional environmental objectives, Atlas Copco will reevaluate its current approach. Clarification in how to report enabling activities is also likely to impact the taxonomy mapping as many of the company’s products and solutions are essential in specific manufacturing processes which are included in the taxonomy.

Revenue

Substantial contribution criteria	DNSH criteria (Does Not Significantly Harm)	Economic activities
Climate change mitigation	Climate change mitigation	Code
Climate change adaptation	Climate change adaptation	Absolute revenue (MSEK)
Water and marine resources	Water and marine resources	Proportion of revenues (%)
Circular economy	Circular economy
Pollution prevention	Pollution prevention
Biodiversity and ecosystems	Biodiversity and ecosystems
Minimum safeguards	Taxonomy- aligned pro portion of revenues, year N	Taxonomy- aligned pro portion of revenues, year N-1
Category (enab ling activity)	Category (transitional activity)
A. TAXONOMY-ELIGIBLE ACTIVITIES	60.28%
A1. Environmentally sustainable activities (Taxonomy-aligned)
Revenue from environmentally sustainable activities (Taxonomy-aligned) (A.1)	0.0	0.00%
	100%	0.00%
A2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacture of other low-carbon technologies	3.6	85
	193.0	60.28%
Revenue from Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)	85	193.0
	60.28%
Total (A.1 + A.2)	85	193.0
	60.28%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Revenue from Taxonomy-non-eligible activities (B)	56	132.2
	39.72%
Total (A + B)	141	325.2
	100.00%

Atlas Copco 2022 136

SUSTAINABILITY NOTES

Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
• Sustainability notes
Four years in summary
Contacts

CapEx

Substantial contribution criteria	DNSH criteria (Does Not Significantly Harm)	Economic activities
Climate change mitigation	Climate change mitigation	Code
Climate change adaptation	Climate change adaptation	Absolute CapEx (MSEK)
Water and marine resources	Water and marine resources	Proportion of CapEx (%)
Circular economy	Circular economy
Pollution prevention	Pollution prevention
Biodiversity and ecosystems	Biodiversity and ecosystems
Minimum safeguards	Taxonomy- aligned proportion of CapEx, year N	Taxonomy- aligned proportion of CapEx, year N-1
Category (enab ling activity)	Category (transitional activity)
A. TAXONOMY-ELIGIBLE ACTIVITIES	7.34%
A1. Environmentally sustainable activities (Taxonomy-aligned)
CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)	0.0	0.00%
	100%	0.00%
A2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacture of other low-carbon technologies	3.6	560.5
	4.26%
Transport of motorbikes, passenger cars and light commercial vehicles	6.5	377.9
	2.87%
Installation of energy efficiency equipment	7.3	13.1
	0.10%
Installation of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)	7.4	3.2
	0.02%
Installation of instruments and devices for measuring, regulation and controlling energy performance of buildings	7.5	0.4
	0.00%
Installation of renewable energy technologies	7.6	9.9
	0.08%
CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)	964.9	7.34%
Total (A.1 + A.2)	964.9	7.34%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities (B)	12 181.1	92.66%
Total (A + B)	13 146.0	100.00%

OpEx

Substantial contribution criteria	DNSH criteria (Does Not Significantly Harm)	Economic activities
Climate change mitigation	Climate change mitigation	Code
Climate change adaptation	Climate change adaptation	Absolute OpEx (MSEK)
Water and marine resources	Water and marine resources	Proportion of OpEx (%)
Circular economy	Circular economy
Pollution prevention	Pollution prevention
Biodiversity and ecosystems	Biodiversity and ecosystems
Minimum safeguards	Taxonomy- aligned proportion of OpEx, year N	Taxonomy- aligned proportion of OpEx, year N-1
Category (enab ling activity)	Category (transitional activity)
A. TAXONOMY-ELIGIBLE ACTIVITIES	21.79%
A1. Environmentally sustainable activities (Taxonomy-aligned)
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)	0.0	0.00%
	100%	0.00%
A2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacture of other low-carbon technologies	3.6	1 185.7
	21.79%
OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)	1 185.7	21.79%
Total (A.1 + A.2)	1 185.7	21.79%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities (B)	4 256.5	78.21%
Total (A + B)	5 442.2	100.00%

