For customer success anda healthier planet
Annual and sustainability report 2022

01
Introduction

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

01

02

Introduction

00 Contents
02 This is Munters
03 How Munters creates value insociety
04 Value chain
05 The year in brief
06 Events during the year
07 Comments from the CEO
09 Financial targets
10 Sustainability targets

05

Strategy

12
13
15
17
19

Our strategy
Strategy Markets
Strategy Customers
Strategy Innovation
Strategy Excellence in everything
we do

21 Strategy People

06

Corporate governance

Financial information

82 Comments from the Chairman
83 Corporate governance at
Munters
84 Corporate Governance Report2022
87 – Internal control of financial
reporting89 – Board of Directors
90 – Group Management

98 Contents, financial reports
99 Board of Directors’ Report
104 Financial statements, Group108 Financial statements,
Parent company
111 Notes
138 The Board’s assurance
139 Auditor’s report
143 Auditor’s report on statutory
sustainability statement andcorporate governance statement
144 Definitions

91 Risks and risk management

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

03
Operations

24
25
26
33

Megatrends for growth
Our business areas
Business area AirTech
Business area Data Center

Technologies

40 Business area FoodTech

04
Sustainability

49 Sustainability strategy
50 Organization and governance
52 Focus area
Resource efficiency & environment

58 Focus area

People & society

61 Focus area

Responsible business practices

07

63 The sustainable development
Goals
64 Stakeholder dialogue
65 Materiality analysis
67 Frameworks we follow
70 EU taxonomy

Other information
146 Share and shareholders
148 Shareholder information
149 Our history of innovations

The audited annual report for Munters Group AB (publ), corp. reg. no. 556819-2321, refers to pages 99–138. Munters has
prepared the sustainability report in accordance with disclosure requirements set out in the Swedish Annual Accounts Act chapter
6 paragraph 11. This report is also Munters Communication on Progress (CoP) report in accordance with the Global Compact.
The report is presented on pages 3–4,10,12–22 and 49–80.
Every care has been taken in the translation of this annual and sustainability report. In the event of discrepancies, the Swedish
original will supersede the English translation. The addition of the total amounts reported can lead to rounding differences.

Contents B

01
Introduction

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Introduction
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

01
Introduction 1

01
Introduction

INTRODUCTIONCONTENTSWorld leader in energy-efficient climate solutions
Munters is a global leader in climate solutions. Using innovative technologies, Munterscreates the perfect climate for demanding and sophisticated industrial applications.
Curiosity and an ambition to create pioneering technologies have been part of our DNA
since the start in 1955.

THIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE

GLOBAL OPERATIONSCLOSE TO OUR CUSTOMERSFINANCIAL INFORMATIONOTHER INFORMATION

Headquarter
Software development centers
Production site
Assembly site

SALES 2022, MSEKNUMBER OF
PRODUCTION PLANTSNUMBER OF EMPLOYEES

10,386 19 3,940
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

REGIONS, PERCENT OF NET SALES 2022
%

0

20

Americas, 46%

40

EMEA, 29%

60

80

100

APAC, 25%

This is Munters 2

01
Introduction

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETY

How Munters creates value in society
Munters offers innovative, efficient and sustainable solutions for customers in many different segments
where controlling indoor humidity, temperature and energy efficiency is mission-critical. Climate control systems often account for a large percentage of the energy consumption in many of our customers’
operations. With an optimal climate system, we can help them to more efficiently use energy or water
resources, and thereby reduce their climate and environmental impact.

VALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONBATTERY
PRODUCTION

Production ofbatteries requires
a highly controlledenvironment withstable temperatureand ultra-dry air inorder to ensure thesafety and qualityof the final product.
A large share of
the world’s lithium
batteries for the auto
industry is manufactured in environmentswith Munters climate
solutions.

ELECTRONICS

INFRASTRUCTURE

Our solutions create
an optimal environment for customers
in the electronics
industry. Manufacturers of monitors,
components andLEDs get a controlled
air environment for
their sensitive processes, reduced energy costs and lower
carbon emissions.

Facilities andinfrastructure suchas bridges, water
treatment plants andwind turbines needstable dehumidification. Munters climate
systems ensure low
humidity in the designs of these structures, which extends
their service life.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

FOOD &
BEVERAGESPHARMA­
CEUTICALS

Our solutions control
climate conditions
the whole way
from farm to table,
ensuring hygiene
and optimal productquality, while at thesame time increasing
productivity andconserving energy.

Munters offers
customized dehumidification solutions
for the pharmaceutical industry.
Careful control andmonitoring keep
humidity constant, so
medicines in the formof tablets, capsules,
granules and powders maintain their
quality and shelf life.

DATA CENTERS

Digitization andglobal data traffic
are growing andmore data centers
are being built
around the world.
Advanced cooling solutions are
critical for reliable
operation, and low
energy consumption
helps reduce carbon
emissions.

DIGITAL
SOLUTIONS FORAGRICULTURE

For major foodproducers, for example, a controlled
production chain isvital. Through our AI
solutions, large partsof production can becontrolled, helping
to improve animal
health and reduce
waste and thereby
increasing profitability.

FARMING

GREENHOUSESWe develop andmanufacture climate
control systems forsustainable farming.
We optimize theindoor climate forpoultry farming,
egg production,
pork farming andmilk farms. Thereby
helping to improveanimal health andincrease quality andfood safety.

By providing acontrolled indoor
climate for cultivating plants, growers
can produce under
optimal conditions.
Our innovative product range includes
control equipment,
ventilation, evaporative cooling andheating.

How Munters creates value in society
 3OUR PURPOSE

For customer success anda healthier planet

CONTENTSOPERATIONS&APOTHER INFORMATIONINNOVATION, R&D» Design for lower energy/
water consumption during
the product lifecycle» Lifecycle analysis to calculate environmental impact» Avoid hazardous waste» Standardization of components/material needs» Automation and digitization

PL

SALES & APPLICATION
KNOW-HOWIC A

TI O N K N O

H
W-

IO

O

SOURCING» Offer high-quality,» Select suppliers who
resource-efficient climate
provide quality standsolutions
ards and sustainable
solutions» Have insight into the customer’s production» Use materials fromprocesses and an underrecycled and responstanding of current andsible sources
future needs» Ensure that our largest
suppliers follow our» Offer extensive knowledge
Code of Conductof specific applications

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

T
BU

ES

FINANCIAL INFORMATION

RI
ST
DI

CORPORATE GOVERNANCE

SAL

SUSTAINABILITY

EXTERNAL FOCUS• Smart, energy-efficient climate solutions• A digital and connected offer• Responsible end-to-end value chain

AL

STRATEGY

INTERNAL FOCUS• A diversified and inclusive work environment• High resource efficiency with minimal waste• A safe workplace

ST

TARGETS FOR LONG-TERM GROWTHINCOMMENTS FROM THE CEO

N
,R
&D

EVENTS DURING THE YEAR

G

O
VA
TIO

THE YEAR IN BRIEF

Munters have integrated
sustainability in every aspectof our business strategy.
A key tool in assurance andreporting of our sustainability
efforts is our value chain thatsummarizes and illustrates
focus areas and its impact
on sustainability

W

VALUE CHAIN

SOU
RC
IN

HOW MUNTERS CREATES VALUE IN SOCIETY

END-OF-LIF
E

PRODUC
TIO
N

THIS IS MUNTERSN

INTRODUCTION

L AT I O

Introduction

IN
N

01

Value chain

N

SERV

&
ICE

PRODUCTION

DISTRIBUTIONSERVICE & INSTALLATION» Health and safety are
our highest priority» Use renewable energy
sources» Reduce water consumption in production» Minimize waste» Reuse and recycle
material

Responsible distribution:» Optimize the supply
chain» Reduce emissions fromtransports» Offer unique expertise to
optimize our customers’
operations and performance for as long as
needed» Monitor an maintain to
prolong product lifetimeand ensure resource
efficiency throughout the
product lifetime

END-OF-LIFE
EXTERNAL FOCUS» Extend the life of the
product» Collect, reuse andrecycleValue chain 4

01
Introduction

INTRODUCTIONCONTENTS

The year in brief
2022 was a record year for Munters, when our strong position and offer was
confirmed. We delivered strong growth in our prioritized areas. To reflect thestrong demand for our energy-efficient solutions, we updated our financial
targets during the year.

THIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE• Order intake increased by 87 per cent,a currency-adjusted increase of 67 per cent.
Munters largest orders ever were signed within
DCT (Data Center Technologies) for data centercooling. Large orders were also received within
AirTech for climate systems within battery production and within FoodTech for SaaS solutions(Software-as-a-Service).

• Net sales increased by 41 per cent, acurrency-adjusted organic increase of 23 percent driven by strong organic growth in AirTech
and DCT. FoodTech had a flat development
compared to previous year.

FINANCIAL INFORMATION• Adjusted EBITA was MSEK 1,070 (889),
corresponding to an adjusted EBITA marginof 10.3 per cent (12.1). Operating profit was
MSEK 881 (753), a margin of 8.5 per cent(10.2). The result for the year was affected byhigh raw material prices, component shortages and consequently longer lead times andinflationary pressure. Prices have been adjusted
continuously during the year to compensate forcost increases.

• New raised financial targets, both in termsof growth and profitability, were presented at
a capital markets day for owners, institutional
investors, analysts and other stakeholders in
December. Read more about our raised financial
goals on page 9.

OTHER INFORMATIONORDER INTAKENET SALES

ADJUSTED EBITA AND
ADJUSTED EBITA-MARGINAL

Key figures

MSEK

MSEK

MSEK

%

20,00012,0001,200

15MSEK if nothing else is specified

10,000

1,000

8,000

800

6,000

600

4,000

400

2,000

200

15,00010,000

10

5

5,000

0

2018 2019 2020 2021 2022

0

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

2018 2019 2020 2021 2022

0

2018 2019 2020 2021 2022

0

Order intake
Net sales
Adjusted EBITA
Adjusted EBITA margin, %Operating profit (EBIT)
EBIT margin, %Net income
Earnings per share after dilution, SEK
Net debt
Number of employees at the end of the year

2022

2021

2020

2019

2018

16,83010,386
1,070
10.3
881
8.5
577
3.17
3,825
3,940

9,013
7,348
889
12.1
753
10.2
515
2.81
2,389
3,315

7,249
7,015
906
12.9
707
10.1
432
2.32
2,116
3,214

7,302
7,153
871
12.2
556
7.8
283
–0.91
3,062
3,088

6,698
6,412
725
11.3
529
8.3
327
–0.57
2,843
3,518

The year in brief 5

01

Events during the year

Introduction

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION• Grete Solvang Stoltz joined the management
team as Group Vice President HR and Sustainability. Grete was most recently Senior Vice
President Human Resources and Sustainability
at LKAB.

• A number of minority investments andstrategic partnerships were initiated in orderto give us access to cutting-edge technology.
Including BarnTools, in Iowa, US, and FarmSee,
in Tel Aviv, Israel.

• Acquisitions in all three business areas.
In Data Center Technologies, Edpac, an Irelandbased manufacturer of data center coolingequipment and air handling systems, wasacquired. In AirTech, Hygromedia, a manufacturer of desiccant dehumidification media, andRotorSource, a supplier of rotors and cassettes
to original equipment manufacturers, wereacquired. In FoodTech, InoBram, a Brazilian
manufacturer of climate controllers for farms andfood producers, was acquired*.

• Data center technologies became a new
business area in response to it being a prioritized, growing market segment and to increasetransparency. Stefan Aspman was appointedGroup Vice President & President of businessarea Data Center Technologies.

• All business activities in Russia weresuspended during the year due to the war in
Ukraine. We had no employees in Russia andpreviously generated approximately 1.5 percent of annual net sales in Russia.
• Magnus Nicolin was elected as the newchairman of the board and MariaHåkansson and Anders Lindqvist were elected
as new board members.
• Henrik Teiwik was appointed Group Vice
President & President of business area AirTech
and joined Munters management team. Henrik
has extensive leadership experience as CEO ofHandicare Group and Vice President at Alimak
Group.

• Two new factories opened, one in Czech
Republic to meet increased demand from thebattery market and one that supplies data centercooling systems in the US. With these newfacilities add production capacity and increase
productivity in the European and US markets.
A decision was also made to build an all-new
facility in the US for manufacturing of desiccantdehumidification products and for servicing theNorth American market.

Opening of new factory in Virginia• Life cycle analysis (LCA) implemented. LCA
increases our understanding of a product’s
carbon footprint and how we can reduce it. It
also improves our ability to support customers intheir efforts to reduce energy and resource consumption. We were third-party audited on LCAs
for 10 product families carried out according
to ISO14044 and ISO14067 and successfully
certified for all 10 families.
* Subject to certain corporate and regulatory approvals ,including CADE (Brazilian antitrust) approval).

New factory in the Czech Republic

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

The year in brief 6

01

COMMENTS FROM THE CEO

Record demand in a time of uncertainty

Introduction

In 2022, we demonstrated that Munters has carved out a strong position in
attractive emerging markets. We grew organically by 23 per cent, currencyadjusted, and made acquisitions that further strengthen us as we continue toexpand. At the same time, we have improved our efficiency and operating
capacity with new production plants in Europe and the US. This is the resultof a fantastic collaboration and engagement among our employees.

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY
OPERATIONS

We saw in 2022 that demand for our products isincreasingly driven by a strong focus on sustainability among customers. In discussions with mostcustomers today, lower emissions, more efficientenergy usage and lower resource consumption are
key issues. The majority are also in markets driven
by two strong megatrends: electrification anddigitization.
Our energy-efficient solutions are meeting customer demand, evidenced by the high order intake
in 2022. We also signed the largest orders everin Munters history. In AirTech we received several
major orders in the battery segment, and the largest
order was signed within Data Center Technologies.
FoodTech also won several strategically important
contracts within Digital Solutions. As we begin
2023, we are well positioned with a strong orderbook.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

FOCUS ON CUSTOMER RELATIONSHIPSKLAS FORSSTRÖM
President and CEO

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Munters has an exceptional offering that stands out
for its high quality and where our service offering
contributes to a long product life. Our innovative
capabilities and understanding of our customers’
needs are also driving the strong demand forour products and solutions. Through new, moreenergy-efficient product generations, we gain new
customers and deepen our existing customer relationships. Continuous innovation is essential in orderto maintain and strengthen our position.
INCREASED INVESTMENTS IN INNOVATION

In 2022, we continued to increase investments in
product development and several new products
were launched. FoodTech introduced the Saturn
FIVE fan and ROTEM TRIO controller, and AirTech
launched a version of the FA6 dehumidifier for the
Asian market. During the year, AirTech delivered
several major orders to the battery segment, where
the DSS Pro dehumidification solution, launchedin 2021, is at the heart of the offering. This productcan be installed either indoors or outside and provides significantly lower energy consumption thanprevious product generations.
Another example of a successful, innovative
product is SyCool Split for data centers, which waslaunched in 2021. SyCool Split makes it possible tocool without water, which is a big benefit in areas
where water is in short supply. The strong demandfor SyCool Split is one of the reasons why we havechosen to increase transparency and report Data
Center Technologies as a separate business area
as of 2022.
To further assist customers with their sustainability work and improve our product development
process, we now require a life cycle analysis for all
new products. The analysis increases our understanding of the products’ carbon footprint and how
we can reduce it. It also better enables us to help
customers cut their energy and resource consumption.
STRATEGIC ACQUISITIONSSTRENGTHEN THE OFFERING

In 2022, we completed several strategic acquisitions. Ireland-based Edpac, which manufactures
data center cooling equipment and air handlingsystems, strengthens our presence in the key European
market for data center cooling, and in the autumn
we acquired Hygromedia and RotorSource i USA.
These acquisitions strengthen Munters position asa leading supplier of dehumidification systems andcomponents, primarily in the North American market.
We also completed a number of minority investments
in companies that give us access to cutting-edge

COMMENTS FROM THE CEO 7

01”In every part of theGroup, we are taking
our climate impact into
consideration, and thegoal is to be net zerofrom our operations
by 2030.”

Introduction

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEARCOMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHKLAS FORSSTRÖM
President and CEO

STRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION“Listen to Klas, when he talks about how we work with sustainability within Munters” https://www.munters.com/sv/om-munters/sustainability/

OTHER INFORMATION

technology. I want to wish all our new employees
and partners a warm welcome to Munters!
INCREASED SCALABILITY
FOR PROFITABLE GROWTH

We have also maintained a continuous focus oninternal efficiency and how we can improve ourdigital information flows and processes. Back in
2019, we initiated some projects to improve ourscalability and lay the foundation for profitable
growth. As part of this initiative, we are increasing
modularization, reducing the number of components in our products and further digitizing ouroffering. The products we launched in 2021 and2022 are good examples of this work, and I lookforward to building on this progress.
As demand grows for our solutions, we are
expanding production capacity. In 2022, we
opened new facilities in the US for Data Center

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Technologies and in Czech Republic for AirTech.
We are continuing to increase capacity and areplanning a new AirTech facility in the US that will
be operational in 2024. These investments are also
helping to increase standardization of our offeringand strengthen the service business. At the sametime, they create better, more efficient workflows
and give us more modern work environments.
REDUCING OUR EMISSIONSFor us at Munters, a strong driving force is that we
can contribute on a daily basis to a more sustainable society through our climate-smart solutions.
At Munters, sustainability also involves our own
impacts and resource use. In every part of theGroup, we are taking our climate impact into consideration, and the goal is to be net zero from ouroperations by 2030. I am pleased with and proudof the improvements and progress that were madeduring the year, i.e. total market-based Scope1–2
emissions were reduced by 31 per cent.
EMPLOYEES ARE THE HUB

Looking back at 2022, we can say that it was ayear defined by global uncertainty. The war in
Ukraine led to the obvious decision to immediately
suspend our business ties to Russia. The war andthe continuing impact of the pandemic, especiallyin Asia, led to further supply chain constraints withdelayed projects and deliveries. For our employees, 2022 was therefore a challenging year since
we had to manage material shortages and delivery
delays at the same time as demand grew substantially. I want to thank all our employees for their
dedicated and valuable efforts in 2022. It is a true
privilege to lead a company with such competentand motivated employees.

FUTURE OUTLOOKThe robust demand for our products and solutions
is driven by strong market trends such as digitization and electrification as well as an increased
focus on sustainability by our customers. Our
overarching purpose – for customer success and ahealthier planet – is our leadstar, and sustainability
is integrated in our strategy and everything we do.
By reacting to market opportunities effectively andinnovatively, we continue to strengthen our position.
In December 2022, we raised our financial targets
for both net sales growth and EBITA. I am confident
about Munters continued ability to deliver profitable growth.
Stockholm in March 2023
KLAS FORSSTRÖM
President and CEO

COMMENTS FROM THE CEO 8

01
Introduction

INTRODUCTIONCONTENTSTHIS IS MUNTERS
HOW MUNTERS CREATES VALUE IN SOCIETY

Targets for long-term growth
A responsible business with stable finances and efficient resource use with minimal climate impact isthe foundation for Munters to successfully implement its strategy. With clear goals, we steer operations
and set priorities that help us reach our overarching targets. In December 2022, the Board of Directors
adopted updated financial targets with raised growth and profitability targets while introducing atarget for operating working capital.

VALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEAR

Financial targets

COMMENTS FROM THE CEOTARGETS FOR LONG-TERM GROWTHSTRATEGY

NET SALES GROWTHPROFITABILITYOPERATING WORKING CAPITAL%%OPERATIONS

25

15

20

SUSTAINABILITY

20

CORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

30%
PAYOUT RATIO

%

16

15

10

12

10

(2021: 30)

5

8

5

0

DIVIDEND POLICY

4

–5
–10

0
2018

2019

2020

2021

2022

0
2018

Goal

2019

2020

2021

2022

2018

Goal

2019

2020

2021

2022

Goal

Goal

Goal

Goal

Annual organic growth of net sales of 10 per
cent.

An adjusted EBITA margin above 14 per cent.

Average (LTM) operating working capital (OWC)
in the range of 13–10 % of net sales.

Comment outcome 2022

Comment outcome 2022

Comment outcome 2022

Organic, currency-adjusted net sales during
the year increased by 23 per cent compared to2021. Primarily driven by DCT and the customer
segment battery within AirTech.

Adjusted EBITA -margin was 10.3 per cent(12.1). The result was negatively impacted byhigh raw material prices, component shortages
and consequently longer lead times and inflationary pressure.

OWC amounted to 12.7 per cent (13.1) during
the year, increasing slightly as a result of strong
order intake which led to higher inventory levels,
increased accrued income Partially offset by higher
accounts receivable and a higher level of advances from customers. In relation to net sales, OWC
decreased as a result of the strong growth in 2022.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

According to Munters dividend policy the aim
is to pay an annual dividend corresponding
to 30–50 per cent of net income for the year.
The pay-out decision will take into consideration the company’s financial position,
investment needs,acquisitions and liquidity
position. There can be no assurance whether
a dividend will be proposed or declared inany given year.
T he Board of Directors propose a dividendof 0.95 SEK (0.85) per share which represents 30 (30) per cent of the net incomefor 2022.

Financial targets 9

01
Introduction

INTRODUCTIONCONTENTS0OUR CLIMATE TARGET

Sustainability targets
Munters contributes to sustainable development through our offering of energyefficient climate solutions and our own operations. To maintain a sustainable andprofitable business, Munters has integrated sustainability in every aspect of thebusiness strategy.

EMISSIONS, NET, FROM OUROPERATIONS BY 2030

THIS IS MUNTERS

37%
RESULT – EU TAXONOMY

HOW MUNTERS CREATES VALUE IN SOCIETYVALUE CHAIN
THE YEAR IN BRIEF
EVENTS DURING THE YEAROUR MAIN SUSTAINABILITY AMBITIONSCOMMENTS FROM THE CEO• Resource efficiency and environment, read more on page 52.

TARGETS FOR LONG-TERM GROWTH• People and society, read more on page 58.

STRATEGY

OF NET SALESALIGNED TO THE TAXONOMY• Responsible business practices, read more on page 61.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE

SUSTAINABILITY TARGETS
Description of target

FINANCIAL INFORMATIONOTHER INFORMATION

Target year

Trend to achieve target
based on 2022 results

ENVIRONMENTAL TARGETS
Carbon emissions

Energy efficiency

Net zero emissions from our operations (Scope1–2)

Latest 2030

Measure Scope 3 emissions

Mapping in progress

80% electricity from renewable resources in our production facilities

2026

Continuously reduce electricity consumption in production facilities
relative to production value
Continuously reduce electricity consumption in office and othernon-production space (KwH in relation to m2)

Recurring

Recycling

Raise the recycling rate continuously

RecurringService

Service will account for 30% of net sales

Date not set

SOCIAL TARGETS
30% women leaders2025

30% women in workforce

2025

Zero workplace accidents in production

Recurring

Environmental fines

No environmental fines

Recurring

Training in Code of Conduct

90% of employees to complete training

Recurring

Code of Conduct for suppliers

100% of larger suppliers to sign

Recurring

Inclusion & Diversity
SafetyGOVERNANCE TARGETS

Well aligned with target

Progress made towards target

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Not aligned with target

Sustainability targets 10

02Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Strategy
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

02
Strategy 11

02Strategy

OUR PURPOSE

For customer success and a healthier planet
Our strategic foundation

INTRODUCTIONSTRATEGY

MARKETSOUR STRATEGY

Munters is active around the world, andclimate change, digitization and population
growth are important drivers in all markets.
We focus our resources on strengthening ourposition in areas where we can be a market
leader and on growing the service business.
With high-quality, resource-efficient solutions,
we contribute to more sustainable development.

– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONSNELLENCOY THIN G W

PEOPLE

ED

E

M

XC

ER

V

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

IN

S

IN E

EXCELLENCE IN EVERYTHING WE DO

We strive for quality and efficiency ineverything we do. We are continuously making improvements in every area. We prioritize
and focus on selected areas of investment andimprovement. We monitor, learn, adjust andimprove. We work diligently to reduce ourcarbon footprint.



OTHER INFORMATIONC U S TOFINANCIAL INFORMATION

ER

TION
VA

Employees are the hub of our business.
Through collaboration and a passion for
creating sustainable and energy-efficientsolutions for our customers and partners, we
contribute to our customers’ success and abetter world.

O

PEOPLECORPORATE GOVERNANCE

E

SUSTAINABILITYCUSTOMERS

We closely collaborate with our customers
and try to understand their needs not justtoday but also in the future. Our expertise isbuilt on unique insight into our customers’ operations and production processes. We placeemphasis on how we go to market and our
pricing strategies. Every day we try to deliver
value beyond our customers’ expectations.

MA R ETSKINNOVATION

Munters continuously evaluates and improves
its offering with the aim of staying at theforefront of development. This means that the
product portfolio changes depending on the
R&D priorities and the service offering.

OUR STRATEGY 12

02Markets

Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE

Munters is a global leader in energy-efficient and sustainable climate solutions.
We have a leading position in innovative products and software to create an
optimal indoor climate for livestock farming and greenhouses, where our products are used to control and optimize the entire food production value chain.
We benefit from a number of global market factors that create good growthpotential where we operate, e.g., increased digitization and electrification.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONOUR OBJECTIVE

HOW WE DO IT

SUSTAINABILITY FOCUS

We aim to be a market leader in prioritized markets
and in prioritized segments. We define marketleading as being one of the three leading suppliers.

• Continuously evaluate and improve our offeringwith the aim of staying at the forefront of development.

The prioritized segments are• Several of our products and solutions are adapted to meet local demand.

Munters offers energy-efficient climate control
systems that reduce our customers’ consumption of electricity and water. We focus on
optimizing design and operating conditions
to each specific market use and application.
By maintaining a profitable and sustainable business, Munters creates job opportunities in many different parts of the world. It isessential that we offer an inclusive workplacewith decent jobs for everyone in the markets
where we operate.

• Battery industry• Food industry• Data center cooling• Software used in food production and services• Acquisitions and partnerships are important toour future and are part of our growth strategy;
see next page.
• Increase the share of data-driven products andsolutions.
• Continue to determine how we are affected by
the EU Taxonomy Regulation, including new
definitions and additions that the EU makes overtime. For more information, see page 70.

>30

SALES IN NUMBER OF COUNTRIES

UN:s global goals• Apply Ecodesign principles and LCA to the new
product development process

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Our strategy - Markets 13

02Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONACCOMPLISHMENTS IN 2022

To further enhance Munters strategic journey,
we have started to make financial investments instart-ups with the aim to support innovation for
the group within digitalization, technology, andsustainability. In 2022, five minority investments
were made.

 emand for our climate solutions was higherDthan ever in 2022, resulting in order intake
growth of 87 per cent. The strong megatrend ofclimate change remains an important driver ofour business, and during the year we signed ourlargest orders ever in data center cooling, battery and software areas. Growth came primarily
from prioritized markets.
Data Center Technologies (DCT) became aseparate business area with profit responsibility
and responsibility for the entire value chain tofacilitate profitable growth. Data centers are aprioritized and growing market segment that has
generated strong growth in recent years.
We took important steps in our growth strategy
during the year through acquisitions in all threebusiness areas. Munters has acquired several
companies over the years.

We have participated in various collaborations with universities and other companies tostrengthen our local presence and drive innovation, e.g., our partnership with Polytechnics
in Turin and Milan, Italy.
We continued our investments in digital solutions
through the subsidiary MTech Systems. They offer comprehensive software solutions to control
and forecast the entire supply chain for foodproduction, with integrated systems managing
farms, feed mills, hatcheries and processing
facilities.
Employees at Irish Edpac, a company acquired in 2022.

OTHER INFORMATION

Acquisitions are an important part of our strategy
1999–2009
Foundation DCT & FoodTech

WhyCore/Consolidation - major acquisitions to increase
market presence and/or expand the product range

2010–2017
Repositioning

2017–2022
Gearing for new growth chapter• 1999 – Euroemme, Italy• 2022 – Edpac, Ireland• 2007 – Des Champs Techologies, USA• 2022– InoBram, Brazil*• 2022 – Hygromedia & RotorSource, USA

Technology/Digital - companies with a technologythat strengthens our global or regional offering• 2011 – Rotem, Israel• Two acquisition of intellectual property rights• 2017– Mtech, USA• 2022 Minority investments ex.
BarnTools, USA and FarmSee, Israel• 2017 – Kevin Entreprises, India
Services/String of pearls - local companies thatprovide a stronger market presence. For example, toexpand our service business• Greenfield establishments of Service offices in
Ireland and Norway

New growth areas
AirTechDCT

FoodTech

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

* Transaction closing is subject to certain corporate and regulatory approvals, including CADE (Brazilian antitrust) approval.

Our strategy - Markets 14

02

Customers

Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE

Ever since Munters was founded, we have worked closely with our customers.
Over the years, we have built up unique application know-how in our niche
which enables us to customize climate solutions for many customers and industries. We help our customers succeed through high-quality, energy-efficient
climate solutions that make them more sustainable. A prerequisite for our successis high ethical standards and professionalism.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONOUR OBJECTIVE

HOW WE DO IT

SUSTAINABILITY FOCUS

We aim to be our customers’ first choice as apartner.

• Help our customers succeed through climate
solutions that make their businesses moresustainable

OUR STARTING POINT• Develop close, long-term customer relationships
to understand their business and future needs

For us, the collaboration with our customers isvital, and we make it a priority to help themreach their sustainability targets for water andenergy efficiency or animal health in foodproduction, for example.
Our Code of Conduct for suppliers represents commitment to the ten principles of the
UN Global Compact and describes our view
on issues such as the environment, social responsibility, business ethics and human rights.

Our success is built on close, long-term relationships and a deep understanding of the customer’sbusiness and future needs. We continue to gather
customer insight and utilize our broad-based expertise in applications, technology and components
to offer attractive solutions and services.

• Customize solutions for specific criteria andapplication requirements• Local presence keeps us close to our customers.
This reduces lead times and shortens logistics
flows, which is important from a sustainability
perspective• Develop and expand our service business sothat customers can make optimal use of theirequipment for as long as possible

Yuki Fujimura and Mizuki Ohashi from our Tokyo office.

DISTRIBUTION PER CUSTOMER SEGMENT
Other,17%

Industrial, 33%

Components, 9%

Data Center,13%

UN:s global goals

Services, 15%
Broiler,12%• Ensure high quality and professionalism

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Our strategy - Customers 15

02Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE

ACCOMPLISHMENTS IN 2022

Investments to develop and improve the offeringin order to increase customer value
The work on value-based sales, e.g., pricing
strategies in all three business areas. Value sales
and annual net price changes will be an integral
part of Munters culture going forwardEvaluated and strengthened our go-to-market
models within SaaS, Services and DCT. We
have also expanded our channels to the market.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONCUSTOMERS WANTSUSTAINABLE SOLUTIONSOur existing and potential customers demand
products and services that make their businesses
more efficient and sustainable. It is also importantthat our own products are energy- and resourceefficient. Climate change, lower emissions in the airand preservation of water are strong sustainability
trends that are driving our growth and therefore
also our own focus in terms of product development
and service offering. Other strong sustainability
trends that are driving growth are demands toreduce waste and to improve livestock farming.
Our solutions are used in many mission-criticalapplications and processes where precise control ofmoisture, temperature and other environmental parameters has a critical impact on production quality,
product safety as well as energy efficiency. At thesame time, these solutions often represent a small
share of the total investment in a customer’s project,e.g., a production facility or a farm.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

CUSTOMER TRUSTFor our customers to trust us, we have to maintainhigh ethical standards and professionalism. Our
Code of Conduct sets the minimum level for how
we act on a daily basis. We have zero tolerance
for bribes and other questionable incentives toinfluence a business transaction. Our values guide
us in all our relationships and are the foundation onwhich we have successfully built close, long-term
customer relationships.
CLOSE COLLABORATIONS WITH CUSTOMERS

Through close collaboration between our sales
teams, the customer’s production engineers andresearch and development department, we can ensure that our solutions meet each customer’s specificcriteria and application requirements and deliver
high energy efficiency. Our goal is to have a deep
understanding of customers’ needs and processes
and in that way deliver value beyond their expectations. The insight we gain in our customers’ needs
through these collaborations benefits the entire
customer base in a cost-effective way. Continuous
development of new applications and upskillingalso provide opportunities to continuously update
the offering to stay competitive.

Bobbye Muterspaugh from our production site in Buena Vista, Virginia, US.

SERVICE GIVES CUSTOMER MORE VALUE

Service, which includes maintenance, upgrades
and component replacements, offers growth potential with good profitability. Thanks to local presence
in many countries and close relationships withcustomers, we can offer a high standard of service
and support. Services are a recurring business andare growing in pace with our installed productbase. Our service offer is important to customers,
both from a cost and sustainability perspective,
since service extends the life of the products andincreases the efficiency of installed solutions.

Our goal is to increase services to 30 per centof net sales. The share of sales from Service did notchange in 2022, but our Service business had good
growth mainly in AirTech, which has an extensive
service business. Within FoodTech, a SaaS offering
is being developed and offered.

THE SHARE OF SERVICESHOULD IN THE LONG TERM CONSTITUTE30%
OF NET SALES

Our strategy - Customers 16

02

Innovation

Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION

Our long history of pioneering discoveries, many patents and extensive
application know-how has laid the foundation for our market-leading position.
Close collaboration with customers increases the precision and efficiency of ourinnovation work. Each business area is responsible for R&D in its respective
product areas, with technology centers close to customers.

– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONOUR OBJECTIVE

We will offer pioneering technology that provides
the customer with significant value.
OUR STARTING POINT

Through our energy- and resource-efficient climate
solutions we will stay on the forefront of the industry’s
development and contribute to more sustainable
development.
HOW WE DO IT• Invest continuously in our core technologies,
solutions and digitization to optimize our productportfolio and our innovation and production
technology.
• Utilize our extensive know-how in specific applications and access to unique technology that
we often develop ourselves. Together with ourinnovative approach, this enables us to develop
the most effective solution for the customer, e.g.,in production of batteries, data center coolingor a barn.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

• Through a close collaboration with our customers, we increase the precision and efficiency of
our solutions and innovations.
• To strengthen our strategic development, we aremaking financial investments in startups with thegoal of supporting innovation in digitization,technology and sustainability.
• A common development model: Munters ProductDevelopment Model (MPDM), which is basedon our customers’ needs, takes various sustainability factors into account early in the process,e.g., the choice of materials, recycling options
and energy consumption.
• Continue to develop software to enable ourtechnicians and partners to quickly configure
optimal solutions.
• Innovation goes beyond product development –we strive to be innovative in sustainability,
application knowledge, marketing, services
and production.

SUSTAINABILITY FOCUS

Through our leading technology, we have astrong reputation not only for working sustainably as a company but also for playing a role inhelping customers use resources more efficiently
through our products and solutions.
The energy consumption during the life
time usage of our products accounts for thevast majority of carbon emissions during the
product life cycle. We constantly work to
reduce the resources our climate systems consume, helping customers reach their resourceand environmental targets.
UN:s global goals

Rotor with desiccant drying wheel which are available in a
number of sizes and are designed for a range of applications.

3.8%
INVESTMENTS IN R&D(2021: 3.8)

Research and development investment measured
in relation to net sales

Our Strategy - Innovation 17

02
Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY

ACCOMPLISHMENTS IN 2022

Continued to modularize and establish global product platforms with the goal of offering
the same products with high performance andconsistent execution in all regions. We have big
opportunities here for efficiency gains, e.g., indeveloping materials for our core products.

 number of minority investments and strategicApartnerships were initiated, including BarnTools
in Iowa, US, and FarmSee in Tel Aviv, Israel.

OPERATIONSSUSTAINABILITY

Added a global function Ecodesign

CORPORATE GOVERNANCE

Increased focus on digitizing our offering.

LIFE CYCLE ANALYSISCREATE NEW PIONEERING TECHNOLOGIESSyCool Split (DCT) read more on page 36 or
Amino (FoodTech), read more on page 43

UPGRADED & IMPROVED OFFERINGSDSS Pro following DSS and Saturn FIVE
following Saturn ONE, read more on page 44

MODULARIZING, IMPROVING AND DEVELOPING MORE SUSTAINABLE CORE PRODUCTOFFERINGS & WAYS TO THE MARKET

Materia development for rotors and GLASdek

Focused efforts in LCA (life cycle analysis) andintroduction of a sustainability scorecard in the
Munters Product Development (MPD) process.

Further development of the Center of Excellence,
which is responsible for complex and customized solutions for mission-critical applications.

– PEOPLE

Pioneering technologies & new innovations

FINANCIAL INFORMATIONOTHER INFORMATIONOUR KEY TECHNOLOGIES:• Dehumidification rotors• Direct evaporative cooling systems• Heat exchangers with indirect evaporativetechnology• Mist eliminators• Control systems for monitoring the production
climate• Agricultural fans
• Air humidifiers• Control equipment• Data analysis/visualization
PIONEERING TECHNOLOGY & INNOVATION

Curiosity and an ambition to create pioneering
technologies are part of our DNA. Our focus is on
continued investments in our core technologies,
solutions and digitization, to optimize our productportfolio and our innovative production technology.
• Modularize, improve and develop new, moresustainable products and/or ways to reachthe market. During the year, we improved the

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

DIGITALIZING OUR OFFERINGS

materials in our core products, e.g., rotors and
GLASdek• Upgrade and improve existing offerings, e.g.,
DSS Pro, which is the successor to DSS, and Saturn FIVE, which is the successor to Saturn ONE.
• Create pioneering technology such as SyCool
Split or Amino.

• A mechanism to remove volatile organic compounds (VOC) from the air• Controller for a combined evaporative humidifierand cooling unit.
• A method for cleaning an evaporative humidifierand cooler apparatus.

PATENTS IN 2022

We use a common development model in Munters:
MPDM a multidisciplinary model with clear control
points. With this model, the development process isbased on individual creativity, disciplined innovation and direct insight into customers’ needs. A key
feature is the ability to weigh in various sustainability
factors early in the process. We look at aspects likechoice of materials, recycling options and energy
consumption. When we have laid out the sustainability aspects, we define the value proposition,technical opportunities and profitability potential.

MUNTERS PRODUCT DEVELOPMENT MODEL

In 2020, Munters hired a patent manager, wholeads our global patent committee, among otherthings. The patent committee consists of representatives from every business area and various
countries. The committee assesses internal ideas
and discoveries and decides which discoveries willlead to patent applications.
The increased internal focus led to a surge inpatent applications in 2022. Approved patents in
2022 included:

During the year, there was a strong focus on LCA
throughout the Group. LCA increases our understanding of a product’s carbon footprint and how
it can be reduced. This knowledge can be used tohelp customers reduce their energy and resource
usage.
We have carried out ISO-certified LCAs on ten
product families. We conducted LCAs according
to international standards ISO 14044 and 14067,
and these LCAs have been verified by an independent third party. During the year we acquired
software licenses, so that we internally can analyze
our products and processes in a consistent way.
Over 20 people have received training on how to
use the tool. This aligns with Munters ambition tobase product development, R&D and customer value creation on a scientific approach. LCA provides
a complete assessment of environmental impacts
associated with our products.
LCA has been included in the sustainability
scorecard in the MPD process. Project managers conduct a self-assessment to understand thepotential benefits of new projects or products.
Sustainability thresholds for each criteria and KPIs
still have to be established. This will be includedin the continued training for product and project
managers.
Activities in our innovation portfolio• RESEARCH – to develop new knowledge thatcan be applied to new innovations• TECHNOLOGICAL DEVELOPMENT – to develop new systems that can be integrated in theGroup’s products• PRODUCT DEVELOPMENT – where wedevelop new products and climate solutions• FURTHER DEVELOPMENT – how we maintainand update installed products• APPLICATION DEVELOPMENT – we continuously work to develop new and innovative
solutions for the customer through our application know-how.

Our Strategy - Innovation 18

02

Excellence in everything we doStrategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS

At Munters, we constantly strive for improvements in every area. We strive toincrease digitization and further improve our global processes, so that we cancontinue to deliver high quality and maintain a cost-efficient business.

– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONOUR OBJECTIVE

We constantly strive to increase efficiency andproductivity in everything we do while reducing ourcarbon footprint.
OUR STARTING POINT

Our operations maintain responsible businesspractices and high ethical standards with respectfor human rights, diversity, and health and safety
in the workplace.
HOW WE DO IT• Digitization and best practices to increase scalability and improve our global processes, as wellas continuing to deliver high quality and operatecost effectively.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

• We constantly work on efficient use of working
capital and a strong cash flow in order to create
the flexibility to implement the strategy as well as
make acquisitions.
• We have a valuable supplier network in 35
countries – the emphasis is on coordinatingprocurement in order to increase standardizationand to concentrate on fewer suppliers.
• Work systematically to reduce our climate impact through more efficient energy usage and byincreasing the share of renewable energy in ourown production.
• Work continuously to reduce our environmental
impact in production and to increase our focus
on health and safety. We strive to gradually reduce water consumption in our production processes. We treat water and separate chemicals
and particles in wastewater from our facilities.

SUSTAINABILITY FOCUS

We constantly work to increase efficiency,
quality and reduce our environmental impact.
The sustainability perspective permeates allstages of our operations. Prioritized areas for
us are responsible business practice, increased
diversity, health & safety, reduced carbon
dioxide emissions and contributing positively
to the society in which we operate.
UN:s global goals

PERCENTAGE OF
RENEWABLE ELECTRICITY

72%(2021: 53)
TARGET:

The percentage of electricity fromrenewable resources in our production
facility will be increased to 80% by 2026.

Our strategy - Efficiency and quality 19

02Strategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATIONACCOMPLISHMENTS IN 2022

 anaging global supply chain challengesM
due to the pandemic and the war in Ukraine.
Some products have not been completed intime due to component shortages, and in someprojects customers were not able to accept ourdeliveries because other suppliers’ products
were delayed.
Strategic Operations were integrated in thebusiness areas to create clearer ownership.
We worked continuously to make the Group
more efficient, more flexible and even moreinnovative in every area.

All our major suppliers signed our Code of
Conduct during the year.
T o ensure efficient use of working capital andstrong cash flow, we worked actively with payables and inventory. Projects have to be as cash
neutral as possible from beginning to end. An
efficient production process optimizes inventory
levels throughout the value chain. The work withcapital efficiency continues to produce good results. Working capital remained at a good levelat MSEK 1,393 (1,005) in December 2022.

– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONORGANIZATIONAL CHANGE

PRODUCTION PLANNING

Parts of Strategic Operations were integrated in
the business areas, including procurement. The
goal is to be closer to operations and customers. By
decentralizing selected functions, we create clearerownership in the business units. At the same time,councils have been created where experts fromthe business areas jointly monitor various issues
and ensure that economies of scale are realized
between the business areas.

We have been working for several years toregionalize our value chain. During the year, we
worked intensely to reassess production capacity
and secure it for the coming years. We opened
two new production plants, one in Czech Republic
to meet demand from the battery market and one
in the US for manufacturing of cooling systems fordata centers. A decision was also made to build an
all-new facility in the US to house desiccant dehumidification production and services for the North
American market.

A STRONG SUPPLY CHAIN

Our supplier network is valuable to us and is built on
mutual trust and many years of collaboration. We
will continue to ensure that we have multiple suppliers of critical components. The effort to increase theshare of sustainable transports will continue. It is an
important part of how we work with sustainability
and our value chain in order to reduce our environmental impact. Munters sources goods from around
1,800 suppliers in 35 countries. The 25 largest
direct material suppliers by volume represented
40 per cent (38) of total sourcing volume in 2022.
The goal is to cut the number of suppliers in half in2021–2025. In 2022, the number was reducedby 5 per cent. Having a sustainable value chain is
important to us, and therefore our largest suppliers
are bound by our Code of Conduct.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

RESPONSIBLE PROCUREMENT

All suppliers are expected to live up to Munters
ethical guidelines. During the year, 100 per centof our suppliers signed the Code of Conduct for
suppliers. We regularly review our direct suppliers
and their compliance with our Code of Conduct.
During the year, we took measures to automatecompliance monitoring by using a third-party AI
tool to examine companies. For more information,
see page 61.
Other direct materials account for around two
thirds of a product’s total costs, with raw materials
representing 30 per cent. Munters has tools inplace used to minimize the impact of price fluctuations.

Takumi Mirokuji from our assembly site in Tokyo, Japan.

DISTRIBUTION RAW MATERIALSPolystyrene/
Polypropylene, 2% Aluminium,3%Paper, 7%

Other, 37%
Copper, 21%

Steel,30%

SCALABILITY AND DIGITIZATION

We work continuously to optimize our production processes. All our production units apply the
Munters Production System (MPS), based on LEAN
and WCM principles. The program consists of fivephases and gives each production site guidanceon how to create value for the customer, manage
waste, reach an exceptional service level, empower people, and improve the environment andworking conditions.

The project Transformation Towards Operational Excellence (TTOE) continued during the year toincrease efficiency through linked processes anddigital information flows. This ensures scalability ofthe business and that investments lead to profitable,
cash flow generating growth.
GLOBAL CENTERS OF EXCELLENCE

Through our global Centers of Excellence (CoE),
we create teams of experts who focus on specificmarkets. They work with complex, customized solutions for mission-critical applications in battery production, foods and pharmaceuticals, for example.
With extensive application know-how, they ensure
maximum customer value and performance. The
team has experience in project management andensures that requirements are integrated correctly ina practical, cost-effective and appropriate solution.
They also manage and integrate the collaboration
with various partners and others.

Our strategy - Efficiency and quality 20

02

PeopleStrategy

INTRODUCTIONSTRATEGYOUR STRATEGY– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE
OPERATIONS

Employee engagement is the foundation for good customer relationships, an efficient organization and innovation. We create employee
engagement by offering an inclusive culture marked by diversity,
collaboration and opportunities for personal development. Throughcollaboration and a passion for creating energy-efficient solutions forour customers and partners, we contribute to our customers’ successand a better world.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONOUR OBJECTIVE

HOW WE DO IT

We want to be an employer of choice.

• Work proactively hire more employees andmanagers who are women.

OUR STARTING POINT• Zero tolerance for discrimination and harassment
through a corporate culture distinguished by
openness and transparency. Through periodic
surveys, we follow up that everyone is treatedfairly and with respect in our workplace.

• Diversity and inclusion lead to stronger innovation.
• Our employees’ health and well-being arealways top of mind and we have zero tolerance
for workplace accidents.
• We work diligently to increase the share of employees and managers who are women.
• At Munters no employee should experienceharassment or discrimination.
• Munters strives to be a modern and attractive
workplace.
• Good leadership is the foundation for engaged,
high-performing teams.
• Provide an external, independent whistleblower
channel. For more information, see page 62.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

• Leadership and mentoring programs to promote
development, cross-functional collaboration,team spirit and support employees in their career.
• Offer occupational health and safety program tocreate a safe and healthy work environment.
• Offer a culture with a healthy work-life balance
as well as flexibility where and when the work is
done.

SUSTAINABILITY FOCUS

The health and well-being of our employees
is always in focus and we have zero tolerance
for discrimination, harassment and workplace
accidents. We are convinced that diversity
leads to stronger innovative power.
Munters provides an external, independent, whistleblower channel for reporting
potential breaches of our Code of Conduct.

UN:s global goals

Keith Stokes from our production site in Buena Vista,
Virginia, US.

OUR VALUES• Sustainable value creation• Passion for results• There is always a better way• Team spirit
Our values are reflected in everything we do. Together with theCode of Conduct, they clarify how
we relate to each other and to
customers and other stakeholders.

• A compensation system for senior executives
and key employees aligned with our financial
and sustainability targets.

Our strategy - People 21

02

C ode of Conduct

Code of Conduct training for employees consistingof an introduction and three modules is being rolled
out. The aim is to• Create transparency and build trust amongcolleagues and in the company• Help employees to understand which types of
behaviors are expected• Know when they should escalate issues, and• Who they should turn to for support, and to create an environment where people feel confident
enough to voice their opinions andask questions.

ACCOMPLISHMENTS IN 2022

Leadership program with a focus on central
strategic projects
Internal mentoring program to promote development, cross-functional collaboration, teamspirit and employee development

StrategyContinued rollout of STOP (Safety Observation
Program) aimed at changing behaviors andimproving safety

INTRODUCTIONSTRATEGYOUR STRATEGYP reparations for the launch of a global HCM(Human Capital Management) system that aims
to support the development of employees andbusiness as well as contribute to sustainablegrowth– MARKETS– CUSTOMERS– INNOVATION– EFFICIENCY AND QUALITY– PEOPLE

Diversity and inclusion

A mix of employees with different perspectives
and backgrounds provides valuable insight and a
dynamism that creates innovative solutions andnew ways of working.
We are working towards greater gender
parity. The share of salary setting managers who
are women was 22 per cent in 2022, negatively
affected by acquisitions of companies with a low
percentage of women in manager roles. Munters
Group management team consists of 43 per cent
women. Munters goal is that the share of women
employees and women leaders will reach 30 per
cent by 2025. For more information, see page 60.

We strive for a more even gender distribution
and work conscientiously to increase the proportion of employees and managers who are
women. The development in 2022 was affected
negatively by, among other things, acquisitionsof companies with a low percentage of women

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION ollout of our Code of Conduct for employees,
R
to ensure that all employees are aware of theprinciples we follow. We hold regular training
for all employees in the Code of Conduct for
employees

A modern, attractive workplace

During the year, Munters prepared for the launchof Workday, a global Human Capital Management (HCM) system with functionality supporting
the entire employee life cycle, i.e., recruitment,

AGE DISTRIBUTION%
30

CATEGORY

25

Directemployees*,
46%

20

Development and career paths

We support individual career paths for all our
employees and encourage them to challengethemselves by taking on new responsibilities. During
the year, our Performance & Talent management
process was revised. As of 2023, one of the year’s
performance reviews will concentrate on supporting personal development, short and long term.

15

Men, 79%

Incentive program tied to sustainability

Through the Long-Term Incentive Program (LTIP),
we evaluate not only how well we are meeting
our financial targets, but also how well we as acompany, are for example increasing the share of
renewable electricity in our factories, the share ofwomen leaders, and service growth.

Leadership

A new leadership framework has been launched.
The framework, which is based on modern leadership research, was developed through workshops and interviews with around 50 managers.
The framework serves as the foundation of ourleadership philosophy and provides guidance onleadership qualities that inspire personal development and success. With a common language andleadership practices, we can maintain a culture
where people thrive and have opportunities to perform at their best. Also, our internal management
training for new managers, Manager@Munters,
was relaunched after the pandemic with updated

GENDER DISTRIBUTION
Overhead
employees,
54%

content. MovE (Munters orchestra of visionary
Explorers), an internal leadership program basedon action-learning principles to promote development, cross-functional collaboration, teamwork andsupport employees in their careers. Each annual
program consists of 12 projects which are important
for the implementation of our strategy. Each projectis lead by an employee who receives support froma sponsor from the company’s management teamand the other participants. MovE is an annual
program where participants meet six times a year inworkshops. See information from employees who
participated in the program on page 57.

performance reviews and development, onboarding, training, salary review, retention, organizational and employee data, etc. With global, intuitiveand efficient processes, Workday is designed forworkforce and business development, and willcontribute to Munters sustainable growth. Our
headquarters have been renovated to better meetthe needs of today’s work life. We are also renovating our factories and offices around the world.

Women, 21%

Health and well-being

Our occupational health and safety programminimizes the risk of hazards, injuries and negativeenvironmental impacts, while also ensuring that local and regional regulations are met. The program
comprises all processes and positions, including
subcontractors and visitors at our production facilities. It includes analysis, preventive measures andtraining. The rollout of STOP, which was introduced
in 2020, continued in 2022. The aim is to change
behaviors and improve safety.

Munters have 3,940 (3,315) employees in >30 countries
at the end of 2022
EMPLOYEES PER REGION
%

10
5
0

0
<20 21-30 31-40 41-50 51-60 >61

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

*including service technichians

20

Americas, 41%40

EMEA, 40%

60

80

100

APAC, 18%

Our strategy - People 22

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Operations
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

03
Operations 23

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDS

Megatrends for growth
The megatrends with the biggest impact for Munters are climate change and digitization. This drives and impacts our markets, demand and our strategic priorities.
Early on, Munters saw the rapid expansion of electrification and digitization. Today
we are well-positioned in the market and can therefore meet the global drivers that
support effective climate control solutions. This makes us part of the solution for amore sustainable world.

OUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIES

Megatrends

Munters solutions

The customer’s benefits

FOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

CLIMATE CHANGE

A growing number of companies are taking responsibility and wantto ensure sustainability of their entire value chain. For them, like forus, more efficient use of the earth’s limited resources and a reduced
climate impact are important success factors. This leads to growing
global demand for energy-efficient climate solutions that reduce ourcustomers’ carbon footprint.

• Unique applications and energyefficient products and solutions

Growing data traffic, new cloud services and an ever-growing
number of connected devices are driving growth in industries
exposed to digitization. Digitization also opens the door to new
ways of creating value and interacting with customers. One
example of this is to offer connected service and support.

• Strong global market position withlocal presence• Broad installed product base

POPULATION GROWTH

Resource shortages due to population growth around the world,
as well as a growing urban middle-class consuming more animaland vegetable-based protein, are driving demand for energy- andresource-efficient solutions.

HIGHER DEMANDS IN
PRODUCTIONENVIRONMENTS

There is an increased understanding of the impact of climatechange on productivity and product quality. Specific types of
production, such as production of batteries, require an extremely precise climate. Stricter regulations and escalating control
traceability in livestock farming and food production also driveincreasing demand.

DIGITIZATIONMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Energy-efficient solutions help our customers reduce their environmental impact andensure a sustainable business.

Connected products and systems generate
more data and control in the customer’s production environments and entire value chain.

• Global service offering• Digital solutions for the entire foodproduction value chain

Solutions that contribute to increased
efficiency with higher production forcustomers and reduced carbon emissions.

Improved animal and human health andextended service life of equipment andinfrastructure.

Megatrends 24

03

Our business areas

Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDS

We offer innovative, efficient and sustainable solutions for customers in manydifferent industries where controlling indoor humidity and temperature is missioncritical. All our business areas share an ability to supply high-quality productswith a long service life. Munters conducts operations in three business areas

OUR THREE BUSINESS AREAS

BUSINESS AREAS, PER CENT OF NET SALES 2022
%

0

20

AirTech, 66%

AIRTECH

40

60

Data Center Technologies, 13%

80

100

FoodTech, 21%

DATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

AirTechAirTech is a global leader in energy-efficient air treatment forindustrial and commercial applications. We offer climate solutions
for mission-critical processes that require exact control of moistureand temperature, with a focus on energy efficiency and sustainableclimate systems. Our solutions also provide better indoor air quality
and comfort, as well as increased production capacity.
Read more on page 26, click here

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Data Center Technologies

Data Center Technologies is a leading supplier of advanced climate
cooling solutions using a wide range of heat rejection technologies.
Our solutions produce significant energy savings for data centerscompared with traditional cooling solutions. With a diversified
product portfolio and extensive application know-how, we create
sustainable climate solutions for data center operators worldwide.
Read more on page 33, click here

FoodTech

FoodTech is one of the world’s leading suppliers of innovative andenergy-efficient climate systems for livestock farming and greenhouses, as well as software for controlling and optimizing the entire foodproduction value chain. FoodTech’s solutions increase productivity
while enabling sustainable food production where high demands
are placed on quality, animal health and food safety.
Read more on page 40, click here

Our business areas 25

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSAIRTEC H

Global leader in air treatment for industry
The business area AirTech is a global leader in energy-efficient air treatment
for industrial and commercial applications. We offer solutions for mission-criticalprocesses that require exact control of moisture and temperature, with a focus onsustainable climate systems. Our systems also provide better indoor air quality
and comfort, as well as increased production capacity.

MEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONSHARE OF THE GROUP’SNET SALES

66%(2021: 63%)

IMPORTANT EVENTS IN 2022

• Order valued at approx. MSEK 690, forclimate control system from a major US auto
manufacturer. Deliveries are scheduled from thesecond quarter of 2023 to the third quarter of2024.
• Henrik Teiwik appointed Group Vice President& President of the business area in August.
• Opening of a new factory in Hodonin,
Czech Republic, to meet the growing demand
from battery producers.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

AirTech’s key competitive advantages• Our product quality and performance with along service life
• Our long-term customer relationships• Our ability to understand the customer’s needs• Our extensive expertise• Energy-efficient solutions• Global service offering and local service
organization• Order from Morrow Batteries for climate
control solutions for its first battery factory in
Norway. The first complete climate solution will
be delivered in 2023.
• Acquisition of Hygromedia and RotorSource in the US. The acquisitions are in linewith Munters strategy of strengthening our corebusiness through organic and acquired growth.
• Two orders for climate control systems
from a multinational auto manufacturer. The
combined order value is approximately MSEK
560. Deliveries to plants in the US and Canada
are scheduled from autumn 2023 through 2024.

MISSION

Undisputed leader inhumidity, climate andair quality control for
mission-criticalapplications. We
provide best in classsustainable solutions
across our customers’
value chain.

Strategic priorities
 trengthen our core business by focusing on markets
S
where we are or can be a leaderD evelop our core business through digital services,
new technology and a harmonized, modular productportfolioE xpand the core business through, for example, increased attention on carbon capture and humidification

business area AirTech 26

03

AIRTECH, NET SALES 2022
%

0

20

Industry, 51%

Operations

40

Services, 21%

Clean Technologies, 9%

INTRODUCTION

60

80

100

80

100

Components, 14%Commercial, 6%

AIRTECH, ORDER INTAKE 2022

STRATEGY%

OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS

0

AIRTECH

20

40

Industry, 59% whereof battery 37%

DATA CENTER TECHNOLOGIES

Clean Technologies, 6%

FOODTECH

60

Services, 20%

Components, 11%Commercial, 4%

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

Did you know...

OTHER INFORMATION... that Munters has more than
270 service techniciansaround the world? Service is
one of our prioritizedareas.

STRATEGY

Markets
The global market for energy-efficient air treatment
is characterized by a large number of companies,
many of them local. The market has been undergoing consolidation for several years. Growth in themarket has historically been stable and is expected
to continue to grow. Sustainable climate solutions
with efficient electricity and water consumption is astrong driver in the market.
ACQUISITIONS BROADEN CORE BUSINESSA large part of AirTech’s core offering is built on
rotor based dehumidifiers, which are available ina number of sizes and are designed for a range
of applications. The acquisitions of RotorSourceand Hygromedia during the year are in line withMunters strategy of strengthening our core business

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

through organic and acquired growth. Through theacquisitions we strengthen our position as a leading
supplier of dehumidification systems for a numberof industrial processes. The acquisitions provide
us an additional distribution channel to serve themarket.
Hygromedia is a manufacturer of desiccantdehumidification media, while RotorSource is a
supplier of rotors and cassettes to OEMs (original
equipment manufacturers). Both companies arelocated in Baton Rouge, Louisiana, the US, andtogether have about 30 employees. 2021 revenue
was approximately MSEK 125. The acquisitions,which closed in November 2022, will be accretive
to AirTech’s EBITA margin.

AIRTECH’S MARKET SEGMENTS

Industrial – the largest segment, serving awide range of industries, including battery, food,
pharmaceutical, electronic and chemical manufacturers. A large number of applications are offeredto customers in these industries, e.g., batteries are
manufactured in demanding environments withextremely high climate requirements, where sophisticated dehumidification systems are requested.
Components – comprised of offering for OEMs
that use Munters products as part of their solutions.
The components are usually units to control moisture, cooling and dehumidification.
Clean technologies (CT) – offers applications
to separate solutions from gas flows, e.g., in power
plants and the marine industry. This method canalso be used for carbon capture by supplying
equipment for use in separating liquids from gases.
Commercial – the smallest segment consisting,e.g., of grocery stores and ice rinks.
Service – such as maintenance and upgrades.
We have a large global service network with local
service centers around the world. Through our local
presence, we have close relationships with our customers and can quickly service the installed base.
Growth areas• Food industry• Battery production• Services• Components

business area AirTech 27

03

We make our customers more sustainable

Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

PHARMACEUTICALSINFRASTRUCTURE & WIND POWER

We supply solutions for the pharmaceutical industry so that
medications can be manufactured of the quality required withas low environmental impact as possible while retaining their
quality.

Munters climate control systems ensure low humidity in the designsof bridges, wind turbines and other infrastructure, which can extend
their service life. In this way, we contribute to increased resource
efficiency and support the world’s transition to renewable energy.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONFOOD PRODUCTIONCARBON CAPTURE

We provide the world with healthier food by ensuring
hygienic and optimal production environments.

Clean Technologies offers solutions for carbon capture by
supplying equipment used to separate liquids from gases.

BATTERY PRODUCTIONSERVICEWe enable a large share of the world’s production ofbatteries for electric cars by supplying ultra-dry air. We also
reduce electricity consumption in production to create battery
solutions with lower climate footprint.

Our service offering extends the life of products, improves
efficiency, reduces energy consumption while ensuring quality
and environmental performance.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

business area AirTech 28

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSSTRATEGY

Customers

22

OUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYFINANCIAL INFORMATIONOTHER INFORMATION

Munters invest a lot in innovation andrefinement of existing products for dehumidification, humidification and cooling. We arecontinuously developing new service andupgrade solutions that support our visionof being a sustainable company, supplying
products with a very long life time.
No matter what phase of the life cycle
the equipment is in, our service solutions
and products provide optimal operation andperformance as long as needed.

NUMBER OF OWN SALES OFFICESMEGATRENDSCORPORATE GOVERNANCE

FACTS ABOUT SERVICES

Within AirTech sales take place on mature markets
with own local sellers and distributors, through 22
local and regional sales offices. AirTech has anextensive network of distributors, mainly in emerging markets, as well as for sales of components fordehumidification and direct evaporative cooling toother system suppliers.

Our four Services phases

STRATEGY

PeoplePeople and collaboration are the foundationof AirTech. Together we are stronger and canpromote teamwork, more easily resolve problems
and collaborate cross functionally. Our goal is totrain and provide our employees with increased
knowledge and passion for the journey ahead. We
are therefore developing training programs for both
functional areas and leadership as part of Munters
Academy. We are also developing methods andtraining for managing change, as support for all
our managers. At every level of the organization,
we continue to work with diversity.
The majority of the employees are based in
the US, Sweden, India and China.

2,693
NUMBER OF EMPLOYEES

Xinrui He from our assembly site in Tokyo, Japan.

Major service upgrade completed in two days
Extending the service life of Munters products is part of our effort to reduce emissions andhelp customers reach their sustainability targets. During upgrades, our skilled service teamworks closely with the customer to ensure smooth-running operations and minimize their
downtime.
A good example of this was when our service team in Singapore, led by 14 engineers,
helped a customer to upgrade its MX-5000 dehumidifiers.
The customer is a leader in mass data storage solutions and was in a hurry to geteverything in place. In just two days, 16 rotors were replaced. At the same time, seven DDC
controllers were converted to our latest Climatix models. The project was completed with 11
subcontractors on hand.
Original rotors in our dehumidifiers can be replaced to gain capacity, save energy andoptimize performance. This investment will pay off in two years.

START-UP & WARRANTY – Services to ensure
equipment is operating as designed, e.g.
installation, preventive maintenance andtraining.
SUSTAIN & MAINTAIN – Keeps equipment
running like new through rotor performancechecks, repairs and spare parts.
RETROFIT & UPGRADE – Boosts energy
efficiency and capacity with retrofit solutions
for equipment already in operation. Suchas controls upgrade, rotor replacement andremote assistance.
RETIRE & RENEW – Sustainable replacement
when equipment finally reaches end-of-life.

RETIRE &RENEWSTART-UP &WARRANTYRETROFIT &UPGRADESUSTAIN &MAINTAIN(2021: 2,256)

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

business area AirTech 29

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHSTRATEGY

Excellence in everything we do
We strive for excellence in everything we do andalways consider the best ways to continuously improve how we work and are organized. 2022 wasdistinguished by further supply chain disruptions
and cost inflation of raw materials and components.
AirTech worked actively during the year to strengthen and regionalize its supply chains, and maintainan active pricing strategy to compensate for cost
increases. This will remain a focus area in 2023.

DATA CENTER TECHNOLOGIESFOODTECH

INCREASED PRODUCTIVITY

Productivity improved during the year, partly
through investments in new machinery and production plants, but also through continuous improvements through MPS.

people. It will mainly produce the dehumidification
system Munters DCC Pro for the battery segment,
but also for the food and pharmaceutical industries.
The factory is designed with sustainability in mind,
giving our employees a modern working environment.

NEW FACTORY OPENEDIn 2022, AirTech opened a new production plant in
Hodinin, Czech Republic, to meet growing demand
from battery producers. With 10 000m² of workspace, the factory will employ around a hundred

ANOTHER FACTORY PLANNED

During the year, AirTech also decided to build a
new production plant in the US for manufacturingof desiccant dehumidification products and toservice the North American market. The facility is
being built in Amesbury, Massachusetts, and willbe the new home to Munters entire workforce in
Amesbury. The decision was made in response to
the growing demand for desiccant dehumidification
solutions. This state-of-the-art facility will significantly increase capacity, offer improved workflows,
and provide a modern environment for employees
in keeping with Munters sustainability goals. The
plan is to be fully operational at the new site during
2024.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

AirTech has 11 production plants
and 3 assembly plants in 9 countries

ASTRID ORTIS
Development Engineer, AirTech R&D

You recently joined the company. What made you choose
Munters as an employer?
I was attracted by Munters breadth. On the one hand, it is a large
industrial company with a market-leading position, and on theother hand, basic research is carried out within the company. For
example, I work together with our colleagues in China to develop
a long-term plan for how Munters will work with energy efficiency. The aim is to reduce the products’ environmental impact
and at the same time ensure that they continue to be attractive tocustomers from a financial point of view.

Production sites
Assembly site

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

What is it like to be a woman and at the same time one of
the youngest in the R&D department?
I don’t feel like I’m in the minority here at Munters. I felt welcome
and respected from day one. My colleagues immediately listened
to my ideas and invited me into discussions. The good work
environment is a contributing factor to why I want to stay.

business area AirTech 30

03

Did you know?

Munters fog separator
can eliminate more than95 per cent of sulfur emissions from coal fired
power plants.

Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Jonas Wahlkvist from our production site in Tobo, Sweden.
STRATEGY

Innovation
Within AirTech we want our application experts tocollaborate with the customer’s process supervisors
to devise an optimal solution. This way, Munters
can offer an innovative solution that meets a number of different climate control functions and is optimized based on the customer’s specifications andneeds. We have extensive knowledge of specificapplications and access to various technologies
and components that we often develop ourselves.
INCREASED INTEREST IN REAL-TIME ANALYSIS

We see increased interest in data collection via
sensors on our climate solutions to analyze climate
data in real time. Munters therefore develops connected, digital solutions that provide performance
analysis and remote monitoring.
R&D LAB IN KISTA IS DEVELOPING

The new R&D lab in Kista for verification testing of
Munters products underwent further developmentin 2022, so that testing can be conducted more
effectively and flexibly.
One of the more extensive pilot projects was
focused on measuring the performance of a dehumidification unit with significantly lower energy
consumption than existing models. Another project
has involved measuring in greater detail the performance of a typical air handling system for use in
the growing market for battery production.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Munters supports the world’s firste-methanol factory
In Magallanes, at the southern tip of Chile, the first industrialscale hydrogen plant for manufacturing synthetic fuels is underconstruction. The goal is to deliver 550 million liters of e-gasoline by 2027.
E-fuels are carbon-neutral and compatible with existing
combustion engines, which makes them an attractive alternative for today’s transportation sector. The German auto
manufacturer Porsche has already invested in the productand intends to use it in its race cars.
Munters is one of the many industrial companies playing
a part in building the facility. Our mist elimination technology
is part of the process that captures the CO₂ needed to produce
the e-fuels and separate it from contaminants, resulting in 98
per cent pure CO₂.
The CO₂, which will be captured directly from the air, ismixed with green hydrogen to create e-methanol, which eventually will be converted to e-gasoline. The fuel will be shippedaround the world.
The process will be powered by green electricity andsteam, generated by wind power, which means no additionalemissions in the air.

FACTS
What is carbon capture?

Carbon capture limits CO₂ emissions into the atmosphere bycapturing it and storing it safely, in, for example, undergroundgeological formations. Mass Transfer and Mist Elimination
technologies are critical parts of the carbon capture process
for all industries. Within this area Munters have decades ofexperience, skilled design and support staff, and satisfied
customers throughout the world.

business area AirTech 31

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Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE

Market development and financial results 2022
ORDER INTAKE

Order intake in AirTech increased by 28.9%
currency adjusted (organic 28.5%, structural 0.4%,
FX-effect 14.8%). AirTech met strong demand withgrowth in all regions, primarily driven by the battery
sub-segment as well as the segments CT and Services. Battery in Americas received several large orders during the year and also showed good growthin APAC and EMEA. CT grew primarily in APAC andAmericas, driven by the process industry. Services
had good growth, mainly driven by Americas.
NET SALESNet sales in AirTech showed good growth in all regions, mainly driven by the Industry segment where

especially the battery sub-segment grew strongly
in all regions. The Components segment also grewstrongly in all regions. The sub-segment foodproduction within Industry grew in EMEA and the Americas.
Services showed growth in all regions, particularly in
Americas. CT grew primarily in the Americas.
RESULTS

Profitability as adjusted EBITA margin in AirTech
was stable during the year. Net price increases
were offset by increased efforts to secure component shortages and to manage lead times. Actions
to resolve operational challenges in a production
unit, which started in the fourth quarter of last year,
progressed during the year.

FINANCIAL INFORMATIONOTHER INFORMATIONREGIONAL DISTRIBUTION, SHARE OF NET SALES 2022
%

0

20

Americas, 41%40

EMEA, 27%60

80

8,399 14.8%
ORDER INTAKE, MSEKADJUSTED EBITA MARGIN(2021: 5,842)(2021: 14.6%)

6,830 1,014
NET SALES, MSEKADJUSTED EBITA, MSEK

(2021: 4,664)(2021: 682)

100

APAC, 33%

REGIONAL DISTRIBUTION, SHARE OF ORDER INTAKE 2022%

NET SALES
0

20

Americas, 46%

40

EMEA, 24%

60

80

100

APAC, 30%

MSEK

MSEK

%

MSEK

1,200

15

10,000

12

8,000

9

6,000

6

4,000

3

2,000

0

0

1,000

6,000

MSEK if nothing else is specified

2022

2021

2020

2019

2018

External order bookOrder intake
Net sales
Adjusted EBITA
Adjusted EBITA margin
Operating profit (EBIT)

4,698
8,399
6,830
1,014
14.8
976

2,796
5,842
4,664
682
14.6
635

1,442
4,444
4,116
580
14.1
446

1,276
4,398
4,474
599
13.4
515

1,329
4,224
4,138
549
13.2
547

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

ORDER INTAKE

8,000
7,000

KEY FIGURESADJUSTED EBITA AND
ADJUSTED EBITA-MARGIN

800

5,000

600

4,000
3,000

400

2,000
200

1,000
0

2018 2019 2020 2021 2022

0

2018 2019 2020 2021 2022

2018 2019 2020 2021 2022

business area AirTech 32

03
Operations

INTRODUCTIONSTRATEGYDATA C E NTE R TEC HNOLOGIES

Sustainable cooling solutions that facilitate digitization
The business area Data Center Technologies (DCT) is a technology leader that
supplies advanced climate cooling solutions for data centers. With a diversified
portfolio of patented products and extensive application knowledge, we create
energy-saving solutions for data center operators worldwide.

OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONSHARE OF THE GROUP’SNET SALES

13%(2021: 10%)

DCT’S KEY COMPETITIVE ADVANTAGES• Broad technology portfolio with patented,
leading solutions• Extensive application expertise in optimizing andcustomizing solutions• Strong customer relationships and partnerships
with several of the world’s leading data center
operators

IMPORTANT EVENTS IN 2022

• Acquired Edpac, an Ireland-based manufacturer of data center cooling equipment and air
handling systems. The acquisition strengthens ourpresence in Europe.
• Major order received for Sycool Split froma leading colocation operator in the US valued
at approx. BSEK 1.1. Deliveries began in the
fourth quarter of 2022 and extend through thefirst quarter of 2024.
• Data Center Technologies was established
as a new business area with Stefan Aspman
as Group Vice President & President of thebusiness area from July 2022.

• Several orders received for standard
chilled water computer room air
handlers from a US-based colocation data
center company. The order value is approx.
MSEK 630 and deliveries are scheduled to
begin in the fourth quarter of 2023 through thefirst quarter of 2025.
• Munters received its largest order ever,valued at approximately BSEK 1.8. The orderfor SyCool Split systems came from a leading
colocation operator in the US. Deliveries are
expected to take place over a period of up to
12 months throughout 2024, starting in January.
• Opening of a new 365,000 ft² (34,000 m²)
manufacturing facility in Virginia, US, to meetthe growing demand for data center cooling.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Strategic priorities
MISSION

With a diversified
product portfolio andleading application
knowledge, we create
sustainable climate
solutions for data
centers worldwideF urther investments in application know-howB roaden SyCool’s product range with additional
configuration, sizes and applications,e.g., for liquid coolingD evelop modularity and operational efficiency
E xpand our geographical reachC ontinue to steer the market toward sustainablecooling solutions

Business area Data Center Technologies 33

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Operations

DATA CENTER TECHNOLOGIES, NET SALES 2022%

INTRODUCTIONSTRATEGY
OPERATIONS

0MEGATRENDS

20

Hyperscalers, 28%

OUR THREE BUSINESS AREAS

40

Colocation, 67%

60

80

100

80

100

Enterprise, 5%

AIRTECHDATA CENTER TECHNOLOGIESDATA CENTER TECHNOLOGIES, ORDER INTAKE 2022

FOODTECH%

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

020Hyperscalers, 5%

OTHER INFORMATION

40

Colocation, 93%

60Enterprise, 2%

STRATEGY

MarketGrowth has historically been stable and the market
is expected to continue to grow in pace with theworld’s digitization. The focus on sustainable climate solutions with efficient electricity consumption
and lower water consumption is a strong market
driver.
DCT BECOMES A SEPARATE BUSINESS AREA

During 2022 DCT became a separate businessarea as it is a prioritized, growing market segment
for Munters, which has shown strong growth andincreased traction in the market. Like Munters other

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

business areas, DCT has profit responsibility as well as
responsibility for the entire value chain.
Munters data center solutions and customer
projects are specialized for the segment and benefit
from an increased organizational focus, simplified
processes and shorter decision-making channels.
Munters DCT is a valued partner specializedin cooling. This is an attractive position for growth,since cooling is a major contributing factor for
critical aspects such as sustainability, profitability,
infrastructure and risk.

FOCUS ON EFFICIENT ELECTRICITYCONSUMPTION

Data centers account for an estimated 1–2 per centof global electricity usage, and significantly more
for certain countries. Cooling represents a significant share of energy consumption and Munters,with its technology and extensive application
know-how, has developed climate solutions thatgenerate significant energy savings in data centerscompared to traditional cooling solutions.

Data Center Technologies growth areas• Offerings for smaller data centers in more urban
environments, so-called Edge Data Centers• Growth in Europe through cross pollination of the
product ranges of the former Edpac and Munters• Strong position and collaborations with some of
the world’s leading colocation specialists

Business area Data Center Technologies 34

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

Ashley Hamilton from our production site in Buena Vista, Virginia, US.

OTHER INFORMATIONSTRATEGYSTRATEGY

Customers
Regardless of the type of data center being built
or upgraded, it needs reliable, energy-efficientcooling to optimize for the specific conditions. The
choice of solution depends on a number of factors
such as the surrounding environment, the size anddesign of the facility, the type of data center andits energy density, the area around the building,
local laws and regulations, water access, and thecustomer’s investment horizon and operating costs.
These parameters and others determine which cooling method and equipment match the circumstancesand preferences in the best way.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

PeopleData Center Technologies’
customer segments

Hyperscalers – cloud suppliers with the criticalcomputer and network infrastructure necessary tobuild robust, scalable application environments.
Colocation – manage data centers wherecompanies can rent out the facilities.
Enterprise – built, owned and operated bycompanies and optimized for the end user.

We are one of the market’s most specialized
suppliers, with climate solutions for data centers as
its only focus, which strongly contributes to our reputation as a knowledge and technology leader. Thisdifferentiation and competitive advantage is basedon the extensive application know-how of our employees, and investments in training are critical tomaintain satisfied customers and profitable growth.
To sustain development and quality in its deliveries,
DCT will focus more on R&D and hire more project
leaders, service technicians and other customerrelated functions in 2023.
The majority of the employees are based in the
US and Ireland.

355
NUMBER OF EMPLOYEES(2021: 176)

Business area Data Center Technologies 35

03Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECH

FACTS:
SyCool ® Split

DATA CENTER TECHNOLOGIESFOODTECH

Munters award-winning SyCool Split provides an effective dry and scalable coolingsolution for new and retrofit installations withmulti-story and high-density designs.
The system is available in 250 kW,
400 kW and 500 kW blocks with cooling
capacity.
SyCool’s thermal effectiveness is nominally 60–70 per cent, greatly exceedingthat of competing refrigerant based economizer systems.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Energy-efficient SyCool plays a key rolein the design of a data center
Since data centers require a sustainable design,
the cooling system is often a primary concern
for designers and operators. This is because thecooling system consumes the most electricity in adata center besides the IT equipment itself.
When Digital Crossroad wanted to build a
new data center in a location where a coal-fired
power plant had recently been decommissioned,
sustainability was the key.
Munters indirect economizer cooling system
was selected for the server rooms in the initial

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

construction stage. To save energy and water, a
dry heat exchanger design was chosen with aunique energy-saving feature that uses nearby
cold seawater to provide additional cooling. As
water conservation has become more importantto the data center industry, Munters has focusedon designing waterless cooling and developed
SyCool, a revolutionary new system specially designed for high-efficiency cooling in data centers.
The new SyCool solution can achieve annual
energy efficiency comparable with evaporative
systems – but without using water.

Main features:

After running a number of design analyses,
Digital Crossroad decided to use the new SyCool
system in the upcoming expansion of the data
centers. The new system is even more energy
efficient than the previous version, and without theseawater. The SyCool systems in the initial expansion have been installed and ramped up.
Digital Crossroad is impressed by theefficiency of the systems, which surpassed initialexpectations.

• Split system eliminates duct penetrations• No water consumption• Compatible with liquid cooling (day one
or future conversion)• High-efficiency economization• Factory-optimized controls• Winner of the magazine Mission Critical’s
2021 Top Tier Product Award for ThermalManagement Solutions

Business area Data Center Technologies 36

03Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS

STRATEGY

Excellence in everything we do
CROSS FUNCTIONAL PROJECT TEAMS

Munters DCT has a project-based approach
where customers get access to a dedicated project
team consisting of a project manager, applicationengineers and service specialists who manageand oversee each project. All members of the crossfunctional project teams are experts in data center
applications. Project success is measured and eval-uated from the customer’s perspective, from idea toexecution. Their success is the defining, overarchinggoal rather than partial deliveries along the way.
This approach creates value and customer-centric
teams with the attitude, experience and expertiseneeded to understand the customers’ needs andperspective in a way that creates trust and partnership. Through the service organization, customers

always have access to knowledge, maintenanceand further optimization long after the project has
been delivered.
NEW PRODUCTION FACILITY
I n 2022, DCT opened a new US production plant

The 365,000 ft² (34,000 m²) facility is Munterslargest. It will mainly manufacture advanced andenergy-efficient climate solutions for data centers.
The factory is designed with Munters goal of net
zero production in mind and 100 per cent of electricity consumption comes from renewable sources.

in Daleville, Virginia, against the backdrop ofstrongly increasing demand for data center cooling.

AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE

DCT has production sites in two countries including
Munters largest facility located in Virginia

FINANCIAL INFORMATIONOTHER INFORMATIONCHARLES HODNETT

Director of Operations, DCT Virginia, Americas*

Production sites* Shared facility with AirTech

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

During the year, we opened a new manufacturing facility in Virginia, USA, to meet the growing
demand for data center cooling. How did you
ensure that the facility provides the best possible
working environment?
We wanted to build a place where we all thrive andthat we look forward to coming to each day. For
production, we focused on operator safety throughbetter ergonomics on the flow lanes and operator
cells. In the offices, we aimed to create an inclusivefunctional space - one that is inviting to all andencourages brainstorming. In addition, we have created spacious locker rooms, an inviting cantina withhealthy food options, a sustainably operated R&D
facility, and a first-class customer reception area. To
support Munters’ sustainability efforts, all employeeswith electric cars receive free charging.

Business area Data Center Technologies 37

03

Did you know?
Munters new factoryin Daleville is our largest
facility in America
of 365,000 ft2(34,000 m²)

Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONSTRATEGY

Innovation
Munters provides climate solutions for data centerswith a range of technologies. With the recently launched SyCool Split series, see page 36,
which does not use water, we can supply a highly
energy-efficient climate solution where access to asuitable water supply may be limited or unreliable.
In a world where conservation of both energy andwater are critical, SyCool is a highly attractive alternative, and in 2022 Munters received its largest
order ever, regardless of category, for SyCool. For
indirect cooling, we offer various heat exchanger technologies that work either with or without

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

New US testing lab runs on renewable electricity
adiabatic assistance depending on the customers
requirements.
With our indirect event climate solutions in the
Oasis series, we can, like with SyCool, often meetthe cooling needs of data centers without mechanical cooling (direct expansion (Dx)) for a large
share of the operating hours each year, whichmakes it a highly energy-efficient solution. In somecases, our indirect evaporative cooling solution
can fully eliminate the need for direct mechanicalcooling year-round.

By 2030, Munters aim to be net zero carbon
emissions from own operations. To reach thistarget, we have launched several initiatives.
One of them is a mandatory environmental
impact assessment of all new investments.
This means that every time we replaceor buy new equipment, we also have to findand evaluate an alternative that is better forthe environment.
We recently had an opportunity to dojust that when we moved our test lab in Virginia to the new plant in Daleville, in the U.S.
After conducting an environmental andfinancial assessment, we decided to create atest lab that runs on renewable electricity.

“Despite the longer payback period for thealternative electricity, the investment wasapproved, since our management realizedthat it is the right thing to do for the environment and our business in the long run,”says Maj-Britt Hällmark, Vice President &Senior Advisor for the sustainability group at
Munters.
The investment will also result in a test
lab that offers better control than is possible
with diesel or propane boilers.
“This means that our test data will be
more accurate and our equipment will be
more reliable,” says Mike Boucher, Vice
President, R&D who runs the lab.

Business area Data Center Technologies 38

03Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITY

Market development and financial results 2022
ORDER INTAKERESULTS

Order intake in DCT increased by 405.0% currency
adjusted (organic 379.3%, structural 25.7%, FXeffect 89.5%). During the year order intake grew
substantially as several large orders were received
from colocation operators in the US, with Munterslargest order ever received in the third quarter of
MUSD 176 for SyCool Split systems.

The adjusted EBITA margin in DCT was negatively
impacted by component shortages in both regions
as they resulted in increased lead times as wellas increased production costs. In addition, priceincreases still lagging higher material and freightcosts.

OTHER INFORMATIONADJUSTED EBITA MARGIN(2021: 1,051)(2021: 13.2%)

NET SALES, MSEK

1,401

ADJUSTED EBITA, MSEK

(2021: 702)

(2021: 92)

NET SALESNet sales increased in DCT by 69.3% currency adjusted (organic 34.8%, structural 34.5%, FX-effect30.2%) with strong growth in driven by colocation
operators in both the US and EMEA.

CORPORATE GOVERNANCE
FINANCIAL INFORMATION

6,245 6.0%
ORDER INTAKE, MSEKREGIONAL DISTRIBUTION, SHARE OF NET SALES 2022
%

0

20

Americas, 79%40

EMEA, 20%

60

80

100

80

100

84

APAC, 1%REGIONAL DISTRIBUTION, SHARE OF ORDER INTAKE 2022
%

0

20

Americas, 95%

40

EMEA, 5%60

APAC, 0%NET SALES

ADJUSTED EBITA AND
ADJUSTED EBITA-MARGIN

MSEK

MSEK

%

MSEK

1,500

120

15

8,000

100

12

80

9

60

6

40

3

20

0

0

–3

–20

–6

1,200

KEY FIGURESMSEK if nothing else is specified

2022

2021

2020

2019

2018

External order bookOrder intake
Net sales
Adjusted EBITA
Adjusted EBITA margin
Operating profit (EBIT)

5,937
6,245
1,401
84
6.0
71

703
1,051
702
92
13.2
148

295
657
823
109
13.2
99

504
859
688
63
9.2
51

323
409
313
–27
–8.7
–44

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

900
600
300
0

2018 2019 2020 2021 2022

–40

2018 2019 2020 2021 2022

–9

ORDER INTAKE

6,000

4,000

2,000

0

2018 2019 2020 2021 2022

Business area Data Center Technologies 39

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSFOODTEC H

A world leader in climate control systems for food production
The business area FoodTech is of the world’s leading suppliers of innovative andenergy-efficient climate systems for livestock farming and greenhouses, as well assoftware to control and optimize the entire food production value chain. FoodTech’s solutions increase productivity while enabling sustainable food production
where high demands are placed on quality, animal health and food safety.

MEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONSHARE OF THE GROUP’SNET SALES

21%

FoodTech key competitive advantages• Quality products with high availability and low
cost of ownership• Long-term customer relationships• Our ability to understand and supply solutions
that meet our customers’ future climate needs(2021: 27%)

IMPORTANT EVENTS IN 2022

• Order intake was negatively affectedby weak demand in China, especially in theswine market. In EMEA, the underlying market
weakened as a result of the war in Ukraine andinflationary pressure.
• Contract to deliver a SaaS solution to one of
the world’s largest food producers, valued at
approximately MSEK 200. This is a recognitionof FoodTech’s strategy to connect the entire foodproduction value chain with innovative softwareand precision farming solutions.
• Financial investment in FarmSee, based in
Tel Aviv, Israel. FarmSee offers AI camera-based
weighing sensors with continuous tracking ofeach individual pig on a farm. Through the

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

investment we become a distributor of FarmSee’s
product range and software.
• Strategic partnership and financial investment in BarnTools, based in Iowa, in the
US. BarnTools provides wireless IoT and sensor
solutions for poultry and pork producers.
• Acquisition of majority share in InoBram*,a Brazilian manufacturer of climate controllers
for farms and food producers.
• Contract to supply our SaaS solution to one
of North America’s largest poultry producers.
The order is valued at approximately MSEK 46.

Strategic priorities
MISSION

We help feed the world
by changing the way wecultivate and produce
food.

C reate a unique connected offering for the entire
food production value chain
Further strengthen our leading position in climate
control and data analysis for the poultry andswine segmentsG row in software* Transaction closing is subject to certain corporate andregulatory approvals, including CADE (Brazilian antitrust)
approval.

business area FoodTech 40

03

FOODTECH, NET SALES 2022%

Operations

0
INTRODUCTIONSTRATEGY
OPERATIONS

20

40

60

Broiler, 49%

Digital solutions, 10%

Greenhouse, 6%

Dairy, 4%

Swine, 17%

80

100

Layer, 12%

Other, 2%

FOODTECH, ORDER INTAKE 2022

MEGATRENDS%OUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIES0

FOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE

20

40

Broiler, 46%

Digital solutions, 21%

Greenhouse, 5%

Dairy, 4%60

Swine, 13%

80

100

Layer, 9%Other, 3%

FINANCIAL INFORMATIONOTHER INFORMATIONSTRATEGY

Markets
We see increasing pressure for advanced climate
control systems that ensure higher energy-efficiency
and lower emissions. In addition, calls from authorities and consumers to reduce antibiotic use inlivestock farming are leading to high demands on
livestock farming.
Despite this, 2022 was a challenging year for
FoodTech with a combination of falling volumes
and higher costs. In the APAC region, the Chineseswine market continued to develop weakly for theentire year. Another reason for the lower volumes
was the war in Ukraine, where Munters in the firstquarter decided to suspend all direct and indirect
sales to Russia. This had an immediate effect on
FoodTech’s order intake and sales, and a direct
effect on earnings through inventory write-downs
and costs to adapt the business.

OUR OFFERING

DEMAND FOR INCREASED TRACEABILITY

The operations of FoodTech consist of Climate
Solutions and Digital Solutions.

Increased food traceability is leading to higher demands on data collection and analysis of the entire
value chain, including feed production, stables,
production plants and transports the whole way tothe store. Together with demands for high productivity, this has led to rapid development of thesoftware used by food producers to plan, control
and optimize the entire production chain from feed
to finished product.

In Climate Solutions, FoodTech offers complete
systems to control indoor environments in barns andgreenhouses, including equipment for ventilation,
cooling and heating, as well as various types ofcontrol systems.
In Digital Solutions and the subsidiary MTech
Systems, technologies and systems to control andforecast the entire food production value chain are
offered through integrated systems for farms, feedmill farms, hatcheries and processing facilities.
Within Digital Solutions a data-driven softwaresystem is developed and offered,SaaS.

solutions for the food and agricultural industry andconnect the entire production value chain. InoBram
is based in Pato Branco, Brazil, and has just over
150 employees.*
Growth areas are• Strengthen our position in markets where we areor can be a market leader• Expand our SaaS offering

ACQUISITION OF INOBRAM DURING THE YEAR

During the year, we acquired 60 per cent of
InoBram, a Brazilian manufacturer of climate
controllers for farms and food producers. The
acquisition supports our strategy to grow in digital* Transaction closing is subject to certain corporate and regulatory approvals, including CADE (Brazilian antitrust) approval.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

business area FoodTech 41

03

We help feed the world by changing
the way we cultivate and produce foodOperations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESREDUCED FEED USE

ANIMAL WELL-BEING

We reduce the use of feed by offering a better climate andthereby lowering the amount of feed needed to produce meat.

We improve animal well-being by monitoring the animals’
health and status with our sensors.

FOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

INCREASED TRACEABILITY

BETTER INDOOR CLIMATE

We increase traceability and bio-safety through datacollected from the entire value chain.

We reduce the use of antibiotics through a better indoor
climate for poultry and swine.

LOWER ENERGY CONSUMPTIONMINIMIZE ENVIRONMENTAL IMPACT

We lower energy consumption through better designed
ventilation systems and more efficient equipment.

We minimize waste and reduce transports by predicting
farm yields in real time.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

business area FoodTech 42

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONSTRATEGY

Customers

During the year
the software recurring
revenue increased +39 percent to MSEK 119, with an
ARR of MSEK 133

Efficient climate control is one of the most importantfactors for profitable and sustainable production.
LARGE AND SMALL CUSTOMERSFoodTech’s customers range from large multinationals to individual farms. We have a strong position in
the layer and broiler markets in the US and Europe.
FoodTech is also a leader the swine farming market
with a strong position in the U.S. Sales are primarily
through distributors in local markets, and in somegeographical markets and segments, products are
sold directly to the end customer.
OUR EQUIPMENT IMPROVES ANIMAL HEALTH

Through the technologies and systems that MTech
Systems supplies, FoodTech has many of the world’s
largest food producers in the broiler segment ascustomers, who use our software to plan andmonitor operations. The solutions help the customer
optimize day-to-day operations, provide farm-tofork traceability, and deliver artificial intelligencefor predicting future performance. The integrationof FoodTech’s equipment and software enables
the food industry to improve animal welfare andincrease efficiency, while reducing its carbon footprint and ultimately achieving a more sustainable
way of doing business. Software solutions are often
sold directly to food producers as SaaS solutions.
FoodTech ’s customer segments• CLIMATE CONTROL» Broiler segment» Layer segment» Swine segment» Dairy segment» Greenhouses• DIGITAL SOLUTIONSMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Major food producer chooses Munters smart software
By 2050, global food systems are expected tohave to feed more than nine billion people in asafe, responsible and sustainable way. Growing
populations, increased competition, shortagesof resources such as land, water and energy,
together with climate change and economic andlogistical factors, are all challenges that make thefood industry complex.
Using smart digital tools is one way tomanage this complexity and increase efficiency
and profitability. A growing number of foodproducers around the world are searching fortechnology to manage this complexity.
One of North America’s largest poultry producers purchased Munters innovative software

solution Amino for a value of approximately
MSEK 46. The rollout of the software will begin
in the second quarter of 2023.
The software, which is the latest in a longline of smart solutions, enables food producers
to sustainably optimize their entire value chain,
while at the same time contributing to animal
health.
“I am enthusiastic about the number of top
producers who believe in our vision to monitor
and optimize the entire food production value
chain in order to improve sustainability andanimal welfare,” says Pia Brantgärde Linder,
President of business area FoodTech.

FACTS
MTech – leader in smart digital tools

In the poultry segment, MTech Systems, a
Munters company, is becoming a leader insmart digital tools which enable food producers to manage complexity by analyzing
and optimizing every link of the value chain– from breeding to feeding.
MTech’s innovative Amino software isa cloud-based AI tool for accurate yield
forecasts, production planning and real-time
analysis through the entire food production
chain.
Three immediate benefits of Amino are:
1. Improved data processing and lower riskof costly errors
2. Faster data analysis and problem solving
3. Next-level planning to drive businessresultsbusiness area FoodTech 43

03

Saturn FIVE extraction fanshandle even the toughest
conditions

Operations

The summer of 2022 was exceptionally warmin southern Europe. For poultry farmers, hightemperatures can cause major problems,
including the risk that many of their animals will
suffer strokes, which could significantly reduce
their earnings. With Munters innovative new
Saturn FIVE extraction fans, the effects of extreme
weather can be mitigated and the production
climate can remain stable from one season to thenext.

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Sofie Lundahl and Daniella Karhula Lagerhult from our
production site in Tobo, Sweden.

STRATEGY

PeopleOur employees are the core of our business. Communication and leadership are especially importantfor FoodTech, where we are spread around theworld with long distances between our facilities.
We understand the importance of communication
at every level, both to share information within
the business area and to increase collaboration
between business units.
The majority of FoodTech’s employees are
based in the US, Israel, Italy, China and Germany.

791
NUMBER OF EMPLOYEES(2021: 796)

KEIKO ASANOManaging Director, Munters JapanYou have worked hard to increase the number of women in technology
and sales positions, how has that work been done?
We have trained our managers around unconscious gender biases and raised
the issue of gender equality in recruitment processes by consciously increasing
the number of women we interview. We have communicated Munters commitment to sustainability, gender balance, and work-life balance in company
presentations and discussions with recruiters.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Paolo Furegon achieved a better
quality at a lower cost

Paolo Furegon runs a family business that raises
chickens in the Vicenza province of Italy, where
he has a total capacity of 2 million chickens ayear. In April 2022, Paolo decided to replace
20 old fans with eight new Munters Saturn ONE
and FIVE models.
Just a few months later, the summer temperatures in Vicenza reached as high as 39°C, or
ten degrees warmer than normal in the area.
Thanks to the new fans, Paolo was able to close
the production cycle with only 8 fans without any
losses, despite the extreme heat.
According to Paolo, the biggest benefits frominstalling the new Saturn ventilation system are:• Lower energy costs thanks to superior energy
efficiency and use of fewer fans than expected• Lower total cost of ownership. Fewer fansmean lower installation, maintenance andenergy costs. Moreover, less time is spent on
cleaning the equipment.
• Access to Munters expertise and customer
support.

FACTS
Saturn FIVE is a cost-saving platform

Saturn FIVE is a cost-saving platform designed to meet the needs of farmers in any
climate zone.
By combining exceptional airflow withfull energy efficiency, an indoor climate is
created that contributes to improved animal
welfare, optimized livestock yield, and thereby a higher return on investment and a moresustainable business.
An innovative design with many benefits

Saturn FIVE’s modular design enables farmers
to configure a system to perfectly suit theirneeds.
Innovative materials and components
with a simpler design and fewer moving parts
extend the life of the system and reduce thecost of ownership.
The Saturn FIVE system also has apatent-pending butterfly damper that shutstightly when the fan is off to reduce energy
waste and minimize drafts that could affectthe animals’ well-being. Without the actuator,
the damper opens and remains open even athigh pressure operations, avoiding performance drops, keeping the time to activate
ventilation programs to a minimum, and wasting less energy due to poor ventilation.

business area FoodTech 44

03

FACTS
Heat-X Rotate generates lower emissions

Operations“I t requires minimal time to clean andlargely takes care of itself,” says
Christian Lorentzen. “We have run theequipment for a year and I have only
had to clean the rotor once. The heatexchanger has stayed clean with thebuilt-in air compressor and it works
perfectly.”

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATION

Poultry farmer saves moneywith innovative heat exchangers
Rising energy costs are forcing farmers to seekout smarter heating alternatives. For Christian
Lorentzen’s poultry farm in Denmark, the solution
was to switch to Munters Heat-X Rotate, a heatrecovery solution that saves up to 70 per cent ofheating costs.
Christian Lorentzen’s poultry farm consistsof two structures with a combined capacity of
280,000 birds at the same time. Utilizing heatrecovery is nothing new in his business. He has
had heat recovery installed in all his facilities.
However, the cleaning required with the old system was burdensome, both in terms of time andcost. In addition, it did not deliver the expected
air quality.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

By replacing the heat recovery system withMunters Heat-X Rotate, the farm was able to:• Improve air quality and the overall environment
in the poultry stables, including drier hay and
up to 44 per cent less ammonia, while at thesame time decreasing the risk of pathogens anddiseases• Reduce the dependence on gas as an energy source• Drastically reduce CO2 emissions from the farm
• Achieve a lower total cost of ownership, including installation, maintenance, cleaning andoperating costs.

Lower costs with heat recovery

When energy costs rise, energy costs quicklycommand a larger share of the farm’s budget. The
most effective way to cut costs is to install a heatrecovery solution.

Using natural heat exchanger processes reduces the farm’s consumption of non-renewable energy. A farm can reduce its carbon
footprint by 45 tons a year with just one
Heat-X Rotate. This is the same emissions you
would generate if you drove a car around theworld six times!
Innovative heat recovery with Rotary heatexchanger

Munters air-heat exchanger Heat-X Rotate
promises:• Up to 70 per cent savings on heating costs• Improved indoor air quality and animal
welfare• Lower CO₂ emissions
In addition, Heat-X Rotate has other advantages compared with competing products:• High energy recovery• Compact design, low transport costs• Low energy consumption• Simple maintenance and cleaning tomaintain hygiene• Lower total cost of ownership

Better animal health produces a higher yield

Heat exchangers are designed to ensure an optimal
climate for livestock farming by efficiently recovering heat from the exhaust air which is produced inpoultry and pig stables.
In addition to energy efficiency, the solution
has several advantages. Optimizing the climate forpoultry during the animals’ first week of life leads toa much stronger immune system. Healthier chickens
also require less antibiotics and follow their optimal
growth curve. In the long run, this also results inhigher productivity.

business area FoodTech 45

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSSTRATEGY

Excellence in everything we do
For FoodTech, “Excellence in everything we do”
means being a company that is easy to do business
with, but also working efficiently inside the company.
2022 was a challenging year with a combination of falling volumes and cost increases. During
the year, an optimization program was launchedin China, where we consolidated production fromtwo production plants to one. The aim is to further
improve productivity and reduce working capital.

Another priority has been cost inflation in
our markets. We continued to adjust our pricing
strategy in order to pass along higher material,
payroll and energy costs to the customer. FoodTech
continued to invest in the Southeast Asian market
and early in the year opened a logistics hub in
Vietnam with the goal of improving our offering in
the region.

OUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE

FoodTech has 6 production sites,1 assembly site and3 software development sites in 8 different countries

FINANCIAL INFORMATIONOTHER INFORMATION

Software development sites
Production sites
Assembly sites

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

STRATEGY

Innovation
We collaborate with end customers and dealers
to optimize our product development process andcustomize solutions in terms of humidity level, temperatures, emissions and energy consumption.
A strong driver is digitization, and we areseeing great interest in data collection and analysis
in real time from our customers. Digitized processes
are today, and will in the future increase to be, an
important way to optimize production, improve energy efficiency, increase integration and strengthen
the food production value chain. Munters today
is a world leader in the software used by foodproducers to plan, control and optimize the entire
production chain from feed to finished product.
There is great interest in and potential for theseInternet-based solutions, but competition is stiff andstaying ahead requires continuous investments andimprovements.
We continue to increase investments in productdevelopment and new products introduced during
the year was the Saturn FIVE fan and ROTEM TRIO
controller.

business area FoodTech 46

03
Operations

INTRODUCTIONSTRATEGY
OPERATIONSMEGATRENDSOUR THREE BUSINESS AREAS
AIRTECHDATA CENTER TECHNOLOGIESFOODTECH

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

Market development and financial results 2022
ORDER INTAKE

Order intake in FoodTech declined by –6.8%
FX-adjusted (organic –6.8%, FX-effect 10.3%).
During the year, FoodTech continued to be negatively affected by weak demand in China, especially in the swine market. In EMEA, the underlying
market weakened as a result of the war in Ukraine
and inflationary pressure. Americas has shown
good growth both in Climate Solutions for the broiler and swine segments and Digital Solutions.
NET SALESNet sales declined slightly by –1.8% FX-adjusted(organic –1.8%, FX-effects 10.9%). Americas grew,
especially in Digital Solutions and the broiler andswine sub-segments within Climate Solutions. APAC
declined mainly due to a continued weak swine

market in China, somewhat offset by growth in
the greenhouse and broiler segments. EMEA net
sales remained at the same level as last year.
RESULTS

Adjusted EBITA declined mainly due to lower
volumes in China and EMEA. Price increases
during the year have compensated for increasedmaterial and freight costs. The war in Ukraine
had an impact on the supply chain and market
demand, and lead to operational challenges in a
production unit in EMEA. Since then, activities areunderway to resolve these operational challenges
and lower volumes. In China, an optimization program is underway where production has been consolidated from two production sites to one. Large
investments are underway in Digital Solutions.

2,242 5.8%
ORDER INTAKE, MSEKADJUSTED EBITA MARGIN(2021: 2,166)(2021: 10.4%)

2,211

128

NET SALES, MSEKOTHER INFORMATIONADJUSTED EBITA, MSEK

(2021: 2,028)

REGIONAL DISTRIBUTION, SHARE OF NET SALES 2022

(2021: 210)

%

0

20

Americas, 44%40

EMEA, 40%

60

80

100

APAC, 16%

REGIONAL DISTRIBUTION, SHARE OF ORDER INTAKE 2022
%

0

20

Americas, 53%

40

EMEA, 36%

60

80

100

APAC, 11%KEY FIGURESNET SALES

ADJUSTED EBITA AND
ADJUSTED EBITA-MARGIN

MSEK

MSEK

%

MSEK

2,500

350

15

2,500

12

2,000

9

1,500

6

1,000

3

500

0

0

300

2,000

MSEK if nothing else is specified

2022

2021

2020

2019

2018

External order bookOrder intake
Net sales
Adjusted EBITA
Adjusted EBITA margin
Operating profit (EBIT)

828
2,242
2,211
128
5.8
5

700
2,166
2,028
210
10.4
71

516
2,196
2,126
310
14.6
277

526
2,087
2,032
278
13.7
226

518
2,107
2,018
249
12.4
244

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

ORDER INTAKE

250
1,500

200
150

1,000

100
500
0

50
2018 2019 2020 2021 2022

0

2018 2019 2020 2021 2022

2018 2019 2020 2021 2022

business area FoodTech 47

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

Sustainability report
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

04
Sustainability report 48

04
Sustainability

INTRODUCTIONSTRATEGY

Sustainability strategy
Our sustainability priorities• Offer high-quality, resource-efficient climate solutions• Reduce carbon dioxide emissions, increase energy efficiency
and the share of renewable electricity we use

OPERATIONS• Increase diversity and ensure an inclusive culture and safe workplaces

SUSTAINABILITY• Offer new sustainable products and services

	S USTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESM	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE

Our central sustainability areas
The following three points provide the framework for Munters sustainability
agenda. We integrate this in our strategy and strategic priorities

MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION
OTHER

I

Resource efficiency and environment
Munters strive to offer sustainable products that help customers
to be more efficient and reduce their climate impact. Our own
production will be responsible and we will work to reduce ourenvironmental and climate impact. We choose transports that
limit our environmental impact.
Read more on page 52, click here

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

II

People and society

Munters strive to operate in a just and inclusive way to continuously create engagement. Diversity gives us perspective andvaluable insight. We work collaboratively to benefit our local
communities.
Read more on page 58, click here

III

Responsible business practices

Munters strive to be sustainable and profitable in order to create
value for our stakeholders. We should be reliable and strengthen our relationships with all stakeholders by acting ethically. We
require those we cooperate with to comply with the same ethicalguidelines we follow.
Read more on page 61, click here

Sustainability strategy 49

04
Sustainability

INTRODUCTIONSTRATEGY

Organization & governance
Curiosity and an ambition to create pioneering technologies are part of our DNA.
For us at Munters, sustainable business means that through our climate solutions wecontribute to a more sustainable planet and create value for society. Sustainability
is integrated in every aspect of the business strategy.

OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERSUSTAINABLE BUSINESS MODEL

Munters business model is to offer innovative,
high-quality and energy-efficient solutions for air
treatment and the climate to businesses that needprecise air and climate control.
To deliver sustainable value, Munters is constantly innovating and raising the efficiency of its processes and methods to remain a leader in the industry.
To be successful, it is essential that we havestrong relationships with customers and suppliers,
motivated employees and high ethical standards.
SUSTAINABILITY STRATEGY

Munters has three overarching focus areas for its
sustainability work: Resource efficiency & environment, People & society, and Responsible businesspractices. For targets and results for the company’ssustainability indicators, see page 52–62
SUSTAINABLE ORGANIZATION AND
GOVERNANCE
Board of Directors & Management

The Board of Directors is ultimately responsible for
Munters business strategy and sustainability. The
President and CEO is responsible for implementing
the strategic priorities and sustainability activities,
goal setting and monitoring targets and indicators.
The Group Vice President HR & Sustainability isa member of the Management Team and reports
directly to the CEO. Management is responsible for
ensuring that the business strategy and sustainabil-

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Munters sustainability governance model
BOARD OF DIRECTORSANNUAL SUSTAINABILITYREPORT

Overarching responsibility for strategy,
sustainability, ethics and results
Assignment

Reporting

CEO & MANAGEMENT

GOVERNING DOCUMENTS

Decide on short- and long-term targets,
focus areas and priorities.

STAKEHOLDER DIALOGUE

Assignment, support & control

Analysis based on dialogues

Ongoing reporting & recommendationsSUSTAINABILITY STEERINGCOMMITTEE(Sustainability Core Team)
Leads the coordination of activities to meetthe overarching sustainability targets.

MATERIALITY ANALYSIS

Business areas• Identify and execute activities toreach short- and long-term targets• Ensure compliance with
policies and guidelines.

ity activities are implemented and for monitoring
established targets and regularly communicating
the results and outcomes to the Board of Directors
and relevant parts of the organization. Strategy and• Follow up the activities and key
performance indicators.

• Report on milestones
each quarter..

policy documents are revised by the Board and theCEO once a year and are available on the company’s intranet. For more information on our policies,
see pages 69.

Organization & governance 50

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

Sustainability steering committee

The steering committee is led by the Group Vice
President HR & Sustainability. The steering committee leads the work of proposing targets, coordinating sustainability activities and plans, monitoringand evaluating the activities, and tracking key performance indicators. To maintain a sustainable andprofitable business, Munters has integrated sustainability in every aspect of the business strategy.
The sustainability steering committee consistsof twelve members from Group functions and representatives of all three business areas. The aim is
to share know-how and responsibility for sustainability at every level and in every region within theorganization.
Steering committee’s work in 2022

The steering committee meets frequently and during
the year held 19 meetings. Additional meetings
were held by individual members of the committeewith Munters Management Team and local employees, among others. The steering committee’s work
during the year included:• Monitoring activities, plans and KPIs related toestablished sustainability targets• Drafting strategy for energy and water conservation• Oversight and management of the organization’s
work on measuring indirect emissions according
to the GHG Protocol. Dialogue with partners in
our value chain• Building support for sustainability work in preparation for strategy period 2023–2027• Annual CDP reporting, participation in othersurveys• Mapping of energy use and sources for offices
and other properties not used in production.
Introduced reporting of Scope 1 and 2 emissions
for them• Increased clarity and transparency in the company’s external sustainability• Conducted climate risk analysis according to
the TCFD framework

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

• Meetings and workshops with management tobuild support for more forceful action to increase
the number of women employees and leaders• Began work on a materiality assessment in accordance with the double materiality principle
Steering committee For 2023

A large part of the steering committee’s work in
2023 will focus on preparations for the upcoming
requirements in the European Corporate Sustainability Reporting Directive (CSRD), which enters into
force in 2024, as well as continued support for thework underway on EU Taxonomy reporting. The
steering committee will continue its oversight andmanagement of the work of defining the indirectemissions in the value chain according to Scope 3
in the GHG Protocol. Internal training is plannedfor various target groups to improve understandingof indirect emissions and how we can help ourcustomers reach their emissions targets throughenergy-efficient solutions, in addition to continued
dialogue with our partners both upstream anddownstream.
The steering committee works continuously toincrease the information on and engagement in
the company’s sustainability work and is planninga number of meetings with various groups andemployees in the coming year. The materiality
analysis according to the double materiality principleis scheduled to be completed in the first half of theyear.
Review & monitoring

Compliance with the policies is monitored eachyear and reported to the Board of Directors.
Management is responsible for implementing andmonitoring policies and governing documents.
All employees will be informed of the Code of
Conduct and managers will also receive training
on the guidelines within relevant areas. Muntersprovides key employees with training on national
and international laws on forced labor and humantrafficking. These employees also receive guidanceon identifying the signs of abuse in individuals who
work for or provide services on behalf of Munters.

Employees who violate the policies and governing
documents may face consequences based on thenature of the violation.
Major suppliers much pledge in writing to comply with Munters Code of Conduct for suppliers.
Munters periodically audits its direct hardware suppliers and their compliance with our Code of Conduct for suppliers. The audit results are followed up
with each hardware supplier. Munters has launcheda certification process for hardware suppliers, whomust certify that the materials they have used havebeen manufactured in accordance with current laws
prohibiting forced labor and human trafficking.
Hardware suppliers that violate Munters Code of

Conduct may face consequences and in serious
cases may have the relationship terminated.
Munters also encourages employees, suppliersand customers to report observations of unethicalbehavior such as forced labor or human trafficking.
Munters has an external whistleblower service,where those who report violations of the Code of
Conduct are guaranteed anonymity and will notrisk retaliation.
Munters provides an external, independent,
whistleblower function where those who reportpotential breaches to our code of conduct are guaranteed anonymity and will not risk retaliation.

Organization & governance 51

04

IResource efficiency & environment

Recycling rate%
60
50

Sustainability

SUSTAINABLE PRODUCTSRESPONSIBLE PRODUCTIONEFFICIENT TRANSPORTATION

Reduce our customers’ environmental
impact by offering energy- and resource-efficient solutions as well as services to extend the life of the products.

Through energy- and resource-efficient
production sites, together with efficiencies in how we work, we reduce ourenvironmental and climate impact.

Reduce the environmental impact oftransportation by choosing alternatives
with low emissions and active logistics
planning.

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY

40
30
20
10
0

	ORGANIZATION & GOVERNANCE

2018

2019

2020

2021

2022

	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESWATER CONSUMPTION	MUNTERS CONTRIBUTION TO

We separate chemicals and the particles in thewastewater from our facilities. The majority of our
production consists of assembly, where water isused only for sanitation purposes, so consumption
is very low relative to our total sales.
Going forward, we will mainly focus on how
we can further reduce water consumption in rotor
block production, which accounts for the majorityof all water consumption.

THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION
OTHER

0.01

RESULT – WATER CONSUMPTION

M 3/production value SEK 000(2021: 0.02)
TARGET

Gradually reduce water consumption and treat
wastewater in our production plants and processes.

Water consumptionm³

Comment on 2022 outcome

0.020

In 2022, water consumption decreased in relation
to sales. The absolute water consumption in m³ decreased by 6 per cent as a result of some factoryspecific actions.

0.015

0.010

WASTE AND RECYCLING

We are working to reduce waste and increase
recycling rates in our production facilities, throughsystematic quality improvements. Every facility works proactively to reduce waste throughincreased productivity, better material utilization
and by looking for new areas for reuse or local
recycling options.
The innovation and product development
functions are giving greater consideration to the
choice of materials in the design of new products
and redesign of existing products.
In 2023, a project is scheduled as part of theinternal leadership program MovE to develop a
process for and governance of product Eco-design.

52%

RESULT – WASTE AND RECYCLING(2021: 54)
TARGET

Continuously raise the recycling rate
Comment on 2022 outcome

Total waste increased during the year due to a
sharp increase in production volume. Seven of our
18 production plants have reached a recycling andreuse rate of 93–100 per cent of all waste, while
the three facilities in China remain below average. In some locations recycling is limited by theabsence of local options.

0.005

0.000

2019

2020

2021

2022

Water consumption in m³ related to the turnover in SEK 1,000.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Resource efficiency & environment 52

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYI
ENERGY EFFICIENCY IN OUR PRODUCTION
PLANTSSHARE OF ELECTRICITY FROM RENEWABLE
SOURCES IN OUR PRODUCTION PLANTS

Our climate impact comes mainly from the use of electricity and fossil fuels in production processes, heating,ventilation and cooling. The goal is to continuously reduce energy use and make the facilities and processes
more energy efficient.

One of the most effective ways to reduce the climate
impact of our factories is to gradually transition to energy from renewable sources. With the strong progress
we made in 2022, we are in good position to reach or
surpass the target we set for 2026, that at least 80%
per cent of all electricity will come from renewablesources. How we will continue to increase that shareand improve our energy efficiency will be part of theplans for each factory, to be established in 2023.

	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO

SHARE OF ELECTRICITY FROM RENEWABLE
SOURCES IN OUR OFFICESAND OTHER NON-PRODUCTION SPACE

During the year, we also mapped the energy use andsources for offices and other non-production space.
Even if the energy consumption is relatively small compared to that used in production, we still see a potential
to increase the share of electricity from renewable sources, especially in the properties where we have control
over the choice of supplier. In the lease agreements formany of the smaller premises, electricity and heating
are included in the rent, and there the dialogue with thelandlord is important.

Mwh

Energy efficiency in our
production facilities*

1.2
1.0
0.8
0.6
0.4
0.2
0.0

THE SUSTAINABLE DEVELOPMENT GOALS

2018

2019

2020

2021

2022

STAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERRESULT – ENERGY EFFICIENCY IN OURPRODUCTION PLANTS*

0.62(2021: 0.9)

RESULT – SHARE OF ELECTRICITY FROM RENEWABLE
SOURCES IN OUR PRODUCTION PLANTS

72%(2021: 53)

RESULT – SHARE OF ELECTRICITY FROM RENEWABLE
SOURCES IN OUR OFFICES AND OTHERNON-PRODUCTION SPACE

30%(2021: 27)

Share of electricity from renewablesources in our production plants%

80

TARGETTARGETTARGET

Continuously improve energy efficiency in relation to
output value in our factories.

Eventually, we want 100 per cent of our electricity
to come from renewable sources, and the goal is toreach at least 80 per cent by 2026 in our production
facilities.

Eventually we want 100 per cent of our electricity tocome from renewable sources, in cooperation with
our landlords. We gradually want to reduce electricity
consumption per m² surface.

Comment on 2022 outcome

Comment on 2022 outcome

The biggest increase in the share of electricity fromrenewable sources during the year was in the factories
in the Americas through procurement of wind power
via Renewable Energy Certificates (REC).

The share of electricity from renewable sources increased slightly in 2022 and energy consumption per
m² decreased by 1 per cent.

Comment on 2022 outcome

Energy efficiency was improved through a number ofmeasures, including as part of a project focused on improvements in the four production facilities that accountfor the large share of carbon emissions.

70
60
50
40
30
20
10
0

2018

2019

2020

2021

2022

* MWh/production value SEK 000

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Resource efficiency & environment 53

04

ISCOPE 1 & 2 CO 2 E EMISSIONS IN TON
2022

2021

ChangeScope 1 direct emissions
Scope 2 indirect emissions -location based, 2
Scope 2 indirect emissions -market based 1, 2, 3
Scope 1–2 total emissions

7,795
13,325
7,187
14,982

7,705
15,55014,04521,751

1%
–14%
–49%
–31%

Scope 1–2 emissions in relation to production value in kg CO₂e/ production value
SEK 0001)
Scope 1–2 per employee 2)

0.001
3.8

0.003
6.5

–46%
–41%

,2

Sustainability

INTRODUCTIONSTRATEGY

1) Market based emissions partly includes use of RECs and CEL’s for wind-power in region Americas.
2) Total emissions and related to Net sales and number of employees are based market based emissions.

OPERATIONSSUSTAINABILITY

Emission factors source: IEA Emission Factors 2022
Reporting according to GHG Protocol.

	S USTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESM	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHEREMISSIONS FROM OPERATIONS(SCOPE 1 AND 2)

In 2021, sustainability issues were integrated in thebusiness strategy and we set a target to be net zeroby 2030.
In 2022, guidelines and targets were established for increased energy efficiency and use ofelectricity from renewable sources in our production
facilities.
During the year, we significantly increased theshare of electricity from renewable sources, mainlyin the Americas by procuring wind power via RECs,
which contributed to lower carbon emissions.

• Scope 1 and 2 include emissions fromfactory operations, offices and othernon-production locations as well as company vehicles. Excluding offices with lessthan 10 employees. The two acquisitions
made in the USA in November 2022 will
be included in the reporting from 2023
onwards.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Energy use, and in particular the use of natural gas,
has decreased in relation to output value after anumber of measures, including a project focusedon the four production facilities that account for
the large share of carbon emissions. Read more on
page 57.
During the year, we also mapped energy use
and sources for offices and other properties not
used in production, and introduced Scope 1 and2 reporting for them in accordance with the GHG
Protocol. With this accomplished, we now have acomplete overview and can continuously monitor
Scope 1 and 2 emissions from our own operations.
The goal for our company fleet is to transition togreener vehicles, which we measure by monitoring
the average emissions factor for all vehicles in the
fleet. By year-end 2022 the average emissions factor had decreased by 18 per cent compared with
December 2020, when the measurement began,helping to compensate for an increased numberof vehicles, which was driven by strong growth inservice and sales.

In the year ahead, roadmaps to net zero by2030 will be developed for each factory. The planfor 2023 also includes identifying potential sourcesof renewable electricity for offices and other properties not included in the production plants.

CLIMATE IMPACT ACCORDING TO THE
GHG PROTOCOL

Scope 1- emissions increased in absoluteterms due to an increased number of vehicles
used in service and sales, driven by growth.
Scope 1 emissions from the production
facilities decreased during the year despite
increased volume, thanks to reduced use ofnatural gas.
Scope 2 indirect emissions decreased significantly through increased use of renewableelectricity and improved energy efficiency.
Total Scope 1 & 2 emissions decreased inrelation to output value.

CHANGE 2022
TOTAL SCOPE 1–2 EMISSIONS–31%
TARGET

We are working towards the target of net zero
emissions from our own operations by 2030
Comment on 2022 outcome

Scope 1 and market-based Scope 2 emissions
were significantly reduced during the year mainly
as a result of reduced consumption of natural gas
and increased share of electricity from renewablesourcesResource efficiency & environment 54

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGYI
EXPLANATIONS

Mapping process
Munters has been reporting energy efficiency and the proportion of electricity from renewablesources in its production facilities for several years. In 2020, we began monitoring carbon
emissions from our own operations, Scope 1 & 2. In 2021 and 2022, we made significant
progress in the mapping of the Scope 3 categories that to date have been deemed mostsignificant. The Scope 3 emissions that are reported for the year therefore do not yet represent
100 per cent of the transactions in the selected Scope 3 categories. The mapping work willcontinue in 2023.

	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTPURCHASEDGOODS & SERVICES

GOODS
TRANSPORTSOWNOPERATIONSFREIGHT
TRANSPORTS

USE OF SOLDPRODUCTSCORPORATE GOVERNANCE
FINANCIAL INFORMATIONSCOPE 3SCOPE 1 AND 2

SCOPE 3OTHER

EMISSIONS FROM THE VALUE CHAIN
UPSTREAM AND DOWNSTREAM (SCOPE 3)

In 2020, we began monitoring Scope 3 emissions
from category 5, Waste Generated in Operations,and from category 6, Business Travel.
In 2021, a project was established to map
relevant emissions from additional upstream anddownstream activities in the coming years.
Although this work was intensified in 2022 andresulted in the mapping of a much larger proportion of the value chain’s emissions, 100 per cent ofthese categories are not yet included in the measurement. We can already see that category 11, Useof Sold Products, as we expected accounts for an
overwhelming majority of the emissions.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Due to the range of product variations, customizations to meet specific customer needs, and large
number of different applications, climate conditions
and need for operating hours, which affects energy
consumption and the life of the product, we havebased our calculations on the values and assumptions that can be considered typical and reasonably reflect the average for sold products.
When the mapping of relevant emissions has
been completed, it will serve as the basis for more
specific targets and investment priorities.
In 2023, the internal leadership program MovE
includes a project to educate our global procurement unit on the importance of sustainability in the
supply chain and how suppliers can contribute to

reduced carbon emissions. The purpose of the project is also to improve and automate our processes
for measuring emissions in various categories ofpurchased goods and services, so that we canevaluate them and work to reduce them.

SCOPE 3 EMISSIONS CO 2 E IN TON

Category 1 Purchased goods and services:
Includes emissions from approximately 95 percent of direct production-related materials,
based on purchase value. The emissions havebeen partly calculated using spend-based
method, while, e.g., emissions from purchased
metals are material-specific.
Category 4 and 9 Transportation: Includes
emissions from approximately 18 per cent ofprocured transports. The emissions are basedon CO₂e reports from suppliers.
Category 5 Waste Generated in Operations:
The emissions are calculated on the basis of
the amount of reported waste in kg that is notrecycled.
Category 6 Business travel: The emissions are
based to 95 per cent on emission reports fromtravel agencies, complemented by our own
monitoring.
Category 11 Use of Sold Products: Includes
emissions from an estimated one third of soldproducts, excluding service and spare parts.
The emissions are calculated on the basis ofenergy consumption for sold products, in linewith the values and assumptions that can beconsidered typical and reasonably reflect the
average for sold products. In the calculations
it has been assumed that the product’s finaldestination is the country where the customer
is located and the emissions align with thatcountry’s average emission factor according
to IEA in 2022.

SCOPE 3 EMISSIONS CO 2 E IN TON
2022

Scope 3 as measured
Scope 3 CO2 e ton/SEK 1000 turnover

4 521 686
0,44

Emission factors source: IEA Emission Factors 2022
Reporting according to GHG Protocol.

2021
Scope 3 as measured
only emissions from categories 1, 5 and 6
Scope 3 CO2 e ton/SEK 1000 turnover

301 895
0,04

Emission factors source: IEA Emission Factors 2022
Reporting according to GHG Protocol.

Resource efficiency & environment 55

I04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSGROW THE SERVICES BUSINESSSTAKEHOLDER DIALOGUE

Services, which includes maintenance, upgrades
and spare parts, has good growth potential withgood profitability. Our service business, which
generates recurring revenue, is growing in pace

MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTwith our installed base of products. Our service
offering is important for customers, not least from asustainability perspective, since service extends thelife of the products and increases the efficiency of
installed solutions.

CORPORATE GOVERNANCE

THEO BENTVELZENFINANCIAL INFORMATION
OTHER

15%

Service

RESULT – SHARE SERVICE

%
15
12

(2021: 15)

9
6

TARGET

3

Service will account for 30 per cent of net sales in
the long term

0

2019

2020

2021

2022

The share of service

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Product Manager, Service, EMEA

You have been with the company for 30 years.
What made you stay for so long?
Time flies when you’re having fun! I would say 30
years have flown by because I have always enjoyedworking at Munters. I really like the fact that we havegood products that help customers solve their challenges and also reduce energy consumption. It doesn’t
matter what industry our customers are in, we’re therewith a solution to handle a specific problem.

Comment on 2022 outcome

The share of sales from Services did not change
in 2022, but had good growth mainly in AirTech,
which has an extensive service business. Within
FoodTech, a SaaS offering is being developed andoffered.

Resource efficiency & environment 56

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOWI
Training in sustainability and ecodesign
During the year, we increased our awareness of product sustainability
and ecodesign. To consolidate leadership in this area, we created a
new role at the Group level, Global Eco Design Manager.
The EU’s Circular Economy Action Plan states that up to 80 per
cent of a product’s environmental impact is determined during thedesign phase. This makes ecodesign the key to developing moresustainable products. Additionally, product life is an important element
in a company’s Scope 3 emissions; in the manufacturing sector it canaccount for over 70 per cent of the total carbon footprint.
These principles, together with the introduction of LCA and circularity, serve as the basis for the internal employee training begun inautumn 2022. The aim is also to spread awareness and best practices
in product sustainability throughout the Group. To reach this target,
several workshops are planned globally where employees can learn
and share personal experiences relating to the environment, customer
queries, product performance, etc. The first training took place in
September 2022, in Amesbury, in the US, and a number of workshops are planned in 2023.

	EU TAXONOMY REPORT

Nidia Irasema from our production site in Mexico.

Increased knowledge and engagement led to smarter solutions

CORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERSUJATA WUTHOOManaging Director, Munters India and Business Unit Manager,
Clean Technologies

During 2022, you were part of Munters internal
leadership program MovE. What did you think of
the program?
It was a fantastic experience. I got to know many
talented colleagues, learned a lot and increased myunderstanding of various projects that we are runningto build an even stronger Munters. Munters culture is aperfect example of unity and diversity.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

As part of an internal leadership program called MovE,
logistics manager Eliezer Bezerra was assigned to identify which processes cause the most carbon emissions inseveral of Munters factories.
By tracking energy consumption with the help ofdevices attached to equipment and in real time, hedetermined that the production of CELdek was one of
our largest sources. CELdek is an evaporative cooling
pad used where high-efficiency cooling is needed, andis manufactured in Brazil, Mexico, Chasan in China and
Italy. CELdek production requires a great deal of heat,
which is generated from gas, first to heat the paper andthen in the gluing process.
Together with the management at each factory,
Eliezer discussed various alternatives to approve thisenergy-intensive process. In Mexico, the response wasto reduce the number of times they open the furnaces
for fresh air, and in China they found a way to reuse theheat. Italy and Brazil also found new methods to use
much less gas.
“We have been able to greatly reduce our dependence on gas,” says Eliezer. “Thanks to the energy
savings, we can buy electricity from renewable sources.
In Mexico, for example, a portion of the money will go tobuying electricity from a wind project.”
The project’s success is due to the engagement of
the local leadership. “I had many conversations with the
management team at each of the four factories on theimportance of this project and convinced them of thebenefits of making the changes,” he says. “I hope that
we can take what we learned and implement it in all ofMunters factories.”

Resource efficiency & environment 57

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

Total recordable incident rate

People & society

Number
3.5
3.0
2.5

EQUAL & INCLUSIVE WORK ENVIRONMENTCOMMUNITY ENGAGEMENT

A just and inclusive work environment is importantfor our employees to stay engaged, enjoy theirwork and develop professionally. Diversity gives
us different perspectives and valuable insight that
improves our company and our offering.

By cooperating with our local communities,
we can attract both customers and potential
employees. Community projects create prideand engagement among our employees, which
in turn creates value for Munters.

2.0
1.5
1.0
0.5
0.0

	SUSTAINABILITY STRATEGY

2018

2019

2020

2021

2022

The Total Recordable Incident Rate (TRIR) is the number ofaccidents where the employee had to seek medical
assistance multiplied by 200,000/number of hours worked.

	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESSAFETY IN THE WORKPLACE	MUNTERS CONTRIBUTION TO

Munters has zero tolerance for workplace
accidents and all incidents that require medical
assistance are followed up and reported monthly to
management. We conduct systematic risk assessments of the production facilities to preventatively
increase the focus on health and safety. Among theareas included are fire safety, waste and chemical
management, and electrical installations. All units
are evaluated on a rolling three-year schedule.
Munters does not permit child labor and individuals under the age of 18 may not work the night
shift or perform hazardous duties. Forced labor
is strictly forbidden. Munters respects the right tounionize and negotiate collectively. Employees may
not be subjected to corporal punishment, physical,
sexual, psychological or verbal harassment orabuse.

THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

Conversation between employees at Muntersproduction site in Tobo, Sweden.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

1.8

RESULT – TOTAL RECORDABLE INCIDENT RATE

(2021: 1.7)
TARGET

Eliminate accidents in production.
Comment on 2022 outcome

No deaths were reported due to workplace accidents. In 2022, workplace accidents unfortunatelyrose, mainly due to an increased accident rate in
one of our factories, but also because of a delay inthe global rollout of STOP (Safety Observation Program) as a result of Covid-related travel restrictions.
The purpose of STOP is to change behaviors andimprove safety in the factories. We are naturally
dissatisfied with this development and in 2023 willprioritize safety in our production plants, including
through the continued rollout of STOP and stronger
measures in a number of factories.
We will also arrange an internal safety conference for all our production plants in spring 2023.

People & society 58

II

04

II
Our community engagement
The local sustainability committee
in Amesbury, in the US, carried out anumber of activities during the year.
The members met monthly to discussand implement initiatives to improve thelocal factory. This year, for example,
they stopped using disposable plastic
cups in break rooms and replaced
them with reusable Nalgene bottles foreach employee. The team also launched
a composting pilot program that is being carefully
monitored in the hopes of adding compost bins
throughout the factory.

Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT

We had the opportunity to inspire the workforceof the future on Manufacturing Day 2022, when
U.S. manufacturers open their doors to the public. Fifty curious students, teachers and mentors
visited Munters production facility in Lansing,Michigan, where they were given a tour of thefactory. They saw robots in action, learned how
Munters quality-tests its products and got apeek into the distribution process.
For the fourth year in a row, Munters China
received a quality workplace award from China
International Intellectech Co. Ltd. (CIIC) Group,
which ranks Chinese companies based on employee care. CIIC Group evaluates 7,000 companies,
but only 200 are nominated. This year’s theme was“Go beyond , Break boundaries - Releasing Digital
Vitality.”

	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

We can’t change the world, or save it, in a day. But
the small actions we take on a daily basis create realchange. The EMEA AirTech management team spenttime together fishing plastic out of Amsterdam’s canals.

Instead of scrapping used equipment and components, we try to find ways to reuse them. For example, we donated 12 pumps to the local civil defense
authority in Chiusavecchia, Italy. The pumps will be
used to drain buildings after a flood.

Munters is working with the Essex
County Sheriff’s Department in
Massachusetts, US to help low-risk
prisoners gain work experience.
The goal is to help them build skills,
so that after being released they
will have an opportunity to find awell-paying job, which can reduce
recidivism.
Andrea Ghiggini from Munters Italy together with Professor
Enrico Fabrizio and students from ASP.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Munters Italy is collaborating with Alta
Scuola Politecnica, ASP, an honor program for fourth-year students attending the
Polytechnic University in Milan and Turin.
Together, we are working on a project toinvestigate water conservation alternatives
in evaporative cooling for greenhouses. The
ongoing project, called GREENWEC, willconclude in September 2023. The project
team includes seven students and five teachers. We have invested EUR 10,000, themaximum donation for the project.

People & society 59

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERGENDER EQUALITY

At Munters, we are determined to hire more women
and women leaders. For example, we always wantat least one qualified female candidate for every
management position. It is also important that weoffer a sound culture with a work-life balance andflexibility as to where and when the work is done.
Done in 2022

• Worked with awareness and responsibility in thebusiness areas through more detailed oversight,
reporting structure and measures to increase thepercentage of women employees and executives.
• Continued internal training in Gender Balanced
Recruitment. Defined and implemented a process to track women candidates in the recruiting
process.
• Appointed a Vice President of Diversity, Equity &Inclusion (DEI) in September 2022 to lead our
DEI initiatives. DEI targets and measures will be
adapted and incorporated into Munters strategy.
In recent years, we have specifically focused on
gender diversity, and while we will continue ourefforts through these important initiatives, otheraspects of diversity are also important, such as
disabilities, generations, HBTQ+, ethnicity andso on.

• In 2021, we joined the Target Gender Equality
program, which supports participating companies of the UN Global Compact in setting
and reaching ambitious targets for women’s
representation and leadership, starting with theboard and executive management levels. We
participated in the program again in 2022.
Among other things, we have used the Women’s
Empowerment Principles Gender Gap Tool toanalyze our current practices. The tool can help
companies identify actions to empower womeninternally and externally.
• Established a regional team of experts to workwith gender equality.
• Held meetings and workshops with management
to build support for more impactful measures toincrease the number of women employees andleaders.
For 2023

We are setting a new target that one out of every
three senior management appointments will be awoman. This target will be included as a personal
target for senior management, those reporting
directly to them and managers at the next level.
We will also try to improve our understandingat the local level of what is needed to attract andretain qualified women. In the case of the new fac-

tory expansion in Amesbury, Massachusetts, wherea large number of employees will be recruited, thiswill specifically be part of the recruiting process.
Through various global and local measures,continue to create a work environment that is safe,
inclusive, respectful and free from harassment for all
our employees.

Within the framework of the UN Global Compact program, we will participate in the UN Business & Human Rights Accelerator Program in 2023.
Hundreds of companies from around the world
are participating in this six-month program to help
member companies quickly go from engagement toaction for human rights and labor rights.

Share of employees, women

Share of women leaders

%

%

25

25

20

20

15

15

10

10

5

5

0

2019

2020

2021

2022

21%

Global Eco-Design Manager

Which factors were most important to you when you chose to work for
Munters?
“As a single parent, I could not have left my previous job and moved to a newlocation, but when Munters recruited me they offered travel flexibility and theopportunity to work from home. Munters has changed my life. I have a job thatmakes me happy, and I can finally spend more time with my daughter and be amore present mother!”

2019

2020

2021

2022

22%

RESULT – PERCENTAGE OF EMPLOYEES, WOMENRESULT – PERCENTAGE OF LEADERS*, WOMEN(2021: 22)(2021: 23)

TARGET
MICHELLE MARRONE

0

Increase the share of employees who are women.
The target is 30 per cent by 2025.

TARGET

Increase the share of women leaders to 30 per
cent by 2025.

Comment on 2022 outcome

Comment on 2022 outcome

The outcome in 2022 was affected by acquisitionsof companies with a low percentage of women,
and that the headcount increased the most in production and service.

The outcome in 2022 was affected by acquisitionsof companies with a low percentage of women in
manager roles. Moreover, the need for new managers has increased the most in engineering, R&D
and manufacturing in the US, where there has beena shortage of female candidates.
*with salary-setting responsibilities

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

People & society 60

II04
Sustainability

III
Responsible business practices
SUSTAINABLE & PROFITABLEOPERATIONSBUSINESS ETHICSCOLLABORATIONS

The basis of an ethical and sustainable business is compliancewith laws and regulations. By
acting ethically, we instill trustand build strong relationships.

We require our partners tocomply with ethical guidelines
equivalent to those we havecommitted to.

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

Create value for our shareholders by maintaining a sustainable
and profitable business.

	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTBUSINESS ETHICSCORPORATE GOVERNANCE

We do not tolerate corruption, bribes or unethicalbusiness practices in any form. Operating units andsuppliers, and their employees, are not permitted
to offer, receive, request or accept bribes or otherquestionable incentives.

FINANCIAL INFORMATIONOTHERCODE OF CONDUCTThe Code of Conduct and the special Code of
Conduct for suppliers are based on the UN Global
Compact’s ten principles on human rights, labor,
the environment and anti-corruption. Compliancewith the Code of Conduct is monitored each year
and reported to the board.
Code of Conduct training for employees

We have absolutely zero tolerance for corruption
and bribes. To ensure that all employees know
which principles we follow, we provide periodic
training for all employees on our Code of Conduct.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

90%

RESULT – TRAINING IN CODE OF CONDUCTTARGET

90 per cent of white-collar workers to complete thetraining in 2022
Comment on 2022 outcome

During the year, HR informed employees of theimportance of the training and translated it tolocal languages. In 2023, we will continue to train
white-collar employees and increase the target to
100 per cent of all employees, including those inproduction.

Code of Conduct for suppliers

The aim is that our largest suppliers will follow
and sign our Code of Conduct for suppliers. We
conduct periodic reviews of our direct suppliers
and their compliance with our Code of Conduct.
We are taking measures to automate compliancein the supply chain by using a third-party AI tool toreview companies’ financial records, ESG ratings
and any past legal or regulatory violations or liens.
This helps to eliminate human error when criticalbusiness decisions are made and allows facts to be
displayed in a more scalable form. Internal training
on sustainability in the supply chain will be offeredto everyone in procurement in the coming year.
If a supplier does not meet the requirements, anaction plan is drawn up, and if the timetable is notfollowed, the relationship will be terminated.

100%

RESULT – CODE OF CONDUCT FOR SUPPLIERS(2021: 100)TARGET

The target is that 100 per cent of our largest suppliers will sign the Code of Conduct
Comment on 2022 outcome

We reached our target that all major suppliers
signed the Code of Conduct for suppliers. Munters
continues to encourage employees, suppliers andcustomers to report cases of unethical behavior suchas forced labor, child labor or human trafficking.
Munters has an external whistleblower unit wheresuspicions of unethical behavior can be reported
anonymously.

Responsible business practices 61

04
Sustainability

III

Whistleblower cases

ENVIRONMENTAL MANAGEMENT

Environmental fines

ISO CERTIFICATIONS

Munters has a web-based whistleblower unit
managed by an independent outside party thatguarantees anonymity. In 2022, four cases (2)were received and processed through the external
channel and one case through internal reporting.
All the cases have been investigated and addressed.

We attach great importance to reducing the impact
on the environment of our business activities. Using
less resources is good for the environment and for
Munters long-term profitability. Our environmental
commitments are described in the Code of Conduct
and environmental policy, among other places.

Munters goal is not to be fined for non-compliancewith environmental laws and regulations. In 2022,
we received no fines.

Whistleblower cases

Environmental fines

Our goal is that all our logistics, manufacturing and
R&D operations will receive third-party ISO 9001,
ISO 14001 and ISO 45001 certification. We did
not reach our ambitious goal to have all production
facilities ISO 9001:2015 certified by the end of2022, mainly because of the extensive resources
devoted to due diligence and integration of theacquisitions made in 2022. The Group intends tocontinue to certify the production facilities in 2023.
Compliance with central policies in our facilities ismonitored through internal and external audits.

INTRODUCTIONSTRATEGY
OPERATIONS

NumberTSEKSUSTAINABILITY

12

100

	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES

1080

STAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORT

Number of certifications per production site

2020

2021

Planned2022 number 2023

40

ISO 9001:2015 quality management, number of certifications

14/17

14/17

14/17

16/18

20

ISO 14001 environmental management, number of certifications

5/17

8/17

8/17

9/18

ISO 45001 occupational health and safety management,
number of certifications

3/17

7/17

7/17

8/18

60
6

	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALS

ISO-certifications

8

4
2
0

2018

2019

2020

2021

2022

0

2018

2019

2020

2021

2022

CORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Responsible business practices 62

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONS

Munters contribution to the Sustainable Development Goals

SDG 8 DECENT WORK AND
ECONOMIC GROWTH
Munters will be an employer of choice. To
ensure high employee motivation, the safety
and well-being of our employees is our highest priority.
We also want our major suppliers to share the same viewof their employees as we have.

The UN’s Sustainable Development Goals are a call to action to ensure prosperity andat the same time protect the planet. Munters supports all 17 SDGs and has identified thefollowing goals where we feel that we have a greater impact and thereby an opportunity
to make a difference. In certain areas Munters can also have a negative impact, as we
describe below.

Our most important actions» Working proactively to increase risk awareness andcontinuously improve routines and processes» Requirement that our major suppliers commit to theten principles of the UN Global Compact through our
Code of Conduct

SUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORT» We have signed the UN Global Compact
SDG 2 ZERO HUNGER
We offer energy-efficient climate cooling systems for agriculture andthe food industry in a broad range of segments, from livestock and egg
production to milk farms and greenhouses.
Our most important actions» To develop and offer products and solutions that optimize product quality while atthe same time conserving energy and increasing productivity

SDG 5 GENDER EQUALITY AND
SDG 10 REDUCED INEQUALITIESWe are convinced that diversity leads to greater innovation andhigher profit. We will have a corporate culture distinguished byequal treatment and equal opportunities for everyone, as well as reasonable compensation. Therefore, we are also working to increase the share of Munters employees andleaders who are women.

Negative impact
Increased food production can lead to increased consumption of meat, which cancause a negative impact.

Our most important actions» Anti-discrimination policy and work
» Actively promote diversity and inclusion» Committed and actively working according to the UN Target Gender Equality program» Periodic surveys on employee engagement and experiences» External, independent whistleblower service

SDG 6 CLEAN WATER AND SANITATION
Our products can make a big difference, since they use less or no waterin the processes where they are installed, an important competitive factor
especially in the agricultural and data center segments. We also supply
products and solutions that are necessary in the operation of waterworks and water
treatment plants.

SDG 7 AFFORDABLE AND CLEAN ENERGY AND
SDG 13 CLIMATE ACTION
We can make a significant difference through our offering andin our own operations. Our products are energy-efficient andhelp customers in every segment to reduce their energy consumption.

CORPORATE GOVERNANCE
FINANCIAL INFORMATION

Negative impact
By maintaining a profitable and sustainable business, wecreate jobs in large parts of the world, including in lessdeveloped countries. We are aware of the risks inherent
in operating in certain parts of the world. Therefore, thework being done to prevent trafficking and modern slavery is a priority for us. The company is also pursuing thisissue together with suppliers and subcontractors. In certain
countries the risk that workplace safety will be neglected
is higher due to a lower level of safety awareness. We
work proactively throughout the Group to increase awareness and continuously improve routines and processes thatminimize the risk of workplace accidents.

OTHER

Our most important actions» Offer water-efficient products» Improve water efficiency and treat wastewater in our own operation
Negative impact
We use water in part of the production processes and are working to reduce its consumption. We separate chemicals and particles in the wastewater from our facilities.
OTHER RELEVANT SDG’S
SDG 9 Industry, Innovation and Infrastructure
SDG 16 Peace, Justice and Strong Institutions

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Our most important actions» Offer innovative products and solutions that help customers to improve their energy
efficiency with high quality and thereby lengthen the service life of our products» Continuously reduce our own electricity consumption and increase the share of renewable electricity. Gradually increase the share of electric vehicles
Negative impact
Primary parts of the value chain where we cannot control the use, for example, of transports
by suppliers and subcontractors. To mitigate this and gain a better understanding of ourimpact, a Group-wide project is underway to calculate indirect carbon emissions according
to the GHQ Protocol Scope 3. We also contribute negatively to the goal both directly andindirectly through consumption of non-renewable energy in various parts of the value chain.

SDG 12 RESPONSIBLE CONSUMPTION
AND PRODUCTION
We develop and supply products andsolutions that have a positive impact on ourcustomers’ and our own use of natural resources. Within
the Group, we are working to minimize environmental
impacts through systematic quality improvements.
Our most important actions» When innovating, proactively choose products andsolutions with a positive environmental impact» Efficient use of material and waste management» Service offer that extends the efficiency and lifespan ofour products» Perform audits among our largest suppliers to ensurethat they follow Munters Code of Conduct

Munters contribution to the Sustainable Development Goals 63

04
Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT

The figure below shows opportunities for dialogue
and the most important issues for key stakeholders.

Stakeholder dialogue
Munters has operations around the world and collaborates with many
stakeholders. Employees, customers, owners, distributors, suppliers,
partners and people who work in environments where Munters climate
control solutions are installed are examples of important stakeholders.
To create long-term shareholder value, we have to create value for all
our stakeholders. This is why we closely dialogue and collaborate with
our stakeholders. This gives us a better understanding of how and what
we can improve in our work and which issues our stakeholders prioritize.

	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESStakeholders

Channels for dialogue

Material topics

CUSTOMERS ANDRESELLERS• Continuous conversations with customers
and resellers• Periodic customer surveys• Meetings, conferences and participation intrade shows• Munters.com & social media• Delivery reliability, quality and suggestions
for improvements• Munters offering and contribution to lower
carbon emissions and increased resource
efficiency

SUPPLIERS• Periodic customer surveys• Meetings and conferences with suppliers• Munters.com & social media• Delivery reliability, quality and suggestions
for improvements• Compliance on environment, business ethics
and social issues such as labor law andhuman rights

EMPLOYEES• Performance reviews and employee surveys• Conferences and workplace meetings• Internal training, e.g., Munters Academy• Leadership days and programs, e.g.,Munters MovE
• Various workshops on, e.g., reducing our
climate impact• Union collaboration• Intranet Munters World• Munters.com & social media• Inclusion and diversity• Health and safety• Discrimination and harassment• Development opportunities• Compensation• Sustainability issues and climate impact• Compliance on social issues such as labor
law and human rights

CAPITAL MARKET(Shareholders, potential
shareholders, analysts)• Board meetings• Annual General Meeting and reportpresentations• Individual meetings and continuous
dialogue with shareholders and potential
shareholders• Participation in investor conferences• Continuous dialogue with analysts whocover Munters• Munters.com, social media & webinars• Munters overarching strategy as well as
financial and sustainability related targets• Sustainability issues and climate impact• Compliance on social issues such as labor
law and human rights• Innovation with a focus on energy efficiency
and strategic priorities such as digitalsolutions and modular platforms

LENDERS• Individual meetings and continuous
dialogue• Munters.com & social media• Munters overarching strategy as well as
financial and sustainability related targets

POTENTIALEMPLOYEES• Employment interviews• Munters position and offering• Munters.com & social media• Development opportunities and• Participation in job fairs at various universicompensation topics
ties and business associations• Munters sustainability work
• Partner in various projects that promote collaboration between business and academia

	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE

Key stakeholders

MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOWPotCORPORATE GOVERNANCE

Customers&

FINANCIAL INFORMATION

res
el

s
ler

ees
ploy
m
e
l
tia
en

	EU TAXONOMY REPORTOTHERSuppliers

L e n d e rs
Ca

p it

al

ma

r ke tMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Em

y
plo

ee

s

Stakeholder dialogue 64

04

Materiality analysis

Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY

Munters Group Management conducted a materiality analysis in 2021,
which identified the most important sustainability issues. The analysis included
the sustainability issues with the biggest impact on stakeholders’ decisions andthe sustainability issues with the biggest impact on Munters business. The analysis was based on stakeholder dialogues and the Group’s market analysis andstrategic priorities. The sustainability issues were ranked by their importance tostakeholders’ decisions and the impact on Munters business.

Based on the materiality analysis,
the following are our sustainability priorities:• Equitable and inclusive work environment• Sustainable products and services• Innovation• Sustainable production	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERUPDATE OF THE MATERIALITY ASSESSMENT

Ahead of the EU’s upcoming Corporate Sustainability Reporting Directive (CSRD) which willenter into force in 2024, Munters has launched acomprehensive exercise to update the materiality
analysis. The assessment will be based on the principle of double materiality, which is recommended
by the European Sustainability Reporting Standard(ESRS). Double materiality means that sustainability
topics are assessed both outside-in and inside-out.
Munters strives to maintain a long-term, transparent engagement with stakeholders and therefore
plan to have dialogues with affected stakeholders
to inform them about the materiality assessment
process and the results. The result of the materiality assessment will form the basis for Munterssustainability strategy and the resulting focus areas
going forward. We plan to present our updated
materiality assessment results in the 2023 sustainability report.
To see how we work with the sustainability
priorities and related targets and indicators, see thesections describing our strategy and our businessareas.

TIMELINE FOR UPDATED MATERIALITY ASSESSMENT
Q4 2022
Materiality benchmark and internal workshop to update the long materiality list

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Q1 2023
Stakeholder engagement and assessment

Q1/Q2 2023 –Validation of results and support from
Board of Directors and Management Team

Materiality analysis 65

04

Sustainability topic

Sustainability

INTRODUCTION

Based on the 2021materiality analysis

Equitable and inclusive work People
environment

See pages 21–22.

2

Sustainable products andservices

Customers

See pages 15–16

3

Collaborations and partnerships

Customers

Munters strategy focuses on deeply understanding customers’ needs and utilizing
the company’s know-how in applications, technology and components to delivercustomized climate solutions. We closely collaborate with our customers’ productionengineers and R&D departments. Munters goal is to have a deep understanding of
our customers’ needs and processes. We require our partners, such as suppliers anddistributors, to comply with our Code of Conduct.

4

Privacy and responsible
marketingCustomers

The Munters brand should be associated with socially and ethically responsible
behavior, respect for human rights, equal opportunities, good working conditions
and high ethical standards. Munters places a premium on customer privacy andfollows marketing rules and guidelines. The Code of Conduct and Gifts, corporate
hospitality & promotional expenditure procedure govern customer and supplier
relationships.

5

New sustainable products
and services

Innovation

See pages 17–18.

6

A sustainable and profitable Market
business

Munters overarching goal is to maintain a sustainable and profitable business inorder to create value for our stakeholders, such as customers, shareholders andemployees. This affects every aspect of daily operations and is monitored at every
level.

Financing and taxes

MarketThe overarching goal is to ensure that Munters has the financial resources todevelop the business in the short and long term. Munters complies with applicableregulations on taxes and fees.

Local engagement

MarketWe dialogue with stakeholders and our local communities. Collaborations withothers in our communities are important to attract both customers and new employees. Many of the projects also create camaraderie and engagement among our
employees, which creates value for Munters.

Sustainable production

Excellence ineverything we do

See pages 19–20

Sustainable transportation

Excellence ineverything we do

We limit the environmental impact of shipping and business travel by choosing
low-carbon alternatives and active logistics planning. The company car policy was
updated in 2021 and amended with clarifications in 2022.

Business ethics and efficient
procurement

Excellence ineverything we doCompliance with laws and regulations is fundamental. Ethical behavior instills
confidence and builds strong relationships, which create opportunities for promisingcollaborations and profitable business. The Code of Conduct, which applies to both
employees and major suppliers, is the fundamental to Munters operations.

	S USTAINABILITY STRATEGY	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESM	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

INFLUENCE ON STAKEHOLDERS ’DECISIONSSUSTAINABILITY	ORGANIZATION & GOVERNANCE

1

11

3

5
2

8

9
Manage & Communicate

4

Prioritize

7

10

Develop

Implement

6

7

IMPACT ON MUNTERS BUSINESS

8

9
10

11

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

How Munters addresses the topic

1

STRATEGY
OPERATIONSStrategic priority

Materiality analysis 66

04
Sustainability

INTRODUCTIONSTRATEGY

Frameworks we follow
Standardized frameworks make it easier to understand and meet stakeholders’expectations, and we support this by applying the UN Global Compact and the
ISO standards, among others. We participate in CDP’s annual survey on environmental impacts as well as other sustainability surveys.

OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE

ESG Ratings

	RESOURCE EFFICIENCY & ENVIRONMENT

Sustainability ratings and scores are becoming
increasingly important to investors, customers andother stakeholders. For us, the external assessmentof our sustainability work is very important, andwe are working continuously to improve and ourtransparency and our results.

	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS

CPD

FRAMEWORKS WE FOLLOW

Munters joined the CDP in 2018 and since 2019has reported the work we are doing to reduce ourenvironment impacts. The goal is to improve ourrating, and we are proud to have taken anotherstep forward in 2022 when we received a B, whichreflects the actions and progress we made during
the year mainly in reducing carbon emissions.

	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERAllbright – ranking among Sweden’s top
companies in gender equality

Since 2012, the independent foundation Allbright
has annually examined gender representationin executive management. It ranks publicly listedcompanies based on the gender distribution of their
management teams. Companies that have reachedparity between men and women are consideredgreen, companies that do not make it all the way
are yellow, and companies with no women on the
management team are red. We have achieved
an even gender distribution in our management
team and were placed on Allbright’s “green stock
exchange list.”

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

A
Leadership level (A)Management level (B)Awareness level (C)Disclosure level (D)

A–
B
B–

C
C–
D
D–

Frameworks we follow 67

04

Sustainability information according to theAnnual Accounts Act and the UN Global Compact

Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

Munters committed in 2018 to follow and implemented the UN Global Compact’s ten principles onhuman rights, labor, the environment and anti-corruption. The Code of Conduct and the separate Code of
Conduct for suppliers are based on these ten principles and describe Munters view on issues such as theenvironment, social responsibility, business ethics and human rights. This annual report constitutes Munters
annual Communication on Report to the UN Global.

	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO

Environment- &climate impact

Social, laborand human rights

Social, labor and human rights
Anti-corruption& business ethics

Area

Disclosure requirement

BUSINESS MODEL• The sustainability report will describe thecompany’s business model.

POLICY• The sustainability report will describe the policythat the company applies to the issues, including
audit procedures that have been used.

RESULTS OF THE POLICY• The sustainability report will describe the resultsof the policy.

Results are describedon pages 52–56.

MATERIAL RISKS• The sustainability report will describe the material risks that concern the issues and are tied
to the company’s operations, including, whereapplicable, the company’s business relationships,
products or services that probably have negative
consequences.

Munters sustainability risks and how they are managed are described on pages 91–96.

RISK MANAGEMENT• The sustainability report will describe how thecompany manages risks.

Munters risk management is described on pages 91–96.

PERFORMANCE
INDICATORS• The sustainability report will describe the key
performance indicators that are relevant tothe business.

Munters performance indicators can be found on pages 52–62.

THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Munters business model is described on page 4.
Munters sustainability policies and guidelines are described on page 69.

Results are describedon pages 58 and 60.

Results are describedon pages 61–62.

Frameworks we follow 68

04
Sustainability

Selection of governance documents steering our work within the sustainability area
Sustainability area

Environment and climate impact

POLICIES, PROCEDURES • Code of Conduct (policy)
AND GUIDELINES• Sourcing policy including Code of Conduct for suppliers (procedure)• Sustainability policy including Energy & water conservation strategy
procedure and Air transport guideline• HR policy including Company car guidelines

INTRODUCTION

Social, labor and human rights

Anti-corruption and business ethics• Code of Conduct (policy) including Whistleblower procedure, Anti- Bribery • Code of Conduct (policy) including Whistleblower procedure, Antiprocedure, Gifts, corporate hospitality & promotional expenditure proceBribery procedure, Gifts, corporate hospitality & promotional expenddure and Trade sanctions & export control procedure
iture procedure and Trade Sanctions & Export Control procedure• Sourcing policy including Code of Conduct for suppliers (procedure)• Sourcing policy including Code of Conduct for suppliers (procedure)• HR policy• Fraud policy• Work environment policy including Anti-discrimination & harassment proce- • Data protection policy
dures, Physical security procedure and Flexible workplace procedure• IT policy• Data protection policy• HR policy

STRATEGY
OPERATIONS• Insider policy

SUSTAINABILITY• Competition and compliance policy	S USTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE• Communication policy

	RESOURCE EFFICIENCY & ENVIRONMENT• Finance policy including Tax procedure

	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES

MAIN TOPICS

M	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS• The main focus is on minimizing carbon emissions and increasing resource efficiency by offering energy- and resource-efficient solutions
that reduce customers’ environmental impact. Munters environmental
impact is reduced through energy- and resource-efficient production
units and services that extend the life of the products. Munters limits its
environmental impact by choosing low-carbon transport modes andsmart logistics.

• Munters respects human rights and promotes fair labor conditions.

• Energy efficiency in our production plants, reported on page 53.

• Allbright rating, reported on page 67.

• Share of electricity from renewable sources in our production plants,
reported on page 53.

• Share of women employees and leaders, reported on page 60.

• The company’s priority is to create an inclusive and safe work environment.
• Munters does not accept discrimination based on ethnicity, nationality,
religion, disability, gender, sexual identity, union affiliation, political views,
parental status, family situation, or age.

• Munters promotes accepted business practices and does not accept
illegal payments, bribes, kickbacks or other questionable incentives
to influence a business transaction. Employees and distributors areprohibited from giving, offering or promising a bribe or other benefit toexercise undue influence over a person’s decision-making. Employees
and distributors are also prohibited from receiving, requesting or
accepting a promise of a bribe or other undue advantage designed tomanipulate their decision-making.

• Munters does not permit child labor and individuals under the age of 18
may not work the night shift or perform hazardous duties.
• Munters and its partners will comply with environmental laws andprovisions. Methods that minimize environmental impacts are encour- • Forced labor is strictly forbidden. Munters respects the right to unionize and • Gifts and similar benefits that exceed a value of EUR 400 per occanegotiate collectively.
aged and caution is taken with hazardous substances and processes.
sion or EUR 2,000 per calendar year from the same company must be
Air transport is used only when alternatives are unavailable due toreported. All gifts to or from officials must be approved in advance by• Employees may not be subjected to corporal punishment, physical, sexual,
lead times or quality considerations. Munters fleet is being converted
an immediate supervisor and registered.
psychological or verbal harassment or abuse.
to green vehicles.
• Munters expects its suppliers and partners to approve and actively follow• Munters production facilities will continuously improve their energy
the standards and principles laid out in the Code of Conduct. Suppliers are
efficiency and raise the percentage of electricity from sustainableencouraged to develop requirements and systems similar to Munters andsources. We work continuously to reduce water consumption in our
promulgate them to their suppliers and subcontractors.
processes relative to the output value.
• Munters works actively with data security and only collects personal information for specific, express and legitimate purposes.

FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERTARGETS AND
INDICATORS• Share of electricity from renewable sources in our offices and othernon-production space, reported on page 53.

• Total Recordable Incident Rate and deaths in our production facilities,
reported on page 58.

• Share of largest suppliers that have signed the Code of Conduct for
suppliers, reported on page 61.
• Training of employees in the Code of Conduct, reported on page 61.
• Number of whistleblower cases, reported on page 62.

• Waste & recycling rate, reported on page 52.

• Fines received due to non-compliance with environmental laws andregulations, reported on page 62.

• Services as a percentage of sales, reported on page 56.

• ISO certifications, reported on page 62.

• Emissions according to the GHG Protocol, reported
on pages 54–55.
• Carbon Disclosure Rating (CDP), reported on page 67.
• Water consumption in factories, reported on page 52.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Frameworks we follow 69

04
Sustainability

INTRODUCTION

EU taxonomy report
Munters has analysed and classified its operations in line with the EU taxonomy.
On the coming pages we present the economic activities in Munters that we
assess are eligible and those that are aligned with the taxonomy for 2022.

STRATEGY
OPERATIONSSUSTAINABILITY	S USTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESM	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

The taxonomy applies to listed and large public
interest companies with more than 500 employees.
Companies must disclose the share of their turnover, capital expenditure and operating expenditure
generated by the economic activities that are assessed to be taxonomy eligible and/or aligned. Asa listed company, Munters must report according to
the taxonomy for 2022.
The taxonomy states that economic activities
qualify as sustainable if they:a. Make a substantial contribution to one or moreof the following six environmental objectives:
1. Climate change mitigation
2. Climate change adaptation
3. Sustainable use and protection of water andmarine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity andecosystems
b. Do no significant harm (‘DNSH’) to the otherenvironmental objectivesc. Meet minimum safeguards set out in the Article
18 of the Taxonomy Regulation, andMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

d. Comply with technical screening criteria to beestablished by the Commission in delegated acts.
Companies must report contributions to environmental objectives 1 and 2 and report activities thatmeet all relevant technical screening criteria as
well as the minimum safeguards. Companies must
add environmental objectives 3 to 6 to their annual
report for the financial year 2023.
During 2021, Munters performed an analysis in several steps to identify taxonomy-eligible
economic activities. As a result, 35% of turnover,
37% of operating expenditure and 49% of capital
expenditure were reported as taxonomy eligible
for the financial year 2021. In 2022, the analysis
was expanded beyond the Taxonomy-eligible
economic activities in 2021 to also include points
b-d above. An in-depth analysis of the technicalscreening criteria as the minimum safeguards was
performed as well. The included business in 2022
spans five economic activities as defined in thetaxonomy and includes parts of Munters’ threebusiness areas. The reported KPIs relate to businesswhere required performance data is available andof good quality.

Munters is of the opinion that a majority of its
products and services contribute to sustainablebusiness by enabling customers to reduce their energy usage and waste. However, Munters provides
expert solutions and services in an industry which
is not well defined in the current version of the taxonomy and thus significant parts of our business do
not have matching dedicated economic activities
with substantial contribution criteria.

INCLUDED ECONOMIC ACTIVITIESEU Taxonomy economic activity

Munters’ businessBusiness Area

3.5 Manufacture of energy-efficient equipment for buildings

Controllers

FoodTech

3.6 Manufacture of low carbon technologies Dehumidification – Industrial segment andComponent segment, Cooling of data center,
SyCool Split product7.3 Installation, maintenance and repair ofenergy efficiency equipment

Services

8.2 Data-driven solutions for GHG emissions
reductions
Software

AirTech andData Center Technologies

AirTechFoodTech

EU taxonomy report 70

04
Sustainability

TURNOVER

Economic activities

Substantial contribution criteria
3.
Propor- 1. Climate 2. Climate
Water
Taxon- Absolutetion ofchangechangeandomy turnover, turnover,mitiga- adoption,
marine 4. Circularcode(s)MSEK%tion, %
% resources economy(Unit)(MSEK)

(%)

(%)

(%)

(%)

(%)

Do No Significant Harm criteria (DNSH)
5.
Pollution
prevention(%)

3.
6. BiodiWater
versity 1. Climate 2. Climate
andand ecochangechangemarine 4. Circularsystems mitigation adoption resources economy
(%)

(Y/N)

5.
Pollution
prevention

6. Biodiversity Minimum
and ecosafesystems
guardsTaxonomyaligned Category Category
proportion (enabling(transiof turnoveractivity
tional2022or) activity)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(%)

(E)

INTRODUCTION

A.1. Taxonomy-aligned activities

STRATEGY

Manufacture of energy efficiency
equipment for buildings

3.5

66

1%

100%

Y

Y

Y

Y

Y

Y

1%

E

Manufacture of low carbon
technologies

3.6

2,892

28%

100%

Y

Y

Y

Y

Y

Y

28%

E

	SUSTAINABILITY STRATEGY

Installation, maintenance and repair ofenergy-efficient equipment

7.3

Y

N/A

Y

N/A

N/A

Y

8%

E

	ORGANIZATION & GOVERNANCE

Total taxonomy-aligned activities

	RESOURCE EFFICIENCY & ENVIRONMENT

A.2. Eligible but not taxonomy-aligned activities

OPERATIONSSUSTAINABILITY	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE

100%
37%

100%

3.6

280

3%

8.2

397

4%

FRAMEWORKS WE FOLLOW

Total A.1. + A.2.

FINANCIAL INFORMATION

8%37%

Data-driven solutions for GHG
emissions reductions

MATERIALITY ANALYSISCORPORATE GOVERNANCE

874
3,832

Manufacture of low carbon
technologies

Total eligible but not taxonomyaligned activities

	EU TAXONOMY REPORT(T)

A. TAXONOMY-ELIGIBLE
ACTIVITIES

677

7%

3%

4,509

43%

43%

37%

43%

B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
Non-eligible activities

5,877

57%

TOTAL A+B

10,386

100%

OTHER

SPECIFICATION OF DISCLOSURE – TURNOVER
Accounting policy
Turnover is defined as net turnover derived from products
or services, including intangibles, associated withtaxonomy aligned or eligible economic activities. For
more information about Munters revenue recognition, seenote 1, accounting principles.
When determining and allocating the taxonomy
aligned and/or -eligible turnover, businesses have beengrouped according to economic activities based on fulfill-

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

ment of the technical screening criteria, Do No Significant
Harm criteria and the Minimum safeguards.
All the taxonomy aligned and/or -eligible net turnover
relates to the objective climate change mitigation; noturnover has been defined as derived from products andservices associated with the objective climate change
adaptation.
Turnover from the three business areas of Munters has
been reported and from four different economic activities.
Economic activities assessed to be aligned with the taxon-

omy spans the areas 3.5, 3.6 and 7.3. Economic activities
assessed to be eligible but not aligned with the taxonomy
are within the areas 3.6 and 8.2.
On coming pages the assessment of the economic
activities is described.

EU taxonomy report 71

04
Sustainability

ASSESSMENT OF COMPLIANCE WITHREGULATION (EU) 2020/852
BUSINESS AREA AIRTECH
Two economic activities within business area AirTech havebeen included as aligned. Economic activities within 3.6
and 7.3 are assessed to be aligned with the taxonomy.
Here below and on the next pages these activities andtheir turnover are described.

INTRODUCTIONSTRATEGY

Manufacture of other low carbon technologies, 3.6
The first economic activity relates to the manufacture ofother low carbon technologies. The taxonomy states thatthe manufacture of technologies aimed at substantial
GHG emission reductions in other sectors of the economy,
where those technologies are not covered elsewhere in
the taxonomy, substantially contribute to climate mitigation. Furthermore, the technical screening criteria specify
that such technologies must demonstrate substantial
lifecycle GHG emission savings compared to the best performing alternative technology available on the market.

Technical screening criteria
Munters’ products within AirTech utilize desiccant dehumidification solutions. This technology is significantly moreenergy efficient than alternative technology under certain
circumstances, i.e., when the installation environment hascertain characteristics. These circumstances include, but
are not limited to, air temperature and humidity level in the
installation environment.
In 2022, Munters performed life cycle analyses of 10
products within AirTech. Through these analyses, Munters
can determine that these products meet the technicalscreening criteria.

The products we performed life cycle analyses of are:
IDS, HCD, ICA, GreenDry, DSS PRO, MX2, MX2 Plus,
ML, ML Plus and Rotor components.
The turnover from sales of these products has been
included in the reported turnover. For AirTech the products
are reported within segments Industrial and Components.
Munters estimates that a significantly larger portion ofsales than those reported operate under circumstanceswhere alternative technology is less energy efficient andexpects the included portion to grow as data accessibility
and quality improve.

OPERATIONSDNSH – MANUFACTURE OF LOW CARBON TECHNOLOGIES, 3.6

SUSTAINABILITY

Do No Significant Harm criteria (DNSH)

Munters interpretation of the criteria

Assessment Comment2) Climate change adaptation - The activity
complies with the criteria set out inAppendix A

Munters shall conduct a climate risk analysis ofphysical risks.

Compliant

In 2022, Munters started a process to broaden and deepen the analysis and evaluation of risks and opportunities related to climate change. Climate change risks
had already been part of the risk analysis carried out locally at our production sites with the support of the Munters Loss Prevention Standard (MLPS, see page 91
for more information). With the help of this analysis, the central sustainability group began during the year to analyze local climate change risks and opportunities(for more information, see page 93). As part of the analysis, an overview of Munters assets was prepared and the most vulnerable asset was determined to be our
production plants. The units were evaluated as a first step. The results of the analysis provided the group with a consolidated view of how acute and chronic climatechange risks are for our production plants. This has also been discussed and calibrated with Group Management. Identified risks are for example the risk for storm
in Florida, Fort Myers. Furthermore, Munters started a process to prepare for a future TCFD (Taskforce for Climate Disclosure) reporting.

3) Sustainable use and protection of waterand marine resources – The activity complies with the criteria set out in Appendix B

Munters should identify and address risks related
to water quality and should aim to prevent water
stress.

CompliantMunters aim to gradually reduce water consumption and treat wastewater in our production plants and processes. For more information about Munters’ water
consumption see page 52. The largest part of Munters operations has no material impact on water. Munters has operations in for example Israel where wateris scarce.

(a) reuse and use of secondary raw materials
and reused components in products
manufactured;

Munters ambition should be to secure a highlevel of recycling and use of secondary materialand components in produced products.

Compliant

We use a common development model in Munters: MPDM, Munters Product Development Model, based on insight into customers’ need. We weigh in various
sustainability factors early in the process, such as choice of materials, recycling options and energy consumption. For more information about the MPDM see
page 17-18. For raw materials purchased, such as steel, we support our suppliers who offer recycled content material. However, in many other cases, the content of recyclability of the component or even the ability to purchase used/reused components is highly unlikely due to many factors such as our custom design
requirements. For many of our products it is not possible to source reused or secondary material, for example, steel. In those cases we are seeking to work with
suppliers that can prove they are working to lower their emissions and reduce their entire carbon footprint.

