Burckhardt Compression
Annual Report 2021

Plain-text annual report

ANNUAL REPORT 2021 1 Burckhardt CompressionAnnual Report 2021Table of contents REPORT SECTION International 02 At a Glance 04 Milestones 2021 06 08 Letter to Shareholders Key Figures 11 12 Our Company 18 Our Strategy 22 Systems Division 26 Services Division 30 SUSTAINABILITY 32 Story #1: Creating impacts where they matter 34 Story #2: Innovation to tackle the energy transition 38 41 44 45 47 49 51 53 54 55 Sustainability Report 2021 1. GREENHOUSE GAS EMISSIONS AND CLIMATE CHANGE 2. ENERGY USE AND EFFICIENCY 3. LONGEVITY AND CYCLABILITY 4. ENVIRONMENTAL IMPACTS OF APPLICATION PURPOSE 5. WORKING CONDITIONS 6. OCCUPATIONAL HEALTH AND SAFETY 7. PRODUCT SAFETY 8. BUSINESS CONDUCT OUR COMMITMENT Extended key figures 58 60 GRI content index 65 SASB Mapping 66 CORPORATE GOVERNANCE 67 1. GROUP STRUCTURE AND SHAREHOLDERS 69 70 75 76 78 2. CAPITAL STRUCTURE 3. BOARD OF DIRECTORS BOARD MEMBERS 4. EXECUTIVE MANAGEMENT EXECUTIVE MEMBERS 5. COMPENSATION, SHAREHOLDINGS AND LOANS 6. SHAREHOLDERS’ PARTICIPATION RIGHTS 7. CHANGES OF CONTROL AND DEFENSIVE MEASURES 8. AUDITORS 79 9. INFORMATION POLICY 10. QUIET PERIODS 80 COMPENSATION REPORT 81 1. BASIS 2. COMPENSATION POLICY 3. ORGANIZATION, DUTIES AND POWERS 4. COMPENSATION SYSTEM 83 85 86 87 5. COMPENSATION PAID WITH COMPARATIVE FIGURES FOR THE PREVIOUS YEAR 6. OVERVIEW OF SHAREHOLDINGS AND DISTRIBUTED SHARES 7. TRANSACTIONS WITH THE BOARD OF DIRECTORS, THE EXECUTIVE MANAGEMENT AND RELATED PARTIES 8. MOTIONS FOR THE ANNUAL GENERAL MEETING 9. EVALUATION OF THE COMPENSATION SYSTEM REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING 88 FINANCIAL REPORT 90 91 92 93 Consolidated income statement Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity 94 Notes to the Consolidated Financial Statements 1. GENERAL INFORMATION 2. ACCOUNTING POLICIES 3. FINANCIAL RISK MANAGEMENT 4. BUSINESS COMBINATIONS AND OTHER CHANGES IN THE SCOPE OF CONSOLIDATION 5. SEGMENT REPORTING 6. PERSONNEL EXPENSES 99 100 101 103 7. RESEARCH AND DEVELOPMENT EXPENSES 8. OTHER OPERATING INCOME AND EXPENSES 104 9. FINANCIAL INCOME AND EXPENSES 10. INCOME TAXES 106 11. EARNINGS PER SHARE 12. INTANGIBLE ASSETS 108 109 110 111 13. PROPERTY, PLANT & EQUIPMENT 14. OTHER FINANCIAL ASSETS 15. INVENTORIES 16. TRADE RECEIVABLES 17. OTHER CURRENT RECEIVABLES 18. SHARE CAPITAL AND TREASURY SHARES 19. FINANCIAL LIABILITIES 112 20. PROVISIONS 21. OTHER NON-CURRENT LIABILITIES 113 22. OTHER CURRENT LIABILITIES 23. ACCRUED LIABILITIES AND DEFERRED INCOME 24. DERIVATIVE FINANCIAL INSTRUMENTS 25. CONTINGENT LIABILITIES 114 26. COMMITMENTS 27. PLEDGED ASSETS 28. SHARE-BASED PAYMENTS 29. RELATED PARTY TRANSACTIONS 115 116 118 30. EMPLOYEE BENEFIT OBLIGATIONS 31. IMPACTS OF THE CONFLICT BETWEEN RUSSIA AND UKRAINE 32. EVENTS AFTER THE BALANCE SHEET DATE 33. GROUP COMPANIES AND ASSOCIATES REPORT ON THE AUDIT OF THE FINANCIAL REPORT (CONSOLIDATED FINANCIAL STATEMENTS) 122 Financial Statements of Burckhardt Compression Holding AG, Winterthur BALANCE SHEET 123 INCOME STATEMENT NOTES TO THE FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG 128 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR (FINANCIAL STATEMENTS) 131 Glossary/Imprint Burckhardt Compression is the worldwide market leader for reciprocating compressor systems and the only manufacturer and service provider that covers a full range of reciprocating compressor technologies and services. Its customized and standard compressor systems are used in the gas gathering and processing, gas transport and storage, refinery, chemical, petrochemical, industrial gas and hydrogen mobility and energy markets. Since 1844 its highly skilled workforce has crafted superior solutions and set the benchmark in the gas compres- sion industry. ONLINE REPORT report.burckhardtcompression.com 02 REPORT SECTION 30 SUSTAINABILITY 66 CORPORATE GOVERNANCE 80 COMPENSATION REPORT 88 FINANCIAL REPORT Table of contents Cover: LNG Tanker Rainbow Flex Photo of Benjamin Seeger, Field Service Coordinator on his way to his next job site on board the Rainbow Flex. 1 Burckhardt CompressionAnnual Report 2021At a Glance SIGNIFICANTLY HIGHER ORDER INTAKE The fiscal year 2021 was characterized by a significantly higher order intake and a clearly improved operating income. The Board of Directors will propose a higher dividend. We made further progress towards our Mid-Range Plan targets as well as in integrating digitalization and sustainability into our strategy and operations. Order intake in CHF mn Sales in CHF mn 976.6 650.7 6 . 8 5 6 6 . 9 2 6 6 . 4 9 5 3 . 9 9 5 7 . 8 5 6 3 . 7 0 6 6 . 6 7 6 2 . 5 2 5 Operating income (EBIT) in CHF mn 70.3 8 . 0 6 8 . 4 5 5 . 4 4 7 . 1 4 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 Net income in CHF mn Shareholders’ equity in CHF mn Net financial position in CHF mn 50.4 . 2 7 4 9 . 9 3 2 . 2 3 0 . 9 2 242.9 –56.8 0 . 5 4 3 2 . 5 3 3 . 5 7 1 3 6 . 9 1 2 4 . 9 4 – 1 . 2 6 – 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 7 1 8 1 2 4 . 2 8 – 0 2 1 2 7 . 1 9 – 9 1 Burckhardt CompressionAnnual Report 2021At a Glance Water consumption EcoVadis –8.1% Global water consumption in our factories was reduced by 8.1%. Burckhardt Compression was awarded the EcoVadis silver medal in 2021 for its sustainability management, which placed it in the top 25% in the sector. 2021 Performance FY2021 Total Shareholder Return FY2021 in % 80 60 40 20 0.0 57.9% 10.9% Burckhardt Compression SPI 1 2 r a M 1 2 r p A 1 2 y a M 1 2 n u J 1 2 l u J 1 2 g u A 1 2 p e S 1 2 t c O 1 2 v o N 1 2 z e D 2 2 n a J 2 2 b e F 2 2 r a M Performance since IPO Total Shareholder Return 26 June 2006 to 31 March 2022 in % 658.9% 167.4% Burckhardt Compression SPI 8 0 n u J 0 1 n u J 2 1 n u J 4 1 n u J 6 1 n u J 8 1 n u J 0 2 n u J 800 600 400 200 0.0 6 0 n u J 3 Burckhardt CompressionAnnual Report 2021 PARTNERSHIP WITH SHELL NEW ENERGIES Shell New Energies has selected Burck- hardt Compression as its partner for the development of oil-free high-pressure hydrogen compressors. As part of this project, Burckhardt Compression is building a new test facility in Winterthur, Switzer- land, to further develop sealing technol- ogy and solutions for hydrogen refueling stations serving heavy-duty vehicles. These solutions will enable the compression of hydrogen gas up to 900 bar (as a booster), using non-lubricated compressors. Milestones 2021 1.5 MILLION OPERATING HOURS WITH LABY®-GI COMPRESSORS Burckhardt Compression’s Laby®-GI compressor system plays an important role in the fuel supply on liquefied natural gas (LNG) carriers. During transport, the liquid gas warms up resulting in a small amount of evaporation in the form of boil-off gas that is then either reliquefied and fed back into the tank or used as fuel for the carrier’s engines. Liquefaction systems and diesel gas engines both require pressure of up to 300 bar. This is why Burckhardt Compression has developed specific solutions for LNG applications that compress gas at low temperatures and high pressure, and meet the stringent requirements of use on the high seas. The unique selling point of the Burckhardt Compression system is the sealed crankcase that prevents methane from escaping into the atmosphere. In the reporting period, the installed system Laby®- GI recorded 1.5 million operating hours for the first time, reflecting its high level of reliability. ECONOMICAL AND ECO- LOGICAL OIL-FREE HYDROGEN COMPRESSOR In the reporting period, Burckhardt Compression developed and sold large high-pressure reciprocating compressors with a discharge pressure of up to 550 bar for use in a range of hydrogen applications. The innovative design makes them particularly suitable for filling hydrogen trailers and hydrogen fueling stations with high mass flows, and reduces the number of compres- sors required. The development of seals for oil-free high-pressure recipro- cating compressors represents another milestone. These innovations enable Burckhardt Compression to efficiently support the planned increase in volume across various hydrogen applications. 4 Annual Report 2021 Burckhardt Compression 2021 ACQUISITION OF MARK VAN SCHAICK STRENGTHENS SERVICE BUSINESS Burckhardt Compression’s acquisition in December 2021 of Mark van Schaick BV, based in Rotterdam in the Netherlands, expands its repair and service capabilities in Europe. The company is a leading provider of complex repair services – including crankshafts – for customers worldwide in the maritime and petrochemical industries. Milestones 2021 COLLABORATION WITH MICROSOFT AND PTC Under the name UP! Solutions, Burckhardt Compression offers digital solutions that provide real-time monitoring of compressors and remote support for customers’ on-site maintenance – whether on land or at sea. To accelerate these developments, the company collaborates with the leaders in innovative digital solutions. In the reporting period Burckhardt Compression announced that it was working with PTC – based in Boston, US – to develop remote service solu- tions for customers around the world and augmented reality (AR) service solutions. Burckhardt Compression also works with Microsoft in order to offer customers remote support that’s stable even in rough seas. RECORD ORDERS FOR HYPER COMPRESSORS AND INDUSTRIAL GAS COMPRESSORS FOR THE SOLAR PANELS INDUSTRY The sharp rise in global demand for solar cells and the resulting increase in production capacity led to a record number of orders for Burckhardt Compression in the reporting period. To make solar cells, polysilicon and a thin layer of EVA plastic are required – and Burckhardt Compression is a leading supplier of compression solutions for both. 5 Annual Report 2021 Burckhardt Compression International ALWAYS CLOSE TO OUR CUSTOMERS Customer proximity is one of our success factors. Burckhardt Compression is represented on all continents with 36 com - panies worldwide, 3 production sites and 5 assembly plants. 36 subsidiaries worldwide 2’732 employees 80 countries worldwide with Burckhardt Compression presence 6 Annual Report 2021 Burckhardt Compression Burckhardt Compression International International Burckhardt Compression Manufacturing/Assembly Locations Burckhardt Compression Subsidiaries, Associates and Service Centers OUR CUSTOMERS Our customer base includes some of the largest, most famous, and most innovative companies in the world. We serve – energy companies, – gas transportation and storage companies (onshore and offshore) – customers in the marine sector – H2 processing industries – petrochemical/chemical companies – industrial gas companies – general engineering companies that design and construct production lines or entire plants for our end customers Sales of new machines, mostly via general contractors, are the responsibility of the Systems Division, while the Services Division is responsible for all service and spare parts activities. Burckhardt Compression attaches great importance to a partner- ship-based relationship with its customers. In order to understand their needs even better and continuously improve, both divisions conduct regular customer surveys. 7 7 Annual Report 2021 Burckhardt Compression RubrikBurckhardt CompressionAnnual Report 2021Letter to Shareholders DEAR SHAREHOLDERS, The fiscal year 2021 was characterized by a significantly higher order intake and a clearly improved operating income. The Board of Directors will propose a higher dividend. We made further progress towards our Mid-Range Plan targets as well as in integrating digitalization and sustainability into our strategy and operations. Orders strongly driven by energy transition in Asia, USA and Europe In the year under review, global markets benefited from the global transi- tion towards more sustainable and secure energy sources. Thanks to our positioning along these trends, order intake increased significantly. The sharp rise in solar panel production in China strengthened the demand for compressors in the Low Density Polyethylene (LDPE), Ethylene-Vinyl-Ac- etate (EVA) and polysilicon plants applications, driving the growth in the Petrochemical and Industrial Gas markets. The demand for hydrogen fuel stations in Europe and the USA, as well as the ongoing investments in hy- drogen liquefaction plants, drove orders in the Hydrogen Mobility and En- ergy markets, while the demand for LNG fueled ships (Liquefied Natural Gas), LNG carriers and LPG carriers (Liquefied Petroleum Gas) stimulated growth in the Transport and Storage business. The Services market in Asia Pacific (excluding China), North America and Europe benefited from a lift- ing of most pandemic-related lockdowns and travel restrictions during the year, with positive impacts especially on the maintenance and repair busi- ness. Engineered solutions and spare parts continued to grow. Market and Business Challenges The various lockdowns in China, as well as the Chinese energy shortages in the fall of 2021, impacted the business partially. Global challenges in the supply chain could so far be averted thanks to a diversified supply network and framework agreements with various suppliers. During fiscal year 2021, the related increasing raw material and logistic prices could be passed on or mitigated. Due to the war in Ukraine, Burckhardt Compression is not accepting new orders from the Russian market since mid-March 2022. In the past few years, 2% to 5% of sales were attributable to business with Russia. The tightening of sanctions, after the year-end closing, will affect the execution of the backlog of Russian projects. Many of these challenges are expected to continue in 2022. Group: significantly higher order intake, clear growth of profitability In fiscal year 2021, the Group increased its order intake significantly by 44.3% to CHF 976.6 mn. Sales amounted to CHF 650.7 mn, similar to the previous year. Gross profit was up 14.9%, to CHF 190.8 mn, yielding a signifi- cantly higher gross profit margin of 29.3% (previous year: 25.2%). The consolidated operating profit (EBIT) rose 15.7%, to CHF 70.3 mn (previ- ous year: CHF 60.8 mn), corresponding to an EBIT margin of 10.8% (previous year: 9.2%). Net profit of CHF 50.4 mn exceeded the previous year figure (CHF 47.2 mn) by 6.8%, while earnings per share attributable to Burckhardt Compression Group shareholders rose by 14.0%, from CHF 13.00 to CHF 14.82. 8 Burckhardt CompressionAnnual Report 2021Letter to Shareholders Selling, marketing and general administrative expenses amounted to CHF 106.9 mn (16.4% of sales). Research and development expenses in- creased by CHF 4.3 mn to CHF 19.7 mn in order to develop innovative solu- tions for the marine as well as hydrogen mobility and energy markets. Other operating income (net) was at CHF 6.1 mn, or CHF 3.0 mn above the previous year, primarily due to non-recurring effects. Total assets at the end of March 2022 were reported at CHF 837.8 mn, 10.5% higher than in the previous year. This rise is attributable mainly to the strong increase in advance payments from customers and the growth in inventories. The net financial position at the end of fiscal year 2021 amounted to CHF –56.8 mn (CHF –82.4 mn at the end of fiscal year 2020). Work in progress pre-financed by customer advance payments improved to CHF 52.0 mn (end of March 2020: CHF 11.5 mn) as a result of the strong growth in order intake. Total equity improved to CHF 242.9 Mio. (+23.3 Mio.), while the equity ratio of 29.0% is unchanged from the previous year and slightly below the target level of over 30% – attributable to higher total as- sets and the offsetting of goodwill against the equity from the acquisition of Mark van Schaick BV. Systems Division: markedly higher order intake, lower sales, EBIT and gross profit margins substantially up After a strong first half-year, order intake of the Systems Division contin- ued to grow in the second half of the year, reaching CHF 651.1 mn for the full year (+60.9%). This amount includes an exceptionally high number of large orders received for LDPE, EVA and polysilicon applications, ending up in a total amount of around CHF 150 million order intake. The invoic- ing of these projects will be spread over the next two fiscal years. Sales of CHF 372.7 mn was 9.1% below the previous year figure, due to the corona- related weak order intake in the first half of 2020. Gross profit was up 20.7% to CHF 71.3 mn, resulting in a gross profit margin of 19.1% (previous year: 14.4%), mainly due to a favorable product mix and a higher capacity utili- zation. Price increase in certain material categories were compensated by procurement savings and by professional project management. Thanks to a strong second half-year, the division significantly improved its EBIT margin to 5.7% (previous year: 3.9%) despite the lower sales volume. Services Division: significantly higher order intake and sales, higher EBIT Orders received by the Services Division rose by a strong 19.6% to CHF 325.5 mn, comparing to a previous year, which included a long-term marine service contract over a period of ten years in the low double-digit million range. Sales increased by 11.8% to CHF 278.0 mn. Gross profit grew by CHF 12.5 mn to CHF 119.6 mn, resulting in a gross profit margin of 43.0%, unchanged from the previous year. EBIT rose by CHF 7.1 mn to CHF 58.4 mn thanks to higher sales and resulted in an EBIT margin of 21.0% (previous year 20.6%). Arkos Field Services (USA) clearly improved, and the integra- tion of the acquired Mark van Schaick BV business in the Netherlands is well underway. First successes with digital solutions In the reporting period, we integrated digital service solutions into our service portfolio under the name UP! Solutions. UP! Remote Support, the first service of its kind, supports our customers on site in real time with a HoloLens (augmented reality glasses) or a tablet. Our experts guide the on- site technician with precise instructions through each individual work step, diagnose problems, and propose solutions. Additional services based on data analysis and artificial intelligence are currently in development and will be tested with pilot customers in the current fiscal year. First sustainability report in accordance with GRI standards We made significant progress in systematically integrating sustainability into our strategy and business processes. We have strengthened our man- agement approaches to the material sustainability topics in cross-func- tional teams and defined key performance indicators, which are presented in the sustainability report, following the GRI standards. Strengthening the sustainability performance and contributing to the energy transition is a long-term commitment and will play an integral role in the development of the new Mid-Range Plan for 2023 to 2027. New CEO Fabrice Billard On April 1st, 2022, Fabrice Billard, previously president of Systems Division, succeeded Marcel Pawlicek as CEO. While providing continuity for the ex- ecution of the last year of the current Mid-Range Plan, the new manage- ment will focus on building a new strategic plan, capitalizing on the future market opportunities related to the global energy transition and to the re- duction of CO₂ and other greenhouse gas emissions at customer facilities. 9 Burckhardt CompressionAnnual Report 2021Letter to Shareholders Outlook for fiscal year 2022; new Mid-Range Plan in 2023 We expect to continue to benefit from the positioning in applications re- lated to the global transition towards more sustainable and secure ener- gy sources. Based on the order intake of the past two fiscal years and on the challenges in the supply chains, we currently expect sales to grow to between CHF 720 mn and CHF 760 mn at Group level for the fiscal year 2022, thus exceeding the target of CHF 700 set in the Mid-Range Plan. Due to one-off costs related to the tightening of sanctions towards Russia after the year-end closing (EBIT impact of CHF 5 to 7 mn expected), as well as a change in business mix towards our Systems Business, the operating margin is expected to be similar to the prior year and therefore within the Mid-Range Plan target of 10% to 15%. This is assuming that global chal- lenges in the supply chain and geopolitical developments will not signifi- cantly impact the business activity levels going forward. The new Mid-Range Plan for 2023 to 2027 will be prepared in the current fiscal year and is expected to be externally communicated in November 2022. Dividend Earnings per share attributable to Burckhardt Compression Group share- holders rose by 14.0%, to CHF 14.82. The Board of Directors will propose to the Annual General Meeting a dividend of CHF 7.50 per share (previous year: CHF 6.50), an increase of 15.4% compared to fiscal year 2020. This corresponds to a payout ratio of 50.6% of earnings per share attributable to shareholders of Burckhardt Compression (previous year: 50.0%), remain- ing at the lower end of the target range of 50% to 70% in order to further strengthen the equity ratio towards the target of 30%. 10 Ton Bücher, Chairman of the Board of Directors Marcel Pawlicek, CEO until March 31, 2022 Thanks The Board of Directors and Executive Management would like to thank our employees for their continuing high level of commitment. Their unwaver- ing engagement made it possible to satisfy our customers and clearly im- prove our financial performance in a challenging global environment. We would also like to thank our shareholders and our customers worldwide for their trust. Kind regards, Ton Büchner Chairman of the Board of Directors Marcel Pawlicek CEO until March 31, 2022 Winterthur, June 8, 2022 Burckhardt CompressionAnnual Report 2021Key Figures KEY FIGURES in CHF mn Total Order intake Sales Operating income (EBIT) in % of sales Net income in % of sales Systems Division Order intake Sales Operating income (EBIT) in % of sales Services Division Order intake Sales Operating income (EBIT) in % of sales Balance sheet Balance sheet total Shareholders’ equity in % Net financial position Share Net income per share Dividend per share Payout ratio Market capitalization (in CHF mn) Employees Employees as per end of fiscal year (FTE) Apprentice Turnover rate Average company affiliation (years) Environment Energy use (MWh) Greenhouse gas emissions Scope 1 (tCO2e) Greenhouse gas emissions Scope 2 (tCO2e) Water (m3) 11 2021 976.6 650.7 70.3 10.8 50.4 7.7 651.1 372.7 21.1 5.7 325.5 278.0 58.4 21.0 837.8 29.0 –56.8 14.82 7.50 50.6% 1’662.6 2’732 64 10.1% 8.4 42’581 2’465 12’815 83’810 2020 Change 2021/2020 676.6 658.6 60.8 9.2 47.2 7.2 404.6 409.8 16.2 3.9 272.1 248.8 51.2 20.6 758.1 29.0 –82.4 13.00 6.50 50.0% 1’071.0 2’538 59 9.5% 8.5 38’733 3’391 8’184 91’218 44.3% –1.2% 15.7% 6.8% 60.9% –9.1% 30.4% 19.6% 11.8% 13.9% 10.5% 14.0% 15.4% 55.2% 7.7% 8.5% –1.2% 9.9% –27.3% 56.6% –8.1% Burckhardt CompressionAnnual Report 2021 Our Company TRADITION AND INNOVATION For 178 years, Burckhardt Compression has been at the forefront of its industry and has continued to innovate to become the leader in reciprocating compression systems and services. VISION We are our customers’ first choice for reciprocating compression solutions across the entire product life cycle. MISSION Systems Division: We provide optimum reciprocating compression solu- tions for every customer. Services Division: We love to provide services that matter. Hands-on. GUIDING PRINCIPLES We are convinced that our well-established corporate culture forms the foundation of our competitiveness. The reputation that Burckhardt Com- pression enjoys and the mutual trust that exists within the Group depend mainly on the integrity and conduct of each and every employee. A com- prehensive values program called “Values and Behaviors” ensures that em- ployees in all Group’s locations and companies share and actively uphold the same corporate values and principles. KEY APPLICATIONS Gas gathering and processing The production of marketable and transportable natural gas begins with pre-processing at the gas field itself using high-speed compressors. These remove condensates, acid gas, mercury and water from the gas. Typically, such processes produce the corrosive exhaust gases carbon dioxide (CO2) and hydrogen sulfide (H2S), which are then removed from the process by in- jection into high-pressure disposal wells using reciprocating compressors. Besides these onshore solutions, Burckhardt Compression also pro- vides offshore solutions for various applications associated with gas gath- ering and processing. Gas transport and storage Gas transport and storage is a key market for Burckhardt Compression. In order to store or transport gases, they must be compressed or liquefied. Gases typically used in this area of application are LNG (liquefied natural gas), LPG (liquefied petroleum gas) and CNG (compressed natural gas). In the case of natural gas, liquefaction shrinks its volume by a factor of 600. Gas transport via LNG tankers offers greater flexibility and avoids the geo- political risks associated with a dependence on gas pipelines. The process chain supported by Burckhardt Compression’s compressors and services includes liquefaction, transfer to the carrier, handling the boil-off gases (BOG) during transport, unloading, storage until regasification, and feeding into the consumer network. Burckhardt Compression provides unique solu- tions for the compression and reliquefaction of BOG and fuel gas injection in two-or four-stroke marine diesel engines, and has acquired a significant share in the LNG-powered ships market over recent years. The company offers high and low pressure solutions for dual-fuel engines. Both systems allow the ship operator to switch between diesel fuel injection or injection of BOG produced on board. In addition to LNG carriers, commercial and cruise ships also increasingly use LNG or dual-fuel engines in order to meet stricter environmental regulations. Burckhardt Compression’s compres- sors are the only ones that do not result in loss of gas (known as “methane slips”) and therefore meet the very highest emissions regulations. Increas- ing energy requirements and the associated rise in demand for natural gas has boosted global trade. Burckhardt Compression also offers solutions for gathering and storage of natural gas and other hydrocarbons in onshore or offshore installations. Refinery Refineries use distillation and chemical reactions to turn crude oil into commercial products from which a range of fuels and lubricants can be extracted, as well as raw materials for other downstream processes. In this market, Burckhardt Compression mainly supplies compressors for various hydrogen applications (hydrotreating, isomerization, hydrocracking, re- forming). The compressors are used to refine the raw products and reduce the nitrogen and sulfur content and odorants. Stricter environmental regu- lations, increased cost pressure, facility expansion and the requirement to process raw products of differing quality in a single facility, are important 12 Burckhardt CompressionAnnual Report 2021Our Company From engineering workshop to global market leader 1844 Franz Burckhardt opens engineering workshop in Basel 1935 Development and sale of the first labyrinth piston compressor (Laby) for oxygen compression in steel production 1951 Manufacture of LDPE thermoplastic using hyper compressors 2015/19 Acquisition of Arkos Field Services, US, in two stages. Access to a qualified workforce and service centers across the US 1856 Production of steam-powered machines 1883 Development and sale of the first single-stage, dry-running reciprocat- ing compressor 1890 August Burckhardt founds the Burckhardt Maschinenfabrik 1913 Delivery of first compressor for ammonia synthesis to BASF Ludwigshafen, Germany 1920 Start of fertilizer production using ammonia synthesis compressors 13 1969 Acquisition by Sulzer 1971 Transport and storage of natural gas with process gas compressors 1982 Consolidation of Sulzer’s activities in the field of reciprocating com- pressors to form Maschinenfabrik Sulzer-Burckhardt AG 1999 Consolidation of Basel and Winterthur sites at the Winterthur site 2002 Five members of the management board buy out the business togeth- er with a financial investor. Name changed to Burckhardt Compression 2006 Stock exchange listing on the SIX Swiss Exchange (IPO), valor BHCN 2013 Laby®-GI compressors were used on LNG tankers 2016 New company structure with two divisions, Systems and Services 2016/20 Acquisition of Shenyang Yuanda Compressors, the leading Chinese manufacturer of reciprocating com- pressor systems, in two stages. Proximity to local market, expansion of the product portfolio and direct access to an established, local supply chain 2020 Acquisition of the compressor busi- ness of The Japan Steel Works JSW to strengthen position in the global market and particularly in Japan 2021 Acquisition of Mark van Schaick 2021 Launch of high pressure non-lubri- cated compressor for H2 mobility and energy Company history Compressor development Burckhardt CompressionAnnual Report 2021Our Company drivers in this area of application. Standard refineries are increasingly con- verted into biorefineries in which various intermediate and end products (e.g. chemicals, materials, bioenergy) are sustainably produced with the fullest possible use of biomass. Petrochemical/chemical industry The petrochemical/chemical industry is one of Burckhardt Compression’s main markets. The production of a vast range of petrochemical and che- mical products, such as polyolefins (polymers), lacquers, synthetic rubbers, adhesives and dyes, solvents, paints, fertilizer, detergents and textiles, entails the processing of oil and natural gas. Demand in this area is fed primarily by the growing worldwide demand for industrial products made of plastic, which is driving an expansion of production capacity, combined with a trend towards greater local added value. Chemical recycling, which uses reciprocating compressors to break down petrochemical products to the constituent gas, is an application that will gain in importance as it conserves resources. The lower consumption resulting from increased recycling of everyday products is more than offset by greater demand for high-end plastic products. In this application area, companies will continue their efforts to reduce costs by replacing smaller plants with larger ones, establishing strategic production sites and extending value-added chains. Hyper Compressors, one of Burckhardt Compression’s specialist products, are used in the manufacture of industrial plastics, in particular solar panel film. Industrial gas The end market for industrial gases is quite broad, encompassing indus- tries as diverse as metalworking and metallurgy, chemical companies, food manufacturing, glass, pulp and paper manufacturing, electronics, construction, rubber and plastics processing and healthcare. Industrial gases, such as argon, helium, carbon dioxide, carbon monoxide, oxygen, ni- trogen and hydrogen, are produced in air separation or hydrogen generation plants. Growth drivers are regional growth and industry-specific growth. It is also important to mention the leading role that Burckhardt Compression now plays in solutions for the production of polysilicon, thanks to the rising demand for solar panels. 60 Burckhardt Compression has more than 60 years of experience and offers a broad product range of hydrogen applications and oil-free compressors. H2 mobility and energy H2 mobility and energy is the fastest growing market for Burckhardt Com- pression. The energy and transport industry’s hopes rest on hydrogen and its use as a driver of the urgently required reduction in carbon dioxide emis- sions. Compressors play a key role in the hydrogen logistics chain. Demand for ultra-pure high-pressure hydrogen for fuel cells is increasing rapidly. The company has developed solutions for hydrogen production and lique- faction plants, hydrogen fueling stations with high mass flows, trailer fill- ing and power-to-gas hydrogen production. COMPRESSOR SYSTEMS Burckhardt Compression’s reciprocating compressors lie at the heart of our customers processes. Laby® – Labyrinth Piston Compressors The Labyrinth Piston Compressor is unique with its exceptional level of re- liability and availability. The special Labyrinth seal on pistons and piston rods creates a completely oil-free, contactless seal. This prevents piston ring debris from contaminating the gas as well as friction-induced hot spots. The result is a longer service life, which has a positive impact on overall reliability and operating costs. The Laby® Com- pressor is designed to compress bone-dry, dirty, abrasive and other gases. The gas-tight and pressure-resistant casing reduces gas emissions and losses to the environment to virtually zero. The Laby® Compressor easi- ly manages the compression of LNG boil-off gas at suction temperatures down to –160°C (–250°F). 14 Burckhardt CompressionAnnual Report 2021Our Company Laby®-GI Compressors The Laby®-GI Compressor is mainly used for the compression of LNG boil- off gas. It has a fully balanced design that eliminates unbalanced moments and forces, so it can be used on offshore vessels and installations where strict guidelines on maximum allowable vibration levels on deck struc- tures must be observed. The unique combination of labyrinth seal design and tried-and-tested ring seal technology makes Laby®-GI Compressors the solution of choice for both low-temperature and high-pressure applica- tions. The proven technology guarantees maximum efficiency and lowest life cycle costs without any gas slippages. Depending on the operating con- ditions, Laby®-GI Compressors can be engineered for lubricated or non-lu- bricated compression applications. Process Gas Compressors per API 618 We have many years of experience with hydrogen compression systems for the refining industry and now also offer hydrogen compression solu- tions for the H2 mobility marketplace. Process Gas Compressors built by Burckhardt Compression are synonymous with unrivaled availability and long operating lives. Optimal sizing and the use of top quality compressor components and materials ensure low operating and maintenance costs. Our Process Gas Compressors are built to customer-specific applica- tion requirements in accordance with the API 618 guidelines. Burckhardt Compression offers non-lubricated and lubricated Process Gas Compres- sors, horizontal and vertical. They are suited in particular to the high-pres- sure compression of hydrogen, hydrocarbon and corrosive gases. The design, the advanced Burckhardt Compression technology and superb quality together with the robust construction translate into excellent reliability and low life cycle costs. Burckhardt Compression now offers a complete portfolio of Process Gas Compressors for refineries. In addition to the premium product line, which focuses on lowering operating costs through optimized design and high-quality components, we now offer a robust, modular and CAPEX-opti- mized product line. Thanks to Burckhardt Compression global engineering and service organizations, customers benefit from the Group’s centers of excellence around the world and comprehensive solutions geared to cus- tomer requirements. Hyper Compressors Burckhardt Compression is the world market leader for Hyper Compres- sors. The Hyper Compressor is a high-pressure reciprocating compres- sor for low density polyethylene (LDPE) and ethylene-vinyl acetate (EVA) plants with a discharge pressure of up to 3’500 bar. Burckhardt Compres- sion has established an outstanding track record with nearly 70 years of experience in building this type of compressor. They are characterized by a long operational life and high safety standards, which can be traced to their unique construction design and Burckhardt Compression’s global one-stop maintenance and service capabilities. The most powerful compressor in the world, driven by a 33’000 kW electric motor and compression capacity of 400’000 tonnes of ethylene a year, was built by Burckhardt Compression in 2016. Standard High-Pressure Compressors Burckhardt Compression’s standard high-pressure compressors are re- ciprocating compressors with a compact design and low weight. They are delivered skid-mounted with structural supports that dampen vibration, so there is no need for a special foundation. The air and water-cooled com- pressors are used to compress air, hydrogen, nitrogen, helium, argon, nat- ural gas and other non-corrosive gases and gas mixtures at land facilities and on ships. The standard high-pressure compressors, which are small- er than the other compressors in Burckhardt Compression’s portfolio of piston compressors, have an output of up to 220 kW, maximum discharge pressure of 450 bar and suction volumes of up to 1’500 Nm3/h. High-Speed Compressors High-speed compressors are essentially process gas processors with shorter strokes and higher rotational speeds (1’000–1’800 rpm). These compressor systems are used for natural gas production and transport ap- plications, and they are often powered by gas engines rather than electric motors. Due to the short-term nature of planning decisions in this industry, there is a strong desire to keep initial investment costs to a minimum. With this in mind, Shenyang Yuanda Compressor launched a compressor specifi- cally for natural gas production and transport companies. It is now market- ed to selected industries through Burckhardt Compression’s distribution channels. Initial project wins in Europe attest to this product’s potential. Diaphragm Compressors Diaphragm compressors compress gas by means of a flexible membrane. These membranes are usually metallic and have a limited stroke, and are thus used for smaller gas flows. The advantage of this technology is that the gas is hermetically sealed by the membrane during compression, so very high levels of gas purity can be achieved. Compression is also oil-free and very high pressures can be achieved. Burckhardt Compression’s dia- phragm compressors are produced by Shenyang Yuanda Compressor and are used for small hydrogen fueling stations and for the compression of small quantities of pure gas for medical and other purposes. 