Atlas Copco 2022 137

SUSTAINABILITY NOTES

Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
• Sustainability notes
Four years in summary
Contacts

About the sustainability report

Sustainability is an integral part of Atlas Copco’s business model and the Group therefore reports financial and non-financial data in an integrated annual report. The sustainability report includes information regarding issues where Atlas Copco has a significant impact on the economy, environment and people, including human rights. Atlas Copco publishes a sustainability report annually. This year’s report has been prepared in accordance with GRI Standards 2021 and applies to the period January 1, 2022 through December 31, 2022, which is in line with the Group’s financial reporting. This sustainability report was published on March 22, 2023.# SUSTAINABILITY NOTES

Introduction

This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial definitions
• Sustainability notes
Four years in summary
Contact information

GRI content index

GRI Standard Disclosure Location Comments and omissions

General disclosures

Nr	Description	GRI 2: General Disclosures 2021	Location	Comments and omissions
2-1	Organizational details		119–122, 138
2-2	Entities included in the organization’s sustainability reporting		138
2-3	Reporting period, frequency and contact point		138
2-4	Restatements of information		42, 138, 144–145
2-5	External assurance		138
2-6	Activities, value chain, and other business relationships		Inside cover, 7–10, 21–33	For information on significant acquisitions and divestments, see pages 20–32.
2-7	Employees		80, 83, 132	Omission: Atlas Copco reports aggregate number of full-time equivalents. The figures broken down into full-time/part-time employees, and additional workforce by gender, are currently not available in the Group's HR system and can therefore not be reported.
2-8	Workers who are not employees		132	Omission: Additional workforce may be temporary or permanent, generally employed by a third party. Additional workforce by gender or by type of contractual relationship is currently not available in the Group's HR system and can therefore not be reported.
2-9	Governance structure and composition		52–53, 129
2-10	Nomination and selection of the highest governance body		53
2-11	Chair of the highest governance body		55	The chair of the board is not a senior executive of Atlas Copco.
2-12	Role of the highest governance body in overseeing the management of impacts		53, 129
2-13	Delegation of responsibility for managing impacts		129
2-14	Role of the highest governance body in sustainability reporting		129
2-15	Conflicts of interest		53	Atlas Copco operates in compliance with the Swedish Companies Act which includes rules and procedures applicable to conflicts of interest.
2-16	Communication of critical concerns		53, 129–130
2-17	Collective knowledge of the highest governance body		53
2-18	Evaluation of the performance of the highest governance body		53
2-19	Remuneration policies		82–83
2-20	Process to determine remuneration		53–54
2-21	Annual total compensation ratio			Omission: Not reported at Group-level. Atlas Copco is committed to a fair and sustainable remuneration policy, both to stay competitive as an employer and from an internal equity perspective. We are currently not able to report on this disclosure in a meaningful manner, but remain committed to transparency in this regard.
2-22	Statement on sustainable development strategy		3–4, 54
2-23	Policy commitments		129
2-24	Embedding policy commitments		40–41, 51, 129
2-25	Processes to remediate negative impacts		129
2-26	Mechanisms for seeking advice and raising concerns		40, 129
2-27	Compliance with laws and regulations		130
2-28	Membership associations		129
2-29	Approach to stakeholder engagement		126
2-30	Collective bargaining agreements		132

Material topic disclosures

Nr	Description	GRI 3: Material topics 2021	Location	Comments and omissions
3-1	Process to determine material topics		127	See more information on www.atlascopcogroup.com
3-2	List of material topics		127
3-3	Management of material topics		6, 129

ECONOMIC IMPACT

Economic performance

Nr	Description	GRI 3: Material topics 2021	GRI 201: Economic performance 2016	Location	Comments and omissions
3-3	Management of material topics			6, 129–130
201-1	Direct economic value generated and distributed			130, 145
201-2	Financial implications and other risks and opportunities due to climate change *			46, 131	Omission: The assessment of climate-related risks and their financial implications has started at divisional level. However, the outcome is not yet consolidated and disclosed in quantitative terms outside the organization.

