ANNUAL REPORT
2020/21

KLINGELNBERG AG
Binzmühlestrasse 1718050 Zürich, SwitzerlandFon:+41 44 278 7940
Mail: investorrelations@klingelnberg.com
Web: www.klingelnberg.com

Content
03 To our Shareholders
06 At a Glance
10 Highlights 2020/21
18 Company Profile
24 Management Report
34 Corporate Governance
60 Compensation Report
76 Consolidated Financial Statements
112	Statutory Financial Statements of
KLINGELNBERG AG
132 Alternative Performance Measures
136 Financial Calendar

KLINGELNBERG GROUP
To our Shareholders

Dear Shareholders,Your company, KLINGELNBERG AG, looks back on a financial year in which we have demonstrated
impressive strength. KLINGELNBERG has shown that the company is fully capable of coping withdifficult situations. By doing so, the company has demonstrated the intrinsic power it possesses –both economically and in terms of the quality and commitment of its management and employees.
Let’s not forget: The entire financial year was dominated by crises, on which the company had
no influence. There was COVID-19, but also the blockage of the Suez Canal, which meant thatmachines could no longer be shipped within the financial year and numerous further difficulties.
And yet, KLINGELNBERG managed to record better figures increasingly over the financial year
and reverse the negative trend. KLINGELNBERG can justifiably claim that every aspect that thecompany was able to control has developed positively.
Several factors influenced the company’s performance in the past financial year:
In addition to the uncertainty in the automotive industry due to legislative communications
and discussions about future technologies, particularly in Europe, the corona crisis also affected our company. OEMs postponed investments, and planned investments in machines for combustion technology were often canceled or reconsidered. The same applied to investments incapacities for e-Mobility.
Supply chains were under pressure due to COVID-19, as were the logistics for delivering machines. The traditional service and maintenance business for our machines was also affected.
The major regions developed very differently economically. Reliable forecasts were impossible.
KLINGELNBERG did everything it could early on to defy the strong headwind – and proved
highly successful in doing so. Our Efficiency Enhancement Program, designed to reduce costs
and optimize processes, is taking effect. This can be seen, among other things, from the fact that
KLINGELNBERG was able to improve its operating result by EUR 7,2 million to EUR -11,6 million
despite a EUR 53,4 million drop in net sales.
KLINGELNBERG has done a lot:We have kept the cash positions stable.
We have further developed and improved our positions in the areas of e-Mobility and Renewable Energies.
We have pushed ahead with our Efficiency Enhancement Program.
And we have maintained our innovative strength at a high level despite all the difficulties we
had to cope with.

03

KLINGELNBERG GROUP
To our Shareholders

We have also used the crisis as an opportunity. In many markets such as China, the USA and otherregions, KLINGELNBERG participated disproportionately in the incipient boom in orders for windturbines. In the automotive sector, KLINGELNBERG is excellently positioned for developments ine-Mobility and has won numerous contracts. It has once again proven a successful strategy to be
diversified across all relevant industries and to be positioned worldwide while competing for orders
with a high level of entrepreneurial commitment. This proved a successful way to participate in the
rapid recovery in Asia, especially in China while at the same time compensating for losses in theautomotive market by expanding our position in the dynamically growing market for renewableenergies. As a result, KLINGELNBERG was able to win substantial order volumes, particularly inthe final months of the financial year. In individual months, order intake even reached the highest
levels in the history of our company. That is certainly anything but self-evident in the current
environment.
We see ourselves well equipped for the future: Our grinding machines for the wind power industry
are appreciated and demanded by customers worldwide. Our integrated solutions for e-Mobility
are very popular, and together with our partners we are working to meet the ever-increasing
demands of this highly sophisticated emerging market.
We, therefore, have every reason to look to the future with confidence:
We have mastered the pandemic in an impressive manner so far, and with full order books, weare entering what we hope will be a successful 2021/22 financial year. And we know that also thecoming financial year will be a year of innovations.
At this point, and in view of the great challenges we have had to master and will have to master inthe future, we would like to thank our customers, our employees and, last but not least, you, ourshareholders: Thanks to your support, we have made it through this crisis in good shape, we havebeen able to position the company in the best possible way and can now get off to a flying start!

Dr. Jörg Wolle
Chairman of the Board of Directors
Zürich, 23 June 2021

04

Jan Klingelnberg
CEOKLINGELNBERG GROUP
To our Shareholders05

At a GlanceKLINGELNBERG GROUP
At a Glance

Financial overview
Key facts
Net sales of EUR 158,7 million (-25,2%)

No dividend payout this year

Order intake rose by EUR 21,0 million(+10,8%) to EUR 215,5 million
EBIT amounted to EUR -11,6 million,
an increase of EUR 7,2 million
Net loss amounted to EUR -7,3 million
Equity ratio remained solid at 55,6%Group key figures
2020/212019/20

ChangeNet sales from goods and services

158,7

212,1

-53,4

Order intake

215,5

194,5

21,0

Order backlog

157,7

100,7

57,0

Operating result (EBIT)

-11,6

-18,8

7,2

Net loss

-7,3

-25,4

18,1

Basic earnings per share (in EUR)

-0,82

-2,87

2,05

Diluted earnings per share (in EUR)

-0,82

-2,87

2,05

Operating result as % of net sales from goods and services(7,3%)(8,9%)

1,6%

Net loss as % of net sales from goods and services(4,6%)(12,0%)

7,4%

Cash flow from operating activities

7,6

-2,2

9,8

Investments

3,7

5,6

-1,9

Free cash flow

7,3

-6,5

13,8

1.145,01.250,6-105,631.03.2021

31.03.2020

ChangeTotal liabilities and equity

216,9

244,9

-28,0

Net debt

-15,5

-8,7

-6,8

Total equity

120,5

131,6

-11,1

Equity ratio

55,6%

53,7%

1,9%

EUR million

Employees (FTE)

EUR million

For alternative performance measures please refer to chapter Alternative Performance Measures.

