G1 Significant accounting principles – assessments and assumptions for accounting purposes

§ Accounting principles

The symbol and heading show where the accounting principles are described in each note. The accounting principles have been applied consistently to all periods presented in these consolidated financial statements.

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) Accounting Standards adopted by the International Accounting Standards Board (IASB) as endorsed by the EU. In addition, the recommendation RFR 1 Supplementary Accounting Rules for Groups, issued by the Swedish Corporate Reporting Board, has been applied.

The Parent Company has applied the same accounting principles as those applied in the consolidated financial ­statements except as set out in note P1, Accounting principles, Parent Company.

The financial statements are presented on pages 32-50 and 114-171 in the printed Annual Report. The Parent Company’s Annual Report and the consolidated financial statements were approved for issuance by the Board of Directors on March 6, 2026. Both the Group’s and the Parent Company’s income statements and balance sheets are subject to adoption at the Annual General Meeting on April 28, 2026.

Basis of consolidation

The consolidated financial statements are prepared in accordance with the Group’s accounting principles and include the accounts of the Parent Company and all subsidiaries over which the Parent Company exercises control.

Foreign currency

Financial statements of foreign operations

The assets and liabilities of foreign operations, arising on consolidation, are translated from the foreign operation’s functional currency to the Group’s reporting currency, SEK. Revenues and expenses of foreign operations are translated to SEK at average rates that approximate the foreign exchange rates prevailing at each of the transaction dates.

Translation differences arising from the translation of the net investment in foreign operations are recognized in other comprehensive income and are accumulated in a separate component of equity, a translation reserve. If the foreign operation is divested, the accumulated translation differences attributable to the divested foreign operation is reclassified from equity to profit or loss for the year as a reclassification adjustment at the date on which the profit or loss of the divestment is recognized. For cases in which divestments made include a residual controlling influence, the proportionate share of accumulated translation differences from other comprehensive income is transferred to non-controlling interests.

Changes in accounting policies 2025

IASB has published amendments of standards effective in 2025. These have not had any material impact on the financial statements.

Changes in accounting policies 2026 or later

IFRS 18 Presentation and Disclosure in Financial Statements.

The implementation of IFRS 18 will have an impact on the Group’s presentation of the income statement and statement of cash flows. It also requires additional note disclosures. Sandvik is still assessing the full impact of IFRS 18. The standard will be applied from January 1, 2027.

No other new or amended standards effective from 2026 or later are expected to materially affect the financial statements.

Critical accounting estimates and judgments

In order to prepare the financial statements, management and the Board make various judgments and estimates that can affect the amounts recognized in the financial statements for assets, liabilities, revenues and expenses as well as information in general, including contingent liabilities.

The judgments and estimates discussed in notes where applicable are those deemed to be most important for an understanding of the financial statements, considering the level of significant estimations and uncertainty. The conditions under which Sandvik operates are gradually changing, meaning that the judgments also change. Climate change has been assessed to not have a significant impact on the financial statements nor on the estimates and assumptions made when preparing the annual report and consolidated financial statements.

! Critical estimates and judgments

The symbol and heading show where the estimates and judgments are described in each separate note. The notes and critical estimates and judgments refers to: