Enabling the shift towards clean energy
for a sustainable future
Annual Integrated Report 2023
Our multisensor module for smart buildings measures
various physical parameters, enabling data-driven
processes for efficient energy management, cost
reduction, and minimization of CO
2
emissions.
For decades, our commitment to patient safety is evident
through our high-quality, precise, and safe components,
including pressure regulators, valves, and assemblies,
designed for anesthesia and respiratory technology.
HOW OUR PRODUCTS IMPACT EVERYDAY LIFE
Digitally Integrated Smart Building Management Reliability and Innovation in Ventilation Technology
Inductive Heating: Sustainable Technology
Our innovative Compact Lock, designed for tight spaces
like parcel lockers, offering exceptional impact resistance
without compromising security. Its cost efficiency allows it
to compete with the Asian market.
Efficient Security, Global Competitiveness
Boasting speed, accuracy, controllability, repeatability, and
cleanliness, Kendrion's Modular Inductive Heating System
supports the transition to greener energy in sectors like
food processing and printing.
To ensure safety of goods and employees, we offer
functional safety solutions to monitor the AGV and its
environment as well as holding brakes to stop the vehicle
accordingly.
Automated Processes
In the rapidly evolving world of surgical robotics, precision
and patient safety are of utmost importance.
Our brakes play a crucial role, ensuring absolute reliability
and precise positioning.
Exact Positioning
2
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Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
In electronic manufacturing, precision is crucial for flawless
assembly. Kendrion brakes are essential for maintaining
lightweight robots in the exact position.
Wind turbines generate the electricity needed to keep all
operations running smoothly. Kendrion brakes keep the
rotor blades in the optimum position even during heavy
storms.
Sustainable Power Accuracy in Manufacturing
Our modular valve for semi-active-damping are a game-
changer in automotive technology, providing drivers with
unparalleled comfort and ride quality. By intelligently
adjusting the behaviour of the damper to the road
conditions in real time, these valves enhance the driving
experience, ensuring a smoother, more controlled journey
in various terrains.
Elevating Ride Quality: Valves for Semi-Active-Damping
Revolutionizing Daily Commutes with
Enhanced Vehicle Acoustics
Kendrion's sensor cleaning solutions for Advanced Driver
Assistance Systems (ADAS) play a crucial role in
maintaining the reliability and effectiveness of safety
features in modern vehicles. These distribution systems
ensure that sensors remain clean and functional under all
conditions, providing drivers with consistent, dependable
assistance for a safer driving experience.
Our Multichamber Air Spring-Rate Valves enhance comfort
and safety in everyday road traveling by offering additional
functionality and versatility to airsprings. This technology
enables vehicles to seamlessly adjust to varying driving
conditions, leading to an efficient, smoother, and safer ride.
Ensuring Clear Vision: Kendrion's Sensor Cleaning
Solutions for ADAS
Transform your everyday driving experience with
personalized vehicle soundscapes, adjustable in real-time
for comfort or excitement, thanks to advanced live
parametrization technology. Whether stuck in traffic or
cruising on the highway, the tailored audio environment
turns every journey into an auditory delight, elevating the
mundane to the extraordinary.
Revolutionizing Vehicle Dynamics:
Multichamber Air Spring-Rate Valves
HOW OUR PRODUCTS IMPACT EVERYDAY LIFE
3
Annual Integrated Report 2023
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
This document is the PDF version of the 2023 Annual Integrated Report of Kendrion N.V. and has been prepared for ease of use.
The European Single Electronic Format (ESEF) reporting package is available on the company’s website at www.kendrion.com.
In case of discrepancies or ambiguities between this PDF version and the ESEF reporting package, the latter prevails.
2 How our products impact everyday life
5 Profile
6 Organization
7 Preface Joep van Beurden, CEO
9 Facts and figures
11 World map
12 Strategy and financial objectives
16 Enabling energy transition
21 Share and shareholder information
24 Members of the Executive Board
25 Report of the Executive Board
25 Industrial activities
28 Driving sustainable innovation, Robert Lewin
30 Automotive activities
33 Kendrion China, Kelly Tuo
35 Financial review
38 Sustainability review
65 People & Culture
73 Outlook
75 Risk management
83 Corporate Governance Report
88 Members of the Supervisory Board
90 Preface Frits van Hout,
Chairman of the Supervisory Board
91 Report of the Supervisory Board
96 Remuneration Report
113 Financial statements
189 Other information
189 Provisions in the Articles of Association
governing the appropriation of profit
190 Independent auditor’s report financial statements
202 Limited assurance report non-financial information
205 Principal subsidiaries
207 Glossary – definitions of non IFRS financial
measures
209 Reconciliation of non IFRS financial measures
212 About the Sustainability Report
CONTENTS
PHOTOGRAPHY
AND IMAGES
Wessel de Groot Fotografie
Kendrion N.V.
Shutterstock
iStock
A digital version of this Report
is available on the website
www.kendrion.com
along with other publications
such as press releases.
Annual Integrated Report 2023
4
Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsContents
PROFILE
Kendrion designs, manufacturers and delivers
intelligent actuators that help advance the global
push towards electrification and sustainable
energy.
Today, these compact, smart actuators are used in wind
turbines, robots, factory automation, electric vehicles, energy
distribution, and industrial heating processes, where they
support OEM customers around the world to transition to safer
and cleaner forms of energy.
As a technology pioneer and innovator, building on a foundation
of over 100 years of experience, we are driven by a desire
to explore creative solutions to the engineering challenges of
tomorrow. Our modular product design approach and agile
way of working enable us to create complex products and
customized systems that save our customers time and costs
and has made Kendrion the trusted partner of some of the
world’s market leaders in the industrial and automotive
segments.
We actively and consciously source, manufacture, and conduct
our business. Sustainable business practices are integrated in
our processes and embedded in our culture.
Rooted in Germany, headquartered in The Netherlands, and
listed on the Amsterdam stock exchange, our footprint extends
across Europe to the Americas and Asia.
Enabling the shift towards clean energy for a sustainable future
Precision. Safety. Motion.
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Contents Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsProfile
ORGANIZATION
AUTOMOTIVE CORE AUTOMOTIVE E
Focus on the production of
existing valve, actuation and
control technologies for
combustion engine commercial
and passenger car vehicles.
Focus on the development and
marketing of advanced smart
actuator and control technologies
for electric and autonomous
driving vehicles.
INDUSTRIAL AUTOMOTIVE
INDUSTRIAL
ACTUATORS AND CONTROLS
We focus on customized solutions
for industrial applications based
on electromagnetic actuators,
control technology and fluid
technology.
INDUSTRIAL
BRAKES
We are a full-line provider of
electromagnetic brakes for
electromotors in industrial end
markets.
6
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PREFACE
Enabling the shift towards clean energy
for a sustainable future
Reflecting on 2023, it was another year marked by substantial
external challenges. The continued war in Ukraine, economic
repercussions from COVID-19 stimulus measures resulting in
supply chain disruptions and persistent inflation reverberated
across global businesses. This was compounded in the fall by
the war between Israel and Hamas in Gaza. Despite this
challenging environment we delivered solid results.
We are on the brink of a shift in how we obtain our energy,
moving towards clean sources. Kendrion is in a good position
to capitalize on the emerging opportunities within our Business
Groups and in China. The transition to clean energy has only
just begun, and our organization is poised to fully leverage this
transformative shift.
I want to express my appreciation to each person at Kendrion
for their dedication, pursuit of excellence, and ability to face
challenges with a positive outlook. The hard work of our people
has had a significant impact as we persist in our efforts to make
our company better.
Solid results in a volatile market
We began 2023 with optimism, eager to return to business as
usual. However, reality proved different: volatile market
conditions continued to impact our operations across all
Business Groups and geographical areas. Particularly, the
economies of Germany and China, responsible for almost half
of our revenue, did not meet expectations.
The resulting slowdown, especially in Industrial Brakes,
demanded flexibility in our resource and production planning.
In the automotive industry, the number of passenger cars
produced increased and fortunately displayed less volatility and,
consequently, better predictability in order patterns. During
2023, we successfully increased our Automotive sales prices,
leading to improved financial performance, especially in the
second half of 2023.
In this difficult business environment, our Group revenue
remained flat at EUR 518.5 million compared to
EUR 519.3 million in 2022. In Industrial, revenue decreased
by 7% from EUR 276.5 million in 2022 to EUR 256.5 million,
primarily due to a sharp reduction in demand for industrial
brakes, especially in Germany and China. Organic revenue
in Industrial remains 17% higher than pre-COVID levels,
constituting 49% of the total Group’s revenue. In Automotive,
revenue grew by 8%, reaching EUR 262.0 million. Automotive
Core realized EUR 189.5 million revenue and Automotive E
EUR 72.5 million. This growth can be attributed to sales price
increases in Automotive Core and the implementation of
projects in Automotive E.
Focus on clean energy solutions across Business Groups
All our Business Groups and our operations in China focus on
delivering smart actuator products that support the broad
energy transition away from oil, natural gas, and coal, towards
clean forms of energy.
Joep van Beurden,
CEO
7
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In Automotive we specialize in actuators for sound, suspension,
and smart actuation – three products specifically aimed at
Autonomous, Connected, Electrified and Shared vehicles, or
ACES. In Industrial Brakes (IB), despite the downcycle in 2023,
we benefit from the fast-growing market for electromotors.
Since our brakes are sold as part of an electromotor, IB’s
business is related to the flourishing market for electrified
solutions. This includes areas such as intralogistics (AGVs and
electric forklift trucks, and more), robotics and wind power.
The product portfolio of our Business Group Industrial
Actuators and Controls (IAC) includes modular, electrified
induction heating systems to replace traditional heating
solutions using gas or oil, circuit brakers for electricity
distribution systems, and a safety actuator for nuclear power
facilities.
Securing profitable growth
In 2023, we implemented two significant strategic changes
that reflect our confidence in emerging opportunities: the further
advancement of the establishment of the Automotive E
organization and the inauguration of our state-of-the-art factory
in China.
To sharpen our focus on ACES, on 31 December 2022 we
completed the restructuring of the Automotive Group into two
units: Automotive Core and Automotive E. While Automotive
Core focuses on existing technologies for vehicles with an
internal combustion engine (ICE), Automotive E is dedicated to
opportunities within the Autonomous, Connected, Electrified
and Shared (ACES) mobility transition.
Throughout 2023, we further advanced the new structure
which enhanced the efficiency and cash generation of our
existing combustion engine business, accelerated our
innovation, and facilitated the development of strategically
relevant products such as AVAS sound systems, active
suspension, and smart actuators for sensor cleaning, seat
massage valves and battery cooling. Notably the Automotive E
organization contributed around EUR 230 million in won
projects to our long term orderbook.
Furthermore, our new 28,000 m² state-of-the-art factory in
China, fully operational since May 2023, has improved our
ability to serve Chinese customers. As the largest facility in
the Kendrion Group, this new factory positions us well to
capitalize on our project pipeline and the numerous
opportunities we are pursuing in China. We anticipate reaching
maximum capacity in 3 to 4 years from now. In the first full year
In 2023, we implemented two significant strategic
changes that reflect our confidence in emerging
opportunities: the further advancement of the
establishment of the Automotive E organization and
the inauguration of our state-of-the-art factory in China.
of operation, we expect to ramp up production for six new
Automotive E projects. This would not have been possible
without the new facility.
Outlook
The outlook for 2024 remains uncertain due to a potential
recession in Europe and sustained weakness in the Chinese
economy impacting global economic activity. Looking beyond
the short term uncertainties, however, the global transition
towards clean energy sources – electrical power, green
hydrogen, and nuclear power – presents Kendrion with
a growing list of opportunities. Positioned strategically, we
anticipate substantial business growth in the years to come.
Our focus remains on growth initiatives aligned with the energy
transition to achieve our 2025 financial targets: an average
organic growth of 5% between 2019 and 2025, an EBITDA
of at least 15% in 2025 and an ROI of at least 25% in 2025.
8
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PREFACE
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
1
Not meaningful.
2
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to reconciliation of non-IFRS information, starting on page 207.
3
Invested capital excluding intangibles arising from acquisitions.
Revenue
(EUR million)
0%
518.5
2022 519.3
Profit for
the period
(EUR million)
NM
1
9.9
2022 -46.3
Normalized
2
EBITDA
(EUR million)
7%
53.1
2022 57.4
Dividends
(proposed)
(EUR million)
36%
6.9
2022 10.8
ROI
2,3
(in %)
13.6%
13.5%
2022 15.6%
FACTS AND FIGURES
Net cash flows from
operating activities
(EUR million)
4%
36.4
2022 37.9
9
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Total number
of employees
by gender
(in % F vs M)
46/54
2022 47/53
Total number of
employees (FTE)
(at 31 December)
5.3%
2.606
2022 2.753
Illness rate
(in %)
13%
4.7%
2022 5.4%
Accidents
(per 1,000 FTE)
18%
7.7
2022 6.5
Relative energy
consumption (in
tonnes kWh/million
added value)
1.8%
149.9
2022 147.2
Relative CO
2
emission
(in tonnes kWh/
million added value)
10.1%
27.3
2022 24.8
Number of
CSR supplier
audits
13.8%
25
2022 29
10
Annual Integrated Report 2023
Please refer to the section ‘About the sustainability report’ on pages 212-214 of this Annual Integrated Report for reporting periods, definitions,
scope and limited assurance review.
FACTS AND FIGURES
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
WORLD MAPWORLD MAP
Revenue (in EUR million) segmented by customer location
FTE segmented by region
71.2
14%
Kendrion
business
location
1
Including other countries with revenue of EUR 3.0 million
84.6
16%
362.7
70%
40% 60%
289
46% 54%
2,102
57% 43%
215
EUROPE
THE AMERICAS
ASIA
1
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STRATEGIC INTENT
AUTOMOTIVE
CHINA
INDUSTRIAL
BRAKES
CHINA
ACTUATORS
AND
CONTROLS
CHINA
THE KENDRION WAY
STRATEGY AND FINANCIAL OBJECTIVES
Amidst geopolitical turbulence, sluggish growth in Europe and
China, the conflict in Gaza and inflation impacting businesses
globally, Kendrion maintained its commitment to achieving
sustainable growth. This commitment is driven by the
widespread and accelerating energy transition towards
electrification and other clean energy sources. In the short term,
the brake market, which experienced organic growth of around
20% in both 2021 and 2022, faced weakness, particularly in
the second half of 2023.
In Automotive we successfully increased our margin by passing
on price increases to our customers. The completion of our
new factory in Suzhou’s Industrial Park in China marked a
significant milestone. Additionally, we successfully navigated the
segregation of our Automotive Group into two units: Automotive
Core and Automotive E. This strategic move, prompted by the
rapidly evolving automotive market, resulted in heightened
focus, transparency and dedicated performance indicators.
Consequently, there was an improvement in financial
performance throughout the year in Automotive Core and
substantial new business wins in Automotive E, amounting to
nearly EUR 230 million. Currently, we are actively pursuing
opportunities exceeding EUR 1.5 billion.
We focus on a highly promising segment within the Kendrion
Automotive Group: Autonomous, Connected, Electrified,
Shared passenger cars, or ACES, which holds substantial
growth potential. The new factory in Suzhou not only provides
the capacity to accommodate our existing production but also
facilitates the ramping up of six new Automotive E projects.
Moreover, this new facility positions us to leverage numerous
Enabling the shift towards clean energy for a sustainable future
Our strategy
Kendrion strategically directs its resources and capital
toward areas propelled by the powerful, accelerating global
shift towards clean energy. This strategic focus presents
opportunities for sustainable and profitable growth,
encompassing:
■ Industrial Actuators and Controls: electricity distribution,
control technology, industrial locks, nuclear power, and
inductive heating.
■ Industrial Brakes: wind power, robotics & automation,
and intra-logistics.
■ Automotive E: sound systems, smart suspension valves
and smart actuators for sensor cleaning, seat massage
valves and battery cooling.
■ China: multiple opportunities for our three Business
Groups, spanning various industrial and automotive
applications, aligned with enabling the energy transition
and consistent with the aforementioned market
segments.
Provided the current slow economic circumstances clear
up during 2024, we are confident in achieving our financial
targets – 5% organic growth annually between 2019 and
2025, with an EBITDA of at least 15% and an ROI of at
commercial opportunities we are actively pursuing across
Automotive E, Industrial Brakes and Industrial Actuators and
Controls.
In 2023, our continued focus on opportunities related to the
transition to clean energy yielded a solid financial performance,
despite an unpredictable and complex economic and business
environment.
least 25%. This confidence stems from the progress made thus
far, and the ongoing development of our product pipeline
across all growth areas.
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Kendrion stands as a leading player in the markets for both
permanent magnet brakes and spring-applied brakes. Given
the close integration of these brake technologies with
electromotors, the accelerating transition towards electrification
presents Industrial Brakes (IB) with substantial opportunities in
a fast-growing market. IB’s comprehensive range of high-quality
products finds global appeal, reaching customers from Europe
to China, the US, and India.
In both 2021 and 2022, we achieved robust organic growth of
around 20% per year, across nearly all segments served by IB.
However, the landscape shifted in 2023. Elevated interest
costs, impacting global investments in capital goods such as
STRATEGY AND FINANCIAL OBJECTIVES
Industrial Actuators and Controls
Industrial Brakes
Industrial Actuators and Controls (IAC) remains committed to
achieving profitability and cash flows surpassing the Group
average. This enables us to strategically invest in sustainable
growth opportunities. With the ongoing, global shift towards
clean energy sources, IAC, with products such as our induction
heating systems for industrial processes, industrial locks for
baking ovens, laboratory equipment and parcel lockers, safety
valves for nuclear power plants, and solenoids for high voltage
circuit breakers, is well positioned to capitalize on these
opportunities. In alignment with the Group strategy, IAC is pro-
actively investing in these avenues.
robots and wind power, coupled with some destocking resulted
in a substantial slowdown in the brake market, specifically in
the second half of 2023. Looking ahead we maintain a positive
outlook for IB, expecting substantial long-term growth. Firstly,
the continuous automation of global industrial manufacturing
processes is driving the widespread adoption of industrial and
collaborative robots across diverse industries. Secondly,
worldwide investment in green energy is gaining momentum,
fostering an increased demand for wind turbines. And finally,
within the internal logistics sector, the shift towards more
automation is accelerating, as warehouses for e-commerce and
other delivery services progressively adopt automated guided
vehicles (AGVs) and electric forklift trucks.
13
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Contents Profile Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsStrategy
The automotive industry is experiencing a significant
transformation driven by four interconnected trends:
Autonomous driving, Connected vehicles, Electrification of
the powertrain and Shared mobility, or the so-called ACES.
Kendrion anticipates that, overall, ACES will increase the
actuator content per car, contributing to above-average
growth. Recent market research projects a 40% annual
growth projection for the market of electrified passenger
cars in the next five years. We are confident in our strategic
positioning to capitalize on this evolving trend.
Our innovative product platforms are precisely tailored for
ACES. They include systems and components for active
suspension, Acoustic Vehicle Alerting Systems (AVAS) for
electric vehicles, and various ‘smart’ actuators for
applications such as sensor cleaning, seat massage
Automotive
China
In recent years, Kendrion has witnessed substantial revenue
growth in China. The project pipeline supports continued growth,
and the Chinese market presents significant additional
opportunities for this growth to continue.
To support this, we have established a new 28,000 m
2
production facility at the renowned Suzhou Industrial Park (SIP),
doubling our production capacity and thus revenue potential.
functionality and battery cooling. With the rapid evolution to
electrified and smarter vehicles we have established a
dedicated unit, Automotive E, responsible for developing,
marketing, and selling ACES-related products. This strategic
move aligns with our focus on products facilitating the shift
towards cleaner energy. Automotive E is committed to investing
in innovative products, fostering close customer relationships,
driving business development, managing programs and
ensuring profitable growth.
Automotive Core oversees Kendrion’s Automotive business
concerning established applications for combustion engine cars
and commercial vehicles. It places a strong emphasis on
operational excellence, lean production, cost efficiency, as well
as maintaining profitability and cashflow.
With the move completed in the summer of 2023, we are
currently ramping six new Automotive E projects, with more in
the pipeline. The building is expected to support around
EUR 100 million in revenues, a target we aim to reach over the
next 3-4 years.As the global shift toward sustainable energy
continues, the growth prospects in China align with those in
Europe and the US. In 2023, Kendrion China again expanded its
project pipeline, despite lower-than-expected economic activity.
14
Annual Integrated Report 2023
STRATEGY AND FINANCIAL OBJECTIVES
Contents Profile Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsStrategy
Financial targets
In 2023, we witnessed a significant increase in demand for
our products in Automotive E, while Industrial Brakes noticed
a notable slowdown following two years of robust growth.
The challenging economic conditions persisted, especially in
Europe and China, which collectively contribute 80% to
the Group’s revenue. Despite these challenges, our 2023
revenue came in at EUR 518.5 million, flat compared to the
EUR 519.3 million of 2022. Our 2023 normalized EBITDA² was
EUR 53.1 million, marking a 7% decrease compared to 2022
(EUR 57.4 million). The return on investment¹
,
² stood at 13.5%
(2022: 15.6%).
ACTUAL
14%
ACTUAL
1%
TARGET 2025
25%
TARGET 2019-2025
5%
ACTUAL
10%
TARGET 2025
15%
ACTUAL
50%
TARGET
35-50%
Return on
investment
1, 2
Average
organic growth
EBITDA margin
2
Dividend pay-out
STRATEGY AND FINANCIAL OBJECTIVES
Considering the opportunities identified, our project pipeline
and the robust organic growth observed in 2021 and 2022,
and provided the current slow economic environment will
improve over 2024, we see a path to meet our four ambitious
medium-term financial objectives for 2025:
■ Average organic growth of 5% between 2019 and 2025
■ Return on investment of at least 25% by 2025¹
,
²
■ EBITDA margin of at least 15% by 2025²
■ Dividend pay-out: 35-50% of normalized net profit before
amortization²
1
Invested capital excluding intangibles arising from acquisitions.
2
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 207.
15
Annual Integrated Report 2023
Contents Profile Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsStrategy
Power Pinch Valve:
A breakthrough in tube clamping
In the dynamic landscape of medical, lab, and
analysis technology, Kendrion has identified
a crucial market gap concerning the clamping
of hard tubes, specifically those made of PVC.
Unlike costly motor-actuated alternatives, our
innovative Power Pinch Valve provides a cost-
effective, competitive solution, filling the market
void with ease of control, affordability, and robust
clamping force.
Crucial for applications requiring precise media flow
regulation, the electromagnetic-actuated Power Pinch
Valve is a game-changer in various industries such as
dialysis, laboratories, beverage, and agriculture. With
compact dimensions (84x53x146mm) and a robust
clamping force of 42N, this valve is perfect for
applications using PVC and silicone tubes with
a hardness of 70-80 Shore.
Powered by the reliable Kendrion HD8 solenoid, the
valve features carefully calibrated magnetic and spring
forces for precision and durability. Available in NO
(Normally Open), NC/MO (Normally Closed with
Manual Override), and CR (Cartridge Version) options,
it offers versatility and performance across various
settings.
In 2023, our focus on partnerships and client
acquisition yielded positive results, particularly in the
dialysis, diagnostics, pharmacy, chemical, and bio-
reactor sectors. Furthermore, we identified agricultural
watering systems as a promising market for our Power
Pinch Valve. In 2024, we anticipate doubling our
turnover from these valves.
Looking ahead, Kendrion is committed to expanding
its Power Pinch Valve line to solidify its position in the
pinch valve markets. Already in use in the US, China,
and Europe, it positions us to meet growing demand
and strengthen our leadership in the pinch valve
market. Our initial emphasis will be on niche markets
for hard tubes, with plans to extend functionality to
softer tubes with smaller dimensions. Additionally,
we aim to enhance the product's capabilities by
integrating position sensors, making our pinch valves
indispensable.
Our cutting-edge and sustainable products
Explore how our cutting-edge and sustainable products, along with our promising
technologies, are assisting OEMs worldwide
ENABLING ENERGY TRANSITION
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Over the past few years, the landscape of industrial
automation has gone through a transformative shift
from pneumatic to electromechanical actuators.
This evolution has been driven by factors such as
the high operational cost of pneumatic systems,
environmental concerns, and the need for more
sustainable and efficient solutions. In this dynamic
environment, automated guided vehicles (AGVs)
have also emerged as pivotal facilitators of
automated material transport across various
sectors, including company premises, warehouses,
and healthcare.
As a key player in solenoid and control technology
solutions, Kendrion plays a crucial role in ensuring the
reliability and safety of both industrial automation and
AGV operations. Our motion controller for stepper
motors in AGVs addresses the complexities of these
systems, providing precise control and synchronization
of movements. Simultaneously, we offer a full range
Meeting transformative trends in
automation, robotics and AGV
of electromechanical actuators, including the new
AUTOMATION LINE which has bolstered our presence
in the industrial automation and AGV markets.
In 2023, we experienced significant success in both
markets. Sales of the distributed motion controller for
AGVs doubled, and we successfully introduced this
product to new clients. We expanded our solenoid
component portfolio, including energy-saving products.
The cost-effectiveness of our products has
strengthened our competitive position in the evolving
industrial landscape. Notably, the establishment of
potential partnerships, acquisition of new clients, and
the development of a pallet stopper for conveyor
systems contributed to Kendrion's status as a
comprehensive supplier.
Looking ahead, Kendrion is strategically positioned for
a targeted sales campaign to acquire new customers
in the AGVs, autonomous mobile robots (AMRs), and
industrial automation markets.
We direct our efforts towards developing new
electromechanical actuators tailored for collaborative
robots (cobots). This strategic initiative aligns with the
increasing demand for automation solutions and aims
to position Kendrion as the preferred supplier of
solenoid and control technology solutions for diverse
applications.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Surgical robots empower surgeons to perform
precise movements for the well-being of the
patient, making it evident why this unique
partnership between man and machine is gaining
ground in medicine. Kendrion positions itself as a
leading provider of braking solutions for medical
robots, ensuring safety and precision in the fast-
growing surgical robots market. This has resulted
in consistent demand, underscoring the
confidence placed in our expertise.
In 2023, we developed an innovative emergency stop
brake for a start-up that was launching a solution for
robot-assisted surgery. The brake is characterized by
a compact design, a large inner diameter and minimal
energy consumption. Based on the Servo Slim Line
series, it provides high power density and has been
modified for safe operation, with an added advantage
of extremely low energy consumption to minimize heat
generation in the application. This customized solution
underscores our proficiency in developing tailored
brakes for demanding applications.
Ensuring safety and precision in the
fast-growing surgical robots market
We will continue to focus on exciting and future-
orientated projects in medical technology, particularly in
the fields of robotics, medical devices, and healthcare
applications. We recognize the enormous potential of
these industries and strive to be an integral part in their
success stories through innovative safety brakes.
We see the opportunity to drive the development of
medical technology by ensuring safety and precision.
Kendrion’s brakes play a pivotal role in enabling
medical device manufacturers to develop innovative
technologies that enhance people's health and quality
of life globally. As a reliable partner, we provide support
to both established and emerging companies.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Multi-sensor module elevates
building efficiency
In the rapidly evolving landscape of smart
buildings, the demand for intelligent building
automation and energy efficiency has become
paramount for businesses and large property
owners. The challenge lies in optimizing data-
driven processes not only for comfort and high-
quality indoor environments but also for substantial
reductions in energy costs and CO
2
emissions of
expansive building complexes. The unpredictable
nature of factors like remote work further
complicates building use, making insights into
occupancy crucial for efficient resource
management.
Addressing these challenges, Kendrion’s electronic and
embedded systems arm, 3T, collaborated with building
automation specialist Priva to develop the bGrid
®
Multi-Sensor Module. This innovation aims to measure
and capture various physical parameters within smart
buildings discreetly. The module, seamlessly integrated
into the infrastructure, employs sensors to regulate
lighting, blinds, and heating based on real-time data
related to factors such as light conditions, air quality,
temperature, and movement within the building.
Since its market introduction in 2020, the bGrid
®
Multi-Sensor Module has gained immense popularity
for its efficiency and versatility.
Looking ahead, as a preferred design partner of Priva,
Kendrion looks forward to exploring more joint
innovations to meet the evolving needs of bGrid’s
customers. The collaborative efforts of Kendrion, Priva,
and bGrid promise a future where smart buildings
seamlessly integrate technology for enhanced comfort,
energy efficiency, and sustainability.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Innovative damping valves
for sustainable driving
The outlook for automotive active suspension
systems is promising, fueled by the rise of electric
vehicles and the growing demand for a comfortable
ride. Kendrion is uniquely positioned to seize
emerging opportunities with our cutting-edge
solutions that redefine ride quality. Our latest
innovation, the external Continuous Damping Valve
(eCDV), of which production started in 2023, is
already gaining significant traction in the market.
By fine-tuning damper behavior, the eCDV enhances
overall vehicle efficiency, safety, and comfort.
It dynamically adjusts to road conditions, delivering
real-time improvements for a smoother, more
responsive ride. Seamlessly integrating into existing
vehicle architectures, it stands as the ideal solution for
upgrading high-tier vehicles and SUVs to eco-friendly
driving without compromising performance or safety.
In 2023, the demand for our valves, notably the eCDV,
experienced a significant surge, particularly in China.
In addition we secured a nomination from the largest
and leading air suspension system manufacturer in
China, solidifying a closer partnership.
Additionally, we acquired our first European OEM
customer through one of our partners. Our platform
approach is proving instrumental in meeting their
diverse requirements and scaling effectively.
Looking ahead, our focus remains on expanding the
eCDV's potential and ramping up production of our
entire product line in our brand-new 28,000m² facility
in China. Further into the future, we are developing the
next generation of products and proactively targeting
the European market. Balancing the demands of mid-
range and premium vehicles, we continuously evolve to
meet changing requirements, upholding our role as
trusted automotive industry partner.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
SHARE AND SHAREHOLDER INFORMATION
Movements in the number of outstanding shares
Shares entitled
to dividend
Shares owned
by Kendrion
Total number of
issued shares
At 1 January 2023 15,026,305 88,316 15,114,621
Issued shares (share dividend) 199,358 (40,038) 159,320
Issued registered shares (share plan) 2,073 – 2,073
Granted shares (share plan) 48,278 (48,278) –
At 31 December 2023
15,276,014 – 15,276,014
Other information
EUR, unless otherwise stated 2023 2022 2021
Number of shares x 1,000 at 31 December 15,276 15,115 14,935
Market capitalization at 31 December (EUR million) 184.5 234.3 314.4
Highest share price in the financial year 19.60 22.40 24.65
Lowest share price in the financial year 10.82 13.02 16.90
Share price on 31 December 12.08 15.50 21.05
Average daily ordinary share volume 15,260 7,022 14,129
Profit per share 0.65 (3.09) 0.97
Normalized net profit before amortization per share
1
0.91 1.44 1.39
Major shareholders as at 31 December 2023
2
Interest in % Date of report
Teslin Participaties Coöperatief U.A. 21.30 At 23 March 2023
Kempen Capital Management N.V. 15.33 At 11 April 2023
Invesco Limited 4.96 At 14 December 2023
Cross Options Beheer B.V. 5.37 At 8 May 2017
Add Value Fund NV 3.22 At 13 July 2022
Midlin N.V. 3.08 At 11 December 2020
T. Rowe Price Group, Inc. 3.05 At 10 March 2023
Total
56.31
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 207.
2
On the basis of the information in the register of the AFM and listed on the website at www.afm.nl.
Share capital
The authorized share capital of Kendrion N.V. as at
31December 2023 amounts to EUR 80,000,000 and is divided
into 40,000,000 ordinary shares with a nominal value of
EUR 2.00 each. At year-end 2023, the total number of ordinary
shares issued was 15,276,014. There is one class of ordinary
shares and no depositary receipts for shares have been issued.
Kendrion’s ordinary shares are listed on NYSE Euronext
Amsterdam Small Cap Index (AScX).
Movements in the share price
from 2 January 2023 to 29 December 2023
Kendrion N.V. share
AEX
ASCX
AMX
Index
29 December 20232 January 2023
-30
-0
-10
-20
10
20
30
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Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Treasury shares
As at 31 December 2023, Kendrion N.V. does not hold any
shares in its own capital.
Dividend policy
Kendrion endeavours to realize an attractive return for
shareholders supported by a suitable dividend policy. In view of
safeguarding a healthy financial position, consideration is also
given to the amount of profit to be retained to support the
SHARE AND SHAREHOLDER INFORMATION
Kendrion will propose a dividend of EUR 0.45 per share,
representing a payment of dividend of 50% of normalized net
profit before amortization for 2023 at the Annual General
Meeting of Shareholders on 15 April 2024. The total amount
of dividend is EUR 6.9 million. It will be proposed that payment
of the dividend will be made in cash, or at the option of
shareholders, in the form of ordinary shares charged to the
share premium reserve with any remaining fraction being settled
in cash.
Major shareholders
Any person holding or acquiring an interest of 3% or more in a
Dutch publicly listed company is bound, based on the Financial
Supervision Act (Wet op het Financieel Toezicht), to disclose
such a holding to the Dutch Authority for the Financial Markets
(AFM). The disclosure is recorded in the register of the AFM and
listed on the website at www.afm.nl/en.
Participation
Kendrion maintains a share-based incentive plan for its senior
management and certain key employees.
Effective as of 2019, members of the Management Team are
eligible for a grant of conditional performance shares and
effective as of 2021 participation in the share-based incentive
program has been extended to selected members of
Kendrion's senior leadership team. The conditional
performance shares granted will vest upon achievement of
performance measured over a three-year period. The actual
number of shares that will be allocated upon expiry of the
three-year vesting period is subject to the realization of
predefined performance criteria. Under the 2021 long-term
incentive plan for the Management Team (i.e. performance
period 2021 through 2023), 36,036 conditional performance
were granted. Of the 36,036 conditional performance shares
granted to the Management Team, a total of 5,786 shares
have vested.
company’s medium and long-term strategic plans and to
maintaining a solvency ratio of at least 35%. Kendrion strives
to distribute dividends representing between 35% and 50%
of its normalized net profit before amortization.
In principle, Kendrion offers shareholders an opportunity
to opt for dividends in cash or in the form of ordinary shares
in Kendrion N.V.’s capital.
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SHARE AND SHAREHOLDER INFORMATION
Regulations to prevent insider trading
Kendrion has regulations covering securities transactions by
members of the Executive Board, members of the Supervisory
Board, members of the Management Team and other
designated employees. The Insider Trading Code is published
on the corporate website at www.kendrion.com.
The Insider Trading Code is intended to ensure the avoidance
of insider trading or the appearance thereof, and any mixing
of business and private interests.
In 2023, conditional performance shares have been granted to
the members of the Executive Board pursuant to the Executive
Board long-term incentive plan. More information about
(conditional performance) shares granted to the members of
the Executive Board is set out on page 107. A comprehensive
description of the long-term incentive plan is included in the
‘Remuneration Report’ section on pages 109.
Analysts
The following stock exchange analysts actively monitor the Kendrion share:
Berenberg Axel Stasse
Degroof Petercam Frank Claassen
ING Bank Tijs Hollestelle
The Idea-Driven Equities Analyses Company Maarten Verbeek
Edison Group Johan van den Hooven
Kepler Cheuvreux Tim Ehlers
Financial calendar
Wednesday, 28 February 2024 Publication annual results 2023
Monday, 18 March 2024 Record date General Meeting of Shareholders
Monday, 15 April 2024 General Meeting of Shareholders
Wednesday, 17 April 2024 Ex-dividend date
Thursday, 18 April 2024 Dividend record date
Friday, 19 April - Monday, 6 May 2024, 3pm Dividend election period (stock and/or cash)
Tuesday, 7 May 2024 Determination stock dividend exchange ratio
Tuesday, 7 May 2024 Publication first quarter results 2024
Thursday, 9 May 2024 Cash dividend made payable and delivery stock dividend
Wednesday, 21 August 2024 Publication half-year results 2024
Tuesday, 12 November 2024 Publication third quarter results 2024
Investor relations
Kendrion attaches great importance to appropriate
communications with financial stakeholders such as investors,
debt capital providers and analysts, providing them with good
insights into recent developments. Transparency is intended
to lead to healthy pricing, and to support liquidity.
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MEMBERS OF THE EXECUTIVE BOARD
J.H. Hemmen
Position Chief Financial Officer
Year of birth 1973
Nationality Dutch
Joined Kendrion 1 June 2005
Appointment to position
Second term
1 July 2019
1July 2023 – 1 July 2027 (AGM 17 April 2023)
J.A.J. van Beurden
Position Chief Executive Officer
Year of birth 1960
Nationality Dutch
Appointment to position 1 December 2015
Third term 1 December 2023 – 1 December 2027 (AGM 17 April 2023)
Member of the Supervisory Board and Chairman of the Nomination
and Remuneration Committee of Adyen N.V.
Member of the Supervisory Board and Chairman of the Audit
Committee of the University of Twente
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OUR PRODUCTS ARE USED IN
Energy generation and distribution
Food and beverage machinery
Industrial automation
Intralogistics
Medical equipment
Robotics
Textile machinery
Wind power
OUR CUSTOMERS INCLUDE
ABB
ASML
Collins Aerospace
Eaton Corporation
Euchner
Fresenius
Jiangxi Special Motors
Lancer
Lenze
Oerlikon
Schneider Electric
Siemens
TOTAL INDUSTRIAL REVENUE
(in EUR)
256.5 million
2022 276.5 million
Industrial activities
Europe
73%
Asia and
Rest of the world
19%
The Americas
8%
INDUSTRIAL ACTUATORS AND CONTROLS
Customized solutions for industrial applications
based on electromagnetic actuators, control
technology and fluid technology.
INDUSTRIAL BRAKES
Full-line provider of electromagnetic brakes for
electromotors in industrial end markets.
Kendrion locations with regional revenue breakdown
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Profile
Kendrion’s industrial activities focus on developing and
manufacturing electromagnetic brakes, actuators, and control
units for a wide range of industrial applications, including wind
turbines, robots, automated guided vehicles, energy
distribution, medical equipment, and inductive heating.
These activities are conducted through two Business Groups:
Industrial Brakes (IB) and Industrial Actuators and Controls
(IAC). IB specializes in the development and manufacture
of electromagnetic brakes for electromotors across various
industrial end markets. IAC focuses on the development and
production of customized electromagnetic actuator technology,
gas and fluid control valves, and control technology.
Our main differentiators lie in our application expertise and
engineering skills, enabling us to design high-performance
products of unparalleled quality. Our Industrial Business Groups
have R&D centers and production facilities in Germany,
Romania, China, the US, and India. Products are marketed
via their own sales organization with locations in Germany,
Austria, Sweden, China, India, and the US. A worldwide sales
distribution network is dedicated to both standard and
application-specific components.
Market and market position
IB serves several global markets, anticipating above average
growth opportunities in industrial automation, robotics, wind
power and intralogistics. The growth opportunities in these
markets are driven by the industry-wide energy transformation,
which has escalated the global demand for electromotors and
IB’s extensive range of braking solutions. Kendrion is one
of the leaders in the global industrial brake market, uniquely
positioned as the sole industrial brake company holding a
prominent position in both spring-applied and permanent
magnet brake technology.
IAC serves many end markets including machine automation,
energy distribution, medical equipment, access control and
industrial appliances. Similar to IB, IAC strategically operates
in niches offering substantial growth prospects, driven by the
global energy transformation. These niches include induction
heating of industrial processes, energy distribution, and valves
for nuclear power plants.
Our Industrial Business Groups operate in a market
predominantly characterized by mid-sized companies with
a regional focus. The primary regional market for our Industrial
activities remains Germany, renowned for its advanced and
globally leading mechanical engineering and automation
industries. Following closely is China. Other key strategic
markets are the US, the Benelux, Switzerland, Austria, Italy,
and Sweden.
Enabling the energy transition
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INDUSTRIAL ACTIVITIES
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Developments in 2023
Kendrion’s Industrial activities generated a revenue of
EUR 256.5 million in 2023, a decrease from EUR 276.5 million
in 2022, primarily due to increased interest rates dampening
global demand of capital goods, particularly affecting Industrial
Brakes. This slowdown in 2023 stands in stark contrast to
the double-digit growth observed in both 2021 and 2022.
IAC benefited from a diverse portfolio with higher revenue in
aviation, medical and energy more than offsetting a weak
capital goods segment. Looking ahead, we anticipate both
Industrial groups to benefit from favorable trends towards
renewable energy, electrification, and industrial automation.
The sharp slowdown did impact profitability, as our efforts to
reduce costs only partially compensated for the reduction in
revenue.
Throughout the year, IB further expanded its long-term revenue
pipeline, engaging with both new and existing customers in
the areas of wind power, intralogistics, and robotics.
A comprehensive study of IB’s most important existing markets
and emerging sectors instills confidence that IB is well-
positioned to outperform global industrial production. Existing
markets encompass electromotors, wind power, robotics,
and intralogistics, with rapidly growing markets such as
collaborative robots and automated guided vehicles.
Looking ahead, we anticipate both Industrial groups to
benefit from favorable trends towards renewable energy,
electrification, and industrial automation.
In response to the cyclically lower revenue levels of anticipated
in the second half of 2023, IB has implemented short-time work
in the German facilities in Aerzen and Villingen. This allows for
a significant reduction in both direct and indirect labor costs,
while retaining the capabilities to swiftly respond to future
growth opportunities. Looking forward, IB remains committed
to furthering the localization of production and R&D capabilities
for both spring-applied and permanent magnet brakes in
China.
During 2023, IAC continued to benefit from its strategy to target
selective niche markets that offer above-average profitability
and growth. IAC secured numerous new projects for its locking
and inductive heating technologies for industrial equipment,
solenoids, and control technology for intralogistics, along with
highly specialized flow control valves for the medical industry.
In certain end markets where IAC offers products that support
the global energy transition, the business group benefited from
a continued strong momentum for existing technologies
including safety switches for energy distribution and safety
valves for nuclear power plants. Following its acquisition in
2021, 3T had another impressive year, achieving a revenue of
EUR 15.0 million, a significant increase from EUR 12.2 million in
2022. Its profitability remains robust. In response to the influx
of new customer contracts, 3T will open a third office in the
Netherlands in Drachten, situated in the northern part of
the country. This expansion is expected to accommodate
additional employees and facilitate sustained growth over
the coming years.
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Contents Profile Strategy Outlook Report of the Supervisory Board Financial statementsContents Profile Strategy Outlook Report of the Supervisory Board Financial statementsReport of the Executive Board
In the dynamic landscape of the global sustainability
transformation, niche markets offer opportunities for Kendrion’s
innovative and high-quality products to play their role in the
transition toward clean energy.
Our strategic focus remains on the most promising
opportunities that will bolster our market presence and ensure
our success as we contribute to a safer and more sustainable
future. These include our induction heating, electronic locks,
and Power Pinch valves, all of which offer exciting potential
across multiple applications.
Induction heating: Redefining efficiency in energy
consumption
Induction heating is transforming industries, by offering a
greener, cost-effective alternative to traditional methods.
Kendrion has been a trusted provider of induction heating
systems for over two decades, building on our integrated
electromagnetics and electronics development, including
Driving sustainable innovation: Kendrion’s focus on
promising niche markets
our software expertise. Our solutions are used in industries
from textile fiber production to food and plastics processing.
Flexible and tailored, they meet precise temperature control
requirements, limited maintenance costs and emission-free
heating.
Renowned for their exceptional efficiency, our systems achieve
an impressive 95% heat transfer rate. This allows Original
Equipment Manufacturers (OEMs) to create more compact
and competitive solutions than when using traditional methods.
With a growing emphasis on total cost of ownership (TCO), end
customers are increasingly inclined to invest in inductive heating
solutions. The potential energy savings can reach up to 50%.
While we originally focused on the German market, our recent
expansion into the Netherlands and Belgium signals substantial
sales potential. We anticipate doubling our revenue from
induction heating systems within the next five years.
Niche markets offer opportunities for Kendrion’s
innovative and high-quality products to play their role
in the transition toward clean energy.
Robert Lewin
Managing Director
Industrial Actuators and Controls
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DRIVING SUSTAINABLE INNOVATION
Electronics locks promise a ‘safe’ return
Increasing demand for security in industrial and commercial
sectors will drive robust growth in the electronic locks market
over the next few years. Kendrion is well-placed to exploit this
potential, with a wide range of door locks designed specifically
for industrial applications.
Our solenoid locks are used in an extensive array of
applications, including commercial washing machines – where
we are the market leader – supermarket baking ovens,
laboratory equipment, and the most recent one: parcel lockers.
With the growing popularity of these parcel lockers, we expect
appetite for our locks to grow exponentially.
Power Pinch Valve: Revolutionizing safety in critical
applications
Pinch valves play a crucial role in applications requiring precise
and controlled flow regulation of fluids. Kendrion continues to
be a pioneer in customized pinch valves for various industries,
including dialysis systems, laboratory setups, the beverage
industry and agricultural irrigation systems. Recently, we have
initiated the standardization process for our pinch valves,
improving cost-efficiency, scalability, and maintaining consistent
quality across our product line.
Our latest breakthrough, the 2/2-way Power Pinch Valve, with
a robust clamping force of 42N, is ideal for applications using
PVC and silicone tubes. Already in use in the US, China, and
Europe, the 2/2-way Power Pinch Valve positions us to meet
growing demand and to strengthen our leadership in the pinch
valve market. In 2024, we anticipate doubling our turnover from
these valves.
Pinch valves play a crucial role in applications requiring
precise and controlled flow regulation of fluids. Kendrion
continues to be a pioneer in customized pinch valves for
various industries, including dialysis systems, laboratory
setups, the beverage industry and agricultural irrigation
systems.
Ensuring high quality, compliance, and confidence
in the future
Committed to fostering a more sustainable future, we actively
explore new applications for our products. Our in-house market
research team ensures we stay ahead of relevant market trends
and developments and maintain a profound understanding of
our customers’ needs — both current and future.
Several of our customers operate in critical and highly regulated
sectors such as medical, aerospace, and nuclear power.
With a dedicated quality organization, we not only adhere to
ISO 9001 quality requirements, but also routinely surpass them,
ensuring that our products meet the exacting standards of
the industries we are active in.
Globally, our technological expertise, agility, and flexible
production processes position us to deliver meaningful
solutions for OEMs, end-users, and society at large.
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Innovative solutions for passenger cars and
commercial vehicles focused on advanced valve
technology, smart actuation and control technology
to enable the transformation to Autonomous,
Connected, Electric and Shared (ACES) mobility.
OUR PRODUCTS ARE USED IN
Active suspension systems
Fuel systems
Mobile hydraulics
Acoustic vehicle alerting systems
Thermal management
Sensor cleaning systems
Transmission systems
OUR CUSTOMERS INCLUDE
BMW
Continental
Daimler Group
Danfoss
Ford
Great Wall Motors
Hyundai Kia
KYB
Marelli
Stellantis
ThyssenKrupp Bilstein
Volkswagen Group
ZF Friedrichshafen
TOTAL AUTOMOTIVE REVENUE
(in EUR)
262.0 million
2022 242.8 million
The Americas
24%
Europe
67%
Asia and
Rest of the world
9%
Automotive activities
Kendrion locations with regional revenue breakdown
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Profile
The Kendrion Automotive Group (KAG) develops,
manufactures, and markets innovative, high-quality
electromagnetic actuators and control units for customers
in the automotive industry worldwide. Our customers include
major OEMs and Tier 1 suppliers across global markets for
passenger cars, commercial vehicles, and off-highway vehicles.
The KAG organization is split into 2 distinct organizations:
Automotive Core and Automotive E.
KAG’s primary focus is on advanced valve technology, smart
actuation, and control technology tailored to facilitate the
transformation towards Autonomous, Connected, Electric
and Shared mobility, collectively known as ACES. Applications
driving this transformation comprise sound systems (AVAS),
active suspension valves, and smart actuators, which
presently contribute approximately 28% to KAG’s revenue.
Other KAG applications include transmission systems and fuel
systems for passenger cars, hydraulic solenoids for agricultural
equipment, and thermal management systems for commercial
vehicles.
KAG maintains a global presence through its R&D centers and
manufacturing facilities situated in Germany, Rumania, Czech
Republic, the US, and China. Kendrion develops products
designed to meet customers’ specific needs, placing great
emphasis on performance, quality, and reliability.
Accelerating the transformation
Market and market position
The accelerating shift toward electrification in the automotive
industry, coupled with the emergence of electric and
autonomous vehicles, are expected to transform the overall
automotive market significantly. Several countries and car
manufacturers have announced to completely phasing out
internal combustion engine cars by 2035.
To increase our focus on clean energy even more, we
previously decided to split the Automotive Group into
Automotive Core and Automotive E. The split involved
a structural redesign, resource reallocation, the establishment
of separate financials and the formulation of distinct key
performance indicators. Automotive E is tasked with developing
products relevant to electric vehicles, prioritizing profitable
growth and innovation. Automotive Core manages our
combustion engine-related business with cash and cashflow
serving as its primary KPIs. As part of this reorganization, KAG
successfully further streamlined its costs, saving EUR 4 million
per year starting Q1 2023. The split is anticipated to enhance
our focus on products for E, where innovation and growth
abound, and to optimize the efficiency and cash generation
of our existing combustion engine business through Automotive
Core. The Core and E split, including the cost savings, was
implemented effectively in December 2022.
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According to market analysts study by S&P Global Mobility, the
battery electric vehicle market is projected to experience an
average annual growth rate of approximately 27% between
2023 and 2028. This growth trajectory is instrumental in
propelling demand for Kendrion’s actuators, specifically
designed for electrified vehicles such as Kendrion’s Phantone
sound system, active suspension valves, and smart actuators.
Anticipated regulatory requirements worldwide, mandating
electric cars to emit a sound below a specific speed, are
expected to drive the demand for Kendrion’s Phantone sound
system. Moreover, the markets for high-end suspension
systems are also expected to continue its fast-paced growth as
more heavy electric vehicles are being equipped with active and
air suspension systems.
Automotive Core and E compete in a market that features
several mid-sized competitors, predominantly situated in
Germany. Europe remains Kendrion’s primary automotive
market, where the majority of the revenue is derived from
collaboration with major German car manufacturers and Tier 1
automotive suppliers. Notably, Kendrion China has significantly
bolstered its market position by securing multiple new projects
with both local and global brands in recent years.
Developments in 2023
KAG’s revenue reached EUR 262.0 million (2022:
EUR 242.8 million). Although Automotive revenue is gradually
recovering from the historically low level of the first COVID-19
year in 2020, car production in Europe, where KAG realizes
two thirds of its revenues, is still well below the pre-pandemic
level. Analysts estimate European car production of
EUR 17.8 million units in 2023 against 21.1 million in 2019*.
At the end of 2022, Kendrion has split the Automotive Business
Group into two distinct units: Automotive Core and Automotive
E. While Automotive Core concentrates on maximizing value
from existing technologies for combustion engine cars and
commercial vehicles, Automotive E focuses on the
development and marketing of new product technologies that
enable future mobility. The spilt has increased our focus and
has helped to gradually raise the sales prices to our customers
in Automotive Core, reflecting the inflation, ultimately enhancing
the profitability of our Automotive Group, particularly in the
second half of 2023. The current pillars of the Automotive E
portfolio are acoustic vehicle alerting systems, valves and
electronic control units for suspension systems and valves and
control units for sensor cleaning.