15 Burckhardt CompressionAnnual Report 2021Original spare parts for optimal compressor operation Original spare parts backed by Burckhardt Compression’s full warranty as an OEM stand for superior quality and ensure low life cycle costs and the optimal operation of compressor systems. These top-quality compressor components are tailored to specific system requirements. Compressor components, such as valves, seals, and packings, are subject to wear and tear, so these parts largely determine the duration of service intervals, op- erational availability and, ultimately, the overall life cycle costs of recipro- cating compressors. Monitoring and diagnostics – digital service solutions Under the name UP! Solutions, Burckhardt Compression provides a range of products that offer significant levels of control and convenience and en- able its customers to remain leaders in innovation and technology. UP! Re- mote Support has been on the market since this reporting period and offers a remote support solution where customers receive direct, on-the-job sup- port from the experts at Burckhardt Compression via a tablet or HoloLens. UP! Solutions represents user-friend- liness and maximizes productivity through optimized uptime and overall cost management, resulting in cus- tomer success. Our Company 24/7 Depending on the size of the project and site, Burckhardt Compression also offers 24/7 shift operation, so pro- duction systems can be put back into operation even faster. SERVICE AND COMPONENTS BUSINESS The Services Division operates as a holistic provider of service expertise for reciprocating compressors and the associated system technology. Its comprehensive range of services, from simple modifications to extensive retrofit and revamp projects, and turnkey solutions, is backed by OEM parts with high supply readiness and vast engineering know-how. Experienced field service technicians ensure close interaction with the customer and rapid response. Service Centers around the world also handle repairs of all brands. We also provide reliable expert monitoring and diagnostic solu- tions and advisory services – all from a single source. Comprehensive engineering, revamp and repair expertise For operators, the reliability, availability and cost-effectiveness of recipro- cating compressor systems, and their compliance with environmental and emission regulations, are crucial; thus, partners that can offer expertise and sound advice are crucial. Burckhardt Compression stands out from other manufacturers and service providers because of its comprehensive in-house expertise. A wide range of complementary services are offered individually for all brands of reciprocating compressors and their auxiliary systems. Our internal specialists come from various technical fields and use proprietary, advanced software tools to model, calculate, and optimize reciprocating compressor performance, regardless of make or brand. They are capable of resolving even highly complex technical problems cost-ef- fectively and efficiently. A highly motivated team carries out revamp projects of any complexity to the full satisfaction of customers and can prolong the operating life of older compressors by retrofitting them with the latest technology. This range of services also includes a valve service, overhaul of compressors and repairs to the current best practice level. This work is done by 50 service workshops around the world. 16 Burckhardt CompressionAnnual Report 2021Our Company Reliable condition monitoring and diagnostic systems for reciprocating compressors and equipment, integrated within the top-level systems for monitoring an entire production facility, are effective tools for enhancing workplace safety and prolonging the service intervals of a compressor system. Continuous machine diagnosis detects potential and actual anom- alies at an early stage and thus helps to avoid costly and unexpected down- time. The diagnostic systems made by our subsidiary PROGNOST Systems GmbH are designed for use with all types of reciprocating compressors and with many other types of rotating machinery. They are backed by unrivaled technology and deliver value day after day to our customers. The introduction of the myFleet customer portal provides Burck- hardt Compression’s customers with a transparent overview of its prod- ucts and services, enabling users to access compressors and spare parts so that they can stay on top of business. The myFleet portal offers a rapid, transparent and efficient overview of queries, documentation and spare parts for compressors. PRODUCT DEVELOPMENT AND INNOVATION Innovation management and systematic product development serve to strengthen our competitive position and enable us to enter new markets. The overarching goal is to enhance and strengthen our market-leading technology. Quality, technology, materials, and design specifications are geared towards high operational reliability, optimal service intervals and easy maintenance – all with the aim of achieving the lowest possible oper- ating costs and increasing the sustainability of our solutions. Our product development follows a Stage-Gate process. It starts with the idea generation and selection phase and goes through the initial evaluation of product viability and market attractiveness, followed by the elaboration of product performance specifications and market analysis, and then the actual product development and subsequent launch. After commissioning and operation, a final check is conducted. All Stage-Gate milestones are subject to approval by the Innovation Board, which is head- ed by members of the Executive Management. Our more than 300 field service experts have gained their know-how over many years and have extensive expertise in each particular application. Field Service – close to the customer Geographic proximity and trusting relationships are vital to Burckhardt Compression’s success. More than 300 experts in Field Service, from engi- neers to local site managers, provide a rapid response capability that cov- ers all the necessary skills and is notable for a pronounced service men- tality. A local presence simplifies interaction with the customer, shortens the supply chain and maximizes uptime. This service network will continue to grow. Customer training The objective of our ever-growing range of customer training and learning programs is to foster regular technical exchange with our customers on compressors and their operation, and to pass on Burckhardt Compression’s engineering expertise. Theoretical and practical training programs for various types of compressors and for our own and third-party components are offered at our modern training center in Winterthur, and at locations in Korea, China, India, Germany and the US; we also provide on-site training at customer sites for their systems. As part of the digitalization strategy, online training has recently been accelerated to the point that it is already more important than physical face-to-face training. This trend will contin- ue in coming years. 17 Burckhardt CompressionAnnual Report 2021Our Strategy ACTIVE INTEGRATION OF STRATEGY AND SUSTAINABILITY Our strategy builds on an integrated business model and is supported by long-term energy trends and digitalization. INTEGRATED BUSINESS MODEL Integrated business model as the key to our success Most compressors function as critical components of a larger system with an average lifespan of 40 years or more, so it is vital to have the support of a long-term oriented organization that offers expertise in all aspects with highly trained employees. The key to ensuring the sustainability of our solutions and success on the market is a profound knowledge of the requirements of numerous application areas, and technical expertise in the systems and individual components. Burckhardt Compression’s two divisions, Systems and Services, cooperate with each other closely and between them cover the entire life cycle of reciprocating compressor sys- tems. Customers are supported throughout the whole life of their systems by a wide range of products and services, from project definition, project execution, system installation and commissioning ongoing service and spare parts through to the complete overhaul of their system or even its conversion for a new purpose. The graphic below shows the entire life cycle of a compressor pro- ject, including all project phases, and also displays the interaction between the two divisions. LIFE CYCLE OF A TYPICAL PROJECT Duration 1–3 years 10–22 months 1–12 months 1–2 months 2 years (avg) 40 years (avg) Phase Evaluation and start of construc- tion Engineering and Manufacturing of compressor system Compressor installation Compressor start-up Warranty period Post-warranty Decision Maker End customer/ EPC/Licensor End customer/ EPC End customer Project Progression Decision to build plant and purchase order Compressor shipped & transfer of ownership Product acceptance Repair & main- tenance; structural machine build Services Division Division in Charge Systems Division Systems Division Services Division 18 Burckhardt CompressionAnnual Report 2021Our Strategy BASF is one of our longest-standing customers. As early as 1885, Burckhardt Compression supplied one of the first reciprocating compressors to Ludwigshafen. And we are proud that the company is still among our valued customers today. RESILIENCE Stability in extraordinary situations Burckhardt Compression’s business model, based on two strong divisions, proved its worth in the exceptional situation caused by the pandemic and con- tributed to the firm’s stability. The company’s deliberate decision to diversify geographically in recent years has also proved correct. Since the Systems Division has production facilities on different continents, the impact of local lockdowns on logistical supply chains and production itself could be mitigated. The Services Division also benefited from a broad geographical presence and the expansion of its global marine business. The effects of travel restrictions remained within bounds thanks to the global network of Service Centers that has been built up and continuously expanded in recent years. SUSTAINABILITY A long-term strategic commitment For Burckhardt Compression, sustainability means creating long-term values for society, the environment and the economy. Our sustainability roadmap fol- lows an impact driven approach, is focused on material topics and has a firmly anchored governance. We have a long track record of implementing high stand- ards in terms of working conditions, employment relations, environmental management, health and safety at work and in providing durable and repairable products. This is a comprehensive commitment that we continue to expand. Our compressors are used mostly in upscaled industrial and energy sup- ply processes. With our technology and engineering expertise, we help our cus- tomers reduce energy consumption, greenhouse gas emissions and resource use. That is why we work closely with our customers and develop robust solu- tions to tackle their challenges. Read more in our Sustainability Report on page 30. 19 Burckhardt CompressionAnnual Report 2021Our Strategy MID-RANGE PLAN FOR FISCAL YEARS 2018 TO 2022 On track to achieve target Burckhardt Compression’s strategy process is based on a mid-range plan that is usually revised every five years and reviewed annually. The current plan covers the fiscal years 2018 to 2022; the next plan for the period 2023 to 2027 is in preparation. The main objective of both divisions is to further strengthen market leadership and achieve profitable growth. According to the current mid-range plan, the focus of the Systems Division is on improving profitability while maintaining global market lead- ership, with target sales for 2022 of CHF 340 million and an EBIT margin of 0% to 5%. The achieved sales figure was higher in the years 2017 to 2021, and at 5.7% in 2021, the EBIT margin exceeded the upper value of the target corridor. In addition, the presence in the various market segments is to be diversified more broadly and new applications are to be launched. The Services Division aims to increase its sales to CHF 360 million including Arkos Field Services by 2022, but will probably not quite reach the specified sales figure. A target corridor of 20% to 25% has been defined for the EBIT margin, which has been consistently achieved in recent years. The growth priorities in the service business are the steadily increasing in- stalled base of own equipment as well as the service business for compres- sors from other manufacturers, primarily from manufacturers that have left the market. To this end, Burckhardt Compression will take further op- erational initiatives such as the implementation of global processes, the further expansion of the local and regional presence as well as the devel- opment of service structures for the marine business. As stated in the letter to shareholders, Burckhardt Compression ex- pects sales to grow to between CHF 720 million and CHF 760 million for the current fiscal year 2022, thus exceeding the target set in the mid-range plan. The operating margin for fiscal year 2022 is expected to be similar to the prior year and thus within the expected range of 10% to 15%. This is assuming that global challenges in the supply chain and geopolitical de- velopments will not significantly impact the business activity levels going forward. 50% Sustainable energy and natural gas applications already account for about 50% of our overall sales. GROWTH SUPPORTED BY MEGATRENDS Population growth and energy transition Burckhardt Compression’s strength in selected applications make it very well placed to support the world’s population growth and to meet the en- ergy transition challenges. With the global population rising, demand for industrial gases for ap- plications such as fertilizers, medical usage and food and beverage pack- aging will continue to grow. Demand for natural gas as a fuel for mobility, heating, and cooking is also rising due to the growing middle class world- wide. Global demand for petrochemical and chemical products and indus- trial gases also continues to rise, driven by the growth in global GDP and the sharp increase in demand for solar panels. And in this area of applica- tion, sustainability aspects, such as recycling or the use of alternative raw materials, are becoming increasingly important. Hydrogen is growing fast for applications in the mobility and energy sectors. In addition, ever-strict- er environmental regulations for the shipping industry are resulting in new, innovative engine solutions, such as the dual-fuel engine for which Burck- hardt Compression has developed a unique compressor solution. Solutions and services for sustainable energies and natural gas ap- plications already account for about half of Group sales. Digitalization Burckhardt Compression has successfully advanced the development of digital products for its customers. The collection and evaluation of data on oscillation, vibration and temperature, combined with the expertise at Burckhardt Compression, leads to increased efficiency and availability of the compressors. Any anomalies are calculated down to fractions of a sec- ond and operators are informed immediately. Comparison of our data with other similar compressors enables us to predict service work that may be required. 20 Burckhardt CompressionAnnual Report 2021Our Strategy Under the name UP! Solutions, we offer digital products that provide added value to the customer. One of these is UP! Remote Support, where a Burck- hardt Compression expert provides real-time support to customers via Ho- loLens – augmented reality glasses – or via their tablet, all ATEX-certified for potentially explosive situations. The experts direct local maintenance crews and issue precise instructions for each subsequent stage in the pro- cess. Expert knowledge is therefore available at all times and in all places. Burckhardt Compression works with exceptional partners to ensure that we continue to offer leading solutions, such as Microsoft, which pro- vides Microsoft Dynamics 365 remote assist for UP! Remote Support, and PTC, which provides Vuforia – the perfect link between the physical and digital world for use in augmented reality solutions. STRICT BRANDING Burckhardt Compression constantly strives to optimize and strengthen its established brand internationally. Our corporate identity and long-term brand strategy express the organization’s values and principles, and high- light Burckhardt Compression’s position as unique, long-term and global partner with a strong Swiss tradition. The umbrella brand, and its corre- sponding logo in the form of the red-blue stylized compressor valve plate, has been internationally registered for many years. When making an acquisition, Burckhardt Compression decides at the start of the integration process whether a brand is to be retained or inte- grated into an existing house brand. As part of excellent know-how, Burckhardt Compression also offers state-of-the-art digital solutions. They were developed in collaboration with innovation leaders such as Microsoft and PTC. Burckhardt Compression Group brands: – Shenyang Yuanda Compression, one of the largest manufacturers of reciprocating compressors in China, whose products are sold in its domestic market – BCS Compressor, products made by Shenyang Yuanda Compressor for export markets that leverage Burckhardt Compression’s global sales network, processes, and service organization – Arkos Field Services, our exclusive services provider in the US – Prognost, the world leader in compressor monitoring and diagnostic systems – SAMR, a leading manufacturer of sliding bearings based in France – Mark van Schaick, repair and service expertise in Europe for the mari- time and petrochemical industries – Digital applications and solutions are presented under the internation- ally registered name “Up! Solutions” Burckhardt Compression’s brand and patent attorneys will vigorously and steadfastly defend the company against any imitations, counterfeiting or patent infringements. Clear rules govern use of the brands and their per- ception is developed and promoted through active use in corporate and marketing communication. 21 Burckhardt CompressionAnnual Report 2021Systems Division Systems Division Order intake in CHF mn Sales in CHF mn Gross profit in CHF mn 651.1 372.7 71.3 0 . 8 2 4 6 . 4 0 4 2 . 1 6 3 8 . 9 1 3 4 . 4 8 3 4 . 5 7 3 3 . 8 8 3 8 . 9 0 4 1 . 9 5 8 . 2 4 5 . 0 3 2 . 7 2 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 Operating income (EBIT) in CHF mn 21.1 2 . 6 1 4 . 6 9 1 0 2 1 2 0 . 9 – 7 1 7 . 8 – 8 1 in CHF mn Order intake Sales Gross profit in % of sales EBIT in % of sales Headcount at end of fiscal year (full-time equivalents) 22 2021 651.1 372.7 71.3 19.1% 21.1 5.7% 1’518 2020 404.6 409.8 59.1 14.4% 16.2 3.9% 1’429 Change 2021/2020 60.9% –9.1% 20.7% 30.4% 6.2% Burckhardt CompressionAnnual Report 2021 Post-COVID recovery and global transition towards more sustainable and secure energy sources resulted in an exceptionally high order intake growth. +61% Systems Division 23 Burckhardt CompressionAnnual Report 2021Gas gathering and processing After the drop seen in fiscal year 2020, the market gradually recovered in the reporting period. However, despite rising prices for crude oil and natu- ral gas, new investment remained at a low level. Gas transport and storage In the first half of the year, this segment benefited from a surge in demand in the LPGM market. The LNG marine segment also recorded growing demand, both in the transport of gases and for LNG-powered ships. Several orders for LNG terminals were received, especially in China. Refinery Demand recovered in 2021, driven by various capacity expansion projects and bio-fuel projects in North America and Europe. Chemical and petrochemical industry This area of application saw significant activity due to large LDPE/EVA pro- jects for solar panel plants in China. Industrial gas The various user industries are developing in line with our expectations, matching the increase in global GDP. In the reporting period, Shenyang Yuanda Compressor benefited from the booming market for polysilicon in China, the main raw material in the production of solar cells. H2 mobility and energy Recently, and particularly in the reporting period, investments in the hydro- gen economy have been strongly increasing in the hydrogen economy has been strongly increasing due to efforts to reduce CO2 emissions and secure additional energy sources. One particular order concerned compressors for the world’s largest hydrogen liquefaction plant in Korea. We entered into a partnership with Shell New Energies to develop oil-free high-pres- sure hydrogen compressors. It still represents only a small portion of the total market, but the long-term potential is undoubtedly huge. Systems Division The strong order intake growth is due to the markets’ generally rapid re- covery from the pandemic since the beginning of 2021, combined with the accelerated global energy transition. This growth was particularly strong in solar panel applications (LDPE/EVA and polysilicon) in China, marine business in LPGM/LNGM applications, and in the H2 mobility and energy market. After a strong first half-year, order intake of the Systems Division increased significantly once again in the second half of the year, reaching CHF 651.1 mn for the year (+60.9%). This amount is including an exceptionally high number of large orders received for LDPE, EVA and polysilicon appli- cations, ending up in a total amount of around CHF 150 million order intake. The invoicing of these projects will be spread over the next two fiscal years. Sales of CHF 372.7 mn was 9.1% below the previous year figure, due to the corona-related weak order intake in the first half of 2020. Gross profit was up 20.7% to CHF 71.3 mn, resulting in a gross profit margin of 19.1% (previ- ous year: 14.4%), which was supported to a large extent by a more favora- ble product mix and a higher capacity utilization. Price increase in certain material categories were compensated by procurement savings in others and by strong performance in project execution. Thanks to a strong second half-year, the division significantly improved its EBIT margin to 5.7% (previ- ous year: 3.9%) despite the lower sales volume. MARKETS Burckhardt Compression offers compressor system solutions in the fol- lowing application areas: – Gas gathering and processing – Gas transport and storage, incl. marine – Refinery – Petrochemical/chemical industry – Industrial gas – H2 mobility and energy Burckhardt Compression maintained its strong market position in the re- porting period. Burckhardt Compression signed a Memo- randum of Understanding with HRS, a European designer and manufacturer of hydrogen refueling stations and pioneer in hydrogen mobility to contribute to the energy transition with reliable and economical compression solutions to scale up the hydrogen infrastructure. 24 Burckhardt CompressionAnnual Report 2021OUTLOOK In the gas gathering and processing market, the rise in prices for crude oil and natural gas, combined with potential shifts in the geographi- cal focus of production, could stimulate investment in USA and in the Gulf region. In the gas transport and storage market, the global need to secure energy sources and the trend towards environmentally friendly energy is resulting in a strong demand of LNG as fuel. Increased efforts to provide sustainable energy will compel the refinery segment to press ahead with the development of biofuels. As far as the petrochemical/ chemical industry is concerned, Burckhardt Compression expects to re- ceive a steady level of orders in the next fiscal year. In the fiscal year 2022 onwards, however, the industrial gas market is expected to remain strong due to new polysilicon plants in China. Finally, the H2 mobility and energy market, in which Burckhardt Compression recorded significant progress in the reporting period, is expected to become a significant sales pillar for the company in the medium term due to global environmental and energy policy targets. Systems Division 10’000 The Laby®-GI Compressor type LP250 is the world’s first oil-free reciprocat- ing high-pressure fuel gas compressor in service. The compressor system is installed on a LNG carrier and reached 10’000 hours of uninterrupted opera- tion. SALES ORGANIZATION In the course of the reporting period, the Systems Division consolidated its sales structure by merging the North-East and South-East Asia regions into a single larger East Asia region. At the same time, we strengthened Korea as a regional hub for both sales and project execution. In the area of H2 mobility and energy, we expanded our sales capacity in Europe, the US and Korea. INFRASTRUCTURE AND CAPACITY In Winterthur, Burckhardt Compression has invested substantially in logis- tics, including a new high-bay warehouse, in order to optimize processes and eliminate external storage areas. Investment in our manufacturing workshop is also ongoing to build lean manufacturing cells and accelerate production throughput. The higher level of orders also required an increase of personnel, with the focus on China, India and Switzerland. RESEARCH AND DEVELOPMENT Development activities focused on three areas: technology for the com- pression of hydrogen as an energy carrier, new products for the supply of gas-powered ships and portfolio optimization for applications in the pet- rochemical industry. The newer markets of gas-powered ships and energy supply using hydrogen both require new, standardized products, including the control and monitoring of compressors. In the reporting period, we de- veloped the first products that meet these requirements. 25 Burckhardt CompressionAnnual Report 2021Services Division Services Division Order intake in CHF mn Sales in CHF mn Gross profit in CHF mn 325.5 278.0 119.6 1 . 2 7 2 1 . 6 4 2 7 . 0 3 2 4 . 5 0 2 3 . 1 4 2 8 . 8 4 2 9 . 3 2 2 2 . 0 1 2 2 . 5 0 1 0 . 7 0 1 1 . 7 0 1 9 . 7 9 Operating income (EBIT) in CHF mn 58.4 2 . 8 5 4 . 4 5 7 . 4 5 2 . 1 5 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 7 1 8 1 9 1 0 2 1 2 in CHF mn Order intake Sales Gross profit in % of sales EBIT in % of sales Headcount at end of fiscal year (full-time equivalents) 26 2021 325.5 278.0 119.6 43.0% 58.4 21.0% 1’198 2020 272.1 248.8 107.1 43.0% 51.2 20.6% 1’095 Change 2021/2020 19.6% 11.8% 11.6% 13.9% 9.4% Burckhardt CompressionAnnual Report 2021 The Services Division succee- ded in significantly increasing order intake in fiscal year 2021, primarily in Engineering/Re- vamp/Repair and Spare Parts. +20% Services Division 27 Burckhardt CompressionAnnual Report 2021Services Division In the reporting period, the Services Division used its strength as a full ser- vice provider to increase its level of incoming orders by 19.6% in a positive market environment. Sales rose by 13%. The EBIT margin rose again thanks to higher sales and resulted in a slightly higher EBIT margin. As part of the current mid-range plan for 2018 to 2022, we have implemented redefined business processes, intensified our marine business, set up our technical Support Center and expanded our global sales training. Orders received by the Services Division rose by 19.6% to CHF 325.5 mn, which is a strong performance given the fact that the previous year includ- ed a long-term marine service contract over a period of ten years in the low double-digit million Euro range. Sales increased by 11.8% to CHF 278.0 mn. Gross profit grew by CHF 12.5 mn to CHF 119.6 mn, resulting in a gross prof- it margin of 43.0%, unchanged from the previous year. EBIT rose by CHF 7.1 mn to CHF 58.4 mn thanks to higher sales and resulted in a slightly high- er EBIT margin of 21.0% (previous year 20.6%). Arkos Field Services (USA) was profitable, and the integration of the acquired Mark van Schaick BV business in the Netherlands is well underway. MARKETS Burckhardt Compression offers services in the following application areas, certified to ISO 9001, 14001, and 45001: – Preventive maintenance – Spare parts for compressor systems – Overhauls and repairs – Project solutions for modernizations and plant improvements – Problem diagnoses and troubleshooting – Solutions for plant monitoring (Prognost) In the reporting period, Burckhardt Compression expanded and strength- ened its market position. Demand for spare parts and services increased, particularly in China, Europe, and the US. In the marine segment, we car- ried out several dry dock overhauls, including the first 5-year overhaul of a Laby®-GI for Teekay LNG. Demand for complete solutions for overhauls (turnarounds) rose in Europe and the Middle East, and these were com- After five years in service, an LNG carrier was scheduled for dry-dock in Singapore, but with just three weeks’ notice, the location was changed to Dubai. Burckhardt Compression quickly redeployed its maintenance team and logistics to ensure both boil-off gas (BOG) compressors were serviced within the 18-day window. 28 Annual Report 2021 Burckhardt Compression pleted safely and to schedule for our customers. We entered into strategic partnerships with KB-Delta and SERO PumpSystems, and long-term col- laborations with leading compression systems operators on land and on the seas. Spare Parts Growth in the spare parts business continued in the reporting period, both for our compressors and for those of third-party suppliers. Burckhardt Compression also benefited from the trend for spare parts to be required in conjunction with services. The targeted expansion of the third-party prod- ucts business is generating an increasing proportion of sales. Engineering/Revamp/Repair This segment saw increased activity, with significant orders received from Germany, Norway, China, Singapore, Taiwan and central Asian countries. Thanks to the relaxation of coronavirus restrictions, we were able to make better use of our capacity. It is encouraging to see the continuing trend for long-term service contracts, helping to strengthen and stabilize the busi- ness, and the requirement for complex engineering solutions for complete on-site overhauls (turnaround projects). The repair business in our Service Centers worldwide will also benefit from the recently completed standard- ization of repair processes across the Group. Field Service The release of corona-related measures allowed an increase of capacity utilization. In the US, Arkos Field Service is growing and has been profitable. Monitoring and diagnostics In addition to reciprocating compressors, PROGNOST diagnostic systems were also used in gearbox applications during the year under review. For example, after an intensive 18-month test phase in competition with other suppliers, the first PROGNOST predictor systems for monitoring and diag- nosing gearboxes on hot roll mills were ordered from an American steel mill. In general, our solutions are more needed to switch to remote moni- toring and also to condition-based service. SALES AND SERVICE ORGANIZATION Demand in the market for complete solutions instead of individual servic- es, as well as for on-site service capabilities, was strong in 2021. Burck- hardt Compression is meeting this requirement with an ongoing expansion of its regional sales structures and continuous process improvements. The highly qualified local Field Service Representatives and Repair Centers are responsible both for customer care and for evaluating local market op- portunities. The partnership model introduced two years ago has proven highly effective. It aims to offer service capabilities close to customers, particularly in small but fast-growing markets, while limiting the invest- ment required. Regional and global Engineering Services offer substantial support for local service provision, allowing Burckhardt Compression to be a strong service partner in all geographies. Services Division 20 Burckhardt Compression acquired Mark van Schaick BV, based in Rotter- dam, Netherlands. The company has more than 20 years of experience in machining and is a leader in servicing complex repairs such as crankshafts. In the reporting period, the division conducted a customer satisfaction survey and received approximately 800 responses. Almost 90% of re- spondents stated that they are satisfied with our service, almost 80% see Burckhardt Compression as the leading service provider on the market, and slightly more than 60% associate us with services for all compres - sor brands. INFRASTRUCTURE AND CAPACITY The official opening of a new site in Indonesia had to be postponed once again due to the coronavirus. We added new service partners in Vietnam, Hungary and Brunei. ACQUISITIONS Burckhardt Compression’s acquisition in December 2021 of Mark van Scha- ick BV, based in Rotterdam in the Netherlands, expands its repair and ser- vice capabilities in Europe. The company is a leading provider of mainte- nance and complex repair services – including crankshafts – for customers in various industries. The integration of The Japan Steel Works – the acquired global compressor company – was concluded in the first half of the year. The in- tegration of Arkos Field Services, including structural and organizational changes that will lead to greater profitability, is on track. RESEARCH AND DEVELOPMENT UP! Solutions, launched in the reporting period, offers customers addition- al online monitoring and support options. The service package includes re- mote digital support (UP! Remote Support), where a technician diagnoses the problem, proposes solutions and offers technical support. We made our first Remote Support sales shortly after it was launched. An additional package uses machine learning and artificial intelligence to increase the productivity and uptime of the compressor through proactive maintenance and optimized service cycles. It is currently under test with pilot custom- ers. The new online customer portal myFleet has also proven a success, en- abling customers to order spare parts and book additional services online. OUTLOOK The underlying attractive growth prospects for the Service business re- main unchanged: – More and more customers are outsourcing their service operations. Suppliers are increasingly becoming service partners. Thus, long-term service agreements are becoming more important. – The portfolio of installed compressor systems from Burckhardt Compression continues to grow. – Customers are seeking efficiency gains to increase their competitive- ness. This requires retrofitting and conversions, not least driven by the need to comply with environmental regulations (efficiency improve- ments and emissions reduction). – Maintenance of equipment using the latest digital capabilities is be- coming more important. This reveals a trend to move from preventive to condition-based maintenance. Demand for comprehensive services from a single source will therefore grow more strongly than the direct spare parts business. Customers in- creasingly expect engineering solutions, competent advice on site and tai- lor- made maintenance strategies. Our focus areas for organic growth are our consistently increasing portfolio of installed equipment and the service business for compressors from other manufacturers, primarily those that have left the market. To further support the growth regions, Burckhardt Compression will focus on expansion of local and regional service expertise and increasingly on digi- tal solutions. The numerous LNG ships commissioned in recent years will all re- quire servicing and spare parts, resulting in additional business potential for Burckhardt Compression. The most interesting potential lies in the pro- vision of long-term service agreements tailored to the whole compressor life cycle. Geographically, the best growth opportunities are in the Asia-Pa- cific region, but also in North America and Europe thanks to the large num- ber of marine customers domiciled there. In North America, Burckhardt Compression will benefit from the expansion in service activities brought by the integration of Arkos. 29 Annual Report 2021 Burckhardt Compression Sustainability Report Sustainability in practice “Through our activities, we want to make a real and measurable contribution to the global energy transition and thus create long-term value – for the environment, for society and for our company.” Fabrice Billard CEO as of April 1, 2022 Online AR report.burckhardtcompression.com/ sustainability-report 30 Annual Report 2021 Burckhardt Compression Sustainability Report OUR COMMITMENT TO SUSTAINABLE VALUE CREATION Burckhardt Compression is an industrial tech- nology company specializing in reciprocating compression solutions for all types of gases. With a company history stretching back over 178 years and products with a useful life to more than half a century, we base our business decisions on a long-term perspective. And we approach sustainability with the same mindset: pragmatic, focused on the long-term, creating value and impact driven. 31 → Burckhardt CompressionAnnual Report 2021Sustainability Report Story #1 Creating impacts where they matter In order to use limited resources in a tar- geted way, sustainability must be impact- driven and relevant. That is why we work closely with our customers and develop ro- bust solutions to tackle their challenges. The savings potential that we can unlock together with our customers exceeds our direct impact in operations many times over. Our compressors are used mostly in upscaled industrial and energy supply processes. Hence the main environmental impact is in the use phase for our customers. With our technology and engineering expertise, we help our custom- ers reduce energy consumption, greenhouse gas emissions and resource use. Online AR report.burckhardtcompression.com/ creating-impacts 32 EXISTING COMPRESSOR ADAPTED TO NEW PROCESS This past fiscal year we worked with a leading European oil and gas company to resize the ca- pacity of a compressor to reflect new process requirements. The customer needed a solution that required a reduction in gas flow of more than 50%. We started by conducting a detailed in- spection along with a technical analysis. From this, we developed our solution to overhaul the existing compressor and adapt it to the new specifications. The right sizing of a compressor has a particularly significant effect on efficient energy use. This meant the customer did not have to purchase a new compressor or resort to the bypass system, enabling it to make optimal use of the existing resources. Burckhardt CompressionAnnual Report 2021EXAMPLE CONTRIBUTIONS TO THE SUSTAINABLE DEVELOPMENT GOALS SDGs SDG 7 Enabling energy savings of 1’800 MWh per year through the resizing of an existing compressor system. SDG 13 Reduction of CO2 emissions resulting from energy savings. SDG 12 Reuse and upgrade of a compressor system. CONSIDERABLE ENERGY SAVINGS ACHIEVED The fully revamped compressor is as good as new, thanks to our overhaul of all major compo- nents and upgrade to high-performance compo- nents. This has enabled us to successfully tran- sition the compressor to the next lifetime. Our customer will be able to save about 1’800 megawatt hours of electricity per year, thanks to the modified process. Considerable energy savings enabled 1’800 MWh per year is equivalent to: or Annual electricity consumption of >500 average Swiss households. Approximately a third of the annual electricity consumption in 2021 of our Winterthur site, including head office. 33 Sustainability ReportBurckhardt CompressionAnnual Report 2021Story #2 Innovating to tackle the energy transition Compressors have been instrumental in impor- tant developmental advances in the industry. At Burckhardt Compression, we believe that technology and innovation are crucial to meet the sustainability challenge. Since we were established more than 178 years ago, we have set new benchmarks and pushed boundaries to find solutions for both today and tomorrow. We are cur- rently focusing our minds and developing new technologies for LNG transport as well as hydrogen mobility and energy. Online AR report.burckhardtcompression.com/ energy-transition 34 Sustainability ReportBurckhardt CompressionAnnual Report 2021Bridging technology paving the way to sustainable shipping Burckhardt Compression’s Laby®-GI fuel gas compressors play a crucial role in the current transition of the shipping industry. The com- pressors enable liquefied natural gas (LNG) to be used as a fuel instead of the more carbon-inten- sive and sulfur-rich heavy fuel oil. This provides a short and medium-term interim fuel to meet the more stringent international environmen- tal requirements until zero-emission solutions are developed. Greenhouse gas emissions are reduced by up to 25% compared with heavy fuel oil, thanks to use of gas as a fuel and modern ship design. → 35 Sustainability ReportBurckhardt CompressionAnnual Report 2021Our Laby®-GI Compres- sor is the world’s only completely oil-free and leakage-free high-pres- sure reciprocating compressor for the use of gas as a fuel in the shipping industry. However, for LNG to serve as an interim form of fuel in shipping, efficient and in particular leak- age-free use is crucial. All Laby®-GI compressors are gas-tight, thus preventing gas emissions into the atmosphere. We are also the only manufac- turer capable of compressing gas to 300 bar by means of a large ring-seal compressor system without cylinder lubrication. Oil-free compres- sion of the gas renders oil separation and filtra- tion of the gas superfluous and saves up to 1’200 liters of lubricant per year. EXAMPLE CONTRIBUTIONS TO THE SUSTAINABLE DEVELOPMENT GOALS SDGs SDG 13 Reduction of greenhouse gas emissions through the non-leaking use of LNG as a fuel in shipping instead of heavy fuel oil. SDG 12 Responsible use of resources through operation without cylinder lubricants. 