07

KLINGELNBERG GROUP
At a Glance

Net sales from goods and services, in EUR million

Order intake, in EUR million

300

300

250
200

257,0

278,2

231,0

250

158,7

50

50

2017/18

2018/192019/20

2020/21

215,5

150
100

2016/17

265,2

194,5

100

0

263,2

200

212,1

150

253,4

0

Order backlog, in EUR million

2016/172017/18

2018/192019/20

2020/21

Employees (FTE), full time equivalents
157,7

140
120

1400

124,9

130,7

1200

118,2

100

800

60

600

40

400

20

200
2016/172017/18

2018/192019/20

2020/210

Personnel expense, in EUR million

1.310

1.251
1.145

2016/172017/18

2018/192019/20

2020/21

Other operating expense*, in EUR million
50

120

45

110,6

100
80

1.267

1000

100,7

80

0

1.207

86,3

94,8

101,2

40

83,7

60

35

38,1

40,7

38,7

37,7

30
25

26,2

20
40

15
10

20
0

2016/172017/18

2018/192019/20*2017/18 and 2018/19 adjusted, without IPO costs

08

2020/2150

2016/172017/18

2018/192019/20

2020/21KLINGELNBERG GROUP
At a Glance

Operating result (EBIT)*, in EUR million

Operating result as % of net sales from goods and services*

40

15

30

31,1

20

11,2

10

22,8

18,3

8,9

7,9
5

10
0

0

-11,6

-10

-18,8

-5

-20

-7,3

-8,9

-30

2016/172017/18

2018/192019/20-10

2020/21

2016/172017/18

2018/192019/20

2020/21

Share price, from April 2019 – March 2021
40

35
30

25
20
15
10

1

1

02
.2
03

1
02

02
.2
02

0
.2
01

0
02

0
02

0

02
.2
12

.2
11

.2
10

0
02

02
.2

.2
08

09

0
.2
07

02

0
.2

06

02

0

0

0

02

02
.2
05

.2
04

0

02

02

.2

.2
02

03

0

9
.2
01

02

9
.2
12

01

.2
11

01

9
.2

10

01

9

9
.2
09

01

.2
08

01

9

9

01
.2
07

01

9
.2
06

01
.2

.2
04

05

01

9

5

*2017/18 and 2018/19 adjusted, without IPO costs

09

Highlights 2020/21

KLINGELNBERG Precision Measuring Centers integrate all coordinate and gear measurementtasks, as well as geometric and roughness measurement tasks, on one machine, which can be
set up directly in the production environment.

KLINGELNBERG GROUP
Highlights 2020/21

Product Highlights:

Complete measurement in a single stage
The precision requirements for components and assemblies are constantly increasing. To meetthese demands, as many measurement tasks as possible should be combined into a single sequence – ideally directly on the shop floor rather than in the measuring room. The KLINGELNBERG
Precision Measuring Centers do just that. They integrate all coordinate and gear measurementtasks, as well as geometric and roughness measurement tasks, on one machine, which can be set
up directly in the production environment.
Combining different measurement tasks on one machine is a true leap forward in terms of quality
assurance. It saves on tooling and adjustment times, eliminates the need for repeated aligning on
the measuring machine and significantly reduces throughput times. Particularly for high-precisioncomponents produced in large quantities, this presents interesting potential. Due to their possible
interchangeability, they must be determined with stable, high levels of precision.
The Precision Measuring Centers systematically follow the approach of processing as many measurement tasks as possible on one machine. They execute the entire process in a single automatedsequence directly on the shop floor. Particularly when producing large series of axially symmetrical drive elements with their many GD&T features, it is important to monitor the process in realtime and as close as possible to the production environment.

Easy to operate and systematically rules out operating errors – the component to be measured can be identified via a scanner, and the machine automatically selects the correct program in the background.

11

KLINGELNBERG GROUP
Highlights 2020/21

From laboratory application to serial measurement
Whereas the initial development stages of optical metrology were focused on applications usedprimarily in the lab, the solution now available is systematically oriented toward series applicationof cylindrical gear measurement. The primary advantage here is greater efficiency through a reduction in measurement times of up to 40%.
For this reason, KLINGELNBERG has been focusing its efforts on the entire signal chain in opticalmetrology and has joined forces with other development partners to develop a measurement
system tailored specifically to the requirements of gear measurement. In this system, the active,
current-carrying elements, such as a high-power light source, electronics and signal processing,are arranged separately from the sensor in the control cabinet. The distinct advantage of this isthat it prevents thermal effects from occurring on the sensor itself as well as around the sensor –on the 3D tracer head, for example.
Compared to a laser sensor, this sensor has a significantly more favorable compact design. In addition, unlike a laser sensor, this sensor works equally in all directions due to the coaxial light directed toward the component surface and back. The large lens aperture enables measurements
on highly inclined surfaces, which are inevitable on gears. Thanks to the system’s high resolution,measurements in the sub-micrometer range are now ensured.

12

KLINGELNBERG GROUP
Highlights 2020/21

KLINGELNBERG’s Industry 4.0 solutions
In line with Industry 4.0, KLINGELNBERG is continually expanding its modules and their ability to communicate with each other. Users therefore benefit from extensive integration of
KLINGELNBERG machines and application software.
The symbiosis between the Smart Process Control and SmartTooling software applications provides access to a wealth of additional information, which can then be used to easily identify the
impact of a broad range of factors on production.

Smart Process Control – a GearEngine® module

With the Smart Process Control software, users have a comprehensive process documentation toolat their disposal. As one of the elements of GearEngine®, which is specifically designed for the production process, the software provides deep insights into production.

A 360° view of the shop floor with
SmartTooling
SmartTooling is a turnkey system that provides
a comprehensive view of all key production parameters. Machine data are not the only critical data for a highly efficient production process. Data from the tools and clamping devices
can also be used for extensive analyses, thereby
opening up new ways to leverage optimization
potential.