Anti-corruption

Nr	Description	GRI 3: Material topics 2021	GRI 201: Economic performance 2016	Location	Comments and omissions
3-3	Management of material topics			6, 40–41, 129–130
205-1	Operations assessed for risks related to corruption *			130
205-2	Communication and training about anti-corruption policies and procedures *			40–41, 145	Omission: A new mandatory training in the Code of Conduct will be launched in 2023, and data for employees is therefore not available. Data on significant suppliers are not broken down by type or region.
205-3	Confirmed incidents of corruption and actions taken			130

Anti-competitive behavior

Nr	Description	GRI 3: Material topics 2021	GRI 201: Economic performance 2016	Location	Comments and omissions
3-3	Management of material topics			6, 40–41, 129–130
206-1	Legal actions for anti-competitive behavior, anti-trust, and monopoly practices			130

ENVIRONMENTAL IMPACT

Energy

Nr	Description	GRI 3: Material topics 2021	GRI 302: Energy 2016	Location	Comments and omissions
3-3	Management of material topics			43–44, 129–131
302-1	Energy consumption within the organization			130, 144
302-3	Energy intensity			144

Emissions

Nr	Description	GRI 3: Material topics 2021	GRI 305: Emissions 2016	Location	Comments and omissions
3-3	Management of material topics			6, 43–44, 129–131
305-1	Direct greenhouse gas emissions (Scope 1)			6, 42, 144
305-2	Energy indirect greenhouse gas emissions (Scope 2)			6, 42, 144
305-3	Other indirect greenhouse gas emissions (Scope 3)			6, 42, 144
305-4	Greenhouse gas emissions intensity			6, 42, 144

Supplier environmental assessment

Nr	Description	GRI 3: Material topics 2021	GRI 308: Supplier environmental assessment 2016	Location	Comments and omissions
3-3	Management of material topics			6, 43, 133
308-1	New suppliers that were screened using environmental criteria			133	Significant suppliers, both new and existing, are identified using a risk-based approach. Omission: Data for new suppliers is not specifically disclosed. Environmental and social screening is conducted and reported jointly.
308-2	Negative environmental impacts in the supply chain and actions taken *			133	Omission: Supplier audits cover both environmental and social aspects and the data is not broken down into these categories.

• The disclosure has been added in this years’ report
  Atlas Copco 2022 139# SOCIAL IMPACT

Employment

GRI 3: Material topics 2021
3-3 Management of material topics 6, 38–39, 129

GRI 401: Employment 2016
401-1 New employee hires and employee turnover 132, 145
Omission: Atlas Copco does not report turnover by age group and gender.

Occupational health and safety

GRI 3: Material topics 2021
3-3 Management of material topics 6, 39, 129, 132

GRI 403: Occupational health and safety 2018
403-1 Occupational health and safety management system 39, 129, 132
403-2 Hazard identication, risk assessment, and incident investigation 129, 132
403-3 Occupational health services 39, 129
403-4 Worker participation, consultation, and communication on occupational health and safety 39
403-5 Worker training on occupational health and safety 39, 132
403-6 Promotion of worker health 39
403-7 Prevention/mitigation of occupational health/safety impacts directly linked by business relationships 132
403-8 Workers covered by an occupational health and safety management system * 132
Calculation based on units required to be ISO 45001-certied
403-9 Work-related injuries 132
* The disclosure has been added in this years’ report

Atlas Copco 2022 141
SUSTAINABILITY NOTES
Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial denitions
• Sustainability notes
Four years in summary
Contact information

GRI Standard Disclosure Location Comments and omissions

Training and education

GRI 3: Material topics 2021
3-3 Management of material topics 6, 37–38, 129

GRI 404: Training and education 2016
404-1 Average hours of training per year per employee * 145
Omission: Atlas Copco does not have data broken down by gender.
404-2 Programs for upgrading employee skills and transition assistance programs * 37, 132
404-3 Percentage of employees receiving regular performance and career development reviews 145
Omission: Atlas Copco does not have data broken down by gender and employee category.