36 – 1’200 l Oil-free compression of the gas renders oil separation and filtration of the gas superfluous and saves up to 1’200 liters of lubricant per year. Sustainability ReportBurckhardt CompressionAnnual Report 2021Another step toward efficient use of hydrogen in the energy transition Successful energy transition depends on a wide range of technologies for the production and storage of renewable energy. Hydrogen has the potential in this context to be an essential step- ping stone in the energy transition in specific fields of application, such as heavy-duty trans- port, and as a complement to existing technol- ogy, such as battery-powered electromobility. The use of hydrogen is not new to Burckhardt Compression; we have decades of experience in the compression of this gas. However, in order to be used on a broad and efficient scale as part of the energy transition, new requirements for the compression of this gas must be met. We are working intensively on the further development of our compressor solutions and in this fiscal year we were able to launch an oil-free compressor with a discharge pressure of 550 bar and high capacity. The large high-pressure reciprocating compressors have been specifi- cally developed for use in a variety of hydrogen applications and are particularly suitable for hy- drogen trailer filling and hydrogen fuel stations with high capacity. These compressor solutions have been designed for mass flows in excess of 150 kg/h and help to reduce the number of com- pressors required. With our new seals for oil-free high-pressure reciprocating compres- sors, we are able to support the forthcom- ing volume upscaling in the various hydro- gen applications in a cost-efficient way. 550 bar In this fiscal year we were able to launch an oil-free compressor with a discharge pressure of 550 bar and high mass flows. EXAMPLE CONTRIBUTIONS TO THE SUSTAINABLE DEVELOPMENT GOALS SDGs SDG 13/SDG 7 Development and promotion of technologies for the energy transition. 37 Sustainability ReportBurckhardt CompressionAnnual Report 2021SUSTAINABILITY REPORT 2021 Our sustainability roadmap follows an impact driven approach, is focused on material topics and has a firmly anchored governance. Burckhardt Compression materiality matrix Material topics Operational topics Other topics Sales & project implementation practices Economic contribution Intellectual property & access to knowledge Forced labor/ child labor e c n a v e l e r r e d l o h e k a t S Energy use & efficiency Greenhouse gas emissions & climate change Business conduct Working conditions Occupational health & safety Environmental impacts of application purpose Longevity & cyclability Resource/ material efficiency Product safety Diversity, inclusion & equal opportunity Data security & privacy Training & development Waste & hazardous substances Conflict & security Non-greenhouse gas air emissions Biodiversity Land degradation Political accountability Corporate citizenship & community impacts Water & wastewater Tax contribution & allocation Social impacts of application purpose Noise, vibration, odor & electromagnetic radiation Land rights/indigenous rights Asset & process integrity Impacts on society, environment and economy 38 Sustainability ReportBurckhardt CompressionAnnual Report 2021 OUR IMPACT-DRIVEN APPROACH We aspire to create sustainable values with our products and services by in- corporating economic, environmental and social aspects in equal measure into our activities. We have a long track record of implementing high standards in terms of working conditions, employment relations, environmental manage- ment, health and safety at work and our durable and repairable products. This is a comprehensive commitment that we continue to expand. Focus on eight material topics We used a materiality analysis to determine where our company’s activ- ities have the greatest impact on society, the environment and the econ- omy, and which topics are relevant to our stakeholders. For this purpose, we conducted an impact analysis, where we assessed actual and potential positive and negative impacts of our activities along the value chain. The aspects of scale, scope and likelihood of impacts were taken into account as assessment categories. In addition, we gathered the views and concerns of our key stakeholders – investors, customers, employees and suppliers – online and in person. This materiality matrix provides guidance and focus for the further integration of our sustainability efforts into business activi- ties. It will be reviewed at regular intervals and adjusted if required. The topics located in the top-right of the matrix were identified by us as material. For each of the eight material topics, we have appointed a topic leader, who together with subject matter experts will further develop our approach. Material topics value chain impacts supply chain own operations use/ end-of-life 1. Greenhouse gas emissions & climate change Impacts on climate change, including greenhouse gas emissions along the value chain, and mitigation of climate change risks. 2. Energy use & efficiency Energy consumption, efficiency and sources for the production, provision and operation of Burckhardt Compression’s products and services. 3. Longevity & cyclability Fostering a long lifecycle and the circularity of materials and products in Burckhardt Compression’s business activities, including maintenance and repair services. 4. Environmental impacts of application purpose Environmental impacts of the use case of Burckhardt Compression’s products and services, including the contribution to a sustainable energy transition. 5. Working conditions Employment terms including working hours, compensation, and labor- management relations as well as the satisfaction of employees with those terms. 6. Occupational health & safety 7. Product safety Maintaining and promoting a safe and healthy working environment for work- ers involved in the production and provision of Burckhardt Compression’s products and services. Maintaining and promoting the safe and healthy operation of Burckhardt Compression products and maintained products of other brands. 8. Business conduct Ensuring and promoting that Burckhardt Compression’s business activities are conducted in compliance with regulations, standards and ethical principles. t n e m n o r i v n E y t e i c o S y m o n o c E 39 Sustainability ReportBurckhardt CompressionAnnual Report 2021We have also identified several “operational topics”. These are important to us as well, but we will not pursue them with the same strategic approach as the material topics. They will be integrated into the operational busi- ness activities at the departmental level. The “other topics” may be of greater relevance for a specific subsidiary, but not across the whole Group. We address these topics on a situation-specific basis. Strategic focus on the UN Sustainable Development Goals (SDGs) Burckhardt Compression is committed to supporting the Sustainable Development Goals (SDGs) as defined by the United Nations. These SDGs address the world’s most pressing sustainability challenges and are to be achieved as part of Agenda 2030 for Sustainable Development. Our strategic approach to sustainability is based on our eight mate- rial topics and is aligned with the SDGs mentioned above. We have stated five sustainability ambitions, each linked to a strategic SDG and directly related to our material topics: – Safeguarding human health (SDG 3: Good health and well-being) – Promoting prosperous work (SDG 8: Decent work and economic growth) – Tackling climate change (SDG 13: Climate action) – Driving energy transition (SDG 7: Affordable and clean energy) – Valuing natural resources (SDG 12: Responsible consumption and production) We have also identified six additional SDGs to which we can make a con- tribution. Overarching due diligence on human rights and international environmental standards The focus on our material topics and sustainability ambitions includes an overarching due diligence approach. We acknowledge the responsibility to respect internationally recognized human rights and international envi- ronmental standards. We incorporate the precautionary principle into our activities and decision making, such as the consideration of environmental requirements in product design, the consideration of human rights in our supply chain and the assurance of safe product operation at our customers’ sites. Supply chain management plays a key role in this. Burckhardt Com- pression uses its suppliers’ experience to continuously improve its prod- ucts, because an important part of the value creation is provided by them. We source raw materials for the foundry in Shenyang, China, raw materials and semi-finished products for the manufacture of compressors in our fac- tories and components and other accessories to complete and maintain the compressor systems on-site. For this, we have an established global supply chain, with core suppliers for production located in the wider re- gional area. Strategic sustainability framework Tackling climate change Promoting prosperous work Driving energy transition ational health & safet y p u c c O ct y u t d e o f a r P s s n g W orkin co n ditio G H G emissions & climate change s u i n e ss conduct B Sustainability Roadmap Safeguarding human health 40 Environmental im pacts of a p Energ effi cie y u s e & n c y p li c a t i o n p u r p o s e L c o y n c g l e a v b i i t l i y Valuing natural resources t y & Sustainability ReportBurckhardt CompressionAnnual Report 2021 Through our recently devised Code of Conduct for business partners, we set the same high standards for suppliers as we do within our company, and we also include them in our environmental and quality policy. We conduct checks on-site or when goods arrive to ensure observance of specifications and verify it by reviewing the required audit reports. In addition, we adopt- ed a policy on conflict minerals in the reporting period. In the future, we will work even more closely with our suppliers on joint solutions for the energy transition and increase transparency relating to raw materials in our supply chain. Ongoing development of our sustainability approach Over the reporting period, we made significant progress in systematically integrating sustainability into our business. We have enhanced manage- ment approaches for our material topics in cross-functional teams and defined key performance indicators, which are presented for the first time in this Sustainability Report. This report has been prepared in accordance with the GRI Standards: Core option. It is the first comprehensive Sustain- ability Report by the Burckhardt Compression Group prepared in line with international standards. Enhancement of our sustainability performance is a long-term com- mitment, and we intend to and will harness more potential. In the next fis- cal year, we will build specifically on the successes and findings from this year. We will in particular optimize data collection and define targets for the material topics under the new mid-range plan 2023–2027. In doing this, we want to ensure that the sustainability strategy is an integral part of our business strategy. OUR MATERIAL TOPICS 1. GREENHOUSE GAS EMISSIONS AND CLIMATE CHANGE The bulk of the emissions associated with our business activities arises in the use phase of our compressors, due to their long lifetime of 30–50 years. Other emissions occur in our operating facilities, where we have the most direct influence, and in logistics and the materials used. Our approach Burckhardt Compression endeavors to reduce the company’s carbon foot- print and optimize emissions during the use phase of the compressors. In an initial phase, we focus on three key areas: – Reduction of the company’s carbon footprint – Evaluation and optimization of the impact of our inbound and outbound logistics – Improvement of the carbon footprint of compressors Our climate policy is the basis for all our activities related to climate change and part of our wider environmental policy. Our environmental management system, certified in accordance with ISO 14001, is the most important instrument in reduction of our environmental footprint. Each subsidiary takes responsibility for reducing its own greenhouse gas emis- sions and sets relevant targets. Our sites in India and Switzerland, for ex- ample, have set long-term reduction targets as part of industry initiatives or government agreements. Reduction of greenhouse gas emissions during the use-phase of our compressor systems is an integral part of our product and innovation man- agement and our service offer. Progress in fiscal year 2021 For the first time, we consolidated environmental data at Group level to calculate direct (Scope 1) and energy-related indirect (Scope 2) greenhouse gas emissions. To evaluate emissions in inbound and outbound logistics, we have prepared a data collection for the coming fiscal year. In addition, we calcu- lated the product emissions of different compressors over their entire life cycle in order to put our emissions in an overall context. Topic lead: President Systems Division Tackling climate change is one of the most pressing global challenges. The potential consequences of climate change are grave, in some cases irreversible, and affect individuals, organizations and countries alike. The Paris Agreement of 2015 is a legally binding international treaty between states on climate change. It recognizes the need to limit global warming to below 2°C above pre-industrial levels, preferably as low as 1.5°C. To achieve this global goal, immediate and decisive action is required at all levels to reduce greenhouse gas emissions worldwide. Burckhardt Compression recognizes its responsibility and the poten- tial to reduce its greenhouse gas emissions across the entire value chain. Our activities and technology make an increasing contribution to combat- ing climate change and to supporting Sustainable Development Goal 13: Climate action. 41 Sustainability ReportBurckhardt CompressionAnnual Report 2021On an operational level, we were able to continue with various projects to reduce our emissions. The measures implemented locally relate in par- ticular to the reduction of electricity consumption and the increase in the proportion of renewable energies. For example, Burckhardt Compression’s electricity consumption in Switzerland was converted to 100% renewable energies in the reporting period. Burckhardt Compression India was able to significantly reduce Scope 1 and Scope 2 emissions through a compre- hensive energy audit. At our foundry in Shenyang, China, we successfully completed the conversion from coal-fired to electric furnaces. Greenhouse gas emissions also play a vital role in our continued product development and collaboration with our customers. We see high potential for avoidance of gas leakage, particularly where greenhouse gases are compressed. With this in mind, we launched a research and de- velopment project in the reporting period to evaluate various approaches for comprehensive emissions management of existing compressors. In ad- dition, we have invested heavily in digitalization and are one of the pioneers in our industry. Solutions such as UP! Solutions Remote Support contribute to a reduction of greenhouse gas emissions through decreased travel by service technicians. Our performance The absolute greenhouse gas emissions for Scope 1 and Scope 2 are 15’280 tonnes of CO2 equivalents (CO2e). Scope 1 emissions have decreased in recent years, while Scope 2 emissions have increased, mainly due to the switch from coal-fired to electric furnaces at the Shenyang Yuanda foundry, while casting production has increased significantly. Chosen compressor supplier for renewable diesel production plant Burckhardt Compression has been chosen as a partner for a clean, renewable diesel production plant in northern Europe. The project aims to upgrade an existing plant for the production of clean, renewable diesel based on different raw materials. The plant upgrade ensures co-processing of 40% renewable feedstock and is designed to be expanded to 100% renewable feed- stock in the future. Greenhouse gas emissions in tons of CO2e 15’280 5 1 8 2 1 ’ 1 4 4 7 ’ 4 8 1 ’ 8 9 7 8 3 ’ 9 1 1 9 3 3 ’ 0 2 5 6 4 2 ’ 1 2 Scope 2 Scope 1 Greenhouse gas emissions intensity Scope 1 and 2 Tons of CO2e/1’000 working hours 2.8 2 . 2 0 . 2 9 1 0 2 1 2 Greenhouse gas emissions business travel Tons of CO2 1’360 976 38 44 302 Airplane Train Bus Car 9 1 0 2 1 2 42 Sustainability ReportBurckhardt CompressionAnnual Report 2021Business travel forms only a small part of Burckhardt Compression’s oth- er indirect greenhouse gas emissions (Scope 3), but can be directly influ- enced. Compared with the previous year, the number of business trips has increased again slightly, but is still significantly below the level of 2019. By strengthening our digital infrastructure, we will reduce travel frequency in the medium term. H2 diaphragm compressor for Hungarian project for green hydrogen The Hungarian government has announced it will support various projects to convert surplus electricity into gas energy. One of the successful tenders is the “Aqua- marine” project, which includes a hydrogen plant in an underground gas storage facility operated by Hungar- ian Gas Storage Ltd. The produced hydrogen is mixed into natural gas and utilized in their own gas engines and furnaces, therefore reducing CO2 emissions. A top priority in our efforts to tackle climate change is to reduce carbon emissions generated from business operations. However, over the entire life cycle of a compressor, other potential arises where we can achieve a much higher impact. In fiscal year 2020, Burckhardt Compression India calculated the emissions of a compressor over its entire life cycle for the first time. In this fiscal year, we added three more compressors to the cal- culation to better understand our Scope 3 emissions. The results show very clearly that emissions during the use phase account for by far the greatest proportion. This is attributable to the high power range of our compressors, their long lifetime and their uninterrupted operation. Outlook for fiscal year 2022 With the fundamental findings from this year, we will begin the next stage of developing a road map for the long-term reduction of greenhouse gas emissions in line with the Paris Agreement. We also plan to extend the greenhouse gas inventory to further Scope 3 categories. Another focus is on a joint reduction of greenhouse gas emissions with our customers. Greenhouse gas emissions of various compressors over the entire life cycle in % Process Gas Compressor 2B1Y life cycle 20 years Materials: 0.0764% Transport: 0.0251% Production: 0.0306% Use phase: 99.8678% End-of-life: 0.0001% Diaphragm Compressor MD10 life cycle 20 years Materials: 0.7802% Transport: 0.0850% Production: 0.3620% Use phase: 98.7718% End-of-life: 0.0010% Laby®-GI Compressor 5LP250-V life cycle 30 years Materials: 0.0751% Transport: 0.0114% Production: 0.0086% Use phase: 99.9047% End-of-life: 0.0002% Hyper Compressor K8 life cycle 30 years Materials: 0.0381% Transport: 0.0129% Production: 0.0010% Use phase: 99.9479% End-of-life: 0.0001% 43 Sustainability ReportBurckhardt CompressionAnnual Report 20212. ENERGY USE AND EFFICIENCY Topic lead: Vice President Compressor Engineering & Manufacturing The development of society depends on the conversion, use, storage and transmission of power. Reliable and affordable access to power is a basic need. However, the extensive demand for energy is also tied to significant environmental impacts. The use, efficiency and type of energy therefore assume a special significance for sustainable development, combined with far-reaching social, economic and environmental implications. As an industrial technology company specializing in the compression of all types of gases, Burckhardt Compression occupies a key position in the energy system. Our activities require a significant amount of energy in the manufacturing process and even more in the operation of our com- pressors. Our technology is also used to provide, transmit and store energy. This means Burckhardt Compression has significant potential to support the energy transition and thus support Sustainable Development Goal 7: Affordable and clean energy The biggest impact of our activities is in the use phase of our prod- ucts. Our approach Burckhardt Compression endeavors to reduce energy demand, promote renewable energies and contribute to the energy transition through its technology. The focus is on: – Energy use, energy efficiency and energy quality, including renewable energy in our operations. – Use and efficiency of energy in the operation of our products at custom- ers’ sites throughout the use phase. Our environmental policy and ISO 14001-certified environmental manage- ment system form the basis of all activities related to energy consump- tion in our value chain. Each subsidiary takes responsibility for reducing its greenhouse gas emissions and sets relevant targets. Our Winterthur site, for example, is in the process of implementing a multi-year project to save energy in production operations and offices. As another example, the factory in Pune has won the GreenCo Star Performer Award several times. GreenCo is an initiative created by the Confederation of Indian Industry (CII). GreenCo’s rating system takes a holistic approach to measurement of the results of corporate environmental initiatives. The energy use and efficiency of our compressor systems forms an integral part of our product and innovation management. Through our comprehensive services, we improve the energy requirements of our own and third-party compressor systems throughout their entire life cycle. Progress in fiscal year 2021 In the reporting period, Burckhardt Compression continued it’s measures to reduce energy consumption in different sites. In India, for example, we achieved energy savings of more than 95’000 kWh in 2021 for the local site by conducting an energy-saving audit and carrying out several specific pro- jects. In addition, for the first time we have undertaken a global consolida- tion of the energy consumption of all subsidiaries, an important basis for the planned corporate target setting. We are increasingly turning to renewable energy sources in our op- erations. In the reporting period, the subsidiary in Italy and the facility and head quarters in Switzerland managed to switch their electricity supply over entirely to renewable energy sources. In terms of products, we have developed and approved for sale the next, more energy-efficient generation of Laby®-GI compressors. It fea- tures significantly improved energy efficiency compared with previous ver- sions. In the service segment, we have stepped up our approach to energy saving through revamps and upgrades. New-generation Laby®-GI compressors for LNG ships The latest generation of Laby®-GI compressors, type 5LP250-V, marks another milestone in the further evolu- tion of our products. This version features in particular a significantly improved energy efficiency compared with previous versions. We obtain a 5% higher quantity of compressed gas with an average of 5% (50 kW) lower power requirement. Assuming an annual operating time of 4’000 hours, this means recurring savings of 200 MWh per compressor. 44 Sustainability ReportBurckhardt CompressionAnnual Report 2021Our performance Compared with the previous year, our energy consumption has increased in absolute terms by 9.9% and our energy intensity by 8.0%. Most part of the increased energy demand is due to the switch from coal-fired to electric furnaces and the increased production at the Shenyang Yuanda foundry. We increased the Group-wide proportion of renewable electricity compared with the previous year thanks to the conversions in Switzerland and Italy. Nevertheless, much scope for progress still remains. With product improvements and services, we managed to reduce our customers’ energy consumption in the reporting period. We currently eval- uate a limited number of projects for energy savings and will present these transparently in the future. Outlook for fiscal year 2022 In the current fiscal year 2022, we will set out a road map to increase the share of renewable electricity across the Group. In addition, we are plan- ning short- and long-term targets at Group level to increase electricity efficiency in our operations. Local energy-saving measures at operational level will continue as planned. For example, our factory in Pune, India, is in the process of applying for “Platinum” status under the GreenCo initiative. We will set targets based on newly defined key performance indica- tors and initial data collected on compressor energy consumption and put in place regular data collection. This will allow us to improve and report on our offering and the impact of energy consumption savings through our service activities in the future. 3. LONGEVITY AND CYCLABILITY Energy consumption in MWh 42’581 7 7 0 8 3 ’ 3 3 7 8 3 ’ 9 1 0 2 1 2 Energy intensity MWh/1’000 working hours 7.9 3 . 7 8 . 6 Topic lead: President Services Division A large number of natural resources are finite, and the extraction of raw materials is frequently associated with significant environmental and social consequences. It is thus essential to keep raw materials for longer in the use phase and to close loops in order to be able to use materials repeatedly. Our compressors are made mainly of iron and steel, materials that are easily recyclable. They are relatively material-intensive to manufac- ture due to the physical demands of the high pressures involved. However, with their lifetime life of 30-50 years, our compressors are also very du- rable. More than half of active compressors equipped with a Burckhardt Compression serial number have been in service for more than 20 years, the oldest for 92 years. We secure this long lifetime through the services we provide for our own compressors and those from other manufacturers. 45 9 1 0 2 1 2 Share of renewable electricity in % Renewable 13 Other 87 Sustainability ReportBurckhardt CompressionAnnual Report 2021In the manufacture and servicing of compressors, we have a significant amount of scope to contribute to a circular economy and support Sustain- able Development Goal 12: Responsible consumption and production. Significant impacts result from the raw materials used for our com- pressors, the replacement of components during the use phase and the use of operating materials such as lubricant. Our approach Burckhardt Compression fosters long life cycles and the circularity of materials in its products and services. Our holistic approach centers on five aspects: – Longevity of new products through technology, engineering, easy maintenance and optimized wear parts – Longer life cycles of existing compressor systems through retrofitting, overhauling and longer maintenance intervals – Repairing of components and compressors – Use of recycled materials, in compliance with material requirements and standards – Recyclability of our products To foster longevity, we use our in-depth technical knowledge to develop reliable, long-lasting and high-performance compressor solutions. With innovations such as our Persisto® materials and Redura® sealing systems, we achieve maximum performance for efficient, reliable and long-lasting operation. To achieve our long product lifetime of 30–50 years, we offer a full range of reliable services and durable compressor components devel- oped in-house. By reconditioning equipment, we support the short recycling loop with a comprehensive range of revamp and upgrade services, as well as our refurbish programs for entire compressor systems. We also repair and re- Overhaul of a hyper crankcase in a polyethylene unit After 180’000 operating hours, equal to more than 20 years of standard operation, a low-density polyethylene (LDPE) manufacturer discovered hard scuffing damage on the contact surfaces between the hyper compres- sor crankcase and the distance pieces. Working to an extremely tight deadline, Burckhardt Compression successfully overhauled the compressor and put it back into operation. The movement and vibration of the distance pieces and cylinders were significantly reduced, extending the lifetime of the plunger, packing and elastic rod. In addition, oil leakage between the crankcase and the distance pieces was minimized. furbish compressor components, such as valves, using our global network of service centers. Progress in fiscal year 2021 One focus in the reporting period was the advancement of our long-term approach to condition-based maintenance of compressors. The long-term goal actually represents a paradigm shift in compressor maintenance: moving away from standardized replacement plans based on the operat- ing cycle to predictive maintenance based on the actual condition of the compressor. In addition to improving quality and efficiency, our data-based approach extends the lifetime of the equipment and individual parts. Operating hours in comparison LABY® Compressor 3K160 Passenger car Weight: 9t Operating hours: 8’000 per year 46 When our specialists carry out the first service, an average pas- senger car has already quit service a long time ago. Weight: 1.5t Operating hours: 5’000 total* * Assumption: 300’000 km with 60 km/h Sustainability ReportBurckhardt CompressionAnnual Report 2021Our performance Repair instead of replacement is a key component in the circular econo- my. We thus recorded the portion of reused or refurbished components in service activities for selected key parts for the first time in fiscal year 2021. The data demonstrates our contribution to the circular economy through our services; for example, for valves the share of refurbished components is 81% in all service interventions. Outlook for fiscal year 2022 We will continue our condition-based maintenance initiative in the current fiscal year 2022. This undertaking will continue until 2025 and, along with our digital offering, will be one of the main themes in the Services division. Another focus will be to enhance our extensive service activities with an emphasis on revamping, upgrading and reprocessing manufacturing compressor systems in order to extend their operational life. In doing so, we want to be able to better measure and manage the impact of our service performance on lifetime and the circular economy in particular. 4. ENVIRONMENTAL IMPACTS OF APPLICATION PURPOSE Topic lead: Vice President Sales Systems Division Our core competence is mastering gas compression technologies for a wide range of gases. Gas plays a crucial role in the process industry and the energy supply. The range of applications is very broad, from conventional energy supply to industrial gases to renewable energy systems. A signifi- cant part of the indirect environmental impact of our business activities depends on to the application purpose. Through innovative solutions in the development of new compressor systems and components as well as customized services, we can support our customers to drive the transformation to a sustainable economy. We have the potential to contribute to three of our strategic Sustainable De- velopment Goals (7, 12 and 13). The main impacts of this topic are related to the use-phase of our products and services. Proportion of reused or refurbished components in service work in 2021 for selected key components. in % Valve Crank gear Cylinder Hyper components 81% 100%=26’422 59% 100%=227 51% 100%=1’223 69% 100%=1’680 100% = Total components recycled or newly manufactured by Burckhardt Compression for service activities. Through the acquisition of Rotterdam-based company Mark von Schaick BV in the reporting period, we significantly expanded our capability for complex repairs of main parts, such as crankshafts. We also looked more closely at recyclability and analyzed the ma- terials used throughout the product range. The predominant proportion by weight relates to ferrous materials, such as steel and cast iron. They account for an average share of more than 95% and are highly recyclable, with established markets available for this in most regions. In addition, we carried out initial clarifications with our suppliers as to how much of the input materials used come from recycled sourc- es. This revealed a mixed picture, depending on the recycling maturity of the respective regional markets. In Europe, our suppliers can rely on an established recycling market, which explains why the proportion of recy- cled materials tends to be higher than in Asian supply chains. Our plant in Switzerland profits from this in particular, with a predominantly regional supply chain. Emergency repair of a 50-year-old nitrogen compressor A leading stainless steel products manufacturer based in Italy contacted Burckhardt Compression after sudden and extreme vibration caused the 50-year-old dry compressor to come to an unexpected standstill. Our root cause analysis found that the compressor was still technically sound, but cracks in the foundation and dam- aged anchor bolts were causing the malfunction. Thanks to our prompt intervention, the base was repaired on site and the compressor was put back into operation within the client’s tight schedule, ready for the coming years of operation. 47 Sustainability ReportBurckhardt CompressionAnnual Report 2021Compressor for a new green hydrogen production plant in Switzerland Burckhardt Compression received an order for a Dia- phragm Compressor for a green hydrogen production plant in Switzerland. The compressor system is designed for hydrogen mobility applications and capable of discharging hydrogen at a high pressure and high purity, suitable for fuel cells. Our Approach Burckhardt Compression is committed to the long-term alignment of its business activities with a sustainable economic system. We identified four positive impact areas: – Climate change mitigation – Energy transition – Circular economy – Environmental pollution prevention We are expanding the areas of application for our customers and support- ing the transition to a sustainable economy through our continuous innova- tion in compressor systems, materials, components, and services. Marine applications: Liquified natural gas represent a short and me- dium-term bridge fuel for marine applications to comply with tightening international regulations on greenhouse gas emissions until zero-emis- sions solutions are developed. Modern ship designs are introducing gas as fuel instead of carbon-intensive and high-sulfur content heavy fuel oil helping to reduce greenhouse gas emissions by up to 25%. Burckhardt Compression Laby® and Laby®-GI fuel gas compressors play an essential role in the current transition of the shipping industry. The large portfolio available and the flexible compressor concepts can provide fuel gas to all types of modern dual-fuel engines. All applied compressor types are of gastight design, allowing fuel gas compression up to 300 bar with zero emissions to the environment. Hydrogen distribution and fueling applications: We are supporting the development of hydrogen mobility by developing a range of compressors, including diaphragm and reciprocating compressors that meet the specific technical challenges of these new applications. Examples are the innova- tive materials and ring geometries which enable process gas compressors to be operated without oil lubricants for hydrogen trailer filling and in fue- ling applications for hydrogen-powered trains, trucks, or buses, with pres- sures of up to 550 bar. The technological advantages of reciprocating com- pressors for this application are unrivaled efficiency and long service lives. Hydrodesulfurization: Process gas compressors per API 618 are used specifically in industrial processes for the desulfurization of fuels. Progress in fiscal year 2021 During the reporting period, we developed a sustainability screening ap- proach to better structure our business activities from an environmental impact perspective. This classification system makes use of internation- al standards such as the EU taxonomy for sustainable activities or South Korea’s K-Taxonomy, without claiming to fulfil these sometimes complex, technical implementation requirements. The main purpose of this screen- ing system is to serve as a high-level compass for the targeted further development of our business activities towards a sustainable economy. As we are in the market for capital goods, this transformation towards a sustainable economy is taking place over the long-term. At the business level, we have continued to expand our activities that contribute to a sustainable economy. We were able to achieve a strong growth in H2 Mobility & Energy and to help the industry solve specific com- pressor related technical challenges. This is not least due to our increased R&D and the strengthening of our business development resources for these markets. Examples for the success are: – We entered a partnership with Shell Renewables and Energy Solutions for the development of heavy-duty hydrogen refueling station com- pressor systems. Burckhardt Compression is building a new test facility in Winterthur, Switzerland, dedicated to the advancement of sealing technologies and solutions for hydrogen refueling stations serving heavy-duty vehicles. – Burckhardt Compression has signed a contract with Jiangsu Hongjing New Material Company Ltd. to equip three production lines for EVA (eth- ylene-vinyl acetate copolymers) and LDPE (low-density polyethylene) with three Booster-Primary and three Hyper Compressors. Specifical- ly, the three 200 kilotons per year photovoltaic class ethylene-vinyl acetate copolymers plants will help to satisfy the worldwide demand for EVA polymer, which, shaped as a film, is used in solar panels as an insulating and sealing agent around the solar cells. 