13

KLINGELNBERG GROUP
Highlights 2020/21

Virtual Events:

Participation in virtual events
Due to the COVID-19 situation and the number of in-person events that have been canceled as aresult, KLINGELNBERG participated in virtual events for the first time in the financial year 2020/21.
BEARING World 2020 and IMTEX Connect 2021 were among these events. KLINGELNBERG also
successfully launched its own webseminar series.

Virtual BEARING WORLD Conference from 19 to 23 October 2020
BEARING WORLD, the international roller and plain bearing conference for “Industrial Researchand Science in Dialogue with Practical Application”, took place for the third time. The expert fo-

rum was hosted by the German Research Association for Drive Technology (Forschungsvereinigung Antriebstechnik e.V.). The event focused on all facets of bearings and all involved components. Contrary to the original plans, the conference was not held as an in-person event in 2020,
but rather as a virtual event from 19 to 23 October 2020. A first-time participant in the symposium, KLINGELNBERG showcased its expertise in the field as a sponsoring partner with a virtual exhibition booth. The online information offering included product videos and other ways todownload detailed documentation, among many other things. Throughout the five-day event,
KLINGELNBERG experts in roller bearing measuring technology were available in a live chat.

14

KLINGELNBERG GROUP
Highlights 2020/21

IMTEX Connect Digital Platform from 21 to 27 January 2021
In response to the dynamic market conditions, IMTEX Connect, India’s digital platform, waslaunched under the auspices of the Indian Machine Tool Manufacturers’ Association (IMTMA).
Since 1969, IMTMA has hosted its flagship exhibition, IMTEX (International Machine Tool and
Manufacturing Technology Exhibition) – one of lndia’s leading B2B machine tool shows. For the
first time ever, IMTEX Connect took place on a virtual platform from 21 to 27 January 2021. The
event preceded the in-person IMTEX exhibition that is scheduled to take place at a later date in
Bengaluru, India. KLINGELNBERG was also present with a virtual exhibition booth run by its Indiansubsidiary, KLINGELNBERG India PVT. Ltd.

KLINGELNBERG launched webseminar series
In May 2020, KLINGELNBERG
launched its own webseminarseries featuring a host of exciting topics from the worldof gears. During a 60-minute
live session, participants had
the opportunity to improvetheir knowledge from the comThe keynote speakers in our seminar series, Dr. Gorgels (left) and Dr. Müller
fort of their own workstation (right) present exciting topics from the world of gear manufacturing.
and then submit questions to
the KLINGELNBERG experts. In addition, KLINGELNBERG presented solutions for electromobility starting in February 2021. The targeted address explored the new challenges posed by electric drive technology, highlighted the process landscape in production engineering, presented
KLINGELNBERG’s quality management for electric gearboxes, and introduced solutions for highly
productive manufacturing of gears.

15

KLINGELNBERG GROUP
Highlights 2020/21

Miscellaneous:

KLINGELNBERG wins “Best of Industry Award” for the second time
For the fifth year running, the trade magazine MM Maschinenmarkt honored outstanding industry innovations with its “Best of Industry Award” on 25 June 2020. In total, 22 companies vied forthe prize in nine categories. KLINGELNBERG wasamong the lucky winners, receiving accolades inthe “Measurement Technology” category for its“Complete Measurement in a Single Stage – Done-in-One” solution.
The jury selection was preceded by an online reader vote, which accounted for 50% of the evaluation process. Only selected prize-winning industrial products were eligible for the nomination.
Qualified nominees included products or solutions
from all branches of industry that had already won
an industry award in 2019 or had been short-listed, or received the most clicks from readers of the
MM trade magazine.

KLINGELNBERG México, S.A. de C.V. celebrates 20-year anniversary
On 01 November 2020 KLINGELNBERG México, S.A. de C.V. celebrated a milestone anniversary. For
20 years, KLINGELNBERG has been offering distribution services and individual technical service at
its Mexico location in Querétaro City. Since it was established in 2000, the Mexican branch officehas undergone continuous development.