In 2023, the Automotive E portfolio represented 28% of
the total Automotive Group revenue.
KAG has added an additional EUR 300 million (2022:
EUR 305 million) in lifetime revenue to its long-term order book,
reflecting a positive book-to-bill ratio of 1.15 times the 2022
Automotive revenue. More than EUR 230.0 million project
wins are attributed to Automotive E (2022: EURO 200 million),
resulting in a book-to-bill ratio of 3.2 for Automotive E.
The remaining EUR 70 million in lifetime revenue wins
stem from product lifetime extensions in Automotive Core.
New business nominations were won in all three Automotive E
technology segments, with the majority in suspension
applications. Another year with a significant positive book-to-bill
in Automotive E has increased our confidence that, despite the
challenges in the automotive industry, the technology platforms
that Automotive has invested in in recent years have the
capacity to put the Automotive Group back on a trajectory
of sustainable and profitable growth.
New business nominations were won in all three
Automotive E technology segments, with the majority
in suspension applications.
*
Source: IHS Markit
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In 2023, our operations in China achieved a significant
milestone with the inauguration of our state-of-the-art
28,000m
2
factory at the renowned Suzhou Industrial Park (SIP)
in China – the largest in the Kendrion Group. But this is only
the start: substantial nominations for our automotive products
and the first cross-selling opportunities for our industrial brakes,
are propelling us towards a future of growth and collaborative
success.
Consistent performance
Since its establishment in 2005, Kendrion China has
experienced remarkable growth. In the challenging 2023
economy, we focused on three achievements: maintaining
a stable turnover, finalizing, and initiating production in the new
plant, and pursuing new sales opportunities.
Our growth ambition is built on a solid foundation.
As the world's largest automotive and electric vehicle (EV)
market, China presents abundant opportunities for our
products. Contributing to 60% of global battery-powered car
sales, China had an impressive 80% annual growth rate
in 2023, solidifying its position as the fastest-growing region.
Additionally, eighteen of the top 20 EV models worldwide
originate from China.
Kendrion China’s successful expansion
Aligned with the Chinese market
Our product portfolio aligns well with this fast-growing
EV market. In 2023, our continuous damping valves (eCDV
and iCDV) and Air Suspension Valves (ASV) received significant
nominations from Chinese as well as European customers
active in China. The increasing demand for luxury and high-
performance vehicles, coupled with a growing emphasis on
passenger comfort and safety, is driving the adoption of active
suspension systems. We expect a surge in demand for our
valves. Electric vehicle active suspension systems require eight
valves and our market projections indicate a fivefold increase
by 2028.
New cross-selling nominations
Simultaneously, we capitalized on new cross-selling
opportunities. In 2022, we secured the first contract with
a Chinese vehicle brand to integrate our industrial brakes,
enhancing the smooth operation of automated, voice-controlled
car doors. The first vehicle equipped with these brakes debuted
in August 2022. In October 2023, four more models followed,
resulting in a significant increase in demand for our brakes.
Additional models featuring our brakes are scheduled for
release in 2024.
Since its establishment in 2005, Kendrion China has
experienced remarkable growth.
Telly Kuo
President Kendrion Asia
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Annual Integrated Report 2023
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsReport of the Executive Board
KENDRION CHINA
Our unique capability to manufacture both automotive and
industrial products within the same facility strategically positions
us to continue to pursue cross-selling opportunities. This initial
success marks only the beginning, and we envision more
opportunities to explore in the years ahead.
Powering tomorrow
Our new factory is a key element in this promising future, and
we strategically chose the Suzhou Industrial Park (SIP) as the
location. Positioned among advanced local and foreign
manufacturing companies in the automotive and industrial
sectors, our high-tech facility is designed to support our
anticipated business growth.
The factory embraces innovative technologies, incorporating
artificial intelligence, robotics, solar power, and smart
warehouse logistics. Notably, 70% of the warehouse
constitutes a fully automated, 22-meter-high area, with water
recycling for industrial brake washers.
In 2023, we began reaping the rewards of our solar panel
investment. We anticipate generating around 650,000 kWh
annually through sustainable and self-generated solar power,
which will enable us to independently cover a substantial part of
our electricity requirements.
Our new factory embraces innovative technologies,
incorporating artificial intelligence, robotics, solar power,
and smart warehouse logistics.
Navigating change with confidence
As management, we take immense pride in our team's
exceptional response to the significant changes brought about
by our new factory. Their remarkable flexibility and unwavering
dedication facilitated a smooth transition of equipment from the
existing two factories to the new facility in under two months,
ensuring minimal disruption to production processes and
customer deliveries.
The tremendous potential for our active suspension systems,
our first sales of industrial brakes to automotive customers, and
the team's unwavering drive for excellence give us great
confidence that we will take advantage of the opportunities and
rise to the challenges that lie ahead of us.
Telly Kuo
President Kendrion Asia
34
Annual Integrated Report 2023
KENDRION CHINA
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
FINANCIAL REVIEW
the weaker average Chinese and US currencies. The industrial
activities realized revenue of EUR 256.5 million, which was
7% below the previous year and caused by a slowdown in the
markets for industrial automation and wind power in Germany
and China affecting revenues in Industrial Brakes. Revenue in
Industrial Actuators and Controls was partially affected by the
same market dynamics, but benefited from more than offsetting
demand increases in other segments. Revenue in the
Automotive Group grew with 8% to EUR 262.0 million driven
by higher average sales prices in Automotive Core and volume
increases in Automotive E. Automotive Core realized
EUR 189.5 million revenue and Automotive E EUR 72.5 million.
35
Annual Integrated Report 2023
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Key figures
2023 2022
EUR million Reported Adjustments Normalized Reported Adjustments Normalized
Revenue
518.5 – 518.5 519.3 – 519.3
Other income 0.1 – 0.1 0.5 0.5 0.0
Total revenue and other income 518.6 – 518.6 519.8 0.5 519.3
Changes in inventories of finished goods and work in progress 0.6 – 0.6 1.8 – 1.8
Raw materials and subcontracted work 275.1 0.1 275.0 268.7 – 268.7
Staff costs 151.5 1.6 149.9 153.6 5.3 148.3
Impairments of fixed assets 0.1 0.0 0.1 58.7 58.6 0.1
Other operating expenses 40.7 0.8 39.9 43.6 0.6 43.0
EBITDA
1
50.6 (2.5) 53.1 (6.6) (64.0) 57.4
Depreciation and amortization 26.8 – 26.8 28.0 – 28.0
Finance income and expense and share loss of an associate 9.9 (0.0) 9.9 5.1 0.7 4.4
Income tax expense 4.0 (0.9) 4.9 6.6 (0.2) 6.8
Profit for the period 9.9 (1.6) 11.5 (46.3) (64.5) 18.2
Amortization after tax 2.4 – 2.4 3.5 – 3.5
Profit for the period before amortization
1
12.3 (1.6) 13.9 (42.8) (64.5) 21.7
Cash flows
Cash flow from operations
36.4 4.1 40.5 37.9 3.0 40.9
Cash flow from investing activities (29.6) 0.4 (29.3) (37.9) 0.1 (37.8)
Free cash flow
1
6.8 4.5 11.3 0.0 3.1 3.1
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation of non-IFRS information, starting on page 207.
Group performance
Kendrion realized EUR 518.5 million revenue in 2023,
compared with EUR 519.3 million in the previous year. Revenue
growth at constant rates of exchange was 1%, as currency
translation negatively affected group revenue mainly due to
Profit for the period ended at EUR 9.9 million, against a loss
of EUR 46.3 million in the previous year. Previous year’s profit
was significantly affected by a EUR 58.5 million impairment of
goodwill and other acquisition related intangibles and tax assets
in the newly established unit Automotive Core. The impairment
was the result of the fundamental shift in the automotive
industry which is expected to gradually phase out the
combustion engine. For a meaningful analysis of the underlying
financial performance of the group, Kendrion presents certain
performance measures on a normalized basis. The normalized
performance measures exclude costs and benefits that are
generated outside the ordinary course of business and include
restructuring charges, asset impairments and other items
of an incidental nature. Definitions and a detailed reconciliation
of these alternative performance measures to the closest
applicable IFRS performance measures can be found on
pages 207-211 of this Annual Integrated Report.
Normalized EBITDA
1
in 2023 came in at EUR 53.1 million
compared with EUR 57.4 million in the previous year.
Normalized EBITDA as a percentage of revenue ended at
10.2% (2022: 11.1%). The costs for raw materials and
subcontracted work increased by EUR 6.3 million, or 2%.
The increase was mainly the result of the higher proportionate
revenue share of the Automotive Group compared to the
previous year. The Automotive Group has on average higher
material costs as a percentage of revenue compared with
the Industrial business groups. Total staff and other operating
expenses, excluding costs that are normalized from the results,
decreased by EUR 1.5 million as cost savings more than
offset the inflationary pressure on wages and other costs.
Normalized finance costs
1
increased by EUR 5.5 million to
EUR 9.9 million because of higher average market interest rates
and negative realised and unrealised currency differences of
EUR 1.5 million. The normalized effective tax rate increased
to 30.4% (2022: 27.4%). Taxation costs were affected by a
EUR 0.5 million lower valuation of carry forward tax losses in
the US. Normalized profit before amortization
1
ended at
EUR 13.9 million, (2022: EUR 21.7 million). In 2023 the group
incurred in total EUR 2.5 million costs and benefits that were
generated outside the normal course of business (2022:
EUR 64.7 million). The costs mainly relate to the integration
of the Chinese locations into the new manufacturing location
in Suzhou. The after-tax amount of normalized costs
in 2023 was EUR 1.6 million (2022: EUR 64.5 million).
Net cash flows from operating activities came it at
EUR 36.4 million (2022: EUR 37.9 million). Cash flows from
investing activities came in at negative EUR 29.6 million
compared to negative 37.9 million in the previous year. The
largest investment – EUR 6.3 million (2022: EUR 15.0 million) –
related to the finalization of the construction of the new
manufacturing facility at China’s Suzhou Industrial Park.
Other investments mainly related to new production lines in
the Industrial and Automotive activities. Cash flows in 2023
included EUR 4.5 million cash items related to costs that have
been normalized from the results (2022: EUR 3.1 million) mainly
related to restructuring activities and the settlement of a tax
claim agree to in the previous year. Overall normalized free cash
flow
1
ended at EUR 11.3 million (2022: EUR 3.1 million).
Total net debt ended at EUR 145.0 million, an increase of
EUR 4.7 million compared to 31 December 2022. The positive
free cash flow was more than offset by EUR 3.2 million
payments of lease liabilities and EUR 7.1 million dividends paid.
Total invested capital per 31 December 2023 ended at
EUR 217.5 million (31 December 2022: EUR 213.3 million),
when excluding goodwill and other intangibles arising on
acquisitions. Invested capital was EUR 218.9 million when
excluding items that have been normalized. Return on invested
capital
1
ended at 13.5% (2022: 15.6%).
Liquidity position
Kendrion’s liquidity position exists of freely available cash
balances and undrawn facilities. Cash balances on
31 December 2023 amounted to EUR 20.6 million (2022:
EUR 37.8 million). In addition, Kendrion had EUR 43 million
(2022: EUR 20 million) available under undrawn credit facilities.
Kendrion’s main credit facility is a EUR 102.5 million facility
agreement with HSBC Bank and ING Bank. The facility
agreement runs until 26 April 2026 and includes a one-year
extension option. Certain covenants apply including a
maximum leverage ratio of 3.25, with a possible temporary
spike up to 3.75 under certain conditions. Kendrion’s leverage
ratio1 based on the definitions in the facility agreement as per
31 December 2023 was 2.7 (31 December 2022: 2.4).
Research & Development
EUR 27.0 million (2022: EUR 29.4 million) costs for R&D are
included in the operating expenses, of which EUR 21.1 million
(2022: EUR 21.6 million) staff costs. An amount of
EUR 2.5 million in R&D expenses (2022: EUR 3.0 million)
has been capitalized as R&D on the balance sheet. Costs for
R&D as a percentage of revenue came to 5.0% (2022: 6.2%).
Kendrion Group employed 249 FTE R&D employees.
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 207.
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FINANCIAL REVIEW
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R&D activities primarily focused on modifying existing
electromagnetic brake technology for growth markets such
as AGVs and surgical robots, locking solutions for industrial
applications, inductive heating technology for industrial
processes, the AVAS sound platform, customer-specific
applications for active and air suspension and a platform
application for sensor cleaning.
Developments per segment
The Industrial activities generated EUR 256.5 million (2022:
EUR 276.5 million) of revenue in 2023, representing 49%
of group revenue. Revenue at constant rates of exchange
decreased 6% in 2023. Revenue in Industrial Brakes came
in at EUR 129.0 million (2022: EUR 251.2 million) and in
Industrial Actuators & Controls at EUR 127.5 million 2022:
EUR 125.3 million). Revenue in Industrial Brakes was affected
by a significant slowdown in the market for industrial
automation and wind energy in their main markets Germany
and China. As a result, revenue in Industrial Brakes at constant
rates of exchange decreased 13% in 2023 million after two
consecutive years of strong growth in 2021 and 2022.
Industrial Actuators & Controls benefited from a diversified
market segmentation with good revenue in medical, aviation
and energy sectors more than offsetting weakness in other
segments.
Profit before finance expenses was EUR 23.1million
(2022: EUR 40.5 million). Normalized EBITDA
1
came in at
EUR 36.1 million (2022: EUR 47.5 million). Reduced profitability
is fully attributable to lower revenues in Industrial Brakes
because of the cyclical industrial downturn. Normalized
EBITDA in the Industrial groups excludes a total amount of
EUR 1.5 million in costs and benefits (2022: EUR 0.6 million)
that are that are generated outside the ordinary course of
business of the Industrial activities. These costs include
restructuring charges in Industrial Brakes and costs related
to the relocation of existing facilities to the new manufacturing
facility at Suzhou Industrial Park.
The Kendrion Automotive Group (KAG) realized 9% revenue
growth when measured at constant rates of exchange,
resulting in its revenue increasing to EUR 262.0 million (2022:
EUR 242.8 million) and accounting for 51% of group revenue.
Since the end of 2022, the Automotive business group has
been separated in Automotive Core, focusing on technologies
for combustion engine vehicles, and Automotive E focusing
on developing and marketing technologies for electrified
and autonomous mobility. Automotive Core realized
EUR 189.5 million revenue and Automotive E EUR 72.5 million.
Profit before finance costs ended at EUR 0.7 million (2022:
EUR -75.1 million). The Automotive Group realized normalized
EBITDA
1
of EUR 17.0 million (2022: EUR 9.9 million).
Normalized EBITDA in the Automotive Group excludes
EUR 1.0 m costs (2022: EUR 63.4 million) that are generated
outside the ordinary course of business and mainly relate to
restructuring charges and the relocation in China.
Management statement
In accordance with article 5:25c of the Financial Supervision
Act (Wet op het Financieel Toezicht), the Executive Board
confirms, to the best of its knowledge, that: (i) the consolidated
financial statements give a true and fair view of the assets,
liabilities, financial position, and profit and loss of Kendrion N.V.
and its consolidated companies; (ii) the Annual Integrated
Report gives a true and fair view of the position as at
31 December 2023 and the developments during the financial
year of Kendrion N.V. and its group of companies included in
the consolidated financial statements; and (iii) the Annual
Integrated Report describes the main risks Kendrion is facing.
The members of the Executive Board have signed the
consolidated financial statements to comply with its statutory
obligation pursuant to article 2:101, paragraph 2 of the Dutch
Civil Code and article 5:25c of the Financial Supervision Act.
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 207.
37
Annual Integrated Report 2023
FINANCIAL REVIEW
Contents Profile Strategy Outlook Report of the Supervisory Board Financial statementsReport of the Executive Board
The world we live in has become increasingly
turbulent and unpredictable, with geopolitical
instability and the effects of climate change
having a large impact on people’s lives and
economies worldwide. The transition to a more
sustainable world using clean energy sources is
more pressing and urgent than ever. We are
dedicated to help reducing the negative impact
of climate change and to addressing social
matters. Our approach is characterized by the
ambition to mitigate risks, manage performance,
and establish long-term sustainable value.
The extent to which meaningful contributions can
be made is subject to an unambiguous approach
throughout the supply chain of the industry in
which we operate. We are supported by our
customers, suppliers, and other business
relations who have also inspired and pushed
the sustainability transformation, and we are
committed to scaling up our and our supply
chain partners’ efforts.
Sustainability review
Creating long-term sustainable value
Managing our environmental impact
We are committed to minimizing our environmental impact.
Measuring, managing, and reporting environmental impact is
essential for making well-informed decisions and safeguarding
our performance is aligned to our values and ambitions.
Our global sustainability program describes our approach to
defining, measuring, and managing our environmental impact.
We are positioned to enable the shift towards clean energy as
all our Business Groups and our operations in China focus on
delivering smart actuator products that support the broad
energy transition away from fossil fuels towards clean forms
of energy. Our dedication to taking climate action is reflected
in our ambitious reduction targets.
Kendrion’s global sustainability program forms an integral part
of our strategic plan and our short- and longer-term objectives.
Our ambition to continuously improve our sustainability
performance required cultural and organizational changes.
Our sustainability ambitions are appropriately aligned with our
organizational set-up where decision makers are empowered
and held accountable for prioritizing and fundamentally
enhancing our sustainability performance. Sustainability
objectives are cascaded to our Business Groups and made
an explicit component of Kendrion’s performance-based
remuneration schemes. Personal targets set for senior
management include sustainability criteria. The short-term and
long-term variable remuneration of the Executive Board also
include sustainability performance criteria (e.g., energy
efficiency and reduction of CO
2
emissions) and social
performance criteria (e.g., diversity, company culture, leadership
development). Reference is made to the Remuneration Report
included in this Annual Integrated Report for detailed
information on the application of the Remuneration Policy for
the Executive Board and the actual performance in 2023
against the predefined performance criteria.
We are confident that our sustainability program serves
the long-term interests of our stakeholders, including the
communities where we operate. Our current sustainability
program expired as per the end of 2023. With the increasing
sustainability demands and the resulting legislative initiatives,
we are motivated to further sharpen and strengthen our
sustainability ambitions and strategy.
Mitigate climate change
resulting from business and
operations
Care for social wellbeing
by respecting human rights
Support and enable
the transition to a sustainable
world
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Engaging with our stakeholders
To create long-term sustainable value for our stakeholders,
we engage in an open and continuous dialogue about
sustainability themes to deepen our insights into their needs
and expectations. This regular engagement helps us improve
and innovate our global sustainability program, not only in
design but also in management and execution. In engaging
with our stakeholders, we aim to build trust, identify trends,
and address critical issues, including the implications of climate
change for our business operations and products as well as
the impact of our operations on the environment and society.
The dialogue with our stakeholders helps us assess our
environmental risk profile and establish what mitigation plans
are required or expected to make a meaningful contribution
to a sustainable future. By engaging in a dialogue, we provide
transparency in our plans and actions to reduce the negative
impact of climate change and to address other related
challenges. When developing strategies and mitigation plans,
we always consider input provided by our stakeholders.
Our key stakeholder groups include customers, suppliers,
employees, shareholders, local communities, technical
universities, and institutions of higher technical education.
For each group, Kendrion’s stakeholder engagement varies and
includes formal and informal channels that are being used with
varying degrees of regularity. Our key stakeholder groups are
described on pages 62-63 of this Annual Integrated Report.
Key themes addressed during our stakeholder dialogues in
2023 included:
■ Environmental impact and climate change:
decarbonization and energy efficiency, and renewable
energy sources;
■ Supply chain management: raw material sourcing and
environmental and social standards in the supply chain;
■ Sustainable production and waste management:
contributing to climate mitigation and adaptation objectives;
■ Social impact: labor practices, community engagement
and human rights;
■ Governance: executive remuneration and risk
management.
Materiality matrix
SIGNIFICANCE TO STAKEHOLDERS
SIGNIFICANCE TO KENDRION
Water management
Customer engagement
Energy management & emissions
Community involvement
Material & waste
management
Customer privacy &
data security
Economic performance
Responsible & innovative products
Business
ethics & Integrity
Employee development
Inclusive workplace
Strategic partnerships & co creation
Responsible procurement
Human rights
Employee health & safety
Natural capital Social and human capital Responsible business conduct
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Identified material matters
For a focused strategic approach, aimed at a healthy balance
between stakeholder expectations and business aspirations,
we identify and assess the material topics that are most
relevant to Kendrion’s activities. To this end, Kendrion uses
a materiality analysis to gain insight into the relevance and
importance of topics for both Kendrion and our stakeholder
groups. The relevance of identified material topics for internal
and external stakeholders may vary and is subject to change.
In this Annual Integrated Report, we are disclosing material
topics following our 2020 materiality assessment which did not
reveal significant movements in the ranking of individual themes
compared to the assessment of 2018. The outcome of the
2018 and 2020 assessments is a refined number of material
themes structured in a materiality matrix around Kendrion’s
three pillars of value creation that form the basis of the global
sustainability program: Natural Capital, Social and Human
Capital and Responsible Business Conduct.
Our current materiality matrix shows an enhanced classification
and organization of material themes with a view to maintaining
continued focus on those themes where Kendrion can have the
most impact.
Kendrion’s materiality matrix shows the material topics along
two axes: significance to stakeholders and significance to
Kendrion.
The outcome of the 2018 and 2020 materiality analyses formed
important input for Kendrion’s sustainability program and the
2019-2023 target framework as well as the further
development and execution thereof.
While this Annual Integrated Report generally covers topics in
the above materiality matrix, under Kendrion’s second 5-year
sustainability plan covering 2019-2023, Kendrion has chosen
to not set measurable sustainability targets for each material
topic, but instead select the topics where it can have most
impact.
Kendrion reports against the 2019-2023 target framework and
related commitments.
Kendrion reports only on the most relevant material topics.
The most relevant material topics are economic performance,
anti-corruption, energy efficiency, carbon emissions,
occupational health and safety, training and education, non-
discrimination, and equal opportunities. Kendrion reports
according to the GRI reference claims, which are described
on pages 212-213 in the section ‘About the Sustainability
Report’.
2019-2023 TARGET FRAMEWORK
Please refer to the section ‘About the sustainability report’ on pages 212-214 of this Annual Integrated Report for reporting periods, definitions,
scope and limited assurance review.
Recurring annual improvement
of health & safety figures
number of accidents per 1,000 FTE,
lost time injury rate per 1,000 FTE,
group-wide illness rate
The establishment of a
Global Diversity Committee,
responsible for advancing diversity
The implementation of a global
company culture campaign
Rewarding 10 community
investment initiatives per year
through Together@Kendrion
Maintain a responsible
product portfolio
Products that Keep you Safe, Products
that Reduce Climate Impact and Products
that Improve Health
Sustainable sourcing
Sourcing only from approved suppliers
and conducting at least 25 implementation
audits annually
Continuous improvement
and strengthening of
the Global Legal Compliance
and Governance Framework
to secure responsible business conduct
Natural Capital
Social and Human Capital
Responsible Business Conduct
15%
Relative reduction
of energy
consumption
Implementation of the waste
management hierarchy
in global waste management practices
15%
Relative reduction
of CO
2
emission
40
Annual Integrated Report 2023
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Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
CSRD consistent double materiality
assessment
In anticipation of the upcoming Corporate Sustainability
Reporting Directive (CSRD) – with the support of external
experts, we have started the process to update our materiality
assessment to align with the double materiality approach.
As per the new requirements, a CSRD compliant materiality
assessment requires a review of material matters that represent
relevant impacts of our operations and activities on the
environment, people, and their human rights (i.e. impact
materiality) and a review of how sustainability and climate
impact our operations and activities (i.e. financial materiality).
Building on our existing material matters, we have conducted
a company analysis, the outcome of which was used to create
a long list of topics. The list of topics has been the starting
point for our stakeholder dialogue, and initial impact, risk,
and opportunity (IRO) collection. The results of the initial IRO
collection have been used as input for our subsequent
identification of IROs. Identified IROs were evaluated in line with
CSRD requirements – and will form the basis for our preliminary
materiality matrix needed for the classification of our focus
topics. We will continue engaging with our stakeholders and
-with the help of external consultants- finalize the assessment
and materiality matrix for those areas where interpretations of
the CSRD and underlying European Sustainability Reporting
Standards (ESRS) were not yet fully clear when preparing for
this Annual Integrated Report. We will make the required
disclosures in our 2024 Annual Integrated Report, including the
finalized CSRD materiality matrix.
2024 - 2028 Sustainability/ESG program
During the past period we completed the development of our
third 5-year sustainability/ESG program for the period 2024-
2028. The development process involved the completion of
various extensive analyses, the identification of areas for
improvement, and validation of ambitious and realistic
sustainability targets. The key components of the 2024-2028
sustainability/ESG program are outlined below.
■ Achieve a further 70% reduction in CO
2
emissions.
■ Establish reporting frameworks for Scope 1, 2 and 3
reporting and disclosure.
■ Implement gender diversity targets at Business Group level
for indirect staff, aiming for a 25% improvement over time
with a minimum threshold of 33%.
■ Enhance supplier selection and screening by transitioning
from basic risk assessment to integrating ESG metrics into
the sourcing process.
■ Sustain ESG ratings from EcoVadis and CDP.
The official launch of the new sustainability program is
anticipated in February 2024.
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Contents Profile Strategy Outlook Report of the Supervisory Board Financial statementsReport of the Executive Board
Please refer to the section 'About the sustainability report' on pages 212-214 of this Annual Integrated Report for reporting periods, definitions,
scope and limited assurance review.
TARGET 2023
15%
Relative reduction of
energy consumption
REALIZED
15.31%
Relative reduction
of CO
2
emission
TARGET 2023
15%
REALIZED
22.9%
REALIZED IN 2023
Completed required analyses to
finalize the 2024-2028 ESG program
Reduction relative CO
2
emissions
from energy by production plants
by 56% compared to 2015
NATURAL CAPITAL
The Natural Capital pillar focuses on reducing the
negative impacts of climate change by increasing
energy efficiency and use of renewable energy,
reducing CO
2
emissions, and strengthening
waste management practices.
Energy efficiency, renewable energy and
CO
2
emissions
Sustainability objective 2019-2023 target framework:
15% relative reduction of energy consumption and CO
2
emissions by the end of 2023
We are dedicated to reducing the impact of our business
operations on the environment. We consistently strive to
increase energy efficiency and use of renewable energy to
reduce emissions of CO
2
in the development and manufacture
of our products. We have implemented several initiatives to
reduce our carbon footprint and increase energy efficiency,
including the transition to renewable energy sources and the
implementation of enhanced waste management practices.
Sustainable growth opportunities
The energy transformation impacts the industries we operate
in. Sustainable products and technologies are seen as the
default choice by a growing number of people. As developer
and manufacturer of high-quality actuator products we are well
positioned to contribute to the global shift towards
electrification and clean energy.
With our product portfolio we contribute to the increasing
demand for clean energy and the accelerating development of
electrification of industrial processes and mobility. These key
trends in electrification drive demand for our products in wind
power, automated warehouses, induction heating technology
and electric vehicles that support the transition from fossil fuel
to electrical solutions. The strategic plans of our Business
Groups are directed at these market segments accordingly.
Industrial Brakes (IB) capitalizes on the energy transition in
segments such as wind power, intralogistics, and robotics.
Industrial Actuators and Controls (IAC) responds to the
increasing demand for sustainable products and technologies
with its electrified induction heating systems that replace
traditional gas and oil heating solutions, its circuit brakers
for electricity distribution and its safety actuators for nuclear
power facilities.
The 2022 split of the Automotive Group into two distinct units
– Automotive Core and Automotive E – brought us the
additional strategic agility needed to contribute to the
accelerating transformation the automotive industry is going
through. The split further strengthens Kendrion’s ability to
benefit from the move towards automotive electrification and
clean energy and presents a well-considered and thought-out
path towards the future of new forms of sustainable mobility.
2019-2023 TARGET FRAMEWORK
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been achieved compared with 2018, and a relative reduction
of CO
2
emission of 22.9% compared with 2018 has been
achieved. Since 2015 a relative reduction of CO
2
emissions –
mostly from energy by production plants – of 56% has been
achieved.
An important milestone has been the installation of solar panels
on our new 28,000 m
2
manufacturing facility in Suzhou, China.
With our solar panels in China, we envisage generating an
estimated 650.000 kWh annually, which will enable us to cover
around 30% to 40% of our estimated electricity requirements in
China.
For our remaining energy requirements in China that cannot
be satisfied through our own solar panels, green energy will be
purchased.
As part of the preparations for our new 5-year sustainability
program for the period 2024 to 2028 – we carried out a GHG
scope 3 materiality assessment together with an external
specialist. This materiality assessment was performed in
support of our upcoming measurement and disclosure of
scope 1, 2 and 3 CO
2
emissions where we currently report our
scope 1 and 2 emissions on a consolidated basis.
With the increasingly smart actuation technology of Automotive
E, we help facilitate Autonomous, Connected, Electric and
Shared mobility (or ACES). These developments come with
an increasing demand for software and electronics to control
our actuators and the safety and comfort of electric vehicles.
With the addition of 3T – a Netherlands-based developer of
electronics and embedded systems – we have expanded our
electronics development capabilities significantly and enhanced
our ability to deliver high quality smart actuators for electrified
and autonomous vehicles.
Decarbonization of our operations
We are dedicated to supporting the Paris Agreement to limit
global warming to 1.5 Celsius. Under our 2019-2023
sustainability target framework we aspire to realizing a 15%
relative reduction of energy consumption and CO
2
emissions
by the end of 2023. The roadmap has been subject to regular
review to ensure continued effectiveness of measures
implemented and to allow for possible adjustments as required
in view of our 15% relative reduction targets. With the support
of a consultancy firm, we have previously carried out a
comprehensive assessment which has given us the necessary
outside-in perspective on our decarbonization plans. Consistent
with the recommendations made, we have advanced our
decarbonization propositions in support of the realization of our
2019-2023 sustainability target framework.
The implementation of energy-efficient practices – specifically in
our production facilities – and the further transition to renewable
energy sources, yielded the achievement of the 2019-2023
sustainability targets to realize a 15% relative reduction of
energy consumption and CO
2
emissions. As per the end of
2023 a relative reduction of energy consumption of 15.31% has
1. Purchased goods & services2. Capital goods
3. Fuel and energy
related emissions
4. Transport & distribution
5. Waste from
own facilities
6. Business travel
7. Commuting of employees
8. Upstream
leased assets
9. Transport
and Distribution
10. Processing
of sold products
11. Use of sold products
12. End of life
13. Downstream
leased assets
14. Franchises
15. Investments
Own control and influence
Emission level in t CO
2
e
high
low
high
No ActivityScreening Calculation
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Our scope 3 materiality assessment involved an analysis of
15 categories of scope 3 emissions in line with the definitions
of the Greenhouse Gas Protocol. The various categories were
assessed for their relevance and influenceability and were
accordingly arranged in a matrix.
In addition to distinguishing among scope 1 and 2 emissions
and advancing our scope 1 and 2 reduction targets; measuring
and managing our scope 3 emissions and developing scope 3
reduction targets will be part of our 2024-2028 sustainability
target framework. We intend to launch our third 5-year
sustainability target framework in February of 2024.
Developing and executing a sustainability strategy with
ambitious goals involves transformation time and costs.
The extent to which meaningful contributions can be made
is subject to an unequivocal approach throughout the supply
chain of the industry in which we operate. We are actively
engaging with customers and suppliers that are equally
dedicated to addressing climate change challenges. We aim to
develop partnerships that advance emission reduction efforts
throughout the supply chains of which we are part.
Sustainability rating and environmental
certification
For many years now, we have been actively engaged in reducing
its environmental impact. We apply an environmental reporting
system that tracks the CO
2
emissions and energy consumption
of all the production plants. Kendrion has consistently improved
its production processes with the overall objective of reducing
the environmental footprint of the production plants.
Our 2023 EcoVadis sustainability rating put us in the top 19%
(2022: 22%) of rated manufacturing companies and our first
CDP score (B minus) shows our good environmental
management.
Energy consumption
2023 2022
Δ %
2023 / 2022
Power kWh 24,724,627 24,113,379 2.5%
Fuel oil kWh 337,110 403,740 -16.5%
Natural gas kWh 9,193,299 10,147,307 -9.4%
34,255,036 34,664,426 -1.2%
Energy consumption per EUR million added value 2023 2022
Δ %
2023 / 2022
Power kWh 108,164 102,381 5.6%
Fuel oil kWh 1,475 1,714 -13.9%
Natural gas kWh 40,218 43,084 -6.7%
149,857 147,179 1.8%
Energy consumption 2023 2022
Δ %
2023 / 2022
Absolute consumption, kWh 34,255,036 34,664,426 -1.2%
Relative consumption, kWh / million EUR added value 149,857 147,179 1.8%
CO
2
emissions
2
2023 2022
Δ %
2023 / 2022
Absolute emissions, tonnes 6,231 5,833 6.8%
Relative emissions, tonnes / million EUR added value 27.3 24.8 10.1%
1
Please refer to the section ‘About the sustainability report’ on pages 212-214 of this Annual Integrated Report for reporting
periods, definitions, scope and limited assurance review.
2
Scope 1 and 2 of the Greenhouse Gas Protocol.
Energy and Emissions
1
Our sustainability ratings illustrate our long-standing dedication
to making meaningful contributions.
The global certification ISO 50001 Energy Management System
supports the production plants in their efforts to use energy
more efficiently by developing and maintaining an energy
management system. Kendrion’s environmental management
systems are in accordance with ISO 14001.
ISO 14001 Environmental Management Systems specify
requirements for an environmental management system
to enhance environmental performance. Kendrion’s largest
production plants are ISO 50001 certified and ISO 14001
certified.
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Waste management: waste disposal and
recycling
We focus on the development and implementation of waste
reduction and waste use. Our efforts are structured according
to the long-recognized hierarchy of management of waste, in
the following order of preference: prevention, reuse, recycling,
other recovery and (landfill) disposal.
Kendrion’s ISO 14001 certified manufacturing facilities maintain
records of their production and processing of all waste and
work with certified waste processing companies to the extent
required by local regulation. New waste reduction measures
must be implemented each year as part of the ISO 14001
certification process.
We maintain a centralized waste data collection process with
uniform waste data collection sheets and waste registers using
standardized and consistent definitions. The standardization of
internal reporting and control processes enable comprehensive
reviews of the different categories of waste generated by our
manufacturing facilities. Our uniform practices furthermore allow
for the identification and handling of differences in local waste
management practices that are driven by – for example –
variances in production processes or regulatory requirements.
The outcome of the most recent waste data analysis shows
a slight increase of total waste compared to the prior year and
the overall recycling rate came out at 84.8% (prior year: 74%).
The distribution of hazardous waste (8%, prior year 8.7%) and
non-hazardous waste (92%, prior year 91.3%) slightly shifted.
The top-three of hazardous and non-hazardous materials
remained unchanged, with cooling fluid, solvent, old oil, and
packaging of hazardous substances comprising the top-three
of hazardous materials and iron and steel, commercial waste
and cardboard dominating the top-three of non-hazardous
materials.
Following our earlier engagement with a specialized
consultancy firm we expanded our horizon with respect to
waste management. The comprehensive analysis carried out by
the external specialist covered a review of key characteristics
of our manufacturing processes and the various categories of
waste reported through the uniform data collection sheets and
waste registers. The outcome of the analysis enhanced our
insights and has – among other things – been used to progress
our uniform waste standards. The degree of compliance of
a manufacturing location with our newly developed waste
standards is assessed annually by means of an internal rating
and verification system. The implementation of new waste
standards and the related rating and verification system enable
us to closely monitor each manufacturing location. The uniform
waste standards will be reviewed regularly to ensure they
continue meeting current practices and expectations.
Our dedicated waste management task force comprising waste
management and quality professionals of all Business Groups
will continue its analysis to ascertain the feasibility of indicators
and monitoring parameters in the following areas: zero landfill
waste, recycling – specifically recycling of Critical Raw Materials
(CRMs) – and waste per unit sale (kg). With our current waste
management practices – and the envisaged improvements
thereof – we reduce our environmental impact and promote
a more sustainable future.
TAKING RESPONSIBILITY
Prevention
Reuse
Recycling
Other recovery
Disposal
WASTE MANAGEMENT HIERARCHY
2023 TARGET
Diversity@Kendrion
49 nationalities,
9 countries,
46% female workforce
2023
573
2023
7.7
2023
4.7%
6.5
2023 TARGET
5.4%
Illness rate
2023 TARGET
707
Accidents
(per 1,000 FTE)
Lost Time Injuries
(in days)
Please refer to the section 'About the sustainability report' on pages 212-214 of this Annual Integrated Report for reporting periods, definitions,
scope and limited assurance review.
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SOCIAL AND HUMAN CAPITAL
The Social and Human Capital pillar concerns
the preservation of the health and safety of our
employees by providing a high-quality and safe
work environment and maintaining a culture
consistent with the norms and values underlying
The Kendrion Way and our Code of Conduct.
Diversity, fair labor practices and recognition of
human rights are other material themes of the
Social and Human Capital pillar.
Sustainability objective 2019-2023 target framework:
recurring annual improvement of health and safety figures
Health and Safety
We provide a high-quality and safe work environment where the
norms and values underlying The Kendrion Way, and our Code
of Conduct are acknowledged and respected. Health and
safety have the highest priority in every aspect of Kendrion’s
operations. We apply the most stringent quality and health and
safety standards to protect our people from potential risks that
may occur in the workplace and to reduce the risk of accidents
and injuries. Kendrion’s employees receive periodic safety
training, including training in proper use of machinery, protective
equipment, handling of substances, emergency procedures,
and other safe work practices. In addition, safety inspections
are carried out at regular intervals. The health and safety of
employees are a crucial aspect of any manufacturing operation
and essential to the successful conduct of our business.
The Kendrion Health Task Force, chaired by the CEO, monitors
our global health and safety figures, and coordinates the
implementation of improvement measures in all our facilities.
The Task Force meets monthly or more often as needed.
Day-to-day responsibility for health and safety is concentrated
within the Business Groups in which health and safety are
managed systematically and in a standardized manner with
clear rules and procedures based on recognized industry
standards and best practices that are laid down in Health,
Safety & Environmental (HSE) policies. Each production plant
further implements initiatives to enhance its HSE standards
depending on plant-specific needs, production lines and
Our joint value journey so far…
2019
The Kendrion Way
2020
Update Code of Conduct:
a diverse and inclusive culture
and atmosphere
2021
Strategic diversity framework
2022
Circle of Trust
German Charta der Vielfalt
Update Fair Labour &
Human Rights Policy
2023
Celebrations:
International Women’s Day
World Day for Cultural Diversity
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technologies. HSE audits are performed to assess
implementation and compliance with HSE policies at regular
intervals. All employees are required to adhere to local health
and safety procedures and practices and participate in training
programs. Specific and measurable performance targets for
Kendrion’s business units and local management include health
and safety metrics, which are determined by the number
of accidents per 1,000 FTE, Lost Time Injury (LTI) rates and
illness rates.
5S methodology
Due to a continued focus on the safety of the production
processes, Kendrion achieved good safety results across its
production plants. Some of our production plants apply the 5S
methodology, which aims to continuously improve workplace
safety and working conditions. These plants apply a systematic
process to optimize their production lines and periodically
perform 5S audits to verify compliance with the methodology.
We are dedicated to ensuring due compliance with the
applicable occupational health and safety regulations at all our
locations. Our health and safety procedures contribute to the
advancement of selected UN Sustainable Development Goals
(SDGs), towards SDG 3 (Good health and well-being) and
SDG 8 (Decent work and economic growth).
Promoting and maintaining a culture consistent with the norms
and values underlying The Kendrion Way and our Code of
Conduct are key to enabling long-term employment. The
Kendrion Way forms the solid foundation of our strategy that
is symbolically captured in the Kendrion ‘strategic house’.
Our culture and the underlying values underpin all the work
we do and contribute to creating an open and inclusive
atmosphere. Our Code of Conduct provides further guidance
about our cultural norms and values, the value ‘integrity’ in
particular. Reference is made to the section People and Culture
included in this Annual Integrated Report for more information
on The Kendrion Way and our Code of Conduct.
Fair labor practices and human rights
Respecting human rights is fundamental to a sustainable
society and an essential component of promoting sustainable
business practices throughout our organization and interactions
with customers, suppliers, and other business partners.
We recognize and support the human rights outlined in the
Ten Principles of the United Nations Global Compact.
Acknowledging and respecting fair labor practices and human
rights are an essential component of conveying and practicing
sustainable business standards. We acknowledge and respect
children’s rights to education and development, and the
applicable minimum employment age and related conditions
consistent with applicable statutory requirements. Kendrion
does not tolerate any form of forced or involuntary labor and
endeavors to apply the UN Guiding Principles on Business and
Human Rights. We consider ourselves a responsible corporate
citizen. We take responsibility for the living conditions and
career opportunities at our locations and maintain strong
ties to the communities in which we operate. Intercultural
understanding and respect, fair working conditions, career
development, (gender) diversity and employee representation
are some of the focal points of our corporate citizenship
initiatives. These are also areas in which we aim to contribute
to the advancement of selected UN Sustainable Development
Goals (SDGs), towards SDG 5 (Gender equality) and SDG 8
(Decent work and economic growth).
Our commitment to endorse fair labor practices and to respect
human rights is recorded in our Fair Labor and Human Rights
Policy. Our Fair Labor and Human Rights Policy contains global
standards and principles applicable across all Kendrion
business operations.
With an international workforce and facilities across three
continents, we take a specific interest in promoting respect and
tolerance for different cultures, beliefs, and other characteristics
such as religion and gender. We have recorded the value of
equal opportunities and equal treatment in our Code of Conduct.
We develop education projects that facilitate young people’s first
experience with the labor market and career development.
Because the demand for Science, Technology, Engineering and
Mathematics (STEM) skills within Kendrion is high these projects
also aim to encourage young talented students to take an
interest in STEM related studies.
The Circle of Trust
Workplace well-being is an important part of Kendrion’s culture
as it relates to all aspects of our employees’ working life at
Kendrion. Promoting cohesion – within a professional community
where all employees feel welcome and respected, regardless of
their background or position – enables engagement, innovation,
and performance. We have made a concerted effort to prioritize
the well-being of our employees through a variety of initiatives.
Achieving social change for female employees, particularly in the
workforce, remains a topical theme. Overall, social change for
female employees is a multifaceted topic that requires consistent
effort not only from employers but also from their employees.
Building on our employee wellbeing program we established
The Circle of Trust, providing female Kendrion employees access
to a trusted network and a confidential support line. The primary
objective of The Circle of Trust is to foster a safe and ethical
working environment and promoting female empowerment
and well-being. Through our trusted network and confidential
support line of The Circle of Trust, we create a sense of
community, contributing to the advancement of social progress
for female employees.
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RESPONSIBLE BUSINESS CONDUCT
The Responsible Business Conduct pillar
focuses on business conduct and integrity,
accountability, and transparency. Material themes
for the Responsible Business Conduct pillar
include sustainable sourcing and ethical
behavior.
Sustainable sourcing
We are looking for ways to increase efficiency and transparency
in our supply chain and are committed to sourcing our materials
in an environmentally responsible and socially viable manner.
Our pursuit of long-term sustainability goals are not limited to
achieving energy efficiencies and reducing our carbon footprint.
Our sustainability commitments and efforts are directed at other
parts of the value chain as well. We select suppliers based on
various criteria, including sustainability criteria. As part of our
selection and screening process we require our suppliers to
sign and adhere to the Kendrion Supplier Code of Conduct.
Our Supplier Code of Conduct includes specific requirements
relevant to the recognition of human rights, commitments to
a safe working environment, environmental protection, and
responsible business practices.
We operate as part of a supply chain with a central focus
on product development and manufacturing processes.
Kendrion and other parties forming part of the supply chain
are collectively responsible for maintaining the quality and
sustainability of the materials and products in the supply chain.
We want to play a meaningful role in our supply chain.
To achieve meaningful results, it is necessary to progress our
proactive engagement with suppliers, and to continue focusing
on suppliers’ environmental and social performance in our
selection and assessment process.
The sourcing of certain minerals such as tantalum, tin,
tungsten, and gold (i.e. ‘conflict minerals’) has been linked
to human rights abuses or widespread violence. We conduct
inquiries into our supply chain to confirm that materials supplied
are conflict-free and that suppliers are not aware of non-
compliance in their supplier base. We do not source any
tantalum, tin, tungsten, or gold. We request our suppliers to
complete a conflict mineral reporting template or similar
material statement to evidence compliance. We expect our
suppliers to adhere to the principles and standards included
in our Supplier Code of Conduct, which also contains
restrictions on the use of conflict minerals.
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Permanent magnets are used in some of Kendrion’s products.
The volumes we use are limited. However, we cannot avoid the
use of permanent magnets altogether, as their use increases
product functionality and certain product specifications, such
as torque in industrial brakes. One category of permanent
magnets contains several rare earth metals. The mining and
refining of rare earth metals is energy intensive. Kendrion strives
to use as little of these permanent magnets as technically
feasible.
Our facilities are supported by an extensive supplier network.
Frequently used materials are steel, aluminum, copper, and
plastics. In many cases, semi-finished products are purchased
based on specifications of Kendrion’s customers. Kendrion
used 1,713 tons of copper (best estimate) in the manufacture
of its products in 2023 (2022: 1,811).
Looking ahead
In tandem with our existing sustainability program and in
anticipation of our new 2024-2028 sustainability program, we
are dedicated to advancing our existing processes for supplier
selection and screening. Responding to the reasonable
expectations of our stakeholders and existing and upcoming
regulatory requirements – our emphasis shifted from mere risk
assessment to further embedding sustainability requirements in
our sourcing processes. Engaging with our suppliers – and
customers – to take to take climate action is an important step
and integral to our selection and screening process.
We will continue this engagement with our suppliers, also to
better understand how to use environmental and social metrics
in future supplier selection. For example, the collection of
primary GHG emissions data from our suppliers is expected to
contribute to a reduction of emissions from our procured goods
and services. The results of our scope 3 materiality assessment
– as shown in the diagram on page 43 – also demonstrate the
high relevance and influenceability of the scope 3 category
‘purchased goods and services'. Our third 5-year sustainability
program for the period 2024-2028 will include additional
metrics and improved existing metrics against which our
suppliers will be assessed. Below is a summary overview of
the envisaged metrics.
Natural Capital
■ Renewable energy
■ Energy efficiency
■ CO
2
emission values
cradle to gate
■ Waste prevention /
Waste management
Social and Human Capital
■ Human Rights
■ Labour Rights
■ Diversity, equality
and inclusion
■ Occupational health
and safety
Responsible Business Conduct
■ Export controls and
economic sanctions /
Sanction monitoring
■ Environmental
management system
(ISO14001)
Materials
■ Percentage of recycled materials
■ Product less CO
2
impact than
comparable products
■ Reuse and recycling
■ Regulations - Conflict Minerals,
RoHS, REACH, VDA etc.
■ Hazardous substances
Ecology
■ Land, forest and water rights
■ Biodiversity, land use and
deforestation
■ Soil quality
Compliance
■ Whistleblower / Anti-Corruption
& anti-bribery
■ Data Security / personal data
protection
■ Intellectual Property
Sustainable sourcing metrics
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Supplier Code of Conduct and audit
procedures
We feel responsible for ensuring that our sustainable sourcing
standards are maintained along our supply chain. To minimize
occurrence of environmental and social risks in our supply
chain, we apply a standardized due diligence process, including
completion of (material) compliance statements and use of
other checks and validations. New suppliers are required to
adhere to the principles and standards of our Supplier Code of
Conduct, which explicitly includes Kendrion’s right to carry out
an audit at the supplier’s site to verify compliance with the
standards and principles of our Supplier Code of Conduct.
Kendrion conducts audit procedures to review whether
suppliers comply with the standards and principles of the
Supplier Code of Conduct. Supplier audits are internal audits
performed by Kendrion employees based on an internal
procedure that prescribes the collection of corporate
responsibility documentation of the relevant supplier in the case
the supplier is ISO certified, and the use of standardized self-
assessment questionnaires in the case the supplier is not ISO-
certified. Audits that reveal that a supplier does not meet the
requirements of the Supplier Code of Conduct are followed by
a meeting to ask the supplier to prepare a remediation plan.
Failure to adequately follow up the remediation plan may result
in the termination of the relationship with the relevant supplier.
The results of the 25 (2022: 29) supplier audits conducted in
2023 have been encouraging as most suppliers followed
through on our audit procedures. As in 2022, none of our
suppliers failed to fulfil the recommended requirements for
compliance with the Supplier Code of Conduct. However, there
was a limited number of suppliers where we had to follow up
to clarify their responses.
Through the approach and initiatives set out above, Kendrion
actively encourages its suppliers to take responsibility in
addressing issues that affect the supply chain.
Ethical behavior
We are committed to maintaining the highest standards of
conduct in all our business activities. To this end, we foster
a culture where universal ethical values and behaviors are the
standard. These ethical values and expected behaviors are laid
down in a set of internal policies and procedures. In addition
to setting norms, values and expected behaviors, Kendrion’s
policies and procedures are directed at ensuring compliance
with applicable laws and regulations.
Key internal policies and procedures include Code of Conduct,
Anti-Bribery and Anti-Corruption Policy, Speak-up procedure,
Fair Labor and Human Rights Policy, Competition Compliance
Manual, Insider Trading Code, Data Protection Governance
Guidelines, Personal Data Breach Reporting Procedure,
Supplier Code of Conduct and related internal policies and
procedures.
Our Code of Conduct builds on the values of The Kendrion
Way, and is intended to further develop and implement our
corporate norms and values, with a particular emphasis on
‘integrity’ . The Code of Conduct is about bringing together
over 2.637 people with 49 different nationalities from multiple
Kendrion locations around the globe that operate under
The Kendrion Way and together form the Kendrion brand.
The Code of Conduct provides unity and sets guidance for
business decisions. It provides principles of ethical business
behavior and is integral to our culture. It is about taking
the right decisions in our everyday business lives.
We expect all our employees to do what is ethically right and
legal, and not only live by and respect the principles set forth in
the Code of Conduct, but also convey the message underlying
the Code of Conduct. Education, training and concrete
examples of expected behaviors, dilemmas and actions are key
to ensuring continued compliance with our values.
Kendrion does not tolerate bribery or any form of corruption.
Bribery may involve the offering, promising, or giving of
payments or other benefits to any person (including
government officials or public officials) to improperly influence
a business outcome, but it also means accepting payment or
benefits offered to improperly influence a business outcome.
Integrity of financial reporting is also a key principle.
The Kendrion Anti-Bribery and Anti-Corruption Policy
specifically addresses these matters.
Kendrion considers it essential that every employee
understands, complies with, and conveys the shared norms
and universal ethical values and behaviors as laid down in the
internal policies and procedures. Our policies and procedures
are fundamental to ensuring responsible business conduct. It is
the responsibility of senior management to lead by example
and to ensure that all Kendrion employees are aware of and
behave in accordance with the spirit and the letter of Kendrion’s
policies and procedures.
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Monitoring and accountability
As we require all employees to understand and sign off on and
comply with the Code of Conduct – the Code of Conduct is
part of every employee’s onboarding process. To ensure
continued awareness of the values underlying the Code of
Conduct and the relevance of continued compliance – a new
online training was introduced in the course of 2023. This online
training specifically addressed matters such as corruption,
bribery, conflicts of interest etc.