48 Sustainability ReportBurckhardt CompressionAnnual Report 20215. WORKING CONDITIONS Topic lead: Chief Human Resources Officer Jobs with decent working conditions are a basic premise for the develop- ment of individuals and society. They drive prosperity and provide a live- lihood for people. Our employees are central to our success, and we are proud of our global and diverse workforce. As an industrial technology company with production sites and service centers worldwide, we employ a broad range of skilled personnel. With our engagement in providing good working conditions, we con- tribute to the targets of the Sustainable Development Goal 8: Decent work and economic growth. We believe our most direct impact concerns the working conditions of our more than 2’700 employees around the world. In addition, we recognize our responsibility to exercise due diligence in the review of working conditions in our supply chain. Our approach Burckhardt Compression is committed to upholding fundamental interna- tional labor standards and strives to provide conditions that overall exceed the local industry average. To achieve this, we focus on three areas: – Dialog and relations – Terms and compensation – Organizational culture The impacts on employees from suppliers, contractors and outsourced activities are managed mainly through our responsible procurement ap- proach. Our Performance We have applied our sustainability screening approach on new projects in part of the Systems Division as a pilot, representing 52% of the total order intake: – We classified around 9% of the total order intake as new energy applica- tions. Examples are green hydrogen projects in H2 Mobility & Energy or projects for the solar panel industry. – Around 10% of the total order intake is classified as being transitional with environmental advantages but not yet fully sustainable. Examples are Industrial Gas applications, biogas applications in Refinery, dual fuel LNG applications in Gas Transport & Storage and grey hydrogen projects in H₂ Mobility & Energy. – Around 33% of total order intake is classified as conventional applica- tions. Examples are conventional petrochemical application without a clear link to a sustainability use-case or the traditional refinery business. – 48% of the total order intake has not yet been classified. Outlook for fiscal year 2022 In the coming fiscal year, we will continue our development of innovative non-lube, high-pressure and high-flow hydrogen compressor systems to meet the specific technical challenges along the hydrogen value chain and enable the conversion of heavy-duty transport towards clean energy solu- tions. Equally, we will continue to strengthen our compressor solutions for LNG carriers and LNG fueled ships to support the short-term replacement of marine heavy fuel by natural gas as a propulsion fuel. We will make use of our evaluation system for business activities as a compass for allocating our resources towards a sustainable economy in a mid- to long-term. A roll-out is planned to also include key business activ- ities from the Services Division and the remaining business activities from the Systems Division. In doing so, we will further align our approach with the external developments such as the EU taxonomy. Compressor supplier for a hydrogen liquefaction plant in South Korea. The order includes three Process Gas Compressor API 618 systems for the compression of hydrogen within the liquefaction process. The new installation in South Korea is the largest hydrogen liquefier plant worldwide. It is part of the country’s strategy to remain a global leader in the development of hydrogen as clean energy. It will be able to produce up to 90 tons of liquefied hydrogen per day. The liquefaction plant is planned to start production in 2023. 49 Sustainability ReportBurckhardt CompressionAnnual Report 2021Dialog and relations: We acknowledge and support freedom of association as set out in our Code of Conduct. Open dialog with employees is a central priority for Burck- hardt Compression and is fostered in various ways. In addition to employ- ee surveys and continuous exchange with line managers, employees are informed online several times a year in person by members of the Execu- tive Management about the state of the business and other matters, with questions answered. Furthermore, we maintain several harmonized digital and office-based platforms for regular exchange of information with our employees. Our online platform and mobile application “BC Connect” is an exchange platform accessible to all employees and allows them to receive, comment on and write messages. Other dialog tools are used at local level in the form of collective bargaining and employee representation. 63% of Burckhardt Compression’s employees worldwide are covered by a collec- tive agreement. Terms and compensation: Burckhardt Compression offers attractive terms and conditions of employ- ment adapted to prevailing requirements on an ongoing basis. We bench- mark our salaries against external salary surveys conducted by Willis Tow- ers Watson and have an ongoing monitoring system in place to eliminate significant salary differences between equivalent jobs. We have greatly expanded our flexibility in terms of staff working from home and have en- hanced our infrastructure to enable our employees to work comfortably from any location. Organizational culture: We are convinced that our well-established corporate culture forms the foundation of our competitiveness. The reputation that Burckhardt Com- pression enjoys and the mutual trust that exists within the Group depend mainly on the integrity and conduct of each and every employee. A com- prehensive values program called “Values and Behaviors” ensures that employees in all Group locations and companies share and actively uphold the same corporate values and principles. The internal Code of Conduct is designed to set fundamental standards and principles for how employees should interact and behave toward partners, stakeholders and the environ- ment. A global Speak Up channel operated by a third party is available to report violations of our standards, values and behavioral guidelines. Rating from employee survey January 2020 and January 2022 Average points scored for the statement: “All in all, I am satisfied with my current work situation” 20 22 71 77 0 Strongly disagree 100 Strongly agree Average points scored for the statement: “I would recommend Burckhardt Compression to others as a good place to work” 20 22 77 84 0 Strongly disagree 100 Strongly agree Average points scored for the statement: “The top management provides information to employees in a way they can understand” 20 22 72 80 0 Strongly disagree 100 Strongly agree Average points scored for the statement: “My work generally provides me with sufficient opportunities to balance my work life and my private life” 20 22 67 74 0 Strongly disagree 100 Strongly agree Average points scored for the statement: “In our company employees are treated with respect, no matter what job they perform” 20 22 76 83 0 Strongly disagree 100 Strongly agree 50 Sustainability ReportBurckhardt CompressionAnnual Report 2021Progress in fiscal year 2021 Burckhardt Compression continuously adapts its working conditions to current requirements; for instance, in response to the pandemic in the reporting period. We have further expanded our remote working concept in line with the needs and wishes of our employees. The cooperation be- tween employees and line managers working from home has functioned impeccably. We are convinced that flexible working arrangements bring many advantages, reinforce mutual trust and satisfy the wish of many em- ployees for more personal responsibility and self-organization. This is why, during the reporting period, Burckhardt Compression Switzerland added extra options to its policy on remote working. At Group level, a related rec- ommendation for further flexibility with regard to remote working options was passed on to all subsidiaries, which implement this recommendation tailored to the local conditions During the reporting period, we conducted our biennial worldwide employee survey. As in past years, the high participation rate of 90% was very pleasing and reflects the high level of engagement of our staff. On a positive note, overall employee satisfaction and engagement increased compared with the last survey. Both ratings rank above the industry aver- age, which marks Burckhardt Compression out as an attractive employer. The results from this survey are systematically evaluated as a basis for continuous improvement. Our performance The average score for the statement “All in all, I am satisfied with my cur- rent work situation” rose to 77 out of a possible 100 points, an increase by 6 points compared with the last survey. This confirms our efforts to create and continuously improve attractive working conditions. For the statement “I would recommend Burckhardt Compression as a good place to work”, we improved our rating by several points to 84. High levels of employee loyalty and identification with the company are also confirmed by the fact that the typical employee has been with the company for 8.4 years. Employee turnover ratio in % of yearly average of full time equivalent Other 1.6 Involuntary 1.1 2019: 9.5 2020: 9.5 2021: 10.1 Voluntary 7.4 The employee turnover rate increased to 10.1% in the reporting period. This figure includes all departures, including fixed-term employment contracts that came to an end. Of this, 7.4 percentage points are accounted for by voluntary departures, which is above the target figure of 5%. Outlook for fiscal year 2022 In the coming fiscal year, we will continue to use the findings from the employee survey to identify the most important areas in order to improve employee satisfaction. Based on the findings, we will derive the specific measures to be adopted locally in order to address the specific needs of our employees in the different regions. We are also working on introducing a global award program for exceptional team performance. This will reward teams that have particularly excelled and contributed to the success of the company through their performance. 6. OCCUPATIONAL HEALTH AND SAFETY Among the most attractive employers in Switzerland Burckhardt Compression ranks as one of the most attractive Swiss employers in 2022. This ranking is based on an independent survey of employees. This survey of employees was carried out by data analyst Statista via an online access panel, combined with input from the readers of Handelszeitung and Le Temps. More than 1’500 employers with 200 or more employees in Switzerland were identified for the survey. Burckhardt Compression was placed an excellent 30th in the overall rankings, up there with last year’s good result. Within its own sector of mechanical and plant engineering, Burckhardt Compression ranked fifth. 51 Topic lead: Vice President Quality & Infrastructure Healthy and productive employees are the key to added value for our customers. The protection of physical integrity and promotion of mental well-being are therefore top priorities. By providing a safe working environ- ment and promoting health, we can help achieve Sustainable Development Goal 3: Good health and well-being, and also Sustainable Development Goal 8: Decent work and economic growth. Our influence in this area ex- tends to our own employees, to external employees in our workplaces and to working conditions in supply chain companies. Sustainability ReportBurckhardt CompressionAnnual Report 2021Our approach We are committed to the prevention of accidents and work-related illness- es and to the promotion of the mental well-being of employees and work- ers whose work or workplace is under the control of Burckhardt Compres- sion. We focus our approach on two components: – Occupational health and safety system and prevention culture – Mental health and well-being The impact on employee health and safety in our supply chain is controlled through the responsible procurement approach Our occupational safety policy and management system certified in line with ISO 45001 form the basis that governs all activities relating to health and safety in the workplace. All Burckhardt Compression sites are certified in accordance with ISO 45001, apart from the subsidiaries SAMR Métal Rouge, Prognost and Arkos Field Service, all of which have their own health and safety systems. Numerous measures ranging from detailed risk assessments, safety inspections accompanied by management to workplace safety training and mandatory wearing of protective footwear, protective eyewear and other work-relevant protective equipment demon- strate their effectiveness in a steadily reducing risk exposure. Creation of a culture of prevention through raising awareness and involving employee representatives in the safety committee at each site is an important part of to our approach. To promote physical and mental health, the Dr. BeWell program was launched in 2019. Implemented locally, this includes a varied range of physical exercises as well as preventative measures and special topics. The program is just one of the ways in which Burckhardt is improving employee satisfaction, health, and motivation is improved and reducing absences. Progress in fiscal year 2021 We were able to successfully recertify our management system at Group level in accordance with the new ISO 45001 standard during the reporting period. We systematically incorporated the findings and advice of the local certification bodies. These represent the basis for the ongoing improve- ment of our management system in the years ahead. This year, we successfully integrated our new subsidiary in Sweden into the Group health and safety management system. In January 2022, we carried out a global employee engagement sur- vey, which included the topic of health and safety in the workplace. The feedback is particularly valuable for further development of our manage- ment system. 52 52 Annual Report 2021 Burckhardt Compression Lost Time Injury Rate (LTIR) Per 200’000 hours worked 1.1 2 . 1 . 7 0 9 1 0 2 1 2 Severity Rate (SR) Lost days/recordable incidents 25.0 0 . 4 2 4 . 8 1 9 1 0 2 1 2 Lost Time Workday Rate (LTWR) Per 200’000 hours worked 27.8 8 . 1 2 4 . 6 1 9 1 0 2 1 2 Sustainability ReportBurckhardt CompressionAnnual Report 2021We rigorously pursued our management approach to mitigate the effects of the pandemic in the reporting period. We oriented the measures and im- plementations to the local number of cases and hazard assessments. We effectively countered the effects of the pandemic by implementing com- prehensive protective measures at our sites, allowing working from home as a precautionary measure and communicating effectively. Its highest priority at all times has been to safeguard the health of its employees and their families, as well as that of its customers and business partners. Our performance The Lost Time Workday Rate (LWTR) has increased from 16.4 to 27.8, due to the highly increased workload in the factories and related new hires and use of temporary personnel. We thoroughly analyze the cause of every accident, both those with and those without loss of work days, and imple- ment corrective measures. We are engaging in appropriate efforts at every level; on the part of management, executives and the workforce. In the re- porting period, we recorded no fatal accidents, mirroring the situation in previous years. In the employee survey, we were able to improve on the topic of health and safety by 8 points compared to the last survey. An important indicator for us concerning mental health and well-be- ing is work-life balance, which is regularly surveyed as well. Compared with the results of the past survey, we improved our score from 67 to 74 points. Outlook for fiscal year 2022 One focus will be to continue to bolster our safety culture, which we will achieve by continuing the campaign to raise awareness and provide infor- mation at local level that was launched in fiscal year 2021. A second focus will be on internal coordination and integration with- in the Group. In fiscal year 2022, we will focus on the two locations Shen- yang and Shanghai in China and on our companies Arkos and BCUS in the US. The aim is to align local approaches and achieve continuous improve- ment through shared learning experiences. Program to raise health and safety awareness In fiscal year 2021, we launched a broad awareness-rais- ing program on the topic of occupational safety. Using various media, including leaflets, videos and on-site installations, we highlighted the most important sources of danger. As a result, we were able to sharpen awareness and in the long-term strengthen our safety culture at our operating sites. 7. PRODUCT SAFETY Topic lead: Vice President Contracting Systems Division Compressors are a critical equipment in various applications in the process industry and energy provision. System safety and reliability is one of the most important areas of expertise in our business due to the high pres- sures, continuous operation, integration in complex industrial processes and the individual hazard potentials of the compressed gases. By ensuring product safety, we make a contribution to Sustainable Development Goal 3: Good health and well-being. The main effects are in the use phase and extend over the compressors’ decades of operation. Our approach Burckhardt Compression endeavors to ensure safe operation of compres- sor systems in every phase of their life cycle. Our approach encompasses five main areas of risk mitigation: – International norms and standards Where available, we use and follow international standards for the de- velopment, production, commissioning and maintenance of compressor systems. This includes the evaluation of safety risks and certification in accordance with mandatory laws and standards. – Simulation, calculation and testing Our comprehensive knowledge of calculation and simulation allows us to optimize the dimensioning of compressor systems. We also use specific testing and inspection procedures to ensure safety and func- tionality. – Outstanding processes Defined working principles, processes and our ISO 9001-certified quality management system ensure our processes meet the strict require- ments. – Control systems and maintenance Our compressor systems are fitted with a minimum protection system that shuts down the system in the event of a critical disruption. Our PROGNOST®-SILver system for monitoring and diagnosing the condition of reciprocating compressors and our UP! solutions for long uptime and maximum reliability are key tools in increasing operational reliability, extending service intervals and preventing breakdowns. – Documentation and training To ensure the smooth operation of compressor systems, we produce a specific set of operating documents for each system and also offer a wide range of training modules available either online or at our training centers. 53 Sustainability ReportBurckhardt CompressionAnnual Report 2021Rating from employee survey January 2020 and January 2022 Points scored for the statement: “My workplace is designed to prevent any harm to my health” 20 22 71 79 0 Strongly disagree 100 Strongly agree Successful expansion of customer training in online and hybrid formats We offer a comprehensive training program to support safe and appropriate operation of compressors. The change to online and hybrid formats allowed us to com- pensate for the cancellation of on-site training courses caused by the pandemic and we are almost back to the pre-pandemic level, with 35 customer training sessions. The recently developed online training course for the particularly safety-related use of oxygen gases enabled us to double the training capacity for this module. Progress in fiscal year 2021 During the reporting period, we began to establish new skill centers to maintain and continually improve the high quality of our design standards for new product lines across all our plants. In addition, we carried out a comprehensive review of our internal product approval process. This de- fined approval process is particularly important to both our global quality commitment and product safety. It ensures that we meet the required in- ternational standards and norms. Our 8D report provides us with an industry-wide practical method of checking problems with compressor systems. It uses an eight-stage approach to evaluate a problem and determine lasting solutions. During this reporting period, we revised and strengthened the collection and pro- cessing of these reports. With this, we aim to strengthen the findings from the cross-case analysis, which also concern quality and product improve- ments, in addition to product safety. We successfully completed an extensive test of our high-pressure compressors for marine applications. The construction of the new test facility in Winterthur for the further development of sealing technologies and solutions for hydrogen filling stations at pressures up to 900 bar is also forging ahead. In addition to technical feasibility, strict compliance with extremely high safety standards and procedures plays a decisive role in the successful operation of this new generation of compressors. Our performance As part of the approval process, 100% of the new product configurations have been through a risk and design assessment that includes product safety. No incidents related to the product safety of our compressors were registered over the reporting period. Similarly, no violations of regulations or voluntary codes took place in relation to product safety. Outlook for fiscal year 2022 Our focus for the coming period will be on the further implementation and reinforcement of the process improvements started in 2021, in addition to the continuous implementation of our approaches to risk minimization. In the field of control systems, we have developed a strategy for a wider and more proactive distribution of Burckhardt Compression compressor con- trol systems, which we will put into practice. As part of our digitalization initiatives, we will also initiate new approaches to taking our engineering base, operational data evaluations for product improvements and custom- er training to the next level. 8. BUSINESS CONDUCT Topic lead: General Counsel Unethical business practices have the potential to damage the economy and society. They cause economic losses, promote social inequality and undermine democratic processes. As a global business with a far-reaching network of business partners, we are obliged to conduct our business eth- ically, legally and in an environmentally and socially responsible manner. Ensuring our business conduct is in accordance with legal and internation- al standards is a fundamental precondition, as it is for other material sus- tainability topics. The number of compressors fitted with a Burckhardt Compression control system is currently running at 29%. We are firmly convinced that our solutions offer significant added value in terms of reliability and safety, which is why we want to increase this percentage. Our approach Burckhardt Compression undertakes to carry out its business activities in an ethical, legal and environmentally and socially responsible manner. We expect every business partner with which we have a business relationship 54 Sustainability ReportBurckhardt CompressionAnnual Report 2021to conduct itself in a similar manner. We assess every aspect of our busi- ness relationship and focus particularly on: – No corruption – Free competition – Export compliance Our Code of Conduct defines the fundamental standards and principles for employee interaction and with partners, stakeholders and the environ- ment. With the Code of Conduct for business partners, our suppliers, local agents and partners commit to conduct their business in an ethical, legal and environmentally and socially responsible manner. We train our em- ployees in the fields of anti-corruption, compliance with free competition and adherence to export controls. We have introduced audits of control procedures to prevent corruption and anti-competitive practice. Our Speak Up reporting system is a complaints channel operated by an independent third party. It allows employees, business partners and third parties that are aware of suspected misconduct to register it in the reporting system. The system is designed to allow protection of the identi- ty of the reporting party and comments to be made anonymously. Progress in fiscal year 2021 We revised our Code of Conduct during the reporting period. It was for- warded to every employee in the Group and is available on the website in 11 languages. We also produced a new Code of Conduct for our business partners, which includes instructions and explanations. This Code of Conduct has been signed by suppliers and business partners representing more than 80% of our purchasing volume. To further raise awareness of compliance with the law in the areas of anti-corruption and free competition among the employees concerned, a new training module was produced for these subject areas during the re- porting period. In total, 385 employees who deal with these areas in their work have successfully completed this module. Speak Up was launched in the reporting period, and all employees and business partners were informed that it had gone live. The system had a successful launch, and this is reflected in the levels of activity in its first year. Our performance A total of 16 suspected cases were recorded on the Speak Up reporting sys- tem: 13 by employees and three by external business partners. All the cases were processed and closed within the reporting period. One serious viola- tion of our Code of Conduct was identified and in 11 further cases, measures were put in place. The average processing time to the conclusion of the investigation was 71 days. No violations of competition law or instances of corruption connect- ed to our business activities were identified during the reporting period. Our existing processes and preliminary clarifications of export con- trols have proven their worth. Twelve requests for clarification of export regulations were forwarded to the appropriate authorities during the re- porting period. Of these, eleven cases were approved, and one was rejected 55 16 Speak Up notifications External 3 Internal 13 by the authorities. Six approved requests concerning Russia were subse- quently cancelled due to changing legislation on March 4, 2022. No viola- tions of export controls were identified. Due to Russia’s war with Ukraine, the Board of Directors and the Ex- ecutive Management have decided not to accept any new contracts from or with Russia since mid March 2022. This applies to both the Systems and Services Divisions. We do not have any subsidiaries in either Russia or Ukraine. We will comply with the export control provisions and legal sanc- tions applicable. Outlook for fiscal year 2022 We are planning to further strengthen our review activities in order to com- ply with export controls. A first step in this direction is the increased inclu- sion of this topic in our internal audits. We are increasing awareness of the need to observe our Code of Conduct through a range of measures, such as training sessions and internal communication OUR COMMITMENT Firmly anchored sustainability governance The very top of our organization is committed to sustainability. Responsi- bilities are clearly defined at every level and closely linked to strategy. All sustainability-related activities are supervised by the Board of Directors. The Strategy and Sustainability Committee supports the CEO in develop- ing corporate strategy and advises the Board of Directors on all matters relating to strategy and sustainability. All members of the Executive Management are also members of the Sustainability Executive Team, which is responsible for the strategic approach at Group level and compliance with our sustainability road map. Every material topic is led by a member of senior management. These managers form the sustainability steering group, which is responsible for implementing the sustainability road map and defining the topic-specific management approach. Sustainability ReportBurckhardt CompressionAnnual Report 2021Recognition of good investor relations Leading Swiss business newspaper Finanz und Wirtschaft gives investor relations and transparency an A– rating (A is the highest rating) and growth a B– rating. In the ranking of annual reports conducted by HarbourClub and business magazine Bilanz, Burckhardt Compression’s Annual Report 2020 came in at a good 47th (from a total of 238 companies) in the “Value Reporting Print” category and 19th in the “Value Reporting Online” category. auspices of the Swiss Federal Office for Professional Education and Tech- nology and the Swiss-Indian Chamber of Commerce to establish an appren- ticeship system in India based on the Swiss model; the company is also a corporate sponsor of the AZW Training Center in Winterthur for vocational career pathways. Burckhardt Compression has a fundamental belief that mixed teams perform better. In the reporting period, women made up 20% of the Board of Directors and 20% of Executive Management. Of the global workforce, 15.2% is female. Dialog with our stakeholders The appropriate involvement of our various stakeholders is extremely important to Burckhardt Compression. We have identified four key stake- holders within our sustainability management: customers, employees, investors and suppliers. We are engaged in more detailed discussions with them and actively involve them in identifying material topics. In addition, we also maintain an open dialog with other stakeholder groups, such as the media, the scientific community, associations, civil society and the state, as required. Customers Burckhardt Compression seeks long-term customer relations. The long- est-standing customer relationship dates back to 1885, when the compa- ny supplied BASF in Ludwigshafen with one of the first compressors ever built. Customer satisfaction is measured using various tools. The results are evaluated as part of the management process with the divisional man- agement teams, and actions are initiated and implemented in accordance with the results. For example, customer surveys were carried out in the re- porting period with a focus on the Services Division. Customer priorities in the field of sustainability were climate, energy and occupational safety. All three topics are key elements of our approach to sustainability. Sustainability governance at Burckhardt Compression Board Strategy & Sustainablity Committee Executive Sustainability Team Executive Management + Corporate Communication Sustainability Steering Group Topic leaders Implementation Support Topic contributors t n e m e g a n a M y t i l i b a n a t s u S i Implementation is supported by designated experts in the field and key local individuals in the subsidiaries. They provide technical expertise and ensure on-site implementation. A designated sustainability manager leads and moderates the sus- tainability-related activities at Group level and, as a technical expert, sup- ports all functions and subsidiaries with implementation of the road map. Our employees are the key to our success Together we are successful and create sustainable value. Burckhardt Compression is thus engaged in the advancement of all employees and a diverse workforce and structure. They are a vital factor in the implementa- tion of our sustainability ambitions. We appreciate our employees’ expertise and promote knowledge sharing. Personal training and development is part of the annual appraisal and performance review process and is financially supported by the com- pany. To ensure the ongoing development of technological expertise and personal and managerial skills within the company, employees around the world participate in internal technical, product and leadership train- ing modules, which are conducted across the Group several times a year through a range of programs. To provide even more support for the profes- sional development of our employees, we are also planning to introduce a new development process in 2022 to determine individual training pri- orities. We promote and support new talent at all levels and are committed to the Swiss system of apprentice training. The company currently has 46 apprentices in Switzerland and 18 in India in eight occupations. Burckhardt Compression is a founding member of the initiative launched under the 56 Sustainability ReportBurckhardt CompressionAnnual Report 2021 Investors Burckhardt Compression maintains open and transparent dialog with its investors and other interested parties. The aim of investor relations is to accurately portray the company and its markets to enable a fair valuation of Burckhardt Compression stock. In recent years, the importance of ESG (Environment, Social, Govern- ance) rating agencies have also increased significantly for our investors. We have therefore incorporated the findings of the most important agencies into the development of our sustainability approach. Important sustaina- bility priorities for our investors include climate change, business conduct and energy consumption. All three are covered in the material topics. Employees Open dialog with employees is a central priority for Burckhardt Compres- sion and is carried out in different ways. The most important dialog chan- nels are described in this report in the material topic working conditions. The most important priorities for employees are health and safety at work, working conditions and training and development. We actively deal with the first two within our material topics. Training and development is a cen- tral pillar of our HR management. Suppliers We work closely with suppliers in the development phase, with the aim of long-term partnerships. Suppliers are qualified using a set process and evaluated through the measurement of key performance indicators. Ex- changes and performance review take place on a regular basis via on-site visits, virtual meetings, audits or virtual inspections. Strategic procure- ment is an integral part of Burckhardt Compression’s strategic manage- ment cycle. We aim to provide further incentives for our suppliers with a global award system in the categories of performance and sustainability in the coming fiscal year. The central sustainability priorities for suppliers are occupational health and safety, energy consumption, and business con- duct. All three topics are key elements of our approach to sustainability. EcoVadis silver medal award Burckhardt Compression was awarded the EcoVadis silver medal for sustainability management with its place in the top 25% in the sector. EcoVadis is one of the largest platforms for assessment of supplier sustain- ability and is used by many Burckhardt Compression customers. Global workforce by gender Employees (full-time equivalents) 2’732 9 7 3 2 4 2 ’ 2 6 1 9 4 7 3 6 1 3 2 ’ 8 5 1 ’ 2 female male 9 1 0 2 1 2 Global workforce by region, 2021 in % Americas 11 APAC 46 EMEA 43 2’732 Global workforce by age, 2021 in % 55+ years 15 45 – 54 years 22 57 2’732 <25 years 3 25 – 34 years 28 35 – 44 years 32 Sustainability ReportBurckhardt CompressionAnnual Report 2021Extended key figures Environmental metrics 1 Energy use Electricity Fuels and combustibles 2 District heating Energy intensity (energy use/working hours) Greenhouse gas emissions Scope 1 3 Combustibles Fuels Others Greenhouse gas emissions Scope 2 4, 5 Electricity District heating Greenhouse gas emission intensity (Scope 1 and 2/working hours) Greenhouse gas emission business travel (Scope 3) Water 6 Waste 6 MWh MWh/1’000 working hours tCO2e tCO2e tCO2e / 1’000 working hours tCO2e m3 t 2021 2020 2019 42’581 27’180 9’861 5’541 7.9 2’465 1’243 994 228 12’815 11’869 946 2.8 1’361 83’810 2’805 38’733 18’917 11’681 8’135 7.3 3’391 2’373 793 225 8’184 6’796 1’389 2.2 1’211 91’218 2’606 38’077 18’137 13’114 6’827 6.8 3’879 2’578 1’133 168 7’441 6’276 1’166 2.0 3’429 121’803 2’408 1 With the exception of the key figures for water consumption and waste, the data relate to all sites of the Burckhardt Compression Group. The data collection for environmental data is performed by calendar year. The greenhouse gas inventory was calculated according to the WRI/WBCSD Greenhouse Gas Protocol Standard. ’Operational control’ was selected as the consolidation approach. 2 From fossil sources. 3 Scope 1 includes all directly caused emissions (e.g. combustion of fuels, loss of refrigerants). 4 Scope 2 includes emissions caused with purchased energy (electricity, district heating). 5 Reported according to the market-based approach under the Greenhouse Gas Protocol Scope 2 standard. The location-based approach results in emissions of 13’278 tCO2e in 2021 (2020: 8’575 tCO2e, 2019: 7’801 tCO2e) 6 Data refer to the production and assembly sites of the Burckhardt Compression Group, including headquarter (Switzerland, India, China, South Korea, United States). Employees Number of employees Permanent Male/Female EMEA APAC Americas Temporary Male/Female EMEA APAC Americas Full-time Male/Female Part-time Male/Female 58 2021 2020 FTE 2’732 2’508 2’538 2’339 2’145/363 2’000/339 1’152 1’066 290 224 171/53 16 207 1 2’628 2’256/372 104 60/44 1’037 1’014 288 199 158/40 13 185 1 2’445 2’103/342 93 55/37 Sustainability ReportBurckhardt CompressionAnnual Report 2021FTE 451 FTE 451 382 69 45 171 121 69 45 208 172 71 FTE 266 FTE 266 230 36 17 82 87 36 44 95 106 65 2021 2020 % yearly average 17.1% % end of year 16.5% 16.5% 16.6% 50.2% 22.2% 13.7% 11.6% 11.4% 17.8% 13.5% 24.4% FTE 149 FTE 149 119 30 16 54 35 27 17 76 54 19 % yearly average 5.8% % end of year 5.9% 5.5% 7.8% 20.3% 6.9% 4.5% 4.9% 4.8% 7.3% 4.5% 6.6% % yearly average Headcount1 % yearly average1 10.1% 249 9.5% % end of year Headcount1 % end of year1 9.7% 9.9% 8.7% 19.1% 10.6% 9.9% 6.0% 11.1% 8.1% 8.3% 22.2% 249 214 35 19 77 53 39 61 101 82 66 9.6% 9.8% 8.8% 23.5% 9.8% 6.7% 6.9% 16.7% 9.2% 6.8% 22.8% 2021 2020 2019 1.1 25.0 27.8 0.7 24.0 16.4 1.2 18.4 21.8 New employee hires (% of yearly average) New employee hires (% of end of year) Male Female <25 years 25–34 years 35–44 years 45–54 years 54+ years EMEA APAC Americas Employee turnover (% of yearly average) Employee turnover (% of end of year) Male Female <25 years 25–34 years 35–44 years 45–54 years 54+ years EMEA APAC Americas 1 Turnover data for 2020 is based on headcount. Occupational health and safety 1 Lost Time Injury Rate (LTIR)2 Severity Rate (IR) 3 Lost Time Workday Rate (LTWR)4 1 The data collection for occupational health and safety data is performed by calendar year. 2 Rate per 200’000 working hours for number of recordable incidents with lost time > 1 working day. 3 Number of lost days/incidents subject to registration with loss > 1 working day. 4 Rate per 200’000 working hours for total of lost workdays. 