Diversity and inclusion

GRI 3: Material topics 2021
3-3 Management of material topics 6, 37–38, 129, 132

GRI 405: Diversity and equal opportunity 2016
405-1 Diversity of governance bodies and employees 6, 53, 55–58, 133
Omission: Atlas Copco does not, unless required for compliance with local laws and regulations, gather data on diversity from employees or members of governance bodies, such as belonging to a minority or vulnerable group.

Non-discrimination

GRI 3: Material topics 2021
3-3 Management of material topics 40–41, 129

GRI 406: Non-discrimination 2016
406-1 Incidents of discrimination and corrective actions taken 130

Supplier social assessment

GRI 3: Material topics 2021
3-3 Management of material topics 6, 40–41, 133

GRI 414: Supplier social assessment 2016
414-1 New suppliers that were screened using social criteria 133
Signicant suppliers, both new and existing, are identied using a risk-based approach.
Omission: Data for new suppliers is not specically disclosed. Environmental and social screening is conducted and reported jointly.
414-2 Negative social impacts in the supply chain and actions taken * 133
Omission: Supplier audits cover both environmental and social aspects and the data is not broken down into these categories.

Customer health and safety

GRI 3: Material topics 2021
3-3 Management of material topics 41, 128–129, 134

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services 134

Marketing and labeling

GRI 3: Material topics 2021
3-3 Management of material topics 129, 134

GRI 417: Marketing and labeling 2016
417-2 Incidents of non-compliance concerning products and service information and labeling 134

GRI content index

• The disclosure has been added in this years’ report

Atlas Copco 2022 142
SUSTAINABILITY NOTES
Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial denitions
• Sustainability notes
Four years in summary
Contact information

Energy management

Metric	Code	Comment	Page
1. Total energy consumed	RT-IG-130a.1	Total energy is reported in MWh, not in gigajoules.	130
2. Percentage grid electricity		Percentage of grid electricity is not reported.	130
3. Percentage renewable energy

Employee health & safety

Metric	Code	Comment	Page
1. Total recordable incident rate (TRIR)	RT-IG-320a.1		132, 145
2. Fatality rate
3. Near-miss frequency rate (NMFR)

Fuel economy and emissions in use-phase

Metric	Code	Comment	Page
Sales-weighted fuel eciency for non-road equipment	RT-IG-410a.2	Product fuel eciency is not reported but the Group innovates to help customers increase energy eciency and reduce emissions. All projects for new and redesigned products should have targets for reduced carbon impact.	34–36

Materials sourcing

Metric	Code	Comment	Page
Description of the management of risks associated with the use of critical materials	RT-IG-440a.1	Risk management associated with conict minerals is described.	41, 47, 129, 133

Remanufacturing design & services

Metric	Code	Comment	Page
Revenue from remanufactured products and remanufacturing services	RT-IG-440b.1	Share of revenues is not reported but topic is addressed.	35

SASB Index

Table 1. Sustainability disclosure topics and accounting metrics

Metric	Code	Comment	Page
Number of units produced by product category	RT-IG-000.A	Not reported.
Number of employees	RT-IG-000.B		18, 83, 145

Table 2. Activity metrics

Metric	Code	Comment	Page

Atlas Copco 2022 143
SUSTAINABILITY NOTES
Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial denitions
• Sustainability notes
Four years in summary
Contact information