We monitor compliance with the Code of Conduct – and other
applicable internal policies – in all operating companies through
quarterly internal reporting procedures that operating
companies are subject to. Reports submitted are – to the
extent required and appropriate – discussed among the
Executive Board and the responsible Business Group Director
and Business Group management team during quarterly
business reviews.
Speak-up line
We encourage our employees who have a concern about a
(suspected) violation of our Code of Conduct or any related
policy – to speak up and express their concerns. Our Speak-up
procedure provides guidance on how to raise concerns and the
way in which reported concerns are handled. Our reporting
procedure includes a global Speak-up line managed by an
external party through which employees who feel
uncomfortable raising their concerns with their direct manager,
higher management, or their HR manager, can speak-up and
raise their concerns anonymously. The Speak-up line offers
phone and web-based reporting and is available to our
employees twenty-four hours, seven days a week.
Reports of potential or suspected misconduct or other issues
can be made by employees in their native language. In 2023, 7
(2022: 6) reports were made through the Speak-up line.
These reports were assessed by the Compliance Committee
and, where appropriate, further investigated or advised upon.
Violation of the Code of Conduct may lead to sanctions,
including termination of employment. None of the reports made
through the Speak-up line in 2023 resulted in a dismissal of
employees.
The Speak-up line is also accessible to external stakeholders
of Kendrion that wish to make a report and raise their concerns
about a(n) (alleged) breach of the Code of Conduct or related
policies. The Speak-up procedure and the contact details of
our Speak-up line are also published on our corporate website.
Taxes
Our tax policy is based on the core values embedded in the
Code of Conduct and aligned with our strategy and the notion
of responsible business conduct.
Taxable profits are recognized in jurisdictions in which value is
created, in accordance with the applicable tax regulations and
standards, including the OECD Guidelines for Multinational
Enterprises and local transfer-pricing and other applicable tax
regulations. Kendrion does not seek to establish aggressive
tax-driven structures that are not compliant with the letter and
spirit of applicable tax regulations. This means that Kendrion
does not pursue any aggressive tax planning or establishment
of entities in tax haven jurisdictions solely for tax optimization
purposes and without commercial substance. Reference is
made to pages 83-87 (Corporate Governance Report) for more
information about our tax policy.
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SDG 3 – Good health and well-being
Kendrion has strong HSE policies within its
organization and each production plant
implements tailored initiatives to further enhance
their HSE standards depending on plant-specific needs,
production lines and technologies. Through Kendrion’s
Sustainable development goals
Kendrion aims to contribute to the advancement of several
selected SDGs.
Kendrion previously conducted a review of where it can best
contribute to the advancement of SDGs. This involved careful
consideration of all SDGs, while taking dialogues with
stakeholders into account. The outcome of the materiality
assessment performed in 2020, which also included a
sustainability survey, required nor justified substantive
amendments to Kendrion’s prior determination that SDGs 3
(Good health and well-being), 12 (Responsible consumption
and production) and 13 (Climate action) are areas where
Kendrion can achieve the biggest and most positive impact.
Kendrion will continue developing best practices and standards
– and where appropriate qualitative and quantitative targets –
that support the advancement of the selected SDGs.
Responsible Product Portfolio (which includes Products that
Improve Health, Products that Reduce Climate Impact and
Products that Keep you Safe), Kendrion contributes the
advancement of healthier lives and improvement of well-being
for all.
SDG 12 – Responsible consumption and
production
In all its production processes, Kendrion is
committed to minimizing waste and disposing of
waste in an environmentally responsible manner. Kendrion’s
largest production plants are ISO 14001 certified. As part of the
ISO 14001 certification process, new waste reduction
measures must be implemented every year. Through the
implementation of a waste management hierarchy in
harmonized waste management practices, Kendrion is
committed to contributing to the advancement of sustainable
production patterns.
SDG 13 – Climate action
Kendrion has established strategies and plans
to increase energy efficiency, use renewable
energy and reduce CO
2
emissions. Concrete
and measurable targets support these strategies and plans.
To mitigate the effects of climate change, Kendrion focuses
resources on the development of sustainable products and the
improvement of manufacturing processes. Kendrion contributes
to creating a sustainable future as many products in our
product portfolio help meet the increasing demand for clean
energy and facilitate the accelerating development of
electrification of industrial processes.
These key trends in electrification particularly drive the demand
for Kendrion’s products in wind power, automated warehouses,
and induction heating technology supporting the transition for
certain oil and/or gas enabled industrial processes to electrical
solutions. Kendrion’s smart actuation technology supports the
transition to sustainable mobility (i.e. Autonomous, Connected,
Electric and Shared driving). Kendrion’s largest production
plants maintain energy management systems in accordance
with ISO 50001.
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Disclosures pursuant to the EU Taxonomy
Regulation
The EU Taxonomy Regulation
provides a statutory framework
pursuant to which sustainable economic activities are classified.
The classification and earmarking of sustainable economic
activities make a positive contribution towards increasing
transparency and thereby comparability of the extent to which
companies are pursuing sustainable economic activities within
the meaning of the EU Taxonomy Regulation.
Pursuant to the EU Taxonomy Regulation, Kendrion is subject
to mandatory disclosures of its economic activities in terms of
revenue, capital expenditures and operational expenditures, in
each case to the extent these financial performance indicators
are linked to eligible and aligned economic activities within the
meaning of the EU Taxonomy Regulation and the Delegated
Acts issued thereunder.
An economic activity is considered eligible under the EU
Taxonomy Regulation if such activity is in scope of the
Delegated Acts to the EU Taxonomy Regulation and considered
likely to substantially contribute to one of the six environmental
objectives, i.e. (i) climate change mitigation; (ii) climate change
adaptation; (iii) sustainable use and protection of water and
marine resources; (iv) transition to a circular economy;
(v) pollution prevention and control; and (vi) protection and
restoration of biodiversity and ecosystems. Whether an
economic activity taxonomy eligible or not does not define
the (un)sustainability of that activity. Being taxonomy eligible
is exclusively an indication that a certain economic activity is
considered to make a substantial contribution to one of the six
environmental objectives defined under the EU Taxonomy
Regulation.
Taxonomy alignment of an economic activity goes beyond
eligibility. Taxonomy aligned means that an economic activity
complies with the requirements enumerated specifically for this
activity – as the economic activity:
■ substantially contributes to one or more of the
environmental objectives under the EU Taxonomy
Regulation by meeting the relevant technical screening
criteria under the applicable Delegated Acts to the EU
Taxonomy Regulation;
■ does not cause any significant harm to the other
environmental objectives, by meeting the applicable
‘Do no Significant Harm’ criteria under the Delegated Acts
to the EU Taxonomy Regulation;
■ is carried out in compliance with the minimum safeguards.
Only when an economic activity is compliant with the
abovementioned conditions, criteria, and the relevant minimum
safeguards is the activity considered to be taxonomy aligned.
Eligible activities
We carried out an analysis of our activities to identify activities
that correspond to the activities included in the taxonomy
Delegated Acts. The assessment and determination of
Kendrion’s taxonomy eligible activities is based on current
insights and best judgement in the absence of certain data that
is not yet in full obtainable through existing reporting systems.
Although significant progress has been made during the year
under review, certain additional changes to our reporting
systems and data collection processes are needed to further
improve our taxonomy data collection process and analysis.
Our 2023 taxonomy assessment led to the identification of
the following eligible activities.
Eligible activity Description
3.1 Manufacture of renewable
energy technology
Electromagnetic brakes
for wind power turbines
3.3 Manufacture of low carbon
technologies for transport
Components and
subsystems for electric
vehicles
3.6 Manufacture of other low
carbon technologies
Components and
subsystems for induction
heating
7.1 Construction of new
buildings
Construction new China
factory (28,000 m
2
)
Consistent with current guidance, where taxonomy eligible
economic activities could cover both the 'climate change
mitigation' and the 'climate change adaptation' environmental
objective, economic activities have been allocated to the EU
taxonomy environmental objective 'climate change mitigation'
as the contribution to 'climate change adaptation' is considered
less significant.
Electromagnetic brakes for wind power turbines
Kendrion has been active in the wind energy industry for years
and is well-positioned to support manufacturers of wind
turbines. Tens of thousands of Kendrion’s brakes are installed in
wind parks worldwide and with factories in the EU, China, India
and the US, Kendrion can provide locally customized, high-
quality brakes.
Components and subsystems for electric vehicles
Supporting the change towards clean, electric mobility, with
increased passenger comfort and safety is a strategic focus
area of Kendrion. In Automotive E Kendrion focuses on
actuators for sound, suspension, and sensor cleaning, three
products specifically aimed at Autonomous, Connected,
Electrified and Shared, or abbreviated ACES vehicles.
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This includes subsystems and components for active
suspension, Acoustic Vehicle Alerting Systems (AVAS) for
electric vehicles, and a turnkey sensor cleaning solution.
Components and subsystems for induction heating
Kendrion’s Industrial Actuators and Controls Business Group
product portfolio includes modular, electrified heating systems
to replace traditional heating solutions that use gas or oil.
Construction 28,000 m
2
high-tech factory in China
Solar panels have been installed on our new 28,000 m
2
high-
tech manufacturing facility in China. With these solar panels,
we expect to generate approximately 650,000 KwH annually,
which will enable us to cover around 30% to 40% of our
estimated electricity requirements in China. For our remaining
energy requirements in China that cannot be satisfied through
our own solar panels, green energy is purchased.
Assessment of alignment of activities
We carried out an assessment of the technical screening
criteria for identified eligible activities based on an analysis of
the relevant product propositions. The assessment involved
Kendrion’s sustainability expert task force as well as business
controllers and managers from different function areas who are
responsible for or are otherwise overseeing the development,
manufacture, or sale of eligible product activities. To achieve EU
Taxonomy alignment of economic activities, it is required to
meet all of the applicable 'Do no Significant Harm' criteria under
the Delegated Acts supporting the EU Taxonomy Regulation.
Absent full compliance with all of these criteria - the
abovementioned identified eligible activities are not considered
to be EU Taxonomy aligned.
Minimum safeguards
The minimum safeguards consist of criteria relating to human
rights and responsible business conduct – particularly in the
areas of anti-bribery and anti-corruption – fair competition
and taxation. Kendrion respects the OECD Guidelines for
Multinational Enterprises and the UN Guiding Principles on
Business and Human Rights – as such principles are also
recorded in various policies, including Kendrion’s Fair Labor
and Human Rights Policy, Anti-bribery and anti-corruption
Policy, tax policy, Code of Conduct, Supplier Code of Conduct
and Competition Compliance Manual. Kendrion’s Compliance
Committee evaluates and monitors implementation of and
compliance with applicable procedures and policies. Kendrion
is a member of the UN Global Compact and supports the Ten
Principles of the UN Global Compact in each of the four areas:
human rights, labor, environment, anti-corruption). The policies
and procedures in place reflect the UN Global Compact
principles and our membership to the UN Global Compact is
a confirmation of our commitment and sustainability ambitions.
While Kendrion has established policies to promote fair labor
and human rights, the necessary measures to fully align with
the minimum safeguards outlined at the beginning of this
section have not been implemented as of yet.
Human Rights
Kendrion suppliers are required to adhere to Kendrion’s
Supplier Code of Conduct – which includes the recognition
of human rights. We have in place a supplier audit procedure
pursuant to which compliance with Kendrion’s Supplier Code of
Conduct is assessed. Our Fair Labor and Human Rights Policy
contains global standards and principles endorsing fair labor
practices and respect for human rights.
Anti-bribery and anti-corruption
Kendrion takes a zero-tolerance approach to bribery and
corruption. Our commitment to prevent corruption has been
recorded in Kendrion’s Anti-bribery and anti-corruption policy
as well as our Code of Conduct. In 2023 – an online anti-
bribery and anti-corruption training was rolled out.
Taxation
Our sustainability commitments, our company values as
embedded in the Code of Conduct and The Kendrion Way, also
form the foundation of our approach to taxation. Kendrion’s tax
policy is based on the values laid down in the Code of Conduct
and aligned with Kendrion’s strategy and rationale underlying
the value creation pillar Responsible Business Conduct, which
is part of Kendrion’s current global sustainability program.
Fair competition
We support the principle of free enterprise and unrestricted
competition as a basis for conducting business and we
adhere to the applicable competition laws and regulations.
Our Competition Compliance Manual provides guidance and
principles on fair competition.
Kendrion’s Responsible Product Portfolio
Aside from our efforts relevant to the requirements imposed
pursuant to the EU Taxonomy Regulation, we continue our
focus on the expansion of our Responsible Product Portfolio,
which includes the category ‘Products that reduce climate
impact’ – i.e. products that contribute to or otherwise support
the energy transition. We systematically take account of the
different aspects of sustainable product development with
a view to enhancing Kendrion’s environmentally sustainable
economic activities, whilst recognizing that we are part of an
extensive chain of links that together comprise the supply chain
of the industries in which we operate.
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Our Responsible Product Portfolio also covers the categories:
‘Products that keep you safe’ and ‘Products that improve
health’. The product roadmaps of our Business Groups are
directed at all three categories of the responsible product
portfolio.
Financial performance indicators
The figures reported below relate to the consolidated
companies included in Kendrion’s consolidated financial
statements.
Revenue
As per 31 December 2023, the total revenue used for the
calculation of the taxonomy revenue performance indicator
amounts to EUR 518.5 million and corresponds to the group
revenue as included in the consolidated financial statements.
Our consolidated revenue can be reconciled to our
consolidated financial statements, cf. income statement
on page 115 of this Annual Integrated Report.
Kendrion’s taxonomy eligible revenue amounts to
EUR 34.1 million representing close to 6.6% of total revenue
for 2023 and corresponds to revenue generated by the
manufacturing and sale of electromagnetic brakes for wind
power turbines, components and subsystems for electric
vehicles and components and subsystems for induction
heating. As per the comprehensive assessment performed, the
abovementioned products fall within the scope of the relevant
Delegated Acts supplementing the EU Taxonomy Regulation.
Moreover, the technologies relevant to these products
contribute to the reduction of CO
2
emission. Various internal
controls – including organizational data structuring - are in
place with a view to avoid double counting in respect of the
financial metrics disclosed under the EU Taxonomy Regulation.
Although of the total 2023 revenue we cannot report
taxonomy aligned revenue due to insufficiencies relevant
to certain process steps – we would have expected that
the 2023 revenue generated by the manufacturing and sale
of electromagnetic brakes for wind power turbines would
have qualified as taxonomy aligned revenue absent such
insufficiencies relevant to certain process steps.
Capital expenditures
Total capital expenditure consists of all additions to tangible and
intangible fixed assets during the financial year, before
depreciation, amortization, and any other re-measurements.
Additions resulting from business combinations are also
included, except for goodwill. Our total capital expenditure can
be reconciled to our consolidated financial statements, notes
1 and 2 of the financial statements in this Annual Integrated
Report. Taxonomy eligible capital expenditure includes capital
expenditure directly related to the taxonomy eligible economic
activities, including the construction of an energy efficient
building in China.
As per 31 December 2023, the total amount of capital
expenditures used for the calculation of the taxonomy capital
expenditure performance indicator amounts to
EUR 30.7 million.
As per 31 December 2023, taxonomy eligible capital
expenditures amount to EUR 10.3 million and relate to
investments in development and manufacture of components
and subsystems for electric vehicles as well as investments
relevant to the construction of the new manufacturing facility
in China. The amount of taxonomy eligible capital expenditures
does not qualify as taxonomy aligned.
Operating expenditures
Total operational expenditures consist of direct non capitalized
costs related to research and development, repair and
maintenance and any other direct expenditure relating to
the day-to-day servicing of assets of property, plant and
equipment. This includes research and development
expenditure recognized as an expense during the reporting
period in our income statement, as referred to in note 23 of
the financial statements in this Annual Integrated Report.
Maintenance and repair and other direct expenditures relating
to the day-to-day servicing of assets of property, plant and
equipment were determined based on expenses that are
recorded as repair and maintenance and housing costs,
including in different line items as other operating expenses
in note 23 of the financial statements in this Annual Integrated
Report.
As per 31 December 2023, the total amount of operating
expenditures used for the calculation of the taxonomy
operating expenditures performance indicator amounts to
EUR 34.8 million.
As per 31 December 2023, taxonomy eligible operating
expenditures amount to EUR 2.4 million and relate to costs
relevant to development and manufacturing of components
and subsystems for electric vehicles as well as costs relevant
to the development and manufacturing of components and
subsystems for inductive heating. The amount of taxonomy
eligible operating expenditures does not qualify as taxonomy
aligned.
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Year Substantial Contribution Criteria DNSH criteria
TURNOVER
Economic activities
A. Taxonomy Eligible activities
A.1 Environmentally sustainable activities (Taxonomy aligned)
Manufacture of renewable energy technologies 3.1 - 0% Y Y N N N N N N Y N Y N N 0% Enabling
Manufacture of low carbon technologies for transport 3.3 - 0% Y Y N N N N N N N N N N N 0% Enabling
Manufacture of other low carbon technologies 3.6 - 0% Y Y N N N N N N N N N N N 0% Enabling
Turnover of environmentally sustainable activities
(Taxonomy-aligned) (A.1.) - 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0%
Of which enabling - 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% Enabling
Of which transitional - 0% 0% N N N N N N N 0%
A.2 Taxonomy Eligible but not environmentally sustainable
activities, non-aligned Taxonomy activities
Manufacture of renewable energy technologies 3.1 13.1 2.5% EL EL N/EL N/EL N/EL N/EL 2.30%
Manufacture of low carbon technologies for transport 3.3 17.9 3.5% EL EL N/EL N/EL N/EL N/EL 4.60%
Manufacture of other low carbon technologies 3.6 3.1 0.6% EL EL N/EL N/EL N/EL N/EL 1.50%
Turnover of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
34.1 6.6% 100% 100% 0% 0% 0% 0% 8.40%
A. Turnover of Taxonomy-eligible activities Total A.1+ A.2 34.1 6.6% 100% 100% 0% 0% 0% 0%
B. Taxonomy-non-eligible-activities
Turnover of Taxonomy-non-eligible activities 484.4 93.4%
Total (A+B) 518.5 100%
Code
Turnover in mio €
Proportion of Turnover, year 2023
Climate change mitigation
Climate change adaption
Water
Pollution
Circular Economy
Biodiversity
Climate change mitigation
Climate change adaption
Water
Pollution
Circular Economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy-aligned (A.1.)
or -eligible (A.2.) Turnover, year 2022
Category enabling activity
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Code
CapEx in mio €
Proportion of CapEx, year 2023
Climate change mitigation
Climate change adaption
Water
Pollution
Circular Economy
Biodiversity
Climate change mitigation
Climate change adaption
Water
Pollution
Circular Economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy-aligned (A.1.)
or -eligible (A.2.) CapEx, year 2022
Category enabling activity
Year Substantial Contribution Criteria DNSH criteria
CAPEX
Economic activities
A. Taxonomy Eligible activities
A.1 Environmentally sustainable activities (Taxonomy aligned)
Manufacture of low carbon technologies for transport 3.3 - 0% Y Y N N N N N N N N N N N 0% Enabling
Construction of new buildings 7.1 - 0% Y N N N N N N N Y N N N N 0% Enabling
CapEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1.) - 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0%
Of which enabling - 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% Enabling
Of which transitional - 0% 0% N N N N N N N 0%
A.2 Taxonomy Eligible but not environmentally sustainable
activities, non-aligned Taxonomy activities
Manufacture of low carbon technologies for transport 3.3 4.5 14.6% EL EL N/EL N/EL N/EL N/EL 13.8%
Construction of new buildings 7.1 5.8 18.8% EL N/EL N/EL N/EL N/EL N/EL 38.5%
CapEx of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities) (A.2)
10.3 33.4% 100% 43,7% 0% 0% 0% 0%
A. CapEx of Taxonomy-eligible activities Total A.1+ A.2 10.3 33.4% 100% 0% 0% 0% 0% 0% 52.3%
B. Taxonomy-non-eligible-activities
CapEx of Taxonomy-non-eligible activities 20.5 66.6%
Total (A+B) 30.7 100%
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Year Substantial Contribution Criteria DNSH criteria
OPEX
Economic activities
A. Taxonomy Eligible activities
A.1 Environmentally sustainable activities (Taxonomy aligned)
Manufacture of low carbon technologies for transport 3.3 - 0% Y Y N N N N N N N N N N N 0% Enabling
Manufacture of other low carbon technologies 3.6 - 0% Y Y N N N N N N N N N N N 0% Enabling
OpEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1.) - 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0%
Of which enabling - 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% Enabling
Of which transitional - 0% 0% N N N N N N N 0%
A.2 Taxonomy Eligible but not environmentally sustainable
activities, non-aligned Taxonomy activities
Manufacture of low carbon technologies for transport 3.3 1.8 5.1% EL EL N/EL N/EL N/EL N/EL 7.3%
Manufacture of other low carbon technologies 3.6 0.6 1.7% EL EL N/EL N/EL N/EL N/EL 1.8%
OpEx of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities) (A.2)
2.4 6.8% 100% 100% 0% 0% 0% 0% 9.1%
A. OpEx of Taxonomy-eligible activities Total A.1+ A.2 2.4 6.8% 100% 100% 0% 0% 0% 0%
B. Taxonomy-non-eligible-activities
OpEx of Taxonomy-non-eligible activities 33.6 93.2%
Total (A+B) 36.0 100%
Code
OpEx in mio €
Proportion of OpEx, year 2023
Climate change mitigation
Climate change adaption
Water
Pollution
Circular Economy
Biodiversity
Climate change mitigation
Climate change adaption
Water
Pollution
Circular Economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy-aligned (A.1.)
or -eligible (A.2.) OpEx, year 2022
Category enabling activity
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Reporting principles and external verification
Being transparent and accountable is fundamental to the way
in which Kendrion operates. Our approach to reporting
enhances discipline to our sustainability and responsible
business practices. It ensures that we align our activities with
our strategic objectives and business values. Our sustainability
reporting shows whether our activities and initiatives meet our
2019 to 2023 sustainability target framework. The scope of
Kendrion’s non-financial reporting is based on the information
requirements of our key stakeholder groups. To ensure
that Kendrion meets the information requirements of its
stakeholders, Kendrion performs materiality analyses at regular
intervals.
Kendrion adheres to a solid validation and reporting process
supported by an appropriate control framework to safeguard
the quality and accuracy of the collected non-financial data.
Selected sustainability performance targets are subject to
a limited assurance review by Deloitte Accountants B.V.
Please refer to pages 202-204 of this Annual Integrated Report
for reporting periods, definitions, scope, and limited assurance
review.
Kendrion’s Executive Board expresses its continued support
for the UN Global Compact and Kendrion’s ongoing
commitment to the initiative. This Annual Integrated Report
provides a description of actions that Kendrion has taken
and the measures Kendrion intends to take to implement the
Ten Principles of the UN Global Compact in each of the four
areas (human rights, labor, environment, anti-corruption).
SUSTAINABILITY
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Products that keep you safe • Products that keep you healthy • Products that reduce climate impact
Products that reduce climate impact
Environmentally sustainable economic activities
AUTOMOTIVE
ELECTRIC VEHICLES
Products that keep you healthy
INDUSTRIAL ACTUATORS
AND CONTROLS
INDUCTIVE HEATING AND ENERGY DISTRIBUTION
Products that keep you safe
INDUSTRIAL BRAKES
WINDPOWER AND AUTOMATED WAREHOUSES
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Increase renewable energy Reduce emissions Sustainable sourcing Gender diversity Health and safety
Accelerating ambitions beyond 2023
Progressing on sustainability
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Stakeholders
Local communities
Kendrion is making a positive
contribution to the reduction of social
and economic gaps. Kendrion
appreciates the importance of
maintaining constructive and
appropriate contacts with local
communities and authorities.
Suppliers
Kendrion is consistently looking for
ways to increase transparency in the
supply chain and expects its suppliers
to adhere to the standards of the
Kendrion Supplier Code of Conduct and
follows a consistent approach towards
the performance of supplier audits to
verify compliance. These efforts
contribute to a continuous improvement
in compliance with the Supplier Code of
Conduct.
Customers
Kendrion’s customer base comprises
industrial companies that use our
components to manufacture a range of
industrial applications as well as Tier 1
suppliers and OEMs in the automotive
sector. Kendrion’s customers are
increasingly implementing sustainability
requirements for their suppliers.
Kendrion focuses on consistent
compliance with these requirements.
Technical universities and
institutions of higher
technical education
Active engagement with students is key
to understanding their views and
observations on sustainability and forms
a valuable platform for the exchange of
knowledge and experiences. Dialogues
with students are often inspirational and
stimulate the formulation of innovative
sustainability goals and ambitions,
including our ambition to encourage
young talented female students to take
an interest in Science, Technology,
Engineering and Mathematics (STEM)
related studies. These dialogues also
raise awareness among students about
sustainability and its importance.
Employees
Our talented and highly skilled
employees play a crucial role in the way
in which Kendrion operates its business.
Kendrion fosters a culture that
empowers its employees to reach their
full potential and to achieve the best
results. As reflected in ‘The Kendrion
Way’ and the Code of Conduct we
create an open and inclusive culture
to recruit, motivate and retain a highly
diverse workforce that reflects the
communities in which we operate.
An engaged and committed workforce
contributes to the achievement of
Kendrion’s financial and non-financial
targets.
Shareholders
The endorsement of sustainable
development and addressing
environmental, social and governance
(ESG) related issues is becoming
increasingly important for Kendrion’s
shareholders. Kendrion engages with
its major shareholders and financiers,
not only concerning Kendrion’s global
sustainability program and its material
topics and objectives, but also with
respect to the ESG policies and
activities of its major shareholders and
financiers. Kendrion provides adequate
transparency towards its shareholders
and financiers about climate change
and reducing the negative impact of
climate change and addressing other
social issues, strategy and financial
performance.
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Local communities
Communication resources and channels
Local meetings, Kendrion websites, open days
Engagement with local communities takes place at regular intervals
Topics discussed
Communities’ participations and investments
Relevance to Kendrion’s global sustainability program
Community connection, involvement and participation
Suppliers
Communication resources and channels
Supplier Code of Conduct, supplier sustainability and quality audits,
Kendrion websites, supplier and contract meetings
Engagement with suppliers takes place at regular intervals
Topics discussed
Quality of products and services, Kendrion’s global sustainability
program and objectives, management of supply chain risks (e.g.
material shortages) and joint pursuit of improvements in the supply
chain, responsible business conduct, Supplier Code of Conduct,
waste, energy, water use, use of rare earth materials, conflict minerals
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
supplier’s perspective (incl. the improvement of transparency in the
supply chain), further insight into supplier needs and expectations,
sharing experiences and best practices, continuous improvement
and development of sustainability contributions
Customers
Communication resources and channels
Customer and sales meetings, Kendrion websites, contract
meetings, press releases
Engagement with customers takes place at regular intervals
Topics discussed
Quality of products and services, Kendrion’s global sustainability
program and objectives, customer satisfaction, waste, energy, water
use, use of rare earth materials, conflict minerals, responsible
business conduct, ISO and IATF certification
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
customer’s perspective, further insight into customer needs and
expectations, sharing experiences and best practices, continuous
improvement, and development of sustainability contribution
Technical universities and
institutions of higher technical
education
Communication resources and channels
Presence at fairs, organization of student events, projects and
internships engagement with universities, schools and institutes
takes place at regular intervals
Topics discussed
Kendrion’s global sustainability program and objectives (incl.
advancement of gender diversity), also with a view to creating
awareness and stressing the importance and relevance of
sustainability
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability of new
generation and raise awareness
Employees
Communication resources and channels
Works Council meetings, meetings with employee representatives,
employee satisfaction and culture surveys, workshops, training
courses, intranet, internal personnel magazine, e-mail newsletters,
feedback meetings, staff and townhall meetings
Engagement with employees takes place on a daily basis
Topics discussed
Kendrion’s global sustainability program and objectives, particularly
regarding health and safety, employability, training and development,
employee satisfaction and company culture, responsible business
conduct, compliance and ethical behavior
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
employee’s perspective, further insight into employees’ capabilities
and motivations, strengthening business sustainability culture,
enhancing employee commitment, participation, and awareness
Shareholders
Communication resources and channels
General Meeting of Shareholders, analyst and investor meetings,
conferences, Capital Markets Day, press releases, Kendrion’s
corporate website
Engagement with shareholders takes place at least on a quarterly
basis
Topics discussed
Kendrion’s global sustainability program and objectives
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
investor’s perspective (incl. climate change and reducing the
negative impact of climate change and addressing other social
issues), further insight into shareholders needs and expectations,
sharing experiences and best practices, continuous improvement,
and development of sustainability contributions
The table below describes the communication resources and channels per stakeholder and their relevance to Kendrion’s global sustainability program.
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Value creation model
1
Normalized for costs and benefits outside the normal course of business. The bridge from reported to normalized figures can be found on pages 209-211.
Value creation model
Business output
Revenue
EBITDA
1
518.5 mln
53.1 mln
9.9 mln
€
€
€
OUTPUT
Relative decrease of energy
consumption compared
to 2018
Relative decrease
of CO
2
emissions
compared to 2018
23.0%
15.0%
Natural Capital
Number of CSR
supplier audits
25
Responsible Business Conduct
Accidents
7.7 accidents per 1,000 FTE
573 LTI (days)
Illness rate
4.7%
Social and Human Capital
ENTERPRISE
RISK
MANAGEMENT
GLOBAL
LEGAL
COMPLIANCE
AND
GOVERNANCE
FRAMEWORK
REDUCED
CLIMATE IMPACT
INCREASED SAFETY
AND MOBILITY
INCREASED
COMFORT
IMPROVED
HEALTH
OUTCOME
Total loans and borrowings
Net cash from operations
Shareholders equity
36.4 mln
165.6 mln
172.0 mln
€
€
€
Financial capital
Power
Fuel oil
Natural gas
Copper
24,724,627 kWh
337,110 kWh
9,193,299 kWh
1,713 tons
Natural capital
Solutions and products
> 10,000
Manufactured capital
2,606
Human capital
FTEs
INPUT
Profit for
the period
STRATEGIC INTENT
AUTOMOTIVE
CHINA
INDUSTRIAL
BRAKES
CHINA
ACTUATORS
AND
CONTROLS
CHINA
THE KENDRION WAY
ADDED VALUE
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2,606
Total number of
employees in FTEs
at 31 December
(number FTE)
2022 2,753
1,379
Direct employees
(number FTE)
2022 1,404
1,080
Indirect employees
(number FTE)
2022 1,135
147
Temporary
employees
(number FTE)
2022 214
2,637
Total number of
employees
at 31 December
2022 2,708
1,237
Women employed
(number)
2022 1,267
1,400
Men employed
(number)
2022 1,441
People & Culture
Please refer to the section ‘About the sustainability report’ on pages 212-214 of this Annual Integrated Report for reporting periods, definitions, scope and limited assurance review.
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411
Employees with
a fixed-term
contract
(number)
2022 470
22
Overall employee
turnover rate
(%)
2022 22
44
Average age of
all employees
2022 42
12
Average number of
years’ service
2022 10
4.7
Illness rate
¹
(%)
2022 5.4
54.7
Wage costs per FTE
(EUR 1,000)
2022 53.0
0.4
Training costs
(as a % of wage
costs)
2022 0.5
¹
Please refer to the section ‘About the sustainability report’ on pages 212-214 of this Annual Integrated Report for reporting periods, definitions, scope and limited assurance review.
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Diverse and inclusive learning organisation
We maintain a culture and environment that empowers
everyone to reach their full potential. Prioritising personal and
professional growth encourages performance and enhances
professional values, expertise, and capabilities. We encourage
our people to translate their ideas into action, thereby
increasing their engagement and performance within a safe
and high-quality work environment. The ongoing development
of the professional values, expertise and capabilities of our
employees is critical to creating long-term, sustainable value
for our customers and other stakeholders. We are committed
to being the industry’s employer of choice, dedicated to
supporting our people in being their best by enabling a culture
built on diversity, inclusion, and learning.
Our professional values
Kendrion’s strategy for realizing long-term, sustainable value
creation is symbolically captured in our strategic house that
provides direction and uniformity within a clear structure.
Creating long-term sustainable value with a lean and focused
organization, and fostering a diverse, inclusive, safe, and
high-quality work environment, is crucial to our strategy.
The foundation of our strategic house is our culture. No building
remains stable without a strong foundation, regardless of the
strength of its building blocks. Our culture and its underlying
values underpin all we do. The key values exemplifying our
culture are articulated in The Kendrion Way: ‘A global team
of actuator specialists, with courage to act, curiosity to learn
from successes and mistakes, confidence to share, and
open to feedback’. The Kendrion Way offers our employees
clear guidance on ‘’how we do things” at our company,
irrespective of location, level of responsibility or functional role.
The Kendrion Way provides a universal approach towards
realizing our ambitions and serves as the foundation upon
which we are building Kendrion’s future.
We are committed to maintaining the highest standards of
conduct in all our business activities. Our Code of Conduct
is intended to further develop and implement our corporate
norms and values, with a particular emphasis on ‘integrity’.
The Code of Conduct sets guidance for our business decisions.
It provides principles of ethical business behavior and is integral
to our culture. Containing clear and universal standards,
The Code of Conduct establishes expected behaviors for all
employees, contributing to the creation of a safe and respectful
environment for everyone. We are dedicated to maintaining a
positive, diverse, and inclusive work environment, and do not
tolerate any form of discrimination, harassment, or misconduct.
We are committed to conducting our business in a transparent
and responsible manner and will continue to review and update
our Code of Conduct to ensure that our norms and values
remain relevant and effective. The Code of Conduct can be
found on the corporate website at www.kendrion.com.
Increasing awareness, education, training, and providing
concrete examples of expected behaviors, dilemmas and
actions are key to promoting and preserving our culture. With
the support of dedicated value teams, managers are entrusted
with enhancing awareness and assisting their team members in
their value journey. and to help them understand what each
value means for themselves, their team, and the organization.
People and culture
A mix of interactive trainings is available to help our employees
internalize and embody the values outlined in The Kendrion
Way and the Code of Conduct.
Employee value proposition and engagement
Our workforce is crucial to the successful execution of our
strategy.
Employee value proposition
We foster a purpose-driven and professional environment,
where people are recognised for a job well done and are fairly
and competitively remunerated in line with personal and
company performance. In an increasingly competitive talent
market, our employee value proposition is crucial to retaining
and attracting talent that supports the successful execution
of our strategy. We consistently invest in talent attraction
and employer brand strategies to recruit new talent.
Our comprehensive recruitment strategy involves targeted
advertising, networking events, and partnerships with technical
universities and higher technical education institutions. In our
recruitment strategy, we take a global approach.
Digital innovation contributed to the execution of several
targeted marketing campaigns across various social media
platforms. This global approach and marketing campaigns have
enabled us to reach broader talent pools. Our recruitment team
has also created a positive candidate experience, with positive
responses. On our career website, candidates can find
information about vacancies worldwide and the countries in
which we operate.
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Attracting and selecting young, early-career professionals
is particularly important. In addition to maintaining good
relationships with technical universities and higher technical
education institutions, our offices are situated at attractive and
inspiring locations such as the High Tech Campus in
Eindhoven, the Netherlands, and the renowned Suzhou
Industrial Park (SIP) in China. Career-advancing development
opportunities, international exchange programs, workstyle
flexibility, and a positive, engaging, and inclusive company
culture are key elements of our employee value proposition.
Our efforts have led to a reduction in employee turnover and
an improvement in employee satisfaction.
In a historically male-dominated industry, we strive to
encourage and attract talented females, including early-career
professionals, through our renowned apprenticeship and
trainee program. We have established an informal partnership
with the Hochschule Furtwangen University (HFU) in Germany,
providing guest lectures on managing diversity within our
organization as part of the Intercultural Management module
offered by the HFU. Through our active engagement with
students and the exchange of experiences and perspectives,
we seek to encourage and inspire students to pursue a STEM
(Science, Technology, Engineering and Math) career path,
contributing to our ambition of attracting talent to our industry.
Employee engagement
Being recognized as a safe, inspiring, and high-quality place
to work requires active engagement with our employees.
This is becoming ever more important in a market where it is
challenging to attract talent, more specifically specialists in
areas such as software and electronics, and where the ways of
working have changed over the past years. Understanding our
employees’ expectations in this changing work environment is
key as it impacts the way in which we execute our strategy and
engage with our customers, suppliers, and other business
relations. We facilitate flexible workstyles that contribute to the
performance and job satisfaction of our employees. In addition
to enabling workstyle flexibility, including remote and hybrid
models, we continue to provide a safe space for collaboration
and the exchange of expertise within our offices. Striking a
healthy balance between flexible workstyles and ensuring the
availability of safe workplaces, where diverse individuals feel
inspired and can excel, remains crucial for the wellbeing of our
employees.
We offer our employees the opportunity to work on meaningful
tasks and innovative projects. Another essential component of
our efforts to maintain an engaged and committed workforce
involves offering a wide range of measures and tools aimed at
cultivating a healthy, safe, and sustainable workplace culture.
This includes annual ‘Health Days’, medical check-ups, sports
opportunities, and other events. Maintaining a healthy work-life
balance is important to sustaining employee satisfaction and
engagement. We enable employees to balance their personal
lives with our dynamic, purpose-driven, and performance-
oriented work environment.
Beyond physical health, we recognize the significance of
prioritizing our employees’ mental well-being. At select
locations employees have the option to consult with a
psychologist at their request. Increasing mental health
awareness and showing respect and acceptance contributes
to removing potential barriers for employees to seek help when
struggling with mental health issues. Good physical and mental
health creates a more resilient workforce and enhances
employee well-being.
Being recognized as a safe, inspiring, and high-quality place to work requires active engagement with our employees.
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We assess our progress in maintaining and building a safe
and inclusive workplace through regular employee satisfaction
and culture surveys. Monitoring the results enables us to better
understand developments and requirements to uphold our
positive, engaging, and inclusive company culture. Our most
recent survey took place in 2022 and we anticipate preparing
a subsequent employee survey in 2024. The outcomes of
the 2022 survey revealed, among other insights, that our
employees feel a strong connection with Kendrion as an
employer and that they feel valued and appreciated.
Specifically, satisfaction regarding recognition and opportunities
for growth and development were positive. Moreover, the
survey affirmed our employees’ capacity and willingness to
thrive in times of change, going the extra mile to contribute to
Kendrion’s success. Immediate managers play a crucial role in
fostering a positive employee experience. At the same time,
employees have requested more support and communication
concerning changes affecting the organization or their work.
We are committed to prioritizing employee engagement and
are confident that this will result in increased productivity, job
quality, and overall success in executing our strategy Employee
Achieving social change for female employees, particularly
in the workforce, remains a topical theme. Strengthening our
holistic approach across these well-being pillars, we have
established The Circle of Trust, providing female Kendrion
employees access to a trusted network and a confidential
support line. The primary objective of The Circle of Trust is to
foster a safe and ethical working environment and promoting
female empowerment and well-being. Through our trusted
network and confidential support line of The Circle of Trust,
we create a sense of community, contributing to social
progress for female employees. The Kendrion Way, our Code
of Conduct and Speak-Up Procedure clearly define our values
and commitments, and the process for reporting concerns.
An official record of our norms and values, and a confidential
reporting procedure remain critical. However, The Circle of
Trust serves as an informal space where female employees
feel comfortable sharing their experiences and concerns within
a trusted group. Special expert sessions are held annually,
focusing on specific themes such as self-awareness and
visibility of women within the organization. Through our Circle
of Trust, we actively contribute to the ongoing advancement
of social change for female employees.
Opportunity to learn and grow
By providing career-enhancing development opportunities
for our employees, we facilitate their growth and progression
within their roles. Investing in our employees is essential for
creating long-term and sustainable value. We provide our
employees with the tools, resources, and opportunities to
enhance their capabilities and skills, allowing them to achieve
their career goals.
We have implemented a variety of initiatives to enable career
development within Kendrion and offer a broad spectrum of
learning and development tools and opportunities. Cultivating
a culture of trust and recognition as outlined in The Kendrion
Way and our Code of Conduct is an important contributor.
Our ‘Learn and Share’ value team, part of The Kendrion Way,
oversees several learning and development programs designed
to advance relevant skill sets and leadership capabilities. We
leverage learning and development tools to accelerate and
strengthen our capabilities in critical areas for the successful
execution of our sustainable growth strategy, ranging from
personal strengths to inspirational leadership, health, and social
and emotional well-being.
Our focus remains on maintaining a culture where employees
feel supported and empowered to take charge of their own
career development. The role and responsibility of our
leadership are key in creating and maintaining an inspiring
learning environment that stimulates innovation and
development. Emphasizing personal leadership, building
internal knowledge networks, and fostering innovation and
agility are integral values in our management programs and
development initiatives.
We respect the principle of equal opportunities for career
development, irrespective of background, nationality, ethnicity,
religion, age, or gender. To maximize the potential of our
employees and to meet their developmental needs, we support
the principle of internal mobility, striving to fill vacancies with
qualified internal candidates. Internal moves are viewed as
beneficial to our people, offering new and challenging
opportunities and experiences, while retaining valuable
knowledge within the organization.
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Our culture, which encourages the sharing of ideas, knowledge,
expertise, and on-the-job training, positively contributes to
the development of our employees.
We encourage internal promotion and the advancement
of young talent to management roles in our business.
The Kendrion High Potential program serves as our global
learning and development program, offering aspiring young
talents with managerial potential access to diverse learning
modules. The High Potential program offers development
opportunities that are aligned with business and individual
needs including strengthening personal competencies.
Additional modules, e.g. sustainability, diversity and inclusion
and strategy, are added as deemed appropriate.
Our efforts have resulted in an engaged and motivated
workforce. We are proud of our culture; employees are
assessed and valued on their merits and have the confidence
to take on new roles and responsibilities that align with their
expectations, talents, and ambitions. We remain committed
to continuing our efforts, ensuring that our employees continue
to receive the tools and resources they need to realize their full
potential.
Succession management
We have implemented a comprehensive succession
management plan. This plan includes identifying successors
for critical positions and the monitoring of their development
to ensure they are ready for leadership roles at the right time.
Training and development programs are also strategically
designed to equip our talented employees for future leadership
roles in the future. Our efforts help us reinforce a healthy
leadership pipeline and accelerate the development and growth
of top talent.
Our talent management and succession-planning tool identifies
and facilitates the monitoring and review of our employees.
More specifically, the tool enables a structured development
of our employees, including current and potential leaders who
have the talent and potential to take on a new role in the future.
The tool also helps us conduct performance reviews, offering
clear and structured insights into employee development.
The tool incorporates a competency framework that defines
how we expect our employees to fulfil the tasks and
responsibilities in line with their job role. Together with the skills
required for a certain job role, the competency framework
forms the basis of our performance reviews and determines the
requirements for future positions. The competency framework
is updated as appropriate to increase effectiveness and
improve the performance review process. It helps our
managers and employees to better determine career paths and
the corresponding training and development needs. With our
talent management and succession-planning tool we create an
environment for our employees to grow, perform and succeed
in their careers.
Compensation and benefits
We provide compensation and benefits schemes that align with
industry standards and local practices, aiming to attract and
retain the most diverse talent around the globe in a fair and
responsible manner. We do not offer remuneration packages
below the applicable minimum-wage standards. Our
compensation and benefits schemes are designed to create
transparency and fairness in the structure of both fixed and
variable remuneration, while offering a competitive package
with appropriate upside potential linked to performance.
Our compensation schemes include performance-based
compensation and share-based compensation for eligible
employees. These programs aim to ensure fair and attractive
compensation. As such, our compensation scheme is designed
to incentivize achieving sustainable strategic, operational, and
financial objectives in the short-term and long-term.
Building a diverse and inclusive workplace
Diversity is crucial for creating a fair and inclusive society.
It promotes equal opportunities and helps break down barriers
of prejudice and unconscious bias. We provide an environment
where all employees have equal opportunity to develop and
contribute to the realization of our strategy, regardless of their
age, background, gender, nationality, ethnicity, religion or any
other (protected) characteristic. Diverse and inclusive teams
make our organization more agile, creative, and innovative.
Enabling a diverse and inclusive workforce – in terms of gender,
nationality, and background (i.e. education, (work) experience),
age, etc. – gives us access to a larger talent pool.
Having the right mix of people in the right jobs, with the right
capabilities, encourages better decision-making and helps us
grow our business.
EMPLOYEE LIFECYCLE
DIVERSITY MATTERS
RECRUITMENT
counteract
existing barriers
RETENTION
reward,
recognition
& benefits
ADVANCEMENT
INTO
MANAGEMENT
ROLES
it drives performance & innovative results
INTENT ALIGNED WITH ACTION
Management awareness, commitment and behaviour
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As part of the Social Capital and Human Capital value creation
pillar of our global sustainability program, we are committed to
creating and maintaining a diverse and inclusive workforce
where all employees feel welcome and respected. We actively
promote diversity across the employee lifecycle, leveraging this
framework to address these aspects and the complexity
around (gender) diversity, especially in a company like Kendrion
where the demand for technical and Science, Technology,
Engineering and Mathematics (STEM) skills is high.
Leadership support and shared responsibility form the
backbone of our approach, guiding us in establishing a truly
diverse and inclusive workplace. Key priorities within our
strategic diversity framework include:
■ Recruitment of diverse employees: Ensuring that our
recruitment process is unbiased, signaling our interest in
a diverse candidate pool; supporting applications from
a diverse group; and clearly communicating these
expectations to our recruitment teams.
■ Developing and maintaining a robust pipeline
of diverse talent.
■ Retention and promotion of talents with diverse
backgrounds, nationalities, and genders: Covering
various aspects such as reward, recognition, benefits,
work allocation, performance management, and career
development.
■ Advancement into management roles: Preserving an
environment that fosters the growth of a diverse group of
talents into management, technical, and other leadership
roles.
While our overarching focus embraces diversity in its broadest
sense, our strategic approach is directed at the improvement of
gender balance in management roles, technical roles, and other
leadership positions. Through building engagement around
gender equality among managers and other (senior) employees,
Several proactive measures have been initiated to promote
diversity and elevate the representation of female employees in
our Business Groups. These include introducing changes to our
recruitment process, sourcing candidates from diverse pools,
conducting unconscious bias training sessions, and
establishing a so-called employee resource group, such as
The Circle of Trust. Consistently addressing challenges faced
by female employees has significantly contributed to improving
our overall workplace culture.
Kendrion is a proud signatory of the German Charta der Vielfalt
(Diversity Charter). Supported by the German Commissioner
of the Federal Government for Migration, Refugees and
Integration, the charter promotes the recognition, appreciation,
and integration of diversity in business culture.
implementing concrete actions and initiatives, and providing
insights into possible barriers, we aim to increase sustainable
gender diversity across the organization.
Specific numerical gender diversity targets will be incorporated
into our new sustainability program for the period 2024-2028.
The identified gender diversity targets will involve an
improvement requirement of female FTE for our indirect staff
within our Business Groups of 25% combined with a minimum
threshold requirement of 33%, to be achieved over multiple
years. Further qualifications and conditions relevant to the
introduction of these numerical gender diversity targets will
be laid down in our 2024-2028 sustainability program that we
anticipate launching in the course of 2024.
Diverse and inclusive teams make our
organization more agile, creative, and
innovative. Having the right mix of people
in the right jobs, with the right capabilities,
encourages better decision-making and
helps us grow our business.
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Kendrion’s workforce comprises 49 nationalities (2022: 47)
across 9 countries (2022: 9) Furthermore, 46% of our
workforce is female (2022: 47%), reflecting a healthy balance
of backgrounds, nationalities, and gender throughout the
organization.
Fair labor practices and human rights
Respecting human rights is fundamental to a sustainable
society and an essential component of promoting sustainable
business practices throughout our organization and interactions
with customers, suppliers, and other business partners.
We recognize and support the human rights outlined in
the Ten Principles of the United Nations Global Compact.
We acknowledge and respect children’s rights to education
and development, and the applicable minimum employment
age and related conditions consistent with applicable statutory
requirements. Kendrion does not tolerate any form of forced
or involuntary labor and endeavors to apply the UN Guiding
Principles on Business and Human Rights. Our commitment
to endorse fair labor practices and to respect human rights is
recorded in our Fair Labor and Human Rights Policy. Our Fair
Labor and Human Rights Policy contains global standards and
principles applicable across all Kendrion business operations.
Our Fair Labor and Human Rights Policy can be found on the
corporate website at www.kendrion.com. No material human
rights or labor issues were raised in relation to our activities in
2023.
We require our suppliers to recognize human rights and to
ensure that they are not engaged in any violations or abuses.
Suppliers must confirm their compliance with the sustainable
sourcing standards, including the recognition of human rights,
by signing our Supplier Code of Conduct.
Internal audit procedures are in place to assess suppliers’
adherence to the Supplier Code of Conduct. For detailed
information about our Supplier Code of Conduct and the
corresponding internal audit procedures, reference is made
to page 50 of this Annual Integrated Report. Our Supplier
Code of Conduct can be found on the corporate website
at www.kendrion.com.
Employee representation
Fair labor practices and human rights are essential for ensuring
that our employees are treated respectfully. This encompasses
the provision of fair wages, a safe working environment and
protection against discrimination and harassment. It also means
allowing employees to form unions and engage in collective
bargaining. Kendrion upholds freedom of association and the
right to collective bargaining. Works councils and employee
representatives have been appointed at Kendrion’s major
operating companies in Germany as well as Kendrion’s
operating companies in the Netherlands, Romania and Austria.
These works councils and employee representatives are
involved in a wide range of employment, health & safety, and
social issues, in accordance with local labor legislation. Regular
meetings and consistent communication provide employees
with opportunities to raise questions and contribute valuable
input. We believe that constructive interaction with our works
councils and employee representatives fosters a more engaged
and satisfied workforce, leading to improved productivity and
morale. We appreciate the efforts of our dedicated works
councils and employee representatives in voicing and
addressing the needs and questions of our employees.
Approximately 64.4% (2022: 67.4%) of all Kendrion employees
are represented by these works councils and employee
representatives. Moreover, approximately 70.2% (2022: 62.4%)
of employment contracts in Germany are governed by or follow
the collective bargaining agreements for the metal industry.
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Outlook
Reflecting on 2023, the year presented a mixed economic and
geopolitical landscape. On a positive note, the energy crisis in
2022, stemming from the Russian invasion of Ukraine on
24 February of that year, subsided, thanks to the EU’s
successful reduction of dependency on Russian natural gas.
This, in combination with decisive action by major central banks
including the FED and ECB, contributed to a gradual decline in
inflation throughout the year. However, challenges persisted as
the global economy, initially slowing in the first half of 2023,
faced further declines in the second half. The ongoing war in
Ukraine slowed no signs of resolution, and on 7 October of
this year, the conflict between Hamas and Israel added further
geopolitical complexity. Regionally, the EU grappled with
a potential recession throughout the year, with Germany,
representing around 40% of the Group’s revenue, experiencing
economic difficulties beyond the EU average. Fortunately, the
US fared slightly better despite continued political uncertainty
and a significant UAW strike impacting the US automotive
market. In China, the anticipated COVID rebound, following
the relaxation of strict lock-down rules early in 2023, did not
materialize. China grew its GDP with a modest 4% year-over-
year in 2023. Exports fell short of expectations, and a recovery
is not expected in the near term.