(b) design for high durability, recyclability,
easy disassembly and adaptability of
products manufactured;

Munters ambition should be that every productshall have an optimized design for high durability, recýclability, ease of disassembly andadaptability.

CompliantMunters has a life-cycle approach towards all product development. This means that we have a product development stage-to-gate process including asustainability assessment. The new product needs to be assessed comapred to its predecessor, to assess whether it is more or less sustainable. The assessment
focuses on each of the 4 stages of the life cycle of the product: raw materials, production, use phase and end-of-life. The criteria to score high on Sustainability
are for example reduction of size, lightweighting, use of recycled material, minimization of packaging, ease of disassembly and other eco-design principles
that aim to minimize the negative impact of the product already at its design phase. It is our goal that each new generation of all products should be moreenergy-efficient than the previous one.

(c) waste management that prioritises recycling over disposal, in the manufacturing
process;

Munters should have a policy that prioritises
recycling over disposal in the manufacturing
process.

Compliant

We are working to reduce waste and increase recycling rates in our production facilities, through systematic quality improvements.
The recycling rate is measured and followed-up every quarter. For more information see page 52.

(d) information on and traceability of subWhen substances of concern are used in manstances of concern throughout the life cycle ufactured products information and traceabilityof the manufactured products.
about these should be secured.

CompliantMunters does not use substances of concern in the manufactured products.

5) Pollution prevention and control – The
activity complies with the criteria set out inAppendix C to this Annex.

The economic activity shall be aligned withvrious directives such as the RoHS, REACH anddirectives regarding how to use lead and othersubstances of concern.

CompliantMunters is compliant with all relevant directives. Munters does not use substances of concern in the manufactured products.

6) Protection and restoration of biodiversity andecosystems – The activity complies with thecriteria set out in Appendix D to this Annex.

EIAs (Environmental Impact Assessment) shall be
conducted in line with the directive 2011/92/
EU334

CompliantMunters is following the Directive 2011/92/EU334. In 2022 one EIA was conducted in the US as a consequence of the plans of moving to a new production
facility in Amesbury in 2024. It is mandatory according to local legislation that such an analysis should be conducted.

	S USTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESM	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION

4) Transition to a circular economy – The activity assesses the availability of and, where
feasible, adopts techniques that support:

OTHER

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

EU taxonomy report 72

04
Sustainability

Installation, maintenance and repair of energy
efficiency equipment, 7.3
The second economic activity relates to the installation,
maintenance and repair of energy efficiency equipment.
Substantial contribution to climate mitigation is definedin the taxonomy as individual renovation measures consisting of installation, maintenance and repair of energy
efficiency equipment. Turnover from a portion of the sales
within the Service segment has been included in the turn-over reported as aligned. The reported portion represents
service which relates to the equipment included in theother economic activities within business area AirTech,i.e., taxonomy-aligned products and solutions within the
Industrial and Components segments. The included service
turnover is calculated using the same portion as taxonomy-aligned equipment sold as a share of total sales ofequipment within the Industrial and Component segments.

Technical screening criteria
The share of Munters’ installation, maintenance and repair
activities that is aligned with the taxonomy is the share thatis tied to the products that Munters has performed a Life
Cycle Analysis of and aligns with point 3.6. Through the
installation, maintenance and repair of energy efficiency
products, Munters helps to ensure the energy efficiency
and long service life of the installed products. Munters

has made the assessment that this activity is aligned with
criteria e (installation, replacement, maintenance andrepair of heating, ventilation and air-conditioning (HVAC)
and water heating systems, including equipment related to
district heating services, with highly efficient technologies)
according to the technical screening criteria for 7.3.

INTRODUCTIONSTRATEGY
OPERATIONSDNSH – INSTALLATION, MAINTENANCE AND REPAIR OF ENERGY-EFFICIENT EQUIPMENT, 7.3
Do No Significant Harm criteria (DNSH)

Munters interpretation of the criteria

Assessment Comment

SUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE

2) Climate change adaptation – The activity complies with the criteria Munters shall conduct a climate risk analysis of physical risks.
set out in Appendix A

Compliant

	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION
OTHER

3) Sustainable use and protection of water and marine resources The activity complies with the criteria set out in Appendix B

N/A4) Transition to a circular economy – The activity assesses the availability of and, where feasible, adopts techniques that supports
activities according to a, b, c and d.

N/A5) Pollution prevention and control - The activity complies with thecriteria set out in Appendix C to this Annex.

In case of addition of thermal insulation to an existing building envelope, aCompliantbuilding survey is carried out in accordance with national law by a competentspecialist with training in asbestos surveying. Any stripping of lagging that contains or is likely to contain asbestos, breaking or mechanical drilling or screwing
or removal of insulation board, tiles and other asbestos containing materials iscarried out by appropriately trained personnel, with health monitoring before,
during and after the works, in accordance with national law.

6) Protection and restoration of biodiversity and ecosystems –The activity complies with the criteria set out in Appendix D to thisAnnex.

N/A

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

In 2022, Munters started a process to broaden and deepen the analysis and evaluation of risks
and opportunities related to climate change. Climate change risks had already been part of the risk
analysis carried out locally at our production sites with the support of the Munters Loss Prevention
Standard (MLPS, see page 91 for more information). With the help of this analysis, the central sustainability group began during the year to analyze local climate change risks and opportunities (for more
information, see pages 93–93). As part of the analysis, an overview of Munters assets was preparedand the most vulnerable asset was determined to be our production plants. The units were evaluated asa first step. The results of the analysis provided the group with a consolidated view of how acute andchronic climate change risks are for our production plants. This has also been discussed and calibrated
with Group Management. Identified risks are for example the risk for storm in Florida, Fort Myers.
Furthermore, Munters started a process to prepare for a future TCFD (Taskforce for Climate Disclosure)reporting.

Munters does not engage in the service activities referred to in Appendix C.

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Sustainability

INTRODUCTIONSTRATEGY

Changes compared to the reporting for 2021
In 2021, the portion of the Industrial segment within
AirTech that sells solutions to customers that manufacture
batteries was classified under 3.4, Manufacture of batteries. Here the taxonomy states that the manufacture of batteries or components substantially contributes to climate
mitigation. In 2022, this portion was reclassified to 3.6
since the life cycle analyses were performed on the products that are sold to the battery segment. Consequently,
the products that Munters sells to the battery segment meet
the technical screening criteria under 3.6.

OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY

BUSINESS AREA DATA CENTER TECHNOLOGIESOne economic activity has been included from the business area Data Center Technologies. The economic activity is assessed to be aligned with 3.6 of the taxonomy.
Other low carbon technologies, 3.6
Within the business area, the product SyCool Split isincluded in the manufacture of other low carbon technologies. The taxonomy states that the manufacture of technologies aimed at substantial GHG emission reductions
in sectors of the economy not included elsewhere in thetaxonomy substantially contributes to climate mitigation.
Furthermore, the technical screening criteria specify thatsuch technologies must demonstrate substantial life cycle
GHG emission savings compared to the best performing
alternative technology available on the market.

Technical screening criteria
In 2022, Munters performed life cycle analyses of one
product within Data Center Technologies, SyCool Split.
Through this analysis, Munters was able to determine that
this product meets the technical screening criteria.
Turnover from sales of SyCool Split has been includedin the reported taxonomy-eligible KPIs. In 2023, theanalysis of Data Center Technologies will be expandedwith criteria for DNSH and minimum safeguards with theaim that this share will be taxonomy aligned.

	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

BUSINESS AREA FOODTECH
Within business area FoodTech, two economic activities
have been included. One economic activity is reported as
taxonomy eligible and one economic activity is reported
as taxonomy aligned.
Manufacture of energy efficiency equipment forbuildings, 3.5
The first activity relates to the manufacture of energy
efficiency equipment for buildings where the turnover
originating from sales of controllers, sensors and related
accessories has been included. The taxonomy states thatenergy efficient building automation and control systems
for residential and non-residential buildings substantiallycontribute to climate change mitigation. FoodTech’s controllers, sensors and accessories are energy efficient products for monitoring and controlling the climate, primarily in
livestock farming buildings. Besides being energy efficientin themselves, the products enable customers to increase
the overall energy efficiency in their facilities.
Technical screening criteria
Munters’ view is that FoodTech’s range of controllers, sensors and accessories meets the technical screening criteria
since besides being energy efficient in themselves, they
enable customers to increase the overall energy efficiency
in their facilities.

Data-driven solutions for GHG emissions reductions
The second economic activity relates to data-driven solutions for GHG emissions reductions where MTech Systems’software solutions have been included. The taxonomy
states that software solutions primarily aimed at provisionof data and analytics enabling GHG emission reductions
substantially contribute to climate change mitigation.
MTech Systems provides solutions for planning and monitoring operations in livestock farming facilities and enables
optimizing on a range of parameters, including water andfeed usage, energy usage and waste produced, all ofwhich are drivers of GHG emissions.

Technical screening criteria
Munters’ view is that MTech Systems’ software solutions
meet the technical screening criteria since they clearly
help customers to reduce their GHG emissions by providing data on the underlying parameters for controllingthem.
Turnover from sales of software has been included in
the reported taxonomy-eligible KPI. In 2023, the analysis
will be expanded with criteria for DNSH and minimum
safeguards with the aim that this share will be taxonomy
aligned.

	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO

DNSH – MANUFACTURE OF ENERGY EFFICIENCY EQUIPMENT FOR BUILDINGS, 3.5
Do No Significant Harm criteria (DNSH)

Munters interpretation of the criteria

Assessment

Comment2) C limate change adaptation - The activity complies with thecriteria set out in Appendix A

Munters shall conduct a climate risk analysis of physical risks.

Compliant

In 2022, Munters started a process to broaden and deepen the analysis and evaluation of risks and opportunities related to climate change. Climatechange risks had already been part of the risk analysis carried out locally at our production sites with the support of the Munters Loss Prevention Standard (MLPS, see page 94 for more information). With the help of this analysis, the central sustainability group began during the year to analyze local
climate change risks and opportunities (for more information, see page 92-93). As part of the analysis, an overview of Munters assets was preparedand the most vulnerable asset was determined to be our production plants. The units were evaluated as a first step. The results of the analysis provided
the group with a consolidated view of how acute and chronic climate change risks are for our production plants. This has also been discussed andcalibrated with Group Management. Identified risks are for example the risk for storm in Florida, Fort Myers. Furthermore, Munters started a process to
prepare for a future TCFD (Taskforce for Climate Disclosure) reporting.

3) Sustainable use and protection of water and marine
resources – The activity complies with the criteria set out inAppendix B

Munters should identifiy and address risks related to water quality and should
aim to prevent water stress.

CompliantIsrael, Tel Aviv, is located in an area where water is scarce. As a consequence, Munters has identified that a special focus on water is needed inthis area. In the manufacturing process Munters does not use any water in Tel Aviv. The water consumption in Israel is used for sanitation purposes.
Munters aim at gradually reducing water consumption and treat wastewater in our production plants and processes. For more information about ourwater consumption see page 52.

(a) reuse and use of secondary raw materials and reusedcomponents in products manufactured;

Munters ambition should be to secure a high level of recycling and use of
secondary material and components in produced products.

Compliant

We use a common development model in Munters: MPDM, Munters Product Development Model, based on insight into customers’ need. We weigh invarious sustainability factors early in the process, such as choice of materials, recycling options and energy consumption. For more information about
the MPDM see page 17–18. The production facility in Tel Aviv is certified according to the ISO standard 14001.

(b) design for high durability, recyclability, easy disassembly
and adaptability of products manufactured;

Munters ambition should be that every product shall have an optimized designfor high durability, recýclability, ease of disassembly and adaptability.

CompliantMunters has a life-cycle approach towards all product development. This means that we have a product development stage-to-gate process including
a sustainability assessment. The new product needs to be assessed compared to its predecessor, to assess whether it is more or less sustainable. The
assessment focuses on each of the 4 stages of the life cycle of the product: raw materials, production, use phase and end-of-life. The criteria to scorehigh on Sustainability are for example reduction of size, lightweighting, use of recycled material, minimization of packaging, ease of disassembly andother eco-design principles that aim to minimize the negative impact of the product already at its design phase. It is our goal that each new generationof all products should be more energy-efficient than the previous one.

(c) waste management that prioritises recycling over disposal,in the manufacturing process;Munters should have a policy that prioritises recycling over disposal in the
manufacturing process.

Compliant

We are working to reduce waste and increase recycling rates in our production facilities, through systematic quality improvements. The recycling rate ismeasured and followed-up every quarter. For more information see page 52.

(d) information on and traceability of substances of concern
throughout the life cycle of the manufactured products.

When substances of concern are used in manufactured products information andtraceability about these should be secured.

CompliantMunters does not use substances of concern in the manufactured products.

5) Pollution prevention and control – The activity complies withthe criteria set out in Appendix C to this Annex.

The economic activity shall be aligned with various directives such as the RoHS,
REACH and directives regarding how to use lead and other substances ofconcern.

CompliantMunters is compliant with all relevant directives. Munters does not use substances of concern in the manufactured products.

6) Protection and restoration of biodiversity and ecosystems –The activity complies with the criteria set out in Appendix D
to this Annex.

EIAs needed to be carried out in accordance with Directive 2011/92/EU334

CompliantThis economic activity only has operations in Israel and operations are not located in a nature conservation area. Munters has not made any amendments to the site during the last year.

THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION
OTHER

4) Transition to a circular economy - The activity assesses theavailability of and, where feasible, adopts techniques that
support:MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	S USTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICESM	 UNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER

Minimum safeguards related to all economic activities that are assessed to be aligned and/or eligible
with the taxonomy
Munters offers innovative, high-quality and energy-efficient solutions for air treatment and the climate to businesses that need precise air and climate control. Munters
has three overarching focus areas for its sustainability
work: Resource efficiency & environment, People & society, and Responsible business practices. Sustainability is an
integrated part of the strategy.
» Within the area of resource efficiency & environment
Munters actively work with reducing water consumption, increase our recycling rate and energy efficiency
as well as increased the share of electricity fromrenewable sources in our production plants. We havebeen reporting energy efficiency and the proportionof electricity from renewable sources in our production
plants for several years. In 2020, we began monitoringcarbon emissions from our own operations, Scope 1& 2. In 2021 and 2022, we made significant progressin the mapping of the Scope 3 categories that to datehave been deemed most significant. The Scope 3
emissions that are reported for the year therefore do
not yet represent 100 per cent of the transactions in theselected Scope 3 categories. The mapping work willcontinue in 2023.
» Within People & society we are focusing on securingsafety in the workplace, our community engagement
and to increase diversity at Munters. We are since several years working purposefully to increase the share ofwomen employees and managers.
» In the area of Responsible business practices wecontinuously work on strengthening and educating
employees in the area of business ethics.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Munters adhere to several guidelines and principles alllaid out in the policies and guidelines for our sustainability
work. You will find more about these on page 68 in the
Annual report 2022.
In the area of Human rights Munters is committed to
freedom of association & collective bargaining, prohibition of child labour, prohibition of forces labor & humantrafficking and anti-discrimination & harassment.
We have conducted a risk analysis of our value chain
related to human rights. Based on the outcome of thisanalysis we have established that the relationship with our
suppliers is the highest risk area. Therefore we conduct periodic reviews of our direct suppliers and their compliancewith our Code of Conduct. You will find more information
about this on page 69.
We actively work with anti-corruption and have various
policies in place in the area as well as prevention plans
and follow-ups. We do not tolerate corruption, bribes orunethical business practices in any form.
Munters follows OECD Transfer Pricing Guidelines forMultinational Enterprises. For these we have plans andmonitoring to ensure we follow the guidelines.
Considering the total work Munters do within the areaof sustainability, we assess that the operations is alignedwith the Minimum safeguards of the taxonomy.

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Sustainability

CAPITAL EXPENDITURE

Economic activities

Substantial contribution criteria

Taxonomycode(s)(Unit)

3.
Water
Absolute Propor1. Climate
2. Climate
and4.
Capex,
tion of change mitichange
marine Circular
MSEK Capex, %gation, % adoption, % resources economy(MSEK)

(%)

(%)

(%)

(%)

(%)

Do No Significant Harm criteria (DNSH)

5.
Pollution
prevention(%)

3.
6. BiodiWater
versity 1. Climate 2. Climate
and4.
and ecochangechangemarine Circularsystems mitigation adoption resources economy
(%)

(Y/N)

5.
Pollution
prevention

6. Biodiversity Minimum
and ecosafesystems guards

Taxonomyaligned Category Category
proportion (enabling(transiof Capex
activity
tional2022or) activity)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(%)

(E)

A. TAXONOMY-ELIGIBLE
ACTIVITIESINTRODUCTION

A.1. Taxonomy-aligned activities

STRATEGY

Manufacture of energy efficiency
equipment for buildings

3.5

48

3%

100%

Y

Y

Y

Y

Y

Y

3%

E

Manufacture of low carbon
technologies

3.6

566

32%

100%

Y

Y

Y

Y

Y

Y

32%

E

	SUSTAINABILITY STRATEGY

Installation, maintenance and repair ofenergy-efficient equipment

7.3

Y

N/A

N/A

Y

N/A

Y

0%

E

	ORGANIZATION & GOVERNANCE

Total taxonomy-aligned activities

614

35%

35%

	RESOURCE EFFICIENCY & ENVIRONMENT

A.2. Eligible but not taxonomyaligned activities

OPERATIONSSUSTAINABILITY	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALS

Manufacture of low carbon
technologies

3.6

239

13%

100%

Data-driven solutions for GHG
emissions reductions

8.2

100%

45

3%

MATERIALITY ANALYSIS

Total eligible but not taxonomyaligned activities

283

16%

13%

FRAMEWORKS WE FOLLOW

Total A.1. + A.2.

897

51%

51%

STAKEHOLDER DIALOGUE	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION

35%

51%

B. T AXONOMY-NON-ELIGIBLE
ACTIVITIES
Non-eligible activities
TOTAL A+B

850

49%

1,747

100%

OTHER

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUESPECIFICATION OF DISCLOSURE – CAPITAL
EXPENDITURE
Accounting policy
Capital expenditure is defined as the proportion of capital
expenditure related to taxonomy-aligned economic activities that qualify as any of the following:» They relate to assets or processes that are associatedwith taxonomy-aligned economic activities» They are part of a plan to expand taxonomy-aligned
economic activities or to allow taxonomy-eligible
economic activities to become taxonomy-aligned(“CapEx plan”)» They relate to the purchase of output from taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or lead to GHG reductions, notably activities listed
in sections 7.3 to 7.6 of Annex I of the commissiondelegated regulation on climate change, as well asother economic activities listed in the delegated acts
referred to in Articles 10.3, 11.3, 12.2, 13.2, 14.2 and15.2 of Regulation (EU) 2020/852, provided that suchmeasures are implemented and operational within 18
months.

MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION» The CapEx plan referred to in the second point above
meets the following conditions:» The plan aims either to expand Munters’ taxonomy-aligned economic activities» The plan has been disclosed at economic activity
aggregated level.
» Research and development costs accounted for in thecapital expenditure KPI have not been counted as
operating expenditure.
» All reported taxonomy-eligible capital expenditure
relates to the objective climate change mitigation.
Assessment of compliance with Regulation (EU)2020/852
All reported capital expenditure relates to the same economic activities identified in the turnover section; no further
capital expenditure has been added concerning further
environmental objectives pursued.
For more information about how Munters defined
capital expenditure, see pages 110–113.

BUSINESS AREA AIRTECH
In business area AirTech capital expenditures related toeconomic activities in 3.6 that are aligned with the taxonomy has been accounted for.
Manufacture of low carbon technologies, 3.6
In this areas capital expenditures are recognised that consist of expenditures related to an expansion of a productionfacility in Sweden as well as expenditures related toleasing of a new production facility in the Czech Republic.
In addition, capital expenditures that are aligned with thetaxonomy has been determined using the proportion of
turnover identified within relevant areas.

BUSINESS AREA FOODTECH
In business area FoodTech capital expenditures related toeconomic activities in 3.5 and 8.2 been accounted for.
The activities in 3.5 are assessed to be aligned with thetaxonomy and the activities in 8.2 are assessed to beeligible with the taxonomy.
Manufacture of energy efficiency equipment forbuildings, 3.5
In this area capital expenditure related to investments inresearch and development are accounted for.
Data-driven solutions for GHG emissions
reductions, 8.2
In this area capital expenditure related to investments inresearch and development are accounted for.
BUSINESS AREA DATA CENTER TECHNOLOGIESIn business area Data Center Technologies capital expenditures related to economic activities in 3.6 has beenaccounted for. The activities are assessed to be eligible
with the taxonomy.
Manufacture of low carbon technologies, 3.6
In this area capital expenditure has been accounted forthat consist of partly expenditures related to leasing ofa new production facility in the US. Furthermore capital
expenditures that are eligible with the taxonomy has
been determined using the proportion of eligible turnover
identified within relevant areas.

OTHER

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Sustainability

OPERATING EXPENDITURE

Economic activities

Substantial contribution criteria

Taxonomycode(s)(Unit)

Absolute
Opex,
MSEK

3.
1. Climate
Water
Proporchange
2. Climate
and4.
tion of mitigation,change marine CircularOpex, %
% adoption, % resources economy(MSEK)

(%)

(%)

(%)

(%)

(%)

Do No Significant Harm criteria (DNSH)
5.
Pollution
prevention(%)

3.
6. BiodiWater
5.
versity 1. Climate 2. Climate
and
4. Pollution
and ecochangechangemarine Circular prevensystems mitigation adoption resources economy
tion
(%)

(Y/N)

6. BiodiTaxonomy Category Category
versity Minimum aligned pro- (enabling(transiand ecosafeportion ofactivity
tionalsystems
guards Opex 2022or) activity)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(Y/N)

(%)

(E)

INTRODUCTION

A.1. Taxonomy-aligned activities

STRATEGY

Manufacture of energy efficiency
equipment for buildings

3.5

21

9%

100%

Y

Y

Y

Y

Y

Y

9%

E

Manufacture of low carbon
technologies

3.6

57

25%

100%

Y

Y

Y

Y

Y

Y

25%

E

	SUSTAINABILITY STRATEGY

Installation, maintenance and repair ofenergy-efficient equipment

7.3

Y

N/A

N/A

Y

N/A

Y

8%

E

	ORGANIZATION & GOVERNANCE

Total taxonomy-aligned activities

	RESOURCE EFFICIENCY & ENVIRONMENT

A.2. Eligible but not taxonomyaligned activities

OPERATIONSSUSTAINABILITY	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALS

17

8%

100%

95

42%

42%

Manufacture of low carbon
technologies

3.6

17

7%

Data-driven solutions for GHG
emissions reductions

8.2

26

11%

MATERIALITY ANALYSIS

Total eligible but not taxonomy-aligned activities

43

19%

7%

FRAMEWORKS WE FOLLOW

Total A.1. + A.2.

138

61%

61%

STAKEHOLDER DIALOGUE	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATION(T)

A. TAXONOMY-ELIGIBLE
ACTIVITIES

42%

100%

61%

B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
Non-eligible activities

88

39%

TOTAL A+B

226

100%

OTHER

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Sustainability

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY	SUSTAINABILITY STRATEGY	ORGANIZATION & GOVERNANCE	RESOURCE EFFICIENCY & ENVIRONMENT	PEOPLE & SOCIETY	RESPONSIBLE BUSINESS PRACTICES	MUNTERS CONTRIBUTION TO
THE SUSTAINABLE DEVELOPMENT GOALSSTAKEHOLDER DIALOGUE
MATERIALITY ANALYSIS
FRAMEWORKS WE FOLLOW	EU TAXONOMY REPORTCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHERSPECIFICATION OF DISCLOSURE – OPERATING
EXPENDITURE
Accounting policy
Operating expenditure is defined as direct non-capitalized costs that relate to research and development, building renovation measures, short-term leases, maintenanceand repair, and any other direct expenditures relating to
the day-today servicing of items of property plant andequipment by the undertaking or third party to whom
activities are outsourced that are necessary to ensure thecontinued and effective functioning of such assets. The
operating expenditure included if they fall under any of
the following areas:» They relate to assets or processes associated with taxonomy-aligned economic activities, including training
and other human resources adaptation needs, anddirect non-capitalized costs that present research anddevelopment;» They are part of capital expenditures aiming to expand
taxonomy-aligned economic activities.
They relate to purchases of output from taxonomy-aligned economic activities and to individual measuresenabling the target activities to become low-carbon or tolead to greenhouse gas reductions as well as individual
building renovation measures as identified in the delegated acts adopted pursuant to in Articles 10(3), 11(3),
12(2), 13(2), 14(2), 15(2) of Regulation (EU) 2020/85,
provided that such measures are implemented and operational within 18 months.

Assessment of compliancewith Regulation (EU) 2020/852
All reported operating expenditures are related to thesame economic activities reported as reported in turnover;no additional operating expenditure concerning otherobjectives has been reported.

BUSINESS AREA FOODTECH
In business area FoodTech operating expenditures related
to economic activities in 3.5 and 8.2 has been accountedfor. The activities in 3.5 are assessed to be aligned withthe taxonomy and the activities in 8.2 are assessed to beeligible with the taxonomy.

BUSINESS AREA AIRTECH
All reported operating expenditure relates to the economic activities in 3.6 and 7.3 assessed to be aligned with thetaxonomy.

Manufacture of energy efficiency equipment forbuildings, 3.5
In this area are operating expenditures related to researchand development are reported.

Manufacture of low carbon technologies, 3.6
In this area operating expenditures related to researchand development has been reported.

Data-driven solutions for GHG emissions
reductions, 8.2
In this area are operating expenditures related to researchand development are reported.

BUSINESS AREA DATA CENTER TECHNOLOGIESThe reported operating expenditures are related toeconomic activities in 3.6 that are assessed to be eligible
with the taxonomy.
Manufacture of low carbon technologies, 3.6
In this area are operating expenditures related to researchand development are reported as well as maintenanceand repair related to the economic activities assessed tobe eligible with the taxonomy.

Installation, maintenance and repair of energyefficient equipment, 7.3
In this area operating expenditures for installation,
maintenance and repair of equipment assessed to bealigned with the taxonomy has been reported. Installation,
maintenance and repair has been determined using the
proportion of turnover identified within relevant areas, see
the specification of disclosure – turnover section.

All reported taxonomy-eligible operating expenditure
relates to the objective climate change mitigation.
For more information about Munters accounting policy for
operating expenditure, see note 1, accounting policies.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	C OMMENTS FROMTHE CHAIRMAN OF THE BOARD	C ORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHER

Corporate governanceRoger Östman from our production facility in Tobo, Sweden.
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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81

05

COMMENTS FROM THE CHAIRMAN OF THE BOARD

Munters now has a solid foundation
for continued profitable growth

Corporate governance
INTRODUCTION

After nearly a year as Chairman, I can say that Munters has a clear, effective
strategy and strong position in the global market for climate solutions for industry,data centers, food production and agriculture. Munters world-leading offeringand extensive application know-how give us good opportunities to continue togrow with existing and new customers.

STRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	C OMMENTS FROMTHE CHAIRMAN OF THE BOARD	C ORPORATE GOVERNANCE
AT MUNTERS GROUP

Dear shareholders andother stakeholders in Munters,

CORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERMAGNUS NICOLIN
Chairman of the Board

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

I have lived and worked internationally for nearly
40 years and most recently served as CEO for ten
years of the publicly traded Australian company
Ansell. Ansell is a global leader in personal protective equipment (PPE) with over 14,000 employees
and revenue of SEK 20 billion. Like Ansell, Munters
is the leading player in its specific niche. I believethat also Munters has a great potential to continue
to build our position and thus create value for ourshareholders.
It was exciting and interesting to be introduced
to Munters in 2022 and learn about the company
in depth. In the past year, I and the other membersof the Board of Directors, have had the privilegeof meeting people from many different parts ofthe company and visiting operations in various
regions. I am impressed by the expertise Munters
has built up and the growth we are delivering,both organically and through acquisitions. Strong,longstanding customer relationships have given
Munters deep insight into both current issues andfuture challenges for our customers.
Sustainability is one of the most pressing issuesof our time. Electrification and digitization of society,together with growing demand from customers

for energy efficient solutions, are raising interest in
Munters offering. The major orders that Munterssigned in 2022 within the battery segment in AirTech
and within Data Center Technologies, to name afew, are clear proof of these trends and our uniquecompetence to deliver the best solutions in theseareas. The success we are now achieving in SaaS
solutions for food producers also illustrates how we
can contribute to a more sustainable society.
Munters has implemented several importantchanges in the last three years by increasing
investments in innovation, in new production capacity, including the US and Czech Republic, andby beginning to implement new, efficient digitalprocesses. We have also placed greater focus ondeveloping the service business to ensure that oursolutions always work as expected, extend thelife of our products and generate more consistentrevenue flows. Our climate solutions are mission-critical for our customers and have to workat all times, e.g., if a fan stops, the temperature
can be harmful for chickens; if the cooling in adata center stops working, it can lead to internet
shutdowns; or if the cooling and humidity control
in a battery factory stop working, production will
be disrupted and cause a major fire risk. It is withgreat satisfaction that I have taken note of Muntersstructured approach to increasing sustainability in
our own operations. To be a credible partner andadvisor, we obviously must have internal sustainability as a high priority, and here Munters has madegood progress in cutting emissions from operations
and reducing waste, among other things. Overall,through the investments we are now making to future-proof Munters, we have laid a solid foundation
for continued profitable growth.
One of the most important tasks for us on the
Board of Directors is to be an active sounding
board for the management team on this journey.
One question we are now moving higher up on theagenda is internal talent development, diversity andleadership. A broad global talent pool to recruitfrom is a key element in order to future-proof thecompany and enable the growth we want to see.
Lastly, I want to thank all our employees fortheir fantastic efforts in 2022. Munters is a strong,
global company, and I look forward to playing apart as we continue to strengthen the company’s
position as a world leader in energy-efficient
climate solutions.
MAGNUS NICOLIN
Chairman of the Board

Comments from the Chairman of the Board 82

05

Corporate governance at Munters GroupSHAREHOLDERS

The right of the shareholders to decide on Muntersaffairs is exercised at the General Meeting (GM).
Shareholders who are recorded in the share register on the record date and have registered for theGM within the time indicated in the notice to attend
have the right to participate in the GM, in personor by proxy.

conveys opinions from shareholders to other Board
members, and serves as spokesperson for the Board.
The Chairman of the Board is responsible for other
Board members receiving sufficient information to
perform their work effectively, and for ensuring thatthe Board’s decisions are implemented. The Chairman of the Board is also responsible for the Board’s
annual evaluation of its work.

CORPORATE GOVERNANCENOMINATION COMMITTEE

BOARD COMMITTEES	COMMENTS FROMThe Nomination Committee is charged with preparing and submitting proposals before the AGM
on behalf of the shareholders for the election of the
Chairman of the AGM, election of the Chairmanof the Board and other Board members, electionof the auditors, and fees to the auditors and to theBoard. In addition, the Nomination Committee
assesses the independence of Board members in relation to the company and major shareholders. The
company’s Audit Committee assists the Nomination
Committee with the proposal for the election of theauditors, and the Nomination Committee’s proposals to the General Meeting for auditors’ elections
contain the Audit Committee recommendation.

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERBOARD OF DIRECTORSThe Board is responsible for Munters organizationand management of Munters affairs. Under thecompany’s Articles of Association, Munters Boardof Directors shall consist of at least three and no
more than ten members elected by the AGM. The
Board members are elected annually by the AGM
for the period until the conclusion of the next AGM.
The Chairman of the Board of Directors leads
and oversees the work of the Board, ensuring that
activities are conducted efficiently. The Chairman
also ensures that the Swedish Companies Act andother applicable laws and regulations are observed,
and that the Board receives the training it needs toimprove its knowledge of Munters. The Chairman
monitors operations in close dialogue with the CEO,MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

The Board of Directors currently has three committees: the Audit Committee, the Compensation
Committee and the Investment Committee. The
members of the committees are appointed fromamong the Board of Directors for a period of one
year. Reports to the Board on issues addressed atcommittee meetings are submitted either in writingor verbally. The work of each committee is performed in accordance with the instruction from theBoard. Minutes of committee meetings are provided
to all Board members.
The Audit Committee

The main tasks of the Audit Committee are to ensurethat the Board of Directors fulfills its supervisory
duty in relation to internal control, auditing, financial risk management, accounting and financial
reporting; to prepare matters concerning the
procurement of auditing and other services fromthe auditor; and to prepare certain accounting andauditing matters to be resolved by the Board.
The Compensation Committee

The Compensation Committee prepares compensation and other employment terms for the CEO
and decides on them for other senior executives.
The committee represents the Board in managerialand succession planning as well as leadershipdevelopment.
The Investment Committee

The Investment Committee assists the Board of

Corporate Governance Structure
SHAREHOLDERS

GENERAL MEETING

AUDIT COMMITTEENOMINATION COMMITTEEREMUNERATION COMMITTEE
EXTERNAL AUDITORINVESTMENT COMMITTEE

THE BOARD OF DIRECTORSCEOGROUP MANAGEMENT

INTERNAL CONTROL OF
FINANCIAL REPORTING

DAILY MANAGEMENT

External governance systems

The external governance systems thatprovide the framework for Munters
corporate governance consist primarilyof the Swedish Companies Act, theSwedish Annual Accounts Act, the Codeand other applicable regulations andrelevant legislation.

Internal governance systems
and policies

Internal binding policy documents
include:• Rules of Procedure for the BoD• Instructions for the CEO• Instructions for the Compensation, theAudit and Investment Committees• Code of Conduct• Steering documents

Directors by monitoring material strategic initiatives
that are important to the Group’s value creation. In
addition, the Investment Committee approves andsupports the Board and the company’s management in material contractual processes.

• Finance policy• Sustainability policy• Communication policy• Insider policy• Internal control policy• HR policy• Policy for Munters Group Management
Holding of Munters Shares
Policies, procedures & guidelines can befound at www.munters.com

CEO AND GROUP MANAGEMENT

information and supporting documentation for
Board meetings and, if requested by the Chairmanof the Board, summons the meeting. The CEOreports at Board meetings and submits motivatedproposals for resolution by the Board. The CEO is
assisted by a Group Management comprised of theheads of the business areas and staffs.

The Board of Directors appoints the President andCEO. The CEO is responsible for day-to-day
management according to the Board’s instructions
as well as for taking all necessary measures toensure that the organization and the control of thecompany’s accounts comply with current rules andregulations. The CEO also prepares all necessary

The AGM appoints the auditors, who review theannual report, accounts, consolidated financial
statements, management of the Board and theCEO, and the annual reports and accounts for
subsidiaries, and issues the Audit Report.

AUDITORS

Corporate governance at Munters Group 83

05

Corporate governance
INTRODUCTIONSTRATEGY

Corporate Governance Report 2022
The corporate governance report has been prepared in accordance with the Swedish Annual
Accounts Act and the Swedish Corporate Governance Code (“the Code”). Munters did not breachany of the rules of the Code in 2022. The auditors have reviewed the report, and the statement fromthe auditors can be found on page 143.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATION
OTHER

2022 Annual General Meeting2023 Annual General Meeting

The Annual General Meeting (AGM) for 2022 washeld on 18 May 2022. Due to the pandemic, theAGM was held according to sections 20 and 22of the Act (2020:198) on temporary exemptions
to facilitate the execution of general meetings,
whereby the shareholders were able to exercise theirvoting rights at the meeting only by postal voting in
advance. According to the voting list, approximately
71.8% of the votes were represented. Complete
information on the 2022 AGM and the minutes canbe found on the Munters website, www.munters.com.

The 2023 Annual General Meeting will be held on
May 17, 2023. For further information, refer to page
148 and the Munters website, www.munters.com.

The issues resolved by the AGM included thefollowing:• Dividend in accordance with the Board’s proposal of SEK 0.85 per share.
• Discharge of the Board members and the CEOfrom personal liability for the administration of
the company in 2021.
• Remuneration to the Board of Directors.
• Re-election of Board members Håkan Buskhe,
Helen Fasth Gillstedt, Kristian Sildeby and Anna
Westerberg.
• Election of Magnus Nicolin, Maria Håkansson
and Anders Lindqvist as new Board members.
• Election of Magnus Nicolin as the new Chairman of the Board.
• Remuneration to the auditors according toapproved invoices.
• Compensation guidelines for senior executives.
• Approval of the Board’s remuneration report.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Nomination Committee for the 2023 AGM

The Nomination Committee for the AGM shall becomposed of representatives of the four largest
shareholders by votes as listed in the share register
maintained by Euroclear Sweden AB as of August
31 of each year.
The Chairman of the Board shall serve as aco-opted member of the Nomination Committee
and also convene its first meeting. The member representing the largest shareholder by votes shall be
appointed Chairman of the Nomination Committee.
The Chairman of the Nomination Committee shallhave the deciding vote in a tie.
The composition of the Nomination Committee
shall be announced no later than six months prior
to the meeting. Changes in the composition of
the Nomination Committee shall be made public
immediately. No remuneration shall be paid tothe members of the Nomination Committee. Anynecessary expenses for the Nomination Committee’s work shall be paid by the company. The
Nomination Committee’s term extends until thecomposition of the next Nomination Committee has
been announced.
The reasoned statement of the Nomination
Committee for the 2022 AGM declares that in
preparing its proposal for the Board of Directors theNomination Committee has applied Rule 4.1 of theCode as a diversity policy. The goal of the policy
is that the Board, given the company’s operations,stage of development and conditions in general,shall have an appropriate composition marked bydiversity and breadth in terms of the competence,experience, and background of the members elected by the GM, and shall promote gender parity.
The 2022 AGM resolved to elect Board membersin accordance with the proposal of the Nomination
Committee.
From the time it was constituted up until thesubmission of the Annual Report, the Nomination
Committee has held six recorded meetings.
Nomination Committee ahead of the 2023 AGM
Name
Magnus Fernström
Hans Christian Bratterud
Mats Larsson
Lovisa Runge

Elected by Holding
FAM ABODIN fonder
First Swedish National
Pension Fund
Fourth Swedish
National Pension Fund

28.3%
8.20%
7.44%
6.02%

Board of Directors 2022

Munter’s articles of association were adopted at theAGM on 18 May 2022 and contain no special provisions on the appointment and dismissal of board
members or on changes to the articles of association.
For the complete articles of association, refer toMunter’s website.
At the 2022 AGM, seven Board members

were elected, three of whom are women and fourmen. Under Swedish law, the trade unions have theright to representation on the Board and they wererepresented in 2022 by two members and one
deputy. The CEO and the Group Vice President andthe CFO of Munters attend the Board meetings. Attorney Johan Lekholm from Mannheimer Swartling
Advokatbyrå AB serves as the Board’s secretary.
Other members of Group Management participate
in the Board’s meetings to present specific issues.
Board activities

The duties of the Board of Directors are set forth
primarily in the Swedish Companies Act and theCode. Board activities are also governed by therules of procedure adopted annually by the Board.
The rules of procedure govern the division of workand responsibility between the members of theBoard, its committees, the Chairman and the CEO.
The instructions for the CEO also contain instructions for financial reporting. The tasks of the Board
include adopting strategies, business plans and targets; issuing interim reports and year-end financial
statements; managing risks; and setting policies andguidelines. The Board shall also monitor economic developments, ensure the quality of financial
reporting and the internal controls, and evaluate
the Group’s operations based on the objectives andguidelines set by the Board. Moreover, the Board is
responsible for appointing the CEO. The Board alsodecides on major investments as well as organizational and operational changes.

Corporate Governance Report 2022 84

05

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	C OMMENTS FROMTHE CHAIRMAN OF THE BOARD	C ORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD

Composition of the Board of Directors
Boardmeetings

Name*Elected at AGM 2022

7/7
13/13
13/13
11/13
13/13
7/7
6/7
13/13
6/13
13/13

FINANCIAL INFORMATION

Investment
Committee

%

–
5/5
–
–
5/5
3/3
–
–
–
–

3/3
–
–
–
7/7
–
3/3
–
–
–

35

3/3
–
–
8/8
8/8
–
–
–
–
–

25

35
30

Men, 70%

3

Women, 30%

3

25

2

20

15

15

1

10

10
5

5
0

GENDER DISTRIBUTION

4

40

3

30

20

%

4

30-40 41-50 51-60

0>61

1 year 2-5 years> 5 years

Number of people

Number of people** Employee representative

Board meetings 2022

In 2022, the Board of Directors held 12 meetings. Following is an overview of the key issues addressed at these meetings.

– GROUP MANAGEMENTRISKS AND RISK MANAGEMENT

Audit Compensation
Committee
Committee

40

Magnus Nicolin,
Chairman of the Board*
Helen Fasth GillstedtHåkan Buskhe
Anna Westerberg
Kristian Sildeby
Maria Håkansson*
Anders Lindqvist*
Simon Henriksson**
Tor Jansson**Robert Wahlgren**

TIME ON THE BOARD

AGE DISTRIBUTION

Attendance

JANUARY
Board meetings

OTHER• Report fromthe Board’s
committees

FEBRUARY

MARCH•D
 ecision on
dividend proposal for thefinancial year
2021

•A
 pproval of
Annual andSustainability
Report 2021

• Approval andrelease of theyear-end report(Q4 report)

APRIL

MAY

JUNE

•R
 esolution on•A nnual General
notice andMeeting
proposal for the
Annual General
Meeting•A pproval andrelease of Q1
report

AUGUSTSEPTEMBER•A pproval and • R eview of HR
release of Q2
issues andreportsuccession
plans

JULY

•R
 eview ofstrategy work

NOVEMBER

DECEMBER•A pproval and • R eview of
release of Q3
strategic plan
reportfor the GroupOCTOBER•A pproval of
proposedfinancial targets for 2023

•A
 pproval ofrevised policies• E lection of members of the Board’s
committees•D ecision to adopt
the rules of procedure for the Boardand the rules ofprocedure for thecommittees
M

Audit Committee
Compensation Committee
Investment Committee

M

M

M M

M

M
M
M

M

M

M

M

M

M

M

M M

M

M

M Committee meetings

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Corporate Governance Report 2022 85

05

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTThe CEO discusses business development at
ordinary Board meetings. The auditor holds briefings for the Board where the auditor’s reports are
discussed. The auditor also meets with the Board
without management present.
The company meets the requirements in the
Code in that a majority of the members elected by
the AGM are independent of the company andcompany management, and that at least two ofthem are independent of the major shareholders.
An evaluation is conducted each year to ensure
the quality of the Board’s work and to identify any
need for additional competence or experience. The
Chairman of the Board is responsible for conducting the evaluation and reporting it to the Nomination Committee. At the request of the Nomination
Committee, the Board members shall take part ininterviews with the Nomination Committee to facilitate the evaluation. In 2022, a traditional external
evaluation of the Board’s work was conducted. The
results of the interviews and the Board evaluation
have been reported to the Board and the Nomination Committee.

FINANCIAL INFORMATIONOTHER

Audit Committee

Recurring agenda items at the Audit Committee’s
meetings are accounting issues, quarterly reports,
the annual report and consolidated financial statements, regular reporting from the Group function
Internal Control, legal requirements, risk management and reports from the auditor. In addition,
the Audit Committee monitors the impartiality andindependence of the auditor, evaluates the audit
work, and discusses the collaboration between theauditor and the company’s internal control function.
The Audit Committee also assists the Nomination
Committee in preparing nominations for auditor
and proposals in respect of audit fees by submitting
recommendations to the Nomination Committee.
During the period between two consecutive
AGMs, the Audit Committee is required to hold atleast five meetings, normally in conjunction with theordinary meetings of the Board of Directors.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Compensation Committee

External auditor

The task of the Compensation Committee is toprepare issues relating to compensation for the CEO
and Munters other senior executives. The Compensation Committee proposes guidelines for, among
other things, the breakdown between fixed andvariable compensation and the relationship between
results and compensation, the principal conditions
for bonuses and incentive schemes, conditions forother benefits, pensions, termination, and severance
pay. The Committee also prepares proposals forindividual compensation packages for the CEO andother senior executives. Furthermore, the Compensation Committee monitors and evaluates the outcomeof variable compensation schemes and Munterscompliance with the compensation guidelines adopted by the Annual General Meeting, in addition topreparing the report that the Board signs off on andsubmits to the AGM for approval. See also “Remuneration guidelines for senior executives.”

Ernst & Young AB has been Munters auditor since2010, and Rickard Andersson, authorized public
accountant and member of FAR (the professional
institute for authorized public accountants in Sweden), has been auditor-in-charge since 2019. Prior
to Munters 2021 AGM, a procurement was madeand Ernst & Young AB were re-elected at the AGM
as auditor for a mandate period of four years, up to
and including the 2025.
CEO and Group Management

Group Management consisted in 2022 of the CEO,the Group Vice President and CFO, three businessarea Presidents and two Group Vice Presidents re-sponsible for the central functions Business Excellence;and HR & Sustainability.
Group Management holds monthly meetings
with a focus mainly on the Group’s strategic and operational development and performance. A numberof reviews and progress reports were presented aswell on contingency plans for the pandemic, major
orders, potential acquisitions, risk management, etc.
Munters organization is distinguished by adecentralized approach where a large share of
the responsibility and authority is delegated toeach business area and subsidiary. Every legal
entity, which does not necessarily reflect operating
activities, has a board of directors that focuses oncompliance, among other things.

Group structure

Investment Committee

The Investment Committee assists the Board of
Directors by monitoring and steering material
strategic initiatives that are important to the Group’s
value creation and by supporting the company’s
management in this respect, as well as drafting
proposals for material strategic initiatives andprojects for the Group. Additionally, the Investment
Committee approves, as well as supports the Boardand management in, the process for control andreview of the company’s contracts. The Investment
Committee’s work can largely be divided into:• Large customer contacts• Mergers and acquisitions in general as well as
strategic alliances; and• Other strategic initiatives of a material strategic
nature where capex exceeds the CEO’s authorization limit.
The Investment Committee is convened asneeded to carry out its tasks.

BUSINESS AREA AIRTECHHENRIK TEIWIKBUSINESS AREA
DATA CENTER TECHNOLOGIESSTEFAN ASPMAN
BUSINESS AREA FOODTECHPIA BRANTGÄRDE LINDERCEOKLAS FORSSTRÖMFINANCE, STRATEGY,IR/ERM & IT
ANNETTE KUMLIEN

HR & SUSTAINABILITY
GRETE SOLVANG STOLTZ

BUSINESS EXCELLENCESTEFAN MÅHLCorporate Governance Report 2022 86

05Internal control of financial reporting

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERInternal control entails clarity, orderliness andensuring that what has to be done is done asintended. Internal control is the collective term forthe organization and the systems, processes androutines that enable this.
Munters has an internal control function whose
purpose is to support management so that it cancontinuously ensure good internal control of financial
reporting. The work that is conducted through thisfunction is primarily focused on ensuring compliancewith directives and guidelines and creating goodconditions for control activities in key processes related to the financial reporting. The Audit Committee isregularly informed of the results of the work that theinternal control function within Munters performs withregard to risks, control activities and follow-up on thefinancial reporting. The Audit Committee reports to
the Board on a regular basis. In addition, the internal
control function maintains good communication withthe external auditors.
Munters internal control of the financial
reporting is based on the framework issued by theCommittee of Sponsoring Organizations of theTreadway Commission (COSO). This framework
covers five main areas: control environment, risk
assessment, control activities, information andcommunication, and monitoring.
Control environment

Internal control is shaped by the overall control
environment. The Board of Directors is responsible for establishing an effective system of internal
control and supervising the work through the CEO.
Group Management sets the tone for the businessand influences employees’ awareness with respect

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

to control. One condition for a strong control
environment is that there are clearly defined values
in terms of ethics and integrity, and that they arecommunicated through governing documents suchas policies, guidelines, manuals and codes.
The Group staff function Internal Control serves
as the Group’s internal audit function and debriefs
the Audit Committee. The function works on developing, improving and safeguarding the internal
control over the financial reporting in the Group.
This is partly done proactively with a focus on theinternal control environment and partly by reviewing how well the internal control is working.

Munters control environment
CONTROL
ENVIRONMENTFOLLOW-UP &IMPROVEMENTINFORMATION &COMMUNICATION

Risk responsibility
Risk assessment

A risk assessment is conducted on a yearly basis
pursuant to the Group’s risk management policy. The
purpose is to identify, document and quantify theconsequences and probability of events that would
prevent Munters from achieving its objectives.
The Enterprise Risk Management (ERM) framework is an integral part of Munters overarching
management system consisting of various policies.
The purpose of the ERM framework is to strengthen governance by integrating risk managementwith the design and implementation of Muntersstrategy. The ERM framework is designed to identify
and manage existing risks in order to reach thecompany’s strategic goals. The framework provides
methods to identify and evaluate risks. In addition,
the ERM process ensures that Group Management
and the Board share a common understanding of
Munters risk tolerance in relation to the company’s
goals.

RISK ASSESSMENT

The ERM function is responsible for implementation of the ERM strategy and ERM activities at theGroup level.
Responsibility for the company’s primary risks isdelegated among members of Group Management,
and each line manager is responsible for managing
the risks that arise within their respective area of
responsibility. Those responsible for each Groupfunction and business area appoint one or more risk
officers to implement the risk work within the unit. The
Group Vice President and CFO is responsible foroversight of the ERM, and the Board of Directors andthe Audit Committee are responsible for monitoring
the effectiveness and appropriateness of the ERM.
For more information on Munters risk work, refer topages 91–96 and Note 3.
Control activities

Controls have been designed based on identified
risks to detect, prevent and correct errors and discrepancies. Controls take place at the transaction

CONTROL ACTIVITIES

level, at the Group level and as general IT controls.
Control activities are carried out in the entire organization, at all levels, and for all functions. Transaction-based controls, which can be either manualor automatic, are performed to manage the risk oferrors in the financial reporting. Examples of suchcontrols include reconciliations and analyses. Company-wide controls are designed for among things
to ensure that instructions on payment approvals,
authorizations and responsibilities in credit granting
are followed. Examples of general IT controls arechange management, back-up routines and authorizations. The company’s Group Vice President and
CFO is responsible for ensuring that identified risks
relating to the financial reporting at Group level
are addressed. In each legal entity, the accounting staff is responsible for having the necessarycontrol activities in place, and that accounting andthe financial statements are correct and accurate.
Global controllers and finance directors in eachlegal entity update forecasts and conduct outcome
analysis. All business areas present their financial

Corporate Governance Report 2022 87

05

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	C OMMENTS FROMTHE CHAIRMAN OF THE BOARD	C ORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENT

Rauno Köngäs and Haris Hodovic from our
production facility in Tobo, Sweden.

RISKS AND RISK MANAGEMENTFINANCIAL INFORMATION
OTHER

results in written monthly reports to the CEO and theGroup Vice President and CFO, who in turn present
them to Group Management.
Since 2019, the internal control function carries
out and coordinates evaluation activities throughMunters internal control system, where the subsidiaries on a quarterly basis report back on whether
key controls have been performed in accordancewith Munters Risk and Control framework.
After the preparations in 2019, a project called
Transformation Towards Operational Excellence(TTOE) was launched in 2020 to increase efficiency through linked processes and information flows.
This project continued in 2022. The ambition is tobuild a leading value chain and processes.
Information and communication

Munters has information and communications channels that aim to ensure that information is identified,collected and communicated in a way and within a

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

time-frame that enables employees and managers
to perform their tasks. Reporting instructions andaccounting guidelines are conveyed to affected
employees through monthly newsletters and quarterly teleconferences. The Group uses a common
system for reporting and consolidation of financial
information.
Governing documents – in the form of policies,
guidelines and manuals for the financial reporting– are communicated primarily via the intranet and
the Group’s financial handbook, and updated asneeded. Information for external parties is communicated on the Munters website together withother news and press releases. Quarterly reports
are published and supplemented with presentations
and investor meetings. The Annual Report is provided to shareholders and other stakeholders throughpublication on the Munters website and in a printed
version upon request.

Monitoring

Monitoring and testing of control activities areroutinely conducted throughout the year to ensurethat the risk has been taken into account andsatisfactorily managed. Testing is carried out by employees who are independent of the controls andpossess the competence to evaluate the controls.
Failed controls must be mitigated, which means that
actions must be taken and implemented to correct
deficiencies. Reports are presented to the Audit
Committee twice yearly and the Audit Committee inturn reports regularly to the Board.
The Board of Directors has ultimate responsibility for all decisions regarding compliance within
Munters. The Board reviews and approves internal
control policies on a yearly basis. If needed,
reviews and approvals are more frequent.
Each division manager is ultimately responsible
for the financial information for their division. The

information is followed up at the business area level
by Group Management and, lastly, by the Board of
Directors. Munters financial position, strategies andinvestments are discussed at every Board meeting.
The Board is also responsible for monitoring internal control. This includes ensuring that measures aretaken to address any shortcomings and following
up on proposed measures that were pointed out inconjunction with the external audit.
Assessment of the need for a separate internal
audit function

Munters has no internal audit function, as it is theBoard’s opinion that the company’s internal organization and monitoring processes fill this function ina satisfactory manner.
For certain special audits, outside expertise canalso be brought in.

Corporate Governance Report 2022 88

05

Board

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

Born
Education andprofessional experience

CORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022

Current assignments/positions– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATION

Selected previous assignments

OTHER

Holding in Munters Group AB
Independent in relation to theCompany’s major shareholders
Independent in relation to
the Company and GroupManagement

MAGNUS NICOLIN

HÅKAN BUSKHEHELEN FASTH GILLSTEDTMARIA HÅKANSSON

ANDERS LINDQVISTKRISTIAN SILDEBYANNA WESTERBERG

Chairman of the Board since May
2022.
Chairman of the Remunerationcommittee. Member of theInvestment committee.
1956
MBA, Wharton – University ofPennsylvania. BSc, Stockholm
School of Economics.

Board member since 2020.

Board member since 2017.
Chairwoman of the Audit committee.

Board member since 2022.
Member of the Audit committee

Board member since 2022.
Member of the Remunerationcommittee.

Board member since 2017.
Member of the Audit Committee,
Remuneration Committee, andInvestment committee.

Board member since 2020.
Chairwoman of the Investmentcommittee.