16

KLINGELNBERG GROUP
Highlights 2020/21

Public Relations (PR) of the KLINGELNBERG GroupTo keep the market abreast of
current topics, KLINGELNBERG
also engages in intensive public
relations work. In addition to issuing press releases and technical articles for trade journals ona regular basis, KLINGELNBERG
publishes the GEARS inline customer magazine – a dedicatedtrade journal for the gear industry – annually in German andEnglish.
GEARS inline

GEARS inline
Trade Magazine for Gear Technology
01 | 2014

GEARS inline

GEARS inline

GEARS inline

GEARS inline

Trade Magazine for Gear Technology

Trade Magazine for Gear Technology

Trade Magazine for Gear Technology

Trade Magazine for Gear Technology

02 | 201503 | 201604 | 201705 | 201804

10

Bevel Gear TechnoloGy:
3M™ cuBiTron™ ii GrindinG

Bevel Gear TechnoloGy: Becal –applicaTion-opTimized calculaTion

A New Era?
3M™ Cubitron™ II Reveals Full Potential of Bevel-Gear Grinding

Optimized Bevel Gear Design by Means ofLocalized Load Capacity Calculation

1016cylindrical Gear TechnoloGy:
hF Gear cuTTinG Machine

cylindrical Gear TechnoloGy:
all-in-one soluTion

Evolution in the Cylindrical Gear Sector:
Two Technologies – One Machine

The Adaptable VIPER 500: Flexible Cylindrical
Gear Grinding Machine for the Universal Market

16

24

Precision MeasurinG cenTers:lean MeasurinG Processes

precision measurinG cenTers:
no reseTTinG, no chanGes

The Next Generation of Precision Measuring Centers for
Future-Proof Quality Management

Complete Inspection of Rotation
Symmetrical Components on One Machine24

30

drive TechnoloGy:
hiGh-sPeed Gear seTs

drive TechnoloGy:
hiGh planninG reliaBiliTy

Always Reliable, Even with Minimal Lubrication –Bevel Gear Sets for High-Speed Machining Processes

The current issue of
GEARS inline (No.7)

IN FOCUS:
04 Quo vadis drive train?

04
BEVEL GEAR TECHNOLOGY:
SMART PROCESS CONTROL

Flexibility in manufacturing is the right strategy

Are You Using Ideal Cutting Processes?
Graphics-Supported Optimization Made Easy!

BEVEL GEAR TECHNOLOGY:CYLINDRICAL GEARTECHNOLOGY:
10 Speed Viper

C 30 – a high-performance product with aflexible range of applications

CYLINDRICAL GEAR TECHNOLOGY:PROFILE GRINDING WITH GEARPRO

06 | 2019

10 What’s New with Speed Viper

The underestimated task on the component

BEVEL GEAR TECHNOLOGY:
06 Advancements in the C 30

10

Trade Magazine for Gear Technology

CYLINDRICAL GEAR TECHNOLOGY:BEVEL GEAR TECHNOLOGY:
04 Focus on deburring

16 G 35 Dual-Spindle Machine
20 Measurement on the Shop Floor

Making inroads in new markets with
innovative ideas

12 Integrated systems

26 Predicting Service Life with KIMoS

Industry 4.0 for gears

Grinding Special Gearings: How Challenges Are Shifting
the Boundaries of What's Possible

PRECISION MEASURING CENTERS:PRECISION MEASURING
CENTERS:
18 New hybrid technology

CYLINDRICAL GEAR TECHNOLOGY:
26 Complete machining of gears

22

Machining instead of tooling: From the rod to the gear

34 Hybrid Measuring Technology

Combining tactile and optical metrology

DIGITAL SOLUTIONS:DRIVE TECHNOLOGY:
FOCUS ON NOISE SOURCES

38 SmartTooling: Tools at a Glance
42 OPC UA Umati for Industry 4.0
44 GearEngine®: Enhanced Functions
46 Smart Process Control