Kendrion develops and manufactures actuator products
contributing to the global shift towards electrification and clean
energy.
Our balanced, diverse product portfolio supports this transition,
without excessive reliance on any specific vertical or market
segment.
Our products include brakes for wind power, robotics,
automated warehouses, sound actuators, suspension and
sensor cleaning products for electrical vehicles; and induction
heating technology that facilitates the transition from
oil and gas to electrical solutions in industrial applications.
This commitment to electrification has guided our product
development decisions across all Business Groups, including
operations in China, for the past few years and will remain a key
focus moving forward.
The emphasis on energy transition continues to guide
Kendrion’s operational and strategic decisions.
Enabling the shift towards clean energy
The emphasis on energy transition continues to guide Kendrion’s
operational and strategic decisions.
To further increase our focus on electrified vehicles, we have
split our automotive franchise into two distinct units:
Automotive Core and Automotive E.
The widespread adoption of Autonomous, Connected, Electric,
and Shared (ACES) vehicles, in combination with the ongoing
pursuit of enhanced safety and comfort, presents substantial
growth opportunities for both the automotive industry and
Kendrion. Automotive E is fully dedicated to these
opportunities. Our innovative product platforms encompass
systems and components for active suspension, Acoustic
Vehicle Alerting Systems (AVAS) for electric vehicles, and smart
actuation, including a turnkey sensor cleaning solution.
Automotive Core is responsible for Kendrion’s automotive
business related to combustion engines, emphasizing
operational excellence, lean production, cost efficiency,
profitability, and cashflow.
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The acquisition of INTORQ in 2020 significantly strengthened
our position in the industrial brakes market. Given that our
industrial brakes are sold in tandem with an electromotor, the
accelerating energy transition towards electrification opens up
substantial opportunities in a flourishing market. In 2023, the
brake market experienced a setback due to higher interest
rates and a slowdown in China, resulting in reduced demand
for industrial goods like robots, wind power and industrial
automation.
The acquisition of Dutch electronics and embedded systems
developer 3T in September 2021 holds significant growth
potential for our Industrial business. 3T’s expertise seamlessly
aligns with the control technology activities of our Industrial
Actuators and Controls (IAC) Business Group. This acquisition
also reinforces our software and electronics development
capabilities, benefiting not only our Automotive Group but
specifically the Automotive E organization, where software
and electronics play a substantial role in our products for
sound actuation and sensor cleaning. Throughout 2023, 3T
experienced substantial growth, albeit constrained by our
ability to hire more software and electronics engineers.
To accommodate our expanding project pipeline and the
associated growth in China, we successfully completed the
28,000 m
2
manufacturing facility at Suzhou’s Industrial Park,
an esteemed location for technology and advanced
manufacturing companies. The facility officially opened on
24 May 2023, and by August 2023, all product lines from
our previous facilities in Suzhou and Shanghai were fully
operational.
Entering 2024, the broad disruption of the automotive industry
continues. We anticipate reaping the benefits from six
Automotive E projects ramping up in China. With an additional
EUR 230.0 million in lifetime revenue added to our Automotive
E project portfolio, we have established a robust foundation for
further future growth. In Industrial Brakes, we expect the market
for brakes to stabilize at the level observed in the second half of
2023. Over the long term, the market for industrial brakes is
poised to gain from the global push towards electrification,
driving demand for our products in wind power, robotics &
automation, forklift trucks, AGVs and more. With leading
positions in all these segments, we foresee substantial gains
from underlying growth trends. IAC will continue to focus on
strong cash generation and on actively targeting opportunities
in segments such as inductive heating for industrial processes,
energy distribution, control technology, nuclear power, and
industrial locks. To facilitate more growth for 3T, IAC will open a
satellite office in Drachten, a city in the north of the Netherlands,
close to two higher education institutions for software and
electronics engineers. In China, our new manufacturing facility
The global acceleration towards electrification and clean
energy is expected to persist, presenting opportunities
in the years ahead.
is geared to accommodate the expansive project pipeline,
including the initiation of the six new Automotive E projects.
These projects are expected to contribute to Kendrion China’s
growth over the year.
The economic outlook for 2024 remains uncertain. The ongoing
war in Ukraine has led many economists to predict a recession
in Europe, and possibly the US. China is grappling with
deflation and is expected to grow only modestly in 2024.
In short, the outlook for 2024 remains subdued and unclear.
Therefore, we expect the market unpredictability observed in
2023 to persist in 2024. The global acceleration towards
electrification and clean energy is expected to persist,
presenting opportunities in the years ahead. Provided the world
returns to a more stable economic environment in the course
of 2024, we remain committed to executing on our strategic
plans, aimed at achieving our medium-term financial targets:
5% organic growth between 2019 and 2025, an EBITDA of
at least 15% in 2025 and a ROI of at least 25% in 2025.
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Effective risk management
Effective risk management is key to executing Kendrion’s
strategy, achieving long-term value for Kendrion’s stakeholders,
protecting the company’s reputation and good corporate
governance. Kendrion promotes entrepreneurship and
empowers management to exercise their discretionary powers
as appropriate. Kendrion’s risk management is not intended to
eliminate all risks since exposure to risk is unavoidable in doing
business. Kendrion actively conveys the need to maintain
a healthy balance between entrepreneurial spirit and risk
awareness. We adopt an approach to business risks that is
consistent with our risk appetite and that minimizes the
probability of adverse events and the impact of such events,
while remaining competitive in an ever-developing business
environment. The Executive Board emphasizes that risk
management and control systems can neither offer an absolute
guarantee that the company’s objectives will be achieved nor
entirely prevent material errors, loss, fraud, or violations of laws
or regulations.
Risk management framework
Risk management is integrated in Kendrion’s business
practices and extends to all areas such as culture,
policymaking, processes, duties, influencing conduct and all
other aspects of doing business. Kendrion’s approach to risk
management is part of its control environment and consists of
two main complementary elements: a top-down strategic view
of risk at the enterprise level and a bottom-up view of risk at
the operational level. The approach to risk management
interacts with all relevant elements in the control environment,
both on the enterprise as well as on the operational level.
With this consistent approach, Kendrion’s risk management
and control framework fosters a culture of risk awareness
Risk management
across the organization by identifying risks in a systematized
manner and defining appropriate controls aimed at the
mitigation and management of these risks in line with
Kendrion’s risk appetite.
The Executive Board is responsible for maintaining a
comprehensive risk management and internal control system
aligned with the risks associated with Kendrion’s strategy
and activities, and for regularly reviewing and supervising its
effectiveness. In addition to maintaining a risk management
and internal control system, the Executive Board is responsible
for ensuring that such system is embedded in Kendrion’s
business practices.
Kendrion’s risk management function, headed by the Internal
Audit and Risk Manager, provides guidance and support to
the Executive Board. This includes driving risk awareness
across the Kendrion organization and leading reviews of
operational processes and effectiveness of the risk
management and control system.
CONTROL ENVIRONMENT
Annual corporate
risk management
cycle
Code of conduct
Speak-up procedure
Corporate policies
Internal audit
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OPERATIONAL
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Periodic business reviews
Planning & Control cycle
Local policies and procedures
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Project risk
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Certificates
Quarterly
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Risk
owners
Corporate
top 10
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The Executive Board conducts an annual risk assessment
and considers if adjustments to the risk management and
internal control system are required, as conditions and market
circumstances change. The risk assessment includes a section
specifically focused on fraud risks that are relevant for
Kendrion. The result of the annual risk assessment is discussed
within Kendrion’s Management Team and shared and
discussed with the Supervisory Board. To strengthen risk
management and oversight, risk owners are assigned to the
top-10 risks identified, and each risk owner is responsible for
preparing and updating mitigation plans. On a quarterly basis,
risk owners report to the Executive Board on mitigation
progress and risk development. This report is also shared and
discussed with the Audit Committee.
At the operational level, Kendrion’s plants hold internationally
recognized certifications designed to assess and improve their
processes. They have a responsibility to put internal controls
and procedures in place and to verify their effectiveness by
testing them at regular intervals. Local management is
expected to be fully aware of the operational risks and
the necessity of internal controls and procedures.
Risk appetite
K
endrion’s risk management framework balances risk and
opportunity and unambiguously describes the Executive
Board’s appetite for risk. The Executive Board and the
Management Team periodically review and discuss Kendrion’s
approach to risk management, as Kendrion’s risk appetite
may change over time reflecting developments in society,
geopolitics, the competitive and customer landscape as well
as changes within Kendrion.
RISK AREA RISK APPETITE TARGET
Risk averse Risk taking
Strategic
Operational
Financial & reporting
Compliance
Entrepreneurial
Innovative
Punctual
Sincere
Kendrion’s risk appetite provides an indicative bandwidth that
guides the organization during its decision-making process.
This bandwidth is defined for each of the following risk areas;
Strategic, Operational, Financial & Financial reporting and (Tax)
Compliance. The width of the bandwidth and the position on
the risk spectrum (from risk averse to risk taking) differs for
each of the risk areas. The above visual shows that Kendrion
is risk averse when it comes to compliance risk exposure,
whereas the bandwidth for strategic risks is much broader
and allows for a higher degree of risk-taking in pursuit of
the strategic objectives.
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Risk overview
Risk area Risk name Risk description
Strategic
Market disruption/decline and uncertainties related
to the global political and economic conditions
Continued long-term recession in the automotive and/or industrial markets. Additionally, Inability to respond
with agility to volatile economic and political conditions may lead to difficulties to manage business operations.
Unsuccessful long-term strategy or unsuccessful
implementation of long-term strategy
The strategy does not deliver the expected results (e.g. growth, profit, market share) or focus on the right
products and product portfolio — also based on megatrends — to serve clients in the future, leading to
a decline in market share and financial performance.
Unable to attract and retain qualified personnel Inability to attract and retain qualified people by being unresponsive to relevant employee satisfaction drivers
(e.g. modern, diverse and inclusive working environment, competitive compensation) may lead to increased
stress on existing personnel, absence or loss of key knowledge, or capacity issues.
Operational Sourcing issues and/or purchase price increases Risk of instability in the supply chain (affecting sourcing of raw materials, services, energy) and/or significant
increase of purchase prices could lead to business interruptions and additional costs.
IT and Cyber Security risks Cyber risks e.g. failures of information systems and the alteration, destruction or copying of data through
unauthorized system and data access, may lead to business interruptions, loss of confidential data or
reputation damage.
Significant order volume fluctuation/decline or project
cancelation
Increase in the volatility of customer orders, with larger deviations in quantities and cancellations of projects
altogether.
Financial & reporting Cost increases or efficiency losses are not transferred
to the customer
Cost increases for raw materials, energy or wages or efficiency losses caused by volatile order volumes are not
passed on to the customer.
Customer-related risk Customer actions (pressure on price) or issues (insolvency) impacting profit margins, asset values (impairment)
and/or cash flow.
Cash flow / liquidity risk Insufficient cash generated through operating activities to finance business activities and pursue strategic
opportunities.
Compliance Employee health and safety Inability to manage a healthy working environment (e.g. hygiene protocols) and employee safety may lead
to incidents, loss of productivity, demotivation or absence.
Tax compliance Non compliance with applicable tax regulations can lead to increase of tax expenses, penalties, litigation
and harm the reputation with authorities and other stakeholders.
In addition to the selected key risks described in the table
above, Kendrion distinctively recognizes risks related to climate
change, tax compliance, and fraud. Each of the risk areas and
the associated key risks will be addressed in more detail.
Strategic risks
Market disruption/decline and uncertain political and
economic conditions
Kendrion operates in a competitive market that is exposed
to economic changes, geopolitical developments, societal
changes as well as industry disruption, including the
accelerating transformation from a predominantly hardware-
based automobile to a software-centric electronic device on
wheels. Market disruption, saturation (e.g., possible Peak Car
in EU and USA) or decline, could pressure Kendrion’s financial
results and the company’s ability to achieve its strategic goals.
Volatile economic and political conditions may lead to difficulties
in managing business operations (e.g. planning and forecasting)
and declined business performance. Kendrion will continue its
development efforts to address markets that offer sustainable
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above average growth, by offering a tailored product portfolio
focused on megatrends such as industrial and automotive
electrification and automation.
This is supported by maintaining a lean and flexible organization
that can swiftly adjust to the economic tides and market trends.
This flexibility not only relates to working with temporary staff
and focusing on the reduction of variable operating expenses,
but also includes the ability to communicate up-to-date
financial information efficiently to decision-makers throughout
the organization, make justifiable insourcing and outsourcing
decisions, adjust supplier contracts, implement performance-
dependent employee benefits, work with flexible hour contracts
and use opportunities to reduce working hours in specific
countries. The composition of the group with about 50%
automotive activities and 50% industrial activities reduces
Kendrion’s exposure to a market disruption or decline in one
of these markets.
Unsuccessful strategy or unsuccessful implementation
of long-term strategy
In the current volatile environment, there is always the risk that
a company's long-term strategy will not deliver the expected
results, such as growth, profit, or an increase in market share
(within the expected timeframe). This risk can also arise if the
long-term strategy is not successfully implemented, for example
if the company does not focus on the right products or product
portfolio or does not adequately consider megatrends or its
clients’ needs. If the long-term strategy is not successful or not
implemented effectively, it can lead to a decline in market share
and financial performance for the company. Kendrion is aware of
the importance to plan and execute strategic changes carefully,
and to be prepared to adapt to changing circumstances. There
is an in-depth annual strategic review process, involving senior
management of the company, to assess Kendrion’s
performance compared to its multi-year strategy. This includes
quarterly meetings to review progress of individual business
groups on operational targets and strategic projects.
In these meetings, any relevant changes in the environment are
considered and monitored to ensure timely adjustments of
strategic projects or to consider alternative solutions.
Unable to attract and retain qualified personnel
The market for talent is increasingly competitive, especially
pertaining to the key skills, expertise, and capabilities we need.
Inability to attract and retain qualified employees may lead to
high dependency on existing personnel and loss of knowledge.
Kendrion’s required know-how is highly specific and often
requires on-the-job training. A lack of skilled employees could
impede the achievement of Kendrion’s strategic objectives.
Kendrion strives to be recognized as a safe, inspiring, and high-
quality place to work. Besides offering competitive benefit
packages and securing good and safe labor conditions in all
locations, Kendrion offers flexible work styles that contribute
to the performance and job satisfaction of employees.
By investing in succession planning (e.g. through a training
program for high potentials), various in-house training programs
and apprentice programs, Kendrion intends to encourage
ambition and give employees the possibility to work on exciting
tasks and innovative projects. Kendrion conducts company
wide employee satisfaction and culture surveys at regular
intervals enabling people to give and receive feedback. So that
Kendrion can attract early career professionals it maintains
good relations with technical universities and institutions of
higher technical education. In addition, Kendrion makes sure
that offices are located at attractive and inspiring locations.
Operational risks
Sourcing issues and/or purchase price increases
Kendrion is dependent on a continuous supply of (raw)
materials for its plants to operate and to be able to meet
customer demands and expectations.
The supply chain of (raw) materials can be disrupted in many
ways, from issues during transport, to a bankrupt supplier, or
scarcity of certain materials. Suppliers can also be faced with
increased demand for their products or increasing raw material
prices, resulting in increases in purchase prices for Kendrion’s
raw materials.
Kendrion actively endeavors to increase the number of
alternative sources for its most important (raw) materials, while
always making sure that (raw) materials are purchased from
reputable suppliers. Quantities are generally secured via
advance capacity confirmations and regular financial quick
checks are performed to assess the solvency of suppliers.
Suppliers that are critical to Kendrion’s supply chain have been
identified and are actively monitored to secure continuity of the
supply chain. Kendrion predominantly uses local supply chains
for local production and revenue, and when certain materials
have a single supplier, contingency measures are discussed
(e.g. insourcing when possible, active periodic monitoring of
critical suppliers) to ensure the exposure is within Kendrion’s
risk appetite and swift action is possible when required. In case
disruptions in the supply chain do occur, the customers
affected by this disruption will be informed immediately and
solutions will be discussed.
Significant order volume fluctuation/decline or project
cancelation
External events such as a pandemic, an economic downturn,
supply chain disruptions or changes in regulations or
preferences, including the sustainability transformation, can
cause certain customers to experience a structural decline
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in the demand for their products. This could cause a similar
decline in their order volumes or even the cancellation of
projects altogether.
Also, persisting shortages in the supply of raw materials to our
customers may increase the risk for customer orders to be
adjusted due to lack of certain components, resulting in ad-hoc
and unpredictable adjustments to order levels. In turn, this could
result in significant and short-term fluctuations in demand,
requiring short-term plant capacity adjustments, and
consequently, additional costs for underused plant capacity or
an increase in production backlog due to insufficient production
capacity. Order volatility could also result in increased inventory
levels either because orders are cancelled, or to ensure that
increased demand can be fulfilled.
Kendrion focuses on strengthening relationships with customers
and engages constructively with them to actively monitor
developments and changes to order volumes and timing where
possible. Kendrion undertakes to negotiate contractual terms
that ensure that sales prices per product increase when volumes
are reduced, and that investments (e.g., development, tools,
and equipment) are reimbursed if contracts are cancelled or
predicted volumes are not achieved. However, this will not be
sufficient to offset all the expenses incurred or compensate for
revenue loss. Demand levels are closely monitored to timely
detect overcapacity and production capacity and purchase
volumes are adjusted accordingly to mitigate the impact on
profit and working capital. Kendrion continuously adapts its
production and supply chain planning to movements in day-to-
day orders, and the roll-out of predictive planning tools have
enabled an increased flexibility in production while maintaining
a high level of efficiency.
Financial & reporting risks
As a globally operating, publicly listed company, Kendrion must
comply with financial reporting requirements.
Material misstatements in reporting could affect Kendrion’s
reputation and/or stock market value. Kendrion reports to the
market on a quarterly basis, and reports financial figures based
on IFRS standards.
With the risk appetite for this risk area being on the adverse
side of the spectrum, Kendrion has several controls in place
that help to contain risk exposure within acceptable
boundaries.
It is critical that all operating entities report to the same
standards and deliver the same quality of reporting, in line with
applicable accounting and reporting principles. There are local
planning and control cycles that provide financial and non-
financial information to the group based on standardized
reporting formats on a weekly, monthly, or annual basis, based
on a group reporting manual. To protect the integrity and
accuracy of reported information without having to rely on
manual controls, it is important that effective general IT controls
are in place, such as proper segregation of duties, access
control for important systems, and source data protection
through proportionate change control procedures for all
accounting and reporting systems and their key infrastructure.
Where Kendrion would mitigate sub-optimal general IT controls
in previous years by performing additional manual controls, in
recent years these manual controls have gradually shifted to
automated IT controls through continuous improvement
actions, also based on recommendations by the external
auditor over the past years. Kendrion will continue to improve
its general IT controls, with a focus on increased control
automation, while balancing available resources against
improvement benefits.
IT and Cyber Security risks
Cyber risks e.g. failures of information systems and the
alteration, destruction or copying of data through unauthorized
system and data access, may lead to business interruptions,
loss of confidential data or reputation damage.
On 29 August 2023 Kendrion reported the identification of a
cyber security incident involving unauthorized third-party
access to certain of the company’s IT systems. In response,
Kendrion immediately shut down all affected IT systems to
contain the incident and activated its response protocol,
including contingency plans to continue operations without
these systems. On 5 September 2023, Kendrion announced it
had restored all key IT systems, having incurred minimal
disruption for customers and employees and no material
impact on the company’s financial results.
During 2023 Kendrion has further intensified its focus on
cybersecurity risks, acknowledging the significant impact on
operational integrity and stakeholder confidence. Kendrion has
integrated renowned security monitoring tools that provide
advanced 24/7 threat detection, network monitoring, and real-
time alerts, enabling us to identify and respond to potential
threats swiftly. In addition, Kendrion places strong emphasis on
contingency planning involving strategies to ensure business
continuity and data integrity in the event of a cyber incident.
Contingency plans include redundant data storage, backup
systems, and disaster recovery protocols to quickly restore
operations with minimal disruption. Combined with regular
software updates, employee training, and continuous
vulnerability assessments, our multi-layered approach to
cybersecurity fortifies our defense against cyber-attacks. This
proactive stance, encompassing state-of-the-art technologies,
best practices, and robust contingency planning, safeguards
our digital infrastructure and sensitive data, reinforcing our
standing as a secure, resilient, and responsible organization.
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On a quarterly basis, all responsible officers provide a letter of
representation confirming the correct and complete reporting
of financial and non-financial information and the absence of
material violations of applicable laws, rules, and regulations,
along with internal policies such as the Kendrion Code of
Conduct. This also includes continuous monitoring of
upcoming changes in accounting and/or reporting standards,
laws and regulations, and periodic discussions with responsible
finance leaders and senior management within the business
units.
Apart from the key financial & reporting risk mentioned above,
Kendrion also recognizes financial & reporting risks related to
debt financing, credit exposure and interest and exchange rate
fluctuations (refer to pages 139-142 and following of the
financial statements for an outline of Kendrion’s financial market
risks and the policy for mitigating those risks or their impact).
Kendrion has proportionate mitigating measures in place for
these risks, which are monitored on different levels within the
company.
Cost increases or efficiency losses are not transferred
to the customer
Kendrion’s gross margin can be negatively impacted by
increased prices of raw materials, energy and labor, or
efficiency losses through low and volatile order volumes, if
these effects cannot be transferred to customers in a timely
manner.
Kendrion aims to minimize the financial impact of price
fluctuations for those materials that are most relevant. The most
important (raw) materials for Kendrion are machined steel parts,
raw steel, copper and permanent magnets. Where feasible,
Kendrion includes raw material price clauses in its long-term
customer contracts that provide for a sales price adjustment
when the actual average raw material price over a certain
timeframe deviates from a predetermined base price.
Short-term agreements generally provide for price surcharges,
allowing the sales price to be adjusted based on the prevailing
market prices for logistics, raw materials, or energy. When
customers reduce their orders below previously agreed levels,
additional costs are charged to these customers to offset
inefficiencies.
Customer-related risk
Key and other customers that represent a significant part of
Kendrion’s revenue may demand more favorable terms for their
business. This may manifest itself in the form of renegotiations
on price or other adverse changes to contractual conditions,
such as extended payment terms. This may impact margins
and/or cash flow. If customers become insolvent, this could
involve writing off outstanding invoices and stock and
equipment becoming obsolete, resulting in losses.
Kendrion aims to maintain and protect its contractual position
and reject unreasonable changes to existing terms, while
valuing and preserving business relations. By consistently
delivering qualitative products according to customer
expectations against a competitive proposition, Kendrion aims
to satisfy its customers while also remaining profitable. Through
conducting credit reviews of significant customers, enforcing
customer credit limits, and prepayment requirements for new
customers, Kendrion aims to limit the exposure to customer
insolvency to an acceptable level.
Cash flow and liquidity risks
Insufficient cash generated through operating activities can
affect the company’s financial stability and ability to invest in
strategic growth opportunities. Kendrion closely monitors and
manages cash flow and liquidity risks, including effective
working capital and expenditure management. Kendrion has
implemented stringent cash flow management measures,
prioritizing essential expenditures and optimizing working
capital to enhance our financial position. Optimized working
capital include maintaining a minimum amount of inventory
required to secure efficient operations and delivery
commitments, strict debt collection policies and procedures
and placing emphasis on negotiating fair payment terms.
Kendrion is judicious in its capital expenditure decisions,
carefully evaluating each opportunity for its potential to
contribute to strategic growth and long-term value creation.
Our approach includes rigorous financial forecasting and
scenario planning enabling us to continue strategic investment
opportunities while maintaining a healthy balance sheet.
Kendrion is committed to maintaining a healthy financial
position, reducing its debt levels and laying a solid foundation
for sustainable growth and profitability.
Compliance risks
Kendrion commits to conducting business in accordance with
its Code of Conduct and the values underlying the Code of
Conduct, applicable laws, and regulations, including
employment laws, data protection laws and regulations,
accounting standards, tax laws, health and safety regulations,
as well as governance and statutory filing requirements,
applicable in the countries in which it operates. Senior
management is responsible for raising awareness of, and
applying, applicable laws and regulations.
Global and local policies are developed and maintained to
support compliance. Kendrion’s global policies include a range
of procedures and policies that must be applied when
conducting business, including a Code of Conduct, Insider
Trading Code, Speak-up procedure, etc. Kendrion’s Code of
Conduct builds on the values of The Kendrion Way, an inspiring
motto at the heart of the Kendrion organization.
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The Code of Conduct provides a set of principles and
expectations that guide the behavior of everyone within
Kendrion. Guidance and training are provided to Kendrion
employees to help them recognize compliance dilemmas and
raise actual or suspected misconduct or irregularities following
Kendrion’s Speak-up procedure.
For more information about The Kendrion Way reference is
made to the section People & culture included in this Annual
Integrated Report.
Compliance with Kendrion’s internal policies and procedures,
as well as local laws and regulations is also reviewed by
Kendrion’s internal audit function. The Global Internal Audit and
Risk Manager is responsible for the design and execution of the
annual audit plan to assess the adequacy of Kendrion’s internal
control systems. The Global Internal Audit and Risk Manager
reports to the Executive Board with direct and independent
access to the Audit Committee and external auditor. Audit
results are reported to the Executive Board and the essence
of the results are reported to, and discussed with, the Audit
Committee and external auditors on a regular basis. The results
of the audits conducted in 2023 were discussed with local
management and any control deficiencies have been
addressed.
Employee health and safety
For Kendrion, the health and safety of its employees is
paramount. Inability to manage a healthy working environment
(e.g. hygiene protocols) and ensure employee safety may lead
to incidents such as the spread of illness or injury. If employees
do not feel welcome and safe in the workplace, it can lead to
demotivation, lower morale, or absence, resulting in loss of or
decrease in productivity and an increase in employee turnover.
Kendrion promotes health and safety standards for all its
employees through all available communication channels
(e.g. billboards, intranet, newsletters, etc.). Personal health
is encouraged via several local initiatives (e.g. sports, fruit
baskets, health days) and cooperation with clinics provide
support with mental health issues. Managers are trained to
identify health issues, and first responders’ training is available
to employees interested in learning how to perform first aid.
Employee absence is monitored on a monthly basis as an
indicator of employee health development. By doing so on
a monthly basis, Kendrion is able to adapt to changing
circumstances and implement additional measures when
appropriate.
Tax compliance risks
In line with the overall risk averse appetite for compliance risks,
Kendrion also specifically reiterates this risk averse appetite for
tax compliance and associated risks. Tax risks originate from
local tax rules and regulations as well as from international
regulatory frameworks. Tax risks include transfer pricing risks
on intercompany cross-border deliveries of goods and services,
tax risks related to acquisitions and divestments, tax losses,
taxes carried forward, permanent establishments and potential
changes in tax law. This may result in financial impacts in the
form of increased tax expenses and payments, tax
adjustments, accrued interest, fines, litigation against
Kendrion’s management, and damaging Kendrion’s reputation
with the (local) authorities and its stakeholders.
The Group Finance & Control department is in charge of
establishing and overseeing group wide tax policies. Potential
risks are periodically monitored and assessed based on the
likelihood of occurrence and its potential impact on local and
groupwide financial tax results. For the most important tax
jurisdictions periodic meetings are held with external tax
specialists to assess the tax position, tax risks and to the
extend applicable, any impact of potential changes in tax laws
and legislation. Kendrion actively seeks to reduce tax risks by
involving external tax advisors when specialist knowledge is
required and (local) authorities when interpretations of tax
requirements can have an evident impact.
Climate change
Society, shareholders, and other stakeholders are increasingly
aware of environmental challenges and the impact of climate
change. They demand sustainable operations, solutions, and
products. The socioeconomic impact of climate change and
the adoption of new regulations and the enforcement of
initiatives to reduce global warming and other impacts of
climate change, provide Kendrion with challenges and
opportunities related to its existing and future product portfolio.
In addition, a higher frequency of extreme weather conditions
increases the likelihood of natural disasters, which may, from
time to time, disrupt supply chains, production, delivery times
and the availability of raw materials. Significant material price
increases caused by persistent material shortages and
implementation of government actions to mitigate climate
change, such as carbon tax, will negatively affect future
operating costs.
The product portfolio of Kendrion’s Industrial Business Groups
is expected to benefit from the global trend towards
electrification of industrial processes that decrease the use of
fossil fuels and greenhouse gas emissions. The automotive
industry is transforming based on four reinforcing trends
towards Autonomous, Connected, Electric and Shared (or
ACES) mobility, leading to cleaner, safer and more comfortable
forms of transportation.
To advance these trends, the automotive industry requires new
actuator technologies that will replace existing technologies
developed for internal combustion engines of passenger cars
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and commercial vehicles. Kendrion has been transitioning and
will continue to transition its product portfolio towards these
new technologies. To the extent the existing Automotive
product portfolio relates to combustion engine vehicles, it is
expected that the revenue derived from these technologies will
gradually decrease over the next 10 to 15 years in line with the
phase out of the combustion engine as mandated by various
legislative initiatives around the globe.
On balance we expect our Automotive revenue to benefit from
this transformation.
Kendrion is committed to reducing its contribution to climate
change by reducing the carbon footprint of its operations
through using renewable energy, decreasing energy
consumption, decreasing waste from production and increasing
recycling rates of materials. Kendrion is equally committed
to continuing to invest in a responsible product portfolio by
developing products that help advance our industrial and
automotive customers’ ambitions and objectives to reduce
emissions and climate impact.
Fraud
With its global footprint, Kendrion is exposed to a wide range of
fraudulent activities. Given Kendrion’s activities as an industrial
production company, the most important fraud risks are
identified in the supply chain (kickbacks, shop in shop, bribery,
false invoices), inventory and asset management (theft,
manipulation), administrative processes (fraudulent payments,
falsified records) and cyberattacks. Fraud in this context can
result in a wide range of losses, ranging from negligible financial
loss through petty theft of (office) materials to significant
financial losses, damage to the organization's reputation, and
a loss of customer trust when legal penalties in strict anti-fraud
regimes are involved. Fraud risks are explicitly included in the
annual corporate risk assessment as a separate category,
to ensure active monitoring of fraud risk development, and
continuously create awareness for fraud risks amongst (senior)
management.
Kendrion has measures in place to significantly reduce its
exposure to fraud. An important cornerstone of these measures
is the restriction of access (both physical and digital) to only
those areas that individuals require to perform their day-to-day
activities, and segregation of duties (SoD) so that important
checks and balances are not combined within the same
person. Both the user access and SoD are reviewed on an
annual basis and adjusted to be in line with the risk appetite if
situations change. A significant number of general IT controls
around user access and SoD have been implemented.
However, to date, a few deficiencies in the design and
effectiveness of the controls do exist. To the extent deficiencies
in the IT controls do exist, Kendrion has additional controls in
place that also detect and prevent fraud, such as but not
limited to variance and margin analysis and comprehensive
reviews on key master data changes. At the same time,
Kendrion continues to address and improve the design and
effectiveness of the IT controls.
On top of the foundation of access management and SoD,
Kendrion also implemented an authorization matrix to clearly
define the responsibilities and authorization limits for each
function within the company. This ensures that the right
employees are involved when information is processed or
decisions are made with a certain level of (fraud) risk. Every
employee within the company is informed about Kendrion’s
Code of Conduct (CoC) when they join Kendrion, and the CoC
specifically addresses the most common forms of fraud and the
expected employee behavior concerning these topics. On an
annual basis the CoC (or specific topics thereof) are refreshed
for all employees through different forms of communication
(e.g. posters, video’s, e-learning, workshops, etc.).
In control statement
Based on the approach described above, the Executive Board
is of the opinion that, to the best of its knowledge:
■ the Report of the Executive Board provides sufficient
insights into any failings in the effectiveness of the risk
management and internal control systems;
■ the risk management and internal control systems provide
reasonable assurance that the financial reporting, including
tax, does not contain any material inaccuracies;
■ based on the current state of affairs, it is justified that the
financial reporting is prepared on a going concern basis;
and the Report of the Executive Board states those material
risks and uncertainties that are relevant to the expectation
of Kendrion’s continuity for the period of twelve months
after the date of the Report of the Executive Board.
Properly designed and implemented risk management and
internal control systems significantly reduce, but cannot fully
eliminate, the possibility of human errors, poor judgement,
deliberate circumvention of controls, fraud or infringements of
laws, rules or regulations, or the occurrence of unforeseeable
circumstances. Another factor considered within risk
management is that efforts related to risk management and
internal control systems should be balanced against the costs
of implementation and maintenance.
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Kendrion’s governance framework is based on the statutory
requirements that apply to public limited liability companies in
the Netherlands. This framework includes the principles and
best practice provisions outlined in the Dutch Corporate
Governance Code, most recently updated on 20 December
2022 (the ‘Code’), and Kendrion’s articles of association, last
amended on 25 June 2020. Certain core topics of the Code
are addressed in the various sections of this Annual Integrated
Report. For instance, diversity in the Supervisory Board,
the Executive Board and the Management Team is addressed
in this Corporate Governance Report. ‘The Kendrion Way’
is described in the section ‘Sustainability’ and in the section
‘People & Culture’. The articles of association, along with
ancillary policies such as the Supervisory Board regulations and
the Supervisory Board committee regulations constitute
a framework for the affairs and governance of Kendrion.
This framework ensures the establishment of a sound and
transparent system of checks and balances. For the articles of
association, the Supervisory Board regulations, the Supervisory
Board committee regulations and additional information about
Corporate Governance at Kendrion, please refer to our
corporate website at www.kendrion.com.
Kendrion N.V.
Kendrion N.V. is a public limited liability company incorporated
under the laws of the Netherlands, with its corporate seat in
Amsterdam, the Netherlands. For details regarding Kendrion
N.V.’s share capital, reference is made to the section ‘Share
and shareholder information’ on pages 21-23.
Kendrion N.V., as the ultimate parent company, holds all shares
in Kendrion Finance B.V., a private limited liability company
incorporated under the laws of the Netherlands, with its
corporate seat in Zeist, the Netherlands. Kendrion Finance B.V.,
either directly or indirectly, holds shares in all of Kendrion’s
operating companies, each operating company being directly
or indirectly, wholly owned subsidiaries. Kendrion N.V. is not
subject to the large company structure regime and no works
council having jurisdiction over Kendrion N.V. has been
established nor is there a statutory requirement mandating the
establishment of such a works council. Reference is made to
the People & Culture section of this Annual Integrated Report
for information about works councils and employee
representation established at certain Kendrion operating
companies.
Two-tier governance structure
The Executive Board, comprised of the CEO and the CFO, is
entrusted with the management of Kendrion, under supervision
of the Supervisory Board. Members of the Executive Board and
the Supervisory Board are appointed and dismissed by the
General Meeting of Shareholders. The General Meeting of
Shareholders can amend the articles of association if and
as proposed by the Executive Board, with the prior approval
of the Supervisory Board. The decision to amend the articles
of association requires an absolute majority of the votes cast
at the General Meeting of Shareholders.
Executive Board
The Executive Board is responsible for the management and
the continuity of Kendrion and Kendrion’s long-term and
sustainable value creation strategy, objectives, results, and
policy, including the responsibility for defining strategies and
plans conducive to the goal of the Paris Agreement to limit
global warming. In discharging its responsibilities, the Executive
Board considers the impact of Kendrion and its affiliated
enterprise on people and the environment, whereby the
Executive Board carefully balances the interests of stakeholders
that are relevant in this context. An essential aspect of the
Executive Board’s duties is the establishment and perpetuation
of a culture oriented towards sustainable long-term value
creation. A professionally robust and healthy company culture,
as detailed in the People & Culture section of this Annual
Integrated Report, plays a crucial role in preventing misconduct
and irregularities.
The Executive Board is accountable to the Supervisory Board
and the General Meeting of Shareholders. Crucial decisions
made by the Executive Board necessitate the approval of the
Supervisory Board.
With due regard to the requirement under Kendrion’s articles
of association that the Executive Board must consist of at least
two members, the Supervisory Board determines the number
of members of the Executive Board.
Members of the Executive Board are appointed by the General
Meeting of Shareholders, following the recommendations put
forth by the Supervisory Board. In compliance with provision
2.2.1 of the Code, all Executive Board members are appointed
for a maximum term of four years and may be reappointed
for successive terms of no more than four years each. The
selection process for Executive Board members considers
the diversity objectives outlined in Kendrion’s diversity policy,
accessible on the corporate website at www.kendrion.com.
Other than upon a proposal of the Supervisory Board, the
members of the Executive Board are suspended and dismissed
by the General Meeting of Shareholders by a resolution
adopted by an absolute majority representing at least one-third
of the issued share capital. A resolution of the General Meeting
of Shareholders to suspend or dismiss Executive Board
members in line with a recommendation of the Supervisory
Board is adopted by an absolute majority of the votes cast.
Members of the Executive Board comply with statutory
requirements regarding the number of supervisory or non-
executive functions they can hold in large enterprises.
Corporate Governance Report
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For detailed information about the composition of the Executive
Board and its members, please refer to page 24.
A member of the Executive Board refrains from participating in
the deliberation and decision-making process on any matter in
which a member of the Executive Board has a personal interest
that conflicts with the interests of Kendrion.
Should a conflict of interest arise, a member of the Executive
Board is obligated to promptly report it to the Chairman of the
Supervisory Board. Transactions involving conflicts of interest
with an Executive Board member require the approval from
the Supervisory Board. In 2023, there were no transactions in
which there was a conflict of interest with a member of the
Executive Board. Kendrion has a policy of not providing loans
or guarantees to members of the Executive Board.
Management Team
The Management Team is composed of the CEO, CFO, and
various executives who bear clear accountability for delivering
on all aspects of the strategic plan. Representation on the
Management Team includes Business Group Directors from
the Automotive Group, Industrial Brakes, Industrial Actuators
and Controls, and the Kendrion President Asia. Additionally,
functional areas such as Information Technology, People,
Sustainability and Compliance, are addressed by the CIO, HR
Director, and General Counsel within the Management Team.
The determination of the number of members of the
Management Team is a decision made by the Executive Board
in consultation with the Supervisory Board. For those members
of the Management Team who are not part of the Executive
Board, appointments and dismissals are carried out by the
Executive Board, subject to the Executive Board’s consultation
with the Supervisory Board. When appointing members to the
Management Team, diversity objectives outlined in Kendrion’s
diversity policy will be considered.
The Management Team meets frequently. Members of the
Management Team who are not part of the Executive Board
are regularly invited to attend Supervisory Board meetings.
Supervisory Board
The Supervisory Board is responsible for supervising and
advising the Executive Board in the execution of its tasks
and duties, as well as supervising the overall development
and performance of Kendrion. In discharging its role, the
Supervisory Board prioritizes the interests of Kendrion and its
stakeholders, focusing on aspects such as the effectiveness of
Kendrion’s risk management and internal control systems, and
the integrity and quality of financial and sustainability reporting.
The composition of the Supervisory Board is designed
to ensure that its members can operate critically and
independently, free from influence by each other, the Executive
Board, the Management Team, or any other specific interests.
Each member possesses the necessary expertise, experience,
and background to fulfil their role, in accordance with the
‘Profile outline’ for the Supervisory Board and the diversity
objectives outlined in Kendrion’s diversity policy for the
Supervisory Board. Both the ‘Profile outline’ and the diversity
policy for the Supervisory Board are accessible on the
corporate website at www.kendrion.com.
The Supervisory Board is comprised of four independent
members as defined by the Code. Each member of the
Supervisory Board adheres to statutory requirements regarding
the allowable number of supervisory or non-executive functions
within large enterprises. The composition of the Supervisory
Board aligns with the statutory requirements outlined in
the Dutch Gender Balance Act.
Members of the Supervisory Board are appointed by
the General Meeting of Shareholders based on the
recommendation of the Supervisory Board for a four-year term.
Additionally, the Supervisory Board internally elects a Chairman
from amongst its members.
The Chairman presides over Supervisory Board meetings,
ensuring their effective functioning along with that of its
committees. Additionally, the Chairman facilitates proper
communication between the Supervisory Board, the Executive
Board, the Management Team, and the General Meeting of
Shareholders. Regular contact is maintained between the
Chairman and the CEO, focusing on matters within the
Supervisory Board’s purview. Similarly, the Chair of the Audit
Committee stays in regular contact with the CFO regarding
responsibilities specific to the Audit Committee.
Supervisory Board members step down in accordance with
a rotation schedule adopted by the Supervisory Board.
Members of the Supervisory Board whose term of office expires
can be reappointed. For any reappointment account is taken
of the manner in which the person concerned performed his or
her duties as a member of the Supervisory Board, the diversity
objectives as described in Kendrion’s diversity policy for the
Supervisory Board, and best practice provision 2.2.2 of the
Code regarding appointment and reappointment periods.
Each member of the Supervisory Board can be dismissed
by the General Meeting of Shareholders.
New members of the Supervisory Board undergo an
introduction program, providing them with sufficient familiarity
with Kendrion, its business activities, and pertinent internal
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procedures and processes essential for fulfilling their duties
as members of the Supervisory Board.
Regular meetings of the Supervisory Board typically include the
attendance of the Executive Board and, periodically, members
of the Management Team. Additionally, the Supervisory Board
holds meetings independently, excluding Executive Board
members. Assisting the Supervisory Board is the Company
Secretary, who ensures adherence to correct procedures and
statutory obligations and those outlined in the articles of
association. The Company Secretary also facilitates information
exchange between the Executive Board and the Supervisory
Board and aids the Chairman of the Supervisory Board in
organizing Board affairs.
The Supervisory Board has established two committees:
the Audit Committee and the HR Committee (combining the
remuneration committee and the selection and appointment
committee). The committees are responsible for preparing
the decision-making for the Supervisory Board. The regulations
outlining the tasks and procedures of the committees can
be found on the corporate website at www.kendrion.com.
For detailed information on the composition of the Supervisory
Board, its committees and its members, please refer to
pages 88-89 of this Annual Integrated Report.
Annually, the Supervisory Board evaluates its own functioning,
the performance of its committees, and that of individual
Supervisory Board members. The outcome of this evaluation is
discussed among the members of the Supervisory Board, and
the Chairman subsequently informs the Executive Board as
appropriate. For further details about the annual evaluation of
the Supervisory Board, reference is made to the Report of the
Supervisory Board included in this Annual Integrated Report.
Members of the Supervisory Board do not receive any shares
and rights to acquire shares in Kendrion as remuneration. With
the exception of the Chairman of the Supervisory Board, who
holds 11,800 shares as of December 31, 2023, Supervisory
Board members do not hold any shares in Kendrion. Kendrion
does not grant loans or guarantees to Supervisory Board
members. In accordance with the Supervisory Board
regulations, a member of the Supervisory Board may not
participate in the deliberation and decision-making process on
any subject in which a member of the Supervisory Board has
a personal interest that conflicts with the interests of Kendrion.
In 2023 there were no transactions involving a conflict of
interest with any member of the Supervisory Board.
Diversity within the Executive Board,
Management Team, and Supervisory Board
Kendrion places significant value on fostering diversity within
its workforce, extending from the overall Kendrion organization
to the Executive Board, the Management Team, and the
Supervisory Board. As part of Kendrion’s sustainability
program, the pillar ‘Social and Human Capital’ emphasizes
the prioritization of advancing diversity across the organization.
Ambitious diversity targets, aligned with Kendrion’s diversity
framework, have been established for each of Kendrion’s
Business Groups. The strategic diversity framework and related
targets for Kendrion’s Business Groups are detailed in the
‘People & Culture’ section of this Annual Integrated Report.
A diverse array of competences and skills and a variety of
backgrounds within the Executive Board, the Management
Team and the Supervisory Board contribute to effective
decision-making and, consequently, long-term and sustainable
value creation. Kendrion considers diversity aspects such as
gender, nationality, and background (education, (work)
experience) most relevant for Kendrion and its business.
This commitment to diversity is evident in the ongoing efforts
to enhance diversity in the Executive Board, the Management
Team and the Supervisory Board.
According to Kendrion’s diversity policy for the Supervisory
Board, at least 33% of the Supervisory Board shall consist of
women, and at least 33% shall consist of men. The current
composition of the Supervisory Board, consisting of two female
members and two male members, aligns with the 33% gender
diversity target.
Aligned with statutory requirements introduced in January
2022, gender diversity targets have been set for the Executive
Board and the Management Team. Kendrion is committed
to reshaping the composition of the Executive Board and
Management Team so that, over time, at least 33% of both
the Executive Board, and the Management Team, comprises
women, and at least 33% comprises men. In 2023, there were
no additions to the Executive Board or the Management Team.
The Executive Board currently consists of two men and the
Management Team (excluding the members of the Executive
Board) consists of 25% women and 75% men, thereby the
identified gender diversity targets for the Executive Board and
the Management Board have not yet been met.
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As a global company, Kendrion has also established targets
related to nationality. According to the diversity policy, the
Management Team should include representatives from at least
two regions where Kendrion operates. This nationality diversity
objective for the Management Team has been met. In the case
of the Supervisory Board and the Executive Board, the
objective is to maintain appropriate nationality diversity. In the
Supervisory Board one member holds German nationality,
reflecting Kendrion’s significant operations in Germany.
Furthermore, Kendrion’s diversity policy incorporates a
background diversity objective. According to this policy,
at least one member of the Executive Board and at least three
members of the Management Team should possess experience
in international industrial or automotive business, or an industry
closely related thereto. For the background diversity objective
for the Supervisory Board, please refer to the Supervisory
Board ‘Profile outline’ which is available on Kendrion’s
corporate website. The composition of the Executive Board,
the Management Team and the Supervisory Board align with
their respective background diversity objectives.
The composition of the Supervisory Board is both diverse and
experienced, reflecting a balanced participation of two female
members and two male members. The Executive Board is
composed of qualified, knowledgeable, and experienced
members. The Management Team exhibits a healthy mix of
skills, nationalities, ages, backgrounds, and other relevant
factors.
Kendrion’s diversity policy outlines specific objectives which
will be explicitly considered – beyond functional requirements –
when selecting individuals for (re)appointment to the
Supervisory Board and Executive Board, as well as when filling
vacancies within the Management Team. In the event of
engaging external recruitment consultants, Kendrion provides
search instructions aligned with the diversity principles
underlying the diversity policy. The diversity policy is available
on the corporate website at www.kendrion.com.
General Meeting of Shareholders
At least once a year, Kendrion convenes a shareholder meeting.
Meetings are convened by the Executive Board and/or
Supervisory Board. Meetings can also be convened at the
request of shareholders jointly representing at least 10% of
Kendrion’s issued share capital if authorized by the competent
Dutch court. Shareholders who hold at least 3% of the issued
share capital have the right to propose an item for inclusion on
the agenda. Kendrion will in principle include the item on the
agenda if it has received the substantiated proposal clearly
stating the item to be discussed, or a draft resolution, in writing,
at least 60 days prior to the meeting date. Each shareholder
is entitled to attend shareholder meetings in person or be
represented by written proxy and exercise voting rights in
accordance with the provisions of the articles of association.
Each outstanding share entitles the holder to one vote.
Resolutions are adopted by absolute majority of the votes cast,
unless the articles of association or applicable law provide
otherwise.
Shareholders representing 73.52% (2022: 69.47%) of the total
number of shares entitled to vote were represented at the
General Meeting of Shareholders held on 17 April 2023.
For further details about the authority of the General Meeting of
Shareholders and the articles of association, please refer to the
corporate website at www.kendrion.com.
Special provisions relating to shares
Unless indicated otherwise, there are no restrictions on the
transfer of shares, the exercise of voting rights or the term for
exercising those rights, and there are no special controlling
rights attached to shares. On 17 April 2023, the General
Meeting of Shareholders granted the Executive Board the
authority to: (i) issue shares or grant rights to acquire shares
and restrict or exclude pre-emptive rights in relation to the issue
of shares or the granting of rights to acquire shares; and (ii)
acquire shares in Kendrion N.V. within the limits prescribed by
the articles of association and the applicable statutory
provisions, in each case for a period of 18 months from the
date of the General Meeting of Shareholders (i.e. until
17 October 2024) and subject to the prior approval of the
Supervisory Board.
Auditor
Before being presented to the General Meeting of Shareholders
for adoption, the annual financial statements as prepared by
the Executive Board must be audited by an external certified
public auditor. The General Meeting of Shareholders has the
authority to appoint the auditor. On 12 April 2021, the General
Meeting of Shareholders reappointed Deloitte Accountants B.V.
for a third and final period of four years. The General Meeting
of Shareholders may put questions to the external auditor with
respect to the external auditor’s opinion on the financial
statements. The external auditor shall therefore attend and
be entitled to address the General Meeting of Shareholders.
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In consultation with Deloitte Accountants B.V., Kendrion
initiated a comprehensive tender process in the course of 2023,
inviting various audit firms to participate. Following the
completion of this process, Kendrion intends to propose the
appointment of Mazars Audit & Assurance to the General
Meeting of Shareholders in 2024 as its statutory auditor for
a three-year period starting from the financial year 2024.
Kendrion maintains an internal audit function operating under
the Executive Board’s responsibility, with reporting lines to the
CFO and the Audit Committee of the Supervisory Board. The
internal audit function assesses the design and operation of the
internal risk management and control systems. In accordance
with the Code, the Executive Board and the Audit Committee
of the Supervisory Board are involved in the preparation and
approval of the internal audit plan. The annual internal audit
plan is submitted for approval to the Executive Board and the
Supervisory Board. Internal audit reports are discussed with
the Executive Board and the Audit Committee, and the external
auditor is informed accordingly.
For the management statement of the Executive Board,
required under article 5:25c of the Financial Supervision Act
(Wet op het Financieel Toezicht), please refer to the ‘Report
of the Executive Board’ on page 37.
Agreements in the meaning of the Decree
for the implementation of article 10 of
the Takeover Directive (Besluit artikel 10
overnamerichtlijn)
The credit facilities of Kendrion N.V. include a change of control
provision. An early repayment obligation is triggered if a party
acquires more than half of Kendrion’s issued share capital or
voting rights.
Corporate Governance statement
This Corporate Governance Report, along with the section
‘Share and shareholder information’ on pages 21-23 contains
the information specified in the Decree for the implementation of
article 10 of the Takeover Directive. Furthermore, when combined
with the sections ‘Risk management’ and 'Report of the
Supervisory Board' included in this Annual Integrated Report, it
should be considered as the Corporate Governance Statement
as required by the Decree on the contents of the management
report (Besluit inhoud bestuursverslag).
Relevant documents on corporate website
■ Articles of association
■ Supervisory Board regulations and committee regulations
■ Diversity policy for the Supervisory Board, Executive Board
and Management Team
■ ‘Profile outline’ for the Supervisory Board
■ Insider Trading Code
■ Policy on bilateral contacts with shareholders
■ Code of conduct
■ Speak-up procedure
Taxes
Kendrion’s tax policy is based on the core values embedded
in Kendrion’s Code of Conduct and aligned with Kendrion’s
strategy and the rationale underlying the value creation pillar
‘Responsible Business Conduct’, which is part of Kendrion’s
global sustainability program.
Taxable profits are recognized in jurisdictions in which value
is created, in accordance with the applicable tax regulations
and standards, including the OECD Guidelines for Multinational
Enterprises and local transfer-pricing and other applicable
tax regulations. Tax is not limited to corporate income tax
but also includes VAT, wage withholding tax, social security
contributions, dividend withholding tax, real estate tax and
any other taxes that are payable by Kendrion in the relevant
jurisdictions. Kendrion does not seek to establish aggressive
tax-driven structures that are not compliant with the letter or
spirit of applicable tax regulations. This means that Kendrion
does not pursue any aggressive tax planning or has entities
established in tax haven jurisdictions solely for tax optimization
purposes and without commercial substance.