1963
1962
M.Sc. Licentiate of Engineering,
M.Sc. in Finance & Control and
Chalmers University of Technology, International Business, Stockholm
Gothenburg. More than 30 years
School of Economics. Studies inof experience in program and opSustainable Development,erations management and business Stockholm Resilience Center atdevelopment from national andStockholm University and KTH
international commercial industrial Royal Institute of Technology. Overcompanies, including Saab AB,
twenty years of experience in senior
E.ON Nordic AB and E.ON Sverige positions at Statoil and SAS Group.
AB.
Board member of FAM AB andCEO of FAM AB. Chairman ofBoard member of Handelsbanken
Billerud AB.
the Board of IPCO AB, Deputy
Fonder AB and its representative on
Chairman of the Board Stora Ensonomination committees, Storytel AB,
Oyj, Board member of AB SKF,
Viva Wine Group AB, PowerCell
Kopparfors Skogar AB and The
Group AB and Sortera AB.
Grand Group.
CEO of Ansell Limited, 2010 –Board member of Nefab AB,
Board member of Samhall AB,
2021, President, Europe, Middle
Vattenfall AB, and the Association
Humana AB, AcadeMedia AB,
East, Africa, and Asia Pacific ofof Swedish Engineering Industries
Lindorff Group AS, Swedesurvey
Newell Rubbermaid Inc. 2006–(Teknikföretagen); Vice Chairman of AB, Svefa Holding AB (publ),
2010, CEO of Esselte Business
AeroSpace and Defence Industries Intrum AB
Systems Inc 2002 – 2006 following Association of Europe (ASD); Chaira leveraged buy-out which he led
man of Green Cargo AB; President
together with a PE company, Exec- and CEO of Saab AB; President
utive Vice President & Business Area and CEO of E.ON Nordic AB
President of Esselte Business Systems and E.ON Sverige AB; Executive
Inc. Senior positions in Bayer AG,
Vice President of E.ON Sverige
Pitney Bowes Inc., and McKinsey
AB; CEO of Land Operations for& Company. Board assignments
Schenker AG, Schenker North, andin several global boards, such as
Schenker-BTL AB; CEO of Storel
Ansell, Esselte, Isaberg-Rapid, and AB, Carlsberg and Coca-Cola
PrimixDistribution AB; Production Directorof Carlsberg Sweden.
20,000 shares, call options
10,000 shares.
5,000 shares.
corresponding to 267,522 shares
No
No
Yes

1970
1967
1976
Master of Economics and Business Mechanical engineer and
MSc in Business Administration,
Administration, Stockholm Univeruniversity-level studies in marketing; Stockholm School of Economics.
sity. CEO Swedfund International.
Marine Officer. Extensive experiFormer Investment Manager atExtensive experience withinence in industrial transformation with FAM AB, Vice President, and Headsustainable investments and froma strong focus on results. Provenof Finance & Risk Management at
a variety of global senior positions solid leadership and background in Investor AB.
at Ericsson, with solid knowledge
international technology companies.
of digitalisation, business models,finance, and the sale of systems andservices.
Investment Director & Deputy CEO
CEO Swedfund International, board President and CEO, Mycronic
at FAM AB, Chairman of 82an
AB (publ), chairman of the board
member Global Impact Investingof Dafo Vehicle Fire Protection
Invest AB, Board member of
Network, USA (GIIN), board
Höganäs AB, Kivra AB, Nefab
AB, board member of Gunnebo
member European Development
Holding AB, Spendrups Bryggeri
Holding AB.
Finance Institutions (EDFI).
AB and Peltarion AB.
Vice President Internet of Things
President and CEO of Piab Group
Chairman of the Board of Blasie(IoT) Ericsson; Vice President
AB 2013 – 2019, Divisions Director holmen 54 Restaurang AB. Board
Ericsson Commercial Management for Atlas Copco 2007 – 2013, Pres- member of Lindström & Göthberg
Northern Europe & Central Asia
ident of Atlas Copco China 2006
Executive Development AB andEricsson; CFO Ericsson Nordics– 2007, President of Atlas Copco
Power Wind Partners AB.
& Baltics, Business Unit Controller
Nordic 2004 – 2006, different
Ericsson Global Services; board
positions, Atlas Copco 1989-2004.
member Lindholmen Science Park.
Board member of Norican A/S.

1975
MSc, Industrial Engineering andManagement, Chalmers Universityof Technology, Göteborg. Several
years of experience in leading
positions in the global industrial company AB Volvo. Solidknowledge of digitalization andinnovation as well as sales anddevelopment of services andproducts in a global environment.
President Volvo Buses. Board
member of Volvo Group Venture
Capital.

3,000 shares.

3,000 shares.

12,000 shares.

–

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

SIMON HENRIKSSON

Yes

Board member since 2017.
Employee representative appointed by IF Metall.
Born 1984
Position at Munters: Metrology technician, Tobo site.
Holding in Munters Group AB: 350 shares.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

ROBERT WAHLGREN

Board member since 2010.
Employee representative appointed by Unionen.
Born 1969
Position at Munters: Customized Project Engineering
Coordinator, Munters Europe AB.
Holding in Munters Group AB: –Senior Vice President for Volvo
Group Connected Solutions;
President for Volvo Group Venture
Capital; Vice President of ProductManagement Industrial for Volvo
Penta; Managing Director for
Infocandy Group Ltd; Management
Consultant at Applied Value LLC
and Applied Value AB.

TOR JANSSON

Deputy member since 2019.
Employee representative appointed by IF Metall.
Born 1989
Position at Munters: Tobo site, Munters Europe AB.
Holding in Munters Group AB: –Board 89

05

Corporate governance
INTRODUCTION

Group
management
KLAS FORSSTRÖMANNETTE KUMLIEN*HENRIK TEIWIKPIA BRANTGÄRDE LINDER

GRETE SOLVANG STOLTZSTEFAN MÅHLPosition

President and CEO since 2019

Group Vice President and CFO
since 2019

Group Vice President andGroup Vice President andPresident of AirTech since August President of Data Center Tech2022
nologies since July 2022

Group Vice President andPresident of FoodTech sinceAugust 2020

Group Vice President HR &Sustainability since 2022

Group Vice President and Headof Strategic Operations since
2020

Born
Principal education

1967
Master of Science in Materials
Physics and Master in Business
Administration from Uppsala
University as well as advanced
management studies at INSEAD

1965
Bachelor of Science inBusiness Administration from theStockholm School of Economics

1980
Master of Science in Businessand Economics from Stockholm
School of Economics, major in
Finance1981
Master of Science in Businessand Economics with a Major
in Business Administration andManagement, at Dalarna University and Uppsala University
and Beijing Jiatong University,
China
Previously President of Sandvik SVP and COO at Diaverum and Previously CEO of Handicare
Close to 20 years in Strategic
Machining Solutions Businessprior to that CFO. PreviouslyGroup. Prior to that various
Marketing and Offer Manarea. Prior to that, more than 20 CFO at several listed companies senior managerial positions
agement, 10 years in several
years of different senior manas Höganäs and Pergo, as well in Alimak Group, including
strategic key positions within
agement positions at Sandvik,
as business controlling roles atbusiness area manager for
Sandvik including Head ofincluding positions such as
Perstorp and Sandvik
Construction and Rental andBusiness Control and PerforPresident of Sandvik Hardbusiness development. Also
mance Management at Sandvik
Materials and Sandvik
experience from strategy
Coromant and Global Head
Coromant
consulting as Associate Principal of Commercial Pricing andat McKinsey & Company
Profitability Management for the
Sandvik Machining Solutions
business area. Also experienceas business strategy consultant

1973
Master of Science in MechanicalEngineering from Chalmers
University of Technology andExecutive Master of Business
Administration (EMBA) from
Stockholm School of Economics

1970
Master in Business
Administration from Luleå
University of Technology

1967
Bachelor of Science in
Mechanical Engineering withfocus on Automation
Technologies

Previously Business Area Manager
for HV Products North Europe at
ABB. Prior to that more than 20
years at ABB in various senior
management positions globally,
including General Manager
for HV Breakers, Head ofOperations for a global productgroup, Technology Manager,
Project Manager and Area
Sales Manager

Previously Senior Vice President
HR and Sustainability LKAB
group. Prior to that 12 years
within SCA in various management positions including
Logistic manager, HR manager
and CFO for SCA Packaging
MunksundVarious management positionsat Munters, such as Vice
President Global Sourcing andInterim Director of Operations
AirTreatment Division Europe.
Global Director Strategic Purchasing and Quality Assurance
at LPG Allgon/Powerware
Technologies and Vice President
Strategic Purchasing andComponent Engineering at
Siemens-Elema AB Medical
Solutions

Other current assignments

Board member, IPCO AB.

–

Holding in Munters Group AB

131,900 shares

Board member in AFA Trygg
and AFA Liv–

STRATEGYSTEFAN ASPMAN**OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUP

Professional experience

CORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERBoard member in Cavotec SA
and Dirac Research AB
27,000 shares.

––

Board member in Roxtec Group6,000 shares

2,000 shares

2,736 shares

25,000 shares* Annette Kumlien has decided to leave the company for a new assignment during the spring 2023.
** Stefan Aspman was also Head of Commercial Excellence, Strategic Marketing and Communications; from February 2021 until January 2023.
Stephane Darcq, Group Vice President Innovation, was part of the management team from November 2020 until January 2023.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Group management 90

Corporate governance
INTRODUCTIONSTRATEGY

Impact05

Risks and risk management
Risks are a natural element of all businesses and effective risk management andassessment are essential for Munters to achieve its business goals. Risk management is critical to create a base to ensure that we manage and capitalize on theopportunities that every risk entails.

OPERATIONSSUSTAINABILITY

Identified risks are charted in a risk matrix.
They are evaluated based on the potential
impact on Munters, the probability they will
occur and how well the risk is managed.

CORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD

Probability

	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATION
OTHER

Munters serves customers in various industries andmarket segments. Munters has production andassembly plants, along with sales and sales offices,in around 30 countries. Together, this provides
underlying risk diversification. At the same time, ourglobal presence creates challenges due to cultural,
legal and political differences.
RISK MANAGEMENT

The Board of Directors has ultimate responsibility for the Group’s risk management and approves
the company’s risk management policy. GroupManagement identifies, evaluates and manages
risks within their respective areas of responsibility.
The Group Vice President and CFO is responsible
for coordinating risk evaluation and compiles the
documentation reported to the Audit Committee
and to the Board of Directors.

Risk assessment and management are an importantpart of the company’s strategic planning process.
Risk management is also an important part of theinternal control process.
Management of operational risks at Munters
is integrated in the strategic planning process andvarious business processes and controls, e.g.,
approval requirement for certain decisions. Several
cross-process risks are coordinated centrally, suchas risks involving information security, IT security,
responsible business practices, and anti-corruption
and bribery.
Financial risk management is governed by aGroup policy and carried out by Group Treasury.
For more information on financial risk management,
see Note 3.

Enterprise Risk Management (ERM) is an integral
part of Munters overarching management system
consisting of various policies. The purpose of ERM
is to provide a comprehensive overview of the risks
and uncertainties that the company is exposed toand to support value creation, ensure risk awareness and balance risks versus expected return. The
ERM framework is designed to identify and manage existing risks in order to reach the company’s
strategic goals and provide methods to identify andevaluate risks. In addition, the ERM process ensuresthat Group Management has reached a consensus on Munters risk tolerance in relation to thecompany’s goals. Every business area and GroupMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

RISK EVALUATION PROCESS

function within Munters is responsible for identifying
and managing risks within their organization in accordance with the Munters risk process and current
policies and guidelines.
Risk management planning is done in collaboration with those who have been delegatedrisk responsibility together with the Enterprise Risk
Management function.
The ERM function, which reports to the Group
Vice President and CFO, is responsible for theGroup-wide risk assessment as part of the strategicplanning process. In 2022, this process was carriedout in the spring and summer. The assessments
are collected from the business areas and Groupfunctions, which identify and evaluate risks basedon their probability and potential impact on operations. The most significant risks and uncertainties,
and how they are managed, are regularly reported
to Group Management, the Audit Committee andthe Board of Directors.
Identified risks are charted in a risk matrix. They
are evaluated based on the potential impact on
Munters, the probability they will occur and how
well the risk is managed.

RISK MITIGATION AND RISK CULTURE

The Munters ERM shifts focus based on how thestrategic priorities change.
Risk management

The ERM function is responsible for implementationof the ERM strategy and ERM activities at the Grouplevel. Responsibility for the company’s primary risks
is delegated among members of Group Management, and each line manager is responsible formanaging the risks that arise within their respective
area of responsibility. Those responsible for eachGroup function and business area appoint one ormore risk officers to implement the risk work within
the unit. The Group Vice President and CFO is
responsible for oversight of the ERM.
Risk culture

Munters risk culture is the attitude, the conduct andthe understanding of risk that affects decision-making. For Munters to manage its risks, strong risk
awareness is needed at every level of the organization, and it is important to have the right resources
to ensure that the requirements set forth in theframework can be met, monitored and supported in
an appropriate way.

Risks and risk management 91

05

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	C OMMENTS FROMTHE CHAIRMAN OF THE BOARD	C ORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERRISK IDENTIFICATIONRISK COMMUNICATION AND REPORTING

Current risks within each business area are identified through a bottom-up process. Different risk
categories are used as inspiration to identify risks
as they arise and ensure that the company’s risk
register covers all applicable risk areas.

The Munters Risk Council has been establishedto facilitate coordination within the company andmake improvements to the ERM framework and the
management of actual risks. The chairman of thisCouncil, on which Group Management participates, is responsible for ERM.
The ERM function regularly coordinates thereporting of the status of key risks to the Munters
Risk Council. All risks identified outside the reporting
cycle, and which potentially could be significant at
the Group level, are escalated to the ERM function.
The ERM function reports on the status of thecompany’s risks twice a year to the Audit Committee. These reports contain an overarching risk
matrix and follow-up on management of the risks.
The primary risks are continuously monitored by the
ERM function with regard to the status of the implementation or development of the mitigation plan.

RISK ANALYSIS

Munters primary risks are defined as the company’s
most important identified risks and are presented
on pages 95–96. Responsibility for each suchrisk is delegated to a member of Group Management. The ERM function identifies potential
risks in Munters risk register in connection witha workshop with the various business areas andGroup functions. These risks are then discussed andconsolidated by Group Management. The ERM
function is then responsible for coordinating risks
and monitoring them within the company.
The impact of an identified risk is estimated fromthree different perspectives: financial, strategic andoperational.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

RISKS AND OPPORTUNITIES RELATED TO
CLIMATE CHANGE

In 2022, Munters started a process to broaden anddeepen the analysis and evaluation of risks andopportunities related to climate change.
Climate change risks had already been part of
the risk analysis carried out locally with the supportof the Munters Loss Prevention Standard (MLPS,
see page 94 for more information). With the help of
this analysis, the central sustainability group began
during the year to analyze local climate changerisks and opportunities. As part of the analysis, an
overview of Munters assets was prepared and themost vulnerable asset was determined to be our
production plants. The units were evaluated as afirst step. The results of the analysis provided thegroup with a consolidated view of how acute andchronic climate change risks are for our production
plants. This has also been discussed and calibrated
with Group Management.
Furthermore, Munters started to work onreporting in the future in accordance with the Task
Force for Climate-related Financial Disclosures(TCFD). Last fall the central sustainability group
identified business risks and opportunities in two
different climate scenarios based on data from theInternational Panel on Climate Change (IPCC) andthe International Energy Agency (IEA). We choose
to conduct the analysis according a 2˚C scenario(IEA) and a 4˚C (IPCC). Risks and opportunities
and the impact on Munters from these were evaluated for the scenarios.
Leading up to 2023, the central sustainability
group will continue its work with climate changerisks and opportunities and broaden the analysis toinclude additional asset classes. Furthermore, therequirement to analyze climate change risks in local
business contingency plans (which are based on
MLPS) will be tightened.
Risks related to climate change were identified
during Munters risk assessment process in 2022.
Our carbon footprint together with Climate change
was determined to be primary risks for Munters
operations; see the description of how these risks
are managed on pages 95–96.

Risks and risk management 92

05

Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

International Energy Agency (IEA) Sustainable Development Scenario

SCENARIO 1 – WELL BELOW 2˚SCENARIO
This scenario is an integrated scenario specifying a pathway aiming at: ensuring universal
access to affordable, reliable, sustainable and modern energy services by 2030 (SDG 7);
substantially reducing air pollution (SDG 3.9); and taking effective action to combat climatechange (SDG 13).
This scenario was selected to assess Munters transition risks operating in an economy andsociety that has to make significant changes to shift to a low carbon world, where temperaturerise is limited to 2˚C.

THE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD» Staggered introduction of CO2 prices» Policies to support circular economies» Adoption of lower carbon technologies» Increased investment costs connected to reaching Net Zero

» Few climate policy changes» Emissions remain high» Physical manifestations of climate change are increasingly apparent» Increased frequency of extreme weather (storms and floods) causes increased incidence ofdisruption to manufacturing and distribution networks» Sea level rise 0.3M

ASSESSED TIME-FRAME 2030–2040
Expected impact on Munters

ASSESSED TIME-FRAME 2040–2050
Expected impact on Munters

Scenario assumptions– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERSCENARIO 2 – HIGH EMISSIONS 4˚ SCENARIO

This scenario has the highest emissions of all developed scenarios in combination with the absence of climate policy. It is often referred to as “business as usual” and suggests the outcome
if society does not make concerted efforts to cut greenhouse gas emissions.
This scenario was selected to assess Munters physical risks connected to increased emissions and temperature levels.

Scenario assumptions

CORPORATE GOVERNANCE	COMMENTS FROMIntergovernmental Panel on Climate Change (IPCC)
Representative Concentration Pathways (RCP) 8.5 Scenario» Stricter regulations and disclosures requiring more resources from Munters to monitor.
» Increased input, shipping, sourcing and materials costs due to introduction of CO2 prices.
» Need to invest in R&D and product management due to increased demand from customers
regarding energy efficiency and clean technologies.
» Loss or shift of customer groups, such as lithium, coal, and datacenters, if these are phasedout due to changes in the market.
» Potential to become market leader in energy efficient products and solutions.

» Supply chain disruptions due to extreme weather events leading to increase in costs, leadtimes, and availability of materials» Local workforce disruptions resulting from worsened working conditions (such as hightemperatures in factories, ability to get to work due to weather etc.)» Local and global disruptions resulting from power, phone and internet outages.
» Loss of biodiversity having a snowball effect on the Earth’s climate and weather patterns
indirectly affecting Munters’ operations.
» Increased demand for Munters products including cooling and drying equipment.

Primary risks for Munters

Primary risks for Munters» Increased input, shipping, sourcing and materials costs due to introduction of CO2 prices.
» Need to invest in R&D and product management due to increased demand from customers
regarding energy efficiency and clean technologies.
Primary opportunities for Munters» Position Munters as a market leader in energy efficient products and solutions.

» Supply chain disruptions due to extreme weather events leading to increase in costs, leadtimes, and availability of materials» Local workforce disruptions resulting from worsened working conditions (such as hightemperatures in factories, ability to get to work due to weather etc.)» Local and global disruptions resulting from power, phone and internet outages.
Primary opportunities for Munters:» Increased demand for Munters products including cooling and drying equipment. (energy
efficient products)

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Risks and risk management 93

05

Corporate governance
INTRODUCTION

Risk categories
Munters primary risks are distributed by categories. These risk categories andtheir risk universe are used as inspiration during the analysis work to identify risks
and ensure that the company’s risk register covers all applicable risk areas.

STRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	COMMENTS FROMTHE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHERRISK CATEGORIES

Risks are divided into four categories: Strategic,
Operational, Regulatory and Financial. This encompasses general risks due to political and macroeconomic trends, and specific risks directly related
to the Group’s operations. A number of risks lie
outside Munters direct control, while others can becontrolled. Sustainability risks are fully integrated in
the framework.
MARKET RISKS

Market risks are related to the development of themarket and includes, among other things risks frommacro trends, climate change and political risks.
STRATEGIC RISKS

Strategic risks are related to the market’s development and include risks from macro trends, climatechange and political risks. Strategic risks are also
associated with the brand and strategic direction,organizational culture, resource allocation, major
investments and acquisitions. Risks associated withinternal and external communication also fall into
this category.
OPERATIONAL RISKS

Operational risks are associated with the company’s internal resources: systems, procedures andemployees. This may include environmental risks
or the risk of a business interruption due to a data

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

intrusion, fire, machinery breakdown or extreme
weather. Examples of operational risks that affect
employees are the risks associated with health andsafety, succession planning, the ability to retain
core competencies and relationships with tradeunions.
REGULATORY RISKS

Regulatory risks include the risk of loss of reputationand costs owing to the violation of laws and regulations, and bribes and corruption. This category also
covers risks resulting from the violation of humanrights and the provisions of signed agreements with
employees, customers and other business partners.
FINANCIAL RISKSThe Group’s financial risks mainly consist of currency, interest and financing risks. A description of thefinancial risks and how they are managed can befound in Note 3.
INSURABLE RISKS

Munters works actively with insurance solutions,and Group-wide policies are governed by central
guidelines.
This includes all the usual types of businessinsurance, such as general liability, product liability
and injury prevention, the main purpose of whichis to prevent property damage and business interruptions.

Also included are property and casualty insurance, directors and officers liability insurance, andemployment practices liability insurance.
Insurance is obtained from both the Swedishand international insurance market. In addition,
Munters internal audit function is responsible forindependently evaluating the effectiveness of asample of the internal control processes each year.
MUNTERS LOSS PREVENTION STANDARD

We work preventively to minimize the risks related
to fire, the work environment, and health and safety.
The Munters Loss Prevention Standard (LPS) is built
on the Group’s guidelines and rules, but also local
laws and other regulations as well as insurance
requirements. MLPS was used in 2022 in the risk
evaluations of our production and assembly plants.
The objective is that all plants will be evaluated ona three-year cycle. Due to the pandemic, whichbroke out in 2020, evaluations and follow-ups in
2021 were largely conducted virtually. In 2022,
on the other hand, 11 facilities were inspectedin person. MLPS is also used for evaluations inconjunction with acquisitions, investments and new
construction. Going forward, MLPS will also be
used to minimize risks for Munters other locations
such as sales offices.

Risks and risk management 94

05

Corporate governance
INTRODUCTIONSTRATEGY

Risk management
In 2022 Munters focus on continuing the improvement of its risk management,
both locally and at a group level. The risk assessment in 2022 resulted in a totalof 11 risks that could have a material impact on Munters. A brief description ofthese risks and how they are controlled and managed is provided below.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	COMMENTS FROM

Risk category

Risk

Risk description

Management of risk

Macroeconomic development

Risk that Munters is not quick and flexible in monitoring and adapting the organization tomacroeconomic developments. This could cause Munters to lose sales and market share.

Munters is constantly following the global and local market development. Scenarioplanning to handle various macro scenarios are made both globally and locally within
the company.

Climate change

Climate change can lead to an increased temperature globally, which will lead to glaciersmelting, increased ocean levels, more and more intense weather events like periods ofextreme heat, drought, torrential rain and storms which in turn will increase the risk for consequences such as forest fires and floodings. This in turn leads to increase risk for disruption in
Munters operations.

For more information about how these risks are managed, see pages 92 and 93.

Geopolitical change

Risk that Munters could lose part of a market due to a political change that, for example, shuts
off opportunities to sell to that market.

The business areas of Munters are conducting continuous evaluations of the markets weare operating in. As part of this evaluation geopolitical risks are evaluated.

Increased regulation

Risks associated with increased regulation that leads to stricter requirements on compliance inseveral areas. The risk is that Munters will not be able to meet the requirements it faces, which
could result in lower sales and trust among customers and other target groups.

Munters follows the development of regulations on a central as well as local level throughown analysis and with the help of external advise. Through mapping of the impact fromvarious regulations on Munters we can ensure actions are taken to secure that Muntersadhere to any changes in relevant legislations.

Innovation

Risk that Munters does not develop new innovations fast enough or have a sufficiently effective innovation process. This can lead to the loss of market share.

For more information about how Munters work with innovation, see pages 17–18.

Digitization

Risk that Munters does not succeed in digitizing its offering or internal processes according to
the set targets and ambitions. This can lead to Munters not reaching the economies of scaleinternally through a transparent data management. It can also lead to Munters loosing market
shares.

Munters has several ongoing initiatives driven both on a global as well as local level inorder to increase the digitazation of internal processes and the offering. These initiatives
are monitored and followed-up on a regular basis centrally and are reported to thegroup management team as well as the Board of Directors.

Cyber-security

Cyber-threats are a risk that has also increasingly targeted Munters and its products. Some
products contain a large amount of software, and it is becoming more common for products
to be connected to various networks. There is a risk that Munters existing IT systems are not
structured in a way that optimally supports the company’s business processes or strategic
ambitions. There is also an information management risk consisting, e.g., of IT attacks.

During 2022 Munters has continued to inform and educate employees about cyberthreats in combination with continued investments in existing and new security systems.
Yearly penetration tests are conducted according a set plan in order to ensure that the
security demand for our IT-infrastructure are fulfilled and also that precautionary updates and improvements has been executed.

THE CHAIRMAN OF THE BOARD
	CORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONMARKET RISKSOTHERSTRATEGIC RISKSMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Risks and risk management 95

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Corporate governance
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE	C OMMENTS FROMTHE CHAIRMAN OF THE BOARD

Businessinterruption

Risks associated with the production of key components in one or a few plants and that aninterruption could affect large parts of operations, causing long lead times, for example. Also
included is the risk of data intrusion, fire or other natural disasters that could lead to a businessinterruption.

Since the start of 2020 Munters is actively working to revise its market presence andvalue chain. In 2022 we continued to evaluate suppliers and to assess our dependency
on single components and risks associated with this. In addition we strengthened the
local business contingency plans.

Carbon footprint

Risk that we do not reduce the carbon footprint of our products, e.g., through energy conservation by customers, or that we do not reduce the carbon footprint of our operations in linewith our ambition. This risk could mean that we lose trust among customers and other target
groups and that we could see a loss of sales.

In 2022 we conducted 11 life cycle analysis of our products and solutions. This
strengthens our efforts to secure that our products reach the energy efficiency demands
our customers have. For more information about how we work with minimizing our
impact on the environment, see pages 50–57.

Quality control

Risk of insufficient quality control processes, which could result in the company’s products having to be recalled or not working as promised, negatively impacting earnings and customer
relationships.

The focus on quality and the processes needed to increase the knowledge and awareness of quality has increased at Munters in recent years. Several initiatives has been
conducted with the focus to strengthen customer satisfaction, reduce warranty notifications and strengthen the production process. As in 2021, the focus during 2022 wason strengthening and streamline production processes to increase the quality.

Recruit and retain talent

In recent years, Munters need for specialists in several areas has increased. As the company
grows, the need for employees increases in all areas to ensure that Munters can meet its
customers’ expectations. In a highly competitive market, there is a risk that employees will be
recruited by competitors or other companies and that Munters will lose out on talent. Munters
also has to ensure that they are offered a competitive and attractive work environment. Thereis otherwise a risk that Munters will not succeed in recruiting and cannot effectively run its
operations.

During 2022 Munters has taken several measures to strengthen the attractiveness of
Munters as an employer, for example a project aiming at strengthening Munters employer brand. A global Human Capital Management platform was introduced in 2022
(Workday).

	C ORPORATE GOVERNANCE
AT MUNTERS GROUPCORPORATE GOVERNANCE REPORT 2022
– BOARD– GROUP MANAGEMENTRISKS AND RISK MANAGEMENTFINANCIAL INFORMATIONOTHER

OPERATIONALRISKSMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Financial information
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

06
Financial information 97

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Financial information
Content Financial reports
98
Board of Directors’ report
99
Financial statements, GroupStatement of comprehensive
income104
Statement of financial position
105
Statement of changes in equity 106
Cash flow statement
107
Financial statements,
Parent Company
Income statement
108
Balance sheet
108
Change in equity
109
Cash flow statement
110
Notes
111
The Board’s assurance
138
Auditor’s Report
139
Auditor’s report on the corporate
governance statement
143
Auditor’s report on the statutory
sustainability statement
143
Definitions
144

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Notes
Note 1

Accounting principles

111

Note 19 Accounts receivables

127

Note 2Significant estimates and assessments

117

Note 20 Prepaid expenses and accrued income

128

Note 3Financial risk management

117

Note 21 Equity

128

Note 4

Net sales

119

Note 22 Proposed distribution of earnings

128

Note 5

Operating segments

120

Note 23 Financial instruments by category

129

Note 6

Cost by nature

121

Note 24 Interest-bearing liabilities

130

Note 7

Fees to auditors

121

Note 25 Provisions for pensions

131

Note 8Depreciation, amortization and impairment losses

121

Note 26 Other provisions

132

Note 9Other operating income and expenses

121

Note 27 Accrued expenses and deferred income

132

Note 10 Financial income and expenses

121

132

Note 11 Income taxes

122

Note 28 Pledged assets, contingent assets andcontingent liabilities

Note 12 Earnings per share

122

Note 13 Intangible assets

123

Note 14 Property, plant and equipment

125

Note 15 Right-of-use assets

126

Note 16 Participations in subsidiaries

127

Note 17 Participations in associated companies
Note 18 Inventory

Note 29 Transactions with related parties

132

Note 30 Business combinations

133

Note 31 Average number of employees and gender

133

Note 32 Salaries, other remuneration and social
security expenses

134

127

Note 33 Remuneration to the board andsenior executives

134

127

Note 34 Long term incentive programs

136

Content financial information
Financial information 98

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Board of Directors’ report

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONThe Board of Directors and the CEO of Munters
Group AB (publ), corp. reg. no. 556819-2321, with
its registered office in Stockholm, Sweden, hereby
submits the consolidated accounts and annual reportfor the fiscal year January 1 to December 31 2022.
The address of the headquarter is Munters
Group AB, Box 1188, SE-164 40 Kista, Sweden,
visiting address Borgafjordsgatan 16 in Kista.
“Munters Group AB” or “the Parent Company” refer
to Munters Group AB (publ), and “Munters” or “theGroup” refer to the Munters Group, which comprises
Munters Group AB and its Group companies.
The Board of Directors approved the annual
accounts for publication February 28, 2023. The
Group and Parent Company statement of comprehensive income and financial position will be submitted for approval at the Annual General Meetingon May 17, 2023.

OPERATIONSThe Munters Group is a world-leading supplier ofenergy efficient dehumidification and air treatment
solutions. Using innovative technology, Munters’
experts create the perfect climate for customers ina variety of business segments. Munters has been apioneer in the field of air treatment since the company was founded in 1955. As of now production
and sales occur in over 30 countries by about
4,000 coworkers. Munters Group AB has been
listed on Nasdaq Stockholm since 2017 and isorganized into three business areas: AirTech, Data
Center Technologies and FoodTech.
Financial information by segment is presented
in Note 5, Operating segments.

Order intake
Net sales
Operating profit
Operating margin, %Profit/loss after financial items
Net income
Net debt
Equity/assets ratio, %Total assets
Investments in tangible and intangible assets
Number of employees at the end of the year

2022

2021

2020

2019

2018

16,83010,386
881
8.5
739
577
3,825
34
15,419
539
3,940

9,013
7,348
753
10.2
668
515
2,389
41
10,742
342
3,315

7,249
7,015
707
10.1
552
432
2,116
39
9,574
217
3,214

7,302
7,153
556
7.8
367
283
3,062
36
10,093
191
3,088

6,698
6,412
529
8.3
404
327
2,843
40
9,268
232
3,518

In 2020 Munters Data Center business in Belgium was discontinued. The summary above refers to continuing operations
and is restated for the years 2018–2020 to reflect only continuing operations.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Order intake increased by 87% to MSEK 16,830(9,013), primarily driven by increased demand
within Data Center Technologies and AirTech. Data
Center Technologies received multiple large orders
from colocation operators in the US during theyear. In September the Groups largest order ever
was received valued at MUSD 176 for SyCool Splitsystems.
Net sales increased by 41% to MSEK 10,386(7,348), organic growth was 23%. Growth was
driven by strong demand in AirTech and Data Center Technologies with organic growth of 31% and
35% respectively while FoodTech showed negative
organic growth of –2%.

restructuring projects in AirTech and FoodTechamounting to MSEK –35 (–124) and costs related
to closure of business activities in Russia andBelarus following the war in Ukraine amounting to
MSEK –27. In addition, items affecting comparability of MSEK –12 (62), mainly related to M&A
activities, have been recognized during the year.
Adjusted EBITA amounted to MSEK 1,070(889), corresponding to an adjusted EBITA marginof 10.3% (12.1).
Financial items

Financial income and expenses amounted to MSEK
–142 (–84), whereof interest expense on lease liabilities amounted to MSEK –23 (–15). The average
weighted interest rate including fees per the end of
December was 6.0% (2.2).

Operating profit

FIVE-YEAR SUMMARYMSEK unless otherwise stated

NET SALES AND RESULT
Order intake and net sales

Operating profit amounted to MSEK 881 (753),
which constitutes an operating profit margin of
8.5% (10.2). AirTech showed somewhat improved
operating margin while the profitability in Data
Center Technologies and FoodTech decreased.
Further operating profit was negatively impacted by central expenses following investments indigitalization and automization to build a scalable
business to capture continued growth.
Amortization and write-downs of intangible
assets for the year was MSEK –114 (–74), where
MSEK –36 (–30) related to amortization of intangible assets from acquisitions.
Operating profit includes items affecting
comparability of MSEK –75 (–62). Items affecting
comparability primarily relates to the on-going

Taxes

Income taxes for the year was MSEK –162 (–153).
The effective tax rate in 2022 was 22% (23).
Investments and leases

Investments in property, plant and equipment
amounted to MSEK 222 (138). Investments in intangible assets amounted to MSEK 317 (204) and was
primarily related to capitalized R&D expenses in
Sweden, Israel, and US but also capitalization of
expenses related to a new global ERP system thathave not yet been taken into use.
The Group entered into new lease contracts
amounting to MSEK 482 (124). The new contracts
primarily relate to production facilities in US andCzech Republic.

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Goodwill

Goodwill at December 31, 2022, amounted to
MSEK 5,359 (4,248). Business combinations
made up MSEK 598 of the increase while currency
exchange-rate differences explained the remaining
part.

Unutilized part of the RCF as of December 31
amounted to MEUR 65 (163).
Along with the primary loan facilities, anamount of MSEK 2 (13) in local debt is outstandingin, for example, Ireland. The backup facility with
EKN was unutilized and the new loan from NIB
undrawn.

Financial position and liquidity

Interest-bearing liabilities, including lease liabilities,
increased by MSEK 1,745 during the year andamounted to MSEK 4,495 (2,750) as of December
31. Cash and cash equivalents amounted to MSEK
914 (674) as of year-end.
Munters primary financing facilities consists ofa term loan of MUSD 165 and a Revolving Credit
Facility (RCF) of MEUR 250 with final maturity
date in June 2026. The facilities are granted bya group of six banks and have no mandatory
amortization requirement. Since November 2021
Munters has linked the loan facilities to sustainability targets. The primary financing facilities have
one financial covenant, consolidated net debt inrelation to adjusted EBITDA, with some adjustments
made in accordance with the loan agreement. The
accounting standard for leases, IFRS 16, does notaffect the covenant calculation according to theloan agreement definition and neither does the net
pension liability.
Munters also has a backup facility of MSEK
750 maturing in 2023 which is secured by aguarantee from EKN (The Swedish Export Credit
Agency). In December 2022 a new 7-year termloan of MSEK 750 from the Nordic Investment
Bank (NIB) was signed.
Net debt as of December 31 amounted to
MSEK 3,825 compared to MSEK 2,389 at theend of December 2021. Net debt in relation to
Adjusted EBITDA was 2.9x at the end of December
2022 compared to 2.2x at the end of December
2021. The slightly higher leverage ratio is mainly aconsequence of acquisitions and increased leaseliabilities related to the new factories.
At the end of December the term loan facility of
MUSD 165 was fully drawn. Of the RCF of MEUR
250 an amount of MEUR 185 (87) was utilized.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

SIGNIFICANT EVENTS DURING THE YEAR
New business area Data Center Technologies

During the year Data Center Technologies became
a separate business area after previously having
been a part of AirTech.
Data centers is a prioritized and growing
market segment for Munters, which has achieved
high traction and strong growth. Our data center
solutions, technologies and customer projects are
specialized for the segment and will benefit fromincreased focus in the organization. The change
also aims to decentralize business responsibility
and simplify the way we work.
Stefan Aspman, former Group Vice President
and Head of Commercial Excellence and Strategic
Marketing at Munters, was appointed President ofbusiness area.
Closure of business activities in Russia

As a consequence of the war in Ukraine, Munters
stopped all business activities in Russia and Belarus.
In 2021, net sales in Russia amounted to approximately 1,5 percentage of the Group’s total net
sales. Munters had no employees in the area.
Large orders

During the year Munters has seen a large increasein demand and signed a number of large orders..
In July, Munters announced the signing of alarge order of climate control solutions from a large
car manufacturer in the USA. The order had a valueof approximately MUSD 65 and deliveries are expected to start in the second quarter of 2023 andcontinue through the third quarter of 2024.
The battery market segment is one of Munters
prioritized areas for growth.

In August, Munters received multiple orders
from a US-based colocation data center company.
The value of the orders amounted to approximately
MUSD 63 and deliveries are expected to start in
the fourth quarter of 2023 and to be finalized in thefirst quarter of 2025.
In August, Munters announced an order for
Sycool Split Systems from a leading Data Center
colocation operator in the US with a value ofapproximately MUSD 176, including Munters
SyCool Split systems as well as field service work.
Deliveries are expected to take place over a periodof up to 12 months throughout 2024, starting inJanuary 2024.

dehumidification systems was opened in September. The factory with its 10,000 m2 of workspace,
will mainly produce the dehumidification system
Munters DSS Pro. The new factory is designed withsustainability in mind, giving our employees thebest, modern, working environments.
In September, a new factory for the production of advanced and energy-efficient coolingequipment for data centers was opened. The new
34,000 m² manufacturing facility is Munters largest
plant in the Americas. The factory is designed withMunters net-zero emissions target in mind withupcoming installation of solar panels on the roof,
estimated to cover a large part of the daily energy
consumption.

Acquisitions

In January, Munters acquired EDPAC, an Irelandbased manufacturer of data center cooling equipment and air handling systems for a purchase priceof MEUR 29. The acquisition is part of Muntersstrategy to grow in the prioritized data center segment and strengthens its presence in Europe throughthe acquisition.
In November, Munters announced the acquisitions of Hygromedia and Rotor Source, both located in Baton Rouge, Louisiana, USA. Hygromedia
LLC specializes in components, supplying desiccantrotor manufacturers in the US, Europe and Asia.
Rotor Source Inc. provides desiccant dehumidification and energy recovery products to OEMs,
mainly for heating, ventilation, and air conditioning(HVAC) systems. Customer segments include lithium-ion battery, pharmaceuticals, electronics, foodprocessing, aerospace, among others. Through theacquisitions we strengthen our position as a leading
supplier of desiccant dehumidification technology
systems for numerous industrial processes. These
acquisitions provide Munters with an additional
channel to market to serve it even better.
Munters opened new factories

To meet growing demand from battery producers,
the food industry, as well as the pharmaceuticalindustry a new factory for production of industrial

Munters builds new facility in US

In November, Munters announced that an all-newsite in the US will be built, to house desiccantdehumidification products and services for the
North American market. The new facility will house
fabrication, assembly, rotor production, a new
R&D lab, as well as a service training academy.
The ~ 38,000 m² flagship facility will be located inAmesbury, Massachusetts, USA and will be hometo the Munters workforce in Amesbury. In-line withMunters sustainability goals, investments will bemade in equipment that does not rely on fossil fuels,
and renewable energy sources will be used for thebuilding’s electrical consumption. The plan is to be
fully operational at the new site during 2024.
Changes to the management team

In May Henrik Teiwik was appointed Group Vice
President and President for business area AirTech.
Henrik has extensive leadership experience as
CEO of Handicare Group and before that as Vice
President of Alimak Group.
In June Stefan Aspman, previously Group Vice
President and Head of Commercial Excellence andStrategic Marketing was appointed President of the
newly formed business area Data Center Technologies.

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Annual General Meeting 2022

The Annual General Meeting of Munters GroupAB was held on Wednesday, May 19, 2022. Dueto the corona virus and in order to reduce the riskof infection, the Board of Directors decided that
the Meeting should be held only by postal vote on
the basis of the temporary legal rules that appliedin 2022. This meant that the meeting was held
without the physical presence of shareholders,
representatives or third parties. The AGM resolvedin accordance with the Nomination Committee’s
proposal and re-elected board members Håkan
Buskhe, Helen Fasth Gillstedt, Kristian Sildeby andAnna Westerberg and elected Maria Håkansson,
Anders Lindqvist and Magnus Nicolin.
Nomination Committee for
the Annual General Meeting 2023

In October, the Nomination Committee of Munters
Group AB was appointed. Magnus Fernström,
FAM AB, Chairman of the Nomination Committee,
Hans Christian Bratterud, ODIN Fonder, Lovisa
Runge, Fourth Swedish National Pension Fund,
Mats Larsson, First Swedish National Pension Fund.
Prior to the Annual General Meeting 2023, theNomination Committee shall submit proposals for
the Chairman of the Annual General Meeting, theBoard of Directors, The Chairman of the Board,
auditor, Board fees with a division between the
Chairman and other members and remuneration
for committee work, fees to the company’s auditor
and, if necessary, proposals for changes to theNomination Committee instruction.
FINANCIAL INSTRUMENTS

The financial instruments in the Group, in addition
to those arising from operating activities, consistsof interest-bearing bank borrowing and currency
derivatives. Further information on financial instruments can be found in Notes 3, 23 and 24.
RESEARCH AND DEVELOPMENT

Research and development costs amounted to
MSEK 236 (162), corresponding to 2.3% (2.5)
of net sales. Capitalization of internally generated

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

intangible assets amounted to MSEK 159 (118).
Activities in the field include research collaborations, technology and product development andproduct ownership. To ensure sustainable value
creation, innovation, development and productlaunches are balanced. A clear trend has been tofocus on digitization and smarter products.
Sustainability and energy efficiency aresomething Munters considers very important, anda large part of our research resources are used
for the development of new technologies in theseareas.
EMPLOYEESAt the end of the year, the number of permanent
full-time equivalents was 3,940 (3,315). The
increase was linked to business combinations,investments in research and development, staff in
factories and a strengthening of the company’sgroup corporate functions.
For remuneration to senior executives as well as
adopted remuneration guidelines for this remuneration see Note 33.
SIGNIFICANT RISKS & UNCERTAINTIESThe Group’s significant risks and uncertainties
can be divided into four categories: strategic,
operational, financial and regulatory risks. In thesecategories, there are both risks due to political andmacroeconomic trends and specific risks directly
linked to the business carried out by the Group.
A risk assessment is carried out on an annual basis
and the purpose is to identify and address the mostimportant risks.
Munters products are used in complex customer processes. Quality and contract obligations are critical and could result in claims fromdamages. The Group depends to some extent on
key customers and key personnel. Consideringthat Munters is a company with geographicallywidespread operations and many small organizational units, there is a risk of failure to comply with
relevant regulations in the business ethics area,
e.g. anti-bribery rules.

A risk assessment is performed annually for the
purpose of identifying and remedying the most important risks. Munters’ primary risks are defined as
the company’s most important identified risks andare presented on the pages 91–96 of this report.
The Group’s financial risks mainly consist of
currency, interest and financing. Munters works
actively with insurance solutions, and Group-wide
policies are governed by central guidelines. These
include general liability and product liability, property, business interruptions, transportation, director
and officer liability insurance and employment
practice liability, the main purpose of which is toprevent property damage and business interruptions. A more extensive description of financial risks
and how these are managed can be found in note 3.
PARENT COMPANY

The parent company has no sales of goods and services to external customers. Cash and cash equivalents at the end of the year amounted to MSEK 0 (0).
At the end of the year, the parent company had five
permanent employees, three men and two women.
SHARE CAPITAL AND OWNERSHIP INMUNTERS GROUP AB

The share capital of 5,533,735 SEK comprises of
184,457,817 shares with a par value of SEK 0.03
per share where of 2,389,358 treasury shares The
shares in Munters Group AB are listed on Nasdaq
Stockholm under the name MTRS. The ten largest
owners in Munters Group AB hold a total of 64,9%(71,0) of outstanding shares. Of these, FAM AB
holds 28,0% (27,8). No other shareholder holds
more than ten per cent of the shares, either directly
or indirectly, in Munters Group AB.
PROPOSAL ON DISTRIBUTION OF DIVIDENDAt the disposal of the Annual General Meetingare the following earnings; KSEK 3,893,879. The
Board of Directors of Munters Group AB proposesthat the Annual General Meeting 2023 resolves
that a dividend of SEK 0.95 be paid for 2022,
implying MSEK 175 and that other retained earnings amounting to MSEK 3,719 be carried forward.

PROVISIONS IN ARTICLES OF ASSOCIATIONThe Annual General Meeting is charged withappointing and dismissing Board members. The
Annual General Meeting decides on changes to
the Articles of Association.
GUIDELINES FOR REMUNERATIONTO SENIOR EXECUTIVES

The guidelines for remuneration to senior executives
that has applied in 2022 are shown in Note 33.
The company’s auditors have reviewed that theguidelines decided by the Annual General Meeting
have been followed.
The Board of Directors proposes that the 2023
annual general meeting resolve on guidelines forthe remuneration of senior executives to be in force
until further notice, pursuant to the following.
The group of executives encompassed by theguidelines comprises the CEO and other membersof the group management. The guidelines also
encompass any remuneration to Board members,
other than Board fees. The guidelines shall apply
to remuneration agreed, and amendments toremuneration already agreed, after adoption of theguidelines by the 2023 annual general meeting.
The guidelines do not apply to any remuneration
resolved by the general meeting.
The guidelines’ promotion of the company’sbusiness strategy, long-term interestsand sustainability

Munters business strategy is to be a global
leader in energy-efficient and sustainable climate
solutions. Our solutions enable energy efficient
production processes with reduced carbon dioxide
emissions for our customers. Using innovative technologies, Munters creates the perfect climate fordemanding and sophisticated industrial applications and processes, of which the largest segments
are food, pharmaceuticals, and agriculture.

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INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Munters conducts operations in three business areas:» AirTech is a global leader in energy-efficient air
treatment for industrial and commercial fields ofapplication.
» Data Center Technologies is a leading supplierof advanced climate cooling solutions using awide range of heat rejection technologies thatcreate sustainable climate solutions for data
center operators worldwide..
» FoodTech is one of the world’s leading suppliers of innovative and energy-efficient climate
systems for livestock farming and greenhouses,
as well as software for controlling and optimising
the entire food production value chain.
For further information regarding Munters business strategy, see Munters website (https://www.
munters.com/en/about-us/munters-in-short/).
A prerequisite for the successful implementationof Munters business strategy and safeguarding of
the company’s long-term interests, including its sustainability, as well as delivery on the ambitions thecompany has, is that the company is able to recruitand retain qualified personnel. In order to do so,
Munters must be able to offer a competitive total
remuneration based on market terms, which theseguidelines enable.
Munters has implemented long-term share-related incentive programs in 2017–2020, in whichsome senior executives have had the opportunity toparticipate. These programs have been resolved byeach general meeting and are therefore excluded
from these guidelines. For information regarding
performance criteria, terms and conditions, andcosts for these programs, see the Board of Directors’ complete proposal for each general meetingon Munters website and in Munters annual report.
Variable cash remuneration covered by theseguidelines shall aim to promote the company’sbusiness strategy and long-term interests, including
its sustainability
Types of remuneration

The remuneration shall be on market terms and may
consist of the following components: fixed annual
cash salary, variable cash salary, pension and other

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

benefits. Additionally, the general meeting may –irrespective of these guidelines – resolve on, for example, share and share price-related remuneration.
Fixed cash salary

The fixed cash salary shall reflect the demands andresponsibility that the position entails as well as
individual performance. The fixed cash salary shallbe revised annually.
Variable cash salary

Variable cash salary may consist of annual variable
cash salary and /or long-term variable cash salary.
The annual variable cash salary shall be maximized to 50 per cent of the fixed annual cash salary
for the CEO and other senior executives. The satisfaction of criteria for awarding variable cash salary
shall be measured over a period of one year.
The annual variable cash salary shall belinked to predetermined and measurable financial criteria, such as operating result and working
capital. By linking the remuneration of the senior
executives to the company’s earnings and financing
of its operating activities, the criteria promote theimplementation of the company’s business strategy
and long-term interests, including its sustainability.
Furthermore, the criteria for variable cash salary
shall be designed so that they do not encourage
excessive risk taking.
The long-term variable cash salary shall beawarded after one, two, and three years, respectively, and shall be maximized to a total of 150 per
cent of the annual fixed cash salary for the CEO,and 55 per cent of the annual fixed cash salary forother members of Group Management, distributed pro-rata over the three years. The satisfactionof criteria for pay out of long-term variable cash
salary shall be measured during a one-, two- andthree-year period, respectively, before pay out.
The long-term variable cash salary shall belinked to predetermined and measurable financial
criteria (weighting 70 per cent) and non-financial
criteria (weighting 30 per cent). The financial
criteria may consist of, for example, adjusted EBITA
and Operating Working Capital and the non-finan-cial criteria may consist of, for example, weighted
sustainability goals (such as the annual increase in
the share of electricity from renewable sources inour production facilities, the annual share of female
managers who have been appointed within thegroup, as well as the annual service growth within
the group). By linking the remuneration of the senior
executives to the company’s earnings, financing of
day-to-day operations, and sustainability, the criteria promote the implementation of the company’sbusiness strategy and long-term interests, including
its sustainability. The criteria for long-term variable
cash salary shall be designed so that they do not
encourage excessive risk-taking.
A certain part of the net amount after tax
of paid out as long-term variable cash salaryis expected to be invested in Munters shares,
according to the share ownership policy which theBoard has adopted. The entire net amount after tax
is expected to be invested in Munters shares until
the holding in value corresponds to 200 per centof the gross annual fixed cash salary for the CEO
and 100 per cent of the gross annual fixed cash
salary for other members of Group Management.
When such a holding has been achieved, half ofthe net amount after tax is expected to be invested
in Munters shares.
To which extent the criteria for awarding variable cash salary have been satisfied shall be evaluated when the measurement period has ended. The
Board of Directors is responsible for the evaluation
so far as it concerns variable cash salary to theCEO. The Remuneration Committee is responsible
for the evaluation so far as it concerns variable
cash salary to other members of the Group Management. For financial objectives, the evaluation
shall be based on the latest financial information
made public by the company.
Terms and conditions for both annual variable
cash salary and long-term variable cash salary
shall be designed so that the Board of Directors, if
exceptional economic circumstances prevail, has
the option of limiting or refraining from payment if
such a measure is considered reasonable.

Additional variable cash remuneration may beawarded in extraordinary circumstances, provided
that such extraordinary arrangements are limited intime and only made on an individual basis, either
for the purpose of recruiting or retaining executives,
or as remuneration for extraordinary performance
beyond the individual’s ordinary tasks. Such remuneration may not exceed an amount corresponding
to 50 per cent of the fixed annual cash salary andshall not be paid more than once per year and per
individual. Resolution on such remuneration shallbe made by the Board of Directors based on a
proposal from the Compensation Committee
PensionFor the CEO, pension benefits, including healthinsurance, shall be defined contribution. Variable
cash salary shall not qualify for pension benefits.
Pension contributions for defined contribution
pension shall amount to not more than 35 per centof the fixed annual cash salary.
For other members of the group management,
pension benefits, including health insurance,
shall be defined contribution unless the executive
concerned is subject to defined benefit pension
under mandatory collective agreement provisions.
Variable cash salary shall qualify for pension benefits to the extent required by mandatory collective
agreement provisions applicable to the executive.
Pension contributions for defined contribution
pension shall amount to not more than 35 per centof the fixed annual cash salary.
Other benefits and compensation

Other compensation may consist of other benefits
that are customary and in line with market terms,
such as medical insurance, life insurance and company cars, which shall not constitute a significant
part of the total remuneration. Such benefits may
amount to not more than 10 per cent of the fixedannual cash salary.
For employments governed by rules other than
Swedish, pension benefits and other benefits may
be duly adjusted for compliance with mandatory
rules or established local practice, taking into

Board of directors’ report 102

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

account, to the extent possible, the overall purposeof these guidelines.
Consultancy fee to Board members

In specific cases, and for a limited time, Munters
Board members elected by the general meeting may
be able to be remunerated for services within theirrespective areas of expertise, which does not constitute board work. For these services (including services
performed by a Board member wholly-owned company), a fee on market terms can be paid, provided
that such services contribute to the implementationof Munters business strategy and safeguarding of
Munters long-term interests, including its sustainability.
Such consultancy fee may, for each Board member, inno case exceed one year’s Board fee.

	CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT	NOTES
	THE BOARD’S ASSURANCE	AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Termination of employment

Fixed cash salary during the notice period andseverance pay, as well as remuneration for any
non-compete restrictions, shall in total not exceed
an amount corresponding to the fixed cash salary
for two years for the CEO and 18 months for othermembers of the group management. Severance pay
shall not be paid if notice of termination of employment is made by the CEO and other members of thegroup management. The notice period between thecompany and the CEO, and other members of thegroup management, shall not exceed 6 months.
Remuneration for any non-compete restrictions
shall compensate for any loss of income and shall
only be paid for such period as the former executive does not have the right to severance pay. The
remuneration shall amount to not more than 60 per

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

cent of the fixed annual cash salary at the time of termination of employment, unless otherwise provided
by mandatory collective agreement provisions,and shall be payable during the period subject tothe non-compete restriction, which shall not exceed
12 months after termination of employment.
Salary and employment conditions for employees

In the preparation of the Board of Directors’
proposal for these remuneration guidelines, salaryand employment conditions for employees of thecompany and the group’s Swedish operation havebeen taken into account by including informationon the employees’ total remuneration, the components of the remuneration and increase and growthrate over time, in the Compensation Committee’s
and the Board of Directors’ basis of decision whenevaluating whether the guidelines and the limitations set out herein are reasonable In the company, i.e. in Munters Group AB, there are only five
employees, all are senior executives.
Preparation and decision-making process

The Board of Directors has established a Compensation Committee. The committee’s tasks include,
among other things, preparing the Board of Directors’ decision to propose guidelines for remuneration to senior executives. The Board of Directors
shall prepare a proposal for new guidelines at least
every fourth year and submit the proposal to theannual general meeting. The guidelines shall be inforce until new guidelines are adopted by the general meeting. The Compensation Committee shallalso monitor and evaluate programs for variable

remuneration for the group management, the application of the guidelines for remuneration to senior
executives as well as the current remuneration
structures and compensation levels in the company.
The CEO and other members of the group management do not participate in the Board of Directors’
processing of and resolutions regarding remuneration-related matters in so far as they are affected bysuch matters. Remuneration to the CEO is preparedby the Compensation Committee and decided
by the Board of Directors. Remuneration to othermembers of the group management is preparedby the CEO and decided by the Compensation
Committee.

CORPORATE GOVERNANCE REPORTAND SUSTAINABILITY REPORT

Munters Group AB has chosen to prepare the Corporate Governance Report and Sustainability Reportas a separate document from the Annual Report.
The Corporate Governance Report is outlined
on Pages 84–90 and the Sustainability Report on
Pages 3–4, 10, 12–22 and 49–80. The sustainability report now also includes Munters taxonomy
report. For descriptions of risks and controls in
conjunction with preparation of the consolidated
accounts, refer to the Corporate Governance
Report.
FINANCIAL STATEMENTS AND NOTES

Derogation from the guidelines

The Board of Directors may temporarily resolve
to derogate from the guidelines resolved by thegeneral meeting, in whole or in part, if in a specificcase there is special cause for the derogation anda derogation is necessary to serve the company’s
long-term interests, including its sustainability, or toensure the company’s financial viability. As statedabove, the Compensation Committee’s tasks include preparing the Board of Directors’ resolutions
in remuneration-related matters, which includes
preparing any resolutions to derogate from theguidelines.
SIGNIFICANT EVENTS AFTER
THE BALANCE SHEET DATEThe Group’s income and financial position in otherrespects are presented in the following statementsof comprehensive income, financial position, cash
flows and changes in equity, as well as in theNotes. The Parent Company’s income and financial
position in other respects are presented in thefollowing income statement and balance sheet,statement of changes in equity, cash flow statement
and notes. All amounts are in millions of Swedishkronor (MSEK) unless otherwise specified.
Totals quoted in tables and statements may
not always be the exact sum of the individual items
because of rounding differences. The aim is thateach line item should correspond to its source androunding differences may therefore arise.

No significant events have occurred after the balance sheet date.