59 Sustainability ReportBurckhardt CompressionAnnual Report 2021GRI content index GRI standard Disclosure Page(s) Further information and omissions Burckhardt Compression Holding AG – GreenCo by CII Confederation of Indian Industry – AZW Winterthur, Board – CII Confederation of Indian Industry – EFRC - European Forum for Reciprocating Compressors – ICAAMC - Compressor Applications and Machinery Committee – Joint Chamber of Commerce Switzerland – CIS/Georgia – SWISSMEM - Schweizer Maschinen-, Elektro- und Metall-Industrie – Swiss Mechatronics – Swiss-American Chamber of Commerce – Swiss-Chinese Chamber of Commerce – Swiss-Indian Chamber of Commerce – Switzerland Global Enterprise GRI 101: Foundation 2016 GRI 102: General disclosures 2016 Organizational profile GRI 102: General disclosures 2016 102-1 Name of the organization 102-2 Activities, brands, products and services 102-3 Location of headquarters 102-4 Location of operations 102-5 Ownership and legal form 102-6 Markets served 102-7 Scale of the organization 102-8 Information on employees and other workers 102-9 Supply chain 102-10 Significant changes to the organization and its supply chain 94 94 94 116–117 94 7 6, 11, 15–17 58 40–41 100–101 102-11 Precautionary approach or principle 40–41 102-12 External initiatives 102-13 Membership of associations and interest groups – – Strategy GRI 102: General disclosures 2016 102-14 Statement from senior decision-maker 8–10 Ethics and integrity GRI 102: General disclosures 2016 Governance 102-16 Values, principles, standards and norms of behavior GRI 102: General disclosures 2016 102-18 Governance structure Stakeholder engagement GRI 102: General disclosures 2016 102-40 List of stakeholder groups 102-41 Collective bargaining agreements 102-42 Identification and selection of stakeholders 102-43 Approach to stakeholder engagement 102-44 Key topics and concerns raised 50 55–56, 66–79 56–57 50 56 39, 56–57 56–57 60 Sustainability ReportBurckhardt CompressionAnnual Report 2021GRI standard Disclosure Page(s) Further information and omissions Reporting practice GRI 102: General disclosures 2016 102-45 Entities included in the consolidated financial statements 102-46 Defining report content and topic boundaries 116–117 38–40 102-47 List of material topics 102-48 Restatements of information 102-49 Changes in reporting 102-50 Reporting period 102-51 Date of most recent report 102-52 Reporting cycle 102-53 Contact point for questions regarding the report 102-54 Claims of reporting in accordance with the GRI Standards 102-55 GRI content index 102-56 External assurance 39 – – – – – – 41 60–64 – – – 01.04.2021 – 31.03.2022 01.06.2021 Yearly sustainability@burckhardtcompression.com This report has not been externally verified. 61 Sustainability ReportBurckhardt CompressionAnnual Report 2021GRI standard Disclosure Page(s) Further information and omissions Material topics Greenhouse gas emissions and climate change GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 103-2 Management approach and its components 103-3 Evaluation of the management approach GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions 305-2 Energy indirect (Scope 2) GHG emissions 305-4 GHG emissions intensity Energy use and efficiency GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 41 41–42 42–43 42, 58 42, 58 42, 58 44 103-2 Management approach and its components 44–45 GRI 302: Energy 2016 302-1 Energy consumption within the organization 103-3 Evaluation of the management approach 302-3 Energy intensity Longevity and recyclability GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 103-2 Management approach and its components 103-3 Evaluation of the management approach Own indicators Reused or refurbished components Environmental impacts of application purpose GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 45 45, 58 45, 58 45–46 45–46 46–47 47 47 103-2 Management approach and its components 47–48 Own indicators Working conditions 103-3 Evaluation of the management approach Sustainability evaluation of business activities GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 103-2 Management approach and its components 103-3 Evaluation of the management approach GRI 401: Employment 2016 401-1 New employee hires and employee turnover Own indicators Occupational health and safety Score satisfaction work situation Score workplace recommendation GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 49 49 49 49–51 50–51 51, 59 50 50 51 103-2 Management approach and its components 51–52 103-3 Evaluation of the management approach 52–53, 59 62 Sustainability ReportBurckhardt CompressionAnnual Report 2021GRI standard Disclosure Page(s) Further information and omissions GRI 403: Occupational Health and Safety 2018 403-1 Occupational health and safety management system 403-2 Hazard identification, risk assessment, and incident investigation 403-3 Occupational health services 403-4 Worker participation, consultation, and communication on occupational health and safety 403-5 Worker training on occupational health and safety 403-6 Promotion of worker health 52 – – – 52 52 b. All employees who are under the care and control of Burckhardt Compression (including external employees on our premises) are covered. a. The EOHS team (Environment, Occupational Health and Safety team), under the direction of the Quality Team and Safety Officer, is respon- sible for conducting risk assessments using risk graphs. The risk assessment will be used for training and awareness activities in the respective work area. Safety inspections are used for risk mitigation. b. Notifications will be made using a dedicated EOHS notification form. c. A work stoppage procedure is in place to stop work in the event of an unsafe situation. d. There is a procedural policy for reporting near misses, incidents, investigations, nonconformi- ties, and corrective and preventive actions. There is a company ambulance service at the site in Winterthur, which is operated in conjunction with surrounding companies. A specific procedure for Consultation & Participa- tion, Communication regulates the involvement of employees. Involvement takes place at all levels (steering committee, core team, execution teams). In addition to mandatory training during induction, regular specific training is provided on work-related hazards, first aid, and emergency and evacuation. Non-occupational services and offerings depend on country-specific implementation and may include the following: – regular health check-ups – access to medical facilities – other preventive measures, for example as part of our Dr. BeWell program 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 40–41 This aspect is covered in our approach to due diligence. 403-8 Workers covered by an occupational health and safety management system 52 i. 100% are covered by an occupational health and safety management system. ii. 100% of employees are covered by an internally audited system. iii. 89.8% are covered by an externally certified system. 63 Sustainability ReportBurckhardt CompressionAnnual Report 2021GRI standard Disclosure Page(s) Further information and omissions Product safety GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 53 103-2 Management approach and its components 53–54 GRI 416: Customer Health and Safety 2016 103-3 Evaluation of the management approach 416-1 Assessment of the health and safety im- pacts of product and service categories 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services Business conduct GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundary 54 54 54 54 GRI 205: Anti-corruption 2016 GRI 206: Anti-competitive behavior 103-2 Management approach and its components 54–55 103-3 Evaluation of the management approach 205-3 Confirmed incidents of corruption and actions taken 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices 55 55 55 64 Sustainability ReportBurckhardt CompressionAnnual Report 2021SASB Mapping SASB SUSTAINABILITY DISCLOSURE TOPICS & ACCOUNTING METRICS Topic SASB Accounting Metric Code Reference Energy Management Employee Health & Safety Fuel Economy & Emissions in Use- phase Materials Sourcing Remanufacturing Design & Services SASB ACTIVITY METRICS (1) Total energy consumed, (2) percentage grid electricity, (3) percentage renewable RT-IG-130a.1 GRI 302-1 GRI 302-3 Page 58 (1) Total recordable incident rate (TRIR), (2) fatality rate, and (3) near miss frequency rate (NMFR) Sales-weighted fleet fuel efficien- cy for medium- and heavy-duty vehicles Sales-weighted fuel efficiency for non-road equipment Sales-weighted fuel efficiency for stationary generators Sales-weighted emissions of: (1) nitrogen oxides (NOx) and (2) par- ticulate matter (PM) for: (a) marine diesel engines, (b) locomotive diesel engines, (c) on-road medium- and heavy-duty engines, and (d) other non-road diesel engines Description of the management of risks associated with the use of critical materials Revenue from remanufactured products and remanufacturing services RT-IG-320a.1 GRI 403-1 to 8 Pages 53, 58 RT-IG-410a.1 n/a RT-IG-410a.2 RT-IG-410a.3 RT-IG-410a.4 n/a n/a n/a RT-IG-440a.1 Pages 41, 74 RT-IG-440b.1 Activity Metric Code Reference Further Information and omissions Number of units produced by prod- uct category RT-IG-000.A n/a This information is not communi- cated publicly for business reasons. Number of employees RT-IG-000.B GRI 102-8 Page 58 Further Information and omissions Percentage grid electricity is not evaluated separately until now. We are working on making this break- down available in the future. We do not yet track near miss frequency rate (NMFR). We are eval- uating the possibility of providing such information in the future. Not applicable to our products. The vast majority of Burckhardt Com- pression’s compressors are powered by electricity. We do not yet track revenue along this breakdown. We are evaluating the possibility of providing such information in the future. 65 Sustainability ReportBurckhardt CompressionAnnual Report 2021Corporate Governance Corporate Governance Burckhardt Compression is committed to responsible corporate governance. The com- pany adheres to the Directive on Information Relating to Corporate Governance (DCG) issued by SIX Swiss Exchange, where applica- ble to Burckhardt Compression, and the “Swiss Code of Best Practice for Corporate Governance” issued by economiesuisse. 66 Annual Report 2021 Burckhardt Compression Corporate Governance This report is structured in accordance with the DCG’s outline and number- ing. Unless otherwise noted, the information presented reflects the latest DCG’s version as of March 31, 2022. 1. GROUP STRUCTURE AND SHAREHOLDERS 1.1. Group structure 1.1.1. Management structure Burckhardt Compression is managed through a divisional organizational structure consisting of two divisions, the Systems Division (compressor manufacturing business) and the Services Division (compressor services and components). The management structure of the Burckhardt Compres- sion Group is given in the organizational chart below: Organigram (per March 31, 2022) CEO Marcel Pawlicek CHRO NN CFO Rolf Brändli President Systems Division Fabrice Billard President Services Division Rainer Dübi 1.1.2. Listed Group companies Burckhardt Compression Holding AG, a corporation organized under the laws of Switzerland with legal domicile in Winterthur, is the only listed Group company. Burckhardt Compression registered shares (BCHN) are listed on the SIX Swiss Exchange in Zurich (ISIN: CH0025536027; securi- ty number 002553602). Its market capitalization as per March 31, 2022 amounted to CHF 1’662’600’000. 1.1.3. Unlisted Group companies Information on the unlisted companies included in the scope of consolida- tion of Burckhardt Compression Holding AG is given in the financial report on page 124, Note 102, “Subsidiaries”. With the exception of Burckhardt Compression Holding AG, none of the companies included in the scope of consolidation hold any BCHN shares. 1.2. Significant shareholders According to information available to the company from the disclosure notifications of the SIX Swiss Exchange AG, the shareholders listed in the following table reported shareholdings of at least 3% of the voting rights as per March 31, 2022. In accordance with the company’s Bylaws, the voting rights of NN Group N.V. are limited to 5.0% of the total number of BCHN registered shares recorded in the share register: Name Country of shares in % MBO Aktionärsgruppe (Valentin Vogt, Daniela Vogt, Harry Otz, Leonhard Keller, Martin Heller, Ursula Heller, Marcel Pawlicek) NN Group N.V. UBS Fund Management (Switzerland) AG BlackRock, Inc. CH NL CH US 12.4 9.86 5.02 3.07 More detailed information on the disclosure notifications is available on the website of the SIX Swiss Exchange’s Disclosure Office: (https://www.ser-ag.com/en/resources/notifications-market-participants/ significant-shareholders.html#/). 1.3. Cross-shareholdings Burckhardt Compression Holding AG has no cross-shareholdings with any other company or group of companies. 2. CAPITAL STRUCTURE 2.1. Capital The issued share capital of Burckhardt Compression Holding AG amounts to CHF 8’500’000, comprising 3’400’000 fully paid registered shares with a nominal value of CHF 2.50 each. 67 Annual Report 2021 Burckhardt Compression Individual persons who have not expressly declared in their registration ap- plication that they hold the shares for their own account (nominees) will be entered in the Share Register with voting rights if the nominee concerned provides proof that he is subject to supervision by an accredited bank and financial market regulator and if he has concluded an agreement with the Board of Directors concerning his status. Nominees holding up to 2% of the issued shares will be entered in the Share Register with voting rights without having to sign an agreement with the Board of Directors. Nomi- nees holding more than 2% of the issued shares will be entered in the Share Register with 2% voting rights and, for the remaining shares, without vot- ing rights. Above this 2% cap, the Board of Directors may have nominees entered in the Share Register with voting rights if they disclose the names, the addresses, the nationalities, and the shareholdings of the persons for whom they hold more than 2% of the issued share capital. 2.7. Convertible bonds and options The company does not have any outstanding convertible bonds and has not issued any option rights. Corporate Governance 2.2. Details on authorized and conditional capital The company does not have any authorized or conditional capital. 2.3. Changes in capital There has been no movement in share capital since the IPO in June 2006. Shares and participation certificates 2.4. Voting rights may only be exercised after the shareholder has been regis- tered in the Share Register. All shares are entitled to full dividend rights. Voting rights per shareholder are restricted to 5% of the total number of the registered shares recorded in the commercial register. This does not apply to shareholders who were in possession of more than 5% of the shares of Burckhardt Compression Holding AG before the Initial Public Offering (IPO). The voting rights of treasury shares – held by Burckhardt Compression Holding AG – will be suspended. The company has not issued any participation certificates. Dividend-right certificates 2.5. The company has not issued any dividend-right certificates. 2.6. Limitations on transferability and nominee registrations No person or entity will be registered as a shareholder in the Share Regis- ter for more than 5% of the issued share capital. This entry restriction is also applicable to persons whose shares are held, in whole or in part, by nominees. This restriction is also valid if shares are acquired through the exercise of subscription, option, or conversion rights, with the exception of shares acquired through inheritance, division of an estate or marital prop- erty law. Legal entities and partnerships associated with each other by uni- formly managed capital or votes or in any other way, as well as private and legal entities or partnerships which form an association to evade registra- tion restrictions, are regarded as one person. 68 Annual Report 2021 Burckhardt Compression Corporate Governance 3. BOARD OF DIRECTORS 3.1. Members and 3.2. Other activities and interests The Bylaws stipulate that the Board of Directors consists of a minimum of three and a maximum of seven members. Since the Annual Shareholder Meeting 2021, all members are non-executive and independent members of the Board of Directors in the context of the Swiss Code of Best Practice for Corporate Governance from economiesuisse. The composition of the Board of Directors is as follows: Name Nationality Function First elected Term expires Ton Büchner Urs Leinhäuser Dr. Monika Krüsi Dr. Stephan Bross David Dean CH/NL CH CH/IT DE CH Chairman, non-executive; Chairman SSC Member, non-executive; member AC Member, non-executive; member SSC, Chair NCC Member, non-executive; member NCC Member, non-executive; Chairman AC 2020 2007 2012 2014 2019 2022 2022 2022 2022 2022 AC = Audit Committee NCC = Nomination and Compensation Committee SSC = Strategy and Sustainability Committee No Board member has served as a member of the Executive Management of a Burckhardt Compression Group company. None of the directors have material business relationships with a Burckhardt Compression Group company. The competencies of the Board members are depicted in the following ma- trix: Executive competence (>200 FTEs) Strategic competence Competence in non-European cultures Supply chain competence Competence in BC markets Technological competencies Financial competencies M&A competence Board-level competencies CEO coaching competencies Ton Büchner Urs Leinhäuser Monika Krüsi Stephan Bross David Dean • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • The company’s General Counsel, who serves as Secretary to the Board of Directors, has a degree in law (Dr. iur.). Biographical details and information on other activities and commitments of the individual members of the Board of Directors are given below: 69 Annual Report 2021 Burckhardt Compression Corporate Governance TON BÜCHNER (1965) Independent Board Member since 2020 URS LEINHÄUSER (1959) Independent Board Member since 2007 DR. MONIKA KRÜSI (1962) Independent Board Member since 2012 Education Master of Business Administration, IMD Business School, Switzerland Master of Science in civil engineering, Delft University of Technology, Netherlands Professional background 2012–2017 Chairman of the Executive Manage- ment and CEO, AkzoNobel NV, Netherlands 2007–2011 CEO, Sulzer AG, Switzerland 2000–2002 President, Sulzer Turbomachinery Services, Switzerland 1994–2000 various management positions, Sulzer AG, Switzerland Duties and responsibilities as a director of Burckhardt Compression Holding AG – Chairman of the Board of Directors – Chairman of the Strategy and Sustainability Committee Other activities and commitments – Member of the Board of Directors, Novartis, Switzerland – Chairman of the Board of Directors, Swiss Prime Site AG, Switzerland – Advisor, Ammega, Switzerland Education PhD. in Business Informatics, MBA University of Zurich, Switzerland Professional background Since 2003 Partner, MKP Consulting AG, Switzerland 2001–2003 Partner, Venture Incubator Partners AG, Switzerland 1991–2001 Associated Partner, McKinsey & Co., Inc., Switzerland 1986–1990 Credit Suisse, Switzerland Duties and responsibilities as a director of Burckhardt Compression Holding AG – Member of the Board of Directors – Chair of the Nomination and Compensation Committee – Member of the Strategy and Sustainability Committee Other activities and commitments – Chair of the Board of Directors, Repower AG, Switzerland – Chair of the Board of Directors of Oskar Ruegg AG, Schweiz – Board member, 360°, Switzerland – Board member, Otto Suhner AG, Switzerland – Board member, BGRB Holding AG, Switzerland Education Degree in Business Administration, University of Applied Sciences, Zurich, Switzerland IMD Lausanne (SSE) Professional background Since 2016 Managing Partner ADULCO GmbH, Switzerland 2014–2016 Self-employed, Switzerland 2011–2014 CFO and Deputy CEO, Member of Executive Management, Autoneum Holding AG, Switzerland 2003–2011 CFO and Head Corporate Center, Member of Group Executive Committee, Rieter Holding AG, Switzerland 1999–2003 CFO, Member of Group Executive Committee, Mövenpick Holding, Switzerland 1997–1999 CFO, Piping Systems Division, Georg Fischer AG, Switzerland 1995–1997 Head of Corporate Controlling, Georg Fischer AG, Switzerland 1992 Managing Director, Cerberus, Denmark 1988–1994 Group Controller, Cerberus AG, Switzerland 1986–1988 Deputy Head, Tax Consultancy De- partment, Refidar Moore Stephens, Switzerland 1983–1986 Tax Inspector, Cantonal Tax Department SH, Switzerland Duties and responsibilities as a director of Burckhardt Compression Holding AG – Member of the Board of Directors – Member of the Audit Committee Other activities and commitments – Chairman of the Board of Directors, Avesco AG, Switzerland – Board member, Ammann Group Holding AG, Switzerland – Board member, Liechtensteinische Landesbank AG, Liechtenstein – Board member, VAT Group AG, Switzerland – Board member, PENSADOR Partner AG, Switzerland 70 Annual Report 2021 Burckhardt Compression Corporate Governance DR. STEPHAN BROSS (1962) Independent Board Member since 2014 DAVID DEAN (1959) Independent Board Member since 2019 Education Engineering degree, University of Braunschweig, Germany Professional background Since 2018 Executive Management member (CTO), KSB SE & Co. KGaA, Germany 2017 Executive Management member, Technology, KSB AG, Germany 2014–2017 Senior Vice President, Pumps, KSB AG, Germany 2007–2013 Senior Vice President, Service, KSB AG, Germany 2002–2007 Head Product Management and Development Engineered Pumps, KSB AG, Germany 1997–2001 Head Development and Servic- es Fluid Flow Technical Systems, KSB AG, Germany 1996–1997 Head of Fluid Mechanics Research, KSB AG, Germany 1993–1996 R&D Engineer, KSB AG, Germany Duties and responsibilities as a director of Burckhardt Compression Holding AG – Member of the Board of Directors – Member of the Nomination and Compensation Committee Education Swiss certified expert for accounting and controlling Swiss certified accountant Completed executive education programs at Harvard Business School, Boston, USA, and at the IMD, Lausanne, Switzerland Professional background Since 2019 Self-employed, Switzerland 2004–2019 CEO, Bossard Group, Switzerland 1998–2004 CFO, Bossard Group, Switzerland 1993–1998 Deputy CFO and Corporate Controller, Bossard Group, Switzerland Duties and responsibilities as a director of Burckhardt Compression Holding AG – Member of the Board of Directors – Chairman of the Audit Committee Other activities and commitments – Board member, Bossard Group, Switzerland – Board member, Komax Group, Switzerland – Board member, Brugg Group, Switzerland – Chairman of the Board of Directors, Haag-Streit Group, Switzerland (a division of Metall Zug Group) 71 Annual Report 2021 Burckhardt Compression Corporate Governance Independence of the Board of Directors All members are non-executive and independent members of the Board of Directors in the context of the Swiss Code of Best Practice for Corporate Governance from economiesuisse. Non-executive members of the Board of Directors are considered independent if they have never, or not within the last three years, worked for Burckhardt Compression, and have no or only relatively small business relationships with the company. 3.3. Rules in the Bylaws concerning the number of permitted activities Members of the Board of Directors may not hold more than ten (10) addi- tional board memberships, of which not more than four (4) in listed com- panies. 3.4. Election and term of office Each member of the Board of Directors, the Board Chairman, and each member of the Nomination and Compensation Committee are elected an- nually by the Annual General Meeting. The members of the Board of Direc- tors shall be automatically retired from the Board of Directors in the year in which they reach the age of 70. 3.5. Internal organization and structure The Board of Directors has the final responsibility for the business strategy and the management of the Burckhardt Compression Group. It has final authority and defines the guidelines regarding strategy, organization, fi- nancial planning, and accounting for the Burckhardt Compression Group. The Board of Directors has delegated executive management responsibili- ty to the CEO of Burckhardt Compression Group. The Board of Directors ap- points a secretary for the Board and for the company. The Secretary does not need to be a member of the Board. This role is currently assigned to the company’s General Counsel. The Board of Directors meets as often as business requires, but at least four times per year. In fiscal year 2021, the Board of Directors and Board committees convened the following meetings (see table below). The Board of Directors has a quorum when the majority of the members are present. Decisions are passed by a simple majority. In the event of a tie, the Chairman has the casting vote. The CEO, the two Presidents of the Systems and Services Divisions, the CFO, the CHRO and the General Counsel, in his role as secretary, are regularly invited to attend Board meetings to report on developments in their respective business areas. The Board of Directors has set up the following committees: Audit Committee The Audit Committee advises and supports the Board in all matters related to external and internal audits, risk management, accounting policies and practices and compliance with accounting standards issued. The CEO, the CFO, the head of the internal audit unit and representatives of the external auditors also participated in the Audit Committee’s ordinary meetings. The members are David Dean (Chair) and Urs Leinhäuser. Meeting Governing body Duration Ton Büchner Urs Leinhäuser Monika Krüsi Stephan Bross David Dean 04/19/2021, meeting of 05/26/2021, meeting of 05/26/2021, meeting of 05/27/2021, meeting of 08/03/2021, meeting of 08/09/2021, meeting of 08/26/2021, meeting of 08/30/2021, meeting of 08/31/2021, meeting of 09/17/2021, meeting of 10/26/2021, meeting of 10/26/2021, meeting of 10/27/2021, meeting of 12/10/2021, meeting of 01/20/2022, meeting of 02/22/2022, meeting of 03/09/2022, meeting of SCC NCC AC BOD BOD AC AC SCC BOD NCC NCC AC BOD BOD NCC NCC BOD 9.5 hours 3.5 hours 4 hours 7 hours 6 hours 1.5 hours 2 hours 7 hours 5.5 hours 6 hours 3 hours 3 hours 6.5 hours 6.5 hours 4.5 hours 6 hours 5 hours • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • BOD = Board of Directors | AC = Audit Committee | NCC = Nomination and Compensation Committee | SSC= Strategy and Sustainability Committee 72 Annual Report 2021 Burckhardt Compression Corporate Governance Nomination and Compensation Committee This committee advises and assists the Board of Directors on appointing, assessing and dismissing members of the Executive Management, and draws up proposals for the appointment or dismissal of members of the Board of Directors. Furthermore, the Nomination and Compensation Com- mittee advises and assists the Board of Directors on questions relating to the compensation of the directors and the Executive Management mem- bers. The CEO and the CHRO also attend the ordinary meetings of the NCC. The members are Dr. Monika Krüsi (Chair) and Dr. Stephan Bross. Strategy and Sustainability Committee The Strategy and Sustainability Committee supports the CEO in develop- ing corporate strategy, advises the Board of Directors on strategic matters such as acquisitions and divestments and ensures that sustainability (and social responsibility) is an integral part of the company strategy. It evalu- ates the implementation of company strategy on a regular basis and sub- mits proposals to the Board of Directors if adjustments or other measures are deemed necessary. The members are Ton Büchner (Chair) and Dr. Mon- ika Krüsi. In addition, the Strategy Committee organizes and prepares the annual strategy day in collaboration with the CEO. 3.6. Definition of areas of responsibility The Board of Directors has delegated the executive management of the company and the Group to the CEO of Burckhardt Compression Group, with the exception of the following matters: – Definition of the Group’s business policies and strategy – Definition of the top-level organizational structure of the Group – Approval of the periodic forecasts, the annual report and of reporting and accounting policies – Ensuring adequate internal control systems based on the recommenda- tions of the Audit Committee – Determination of the appropriate capital structure – Appointment and dismissal of members to and from the Executive Management, as well as compensation of the Executive Management – Decisions on new subsidiaries, major capital expenditure projects, acquisitions, financing transactions, the insurance concept and the provision of guarantees if such decisions exceed the powers conferred on the CEO. The powers of the Executive Management and of the Group company executives are listed in detail in the organization regulation (https://www. burckhardtcompression.com/investors/corporate-governance). 3.7. Information and control instruments vis-a-vis the executive committee Financial reporting and planning order intake, the income statement, bal- ance sheet, liquidity planning and cash flow, headcount, personnel costs and capital expenditure are consolidated and annotated on a monthly ba- sis. A rolling forecast of Group results for the current and coming fiscal years is also prepared and annotated four times a year (April, July, October and January). Targets for the coming fiscal year are determined based on the January forecast. The financial report and the forecasts are distributed to the members of the Executive Board and all members of the Board of Directors. At every meeting of the Management of Directors, the members of the Executive Management report on the course of business and on all issues of relevance to the Group. Internal Group Audit and internal control system (ICS) The internal audit reports to the Chairman of the Audit Committee of the Board of Directors. Management responsibility for the unit has been dele- gated to the Head of Group Controlling, who is also responsible for plan- ning and conducting the audits. The CFO is responsible for coordination be- tween the Audit Committee and the head of the Internal Group Audit. The Internal Group Audit team consists of qualified staff from the Finance and Controlling departments of Burckhardt Compression AG and several se- lected financial specialists from the Group’s subsidiaries. Qualified subject matter experts from other fields (e.g. IT, Legal or Human Resources) may be consulted, depending on the auditing assignment. These employees perform the internal audit duties assigned to them in addition to their regu- lar duties and in this additional capacity they report directly to the Head of Internal Group Audit, who in turn reports in this function directly to Chair- man of the Board of Directors’ Audit Committee. This efficient organization is tailored to the needs and size of the Burckhardt Compression Group and fosters an active exchange of information and best practices with the ob- jective of creating sustained added value for the Burckhardt Compression Group by means of continual process improvement. The internal auditors undergo regular training for the performance of their tasks. The training received is coordinated by the head of the internal Group audit. The sched- ule for internal audits is determined by the Audit Committee of the Board of Directors on an annual basis and may be changed or expanded by the Audit Committee as and when required. Eleven internal audits were carried out in fiscal year 2021. The internal auditors’ reports were distributed to the management of the audited company, the members of the Audit Commit- tee of the Board of Directors, the Executive Management members and to the external company auditors. The statutory auditor assesses the effec- tiveness of the internal control system (ICS) in a written report submitted to the Audit Committee and the Board of Directors once a year. 73 Annual Report 2021 Burckhardt Compression Corporate Governance Risk management Burckhardt Compression has an integrated risk management policy. In a two-stage process, key risks are identified using an anticipatory approach and grouped under one of three risk categories – strategic, financial or operational – that have been defined by the Board of Directors. The risks are then evaluated, managed and stringently monitored, avoided, mitigat- ed or transferred to third parties through appropriate risk management measures. The first stage of risk management consists of a continuous risk management process, in which the divisions and larger companies at Burckhardt Compression Group systematically identify and assess the risks in a regular rhythm, define the necessary risk mitigation measures together with the responsible persons, and set and monitor deadlines for implementation. Internal and external factors are included in the evalua- tion of potential risks. The second stage of the risk management process consists of a pe- riodic risk management review that takes place twice a year at the meet- ings of the Board of Directors’ Audit Committee. To this end, the Executive Management prepares an overview of the main risks faced by Burckhardt Compression Group and an assessment of the likelihood of these risks oc- curring and the effects they would have. This overview is presented to the Audit Committee together with the risk mitigation measures, the people responsible for implementing them, and an implementation timetable. The Audit Committee then reports to the Board of Directors about the find- ings of the risk management review. Compliance Burckhardt Compression has a group-wide compliance focusing on com- pliance with legal and internal regulations which include also the Code of Conduct and the Burckhardt Compression Values and Behaviors. The Com- pliance program has a three-pillar framework: – prevention (through policies and trainings), – early detection (though different grievance channels) and – response (different actions on compliance breaches and fine tuning of policies). The updated Code of Conduct was launched in 2021 and conveyed to all employees accompanied by e-trainings. A grievance channel was intro- duced to all employees and business partners. Also, data protection is an important topic taken very seriously at Burckhardt Compression. In 2021, the Data Protection Officer has continued to prioritize and focus on the implementation of the EU’s General Data Protection Regulation (GDPR) requirements within Burckhardt Compression’s projects, processes, and documentation. For many years Burckhardt Compression has also been investing in IT Security to ensure technical resilience to cyber-attacks. In 2021, the focus of the work was on strengthening the safety awareness of all employees. In addition, Burckhardt Compressions has reviewed the IT Security assessment to identify and protect the most relevant assets (Crown Jewels). 3.9. Self-evaluation of the Board of Directors In fiscal year 2021, the Board of Directors conducted a self-evaluation look- ing at the work of the Board of Directors and its individual committees. The evaluation process covered purpose, scope, composition and responsibili- ties and was done as an internal evaluation only. Each of the Board mem- bers completed a questionnaire and the detailed findings were presented back to the Board. Improvement measures were defined and will be regu- larly reviewed. 74 Annual Report 2021 Burckhardt Compression Corporate Governance 4. EXECUTIVE MANAGEMENT 4.1. Members of the Executive Management and 4.2. Other activities and commitments Name Nationality Function Marcel Pawlicek Rolf Brändli Sandra Pitt Fabrice Billard Rainer Dübi *until March 31, 2022 **until March 31, 2022 ***until December 31, 2021 CH CH DE/CH FR/CH CH CEO* CFO CHRO*** President Systems Division** President Services Division Biographical details and information on other activities and commitments of the members of the Executive Management: 75 Annual Report 2021 Burckhardt Compression Corporate Governance MARCEL PAWLICEK (1963) ROLF BRÄNDLI (1968) SANDRA PITT (1971) Education Degree in Business Administration, HWV Zurich, Switzerland Professional background Since 2008 CFO, Burckhardt Compression Group, Switzerland 2001–2008 Head of Finance & Administration, Sulzer Brasil S.A., Brazil; Regional Controller, Sulzer Pumps South America & South Africa 1997–2001 Regional Controller Asia/Pacific, Sulzer International Ltd.; General Manager, Sulzer Hong Kong Ltd., Hong Kong, SAR China 1994–1997 Management Consultant, OBT Treuhand AG Zurich, Switzerland Education Bachelor in Business Administration/Business Informatics, Germany, MBA International Finance/International HR, American University Washington, USA Professional background 2015– December 31, 2021 CHRO, Burckhardt Compression Group, Switzerland 2013–2015 Head Corporate HR, AFG Management AG, Switzerland 2012–2013 Head of HR Central Europe, Holcim (Schweiz) AG, Switzerland 2010–2012 Head of HR, Holcim (Schweiz) AG, Switzerland 2007–2009 Head of HR, BASF Group Switzerland, BASF Schweiz AG, Switzerland 2006–2007 HR Specialist Region Europe, BASF AG, Germany 2003–2006 Internal Consultant Performance Management, BASF AG, Germany 2002–2003 HR Coordinator Europe, BASF AG, Germany Education Degree in Mechanical Engineering, HTL Winterthur, Switzerland, MBA Marketing and International Business, Fordham University, New York, USA Professional background 2011– March 31, 2022 CEO, Burckhardt Compression Group, Switzerland 2008–2011 Head of Design & Manufacturing, Burckhardt Compression AG, Switzerland 2001 – 2008 Head of CSS, Burckhardt Compression AG, Switzerland 1999–2001 Head Sales and Contracting HPI, Sulzer-Burckhardt AG, Switzerland 1989–1999 Project Manager and Marketing & Sales Manager for Burckhardt compressors, Sulzer Inc., USA 1986–1989 Design Engineer, Sulzer-Burckhardt AG, Switzerland Other activities and commitments – President of the Swiss-CIS/ Georgia Chamber of Commerce – Vice President of AZW Winterthur, Switzerland – Member of the Board, Switzerland-Global Enterprise 76 Annual Report 2021 Burckhardt Compression Corporate Governance FABRICE BILLARD (1970) RAINER DÜBI (1969) Education Master of Science in Aeronautics and Aerospace Engineering, Ecole Centrale Paris, France Education Degree in Mechanical Engineering, HTL Winterthur, MASBA School of Management, Switzerland Professional background Since April 1, 2022 CEO Burckhardt Compression Group, Switzerland 2016–2022 President Systems Division, Burckhardt Compression Group, Switzerland 2015–2016 Chief Strategy Officer, Sulzer, Switzerland 2012–2015 Head Business Unit Mass Transfer Technology, Sulzer Chemtech, Switzerland/ Singapore 2010–2012 Head Europe, Middle East, India, Russia & Africa Business Unit, Mass Transfer Technology, Sulzer Chemtech, Switzerland 2008–2010 Vice President Business Development, Sulzer Chemtech, Switzerland 2005–2008 Head Global Customer Services, Sulzer Pumps, Switzerland 2004–2005 Strategic Development Manager, Sulzer Corporate, Switzerland 1999–2004 Principal, The Boston Consulting Group, Switzerland/France Professional background Since 2019 President Services Division, Burckhardt Compression Group, Switzerland 2012–2019 Head of Design & Manufacturing, Burckhardt Compression AG, Switzerland 2010–2012 Senior Sales Manager, Burckhardt Compression AG, Switzerland 2007–2010 Manager Sizing, Burckhardt Compression AG, Switzerland 2003–2007 Sizing Project Engineer, Burckhardt Compression AG, Switzerland 2001–2003 Commissioning Lead Engineer, Alstom, Switzerland 1999–2001 Commissioning Engineer, ABB, Switzerland 77 Annual Report 2021 Burckhardt Compression Corporate Governance Changes in the Management On November 23, 2021 Burckhardt Compression announced that Fabrice Billard will become the new CEO of Burckhardt Compression as of April 1, 2022. On February 3, 2022 Burckhardt Compression appointed Vanessa Valentin as new CHRO and member of the Executive Management. She will join Burckhardt Compression on June 1st, 2022 to succeed Sandra Pitt, who left the company at the end of December 2021. 4.3. Rules in the Bylaws concerning the number of permitted activities Members of the Executive Management may not hold more than five (5) ad- ditional board memberships, of which not more than two (2) additional may be in listed companies. 4.4. Management contracts There are no management contracts with third parties. 