Kendrion provides adequate transparency towards tax
authorities and builds and maintains a professional relationship
with the tax authorities. If and when appropriate, tax authorities
are consulted in advance on certain material transactions or
business restructuring in order, for instance, to ascertain
compliance with the applicable tax regulations. Kendrion makes
tax-related disclosures in accordance with the applicable
statutory regulations and applicable reporting requirements
and standards, such as IFRS.
Stringent controls are implemented to identify, monitor and
address (potential) tax risks, aiming to mitigate and avoid these
risks. Accredited tax advisors are engaged in reviewing and
preparing material corporate income tax returns, if appropriate.
Tax compliance is integrated into Kendrion’s internal audit plan,
with material tax risks and topics, including Kendrion’s tax
policy, reported and discussed within the Audit Committee.
Kendrion takes responsibility and shows prudence with regard
to corporate tax obligations. The effective tax rate of Kendrion
or any of its affiliates is not a key performance indicator for
Kendrion’s finance and tax department nor do individual bonus
schemes contain effective tax rate performance targets.
Additional information about the reconciliation of the effective
tax rate can be found on page 177 of this Annual Integrated
Report.
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F.J. van Hout (Chairman), male, 1960
Chairman
E.H. Slijkhuis, female, 1968
Chair Audit Committee
Nationality Dutch Dutch
International expertise Yes Yes
Date of first appointment 12 April 2021 17 april 2023
Term of office 2021-2025 2023-2027
Current number of SB positions 5 2
Shares in Kendrion 11,800 No
Professional experience Semiconductors Finance/IT
Additional positions
Former positions
Chairman of the Investment Committee of the DeepTech Fonds
(Dutch Ministry of Economic Affairs and InvestNL); Vice-Chairman of
the Supervisory Board, Aixtron SE; Member of the Supervisory Board,
Bambi Belt Holding BV; Member of the Supervisory Board, Stichting
PhotonDelta; Member of the Supervisory Board, Smart Photonics BV;
Member of the Board of Management of the Stichting Continuïteit BESI
Executive Vice President and Member of the Board of Management,
ASML; Chief Strategy Officer, Chief Program Officer, Chief Marketing
Officer and other various functions in management, ASML; CEO,
Beyeler Group; Chief Technology Officer, Datacolor
CFO and Managing Director, Hydratec Industries N.V.;
Member of the Supervisory Board, Deventer Ziekenhuis
CFO Veco B.V.; Interim & Project Manager Finance & IT; Senior
Management function Aviko; Consultant Eiffel; Finance Director
Galegoid; Auditor Deloitte
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MEMBERS OF THE SUPERVISORY BOARD
M.J.G. Mestrom, female, 1961
Chair HR Committee
E. Doll, male, 1959
Audit Committee
Nationality Dutch German
International expertise Yes Yes
Date of first appointment 11 April 2016 24 June 2020
Term of office 2020-2024 (2
nd
term) 2020-2024
Current number of SB positions 1 3
Shares in Kendrion No No
Professional experience HR/organizational design/transformation/international experience Automotive, plastics, industrial, medical, chemical
(expat Hong Kong and frequent business travel across all continents)
Additional positions
Former positions
Chief Human Resources Officer at Brenntag SE
Head of Global Human Resources, at Siegwerk Druckfarben Group;
Senior Global Human Resources positions Philips Electronics
Vice Chairman of Supervisory Board, WITTE Automotive GmbH;
Non-Executive Director, Aeristech Ltd.
Vice Chairman of the Executive Board, Röchling Group; President &
CEO, Röchling Automotive SE; EVP, Plastic Omnium Auto Exterior;
Managing Director, Plastic Omnium GmbH; General Manager, Johnson
Controls GmbH; Business Manager, BASF SE
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In 2023, our pursuit of long-term sustainable growth was
strongly tested by high inflation, rising interest rates, and
geopolitical uncertainties. Nevertheless, Kendrion's global
teams, guided by resilient management, demonstrated
remarkable determination, and delivered consistent results.
The strategic initiatives implemented in 2022 played a pivotal
role in our steadfast performance and positive outlook to the
future. Key strategic initiatives are yielding positive results
We successfully concluded several of these initiatives in 2023,
including the further advancement of the implementation of the
previously effected split of the Automotive Group into 'Core'
Resilient performance despite ongoing challenges
steady. While our Industrial business growth did not meet
expectations, our Automotive business surpassed them, with
an unexpectedly strong performance, in what is still a difficult
market. Looking ahead, we anticipate a rebound in demand
for our industrial products over the long term, and we are
optimistic about the growth prospects for our innovations in the
automotive sector, driven by the continued expansion of ACES
(Autonomous, Connected, Electric, and Shared) technologies.
Cybersecurity resilience
In August 2023, we demonstrated resilience on the
cybersecurity front in our response to a cybersecurity incident.
We blocked the attack in its early stages, preventing major
damage to our infrastructure. Collaborating with top-tier
forensic cybersecurity experts, we shut down, audited and
reconfigured affected IT systems within days, which effectively
mitigated the impact. Thanks to the dedication and flexibility
of our IT and production teams, the incident had no significant
impact on customer deliveries, nor on our financial results.
Together for a sustainable future
As Jabine van der Meijs concluded her term as Supervisory
Board member, we like to thank her for her excellent
contributions and her ever inspiring personality, and warmly
welcome Everien Slijkhuis as new member. The Supervisory
Board sincerely thanks our dedicated management and
employees for their remarkable contributions throughout this
challenging year. While profitability remains a central focus,
our pride comes from our high-quality products and practices
working together. Following the theme "Enabling the shift
towards clean energy for a sustainable future," they actively
contribute to a cleaner world.
Frits van Hout
Chairman of the Supervisory Board
and 'E,' the establishment of a state-of-the-art factory in China,
and the completion of the integration of 3T.
Automotive Core focuses on optimizing profitability and cash
flow, while Automotive E actively spearheads innovation in
sound systems, active suspension, and sensor cleaning.
The benefits in terms of efficiency, focus, and increased orders
are already apparent, with sustained and long-term advantages
anticipated in the evolving automotive landscape.
The inauguration of our new factory in China marked a major
milestone in our localization strategy. Even though the Chinese
economy developed at a slower pace in 2023, the significant
investment in this expansive 28,000m
2
facility positions us
optimally to seize growth opportunities. We were truly
impressed by the skill and diligence that our management and
employees demonstrated in seamlessly transferring operations
from two factories – that have now been closed –
to this new one. As a result, our cutting-edge facility was
operational swiftly and efficiently.
The third initiative, the integration of 3T into the Kendrion group,
has also delivered notable benefits, both enhancing our
electronics and software capabilities and strengthening our
reputation as an employer of choice. The relocation of 3T's
Eindhoven team to the High Tech Campus in Eindhoven brings
us closer to customers and places us within a popular hub for
ambitious tech professionals.
Steady turnover
Despite challenging conditions in both the industrial and
automotive sectors, our overall turnover for the year held
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Contents Profile Strategy Report of the Executive Board Outlook Financial statementsReport of the Executive Board Report of the Supervisory Board
PREFACE
The Supervisory Board provides oversight,
evaluates progress and performance, maintains
a sound and transparent system of checks and
balances, and advises the Executive Board when
appropriate.
This Report of the Supervisory Board sets out the way in which
the Supervisory Board fulfilled its duties and responsibilities in
2023.
Performance in 2023
Under supervision of the Supervisory Board, the Executive
Board developed and implemented a strategy for sustainable
long-term value creation. During the year under review,
important strategic initiatives were progressed or completed –
despite the persistent geopolitical instabilities, high inflation
and increased interest rates. Our global teams have both
determined and resilient achieved consistent results in our
pursuit of long-term sustainable growth. The successful
advancement and completion of strategic initiatives have
been crucial for both performance development and shaping
a positive outlook for our business, ensuring long-term
sustainable growth.
Focus points in 2023
In coordination with the Executive Board, the Supervisory
Board previously determined certain focus areas for 2023.
The Supervisory Board placed special emphasis on the
following points in 2023:
Finalization 2024-2028 sustainability strategy
The shift towards a more sustainable world, driven by clean
energy sources, is now more imperative than ever. Kendrion
is committed to actively contribute to mitigating the adverse
effects of climate change and addressing social themes.
Kendrion’s approach is marked by the ambition to minimize
risks, optimize performance, and create sustainable value for
the long term. Kendrion has been actively engaged in reducing
its environmental impact and promoting social responsibility for
many years. As an illustrative example, Kendrion reduced the
relative CO
2
emissions from energy by its production facilities
by 56% compared to 2015.
During the past period Kendrion finalized the development of
an ambitious new sustainability program for the period 2024
to 2028. The development process encompassed a
comprehensive analysis of existing practices, identification of
areas for improvement, evaluation, and validation of ambitious
yet realistic sustainability targets, and the formulation of
a roadmap for the effective implementation of measures.
The development of an ambitious new sustainability program
not only contributes to a more sustainable future but also
provides commercial opportunities and adds to Kendrion’s
competitive advantage. Increasingly, sustainable products and
technologies are becoming the default choice for a growing
number of companies, presenting significant commercial
potential. Kendrion’s smart actuation technology aligns with
the increasing demand for products that support the energy
transition. Through its Responsible Product Portfolio,
encompassing Products that Improve Health, Products that
Reduce Climate Impact and Products that Keep you Safe,
Kendrion contributes to promoting healthier lives and
enhancing overall well-being. The commitment to prioritizing
the development of this Responsible Product Portfolio will
continue to be a key focus area within the forthcoming
2024-2028 sustainability program.
The key components of the 2024-2028 sustainability program
were presented to and deliberated upon by the Supervisory
Board and are outlined below.
■ Achieve a further 70% reduction in CO
2
emissions.
■ Establish reporting frameworks for Scope 1, 2 and 3
reporting and disclosure.
■ Implement gender diversity targets at Business Group level
for indirect staff, aiming for a 25% improvement over time
with a minimum threshold of 33%.
■ Enhance supplier selection and screening by transitioning
from basic risk assessment to integrating ESG metrics into
the sourcing process.
■ Sustain ESG ratings from EcoVadis and CDP.
The official launch of the new sustainability program is
anticipated in February 2024. Reference is made to the
Sustainability review included in this Annual Integrated Report
for detailed information about our ESG efforts.
The Supervisory Board expresses optimism regarding the
framework of the upcoming 2024-2028 sustainability program,
anticipating that it aligns with the reasonable expectations of
Kendrion’s stakeholders and adheres to prevailing ESG
standards.
Completion
of the new China manufacturing facility at S.I.P.
in Suzhou and successful transfer of the Shanghai and
former Suzhou production activities
Amid the challenges of the 2023 economy, our strategic focus
revolved around three key accomplishments for our China
operations: delivering products in line with customer
expectations and uninterrupted by the construction of the new
facility and the move towards that facility, completing the
construction and initiation of production in the new plant, and
actively pursuing fresh sales opportunities. The completion of
the construction of the state-of-the-art 28,000m² factory in the
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REPORT OF THE SUPERVISORY BOARD
renowned Suzhou Industrial Park (SIP) and the commencement
of operations at the new facility represent a noteworthy
accomplishment. The factory embraces innovative
technologies, incorporating artificial intelligence, robotics,
solar power, and smart warehouse logistics.
China’s growth ambition, rests on a robust foundation. Given
that China stands as the world's largest automotive and electric
vehicle (EV) market, opportunities for Kendrion’s products
unfold in this dynamic landscape. In 2022, China successfully
secured its first contract with a prominent Chinese vehicle
brand, integrating Kendrion’s industrial brakes to optimize the
seamless functioning of automated, voice-controlled car doors.
In 2023, an additional four models were introduced, leading
to a substantial increase in demand for our braking systems.
The considerable nominations for Kendrion’s automotive
products and the first cross-selling opportunities for industrial
brakes are advancing Kendrion China toward a future of growth
and collaborative success in China.
The Supervisory Board commends the seamless transition of
operations from two now-closed factories to Kendrion’s new
and currently largest facility. The facility became operational
swiftly and demonstrated remarkable efficiency. Moreover, the
Supervisory Board expresses confidence in Kendrion China's
growth ambitions, driven by the robust pipeline for Kendrion's
Automotive products, the rapidly expanding electric vehicle (EV)
market, and promising cross-selling opportunities for industrial
brakes.
Sustainable advancement through further strategic
alignment of Automotive Core and E
The division of the Automotive Group at the end of 2022 into
two distinct units – Automotive Core and Automotive E –
highlights the strategic agility essential for effective engagement
and contribution to the rapidly evolving automotive
transformation. Automotive Core will concentrate on
REPORT OF THE SUPERVISORY BOARD
established technologies for vehicles with internal combustion
engines, while Automotive E will pursue growth opportunities
presented by the shift towards emerging forms of sustainable
mobility. Throughout the year, the implementation of the
organisational split continued to evolve – with reassuring
effects.
The performance of the Automotive Group demonstrated
a steady upward trend. We successfully implemented price
increases for our customers, simultaneously achieving stability
in procurement pricing with our suppliers. This, coupled with
improved operational efficiency in our factories and a more
focused R&D spent in Automotive E, resulted in an 80%
increase of normalized EBITDA to EUR 17.8 million in 2023.
The Supervisory Board fully supports the split of the Automotive
Group and the establishment of Automotive E and Core.
This strategic division within the Automotive Group enhances
Kendrion’s capacity to capitalize on the shift towards
electrification and clean energy, representing a thoroughly
considered and well-thought-out path toward the future of
sustainable mobility. Progressing with the organizational split
of the Automotive Group throughout the year has positively
influenced the performance of the Automotive Group in 2023.
Focus points for 2024
The Supervisory Board has defined the following attention
points for 2024:
■ Advancing the execution of the 2024-2028 sustainability
program.
■ Intensify efforts to progress operational flexibility and
operational leverage within Industrial Brakes.
■ Ramping our new Automotive E products in China in line
with our customer’s schedule.
Meetings and attendance
The Supervisory Board conducted eight regularly scheduled
meetings and three extraordinary sessions throughout 2023.
All the aforementioned Supervisory Board meetings were
attended by the Executive Board, occasionally joined by
members of the Management Team. Additionally, pre-
scheduled meetings without the Executive Board and
Management Team were held before each regular Supervisory
Board meeting. The attendance rate for regular scheduled
Supervisory Board meetings in 2023 was 100% (2022: 100%).
In the case of the three extraordinary meetings, Mrs. Mestrom
was unable to attend one session.
Furthermore, the Chairman of the Supervisory Board and the
Chair of the Audit Committee conducted monthly meetings with
the CEO and CFO, respectively. The Supervisory Board also
focused on direct interaction with the Management Team and
other senior management. This included presentations in the
areas of responsibility and one-on-one meetings between
the Chairman of the Supervisory Board and members of the
Management Team.
The agenda for the Supervisory Board meetings encompassed
the focal items outlined above, along with recurring topics
routinely addressed each year. These included discussions on
operational and financial performance, advancements in the
strategic plan, principal risks associated with operations,
progress and milestone achievements in special projects, fraud
and risk management, the internal control system, governance
and compliance matters, and considerations related to the
General Meeting of Shareholders.
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Evaluation
Throughout the year, the Supervisory Board proactively
invested in its ongoing training, staying updated on governance
and compliance matters. Annually, a comprehensive self-
assessment, encompassing evaluations of both the Supervisory
Board committees and individual members, is conducted.
In a meeting without Executive Board members, the
Supervisory Board critically assessed its own performance,
considering aspects such as team dynamics, competencies,
and market knowledge. Furthermore, performance evaluations
were conducted through a structured questionnaire completed
by both Supervisory Board and Executive Board members.
The questionnaire covered various aspects, including the
composition and expertise of the Supervisory Board, the
dynamics and functionality of both the Supervisory Board and
its committees, the performance of individual Supervisory
Board members, the interaction between the Supervisory
Board and the Executive Board, and the delineation of tasks
and responsibilities for the Supervisory Board. For the
upcoming evaluation in 2024, the intent is to engage an
external consultant. It is intended to retain an external
consultant for the annual evaluation in 2024.
The evaluation results affirmed a positive and constructive
relationship between the Supervisory Board and the Executive
Board. Members of the Supervisory Board consistently
demonstrate appropriate responsibility and are esteemed for
their dedication, expertise, and continual commitment.
They exhibit a clear awareness of the distinct roles and
responsibilities between the Supervisory Board and the
Executive Board, actively seeking to uphold these distinctions.
Areas for improvement involve further leveraging the
Supervisory Board members’ knowledge and network
effectively, along with an increased focus on developments
in the field of ESG.
REPORT OF THE SUPERVISORY BOARD
In Supervisory Board-only meetings, members evaluate the
performance of both the Executive Board members. Engaging
with the CEO and CFO, the Supervisory Board deliberates on
performance metrics from the previous year, strategic and
operational priorities for 2023, and opportunities for personal
development.
Composition
The Supervisory Board consists of four members:
Frits van Hout (Chairman), Everien Slijkhuis (Chair
of the Audit Committee), Marion Mestrom (Chair of the
HR Committee) and Erwin Doll.
The Supervisory Board operates independently of the Executive
Board, the Management Team, any other participating interests,
and each other. Each of the Supervisory Board members has
the necessary expertise, experience, and background to carry
out his or her tasks and responsibilities. All members of the
Supervisory Board are independent within the meaning of
the Dutch Corporate Governance Code. The members
of the Supervisory Board satisfy the statutory requirements
concerning the number of supervisory or non-executive
functions that they can have with large enterprises.
The composition of the Supervisory Board is in line with the
Supervisory Board profile as drawn up by the Supervisory
Board and the diversity objectives described in the Diversity
Policy for the Supervisory Board. Both the Supervisory Board
profile and the Diversity Policy can be found on the corporate
website at www.kendrion.com.
The composition of the Supervisory Board reflects a balanced
gender participation of two men and two women.
Committees of the Supervisory Board
The Supervisory Board has established two committees:
the Audit Committee and the HR Committee. The primary
task of the committees of the Supervisory Board is to advise
and facilitate the Supervisory Board with respect to its
responsibilities and to prepare decision-making by the
Supervisory Board. The committees of the Supervisory Board
have their own regulations, which include a detailed description
of the committee’s tasks and responsibilities.
Audit Committee
The Audit Committee uses its knowledge and expertise to
advise on and prepare Supervisory Board’s decision-making,
particularly concerning matters relating to Kendrion’s financing,
financial statements, the integrity, and quality of financial and
non-financial reporting, IT and information security, the
effectiveness of risk management and internal controls, and
the approach and operation of the internal audit function and
internal audit program.
The Audit Committee consists of Everien Slijkhuis (Chair) and
Erwin Doll.
The Audit Committee held four meetings in 2023. Attendance
during 2023 was 100% (2022: 100%). The CFO and the
Internal Audit and Risk Manager attended all meetings.
The external auditor Deloitte Accountants B.V. attended the
meetings of the Audit Committee during which the full-year
financial statements for 2022, the half-year financial statements
for 2023 and the management letter were discussed. The Audit
Committee met with the external auditor without the CFO and
the Chair of the Audit Committee held recurring meetings with
the Internal Audit and Risk Manager.
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The Audit Committee informed itself of relevant developments
in the field of ESG and associated reporting requirements and
in addition to regular updates provided by management during
the Audit Committee meetings.
The Audit Committee monitored and reviewed regular topics
such as: the quarterly financial results, the half-year and full-
year financial statements, the auditor’s report, maintenance and
effectiveness of the risk management framework and internal
control system, the internal audit plan and key findings of
internal audits performed, the external audit plan, transfer
pricing, tax policy, treasury policy, the group insurance program,
the speak-up procedure, legal and compliance, the annual
evaluation of the external auditor and the annual evaluation of
the approach and operation of the internal audit function and
the internal audit program.
Regular updates were provided on the maintenance and
effectiveness of the risk management framework and internal
control system relating to strategic, financial, operational, tax
control and compliance matters. Kendrion monitors its internal
controls through a systematic approach, which is supported by
a solid risk management framework and the internal audit
program.
The Audit Committee also discussed tax and treasury matters,
including Kendrion’s policies relating to transfer pricing. With
respect to tax, the Audit Committee also monitored and
discussed the status of pending tax audits, including the status
of the ongoing German tax audits.
In addition to the above, the Audit Committee monitored
progress on the execution of the 2020-2025 IT strategic
framework, including a comprehensive session about
information security and information security management.
REPORT OF THE SUPERVISORY BOARD
Deloitte Accountants B.V. was reappointed as external auditor
by the General Meeting of Shareholders on 12 April 2021 for
a final term of four years up to and including the financial year
2024. The Audit Committee monitored both the external
auditor’s performance and the effectiveness of the external
audit process and its independence. The Audit Committee
approved the 2023 external audit plan, including scope and
materiality applied. Reviews and discussions were held on the
findings of the external auditor in its management letter and the
actions taken to address the recommendations and
observations made by the external auditor.
Starting from the financial year 2025, legal requirements
mandate the rotation of the audit firm. There are compelling
reasons justifying an early rotation of Deloitte Accountants B.V.,
including upcoming sustainability reporting requirements
(e.g., CSRD) applicable from the financial year 2024 onwards.
The proposed early rotation of Deloitte Accountants B.V. is
supported by Deloitte and there are no disagreements.
Consequently, the Supervisory Board tasked the Audit
Committee with initiating a tender process, inviting selected
audit firms to submit competitive proposals. After a thorough
tender process, the Audit Committee recommended, and the
Supervisory Board subsequently resolved, to propose the
appointment of Mazars Audit & Assurance by the general
meeting of shareholders in 2024 as the statutory auditor for
a three-year term starting from the financial year 2024.
HR Committee
The HR Committee consists of Marion Mestrom (Chair) and
Frits van Hout. The HR Committee held two meetings, with an
attendance rate of 100% (2022: 100%). The CEO attended
both meetings. In addition to the scheduled meetings, the HR
Committee had several informal meetings with and without
the members of the Executive Board being present.
Succession planning
Anticipating the conclusion of Mrs. Marion Mestrom's second
term in 2024, the search for a new member for the Supervisory
Board commenced early in the year. Upon concluding the
search process, the Supervisory Board will deliberate and
formulate a resolution to propose a candidate for appointment
by the general meeting of shareholders.
The Supervisory Board and the Executive Board express their
deep appreciation to Marion Mestrom for her significant and
invaluable contribution to Kendrion as she provided thoughtful
guidance and oversight throughout her membership and as
Chair of the HR Committee.
Mr. Erwin Doll was initially appointed to the Supervisory Board
on June 24, 2020, for a four-year term ending on the day of the
annual general meeting of shareholders in 2024. Expressing his
availability for a second term, Mr. Doll has conveyed his
intention to continue serving as a member of the Supervisory
Board. The Supervisory Board is delighted to propose the
reappointment of Erwin Doll, and this nomination will be
presented to the general meeting of shareholders on
April 15, 2024.
Performance management
The HR Committee considered and prepared the performance
reviews of the members of the Executive Board for discussion
in the Supervisory Board. The outcome of the performance
reviews process was discussed in a Supervisory Board-only
meeting.
Variable remuneration
The HR Committee agreed the financial and non-financial
performance criteria for the short-term and long-term variable
remuneration of the Executive Board and reviewed progress
on these performance criteria.
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The Executive Board provided the HR Committee with
information on the main components of the remuneration
structure applying to members of the Management Team
who are not members of the Executive Board. The variable
remuneration of the Management Team is aligned to the
structure of the Executive Board variable remuneration.
Financial statements and auditor’s opinion
The 2023 financial statements included in this Annual
Integrated Report have been audited and Deloitte
Accountants B.V. has issued an unqualified opinion.
These were discussed with the Supervisory Board, the Audit
Committee in the presence of the external auditor, and the
Executive Board.
The Supervisory Board is of the opinion that the 2023 financial
statements meet all requirements for transparency and
correctness. Therefore, the Supervisory Board recommends
that the General Meeting of Shareholders to be held on
15 April 2024 adopt the 2023 financial statements and
the appropriation of net income.
This Annual Integrated Report furthermore contains a limited
assurance report of Deloitte Accountants B.V. on selected
sustainability performance targets.
REPORT OF THE SUPERVISORY BOARD
Profit appropriation
Kendrion realized a net profit of EUR 9.9 million in 2023.
Normalized net profit before amortization
1
of intangibles
amounted to EUR 13.9 million.
The Supervisory Board approved the proposal of the Executive
Board to pay out 50% of normalized net profit before
amortization as dividend.
The members of the Supervisory Board have signed the 2023
financial statements to comply with their statutory obligation
pursuant to article 2:101, paragraph 2, of the Dutch Civil Code.
Concluding remarks
Notwithstanding challenging conditions in both the industrial
and automotive sectors, annual turnover remained resilient.
While the growth of the Industrial business fell short of
expectations, the Automotive segment exceeded projections,
demonstrating an improving and robust performance in a
persistently challenging market. We thank the Executive Board,
the Management Team and the entire Kendrion staff for their
flexibility, loyalty, and commitment to perform throughout what
has been a challenging year. We extend our appreciation to our
shareholders for their continued trust and support.
Supervisory Board
Frits van Hout, Chairman
Everien Slijkhuis
Marion Mestrom
Erwin Doll
28 February 2024
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 207.
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REMUNERATION REPORT
Introduction
This Remuneration Report describes the application of the
Remuneration Policy for the Executive Board and the actual
performance in 2023 against the predefined performance
criteria. In addition, the Remuneration report provides an
overview of the remuneration of the Supervisory Board in 2023.
Performance in 2023
2023 was a year another marked by significant challenges due
to the persistent geopolitical instabilities, high inflation, and
increased interest rates. Taking account of the challenging
market conditions, the Executive Board demonstrated
resilience in the execution of a strategy directed at sustainable
long term value creation. Whilst maintaining focus on the
implementation and advancement of important strategic
initiatives, necessary adaptations to the business were made in
view of the difficult market circumstances, including increased
emphasis on operational cost controls and cash management.
Important strategic initiatives that contributed to the solid
performance and encouraging outlook to the future include the
progression of the previously effected split of the Automotive
Group into separate units Automotive E and Core and the
completion of the new high-tech manufacturing facility in
Suzhou and swift transfer of the Shanghai and former Suzhou
production activities to the new manufacturing facility.
In addition, required analyses were completed to finalize the
2024-2028 ESG program. Key components of the 2024-2028
ESG program include:
■ Achieve a further 70% reduction in CO
2
emissions.
■ Establish reporting frameworks for Scope 1, 2 and 3
reporting and disclosure.
■ Implement gender diversity targets at Business Group level
for indirect staff, aiming for a 25% improvement over time
with a minimum threshold of 33%.
■ Enhance supplier selection and screening by transitioning
from basic risk assessment to integrating ESG metrics into
the sourcing process.
■ Sustain ESG ratings from EcoVadis and CDP.
The official introduction of the new ESG program is anticipated
for February 2024.
Remuneration Policy Executive Board
The Remuneration Policy for the Executive Board has been
developed by the Supervisory Board and adopted by the
General Meeting of Shareholders in April 2023.
The Remuneration Policy is evaluated at least once every four
years by the Supervisory Board, and unless otherwise resolved
by the General Meeting of Shareholders, the Remuneration
Policy adopted by the General Meeting of Shareholders in
April 2023 becomes applicable to (i) remuneration granted in
the years 2024 up to and including 2027 – irrespective whether
pay-outs and vesting of performance shares become due,
occur or are made after 2027; and (ii) remuneration of Executive
Board members reappointed by the General Meeting of
Shareholders in April 2023 as of the date on which the new
term of office of the relevant reappointed Executive Board
member commences.
The HR Committee will continue to keep the Supervisory Board
informed about relevant market and legislative developments to
support the periodic evaluation of the Remuneration Policy and
related decision-making. For more information about Kendrion’s
Remuneration Policy, please visit the corporate website at
www.kendrion.com.
Remuneration objectives
The Remuneration Policy serves to recruit and retain diverse,
qualified, and experienced executives to deliver Kendrion’s
sustainable long-term value creation strategy. In addition,
the Remuneration Policy aims to maintain an adequate link
between pay and performance and appropriately align the
interests of the members of the Executive Board with the
interests of shareholders – and the interests of other
stakeholders – and focus on the sustainable delivery of high
performance over the long-term by stimulating share ownership
whilst adhering to the applicable standards of good corporate
governance.
Taking account of Kendrion’s size (in terms of revenues,
average market capitalization, total assets, and number of FTE),
its industrial market position, geographical scope and labor
market competition, the companies included in the AScX Index
on Euronext Amsterdam are defined as relevant reference
group. Financial services, real estate and movies and
entertainment companies are excluded from the reference
group. Within the defined reference group, Kendrion is
positioned around the median in terms of the average of
the abovementioned parameters revenues, average market
capitalization, total assets, and number of FTE. The
remuneration structure and level for the Executive Board is set
around the median level relative to the reference group.
The Remuneration Policy does not contain variable incentives
that may be detrimental to the responsibilities of the Executive
Board in defining and achieving Kendrion’s sustainable long-
term value creation strategy.
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Temporary deviations
In exceptional circumstances, the Supervisory Board can
decide to temporarily deviate from the Remuneration Policy for
members of the Executive Board. Exceptional circumstances
mean circumstances in which a deviation is considered
necessary to serve the long-term interests and sustainability of
Kendrion or to otherwise ensure its viability. Depending on the
exceptional circumstances, the Supervisory Board can resolve
to deviate from any or all the four remuneration components
included in the Remuneration Policy for the members of the
Executive Board.
When considering a temporary deviation from the
Remuneration Policy, the Supervisory Board shall consider
Kendrion’s sustainable long-term value creation strategy,
ongoing business, and operational requirements as well as the
financial situation of Kendrion. In addition, the temporary
deviation considered should be assessed in light of the
principles of reasonableness and fairness.
Upon having resolved a temporary deviation from the
Remuneration Policy, the Supervisory Board will (i) cancel and
withdraw all deviations from the Remuneration Policy prior to
the first annual General Meeting of Shareholders following the
effective date of the deviation; or (ii) propose the necessary
amendments to the Remuneration Policy for adoption during
the first annual General Meeting of Shareholders following
the effective date of the deviation.
Deviations from the Remuneration Policy will be reported in
Kendrion’s remuneration policy.
The Supervisory Board did not decide to deviate temporarily
from the Remuneration Policy for the members
of the Executive Board in 2023.
Remuneration components
The Remuneration Policy for members of the Executive Board
consists of four components: a fixed base salary, a short-term
variable remuneration, a long-term variable remuneration and
other benefits such as a pension scheme and a car allowance
or lease budget.
The sum of the fixed base salary, the short-term variable
remuneration and the long-term variable remuneration for
members of the Executive Board are considered appropriate in
relation to: (i) the identity, the purpose, and values of Kendrion,
(ii) the pay-ratios within Kendrion, (iii) the (international) context
in which Kendrion operates and (iv) reasonable views of
relevant stakeholder groups.
The variable remuneration components are subject to
a maximum value determined in advance in accordance with
the Remuneration Policy. The Supervisory Board will carry out
scenario analyses to assess whether the pay-out level of
variable remuneration components appropriately reflect
performance.
Fixed base salary
Members of the Executive Board receive a fixed base salary,
the amount of which is set around the median level relative to
the abovementioned reference group. The fixed base salary
levels can be adjusted to be decided upon by the Supervisory
Board, based on general market movement and inflation
figures.
In addition to the above, any increase of the annual fixed base
salary up to and around the prevailing median level relative to
the abovementioned reference group, can be decided upon by
the Supervisory Board and will not be regarded as an
amendment to the Remuneration Policy.
On 27 February 2023 the Supervisory Board unanimously
resolved to nominate Messrs. Van Beurden and Hemmen for
reappointment as members of the Executive Board by the
General Meeting of Shareholders on 17 April 2023. During their
meeting on 17 April 2023, the General Meeting of Shareholders
reappointed both Mr. Van Beurden and Mr. Hemmen for a four-
year term ending on 1 December 2027 and 1 July 2027,
respectively. Following these reappointments and the adoption
of the new Remuneration Policy by the General Meeting of
Shareholders, the fixed gross salaries for the members of the
Executive Board are as indicated in the table below.
2023 Annual base salary (gross) Proportionate amount (gross)
CEO (J.A.J. van Beurden) EUR 550,000 – as of 1 January 2023 until expiry 2
nd
term on 1 December 2023 EUR 504,166.66 (i.e. 11/12
th
of EUR 550,000)
EUR 590,000 – as of commencement 3
rd
term on 1 December 2023 EUR 49,166.66 (i.e. 1/12
th
of EUR 590,000)
Total EUR 553,333.32 (actual)
CFO (J.H. Hemmen) EUR 335,000 – as of 1 January 2023 until expiry of 1
st
term on 1 July 2023 EUR 167,500 (i.e. 6/12
th
of EUR 335,000)
EUR 350,000 – as of commencement 2
nd
term on 1 July 2023 EUR 175,000 (i.e. 6/12
th
of EUR 350,000)
Total EUR 342,500 (actual)
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The table below provides an overview of the development of the annual gross base salary levels of the members of the Executive Board during previous financial years.
2023 annual gross base salary
2022 annual
gross base salary
2021 annual
gross base salary
2020 annual
gross base salary
2019 annual
gross base salary
2018 annual
gross base salary
2017 annual
gross base salary
2016 annual
gross base salary
CEO (J.A.J. van Beurden) EUR 550,000 (as of 1 January 2023 until
expiry 2
nd
term on 1 December 2023)
EUR 590,000 (as of commencement 3
rd
term on 1 December 2023)
EUR 553,333.32 (actual)
EUR 550,000
EUR 550,000 EUR 550,000 EUR 504,645
1
EUR 490,900 EUR 474,300 EUR 465,000
EUR 550,000
2
EUR 517,916.67
(actual)
4
EUR 508,424.58
3
(actual)
CFO (J.H. Hemmen) EUR 335,000 (as of 1 January 2023 until
expiry of 1
st
term on 1 July 2023)
EUR 350,000 (as of commencement 2
nd
term on 1 July 2023)
EUR 342,500 (actual)
EUR 335,000
EUR 310,788 EUR 270,250 EUR 235,000
5
EUR 254,485.41
(actual)
4
EUR 117,500
(actual)
1
Effective until 1 December 2019.
2
Effective as of 1 December 2019 (i.e. the commencement date of the CEO’s second term).
3
The sum of EUR 462,591.25 (i.e. 11/12
th
of EUR 504,645) and EUR 45,833.33 (i.e. 1/12
th
of EUR 550,000).
4
Voluntary salary reduction of 15% during April through July 2020 inclusive and voluntary salary reduction of 10% for the month August 2020 in view of COVID-19 prompted cost measures.
5
Effective as of 1 July 2019 (i.e. the effective date of appointment to the Executive Board).
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Short-term variable remuneration
The short-term variable remuneration is payable in cash,
the amount of which is based on the achievement of
predetermined, specific, and measurable financial and non-
financial driven performance criteria.
The overview below describes the key elements of the short-
term variable remuneration as recorded in the Remuneration
Policy for the Executive Board.
CEO
The short-term variable remuneration ranges from 0%
to 90% of the annual fixed gross base salary of the
CEO, with 60% being the target amount
CFO
The short-term variable remuneration ranges from 0%
to 67.5% of the annual fixed gross base salary of the
CFO, with 45% being the target amount
Performance criteria
The performance criteria for the short-term variable
remuneration are based on Kendrion’s strategic intent to
continuously grow revenue and profitability in a sustainable way.
The performance criteria for the short-term variable
remuneration include financial and non-financial criteria.
The financial driven performance criteria determine 60% of
the short-term variable remuneration and reflect the financial
priorities of Kendrion. The remaining 40% of the short-term
variable remuneration is determined by non-financially driven
performance criteria and reflect sustainability/ESG ambitions
and other priorities directly linked to Kendrion’s strategic intent.
Financial performance criteria
■ The financial driven performance criteria determine 60%
of the short-term variable remuneration.
■ Each year the Supervisory Board selects at least three
financial driven performance criteria from the list below with
a view to incentivize delivery of financial priorities that
support Kendrion’s strategic and operational spearheads.
■ The Supervisory Board may allocate different weight
percentages to the different financial performance criteria it
selects for a particular year, provided a minimum weight of
10% shall apply to a financial performance criterion.
■ Financial performance criteria
1
■ Net profit
■ Return on sales (ROS)
■ Return on investment (ROI)
■ Organic growth
■ Free cash flow
■ Revenue
■ EBITA
■ EBITDA
Non-financial performance criteria
■ The non-financial performance criteria determine 40%
of the short-term variable remuneration.
■ Each year the Supervisory Board selects a certain number
of non-financial performance criteria derived from the
strategic and operational spearheads for the respective
performance year, which will in any event include
performance criteria in the area of sustainability/ESG
(i.e., environmental, social and/or governance criteria).
■ Achievement of each individual non-financial performance
criterion will be measured by applying a binary scoring
model. The amount of the pay-out for the achievement of
non-financial performance criteria depends on the number
of non-financial performance criteria achieved.
■ A predefined step curve will be applied to calculate the pay-
out between the achievement of the minimum threshold
number of selected non-financial performance criteria and
achievement of all selected non-financial performance
criteria. No pay-out will be made for below threshold
performance.
Investment
Members of the Executive Board must invest at least 20% of
the net amount of the pay-out of the short-term remuneration
earned until the required ownership level has been reached as
prescribed under Kendrion’s ‘Share ownership guideline’ of the
Remuneration Policy.
1
In each case excluding items that are generated outside the ordinary course of business and the amortization of intangibles arising on acquisitions or similar corporate events.
■ The performance incentive zone (threshold, target and
maximum) for each financial performance criterion will be
determined in advance by the Supervisory Board by
reference to the strategic and operational spearheads for
the respective performance year. No pay-out will be made
for below threshold performance. In the case of
performance equal to the threshold performance of the
relevant performance criterion, the pay-out of the short-
term incentive will be equal to 50% of the relevant target
amount. A linear curve will be applied to calculate the pay-
out between threshold performance and maximum
performance.
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2023 short-term variable remuneration
Within the framework of the Executive Board Remuneration
Policy, the Supervisory Board takes an informed decision
relevant to the variable remuneration of the members of the
Executive Board. For the determination of the financial and
non-financial performance criteria of the 2023 short-term
incentive, the Supervisory Board considered – amongst others
– the 2023 focus items as previously defined by the Supervisory
Board; the increasing demands and complexity around ESG
and ESG reporting and disclosure requirements, the volatile
economic climate and trading environment; and the importance
of long-term value creation through continued investments in
sustainable growth areas. The 2023 focus items of the
Supervisory Board included the finalization of the 2024-2028
ESG strategy, completion of the new high-tech manufacturing
facility in Suzhou and the successful transfer of production
activities to the new facility and progressing the previously
effected split of the Automotive Group into separate units
Automotive E and Core. The Supervisory Board reported on
the progression made and the key points of attention relevant
to the 2023 focus items in the Report of the Supervisory Board
included in this Annual Integrated Report.
For the 2023 short-term variable remuneration, the Supervisory
Board followed the recommendations of the HR Committee
and selected four financial performance criteria, a non-financial
performance criterion in the area of sustainability/ESG and
other non-financial performance criteria that are linked to the
Supervisory Board’s 2023 focus items and Kendrion’s strategic
plan and operational spearheads. The 2023 financial and non-
financial performance criteria reflect the collective responsibility
of the members of the Executive Board and make no distinction
between the applicable performance criteria for the CEO
and CFO.
In 2023, the following short-term incentive target amounts
applied to the members of the Executive Board:
2023 short-term incentive
target amount
CEO (J.A.J. van Beurden) EUR 332,000
CFO (J.H. Hemmen) EUR 137,375
The abovementioned target amounts have been calculated as
follows:
CEO (J.A.J. van Beurden)
Annual fixed base salary (gross) Target amount Proportionate target amount
EUR 550,000 (as of 1 January 2023 until expiry 2
nd
term on 1 December 2023) EUR 330,000 (i.e. 60% of EUR 550,000) EUR 302,500 (i.e. 11/12
th
of EUR 330,000)
EUR 590,000 (as of commencement 3
rd
term on 1 December 2023) EUR 354,000 (i.e. 60% of EUR 590,000) EUR 29,500 (i.e. 1/12
th
of EUR 354,000)
Total EUR 332,000 (i.e. sum of EUR 302,500 and EUR 29,500)
CFO (J.H. Hemmen)
Annual fixed base salary (gross) Target amount Proportionate target amount
EUR 335,000 (as of 1 January 2023 until expiry 1
st
term on 1 July 2023) EUR 117,250 (i.e. 35% of EUR 335,000) EUR 58,625 (i.e. 6/12
th
of EUR 550,00)
EUR 350,000 (as of commencement 2
nd
term on 1 July 2023) EUR 157,500 (i.e. 45% of EUR 350,000) EUR 29,500 (i.e. 6/12
th
of EUR 157,500)
Total EUR 137,375 (i.e. sum of EUR 58,625 and EUR 78,750)
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For the performance year 2023, the short-term incentive
performance criteria are allocated as follows:
Short-term remuneration as percentage of annual
gross base salary
Performance
criterion
Weight Minimum At target Maximum
Financial performance criteria (60%)
ROI 15% 0 CEO 9% 13.5%
CFO 6.75% 10.2%
ROS 15% 0 CEO 9% 13.5%
CFO 6.75% 10.2%
EBITDA 10% 0 CEO 6% 9%
CFO 4.5% 6.75%
Free cash flow 20% 0 CEO 12% 18%
CFO 9% 13.5%
Non-financial performance criteria (40%)
0 CEO 24% 36%
CFO 18% 27%
TOTAL 100% 0 CEO 60% 90%
100% 0 CFO 45% 67.5%
2023 short-term financial performance criteria
In 2023, the actual performance against the financial performance criteria was as follows:
2023 short-term incentive performance on financial performance criteria
Financial
performance
criterion
Pay-out as % of
short-term incentive
target amount
Pay-out as % of
2023 annual gross base salary (actual)
Pay-out in EUR (gross)
CEO (J.A.J. van
Beurden)
CFO (J.H. Hemmen) CEO (J.A.J. van
Beurden)
CFO (J.H. Hemmen)
ROI 63.7% 5.70% 3.81% EUR 31,540 EUR 13,050
ROS 0% 0% 0% EUR 0 EUR 0
EBITDA 0% 0% 0% EUR 0 EUR 0
Free cash flow 58.5% 7.02% 4.69% EUR 38,844 EUR 16,072.87
TOTAL 12.72% 8.50% EUR 70,384 EUR 29,123
2023 short-term non-financial performance criteria
The non-financial performance criteria for the 2023 short-term incentive recognize the collective responsibility of the Executive
Board and are aligned to the Supervisory Board’s 2023 focus items and Kendrion’s strategic and operational spearheads.
The table below provides a summarized description of the non-financial performance criteria.
Summarized description 2022 non-financial performance criteria
Sustainability Completion remaining analyses to finalize the 2024-2028 ESG program ready for official launch in 2024
Sustainability Realization relative CO
2
reduction of at least 15% and relative energy reduction of at least 15% compared to
2018 and min. of 25 supplier audits consistent with the 2019-2023 sustainability target framework
China Completion of the new high-tech manufacturing facility in Suzhou and swift transfer of the Shanghai and former
Suzhou production activities to the new manufacturing facility
Automotive Group Enhance strategic positioning of Kendrion Automotive Group, amongst others by strengthening commercial
and contractual terms for certain key-accounts and implementing appropriate adjustments to pricing grids
Consistent with the Remuneration Policy, achievement of an individual non-financial performance criterion will be measured by
applying a binary scoring model where a non-financial performance criterion can either be achieved or not achieved. The amount of
the pay-out for the non-performance criteria depends on the number of non-financial performance criteria achieved. The following
step curve is applicable for the 2023 non-financial performance criteria.
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The Automotive Group achieved solid revenue results –
attributable to the successful implementation of sales price
increases and the further strengthening of its strategic position.
The latter also due to the advancement of the previously
effected split of the Automotive Group in the distinct units:
Automotive Core and E.
Decarbonization remains key to reducing the negative impact
of climate change and Kendrion has long been engaged in
reducing its environmental impact. Kendrion’s production
facilities already achieved a 56% reduction in relative CO
2
emissions from energy compared to 2015. The 15% relative
energy consumption and CO
2
reduction targets under the
2019-2023 sustainability target framework have been widely
achieved and measure 15.31% and 22.9%, respectively per
year-end.
The Supervisory Board is optimistic about the forthcoming
2024-2028 ESG program – the development of which was
successfully completed in 2023 – and is looking forward to
the official introduction of the program in February 2024.
The Supervisory Board will continue monitoring progress in
the above-mentioned areas. Reference is made to the Report
of the Supervisory Board included in this Annual Integrated
Report that also substantiate performance and achievements
realized in 2023 and the focus areas for 2024.
During the annual performance reviews, specific attention was
paid to the individual performance and development of the
members of the Executive Board against the non-financial
performance criteria as well as key competencies such as
(change) leadership and organizational alignment and strategic
business orientation.
Based on the comprehensive review of the performance of
the members of the Executive Board, the Supervisory Board
resolved that the members of the Executive Board realized all
four non-financial performance criteria as set under the 2023
short-term variable remuneration.
Consistent with the step-up curve, the score on the non-
financial performance criteria results in a pay-out of 150% of
the short-term target amount corresponding to a pay-out of
EUR 199,200 (gross) for the CEO and EUR 82,425 (gross) for
the CFO, representing: 36% of the CEO’s 2023 annual gross
base salary of EUR 553,333.32 and 24.06% of the CFO’s 2023
annual gross base salary of EUR 342,500.
Number of non-financial
performance criteria achieved
Short-term
incentive pay-out
% of target amount
All 4 non-financial performance criteria achieved 150%
3 out of the 4 non-financial performance criteria achieved 100%
2 out of the 4 non-financial performance criteria achieved 50%
1 out of the 4 non-financial performance criteria achieved 0%
0 out of the 4 non-financial performance criteria achieved 0%
Throughout the year, the Supervisory Board reviewed progress
against the non-financial performance criteria and received
detailed updates about relevant developments and actions
taken. During the December 2023 Supervisory Board meeting,
the Executive Board presented the accomplishments and
advancements realized. Managing and dealing with the
persistent challenging trading conditions forcing enhanced
focus on – amongst others – operational cost and cash control,
whilst at the same time implementing and advancing important
strategic initiatives supportive to the continued pursuit of
sustainable long-term growth opportunities, and the increasing
demands and complexity around ESG and ESG reporting and
disclosure requirementshave been important themes
considered and discussed among the Supervisory Board
and Executive Board.
With the rapid adjustment of standing practices and the
development of longer-term measures in response to the
changing economic landscape, Kendrion convincingly
demonstrated its organizational agility and resilience.
The Executive Board appropriately anticipated and managed
the unpredictability involved in building a new facility.
The construction of the new high-tech manufacturing facility
in Suzhou was successfully completed mid-year and the
subsequent transfer of the Shanghai and former Suzhou
production activities to the new manufacturing facility was
swiftly finalized well before the end of 2023.
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2023 pay-out short term incentive
Overall performance resulted in the following pay-out of the short-term incentive in 2023:
Total pay-out 2023 short-term incentive (gross) Pay-out as % of 2023 annual gross base salary (actual)
CEO (J.A.J. van Beurden) EUR 269,584
(i.e. sum of EUR 70,384 and EUR 199,200)
48.72% of the gross annual base salary
of EUR 553,333.32
CFO (J.H. Hemmen) EUR 111,548
(i.e. sum of EUR 29,123 and EUR 82,425)
32.57% of the gross annual base salary
of EUR 342,500
The table below provides an overview of the development of the pay-out under the applicable short-term incentive scheme
of the members of the Executive Board during previous financial years.
Short-term incentive
2022
*
2021
*
2020
*
2019
*
2018
*
2017
*
2016
*
CEO (J.A.J. van Beurden) EUR 267,438
(gross)
EUR 429,000
(gross)
EUR 358,600
(gross)
EUR 191,282.90
(gross)
EUR 117,816
(gross)
EUR 170,748 (gross) based
on 90% achievement of 2017
performance criteria, representing
36% of gross annual base salary
(i.e. 36% of EUR 474,300), one-
third paid in cash and two-thirds
awarded conditionally in shares.
EUR 180,420 (gross) based
on 97% achievement of 2016
performance criteria, representing
38.80% of the gross annual base
salary (i.e. 38.80% of
EUR 465,000), one-third paid in
cash and two-thirds awarded
conditionally in shares.
CFO (J.H. Hemmen) EUR 95,023
(gross)
EUR 141,408.80
(gross)
EUR 102,965
(gross)
EUR 37,012.50
(gross)
Not applicable – effective date of appointment to the Executive Board 1 July 2019
*
Pay-out amounts calculated in accordance with the then prevailing remuneration policy.
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Long-term variable remuneration
The long-term variable remuneration component incentivizes
members of the Executive Board to focus on long-term
sustainable value for shareholders and other stakeholders;
it thereby serves to align the interests of the members of the
Executive Board with the long-term interests of shareholders
and other stakeholder groups.
The members of the Executive Board annually receive
conditional performance shares. The conditional performance
shares will vest upon achievement of performance measured
over a period of three years, including the year in which the
conditional performance shares are granted. Vested
performance shares are restricted by a two-year holding period
as of vesting.
The size of the award is defined as a percentage of the annual
fixed gross base salary of the relevant Executive Board member
as per the year in which the conditional performance shares are
granted. The actual grant (i.e. the number of conditional
performance shares) is determined by the percentage of the
annual fixed gross base salary and calculated on the basis of
the average share price during the fourth quarter of the year
immediately preceding the year in which the conditional
performance shares are granted.
The target value as per the year in which conditional
performance shares are granted is as follows:
CEO 60% of the annual fixed gross base salary of the CEO
CFO 50% of the annual fixed gross base salary of the CFO
The maximum opportunity for the long-term variable
remuneration shall not exceed 150% of the target value.
Performance measure
The vesting percentage of the performance shares is
conditional upon the achievement of performance measured
as:
Weight Performance measure
40% Relative total shareholder return (relative TSR)
40% Basic earnings per share (EPS)
20% Sustainability/ESG (i.e. environmental, social and/or
governance)
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Relative TSR
To determine achievement of this performance measure, the relative TSR is measured, which
means share price movements, including dividends and assuming dividends are reinvested.
For the calculation of the relative TSR position, the reinvestment of cash dividend in fixed-
income securities and the reinvestment of stock dividend in the relevant share applies.
The TSR performance of Kendrion is measured against the performance of 20 selected
TSR peer companies included in the table below.