PRECISION MEASURING CENTERS:Noise Generation in Gearings:
See No Evil, Hear No Evil, Speak No Evil …

32 Measurement task variety
Complete measurement on the shop floor

Cost-effective Production of Bevel Gears
in Extremely Small Batches

DIGITAL UNIT

FurTher TraininG

Bevel Gear TechnoloGy

PRECISION MEASURING CENTERSCYLINDRICAL GEAR TECHNOLOGY

32

04

16

20

on The hunTFor Gear daMaGe

increasinG
requiremenTs

ROUGHNESS MEASUREMENT
IN NEW DIMENSIONSMANUFACTURING CYLINDRICALGEARS IN LARGE-SCALE PRODUCTION

Like Sherlock Holmes and Dr. Watson: Hunt Down
the Solution with an Extensive Knowledge Base and Flair

Lapping or Grinding? – Which Technology
is the Right Choice in the Age of Industry 4.0?

New Roughness Probe Measures Gearings
With Modules From as Small as 0.9 mm

Speed Viper – The new force in high-productivity generating
grinding!

CYLINDRICAL GEAR TECHNOLOGY

26

INDUSTRY 4.0 ON ITS OWN TERMS
28
34
35
36
38

GearEngine®
Gear Operator
Gear Designer
Closed Loop Production System
SmartTooling04

CYCLOID GEARINGWITH THE VIPER 500 MFM

First published in 2014, the KLINGELNBERG GEARS inline trade journal has since enjoyed a steadily
growing readership.

17

Company Profile

KLINGELNBERG GROUP
Company Profile

We make the world turn
The KLINGELNBERG Group is one of the world’s leading companies in developing and manufacturing machines for bevel gear and cylindrical gear machining and precision measuring centers foraxially symmetrical components and gearing. The group also manufactures spiral bevel gears tocustomer specifications – with ultimate precision using in-house technology.
The origins of the engineering company date back to 1863. The KLINGELNBERG family remains ananchor shareholder of the company. The path from the company's origins to global market leadership has been shaped by continuous striving towards first-rate quality and absolute reliability, forboth products and service. With numerous R&D engineers worldwide and more than 200 registered patents, the company demonstrates its capacity for innovation each and every day.
KLINGELNBERG operates engineering and manufacturing facilities in Switzerland and Germany.
The company ensures a global presence with regional sales offices and service centers. In addition, its ISO 14001 certification and participation in the VDMA’s (German Mechanical Engineering
Industry Association) “Blue Competence” initiative give credence to the company’s sustainable,
environmentally sound business practices.

19

KLINGELNBERG GROUP
Company Profile

The KLINGELNBERG segments:OERLIKON Bevel Gear Technology
The OERLIKON Bevel Gear Technology segment makes
economical, high-precision manufacturing of bevel gears a
reality for customers. All machines in the system have been
designed to work together to enable pre-machining andfinishing of even the most complex gears. KLINGELNBERG
offers the most advanced technology and efficient machines for each and every step in the process chain.
The production process chain for bevel gears includes tool preparation, cutting, measuring, hardening, grinding or lapping and testing. The KIMoS (KLINGELNBERG Integrated Manufacturing of
Spiral Bevel Gears) software package supports every step in bevel gear design and optimization.
Measurement results are converted to gear corrections with the software KOMET. As part of thisprocess, all necessary data for the gear cutting process, tool preparation and quality control of thefinished bevel gears is prepared in parallel. At the same time, a convenient data handling system
offers the possibility of using development and production databases to access machine tools in
production and quality assurance. The software package thus provides the optimum basis for ultra-modern bevel gear production according to the Closed Loop method, ensuring transparency
and documented quality throughout the entire process chain.