Sustainability performance

	2) Base year (2019)	2020	2021	2022
1) EMISSIONS, ALL OPERATIONS
Scope 1: Direct CO₂ e emissions (’000 tonnes) ³) ⁴)	75	75	79	77
Scope 2: Indirect CO₂ e emissions (’000 tonnes) ³) ⁴)	87	83	56	31
Scope 1+2: CO₂ e emissions (’000 tonnes) ³) ⁴)	162	158	135	108
Scope 2: Location-based indirect CO₂ e emissions (’000 tonnes) ³) ⁴)	–	–	–	138
Scope 3: Other indirect CO₂ e emissions (’000 tonnes) ³) ⁴)	170	634	172	279
	179	393	219	822
Scope 1+2: CO₂ e emissions/COS (tonnes) ³) ⁴) ⁷)	3.0	3.0	2.3	1.5
Scope 3: CO₂ e emissions/COS (tonnes) ³) ⁴) ⁷)	3	141	3	226
	3	016	2	962
ENVIRONMENT, ALL OPERATIONS	2020	2021	2022
Renewable energy for operations, % of total energy use⁵)	–	–	58.0
Direct energy use in GWh⁵) ⁶)	–	–	159
Indirect energy use in GWh⁵) ⁶)	–	–	359
Total energy use in GWh⁵) ⁶)	–	–	518
Total energy use in MWh/COS⁵) ⁶) ⁷)	–	–	7.0
Total waste in ’000 kg	–	–	54	855
Waste (in kg)/COS ⁷)	–	–	739
Reused, recycled or recovered waste, %	–	–	92
Water consumption in ’000 m³	–	–	624
Water consumption (m³)/COS ⁷)	–	–	8.4

1) Calculations according to GRI Standard Guidelines, www.globalreporting.org
2) All operations include all entities
3) CO₂ e stands for carbon dioxide equivalent emissions
4) The reporting of greenhouse gas emissions is done in accordance with the GHG Protocol (ghgprotocol.org). Country factors used for energy come from the International Energy Agency. Scope 2 is presented both as market-based and location-based according to the GHG Protocol. A market-based approach has been applied unless otherwise stated. Factors from NTM (transportmeasures.org) are used for transport of goods when emission data is not provided by the transport company. Scope 1 includes direct energy in own operations and fuel used in company vehicles. Scope 2 includes indirect energy from own operations and electricity from company vehicles. Scope 3 includes GHG emissions upstream and downstream in the value chain. Out of scope emissions data for direct CO₂ emissions from biologically sequestered carbon (e.g. CO₂ from burning biomass/biofuels) was 3561 tonnes in 2022.
5) Energy use excludes fuel and energy from company vehicles.
6) Total energy includes both indirect and direct energy used. Atlas Copco does not report cooling or steam separately. The calculation of direct energy, i.e. energy generated by the company for its own production or operation, comprises all fuels used on the sites, including diesel, oil, biofuel, gasoline, solar, geothermal, propane and natural gas.
7) Operating costs include cost of sales, marketing expenses, administration expenses, research and development expenses, other operating expenses, deducted for employee wages and benets. COS, when presented in relation to sustainability information, refers to cost of sales at standard cost in MSEK.

ENVIRONMENT, PRODUCTION AND DISTRIBUTION UNITS

	2020	2021	2022
Renewable energy for operations, % of total energy use	44	58	67
Direct energy use in GWh⁵)	100	115	108
Indirect energy use in GWh⁵)	251	270	283
Total energy use in GWh⁵)	351	385	391
Total energy use in MWh/COS⁵) ⁷)	6.6	6.5	5.3
Total waste in ’000 kg	31	036	35
Waste (in kg)/COS ⁷)	581	590	527
Reused, recycled or recovered waste, %	93	93	94
Water consumption in ’000 m³	384	395	403
Water consumption (m³)/COS ⁷)	7.2	6.6	5.4

SUPPLIERS WITH ENVIRONMENTAL MANAGEMENT SYSTEM

	2020	2021	2022
Signicant direct suppliers with an approved environmental management system, %	30	31	31

Atlas Copco 2022 144
SUSTAINABILITY NOTES
Introduction
This is Atlas Copco
The year in review
Financials
Other information
Signatures of the Board of Directors
Audit Report
Financial denitions
• Sustainability notes
Four years in summary
Contact information