# Company Industry Country
Market value
(EUR x 1 mln)*
1. Schneider Electric SE Electrical components France 74,653
2. Eaton Corporation plc Diversified industrials US 58,485
3. Sensata Technologies
Holding NV
Electronic equipment: gauges and
meters US 5,787
4. Aalbers Industries NV Electronic equipment: control and filter Netherlands 4,006
5. Emerson Electric Co Electronic equipment: other US 53,229
6. Continental AG Auto parts Germany 11,272
7. Schaeffler AG Auto parts Germany 1,057
8. TKH Group NV Electrical components Netherlands 1,568
9. Borg Warner Inc Auto parts US 8,831
10. SKF AB Metal fabricating Sweden 6,096
11. Phoenix Mecano AG Machinery: industrial Switzerland 320
12. Grammar AG Auto parts Germany 158
13. Regal Beloit Electrical components US 7,437
14. IMI Plc Electronic equipment: control and filter UK 3,786
15. Autoneum Holding AG Auto parts Switzerland 483
16. Akwel Auto parts France 465
17. Elringklinger AG Auto parts Germany 436
18. VBG Group publ AB Auto parts Sweden 299
19. Kongsberg Automotive
ASA
Auto parts Norway 253
20. Sogefi SpA Auto parts Italy 112
Identified possible replacements in case of delisting or other corporate events in respect of any
of the above selected TSR peer companies
# Company Industry Country
Market value
(EUR x 1 mln)*
ABB Ltd Electrical components Switzerland 55,833
VAT Group AG Electronic equipment: control and filter Switzerland 7,681
Addtech AB Electrical components Sweden 3,475
Incap Oyj Electrical components Finland 501
Katek SE Electrical components Germany 204
Freni Brembo SpA Auto parts Italy 3,489
Vitesco Technologies
Group AG
Auto parts Germany 2,185
JOST Werke AG Auto parts Germany 788
hGears AG Auto parts Germany 75
*
Per reporting date 31 December 2022
The position of Kendrion in the TSR performance peer group, upon expiry of the three-year
performance period, determines the score for the relative TSR measure in accordance with the
following performance incentive zone:
Ranking 1-3 4 5 6 7 8 9 10 11-21
Vesting 150% 137.5% 125% 112.5% 100% 83% 67% 50% 0%
The position of Kendrion in the ranking defines the vesting for this part of the conditional grant of
shares. The calculation to determine Kendrion’s ranking shall be conducted by an external
independent and reputable specialized firm.
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EPS
EPS is disclosed in Kendrion’s consolidated financial statements
and is calculated by dividing the profit or loss attributable to
shareholders of Kendrion by the weighted average number of
shares outstanding during the relevant period, excluding ordinary
shares purchased by Kendrion and held as treasury shares.
Earnings are adjusted for changes in accounting principles
during the performance period. The Supervisory Board sets the
performance incentive zone (threshold, target and maximum)
annually by reference to the mid-term plan as approved by the
Supervisory Board in the year of the grant date. Given that these
targets are considered commercially sensitive, EPS targets and
the achieved performance are disclosed in the Annual Integrated
Report after the relevant performance period.
The following performance incentive zone will be used to define
the vesting for this part of the conditional grant of shares:
< Threshold Target Maximum
EPS 0 100% 150%
Vesting is linear between threshold performance and on target
performance and between on-target performance and
maximum performance.
Sustainability/ESG
The Supervisory Board will annually set a sustainability target
that is aligned with Kendrion’s sustainability ambitions.
The Supervisory Board sets the performance incentive zone
(threshold, target and maximum) annually. The achieved
performance will be disclosed in the Annual Integrated Report
after expiry of the relevant three-year performance period.
The following performance incentive zone will be used to define
the vesting for this part of the conditional grant of shares:
< Threshold Target Maximum
Sustainability/
ESG
0 100% 150%
Vesting is linear between threshold performance and on target
performance and between on-target performance and
maximum performance.
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Annual Integrated Report 2023
2023 long-term variable remuneration
Consistent with the applicable Remuneration Policy as adopted
by the General Meeting Shareholders on 17 April 2023, the
members of the Executive Board were granted conditional
performance shares as described in the table below.
2023 annual
gross base salary (actual)
Target amount
Average share
price Q4 2022
Conditional
performance shares
Performance period Expiry holding period
CEO (J.A.J. van Beurden) EUR 553,333.32 EUR 332,000 EUR 15.07 22,030 Performance period 2023-2025 End of 2027
CFO (J.H. Hemmen) EUR 342,500 EUR 171,250 EUR 15.07 11,363 Performance period 2023-2024 End of 2027
The abovementioned target amounts have been calculated as
follows:
CEO (J.A.J. van Beurden)
Annual fixed base salary (gross) Target amount Proportionate target amount
EUR 550,000 (as of 1 January 2023 until expiry 2
nd
term on 1 December 2023) EUR 330,000 (i.e. 60% of EUR 550,000) EUR 302,500 (i.e. 11/12
th
of EUR 330,000)
EUR 590,000 (as of commencement 3
rd
term on1 December 2023) EUR 354,000 (i.e. 60% of EUR 590,000) EUR 29,500 (i.e. 1/12
th
of EUR 354,000)
Total EUR 332,000
CFO (J.H. Hemmen)
Annual fixed base salary (gross) Target amount Proportionate target amount
EUR 335,000 (as of 1 January 2023 until expiry 1
st
term on 1 July 2023) EUR 167,500 (i.e. 50% of EUR 335,000) EUR 83,750 (i.e. 6/12
th
of EUR 167,500)
EUR 350,000 (as of commencement 2
nd
term on 1 July 2023) EUR 175,000 (i.e. 50% of EUR 350,000) EUR 87,500 (i.e. 6/12
th
of EUR 175,000)
Total EUR 171,250
In accordance with the applicable Remuneration Policy, the
vesting percentage of the performance shares is conditional
upon the achievement of performance measured as relative
TSR, EPS and a non-financial measure in the area of
sustainability/ESG. The sustainability/ESG performance
criteria for the 2023 long-term incentive are related to
the advancement of supplier selection and screening by
integrating ESG metrics into the sourcing process and
establishing a supplier ESG performance dashboard and
developing a standardized approach towards supplier data
collection.
REMUNERATION REPORT
Based on the contents and quality of the actions taken and
strategies developed, the Supervisory Board shall determine
performance, whereby: (i) on-target performance results in
100%, maximum performance results in 150% vesting and
minimum threshold performance results in 0% vesting.
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Annual Integrated Report 2023
2021 long-term variable remuneration
Pursuant to the 2021 long-term incentive scheme, 20,245 conditional performance shares have been granted to Joep van Beurden
and 9,533 conditional performance shares have been granted to Jeroen Hemmen. The number of conditional performance shares
has been calculated as follows:
2021 annual
gross base salary
Target amount
Average share
price Q4 2020
Conditional
performance shares
CEO (J.A.J. van Beurden) EUR 550,000 EUR 330,000 (i.e. 60% of EUR 550,000) EUR 16.30 20,245
CFO (J.H. Hemmen) EUR 310,788 EUR 155,394 (i.e. 50% of 310,788) EUR 16.30 9,533
Consistent with the Remuneration Policy governing the 2021 long-term variable remuneration, the vesting percentage of the
performance shares is conditional upon the achievement (during the performance period 2021-2023) of performance measured as:
Weight Performance measure
40% Relative total shareholder return (relative TSR)
40% Basic earnings per share (EPS)
20% Sustainability (i.e. environmental, social and/or governance)
A summary description of the performance measure in the area of sustainability for the performance period 2021-2023 has been
included in the table below.
Summary description sustainability performance measure – 2021-2023
Achievement of measures in line with five-year
roadmap containing energy efficiency and emission
mitigation measures as part of the 2019-2023
sustainability target framework
■ On target performance (i.e. 100% vesting)
■ Max. performance (i.e. 150% vesting)
■ Min. threshold performance (i.e. 0% vesting)
Vesting is linear between min. threshold performance and on-target performance and between on-target performance and max.
performance.
REMUNERATION REPORT
TSR and EPS
When measuring the relative TSR (i.e., share price movements,
including dividends assuming dividends are reinvested), the
position of Kendrion within the predefined TSR performance
peer group, as stipulated by the Remuneration Policy for the
2021 long-term variable remuneration, is ten. As per the
Remuneration Policy governing the 2021 long-term variable
remuneration, the tenth position leads to a 0% vesting.
Based on the EPS performance incentive zones determined by
the Supervisory Board by reference to the 2021 mid-term plan,
the actual 2023 EPS falls below the predetermined minimum
threshold performance level and therefore leads to a 0%
vesting.
Sustainability/ESG – five-year energy and
CO
2
roadmap
The five-year roadmap containing energy efficiency and
emission mitigation measures that has been developed as part
of the 2019-2023 sustainability target framework aims to
achieve a 15% relative reduction of energy consumption and
CO
2
emission by the end of 2023.
As per the end of 2023 a relative reduction of energy
consumption of 15.31% has been achieved compared with
2018, and a relative reduction of CO
2
emission of 22.9%
compared with 2018 has been achieved. Since 2015 a relative
reduction of CO
2
emissions – mostly from energy by production
plants – of 56% has been achieved. Through the accelerated
investment in and implementation of reduction measures, both
the energy efficiency and CO
2
emission target have been
achieved.
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
109
Annual Integrated Report 2023
This achievement justifies on-target performance under the
2021 long-term incentive scheme for the sustainability/ESG
performance measure and thereby results in 100% vesting
of 20% of the target-value. For Joep van Beurden 4,049
performance shares have vested and for Jeroen Hemmen
1,906 performance shares have vested for the achievement
of the sustainability performance measure.
This means that under the 2021 long-term incentive, a total
number of 4,049 shares have vested for Joep van Beurden
and a total number of 1,906 shares have vested for Jeroen
Hemmen.
The vested shares remain subject to a holding period until
the end of 2025.
In accordance with the long-term incentive plan, Joep van
Beurden and Jeroen Hemmen will be entitled to accrued
dividends for each of the 4,049 and 1,906, respectively, vested
shares. Accrued dividends will – in accordance with the long-
term incentive plan – be paid in cash.
Development long-term incentive
The table below provides an overview of the development of
the conditional share awards under the long-term incentive
scheme for the members of the Executive Board during
previous financial years. The table also specifies the expiry
of vesting periods and holding periods for conditional shares
awarded.
Long-term
incentive
2022
number
of shares
Expiry
vesting
period
2021
number
of shares
Expiry
vesting
period
holding
period
2020
number
of shares
Expiry
vesting
period
holding
period
2019
number
of shares
Expiry
vesting
period
holding
period
2018
number
of shares
Expiry
vesting
period
holding
period
2017
number
of shares
Expiry
vesting
period
holding
period
2016
number
of shares
Expiry
vesting
period
holding
period
CEO (J.A.J.
van Beurden)
16,465 End of
2024
20,245 End of
2023
End of
2025
16,533 End of
2022
End of
2024
11,559 End of
2021
End of
2023
6,960 End of
2020
End of
2022
3,383 End of
2019
End of
2021
3,970 End of
2018
End of
2020
CFO (J.H.
Hemmen)
6,740 End of
2024
9,533 End of
2023
End of
2025
6,769 End of
2022
End of
2024
2,409 End of
2021
End of
2023
Not applicable – effective date of appointment to the Executive Board 1 July 2019
REMUNERATION REPORT
Pension arrangement and other benefits
Members of the Executive Board participate in the defined
contribution pension scheme. Kendrion N.V. will pay: (i) the cost
of contributions for participation in the defined contribution
scheme; (ii) the risk premium for the surviving dependents’
pension (nabestaandenpensioen) and (iii) the cost of
contributions for participation in the occupational disability
insurance (including WIA excedentverzekering) (collectively
the “Pension and Disability Insurance Contribution”). In addition,
members of the Executive Board are entitled to an annual gross
allowance to compensate for the loss of accrual of pension
benefits because of the Dutch Wage Tax Act, provided that the
sum of the Pension and Disability Insurance Contribution and
such annual allowance shall annually not exceed an amount of
EUR 75,000. This amount may be adjusted based on market
developments.
No schemes have been agreed for the voluntary early
retirement of members of the Executive Board.
Kendrion maintains a car lease policy for members of the
Executive Board. The lease budget (including fuel) is EUR 2,000
per month. Alternatively, members of the Executive Board are
entitled to a monthly gross car allowance of EUR 2,000.
In addition, Kendrion pays a monthly expense allowance to
members of the Executive Board of up to EUR 450, to cover
costs that are not suitable for individual reimbursement.
The amount of the car allowance and the expense allowance
are not included as a basis for calculation of the Pension and
Disability Insurance Contribution, or any other (variable)
remuneration or allowance, severance amount or benefit.
Kendrion has arranged for a directors’ and officers’ liability
insurance. The costs for this insurance are for the account
of Kendrion.
The Executive Board participates in the defined contribution
plan of Kendrion. The pension contribution in 2023 was
EUR 75,000 (2022: EUR 75,000) for the CEO and
EUR 75,000 (2022: EUR 69,000) for the CFO. In 2023 Kendrion
provided the CFO with a car allowance in the monthly gross
amount of EUR 2,000.
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
110
Annual Integrated Report 2023
Share ownership guideline
An objective of the Remuneration Policy is to appropriately align
the interests of the members of the Executive Board with the
interests of shareholders by encouraging share ownership.
As per the Remuneration Policy adopted by the General
Meeting of Shareholders on 17 April 2023, Kendrion applies a
share ownership guideline for members of the Executive Board
of 100% of the annual fixed gross base salary for the CEO
and 50% of the annual fixed gross base salary for the CFO.
This shareholding must be gradually built up with performance
shares earned under the long-term incentive, although it is
permitted to sell shares to finance taxes due at the date of
vesting of the performance shares, and by purchasing shares
with at least 20% of the net amount of the pay-out of the short-
term incentive. However – during the General Meeting of
Shareholders held on 17 April 2023 – a commitment was made
to propose a further adjustment to the share ownership
guideline during the first next General Meeting of Shareholders
in 2024. The additional amendment comprises:
■ A share ownership requirement for the CEO of 200% of
the annual fixed gross base salary of the CEO (as opposed
to 100% of the annual fixed gross base salary).
■ A share ownership requirement for the CFO of 100% of
the annual fixed gross base salary of the CFO (as opposed
to 50% of the annual fixed gross base salary).
■ The shareholding must be gradually built up with
performance shares earned under the long-term incentive,
although it is permitted to sell shares to finance taxes due
at the date of vesting of the performance shares, and by
purchasing shares with at least 50% (as opposed to 20%)
of the net amount of the pay-out of the short-term
incentive.
Although the abovementioned adjustments will be proposed to
the General Meeting of Shareholders for adoption on 15 April
2024, the management agreements with the current members
of the Executive Board covering the third term for the CEO and
the second term of the CFO, include the abovementioned
share ownership requirements and provisions.
Policy in case of change of control
Unvested performance shares awarded shall be deemed
vested as per the date of the change of control assuming on
target performance, subject to: (i) pro rating to reflect the
proportion of the normal performance period that has elapsed
as per the date of the change of control, and (ii) the
discretionary authority of the Supervisory Board to determine
otherwise, should such deemed vesting of performance shares
result in unreasonable or unequitable remuneration.
Adjustment and claw back
The Supervisory Board is authorized to adjust the amount
of the short-term and long-term variable remuneration to an
appropriate level should payment thereof result in unreasonable
or unequitable remuneration. In addition, a so-called claw-back
provision applies by which the Supervisory Board has the
authority to recover in whole or in part short-term and long-
term variable remuneration awarded to members of the
Executive Board should it transpire that such variable
remuneration was unjustifiably awarded based on incorrect
information.
Other key elements
Term and termination
Management agreements with members of the Executive
Board are entered for a definite period of four years.
The management agreement may be terminated with due
observance of a notice period of six months. Kendrion is
entitled to terminate the management agreement with
immediate effect for cause (i.e., seriously culpable or negligent
behavior on the part of the Executive Board member).
Termination fee
In the event of termination of the management agreement on
Kendrion’s initiative, the termination fee for members of the
Executive Board shall not exceed 100% of the annual fixed
gross base salary (i.e. excluding short-term and long-term
incentive and other elements such as pension contributions).
The members of the Executive Board are not entitled to
a termination fee if the contract is terminated for cause
(i.e. seriously culpable or negligent behavior on the part of
the Executive Board member) or if the contract is terminated
at the initiative of the Executive Board member.
Pay ratio
The Executive Board to employee pay-ratio is approximately 14
(2022: 15). This pay ratio is based on the average of the 2023
Executive Board remuneration including pensions and other
expenses and the average wage costs per FTE in 2023 as
disclosed on pages 65-66 of this Annual Integrated Report.
REMUNERATION REPORT
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
111
Annual Integrated Report 2023
Remuneration Policy Supervisory Board
Objectives
The remuneration policy of the Supervisory Board serves to
recruit and retain diverse, qualified, and experienced members
to supervise the manner in which the Executive Board
implements Kendrion’s long-term value creation strategy.
Considering the nature of the supervisory responsibilities of the
Supervisory Board, the remuneration is not linked to Kendrion’s
performance, and therefore includes a fixed component only.
In line with good corporate governance, Supervisory Board
members will not receive a share-based incentive.
The remuneration of the Supervisory Board shall be as
described in the table below. The base fee and committee fee
levels in the table below are the same as determined by the
General Meeting of Shareholders on 11 April 2022.
Base fee
Chairman Supervisory Board EUR 59,000
Member Supervisory Board EUR 41,800
Committee fee
Chair Audit Committee EUR 7,200
Member Audit Committee EUR 6,000
Chair HR Committee EUR 7,200
Member HR Committee EUR 6,000
Expenses
All reasonable and documented expenses incurred by the
Supervisory Board members in the course of performing their
duties are reimbursed.
Benefits and loans
Members of the Supervisory Board are not eligible to participate
in any benefits scheme offered by Kendrion to its employees,
nor shall Kendrion provide loans.
The aggregate amount of the remuneration of the
Supervisory Board members in 2023 was EUR 214,883 (2022:
EUR 210,800). The table below gives a breakdown of the
remuneration in 2022 per Supervisory Board member.
Supervisory Board member 2023
F.J. van Hout (Chairman) EUR 65,000
M.J.G. Mestrom EUR 49,000
J.T.M. van der Meijs EUR 16,333
E.H. Slijkhuis EUR 36,750
E.M. Doll EUR 47,800
Total
EUR 214,883
Advisory vote remuneration report 2022
The remuneration report 2022 has been discussed with the
shareholders and put to the General Meeting of Shareholders
for an advisory vote during the annual General Meeting of
Shareholders held on 17 April 2023. Of the votes cast, 99.18%
voted in favor of the 2022 remuneration report. Supported by
this advisory vote, the Executive Board and the Supervisory
Board considered that no substantive changes are needed
relevant to the application of the Remuneration Policy.
The voting results of the General Meeting of Shareholders held
on 17 April 2023 can be found on the corporate website at
www.kendrion.com.
Taking account of the content of this 2023 Remuneration
Report, it is determined that the aggregate amount of
remuneration awarded is in line with the Remuneration
Policy and contributes to the performance of Kendrion and
the execution of its long-term value creation strategy.
This 2023 Remuneration Report will be discussed with
shareholders and put to the General Meeting of Shareholders
for an advisory vote during the upcoming annual General
Meeting of Shareholders to be held on 15 April 2024.
Remuneration components 2023
(in EUR) CEO % CFO %
Base salary 553,333 58.11% 342,500 61.64%
Short term incentive 269,584 28.31% 111,548 20.07%
Long term incentive 48,912 5.14% 23,024 4.14%
Pension contribution 75,000 7.88% 75,000 13.50%
Other 5,400 0.57% 3,600 0.65%
Total compensation
952,229 100% 555,672 100%
REMUNERATION REPORT
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
112
Annual Integrated Report 2023
Executive Board remuneration comparative
EUR Thousand 2023 2022 2021 2020 2019
J.A.J. van Beurden, CEO 951.4 1,153.0 1,118.0 984.2 853.5
J.H. Hemmen, CFO 555.0 632.0 565.8 450.4 189.4
Pay ratio 14 15 15 18 14
Company performance
Revenue (EUR million) 518.6 519.3 464.0 396.4 412.4
Normalized EBITDA (EUR million) 53.1 57.4 55.8 44.6 43.8
Normalized EBITDA margin 10.2% 11.1% 12.0% 11.3% 10.6%
Supervisory Board remuneration comparative
2023 2022 2021
2020 (excl. fee
reduction)
2019 2018 2017 2016
Base fee
Chairman Supervisory Board EUR 59,000 EUR 59,000 EUR 45,000 EUR 45,000 EUR 45,000 EUR 45,000 EUR 45,000 EUR 40,000
Member Supervisory Board EUR 41,800 EUR 41,800 EUR 35,000 EUR 35,000 EUR 35,000 EUR 35,000 EUR 35,000 EUR 30,000
Committee fee
Chair Committee EUR 7,200 EUR 7,200 EUR 6,000 EUR 6,000 EUR 6,000 EUR 6,000 EUR 6,000 EUR 5,000
Member Committee EUR 6,000 EUR 6,000 EUR 5,000 EUR 5,000 EUR 5,000 EUR 5,000 EUR 5,000 EUR 5,000
Total Supervisory Board remuneration EUR 210,800 EUR 210,800 EUR 172,000 EUR 172,000 EUR 172,000 EUR 172,000 EUR 172,000 EUR 150,000
REMUNERATION REPORT
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
FINANCIAL STATEMENTS
Annual Integrated Report 2023
113
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2023
113
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS - CONTENTS
114 Consolidated statement of financial position
at 31 December
115 Consolidated statement of profit and loss and
other comprehensive income
116 Consolidated statement of changes in equity
118 Consolidated statement of cash flows
119 Notes to the consolidated financial statements
142 Property, plant and equipment
145 Intangible assets
148 Other investments, including derivatives
148 Deferred tax assets and liabilities
151 Contract costs
151 Inventories
151 Trade and other receivables
152 Cash and cash equivalents
152 Assets classified as held for sale
152 Capital and reserves
154 Earnings per share
156 Loans and borrowings
158 Employee benefits
162 Provisions
162 Contract liabilities
163 Trade and other payables
163 Financial instruments
173 Leases
173 Capital commitments
173 Contingent assets and liabilities
174 Operating segments
176 Staff costs
176 Other operating expenses
177 Net finance costs
177 Income tax
177 Reconciliation of effective tax rate
178 Related parties
180 Other notes
180 Post-balance sheet events
181 Company balance sheet at 31 December
182 Company income statement
183 Notes to the company financial statements
183 General
183 Principles of valuation of assets and liabilities
and determination of results
183 Financial fixed assets
183 Receivables
184 Equity
185 Current liabilities
185 Financial instruments
185 Other income
186 Staff costs
186 Profit appropriation
186 Commitments not appearing on the balance sheet
187 Post-balance sheet events
187 Fees to the auditor
187 Remuneration of and share ownership
by the Executive Board and Supervisory Board
FINANCIAL STATEMENTS
Annual Integrated Report 2023
114
Home
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Consolidated
statement of
financial position
Notes to the
consolidated financial
statements
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER | |||||||
Note | EUR million | 2023 | 2022 | Note | EUR million | 2023 | 2022 |
| Assets | Equity and liabilities | ||||||
| Non-current assets | 10, 11 | Equity | |||||
1 | Property, plant and equipment | Share capital | |||||
2 | Intangible assets | Share premium | |||||
3 | Other investments, including | Reserves | |||||
derivatives | Retained earnings | ( | |||||
4 | Deferred tax assets | Total equity | |||||
5 | Contract costs | ||||||
| Total non-current assets | Liabilities | ||||||
12 | Loans and borrowings | ||||||
| Current assets | 13 | Employee benefits | |||||
6 | Inventories | 4 | Deferred tax liabilities | ||||
Current tax assets | 14 | Provisions | |||||
7 | Trade and other receivables | Total non-current liabilities | |||||
8 | Cash and cash equivalents | ||||||
9 | Assets classified as held for sale | 8 | Bank overdraft | ||||
| Total current assets | 12 | Loans and borrowings | |||||
14 | Provisions | ||||||
Current tax liabilities | |||||||
15 | Contract liabilities | ||||||
16 | Trade and other payables | ||||||
| Total current liabilities | |||||||
| Total liabilities | |||||||
| Total assets | Total equity and liabilities | ||||||
1
1
Equity is attributable to owners of the company as non-controlling interests are not applicable.
FINANCIAL STATEMENTS
Annual Integrated Report 2023
115
Home
Consolidated
statement of
financial position
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Notes to the
consolidated financial
statements
Consolidated statement
of profit and loss and other
comprehensive income
1
This item will never be reclassified to profit or loss.
2
These items may be reclassified to profit or loss.
3
All profits are attributable to owners of the company as non-controlling interests are not applicable.
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Note | EUR million | 2023 | 2022 |
| Other comprehensive income | |||
13 | Remeasurements of defined benefit plans | ||
10 | Foreign currency translation differences for | ( | |
| foreign operations | |||
10 | Net change in fair value of cash flow hedges, | ( | |
| net of income tax | |||
| Other comprehensive income for the period, | |||
| net of income tax | ( | | |
| Total comprehensive income for the period | ( |
1
2
2
3
11 | Basic earnings per share (EUR), | ||
based on weighted average | ( | ||
11 | Basic earnings per share (EUR), | ||
based on weighted average (diluted) | ( | ||
Note | EUR million | 2023 | 2022 |
21 | Revenue | ||
Other income | |||
| Total revenue and other income | |||
| Changes in inventories of finished goods and work | |||
in progress | |||
Raw materials and subcontracted work | |||
22 | Staff costs | ||
Depreciation and amortization | |||
1, 2 | Impairments of fixed assets | ||
23 | Other operating expenses | ||
| Result before net finance costs | ( | ||
24 | Finance income | ||
24 | Finance expense | ( | ( |
| Profit before income tax | ( | ||
25, 26 | Income tax expense | ( | ( |
| Profit for the period | ( |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
116
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Consolidated
statement of
changes in equity
Notes to the
consolidated financial
statements
| Share | Share | Translation | Hedge | Reserve for | Other | Retained | Total | ||
| Note | EUR million | capital | premium | reserve | reserve | own shares | reserves | earnings | equity |
Balance at 1 January 2022 | ( | ||||||||
| Total comprehensive income for the period | |||||||||
Loss for the period | ( | ( | |||||||
| Other comprehensive income | |||||||||
13 | Remeasurements of defined benefit plans | ||||||||
10 | Foreign currency translation differences | ||||||||
| for foreign operations | |||||||||
10 | Net change in fair value of cash flow hedges, | ||||||||
net of income tax | |||||||||
| Other comprehensive income for the period, | |||||||||
| net of income tax | | | | | |||||
| Total comprehensive income for the period | ( | ( | |||||||
| Transactions with owners, recorded | |||||||||
| directly in equity | |||||||||
10 | Issue of ordinary shares | ||||||||
Share-based payment transactions | |||||||||
10 | Dividends to equity holders | ( | ( | ||||||
10 | Appropriation of retained earnings | ( | |||||||
| Balance at 31 December 2022 | ( | ( |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FINANCIAL STATEMENTS
Annual Integrated Report 2023
117
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Notes to the
consolidated financial
statements
Consolidated
statement of
changes in equity
| Share | Share | Translation | Hedge | Reserve for | Other | Retained | Total | ||
| Note | EUR million | capital | premium | reserve | reserve | own shares | reserves | earnings | equity |
Balance at 1 January 2023 | ( | ( | |||||||
| Total comprehensive income for the period | |||||||||
Profit for the period | |||||||||
| Other comprehensive income | |||||||||
13 | Remeasurements of defined benefit plans | ||||||||
10 | Foreign currency translation differences | ( | ( | ||||||
| for foreign operations | |||||||||
10 | Net change in fair value of cash flow hedges, | ||||||||
net of income tax | ( | ( | |||||||
| Other comprehensive income for the period, | |||||||||
| net of income tax | | ( | ( | | ( | ||||
| Total comprehensive income for the period | ( | ( | |||||||
| Transactions with owners, recorded | |||||||||
| directly in equity | |||||||||
10 | Issue of ordinary shares | ( | |||||||
10 | Treasury shares issued | ( | |||||||
Share–based payment transactions | ( | ||||||||
10 | Dividends to equity holders | ( | ( | ( | |||||
10 | Appropriation of retained earnings | ( | |||||||
| Balance at 31 December 2023 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
118
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Notes to the
consolidated financial
statements
Consolidated
statement
of cash flows
Note | EUR million | 2023 | 2022 | Note | EUR million | 2023 | 2022 |
| Cash flows from operating activities | Cash flows from investing activities | ||||||
Profit / (loss) for the period | ( | 1 | Investments in property, plant and equipment | ( | ( | ||
| Adjustments for: | 1 | Disinvestments of property, plant and equipment | |||||
25 | Net finance costs | 2 | Investments in intangible fixed assets | ( | ( | ||
26 | Income tax expense | 2 | Disinvestments of intangible fixed assets | ||||
1, 2 | Depreciation of property, plant and equipment and | 3 | Investments of other investments | ( | ( | ||
software | Net cash from investing activities | ( | ( | ||||
2 | Amortization of other intangible assets | ||||||
| 1, 2 | Impairments of fixed assets | Cash flows from financing activities | |||||
Share-based payments | 12 | Payment of lease liabilities | ( | ( | |||
| (Repayments of) / proceeds from borrowings (non- | |||||||
current) | ( | ||||||
Change in trade and other receivables | ( | 12 | (Repayments of) / proceeds from borrowings (current) | ( | |||
Change in inventories | ( | ( | 10 | Dividends paid | ( | ( | |
Change in trade and other payables | Net cash from financing activities | ( | |||||
Change in provisions | ( | ( | |||||
Change in contract liabilities | ( | Change in cash and cash equivalents | ( | ||||
53.6 | 47.2 | ||||||
8 | Cash and cash equivalents at 1 January | ||||||
Interest paid | ( | ( | Effect of exchange rate fluctuations on cash held | ( | |||
Interest received | 8 | Cash and cash equivalents at 31 December | |||||
Tax paid | ( | ( | |||||
| Net cash flows from operating activities |
CONSOLIDATED STATEMENT OF CASH FLOWS
FINANCIAL STATEMENTS
Annual Integrated Report 2023
119
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Reporting entity
The consolidated financial statements of the Company as at and for the year ended 31 December 2023 comprise the Company and its subsidiaries
(together also referred to as the ‘Group’). The Group is involved in the design and manufacture of intelligent actuators that are used in wind turbines,
Basis of preparation
Statement of compliance
The consolidated financial statements as of 31 December 2023 have been prepared in accordance with International Financial Reporting Standards
(IFRS) and IFRS IC interpretations (IFRIC), published by the International Accounting Standards Board (IASB) as adopted by the European Union
(hereinafter referred to as EU-IFRS) and in accordance with the legal requirements of Part 9, Book 2 of the Dutch Civil Code. The Company financial
statements are integrated part of the 2023 financial statements of Kendrion N.V.
The financial statements were authorized for issue by the Executive Board on 28 February 2024.
(a)
(b)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Annual Integrated Report 2023
120
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(a)
(i)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
121
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(ii)
(iii)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(b)
(i)
(ii)
(c)
(i)
(ii)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
■ Exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group
(iii)
(iv)
(v)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(d)
(i)
(ii)
(iii)
(iv)
(v)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(e)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
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129
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(f)
(g)
(i)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
130
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(ii)
(iii)
(iv)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
131
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(h)
(i)
(ii)
(iii)
(i)
(i)
(ii)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(vi)
(j)
(k)
(l)
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134
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2023
135
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(m)
(i)
(ii)
(n)
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(o)
(p)
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137
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(q)
(r)
(i)
(ii)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
138
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
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Annual Integrated Report 2023
139
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(s)
(i)
(ii)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
140
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
(vi)
(vii)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
141
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(viii)
(ix)
FINANCIAL STATEMENTS
Annual Integrated Report 2023
142
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(t)
| Property, plant and equipment | ||
EUR million | 2023 | 2022 |
Property, plant and equipment owned | 122.0 | 118.3 |
Property, plant and equipment right-of-use assets | 12.5 | 13.3 |
| Total | 134.5 | 131.6 |
| Property, plant and equipment owned | Land and | Plant and | Other fixed | Under | |
| EUR million | buildings | equipment | assets | construction | Total |
| Balance as at 1 January 2022 | |||||
Costs | 68.1 | 162.2 | 63.0 | 22.5 | 315.8 |
Accumulated depreciation and impairment losses | (34.2) | (119.7) | (50.6) | (3.8) | (208.3) |
| Carrying amount as at 1 January 2022 | 33.9 | 42.5 | 12.4 | 18.7 | 107.5 |
Acquired, other | 2.4 | 11.7 | 6.4 | 26.6 | 47.1 |
Disposals | (0.9) | (1.3) | (0.3) | (12.8) | (15.3) |
Currency translation differences | 0.0 | 0.2 | 0.0 | 0.2 | 0.4 |
Reclassified to held for sale | (1.6) | (0.1) | (0.2) | – | (1.9) |
Depreciation for the year | (2.5) | (11.1) | (4.5) | – | (18.1) |
Impairments | (0.7) | (0.1) | (0.0) | (0.6) | (1.4) |
| Carrying amount as at 31 December 2022 | 30.6 | 41.8 | 13.8 | 32.1 | 118.3 |
1
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143
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Property, plant and equipment owned | Land and | Plant and | Other fixed | Under | |
| EUR million | buildings | equipment | assets | construction | Total |
| Balance as at 1 January 2023 | |||||
Costs | 68.0 | 172.7 | 68.9 | 36.5 | 346.1 |
Accumulated depreciation and impairment losses | (37.4) | (130.9) | (55.1) | (4.4) | (227.8) |
| Carrying amount as at 1 January 2023 | 30.6 | 41.8 | 13.8 | 32.1 | 118.3 |
Acquired, other | 6.8 | 6.1 | 4.4 | 5.6 | 22.9 |
Disposals | (0.1) | (0.7) | (0.3) | (0.0) | (1.1) |
Transfer | 21.1 | 3.8 | 1.7 | (24.6) | 2.0 |
Currency translation differences | (0.1) | (0.3) | (0.1) | (1.6) | (2.1) |
Depreciation for the year | (2.5) | (10.7) | (4.7) | – | (17.9) |
Impairments | (0.0) | (0.1) | (0.0) | – | (0.1) |
| Carrying amount as at 31 December 2023 | 55.8 | 39.9 | 14.8 | 11.5 | 122.0 |
Costs | 95.7 | 181.6 | 74.6 | 15.9 | 367.8 |
Accumulated depreciation and impairment losses | (39.9) | (141.7) | (59.8) | (4.4) | (245.8) |
| Carrying amount as at 31 December 2023 | 55.8 | 39.9 | 14.8 | 11.5 | 122.0 |
| Right-of-use assets | Land and | Plant and | Other fixed | Under | |
| EUR million | buildings | equipment | assets | construction | Total |
| Balance as at 1 January 2022 | |||||
Costs | 22.5 | 0.2 | 3.8 | – | 26.5 |
Accumulated depreciation and impairment losses | (8.8) | (0.2) | (3.1) | – | (12.1) |
| Carrying amount as at 1 January 2022 | 13.7 | 0.0 | 0.7 | – | 14.4 |
Acquired, other | 0.9 | 0.0 | 0.6 | – | 1.5 |
Disposals | (0.0) | – | (0.0) | – | (0.0) |
Currency translation differences | 0.2 | 0.0 | (0.0) | – | 0.2 |
Depreciation for the year | (2.3) | (0.0) | (0.5) | – | (2.8) |
| Carrying amount as at 31 December 2022 | 12.5 | 0.0 | 0.8 | – | 13.3 |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Right-of-use assets | Land and | Plant and | Other fixed | Under | |
| EUR million | buildings | equipment | assets | construction | Total |
| Balance as at 1 January 2023 | |||||
Costs | 23.6 | 0.2 | 4.4 | – | 28.2 |
Accumulated depreciation and impairment losses | (11.1) | (0.2) | (3.6) | – | (14.9) |
| Carrying amount as at 1 January 2023 | 12.5 | 0.0 | 0.8 | – | 13.3 |
Acquired, other | 3.3 | – | 0.7 | – | 4.0 |
Disposals | (0.1) | – | (0.0) | – | (0.1) |
Transfer | (2.0) | − | − | − | (2.0) |
Currency translation differences | (0.1) | (0.0) | (0.0) | – | (0.1) |
Depreciation for the year | (2.1) | (0.0) | (0.5) | – | (2.6) |
| Carrying amount as at 31 December 2023 | 11.5 | 0.0 | 1.0 | – | 12.5 |
Costs | 24.7 | 0.2 | 5.1 | – | 30.0 |
Accumulated depreciation and impairment losses | (13.2) | (0.2) | (4.1) | – | (17.5) |
| Carrying amount as at 31 December 2023 | 11.5 | 0.0 | 1.0 | – | 12.5 |
Translation differences are calculated on the carrying amount and reflected in the related item in the cost.
The estimated useful lives of the property, plant and equipment are as follows:
Buildings 10 – 30 years
Plant and equipment 5 – 10 years
Other fixed assets 3 – 7 years
The Executive Board reviews at each reporting period the estimated useful lives of each asset with a definite useful life. During the current year,
the Executive Board determined that the useful lives do not require to be revised.
During 2023, the group bought one building for the residual value (equal the purchase price) of EUR 2.0 million. Depreciation of EUR 20.5 million
and loss and other comprehensive income.
FINANCIAL STATEMENTS
Annual Integrated Report 2023
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Intangible assets | ||||||
| Development | ||||||
EUR million | Goodwill | costs | Software | Concessions | Other | Total |
| Balance as at 1 January 2022 | ||||||
Costs | 133.7 | 10.6 | 30.3 | 1.1 | 75.1 | 250.8 |
Accumulated amortization and impairment losses | – | (4.8) | (25.0) | (0.0) | (37.6) | (67.4) |
| Carrying amount as at 1 January 2022 | 133.7 | 5.8 | 5.3 | 1.1 | 37.5 | 183.4 |
Acquired, other | – | 3.1 | 3.4 | – | – | 6.5 |
Disposals | – | – | (0.8) | – | – | (0.8) |
Currency translation differences | 1.7 | (0.2) | 0.0 | (0.0) | 0.3 | 1.8 |
Amortisation for the year | – | (0.9) | (1.4) | (0.1) | (4.7) | (7.1) |
Impairments | (54.7) | – | – | – | (2.6) | (57.3) |
| Carrying amount as at 31 December 2022 | 80.7 | 7.8 | 6.5 | 1.0 | 30.5 | 126.5 |
| Balance as at 1 January 2023 | ||||||
Costs | 135.4 | 13.5 | 32.9 | 1.1 | 75.4 | 258.3 |
Accumulated amortization and impairment losses | (54.7) | (5.7) | (26.4) | (0.1) | (44.9) | (131.8) |
| Carrying amount as at 1 January 2023 | 80.7 | 7.8 | 6.5 | 1.0 | 30.5 | 126.5 |
Acquired, other | − | 3.3 | 3.1 | − | − | 6.4 |
Disposals | − | (0.1) | (0.0) | − | − | (0.1) |
Currency translation differences | (0.2) | (0.4) | (0.0) | (0.1) | − | (0.7) |
Amortisation for the year | − | (1.3) | (1.8) | (0.0) | (3.2) | (6.3) |
Impairments | − | − | − | − | − | − |
| Carrying amount as at 31 December 2023 | 80.5 | 9.3 | 7.8 | 0.9 | 27.3 | 125.8 |
Costs | 135.2 | 16.3 | 36.0 | 1.0 | 75.4 | 263.9 |
Accumulated amortization and impairment losses | (54.7) | (7.0) | (28.2) | (0.1) | (48.1) | (138.1) |
| Carrying amount as at 31 December 2023 | 80.5 | 9.3 | 7.8 | 0.9 | 27.3 | 125.8 |
2
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Annual Integrated Report 2023
146
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Goodwill EUR million | 2023 | 2022 |
Industrial Actuators and Controls (IAC) | 39.4 | 39.6 |
Industrial Brakes (IB) | 33.8 | 33.8 |
Automotive Core (Core) | − | – |
Automotive E (E) | 7.3 | 7.3 |
80.5 | 80.7 |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Key assumptions | Pre-tax discount rate | Terminal value growth rate | ||
2023 | 2022 | 2023 | 2022 | |
Industrial Actuators and Controls (IAC) | 13.4% | 13.2% | 1.5% | 1.5% |
Industrial Brakes (IB) | 13.4% | 13.2% | 1.5% | 1.5% |
Kendrion Automotive Core (Core) | − | 18.4% | − | (35.0)% |
Automotive E (E) | 12.9% | 11.0% | 2.0% | 2.0% |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
148
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Other investments, including derivatives
Other investments in 2023 include financial derivatives and capitalized professional fees related to the facility agreement (see note 12). Kendrion
amortizes these costs over the remaining maturity of the facility. As these costs relate to the facility agreement as a whole and not to individual loans,
these costs are not part of the effective interest rate of outstanding loans.
EUR million | 2023 | 2022 |
Equity-accounted investee | 0.0 | 0.0 |
Other | 0.5 | 0.4 |
0.5 | 0.4 |
3
Deferred tax assets and liabilities
The Group has recognized deferred tax assets for tax loss carry-forwards in the following jurisdictions:
Germany
At 31 December 2023, the tax loss carry forwards amounted to EUR 11.1 million (2022: EUR 4.7 million) (Trade Tax) and EUR 6.2 million (Corporate
Income Tax) (2022: zero). These are recognized in full, resulting in deferred tax assets of EUR 2.3 million (2022: EUR 0.6 million).
United States of America
At 31 December 2023, the tax loss carry forwards amounted to EUR 17.0 million (2022: EUR 15.6 million) (Federal Tax) and EUR 7.8 million
(2022: EUR 6.9 million) (State Tax). Federal Tax carry-forward losses are not recognized, a deferred tax asset is recorded for EUR 4.8 million of the State
Tax carry-forward losses resulting in a deferred tax assets of EUR 0.2 million (2022: EUR 1.1 million).
China
At 31 December 2023, the tax loss carry-forwards amounted to EUR 29.7 million (2022: EUR 21.5 million). EUR 3.2 million of these carry-forward
losses are not recognized, a deferred tax asset is recorded of EUR 6.6 million (2022: EUR 4.6 million).
4
FINANCIAL STATEMENTS
Annual Integrated Report 2023
149
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The Netherlands
At 31 December 2023, the tax loss carry-forwards amounted to EUR 1.9 million (2022: EUR 5.0 million). These are recognzed in full, resulting in
a deferred tax asset of EUR 0.5 million (2022: EUR 0.7 million).
Deferred tax assets and liabilities included in the financial position
The deferred tax assets and liabilities can be specified as follows:
| Assets | Liabilities | Net | ||||
EUR million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Property, plant and equipment | 1.4 | 2.8 | 3.8 | 3.7 | (2.4) | (0.9) |
Intangible assets | 3.0 | 4.4 | 13.0 | 12.4 | (10.0) | (8.0) |
Inventories | 1.3 | 1.0 | 0.3 | 0.3 | 1.0 | 0.7 |
Employee benefits | 0.4 | 0.8 | 0.2 | 0.2 | 0.2 | 0.6 |
Provisions | 0.0 | 0.2 | 0.0 | 0.0 | 0.0 | 0.2 |
Other items | 4.4 | 3.1 | 1.7 | 0.9 | 2.7 | 2.2 |
Tax value of recognized loss carry-forwards | 9.6 | 7.4 | – | – | 9.6 | 7.4 |
| Deferred tax assets/liabilities | 20.1 | 19.7 | 19.0 | 17.5 | 1.1 | 2.2 |
The deferred tax liabilities relate largely to temporary differences between the carrying amount and tax base of property, plant and equipment and
intangible assets. These are of a relatively long-term nature, mostly longer than five years. Other deferred tax assets relate mainly to deferred revenues
and accruals.
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that future taxable profits will be available against which they
can be set off. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized; such reductions are reversed if the probability of future taxable profits improves. Whether Kendrion is able to realize its deferred
tax assets is an estimate that has an element of inherent uncertainty to it. Both the budget 2024 and mid-term plan, which include the projections for
the upcoming years, are based upon expectations of the market, contracts that have been signed and negotiations currently ongoing for new contracts.
Based on this, Kendrion expects a substantial increase in China’s revenues and results in the upcoming years in order to realize the deferred tax asset.
Tax loss carry forward limitation rules apply in certain jurisdictions in which Kendrion has carry forward tax losses. These rules might under certain
circumstances lead to a (proportional) forfeiture of recognized and unrecognized carry forward tax losses in case of a direct or indirect change in
ownership.
The tax losses carry forward for which no deferred tax assets are recognized in the statement of financial position are reviewed each reporting date.
These tax losses carry forward for which no deferred tax assets are recognized in the statement of financial position amount to EUR 20.2 million
(2022: EUR 13.8 million).
FINANCIAL STATEMENTS
Annual Integrated Report 2023
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Movement in temporary differences during the financial year | ||||
| 2023 | ||||
| Recognized | ||||
| in other | ||||
| Recognized | comprehensive | At 31 | ||
Net, EUR million | At 1 January | in profit and loss | income | December |
Property, plant and equipment | (0.9) | (1.5) | – | (2.4) |
Intangible assets | (8.0) | (2.0) | – | (10.0) |
Inventories | 0.7 | 0.3 | – | 1.0 |
Employee benefits | 0.6 | (0.4) | (0.0) | 0.2 |
Provisions | 0.2 | (0.2) | – | 0.0 |
Other items | 2.2 | 0.1 | 0.4 | 2.7 |
Tax value of loss carry-forwards | 7.4 | 2.2 | – | 9.6 |
2.2 | (1.5) | 0.4 | 1.1 | |
| 2022 | ||||
| Recognized | ||||
| in other | ||||
| Recognized | comprehensive | At 31 | ||
Net, EUR million | At 1 January | in profit and loss | income | December |
Property, plant and equipment | (1.9) | 1.0 | – | (0.9) |
Intangible assets | (8.9) | 0.9 | – | (8.0) |
Inventories | 0.1 | 0.6 | – | 0.7 |
Employee benefits | 1.4 | (0.1) | (0.7) | 0.6 |
Provisions | 0.0 | 0.2 | – | 0.2 |
Other items | 2.7 | 0.1 | (0.6) | 2.2 |
Tax value of loss carry-forwards | 7.2 | 0.2 | – | 7.4 |
0.6 | 2.9 | (1.3) | 2.2 | |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
151
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Contract costs | ||
EUR million | 2023 | 2022 |
Balance at 1 January | 0.3 | 0.5 |
Costs to obtain a contract with customers | 0.4 | – |
Amortization | (0.1) | (0.2) |
| Balance at 31 December | 0.6 | 0.3 |
5
| Inventories | ||
EUR million | 2023 | 2022 |
Raw materials, consumables, technical materials and packing materials | 57.2 | 54.4 |
Work in progress | 16.2 | 16.4 |
Finished goods | 11.4 | 11.7 |
Goods for resale | 2.6 | 2.6 |
87.4 | 85.1 | |
The value of inventory recorded as an expense in 2023 amounts to EUR 263.1 million (2022: EUR 259.7 million). The inventories are presented after
accounting for a provision of EUR 8.1 million (2022: EUR 8.0 million) for obsolescence. In 2023, the release of the write-down to net realisable value of
the inventories in earlier years was EUR 0.5 million (2022: EUR 0.6 million release). The write-down and reversals are included in Raw material and
subcontracted work.
6
| Trade and other receivables | ||
EUR million | 2023 | 2022 |
Trade receivables | 54.4 | 58.8 |
Other taxes and social security | 2.4 | 2.9 |
Other receivables | 6.2 | 4.2 |
Derivatives used for hedging | 1.0 | 2.4 |
Prepayments | 1.2 | 2.2 |
65.2 | 70.5 | |
7
FINANCIAL STATEMENTS
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152
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Cash and cash equivalents | ||
EUR million | 2023 | 2022 |
Cash and cash equivalents | 20.6 | 37.8 |
Bank overdrafts | (7.1) | (3.1) |
| Cash and cash equivalents in the statement of cash flows | 13.5 | 34.7 |
8
Assets classified as held for sale
The assets classified as held for sale relate to a building in where Kendrion Eibiswald GmbH conducted its business. While a sale is expected within
a year this is not in full control of the company. Also refer to note 20.
9
| Capital and reserves | |||||||
| Capital and share premium | |||||||
Shares entitled to dividend | Shares owned by Kendrion | Total number of issued shares | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
At 1 January | 15,026,305 | 14,841,072 | 88,316 | 93,663 | 15,114,621 | 14,934 | 735 |
Issued shares (share dividend) | 199,358 | 179,886 | (40,038) | – | 159,320 | 179,886 | |
Issued registered shares (share plan) | 2,073 | – | – | – | 2,073 | – | |
Granted shares | 48,278 | 5,347 | (48,278) | (5,347) | – | – | |
| At 31 December | 15,276,014 | 15,026,305 | – | 88,316 | 15,276,014 | 15,114,621 | |
Issuance of ordinary shares
In 2023, in total 199,358 new shares were issued (2022: 179,886). During 2023, the Company delivered 48,278 shares to the Executive Board and
senior management as part of its share plan and remuneration packages (2022: 5,347).
10
FINANCIAL STATEMENTS
Annual Integrated Report 2023
153
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Ordinary shares | ||
| The authorized share capital consists of: | ||
EUR million | 2023 | 2022 |
40,000,000 ordinary shares of EUR 2.00 | 80.0 | 80.0 |
| Issued share capital | ||
Balance at 1 January 2023: 15,114,621 ordinary shares (2022: 14,934,735) | 30.2 | 29.9 |
Balance at 31 December 2023: 15,276,014 ordinary shares (2022: 15,114,621) | 30.6 | 30.2 |
| Share premium | ||
EUR million | 2023 | 2022 |
Balance as at 1 January | 38.4 | 45.8 |
Dividend payment | (3.8) | (10.2) |
Share premium on issued shares | 2.7 | 2.8 |
| Balance as at 31 December | 37.3 | 38.4 |
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of subsidiaries outside the euro
zone. Gains and losses relating to the translation risk are recognized in equity. The build-up of the cumulative figure commenced on 1January 2004.
Hedge reserve
The hedge reserve comprises the effective portion of the cumulative net movement in the fair value of cash flow hedging instruments relating to hedged
transactions that have not yet occurred, net of tax.
The hedge reserve decreased by EUR 1.2 million due to the realization of hedged transactions (2022: EUR 0.0 million increase). The hedge reserve
decreased by EUR 0.3 million due to valuation effects (2022: EUR 1.6 million increase). There was no hedge ineffectiveness in 2023
(2022: no hedge ineffectiveness).
Reserve for own shares (treasury shares)
The reserve for the Company’s own shares comprises the shares held by the Company for issuance of share dividend and the remuneration packages
for the Executive Board. At 31 December 2023, the Company held 0 of its own shares (2022: 88,316).
FINANCIAL STATEMENTS
Annual Integrated Report 2023
154
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Other reserves
Other reserves are all the reserves other than those shown separately and primarily represent the accumulated, undistributed profits from previous
financial years.
Retained earnings
In 2023, the result for 2022 was fully transferred to other reserves. Retained earnings in the 2023 financial statements consequently consist solely
of the result for 2023.
Dividends
The following dividends were paid by the Company for the year:
EUR million | 2023 | 2022 |
10.9 | 10.2 |
After the reporting date, the following dividends were proposed by the Executive Board. The dividends have not been recognized as liabilities and
there are no tax consequences in 2023.
EUR million | 2023 | 2022 |
Earnings per share
Basic earnings per share
The calculation of the basic earnings per share at 31 December 2023 is based on the profit for the period of EUR 9.9 million (2022: EUR (46.3) million)
attributable to the holders of ordinary shares and the weighted average number of shares outstanding during the year 2023: 15,197,000 (2022:
14,965,000).