KLINGELNBERG Precision Measuring Centers
Stringent accuracy requirements for gear tooth measurements and increasingly complex drive
components demand the best measuring technology available and a machine and softwareconcept optimized for these applications. That is why leading manufacturers put their trust in
precision measuring centers from KLINGELNBERG which represent the most widely used standard
in the industry, while also serving as a reference for metrology institutes.
Today, KLINGELNBERG Precision Measuring Centers (P-Series) are ideally suited to handle most measurement tasks in a wide range of sectors: Users in the automotive and commercial vehicle industries, andthe aerospace and aeronautical engineering industries, rely on thistechnology that replaces up to six different conventional measuring devices. This allows the following measurement tasks to be
fully automated in a single setting:Gear measurement
General coordinate measurement
Form and position measurement

20Roughness measurement
Contour measurement
Optical measurement

KLINGELNBERG GROUP
Company Profile

HÖFLER Cylindrical Gear Technology
The HÖFLER Cylindrical Gear Technology segment is synonymous with efficient and flexible production of cylindrical gears. All machines have been perfectly designed to work as a system family,
enabling pre-machining and finishing of even the most complex gears. Moreover, thanks to decades-long expertise and great innovative strength, we are able to maintain a leadership position
not only through our high research and development standards, but also our in-house applicationengineering services.
KLINGELNBERG offers the most advanced technology and efficient machines for each and every stepin the cylindrical gear process chain. The production
steps in the pro­cess chain include process design,
cutting, measuring, deburring, grinding and quality control. HÖFLER cylindrical gear machines standout not just because of their advanced hardware;
the company’s own Gear Production software also
makes a key contribution to the successful executionof each step.
The software guarantees convenient machining of even the most complex topographies and ensures maximum efficiency in daily use. Only in this way is concentrated knowledge of state-ofthe-art machining strategies and process sequences placed right in the user’s hands. And with its
numerous options, Gear Production plays an active role in achieving productivity gains.

KLINGELNBERG Drive Technology
Back in 1923, KLINGELNBERG was the first company in the world to begin made-to-order production of bevel gears using the continuous hobbing method at its site in Hückeswagen, Germany.
A high level of innovation and close
partnership with customers and suppliers has constituted a tried-and-tested
success model ever since. In 2008, theDrive Technology segment was moved
from the original plant in the center of
Hückeswagen to the Winterhagen industrial zone, located approximately
five kilometers away. Today, spiral bevel
gears with diameters up to 3.000 millimeters are manufactured there – usingstate-of-the-art methods.

21

KLINGELNBERG GROUP
Company Profile

KLINGELNBERG HISTORY1863 to 1897
FOUNDING

1922 to 1951

n The company is foundedin Remscheid, Germany.

GEAR TECHNOLOGYn Production of bevel gear
machines for the Palloid
method.

n The founders of W. Ferd.
Klingelnberg, Söhne (Julius
and Ernst Klingelnberg).

n First hobbing machinebuilt at the Hückeswagen
plant, model FK 150,
construction year 1923.
n 1951 Internationalization
begins. First subsidiaryabroad.

1985 to 1996
EXPANSIONn First introduction of a
CNC measuring device.

1908 to 1916

PRODUCTION SITESn Production of tools andmachine blades begins
on the company’s own
production site in Remscheid, Germany.
n Tool production is relocated from Remscheid toHückeswagen, Germany.

22n Entry into bevel gear
grinding business throughacquisition of Dr.-Ing.-Wiener-Verzahntechnik-GmbH.
n Takeover of Oerlikon
Geartec AG - Zürich,
Switzerland.
n Acquisition of ZEISSIndustrial Metrology(Höfler) in Ettlingen.

KLINGELNBERG GROUP
Company Profile

1997 to 20032017 to 2018

INNOVATIONSKLINGELNBERG 2.0

n Introduction of a dry
cutting process for spiralbevel gears with the newgeneration of C machines:OERLIKON Spiral Bevel
Gear Cutting Machine
C 28.

n Premiere of HÖFLER
Cylindrical Gear Grinding
Machine Speed Viper for
high-production generating
grinding.
n KLINGELNBERG receives
iF Design Award for its innovative machine design.

n Introduction of a newseries of OERLIKON Bevel
Gear Grinding Machines
G 27/G 60 with verticalconcept.

n KLINGELNBERG has been
listed on the SIX Swiss Exchange since 20 June 2018.