Board of directors’ report 103

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Consolidated statement of comprehensive income
MSEK

Note

2022

2021

Net sales
Cost of goods sold
Gross profit

4, 5

10,386–7,3683,017

7,348–4,9942,354–1,079
–800
–236
–19
–2
881

–844
–556
–162
–39
–
753

7
–150
739
–162
577

2
–86
668
–153
515

577
–0

513
3

3.18
3.17

2.81
2.81

Selling expenses
Administrative expenses
Research and development costs
Other operating income and expenses
Share of earnings in associates
Operating profit
Financial income
Financial expenses
Profit after financial items
Tax
Net income

95, 6, 7, 8
10
10
11

Attributable to Parent Company shareholders
Attributable to non-controlling interests
Earnings per share attributable to Parent Company shareholders
Earnings per share before dilution, SEK
Earnings per share after dilution, SEK

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

12
12

MSEK

Note

2022

2021

483

268

25

91

–3

11

–18
555

–0
264

1,132
1,133
–1

779
779
1

Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange-rate differences on translation of foreign operations
Items that will not be reclassified to profit or loss:
Actuarial gains and losses on defined-benefit pension obligations
incl. payroll tax
Income tax effect not to be reclassified to profit or loss
Other comprehensive income
Total comprehensive income
Attributable to Parent Company shareholders
Attributable to non-controlling interests

FINANCIAL STATEMENTS GROUP 104

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP
F	 INANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Consolidated statement of financial position
MSEK

Note

2022

2021

ASSETS
Non-current assets
Intangible assets
Property, plant and equipment

8, 13
8, 14

7,386
825

5,834
611

Right-of-Use assets
Participations in associated companies
Other financial assets
Deferred tax assets

8, 15
17
23
11

751
34
83
298

360
–
20
278

9,376

7,103

1,956
2,235
2
93
159
684
914
6,042
15,419

1,073
1,394
1
52
78
368
674
3,639
10,742

Total non-current assets
Current assets
Inventory
Accounts receivable
Derivative instruments
Current tax assets
Other receivables
Prepaid expenses and accrued income
Cash and cash equivalents
Total current assets
TOTAL ASSETS

18
3,19,23
23
23
20
23

MSEK
EQUITY AND LIABILITIES
EquityAttributable to Parent Company shareholders
Share capital
Other capital contributions
Reserves
Profit brought forward
Total equity attributable to Parent Company shareholders

2022

2021

6
5,144
1,096
–943
5,303

6
5,144
610
–1,401
4,360

3
5,307

3
4,363

23, 2423, 24
25
26
23
11

3,721
640
227
65
223
442
5,318

2,362
273
303
62
140
405
3,546

23, 2423, 24
25
26
23

–
135
–
150
1,288
55
1,715
257
1,194
4,794
15,419

11
103
6
157
771
40
648
100
998
2,833
10,74221

Non-controlling interests
Total equity
Non-current liabilities
Interest-bearing liabilities
Lease liabilities
Provisions for pensions
Other provisions
Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Interest-bearing liabilities
Lease liabilities
Provisions for pensions
Other provisions
Accounts payable
Current tax liabilities
Advances from customers
Other current liabilities
Accrued expenses and deferred income
Total current liabilities
TOTAL EQUITY AND LIABILITIESMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Note

4
23
27

FINANCIAL STATEMENTS GROUP 105

06

Consolidated statement of changes in equity
Attributable to Parent Company shareholders

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Total

Non-controllinginterests

Total
equity–1,401

4,360

3

4,363

–
484
484

577
72
649

577
556
1,133

–0
–1
–1

577
555
1,132

–
–
–
–
–
–
–

–
–
–
–
–
1
1

25
–3
–58
–154
0
–1
–191

25
–3
–58
–154
0
–
–190

0
3
–
–2
–
–
1

25
–
–58
–156
0
–
–189

6

5,144

1,096

–943

5,303

3

5,307

Opening balance, January 1, 2021

6

5,144

341

–1,745

3,746

5

3,751

Net income
Other comprehensive income
Total comprehensive income

–
–
–

–
–
–

–
270
270

513
–4
509

513
266
779

3
–2
1

515
264
779

40
–0
–4
–127
–69
–5
1
–165

–
–1
–
–2
–
–
–
–3

40
–1
–4
–129
–69
–5
1
–168

4,360

3

4,363

Share
capitalOther capital
contributions

Opening balance, January 1, 2022

6

5,144

610

Net income
Other comprehensive income
Total comprehensive income

–
–
–

–
–
–

Transactions with owners in their capacity as owners:
Exercised share options
Change in non-controlling interests
Put/call option related to non-controlling interests
Dividends paid
Share option plan incl. deferred tax
Other
Total transactions with owners

–
–
–
–
–
–
–

Closing balance, December 31, 2022

MSEK

Translation Profit brought
reserveforwardTransactions with owners in their capacity as owners:
Exercised share options
Change in non-controlling interests
Put/call option related to non-controlling interests
Dividends paid
Repurchase of shares
Share option plan incl. deferred tax
Other
Total transactions with owners

–
–
–

–
–
–

–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

40
–0
–4
–127
–69
–5
1
–165

Closing balance, December 31, 2021

6

5,144

610

–1,401

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

FINANCIAL STATEMENTS GROUP 106

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Consolidated cash flow statement
MSEK
Operating activities
Operating profit
Reversal of non-cash items
Depreciation, amortization and impairments
Other profit/loss items not affecting liquidity
Change in provisions:
Provisions
Cash flow before interest and tax

Note

2022

2021

881

753

377
–24

303
16

–24
1,210

–97
974

–121
–233

–99
–181

Paid financial items
Taxes paid
Cash flow from operating activities before changes in working
capitalCash flow from changes in working capital:
Change in accounts receivable
Change in inventory
Change in accrued income
Change in accounts payable
Change in advances from customers
Cash flow from changes in operating working capital
Change in other working capital
Cash flow from changes in working capital

856

694

–635
–706
–236
397
977
–203
119
–84

–253
–316
49
204
96
–220
45
–175

Cash flow from operating activities

772

519

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

MSEK
Investing activities
Business acquisitions
Investments in associated companies
Investments in participations and securities in other companies
Sale of property, plant and equipment
Sale of intangible assets
Investments in property, plant and equipment
Investments in intangible assets
Cash flow from investing activities
Financing activities
Exercised share options
Loans raised
Amortization of loans
Repayment of lease liabilities
Repurchase of shares
Dividends paid
Dividends paid to non-controlling interests
Other changes to financing activities
Cash flow from financing activities
Cash flow for the period
Cash and cash equivalents at January 1
Exchange-rate difference in cash and cash equivalents
Cash and cash equivalents at December 31

Note

2022

2021

30

–721
–34
–62
27
0
–222
–317
–1,330

–
–
–
2
–
–138
–204
–341

25
1,503
–504
–122
–
–154
–2
–5
743

40
2,311
–2,550
–105
–69
–127
–2
–
–503

184
674
56
914

–324
970
28
674

14
13

24
24
24
21
21

23

FINANCIAL STATEMENTS GROUP 107

06

Parent company income statement

Financial information

MSEK

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORT

2022

2021

Net sales
Gross profit

–
–

–
–

Administrative costs
Other operating income and expenses
Operating profit

–8
8
1

–12
11
–0

–5
–4

–1
–1

7
3

8
7

1
4

1
8

Financial expenses
Profit after financial items

Note

Parent company balance sheet

910Group contributions
Profit before tax

FINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONTax
Net income
STATEMENT OF COMPREHENSIVE INCOME
Net income
Other comprehensive income, net after tax
Comprehensive income for the year

11

4
–
4

8
–
8

MSEK

Note

2022

2021

ASSETS
Non-current assets
Participations in subsidiaries
Deferred tax assets
Total non-current assets

16

4,098
4
4,103

4,094
5
4,100

20

1
1
14
0

1
1
13
0

15
4,118

15
4,115

6

6

4,136
18
–265
4
3,899

4,136
18
–146
8
4,022

3
3

2
2

1
16
192
6
215
4,118

3
18
65
4
91
4,115

Current assets
Prepaid expenses and accrued income
Current tax assets
Receivables from subsidiaries
Cash and cash equivalents
Total current assets
TOTAL ASSETSEQUITY AND LIABILITIES
EquityRestricted equity
Share capital
Unrestricted equity
Share premium reserve
Other capital contributions
Profit brought forward
Income for the year
Total equity

21

Non-current liabilities
Provisions for pensions and similar commitments
Total non-current liabilities
Current liabilities
Accounts payable
Accrued expenses and deferred income
Liabilities to subsidiaries
Other liabilities
Total current liabilities
TOTAL EQUITY AND LIABILITIESMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

27

FINANCIAL STATEMENTS PARENT COMPANY 108

06

Parent company change in equity
RestrictedequityFinancial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENT
NOTES

MSEK

Unrestricted equity

Share Share premium
capitalreserve

Other capital Profit brought
contributions
forwardIncome forthe year

Total equity

Opening balance, 1 January, 2022

6

4,136

18

–146

8

4,022

Income for the year

–

–

–

–

4

4

Transactions with owners in their capacity as owners:
Exercised share options
To be carried forward
Dividends paid
Share option plan incl. deferred tax
Total transactions with owners

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

25
8
–154
2
–119

–
–8
–
–
–4

25
–
–154
2
–123

Closing balance, 31 December, 2022

6

4,136

18

– 265

4

3,899

Opening balance, 1 January, 2021

6

4,136

18

14

–3

4,171

Income for the year

–

–

–

–

8

8

Transactions with owners in their capacity as owners:
Exercised share options
To be carried forward
Dividends paid
Repurchase of shares
Share option plan incl. deferred tax
Total transactions with owners

–
–
–
–
–
–

–
–
–
–
–
–

–
–
–
–
–
–

40
–3
–127
–69
0
–160

–
3
–
–
–
3

40
–
–127
–69
0
–157

Closing balance, 31 December, 2021

6

4,136

18

–146

8

4,022

THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

FINANCIAL STATEMENTS PARENT COMPANY 109

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Parent company cash flow statement
MSEK

Note

2022

2021

Operating activities
Profit after financial items
Profit/loss items not affecting liquidity
Taxes paid
Cash flow from operating activities beforechanges in working capital

–4
2
0

–1
6
–1

–2

5

Cash flow from changes in working capital
Cash flow from operating activities

–3
–5

3
7

25
8
126
–
–154
5

40
22
65
–69
–127
–70

0
0
0

–62
62
0

Financing activities
Exercised share options
Group contributions
Loans raised from subsidiaries
Repurchase of shares
Dividends paid
Cash flow from operating activities
Cash flow for the year
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

21
21

FINANCIAL STATEMENTS PARENT COMPANY 110

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENT
NOTES

Notes
NOTE 1

ACCOUNTING PRINCIPLES

Munters Group AB, corp. reg. no. 556819-2321, is a Swedish public limited
company registered in Sweden with its registered office in Stockholm,
Sweden. This Annual Report and Consolidated Accounts were signed by
the Board of Directors for Munters Group AB on February 28, 2023, andapproved for release by the Board on the same date. The income statements
and balance sheets for the Parent Company and the Group published in the
Annual Report and Consolidated Accounts is to be adopted by the Annual
General Meeting on May 17, 2023. The most important accounting policies
applied in preparing the financial reports are reported below. In general, thesame principles applies for both the Parent Company as for the Group. To theextent which the Parent Company’s accounting policies differ from those of theGroup, or to which it was deemed important to explain the principle appliedin the Parent Company, is indicated under a separate heading at the end of
this Note.

	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONBASIS OF PREPARATIONThe Consolidated Accounts were prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU, the Swedish
Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 1 – Supplementary Accounting Rules for Corporate Groups.
The Parent Company’s Annual Report has been prepared in accordance with
the Annual Accounts Act and with the application of the Swedish Financial
Reporting Board’s recommendation RFR 2 – Accounting for Legal Entities. IFRS
rules for measurement and disclosure are thus applied, with the exception of
the deviations indicated in the section titled Accounting Policies of the Parent
Company.
Basis for assessment
The Consolidated Accounts are based on historical acquisition costs withthe exception of financial derivatives, shares and participations, acquisition
options and purchase considerations that are valued at fair value.
New and amended IFRS applied by the Group
None of the changes related to new and changed standards have had any
impact on any reported amounts and are not expected to have a material
impact on future periods

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

New and amended IFRS that have not started being applied
A number of new standards and interpretations enter into force for the financial
year beginning after 1 January 2022 and have not been applied to the preparation of this financial report. None of these new IFRS or IFRIC changes are
expected to have a significant impact on the Group’s financial statements.
BASIS OF CONSOLIDATIONThe Consolidated Accounts encompass Munters Group AB (the Parent Company) and its subsidiaries. Subsidiaries are all companies over which the Group
has a controlling influence. The Group has controlling influence over a company
when it is exposed to, or has the right to, variable returns from its holdings in thecompany and can impact the returns through its controlling influence in the company. Subsidiaries are included in the Consolidated Accounts as of the date on
which controlling influence was transferred to the Group. They are excluded fromthe Consolidated Accounts as of the date on which controlling influence ceases.
The financial statements for the Parent Company and its subsidiaries
included in the Consolidated Accounts refer to the same period and have been
prepared in accordance with the accounting policies that apply to the Group.
All intra-group transactions, revenues, costs, gains, or losses that arise intransactions between companies included in the Consolidated Accounts havebeen wholly eliminated.
Business acquisitions
The Group assesses for each transaction whether a business combination or an
asset acquisition exists. A business combination exists when the entity acquires controlling influence over a business/businesses. A business consists of activities andassets, which at the minimum consist of inputs and substantial processes that can
produce goods or services to customers to provide returns in the ordinary business.
For transactions where essentially the fair value of the acquired assets
consists of an asset or a group of similar assets, a simplified assessment isrecognized as an asset acquisition. The choice to use the simplified assessment
is applied transaction by transaction.
The Consolidated Accounts have been prepared using application of theacquisition method, which involves eliminating the acquisition cost of shares insubsidiaries against their equity at the time of acquisition. Transaction costs related to acquisitions are not included in the acquisition cost, but are expensed
on an ongoing basis. The equity acquired in the subsidiaries is establishedusing a market-based evaluation of assets, liabilities and contingent liabilities
at the time of acquisition. The Group’s equity thus includes only that part ofthe subsidiaries’ equity that arose after the time of acquisition. In the event ofbusiness combinations where the sum of (i) the acquisition cost of shares in subsidiaries; (ii) the value of holdings without controlling influence; and (iii) the fairvalue of previous holdings exceeds the fair value at the time of acquisition as
regards the Group’s share of the identifiable net assets acquired, the difference
is recognized as goodwill. A potential negative difference – negative goodwill– is recognized as income immediately after being established.
The useful life of each individual intangible asset is established and thenamortized over the established useful life. If the useful life is deemed indefinite,
no amortization is recognized. An assessment that causes the useful life of an
intangible asset to become indefinite takes all the relevant circumstances into
account and is based on the premise that there is no predictable maximum time
limit for the net cash flow generated by the asset. The useful life of goodwill isassumed to be indefinite and goodwill is not amortized.
If the initial recognition of a business combination is incomplete at the end of
the reporting period when the business combination took place, the amounts
for items where recognition is incomplete is recognized on a preliminary basis.
These preliminary amounts can be adjusted during the evaluation period, or
additional assets or liabilities can be recognized, to reflect new information
obtained about the facts and conditions that existed as of the time of acquisition, and would have impacted the recognized amounts at that time if theinformation had been available.
Contingent considerations are classified as financial liabilities and re-evaluated every period to fair value. Re-evaluation profits and losses, if any, arerecognized in income for the year. If the business combination is carried out inseveral steps, the previous equity shares in the acquired company are re-evaluated to their fair values at the time of acquisition. Any resulting profit or loss
arising out of the re-evaluation is recognized in income for the year.
Munters has call options and has issued put options regarding non-controlling interests, which were agreed on in conjunction with the businesscombination. Depending on the conditions in the options as well as in theshareholder agreements, each of the options are classified and recognizedbased on one of the two following principles:» In the event the conditions are deemed to mean that all economic benefits
and disadvantages accrue to Munters right from the time of acquisition, no
non-controlling interest is recognized but a liability equivalent to the fairvalue of the future redemption price, on the other hand, is; changes in value
attributable to the liability are recognized over the income statement. At 31
December 2022, Munters recognizes no options based on this principle.

Notes 111

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION» In the event the conditions in the put/call options are not deemed tomean that all financial benefits and disadvantages accrue to Munters asof the time of acquisition, Munters recognizes non-controlling interests
initially and allocates this part of the income. The Group also recognizes
a liability corresponding to the discounted expected redemption price forthe options whereupon non-controlling participations attributable to theoptions are eliminated. The difference between liabilities for the options andthe non-controlling participations to which the options refer is recognizeddirectly in equity and disclosed separately from other changes in equity.
The dissolution of the discounting effect is also therefore directly recognizedagainst equity. Munters recognized the option attributable to MTech Systems
in the US based on this principle.
Non-controlling interests
In the event of acquisitions under one hundred per cent but where controllinginfluence is achieved, non-controlling interest is determined either as a proportional share of fair value on identifiable net assets excluding goodwill, or at fairvalue. This choice of principle is made for each individual business combination.
Non-controlling interests are recognized as individual items in the Group’s
equity. The Group’s earnings and each component in other comprehensive
income are attributable to the Parent Company’s owners and to non-controlling interests. Losses attributable to non-controlling interests, if any, are also
recognized if it means that the share is negative. Transactions with non-controlling interests that do not lead to loss of control are recognized as equity
transactions (i.e. as transactions with owners in their role as owners). A change
in holdings is recognized through an adjustment of the recognized values forcontrolling and non-controlling interests so that they reflect the changes intheir relative interests in the subsidiary. Upon acquisition from non-controllinginterests, the difference between fair value of purchase consideration paid andthe actual share acquired of the recognized value of the subsidiary’s net assets
are recognized in equity. Profits and losses on divestments to non-controllinginterests are also recognized in equity.
When the Group no longer has controlling interest, each remaining holding
is evaluated at fair value at the time when controlling interest was lost. Thechange in recognized value is recognized in the income statement. Fair value isused as the initial recognized value and constitutes the basis for the continued
recognition of the remaining holding as an associated company, joint venture
or financial asset.
Translation of the accounts, functional currency and reporting
currency of foreign subsidiaries
Items included in the financial reports for the various units in the Group arevalued in the currency used in the economic environment where the respective
companies primarily operate (functional currency).
The Consolidated Accounts are prepared in SEK, which is the functional andreporting currency of the Parent Company. Results of operations and financial
condition for all Group companies that have a functional currency other than thereporting currency are translated into the Group’s reporting currency as follows:

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

» assets and liabilities are translated into the exchange rate on the balancedate;» revenue and costs are translated into the average exchange rate; and all
exchange-rate differences that arise are recognized in other comprehensive
income.
Goodwill and adjustments of fair value that arise in connection withacquisition of foreign operations are handled as assets and liabilities in that
operations and are translated into the exchange rate as of the balance date.
Exchange-rate differences attributable to translation of a net investment inforeign operations are recognized in the Consolidated Accounts, together
with exchange rate differences attributable to borrowing or other financial
instruments classified as hedging instruments for such investments, in Other
comprehensive income and classified as translation reserves in equity. Accumulated gains and losses in equity are recognized in the income statement when
foreign operations are fully or partially divested.
The following foreign exchange rates have been used in translating
accounts:
Average rate

Closing rate

Currency

Country

2022

2021

2022

2021

AUD
CAD
CNY
DKK
EUR
GBP
JPY
NOK
SGD
THB
USD
ZAR

Australia
CanadaChina
DenmarkEuro zone
United Kingdom
Japan
NorwaySingapore
Thailand
United states
South Africa

7.01
7.77
1.50
1.43
10.63
12.47
0.08
1.05
7.34
0.29
10.12
0.62

6.44
6.85
1.33
1.36
10.14
11.80
0.08
1.00
6.38
0.27
8.58
0.58

7.09
7.71
1.50
1.50
11.13
12.58
0.08
1.06
7.78
0.30
10.44
0.61

6.56
7.06
1.42
1.38
10.23
12.18
0.08
1.03
6.68
0.27
9.04
0.57

TRANSACTIONS IN FOREIGN CURRENCIESTransactions denominated in foreign currencies are translated into the functional currency at the exchange rates that apply on the transaction date. Exchange
rate gains and losses that arise in connection with payment of such transactions
and upon translation of monetary assets and liabilities in foreign currency
to the exchange rate on the balance date are recognized in the income
statement. Exchange rate differences concerning operating receivables andoperating liabilities are recognized in EBIT, while exchange rate differences attributable to financial assets and liabilities are recognized as financial income
or financial expense. Realized and unrealized exchange rate differences arethus recognized in income for the year.

SEGMENT REPORTING
Operating segments are reported using a method that tallies with the internalreporting submitted to the chief operating decision maker. The chief operating decision maker is the function responsible for allocating resources andevaluating the Group’s financial position and earnings. In Munters, this function
has been identified as Group Management. Group Management monitors
operations from a product-based perspective, which also constitutes Munters
operating segments: AirTech, Data Center Technologies and FoodTech, which
are also the Groups reportable segments. The accounting policies applied by
the segments are the same policies applied by the Group.
REVENUE RECOGNITION
Munters provides goods such as equipment, components and spare parts tocustomers within two operating segments. Customer contracts can containpure equipment or component sales or sales of equipment including activities
such as installation, startup and commissioning services. Both equipment andinstallation, startup and commissioning services are all distinct in accordancewith the definitions in IFRS 15 meaning any bundled sales will comprise several
performance obligations.
Sale of goods
The majority of customer contracts within Munters fulfill the requirement torecognize revenue at a point in time, which means revenue for the performance obligation to deliver equipment is recognized when this performanceobligation is satisfied (when control passes of the equipment).
Customer contracts within the segment Data Centers Technologies fulfill therequirement to recognize revenue over time, i.e. equipment is highly customized and customer contract terms stipulate that cost incurred will be recovered
with a reasonable profit margin should the customer decide to terminate thecontract. Revenue for the performance obligation to deliver equipment isrecognized over time using a measurement of progress towards complete satisfaction method. Munters uses an output method for this purpose (equipment
produced and passed internal quality control), meaning number of produced
units in relation to total number of units in the customer contract.
Contracts including installation, startup and commissioning activities (bundled sales) include several separate performance obligations and the performance obligations to provide installation, startup and commissioning services
are satisfied over time, which means revenue related to these performanceobligations is recognized over time as the activities are being performed.
In a bundled sale the total transaction price is allocated to each performance obligation according to each performance obligations relative
standalone selling price.
There are in general no significant variable considerations in the customer
contracts, but some contracts agree to volume and cash discounts. In suchcases an estimate is made of the variable considerations that is expected to berefunded to the customer and that part of the transaction price is recognized as
a liability.

Notes 112

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Rendering of service
In addition to installation, startup and commissioning services that comes frombundled sales Munters provides other kind of services to customers such as maintenance services. Revenue from service contracts are recognized over time as thecustomer simultaneously receives and consumes the benefits of the services.
Warranty obligations
Munters provides assurance-type warranties where the warranty is a guarantee of quality of the goods provided. These warranties will continue to beaccounted for under IAS 37 Provision, Contingent Liabilities and Contingent
Assets. Munters commitment to repair or replace defective products in accordance with normal warranty rules is reported as a provision, see Note 26 fordetails.
There are a number of contracts with customers that include extended
warranty. These warranties are regarded as service-type warranties andaccounted for as separate performance obligations with revenue recognizedover the contracted time.
Interest income
Interest income on receivables of long maturity is calculated using the effective-interest method. Interest income includes the accrued amount of transaction
costs and any discounts, premiums, and other differences between the originalvalue of the receivable and the amount received when due.
Dividends
Dividends are recognized as revenue when the right to receive payments has
been established. This applies even if the dividends are disbursed from profits
resulting before the time of acquisition. Consequently, the investment may need
to be tested for impairment.
REPORTING OF GOVERNMENT GRANTS AND GOVERNMENTASSISTANCE
Munters, like other employers, was eligible for different personnel-related
government assistance in connection with the Covid-19 pandemic. All government assistance relating to personnel-related expenses are recognized in
the income statement as cost reductions in the same period as the corresponding underlying cost. Munters has also received government grants in a few
countries. When it’s reasonably certain that these grants will be received, they
are reported as other operating income in the same period as the attributable
costs arise.
WARRANTY COMMITMENTS
Warranty costs are recognized in cost of goods sold. Provisions for warranty
costs are calculated at a standard rate in an amount that corresponds to theaverage warranty costs in relation to sales in the most recent 24-month period,
with an adjustment for known warranty claims exceeding the standard provision.
Provisions for warranty commitments are related to the stated warranty period.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

INCOME TAXESTax expenses for the period cover current tax calculated on taxable earnings
according to the prevailing tax rate. Current tax costs are adjusted withchanges to deferred tax assets and liabilities attributed to temporary differences and loss carry-forwards. Current tax costs are calculated on the basisof the tax regulations decided, or decided in practice, in the countries where
the Parent Company and its subsidiaries operate and generate taxable
income. Taxes are recognized in the income statement except when theunderlying transaction is recognized directly in equity or other comprehensive income, in which case the associated tax is also recognized in equity orother comprehensive income.
Deferred tax is recognized on all temporary differences arising between
the carrying amount on assets and liabilities and their recognized tax base in
the Consolidated Accounts. Deferred tax liability, however, is not recognized
if it arises out of the initial recognition of goodwill. Nor is deferred tax liability
recognized if it arises out of a transaction constituting the initial recognition ofan asset or liability that is not a business combination and at the time of thetransaction impacts neither recognized nor taxable earnings. Deferred income
tax is calculated by applying the prevailing tax rate (and laws) that were
decided or announced as of the balance date and are expected to be in effectwhen the deferred tax asset is realized or a deferred tax liability is settled.
Deferred tax assets on loss carry-forwards are recognized to the extent that it
will be possible to deduct such losses from future profits.
Deferred taxes attributed to temporary differences regarding holdings in
subsidiaries, associated companies or joint ventures are recognized only to theextent to which the Parent Company can control the timing of reversal of thetemporary differences and that it is probable that such a reversal will not occur
in the foreseeable future. Deferred tax assets and liabilities are offset when
there is a legal right to offset for current tax assets and tax liabilities, and when
the deferred tax assets and liabilities are attributed to taxes levied by the sametax authority and relate to either the same tax subject, or different tax subjects
when there is an intent to settle accounts through net payments
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Non-current assets with definite useful life are recognized in the statement offinancial position at acquisition cost, less accumulated depreciation or amortization according to plan and any impairment losses. The assets of acquiredcompanies are recognized at fair value on the date of acquisition.
The acquisition cost of the asset is depreciated or amortized on a straightline basis to the estimated residual value over the anticipated useful life of theasset. For anticipated useful lives, refer to Note 8, Depreciation, amortizationand impairment losses. Each asset’s remaining useful life is tested at the end ofeach accounting period, and adjusted as necessary.
Non-current assets with indefinite useful life are recognized in the statementof financial position at acquisition cost and tested for impairment when there isan indication of impaired value or at least once a year.

Buildings, Land, machinery and equipment
Land is not subject to depreciation because it is considered to have an indefinite useful life. Normal maintenance and repair costs are expensed as theyarise. More extensive renovation and upgrade costs are reported as an asset
and depreciated over the remaining useful life of the asset.
Leasing
Leases are recognized as right-of-use assets and a corresponding liability on
the day that the leased asset is available for use by the Group.
Assets and liabilities arising from leases are initially recognized at present
value. The lease liabilities include the present value of the following lease
payments:» fixed payments (including in-substance fixed payments) after deducting
any incentives in connection with the signing of the lease as well as variable
lease payments that depend on an index or a rate, initially measured withthe help of an index or rate on the commencement date;» amounts expected to be payable by the lessee under residual value guarantees;» the exercise price of an option to purchase the underlying asset if the Groupis reasonably certain to exercise that option;» payments of penalties for terminating the lease, if the lease term reflects that
the Group will exercise an option to terminate the lease.
Lease payments that will be made for reasonably certain options to extend thelease are also included in the measurement of the liability.
The lease payments are discounted by the lease’s implicit interest rate. If thisinterest rate cannot be determined easily, which is normally the case for theGroup’s leases, the marginal loan rate is used, i.e. the rate that the individual
lessee would have paid to borrow the necessary funds to buy an asset ofsimilar value as the right-of-use asset in a similar economic environment withsimilar terms and collateral.
The Group is exposed to future increases in variable lease payments basedon an index or a rate, which are not included in the lease liability until theytake effect. When adjustments of lease payments based on an index or a rate
take effect, the lease liability is remeasured and adjusted against the right-ofuse asset. Lease payments are divided between amortization of the liability
and interest. The interest is recognized in profit and loss over the lease term in a
way that produces a fixed rate for the lease liability recognized in each period.
On the other hand, Munters has no variable payments such as turnover-based
rents or the like.
Options to extend and terminate contracts are included in a number of theGroup’s leases primarily of factories. The terms are used to maximize flexibility.
The overwhelming share of the options to extend and terminate leases can only
be exercised by the Group and not by the lessors.
Munters has no appreciable residual value in the leases.

Notes 113

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Right-of-use asset are measured at cost and include the following:» the amount that the lease liability was originally measured at;» lease payments paid on or before the commencement date, after deducting
any incentives received upon signing the lease;» initial direct costs;» costs to restore the asset to the condition under the terms of the lease.
Right-of-use assets are normally subject to straight-line depreciation over the
shorter of the useful life and the lease term. If Munters is reasonably confidentof exercising a purchase option, the right-of-use asset is depreciated over theuseful life of the underlying asset.
Payments for short-term leases and all leases of low-value assets are expensed on a straight-line basis in the income statement. Short-term leases havea term of 12 months or less. Leases of low-value assets include IT equipment,
telephones and some office furniture
Goodwill
Goodwill relates to the value by which consideration remitted, non-controllinginterest (if any) in one’s own company and the fair value of previous equity sharein the acquired company at the date of acquisition (if the business combination
was carried out in steps) exceed the fair value of identified net assets. If theamount falls below fair value for the net assets acquired (in the event of an acquisition at low price), the difference is recognized directly in the income statement.
Goodwill is not amortized, but is tested for impairment annually or more
often if events or changes in circumstances indicate a possible decrease invalue. Goodwill is reported at acquisition cost less accumulated impairment. In
connection with the sale of a unit, the recognized value of goodwill is includedin the resulting profit/loss.
Patents, licenses and similar intellectual property rights
Direct external expenses for the development of software for internal administrative use are capitalized, provided future efficiency gains are probable andexceed the expenses committed. Activities during the feasibility study phase,and maintenance and training costs, are expensed as they are incurred.
Research and development
Costs for research are expensed as they are incurred. Research expenses arerecognized as an intangible asset in the statement of financial position, provided that it is technically feasible and also that the Group intends to complete theasset for use or sale. There should also be conditions to use and sell the asset,
and it should be possible to demonstrate the probability of future financial benefits. In addition, adequate resources are required to complete the development
and to use or sell the asset. Costs arising before the mentioned criteria are met
are expensed. Amortization of capitalized development starts when the asset
is complete and ready to use. Amortization occurs on a straight-line basis overthe useful life, usually three to five years, and is recognized in the report oncomprehensive income as research and development costs.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Impairment test
When there is an indication that a non-current asset’s value has declined, thecarrying value of the asset is assessed. Goodwill and other intangible assets
with an indefinite useful life are impairment tested on a yearly basis, or more
often if there are indications of impairment.
Impairment testing of individual assets
In the event a carrying value of an asset exceeds its estimated recoverable
amount, the asset is impaired to its recoverable amount. The recoverable
amount is the higher of the asset’s fair value less sales costs, and its value in
use. The recoverable amount is assessed individually for each cash-generating
unit.
Fair value refers to the most likely sale price in a normally functioning market. Value in use refers to the present value of the estimated future cash flowsthat are expected to result from the use of the asset plus the estimate residual
value at the end of the asset’s useful life.
Value in use is normally measured using discounted cash flow models,
which requires assumptions of such parameters as a discount rate, future cash
flows, and the expenses necessary to generate the estimated cash flows. Any
impairment previously recognized is reversed, if the recoverable amount isdeemed to exceed the carrying amount. The reversal amounts are limited suchthat a carrying amount must not exceed what it would have been if no impairment had been recognized in prior periods.
Impairment testing of goodwill
For the purpose of testing the need for impairment, goodwill acquired ina business combination is allocated to cash-generating units or groups ofcash-generating units expected to be favored by synergies in the acquisition.
Each unit or group of units goodwill has been allocated to correspond to thelowest level in the Group at which the goodwill in question is monitored ininternal governance. The Group’s cash-generating units consist of the Group’s
segments: AirTech, Data Center Technologies and FoodTech. Impairment of
goodwill is never reversed.
INVENTORY
Inventory (raw materials and consumables, products in process and finishedproducts and goods for resale) is valued at the lower of acquisition cost andnet sales value. Net sales value is the estimated sale price in operating activities less applicable variable sales costs. For products manufactured in-house,
the acquisition cost consists of direct manufacturing costs plus a reasonable
share of indirect manufacturing costs. Interest expenses are not included in
the value of inventory. Valuation is based on normal capacity utilization. The
acquisition cost is determined using the first-in, first-out method. Otherwise,
weighted average cost may be used if this method is a good approximation of
the first-in, first-out method. Required impairment is recognized for obsolescence based on each item’s age and rate of turnover.

FINANCIAL INSTRUMENTS
Financial instruments are all forms of contracts that give rise to a financial
asset in a company and a financial liability or an equity instrument in anothercompany.
Classification
Munters classifies its financial assets and financial liabilities in the following
measurement categories:» those to be measured subsequently at fair value through profit or loss (FVPL),
and» those to be measured at amortized cost.
Measurement
At initial recognition, the group measures a financial instrument at its fair valueplus, in the case of a financial instruments not at fair value through profit or loss
(FVPL), transaction costs that are directly attributable to the acquisition of thefinancial instruments. Transaction costs directly attributable to financial instruments carried at FVPL are expensed in profit or loss. Subsequent measurement
depends on the group’s business model for managing the instruments andthe cash flow characteristics of the instruments. There are three measurement
categories under IFRS 9.
Amortized cost
Instruments that are held for collection/payment of contractual cash flows
where those cash flows represent solely payments of principal and interest aremeasured at amortized cost. Interest income/expense from these financial
instruments are included in finance income/expense using the effective interest
rate method. Any gain or loss arising on de-recognition is recognized directlyin profit or loss and presented in other gains/(losses) together with foreignexchange gains and losses. Impairment losses are presented as separate line
item in the statement of profit or loss.
Fair value through other comprehensive income (FVOCI)
Assets that are held for collection of contractual cash flows and for sellingthe financial assets, where the assets’ cash flows represent solely payments
of principal and interest, are measured at FVOCI. Movements in the carrying
amount are taken through OCI, except for the recognition of impairment gains
or losses, interest income and foreign exchange gains and losses which arerecognized in profit or loss. When the financial asset is derecognized, thecumulative gain or loss previously recognized in OCI is reclassified from equity
to profit or loss and recognized in other gains/(losses). Interest income fromthese financial assets is included in finance income using the effective interest
rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in thestatement of profit or loss.

Notes 114

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

Fair value through profit and loss statement (FVPL)
Instruments that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain or loss on a debt instrument that is subsequently measured at
FVPL is recognized in profit or loss and presented net within other gains/(losses)
in the period in which it arises.
Accounts receivable and other receivables
As the expected tenor of accounts receivable is short, they are recognized at
the amount expected to be paid based on estimated credit losses with consideration of historical default rates. Any impairments of accounts receivableaffects operating profit or loss. Accounts receivables and other receivables aremeasured at amortized cost.
Derivatives
Derivatives are recognized in the statement of financial position on the trading
date and measured at fair value both initially and in subsequent revaluations
at the end of every reporting period. Changes in value are recognized in theincome statement, no hedge accounting is applied.

CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONCash and cash equivalents
Cash and cash equivalents are defined as cash, bank balances, investments
in securities maturing in three months or less and utilized overdraft facilities.
Utilized overdraft facilities are recognized in the statement of financial position
as current liabilities.
Accounts payable and other payables
Accounts payable are commitments to pay for goods and services acquired
from suppliers in operating activities. Accounts payable and other liabilities areclassified as current liabilities if they fall due within one year. If not, they arerecognized as non-current liabilities. Accounts payables and other liabilities
are measured at amortized cost.
Borrowing
Borrowing is initially recognized at fair value, net after transaction costs. It is
subsequently recognized at amortized cost, as described above under accounts payable and other payables, and any difference between the amountreceived and the amount repaid is recognized in the income statement, allocated over the borrowing period using the effective-interest method.
Fees paid for loan facilities are recognized as transaction costs for borrowing to the extent it is probable that the credit line will be used, either in whole orin part. In such cases, the fee is recognized when the credit line is used. Whenno proof exists that it is probable the credit line will be used, either in whole orin part, the fee is recognized as an advance payment for financial services andallocated over the tenor of the loan commitment in question.
Contingent purchase considerations
Contingent purchase considerations are initially and thereafter, recognized atfair value in the statement of financial position. Changes in value are recognized in other operating income and expenses.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Recognition and derecognition
Purchases and sales of financial assets are recognized on trade-date, the dateon which the group commits to purchase or sell the asset. Financial assets are
derecognized when the rights to receive cash flows from the financial assets
have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

EMPLOYEE BENEFITS
Short-term employee benefits
Liabilities for salaries and benefits expected to be settled within 12 months
after the end of the fiscal year are recognized as current liabilities at the undiscounted amount that is expected to be paid when the liabilities are settled. The
cost is recognized as the services are performed by the employees.

Impairment
The Group assesses on a forward-looking basis the expected credit losses
associated with its debt instruments carried at amortized cost The impairment
methodology applied depends on whether there has been a significant increasein credit risk. For trade receivables, the group applies the simplified approachpermitted by IFRS 9, which requires expected lifetime losses to be recognizedfrom initial recognition of the receivables, see Note 19 for further information.

Post-employment benefits
Within the Group, there are several defined-contribution as well as defined-benefit pension plans and other non-current employee benefits, including
some with pension plan assets.

Offsetting of financial instruments
Financial assets and liabilities may be offset against each other and recognized net in the Consolidated Accounts in cases where Munters has agreed
with the counterparty that assets and liabilities will be netted. No offsetting hastaken place in the statement of financial position.
PROVISIONS
Provisions are recognized when the Group has or may be considered tohave an obligation as a result of events that have occurred, and where it isprobable that payments will be required to fulfil the obligation. A prerequisite
is that it must be possible to reliably estimate the amount to be paid. Provisions
for restructuring measures are allocated when a detailed, formal plan for themeasures is established and well-founded expectations have been createdamong those who will be affected by the measures.
Provisions are measured as the present value of the amount expected to berequired to settle the obligation. In this connection a discount rate before tax isused that reflects a current market assessment of the time value of money andthe risks associated with the provision. The increase in the provision owing totime passing is recognized as an interest expense.
CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent liabilities are reported when there are possible obligations
relating to transpired events that will only become actual obligations given
the occurrence or non-occurrence of one of more uncertain future events thatare not entirely within the control of Munters. Contingent liabilities may also
be an obligation arising from transpired events but not reported as a liability
or a provision because it is not probable that the obligation will be settled
or because the amount of the obligation cannot be calculated with sufficientreliability.
A contingent asset is a possible inflow of resources and is not recognized as
an asset in the statement of financial position before it is as good as certain thatan inflow of resources will arise as an asset.

Defined-contribution pension plans
In defined-contribution pension plans, the Group pays a predetermined premium to a separate legal entity and does not have any legal or informal obligation to make additional payments if, when compensation to the employee is tobe paid, the legal entity has insufficient assets. The Group’s payments relating
to defined-contribution plans are recognized as an expense during the period
the employee performed the services to which the expense relates. Deferredfees are recognized as an asset to the extent that cash repayment or reduction
in future payments can be of benefit to the Group.
Defined-benefit pension plans
All other plans for post-employment benefits other than defined-contributionplans are defined-benefit plans. The liability or asset regarding defined-contribution pension plans that is recognized in the statement of financial position is
the present value of the defined-benefit obligation at the end of the reporting
period less the fair value of the plan assets. The defined-benefit pension
obligation is calculated annually by independent actuaries using the projected
unit credit method. The present value of the defined-benefit obligation isestablished by discounting estimated future cash flows using the interest rate
for high-quality corporate or housing bonds issued in the same currency thatthe benefits will be paid in, with tenors comparable to the pension obligationin question.
For Swedish plans, the discount rate equals the housing bond rate. Net
interest is calculated by applying the discount rate to defined-benefit plans andto the fair value of the plan assets. This cost is included in operating profit.
Revaluation gains and losses arising out of experience adjustments andchanges to actuarial assumptions are recognized in other comprehensive income during the period in which they arose. They are included in profit brought
forward in the statement of changes in equity and in the statement of financial
position. Expenses for employment during previous periods are recognizeddirectly in the income statement. Expenses for the year for employment in thecurrent year are included in operating profit and the interest expense for thedefined-benefit net liability is recognized in financial expenses in the income
statement.

Notes 115

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP
F	 INANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Special employer’s contribution in Sweden is calculated on the difference
between the pension obligation adopted according to IAS 19 and according to the rules applied for the legal entities. Calculated future employer’s
contribution is recognized in the statement of financial position as a part of thepension obligation. The change in the provision is recognized, to the extent thatit pertains to the effects of revaluations, in other comprehensive income.
Share-based payment
The Group has a number of share-based payment plans where the company
obtains services from employees as consideration for the Group’s equity instruments. Information on these plans is disclosed in Note 34.
Employee stock option program
The fair value of the service that entitles employees to an allotment of options
through the Munters employee stock option program is recognized as aemployee cost with a corresponding increase in equity. The total amount to
expense is based on the fair value of the options that are allotted:» including all market related terms (e.g., target share price)» excluding any impact from service terms and non-market related terms
for vesting (e.g., profitability, sales goals and that the employee remains
employed by the company for a given period of time),» including the impact of terms that do not constitute vesting terms (e.g.,requirement that employees retain the shares for a given period of time).
The total cost is recognized over the vesting period, i.e., the period over which
all the specified vesting terms will be met. At the end of each reporting period,
the Group revaluates its assessments of how many shares are expected to bevested based on the non-market related vesting terms and the service terms.
Any difference compared with the original estimates that the revaluation gave
rise to, is recognized in profit or loss with corresponding adjustments in equity.
The social security contributions that arise on the allotment of stock options
are regarded as an integral part of the allotment, and the cost is treated as
cash settled share-based payment.
When the options are exercised, the correct number of shares are transferred to the employee. Payments received, after deducting any directly relatedtransaction costs, are credited to equity.
Synthetic options
Share-based payment settled in cash is recognized as staff costs over the time
the service is performed. The fair value of the liability is remeasured at theend of each reporting period and recognized as a commitment for employee
benefits in the balance sheet.
SHARE CAPITAL
Ordinary shares are classified as equity. Transaction costs that can be directly
attributed to issue of new shares or options are reported, net after tax, in equity
as a deduction from proceeds.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

DIVIDENDS
Dividends to the Parent Company’s shareholders are recognized as a liability
in the Group’s financial reports in the period when the dividend was approvedby the Parent Company’s shareholders.
EARNINGS PER SHARE
Earnings per share before dilution are calculated by dividing earnings attributable to the Parent Company’s shareholders by a weighted average numberof shares outstanding during the period. Earnings per share after dilution
are calculated by adjusting the amount used for calculating earnings per
share before dilution through observing the effect after tax of dividends andinterest expenses on potential ordinary shares and of the weighted average ofadditional ordinary shares that would have been outstanding in the event of aconversion of all potential ordinary shares.
RELATED PARTY DISCLOSURESThe companies related to Munters are defined as the Parent Company, subsidiaries, associated companies and owners with an ownership exceeding 10%(FAM AB) as well as other companies managed by FAM AB. “Related physicalpersons” are defined as Board members, senior executives, and close family
members of such persons. Companies in which any of the mentioned physicalpersons have significant influence are also defined as companies related to
Munters. Information on transactions that entail a transfer of resources, services, or obligations between related parties is disclosed, regardless of whether
or not remuneration is paid. The disclosure contains information as to thecharacter of the relationship and the effect of the relationship on the financial
statements.
EVENTS AFTER THE END OF THE REPORTING PERIOD
If events arise that are significant but should not be taken into account when theamounts in the statement of comprehensive income and statement of financial
position are adopted, then the character of the event and, if possible, an estimate of its financial impact will be disclosed in the Board of Directors’ Reportand notes. Significant implies that an omission to disclose the information could
influence financial decisions made by users of the financial statements.
Significant events that confirm the situation existing at the end of thereporting period and occur after the reporting period but prior to the signingof the Annual Report will result in adjustments to the amounts in the Annual
Report.

Statutory sustainability report
Munters Group AB has prepared a sustainability report in accordance with the
Sixth Chapter of the Annual Accounts Act, paragraph 11. The report relates
to the Group and also constitutes Munters Communication on Progress (CoP)
report according to the Global Compact. The report consists of pages 3–4,
10, 12–22 and 49–80.
Financial statements
Under the requirements in RFR 2, the Parent Company’s financial statements
deviate from those presented for the Group. This means that the Parent Company has the following five statements in the Annual Report: income statement,
other comprehensive income, balance sheet, statement of cash flow andstatement of changes in equity.
Financial instruments: Recognition and measurement
The Parent Company does not apply IFRS 9 Financial Instruments. Instead,measurements are based on the acquisition costs of assets and liabilities.
Ownership of subsidiaries
Holdings in subsidiaries are recognized in the Parent Company using the cost
method. If there are indications of a decline in value, the value is tested and, if
required, the holdings are impaired.
Group contributions
The Parent Company recognized all Group contributions, paid and received,
as appropriations.
Shareholders’ contribution
Shareholders’ contributions from the Parent Company are recognized directlyin the receiver’s equity and capitalized in the shares and participations of the
Parent Company, to the extent impairment is not required.
Leasing
In the event that the Parent Company has any leases, these are not recognizedin the balance sheet but are expensed linearly over the contract period of thelease.

ACCOUNTING POLICIES OF THE PARENT COMPANY
The Parent Company’s Annual Report has been prepared in accordance with
the Annual Accounts Act and with the application of the Swedish Financial
Reporting Board’s recommendation RFR 2 – Accounting for Legal Entities.
This means that IFRS are applied with the deviations and additions presented
below.

Notes 116

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSNOTE 2	SIGNIFICANT ESTIMATES AND ASSESSMENTSNOTE 3	FINANCIAL RISK MANAGEMENT

In preparing the financial statements, Group Management and the Board of
Directors makes assessments and assumptions that affect the final accounts
and disclosures. These assessments are based on experience and the various
assumptions that management and the Board consider reasonable under theprevailing circumstances. The conclusions thus drawn form the basis for determinations concerning carrying amounts of assets and liabilities in cases where
they cannot be readily determined using information from other sources. Actual
outcomes may differ from these assessments, if other assumptions are made orother conditions applied. The estimates and assessments that are considered
to have the greatest impact on Munters earnings and financial position are
outlined below.

Through its operations in a global environment, Munters is exposed to several
different financial risks, such as currency risk, interest rate risk, credit risk, andliquidity risk.
The financial risks are controlled and managed based on a financial policy
approved by the Board of Directors. The policy covers the entire Groupand is updated on an annual basis. The purpose of the policy is to create aframework for managing the various financial risks. Risk management andfinancing activities are handled centrally by CFO and the Group Treasury
function, monitored and controlled by the Board of Directors, Audit Committee
and CEO. The overall objective is to limit the volatility attributable to financial
factors in the income statement and balance sheet, protect financial assets andfuture cash flows, as well as optimize the Group’s financing and meet financial
covenants in banking agreements. The Treasury function, which acts as theGroup’s internal bank, identifies, evaluates, and hedges financial risks in close
cooperation with the Group’s operational units.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP
F	 INANCIAL STATEMENTS, PARENTNOTES

Measurement of goodwill
The Group tests for impairment of goodwill each year. This test requires anestimation of parameters affecting future cash flows and a determination ofa discount rate. Then the recoverable amount of each individual cash-generating unit is established by calculating the value in use. Note13 presents
the significant assumptions made to test goodwill and describes the effects ofreasonable and possible changes to the assumptions on which the calculations
were based. At the end of 2022 the Group recognized goodwill to a value of
MSEK 5,359 (4,248).

	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Acquired intangible assets and establishing useful lives
When businesses are acquired, the intangible assets acquired are measured atfair value. In cases where there is an active market for the acquired assets, thefair value is determined based on prices in that market. Because active markets
are often lacking for these assets, valuation models have been developed toestimate fair values. One example of a valuation model is discounted future
cash flows. These assets are amortized based on established useful lives.
Company management makes assumptions and judgements regarding how
long each asset will generate financial benefits for the Group. At the end of2022 the Group recognized Technology, Customer relationships and Brands
to a value of MSEK 1,366 (1,175).
Development expenses
Determining whether an intangible asset resulting from development should berecognized as an asset requires an assessment of the extent to which certain
specific conditions are satisfied. With regard to capitalized development projects, management’s assessment is that their technical and financial feasibility
are confirmed. At the end of 2022 the Group recognized intangible assets
regarding product development to a value of MSEK 392 (268).
Deferred tax assets on loss carry-forwards
The Group recognizes deferred tax assets on loss carry-forwards to the extent
that it is probable such losses can be deducted from future profits. The actual
outcome may deviate from the assessments made because of factors such aschanges in the business climate or to tax regulations

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

At the end of 2022 the Group’s total tax loss carry-forward was MSEK
1,284 (1,149). In the consolidated balance sheet, a value for tax purposes ofcapitalized loss carry-forwards was recognized in the amount of MSEK 101(75) relating primarily to Belgium, Sweden and Germany.
Contingent purchase considerations
A contingent purchase consideration in connection with acquisitions is often
dependent on future financial performance related to the acquired unit. Actual
results may differ from these assumptions, which involve changing a previously
recognized contingent consideration.
Legal disputes
Provisions for legal disputes are estimates of the future cash flows that will be
required to settle the obligations. The disputes primarily relate to contracted
obligations attributable to contracts with customers and suppliers, though othertypes of disputes also arise in normal business operations.
Group Management considers it improbable that any of the known disputes
in which Munters is currently involved, and where no provisions have beenrecorded, will have a significant negative impact on the Group’s accounts.
Warranty provision
Munters warranty provision is based upon management’s best estimates ofamounts necessary to settle future and existing claims. The provision is basedon historical trends of units sold and payment amounts, combined with current
understanding of the status of existing claims. Regular evaluations are madeof the adequacy of these provisions, and they are adjusted when appropriate.
However, the future realized outcome for settling the warranty claims can differ
materially from the provision recorded.
Revenue recognition
A number of customer contracts fulfill the requirement to be recognized overtime based on the degree of completion. The forecasts for each contract constitute an estimate of final revenue and expenses.
Leasing
When defining the lease period, management takes into account all available
information that provides a financial incentive to exercise an extension option,or not to exercise an option to terminate a contract. Opportunities to extend
a contract are included only in the lease period if it is reasonable certain toextend the contract (or not terminate the contract). The majority of the extension
options in lease agreements of office premises and vehicles have not been
included in the reported lease liability as the Group can compensate the assets
without significant costs or interruptions in the business.

Percentage of revenue

Percentage of costs

Currency

2022

2021

2022

2021

USD
EUR
CNY
SEK
GBP
JPY
BRL
AUD
DKK
SGD
KRW
THB
Other
Total

44.2%
21.9%
19.2%
2.2%
1.7%
1.4%
1.3%
1.1%
1.0%
0.9%
0.9%
0.5%
3.7%
100%

40.6%
24.3%
17.9%
2.6%
2.0%
2.3%
1.5%
1.2%
0.8%
1.0%
1.3%
0.8%
3.6%
100%

37.5%
22.9%
15.6%
8.3%
1.8%
1.6%
1.5%
0.8%
0.5%
0.4%
0.4%
0.5%
5.0%
100%

37.5%
23.7%
16.2%
8.8%
2.1%
2.3%
1.2%
0.9%
0.7%
0.6%
0.8%
0.7%
4.6%
100%

Currency risk
Due to Munters global presence, the Group is exposed to transaction exposure
by transactions in foreign currency and through translation exposure whentranslating income statements and balance sheets into SEK.
Transaction exposureGroup internal sales in foreign currency primarily occur through the Group’s
production companies, which invoice the Group’s sales companies in theirfunctional currency. By doing so, transaction exposure and hedging operations
are concentrated to a few companies in the Group.

Notes 117

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS

NOT 3	F INANCIAL RISK MANAGEMENT, CONT.
The hedging of transaction exposure shall primarily occur through so-called
natural hedges, whereby incoming and outgoing cash flows in foreign currencies
are matched in order to minimize the net exposure. For example, Munters has
decided to have major part of its external loans in USD to get a natural hedge
towards the large inflows of USD presented in the table earlier in this note.
Otherwise, hedging shall primarily occur through forward selling of currency.
The value of forward contracts at year-end was MSEK 1.5 (0.9), see Note 23.
Munters does not apply hedge accounting for these financial instruments.
A significant proportion of Munters income and expense is generated inforeign currencies, of which the most significant are presented in the tableearlier in this note. The geographic distribution of Munters production plants
results in a matching of revenues and expenses in local currencies, which limits
the currency exposure.
Munters sensitivity to variations in exchange rates is presented in the table below. The analysis includes transaction exposure and is based on EBIT for 2022.
All other factors influencing earnings are assumed unchanged in the calculation.

BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONSEK +10% compared with
USD
CNY
EUR
KRW
AUD
INR
GBP
JPY
BRL
ILS
CZK
MXN
Other currencies
Total

Estimated effecton EBIT
MSEK
–90.0
–61.4
–12.4
–5.9
–4.3
–4.2
0.1
0.3
1.4
8.1
9.1
9.8
41.7
–107.7

Translation exposure
A large proportion of Munters subsidiaries have net assets in their functional
currency, which is different from the Group’s reporting currency. When these aretranslated into SEK, translation differences arise which are recognized in othercomprehen-sive income. Translation differences attributable to net investments inforeign currency are not hedged. However, pursuant to the financial policy, thisis monitored and calculated regularly in order to determine its impact on earnings
and financial position. The effect on other comprehensive income of the translationof foreign subsidiaries’ net assets into SEK totaled MSEK 483 (268). This refers
mainly to subsidiaries that have USD, EUR and CNY as functional currency.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Interest rate risk
Interest rate risk refers to the risk of the value of financial instruments andinterest-bearing assets and liabilities changing due to changes in interest ratelevels. To ensure efficiency and risk control according to policy, the majority ofborrowings are managed by the Group Treasury function.
Munters is exposed to interest rate risk through interest-bearing borrowings,
which are one of the Group’s sources of financing in addition to equity andcash flow from operating activities. Interest-bearing borrowings consist
primarily of a long-term bank loan with a variable interest rate. In addition,
few subsidiaries are permitted to keep individual third party bank debt.
The Group has no significant interest-bearing assets besides bank balances,
so revenues and cash flow from operating activities are largely independent ofchanges in market interest rates.
The Group had at the end of 2022 no outstanding interest rate derivatives.
Interest exposure
The average fixed interest term for the Group’s external loans was 1.7 months(2.7) at year-end 2022. If the interest rate increases with one percentage in all
countries where Munters has loans or investments, the impact on net financial income and expense would be approximately MSEK 32 (18). This sensitivity analysis assumes that all other factors, such as exchange rates, remain unchanged.
Credit risk
Credit risk is the risk of Munters incurring losses due to a counter-party failingto pay.
Credit exposure
For Munters, the predominant portion of credit risk relates to accounts
receivable. Munters works actively to limit this risk. An approved credit rating
is required for a counterparty to be approved. Advance payment is generally
encouraged, and a partial advance payment is a requirement when the valueof the order is a significant amount and delivery extends over a long periodof time. Accounts receivable are also mainly spread among many customers,
primarily companies in different industries and with wide geographical distribution, which limits concentration of the credit risk.
To ensure that the Group’s accounts receivables are paid, the managementof receivables is regulated in a special policy. According to this policy, eachbusiness unit must have established and documented processes for handling
unpaid receivables. The documented processes include specifications oftime limits for taking various actions, including legal action, as well as who is
responsible at various stages of the process. Documentation of actions taken
ensures that follow-up is possible. The measures are matched to amounts andto different groups of customers and business areas in a manner that will resultin efficient handling of overdue accounts receivable.