EUR million | 2023 | 2022 |
Net profit attributable to ordinary shareholders | 9.9 | (46.3) |
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155
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Weighted average number of ordinary shares | ||
In thousands of shares | 2023 | 2022 |
Issued ordinary shares at 1 January | 15,115 | 14,935 |
Effect of shares issued as share dividend | 159 | 180 |
Effect of shares issued as share plan | 2 | – |
| Ordinary shares outstanding at 31 December | 15,276 | 15,115 |
Weighted average number of ordinary shares entitled to dividend | 15,197 | 14,965 |
Basic earnings per share (EUR), based on ordinary shares outstanding at 31 December | 0.65 | (3.06) |
Basic earnings per share (EUR), based on weighted average | 0.65 | (3.09) |
Diluted earnings per share
The calculation of the diluted earnings per share at 31 December 2023 is based on the profit of EUR 9.9 million (2022: EUR (46.3) million) attributable
to the holders of ordinary shares and the weighted average numbers of shares during the year after adjustment for the effects of all dilutive potential
ordinary shares of 15,384,000 (2022: 15,158,000).
EUR million | 2023 | 2022 |
Net profit attributable to ordinary shareholders | 9.9 | (46.3) |
Effect of dilution | (0.0) | (0.0) |
| Net profit attributable to ordinary shareholders (diluted) | 9.9 | (46.3) |
| Weighted average number of ordinary shares (diluted) | ||
In thousands of shares | 2023 | 2022 |
Weighted average number of ordinary shares entitled to dividend | 15,197 | 14,965 |
Weighted average numbers of ordinary shares (diluted) | 15,384 | 15,158 |
Basic earnings per share (EUR), based on weighted average (diluted) | 0.64 | (3.05) |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
156
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Loans and borrowings
This note contains information on the contractual provisions of the Group’s interest-bearing loans and borrowings, which are carried at amortized cost.
For further information on the interest rates, and the currency and liquidity risks borne by the Group, see note 17 and accounting policy q.
EUR million | 2023 | 2022 |
| Non-current liabilities | ||
Bank syndicate loans | 62.0 | 82.5 |
Schuldschein loans | 72.2 | 72.1 |
Lease liabilities | 10.9 | 9.7 |
Other loans | 8.1 | 2.3 |
153.2 | 166.6 | |
EUR million | 2023 | 2022 |
| Current liabilities | ||
Current portion lease liabilities | 2.6 | 3.5 |
Current portion loans | 2.7 | 4.9 |
5.3 | 8.4 |
Schuldschein loans
On 14 April 2022, Kendrion Finance BV successfully completed a EUR 72.5 million transaction in the Schuldschein private placement market.
The Schuldschein loans exist out of a EUR 52.5 million loan maturing in April 2027 and a EUR 20 million loan maturing in April 2025. The interest rates
on the loans are based on 6-month Euribor plus a margin (between 1.0% – 1.25%). The margin is linked to the ESG score of the Kendrion Group as
rated by Ecovadis. From 2023 onwards, an increase in ESG rating of 10 percent points or more results in a 5 basis point decrease of the margin. Vice
versa, a 5 percent point decrease in ESG score, results in a 5 basis points margin increase. The ESG rating of the Group improved to 61 out of 100 in
2023 (2022: 58 out of 100). The Group is in the top 19% of ESG rated general manufacturing companies.
The loans include a financial covenant relating to the leverage ratio. The leverage ratio (calculated as interest bearing debt / normalized EBITDA) should
remain below 3.25, which under certain circumstances can be temporarily increased to a maximum of 3.75. This covenant is tested quarterly on a
12-month rolling basis. The actual leverage ratio at year-end was 2.7 (2022: 2.4). A reconciliation of normalized EBITDA can be found on page 210.
Revolving credit facility agreement
On 29 April 2022, Kendrion agreed upon a revolving credit facility agreement of EUR 102.5 million with ING Bank and HSBC. The credit facility at the
time had a maturity of 3 years, with two one-year extension options. During 2023, the Group has extended the facility by 1 year.
The interest rates on the loans are based on 6-month Euribor plus a margin (between 0.7% and 1.85%). The margin is based on the leverage ratio of
the Group. In addition, the interest rates are linked to the ESG score of the Kendrion Group, via the same mechanism as the Schuldschein loans.
12
FINANCIAL STATEMENTS
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157
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Lease liabilities
The lease liabilities are payable as follows:
EUR million | 2023 | 2022 |
< 1 year | 2.6 | 3.5 |
1 - 5 years | 9.1 | 7.9 |
> 5 years | 1.8 | 1.8 |
13.5 | 13.2 |
The lease liabilities mostly relate to leases for various buildings & vehicles.
FINANCIAL STATEMENTS
Annual Integrated Report 2023
158
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Employee benefits | ||
EUR million | 2023 | 2022 |
Present value of unfunded obligations* | 4.8 | 5.0 |
| Present value of funded obligations | 3.4 | 4.2 |
Fair value of plan assets | (0.8) | (0.8) |
| Recognized net liability for defined benefit obligations | 7.4 | 8.4 |
Liability for long-service leave and anniversaries | 2.4 | 2.3 |
| Total employee benefits | 9.8 | 10.7 |
Non current portion | 8.7 | 10.7 |
Current portion ** | 1.1 | |
*
The classification of funded/unfunded plans was updated in 2023. This update was implemented retrospectively for comparability purposes. The reclassification
resulted in an increase of the present value of funded plans of EUR 2.7 million per 31 December 2022. The present obligation for unfunded plans decreased by the
same amount and, consequently, the net liability for defined benefit obligations per 31 December 2022, remained unchanged.
**
The total employee benefit provision as of 31 December 2023 amounts to EUR 9.8 million. An amount of EUR 8.7 million is presented as non-current employee benefits
in the statement of financial position. The remainder of EUR 1.1 million is presented under trade and other payables.
13
FINANCIAL STATEMENTS
Annual Integrated Report 2023
159
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The table shows a reconciliation from the opening to the closing balances for the net defined benefit liability and its components:
Defined benefit obligation | Fair value of plan assets | Net defined benefit liability | ||||
EUR million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Balance at 1 January | 9.2 | 12.5 | 0.8 | 0.9 | 8.4 | 11.6 |
| Included in statement | ||||||
| of comprehensive income | ||||||
Current service cost | 0.0 | 0.0 | – | – | 0.0 | 0.0 |
Past service cost | – | – | – | – | – | – |
Interest cost (income) | 0.3 | 0.1 | (0.0) | 0.0 | 0.3 | 0.1 |
0.3 | 0.1 | (0.0) | 0.0 | 0.3 | 0.1 | |
| Included in OCI | ||||||
| Remeasurement loss (gain): | ||||||
| - Actuarial loss (gain) arising from: | ||||||
- Demographic assumptions | (0.0) | (0.1) | (0.0) | (0.1) | – | – |
- Financial assumptions | (0.3) | (2.3) | – | – | (0.3) | (2.3) |
- Experience adjustment | (0.2) | 0.3 | – | – | (0.2) | 0.3 |
| - Return on plan assets excluding | ||||||
interest income | – | – | – | – | – | – |
Effect of movements in exchange rates | – | – | – | – | – | – |
(0.5) | (2.1) | (0.0) | (0.1) | (0.5) | (2.0) | |
Other Contributions paid by the employer | – | – | – | – | – | – |
Benefits paid | (0.8) | (1.3) | (0.0) | (0.0) | (0.8) | (1.3) |
(0.8) | (1.3) | (0.0) | (0.0) | (0.8) | (1.3) | |
| Balance at 31 December | 8.2 | 9.2 | 0.8 | 0.8 | 7.4 | 8.4 |
Actuarial calculations of employee benefits have not been materially influenced by amendments based on historical experience or by variable assumptions.
FINANCIAL STATEMENTS
Annual Integrated Report 2023
160
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The Group contributes to the following post-employment defined benefits plans in several countries, mainly in Germany. Below the characteristics
of the major plans are included.
■ A direct commitment in the form of capital has been agreed upon with the employees, who directly receive this commitment as an one-off payment
upon retirement. An alternative version is a plan where the employees receive monthly payments instead of an one-off payment. The plans are
reviewed on periodic basis.
■ The Defined-Benefit plan entitles a retired employee to receive a monthly pension payment. The amount of these payments is based on individual
contracts with the respective employee. The person has to be employed for a certain time. Each further year of employment the employee receives
an amount in addition to the contractual fixed amount.
The defined benefit plans are administered by multiple pension funds which are legally separated from the Group. The board of the pension fund is
required to act in the best interest of the plan participants and is responsible for setting certain policies (e.g. investment, contribution and indexation
policies) of the fund. The defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market (investment) risk.
The expenses relating to the defined benefit pension arrangements are included in the following line items of the statement of comprehensive income:
| Expense recognized in the consolidated statement of comprehensive income regarding defined benefit arrangements | ||
EUR million | 2023 | 2022 |
Staff costs | 0.0 | 0.0 |
Net finance costs | 0.3 | 0.1 |
0.3 | 0.1 | |
| Principal actuarial assumptions (expressed as weighted averages) | ||
2023 | 2022 | |
Discount rate at 31 December | 4.1% | 3.7% |
Future salary increases | 1.3% | 1.4% |
Future pension increases | 2.1% | 2.1% |
| Composition plan assets | ||
EUR million | 2023 | 2022 |
Bonds | 0.8 | 0.8 |
Equity | 0.0 | 0.0 |
Real estate | 0.0 | 0.0 |
Government loans | 0.0 | 0.0 |
| Total | 0.8 | 0.8 |
FINANCIAL STATEMENTS
Annual Integrated Report 2023
161
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have
affected the defined benefit obligation by the amounts shown below.
| Sensitivity analysis | Defined benefit obligation | |
EUR million | Increase | Decrease |
Discount rate (0.5 percent) | (0.3) | 0.3 |
Future salary growth (1.0 percent) | 0.2 | (0.2) |
Future pension (1.0 percent) | 3.1 | 2.2 |
Future mortality (1.0 percent) | (0.0) | 0.0 |
Although the analysis does not take account of the full distribution of cash flows expected under the plans, it does provide an approximation
of the sensitivity of the assumptions shown. The method for preparing the sensitivity analyses did not changed from prior year.
Assumptions regarding future longevity have been based on published statistics and mortality tables.
At 31 December 2023, the weighted-average duration of the defined benefit obligation was 7.1 years (2022: 7.5 years). The expected payment for 2024
amounts to EUR 1.1 million (2023: EUR 1.2 million).
Liabilities arising from employee benefits
The pension plans included defined contribution plans as well as defined benefit plans. In the case of defined contribution plans, the contribution is
charged to the year to which it relates. With defined benefit plans, benefit obligations are calculated using the projected unit credit method. Calculations
are made by qualified actuaries. The pension liability shown in the statement of financial position represents the present value of the defined benefit
obligation at the financial position date minus the fair value of the plan assets at this date. The discount rate methodology for accounting long-term
employee benefits in accordance with IAS 19 is determined by the Executive Board. Significant judgement is required when setting the criteria for
bonds to be included in the population from which the yield curve is derived. The most significant criteria considered for the selection of bonds include
the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded. The discount rate used to calculate the
defined benefit obligation is based on the yield on corporate bonds issued in Euros.
Since the pension arrangements involve long-term obligations and uncertainties, it is necessary to make assumptions in order to estimate the amount
that the Group needs to invest to fund its pension obligations. External actuaries calculate the obligation for defined benefit plans partly on the basis
of information provided by the Executive Board, such as future pay rises, the return on plan assets, mortality tables and the probable extent to which
pension scheme members will leave the scheme because they have reached retirement age, become incapacitated or left the Group.
FINANCIAL STATEMENTS
Annual Integrated Report 2023
162
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The greater part of the defined benefit obligation at year-end 2023 relates to post employment arrangements in Germany. The group companies
account individually for the pension schemes. The individual group company is fully liable for its benefit obligation. A portion for the German group
companies is reinsured. All pension arrangements accounted for as defined benefit obligations are not open for new participants (< 15% active
participants).
Liabilities arising from employee benefits also include liabilities relating to long-service, early retirement and service anniversaries of EUR 2.3 million
(2022: EUR 2.3 million) in Germany.
| Provisions | ||
EUR million | 2023 | 2022 |
Balance at 1 January | 2.0 | 2.1 |
Provisions made during the period | 0.0 | 3.4 |
Provisions transferred/used during the period | (1.3) | (3.5) |
Provisions released during the period | – | – |
| Balance at 31 December | 0.7 | 2.0 |
Non-current portion | 0.7 | 0.7 |
The provisions consist of a restructuring provision of EUR 0.0 million (2022: EUR 1.0 million).
14
| Contract liabilities | ||
EUR million | 2023 | 2022 |
Balance at 1 January | 4.7 | 4.5 |
Consideration received | 0.2 | 0.4 |
Recognized as revenue in the period | (0.5) | (0.2) |
| Balance at 31 December | 4.4 | 4.7 |
15
FINANCIAL STATEMENTS
Annual Integrated Report 2023
163
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Trade and other payables | ||
EUR million | 2023 | 2022 |
Trade payables | 58.3 | 54.9 |
Other taxes and social security contributions | 2.3 | 1.8 |
Derivatives used for hedging | 0.3 | – |
Non-trade payables | 7.4 | 6.4 |
Accrued expenses | 16.2 | 15.2 |
84.5 | 78.3 | |
16
EUR million | 2023 | 2022 |
Cash and cash equivalents | 20.6 | 37.8 |
Other long-term investments | 0.5 | 0.4 |
Current tax assets | 5.7 | 2.8 |
Trade and other receivables | 65.2 | 70.5 |
| Total | 92.0 | 111.5 |
| Impairment losses | ||||
| Aging analysis of the trade and other receivables | ||||
2023 | 2022 | |||
EUR million | Gross | Provision | Gross | Provision |
Within the term of payment | 54.3 | − | 60.5 | – |
0 – 30 days due | 6.6 | − | 7.0 | – |
31 – 60 days due | 2.2 | − | 1.4 | – |
> 60 days due | 2.3 | (0.2) | 1.8 | (0.2) |
Total trade and other receivables | 65.4 | (0.2) | 70.7 | (0.2) |
17
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164
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2023
165
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
31 December 2023 | 2023 | ||||||
| External | Internal | 12-month | Gross carrying | Loss | Net carrying | ||
| Note | credit rating | credit rating | or lifetime ECL | amount | allowance | amount | |
Trade receivables | 7 | N/A | Low risk | Lifetime ECL | 54.6 | (0.2) | 54.4 |
| Contract costs | 5 | N/A | Low risk | Lifetime ECL | 0.6 | − | 0.6 |
| Equity-accounted investee | 3 | N/A | Low risk | Lifetime ECL | 0.0 | − | 0.0 |
| Other investments | 3 | N/A | Low risk | Lifetime ECL | 0.5 | − | 0.5 |
55.7 | (0.2) | 55.5 | |||||
31 December 2022 | 2022 | ||||||
| External | Internal | 12-month | Gross carrying | Loss | Net carrying | ||
| Note | credit rating | credit rating | or lifetime ECL | amount | allowance | amount | |
Trade receivables | 7 | N/A | Low risk | Lifetime ECL | 59.0 | (0.2) | 58.8 |
| Contract costs | 5 | N/A | Low risk | Lifetime ECL | 0.3 | – | 0.3 |
| Equity-accounted investee | 3 | N/A | Low risk | Lifetime ECL | 0.0 | – | 0.0 |
| Other investments | 3 | N/A | Low risk | Lifetime ECL | 0.4 | – | 0.4 |
59.7 | (0.2) | 59.5 |
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| 31 December 2023 | Carrying | Contractual | |||||
| EUR million | amount | cash flows | 0 – 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | › 5 years |
| Non-derivative financial liabilities | |||||||
Bank syndicate loans | (62.0) | (69.5) | (1.6) | (1.6) | (3.2) | (63.1) | − |
Schuldschein loans | (72.2) | (82.5) | (1.8) | (1.8) | (23.0) | (55.9) | − |
Lease liabilities | (13.5) | (15.7) | (1.4) | (1.4) | (2.8) | (6.9) | (3.2) |
Bank overdrafts | (7.1) | (7.1) | (3.0) | (4.1) | − | − | − |
Other loans and borrowings | (10.8) | (12.1) | (1.6) | (1.0) | (1.5) | (5.5) | (2.5) |
Trade and other payables | (84.5) | (84.5) | (84.5) | − | − | − | − |
Tax liabilities | (7.4) | (7.4) | (7.4) | − | − | − | − |
| Derivative financial assets / liabilities | |||||||
Interest rate swap contracts | 0.7 | 1.5 | 0.7 | 0.4 | 0.4 | 0.0 | − |
Forward exchange contracts | (0.2) | (0.2) | (0.1) | (0.1) | − | − | − |
| Total | (257.0) | (277.5) | (100.7) | (9.6) | (30.1) | (131.4) | (5.7) |
| 31 December 2022 | Carrying | Contractual | |||||
| EUR million | amount | cash flows | 0 – 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | › 5 years |
| Non-derivative financial liabilities | |||||||
Bank syndicate loans | (82.5) | (89.2) | (1.4) | (1.4) | (2.9) | (83.5) | – |
Schuldschein loans | (72.1) | (83.1) | (1.4) | (1.4) | (2.9) | (77.4) | – |
Lease liabilities | (13.2) | (15.9) | (1.4) | (1.4) | (4.8) | (5.9) | (2.4) |
Bank overdrafts | (3.1) | (3.1) | (3.1) | – | – | – | – |
Other loans and borrowings | (7.2) | (7.5) | (3.4) | (0.4) | (0.6) | (3.1) | – |
Trade and other payables | (83.0) | (83.0) | (83.0) | – | – | – | – |
Tax liabilities | (10.3) | (10.3) | (10.3) | – | – | – | – |
| Derivative financial assets | |||||||
Interest rate swap contracts | 2.3 | 1.7 | 0.6 | 0.5 | 0.5 | 0.1 | – |
Forward exchange contracts | 0.1 | 0.1 | 0.1 | – | – | – | – |
| Total | (273.8) | (293.9) | (104.7) | (5.1) | (11.7) | (170.0) | (2.4) |
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statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| 2023 | Carrying | Contractual | |||||
| EUR million | amount | cash flows | 0 – 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | › 5 years |
| Interest rate swap contracts | |||||||
Assets | 1.1 | 1.2 | 0.6 | 0.4 | 0.2 | 0.0 | − |
Liabilities | (0.4) | 0.3 | 0.1 | 0.1 | 0.1 | 0.0 | − |
| Forward exchange contracts | |||||||
Assets | − | − | − | − | − | − | − |
Liabilities | (0.2) | (0.2) | (0.1) | (0.1) | − | − | − |
| Total | 0.5 | 1.3 | 0.6 | 0.4 | 0.3 | 0.0 | − |
| 2022 | Carrying | Contractual | |||||
| EUR million | amount | cash flows | 0 – 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | › 5 years |
| Interest rate swap contracts | |||||||
Assets | 2.3 | 1.7 | 0.6 | 0.5 | 0.5 | 0.1 | – |
Liabilities | – | – | – | – | – | – | – |
| Forward exchange contracts | |||||||
Assets | 0.1 | 0.1 | 0.1 | – | – | – | – |
Liabilities | – | – | – | – | – | – | – |
| Total | 2.4 | 1.8 | 0.7 | 0.5 | 0.5 | 0.1 | – |
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| 2023 | Carrying | Contractual | |||||
| EUR million | amount | cash flows | 0 – 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | › 5 years |
| Interest rate swap contracts | |||||||
Assets | 1.1 | 1.2 | 0.6 | 0.4 | 0.2 | 0.0 | − |
Liabilities | (0.4) | 0.3 | 0.1 | 0.1 | 0.1 | 0.0 | − |
| Forward exchange contracts | |||||||
Assets | − | − | − | − | − | − | − |
Liabilities | (0.2) | (0.2) | (0.1) | (0.1) | − | − | − |
| Total | 0.5 | 1.3 | 0.6 | 0.4 | 0.3 | 0.0 | − |
| 2022 | Carrying | Contractual | |||||
| EUR million | amount | cash flows | 0 – 6 months | 6 – 12 months | 1 – 2 years | 2 – 5 years | › 5 years |
| Interest rate swap contracts | |||||||
Assets | 2.3 | 1.7 | 0.6 | 0.5 | 0.5 | 0.1 | – |
Liabilities | – | – | – | – | – | – | – |
| Forward exchange contracts | |||||||
Assets | 0.1 | 0.1 | 0.1 | – | – | – | – |
Liabilities | – | – | – | – | – | – | – |
| Total | 2.4 | 1.8 | 0.7 | 0.5 | 0.5 | 0.1 | – |
Interest-rate risk
Part of the Group’s loans is governed by a floating interest rate (usually 3- or 6-month EURIBOR). In view of the Treasury Policy, the Group hedges
at least 50% of the floating interest rate exposure. To this extent the Group has outstanding interest rate swaps with a notional amount of in total
EUR 75 million (2022: EUR 70 million). The aggregate fair value of the outstanding interest rate swaps at 31 December 2023 was EUR 0.7 million
(2022: EUR 2.3 million).
The following table shows the interest rates prevailing at the financial position date for interest-bearing financial liabilities. The majority of all interest
expenses relate to senior bank loans. The effective interest rate of these loans equalises the nominal interest rate.
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
2023 | 2022 | ||||||
| Nominal | Year of | Carrying | Carrying | ||||
| Currency | interest | redemption | Fair value | amount | Fair value | amount | |
Bank syndicate loans | EUR | IBOR + 1.3% | 2026 | 62.0 | 62.0 | 82.5 | 82.5 |
Schuldschein | EUR | IBOR +1% to 1.25% | 2025-2027 | 72.2 | 72.2 | 72.1 | 72.1 |
Other loans | Various | 1.40%-5.05% | 2024-2030 | 10.8 | 10.8 | 7.2 | 7.2 |
Bank overdrafts China | CNY | 3.1% | 2024 | 5.5 | 5.5 | 2.7 | 2.7 |
Bank overdrafts - other | EUR | IBOR + 0.8% to 1.6% | 2024 | 1.6 | 1.6 | 0.4 | 0.4 |
| Lease liabilities | Various | 1.5% - 8.3% | Various | 13.5 | 13.5 | 13.2 | 13.2 |
| Total interest-bearing debt | 165.6 | 165.6 | 178.1 | 178.1 |
Sensitivity analysis interest
Financial assets and liabilities with a fixed interest rate are not recognized at fair value by processing the value changes in profit or loss. For this reason,
a movement in interest rates across the yield curve at 1 January 2023 would not have had a material effect on the 2023 profit for the period.
The Group has hedged a considerable part of the floating interest rate exposure by means of interest rate swaps. When taking into account these
swaps and the loans with a fixed rate, in total EUR 74.3 million of the EUR 145.0 million long-term and short-term loans, excluding lease liabilities, at
financial year-end have an interest rate which is fixed for one year or longer. Based on the interest-bearing debt levels at year-end and expected cash
flow development, a 1%-point increase in the interest rate across the yield curve as from 1 January 2024, will have an increasing effect on interest
expenses in 2024 of maximum EUR 0.8 million.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Exchange rate risk
The aggregate fair value of the outstanding forward exchange rate contracts concluded to hedge anticipated transactions was EUR 0.2 million negative
at 31 December 2023 (2022: positive EUR 0.1 million).
A 10%-point appreciation of the currencies listed hereafter against the euro would increase shareholders’ equity at 31 December 2023 and the result
for 2023 by the amounts shown in the following table. A 10%-point depreciation of the listed currencies against the euro would have had the opposite
effect on the result and equity.
31 December 2023 | Equity | Result |
US dollar | 3.7 | 0.1 |
Czech koruna | 0.8 | (0.3) |
Chinese yuan | 6.0 | 0.1 |
Romanian lei | 1.6 | (0.2) |
Indian rupee | 0.2 | (0.1) |
31 December 2022 | Equity | Result |
US dollar | 2.8 | 0.5 |
Czech koruna | 0.9 | (0.3) |
Chinese yuan | 5.8 | 0.1 |
Romanian lei | 1.8 | (0.2) |
Indian rupee | 0.3 | (0.0) |
Principal exchange rates during the reporting period were as follows:
| Applicable currency rates | |||
Value of EUR | At 31 December 2023 | At 31 December 2022 | Average over 2023 |
Pound sterling | 0.8690 | 0.8869 | 0.8705 |
Czech koruna | 24.7237 | 24.1161 | 23.9739 |
Chinese yuan | 7.8509 | 7.3582 | 7.6554 |
US dollar | 1.1050 | 1.0666 | 1.0817 |
Romanian lei | 4.9756 | 4.9495 | 4.9517 |
Swedish krona | 11.0959 | 11.1217 | 11.4466 |
Indian rupee | 91.9033 | 88.1679 | 89.3575 |
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of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
2023 | 2022 | |||
EUR million | Carrying amount | Fair value | Carrying amount | Fair value |
| Assets carried at amortized costs | ||||
Receivables (including current tax assets) | 70.9 | 70.9 | 73.3 | 73.3 |
Cash and cash equivalents | 20.6 | 20.6 | 37.8 | 37.8 |
Held to maturity investments | 0.5 | 0.5 | 0.4 | 0.4 |
92.0 | 92.0 | 111.5 | 111.5 | |
| Liabilities carried at amortized costs | ||||
Bank syndicate loans | (62.0) | (62.0) | (82.5) | (82.5) |
Schuldschein loans | (72.2) | (72.2) | (72.1) | (72.1) |
Other loans | (10.8) | (10.8) | (7.2) | (7.2) |
Lease liabilities | (13.5) | (13.5) | (13.2) | (13.2) |
Bank overdraft | (7.1) | (7.1) | (3.1) | (3.1) |
Trade and other payables (including current tax liabilities) | (91.9) | (91.9) | (93.3) | (93.3) |
(257.5) | (257.5) | (271.4) | (271.4) | |
| Assets / (Liabilities) carried at fair value | ||||
Interest derivatives | 0.7 | 0.7 | 2.3 | 2.3 |
Forward exchange contracts | (0.2) | (0.2) | 0.1 | 0.1 |
0.5 | 0.5 | 2.4 | 2.4 | |
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of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
2023 | 2022 | |
Derivatives | 3.9% | 2.2% |
Leases | 4.3% | 4.3% |
Bank syndicate loans | 5.2% | 3.5% |
Schulschein loans | 4.9% | 3.7% |
Other loans | 2.8% | 1.6% |
Level 1 | Level 2 | Level 3 | Total | |
| 31 December 2023 | ||||
Derivative contracts used for hedging | − | 0.5 | − | 0.5 |
| Total | − | 0.5 | − | 0.5 |
| 31 December 2022 | ||||
Derivative contracts used for hedging | – | 2.4 | – | 2.4 |
| Total | – | 2.4 | – | 2.4 |
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Leases
The Group leases buildings, cars, office equipment and forklifts. The lease term varies between 3 to 15 years. For buildings an option to renew the lease
after the lease period is customary. Information about leases for which the Group is a lessee is presented on several places throughout the financial
statements:
■ total cash outflow for leases is included in the consolidated statement of cash flows for repayments of lease liabilities EUR 3.2 million
(2022: EUR 3.3 million) and in note 24 for interest EUR 0.8 million (2022: EUR 0.6 million);
■ the carrying amount of right-of-use assets at the end of the reporting period by class of underlying assets, addition to these assets and
the depreciation charge for these assets are included in note 1;
■ interest expense on lease liabilities are included in note 24;
■ expenses relating to short-term leases or low-value assets amount to EUR 0.2 million (2022: EUR 0.3 million).
18
19
Contingent assets and liabilities
The Group had guarantees in particular with regard to rentals, financing facilities and post employee benefits totaling to EUR 0.9 million
(2022: EUR 1.4 million).
Based on the outcome of certain water samples taken in Austria in the area where a Kendrion site is located – the Austrian Federal State government
commissioned a further environmental investigation at the Kendrion premises in Austria. The water samples taken in the relevant area showed a slight
above threshold value of Chlorofluorocarbon. An initial environmental investigation was carried out early 2023. Monitoring is still ongoing at the date
of issuance of these financial statements. The outcome of the investigation may or may not result in an obligation for restorative action. No reliable
estimation of a possible obligation can be made and therefore no provision has been recorded.
The Group has divested itself of a number of companies in the past. The customary representations and warranties for transactions of this nature are
included in the relevant share or asset purchase agreements. The Group, as is customary for transactions of this nature, also issued representations
and warranties for potential (tax) claims relating to periods prior to the various divestment dates.
The Group has a contingent asset amounting to EUR 0.1 million (2022: EUR 1.5 million) resulting from claims on customers.
20
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of profit and loss and other
comprehensive income
Consolidated
statement of
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Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The Netherlands | Germany | Other | European countries | |||
EUR million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Revenue from transactions with third parties | 15.0 | 12.2 | 309.4 | 309.9 | 97.2 | 94.0 |
| Other non-current assets | 24.2 | 25.2 | 157.7 | 157.0 | 22.8 | 23.6 |
Deferred tax assets | 1.7 | 2.6 | 9.3 | 8.2 | 0.3 | 0.1 |
Net liability for defined benefit obligations | – | – | 6.0 | 8.2 | 0.3 | 0.2 |
| 1 | ||||||
| Asia | The Americas | Consolidated | ||||
EUR million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Revenue from transactions with third parties | 45.3 | 51.4 | 51.6 | 51.8 | 518.5 | 519.3 |
Other non-current assets | 41.2 | 35.9 | 15.5 | 17.1 | 261.4 | 258.8 |
Deferred tax assets | 6.9 | 6.2 | 1.9 | 2.6 | 20.1 | 19.7 |
Net liability for defined benefit obligations | – | – | – | – | 6.3 | 8.4 |
| Revenue segmented by customer location | ||
EUR million | 2023 | 2022 |
Germany | 192.0 | 203.6 |
Other European countries | 170.7 | 151.1 |
| Asia | 68.2 | 73.4 |
The Americas | 84.6 | 88.4 |
Other countries | 3.0 | 2.8 |
| Total | 518.5 | 519.3 |
1
Mainly related to China
21
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of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Information about reportable segments
Kendrion has split all activities over three segments: Automotive Core, Automotive E and Industrial. Based on the structure of the Group and the criteria
of IFRS 8 – Operating segments, Kendrion has concluded it has four operating segments, the business groups Industrial Brakes and Industrial Actuators
and Controls and Automotive Core and Automotive E, which are subgroups to the business group Automotive. Last year, we aggregated the operating
segments Automotive Core and Automotive E into one reporting segment being Automotive. When looking at the current market developments, long
term financial performance and aggregation criteria in IFRS 8 we deem it appropriate to classify both operating segments as two reporting segments as
of 2023. Given the fact that the change to two operating segments and thus the internal reporting to the Chief Operating Decision Maker only happened
in the last months in 2022 we don’t have financial figures available for the full year and have therefore not included the comparative figures for Automotive
Core and Automotive E.
Based on the aggregation criteria of IFRS 8, Industrial Brakes and Industrial Actuators and Controls have been aggregated into one reportable
segment. The industrial activities of the business units Industrial Brakes and Industrial Actuators and Controls focus on developing and manufacturing
electromagnetic systems and components for industrial applications. These business units also have similar economic characteristics and display a
number of similarities with respect to their technology, production processes, equipment and customers.
| Automotive | Automotive | Automotive | Automotive | |||||
| Industrial | Core | E | Total | Total | Consolidated | |||
EUR million | 2023 | 2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2022 |
Revenue from transactions with third parties | 256.5 | 276.5 | 189.5 | 72.5 | 262.0 | 242.8 | 518.5 | 519.3 |
Inter-segment revenue | 0.0 | 0.0 | 0.1 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 |
| EBITDA | 34.6 | 46.9 | 22.8 | (6.8) | 16.0 | (53.5) | 50.6 | (6.6) |
| EBITDA as a % of revenue | 13.5% | 17.0% | 12.1% | (9.4)% | 6.1% | (22.0)% | 9.8% | (1.3)% |
| Normalized EBITDA | 36.1 | 47.5 | 23.6 | (6.6) | 17.0 | 9.9 | 53.1 | 57.4 |
| Normalized EBITDA as a % of revenue | 14.1% | 17.2% | 12.4% | (9.1)% | 6.5% | 4.1% | 10.2% | 11.1% |
Reportable segment assets | 278.9 | 272.8 | 116.8 | 66.6 | 183.4 | 203.8 | 462.3 | 476.6 |
Reportable segment employees (FTE) | 1,233 | 1,346 | 1,204 | 169 | 1,373 | 1,407 | 2,606 | 2,753 |
1
1
1
1
| Disaggregation revenue | ||
EUR million | 2023 | 2022 |
Revenue from serial produced goods | 510.8 | 512.2 |
Revenue from engineering and samples | 7.7 | 7.1 |
| Total | 518.5 | 519.3 |
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to reconciliation of non-IFRS information, starting on page 207
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of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Staff costs | ||
EUR million | 2023 | 2022 |
Wages and salaries | 117.6 | 119.9 |
Social security charges | 20.2 | 20.5 |
Temporary personnel | 8.0 | 8.2 |
Contributions to defined contribution plans | 1.1 | 0.8 |
Expenses related to defined benefit plans | 0.0 | 0.0 |
Increase in liability for long-service leave | 0.1 | 0.1 |
Other costs of personnel | 4.5 | 4.1 |
151.5 | 153.6 | |
22
| Other operating expenses | ||
EUR million | 2023 | 2022 |
Increase/(Decrease) in provision for doubtful debts | 0.1 | (0.1) |
Premises costs | 7.8 | 9.1 |
Maintenance expenses | 10.8 | 11.1 |
Transport expenses | 2.7 | 2.6 |
Consultancy expenses | 9.4 | 11.5 |
Sales and promotion expenses | 1.1 | 1.4 |
Car, travel and representation costs | 3.0 | 3.1 |
Insurance | 2.4 | 2.2 |
Other | 3.4 | 2.7 |
40.7 | 43.6 | |
The other operating expenses 2023 include EUR 0.8 million costs related to the restructuring measures (2022: EUR 0.6 million).
Research & Development expenses (including staff and other operating expenses) for 2023 totaled EUR 27.0 million (2022: EUR 29.4 million).
23
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| Net finance costs | ||
EUR million | 2023 | 2022 |
Interest income | 0.2 | 0.0 |
Net exchange gain | – | – |
| Finance income | 0.2 | 0.0 |
Interest expenses | (7.5) | (4.2) |
Interest expenses related to lease liabilities | (0.8) | (0.6) |
Interest expenses related to employee benefits | (0.3) | (0.1) |
Net exchange loss | (1.5) | (0.2) |
| Finance expense | (10.1) | (5.1) |
| Net financing costs | (9.9) | (5.1) |
24
| Income tax | ||
EUR million | 2023 | 2022 |
Current tax charge on year under review | (4.0) | (6.6) |
| Total corporation tax expenses in the income statement | (4.0) | (6.6 |
25
| Reconciliation of effective tax rate | ||||
Reconciliation effective tax rate | Reconciliation in EUR million | |||
2023 | 2022 | 2023 | 2022 | |
| Profit before income tax | 13.9 | (39.7) | ||
| Income tax expense at local corporation tax rate | 25.8% | 25.8% | 3.6 | (10.2) |
Effect of tax rates in foreign jurisdictions | (4.2)% | 2.2% | (0.6) | (0.9) |
Non-deductible expenses | 2.7% | (39.1)% | 0.4 | 15.4 |
Tax exempt income | (0.4)% | 0.0% | (0.1) | 0.0 |
Changes in estimates related to prior years | 9.8% | (5.5)% | 1.3 | 2.2 |
Current-year losses for which no deferred tax asset is recognized | 0.0% | (2.5)% | - | 1.0 |
Additional deductible items | (4.7)% | 1.7% | (0.7) | (0.7) |
Other movements | 0.4% | 0.6% | 0.1 | (0.2) |
29.4% | (16.8)% | 4.0 | 6.6 | |
Non-deductible expenses include the effect of partially deductible interest cost, additional deductible items reflect double deduction of R&D cost
in China.
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statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Related parties
Identity of related parties
A related-party relationship exists between the Company and its subsidiaries, their managers and executives. The Company has a number of
agreements with its subsidiaries relating to the charging of central costs to and from the business units, including management, development,
information technology and marketing costs, as well as agreements in respect of Group financing and use of intellectual property. Internal supplies
are also obtained within the business units. Intercompany transactions are effectuated at arm’s length market prices. As all subsidiaries are fully
consolidated and reflected in these financial statements, the amounts of these transactions are not further specified. For a list of the subsidiaries,
see pages 205-206.
| Compensations of key management personnel | ||
| The remuneration of the Executive Board and Supervisory Board is as follows: | ||
EUR thousand | 2023 | 2022 |
Short-term benefits | 1,500.8 | 1,491.3 |
Post-employment benefits | 150.0 | 145.0 |
Other long-term benefits | – | – |
Share-based payments | 71.9 | 359.7 |
Termination benefits | – | – |
1,722.7 | 1,996.0 |
The total remuneration is included in staff costs (see note 22). For a description of the remuneration policy of the members of the Executive Board,
see pages 96-112.
The CEO will, based on this performance, receive a variable remuneration of 48.72% of his gross fixed remuneration. The CEO’s gross variable
remuneration amounts to EUR 269,584 (2022: EUR 267,438) which will be paid in cash.
The CFO will, based on this performance, receive a variable remuneration of 32.57% of his gross fixed remuneration. The CFO’s gross variable
remuneration amounts to EUR 111,548 (2022: EUR 95,023) which will be paid in cash.
Kendrion applies a share ownership guideline for members of the Executive Board of 100% of the annual fixed gross base salary for the CEO and 50%
of the annual fixed gross salary of the CFO. This shareholding has to be gradually built up with performance shares earned under the long-term share
incentive, subject to the sell-to-cover concept as prescribed by the ‘Share ownership guideline’.
The amount charged to the profit or loss regarding the long-term variable remuneration policy was EUR 71,936 (2022: EUR 359,700).
27
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
| The vesting and holding periods for (conditional) shares awarded to the CEO are specified as follows: | |||
CEO (J.A.J. van Beurden) | Number of shares | Expiry vesting period | Expiry holding period |
2023 | 22,030 | Expiry performance period 2023-2025 | End of 2027 |
2022 | 16,144 | Expiry performance period 2022-2024 | End of 2026 |
2021 | 20,245 | Expiry performance period 2021-2023 | End of 2025 |
2020 | 16,533 | Expiry performance period 2020-2022 | End of 2024 |
2019 | 11,559 | Expiry performance period 2019-2021 | End of 2023 |
CFO (J.H. Hemmen) | Number of shares | Expiry vesting period | Expiry holding period |
2023 | 11,363 | Expiry performance period 2023-2025 | End of 2027 |
2022 | 8,194 | Expiry performance period 2022-2024 | End of 2026 |
2021 | 9,533 | Expiry performance period 2021-2023 | End of 2025 |
2020 | 6,769 | Expiry performance period 2020-2022 | End of 2024 |
2019 | 2,409 | Expiry performance period 2019-2021 | End of 2023 |
Pensions
The Executive Board participates in the defined contribution plan of the Company. For 2023, the contribution to the pension insurer was EUR 41,958
(2022: EUR 37,124) for the CEO and EUR 30,147 (2022: EUR 27,017) for the CFO.
Transactions with shareholders
There were no transactions with shareholders, except for the dividend payment, which is disclosed under note 10.
Other related party transactions
There were no transactions with other related parties.
FINANCIAL STATEMENTS
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180
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Other notes
The subsidiary Kendrion Holding Germany GmbH, Markdorf, Germany included in these consolidated financial statements makes use of § 264(3) HGB
(German Commercial Code). In accordance with that rule, the consolidated financial statements of Kendrion Holding Germany GmbH as of
31 December 2022 were not published. A complete list of all subsidiaries is available from the Amtsgericht in Freiburg im Breisgau (number HRB
704749) and from the Company offices. The following German legal entities are consolidated in these consolidated financial statements: Kendrion
(Villingen) GmbH, Kendrion (Donaueschingen/Engelswies) GmbH, Kendrion (Markdorf) GmbH, Kendrion Kuhnke GmbH, Kendrion Kuhnke Automation
GmbH, Kendrion Kuhnke Automotive GmbH, Kendrion FAS Controls Holding GmbH, Kendrion INTORQ GmbH, INTORQ Beteiligungs-GmbH and
Kendrion IP Management GmbH.
The subsidiary Kendrion (UK) Ltd. (registration number 1124810), Bradford, United Kingdom included in these consolidated financial statements is
exempt from the requirements of section 479A (audit of accounts) of the Companies Act 2006.
28
Post-balance sheet events
There were no post-balance sheet events that have to be taken into account in the consolidated financial statements for the year ended
31 December 2023.
29
FINANCIAL STATEMENTS
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181
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Company
income
statement
Notes to the
company financial
statements
Company
balance
sheet
Note EUR million 2023 2022
Fixed assets
Property, plant and equipment 0.6 0.6
Intangible assets – 0.0
Other investments, including derivatives 0.1 0.2
1.3 Financial fixed assets 228.4 221.2
Total non-current assets
229.1 222.0
Current assets
1.4 Receivables 1.2 1.0
Cash and cash equivalents 0.0 0.0
Total current assets
1.2 1.0
Total assets
230.3 223.0
1.5 Equity
Share capital 30.6 30.2
Share premium 37.3 38.4
Legal reserves 14.2 19.0
Other reserves 80.0 133.7
Net profit/ (loss) for the period 9.9 (46.3)
Total equity
172.0 175.0
1.6 Current liabilities
Loans and borrowings 56.5 46.3
Payables 1.8 1.7
Total current liabilities
58.3 48.0
Total equity and liabilities
230.3 223.0
COMPANY BALANCE SHEET AT 31 DECEMBER
(before profit appropriation)
FINANCIAL STATEMENTS
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182
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
COMPANY INCOME STATEMENT
Note EUR million 2023 2022
Revenue | – | – | |
1.8 | Other income | 5.5 | 5.4 |
| Total revenue and other income | 5.5 | 5.4 | |
1.9 | Staff costs | 4.6 | 5.0 |
Depreciation and amortization | 0.1 | 0.1 | |
Other operating expenses | 1.8 | 1.8 | |
| Result before net finance costs | (1.0) | (1.5) | |
Finance income | – | – | |
Finance expense | (2.3) | (1.6) | |
| Profit before income tax | (3.3) | (3.1) | |
Income tax expense | (0.4) | (1.1) | |
| Profit for the period | (3.7) | (4.2) | |
Share in results of Group companies after tax | 13.6 | (42.1) | |
1.10 | Net profit/ (loss) for the period | 9.9 | (46.3) |
FINANCIAL STATEMENTS
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183
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Notes to the company financial statements
General
The Company financial statements are part of the 2023 financial statements of Kendrion N.V. (the ‘Company’). The Company is registered
at the Chamber of Commerce in The Netherlands under number: 30113646.
Principles of valuation of assets and liabilities and determination of results
In selecting the principles employed in the company financial statements for the valuation of assets and liabilities and determination of results,
Kendrion N.V. has made use of the option provided by Section 362, subsection 8, of Book 2 of the Netherlands Civil Code. Consequently,
the principles employed in the Company financial statements of Kendrion N.V. for the valuation of assets and liabilities and determination of results
(the ‘accounting policies’) are identical to those employed in the consolidated EU-IFRS financial statements. Interests in entities in which Kendrion N.V.
has significant influence are measured using the equity method. The consolidated EU-IFRS financial statements have been prepared in accordance
with the standards adopted by the International Accounting Standards Board as endorsed for use in the European Union (hereinafter referred to as
‘EU-IFRS’). These policies are discussed in notes a – t
Financial fixed assets
| Interest in Group | Loans to Group | ||||
| EUR million | companies | companies | Deferred tax | Total 2023 | Total 2022 |
Carrying amount at 1 January | 220.1 | – | 1.1 | 221.2 | 259.5 |
Results of Group companies | 13.6 | – | – | 13.6 | (42.1) |
Movements in deferred tax assets | – | – | (0.5) | (0.5) | (1.0) |
Foreign currency translation differences for foreign operations | (4.8) | – | – | (4.8) | 1.8 |
Other movements | (1.1) | – | – | (1.1) | 3.0 |
| Carrying amount at 31 December | 227.8 | – | 0.6 | 228.4 | 221.2 |
Receivables
R million | 2023 | 2022 |
Receivables from Group companies | 0.6 | 0.6 |
Prepayments and accrued income | 0.6 | 0.4 |
1.2 | 1.0 |
All receivables are due within one year.
1
1.1
1.2
1.3
1.4
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
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184
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Equity
EUR million
Share
capital
Share
premium
Translation
reserve
Hedge
reserve
Reserve for
participations
Reserve for
own shares
Other
reserves
Result for the
year
Total 2023 Total 2022
Balance at 1 January 30.2 38.4 9.4 1.8 7.8 (1.8) 135.5 (46.3) 175.0 223.0
Appropriation of retained earnings – – – – – – (46.3) 46.3 – –
Foreign currency translation differences
for foreign operations – – (4.8) – – – – – (4.8) 1.8
Net change in fair value of cash flow hedges,
net of income tax – – – (1.5) – – – – (1.5) 1.6
Issue of ordinary shares 0.4 2.7 – – – – (0.0) – 3.1 3.1
Own shares issued – – – – – 0.8 (0.0) – 0.8 –
Share-based payment transactions – – – – – 1.0 (1.0) – 0.0 0.5
Dividends to equity holders – (3.8) – – – – (7.1) – (10.9) (10.2)
Other – – – – 1.5 – (1.1) – 0.4 1.5
Net profit/ (loss) for the period – – – – – – – 9.9 9.9 (46.3)
Balance at 31 December
30.6 37.3 4.6 0.3 9.3 – 80.0 9.9 172.0 175.0
Share capital
The authorized capital of the Company amounts to EUR 80 million, divided into 40 million ordinary shares of EUR 2.00 each, of which 15,276,014
ordinary shares have been issued (2022: 15,114,621) .
Share premium
The share premium represents revenue from shares issued at more than their nominal value (issued above par). The issued and paid share capital,
including share premium, is fiscally recognized capital.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of subsidiaries outside
the euro zone. Gains and losses relating to the translation risk are recognized in equity. The build-up of the cumulative figure commenced
on 1 January 2004.
Hedge reserve
The hedge reserve comprises the effective share of the cumulative net movement in the fair value of cash-flow hedging instruments relating
to hedged transactions that have not yet been executed.
1.5
1.5.1
1.5.2
1.5.3
1.5.4
FINANCIAL STATEMENTS
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185
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Statutory reserve for participations
This reserve pertains to participating interests that are accounted for according to the equity accounting method. The reserve represents the difference
between the participating interests’ retained profit and direct changes in equity, as determined on the basis of the Company’s accounting policies, and
the share thereof that the Company may distribute. It is shown as the share in the undistributed results of the subsidiaries since they were first valued
using the equity method. The amount of any dividend – from these subsidiaries – to which there is an entitlement on adoption of the financial statements
is deducted from this reserve.
Reserve for own shares
The reserve for the Company’s own shares comprises the cost of the Company shares that are held by the Company for the remuneration package for
the Executive Board. At 31 December 2023, the Company held 0 of its own shares (2022: 88,316).
Other reserves
Other reserves are all the reserves other than those shown separately and comprise primarily the cumulative, undistributed profits from previous financial
years.
Retained earnings
In 2023, the full result for 2022 was included in other reserves. Retained earnings consequently consist solely of the result for 2023.
Current liabilities
on | 2023 | 2022 |
Debts to Group companies | 56.0 | 45.8 |
Lease liability | 0.5 | 0.5 |
Trade payables | 0.7 | 0.7 |
Other payables and accrued expenses | 1.1 | 1.0 |
58.3 | 48.0 |
An amount of EUR 0.4 million is included on the line lease liability that is due after 2024 (2022: EUR 0.4 million).
Financial instruments
See note 17 to the consolidated financial statements for details on financial instruments.
Other income
EUR million | 2023 | 2022 |
Management fee | 5.5 | 5.4 |
Other | – | – |
5.5 | 5.4 |
1.5.5
1.5.6
1.5.7
1.5.8
1.6
1.7
1.8
FINANCIAL STATEMENTS
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Staff costs
EUR million | 2023 | 2022 |
Wages and salaries | 3.5 | 4.1 |
Social security charge | 0.2 | 0.2 |
Pension costs | 0.6 | 0.5 |
Other costs of personnel | 0.3 | 0.2 |
4.6 | 5.0 | |
Total number of employees and temporary workers at 31 December (FTE) | 19 | 18 |
The Company has only defined contribution plans for its employees.
Profit appropriation
Appropriation of net profit
EUR million | 2023 | 2022 |
Net profit | 9.9 | (46.3) |
The Executive Board has decided, with the approval of the Supervisory Board, that the net profit of EUR 9.9 million will be added to the other reserves.
Commitments not appearing on the balance sheet
Joint and several liability and guarantees
The Company and its Group companies have issued guarantees mainly in the context of the financing by financial institutions.
The Company has issued declarations of joint and several liability, as referred to in Section 403 of Book 2 of the Netherlands Civil Code, for:
■ Combattant Holding B.V., De Bilt;
■ Kendrion Finance B.V., Zeist;
■ 3T B.V., Enschede;
■ Kendrion Marketing B.V., Zeist.
Kendrion N.V. has a guarantee which relates to the rent of the office in Amsterdam totaling to EUR 0.0 million (2022: EUR 0.0 miilion).
Fiscal unity
The Company and its Dutch subsidiaries excluding 3T B.V. form a tax group for corporation tax purposes.
According to the standard terms, each of the companies is jointly and severally liable for corporation tax payable by all the members of the fiscal unity.
1.9
1.10
1.11
1.11.1
1.11.2
FINANCIAL STATEMENTS
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Post-balance sheet events
There were no post-balance sheet events that have to be taken into account in the consolidated financial statements for the year ended
31 December 2023.
Fees to the auditor
With reference to Section 2:382a of the Netherlands Civil Code, the following fees have been charged by Deloitte Accountants B.V. and its member
firms and affiliates in 2023 and 2022 to the Company, its subsidiaries and other consolidated entities:
2023 | 2022 | |||||
| Other Deloitte | Other Deloitte | |||||
| Deloitte | member firms | Total | Deloitte | member firms | Total | |
| EUR thousand | Accountants B.V. | and affiliates | Deloitte | Accountants B.V. | and affiliates | Deloitte |
Audit of financial statements | 516.9 | 405.0 | 921.9 | 488.1 | 375.0 | 863.1 |
Other assurance services | 33.5 | − | 33.5 | 31.0 | – | 31.0 |
Tax advisory services | − | − | − | – | – | – |
Other non-audit services | − | − | − | – | – | – |
| Total | 550.4 | 405.0 | 955.4 | 519.1 | 375.0 | 894.1 |
Remuneration of and share ownership by the Executive Board and Supervisory Board
Remuneration of the Executive Board
The remuneration of current Executive Board members charged to the Company and Group companies, including pension expenses as referred
to in Section 383, subsection 1, of Book 2 of the Netherlands Civil Code, amounted to EUR 1,507,800 (2022: EUR 1,785,100 ). This remuneration
is as follows:
2023 | 2022 | |||||
EUR thousand | J.A.J. van Beurden | J. H. Hemmen | Total | J.A.J. van Beurden | J. H. Hemmen | Total |
Fixed remuneration | 553.3 | 342.5 | 895.8 | 550.0 | 335.0 | 885.0 |
Short-term variable remuneration | 269.6 | 111.5 | 381.1 | 267.4 | 95.0 | 362.4 |
Long-term variable remuneration | 48.9 | 23.0 | 71.9 | 255.2 | 104.5 | 359.7 |
| Total remuneration | 871.8 | 477.0 | 1,348.8 | 1,072.6 | 534.5 | 1,607.1 |
Pension and other expenses | 80.4 | 78.6 | 159.0 | 80.4 | 97.6 | 178.0 |
| Total | 952.2 | 555.6 | 1,507.8 | 1,153.0 | 632.1 | 1,785.1 |
The 2023 short-term variable remuneration will be paid in cash after income tax.