5. COMPENSATION, SHAREHOLDINGS AND LOANS The principles and elements of compensation paid to members of the Board of Directors and the Executive Management as well as the authority and the mechanisms used to determine such compensation are explained in the Compensation Report on pages 80 to 87. The shareholdings of the members of the Board of Directors and the Executive Management in Burckhardt Compression Holding AG are listed in the Compensation Report on pages 80 to 87 and in the financial state- ments, note 103, “Share capital and shareholders” on page 124. Burckhardt Compression Group did not grant any loans, credit or collateral to any of the members of the Board of Directors or the Execu- tive Management in fiscal year 2021 and there are no arrangements of this nature outstanding. 6. SHAREHOLDERS’ PARTICIPATION RIGHTS 6.1. Voting rights restrictions and representation of voting rights No person or entity will be registered as a shareholder in the Share Register for more than 5% of the issued share capital. This entry restriction is also applicable to persons whose shares are held, in whole or in part, by nomi- nees. This restriction is also valid if shares are acquired through the exer- cise of subscription, option, or conversion rights. This restriction on voting rights does not apply to shareholders who were in possession of more than 5% of the shares of Burckhardt Compression Holding AG before the IPO. There is no provision for measures to remove restrictions. A shareholder may be represented at the Annual General Meeting by the independent proxy holder or by another person with legal capacity. All shares held by a shareholder can only be represented by one person. 78 Annual Report 2021 Burckhardt Compression 6.2. Statutory quorums A majority of at least two-thirds of the voting rights represented is required for changes to the company’s Bylaws. 6.3 . Convocation of the General Meeting of Shareholders None of the applicable rules deviate from the law. 6.4. Inclusion of items on the agenda Shareholders who together represent at least 10% of the share capital can ask for an item to be included on the agenda of the General Meeting. The Board of Directors must receive written proposals for items to be included on the agenda, specifying the issue to be discussed and the shareholders’ proposals, at the latest 40 days before the date of the General Meeting. 6.5. Entries in the Share Register The record date for registered shareholders to be entered in the Share Reg- ister prior to an Annual General Meeting will be stated in the invitation to the Annual General Meeting. 7. CHANGES OF CONTROL AND DEFENSIVE MEASURES Obligation to make an offer 7.1. Once a shareholder acquires 33⅓% of share capital and voting rights, he/ she will be under an obligation to submit a public tender offer. The Bylaws contain neither an opting-out nor an opting-up clause. 7.2. Clauses on change of control There are no provisions for special severance payments for members of the Board of Directors or members of the Executive Management in the event of a change of control over Burckhardt Compression Holding AG. 8. AUDITORS 8.1. Duration of mandate and term of office of the auditor in charge PricewaterhouseCoopers AG (PwC) has been the statutory auditor of Burckhardt Compression Holding AG since 2002 and is also in charge of the audit of the consolidated financial statements. The statutory auditor is elected by the General Meeting of Shareholders for one year at a time. Burckhardt Compression plans to tender its external audit contracts at least every 10 years and examine all bids received. The most recent invi- tation to tender was issued during the fiscal year 2012. PwC was awarded the contract in March 2013 and was re-elected as statutory auditor by the General Meeting of Shareholders in June 2013. The auditor in charge will be changed after a maximum period of seven years. Sandra Böhm Uglow has served as auditor in charge since the 2020 reporting period. Corporate Governance 8.2. Auditor’s fees Total fees for auditing services provided by PwC worldwide during fiscal year 2021 amounted to TCHF 372 (previous year: TCHF 354). Details of these dates, possible changes, the company profile, current share prices, presentations, and contact addresses can be found at www. burckhardtcompression.com, where interested parties can also subscribe to the email distribution list. 10. QUIET PERIODS No Board member, member of the Executive Management or other employ- ee of Burckhardt Compression specifically notified by the CFO may trade with Burckhardt Compression shares listed in stock exchange during the period starting from April 1 and October 1 respectively and ending with the close of the first trading day after Burckhardt Compressions’ public release of the relevant annual or half-year report. Besides these recurring lock-out periods, in 2021 there was one specific lock-out period from November 4, 2021 to December 6, 2021 during an acquisition. 8.3. Additional fees The additional fees for services provided by PwC worldwide during fiscal year 2021 are in the amount of TCHF 110 (previous year: TCHF 78). Addition- al services rendered by PwC outside the audit mandate in the previous year are compatible with the audit assignment. 8.4. Information tools of the external auditors The Audit Committee assists the Board of Directors in monitoring the Com- pany’s accounting and financial reporting. It assesses the internal control procedures, the management of business risks, the audit plan and scope, the conduct of the audits and their results. The Audit Committee also re- views the auditor’s fees. The statutory auditor is present during the exam- ination of the consolidated annual and semi-annual financial statements. Once a year, the members of the Audit Committee receive from the statu- tory auditor a summary of the audit findings and suggested improvements. The Audit Committee held four meetings during the 2021 reporting period. The auditor in charge and another representative of the auditor took part in these meetings. INFORMATION POLICY 9. General Burckhardt Compression Holding AG reports order intake, sales, operating results, balance sheet, cash flow, and changes in shareholders’ equity on a semi-annual basis, together with comments on the trend of business and the outlook for the future. Burckhardt Compression Holding AG provides price-sensitive information in accordance with the ad hoc dis- closure requirements set out in the Listing Rules of the SIX Swiss Exchange. Burckhardt Compression Holding AG will send potentially price-sensitive information to all interested parties via an email distribution list. Financial reports are available on our website (www.burckhardtcompression.com) and will be delivered to interested parties on request. Key dates for 2022 and 2023 July 1, 2022 Annual General Meeting November 1, 2022 Results for the first half of 2022 (closing September 30, 2022) June 6, 2023 2022 Annual Report (closing March 31, 2023) July 1, 2023 Annual General Meeting 79 Annual Report 2021 Burckhardt Compression Compensation Report Compensation Report This Compensation Report describes the policies and system in place for the compensa- tion of the Board of Directors and the Execu - tive Management of Burckhardt Compression, together with information on their annual compensation and shareholdings. 80 Annual Report 2021 Burckhardt Compression Compensation Report 1. BASIS This Compensation Report describes the policies and system in place for the compensation of the Board of Directors and the Executive Management of Burckhardt Compression, together with information on their annual compensation. This report was prepared in accordance with the provisions of the Swiss Federal Ordinance Against Excessive Compensation in Listed Companies (OAEC), the Directive on Information relating to Corporate Gov- ernance (DCG) issued by the SIX Swiss Exchange, and the Bylaws of Burck- hardt Compression Holding AG. The Annual General Meeting of Burckhardt Compression Holding AG casts the following votes in relation to the compensation of the Board of Direc- tors and Executive Management: – a prospective vote on the maximum aggregate amount of fixed compen- sation for the Board of Directors and the Executive Management for the fiscal year following the Annual General Meeting – a retrospective vote on the maximum aggregate amount of variable compensation for the Executive Management for the fiscal year preced- ing the Annual General Meeting. 2. COMPENSATION POLICY Burckhardt Compression has established a transparent and long-term-ori- ented compensation system. The objectives pursued with this system are to ensure that the compensation of the Board of Directors and the com- pany executives is market-competitive and to achieve a good balance between the interests of the shareholders, the directors, and executive management. Market-competitive pay is a basic prerequisite for attracting well-qualified directors and executives and ensuring that they remain with the company in the long run. 3. ORGANIZATION, DUTIES AND POWERS The Nomination and Compensation Committee (NCC) is comprised of at least two members of the Board of Directors. The members of the NCC are elected individually and annually by the Annual General Meeting and their term of office shall expire at the end of the next Annual General Meeting. The Annual General Meeting of July 2, 2021 elected Dr. Monika Krüsi and Dr. Stephan Bross to the Nomination and Compensation Committee. The Board of Directors appointed Dr. Monika Krüsi Chair of the Nomination and Compensation Committee. The NCC meets at least twice a year. The CEO and CHRO attend these meetings in an advisory capacity, except during deliberation on meeting topics that pertain to themselves. The Nomination and Compensation Committee held five meetings during the year under review. The duties and powers of the NCC are set forth in the company’s By- laws and Organizational Regulations (www.burckhardtcompression.com/ corporate-governance). The NCC supports the Board of Directors in the performance of its duties pertaining to the compensation and personnel policies of the company and the entire Group as prescribed by law or the company’s Bylaws. The most important duties and powers of the NCC with regard to compensation are given in the table below. Furthermore, the Annual General Meeting casts a consultative vote on the Compensation Report. Proposal/ recommendation by Approval authority Topic Compensation principles and guidelines Compensation Report Compensation of Board of Directors Compensation of Executive Management Loans to members of the Executive Management NCC NCC NCC NCC CEO BOD BOD BOD BOD NCC BOD = Board of Directors | NCC = Nomination and Compensation Committee 4. COMPENSATION SYSTEM Burckhardt Compression Group’s compensation system consists of a mix of fixed and variable components. In accordance with the Bylaws of Burckhardt Compression Holding AG, variable compensation can be paid in whole or part in the form of shares, conditional rights to receive shares, or in comparable instruments of the company. 4.1. Compensation system for the Board of Directors Compensation for the Board of Directors consists of a fixed component, 80% of which is paid in cash, 20% in shares; a fixed cash supplement for directors who serve on a formal Board committee; and a fixed lump-sum for expenses. The number of shares awarded is based on the average share price (daily closing price on the SIX exchange) for the period between the announcement of the full-year results and the Annual General Meeting. The fixed component amounts to CHF 81’000 for members of the Board of Directors and to CHF 184’000 per year for the Chairman of the Board of Directors. The fixed cash supplement for directors serving on a formal Board committee is CHF 10’000 a year. The lump sum for expenses is CHF 4’000 for members of the Board of Directors and CHF 6’000 per year for the Chairman of the Board of Directors. 81 Annual Report 2021 Burckhardt Compression Compensation Report 4.2. Compensation system for the Executive Management Compensation of the Executive Management consists of three compo- nents: – a fixed base salary – a variable performance- and profit-related annual bonus paid in cash – a variable performance- and profit-related long-term incentive bonus awarded in the form of free shares. Base salary The functions performed by members of the Executive Management are assigned to so-called Global Grades as defined by a global functional grad- ing system (Willis Towers Watson Global Grading System). Market data for each Global Grade based on Willis Towers Watson’s Global 50 Remunera- tion Planning Report and the results of annual executive performance ap- praisals are taken into consideration when determining the base salary of the members of the Executive Management. Annual Bonus The members of the Executive Management receive a variable perfor- mance- and profit-related bonus in addition to their base salaries. A new annual bonus plan for the Executive Management went into effect in fiscal year 2020. The annual bonus is calculated from the net income of Burckhardt Compression Group – if a minimum financial threshold of 4% return on sales at the net profit level is achieved – and a percentage rate determined by the Global Grade. The percentage rate applied for the CEO is 0.28%. The percentage rate for other members of the Executive Manage- ment – depending on their Global Grade – ranges from 0.12% to 0.16%. The annual bonus is limited to 50% of base salary. Long-term incentive pay Members of the Executive Management additionally receive long-term incentive pay awarded in the form of free shares. The long-term bonus program is valid for a six-year period (fiscal years 2017–2022). Long-term incentive pay is based on the attainment of the Mid-Range Plan targets for organic growth (sales) and net income of Burckhardt Compression Group for the fiscal years 2018 to 2022 as well as for the 2017 fiscal year. The basis upon which the long-term incentive pay is calculated con- sists of a fixed, predefined amount per Global Grade. If the sales and net in- come targets set in the Mid-Range Plan are attained by the end of the fiscal year 2022, this fixed amount will be multiplied by a factor of 1.0 (0.5 each for sales and net income) and awarded in the form of shares (free shares). The targeted amount of the long-term bonus for the entire six-year period is CHF 900’000 for the CEO and between CHF 450’000 and CHF 600’000 for the members of the Executive Management, depending on their Glob- al Grade. The sales target in the Mid-Range Plan (aggregate) for the six years amounts to CHF 3’819 mn; the net income target (aggregate) is CHF 300 mn. If the targets are only partially achieved, the factors will be reduced by a corresponding amount. Minimum financial targets have been defined for both cumulative sales and for cumulative net income. The mini- mum cumulative sales target is set at CHF 3’346 mn, minimum cumulative net income at CHF 195 mn. If cumulative sales or net income fall short of these minimum thresholds, the corresponding factor will be reduced to zero. If the Mid-Range Plan targets for sales or net income are exceeded, the corresponding factors will be increased up to a maximum amount of 0.6 each (1.2 in total). An interim evaluation of the attained targets was conducted after three years. Members of the Executive Management whose employment with the company had not been terminated as of July 31, 2020 were on that date awarded a number of free shares for the fiscal years 2017, 2018, and 2019, based on attainment of the targets. These free shares were distrib- uted at the end of July 2020. The factors used for the multiplication of the fixed amount in the interim evaluation are limited to 0.3 each (total 0.6). The second allotment of free shares for the fiscal years 2020, 2021 and 2022 will be distributed at the end of July 2023, subject to approval by the Annual General Meeting and provided that the employment contract for the respective Executive Management members has not been terminated for any reason, other than retirement. Persons subsequently appointed to the Executive Management will be entitled to long-time incentive pay on a pro rata basis. The number of shares awarded have been, respectively will be based on the average share price for the periods from the announce- ment of the full-year results to the annual general meetings for the fiscal years 2019 and 2022, respectively. All shares received will not be subject to any restrictions upon the date of transfer. Employment contract terms Employment contracts with Executive Management members are entered into for an indefinite period with a notice period of six months. 82 Annual Report 2021 Burckhardt Compression Compensation Report 5. COMPENSATION PAID WITH COMPARATIVE FIGURES FOR THE PREVIOUS YEAR 5.1. Compensation paid to the Board of Directors The following aggregate compensation was paid to the members of the Board of Directors for the fiscal years 2021 and 2020: in CHF 1’000 Function Fees Members of the Board of Directors Ton Büchner Urs Leinhäuser Dr. Monika Krüsi Dr. Stephan Bross David Dean Total Approved by the 2020 AGM for FY2021 Chairman Member Member Member Member 194 91 101 91 91 568 in CHF 1’000 Function Fees Members of the Board of Directors Ton Büchner 1 Valentin Vogt 2 Urs Leinhäuser Dr. Monika Krüsi Dr. Stephan Bross David Dean Total Chairman Chairman Member Member Member Member 145 36 91 101 91 91 555 Social insurance contributions and other benefits* 18 10 11 10 7 56 Social insurance contributions and other benefits* 14 5 10 10 4 12 55 Approved by the 2020 AGM for FY 2020 1 From July 4, 2020 2 Until July 3, 2020 3 This amount includes a contingency reserve of CHF 11’000. 4 This amount includes a contingency reserve of CHF 15’000. * mandatory social insurance and contributions only, as per local Swiss regulations. The total fixed compensation in the fiscal year under review is CHF 14’000 above the previous fiscal year. This increase is due to the adjustment of the fixed component paid to the Chairman of the Board of Directors and the marginally higher social insurance contributions and other benefits. The Annual General Meeting of July 3, 2020 approved aggregate fixed compensation in the amount of CHF 650’000 (gross, incl. social insurance contributions) for the Board of Directors (5 persons) for fiscal year 2021. The amount of compensation actually paid was CHF 26’000 less than the approved amount. 83 Annual Report 2021 Burckhardt Compression 2021 212 101 112 101 98 624 6503 2020 159 41 101 111 95 103 610 6404 Compensation Report 5.2. Compensation paid to the Executive Management The following compensation was paid to the members of the Executive Management for the fiscal years 2021 and 2020: in CHF 1’000 Function Fixed base salary, cash Social insurance contributions and other benefits Total fixed compensa- tion (gross) Variable an- nual bonus, cash Share-based long-term incentive pay Social insurance contributions and other benefits Total variable compensa- tion (gross) 2021 Total Executive Management Marcel Pawlicek Other members of the Executive Management Total Approved by the 2020 AGM for FY 2021 CEO 445 1’081 1’526 115 256 371 560 1’337 1’897 2’2001 151 337 488 180 360 540 106 216 322 437 997 913 2’2502 1’350 3’247 in CHF 1’000 Function Fixed base salary, cash Social insurance contributions and other benefits Total fixed compensa- tion (gross) Variable an- nual bonus, cash Share-based long-term incentive pay Social insurance contributions and other benefits Total variable compensa- tion (gross) 2020 Total Executive Management Marcel Pawlicek Other members of the Executive Management Total Approved by the 2019 AGM for FY 2020 1 This amount includes a contingency reserve of CHF 200’000. 2 This amount includes CHRO’s compensation until December 31, 2021. 3 This amount includes a contingency reserve of CHF 200’000. CEO 438 115 553 125 150 88 363 916 1’127 1’565 263 378 1’390 1’943 2’1203 267 392 375 525 199 287 841 2’231 1’204 3’147 the business performance over a multi-year period. Such an adjustment is in accordance with Swiss GAAP FER, requiring that the related expenses must be allocated over the program’s vesting period which can lead to ad- justments within individual fiscal years. The total variable compensation for the individual members of the Executive Management for the period under review ranged from 31% to 44% of total compensation. The CEO’s fixed compensation for the period under review is compara- ble to the level from the previous fiscal year. The total amount of fixed compensation for the other members of the Executive Management is CHF 53’000 less than in the prior-year period. This is because fixed com- pensation was paid to the CHRO during 9 months only during the report- ing period The Annual General Meeting of July 3, 2020 approved a total sum of CHF 2’200’000 (gross, including social insurance contributions) for the fixed compensation of the entire Executive Management for the fiscal year 2021. The amount of fixed compensation actually paid (gross, including social insurance contributions) was CHF 303’000 less than the approved amount. The annual bonus for the Executive Management in fiscal year 2021 was CHF 96’000 higher than in the previous year as a result of the higher net income. Expenses for the Executive Management’s long-term incentive pay rose by CHF 15’000 from the previous year. The provision made for the long-term incentive pay has been adjusted based on the assessment of 84 Annual Report 2021 Burckhardt Compression Compensation Report 6. OVERVIEW OF SHAREHOLDINGS AND DISTRIBUTED SHARES 6.1. Detailed overview of distributed shares In the fiscal years 2020 and 2021 the following shares were distributed: Members of the Board of Directors Ton Büchner 1 Valentin Vogt2 Urs Leinhäuser Dr. Monika Krüsi Dr. Stephan Bross David Dean Total Executive Management Marcel Pawlicek Other members of the Executive Management Total1 Total 1 From July 4, 2020 2 Until July 3, 2020 3 Shares are not allocated or are not distributed under the long-term incentive pay program every year. Function Shares distributed in FY 2021 Shares distributed in FY 2020 Chairman Chairman Member Member Member Member CEO  98 n/a   44  44  44  44  274 0 0 0  274  0  146 71  71  71  53  412 1’376 3’043   4’419  4’831  6.2. Detailed overview of shareholdings As per March 31, 2022, the members of the Executive Management and the Board of Directors (and related persons) owned the following numbers of shares of Burckhardt Compression Holding AG: Members of the Board of Directors Ton Büchner Urs Leinhäuser Dr. Monika Krüsi Dr. Stephan Bross David Dean Total Executive Management Marcel Pawlicek Rolf Brändli Sandra Pitt 1 Fabrice Billard Rainer Dübi Total Total Board of Directors and Executive Management As a % of all outstanding shares 1 Until December 31, 2021 85 Annual Report 2021 Burckhardt Compression Function 31.3.2022 Total shares 31.3.2021 Total shares Chairman Member Member Member Member CEO CFO CHRO President Systems Division President Services Division 5’098   1’758  1’163  393  452 8’864  37’737  1’223  n/a  1’300  824 41’084  49’948 1.5%    5’000  1’714  1’119  349  408 8’590  41’937  2’423  908  1’300  824  47’392  55’982 1.7%  9. EVALUATION OF THE COMPENSATION SYSTEM Burckhardt Compression’s compensation system is regularly reviewed by the Nomination and Compensation Committee and the Board of Directors and may be modified if necessary. A compensation benchmark based on external salary surveys com- piled by Willis Towers Watson and presented in its Global 50 Remuneration Planning Report is one element of the integrated compensation system for the Executive Management. During the fiscal year 2020 benchmarking was carried out using this market data; account was also taken of insights from the market benchmarking carried out in 2019 with 13 listed Swiss industrial companies. Compensation Report 7. TRANSACTIONS WITH THE BOARD OF DIRECTORS, THE EXECUTIVE MANAGEMENT AND RELATED PARTIES No other payments or fees for additional services were paid to the mem- bers of the Board of Directors or the Executive Management or to related parties during the fiscal year 2021. No signing bonuses were paid during the fiscal year 2021. At the reporting date no loans, credit lines, or pension ben- efits over and above those provided by mandatory occupational pension plans had been granted to members of the company’s boards. 8. MOTIONS FOR THE ANNUAL GENERAL MEETING Approval of the maximum aggregate amount of variable com- 8.1. pensation for the Executive Management for fiscal year 2021 The Board of Directors proposes that an aggregate amount of CHF 1’350’000 (gross, including social insurance contributions and other benefits) be approved as variable compensation for the Executive Management for fiscal year 2021. 8.2. Consultative vote on the Compensation Report for fiscal year 2021 The Board of Directors proposes that shareholders approve the Compensa- tion Report for fiscal year 2021 in a consultative vote. 8.3 Approval of the maximum aggregate amount of fixed compensa- tion for the members of the Board of Directors for fiscal year 2023 The Board of Directors proposes that a maximum aggregate amount of CHF 890’000 (gross, including social insurance contributions and other benefits) be approved as fixed compensation for the Board of Directors for fiscal year 2023. The proposed amount includes a contingency reserve of CHF 154’000. 8.4. Approval of the maximum aggregate amount of fixed compensa- tion for members of the Executive Management for fiscal year 2023 The Board of Directors proposes that a maximum aggregate amount of CHF 2’400’000 (gross, including social insurance contributions and other benefits) be approved as fixed compensation for the Executive Manage- ment for fiscal year 2023. This is the same amount as approved by the AGM in 2021 for fiscal year 2022 and includes the fixed remuneration of the new- ly elected CEO, communicated on November 23rd 2021, starting on April 1, 2022. The proposed sum includes a contingency reserve of CHF 401’000. 86 Annual Report 2021 Burckhardt Compression Compensation Report Report of the statutory auditor to the General Meeting of Burckhardt Compression Holding AG Winterthur We have audited the remuneration report of Burckhardt Compression Holding AG for the year ended 31 March 2022. The audit was limited to the information according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance) contained in the tables on pages 83 and 84 of the remuneration report. Board of Directors’ responsibility The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accord- ance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordi- nance). The Board of Directors is also responsible for designing the remuneration system and defining individual remunera- tion packages. Auditor’s responsibility Our responsibility is to express an opinion on the remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14–16 of the Ordi- nance. An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration re- port, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing the overall presentation of the remuneration report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the remuneration report of Burckhardt Compression Holding AG for the year ended 31 March 2022 complies with Swiss law and articles 14–16 of the Ordinance. PricewaterhouseCoopers AG Sandra Böhm Uglow Audit expert Auditor in charge Winterthur, 2 June 2022 Oliver Illa Audit expert PricewaterhouseCoopers AG, Bahnhofplatz 17, Postfach, CH-8400 Winterthur, Switzerland Telefon: +41 58 792 71 00, Telefax: +41 58 792 71 10, www.pwc.ch PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. 87 Annual Report 2021 Burckhardt Compression Burckhardt Compression Holding AG Winterthur Report of the statutory auditor to the General Meeting on the remuneration report 2022 Financial Report Financial Report Burckhardt Compression Holding AG’s fiscal year 2021 comprises the period from April 1, 2021 to March 31, 2022. Comments on Financial Report Summary in CHF 1’000 Order intake Sales Gross profit Operating income (EBIT) in % of sales Net income Total assets Total equity Earnings per share attributable to shareholders of Burckhardt Compression Holding AG (in CHF) FTEs as of end of fiscal year 88 Annual Report 2021 Burckhardt Compression 2021 2020 Change 2020/2021 976’559 650’698 190’844 70’336 10.8% 50’399 837’798 242’889 14.82 2’732 676’631 658’580 166’157 60’816 9.2% 47’201 758’093 219’603 13.00 2’538 44.3% –1.2% 14.9% 15.7% 6.8% 10.5% 10.6% 13.9% 7.7% Financial Report SALES AND GROSS PROFIT Sales in the 2021 fiscal year amounted to CHF 650.7 mn, 1.2% less than in the previous year, with stronger contributions from China and the Middle East but less sales in the regions Europe and Other Asia & Australia. Excluding the effects of currency translation and acquisitions, year-on-year sales growth was –2.6%. While Turnover at the Systems Division of CHF 372.7 mn was 9.1% below the previous year’s figure (no impact from acquisitions), which can be explained by the weak order intake in the first half year 2020. Sales at the Services Division increased by 11.8% (excluding acquisitions: 10.9%) to CHF 278.0 mn. Gross profit increased by 14.9% to CHF 190.8 mn, giving a significantly higher gross profit margin of 29.3% (previous year: 25.2%). The Systems Division reported an increase of 20.7% in gross profit to CHF 71.3 mn, resulting in a gross profit margin of 19.1% (previous year: 14.4%). Gross profit at the Services Division grew by 11.6% to CHF 119.6 mn (previous year: CHF 107.1 mn), resulting in a gross profit margin of 43.0%, unchanged from previous year. OPERATING INCOME The consolidated operating profit (EBIT) rose to CHF 70.3 mn (previous year: CHF 60.8 mn), yielding an EBIT margin of 10.8% (previous year: 9.2%). Selling, marketing and general administrative expenses amounted to CHF 106.9 mn (10.9% of order intake, respectively 16.4% of sales), which is CHF 13.8 mn above the previous year, which at that time still included some COVID-related government subsidies in some countries and less travelling expenses due to travel restrictions. Re- search and development expenses rose by CHF 4.3 mn to CHF 19.7 mn due to the higher number of projects to develop innovative applications for new marine solutions and hydrogen mobility and energy. Other operating result amounted to CHF 6.1 mn, which was CHF 3.0 mn above the previous year, primarily due to some non-recurring effects. FINANCIAL INCOME AND TAX EXPENSES Financial expenses increased by CHF 3.1 mn to CHF 4.7 mn, mainly due to negative foreign exchange effects on inter- company loans without equity character. Income tax expense increased by CHF 3.2 mn to CHF 15.2 mn. The resulting tax rate increased to 23.2% (previous year: 20.3%), due to the higher share of profit in countries with higher tax rates and non-refundable withholding tax on internal dividend distribution. NET INCOME Group net income increased by 6.8% to CHF 50.4 mn or 7.7% of sales (previous year: 7.2%). Earnings per share attributable to shareholders of Burckhardt Compression increased from CHF 13.00 to CHF 14.82 (+13.9%). BALANCE SHEET The balance sheet total increased by 10.5% to CHF 837.8 mn. Property, plant and equipment slightly increased by 1.8% to CHF 183.2 mn and inventories by 27.4% to 192.4 mn as per closing date. Trade accounts receivables ended the fiscal year at CHF 259.0 mn, marginally below the previous year (CHF 260.4 mn). 30.0% of the accounts receivables were overdue more than 60 days as per year-end (prior year: 28.0%). Trade receivables that are overdue for more than 90 days are main- ly related to projects in China. The balance between advance payments from customers compared to work in progress and advance payments to suppliers ended the year at CHF 52.0 mn (previous year: CHF 11.5 mn), as a result of the strong increase in orders received. The equity ratio increased to 29.0% (previous year: 29.0%) and is thus below the target of 30%. This can be attributed to the increase in the balance sheet total and the offsetting of goodwill from the acquisition of Mark van Schaick BV against the equity. Total net operating assets lowered by 23.1% compared to the previous year to CHF 274.5 mn. CASH FLOW Cash and cash equivalents increased by CHF 25.6 mn to CHF 101.0 mn in the 2021 fiscal year. Cash flow from operating activities increased by CHF 2.6 mn to CHF 134.8 mn. The net cash outflow from investing activities was amounting to CHF –34.1 mn (previous year: CHF –40.3 mn), including CHF –9.5 mn for the acquisition of the shares of Mark van Schaik BV. Total cash outflow from financing activities was reported at CHF –73.9 mn (previous year: CHF –109.5 mn), includ- ing the payment of dividends amounting to CHF 22.2 mn. The net financial position (net debt) further improved by CHF 25.6 mn to CHF –56.8 mn (previous year: CHF –82.4 mn). 89 Annual Report 2021 Burckhardt Compression Financial Report Consolidated income statement in CHF 1’000 Sales Cost of goods sold Gross Profit Selling and marketing expenses General and administrative expenses Research and development expenses Other operating income Other operating expenses Operating income Financial income and expenses Earnings before taxes Income tax expenses Net income Share of net income attributable to shareholders of Burckhardt Compression Holding AG Share of net income attributable to non-controlling interests Basic earnings per share (in CHF) Diluted earnings per share (in CHF) Notes 2021 2020 650’698 –459’854 190’844 –57’188 –49’735 –19’698 23’957 –17’844 70’336 –4’746 65’590 –15’191 50’399 50’244 155 14.82 14.82 7 8 8 9 10 11 11 658’580 –492’423 166’157 –47’997 –45’064 –15’358 21’055 –17’977 60’816 –1’616 59’200 –11’999 47’201 44’034 3’167 13.00 13.00 The enclosed notes are an integral part of the consolidated financial statements. 90 Annual Report 2021 Burckhardt Compression Financial Report Consolidated balance sheet in CHF 1’000 Non-current assets Intangible assets Property, plant and equipment Deferred tax assets Other financial assets Total non-current assets Current assets Inventories Trade receivables Other current receivables Prepaid expenses and accrued income Cash and cash equivalents Total current assets Total assets Equity Share capital Capital reserves Treasury shares Retained earnings and other reserves Equity attributable to shareholders of Burckhardt Compression Holding AG Non-controlling interests Total equity Liabilities Non-current liabilities Non-current financial liabilities Deferred tax liabilities Non-current provisions Other non-current liabilities Total non-current liabilities Current liabilities Current financial liabilities Trade payables Customers’ advance payments Other current liabilities Accrued liabilities and deferred income Current provisions Total current liabilities Total liabilities Total equity and liabilities * Prior period figures for inventories and customers’ advance payments have been restated (see note 2.2). The enclosed notes are an integral part of the consolidated financial statements. 91 Annual Report 2021 Burckhardt Compression Notes 03/31/2022 03/31/2021* 12 13 10 14 15 16 17 18 18 19 10 20 21 19 22 23 20 13’460 183’236 16’225 4’077 216’998 192’362 258’983 65’177 3’262 101’016 620’800 837’798 8’500 525 –2’136 235’450 242’339 550 242’889 128’881 11’502 12’920 3’306 156’609 28’925 97’263 162’656 36’131 84’853 28’472 438’300 594’909 837’798 12’351 180’080 14’514 4’005 210’950 151’031 260’395 56’981 3’366 75’370 547’143 758’093 8’500 486 –2’206 212’324 219’104 499 219’603 133’070 11’097 14’485 3’916 162’568 24’726 92’474 92’273 73’817 66’065 26’567 375’922 538’490 758’093 Financial Report Consolidated cash flow statement in CHF 1’000 Notes 2021 2020 * 10 9 13 12 10 13 12 4 4 50’399 15’191 4’746 16’775 3’232 –41’350 1’611 –10’837 4’839 70’382 874 30’874 3’911 57 –2’432 –13’513 134’759 –17’662 520 –5’115 –11’820 –34’077 22’350 –22’640 – –51’500 –22’152 –73’942 –1’094 25’646 75’370 101’016 25’646 47’201 11’999 1’616 17’476 3’632 51’170 3’906 10’902 –1’448 8’158 4’045 –20’517 6’435 449 –2’365 –10’464 132’195 –17’425 1’226 –2’938 –21’227 –40’364 100’154 –126’109 –3’153 –50’400 –29’954 –109’462 2’682   –14’949  90’319 75’370 –14’949 Cash flow from operating activities Net income Income tax expenses Financial income and expenses Depreciation Amortization Change in inventories Change in trade receivables Change in other current assets Change in trade payables Change in customers’ advance payments Change in provisions Change in other liabilities Adjustment for non-cash items Interest received Interest paid Income taxes paid Total cash flow from operating activities Cash flow from investing activities Purchase of property, plant and equipment Sale of property, plant and equipment Purchase of intangible assets Acquisition of group companies net of cash acquired Total cash flow from investing activities Cash flow from financing activities Increase in financial liabilities Decrease in financial liabilities Purchase of treasury shares Acquisition of non-controlling interests Dividends paid Total cash flow from financing activities Currency translation differences on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Net change in cash and cash equivalents * Prior period figures for inventories and customers’ advance payments have been restated (see note 2.2). The enclosed notes are an integral part of the consolidated financial statements. 92 Annual Report 2021 Burckhardt Compression Financial Report Consolidated statement of changes in equity in CHF 1’000 Share capital Capital reserves Treasury shares Hedge reserve Translation reserve Goodwill offset Non- controlling interests Total equity Other retained earnings Equity attributable to share- holders of Burckhardt Compression Holding AG Balance at 04/01/2020 Result for the period Currency translation differences Changes of cash flow hedges Dividends paid Changes in treasury shares Share-based payments (distributed) Share-based payments (provision in equity) Goodwill on acquisition1 Acquisition of non-controlling interests1 8’500 435 –5’216 –616 –13’315 –121’835 405’529 273’482 44’024 317’506 10’186 374 –3’153 51 6’163 44’034 44’034 3’167 47’201 10’186 308 10’494 374 374 –20’180 –20’180 –9’774 –29’954 –3’153 –3’153 –6’214 – – 3’907 3’907 –24’872 –24’872 3’907 –24’872 –64’674 –64’674 –37’226–101’900 Balance at 03/31/2021 8’500 486 –2’206 –242 –3’129 –146’707 362’402 219’104 499 219’603 Balance at 04/01/2021 Result for the period Currency translation differences Changes of cash flow hedges Dividends paid Changes in treasury shares Share-based payments (distributed) Share-based payments (provision in equity) Goodwill on acquisition1 Balance at 03/31/2022 8’500 486 –2’206 –242 –3’129 –146’707 362’402 219’104 499 219’603 –1’905 1’836 50’244 50’244 155 50’399 –1’905 1’836 11 –1’894 1’836 –22’037 –22’037 –115 –22’152 39 70 –109 – – 4’395 4’395 –9’298 –9’298 – – 4’395 –9’298 8’500 525 –2’136 1’594 –5’034 –156’005 394’895 242’339 550 242’889 1 See note 4 “Business Combinations and Other Changes in the Scope of Consolidation” The enclosed notes are an integral part of the consolidated financial statements. 