Counterparty exposure
A list of approved counterparties and maximum exposure to each approved
counterparty is established in the financial policy. Approved counterparties
should be characterized by high ethical values and have a credit rating of atleast A-/A2 according to Standard & Poor’s/Moody’s credit assessments.
Exceptions may sometimes be made for local banks, but such cases must havethe advance approval of the CFO.
Liquidity risk
Liquidity risk refers to the risk of Munters, at a given point in time, not having
sufficient liquidity to cover expected or unforeseen expenses.
The liquidity reserve is defined as bank balances or invested funds that canbe released within two banking days without any additional or minor cost,plus any unutilized credit facilities, committed for minimum 12 months, less any
outstanding uncommitted debt. Management continually monitors forecasts ofGroup cash flows and liquidity reserves to ensure that the Group has sufficient
funds to satisfy the needs of operating activities and to cover interest payments
and loan repayments. According to the financial policy, the long-term liquidity
reserve shall exceed an amount equivalent to 1.5 months of disbursements.
A risk to go below the permitted threshold level requires immediate actions.
At the end of 2022, the Group had unutilized credit facilities of MSEK 2 228(2 417). The Group’s total liquidity reserve less restricted cash per end of 2022
amounted to MSEK 2 944 (2 906).
Group Treasury works actively to ensure an effective cash management
structure within the Group by centralizing the liquidity to the parent company
through cash pools and other form of sweeping mechanisms. Cash surplus shallprimarily be used to repay on external debt. The Group’s cash and cash equivalents shall be deposited in bank accounts or high-liquidity interest-bearing
instruments. Any surplus liquidity in subsidiaries shall be deposited with Group
Treasury. By securing accessibility to guaranteed long-term credit facilities,
spreading maturities and sources of financing for borrowings, the Group will
avoid expensive financing and refinancing difficulties. For more information
about the Group’s borrowings, see Note 24.
Capital structure
Munters aims to have a capital structure that ensures long-term stability in operations, satisfies various investment requirements and safeguards the value of theGroup. Munters endeavors to ensure that Group’s subsidiaries shall have an optimal capital structure relating to financing requirements, foreign exchange andtax regulations in each jurisdiction. Subsidiary financing shall mainly be done byinternal loans or capital contributions. Requirements in the Groups external loan
agreement and common praxis following the type of business of the individual
subsidiary and country shall be taken into consideration when deciding form offinancing. An analysis of the subsidiaries’ capital structure is done on a yearlybasis to secure that the different requirements are met.

Notes 118

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONNOTE 4NET SALES

Satisfaction of performance obligations and payment terms
Munters overall supply consists of goods, such as equipment, components
and spare parts, and services, such as installation, startup commissioning andmaintenance services.
Customer contracts range from pure component deliveries, mainly within
FoodTech and in segment Clean Technologies within AirTech, to contracts
comprising equipment, installation, start-up and commissioning services, within
other parts of AirTech and Data Center Technologies.
The performance obligation to deliver goods within AirTech and FoodTech
is in the great majority of contracts satisfied when Munters delivers the goods
according to the delivery terms in the contract, however there are contracts
within AirTech that are satisfied over time as Munters produces the goods. The
performance obligation to deliver goods in Data Center Technologies is satisfied over time as Munters produces the goods. This because the Data Centerscustomer contracts are customer-specific deliveries without alternative use for
Munters and with the right to recover cost incurred with a reasonable profit
margin if the customer should decide to terminate the contract.
Installation, startup and commissioning services are services satisfied overtime as Munters performs. The same relates to aftermarket services, such as
maintenance services and extended warranties, and services and subscription
contracts within Munters software delivery.
Within FoodTech and in segment Clean Technologies within AirTech,
payment terms are in general at point of delivery, which also correlates to timeof revenue recognition. Within other parts of AirTech and within Data Center
Technologies customer advance payment is generally encouraged, and partial
advance payment is required when the value of the order is a significant
amount and delivery extends over a long period. In these customer contracts,
there is not a one-to-one correlation between payment terms and revenue
recognition, which creates customer balances in the financial statement..

Allocation of Net sales
The majority of customer contracts within Munters business areas AirTech andFoodTech fulfill the requirements to recognize net sales at a point in time, eventhough there are a number of customer contracts within these business areasthat requires to recognize net sales over time, which is reflected in the below
matrix. In contrast, the majority of customer contracts within Data Center Technologies requires to recognize net sales over time.
In addition to sales of equipment, Munters also provides different kinds ofservices to customers such as installation, commissioning, start-up and maintenance. Net sales from services are recognized over time as these services are
performed.
Allocation of the transaction price in a customer contract with several performance obligations is based on standalone selling prices.

2022, MSEK

Data Center
AirTech Technologies

Goods transferred at a point
in timeGoods transferred over time
Services transferred over time
Total

5,097
1,156
564
6,816

FoodTech

Total

180
1,192
28
1,400

1,842
120
207
2,170

7,119
2,468
799
10,3862021, MSEK

Data Center
AirTech Technologies

FoodTech

Total

Goods transferred at a point
in timeGoods transferred over time
Services transferred over time
Total

3,554
679
420
4,653

1 743
99
150
1,993

5,353
1, 397
598
7,348

56
619
27
702

Contract balances
Accounts receivables are non-interest bearing receivables with a generalpayment term of 30-90 days. Within FoodTech and segment Clean Technologies within AirTech revenue recognition and billing in general aligns. However,within FoodTech there are contracts with billing annually in advance. These
contracts qualifies for revenue recognition over time and therefore deferred
revenue balances arises. Within FoodTech there is also other contracts qualifying for overtime reporting where payment terms deviates from revenue recognition, which result in both deferred revenue and accrued income balances.
Within AirTech it is common with advanced billings, which creates advancesfrom customers. Within AirTech the great majority of customer contracts qualifies for at a point in time revenue recognition meaning that once equipment
are delivered, revenue is recognized fully for that performance obligation
and any advances in the balance sheet is netted off and remaining balance isrecognized as an accounts receivable.
Within segment Data Center Technologies the great majority of the customer
contracts qualifies for over time revenue recognition meaning that as soon
as the measurement of progress of a performance obligation exceeds any
advanced billings contract assets are recognized due to the fact that the billingterms does not allow for further billing until further milestones have beenreached.
Contract balances
MSEK

2022

2021

Accounts receivables (Note 19)
Accrued income (Note 20)
whereof Contract assets

2,235
515
497

1,394
235
226

Contract liabilities
Advances from customers
Deferred revenue (Note 27)

1,715
80

648
64

Transaction price allocated to remaining performance obligations
The aggregate transaction price allocated to remaining performance obligations at the balance sheet date amounts to MSEK 11,463, whereof MSEK
6,866 is expected to be recognized as revenue during 2023 and MSEK
4,598 is expected to be recognized as revenue during 2024 or later.
Per December 31, 2021, the aggregate transaction price allocated to remaining performance obligations amounted to MSEK 4,198.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Notes 119NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSNOTE 5OPERATING SEGMENTSREPORTABLE OPERATING SEGMENTSTThe Group’s reportable operating segments have been identified from amanagement perspective. Thus, the segment information disclosed is based oninternal reporting to the chief operating decision maker, which at Munters has
been equated with Group Management. The Group’s operations are managed
and reported by three business segments, AirTech, Data Center Technologies
and FoodTech.
AirTech manufactures and markets products and holistic solutions for controlling humidity and improving the indoor climate. Customers’ manufacturing
processes and warehousing are becoming more efficient and product quality,

shelf life, and hygiene are improving. Data Center Technologies is a leading
supplier of advanced climate cooling solutions using a wide range of heatrejection technologies. FoodTech manufactures and markets energy-efficient
products and systems to create the right indoor climate for the animal husbandry and horticultural industries.
Business segment consolidation is performed applying the same policies as
for the Group as a whole. Transactions between business segments are conducted on market terms. Key control and reporting concepts are order intake,net sales, EBIT, and operating working capital.
No individual external customer represents 10% or more of Munters sales.

SUSTAINABILITYCORPORATE GOVERNANCE

AirTechData Center Technologies

FoodTech

Other and elimination

Total

MSEK

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Order intake
Order backlog

8,399
4,698

5,842
2,796

6,245
5,937

1,051
703

2,242
828

2,166
700

–56
–

–46
–

16,83011,463

9,013
4,198

Net sales, external
Net sales, internal
Net sales

6,816
14
6,830

4,653
10
4,664,

1,400
0
1,401

702
0
702

2,170
42
2,211

1,993
35
2,028

0
–56
–56

0
–46
–46

10,386–
10,386

7,348
–
7,348

Adjusted EBITA
Amort. intangible assets
Items affecting comparability
Re-allocation int. services
Operating profit (EBIT)

1,014
–29
–9
–
976

682
–22
–11
–12
635

84
–20
8
–
71

92
–8
62
1
148

128
–59
–64
–
5

210
–40
–97
–2
71

–156
–6
–10
–
–171

–95
–4
–16
13
–101

1,070
–114
–75
–
881

889
–74
–62
–
753

Changes in acc. receivable
Changes in inventory
Changes in accrued income
Changes in acc. payable
Changes in adv. from customers
Cash flow from operating
working capital

–705
–384
–86
302
570

–122
–207
–37
109
178

–4
–316
–152
119
406

–70
–46
72
47
–65

73
–6
2
–44
1

–56
–62
14
30
–17

1
–
–
–
21

–5
0
0
17
0

–635
–706
–236
397
977

–253
–316
49
204
96

–304

–79

53

–62

25

–91

22

12

–203

–220

Other disclosures
Investments
Number of employees

204
2,693

157
2,256

44
355

17
176

168
791

104
796

123
99

64
87

539
3,940

342
3,315

FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONGEOGRAPHIC INFORMATION
The information below is based on where customers have their registered head office.
External net sales
2022

2021

4,317
1,878
521
295
226
198
197
190
183
170
165
163
163
153
152
137
129
111
1,036
10,386

2,440
1,336
437
222
135
160
153
516
114
193
119
56
129
94
118
52
33
87
957
7,348

MSEK

2022

2021

US
SwedenIsraelCzech republic
Ireland
Other countries
Total

923
545
164
136
112
504
2,383

467
298
137
21
0
551
1,473

MSEK
US
China
Germany
SwedenMexicoUnited Kingdom
Italy
BrazilIndia
Japan
FranceIrelandNetherlands
Denmark
Belgium
CanadaPolandAustralia
Other countries
Total

Non-current assets

The information presented in the table above regarding non-current assets isgrouped according to assets location, i.e. where the entity carries on its production of goods and services. Non-current assets consist of tangible assets,right-of-use assets and intangible assets excluding goodwill and brands withan indefinite useful life.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Notes 120NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGYNOTE 6

NOTE 8	DEPRECIATION, AMORTIZATION
AND IMPAIRMENT LOSSESCOST BY NATURE
Group

MSEK
Material costs
Personnel costs (Note 32)
Depreciation
Other purchase costs etc
Total

2022

2021

–4,592–2,786–377–1,728–9,483–3,003–2,124–303–1,126–6,556OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONNOTE 7	FEES TO AUDITORS
Fees and remuneration recognized as an expense to the Group’s auditors
during the period are shown below. Audit engagement refers to the statutory
audit of the annual report and accounts, as well as the administration of theBoard of Directors and the President, other tasks which the Company’s auditors
are responsible for performing, and advice or other assistance occasioned
by observations in such audits or the performance of other similar tasks. Tax
advice is consulting on fiscal issues. Other services are advice that cannot be
attributed to any of the above-mentioned categories.
Group
KSEK
Ernst & Young
Audit engagements
Audit business beyond audit
engagements
Tax advice
Other services
Other auditors
Audit engagements
Tax advice
Other services
Total

2022

Parent Company
2021

2022

2021

11,398

9,745

681

794

523
1,576
760

1,144
858
58

163
–
–

–
–
–

560
36
88
14,932–––
11,804

–
–
–
845

–
–
–
794

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

NOTE 9	OTHER OPERATING INCOME
AND EXPENSES

Amortization of intangible assets and depreciation of property, plant, andequipment are based on the historical acquisition cost and the estimated usefullife of different groups of assets. For assets acquired during the period, depreciation or amortization is calculated from the acquisition date. Depreciation andamortization are charged primarily on a straight-line basis over the following
useful lives.
Research and development work
Patents, licenses, brands (with definitive useful life)
Customer relationships
Technology
Brands (with indefinitive useful life)
Machinery and equipment
Buildings

3–5 years
3–10 years
7–12 years
6–10 years
Not amortized
3–10 years
20–33 years

Group

Parent Company

MSEK

2022

2021

2022

2021

Capital gains on sale oftangible asset
Internal operating income
Government grants related to R&D
Insurance reimbursements
Restructuring costs
Exchange rate differences
Other
Total

24
–
15
–
–58
11
–10
–19

–
–
11
61
–110
4
–4
–39

–
8
–
–
–
–0
–
8

–
13
–
–
–
–0
–1
11

Restructuring expenses are mainly related to on-going strategy implementation
initiatives within AirTech and FoodTech.

Depreciation, amortization, and impairment losses on non-current assets werecharged to income for the year as shown below:
Group
MSEK

2022

2021

Cost of goods soldSelling expenses
Administrative expenses
Research and development costs
Total

–187
–88
–40
–62
–377

–160
–74
–36
–33
–303

NOTE 10 F INANCIAL INCOME AND
EXPENSESGroup

Parent Company

2022

2021

2022

2021

7
0
7

2
0
2

–
–
–

–
–
–

Financial expenses
Interest expenses, subsidiaries
Interest expenses, loans
Interest expenses, leases
Financing fees
Exchange-rate differences
Other financial expenses
Total

–
–101
–23
–28
10
–7
–150

–
–47
–15
–31
15
–8
–86

–5
–
–
–
–
–
–5

–1
–
–
–
–0
–
–1

Net financial items

–142

–84

–5

–1

MSEK
Financial income
Interest income, other
Other financial income
Total

Notes 121

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONNOT 11

INCOME TAXESGroup

Deferred tax assets

Parent Company

MSEK

2022

2021

2022

2021

Current tax
Deferred tax
Income tax for the year

–206
43
–162

–172
19
–153

–
1
1

–0
1
1

739

668

3

7

–152

–137

–0

–1

–13
–9
15

–16
–7
10

–
–0
2

–
–0
–

8

17

–

–

–4
6
–8
–5

8
–7
–20
–1

–
–
–
–

0
–
–
2

–162

–153

1

1

Reconciliation of effective tax
Profit/loss before tax
Tax according to prevailing tax
rate for the Parent Company
Tax effect of:Differences attributable toforeign tax rates
Non-deductible expenses
Non-taxable income
Utilization of losses notrecognized
Change in valuation ofdeferred tax
Tax attributable to prior years
Withholding tax
Other
Tax recognized in income
statement

Tax attributable to components of OCI

Deferred tax attributable to:
Actuarial gains and losses on defined benefit pension
obligations
Total

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

2022

2022

2021

Intangible assets
Property, plant and equipment
Inventory
Accounts receivable
Provisions for pensions
Provisions
Accrued expenses and deferred income
Other items
Loss carry-forward
Closing balance

3
11
48
5
15
32
65
18
101
298

4
14
42
6
29
25
65
8
75
278

NOTE 12 EARNINGS PER SHARE

Deferred tax liabilities
Group
MSEK

2022

2021

Intangible assets
Property, plant and equipment
Inventory
Accounts receivable
Accrued expenses and deferred income
Other items
Closing balance

405
36
–
1
–
1
442

363
29
6
6
0
1
405

Reconciliation of net change in deferred tax assets from the beginning of the year
to the end of year:

Group
MSEK

MSEK

Deferred tax assets for pension provisions refer to the difference between thecalculation of defined benefit pension obligations based on local tax legislation and IAS 19 Employee Benefits..
Deferred tax assets relating to loss carry-forwards are recognized to the extent that it is deemed likely that the losses will be used to offset taxable income.
At year end, there were tax loss-carry forwards in the group companies
amounting to MSEK 1,284 (1,149), whereof the majority maybe carried for an
unlimited period of time.
Loss carry-forwards for which deferred tax assets are not recognized totaled
MSEK 850 (832), Consequently, deferred tax assets on loss carry-forwards
totaling MSEK 433 (317) were recognized. These losses relate to the subsidiaries in Belgium, Germany and Sweden. In all countries, losses may be carriedforward for an unlimited period of time.
Deferred tax liabilities are mainly attributable to the surplus values identified
in connection with the acquisition of Munters AB in 2010.

Group

2021

Change in deferred taxes
Group

–18
–18

–0
–0

MSEK

2022

2021

Opening balance
Changes recorded in this year’s profit
Tax on amounts recorded in OCI
Tax on amounts recorded in equity
Acquisition of subsidiaries
Exchange-rate differences
Closing balance

127
–43
18
–
9
34
144

125
–19
0
6
–
16
127

KSEK
Net income
Attributable to Parent Company shareholders
Attributable to non-controlling interests
Average number of outstanding shares
before dilution
Average number of outstanding shares
after dilution
Whereof treasury shares
Earnings per share before dilution, SEK
Earnings per share after dilution, SEK

2022

2021

576,918
577,114–196

515,417
512,861
2,557

181,752,465

182,207,520

181,932,090
2,389,358
3.18
3.17

182,548,017
2,883,300
2.81
2.81

Computing earnings per share, basic and diluted, is based on the net income
attributable to the Parent Company’s ordinary shareholders. The number ofshares used in the calculation consists of a weighted average of outstanding
ordinary shares during the year. The average share price during the year
exceeded the exercise price for the two employee stock option programs outstanding, implying a minor dilution effect on the number of average outstanding shares for the year.

Notes 122

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSNOTE 13 INTANGIBLE ASSETS

Goodwill

BrandsTechnology

Customer
relationships

Internallygeneratedintangible
assetsAcquisition cost
Opening balance
Capital expenditure
Acquisition of subsidiaries
Exchange-rate differences
Closing balance

4,599
–
598
556
5,753

1,090
–
–
140
1,230

635
26
–
77
737

940
–
55
112
1,107

415
159
–
38
612

284
132
11
8
436

7,963
317
665
931
9,877

Accumulated amortization and impairment
Opening balance
Amortization for the year
Impairment
Exchange-rate differences
Closing balance
Closing carrying amount

–351
–
–
–43
–394
5,359

–6
–
–
–5
–11
1,220

–565
–20
–
–70
–654
83

–919
–18
–
–108
–1,044
63

–147
–54
–
–19
–220
392

–141
–17
–5
–3
–167
269

–2,129–109–5–248–2,491
7,386Internallygeneratedintangible
assetsOther
intangible
assetsTotal

2022 Group, MSEK

Other
intangible
assetsTotal

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEINTANGIBLE ASSETS
Goodwill
In the year, Goodwill has increased by MSEK 598 as a result of businessacquisitions. Further information about the acquisitions is found in Note 30.
Technology
The item mainly consists of technology identified in conjunction with the acquisition of MTech Systems during 2017.
Customer relationships
The item consists of customer relationships identified in conjunction with theacquisition of subsidiaries. During the year customer relationships of 55 MSEK
related to the acquisition of EDPAC has been identified.
Internally generated intangible assets
Internally generated intangible assets relates to recognized development
costs
Other intangible assets

Other intangible assets mainly include patents, tradenames, licenses, andsimilar rights in Sweden, Germany, the United States, the Netherlands andChina.

AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Goodwill

BrandsTechnology

Customer
relationships

Acquisition cost
Opening balance
Capital expenditure
Sold/scrapped
Reclassifications, internal
Exchange-rate differences
Closing balance

4,294
–
–
–
305
4,599

1,016
–
–
–
74
1,090

591
–
–
–
43
635

880
–
–
–
60
940

270
118
–
–
28
415

193
86
–0
1
4
284

7,245
204
–0
1
514
7,963

Accumulated amortization and impairment
Opening balance
Amortization for the year
Impairment
Exchange-rate differences
Closing balance
Closing carrying amount

–343
–
–
–8
–351
4,248

–5
–
–
–0
–6
1,084

–511
–
–17
–37
–565
70

–846
–
–14
–59
–919
21

–106
–
–32
–10
–147
268

–128
0
–11
–2
–141
143

–1,9390–74–116–2,1295,834

2021 Group, MSEKMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Notes 123

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSNOTE 13 INTANGIBLE ASSETS, CONT.
IMPAIRMENT TESTING OF GOODWILL AND BRANDS
The values of goodwill and brands are tested annually, or more frequently
if necessary, to ensure that the value does not deviate negatively from bookvalue. The carrying amounts for goodwill and brands were tested in November, since then, no impairment indication has occurred.
Goodwill and brands with an indefinite useful life are allocated to theGroup’s cash-generating units, which are the smallest identifiable groups ofassets that, as part of continual usage, generate cash inflows that are substantially independent of other assets or groups of assets. The Group’s cash-generating units consists of the Groups three business areas: AirTech, Data Center
Technologies and FoodTech.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENT

Recognized goodwill per cash-generating unit
MSEK

2022

2021

AirTechData Center Technologies
FoodTech
Closing carrying amount

3,777
214
1,368
5,359

2,930
–
1,318
4,248

MSEK

2022

2021

AirTechFoodTech
Closing carrying amount

1,071
149
1,220

951
133
1,084

NOTES
	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Recognized brands per cash-generating unit

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Goodwill as of December 31, 2022, amounted to MSEK 5,359 (4,248).
The increase is explained by acquisitions and exchange-rate effects, mainly asa result of a weaker SEK against USD compared to prior year.
Management estimates that brands have an indefinite useful life because
there is no predictable limit for the period of time during which the brand is
expected to generate net payments for the company
Impairment testing of recognized goodwill and brands has been based on
recoverable amounts for cash-generating units established through calculating
future value in use. Future cash flows for the first five years are mainly basedon the strategic plan for 2023–2027 approved by the Board and GroupManagement, and projections thereof. The growth rate in the terminal period
after the first five years has been determined as 2% (2).
Significant assumptions used to calculate values in use are sales growth
and the EBITA margin, utilization of operating capital employed, other capital
employed and the discount rate. Management has established the growth rate
forecast based on previous results and expectations about future market trendsby operating segment based on the adopted strategic plan. These assessments take into account various economic indicators and internal and external
analyses thereof. Also taken into account are important aspects of financial
performance described in the Group’s strategic plan.
This year’s impairment test did not result in any impairment, nor did theprevious year’s test.
The calculations for 2022 used a nominal discount rate (average weighted
cost of capital before tax) of 11.7% (11.4).
A sensitivity analysis for the parameters discount rate, sales growth and
EBIT margin has been performed for each cash-generating unit, as below. The
effects refer to a change in the individual parameter, all else being equal.

SENSITIVITY ANALYSIS
Discount rate
An increase in the discount rate of one percent would reduce the recoverable
amount of each cash-generating unit as follows: AirTech –13%, Data Center
Technologies –13% and FoodTech –14%. The change would not result in an
impairment being required for any of the cash-generating units.
Net sales growth
A decrease in the net sales growth in the terminal period of one percentage would reduce the recoverable amount of each cash-generating unit asfollows: AirTech –10%, Data Center Technologies –10% and FoodTech –11%.
The change would not result in an impairment being required for any of the
cash-generating units.
EBITA margin
A decrease in the EBITA margin in the terminal period of one percentage
would reduce the recoverable amount of each cash-generating unit as follows:
AirTech –6%, Data Center Technologies –7% and FoodTech –8%. The change
would not result in an impairment being required for any of the cash-generating units.

Notes 124

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCENOTE 14 PROPERTY, PLANT AND EQUIPMENT
Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures and fittings

Construction inprogress

Total

431
3
50
–9
–18
41
499

928
47
4
–11
14
97
1,080

577
53
6
–34
59
59
720

78
118
–
–
–28
9
176

2,014
222
61
–54
27
207
2,475

–2,945
–11
7
13
–29
– 315

–669
–58
10
–7
–69
–794

–441
–57
33
–32
–45
–542

–
–
–
–
–
−

–1,404
–127
49
–27
–143
–1,650

185

287

178

176

825

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures and fittings

Construction inprogress

Total

Acquisition cost
Opening balance
Capital expenditure
Sold/scrapped
Reclassifications
Exchange-rate differences
Closing balance

392
6
–0
3
30
431

849
30
–13
6
56
928

505
54
–21
4
35
577

41
48
–1
–12
2
78

1,787
138
–35
0
123
2,014

Accumulated depreciation and impairment
Opening balance
Depreciation for the year
Sold/scrapped
Reclassifications
Exchange-rate differences
Closing balance

–254
–20
0
–
–20
–295

–591
–53
12
–
–37
–669

–382
–49
17
–2
–26
–441

–
–
–
–
–
−

–1,227
–122
30
–2
–83
–1,404

137

260

137

78

611

2022 Group, MSEK
Acqusition cost
Opening balance
Capital expenditure
Acquisition of subsidiaries
Sold/scrapped
Reclassifications
Exchange-rate differences
Closing balance
Accumulated depreciation and impairment
Opening balance
Depreciation for the year
Sold/scrapped
Reclassifications
Exchange-rate differences
Closing balance
Closing carrying amount

AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

2021 Group, MSEK

Closing carrying amount

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

PROPERTY, PLANT AND EQUIPMENT
Depreciation is based on acquisition cost of the assets and applied estimateduseful lives are presented in note 8.
Buildings and land
The carrying amount of Buildings and land amount to MSEK 185 (137).
During the year the value has increased by MSEK 50 due to acquisitions(see note 30). The carrying amount for land amounts to MSEK 41 (35).

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

Notes 125

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPNOTE 15 RIGHT-OF-USE ASSETS
2022 Group, MSEK
Acquisition cost
Opening balance
New contracts
Sold/scrapped
Exchange-rate differences
Closing balance
Accumulated depreciation and impairment
Opening balance
Depreciation for the year
Sold/scrapped
Exchange-rate differences
Closing balance
Closing carrying amount

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures and fittings

Total

198
451
–46
34
636

339
2
–35
34
342

91
29
–25
7
102

628
482
–106
75
1,078

–96
–53
45
–10
–114
522

–129
–54
35
–14
–163
178

–42
–30
24
–3
–51
51

–268
–136
104
–28
–327
751

Buildings
and land

Plant andmachinery

Equipment, tools,
fixtures and fittings

Total

Acquisition cost
Opening balance
New contracts
Sold/scrapped
Exchange-rate differences
Closing balance

148
60
–19
9
198

285
27
–1
28
339

79
37
–28
3
91

512
124
–48
40
628

Accumulated depreciation and impairment
Opening balance
Depreciation for the year
Sold/scrapped
Exchange-rate differences
Closing balance
Closing carrying amount

–77
–35
19
–4
–96
102

–76
–45
1
–9
–129
209

–42
–26
27
–1
–42
49

–194
–106
47
–15
–268
360

	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

2021 Group, MSEKMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

RIGHT-OF-USE ASSETS
Munters leases various offices, warehouses, equipment and vehicles. In
addition, Munters leases half of its manufacturing facilities around the world,which amounts to around ten factories. The leases are normally signed for fixed
periods, but with the option to extend some contracts. The terms are negotiatedseparately for each lease and contain a number of covenants.
The leases only include variable payments that are based on an index,
which is taken into account in the valuation of the lease liability and the rightof-use asset on the day the index is remeasured. The leases contain both leaseand non-lease components and it is only the lease component that has been
included in the calculation of the lease liability and the right-of-use asset.
Options to extend or terminate a lease are included in a number of theGroup’s leases. The terms are used to maximize flexibility in the managementof the assets used in operations. The overwhelming share of the options toextend or terminate leases can only be exercised by the Group and not by thelessor.
Note 24 discloses the lease liabilities associated with the leased assets.
Total interest expenses, which are included in financial expenses, amounted
to MSEK –21 (–15) during the year. Depreciation and write downs for the year
amounted to MSEK –136 (–106).
Short-term leases and leases of low-value assets were expensed for MSEK
9 (9). These leases will entail payments of MSEK 8 (12) during the years
2023-2027 and MSEK 1 (1) for 2028 and beyond.
The total cash flow from leases recognized in the balance sheet in 2022
was MSEK 144 (120) and is presented partly under financing activities asrepayment of lease liabilities and partly under the operating activities as paidinterest, see Note 24.

Notes 126

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information

NOTE 16	PARTICIPATIONS IN SUBSIDIARIESNOTE 18 INVENTORY

Direct shareholding, 100%

Country

Carrying
amountMunters Holding AB (corp reg.no 556818-9749)
Registered office: Stockholm

Sweden

4,098
4,098

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Material indirect shareholdings

Country

Share, %Munters AB (corp. reg. no. 556041-0606)
Sweden
AB Carl Munters (corp. reg. no. 556035-1198)
SwedenMunters Europe AB (corp. reg. no. 556380-3039)
SwedenMunters Frontier Invest AB (corp. reg. no. 556904-0891)
SwedenProflute AB (corp. reg. no.. 556558-3415)
SwedenMunters Corporation
USA
Munters Frontier US Holdco Inc.
USA
Hygromedia, LLC
USA
RotorSource Inc
USA
Munters Canada Inc
CanadaMunters de Mexico S de RL de CV
MexicoMunters Ireland Limited
Ireland
EDPAC Holdings Ltd
Ireland
EDPAC International Ltd
Ireland
Munters Brasil Industria e Commércio Ltda
BrazilMunters Beteiligungs GmbHGermany
Munters Euroform GmbHGermany
Munters GmbHGermany
Munters Reventa GmbHGermany
EDPAC International GmbHGermany
Munters Netherlands BV
Netherlands
Munters Spain S.A.U.
Spain
Munters Czech s.r.o.
Czech republic
Munters France S.A.S.
FranceMunters Italy SpA
Italy
Munters Ltd
UK
Munters Belgium SA
Belgium
Munters AS
NorwayMunters Finland OY
Finland
Munters Israel Ltd
IsraelMunters A/S
Denmark
Munters (Pty) Ltd
South Africa
Munters-Form Endüstri Sistemleri Sanayive Ticaret A.Ş.
Turkey

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Material indirect shareholdings
Munters India Humidity Control Private Ltd
Munters Air Treatment Equipment (Beijing) Co., Ltd
Jiangyin SAT Air Treatment Equipment Co Ltd
Munters Korea Co., Ltd
Munters Company Ltd
Munters (Thailand) Co., Ltd
Munters (Vietnam) Co., Ltd
Munters K.K.
Munters Pte Ltd
Munters Pty Ltd
MTech Systems USA, LLC
MTech Systems America Latina LtdaCountry

Share, %

India
China
China
South Korea
ThailandThailand
VietnamJapan
Singapore
Australia
USA
Brazil

100
100
100
100
100
100
100
100
100
100
66
66

Parent company participation in subsidiaries
MSEK
Acquisition cost at January 1
Share option program
Accumulated acquisition cost at December 31

2022

2021

4,094
4
4,098

4,099
–5
4,094

No restrictions exist regarding Group’s access to the subsidiaries assets, as aresult of regulations or minorities.

NOTE 17	PARTICIPATIONS IN ASSOCIATEDCOMPANIES
Associate company/Corp. reg. no./Registered officeBarrnTools LLC, 622795, USA
Combient Catalys AB, 556985-1560, Sweden
Carrying amount

Ownership, %
25.0
49.9

2022

2021

Raw materials and consumables
Products in process
Finished products and goods for resale
Projects in progress
Advances to suppliers
Total

893
541
460
8
54
1,956

532
170
347
11
12
1,073

Impairment losses on inventories are based on the age of the items and theturnover rate. Most of the write-downs and reversal of write-downs are related
to the obsolescence that is made at each period end. No significant part of theinventory is valued at the net realizable value.
Inventory provision
MSEK

2022

2021

Opening balance
Acquisition of subsidiaries
Write down current year
Reversal of previous year write down
Exchange-rate differences
Closing balance

–119
–0
–39
11
–11
–159

–112
–
–21
20
–8
–119

MSEK

2022

2021

Current< 30 days
30–90 days
91–180 days
> 180 days
Closing balance

1,645
339
189
47
14
2,235

1,077
175
109
19
14
1,394

NOTE 19 ACCOUNTS RECEIVABLES

2022

2021

32
1
34

–
–
–

During the year a share of earnings in associates of MSEK –2 regarding
BarnTools LLC has been recognized in profit and loss.

MSEKTime analysis of accounts receivablenet after provision for bad debt

Notes 127

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

NOTE 21 EQUITY

Provision for bad debts corresponded to 2% (3) of total receivables andchanged as follows.

Share capital
The share capital of 5,533,735 (5,533,735) SEK comprises of 184,457,817(184,457,817) shares with a par value of SEK 0.03 (0.03) per share. The
shares in Munters Group AB are listed on Nasdaq Stockholm under thesymbol MTRS. The ten largest owners in Munters Group AB hold a total of64,9 % (71,0) of outstanding shares. Of these, FAM AB holds 28,0% (27,8).
No other shareholder holds more than ten per cent of the shares, either directly
or indirectly, in Munters Group AB.

Financial information

Provision for bad debts
MSEK

2022

2021

INTRODUCTION

Opening balance
Provision for anticipated losses
Realized losses
Reversals of unutilized amounts
Exchange-rate differences
Closing balance

37
17
–1
–16
3
42

45
11
–4
–17
3
37

STRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTThe group applies the simplified approach under IFRS 9 Financial Instruments
to measure expected credit losses. This “expected credit loss model” uses a
lifetime expected loss allowance for all trade receivables and contract assets.
The model is based on historical default rates over the expected life of the
trade receivables adjusted for forward looking estimates. Based on Munters
historical statistic from confirmed credit losses the historical default rate has an
insignificant effect on the credit loss provision and therefore the provision forbad debt is built on individual forward-looking estimates.

DEFINITIONSOTHER INFORMATIONNOTE 22	P ROPOSED DISTRIBUTION OF
EARNINGSNOTE 19 ACCOUNTS RECEIVABLES, CONT.

NOT 20	PREPAID EXPENSES AND ACCRUEDINCOMEGroup

Parent Company

MSEK

2022

2021

2022

2021

Prepaid leases
Prepaid insurance premiums
Accrued income

11
28
515

8
26
235

–
1
–

–
0
0

Prepaid expenses for goods
and services
Other items

16
113

17
81

0
–

–
0

Closing balance

684

368

1

1

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Holding of treasury shares
As of December 31, 2022, Munters Group AB hold 2,389,358 treasury
shares (2,883,300 at December 31, 2021), equal to 1,3% of the registeredshare capital. The shares have a par value of SEK 0.03 per share. The share
have been repurchased during in prior years following a decision by the Boardof Directors in Munters Group AB “Munters”) pursuant to authorization grantedby the Annual General Meeting. The purpose of the repurchase was to ensure
delivery of shares to the participants in the incentive programs that the Annual
General Meetings 2018-2020 decided to establish and to hedge costs related
to the programs.
During 2022 a total of 493,942 stock options related to the employee stock
option programs from 2018 and 2019, “LTIP 2018” and “LTIP 2019” respectively, have been exercised. Per December 31, 2022, Munters holds a total of
2,389,358 treasury shares.
The number of outstanding shares at December 31, 2022, amounted to
182,068,459.
Dividend during the period
A dividend has been paid during the year in accordance with the Board of
Directors’ proposal to the Annual General Meeting for 2022, implying 30%
of 2021 earnings, a total of MSEK 154 and a dividend per share of SEK 0.85.
No dividend is paid on treasury shares.

The following earnings (in KSEK) are at the disposal of the Annual General
Meeting:
Unrestricted equity in parent company:
KSEK

2022

Unrestricted equity at the start of the year
Dividend
Exercise of share options
Employee share options
Income for the year
Total

4,016,393–154,369
25,213
2,412
4,230
3,893,879

The board proposes that earnings be distributed as follows:
Dividend
To be carried forward
Total

175,235
3,718,644
3,893,879

According to the dividend policy adopted by Munters´ Board of Directors,
Munters shall aim to pay an annual dividend corresponding to 30-50 per centof the profit for the year. Decisions on any dividend proposals are made by the
Board, taking into account Company’s financial position, investment needs,
acquisitions and liquidity.
During 2022, Munters showed continued strong growth as well as solid
profitability and capital structure. The Board therefore proposes a dividend of
SEK 0.95 (0.85) per share for 2022, totaling MSEK 175 (157), which corresponds to 30 percent of the profit for the year 2022.

Translation reserve
The reserve for exchange rate differences consists of differences that arise
when the income statements and balance sheets of foreign subsidiaries aretranslated into SEK. The positive exchange-rate effects during 2022 weremainly due to a weaker SEK against USD compared to previous year.
Reserve for exchange rate-differences
Opening balance, January 1, 2021

341

Exchange-rate differences
Closing balance, December 31, 2021

270
610

Exchange-rate differences
Closing balance, December 31, 2022

484
1,096

Notes 128

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPNOTE 23	F INANCIAL INSTRUMENTS BY CATEGORY
Book value of financial assets and liabilities by category
MSEK

2022

2021

Financial assets measured at amortized cost
Other non-current financial assets
Accounts receivable
Other current receivables
Cash and cash equivalents
Closing balance

21
2,235
159
914
3,329

20
1,394
78
674
2,165

Financial assets measured at fair value
through profit/loss
Financial investments
Currency derivatives whose cash flows are
not subject to hedge accounting
Closing balance

62

–

2
64

1
1

Total

3,393

2,166

MSEK

2022

2021

	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Financial liabilities measured at amortized costNon-current interest-bearing liabilities
Non-current interest-bearing lease liabilities
Current interest-bearing liabilities
Current interest-bearing lease liabilities
Accounts payable
Accrued expenses
Other non-current liabilities
Other current liabilities
Closing balance
Financial liabilities measured at fair value
through profit/loss
Currency derivatives whose cash flows are not subject tohedge accounting
Acquisition option Mtech, non-current
Closing balance
Total

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

3,721
640
–
135
1,288
6
6
257
6,053

2,362
273
11
103
771
5
3
100
3,629

–
217
217

–
137
137

6,270

3,766

Fair value of assets and liabilities
The carrying amounts of interest-bearing assets and liabilities in the statementof financial position may deviate from their fair value for reasons such aschanges in market interest rates. Munters deems that the interest rate on interest-bearing liabilities is in line with market terms at December 31, 2022, andthe fair value at the end of the reporting period therefore in all material aspects
corresponds to the carrying amount.
The fair value of financial instruments such as accounts receivable, accounts
payable, and other non-interest-bearing financial assets and liabilities, which
are recognized at amortized cost less any impairment, is deemed equal to thecarrying amount because of the short maturities of these instruments.
Derivative instruments
The Group’s derivatives, recognized at fair value in the statement of financial
position, are measured according to IFRS 9 categorized in level 2 according to
the fair value hierarchy to IFRS 13. This means that fair value is based on data
for the asset or liability other than quoted prices on an active market for identical assets or liabilities that are observable either directly (as quoted prices) orindirectly (derived from quoted prices).
At year-end, there were forward currency contracts in the Group as follows
below:
2022
Nominalamount in local currency
AUD/SEKCAD/SEK
CNH/SEKDKK/SEKEUR/SEK
GBP/SEKJPY/SEKSGD/SEKUSD/SEKZAR/SEK
Total

6
1
2
5
29
0
60
1
–30
–14

2021
NominalCarrying amount in loamount cal currency
–0.7
–0.1
–0.0
0.1
2.0
0.0
3.1
0.2
–2.7
–0.4
1.5

5
–
–
3
13
–
88
3
–38
–14

Carrying
amount
0.6
–
–
–0.0
–0.1
–
0.1
0.3
0.2
–0.1
0.9

Financial assets and liabilities that are offset, or which are coveredby a legally binding master netting arrangement or similar agreement
Financial assets and liabilities that can be offset against each other consistof foreign exchange derivatives covered by a legally binding master netting
arrangement. In the year 2022 these items are offset in the balance sheet. The
carrying amounts of such assets and liabilities are listed in the table above.
Contingent earn-outs and put/call acquisition options
The groups contingent earn-out and put/call option, recognized at fair value
in the statement of financial position, are measured in accordance with IFRS 9
and is categorized as level 3 in the fair value hierarchy. The opening balancein the period was related to the put/call option from the acquisition of MTech
Systems in 2017. The put/call option has been amended during the year
meaning that the exercise period was changed. The option can be exercisedfrom 1 January, 2025, until 31 December, 2025. As a result of the renegotiation the fair value has been remeasured as of the balance sheet date resulting
in an increase in the value of MSEK 57. The value is based on EBITDA in thelast 12 months before exercise of the option.
Contingent purchase price considerations
MSEK

2022

2021

Opening balance
Remeasurements
Discounting
Exchange-rate differences
Closing balance

137
57
–
23
217

121
–
4
13
137

Negative net amounts refer to sales, and positive net amounts refer to purchases. The forward contracts fall due in 2023.

Notes 129

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONNOTE 24 INTEREST-BEARING LIABILITIESInterest bearing liabilities, non-current
Munters primary financing facilities consist of a term loan of MUSD 165 and a
Revolving Credit Facility (RCF) of MEUR 250. The facilities have no mandatory
amortization requirement. The final maturity date is in June 2026. Before endof 2022 a new 7 year term loan of MSEK 750 from the Nordic Investment
Bank (NIB) was signed. The facility was not yet utilized per end of the year.
The facility of MSEK 750 secured by a guarantee from EKN (The Swedish
Export Credit Agency) will mature in 2023.
The loan agreements have one financial covenant, consolidated net debt inrelation to adjusted EBITDA, with some adjustments made in accordance withthe loan agreement. The accounting standard for leases, IFRS 16, does notaffect the covenant calculation according to the loan agreement definition andneither does the net pension liability.
As of December 31, the total Interest-bearing liabilities amounted to MSEK
3,721 (2,374). The table outlines the long term debt on Group level together

with local bank debt in group companies. Munters financial policy regulates
the management of external borrowings. The Group’s forecasted performancein relation to the limits stipulated by the covenant is closely monitored. This
ensures that the Group fulfills its commitments to external lenders and minimizes
the liquidity and financing risk. At December 31, 2022, the covenant was met.
Total amount of unutilized credit facilities is showed in Note 3 under header
Liquidity Risk.
The total average weighted interest rate including both long- and shortterm financing at the end of the year was 5.5% (1.7) and 6% (2.2) including
financing cost. Refinancing fees activated in balance sheet amounts to MSEK
15 which will be allocated to P&L over the loans respective lifetime.
Term Loan is deducted by financing cost activated in balance sheet.
Drawings under the revolving credit facility are listed among non-current loans
below.

CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTInterest bearing loans, non-current
Book value

FINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

MaturityType of loan

Interest rate

Currency

2022

2021

2026
2026
2026
2026

Term loan
Utilized committed credit facilities US
Utilized committed credit facilities Sweden
Utilized committed credit facilities Sweden
Other non-current loans

Variable
Variable
Variable
Variable
Fixed/Variable

USD
USD
EUR
SEK
Various currencies

1,707
438
398
1 175
2
3,721

1,470
181
310
400
–
2,362

Total

Interest bearing liabilities, current
The table outlines current bank debt in Munters subsidiaries in Brazil and India, which has been repaid during 2022.
Interest bearing loans, current
Book value
MaturityType of loan

Interest rate

Currency

Other current loans

Fixed/Variable

Various currencies

Total
Total non-current and current loans

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

2022

2021

–
–

11
11

3,721

2,373

Changes in interest-bearing liabilities
Munters has during the year net increased borrowing in SEK, EUR and USD
under the revolving credit facility. The change during the year is also caused bycurrency effects originating from fluctuations in EUR and USD exchange rate.
MSEK

2022

2021

Opening balance
Acquisition of subsidiaries
Loans raised
Amortization of loans
Non-cash movements
Exchange-rate differences
Closing balance

2,373
50
1,503
–504
7
292
3,721

2,455
–
2,295
–2,553
–14
190
2,373

Whereof non-current interest-bearing liabilities
Whereof current interest-bearing liabilities

3,721
–

2,362
11

Change in lease liabilities
Munters had during the year the following changes related to lease liabilities,
involving signing of new lease agreements, amortization of current agreements
and interest and currency effects.
MSEK

2022

2021

Opening balance
New contracts during the year
Cancelled contracts
Capitalized interest
Amortization of loans
Exchange-rate differences
Closing balance

377
481
–9
23
–144
47
774

332
124
–1
15
–120
26
377

Whereof non-current lease liabilities
Whereof current lease liabilities

640
135

273
103

Maturity analysis of lease liabilities
The remaining undiscounted lease payments have the following due date:
Undiscounted leasing liabilities
MSEK

2022

2021

Remaining term 1 year or lessRemaining term 1 to 5 years
Remaining term over 5 years
Total

168
410
390
968

114
215
76
405

Notes 130

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONNOTE 25 PROVISIONS FOR PENSIONS
2022 Group, MSEK
Opening balance

FINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENT

Current service cost
Interest cost/income
Recognized in other comprehensive income
Actuarial changes arising fromchanges in financial assumptions
Experience adjustments
Transactions
Benefits paid by employer
Benefits paid by to plan assets

NOTES
	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONS

Plan assets

Net pension
provision

327

–19

308

Recognized in profit/loss

CONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORT

Present
value of DBO

Exchange-rate differences
Closing balance

OTHER INFORMATION

2021 Group, MSEK
Opening balance
Recognized in profit/loss
Current service cost
Interest cost/income
Recognized in other comprehensive income
Actuarial changes arising fromchanges in financial assumptions
Experience adjustments
Transactions
Benefits paid by employer
Benefits paid by to plan assets

Exchange-rate differences
Closing balance

9
6
15

–
–
–

9
6
15

–104
13
–91

–
–
–

–104
13
–91

–6
–
–6

0
0
0

–6
0
–6

1
246

0
–19

1
227

Present
value of DBO

Net pension
Plan assets
provision

310

–19

291

17
4
21

–
0
0

17
4
21

–5
8
3

0
–
0

–5
8
3

–7
–
–7

0
0
0

–7
0
–7

0
327

–0
–19

–0
308

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

The Group finances pension plans for its employees in several countries. These
plans mainly follow practice in the country in question and may be defined-contribution or defined-benefit plans or a combination of both. The mostimportant defined-benefit pension plans cover employees in Sweden, Belgium,
Italy and France. In France and Italy, provisions are made for mandatory
remuneration when employment ceases. For senior executives of the Group,
there are guidelines regarding pension rights and pension plans described in
Note 33.
Provisions for pensions amount to MSEK 227 (308) at the balance sheet
date, whereof the defined-benefit plans in Sweden constitute MSEK 216 (295)representing 95% of the Groups provisions recognized under IAS 19. The
calculations are primarily based on final salary and the plans are unfunded.
The pension plans in Italy and France, which constitute 2% respectively 1% (2respectively 1) of total pension provisions, are also unfunded.
The Swedish pension plans (known as ITP plans) supplement the country’ssocial insurance system, and result from agreements between employer andemployee organizations. ITP plans mainly comprise retirement pensions,disability pensions and survivor’s pensions. The ITP plan has two parts, firstly,
ITP1, which is a defined-contribution pension plan applying to employees bornin 1979 or later, and secondly, ITP2, which is a defined-benefit pension plan
applying to employees born before 1979. White-collar employees within theGroup in Sweden were covered by both these parts. The ITP2 plan is managed
within Munters in the FPG/ PRI system. Financing occurs through provisions
to an account in the balance sheet, safeguarded by credit insurance from themutual insurance company Försäkringsbolaget PRI Pensionsgaranti.
Defined-benefit pension plans subjects the Group to different kinds of risk
attributable to increases in life expectancy, inflation and salary.
In the Group, there are also defined-contribution plans that mainly compriseretirement pensions, disability pensions and survivor’s pensions. The premiums
are paid continuously during the year by each Group company to separate
legal entities, such as insurance companies. The size of the premium is basedon salary. The cost of these defined-contribution plans for the period totaled
MSEK 78 (59).
Plan assets comprise insurance contracts signed with independent insurancecompanies. No portion of plan assets in 2022 or 2021 was invested in the
Company’s equity instruments, debt instruments, real estate, or other assets
used by the Company. The Group only has a minor share of funded plans.

Significant actuarial assumptions
SwedenWeighted values, %

2022

2021

Discount rate
Future inflation
Future wage and salary increases
Pension in creases
Social security increases

3.60
2.00
2.75
2.00
2.75

1.95
2.20
2.95
2.20
2.95

At the end of the reporting period, the discount rate is derived from a functioning market based on investment-grade corporate bonds adjusted for theduration of the commitment.
Assumptions about life span are based on public statistics and experiencefrom mortality surveys in each country, and are set in consultation with actuarial experts. As of this year, for Swedish pension plans, the most current life span
investigation DUS21. Munters budgeted fees for defined-benefit obligations(“DBO”) equal MSEK 8 (13) for 2023.
Sensitivity analysis - effect of a 0.5% change
SwedenMSEK
Discount rate
Future inflation

–0.5%

+0.5%

23
–16

–21
18

The table shows the effect on the liability of a 0.5% change in discount rate
and future inflation. The sensitivity analysis is performed by changing one actuarial assumption while the other remain constant. This is a simplified method as
actuarial assumptions are usually correlated.
Age analysis - expected payments
MSEK
Within the next 12 months
Between 1-2 years
Between 2-5 years
Total

2022

2021

6
6
19
32

6
6
19
31

The table shows expected payments related to pension benefits in Sweden
over the coming five years (undiscounted). The weighted average duration of
the defined-benefit obligations in Sweden is 18 years (20).

Notes 131

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

2022 Group, MSEK
Opening balance
Acquisition of subsidiaries
Additional provisions
Reversal of unutilized provisions
Utilized during the year
Exchange-rate differences
Closing balance

CORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSNOTE 27	ACCRUED EXPENSES AND
DEFERRED INCOME

NOTE 26 OTHER PROVISIONS

2021 Group, MSEK
Opening balance
Additional provisions
Reversal of unutilized provisions, discontinued operations
Reversal of unutilized provisions
Utilized during the year
Exchange-rate differences
Closing balance

Warranty
provisions

RestrucOther
turing provisions

Parent Company

Total

MSEK

2022

2021

2022

2021

65
–
12
–2
–10
2
67

219
2
48
–24
–46
16
216

Personnel related expenses
Received goods not yet invoiced
Commissions
Interest expenses
Deferred income
Audit and lawyers fees
Other
Closing balance

457
408
70
16
80
14
149
1,194

372
324
57
5
64
13
163
998

15
–
–
–
–
0
0
16

17
–
–
–
–
0
1
18

RestrucOther
turing provisions

Total

Deferred revenue mainly refers to subscription agreements within
Munters software business

69
2
33
–13
–6
8
94
Warranty
provisions

Group

84
–
2
–9
–29
7
54

105
9

103
63

90
11

299
83

–4
–44
–4
7
69

–6
–22
–59
6
84

–
–1
–39
4
65

–10
–66
–104
17
219

OTHER INFORMATION

Contingent liabilities
Group

MSEK

2022

2021

MSEK

Non-current portion
Current portion
Closing balance

65
150
216

62
157
219

PRI guarantees
Guarantees from banks andinsurance companies
Closing balance

During the year, provisions for warranties amounting to MSEK 33 (9) was recognized, an increase compared to last year, which is due to the cost for actual
warranty commitments having increased which affected the provision factor.
No significant restructuring provisions have been made during the year. The
provisions that were made relating to strategy implementation projects in business areas AirTech and Food Tech during 2020 and 2021 have been utilized
throughout the year and the projects are expected to be in all material respects
finalized during 2023.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

NOTE 29	T RANSACTIONS WITH RELATEDPARTIESNOTE 28	PLEDGED ASSETS,CONTINGENT ASSETS AND
CONTINGENT LIABILITIESProvisions consist of:summary judgments, and these are no longer in progress. Munters Corporation is of the firm opinion that the remaining claims are unfounded. Munters
Corporation has coverage for the asbestos-related claims through several insurance policies subject to certain reservations, the insurance companies haveconfirmed that, until further notice, they will pay a significant portion of theexpenses for legal defence. The company is currently also party to a disputein New Jersey, US, regarding environmental damage to a property that had
previously been leased by a company acquired by Munters and later mergedwith one of Munters subsidiaries in the US. An investigation of the cause andextent of the environmental damage is ongoing and is under supervision by
New Jersey Department of Environmental Protection (”NJDEP”). Although apotential environmental liability is difficult to estimate, the company assesses
that there is insurance cover for any environmental liability.

Parent Company

2022

2021

2022

2021

–

–

3

3

209
209

161
161

486
489

436
439

The shares in Munters Group AB are held by FAM AB by 28.0% (27.8). Other
related parties to Munters include other portfolio companies managed by
FAM AB and Munters Board of Directors and Group Management. During theyear no significant transactions with related companies occurred.
The Parent Company has a related party relationship with its subsidiaries.
Information about participations in subsidiaries is provided in Note 16. Transactions between Munters Group AB and its subsidiaries have been carried out
on market terms.
Remuneration for individual members of the Board and senior executives ispresented in Note 33. Munters has not provided guarantees or securities to or
on behalf of Board members or senior executives.

PRI guarantees refers to pension liabilities in Sweden. Guarantees from banks
and insurance companies are operational guarantees, such as advances andcompletion guarantees. Within Munters there are no pledged assets
Litigation
Munters is involved in a small number of commercial disputes. It is the management’s assessment that none of these disputes, where there has not been aprovision recorded, will involve an outflow of resources.
Munters subsidiary in the United States, Munters Corporation is, and hashistorically been, named as co-respondent in asbestos-related cases. In thepast few years, Munters Corporation has won a number of cases throughNotes 132

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES	THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONNOTE 31	AVERAGE NUMBER OF EMPLOYEESAND GENDERNOTE 30	B USINESS COMBINATIONS

Company (country)
EDPAC (IE)
Hygromedia (US)
Rotor Source (US)Businessarea

Average number of employees

Purchase priceConsolidated acquisitions 2022
Month Number ofacquired employees

DCT
AirTechAirTech

Jan
Nov
Nov

Net
sales

150 MEUR 1730
USD 12
See above See above

The table shows number of full time equivalent employees at the acquisition
date. Revenue refers to estimated net sales in 2021. The amounts presented for
Hygromedia reflect Hygromedia and Rotor Source combined.
During the year three acquisitions have been completed. In January 2022
Munters acquired 100% of the shares of EDPAC, an Irish manufacturer ofcooling equipment for Data Centers and air handling systems for a purchaseprice of MEUR 29. The acquisition is a part of Munters strategy to growth in theprioritized Data Center segment. The acquisition strengthens Munters presencein Europe. In the purchase price allocation intangible assets in the form of technology, brands and customer relationships have been identified. Remaining
goodwill is mainly related to synergy effect and other intangible assets that do
not meet the criteria for separate recognition.
In November 2022 Munters acquired 100% of the shares in Hygromedia
LLC and Rotor Source Inc. Hygromedia LLC specializes in components, supplying desiccant rotor manufacturers in the United States, Europe and Asia. Rotor
Source Inc. provides desiccant dehumidification and energy recovery products
to OEMs, mainly for heating, ventilation, and air conditioning (HVAC) systems.
Customer segments include lithium-ion battery, pharmaceuticals, electronics,
food processing, aerospace, among others. Through the acquisition Muntersstrengthen its position as a leading supplier of systems for dehumidification ofmultiple industrial processes. The acquisition provides Munters an additional
distribution channel and opportunities to improve service delivery to the market. Both companies are based in Baton Rouge, Louisiana, USA and together
they employ about 30 employees.
At the balance sheet date the purchase price allocation is preliminary inregards to valuation of intangible assets.
The net sales of acquired companies from the date of acquisition amounted to MSEK 308. Operating profit from the date of acquisition amounted to
MSEK 7 and net income amounted to MSEK 5.
Acquired entities net sales in 2022 amounted to 434 MSEK (–) andoperating profit amounted to MSEK 29 (–). Acquisition related costs in 2022
amounted to MSEK 19 (–).
The table below presents an overview of paid purchase consideration andacquired net assets for the three business combinations performed during2022. No business combinations were made in the comparison year.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

MSEK
Cash purchase consideration paid
Total purchase consideration paid
Fair value of acquired net assets
Goodwill

2022
774
774
–177
598

2022

2021
–
–
–
–

Acquired net assets
MSEK

2022

2021

AssetsIntangible assets
Property, plant and equipment
Inventory
Accounts receivables
Other receivables
Prepaid expenses and accrued income
Cash and cash equivalents
Total assets

67
61
49
81
12
1
53
324

–
–
–
–
–
–
–
–

Liabilities
Non-current interest-bearing liabilities

2–

Deferred tax liabilities
Current interest-bearing liabilities
Other provisions
Accounts payable
Current tax liabilities
Advances from customers
Accrued expenses and deferred income
Total liabilities

9
50
2
47
2
0
35
147

–
–
–
–
–
–
–
–

Net identifiable assets and liabilities

177–

Cash purchase consideration paid
Cash and cash equivalents in acquired companies
Change in Group’s cash and cash equivalents

–774
53
–721

–
–
–

Group
US
SwedenChina
MexicoGermany
India
BrazilCzech Republic
IrelandIsraelItaly
United Kingdom
Japan
Netherlands
Belgium
FranceAustralia
Singapore
Korea
ThailandSouth Africa
Denmark
TurkeySpain
FinlandVietnamCanadaPolandUnited Arab Emirates
Austria
NorwayOther countries
Total

2021

Numberof whichmen, %

Numberof whichmen, %

1,221
469
406
290
246
166
162
147
139
137
133
94
62
47
38
36
32
25
22
22
21
16
13
12
11
7
5
4
4
3
3
19
4,013

81
69
80
70
79
90
80
83
91
77
78
78
84
77
82
83
78
72
64
68
75
81
69
83
82
43
60
100
75
100
100
83
79

972
405
350
215
246
164
143
118
2
140
145
76
66
44
39
37
29
25
22
18
19
16
12
10
12
2
4
3
4
4
1
7
3,350

81
68
78
70
81
89
80
81
100
78
78
78
85
78
90
78
83
76
64
67
79
81
67
80
83
50
75
100
75
76
100
71
78

Gender distribution – Board of Directors and Group Management
At year-end, the Board of Directors consisted of four men and three women.
Group Management, including the CEO, consisted of five men and three
women.