For more information on the long-term variable remuneration see pages 178.
1.12
1.13
1.14
FINANCIAL STATEMENTS
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Remuneration of the Supervisory Board
The total remuneration of current and former Supervisory Board members in 2023 amounts to EUR 215 thousand (2022: EUR 211 thousand).
This remuneration is as follows:
EUR thousand 2023 2022
Supervisory Board Members:
E. Slijkhuis (appointed as of 17 April 2023) 37 –
F. van Hout 65 65
M.J.G. Mestrom 49 49
J.T.M. van der Meijs (stepped down as from 17 April 2023) 16 49
E.M. Doll 48 48
215 211
No loans, advances or related guarantees have been given to the Executive Board or Supervisory Board members.
Share ownership by the Executive Board and the Supervisory Board
31 December 2023 31 December 2022
Executive Board J.A.J. van Beurden 56,835 36,867
J.H. Hemmen 11,403 4,090
Supervisory Board F. van Hout 11,800 7,300
Amsterdam, February 28, 2024
Executive Board Supervisory Board
J.A.J. van Beurden F. van Hout
J.H. Hemmen M.J.G. Mestrom
E. Slijkhuis
E.M. Doll
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Provisions in the Articles of Association governing the appropriation of profit
Under article 35.1 and 35.2 of the Articles of Association of the Company, the Executive Board shall, with the approval of the Supervisory Board,
determine which part of the profits is added to the reserves. The profit remaining after transfer to the reserves is available to the General Meeting of
Shareholders. The Company can only make payments to the shareholders and other parties entitled to the distributable profit insofar as the
shareholders’ equity exceeds the paid-up and called-up part of the capital plus the statutory reserves and exceeds the amounts resulting from
the distribution test, performed by the Executive Board at the date of each dividend payment.
OTHER INFORMATION
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190
OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Independent auditor’s report
To the shareholders and the Supervisory Board of Kendrion N.V.
Report on the audit of the financial statements 2023 included in the annual report
Our opinion
We have audited the financial statements 2023 of Kendrion N.V., based in Amsterdam. The financial statements comprise the consolidated financial
statements and the company financial statements.
In our opinion:
■ The accompanying consolidated financial statements give a true and fair view of the financial position of Kendrion N.V. as at 31 December 2023,
and of its result and its cash flows for 2023 in accordance with International Financial Reporting Standards as adopted by the European Union
(EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
■ The accompanying company financial statements give a true and fair view of the financial position of Kendrion N.V. as at 31 December 2023,
and of its result for 2023 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
1. The consolidated statement of financial position as at 31 December 2023.
2. The following statements for 2023: the consolidated statement of financial position, the consolidated statement of profit and loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows.
3. The notes comprising material accounting policy information and other explanatory information.
The company financial statements comprise:
1. The company balance sheet as at 31 December 2023.
2. The company income statement for 2023.
3. The notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are
further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.
Deloitte Accountants B.V. is registered with the Trade Register of the Chamber of Commerce and Industry in Rotterdam number
24362853. Deloitte Accountants B.V. is a Netherlands affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited.
Annual Integrated Report 2023
191
OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We are independent of Kendrion N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities,
the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-
opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations
in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following
information in support of our opinion was addressed in this context, and we do not provide a separate opinion or conclusion on these matters.
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole at € 1,100,000 (2022: € 1,500,000).
We used Profit before Tax and EBITDA as benchmarks for the calculation of our materiality. The materiality is approx. 8% of profit before tax and 2%
of EBITDA. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial
statements for qualitative reasons.
Component audits are performed using materiality levels determined by the judgement of the group audit team, considering materiality for
the consolidated financial statements as a whole and the reporting structure of the group. Component materiality did not exceed € 577,500
(2022: € 787,500).
We agreed with the Supervisory Board that misstatements in excess of € 55,000 (2022: € 75,000), which are identified during the audit, would be
reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
Kendrion N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements
of Kendrion N.V.
In establishing the overall group audit strategy and plan, we determined the type of work that needed to be performed at the components by the group
engagement team and by the auditors of the components. We directed and supervised the work of our component auditors as part of the group audit.
Our group audit mainly focused on significant group entities in terms of size and financial interest, significant risk or where complex activities are present.
Annual Integrated Report 2023
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OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
For the selected component audit teams, the group audit team provided detailed written instructions, which, in addition to communicating our
requirements of component audit teams, also detailed significant audit areas, including awareness for risks related to management override of controls
and revenue recognition. Furthermore, we developed a plan for overseeing component audit teams based on its relative significance and specific risk
characteristics. Our oversight procedures included a combination of live and virtual meetings with the component auditor, including working paper
reviews. We also reviewed component audit team deliverables to gain a sufficient understanding of the work performed based on our instructions.
The nature, timing and extent of our oversight procedures varied based on both quantitative and qualitative considerations.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain
sufficient and appropriate audit evidence about the group’s financial information to provide an opinion on the consolidated financial statements.
Audit approach fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding
of the entity and its environment and the components of the system of internal control, including the risk assessment process and management’s
process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as
the outcomes.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as among others the
code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to
mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and
bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due fraud is present. In line with last two years
we involved forensic specialists who performed these procedures in close co-operation with us.
We performed, amongst others, the following specific procedures together with our component auditors:
■ We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether
any findings were indicative of fraud or non-compliance.
■ We considered available information and made enquiries of relevant executives , directors (including but not limited to, e.g. General Counsel, Internal
Audit, and Financial Controllers.) and the Supervisory Board.
■ We tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial
statements.
■ Our Forensic Specialists were involved in the oversight of several components and were present during discussions with component auditors, which
were selected based on complexity, risk and/or size.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
■ We evaluated whether the selection and application of accounting policies by the entity, particularly those related to subjective measurements and
complex transactions, may be indicative of fraudulent financial reporting.
■ We evaluated whether the judgments and decisions made by management in making the accounting estimates included in the financial statements
indicate a possible bias that may represent a risk of material misstatement due to fraud. Management insights, estimates and assumptions that
might have a major impact on the financial statements are disclosed in notes to the consolidated financial statements. We performed a retrospective
review of management judgments and assumptions related to significant accounting estimates reflected in prior year financial statements.
■ For significant transactions we evaluated whether the business rationale of the transactions suggests that they may have been entered into to
engage in fraudulent financial reporting or to conceal misappropriation of assets.
■ We assessed the impact of the cyber security incident in August 2023, which involved an authorized third party that gained access to the
Company’s systems. Among others, we performed the following procedures to assess the impact of the cyber security incident on Kendrion’s
operations and financial statements:
■ we and our component audit teams have performed inquiries with management and other relevant personnel;
■ we have assessed the work performed by management’s cyber expert;
■ Considered and performed additional testing on manual journal entries around the period of the cyber-attack;
■ Considered the impact of the cyber-attack on internal controls and our risk assessment; and
■ Analyzed trends in revenue, margins and other accounts subsequent to the downtime of the system.
■ In performing these procedures, we used the support of our component auditors, IT-specialists and forensic specialists.
This did not lead to indications for fraud potentially resulting in material misstatements.
Audit approach compliance with laws and regulations
We assessed the laws and regulations relevant to the entity through discussion with relevant employees, discussion with component teams, reading
minutes and reports of internal audit. We involved our forensic specialists in this evaluation.
As a result of our risk assessment procedures, and while realizing that the effects from non-compliance could considerably vary, we considered the
following laws and regulations: adherence to (corporate) tax law and financial reporting regulations, the requirements under the International Financial
Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code with a direct effect on the financial
statements as an integrated part of our audit procedures, to the extent material for the financial statements.
We obtained sufficient appropriate audit evidence regarding provisions of those laws and regulations generally recognized to have a direct effect on the
financial statements.
Apart from these, the entity is subject to other laws and regulations where the consequences of non-compliance could have a material effect on
amounts and/or disclosures in the financial statements, for instance, through imposing fines or litigation. Our procedures are more limited with respect
to these laws and regulations that do not have a direct effect on the determination of the amounts and disclosures in the financial statements.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Compliance with these laws and regulations may be fundamental to the operating aspects of the business, to the entity’s ability to continue its business,
or to avoid material penalties (e.g., compliance with the terms of operating licenses and permits or compliance with environmental regulations) and
therefore non-compliance with such laws and regulations may have a material effect on the financial statements. Our responsibility is limited to
undertaking specified audit procedures to help identify non-compliance with those laws and regulations that may have a material effect on the financial
statements. Our procedures are limited to (i) inquiry of management, the Supervisory Board, the Executive Board and others within the entity as to
whether the entity is in compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or regulatory
authorities to help identify non-compliance with those laws and regulations that may have a material effect on the financial statements.
In addition to the aforementioned we used a specific artificial intelligence solution with automatically analyzes worldwide news about Kendrion. Naturally,
we remained alert to indications of (suspected) non-compliance throughout the audit.
Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and regulations have been
disclosed to us.
Audit approach going concern
Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will
continue its operations for the foreseeable future, defined as until 31 December 2023. The Executive Board is of the opinion that, based on the current
state of affairs, it is justified that the financial statements are prepared on a going concern basis.
We have evaluated management’s assessment of the Company’s ability to continue as a going concern. In evaluating management’s assessment,
we considered whether management’s assessment includes all relevant information of which we are aware as a result of the audit.
We have evaluated the Company’s going concern assessment and performed (amongst others) the following procedures:
■ Analyzing and discussing cash flow, profit and other relevant forecasts with management;
■ Analyzing and discussing the entity’s latest available internal reportings;
■ Reading the terms of debt covenants and determining whether any have been breached;
■ Reading minutes of those charged with governance and relevant committees for reference to financing difficulties;
■ Inquiring of the entity’s Legal Counsel regarding the existence of litigation and claims and the reasonableness of management’s assessments of their
outcome and the estimate of their financial implications;
■ Performing audit procedures regarding subsequent events to identify those that either mitigate or otherwise affect the entity’s ability to continue
as a going concern;
■ Discussion with component auditors about facts and circumstances which might be relevant for the going concern assessment at group level.
■ Analyzing the Company’s assessment on the impact of the current market developments (i.e. demand volatility and increasing raw material prices).
Based on the procedure performed we concur with management’s evaluation.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have
communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In prior year, we included the goodwill impairment related to the Automotive Core CGU, the general IT controls and group audit as separate key audit
matters. In the current year, we have no longer included the goodwill impairment for Automotive Core as key audit matter, as this was impaired in 2022.
This year, we also considered the valuation of deferred tax assets, specifically related to China, to be a key audit matter.
1. General IT controls
Description
Kendrion has operations in different countries that use one
groupwide Financial IT platform (excl. INTORQ), which is located
and maintained in Villingen, Germany. In the last couple of years,
management has been in the process of establishing a formal IT
control framework and further enhancing the internal controls
surrounding the overall IT environment. We consider Kendrion’s IT
landscape and general IT controls over financial reporting as our
basis for designing audit procedures that are appropriate for our
audit. We have included general IT controls as a key audit matter
because the importance of these controls on the group’s control
environment.
How the key audit matter was addressed in the audit
We have evaluated the Group’s relevant general IT controls, including standard processes and procedures. Our work
consisted of assessing the main characteristics of the IT infrastructure and applications and of testing the relevant internal
controls related to the infrastructure, applications and related processes.
IT audit specialists have been deployed to assist us with testing the group’s general IT controls.
Observation
We observed that management has made further improvements in remediating control deficiencies detected by us in
previous years in relation to the General IT Controls. However, we concluded that (parts of) certain control deficiencies still
existed during the year and therefore we were not able to rely on the general IT controls for the audit of 2023.
As a result we applied a substantive audit approach.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
2. Valuation of a deferred tax asset related to carry forward losses in China
Description
Kendrion has recognized a deferred tax asset related to carry
forward losses in China of € 6,6 million which is disclosed under
note 4 to the financial statements. The deferred tax asset for carry
forward losses in China represents approx. 69% of the total
deferred tax assets for carry forward losses recognized per
balance sheet date, and therefore represents a significant portion
of this balance. Management has recognized this asset to the
extent that they consider it probable that taxable profit will be
available in the foreseeable future based on budget and mid-term
plans. As this is dependent to a large extent on estimates and
assumptions made by management and a recent history of
reported losses in China, the accounting treatment is subject to
uncertainties. Therefore we have classified this as a Key Audit
Matter.
How the key audit matter was addressed in the audit
We have performed the following audit procedures:
■ As part of our group audit oversight proceduresand to gain a better understanding of theChinese market, we have visited
the newKendrion factory in Suzhou, China, and heldmeetings with local management and ourcomponent audit team
about, amongst others,the operations and business outlook.
■ We obtained and reviewed the Company’sposition paper on the recognition of the deferredtax asset related to carry
forward losses.
■ We have assessed the accounting treatment ofthe deferred tax asset related to carry forwardlosses in cooperation with
our component auditteam in China.
■ We have tested management’s assumptions related to management’s forecast on realizing sufficient taxable profit in the
foreseeable future.
■ Specifically, we have challenged management on their assumptions made with regards to its budgets and business plans
and assessed the volumes, prices and margins with the underlying contracts and supporting calculations;
■ We have verified that the disclosure is in accordance with IAS 12.
We have adopted a substantive audit approach and did not rely on internal controls.
Observation
Based on our work performed, we conclude that management has sufficiently substantiated its assumptions in realizing
sufficient taxable profit in the foreseeable future. We therefore concur with management’s assessment in recognizing the
deferred tax asset for carry forward losses related to China.
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OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
3. Group audit
Description
Kendrion is a global organization which operates in 9 countries
and has 20 different locations in Europe, the Americas and
Asia. Almost all revenue and result before net finance costs are
generated outside the Netherlands and are audited by component
auditors of the Deloitte network. The direction and oversight of the
components is a substantial part of the audit of the consolidated
financial statement.
How the key audit matter was addressed in the audit
We have performed the following audit procedures:
■ We performed audit procedures at group level in areas such as IFRS 16, share-based payments, consolidation,
reporting, goodwill impairment testing and taxation. Specialists were involved, amongst others, in the areas of information
technology, tax and valuation.
■ At group level, we have performed audit procedures regarding the corporate entities and we also performed audit
procedures on Kendrion (Shelby) Inc. and 3T B.V.
■ For all other relevant foreign components, the group audit team provided detailed written instructions. Furthermore,
we developed a plan for overseeing each component audit team based on its relative significance to the Company and
certain other risk characteristics.
This included conference calls with component during all stages of the audit whereby fraud specialists accompanied the
group engagement team at several preselected components, performing both remote and onsite file reviews, attending
client meetings and reviewing component audit team deliverables in order to gain sufficient understanding of the work
performed.
■ We have performed site visits to Prosteˇ jov, Czech Republic, Shelby, USA, and Suzhou, China where we have visited
the factories, held discussions with management and our component auditors and performed an on-site file review.
■ As part of the interaction with the components we paid specific attention to the consistent application of the group
accounting policies.
■ As part of our audit of the consolidation, we tested the relevant controls around the elimination of all intercompany
transactions and positions and performed detailed substantive procedures.
Observation
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have
been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion
about the consolidated financial statements.
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OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Report on the other information included in the Annual Report
The annual report contain other information, in addition to the financial statements and our auditor’s report thereon.
The other information consists of:
■ Report of the Executive Board.
■ Report of the Supervisory Board.
■ Remuneration Report.
■ Other information as included in the report.
■ Other information as required by Part 9 of Book of the Dutch Civil Code.
Based on the following procedures performed, we conclude that the other information:
■ Is consistent with the financial statements and does not contain material misstatements.
■ Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise,
we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720.
The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.
Management is responsible for the preparation of the other information, including the report of the Executive Board.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the Supervisory Board as auditor of Kendrion N.V. on April 13, 2013, as of the audit for the year 2015 and have operated
as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit
of public-interest entities.
European Single Electronic Reporting Format (ESEF)
Kendrion N.V. has prepared its annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard
to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
In our opinion, the annual report, prepared in XHTML format, including the (partly) marked-up consolidated financial statements, as included in
the reporting package by Kendrion N.V. complies in all material respects with the RTS on ESEF.
Management is responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby
management combines the various components into one single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ‘Assurance-opdrachten inzake het voldoen aan de
criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting).
Our examination included amongst others:
■ Obtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package.
■ Identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and designing and
performing further assurance procedures responsive to those risks to provide a basis for our opinion, including:
■ obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance and
the XBRL extension taxonomy files has been prepared in accordance with the technical specifications as included in the RTS on ESEF;
■ examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups
have been applied and whether these are in accordance with the RTS on ESEF.
Description of responsibilities regarding the Financial Statements
Responsibilities of management and the Supervisory Board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2
of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable
the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern.
Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of
accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern
in the financial statements.
The Supervisory Board is responsible for overseeing the company’s financial reporting process.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during
our audit.
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. The materiality affects the nature, timing and extent
of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgement and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards
on Auditing, ethical requirements and independence requirements. Our audit included among others:
■ Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing
audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
■ Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
■ Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
management.
■ Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
■ Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.
■ Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect
we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of
the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set
of financial information or specific items.
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We communicate with Executive Board and the Supervisory Board regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant findings in internal control that we identified during our audit. In this respect we also submit
an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit
of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were of most significance in
the audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.
Eindhoven, 28 February 2024
Deloitte Accountants B.V.
B.Beemer
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Limited Assurance Report of the Independent Auditor on Kendrion N.V.’s sustainabilty information
To the shareholders and the Supervisory Board of Kendrion N.V.
Our conclusion
We have performed a limited assurance engagement on the sustainability information in the annual report of Kendrion N.V. for 2023 at Amsterdam.
Based on our procedures performed and the assurance information obtained, nothing has come to our attention that causes us to believe that the
sustainability information in the annual report of Kendrion N.V. does not present fairly, in all material respects:
■ The policy with regard to sustainability matters: The sustainability information consists of performance information regarding Energy consumption
and CO
2
-emission, Accidents and Lost Time Injuries, Illness rate and Number of Supplier audits in the sections ‘Facts and Figures’ on page 10 and
‘Sustainability review’ on pages 38-64 of the 2023 Annual Report (hereafter: “the KPIs”) and
■ The business operations, events and achievements in that area in 2023 in accordance with the applicable criteria as included in the ‘Criteria’ section
of our report.
Our scope is limited to the sustainability information included in the ‘Sustainability review’ chapter (pages 38-64) of the annual report. The EU Taxonomy
regulation disclosure included on page 53-58 is excluded from the limited assurance scope.
The sustainability information is included in the ‘Sustainability review’ of the annual report.
Basis for our conclusion
We have performed our limited assurance engagement on the sustainability information in accordance with Dutch law, including Dutch Standard 3000A
‘Assurance-opdrachten anders dan opdrachten tot controle of beoordeling van historische financiële informatie (attest-opdrachten)’ (assurance
engagements other than audits or reviews of historical financial information (attestation engagements). Our responsibilities in this regard are further
described in the ‘Our responsibilities for the examination of annual report’ section of our report.
We are independent of Kendrion N.V. in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO,
Code of Ethics for Professional Accountants, a regulation with respect to independence). Furthermore, we have complied with the ‘Verordening
gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics for Professional Accountants).
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Criteria
The sustainability information needs to be read and understood together with the reporting criteria. Kendrion N.V. is solely responsible for selecting and
applying these reporting criteria, taking into account applicable law and regulations related to reporting.
The reporting criteria used for the preparation of the sustainability information are disclosed in the chapter ‘About the Sustainability Report’ of the 2023,
which can be seen on pages 212-214.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable,
measurement techniques and can affect comparability between entities and over time.
Consequently, the sustainability information needs to be read and understood together with the criteria applied.
Limitations to the scope of our assurance engagement
The sustainability information includes prospective information such as ambitions, strategy, plans, expectations, and estimates and risk assessments.
Prospective information relates to events and actions that have not yet occurred and may never occur. We do not provide any assurance on the
assumptions and achievability of this prospective information.
The references to external sources or websites in the sustainability information are not part of the sustainability information as included in the scope
of our assurance engagement. We therefore do not provide assurance on this information.
Our conclusion is not modified in respect to these matters.
Responsibilities of the management board and the supervisory board for the sustainability information
The management board is responsible for the preparation and fair presentation of the sustainability information in accordance with the criteria as
included in the ‘Criteria’ section, including the identification of stakeholders and the definition of material matters. The management board is also
responsible for selecting and applying the criteria and for determining that these criteria are suitable for the legitimate information needs of stakeholders,
considering applicable law and regulations related to reporting. The choices made by the management board regarding the scope of the sustainability
information and the reporting policy are summarised in the chapter ‘about the sustainability report’ of the annual report.
Furthermore, the management board is responsible for such internal control as it determines is necessary to enable the preparation of the sustainability
information that is free from material misstatement, whether due to fraud or error.
The supervisory board is responsible for overseeing the sustainability reporting process of Kendrion N.V.
Our responsibilities for the assurance engagement on the sustainability information
Our responsibility is to plan and perform the assurance engagement in a manner that allows us to obtain sufficient and appropriate assurance evidence
for our conclusion.
Our assurance engagement is aimed to obtain a limited level of assurance to determine the plausibility of information. The procedures vary in nature and
timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in a limited assurance engagement is
therefore substantially less than the assurance that is obtained when a reasonable assurance engagement is performed.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We apply the ‘Nadere voorschriften kwaliteitssystemen)’ (NVKS, regulations for Quality management systems) and accordingly maintain a
comprehensive system of quality management including documented policies and procedures regarding compliance with ethical requirements,
professional standards and other relevant legal and regulatory requirements.
Our limited assurance engagement included among others:
■ Performing an analysis of the external environment and obtaining an understanding of relevant sustainability themes and issues, and the
characteristics of the company.
■ Evaluating the appropriateness of the criteria applied, their consistent application and related disclosures in the sustainability information.
■ Obtaining through inquiries a general understanding of the internal control environment, the reporting processes, the information systems and the
entity’s risk assessment process relevant to the preparation of the sustainability information, without obtaining assurance information about the
implementation or testing the operating effectiveness of controls.
■ Identifying areas of the sustainability information where misleading or unbalanced information or a material misstatement, whether due to fraud or
error, is likely to arise. Designing and performing further assurance procedures aimed at determining the plausibility of the sustainability information
responsive to this risk analysis. These procedures consisted among others of:
■ obtaining inquiries from management at group level responsible for the sustainability strategy, policy and results;
■ obtaining inquiries from relevant staff responsible for providing the information for, carrying out internal procedures on, and consolidating the
data in the sustainability information;
■ obtaining assurance evidence that the sustainability information reconciles with underlying records of the company;
■ reviewing, on a limited test basis, relevant internal and external documentation;
■ performing an analytical review of the data and trends;
■ Considering the overall presentation and balanced content of the sustainability information.
■ Considering whether the sustainability information as a whole, including the sustainability matters and disclosures, is clearly and adequately
disclosed in accordance with applicable criteria.
We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the assurance engagement and
significant findings that we identify during our assurance engagement.
Eindhoven, 28 February 2024
Deloitte Accountants B.V.
B. Beemer
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Industrial
Industrial Actuators and Controls (Robert Lewin) Managing Director
Kendrion (Donaueschingen/Engelswies) GmbH, Donaueschingen, Germany Robert Lewin
Kendrion (China) Co. Ltd, Suzhou, P.R. China Telly Kuo
Kendrion (Mishawaka) LLC, Mishawaka, USA Corey Hurcomb
Kendrion Industrial (Sibiu) S.R.L., Sibiu, Romania Mihai Petculescu
Kendrion (Linz) GmbH, Linz, Austria Christian Edelmaier
Kendrion Kuhnke Automation GmbH, Malente, Germany Robert Lewin
Kendrion Kuhnke (Sweden) AB, Kristianstad, Sweden Niklas Sjöström
3T B.V., Enschede, the Netherlands Michiel Bloemen
Industrial Brakes (Robert Lewin) Managing Director
Kendrion (Villingen) GmbH, Villingen-Schwenningen, Germany Ralf Wieland
Kendrion (China) Co. Ltd, Suzhou, P.R. China Telly Kuo
Kendrion (Mishawaka) LLC, Mishawaka, USA Corey Hurcomb
Kendrion INTORQ GmbH, Aerzen, Germany Lars Knoke
INTORQ (Shanghai) Co. Ltd, Shanghai, P.R. China Telly Kuo
Kendrion (Atlanta) Inc (previous INTORQ US Inc.), Atlanta, USA Olaf Detlef
INTORQ India Private Limited, Pune, India Aniket Gujrathi
Automotive (Ralf Wieland / Richard Mijnheer) Managing Director
Kendrion (Villingen) GmbH, Villingen-Schwenningen, Germany Ralf Wieland
Kendrion Kuhnke Automotive GmbH, Malente, Germany Richard Mijnheer, Ralf Wieland
Kendrion (Markdorf) GmbH, Markdorf, Germany Ralf Wieland
Kendrion Automotive (Sibiu) S.R.L, Sibiu, Romania Andra Boboc
Kendrion (Prosteˇ jov) s.r.o, Prosteˇ jov, Czech Republic Tomas Soldan
Kendrion (Shelby) Inc., Shelby, USA Ingo Griessmann
Kendrion (China) Co. Ltd, Suzhou, P.R. China Telly Kuo
Kendrion N.V. has, directly or indirectly, a 100% interest in all subsidiaries.
PRINCIPAL SUBSIDIARIES
At 31 December 2023
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Consolidated
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Blasio Grundstückverwaltungsgesellschaft mbh & Co Vermietungs KG, Mainz, Germany
Combattant Holding B.V., De Bilt, the Netherlands
Kendrion (Eibiswald) GmbH, Eibiswald, Austria
INTORQ Beteiligungs GmbH, Aerzen, Germany
Kendrion FAS Controls Holding GmbH, Villingen-Schwenningen, Germany
Kendrion Finance B.V., Zeist, the Netherlands
Kendrion Holding Germany GmbH, Markdorf, Germany
Kendrion Holding USA Inc., Indianapolis, USA
Kendrion IP Management GmbH, Malente, Germany
Kendrion Kuhnke GmbH, Malente, Germany
Kendrion Marketing B.V., Zeist, the Netherlands
Kendrion Toluca, SA de CV, Mexicaltzingo, Mexico
Kendrion (UK) Ltd., Bradford, United Kingdom
Landfort I B.V., Zeist, the Netherlands
Kendrion N.V. has, directly or indirectly, a 100% interest in all subsidiaries.
OTHER HOLDING AND DORMANT ENTITIES
At 31 December 2023
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
GLOSSARY – DEFINITIONS OF NON IFRS FINANCIAL MEASURES
Added value is a non-IFRS financial measure, which is defined
as total revenue and other income plus changes in inventory
of finished goods and work in progress and subtracted by raw
materials and subcontracted work. Added value is a measure
of the group’s ability to generate a variable profit contribution
on its revenue that is sufficient to absorb the total staff and
other operating expenses. It is an important factor is assessing
to what extent increasing or decreasing revenue volumes will
contribute to the group’s profit.
EBITA is a non IFRS financial measure, which is defined
as profit for the period before income tax expense, finance
income, finance expense, share of profit or loss of an associate
and amortization of other intangible fixed assets. EBITA is a
measure of the group’s ability to realize a positive return on the
group’s operations and continue to provide shareholder returns.
EBITDA is a non IFRS financial measure which is defined
as profit for the period before income tax expense, finance
income, finance expense, share of profit or loss of an associate,
depreciation and amortization. EBITDA is a measure of the
group’s ability to continue to invest in the group’s operations
and provide shareholder returns.
Free cash flow is a non IFRS financial measure that is defined
as cash from operating activities less cash from investing
activities. Free cash flow is a measure of cash flow which is
available for repayment of outstanding interest-bearing debt or
dividend to the shareholders.
Invested capital is a non IFRS financial measure that is defined
as the sum of property plant and equipment, intangible assets,
other fixed assets and net working capital. Invested capital is
a measure to assess the amount of equity and interest-bearing
debt the company has invested in assets and is an important
measure for investors to assess how well a company is using
its financial resources to generate shareholder returns. Invested
capital is a measure widely used by investors and security
analysts to evaluate a group’s profitability relative to other
investment opportunities.
Leverage ratio is a non IFRS financial measure that is defined
as net debt divided by EBITDA. The leverage ratio is a measure
to evaluate the credit worthiness of the group and the ability
of the group to continue to fund its operations with debt.
The leverage ratio is widely used by investors, analysts,
lenders and others to assess the groups credit worthiness in
comparison to other industrial and automotive manufacturing
companies and in relation to the financial covenant agreed in
the group’s financing arrangement which its main lenders.
Net debt is a non IFRS financial measure that is defined as
bank overdraft, current and non-current loans and borrowings
subtracted by cash and cash equivalents. Net debt is a
measure in determining the group’s financial position.
In comparison to the available credit facilities, the total net debt
is an important factor in assessing the group’s liquidity and
in combination which the group’s EBITDA, the net debt is an
important factor in determining the group’s credit worthiness
and ability to fund future investments.
Normalized EBITA is non IFRS financial measures, which is
defined as EBITA before restructuring expense and other
adjustments not related to the group’s normal course of
business including but not limited to gains or losses on
divestitures, transaction costs related to business combinations
and impairments. Normalized EBITA is a measure of the group’s
ability to realize a positive return on the core operations and
continue to provide shareholder returns. We use normalized
EBITA in assessing the effectiveness of business strategies.
In addition to its use by management, we also believe
normalized EBITA is a measure widely used by securities
analysts, investors and others to evaluate financial performance
of the group relative to other industrial and automotive suppliers.
Normalized EBITDA is a non IFRS financial measure which
is defined as EBITDA before restructuring expense and
other adjustments not related to the group’s normal course
of business including but not limited to gains or losses on
divestitures, transaction costs related to business combinations
and impairments. Normalized EBITDA is a measure of the
group’s ability to continue to invest in the operations and provide
shareholder returns based on the core operations. We use
normalized EBITDA in assessing the effectiveness of business
strategies, evaluating and pricing potential acquisitions and as
a factor in management incentive decisions. In addition to its
use by management, we also believe normalized EBITDA is
a measure widely used by securities analysts, investors and
others to evaluate financial performance of the group relative to
other industrial and automotive suppliers.
Normalized effective tax rate is a non IFRS measure that is
defined as reported income tax expenses before adjustments
not related to the group’s normal course of business, including
but not limited to income tax expense on restructuring costs
and impairments, divided by normalized profit before tax which
is defined as profit before tax before adjustments not related to
core operations, including but not limited to restructuring costs
and impairments. Normalized effective tax rate is used to assess
the group’s tax expense in relation to the profit before tax from
its core activities. The normalized effective tax rate is used to
evaluate the effective tax rate relative to previous periods and
other companies.
Normalized free cash flow is a non IFRS financial measure that
is defined as free cash flow before cash flow related to
restructuring expense and other adjustments that are not related
to the group’s core operations, including but not limited to
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
acquisitions and divestitures. Normalized free cash flow is
a measure of cash flow from the group’s core activities which is
available for repayment of outstanding interest-bearing debt or
dividend to the shareholders. We use normalized free cash flow
as a factor in management incentive decisions. In addition to its
use by management, we also believe normalized free cash flow
is a measure widely used by securities analysts and investors
and others to evaluate the value of the group.
Normalized invested capital is a non IFRS measure that is
defined as invested capital adjusted for items in the statement
of financial position that are considered not to be part of the
group’s normal course of business, including but not limited
to provisions or liabilities related to restructurings. Normalized
invested capital is used to assess the return the company
generates on the amount the company has invested in assets
related to its core operations and is a measure for investors
to assess how well a company is using its financial resources
to generate shareholder returns.
Normalized interest charges is a non IFRS measure that is
defined as financing costs before adjustments not related to
the group’s normal course of business including but not limited
to gains or losses on the recycling of currency translation
results previously recorded in equity upon the liquidation of
a legal entity. Normalized interest charges is used to assess
the amount of net financing costs recognized related to the
core operations of the group. Normalized interest charges
is used to be able to compare interest charges to previous
reporting periods and other companies.
Normalized net profit before amortization is a non IFRS
measure that is defined as profit for the period before
amortization and restructuring expense and other adjustments
not related to the group’s core operations including but not
limited to gains or losses on divestitures, transaction costs
related to business combinations and impairments. Normalized
net profit before amortization is a measure of the group’s ability
to realize a positive return on core operations and continue to
provide shareholder returns when excluding any profit impact
from amortizing intangibles arising from business combinations.
The measure is used by management, investors and security
analysts in order to evaluate the shareholder return relative to
companies that do not include business combinations.
Normalized staff and other operating expense is a non
IFRS measure that is defined as operating expense before
restructuring expense and other adjustments not related to
the group’s normal course of business including but not limited
to gains or losses on divestitures, transaction costs related to
business combinations and impairments. Normalized operating
expense is used to assess the amount of operating expense
recognized related to the core operations of the group.
Normalized operating expense is used to be able to evaluate
expenses to previous reporting periods and other companies.
Normalized working capital is a non IFRS measure that is
defined as working capital adjusted for items in the statement
of financial position that are considered not to be part of the
group’s core operations, including but not limited to provisions
or liabilities related to restructurings. Normalized working
capital is used to assess the amount of cash the company has
invested in short term and non-interest-bearing assets and
liabilities in order to run its core operations.
Organic growth is a non IFRS financial measure that is defined
as revenue in the period under review divided by the revenue
in the previous period, excluding revenue that is attributable
to a business combination in one of both periods and/or
the revenue contribution that attributable to a divestiture in one
of both periods. Organic growth is a measure to which extent
the group has been able to increase its revenue compared
to the previous period on a comparable basis and therefore
excluding the impact from acquisitions. Organic growth is
one of the groups long term financial targets. We use organic
growth in assessing the effectiveness of business strategies.
In addition to its use by management, we also believe organic
growth is a measure widely used by securities analysts,
investors and others to evaluate the success of the company’s
commercial strategies and effectiveness relative to other
industrial and automotive suppliers.
ROI or Return On Invested Capital is a non IFRS financial
measure that is defined as EBITA dividend by the sum of
property plant and equipment, intangible assets, other fixed
assets and net working capital subtracted with the amount
of goodwill and other intangible assets arising from business
combinations. ROIC is a measure that assesses the result
from operations is generated per currency equivalent that the
group has invested in property plant and equipment and other
net assets that are part of the group’s operations. ROIC is an
important factor in assessing relative profitability and used as
a factor in management incentive decisions. Besides the use by
management, we believe ROIC is widely use by investors and
securities analysts to assess the performance of the group in
comparison to other manufacturing companies or alternative
investment propositions.
Solvency is a non IFRS financial measure that is defined as total
equity divided by the sum of total equity and total liabilities.
Solvency is a measure that assesses the portion of the total
assets that is funded by equity. We use solvency as a measure
of financial position and credit worthiness. In addition to its use
by management we believe solvency is a measure widely use
by lenders and analysts to evaluate the credit worthiness of
the group.
GLOSSARY – DEFINITIONS OF NON IFRS FINANCIAL MEASURES
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
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statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
RECONCILIATION OF NON IFRS FINANCIAL MEASURES
Measures related to the statement of profit and loss
Organic growth (revenue)
EUR million - unless stated otherwise 2023 2022
Reported revenue 518.5 519.3
Exclude: currency effects on revenue 5.2 –
Normalized revenue (excl. currency effects)
523.7 519.3
Organic growth 0.9% –
Added value
EUR million 2023 2022
Reported total revenue and other income 518.6 519.8
less: Reported changes in inventories of finished goods and
work in progress
(0.6) (1.8)
less: Reported raw materials and subcontracted work (275.1) (268.7)
less: Benefits outside the normal course of business − (0.5)
Normalization of other costs outside the normal course of business 0.1 −
Added value
243.0 248.8
Added value margin % 46.9% 48.1%
Normalized staff, impairments and other operating expenses
EUR million 2023 2022
Reported staff costs 151.5 153.6
Reported impairments of fixed assets 0.1 58.7
Reported other operating expenses 40.7 43.6
Reported staff, impairments and other operating expenses
192.3 255.9
Normalization of restructuring charges (2.3) (5.9)
Normalization of impairments PP&E, goodwill and other intangibles (0.0) (58.6)
Normalization of other (costs) and benefits outside the normal course of
business
(0.1) –
Normalized staff, impairments and other operating expenses
189.9 191.4
Currency effects 1.5 (4.3)
Normalized staff, impairments and other operating expenses
(excl. currency effects)
191.4 187.1
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Bridge from EBITDA to normalized net profit before amortization
EUR million 2023 2022
Reported result before net finance costs 23.8 (34.6)
Reported depreciation and amortization 26.8 28.0
Reported operating result before depreciation &
amortization (EBITDA)
50.6 (6.6)
less: Depreciation on PP&E (20.5) (20.9)
less: Amortization on non-PPA related intangibles (3.1) (2.4)
Reported operating result before amortization (EBITA)
27.0 (29.9)
Normalization of costs and (benefits) related to:
Restructuring measures - Automotive 0.8 5.1
Restructuring measures - Industrial 1.5 0.3
Impairments Goodwill and other intangibles - Automotive – 57.3
Impairments PP&E - Automotive – 1.0
Impairments PP&E - Industrial 0.0 0.3
Other costs / (benefits) outside the normal course of business
- Automotive
0.2 –
Other costs / (benefits) outside the normal course of business
- Industrial
– –
Total Normalizations
2.5 64.0
Normalized EBITDA 53.1 57.4
Normalized EBITDA margin % 10.2% 11.1%
Normalized EBITA
29.5 34.1
Normalized EBITA margin % 5.7% 6.6%
Reported amortisation on PPA related intangibles (3.2) (4.7)
Reported net finance costs (9.9) (5.1)
Normalization related to credit facility – 0.5
Other normalizations of net finance costs (0.0) 0.2
Normalized profit before income tax
16.4 25.0
EUR million 2023 2022
Reported income tax expense (4.0) (6.6)
Normalization related to tax audits 0.6 0.5
Normalization related to deferred income tax adjustment (0.8) 1.2
Impact costs / (benefits) outside the normal course of business
on income tax expense
(0.7) (1.9)
Amortization after tax 2.4 3.5
Normalized net profit for the period before amortization
13.9 21.7
Measures related to the Statement of financial position
Invested capital at 31 December
EUR million 2023 2022
Property, plant and equipment 134.5 131.6
Intangible assets 125.8 126.5
Net working capital 63.9 65.7
Other fixed assets 1.1 0.7
Invested capital
325.3 324.5
Goodwill and other intangibles related to acquisitions (107.8) (111.2)
Operating invested capital
217.5 213.3
Impact costs / (benefits) outside the normal course of business
on invested capital
1.4 4.5
Normalized invested capital
218.9 217.8
RECONCILIATION OF NON IFRS FINANCIAL MEASURES
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Net Debt & Leverage ratio
EUR million - unless stated otherwise 2023 2022
Total interest bearing loans 165.6 178.1
less: Cash and cash equivalents (20.6) (37.8)
Net Debt
145.0 140.3
Normalized EBITDA 53.1 57.4
Leverage ratio (Net Debt / Normalized EBITDA)
2.7 2.4
Net working capital at 31 December
EUR million 2023 2022
Inventories 87.4 85.1
Trade and other receivables, tax receivable 72.8 75.2
Less: Trade and other payables, tax payables, current
provisions and assets clasified as held for sale
(96.3) (94.6)
Net working capital
63.9 65.7
Impact one-off costs and benefits on working capital 1.7 2.8
Normalized working capital
65.6 68.5
As % of revenue 12.6% 13.2%
Measures related to the Statement of cash flows
Free cash flow
EUR million 2023 2022
Net cash flow from operating activities 36.4 37.9
Net cash flow from investing activities (29.6) (37.9)
Free cash flow
6.8 0.0
Normalizations 4.5 3.1
Normalized free cash flow
11.3 3.1
Ratios
Return on Investment % (ROI)
EUR million - unless stated otherwise 2023 2022
Normalized EBITA 29.5 34.1
Normalized Invested capital 218.9 217.8
Return on Investment % (ROI)
13.5% 15.6%
Solvency
EUR million - unless stated otherwise 2023 2022
Total equity 172.0 175.0
Total assets 462.3 476.6
Solvency %
37.2% 36.7%
Normalized effective tax rate
EUR million - unless stated otherwise 2023 2022
Reported income tax expense (4.0) (6.6)
Normalization related to tax audits 0.6 0.5
Normalization related to deferred income tax adjustment (0.8) 1.2
Impact costs / (benefits) outside the normal course of business
on income tax expense
(0.7) (1.9)
Normalized income tax expense
(4.9) (6.8)
Normalized profit before tax 16.4 25.0
Normalized effective tax rate %
30.4% 27.4%
RECONCILIATION OF NON IFRS FINANCIAL MEASURES
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
ABOUT THE SUSTAINABILITY REPORT
The scope of Kendrion’s sustainability/ESG or non-financial
reporting is based on the information requirements of our key
stakeholder groups.
For a focused strategic approach, aimed at a healthy balance
between stakeholder expectations and business aspirations,
we identify and assess the material topics that are most
relevant to Kendrion’s activities. To this end, Kendrion uses
a materiality analysis to gain insight into the relevance and
importance of topics for both Kendrion and our stakeholder
groups. The relevance of identified material topics for internal
and external stakeholders may vary and is subject to change.
In this Annual Integrated Report, we are disclosing material
topics following our 2020 materiality assessment which did not
reveal significant movements in the ranking of individual themes
compared to the assessment of 2018. The outcome of the
2018 and 2020 assessments is a refined number of material
themes structured in a materiality matrix around Kendrion’s
three pillars of value creation that form the basis of the global
sustainability program: Natural Capital, Social and Human
Capital and Responsible Business Conduct.
Our current materiality matrix shows an enhanced classification
and organization of material themes with a view to maintaining
continued focus on those themes where Kendrion can have
the most impact.
The outcome of the 2018 and 2020 materiality analyses
formed important input for Kendrion’s sustainability program
and the 2019-2023 target framework as well as the further
development and execution thereof.
While this Annual Integrated Report generally covers topics in
the above materiality matrix, under Kendrion’s second 5-year
sustainability plan covering 2019-2023, Kendrion has chosen
to not set measurable sustainability targets for each material
topic, but instead select the topics where it can have most
impact. Kendrion reports against the 2019-2023 target
framework and related commitments.
Kendrion reports only on the most relevant material topics.
The most relevant material topics are economic performance,
anti-corruption, energy efficiency, carbon emissions,
occupational health and safety, training and education,
non-discrimination, and equal opportunities.
For a description of our materiality analysis, please refer to
pages 39-40 of this Annual Integrated Report.
Kendrion makes use of the Global Reporting Initiative (GRI)
reference claims for most of the general information and
material topics, including: economic performance, anti-
corruption, energy efficiency, emissions to air, occupational
safety and health and non-discrimination and equal
opportunities. This Annual Integrated Report references
Disclosure 201-1 (a) from GRI 201: Economic performance
2016, Disclosure 205-3 from GRI 205: Anti-corruption 2016,
Disclosure 302-1 (a, c, e-g) from GRI 302: Energy 2016,
Disclosure 305-1 (a, d, f-g) from GRI 305: Emissions 2016,
Disclosure 305-2 (a, d, f-g) from GRI 305: Emissions 2016,
Disclosure 403-9 (a, d-g) from GRI 403: Occupational Health
and Safety 2018, Disclosure 405-1 (a-i, b-i) from GRI 405:
Diversity and Equal Opportunities 2016. For the material
themes ‘responsible procurement practices’ and ‘training and
education’, Kendrion has developed its own indicators.
Kendrion’s non-financial reporting includes only data from
entities that are – directly or indirectly – wholly owned by
Kendrion N.V., unless explicitly stated otherwise. Acquisitions
are reported as from the effective date ownership is acquired.
Being transparent and accountable is fundamental to the way
in which Kendrion operates. Kendrion adheres to a solid
validation and reporting process supported by an appropriate
control framework in order to safeguard the quality and
accuracy of data collected. With a view to maintaining the
quality and consistency of the data reported, the reporting
process and applicable definitions relevant to all non-financial
data collected and subsequently consolidated, are recorded in
an internal reporting manual which is regularly reviewed and
evaluated. Internal control procedures safeguarding the quality
and accuracy of non-financial data collected are part of
Kendrion’s Risk Management Framework. Compliance with the
internal reporting manual and the internal control procedures
are reviewed by the Global Internal Audit and Risk Manager.
The sustainability figures and data presented in this Annual
Integrated Report are not always fully comparable with those
of other companies. This may be caused by differences in
targets and definitions applied and the nature and spread of
Kendrion’s activities making comparison with other industrial
companies difficult. Information used was collected from the
existing management and reporting systems. Any estimates
or forecasts included are explicitly referred to as such.
In 2023, Kendrion closed its production location in Shanghai
and relocated the Shanghai production to its new
manufacturing facility in Suzhou. For the production location in
Shanghai energy consumption values are reported for the first
months of 2023 until completion of the relocation to the new
facility in Suzhou. During 2022 Kendrion closed its production
location in Eibiswald (Austria) and moved relevant production
equipment to Villingen (Germany) and Sibiu (Romania).
For 2022 the production location in Eibiswald was still included
in the non-financial reporting, although production in Eibiswald
ceased in the course of Q3 2022.
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Annual Integrated Report 2023
213
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The non-financial information reported faithfully represents
the outcome of systematic data collection and review.
The reported numbers for energy consumption, absolute and
relative & CO
2
emissions, accidents, lost time injury, illness,
supply chain management as described in the section
‘Sustainability review’ of the 2023 Annual Integrated Report,
have been subjected to a review by the external auditor
Deloitte Accountants B.V. The auditor’s report with limited
assurance on selected targets is included on pages 190-201.
For the reported numbers associated with relative energy
consumption, relative CO
2
emission, accidents per 1,000 FTE,
Lost Time Injuries (LTI), illness rate and audits performed at
direct suppliers, Kendrion used the GRI Standards Specific
Disclosures 302-1, 305-1, 305-2 and 403-2 respectively as
described in the GRI referenced claim mentioned above.
We report on the same indicators as in previous years
and there are no material restatements on the information
accordingly presented in previous years.
Definitions, reporting period and scope
Energy consumption and CO
2
emission
The information on energy consumption is based on the
consumption of Kendrion’s production facilities (electricity,
natural gas, fuel oil) in Germany, the Czech Republic, the USA,
China, India and Romania. For greenhouse gas emissions,
Kendrion applies the same reporting scope as for energy
consumption, only operational control. In our calculations we
only included CO
2
emissions, other emissions like CH4, N2O,
HFCs, PFCs, SF6 and NF3 are not material for us and therefore
not included. Internal and external transport under Kendrion’s
control is limited, therefore transport emissions are excluded.
The relative energy consumption and CO
2
emissions are based
on the added value of the relevant production facilities.
The added value is the revenue plus other income, minus
the changes in inventory and work in progress and minus raw
materials and subcontracted work.
The absolute and relative energy consumption and CO
2
emissions are reported for a 12-month period. Where
information is timely available, the absolute and relative energy
consumption and CO
2
emissions are reported for the period
1 January 2023 up to and including 31 December 2023.
Comparative figures for previous years are calculated based
on identical timeframes.
Calculation of the CO
2
emissions is based on the following
conversion factors:
■ Electricity generated from renewable sources: 0
■ Electricity generated from non-renewable sources
(average): 0.368 kg/kWh (2022: 0.391 kg/kWh)
■ Renewable gas for plants with carbon neutral contracts: 0
■ Natural gas for other plants (average): 0.106 kg/kWh
(2022: 0.112 kg/kWh)
■ Fuel oil (average): 0.208 kg/kWh (2022: 0.206 kg/kWh)
Accidents and LTI
Kendrion reports the total number of work-related accidents
during working time or on the way to or from work for its own
employees and independent contractors under supervision of
Kendrion. Only the accidents that the group entity had to report
to an external institution are reported. As of 2017, Kendrion
reports accidents from all group entities that caused an
absence of more than three calendar days, not including the
day of the accident. This definition is based on regulations
applicable in Germany. In addition, Kendrion reports the
absence resulting from work-related accidents.
The Lost Time Injury (LTI) is time (‘scheduled working days’)
that could not be worked (and is thus ‘lost’) as a consequence
of an employee being unable to perform the usual work due to
an occupational accident (‘at work accident’ as well as ‘way-to-
work accident’) or disease. Kendrion makes no difference in
whether the salaries or wages were paid by Kendrion or by an
external institution during that time.
A return to limited duty or alternative work for the same
organization does not count as ‘lost days’. Counting of ‘lost
days’ begins with the first scheduled working day of full
absence (e.g. the day after the accident). The count of ‘absent
days’ due to a work-related accident ends when the employee
either is fully back to work or is absent from work for other
reasons (e.g. vacation, reduction in overtime, etc.). A lost day
counts as one full day regardless of whether the employee has
a part-time or a full-time contract. Kendrion does not specify
LTI data per region, worker type or gender as Kendrion
considers this information not relevant to its current operations.
Illness rate
The reported illness rate is based on the total illness hours.
The locations in Shelby and Atlanta reported 0% illness on
a yearly basis since no registration of illness takes place.
The total illness hours with and without wage continuation,
cumulative divided by the total timetable hours, cumulative.
Supplier audits
As mentioned above, for reporting on the number of supplier
audits (i.e. ‘responsible procurement practices’) Kendrion
makes use of its own indicator.
ABOUT THE SUSTAINABILITY REPORT
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Annual Integrated Report 2023
214
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
ABOUT THE SUSTAINABILITY REPORT
The supplier audits are internal audits by Kendrion employees
based on an internal procedure that prescribes the collection
of Corporate Responsibility documentation (e.g. Code of
Conduct, ABC Policy, Whistle-blower procedure) of the relevant
supplier in the case the supplier is ISO certified and the use
of standardized self-assessment questionnaires in the case
the supplier is not ISO certified.
Kendrion has not selected underlying performance indicators or
GRI indicators for the following topics: ‘non-discrimination and
equal opportunities’, ‘market presence’, ‘responsible material
consumption’, ‘environmental & energy management’, ‘human
rights’, ‘effluents and waste management’, ‘customer privacy
and data security’, ‘anti-competitive behavior’, ‘biodiversity’,
‘responsible local citizenship’, ‘innovation’, ‘customer
relationship and satisfaction’, ‘remuneration policy’ and
‘business ethics’. Following further engagement with Kendrion’s
stakeholders in the course of 2023, Kendrion will consider
to what extent these material themes continue to be relevant
to stakeholders and whether indicators on these topics should
be developed.