93 Annual Report 2021 Burckhardt Compression Financial Report Notes to the Consolidated Financial Statements 1. GENERAL INFORMATION Burckhardt Compression is a manufacturer and service provider for a full range of reciprocating compressor technol- ogies and services. Its customized compressor systems are used in the gas gathering & processing, gas transport and storage, refinery, chemical, petrochemical, hydrogen mobility and energy and industrial gas sectors. Burckhardt Com- pression’s leading technology, broad portfolio of compressor components and the full range of services help customers around the world to find their optimized solution for their reciprocating compressor systems. Burckhardt Compression Holding AG is a company limited by shares incorporated and domiciled in Switzerland. The address of its registered office is: Franz-Burckhardt-Strasse 5, 8404 Winterthur, Switzerland. Burckhardt Compres- sion registered shares (BCHN) are listed on the SIX Swiss Stock Exchange in Zurich (ISIN: CH0025536027). Burckhardt Compression Holding AG’s fiscal year 2021 comprises the period from April 1, 2021 to March 31, 2022. These consolidated financial statements were authorized for issue by the Board of Directors on June 2, 2022 and will be submitted to shareholders for approval at the annual general meeting scheduled for July 1, 2022. 2. ACCOUNTING POLICIES 2.1 Basis of Preparation The consolidated financial statements of Burckhardt Compression Holding AG have been prepared in accordance with the entire Swiss GAAP FER accounting and reporting standards. In addition, the provisions of the Listing Rules of the SIX Swiss Exchange and Swiss accounting law were complied with. The consolidated financial statements have been prepared under the historical cost convention unless otherwise stated in the following consolidation and accounting policies. 2.2 Change in Accounting Policies Over the current financial year, Burckhardt Compression has successfully achieved a high increase in order volume re- sulting in significantly higher balances of inventories and customers’ advance payments. Inventories and customers’ ad- vance payments have been presented gross in the past. Because of this significant increase, Burckhardt Compression has analyzed the accounting policy on the presentation of these items and has concluded that a net presentation of invento- ries and customers’ advance payments results in a more transparent and meaningful presentation on the balance sheet. Therefore, Burckhardt Compression has changed its accounting policy as of March 31, 2022 from a gross presentation of inventories and customers’ advance payments to a net presentation offsetting customers’ advance payments (without right of clawback) with inventories on a project by project basis. The net amount reported in the consolidated balance sheet under customers’ advance payments contains only customers’ advance payments with no related inventories on a project by project basis. The amounts for the comparative period reported in previously published financial statements have been restated accordingly. The impact of the change on the consolidated balance sheet is presented in the table below. in CHF 1’000 Gross Amounts Offsetting of customers’ advance payments1 03/31/2022 03/31/2021 03/31/2020 Customers’ advance payments Customers’ advance payments Inventories Inventories Customers’ advance payments Inventories 266’444 236’738 190’435 131’677 264’479 145’297 74’082 74’082 39’404 151’031 39’404 92’273 65’540 198’939 65’540 79’757 Net amounts reported in the consolidated balance sheet 192’362 162’656 1 Contains only customers’ advance payments with related inventories on a project by project basis. 94 Annual Report 2021 Burckhardt Compression Financial Report In addition, Burckhardt Compression has restated the amounts previously reported as changes in inventories and chang- es in customers’ advance payments in the cash flow statement. The restatement is illustrated in the table below. in CHF 1’000 Change in inventories Change in customers’ advance payments 2021 –41’350 70’382 2020 51’170 8’158 2.3 Use of Judgments and Estimates These consolidated financial statements include estimates and assumptions that affect the reported figures and related disclosures. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively. 2.4 Principles of Consolidation The consolidated financial statements include all entities where Burckhardt Compression Holding AG has the power to control the financial and operating policy, usually as a result of directly or indirectly owning more than 50% of the voting rights. All of the assets and liabilities as well as the income and expenses of these companies are fully included. Non-con- trolling interests are presented separately in the balance sheet and the income statement. Intercompany transactions, balances and unrealized gains or losses on transactions between group companies are eliminated. Group companies are disclosed in note 33. Acquired companies are fully consolidated from the date on which control was effectively transferred. When a company is acquired in a step-up acquisition, the existing interest is revalued at the time when the company is first consolidated. The revaluation of shares previously owned is offset against retained earnings. Companies which have been divested are included in the consolidated financial statements until the date on which control ceased. Cap- ital consolidation is based on the acquisition method (purchase method). At the time of the acquisition, all previously recognized assets and liabilities of the company are initially valued at fair value. Acquisition-related costs are expensed as incurred. The net assets acquired are compared with the purchase price, and any resulting goodwill is directly offset against equity. In the notes to the financial statements, the effects of a theoretical capitalization and any impairment are shown using an amortization period of five years. In the event of a possible subsequent sale, the goodwill offset against shareholders’ equity at the time of the acquisition is recognized in the income statement against the proceeds of the sale. Associates are those entities in which Burckhardt Compression has significant influence, but no control, over the financial and operating policies. Significant influence is generally presumed to exist when Burckhardt Compression holds, directly or indirectly, between 20% and 50% of the voting rights. Associates are accounted for using the equity method. The proportionate share of net income is shown in the consolidated income statement. As of May 31, 2022, Burckhardt Compression does not hold any Associates. 2.5 Foreign Currency Translation The consolidated financial statements of Burckhardt Compression are prepared in Swiss francs (CHF). Foreign Currency Translation at Company Level Foreign currency transactions are recorded at the exchange rate of the transaction date. Monetary assets and liabilities which are denominated in foreign currencies are translated at period-end exchange rates. Resulting translation differ- ences are recorded in the income statement. Foreign Currency Translation for Consolidation Purposes Assets and liabilities of foreign subsidiaries are translated into CHF using period-end exchange rates. Average exchange rates are used for the translation of the income statements. Translation differences arising from the consolidation of financial statements are recorded as a separate component of equity. Likewise, exchange differences arising on inter- company loans with equity character are directly recorded in equity. 95 Annual Report 2021 Burckhardt Compression Financial Report Major Foreign Currency Exchange Rates 1 EUR 1 USD 100 CNY Average rates Period-end rates 2021 1.07 0.92 14.31 2020 1.08 0.92 13.63 03/31/2022 03/31/2021 1.03 0.92 14.58 1.11 0.94 14.30 Impairment of Assets 2.6 All non-current assets are tested for impairment when indicators exist that the carrying amount of the asset might ex- ceed its recoverable amount. Where the carrying amount of an asset is higher than the recoverable amount, the asset is impaired to its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and its value in use. Impairment tests are performed based on discounted cash flows at the level of the corresponding cash-gen- erating units, representing the lowest level at which such assets are evaluated for recoverability. Intangible Assets and Goodwill 2.7 Acquired software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. The estimated useful life for software generally amounts to three to five years. Internal costs associated with developing or maintaining software are recognized as an expense as incurred. Other intangible assets are recorded at acquisition or production costs less accumulated amortization. The amortization expense is calculated on a straight- line basis over the estimated useful life of the asset. Goodwill resulting from acquisitions is offset against equity at the date of acquisition. The consequences of a theoretical capitalization and amortization of goodwill (using an amortization period of five years) are disclosed in note 12. 2.8 Property, Plant and Equipment Items of property, plant and equipment are stated at cost less accumulated depreciation. They are depreciated on a straight-line basis over their estimated useful lives. Land is stated at cost and is not depreciated, except land use rights in China, which are depreciated over their useful lives. The estimated useful lives are as follows: – Buildings: 20 to 50 years – Machinery: 5 to 15 years – Technical equipment: 5 to 10 years – Other non-current assets: maximum 5 years 2.9 Other Financial Assets Other financial assets include loans and long-term rental deposits. They are stated at cost less appropriate impairment losses. 2.10 Inventories Inventories are stated at the lower of cost or net realizable value. The cost of work in progress and finished goods com- prises material costs, direct and indirect production costs and other order-related production costs. Inventories are stat- ed at weighted average costs or standard costs based on their type and use. Valuation allowances are recognized for slow-moving and excess inventory items. Inventories are presented net of advance payments received from customers on a project-by-project basis, if they do not include a right of clawback. Negative contract balances after offsetting are presented as customers’ advance payments. 96 Annual Report 2021 Burckhardt Compression Financial Report 2.11 Trade and Other Current Receivables Trade receivables and other current receivables are stated at nominal value less valuation allowances for doubtful amounts. Impairments are assessed case by case. An impairment loss is recognized when there is objective evidence that Burckhardt Compression will not be able to collect the full amount due, such as substantial financial problems of the customer or a declaration of bankruptcy. 2.12 Cash and Cash Equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. 2.13 Financial Liabilities Financial liabilities mainly consist of bank debts and a bond. They are recognized at their nominal value. Borrowing relat- ed costs are expensed as incurred in the income statement. 2.14 Provisions Provisions are recognized for warranty obligations, unprofitable contracts, personnel expenses and various commercial risks where Burckhardt Compression has an obligation towards third parties arising from past events, the amount of the liability can be reliably measured and it is probable that the settlement will result in an outflow of resources. The amount of the provisions is based on the expected expenditures required to cover all obligations and liabilities. 2.15 Treasury Shares Treasury shares are stated at acquisition cost and deducted from equity. No subsequent valuation is made. If the treasury shares are disposed of, the resulting gain or loss is recognized as an addition to or a reduction of capital reserves. 2.16 Transactions with non- controlling interests Transactions with non-controlling interests that do not result in a loss of control are treated as a transaction with shareholders of Burckhardt Compression. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and the non-controlling interests. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in retained earnings within the equity attributable to shareholders of Burckhardt Compression. The related cash flows are presented as financing activities in the cash flow statement. 2.17 Government Grants Grants from governments or similar organizations are recognized at their nominal value when there is reasonable assur- ance that the grant will be received, and Burckhardt Compression will comply with all attached conditions. Government grants related to income are deferred and recognized as income over the period necessary to match them with the related costs which they are intended to compensate. Government grants related to assets are deducted directly from the carrying amount of the asset which they are intended to compensate. 2.18 Derivative Financial Instruments Burckhardt Compression uses derivative financial instruments to mitigate currency risks. The risk management policy is described in note 3. The derivative financial instruments are recognized at fair value. Where such derivative financial instruments are linked to specific projected transactions and cash flows, the hedging is deemed to be effective and docu- mented accordingly, changes in the fair value of the cash flow hedges are recognized in equity as long as the hedged item has not been recognized on the balance sheet. Otherwise, the gain or loss relating to fair value changes of the derivative financial instruments is recognized immediately in the income statement as part of other operating income or other operating expenses. 97 Annual Report 2021 Burckhardt Compression Financial Report 2.19 Revenue Recognition Burckhardt Compression recognizes revenue arising from the sale of goods and the rendering of services upon com- pletion of the contract, net of sales or value-added taxes, credits, discounts and rebates. Revenue and the related cost of goods sold are recognized in the accounts when the risks and rewards have passed to the customers subject to the conditions of sale. The following conditions must be met in this regard: – Deliveries have been made and/or the service as per contract has been performed. – A contractually-agreed sales price exists or can be reliably estimated. – Collection of the payment is reasonably assured. – The costs (including those yet to be incurred) can be reliably measured. 2.20 Research and Development Research and development costs are expensed as incurred. 2.21 Income Taxes Income tax expenses include all income tax on the taxable profits of the group. Deferred income tax is recorded in full us- ing the liability method. Deferred income tax assets and liabilities arise on temporary differences between the carrying amounts of assets and liabilities under Swiss GAAP FER and their related tax values. The tax rates and laws enacted or substantively enacted at the balance sheet date are used to determine deferred income tax. Deferred income tax assets result from tax loss carry-forwards, tax credits as well as temporary valuation differences of assets and liabilities. They are recognized to the extent that realization through future taxable profits is probable. 2.22 Off-Balance-Sheet Transactions Contingent liabilities and other non-recognizable commitments are valued and disclosed on each balance sheet date. 2.23 Share-Based Payments Share-based payments with compensation through equity instruments are valued at fair value at the grant date. The corresponding personnel expenses are distributed over the vesting periods. 2.24 Employee Benefits There are various pension plans within Burckhardt Compression based on local conditions in their respective countries. An economic obligation is recognized as a liability if the requirements for the recognition of a provision are met under Swiss GAAP FER. An economic benefit is capitalized provided that Burckhardt Compression is entitled to such benefit in the future, for example, to offset future pension expenses. For Swiss pension plans, economic benefits and/or economic obligations are determined on the basis of the annual financial statements of the pension funds prepared in accordance with Swiss GAAP FER 26. Freely available employer contribution reserves are recognized as financial asset. For foreign plans, the economic impact is determined according to country-specific methods. 2.25 Alternative Performance Measures Alternative Performance Measures are key figures not defined by Swiss GAAP FER. Burckhardt Compression uses al- ternative performance measures as guidance parameters for both internal and external reporting to stakeholders. For the definition of Alternative Performance Measures please visit https://www.burckhardtcompression.com/investors/re- ports-financial-results/key-figures. 98 Annual Report 2021 Burckhardt Compression Financial Report 3. FINANCIAL RISK MANAGEMENT Basic Principles The goal of the group-wide risk management policy is to minimize the negative impact of changes in the financing struc- ture and financial markets, particularly with regard to currency fluctuations. Derivative financial instruments such as foreign exchange contracts may be used to address the respective risks. Burckhardt Compression pursues a conserva- tive, risk-averse financial policy. Financial risk management is based on according principles and regulations established by the Management. These govern Burckhardt Compression’s financial policy and outline the conduct and powers of the group’s treasury department, which is responsible for the group-wide management of financial risks. The financial principles and regulations govern areas such as financing policy, the management of foreign currency risk, the use of derivative financial instruments and the investment policy applicable to financial resources not required for operational purposes. Liquidity Risks Each Burckhardt Compression group company is responsible for managing its liquidity so that day-to-day business can be handled smoothly, while the group treasury is responsible for maintaining the group’s overall liquidity. Some of the group subsidiaries may secure loans from local creditors within the limits approved by the group management. The group treasury provides the local group companies with the necessary funds or invests their excess liquidity. The group treasury maintains sufficient liquidity reserves and open credit and guarantee lines to fulfill the financial obligations at all times. The actual and future cash flows and cash reserves are compiled monthly in a rolling liquidity forecast. The Ex- ecutive Management and the Board of Directors are informed about the liquidity situation and outlook with the regular financial reporting. Currency Risks Burckhardt Compression hedges all major USD-denominated sales transactions of its non-US entities to the extent that such transactions are not fully or partially naturally hedged. EUR-denominated sales and purchase transactions of the Swiss company are fairly evenly balanced when viewed over a period of 1–2 years and are therefore, to a certain extent, naturally hedged at the net profit level over said period. These foreign-exchange flows are regularly monitored by the group treasury; if there is evidence of a sustained shift in these flows, major sales and purchase transactions will be hedged on a case-by-case basis. For this, the group treasury normally uses forward exchange contracts. The other com- panies belonging to Burckhardt Compression group may, after consultation with group treasury, hedge the foreign-ex- change risks of their sales and purchase transactions through local qualified institutions or group treasury, the objective being the optimization of the net profit of each group company as reported in its functional local currency. The group management regularly monitors the changes in the most important currencies and may adjust the hedging policy ac- cordingly in the future. As a globally active corporation, Burckhardt Compression is also exposed to currency risks re- sulting from the translation into Swiss francs of items in the balance sheets of the foreign group companies. Burckhardt Compression does not hedge these translation risks. Credit Risks Credit risk in respect of trade receivables is limited due to the diverse nature and quality of the customer base. Such risk is minimized by means of regular credit checks, advance payments, letters of credit and other tools. There is no concen- tration of customer-related risks within Burckhardt Compression Group as the most important customers in the project business, which account for a large share of Burckhardt Compression’s overall business, vary from one year to the next. In past years Burckhardt Compression experienced no major impairments of receivables. Credit risks of banks and financial institutions are monitored and managed centrally. Generally, only independently rated parties with a strong credit rating are accepted, and the total volume of transactions is split among several banks to reduce the individual risk with one bank. 99 Annual Report 2021 Burckhardt Compression Financial Report Interest Rate Risks Interest rate risks arise from fluctuations in interest rates which could have a negative impact on the financial position of Burckhardt Compression. Assets and liabilities at variable rates expose Burckhardt Compression to cash flow interest rate risk. Capital Risks The capital managed by Burckhardt Compression is its consolidated equity. With regard to its capital management poli- cies, Burckhardt Compression seeks to secure the continuation of its business activities, to achieve an acceptable return for the shareholders and to finance the growth of the business to a certain extent from own cash flow. In order to achieve these objectives Burckhardt Compression can adjust the dividend payments, repay share capital, issue new shares or divest parts of the assets, subject to approval by the general assembly, where applicable. 4. BUSINESS COMBINATIONS AND OTHER CHANGES IN THE SCOPE OF CONSOLIDATION Mark van Schaick BV (Netherlands) On December 21, 2021, Burckhardt Compression AG acquired 100% of the shares in Mark van Schaick BV, a company based in Rotterdam, Netherlands. The company has more than 20 years of experience in machining and is a leader in servicing complex repairs such as crankshafts. With the acquisition of Mark van Schaick BV, Burckhardt Compression specifically complements its repair and service capabilities in Europe and further expands its presence in the service business for reciprocating compressors. Burckhardt Compression hereby also gains highly specialized machining expertise and repair capabilities for the global customer base in the maritime and petrochemical industry. The following table shows the fair value of assets and liabilities acquired at the acquisition date and the goodwill arising from this transaction. in CHF 1’000 Property, Plant and Equipment Inventories Trade receivables and other receivables Prepaid expenses and other current assets Current liabilities Non-Current liabilities Net assets/liabilities acquired at fair value Goodwill from acquisition Total purchase price Less cash and cash equivalents acquired Net cash outflow on acquisition 100 Annual Report 2021 Burckhardt Compression 2’898 7 955 35 –3’543 –188 164 9’298 9’462 – 9’462 Financial Report Shenyang Yuanda Compressor Co. Ltd. (China) On February 23, 2021, Burckhardt Compression acquired the remaining 40% of the shares of Shenyang Yuanda Compres- sor Co. Ltd. Together with the already existing interest of 60%, Burckhardt Compression now holds 100% of the Chinese company. The purchase price for the remaining 40% amounts to CHF 101.9 mn. The parties have agreed that the purchase price shall be paid in two installments. CHF 50.4 mn was paid at closing and the remaining CHF 51.5 mn have been paid on March 11, 2022. Burckhardt Compression recognized CHF 50.4 mn as an acquisition of non-controlling interest in the cash flow from financing activities. The acquisition led to a reduction of non-controlling interests in the consolidated statement of equity in the amount of CHF 37.2 mn. The difference of CHF 64.7 mn between the purchase price and the carrying value of the non-controlling interests was recognized in retained earnings. The Japan Steel Works Ltd. (Japan) On April 21, 2020, Burckhardt Compression acquired the global compressor business from the Japan Steel Works Ltd. (JSW), a Japanese business based in Tokyo, in an asset deal. With the acquisition of the global compressor business from JSW, Burckhardt Compression is strengthening its market presence in Japan. The following table shows the fair value of assets and liabilities acquired at the acquisition date and the goodwill arising from this transaction. in CHF 1’000 Inventories Non-current liabilities Current liabilities Net assets/liabilities acquired at fair value Goodwill from acquisition Total purchase price Less cash and cash equivalents acquired Less deferred consideration Net cash outflow on acquisition 1 Deferred consideration paid on July 5, 2021 A complete list of all Group companies is shown in note 33. 5. SEGMENT REPORTING 719 –1’794 –212 –1’287 24’872 23’585 – –2’3581 21’227 Systems Division Burckhardt Compression’s Systems Division covers a complete range of reciprocating compressor technologies. Its cus- tomized compressor systems are used in the gas gathering & processing, gas transport and storage, refinery, chemical, petrochemical, hydrogen mobility and energy and industrial gas sectors. Depending on the customers’ needs, Burckhardt Compression offers solutions to minimize life cycle costs of the reciprocating compressor systems or solutions to mini- mize the capital expenditure. Services Division Burckhardt Compression’s Services Division is a one-stop provider of a full range of services for reciprocating compres- sors and stands for top-quality, high-performance components for all makes of reciprocating compressors, as replace- ment parts, or to repair or upgrade existing installations. Original spare parts backed by Burckhardt Compression’s man- ufacturing guarantees stand for superior quality and ensure together with various complementary service modules both low life cycle costs as well as the optimal operation of compressor systems. 101 Annual Report 2021 Burckhardt Compression Financial Report Others Certain expenses related to the corporate center are not attributable to a particular segment. They are reported in the column “Others”. Furthermore, “Others” includes real estate income and expenses as well as expenses for strategic projects. in CHF 1’000 Systems Division Services Division Others Total 2021 2020 2021 2020 2021 2020 2021 2020 Sales Cost of goods sold Gross profit Gross profit as % of sales Operating income Operating income as % of sales 372’657 409’793 278’041 248’787 –301’384 –350’731 –158’470 –141’692 71’273 19.1% 21’108 5.7% 59’062 119’571 107’095 14.4% 16’182 3.9% 43.0% 58’353 21.0% 43.0% 51’246 20.6% – – – – – – – – –9’125 –6’612 – – 650’698 658’580 –459’854 –492’423 190’844 166’157 29.3% 70’336 10.8% 25.2% 60’816 9.2% 2021 2020 177’546 4’174 73’603 11’148 49’391 240’334 94’502 650’698 190’129 2’834 74’507 7’206 35’782 214’116 134’006 658’580 2021 2020 9’324 27 562 28 87 3’395 804 14’227 5’127 329 1’072 22 60 18’222 639 25’471 Geographic information in CHF 1’000 Sales by customer location Europe Africa North America South America Middle East China Other Asia & Australia Total in CHF 1’000 Capital expenditure for property, plant and equipment Europe Africa North America South America Middle East China Other Asia & Australia Total 102 Annual Report 2021 Burckhardt Compression Financial Report 6. PERSONNEL EXPENSES in CHF 1’000 2021 2020 Wages and salaries Social security and pension expenses Other personnel expenses Total personnel expenses –173’249 –34’758 –19’597 –227’604 –155’630 –31’469  –13’219  –200’318 In the current fiscal year 2021 the personnel expenses did not contain any governmental contributions related to the Co- rona Virus situation. In the prior year, personnel expenses included governmental contributions from overall six countries related to the Corona Virus situation in the amount of CHF 8.0 mn. 7. RESEARCH AND DEVELOPMENT EXPENSES Research and development activities in the fiscal year 2021 focused on the development of products and technologies for the hydrogen economy. The focus was on standardized compressor packages, sealing technology and solutions for the online monitoring of the compressors. Additionally, we have strengthened our portfolios for new machines and services for the off-shore LNG and the PCI market. 8. OTHER OPERATING INCOME AND EXPENSES in CHF 1’000 Currency exchange gains Other operating income Total other operating income Currency exchange losses  Other operating expenses Total other operating expenses Total other operating income and expenses 2021 7’022 16’935 23’957 –7’683 –10’161 –17’844 2020 8’833 12’222 21’055 –8’562 –9’415 –17’977 6’113  3’078  Other operating income includes real estate income of CHF 6.9 mn (prior year: CHF 6.8 mn). Other operating expenses include real estate expenses amounting to CHF 3.7 mn (prior year: CHF 4.1 mn). 103 Annual Report 2021 Burckhardt Compression Financial Report 9. FINANCIAL INCOME AND EXPENSES in CHF 1’000 Interest expenses Interest income Other financial income (+) and expenses (–) Total financial income and expenses 2021 –3’361 350 –1’735 –4’746 Other financial income and expenses include the exchange rate gains and losses on intercompany loans. 10. INCOME TAXES Income Tax Expenses in CHF 1’000 Current income tax expenses Deferred income tax income (+) and expenses (–) Total income tax expenses Reconciliation of Income Tax Expenses in CHF 1’000 Earnings before taxes Expected income tax expenses Effect of non-recognition of tax loss carry forwards Effect of income tax of prior periods Effect of changes in tax rates Effect of Goodwill amortization for tax purposes Effect of non-deductible expenses/income not subject to tax Total income tax expenses as % of earnings before taxes 2021 –16’221 1’030 –15’191 2021 65’590 –14’728 –27 –1’663 – 1’300 –73 –15’191 23.2% 2020 –3’274 653 1’005 –1’616 2020 –14’322 2’323 –11’999 2020 59’200 –13’006 –2’633 –1’000 – 1’591 3’049 –11’999 20.3% The effective tax rate of Burckhardt Compression Group of 23.2% (prior year: 20.3%) corresponds to the weighted average tax rate based on the profit before income taxes and the tax rate of each group company. The higher tax rate is mainly affected by the changed contribution of taxable income from different countries and non-deductible taxes. 104 Annual Report 2021 Burckhardt Compression Financial Report Current Income Taxes in CHF 1’000 Net current income tax liabilities Balance as per 04/01/2021 / 04/01/2020 Changes in the consolidation scope Recognized in the income statement Income taxes paid Translation differences Balance as per 03/31/2022 / 03/31/2021 thereof current tax assets thereof current tax liabilities Deferred Income Taxes in CHF 1’000 Net deferred income tax liabilities Balance as per 04/01/2021 / 04/01/2020 Changes in the consolidation scope Recognized in the income statement Recognized in equity Translation differences Balance as per 03/31/2022 / 03/31/2021 thereof deferred tax assets thereof deferred tax liabilities Tax Loss Carry Forwards in CHF 1’000 Expiring in the next 3 years Expiring in 4 years or later Total tax loss carry forwards Potential deferred tax assets from tax loss carry forwards Effect of non-recognized tax loss carry forwards Effective deferred tax assets from tax loss carry forwards 105 Annual Report 2021 Burckhardt Compression 2021 2020 4’676 – 14’558 –13’513 305 6’026 2’323 8’349 1’944 – 13’322 –10’464 –126 4’676 936 5’612 2021 2020 –3’417 – –1’030 119 –395 –4’723 16’225 11’502 –893 – –2’323 98 –299 –3’417 14’514 11’097 03/31/2022 03/31/2021 2’389 43’457 45’846 10’302 –5’507 4’795 333 42’333 42’666 9’801 –5’480 4’321 Financial Report 11. EARNINGS PER SHARE in CHF 1’000 2021 2020 Net income attributable to the shareholders of Burckhardt Compression Holding AG Average number of outstanding shares Earnings per share (CHF) 50’244 3’390’572 14.82 44’034 3’386’013 13.00 The average number of outstanding shares is calculated based on the issued shares minus the weighted average number of treasury shares. There are no conversion rights or option rights outstanding; therefore, there is no potential dilution of earnings per share. 12. INTANGIBLE ASSETS Acquisition Costs in CHF 1’000 Software Other intangible assets Intangible assets under con struction 2021 Total Software Other intangible assets Intangible assets under con struction 2020 Total Balance as per 04/01/2021 / 04/01/2020 32’904 685 3’431 37’020 31’992 632 2’106 34’730 Changes in the consolidation scope Additions Disposals Reclassifications Currency translation differences Balance as per 03/31/2022 / 03/31/2021 Accumulated Amortization in CHF 1’000 – 453 – 1’693 –329 34’721 – 3 – – –1 687 – 4’659 –731 –1’693 – 5’115 –731 – 8 –322 – 285 –963 1’303 287 5’674 41’082 32’904 – 30 – – 23 685 – 2’623 – –1’303 5 – 2’938 –963 – 315 3’431 37’020 Software Other intangible assets Intangible assets under con struction 2021 Total Software Other intangible assets Intangible assets under con struction 2020 Total Balance as per 04/01/2021 / 04/01/2020 Changes in the consolidation scope Additions Disposals Reclassifications Currency translation differences –24’097 – –3’187 – – 275 –572 – –45 – – 4 Balance as per 03/31/2022 / 03/31/2021 –27’009 –613 – – – – – – – –24’669 –21’297 – – –3’232 –3’567 – – 279 963 – –196 –27’622 –24’097 –490 – –65 – – –17 –572 – – – – – – – –21’787 – –3’632 963 – –213 –24’669 106 Annual Report 2021 Burckhardt Compression Financial Report Net Book Value in CHF 1’000 Software Other intangible assets Intangible assets under con struction 2021 Total Software Other intangible assets Intangible assets under con struction 2020 Total As per 04/01/2021 / 04/01/2020 As per 03/31/2022 / 03/31/2021 8’807 7’712 113 74 3’431 5’674 12’351 13’460 10’695 8’807 142 113 2’106 3’431 12’943 12’351 Goodwill Goodwill from acquisitions is fully offset against equity at the date of acquisition. The theoretical amortization of good- will is based on the straight-line method and an amortization period of five years. Goodwill from new acquisitions is fixed to Swiss francs using the closing rate at acquisition date. Therefore, there are no exchange rate differences in the move- ment schedules. The impact of the theoretical capitalization and amortization of goodwill is disclosed below. in CHF 1’000 2021 2020 Acquisition costs Balance as per 04/01/2021 / 04/01/2020 Additions from acquisitions Balance as per 03/31/2022 / 03/31/2021 146’707 9’298 156’005 121’835 24’872 146’707 in CHF 1’000 2021 2020 Accumulated amortization Balance as per 04/01/2021 / 04/01/2020 Amortization expense Balance as per 03/31/2022 / 03/31/2021 in CHF 1’000 Net book value –111’589 –10’815 –122’404 –86’506 –25’083 –111’589 2021 2020 Theoretical net book value as per 04/01/2021 / 04/01/2020 Theoretical net book value as per 03/31/2022 / 03/31/2021 35’118 33’601 35’329 35’118 in CHF 1’000 03/31/2022 03/31/2021 Theoretical impact on equity  Equity as per balance sheet Theoretical capitalization of goodwill Theoretical equity including net book value of goodwill 242’889 33’601 276’490 219’603 35’118 254’721 in CHF 1’000 2021 2020 Theoretical impact on net income Net income as per income statement Amortization of goodwill Theoretical net income after goodwill amortization 50’399 –10’815 39’584 47’201  –25’083  22’118  107 Annual Report 2021 Burckhardt Compression Financial Report 13. PROPERTY, PLANT & EQUIPMENT Acquisition Costs in CHF 1’000 Land and buildings Machinery and equipment Other business assets Assets under con- truction 2021 Total Land and buildings Machinery and equipment Other business assets Assets under con- truction 2020 Total Balance as per 04/01/2021 / 04/01/2020 157’343 134’846 33’617 6’807 332’613 168’706 129’007 30’199 20’188 348’100 Changes in the consolidation scope Additions Disposals Reclassifications Currency translation differences – 271 2’957 4’840 –257 –1’122 7’644 –1’042 2’701 –476 – 1’777 –305 – 2’957 – – – – – 7’339 14’227 382 2’964 2’839 19’286 25’471 –273 –1’957 –11’842 –7’093 –1’186 –141 –20’262 214 –6’163 4’396 –549 172 –1’895 –1’236 1’333 7’738 2’230 1’145 –32’972 –25’325 620 446 4’629 Balance as per 03/31/2022 / 03/31/2021 163’959 143’746 34’754 7’882 350’341 157’343 134’846 33’617 6’807 332’613 Accumulated Depreciation in CHF 1’000 Land and buildings Machinery and equipment Other business assets Assets under con- truction 2021 Total Land and buildings Machinery and equipment Other business assets Assets under con- truction 2020 Total Balance as per 04/01/2021 / 04/01/2020 –35’356 –94’681 –22’496 – –152’533 –35’226 –90’727 –19’515 – –145’468 Changes in the consolidation scope Additions Disposals Reclassifications Currency translation differences – – – –4’576 –8’749 –3’450 8 – 246 992 – 299 271 – 387 – – – – – – –16’775 1’271 – 932 – – – –4’749 –9’000 –3’727 5’081 6’363 1’028 – – –462 –1’317 –282 – – – – – – –17’476 12’472 – –2’061 Balance as per 03/31/2022 / 03/31/2021 –39’678 –102’139 –25’288 – –167’105 –35’356 –94’681 –22’496 – –152’533 Net Book Value in CHF 1’000 Land and buildings Machinery and equipment Other business assets Assets under con- truction 2021 Total Land and buildings Machinery and equipment Other business assets Assets under con- truction 2020 Total As per 04/01/2021 / 04/01/2020 121’987 40’165 11’121 6’807 180’080 133’480 38’280 10’684 20’188 202’632 As per 03/31/2022 / 03/31/2021 124’281 41’607 9’466 7’882 183’236 121’987 40’165 11’121 6’807 180’080 Relocation Shenyang Yuanda Compressor Co. Ltd (SYCC) Back in 2018, SYCC started the relocation of its manufacturing and assembly facility, to the newly established China Germany Equipment Manufacturing Industrial Park, which is also located in the city of Shenyang. The relocation was completed end of 2020. In the course of this transaction SYCC has purchased and built new PPE and at the same time has given back existing PPE to the Chinese government. The whole transaction was subsidized by the Chinese government. Overall SYCC in the period 2018 to 2020 invested more than CHF 30 mn for this project. With the completion of the relo- cation project back in fiscal year 2020, land use rights, buildings and machinery that were built or acquired in the course of the relocation have been offset with the granted subsidies by the government (Netting of assets and liabilities; shown under reclassifications in fiscal year 2020). 108 Annual Report 2021 Burckhardt Compression Financial Report 14. OTHER FINANCIAL ASSETS Other financial assets mainly include time deposits. 