Notes 133

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGYNOTE 32 S ALARIES, OTHER REMUNERATION
AND SOCIAL SECURITY EXPENSES
Group

Parent Company

MSEK

2022

2021

2022

2021

Salaries and remuneration
Social security expenses
Pension expenses
Total

2,188
512
87
2,786

1,648
400
77
2,124

27
11
8
45

27
8
8
43

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONNOTE 33	R EMUNERATION TO THE BOARD
AND SENIOR EXECUTIVES
Guidelines
The group of executives encompassed by the guidelines comprises the CEO andother members of the group management. The guidelines also encompass any
remuneration to board members, other than board fees. The guidelines shall apply
to remuneration agreed, and amendments to remuneration previously agreed,
after adoption of the guidelines by the 2022 annual general meeting. The guidelines do not apply to any remuneration resolved on by the general meeting.
The guidelines’ promotion of the company’s business strategy, longterm interests and sustainability
Munters business strategy is to be a global leader in energy-efficient andsustainable climate solutions. Our solutions enable energy-efficient production
processes with reduced carbon dioxide emissions for our customers. Throughinnovative technologies, the Group creates the perfect climate for demanding industrial applications, the largest segments of which are manufacturing,
defense, data centers, food, pharmaceutical and agriculture.
Munters conducts operations in two business areas (as of the date of theguidelines):» AirTech is a global leader in energy-efficient air treatment for industrial andcommercial fields of application.
» FoodTech is one of the world’s leading suppliers of innovative and energy-efficient climate systems for livestock farming and greenhouses, as well as software for controlling and optimizing the entire food production value chain.
A prerequisite for the successful implementation of Munters business strategy
and safeguarding of the company’s long-term interests, including its sustainability, as well as delivery on the ambitions the company has, is that the company is able to recruit and retain qualified personnel. In order to do so, Muntersmust be able to offer a competitive total remuneration based on market terms,
which these guidelines enable.
Munters has implemented long-term share-related incentive programs
during 2017-2020, in which some senior executives have had the opportunity
to participate. These programs have been resolved by each general meeting
and are therefore excluded from these guidelines. For information regarding
performance criteria, terms and conditions, and costs for these programs,
see the Board of Directors’ complete proposal for each general meeting on
Munters website and in Munters annual report, Note 34.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

NOT 33	RENUMERATION TO THE BOARD AND SENIOR EXECUTIVES, CONT.
Variable cash remuneration covered by these guidelines shall aim to promote
the company’s business strategy and long-term interests, including its sustainability.
Types of remuneration
The remuneration shall be on market terms and may consist of the following
components: fixed annual cash salary, variable annual cash salary, pension
and other benefits. Additionally, the general meeting may – irrespective of
these guidelines – resolve on, for example, share and share price-related
remuneration.
Fixed cash salary
The fixed cash salary shall reflect the demands and responsibility that theposition entails as well as individual performance. The fixed cash salary shallbe revised annually.
Variable cash salary
Variable cash salary may consist of annual variable cash salary and/or longterm variable cash salary.
The annual variable cash salary shall be maximized to 50 per cent of the
fixed annual cash salary for the CEO and for other members of the group management. The satisfaction of criteria for awarding variable cash salary shall bemeasured over a period of one year.
The annual variable cash salary shall be linked to predetermined andmeasurable financial criteria, such as operating result and working capital. By
linking the remuneration of the senior executives to the company’s earnings andfinancing of its operating activities, the criteria promote the implementation of
the company’s business strategy and long term interests, including its sustainability. Furthermore, the criteria for variable cash salary shall be designed sothat they do not encourage excessive risk taking. The long-term variable cash
salary shall be awarded after one, two, and three years, respectively, and shallbe maximized to a total of 150 per cent of the annual fixed cash salary for theCEO, and 55 per cent of the annual fixed cash salary for other members of thegroup management, distributed pro-rata over the three years. The satisfaction of
criteria for pay out of long-term variable cash salary shall be measured during
a one-, two- and three-year period, respectively, before pay out. The long-term
variable cash salary shall be linked to predetermined and measurable financial
criteria (weighting 70 per cent) and non-financial criteria (weighting 30 percent). The financial criteria may consist of, for example, adjusted EBITA andOperating Working Capital and the non-financial criteria may consist of, for example, weighted sustainability goals (such as the share of renewable electricity
in the group’s production facilities, the share of female leaders within the group,and the service growth within business area AirTech). By linking the remuneration of the senior executives to the company’s earnings, financing of day-to-day
operations, and sustainability, the criteria promote the implementation of thecompany’s business strategy and long-term interests, including its sustainability.
The criteria for long-term variable cash salary shall be designed so that they
do not encourage excessive risk-taking. A certain part of the net amount after
tax of paid out long-term variable cash salary is expected to be invested in
Munters shares, according to the share ownership policy which the board of
directors has adopted. The entire net amount after tax is expected to be invested
in Munters shares until the holding in value corresponds to 200 per cent of thegross annual fixed cash salary for the CEO and 100 per cent of the gross annu-

al fixed cash salary for other members of the group management. When such aholding has been achieved, half of the net amount after tax is expected to be invested in Munters shares. The extent to which the criteria for awarding variable
cash salary have been satisfied shall be evaluated following expiration of themeasurement period. The board of directors is responsible for the evaluation so
far as it concerns variable cash salary to the CEO. The remuneration committee
is responsible for the evaluation so far as it concerns variable cash salary to other members of the group management. For financial objectives, the evaluation
shall be based on the latest financial information made public by the company.
Terms and conditions for both annual variable cash salary and long-term variable cash salary shall be designed so that the board of directors, if exceptional
economic circumstances prevail, has the option of limiting or refraining frompayment if such a measure is considered reasonable. Additional variable cash
remuneration may be awarded in extraordinary circumstances, provided thatsuch extraordinary arrangements are limited in time and only made on an
individual basis, either for the purpose of recruiting or retaining executives, or as
remuneration for extraordinary performance beyond the individual’s ordinarytasks. Such remuneration may not exceed an amount corresponding to 50 per
cent of the fixed annual cash salary and shall not be paid more than once per
year and per individual. Resolution on such remuneration shall be made by theboard of directors based on a proposal from the remuneration committee.
PensionFor the CEO, pension benefits, including health insurance, shall be defined contribution. Variable cash salary shall not qualify for pension benefits. Pension contributions for defined contribution pension shall amount to not more than 35 per centof the fixed annual cash salary. For other members of the group management,
pension benefits, including health insurance, shall be defined contribution unlessthe executive concerned is subject to defined benefit pension under mandatory
collective agreement provisions. Variable cash salary shall qualify for pension
benefits to the extent required by mandatory collective agreement provisions
applicable to the executive. Pension contributions for defined contribution pension
shall amount to not more than 35 per cent of the fixed annual cash salary.
Other benefits and compensation
Other compensation may consist of other benefits that are customary and in linewith market terms, such as medical insurance, life insurance and company cars,
which shall not constitute a significant part of the total remuneration. Such benefits may amount to not more than 10 per cent of the fixed annual cash salary.
For employments governed by rules other than Swedish, pension benefits
and other benefits may be duly adjusted for compliance with mandatory rules
or established local practice, taking into account, to the extent possible, theoverall purpose of these guidelines
Consultancy fee to Board members
In specific cases, and for a limited time, Munters Board members elected by
the general meeting may be able to be remunerated for services within theirrespective areas of expertise, which does not constitute board work. For these
services (including services performed by a Board member wholly-owned
company), a fee on market terms can be paid, provided that such services
contribute to the implementation of Munters business strategy and safeguarding of Munters long-term interests, including its sustainability. Such consultancy
fee may, for each Board member, in no case exceed one year’s Board fee
NOTES 134

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONNOTE 33 REMUNERATION TO THE BOARD AND SENIOR EXECUTIVES, CONT.
Termination of employment
Fixed cash salary during the notice period and severance pay, as well as remuneration for any non-compete restrictions, shall in total not exceed an amountcorresponding to the fixed cash salary for two years for the CEO and 18 months
for other members of the Group Management. Severance pay shall not be paid
if notice of termination of employment is made by the CEO and other members of
the Group Management. The notice period between the company and the CEO,and other members of the Group Management, shall not exceed 6 months.
Remuneration for any non-compete restrictions shall compensate for any
loss of income and shall only be paid for such period as the former executive
does not have the right to severance pay. The remuneration shall amount to not
more than 60 per cent of the fixed annual cash salary at the time of terminationof employment, unless otherwise provided by mandatory collective agreement
provisions, and shall be payable during the period subject to the non-compete
restriction, which shall not exceed 12 months after termination of employment.
Salary and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these remuneration
guidelines, salary and employment conditions for employees of the company
and the group’s Swedish operation have been taken into account by including
information on the employees’ total remuneration, the components of the remuneration and increase and growth rate over time, in the Compensation Committee’s and the Board of Directors’ basis of decision when evaluating whether theguidelines and the limitations set out herein are reasonable. In the company, i.e.
in Munters Group AB, there are only five employees (all are senior executives).
Preparation and decision-making process
The board of directors has established a remuneration committee. The committee’s tasks include, among other things, preparing the board of directors’ decision to propose guidelines for remuneration to senior executives. The boardof directors shall prepare a proposal for new guidelines at least every fourthyear and submit the proposal to the annual general meeting. The guidelines
shall be in force until new guidelines are adopted by the general meeting. The
remuneration committee shall also monitor and evaluate programs for variable
remuneration for the group management, the application of the guidelines forremuneration to senior executives as well as the current remuneration structuresand compensation levels in the company. The CEO and other members of thegroup management do not participate in the board of directors’ processing ofand resolutions regarding remuneration-related matters in so far as they areaffected by such matters. Remuneration to the CEO is prepared by the remuneration committee and decided by the board of directors. Remuneration toother members of the group management is prepared by the CEO and decided
by the remuneration committee.
Derogation from the guidelines
The Board of Directors may temporarily resolve to derogate from the guidelines
resolved by the general meeting, in whole or in part, if in a specific case there is
special cause for the derogation and a derogation is necessary to serve the company’s long-term interests, including its sustainability, or to ensure the company’s
financial viability. As stated above, the Compensation Committee’s tasks include
preparing the Board of Directors’ resolutions in remuneration-related matters,
which includes preparing any resolutions to derogate from the guidelines.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

2022, KSEK
Members of the Board: (3 women and 4 men)
Magnus Nicolin, chairman since the AGM 18 May, 2022
Magnus Lindquist, chairman until the AGM 18 May, 2022 andchairman in the remuneration committee
Helen Fasth Gillstedt, board member and chairman of theaudit committee
Anna Westerberg, board member and chairman of theinvestment committeeHåkan Buskhe, board member
Maria Håkansson, board member since the AGM 18 May, 2022
Anders Lindqvist, board member since the AGM 18 May, 2022
Kristian Sildeby, board member
Per Hallius, board member until the AGM 18 May, 2022
Lena Olving, board member until the AGM 18 May, 2022
Juan Vargues, board member until the AGM 18 May, 2022
CEO Klas Forsström
Other senior executives, (3 women and 4 men)
Total

2021, KSEK
Members of the Board: (3 women and 5 men)
Magnus Lindquist, chairman and chairman of rem. committee
Helen Fasth Gillstedt, board member and chairman ofaudit committee
Per Hallius, board member and chairman of investment committeeHåkan Buskhe, board member
Lena Olving, board member
Kristian Sildeby, board member
Juan Vargues, board member
Anna Westerberg, board member
CEO Klas Forsström
Other senior executives, (3 women and 4 men)
Total

Board fee/
Variable
Base salary remuneration

Other
benefits

Pensionexpenses

Share based
payments

Total

1,035

1,035

527

527

680

680

546
443
450
383
704
221
227
198
7,900
15,854
29,167

4,054
5,240
9,294

192
768
960

2,526
3,903
6,429

492
498
990

546
443
450
383
704
221
227
198
15,16426,263
46,840Board fee/
Variable
Base salary remuneration

Other
benefits

Pensionexpenses

Share based
payments

Total

1 ,249

1,249

603
498
415
534
629
506
456
7,150
15,701
27,740

603
498
415
534
629
506
456
15,036
26,42546,350Board of Directors
Fees to the Chairman of the Board and other external Board members are paidin accordance with the decision of the Annual General Meeting. No board
fees are paid to the company’s CEO or to the employee representatives.

5,120
3,525
8,644

285
3,431
3,716

2,344
4,155
6,498

138
–386
–248

Salaries and other remuneration paid to the Board for the year 2022 amounted to KSEK 5,413 (4,889) excluding social security contributions. In accordancewith the resolution of the 2022 Annual General Meeting, the fee for externalboard members elected at the AGM amounted to KSEK 1,200 to the Chairmanof the Board and KSEK 450 each to other external members of the Board.

NOTES 135

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGYNOTE 33	R EMUNERATION TO THE BOARD
AND SENIOR EXECUTIVES, CONT.
The Committees
In addition to these amounts, the AGM has decided to pay a fee for committee
work shall be paid to board members elected at the meeting, with a total
amount of KSEK 250 to the chairman of the audit committee, and with KSEK
150 to each of the other members of the audit committee, a total amount of
KSEK 120 to the chairman of the remuneration committee and KSEK 60 to theother members of the remuneration committee and KSEK 120 to the chairmanof the investment committee, and KSEK 60 to each of the other members of theinvestment committee.

OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUP	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

President and CEO
According to the agreement, Munters President and CEO, Klas Forsström, hasa fixed annual salary of KSEK 7,900. In addition, there is a variable cash salary linked to Munters annual incentive program, which amounts to a maximumof 50 per cent of the fixed salary. The variable remuneration also includes thecost from the first measurement period in the long-term cash program launchedin 2022 (LTIP 2022), as well as the cost for the second measurement period in
the long-term cash program launched in 2021 (LTIP 2021).
In addition to this, an extraordinary cash compensation of an extra monthly
salary is also included in the variable compensation.
The total variable salary for the financial year 2022 thus amounted to a
total of KSEK 4,054 (5,120)
Other Senior Executives
Salaries and other remuneration to other senior executives for the year 2022
amounted to KSEK 26,263 (26,425) excluding social security contributions.
Munters annual incentive program
Munters annual incentive program (Performance Pay) for senior executives andother managers within the Group, is based on predetermined and measurable
financial criteria, measured during the financial year. All senior executives
except the business area managers are measured 100 per cent on the Group’s
result. The business area managers are measured 70 per cent on the businessarea’s result, and a share of 30 per cent on the Group’s result. In 2022, the criteria were related to Munters operating profit (adjusted EBITA) and operating
working capital, with a strong connection to Munters medium-term goals andthe needs the company sees as essential to pursue during the year.
During the year the Board of Directors implemented a cash based long term
incentive program (LTIP 2022) for senior executives and key personnel within
the group, see note 34 and guidelines for remuneration of senior executives inthis note for further information regarding the program.

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

NOTE 34	LONG TERM INCENTIVE PROGRAMS
Long-term cash-based incentive program 2021 and 2022
On behalf of the board, the company has introduced a long-term cash-based
incentive program for senior executives and key personnel within the groupin 2021 and 2022. The programs link the participants’ compensation to thecompany’s earnings, financing of the current operations, and sustainability;
they promote the implementation of the company’s business strategy andlong-term interests, including its sustainability. The programs have a three-year
earning period, and the outcome is paid out after one, two, and three years,
respectively, distributed pro rata over the three years. Fulfillment of criteria forthe payment of long-term variable cash salary must be measured over a one-,two- or three-year period before the payment. Participants in the program are
expected to invest the net payout in Munters shares until they reach a defined
investment level. The board nominates the CEO and Munters group management; each member of the group management has nominated additional
participants. A total of 72 employees were nominated for the program in 2021
and 74 employees for the program in 2022. Each category has a maximum
opportunity based on the participant’s current annual base salary percentage.
For senior executives, the program is regulated in the remuneration guidelines
approved by the general meeting, and for other participants, the outcome
amounts to a maximum of 30% of the gross annual base salary. The performance criteria in the program are linked to predetermined and measurable
financial criteria (weighting 70 percent) and non-financial criteria (weighting
30 percent). The financial criteria can consist of, for example, adjusted EBITA
and operational working capital, and the non-financial criteria can consistof, for example, weighted sustainability goals (such as share of renewableelectricity in the group’s production facilities, the share of female leaders within
the group, and service growth within the AirTech business area).
Employee stock option program 2020
At the Annual General Meeting in May 2020, it was resolved in accordancewith the Board’s proposal to introduce a performance based long-term employee stock option program to members of Group Management and certain
other key employees (“LTIP 2020”). The program should comprise no morethan 1,699,000 employee stock options to be granted to members of GroupManagement and certain other key employees, approximately 74 employees
in total. A total of 70 employees accepted the offer, resulting in 1,580,000
employee stock options, whereof 90,000 cash settled.
Each employee stock option that is not cash settled shall entitle the holder
to acquire one share in the company at an exercise price of SEK 45.82.
Each cash settled employee stock option shall entitle the holder to a cash
amount equivalent to the value of one share in the company, calculated as thevolume-weighted average price paid for the company’s shares on Nasdaq
Stockholm during a period of ten business days immediately prior to the exercise of the option, with a deduction of the exercise price described above. The
share options are vested over a three-year period and the participants shall beable to exercise the employee stock options during a one-year period as of thelast date of the vesting period.
Exercise of the employee stock options shall, as a rule, be conditional upon
the program participant still being employed by the Group at time of exercise
and during the full vesting period.
The options are dived into three series. Exercise of the employee stock
options for all series are dependent on the extent to which performance targets
are satisfied related to the compounded annual growth rate of the adjusted
EBITA, the compounded annual growth rate of net sales and a composite
sustainability target consisting of three sub-components, are met during
2020–2022.
The assessed fair value on the grant date, June 30, 2020, was SEK 14.43
per option. The fair value on the grant date is independently determined using
an adjusted form of the Black-Scholes model, see more information on thedata to the model further below. During the year, the program entailed a cost,
excluding social security contributions, of MSEK 3.6.
Employee stock option program 2019
At the Annual General Meeting in May 2019, it was resolved in accordancewith the Board’s proposal to introduce a performance based long-term employee stock option program to members of Group Management and certain
other key employees (“LTIP 2019”), totaling approximately 72 employees.
The program should comprise no more than 1,595,000 employee stock
options divided in three series. No more than 100,000 of these employee
stock options was to be cash settled (also called synthetic options) and theremainder shall entitle the right to acquire one share in the company. A total of
68 employees accepted the offer, totaling 1,498,000 employee stock options,whereof 80,000 cash settled. The employee stock options were allotted for no
consideration.
Exercise of the employee stock options of Series A and Series B is dependent on the extent to which certain performance targets are satisfied during
the fiscal years 2019-2021 (the “performance period”). The performance
conditions determine the extent to which (if any) the employee stock options
in each series may be exercised to acquire shares or receive a cash amountat the conclusion of the three-year period from the grant date of the employee
stock options (the “vesting period”). Each employee stock option that is not
cash settled shall entitle the holder to acquire one share in the company at an
exercise price of SEK 50.27. Each cash settled employee stock option shallentitle the holder to a cash amount equivalent to the value of one share in
the company, calculated as the volume-weighted average price paid for thecompany’s shares on Nasdaq Stockholm during a period of ten business days
immediately prior to the exercise of the option, with a deduction of the exercise
price of SEK 50.27.
The participants shall be able to exercise the employee stock options during
a one-year period as of the last date of the vesting period.

NOTES 136

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPNOTE 34	LONG TERM INCENTIVE PROGRAMS, CONT.
The assessed fair value on the grant date, July 19, 2019, was SEK 8.62 peroption. The fair value on the grant date is independently determined using an
adjusted form of the Black-Scholes model, see more information on the data to
the model further below. During the year, the program entailed a cost, excluding social security contributions, of MSEK 0.7.
Employee stock option program 2018
At the Annual General Meeting on May 17, 2018, it was resolved in accordance with the Board’s proposal on the implementation of a long-term employee stock option program (“LTIP 2018”). The program should comprise no morethan 1,257,000 employee stock options to be granted to members of GroupManagement and certain other key employees, approximately 75 employees
in total. A total of 1,239,190 employee stock options was accepted.
Participation in the plan was at the Board’s discretion and no individual
had a contractual right to participate in the plan or to receive any guaranteed
benefits. Options were granted under the plan for no consideration and carryno dividend or voting rights.

Each employee stock option that is not cash settled shall entitle the holder
to acquire one share in the company at an exercise price of SEK 55. Eachcash settled employee stock option shall entitle the holder to a cash amountequivalent to the value of one share in the company, calculated as the volume-weighted average price paid for the company’s shares on Nasdaq Stockholm during a period of ten business days immediately prior to the exercise of
the option, with a deduction of the exercise price of SEK 55.
The participants shall be able to exercise the employee stock options fromthe third anniversary of the allotment up to and including the fourth anniversaryof the allotment. Exercise of the employee stock options shall, as a rule, be
conditional upon the program participant still being employed by the Group.
The assessed fair value on the grant date, June 27, 2018, was SEK 5.97 per
option. The fair value on the grant date is independently determined using an
adjusted form of the Black-Scholes model, see more information on the data to
the model further below. The program ended in June 2022. The program has
not resulted in any expense during the year.
Below is a summary of allotted and outstanding options (including synthetic)in the three plans.

	FINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCE

2022

AUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Opening balance
Exercised during the year
Forfeited during the year
Closing Balance

Grant dateJune 27th, 2018
July 19th, 2019
June 30th, 2020
Total

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

2021

Average exercise priceper share option

Numberof options

Average exercise priceper share option

Numberof options

48.22
50.98
46.43
44.79

2,582,490–524,899–740,303
1,317,288

49.60
55.00
48.14
48.22

3,867,240–793,940–490,810
2,582,490

Maturity

Exercise
price

Share options
December 31, 2022

Share options
December 31, 2021

27 June 2021
1 June 2022
30 June 2023

55.00
50.27
45.82

–
66,2881,251,000
1,317,288

114,490
1,157,000
1,311,000
2,582,490

Fair value of allotted options
The estimated fair value on the grant date for LTIP 2020 was SEK 14.43 per
option, for LTIP 2019 SEK 8.62 and LTIP 2018 SEK 5.97. The fair value on the
grant date is estimated using an adjusted form of the Black-Scholes model,
which includes a Monte Carlo simulation model that takes into account theexercise price, the term of the option, the impact of dilution (where material),
the share price on the grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of
the option, and the correlations and volatilities of peer group companies. The
inputs in the model for options allotted has been;» The options are allotted for no consideration and vested over a three-year
period. Vested options can be exercised within one year after vesting» Exercise price: LTIP 2020: SEK 45.82, LTIP 2019: SEK 50.27; LTIP 2018:
SEK 55.00» allotment date: LTIP 2020: June 30 2020, LTIP 2019: July 19, 2019; LTIP
2018: June 27, 2018
» maturity date: LTIP 2020: June 30, 2023, LTIP 2019: July 19, 2022; LTIP
2018: June 27, 2021
» share price on the grant date: LTIP 2020: SEK 49, LTIP 2019: SEK 42; LTIP
2018: SEK 47» expected price volatility of the company’s share: LTIP 2020: 40%, LTIP
2019: 36%; LTIP 2018: 26%» expected dividend yield: LTIP 2020: 0, LTIP 2019:0; LTIP 2018:0» risk-free interest rate: LTIP 2020: -0.41%, LTIP 2019: -0.36%; LTIP 2018:
0.24%

NOTES 137

NOTE 1NOTE 2NOTE 3
NOTE 4NOTE 5NOTE 6
NOTE 7
NOTE 8NOTE 9NOTE 10NOTE 11
NOTE 12NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34

06

Financial information
INTRODUCTIONSTRATEGY

Assurance 2022
The undersigned assures that the Annual Report has been prepared in accordance with generally accepted accounting principles, and that theconsolidated accounts have been prepared in accordance with international accounting standards as referred to in Regulation EC 1606/2002of the European Parliament and of the Council of July 19, 2002, on the application of international accounting standards, provide a true andfair view of the Company’s and the Group’s financial position and earnings, and that the Board of Directors’ report and the Board of Directors’
report for the Group provide a fair view of the development of the Company’s and the Group’s operations, financial position, and earnings anddescribe material risks and uncertainties to which the Company and the companies in the Group are exposed.

OPERATIONSSUSTAINABILITY

Stockholm, February 28, 2023

CORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORT

Magnus Nicolin
Chairman of the Board

Klas Forsström
President and CEOHåkan Buskhe
Board Member

Helen Fasth Gillstedt
Board Member

Maria Håkansson
Board Member

Anders Lindqvist
Board Membert

Kristian Sildeby
Board Member

Anna Westerberg
Board Member

Simon Henriksson
Board Member,
employee representative

Robert Wahlgren
Board Member,
employee representative

FINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONOur Auditor’s report was submitted on
March 2, 2023
Ernst & Young AB

Rickard Andersson
Authorized Public Accountant

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Assurance 2022 138

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Auditor’s report

To the general meeting of the shareholders of Munters Group AB, corporate identity number 556819-2321
Report on the annual accounts andconsolidated accounts
OPINIONS

We have audited the annual accounts and consolidated accounts of Munters Group AB (publ) for theyear 2022. The annual accounts and consolidated
accounts of the company are included on pages
99–138 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, thefinancial position of the parent company as of 31
December 2022 and its financial performance andcash flow for the year then ended in accordancewith the Annual Accounts Act. The consolidated
accounts have been prepared in accordance with
the Annual Accounts Act and present fairly, in allmaterial respects, the financial position of the groupas of 31 December 2022 and their financial performance and cash flow for the year then ended inaccordance with International Financial ReportingStandards (IFRS), as adopted by the EU, and theAnnual Accounts Act. The statutory administration
report is consistent with the other parts of the annual
accounts and consolidated accounts.
We therefore recommend that the general
meeting of shareholders adopts the group statement of comprehensive income and statements offinancial position and the parent company income
statement and balance sheet.
Our opinions in this report on the annual
accounts and consolidated accounts are consistent with the content of the additional report thathas 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 gener-

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

ally 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 andthe group in accordance with professional ethics foraccountants in Sweden and have otherwise fulfilled
our ethical responsibilities in accordance with theserequirements. This includes that, based on the bestof 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 haveobtained is sufficient and appropriate to provide abasis for our opinions.

TIMING OF REVENUE RECOGNITION
Description
As described in note 1, revenues from sale of goods arerecognized at a point in time when risks and rewards aretransferred to the buyer in accordance with the delivery
terms. Revenues from larger project assignments are recognized over time in proportion to progress of completionat the reporting date using an output method.
The company´s customer agreements contain several
different performance obligations, as described innote 1 and 4. In order to allocate revenue to different
performance obligations, and to determine the progressof completion of performance obligations within project
assignments, certain estimates have to be made which
affects the timing of revenue recognition. As a result of
the above, we have assessed that the timing of revenue
recognition is a key audit matter.

How our audit addressed this key audit matterIn our audit of the fiscal year 2022, we have evaluatedthe company´s principles of revenue recognition inaccordance with applicable GAAP. We have reviewed
the company´s processes for revenue recognition andevaluated the internal control within these processes.
Also, we have audited revenue transactions close
to the yearend by reviewing customer agreements anddelivery notes to verify that revenue is recognized in thecorrect period. Where applicable, we have evaluatedthe company´s estimates for determining percentage ofcompletion and revenue recognition related to material
project assignments.
Lastly we have reviewed the disclosures regarding
revenue in the annual accounts and consolidated
accounts.

KEY AUDIT MATTERS

Key audit matters of the audit are those mattersthat, in our professional judgment, were of mostsignificance in our audit of the annual accounts andconsolidated accounts of the current period. These
matters were addressed in the context of our auditof, and in forming our opinion thereon, the annual
accounts and consolidated accounts as a whole,
but we do not provide a separate opinion on thesematters. For each matter below, our description of
how our audit addressed the matter is provided inthat context.
We have fulfilled the responsibilities describedin the Auditor’s responsibilities for the audit of thefinancial 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 resultsof our audit procedures, including the procedures
performed to address the matters below, provide
the basis for our audit opinion on the accompanying financial statements.

VALUATION OF GOODWILL AND TRADEMARKS
Description
Goodwill and trademarks amount to SEK 6 579 (5 332)
in the consolidated statement of financial position. As
described in note 13 the company annually, or whenindicators of impairment are identified, performs an
impairment test to verify that the carrying values do not
exceed the calculated recoverable amounts. Recoverable amounts are determined by calculating the value
in use for the respective cash generating unit using a
discounted cash flow model. As also described in note
13, forecasts of future cash flows for the next five years
are based on financial plans approved by the boardof directors. The financial plans include assumptions of
future sales growth and operating margin, as well as
utilization of operating capital employed. Furthermore,assumptions of discount rates and growth beyond thefive-year period are required.
The impairment tests of the fiscal year did result in
any impairment. In note 13, the effects on carrying
amounts from changes in significant assumptions andestimates are disclosed. Due to the assumptions and es-

timates made in conjunction with these impairment tests,
and due to the total amount of the carrying value, wehave considered valuation of goodwill and trademarks
as a key audit matter.
How our audit addressed this key audit matterIn our audit of the fiscal year 2022, we have evaluatedthe company’s process for preparing impairment tests.
We have audited the cash flow models used for the impairment tests and evaluated how cash generating units
are identified. We have also evaluated the significant
assumptions related to future cash flows and forecasts
used in the impairment test by comparing to historicaloutcome, as well as performing sensitivity analyzes.
Furthermore, we have assessed the discount rate used
and the assumptions of long-term growth rate after theforecast period by comparisons to peers and externalsources. With support from our internal valuation specialists, we have evaluated the valuation methods used.
We have reviewed the disclosures regarding goodwill and trademarks provided in the annual accounts
and consolidated accounts.

Auditor’s Report 139

06

Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONOTHER INFORMATION THAN THE ANNUAL
ACCOUNTS AND CONSOLIDATED ACCOUNTSThis document also contains other information than
the annual accounts and consolidated accounts
and is found on pages 1–98. The renumeration
report for the financial year 2022, which will be
submitted after the date of this auditor’s report, also
constitutes of other information. The Board of Directors and the Managing Director are responsible forthis other information.
Our opinion on the annual accounts andconsolidated accounts does not cover this otherinformation 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 materiallyinconsistent with the annual accounts and consolidated accounts. In this procedure we also take into
account our knowledge otherwise obtained in theaudit and assess whether the information otherwise
appears to be materially misstated.
If we, based on the work performed concerning the other information we obtained before thedate of this audit report, conclude that there is amaterial misstatement of this other information, weare required to report that fact. We have nothing toreport in this regard.
If, when reading the remuneration report, weconclude that there is a material error in it, we mustraise that issue with the Board of Directors andrequest that it be corrected.
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 theygive a fair presentation in accordance with the An-

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

nual 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 thepreparation 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 andthe Managing Director are responsible for theassessment of the company’s and the group’s ability
to continue as a going concern. They disclose, asapplicable, matters related to going concern andusing 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 tothe Board of Director’s responsibilities and tasks ingeneral, 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 toissue 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 inaccordance with ISAs and generally accepted
auditing standards in Sweden will always detect amaterial misstatement when it exists. Misstatements
can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of theseannual 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 tothose risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis forour opinions. The risk of not detecting a material
misstatement resulting from fraud is higher thanfor 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 todesign audit procedures that are appropriate
in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of thecompany’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 Boardof Directors’ and the Managing Director’s useof the going concern basis of accounting in
preparing the annual accounts and consolidated
accounts. We also draw a conclusion, basedon 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 tocontinue as a going concern. If we conclude thata material uncertainty exists, we are required
to draw attention in our auditor’s report to therelated disclosures in the annual accounts andconsolidated 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 asa going concern.
» Evaluate the overall presentation, structure andcontent of the annual accounts and consolidated
accounts, including the disclosures, and whether
the annual accounts and consolidated accounts
represent the underlying transactions and eventsin 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, supervisionand performance of the group audit. We remainsolely 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 Boardof Directors, we determine those matters that wereof most significance in the audit of the annual
accounts and consolidated accounts, including themost important assessed risks for material misstatement, and are therefore the key audit matters. We
describe these matters in the auditor’s report unlesslaw or regulation precludes disclosure about thematter.

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATION

Report on other legal
and regulatory requirements

Report on the audit of the administration andthe proposed appropriations of the company’s
profit or loss
OPINIONS

In addition to our audit of the annual accounts andconsolidated accounts, we have also audited theadministration of the Board of Directors and theManaging Director of Munters Group AB (publ) for
the year 2022 and the proposed appropriations of
the company’s profit or loss.
We recommend to the general meeting ofshareholders that the profit be appropriated inaccordance with the proposal in the statutory
administration report and that the members of theBoard of Directors and the Managing Director bedischarged 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 andthe group in accordance with professional ethics foraccountants in Sweden and have otherwise fulfilled
our ethical responsibilities in accordance with theserequirements.
We believe that the audit evidence we haveobtained is sufficient and appropriate to provide abasis 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

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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 thegroup’s equity, consolidation requirements, liquidity
and position in general.
The Board of Directors is responsible for thecompany’s organization and the administration of
the company’s affairs. This includes among otherthings continuous assessment of the company’s
and the group’s financial situation and ensuringthat the company’s organization is designed sothat the accounting, management of assets and thecompany’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 arenecessary to fulfill the company’s accounting inaccordance with law and handle the managementof 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 assesswith 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 thecompany, or» in any other way has acted in contravention of
the Companies Act, the Annual Accounts Act or
the Articles of Association.
Our objective concerning the audit of the
proposed appropriations of the company’s profit orloss, and thereby our opinion about this, is to assesswith reasonable degree of assurance whether the
proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assur-

ance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing
standards in Sweden will always detect actions oromissions that can give rise to liability to the company, or that the proposed appropriations of thecompany’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 appropriationsof 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 starting point in risk and materiality.
This means that we focus the examination on suchactions, areas and relationships that are material forthe 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 andother circumstances that are relevant to our opinion
concerning discharge from liability. As a basis forour 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 beable to assess whether the proposal is in accordancewith the Companies Act.
The auditor’s examination of the ESEF report
OPINION

In addition to our audit of the annual accounts andconsolidated accounts, we have also examined thatthe 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 toChapter 16, Section 4(a) of the Swedish Securities

Market Act (2007:528) for Munters Group AB for
the year 2022.
Our examination and our opinion relate only tothe 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 accordancewith FAR’s recommendation RevR 18 Examinationof the ESEF report. Our responsibility under thisrecommendation is described in more detail in the
Auditors’ responsibility section. We are independent of Munters Group AB in accordance withprofessional ethics for accountants in Sweden andhave otherwise fulfilled our ethical responsibilities inaccordance with these requirements.
We believe that the evidence we have obtained is sufficient and appropriate to provide abasis 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 isnecessary 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 ofChapter 16, Section 4(a) of the Swedish Securities
Market Act (2007:528), based on the procedures
performed.

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONRevR 18 requires us to plan and execute procedures to achieve reasonable assurance that theEsef report is prepared in a format that meets theserequirements.
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 areconsidered material if, individually or in aggregate,
they could reasonably be expected to influence theeconomic 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 acomprehensive 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 assessmentof 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 proceduresthat are appropriate in the circumstances, the auditor
considers those elements of internal control that are

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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 theeffectiveness 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 technicalvalidation 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 reportwith the audited annual accounts and consolidated
accounts.
Furthermore, the procedures also include anassessment of whether the Esef report has beenmarked 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.
Ernst & Young AB, Box 7850, 203 99 Stockholm, was appointed auditor of Munters Group AB
by the general meeting of the shareholders on the
18 May 2022 and has been the company’s auditor
since the 2010.
Stockholm 2 March, 2023
Ernst & Young AB

RICKARD ANDERSSON

Authorized Public Accountant

Auditor’s Report 142

06

Financial information
INTRODUCTION

Auditor’s report on the corporate Auditor’s report on the statutory
governance statement
sustainability statement
To the general meeting of the shareholders of Munters Group AB (publ.),corporate identity number 556819-2321

To the general meeting of the shareholders of Munters Group AB (publ.),corporate identity number 556819-2321

STRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTENGAGEMENT AND RESPONSIBILITY

It is the Board of Directors who is responsible for the
corporate governance statement for the year 2022
on pages 84–90 and that it has been prepared inaccordance with the Annual Accounts Act.

FINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENT

THE SCOPE OF THE AUDITNOTES

Our examination has been 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 substantiallyless in scope than an audit conducted in accordance with International Standards on Auditing andgenerally accepted auditing standards in Sweden.
We believe that the examination has provided us
with sufficient basis for our opinions.

THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONMUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

OPINIONSOPINIONS

A corporate governance statement has been
prepared. Disclosures in accordance with chapter
6 section 6 the second paragraph points 2-6 theAnnual Accounts Act and chapter 7 section 31 thesecond paragraph the same law are consistent withthe annual accounts and the consolidated accounts
and are in accordance with the Annual Accounts Act.

A statutory sustainability statement has been
prepared.

ENGAGEMENT AND RESPONSIBILITY

It is the Board of Directors who is responsible for the
statutory sustainability statement for the year 2022
on pages 3–4, 10, 12–22 and 49-80 and that it
has been prepared in accordance with the Annual
Accounts Act.

Stockholm 2 March 2023
Ernst & Young AB

THE SCOPE OF THE AUDIT

Stockholm 2 March 2023
Ernst & Young AB

RICKARD ANDERSSON

Authorized Public Accountant

Our examination has been conducted in accordance with FAR’s auditing standard RevR 12 The
auditor’s opinion regarding the statutory sustainability statement. This means that our examination of
the corporate governance statement is different andsubstantially less in scope than an audit conductedin 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.

RICKARD ANDERSSON

Authorized Public Accountant

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Financial information
INTRODUCTIONSTRATEGY
OPERATIONSDefinitions of key financial indicators
In this annual report as well as in the quarterly interim reports, there are references to a number of performance measures. Some of the measures are defined in IFRS, others are alternative performance measuresand are not disclosed in accordance with applicable financial reporting frameworks or other legislations.
The performance measures are used by the Group to assist both investors and management in analyzing
Munters’ business. Below are the performance measures found in this annual report described, defined andthe reason for use disclosed.

SUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONCONTENTS, FINANCIAL REPORTS
BOARD OF DIRECTORS’ REPORTFINANCIAL STATEMENTS, GROUPFINANCIAL STATEMENTS, PARENTNOTES
THE BOARD’S ASSURANCEAUDITOR’S REPORTDEFINITIONSOTHER INFORMATIONORGANIC GROWTH

Change in net sales compared to the previous period,
excluding acquisitions and divestments and currencytranslation effects. The measure is used by Munters tomonitor net sales growth driven by changes in volume
and price between different periods.
ORDER BACKLOG

Received and confirmed sales orders not yet delivered and accounted for as net sales. Order Backlog
is a useful measure to indicate the efficiency ofthe conversion of received and confirmed sales
orders into net sales in future periods, and is usedby Munters to monitor business performance andcustomer demand, and adjust operations.
ORDER GROWTH

Received and confirmed sales orders minus cancelledorders during the reporting period. The order intake isan indicator of future revenues and, consequently, an
important KPI for the management of Munters’ business.
OPERATING PROFIT (EBIT)

Earnings before interest and tax. Munters believes
that EBIT shows the profit generated by the operating activities.

EBITA is helpful in analyzing our performance as it
removes the impact of items considered not to beof recurring character and therefore do not reflect
our core operating performance.
ADJUSTED EBITA MARGIN

Adjusted EBITA as a percentage of net sales.
Munters believes that Adjusted EBITA margin is a
useful measure for showing the Company’s profit
generated by the operating activities.
ADJUSTED EBITDA

Operating profit, adjusted for depreciations andamortizations, write-downs of tangible and intangible assets and items affecting comparability.
ADJUSTED EBITDA MARGIN

Adjusted EBITDA as a percentage of net sales.
ITEMS AFFECTING COMPARABILITY (IAC)

Items affecting comparability are events or transactions with significant financial effects, which
are relevant for the understanding of the financial
performance when comparing the current period toprevious periods. Items included are for example,
restructuring activities, capital gains and losses frombusiness divestments and M&A related costs.

ADJUSTED EBITA

Operating profit, adjusted for amortizations,write-downs of intangible assets and items affecting
comparability. Munters believes that using adjusted

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

RETURN ON CAPITAL EMPLOYED (ROCE)

Average operating profit (EBIT) plus financial
income, divided by the average capital employed,
where capital employed is total equity plus
interest-bearing liabilities. The average capital employed is calculated based on the last 12 months.

Capital employed is calculated as the total equity
plus interest bearing liabilities.

OPERATING CASH FLOW

Earnings adjusted for depreciation, amortization,and impairments, as well as for investments andoperating capital.

CASH AND CASH EQUIVALENTS

Cash and bank balances plus investments in securities and the like with maturity periods not exceeding
three months. This is a measure that highlights theshort-term liquidity.
LTM

LTM (last twelve months) after any key indicatormeans that the KPI corresponds to an accumulationof previous twelve month reported numbers. The
measure highlight trends in different KPIs, which isvaluable in order to gain a deeper understandingof the development of the business.
NET DEBTNet debt calculated as interest bearing debt andpension liabilities, deducted by cash and cash
equivalents. This is a measure of the ability to repay
the debt if it was all due.
NUMBER OF EMPLOYEESCAPITAL EMPLOYED

permanent employees at the end of each of the last
13 months divided by 13.

Number of employees is presented recalculated asfull time positions, if not otherwise stated. Average
number of employee is calculated as the sum of

OPERATING WORKING CAPITAL/NET SALES

Average Operating Working Capital last twelve
months as a percentage of Net sales for the same
period.
EARNINGS PER SHARE

Net income adjusted for the right of preferential
shares to dividend, divided by the weighted average number of ordinary shares.
SAAS RECURRING REVENUE

Total recurring revenue from SaaS contracts(Software-as-a-Service) recognized in the period.
The KPI is also presented annualized and named
SaaS ARR, which is calculated by multiplying SaaS
Recurring Revenue in the last quarter by four.
EQUITY/ASSETS RATIO

Equity (including non-controlling interests) divided
by total assets.
AMERICAS

Refers to North-, Central and South America.

Definitions 144

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Other information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONTHE SHAREOUR HISTORYOther information
Sara Melin from our production site in Tobo, Sweden.
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

07
Other information 145

07

The share

Other information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITY

THE SHARE 2022 MUNTERS
2,000,000

SEK
120

1,500,000

100

1,000,000

80

500,00060

CORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONTHE SHAREOUR HISTORY

040
Munters

OMX General Index (OMX GI)

The development for Munters share was positive
during the year. During 2022, the share priceincreased by 46 per cent while the Stockholm
Stock Exchange OMXS30 during the same period
decreased by 23 per cent. The closing price on
the last trading day of the year was SEK 102.90(69.95), equivalent to a market capitalization of
SEK 18.9 billion (12.9). The highest rate paid in
2022 was SEK 108.40 (88.45) and the lowest
price was SEK 51.90 (62.90).
TRADING IN THE MUNTERS SHARE

During 2022, a total of 142.1 million shares (58.1)
were sold. Average turnover during the year was
561,544 shares per day (229,558). Munters

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

No of shares traded, per day

share trading took place to 42 per cent on Nasdaq
Stockholm and to 58 per cent on other marketplaces.
DIVIDEND

Under the dividend policy adopted by the Board of
Directors, Munters aims to pay an annual dividend
that corresponds to 30–50 per cent of net income
for the year. Decisions on any dividend proposals
are taken by the Board in consideration of thecompany’s financial position, investment needs,
acquisitions and liquidity position. The Board of Directors proposes a dividend for 2022 of SEK 0.95
(0.85) per share. This represents 30 per cent of net
income for 2022.

SHARE CAPITALAt December 31, 2022, the number of shares andvotes in Munters totaled 184,457,817. Each share
has a quota value of SEK 0.03, and the share capital totaled SEK 5,533,735. Munters share capital iscomposed of one share class, in which each share
has the same number of votes and yields the sameright to a dividend. Under the Articles of Association, the number of shares may not fall below
150,000,000 and not exceed 600,000,000. The
company’s share capital may not fall below SEK
4,500,000 and not exceed SEK 18,000,000. The
company’s shares are registered with Euroclear
Sweden AB, which administers the company’s

share register and records the shares for individual
investors. Munters Group AB has its own holding of
2,389,358 shares related to employee incentive
programs.
OWNERS

The number of shareholders at December 31, 2022
was 10,859 and the proportion of shareholders
outside Sweden at year-end was 44.8 per cent.
The ten largest individual shareholders had 64.9
per cent of the share capital at that time. FAM AB
was the largest shareholder, with 28.0 per cent of
the share capital.

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Other information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATION

The ten largest shareholders as of December 31, 2022

OWNER DISTRIBUTION

Owner
1
2
3
4
5
6
7
8
9
10
Total ten largest
Other
Total

FAM ABODIN Funds
Fourth Swedish National Pension FundFirst Swedish National Pension Fund
Swedbank Robur Funds
Capital GroupC WorldWide Asset Management
Columbia Threadneedle
Vanguard
La Financière de l’Echiquier

MTRS

CapitalVotes

51,701,057
15,117,971
12,117,477
11,107,008
6,990,649
6,425,000
4,600,605
4,450,378
3,729,677
3,512,035
119,751,857
64,705,960
184,457,817

28.0%
8.2%
6.6%
6.0%
3.8%
3.5%
2.5%
2.4%
2.0%
1.9%
64.9%
35.1%
100.0%

28.0%
8.2%
6.6%
6.0%
3.8%
3.5%
2.5%
2.4%
2.0%
1.9%
64.9%
35.1%
100.0%

Foreign owners,
44.8%

Swedish owners,
55.2%

OTHER INFORMATIONTHE SHAREOUR HISTORY

Shareholding by size
Size

Number ofsharesCapitalVotes

1 – 1,000
1,001 – 10,000
10,001 – 50,000
50,001 – 500,000
500,001 – 1,000,000
1,000,001 – 10,000,000
10,000,001 - 20,000,000
20,000,001 –Unknown shareholder size
Totalt

1,813,846
2,820,967
2,262,352
10,092,874
9,104,517
48,418,741
38,342,456
51,701,057
19,901,007
184,457,817

1.0%
1.5%
1.2%
5.5%
4.9%
26.2%
20.8%
28.0%
10.8%
100.0%

1.0%
1.5%
1.2%
5.5%
4.9%
26.2%
20.8%
28.0%
10.8%
100.0%

Number of known Share of known
shareholders
shareholders
9,713
944
109
59
13
17
3
1
–
10,859

89.4%
8.7%
1.0%
0.5%
0.1%
0.2%
0.0%
0.0%
0.0%
100.0%

CEO and President Klas Forsström and IR Director Line Dovärn visiting Munters Japan. Here together with
Keiko Asano, Managing Director, and the management team of Munters Japan.

Owner distribution
Owner type

Number ofsharesCapital

Votes

Other
Swedish Institutional Owners
Foreign Institutional Owners
Swedish Private Individuals
Unknown owner type
Total

5,984,426
90,329,512
61,421,474
6,821,398
19,901,007
184,457,817

3.2%
49.0%
33.3%
3.7%
10.8%
100.0%

3.2%
49.0%
33.3%
3.7%
10.8%
100.0%

Number of Share of known
known owners
owners553
59
74
10,173–
10,859

5.1%
0.5%
0.7%
93.7%
0.0%
100.0%

Analysts who actively cover the Munters share
KARL BOKVIST
KARL-OSKAR VIKSTRÖMGUSTAV ÖSTERBERG
LUCAS FERHANI
MATS LISSCARL RAGNERSTAM
ANDERS ROSLUNDABG Sundal Collier
Berenberg
Carnegie Investment Bank
Jefferies
Kepler Cheuvreux
NordeaPareto Securities

Source: Data compiled by Modular Finance

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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Other information
INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONTHE SHAREOUR HISTORYFINANCIAL INFORMATIONANNUAL GENERAL MEETING

Munters uses several channels to inform about thecompany’s operations and financial development.
The website – www.munters.com – is continuously
updated with annual reports, quarterly reports,press releases and presentations. The annual report
and the interim report can be ordered on the website, via email: info@munters.se or at the address:
Munters Group AB, Box 1188, 164 26 KISTA if
desired.
Web presentations and telephone conferences
are organized for analysts, investors and the press
in connection with the publication of the company’squarterly reports. About once a year, a capital
market day is arranged where representatives ofthe financial market are offered in-depth information about the company’s operations. A number oftimes a year, webinars are also arranged that focus
on various growth areas for Munters. In addition,
representatives of the group management regularly
meet with analysts, investors and journalists toensure that they have correct and up-to-date
information. In accordance with the agreement with
Nasdaq OMX Stockholm, share price sensitive
information, which is not already generally known,
is never provided at this type of meeting or contact.
Munters applies a silent period that begins on thefirst day of a month in which financial reporting occurs and continues until the report is published. During this period, no meetings are held with investors
or financial analysts. Before the full-year reporting,the quiet period begins on the first of January.

The Annual General Meeting of Munters Group AB
will be held on Wednesday May 17, 2023 in Kista

FINANCIAL CALENDAR

Investor Relations contacts:

2023
April 21
May 17
July 18
October 24

Interim report January–March 2023
Annual general meeting
Interim report April–June 2023
Interim report July–September 2023

Ann-Sofi Jönsson, Vice President,
Investor Relations and Enterprise Risk Management
PHONE: + 46 (0)730 251 005
EMAIL: ann-sofi.jonsson@munters.com

2024
February 1

Year-end report 2024

MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

Right to participate in the general meeting

Shareholders who wish to participate in the Annual
General Meeting must:• be registered in the share register maintainedby Euroclear Sweden AB on Tuesday, May 92023,• notify their intention to attend in accordance withwhat is stated in the notice convening the Annual
General Meeting.
The notice will be published in April. To be entitledto participate in the Annual General Meeting,shareholders whose shareholding is registered in
the name of a trustee must reregister their sharesin their own name in the share register on May 9,2023. Re-registration may be temporary and requested from the trustee well in advance in accordance with the trustee’s procedures. Re-registrationby the trustee not later than May 11, 2023 will betaken into consideration in the share register.
Additional information will be stated in the notice convening the Annual General Meeting, which
will be published in April.

Three reasons to invest in Munters
1. World-leading supplier of energy-efficient climate solutions• We are a leading global supplier with a local presence• We offer ground-breaking technology that we gradually develop to create increased
customer value• Our business model generates a strong and stable cash flow that creates room forinnovations and acquisitions.

2. Well positioned to meet megatrends• Munters has solutions that make our customers more climate-neutral and reduce boththeir electricity and water consumption• Our products contribute to a more efficient digitized business for our customers• With our products for agriculture and the food industry, we enable higher productivity
in food production, which is required to meet the world’s increasing population• Higher demands in production environments within, for example, battery factories
and livestock farming place great demands on climate solutions, which we offer.

3. The sustainable alternative• We make our customers more sustainable• We have a clear and integrated sustainability strategy where our actions and priorities enable long-term profitable growth and an increasingly sustainable business• Our strong position gives us the opportunity to influence and take an active role for amore sustainable value chain• We are part of the solution to a more sustainable worldLine Dovärn, Director,
Investor Relations
PHONE: + 46 (0)730 488 444
EMAIL: line.dovarn@munters.com

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Other information

Innovation and continuous improvements
Munters has been a pioneer in climate control solutions since its founding in 1955.
Munters culture has always been built on curiosity and innovation. We strive forcontinuous improvements in order to remain successful globally.

INTRODUCTIONSTRATEGY
OPERATIONSSUSTAINABILITYCORPORATE GOVERNANCE
FINANCIAL INFORMATIONOTHER INFORMATIONTHE SHAREOUR HISTORY

1950s – founding

1960s – Establishment in the U.S.

Munters is founded in 1955 by inventor andentrepreneur Carl Munters together with Marcus
Wallenberg, among others. The company develops
modern air-conditioning systems based on evaporative cooling, dehumidification and heat recovery.
The business gets off the ground in 1958, when the
Swedish Armed Forces orders 200 dehumidifiers.

Expansion both in Sweden and internationally. Production is established in the U.S. Launch of several
new, innovative products. The best-selling dehumidifier of all time, the M100, is launched in 1964.

1990s – An international group2000s – World leader in climate systems for
agricultural customers

The expansion continues and Munters becomesan international group with sales offices in over 25
countries. Environmental issues become increasingly important, laying a foundation for new productsin evaporative cooling. In 1997, Munters AB islisted on the Stockholm Stock Exchange. Acquisitionof Euroemme, which offers climate solutions for thegrowing business of chicken farming.

Further investment in sales and production in
Asia. Several acquisitions make Munters a world
leader in climate systems for livestock farming andgreenhouse cultivation. Acquisition of Des Champs
Technologies in the U.S. and Toussaint Nyssenne, aleading European manufacturer of large-scale air
treatment systems.

1970s – Oil crisis creates potential

1980s – Acquisition of agents

Product range, customer segments and applications
are expanded. An international distribution network
is established. The oil crisis of 1973 leads to energy
conservation measures and gives Munters major
market potential. In 1974, Munters is acquired by
Incentive AB.

Resellers and distributors are acquired over several
years to broaden and strengthen the business.
Operations expand to several countries, including
Japan in 1987.
Focus on environmental improvements leads tothe acquisition of a unique Swedish air purification
technology, Zeol, which is further developed withMunters rotor technology.

2010s – Focus on core business2020s – I ncreased demand for climate smart
solutions

Focus on the core business. In 2010, Munters is acquired by Nordic Capital Fund VII and the company is de-listed from the Stockholm Stock Exchange.
A three-phase plan on stability, profitability andgrowth is launched. In 2017, Munters is re-listedon Nasdaq Stockholm. Several new products arelaunched with a focus on optimizing the climate
while reducing energy consumption, such as DryCool® Focus and SonarEcho.

New organization in 2020 with two business areas:
AirTech and FoodTech, and an updated strategy. In
2022, a third business area, Data Center Technologies, is formed in response to increased demand.
New production facilities are built in Hodonin in the
Czech Republic and in Virginia, USA.
Acquisitions were carried out in all three businessareas. Within DCT, Edpac, an Irish manufacturerof cooling equipment for data centers, is acquired.
Within AirTech, Hygromedia, manufacturer of components for use in rotors, and RotorSource, supplierof rotors and cassettes to OEM manufacturers, wereacquired. Within FoodTech, InoBram, a Brazilian
manufacturer of control units for climate solutions for
agriculture and food producers, was acquired.** Subject to certain corporate and regulatory approvals, including CADE (Brazilian antitrust) approval).
MUNTERS ANNUAL AND SUSTAINABILITY REPORT 2022

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