Atlas Copco 2008 â tough ending to a record year Annual Report ...

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Audit ReportTo the Annual Meeting of the shareholders of Atlas Copco AB (publ)Corporate identity number 556014-2720We have audited the annual accounts, the consolidated accounts, the accounting records and the administration ofthe Board of Directors and the President of Atlas Copco AB (publ) for the year 2008. The annual accounts and theconsolidated accounts are presented in the printed version of this document on pages 12–95. The Board of Directorsand the President are responsible for these accounts and the administration of the Company as well as for the applicationof the Annual Accounts Act when preparing the annual accounts and the application of International FinancialReporting Standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidatedaccounts. Our responsibility is to express an opinion on the annual accounts, theconsolidated accounts and the administration based on our audit.We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standardsrequire that we plan and perform the audit to obtain high but not absolute assurance that the annual accounts andthe consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principlesused and their application by the Board of Directors and the President and significant estimates made by the Boardof Directors and the President when preparing the annual accounts and the consolidated accounts as well as evaluatingthe overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinionconcerning discharge from liability, we examined significant decisions, actions taken and circumstances of the companyin order to be able to determine the liability, if any, to the company of any Board member or the President. We alsoexamined whether any Board member or the President has, in any other way, acted in contravention of the CompaniesAct, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis forour opinion set out below.The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fairview of the company’s financial position and results of operations in accordance with generally accepted accountingprinciples in Sweden. The consolidated accounts have been prepared in accordance with International FinancialReporting Standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of theGroup’s financial position and results of operations. The statutory administration report is consistent with the otherparts of the annual accounts and the consolidated accounts.We recommend to the Annual Meeting of shareholders that the income statements and balance sheets of theParent Company and the Group be adopted, that the profit of the Parent Company be dealt with in accordance withthe proposal in the administration report and that the members of the Board of Directors and the President be dischargedfrom liability for the financial year.Nacka, February 17, 2009KPMG ABThomas ThielAuthorized Public Accountant96 Atlas Copco 2008
Financial DefinitionsAverage number of shares outstandingThe weighted average number of sharesoutstanding before or after dilution. Sharesheld by Atlas Copco are not included in thenumber of shares outstanding. The dilutedweighted average number of sharesoutstanding is the number of shares thatwould be outstanding if all convertiblesecurities, e.g. personnel stock options,were converted to common stock.Capital employedTotal assets less non-interest-bearingliabilities/provisions. Capital employed forthe business areas excludes cash, taxliabilities and tax receivables.Capital employed turnover ratioRevenues divided by average capitalemployed.Capital turnover ratioRevenues divided by average total assets.Debt/EBITDA ratioNet indebtness in relation to earnings beforedepreciation and amortization (EBITDA).Debt/equity ratioNet indebtedness in relation to equity,including minority interest.Dividend yieldDividend divided by the average share pricequoted.Earnings before depreciation andamortization (EBITDA)Operating profit plus depreciation,impairment and amortization.Earnings per shareProfit for the period, attributable to equityholders of the parent divided by the averagenumber of shares outstanding.EBITDA marginEarnings before depreciation, impairmentand amortization as a percentage ofrevenues.Equity/assets ratioEquity including minority interest, as apercentage of total assets.Equity per shareEquity including minority interest divided bythe number of shares.Interest coverage ratioProfit before tax plus interest paid andforeign exchange differences divided byinterest paid and foreign exchangedifferences.Net cash flowChange in cash and cash equivalentsexcluding currency exchange rate effects.Net indebtedness/net cash positionInterest-bearing liabilities/provisions lesscash and cash equivalents and currentfinancial assets. Adjusted for the fair valueof interest rate swaps.Net interest expenseInterest expense less interest income.Operating cash flowCash flow from operations and cash flowfrom investments, excluding companyacquisitions/divestments.Operating profitRevenues less all costs related to operations,but excluding financial items andtaxes.Operating profit marginOperating profit as a percentage ofrevenues.Profit marginProfit before tax as a percentage ofrevenues.Return on capital employed (ROCE)Profit before tax plus interest paid andforeign exchange differences (for businessareas: operating profit) as a percentage ofaverage capital employed.Return on equityProfit for the period, attributable to equityholders of the parent as a percentage ofaverage equity, excluding minority interest.Weighted average cost of capital (WACC)interest-bearing liabilities x i+ market capitalization x rinterest-bearing liabilities+ market capitalizationi: Due to the very volatile debt markets atthe end of 2008, an estimated averageSwedish risk-free interest rate (10-yeargovernment bonds) and an estimatedaverage risk premium for Atlas Copcocompared to Swedish government rateshave been used in the WACC calculation.The risk-free interest rate used is 4.0% andthe premium used is 0.5%. An estimatedstandard tax rate of 25% has then beenapplied.r: The estimated average risk-free interestrate (4%), plus an equity risk premium(5.0%).Pre-tax WACCWACC divided by (1 – the standard tax rate).Atlas Copco 2008 97
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Atlas Copco2008 - tough ending to a
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• Strong order growth in most are
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Revenues by business areaRevenues b
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educing Atlas Copco’s main enviro
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Many new products were introduced d
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TargetsFinancial targetsAtlas Copco
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StructureThe Group is organized in
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New divisionEffective January 1, 20
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80 000Revenues and marginsMSEK %286
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administration reportconcentrated t
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administration reportEnvironmental
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ADMINISTRATION REPORTCompressor Tec
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administration reportThe Compressor
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administration reportConstruction a
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administration reportThe Constructi
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administration reportIndustrial Tec
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administration reportThe Industrial
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Financial statements, atlas copco g
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Page 100 and 101: Sustainability ReportAtlas Copco’
Page 102 and 103: SUSTAINABILITY REPORTRoles and resp
Page 104 and 105: SUSTAINABILITY REPORTSociety and th
Page 106 and 107: SUSTAINABILITY REPORT10080604020050
Page 108 and 109: SUSTAINABILITY REPORTIn 2008, CO 2
Page 110 and 111: SUSTAINABILITY REPORTwinter and coo
Page 112 and 113: SUSTAINABILITY REPORTNo. of acciden
Page 114 and 115: SUSTAINABILITY REPORTBusiness Partn
Page 116 and 117: SUSTAINABILITY REPORTShareholdersTh
Page 118 and 119: SUSTAINABILITY REPORTSustainability
Page 120 and 121: Corporate Governance ReportThe Boar
Page 122 and 123: Corporate Governance ReportBoard of
Page 124 and 125: Corporate Governance ReportGroup St
Page 126 and 127: Corporate Governance ReportGroup Ma
Page 128 and 129: Corporate Governance ReportRemunera
Page 130 and 131: Corporate Governance ReportBusiness
Page 132 and 133: The Atlas Copco ShareAt December 31
Page 134 and 135: the atlas copco shareOwnership stru
Page 136 and 137: Five Years in SummaryMSEK 2004 1) 2
Page 138 and 139: Financial InformationWelcome to the
Page 140: We are committed to yoursuperior pr
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