15. INVENTORIES The amount presented as inventories as of March 31, 2021 has been restated. Please refer to note 2.2. in CHF 1’000 03/31/2022 03/31/2021 Raw materials, supplies and consumables Work in progress Finished products and trade merchandise Advance payments to suppliers Valuation allowance Total inventories 44’022 82’858 55’517 27’846 –17’881 192’362 36’223 61’183 51’526 19’578 –17’479 151’031 The capital invested in work in progress and advance payments to suppliers is fully financed by advance payments from customers, leaving a positive balance as of March 31, 2022 of CHF 52.0 mn (prior year: CHF 11.5 mn). Burckhardt Compression presents inventories and customers’ advance payments on a net basis. The offsetting impact is illustrated in the table below. in CHF 1’000 03/31/2022 03/31/2021 Customers’ advance payments Customers’ advance payments Inventories Inventories Gross amounts Offsetting of customers’ advance payments Net amounts reported in the consolidated balance sheet 266’444 236’738 190’435 131’677 74’082 74’082 192’362 162’656 39’404 151’031 39’404 92’273 16. TRADE RECEIVABLES in CHF 1’000 Trade receivables, gross Allowance for bad debts Trade receivables, net 03/31/2022 03/31/2021 274’273 –15’290 258’983 271’098  –10’703  260’395  109 Annual Report 2021 Burckhardt Compression Financial Report in CHF 1’000 2021 2020 Allowance for bad debts Balance as per 04/01/2021 / 04/01/2020 Changes in the consolidation scope Additions Release Utilization Currency translation adjustments Balance as per 03/31/2022 / 03/31/2021 –10’703 – –5’576 952 261 –224 –15’290 –8’911  – –2’288   36  934  –474  –10’703  The allowance for bad debts at the end of the 2021 and 2020 fiscal years was entirely related to accounts receivables which were more than 90 days overdue as per closing date. in CHF 1’000 03/31/2022 % 03/31/2021 % Maturity profile of trade receivables Not due Overdue 1–30 days Overdue 31–60 days Overdue 61–90 days Overdue more than 90 days Balance as per 03/31/2022 / 03/31/2021 140’546 23’464 17’247 12’409 65’317 258’983 54.3 9.1 6.6 4.8 25.2 100.0 147’068 20’165 20’334 9’957 62’871 260’395 56.5 7.7 7.8 3.8 24.2 100.0 Trade receivables overdue more than 90 days are mainly related to projects in China. 17. OTHER CURRENT RECEIVABLES in CHF 1’000 Notes receivable VAT receivables Derivative financial instruments Current tax assets Other current receivables Total other current receivables 03/31/2022 03/31/2021 12’295 7’483 3’330 2’323 39’746 65’177 9’770 6’151 1’067 936 39’057 56’981 Other current receivables include the outstanding government grants in connection with the relocation project of Shen- yang Yuanda Compressor Co. Ltd in China (see note 13). 110 Annual Report 2021 Burckhardt Compression Financial Report 18. SHARE CAPITAL AND TREASURY SHARES 03/31/2022 03/31/2021 Number of shares issued 3’400’000 3’400’000 The nominal value per share amounts to CHF 2.50. All shares are registered shares and are paid in full. The breakdown of equity into its individual components is shown in the statement of changes in equity. At the upcoming annual general meeting of shareholders on July 1, 2022, the Board of Directors of Burckhardt Compression Holding AG will propose a dividend for the 2021 fiscal year of CHF 7.50 (prior year: CHF 6.50). As of March 31, 2022, non-distributable reserves amounted to CHF 1.7 mn (prior year: CHF 1.7 mn). 03/31/2022 03/31/2021 Number of treasury shares 9’343 9’634 All treasury shares are held for the share-based long-term incentive program within the Burckhardt Compression Group respectively for the fixed compensation of the board of directors (20% of which paid in shares). 19. FINANCIAL LIABILITIES in CHF 1’000 03/31/2022 03/31/2021 Non-current financial liabilities Current financial liabilities Total financial liabilities 128’881 28’925 157’806 133’070 24’726 157’796 The average effective interest rate amounted to 1.3% in fiscal year 2021 (prior year: 2.0%). Some credit agreements are subject to financial covenants such as a minimum equity ratio or net financial indebt- edness to EBITDA. None of the credit lines which are subject to financial covenants were drawn as per March 31, 2022. Currencies of Financial Liabilities in CHF 1’000 03/31/2022 03/31/2021 Financial liabilities in CHF Financial liabilities in USD Financial liabilities in other currencies Total financial liabilities 134’988 20’928 1’890 157’806 112’850 32’919 12’027 157’796 111 Annual Report 2021 Burckhardt Compression Financial Report Maturities of Non-Current Financial Liabilities in CHF 1’000 Due within 2 years Due within 3 years Due within 4 years Due within 5 years Due beyond 5 years Total non-current financial liabilities 03/31/2022 03/31/2021 586 100’681 198 – 27’416 128’881 920 14’466 100’080 199 17’405 133’070 On September 30, 2020, Burckhardt Compression issued a bond for a total of CHF 100 mn with a coupon of 1.5%. The issue price was 100% of the nominal value. It will be redeemed at par value on September 30, 2024. The bond is listed on the SIX Swiss Exchange. 20. PROVISIONS in CHF 1’000 Employee- related Warranties, penalties, unprofitable contracts Other 2021 Total Employee- related Warranties, penalties, unprofitable contracts Other 2020 Total Balance as per 04/01/2021 / 04/01/2020 11’508 26’426 3’118 41’052 8’072 24’792 1’773 Changes in the consolidation scope Additions Release Utilization – 1’537 –664 195 14’470 –487 – 1’031 –236 195 17’038 –1’387 – 4’497 –197 2’006 5’943 –876 – 3’317 –553 –2’873 –9’185 –2’719 –14’777 –1’003 –5’664 –1’419 Currency translation differences Balance as per 03/31/2022 / 03/31/2021 –397 9’111 –349 17 –729 139 225 – 31’070 1’211 41’392 11’508 26’426 3’118 41’052 34’637 2’006 13’757 –1’626 –8’086 364 Thereof non-current Thereof current 5’271 3’840 7’641 23’429 8 1’203 12’920 28’472 5’514 5’994 8’784 17’642 187 2’931 14’485 26’567 Employee-related provisions include employee benefit obligations (see note 30), provisions for long-term service awards and ordinary termination benefits. 21. OTHER NON-CURRENT LIABILITIES Other non-current liabilities mainly consist of various government grants in China. 112 Annual Report 2021 Burckhardt Compression Financial Report 22. OTHER CURRENT LIABILITIES in CHF 1’000 Notes payable VAT payables Derivative financial instruments Current tax liabilities Other current liabilities Total other current liabilities 03/31/2022 03/31/2021 9’570 3’987 868 8’349 13’357 36’131 2’128 3’859 717 5’612 61’501 73’817 Other current liabilities mainly consist of various social securities payables as well as various taxes payables such as VAT or withholding taxes. In the previous year other current liabilities mainly consisted of deferred purchase price payments for Shenyang Yuanda Compressor Co. Ltd. and the compressor business of the Japan Steel Works Ltd. (see note 4). 23. ACCRUED LIABILITIES AND DEFERRED INCOME in CHF 1’000 Contract-related liabilities Vacation and overtime Salary and bonus payments Miscellaneous Total accrued liabilities and deferred income 03/31/2022 03/31/2021 58’451 4’011 14’262 8’129 84’853 44’877 3’179 11’176 6’833 66’065 24. DERIVATIVE FINANCIAL INSTRUMENTS Burckhardt Compression uses derivative financial instruments to mitigate currency risks. The risk management policy is described in note 3. On the balance sheet, derivative financial instruments are shown as “Other Current Receivables” and “Other Current Liabilities”. in CHF 1’000 Contract value Positive fair values Negative fair values 25. CONTINGENT LIABILITIES 03/31/2022 03/31/2021 167’506 3’330 868 125’932 1’067 717 Guarantees Burckhardt Compression guarantees essentially for securing customer advance payments and for eventual warranty claims from customers. Guarantees are issued by third-party banks or by Burckhardt Compression Holding AG. 113 Annual Report 2021 Burckhardt Compression Financial Report The majority of current customer advance payments as well as major warranty exposures are covered either by a third party bank guarantees or guarantees issued by Burckhardt Compression Holding AG. As per March 31, 2022, Burckhardt Compression had issued guarantees in amount of CHF 238.8 mn (prior year: CHF 181.9 mn). Other Contingent Liabilities As of March 31, 2022, Burckhardt Compression does not have any other contingent liabilities. 26. COMMITMENTS Operating Leases in CHF 1’000 Operating leases due in less than 1 year Operating leases due in 1 to 5 years Operating leases due in more than 5 years Total operating lease commitments 03/31/2022 03/31/2021 3’132 11’606 5’108 19’846 2’645 10’644 4’752 18’041 Purchase commitments Purchase commitments for capital expenditure as of March 31, 2022 amounted to CHF 4.7 mn (prior year: CHF 4.4 mn). 27. PLEDGED ASSETS As of March 31, 2022, Burckhardt Compression had pledged assets with a carrying amount of CHF 91.0 mn (prior year: CHF 143.2 mn) to secure mortgage loans and guarantees. The pledged assets consisted mainly of land and buildings, and to a lesser degree of inventories and trade receivables. 28. SHARE-BASED PAYMENTS Since 2017, there is a long-term incentive plan for the members of the Executive Management and certain other em- ployees in place. Long-term incentive pay is awarded in the form of free shares. None of the shares are subject to any restrictions upon the date of transfer. In 2021, 291 shares at a fair value of CHF 372.50 were granted for the fixed compensation of the board of directors (20% of which paid in shares). In 2020, participants of the long-term incentive plan were granted 26’982 shares at a fair value of CHF 230.50. Personnel expenses in 2021 for share-based payments amounted to CHF 4.4 mn (prior year: CHF 3.9 mn). 29. RELATED PARTY TRANSACTIONS Except for the remuneration as disclosed in the Compensation Report of this Annual Report, no further relations or transactions existed in 2021 and 2020 with the members of the Board of Directors, Executive Management or other re- lated parties. 114 Annual Report 2021 Burckhardt Compression Financial Report 30. EMPLOYEE BENEFIT OBLIGATIONS Burckhardt Compression has various pension plans to which most of its employees contribute. With the exception of companies in Switzerland and Germany, these pension plans are defined contribution pension arrangements. Under these, as a rule, payments are made into pension funds administered by third parties. Burckhardt Compression has no payment obligations beyond making these defined contributions. Burckhardt Compression’s pension plans in Switzerland consist of two independent pension funds: “Sulzer Vorsorge- einrichtung” (SVE), a base plan for all employees, and “Johann Jakob Sulzer Stiftung” (JJS), a plan for employees with sala- ries exceeding a certain limit. The majority of the active participants in the two pension funds are employed at companies not belonging to Burckhardt Compression. The board of trustees for the base plan comprises ten employer representatives and ten employee representatives of the contributing companies and is responsible for asset allocation and risk management. The pension plans contain a cash balance benefit formula. Under Swiss law, the pension funds guarantee the vested benefit amount as confirmed annually to members. Interest may be added to member balances at the discretion of the board of trustees. At retirement date, members have the right to take their retirement benefit as a lump sum, an annuity or part as a lump sum with the balance converted to an annuity. The pension funds may adapt the contribution and benefits at any time. In case of under- funding, this may involve special payments from the employer. The surplus or underfunding cannot be determined per company. The coverage of the collective plans as a whole as of December 31, 2021 amounted to 126.7% (SVE; prior year: 117.6%) and 127.2% (JJS; prior year: 115.8%). The technical interest rate used by both collective plans amounted to 1.5% (prior year: 2.0%). Employer Contribution Reserves Burckhardt Compression does not have any employer contribution reserves Economic Benefits/Economic Obligations and Pension Benefit Expenses in CHF 1’000 Economic portion of the organization Change to prior year period recognized in the current result of the period Currency translation differences Contributions of the fiscal year Pension benefit expenses 03/31/2022 03/31/2021 2021 2021 2021 2021 2020 Pension plans with surplus Unfunded pension plans Total – –1’773 –1’773 – –2’104 –2’104 – 181 181 – 150 150 –8’408 – –8’408 –8’408 181 –8’227 –8’119 –83 –8’202 31. IMPACTS OF THE CONFLICT BETWEEN RUSSIA AND UKRAINE As a consequence of the conflict between Russia and Ukraine, the Board of Directors and the Executive Management have decided not to accept any new orders from or for Russia effective March 14, 2022. For current projects, Burckhardt Compression strictly adheres to the applicable export control guidelines and to the applicable sanctions law. As of March 31, 2022 it was evaluated whether and to what extent the ongoing projects would be affected by the sanctions in place at that time and to what extent any valuation adjustments would be necessary as a consequence in the financial statements as of that date. The clarifications confirmed that the majority of the ongoing projects were not subject to sanctions and therefore no valuation adjustments were necessary for them. 32. EVENTS AFTER THE BALANCE SHEET DATE On April 27, 2022, further sanctions against Russia were imposed and published by the European Union (EU) which will likely affect some backlog orders from or for Russia with a possible negative financial impact at EBIT-level of around CHF 5 – 7 mn for the financial year 2022, if such sanctions are upheld. 115 Annual Report 2021 Burckhardt Compression Financial Report 33. GROUP COMPANIES AND ASSOCIATES Company Registered office Registered capital Interest in capital & h c r a e s e R t n e m p o l e v e d g n i r e e n g n e i & g n i r u t c a f u n a M g n i t c a r t n o C s e l a S e c i v r e S Burckhardt Compression AG 1 Burckhardt Compression Immobilien AG 1 Winterthur, Switzerland Winterthur, Switzerland Burckhardt Compression (Deutschland) GmbH Neuss, Germany Burckhardt Compression (Italia) S.r.l. Milan, Italy Burckhardt Compression (France) S.A.S. Burckhardt Compression (España) S.A. Burckhardt Compression (UK) Ltd. Cergy Saint Christophe, France Madrid, Spain Bicester, United Kingdom Burckhardt Compression (US) Inc. Houston, USA Burckhardt Compression (Canada) Inc. Mississauga, Canada Burckhardt Compression (Japan) Ltd. Tokyo, Japan Burckhardt Compression (Shanghai) Co. Ltd. Shanghai, China Burckhardt Compression (India) Private Ltd. Pune, India Burckhardt Compression (Brasil) Ltda. São Paulo, Brazil Burckhardt Compression (Middle East) FZE Dubai, United Arab Emirates Burckhardt Compression Korea Ltd. Seoul, South Korea Burckhardt Kompresör San. ve Tic. Ltd. Istanbul, Turkey Burckhardt Compression Singapore Pte Ltd. Singapore, Singapore Burckhardt Compression South Africa (Pty) Ltd. Sunnyrock, South Africa Burckhardt Compression Korea Busan Ltd. Busan, South Korea Burckhardt Compression (Saudi Arabia) LLC Burckhardt Compression North America Service LLC Dammam, Saudi Arabia Wilmington, USA CSM Compressor Inc. Edmonton, Canada 116 Annual Report 2021 Burckhardt Compression CHF 2’000’000 CHF 5’000’000 EUR 30’000 EUR 400’000 EUR 300’000 EUR 550’000 GBP 250’000 USD 18’250’000 CAD 200’000 JPY 50’000’000 CNY 14’238’000 INR 331’140’000 BRL 5’818’000 AED 2’000’000 KRW 250’000’000 TRY 800’000 SGD 700’000 ZAR 3’000’000 KRW 7’000’000’000 SAR 1’000’000 USD 1’800’000 CAD 10’000 • • • • • • • • • • • 100% • • 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% • 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Financial Report Company Registered office Registered capital Interest in capital & h c r a e s e R t n e m p o l e v e d g n i r e e n g n e i & g n i r u t c a f u n a M g n i t c a r t n o C s e l a S e c i v r e S Burckhardt Compression (Netherlands) BV Rotterdam, Netherlands Burckhardt Compression (Sweden) AB Landvetter, Sweden Shenyang Yuanda Compressor Co. Ltd.1 Shenyang, China Liaoning Yuanyu Industrial Machinery Co. Ltd. Kaiyuan, China Shenyang Yuanda Compressor Automatic Control System Co. Ltd. Compressor Tech Holding AG1 Shenyang, China Zug, Switzerland PROGNOST Systems GmbH Rheine, Germany PROGNOST Systems Inc. PROGNOST Machinery Diagnostics Equipment and Services LLC Société d’Application du Métal Rouge SAS Arkos Group LLC Arkos Field Services, LP Houston, USA Abu Dhabi, United Arab Emirates Pont Sainte Marie Cedex, France Houston, USA Houston, USA Arkos Realty & Investments, LP Houston, USA EUR 18’000 SEK 100’000 CNY 100’000’000 CNY 39’000’000 CNY 5’000’000 CHF 200’000 EUR 200’000 USD 240’000 AED 300’000 EUR 501’000 USD 11’752’000 – – 100% 100% 100% 100% 60% 100% 100% 100% 100% 100% 100% 100% 100% • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 1 Company is directly held by Burckhardt Compression Holding AG. All other companies are indirectly held by Burckhardt Compression Holding AG. 117 Annual Report 2021 Burckhardt Compression Financial Report Report of the statutory auditor to the General Meeting of Burckhardt Compression Holding AG Winterthur Report on the audit of the Financial Report (consolidated financial statements) Opinion We have audited the consolidated financial statements of Burckhardt Compression Holding AG and its subsidiaries (the Group), which comprise the Consolidated income statement for the year ended 31 March 2022, the Consolidated bal- ance sheet as at 31 March 2022, Consolidated cash flow statement and Consolidated statement of changes in equity for the year then ended, and Notes to the Consolidated Financial Statements, including a summary of significant accounting policies. In our opinion, the consolidated financial statements (pages 90 to 117) give a true and fair view of the consolidated fi- nancial position of the Group as at 31 March 2022 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Swiss GAAP FER and comply with Swiss law. Basis for opinion We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements” section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss au- dit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach Overview Overall Group materiality: CHF 3'250'000 We concluded full scope audit work and audits of selected account balances at five reporting units in three countries. Our audit scope addressed over 64% of the Group's sales. As key audit matter the following area of focus has been identified: Accounting for work in progress of the systems division Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due PricewaterhouseCoopers AG, Bahnhofplatz 17, Postfach, CH-8400 Winterthur, Switzerland Telefon: +41 58 792 71 00, Telefax: +41 58 792 71 10, www.pwc.ch PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. 118 Burckhardt CompressionAnnual Report 2021 Financial Report 119 Burckhardt CompressionAnnual Report 2021 to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influ-ence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. Overall Group materiality CHF 3'250'000 Benchmark applied Profit before tax Rationale for the materiality bench-mark applied We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured, and it is a generally accepted benchmark. We agreed with the Audit Committee that we would report to them misstatements above CHF 325'000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. Audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consoli-dated financial statements as a whole, taking into account the structure of the Group, the accounting processes and con-trols, and the industry in which the Group operates. The audit strategy for the audit of the consolidated financial statements was determined taking into account the work performed by the Group auditor and the component auditors in the PwC network. The Group auditor performed the audit of the consolidation, the disclosures and the presentation of the consolidated financial statements. Where audits were performed by component auditors, we ensured that, as Group auditor, we were adequately involved in the audit in order to assess whether sufficient appropriate audit evidence was obtained from the work of the component auditors to provide a basis for our opinion. Our involvement comprised analysing the reporting, communication with the component auditors, communicating the risks identified at Group level and determining the materiality thresholds for the audits performed by component auditors. Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Accounting for work in progress of the systems division Key audit matter How our audit addressed the key audit matter Burckhardt Compression Group has projects in the sys-tems division, which are accounted for as work in progress in accordance with Swiss GAAP FER. As at 31 March 2022, work in progress in the amount of CHF 82.9 million (mainly related to systems division projects) was recog-nised in the balance sheet. Management estimates the costs to be incurred until their completion, possible penalties as well as net realisable value. This involves significant scope for judgement and an incorrect estimate could have a significant impact on the result for the period. Our audit procedures regarding the accounting for work in progress of systems division projects included in particular the following: • We assessed the design and the existence of the key controls regarding the systems division projects and tested the effectiveness of selected controls. • We selected a sample of systems division projects, based on the contract volumes, the contribution mar-gin and changes in the margin compared to the plan-ning phase, and focused our testing on the following: Financial Report 120 Burckhardt CompressionAnnual Report 2021 Please refer to page 96 (Accounting policies – Inventories) and page 109 (Inventories) in the Notes to the Consoli-dated Financial Statements. • We assessed the contract related calculations to de-termine whether the contractual terms had been rec-orded appropriately. • We discussed with the project controllers and project managers the progress of the projects based on the latest project reports, the costs still to be incurred until their completion and changes in the estimated margin. • We obtained written information from the legal repre-sentatives of the Group. We inspected this written in-formation with regard to indications of potential quality deficiencies or penalties and assessed whether these matters were presented appropriately in the consoli-dated financial statements. • During the audit, we conducted onsite inspections of various compressors still under construction. • For the systems division projects completed during the year under review, we compared various final parame-ters with the estimates made in the planning phase in order to assess, with hindsight, the accuracy of the es-timates made by Management. The results of our audit support the accounting of work in progress of the systems division in the consolidated finan-cial statements. Responsibilities of the Board of Directors for the consolidated financial statements The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with Swiss GAAP FER and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from mate-rial misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be ex-pected to influence the economic decisions of users taken on the basis of these consolidated financial statements. A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our audi-tor’s report. Financial Report 121 Burckhardt CompressionAnnual Report 2021 Report on other legal and regulatory requirements In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers AG Sandra Böhm Uglow Oliver Illa Audit expert Auditor in charge Audit expert Winterthur, 2 June 2022 Financial Report Financial Statements of Burckhardt Compression Holding AG, Winterthur Balance sheet in CHF 1’000 Notes 03/31/2022 03/31/2021 Current assets Cash and cash equivalents Other current receivables due from third parties Other current receivables due from group companies Total current assets Non-current assets Financial assets Long-term loans to group companies Investments in subsidiaries Total non-current assets Total assets Current liabilities Trade payables due to third parties Other current liabilities due to third parties Accrued liabilities and deferred income Current provisions Deferred payments Short-term loans from group companies Total current liabilities Non-current liabilities Loans third parties Total Non-current liabilities Equity Share capital Legal reserves from retained earnings Free reserves from retained earnings Profit brought forward Net income Treasury shares Total equity Total equity and liabilities 521 19 85 625 36’189 273’681 309’870 310’495 3 10 944 – – 3’724 4’681 100’000 100’000 8’500 1’700 194’408 3’342 –2’136 205’814 310’495 275 17 85 377 104’020 273’681 377’701 378’078 2 8 2’612 121 49’756 1’089 53’588 100’000 100’000 8’500 1’700 179’210 37’286 –2’206 224’490 378’078 102 103 104 122 Annual Report 2021 Burckhardt Compression Financial Report Income statement in CHF 1’000 Income Dividend income from group companies Interest income from group companies Income from services provided to group companies Other operating income Total income Expenses Operating expenses Other operating expenses Financial expenses Direct Taxes Total expenses Net income 2021 2020 5’128 856 192 3’807 9’983 –1’552 –3’090 –1’563 –436 –6’641 3’342 39’182 922 192 – 40’296 –2’026 – –802 –182 –3’010 37’286 Notes to the financial statements 101 ACCOUNTING POLICIES The financial statements as per March 31, 2022 are in compliance with the requirements of Swiss corporate law. The financial statements have been prepared in accordance with the provisions of commercial accounting as set out in the Swiss Code of Obligations (Art. 957 to 963b CO). The following disclosures are not being made separately in the statutory financial statements pursuant to Art. 961d (1) CO as Burckhardt Compression Holding AG is presenting its consolidated financial statements according to Swiss GAAP FER: – Additional disclosures in the notes (auditor’s fee; disclosure on non-current interest-bearing liabilities) – Cash flow statement – Management report The treasury shares are stated at acquisition cost and deducted from equity. No subsequent valuation is made. If the treasury shares are disposed of, the resulting gain or loss is recognized in the profit and loss statement. Burckhardt Compression Holding AG uses derivative financial instruments exclusively as hedges of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable future transaction (cash flow hedges). At inception of the hedge, Burckhardt Compression Holding AG docu- ments the hedging relationship and the effectiveness between the hedging instrument and the hedged item. The derivative financial instruments are off-balance sheet items. All the values in the annual financial statements are reported in thousand Swiss Francs unless otherwise indicated. Burckhardt Compression Holding AG’s fiscal year 2021 comprises the period from April 1, 2021 to March 31, 2022. 123 Annual Report 2021 Burckhardt Compression Financial Report 102 SUBSIDIARIES The equity interests held directly and indirectly by Burckhardt Compression Holding AG are shown in note 33 “Group Companies”. 103 SHARE CAPITAL AND SHAREHOLDERS The share capital amounts to CHF 8’500’000 and is composed of 3’400’000 shares, each with a nominal value of CHF 2.50. All shares are registered shares and are paid in full. No person will be registered in the Share Register as shareholder with voting rights with respect to more than five percent of the issued share capital. This entry restriction is also applicable to persons whose shares are totally or par- tially held by nominees. This restriction is also valid if shares are purchased when practicing subscription, warrant and conversion rights, with the exception of shares acquired by succession, distribution of inheritance or matrimonial regime. Legal entities and partnerships associated with each other by uniformly managed capital or votes or in any other way, as well as private and legal entities or partnerships, which form an association to evade the entry restriction, are regarded as one person. Individual persons, who have not expressly declared in the application of entry that they hold the shares for their own account (Nominees), will be entered in the Share Register with voting rights, if the Nominee concerned establish- es his/her subordination to an accredited banking supervision and securities authority, and if he/she has concluded an agreement with the Board of Directors of the company concerning his/her position. Nominees holding two or less than two percent of the issued shares will be entered in the Share Register with voting rights without an agreement with the Board of Directors. Nominees holding more than two percent of the issued shares will be entered in the Share Register with two percent voting rights and, for the remaining shares, without voting rights. Above this limit of two percent, the Board of Directors may enter in the Share Register Nominees with voting rights if they disclose the names, addresses, nationality, and shareholdings of the persons for whom they hold more than two percent of the issued shares. As of March 31, 2022, there is no such declaration between a nominee-shareholder and the board of directors. Shareholder groups which had existed before June 23, 2006 are excluded from the voting rights restrictions. According to information available to the company from the disclosure notifications of the SIX Swiss Exchange Ltd., the following shareholders reported shareholdings of at least 3% of the share capital and voting rights as of March 31, 2022 (according to the statu- tory bylaws the voting rights of NN Group N.V. and UBS Fund Management (Switzerland) AG are limited to 5% of the total number of the registered BCHN shares recorded in the commercial register): Shareholders 03/31/2022 03/31/2021 Name Country % of shares % of shares MBO shareholder pool (Valentin Vogt, Harry Otz, Leonhard Keller, Martin Heller, Ursula Heller, Marcel Pawlicek) NN Group N.V. UBS Fund Management (Switzerland) AG BlackRock, Inc. Atlantic Value General Partner Limited (Mondrian) FEDERATED HERMES INC. CH NL CH US GB US 12.40 9.86 5.02 3.07 < 3.0 < 3.0 12.40 10.31 3.01 3.04 5.03 3.01 124 Annual Report 2021 Burckhardt Compression Financial Report Detailed overview of shareholdings As of March 31, 2022, the members of the Executive Board and the Board of Directors (and related persons) owned the following numbers of shares of Burckhardt Compression Holding AG: Shareholders Members of the Management of Directors Ton Büchner Urs Leinhäuser Dr. Monika Krüsi Dr. Stephan Bross David Dean Total Executive Board Marcel Pawlicek Rolf Brändli Sandra Pitt1 Fabrice Billard Rainer Dübi Total Total Board of Directors and Executive Management As a % of all outstanding shares 1 until 31. December 2021 104 TREASURY SHARES in CHF 1’000 Number at the beginning of the period Purchases Sales Number at the end of the period Function Chairman Member Member Member Member CEO CFO CHRO President Systems Division President Services Division 2021 9’634 0 –291 9’343 31/03/2022 31/03/2021 Total shares Total shares 5’000 1’714 1’119 349 408 8’590 41’937 2’423 908 1’300 824 47’392 55’982 1.7% 5’098 1’758 1’163 393 452 8’864 37’737 1’223 n/a 1’300 824 41’084 49’948 1.5% 2020 21’616 15’000 –26’982 9’634 The average selling price amounted to CHF 228.56 (2020: CHF 228.57) 125 Annual Report 2021 Burckhardt Compression Financial Report 105 FURTHER DISCLOSURES PURSUANT TO ARTICLE 959C PAR. 2 OF THE SWISS CODE OF OBLIGATIONS: Full-time employees Burckhardt Compression Holding AG does not employ any employees. Liabilities to pension funds in CHF 1’000 03/31/2022 03/31/2021 Total liabilities to pension funds 0 0 Net release of undisclosed reserves in CHF 1’000 03/31/2022 03/31/2021 Net release of undisclosed reserves 0 0 Derivative financial instruments in CHF 1’000 03/31/2022 03/31/2021 Forward foreign exchange contracts (negative current fair value on cash flow hedge) 0 0 Guarantees in CHF 1’000 Guarantees 03/31/2022 03/31/2021 25’605 9’962 Burckhardt Compression Holding AG issues advance payment guarantees and performance bonds in the name of Burck- hardt Compression AG and in favor of a small number of selected customers. The credit lines and guarantee facilities extended to Burckhardt Compression AG by financial institutions do not require any assets or shares of Burckhardt Compression Holding AG to be pledged as collateral. 126 Annual Report 2021 Burckhardt Compression Financial Report Remuneration of the Board of Directors and the Executive Management Type and amount of remuneration of the members of the Board of Directors and the Executive Board as well as the prin- ciples and basic elements of the company’s compensation policy are depicted and explained in the compensation report on pages 80 to 87. Events after the balance sheet date There were no additional events after the balance sheet date which affect the annual results or would require an adjust- ment to the carrying amounts of Burckhardt Compression Holding AG’s assets and liabilities. Proposal by the Board of Directors for the appropriation of retained earnings in CHF 1’000 Retained earnings at the beginning of the period Distributed dividend Net income of the year Total The Board of Directors proposes the following appropriation Gross dividend Retained earnings carried forward 2021 216’446 –22’038 3’342 197’749 –25’500 172’249 2020 199’340 –20’180 37’286 216’446 –22’100 194’346 The Board of Directors will propose payment of a gross dividend of CHF 7.50 per registered share at the Annual General Meeting of Shareholders on July 1, 2022. Gross dividend Less 35% withholding tax Net dividend 2021 7.50 –2.60 4.90 2020 6.50 –2.30  4.20 2019 6.00 –2.10 3.90 127 Annual Report 2021 Burckhardt Compression Financial Report Report of the statutory auditor to the General Meeting of Burckhardt Compression Holding AG Winterthur Report on the audit of the financial statements of Burckhardt Compression Holding AG, Winterthur (financial statements) Opinion We have audited the financial statements of Burckhardt Compression Holding AG, which comprise the balance sheet as at 31 March 2022, income statement and notes to the financial statements for the year then ended, including a summary of significant accounting policies. In our opinion, the financial statements (pages 122 to 127) as at 31 March 2022 comply with Swiss law and the com- pany’s articles of incorporation. Basis for opinion We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section of our report. We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach Overview Overall materiality: CHF 1'500'000 We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into ac- count the structure of the entity, the accounting processes and controls, and the industry in which the entity operates. As key audit matter the following area of focus has been identified: Impairment testing of investments in subsidiaries Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or PricewaterhouseCoopers AG, Bahnhofplatz 17, Postfach, CH-8400 Winterthur, Switzerland Telefon: +41 58 792 71 00, Telefax: +41 58 792 71 10, www.pwc.ch PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. 128 Burckhardt CompressionAnnual Report 2021 Financial Report 129 Burckhardt CompressionAnnual Report 2021 error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative consider-ations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole. Overall materiality CHF 1'500'000 Benchmark applied Total assets Rationale for the materiality bench-mark applied We chose total assets as the benchmark because, in our view, it is a relevant and generally accepted benchmark for holding companies. We agreed with the Audit Committee that we would report to them misstatements above CHF 150'000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. Audit scope We designed our audit by determining materiality and assessing the risks of material misstatement in the financial state-ments. In particular, we considered where subjective judgements were made; for example, in respect of significant ac-counting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the fi-nancial statements of the current period. These matters were addressed in the context of our audit of the financial state-ments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Impairment testing of investments in subsidiaries Key audit matter How our audit addressed the key audit matter Investments in subsidiaries is a significant asset category on the balance sheet (CHF 273.7 million). Impairment test-ing of investments whose book value is greater than the book value of the underlying net assets requires Manage-ment to consider the capitalised earnings method or the discounted cash flow (DCF) method. Doing so involves significant scope for judgement, particu-larly to determine the assumptions to use concerning future business results. In identifying the potential need for impairment of invest-ments in subsidiaries, Management uses a predefined im-pairment testing process. Please refer to page 124 (Subsidiaries) in the notes to the financial statements. In our audit of investments in subsidiaries, we performed the following main audit procedures: • We compared the book value of the investments in the year under review with the pro-rata share of the respective company's equity or the compa-ny's valuation, based on an acceptable valuation method. • We assessed the plausibility of the key assump-tions applied by Management (revenue and mar-gin growth, discount rate and long-term growth). We consider the valuation process and the assumptions used to be an appropriate and adequate basis for the im-pairment testing of the investments in subsidiaries as at 31 March 2022. Responsibilities of the Board of Directors for the financial statements The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Directors determines Financial Report 130 Annual Report 2021 Burckhardt Compression is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of ac-counting unless the Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic al-ternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from ma-terial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERT-suisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report. Report on other legal and regulatory requirements In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers AG Sandra Böhm Uglow Oliver Illa Audit expert Auditor in charge Audit expert Winterthur, 2 June 2022 Glossary GLOSSARY We use abbreviations frequently in our daily work, so much so that we often don’t even notice them anymore. Here is a brief glossary of the most common abbreviations. LNG LPG LDPE EVA ME-GI X-DF Liquefied Natural Gas Liquefied Petroleum Gas Low-density polyethylene, soft polyethylene with high chemical resistance, good electrical insulation properties and good sliding behavior Ethylene vinyl acetate, plastic with high heat and good aging resistance dual propulsion system for ships from MAN dual propulsion system for ships from Win GD Boil-Off-Gas Liquid gas that heats up and turns back into gas OEM MPR Original equipment manufacturer Mid-range Plan Burckhardt Compression AG The statements in this review relating to matters that are not historical facts are forward-looking statements that are not guarantees of future performance and involve risks and uncertainties, including but not limited to: future global economic conditions, foreign exchange rates, regulatory rules, market conditions, the actions of competitors, and other factors beyond the control of the company. The Annual Report is published in German and English and is available on the internet under www.burckhardtcompression.com/financial-reports. The English version is binding. The financial report is available in English only. Publisher Burckhardt Compression Holding AG, Winterthur Concept/Design/Publication Linkgroup AG, Zurich Photography Severin Jakob, Zurich Scanderbeg Sauer, Zurich iStock, p. 4, 5 PR consultant PEPR, Oetwil am See Burckhardt Compression Holding AG 8404 Winterhur Switzerland Tel. +41 52 261 55 00 info@burckhardtcompression.com www.burckhardtcompression.com 

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