Sustainability performance 1), continued

1) Calculations according to GRI Standard Guidelines, www.globalreporting.org
2) Direct economic value includes revenues, other operating income, nancial income, prot from divested companies and share of prot in associated companies.
3) Operating costs include cost of sales, marketing expenses, administration expenses, research and development expenses, other operating expenses, deducted for employee wages and benets. COS when presented in relation to sustainability information refers to cost of sales at standard cost in MSEK.4) Costs for providers of capital include financial costs and dividend, but exclude redemption of shares and repurchase of own shares. 5) Will be measured first time in 2023. 6) Results are collected every two years through the Group’s employee survey. Next survey in 2023. 7) The training will be launched in 2023.

ECONOMIC VALUE

	2020	2021	2022
Direct economic value 2)	100 251	111 972	142 233
Revenues	99 787	110 912	141 325
Economic value distributed
Operating costs 3)	55 362	61 019	78 094
Employee wages and benefits, including other social costs	25 582	27 151	33 580
Costs for providers of capital 4)	8 988	9 281	9 765
Costs for direct taxes to governments	4 801	5 372	7 262
Economic value retained	5 518	9 149	13 532
– Redemption of shares	–	–	9 732

PEOPLE

	2020	2021	2022
White-collar employees, %	70	69	69
Blue-collar employees, %	30	31	31
Employee turnover white-collar employees, %	4.2	6.4	7.6
Employee turnover blue-collar employees, %	4.8	7.8	8.9
Total turnover, voluntary leave, %	4.4	6.9	8.0
Yearly performance and development discussion, %	85	82	79
Average training hours per employee	37.8	39.5	42.0
Average training hours, white-collar employees	37.9	39.9	43.2
Average training hours, blue-collar employees	37.6	38.6	39.4
Proportion of female employees, % year end	20.0	20.9	21.6
Proportion of female managers, % year end	19.7	20.5	20.4
Degree to which employees agree that they feel a sense of belonging in the company (score) 5)	–	–	–
Degree to which employees agree that there are opportunities to learn and grow in the company (score) 6)	–	73	–
Degree to which employees agree that we have a work culture of respect, fairness and openness (score) 6)	–	76	–

SAFETY AND WELLBEING

	2020	2021	2022
Recordable injuries total workforce, number	385	387	403
Recordable injuries per million working hours total workforce	4.8	4.5	4.2
Minor injuries total workforce, number	922	1 148	1 261
Minor injuries per million working hours total workforce	11.6	13.4	13.2
Fatalities, number	0	0	0
Fatalities per million working hours total workforce	0	0	0
Sick leave due to diseases and recordable injuries, %	2.1	2.2	2.5
Degree to which employees agree that Atlas Copco takes a genuine interest in their wellbeing (score) 5)	–	73	–
A balanced safety pyramid (yes/no)	Yes	Yes	Yes

ETHICS

	2020	2021	2022
Employees signed compliance to the Code of Conduct, %	99	98	99
Employees participate in the Group’s biennial ethics training 7) , %	–	–	–
New employees participate in the Group’s ethics training within 12 months of joining the company 7) , %	–	–	–
Significant suppliers committed to the Code of Conduct, %	93	93	93
Significant distributors committed to the Code of Conduct, %	84	87	92

Atlas Copco 2022 145

SUSTAINABILITY NOTES

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

Financial definitions

• Sustainability notes

Four years in summary

Contact information

This is the translation of the auditor’s report in Swedish.

To Atlas Copco AB, corporate identity number 556014-2720

Stockholm, 20 March, 2023

Ernst & Young AB

Introduction

We have been engaged by the Board of Directors of Atlas Copco AB to undertake a limited assurance engagement of Atlas Copco AB’s Sustainability Report for the year 2022. Atlas Copco AB has defined the scope of the Sus-tainability Report to the pages referred to in the GRI index on pages 139–142, the Statutory Sustainability Report is defined on page 19.

Responsibilities of the Board and Executive Management

The Board of Directors and Executive Management are responsible for the preparation of the Sustainability Report including the Statutory Sustainability Report in accordance with applicable criteria and the Annual Accounts Act respectively. The criteria are defined on pages 138–142 in the Sustainability Report and consist of the GRI Sustainability Reporting Standards, as well as the accounting and calculation principles that the company has developed. This responsibility includes the internal control relevant to the preparation of a Sustainability Report that is free from material misstatements, whether due to fraud or error.

Responsibilities of the auditor

Our responsibility is to express a conclusion on the Sustainability Report based on our limited assurance procedures and to express an opinion regarding the Stat-utory Sustainability Report. Our engagement is limited to historical information presented in this document and does therefore not cover future oriented information. We have conducted our engagement in accordance with ISAE 3000 (revised) Assurance engagements other than audits or reviews of historical financial information. A limited assurance engagement consists of making inquiries, primarily of persons responsible for the prepa-ration of the Sustainability Report, and applying analyti-cal and other limited assurance procedures. Our examina-tion regarding the Statutory Sustainability Report has been conducted in accordance with FAR’s accounting standard RevR 12 The auditor’s opinion regarding the statutory sustainability report. A limited assurance engagement and an examination according to RevR 12 are different from and substantially less in scope than rea-sonable assurance conducted in accordance with IAASB’s Standards on Auditing and other generally accepted auditing standards in Sweden. The firm applies ISQC 1 (International Standard on Quality Control) and accordingly maintains a comprehensive system of quality control including documented poli-cies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We are independent of Atlas Copco AB in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. The procedures performed in a limited review and an examination according to RevR 12 do not enable us to obtain assurance that we would become aware of all sig-nificant matters that might be identified in a reasonable assurance engagement. The conclusion based on limited assurance procedures and an examination according to RevR 12 does not provide the same level of assurance as a conclusion based on reasonable assurance. Our procedures are based on the criteria defined by the Board of Directors and the Executive Management as described above. We consider these criteria suitable for the preparation of the Sustainability Report. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusions below.

Conclusions

Based on the limited assurance procedures we have per-formed, nothing has come to our attention that causes us to believe that the Sustainability Report is not prepared, in all material respects, in accordance with the criteria de-fined by the Board of Directors and Executive Management. A Statutory Sustainability Report has been prepared.

Outi Alestalo Erik Sandström
Expert Member of FAR Authorized Public Accountant

Auditor’s Limited Assurance Report on Atlas Copco AB’s Sustainability Report and statement regarding the Statutory Sustainability Report

Atlas Copco 2022 146

SUSTAINABILITY NOTES

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

Financial definitions

• Sustainability notes

Four years in summary

Contact information

ORDERS, REVENUES AND PROFIT

	2019	2020	2021	2022
Orders, MSEK	106 104	100 554	129 545	158 092
Revenues, MSEK	103 756	99 787	110 912	141 325
Change, organic from volume, price and mix, %	2	–3	14	12
EBITDA, MSEK	26 597	24 335	29 025	36 549
EBITDA margin, %	25.6	24.4	26.2	25.9
Operating profit, MSEK	21 897	19 146	23 559	30 216
Operating profit margin, %	21.1	19.2	21.2	21.4
Net interest expense, MSEK	–359	–245	–234	–166
Profit before tax, MSEK	21 572	18 825	23 410	30 044
Profit margin, %	20.8	18.9	21.1	21.3
Profit for the year, MSEK	16 543	14 783	18 134	23 482

EMPLOYEES

	2019	2020	2021	2022
Average number of employees	37 805	39 606	41 272	45 781
Revenues per employee, SEK thousands	2 745	2 519	2 687	3 087

CASH FLOW

	2019	2020	2021	2022
Operating cash surplus, MSEK	26 696	25 081	28 952	36 978
Cash flow before change in working capital, MSEK	20 209	20 454	23 870	29 600
Change in working capital, MSEK	–2 971	2 166	–244	–7 415
Cash flow from investing activities, MSEK	–9 683	–16 286	–6 121	–15 503
Gross investments in other property, plant and equipment, MSEK	–1 662	–1 459	–1 970	–3 660
Gross investments in rental equipment, MSEK	–1 140	–486	–510	–884
Net investments in rental equipment, MSEK	–1 087	–416	–474	–808
Cash flow from financing activities, MSEK	–8 024	–8 552	–10 323	–14 651
of which dividends paid, MSEK	–7 663	–8 506	–8 889	–9 250
Operating cash flow, MSEK	14 625	18 910	19 378	17 099

Four years in summary

FINANCIAL POSITION AND RETURN

	2019	2020	2021	2022
Total assets, MSEK	111 722	113 366	136 683	172 301
Capital turnover ratio	0.98	0.86	0.88	0.91
Capital employed, average MSEK	72 732	83 649	87 537	106 054
Capital employed turnover ratio	1.43	1.19	1.27	1.33
Return on capital employed, %	30	23	27	29
Net indebtedness, MSEK	12 013	16 421	8 151	26 570
Net debt/EBITDA, MSEK	0.5	0.7	0.3	0.7
Equity, MSEK	53 290	53 534	67 634	80 026
Debt/equity ratio, %	23	31	12	33
Equity/assets ratio, %	48	47	49	46
Return on equity, %	35	27	30	32

KEY FIGURES PER SHARE

	2019 1)	2020 1)	2021 1)	2022 1)
Basic earnings / diluted earnings, SEK	3.40 / 3.40	3.04 / 3.04	3.72 / 3.71	4.82 / 4.81
Dividend, SEK	1.75	1.83	1.90	2.30 2)
Dividend as % of basic earnings	51.5	60.0	51.0	47.7
Dividend yield, %	2.4	1.9	1.4	2.0
Redemption of shares, SEK	–	–	2.00	–
Operating cash flow, SEK	3.01	3.89	3.98	3.51
Equity, SEK	11	11	14	16
Share price, December 31, A share / B share, SEK	93.4 / 81.3	105.3 / 92.1	156.5 / 133.1	123.1 / 111.1
Highest price quoted, A share / B share, SEK	96.6 / 84.2	111.4 / 97.5	157.4 / 133.4	161.2 / 136.3
Lowest price quoted, A share / B share, SEK

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

Financial denitions

Sustainability notes

• Four years in summary

Contact information

Atlas Copco 2022 147

Atlas Copco 2022 148

CONTACT INFORMATION

Investor relations

Daniel Altho, Vice President Investor Relations

ir@atlascopco.com

Sustainability

Anna Sjörén, Vice President Sustainability

sustainability@atlascopco.com

Media

Amanda Billner, Media Relations Manager

media@atlascopco.com

Atlas Copco in cooperation with Griller grask form AB and Text Helene AB

Copyright 2023, Atlas Copco AB, Stockholm, Sweden

Prepress: Bildrepro

Print: Hylte Tryck

8993 0001 88

Introduction

This is Atlas Copco

The year in review

Financials

Other information

Signatures of the Board of Directors

Audit Report

Financial denitions

Sustainability notes

Four years in summary

• Contact information

Atlas Copco 2022 149

Atlas Copco AB (publ)
SE-105 23 Stockholm, Sweden
Phone: +46 8 743 80 00
Reg. no: 556014-2720
atlascopcogroup.com

	SEK 51.3 / 47.1	66.7 / 57.9	108.5 / 94.8	92.5 / 83.2
Average closing price, A share / B share, SEK	72.0 / 64.7	96.3 / 84.5	134.9 / 114.9	117.9 / 104.4
Average number of shares, millions	4 858.8	4 861.7	4 870.9	4 868.4
Diluted average number of shares, millions	4 863.1	4 869.0	4 882.1	4 875.9
Number of shareholders, December 31	81 656	82 079	87 923	115 459
Market capitalization, December 31, MSEK	440 497	497 187	732 967	586 731

1) Adjusted for share split in 2022
2) Proposed by the Board

Atlas Copco 2022 147