2004 to 2012
EVOLUTION

n The company enters its
seventh generation withJan Klingelnberg.
n Commissioning of theworld's most advanced
large bevel gear manufacturing facility in Winterhagen/Hückeswagen,Germany.
n Assumption of core businessof Höfler Maschinenbau
GmbH in Ettlingen,Germany.

2018 to 2020
NEW MARKETSn KLINGELNBERG wins Bestof Industry Award 2018and 2020 in the categories “Industry 4.0” and“Measuring Technology”
n Conquering new markets
through further development of optical metrology
and development of innovative solutions for thecomplete measurementof roller bearings.

23

Management ReportKLINGELNBERG GROUPManagement Report

Segments and markets
The business performance of the KLINGELNBERG Group in the past 2020/21 financial year was affected by the global developments resulting from the coronavirus pandemic. After the sharp decline in economic activity in the first half of the year, the second half saw an equally strong recovery as new infections fell and containment measures were eased, mainly in advanced economies.
Nevertheless, the calendar year 2020 ended with a negative global GDP performance of -3,6%.
This development was also reflected in the result of the KLINGELNBERG Group. Net sales decreased
by EUR 53,4 million compared to the previous year and amounted to EUR 158,7 million at the endof the financial year. Sales declined at all service locations worldwide. Around 43,5% of all sales
were generated in the EMEA region. A further 40,1% were generated in the Asia-Pacific region.
On the other hand, a new impetus was generated by China’s efforts to achieve carbon neutrality and from the resulting increase in demand for machines in the large-size range of applications. Order intake increased by EUR 21,0 million compared to the previous year and amounted to
EUR 215,5 million at the end of the financial year.

Bevel Gear segment:
At the end of the 2020/21 financial year, the Bevel Gear segment reported net sales of EUR 50,4 million. This was around 40,5% below the prior-year figure. Economic effects triggered by the pandemic and the accompanying travel restrictions had contributed to a slowdown in this segment.
In the second half of the year, the segment recorded a clear upward trend in the automotive andcommercial vehicle sectors, driven primarily by the USA and East Asia.
With the ramp-up of global production in the second half of the year, noticeable signs of recovery
could be seen in the segment’s order books. The general gear and mechanical engineering sector
also had a stabilizing effect. Order intake rose by EUR 17,4 million year-on-year to EUR 69,3 million.
In addition to an upturn in new machine business, the thriving service business in connection withretrofits and refurbishments also contributed to this development.

Cylindrical Gear segment:
Against the backdrop of a global pandemic, the Cylindrical Gear segment proved extremely resilient in the past 2020/21 financial year. Despite the gloomy economic climate, net sales fell only
slightly from EUR 49,4 million to EUR 45,6 million. Nevertheless, there was a significant upturn inthe second half of 2020 due to a noticeable increase in demand for our large RAPID machines. The
main driving force here was the Asian region.
Against the backdrop of China’s carbon neutrality goal, new impulses arose from the increased
demand for machines in the large-size range of applications (wind power). Moderate demand in25

KLINGELNBERG GROUPManagement Report

the smaller-size range of applications was compensated for by extensive waves of projects in thewind power sector. With a significant leap of EUR 17,5 million to EUR 72,0 million in the 2020/21
financial year, this momentum was also reflected in the segment’s order intake.

Measuring Centers segment:
Investment decisions postponed for economic reasons in the wake of the ongoing COVID-19 pandemic also affected the Measuring Centers segment. Net sales decreased by EUR 6,8 million yearon-year to EUR 50,5 million mainly due to the extensive disruption of global value chains and faltering demand.
In line with the overall development, there were also signs of a recovery in the measuring equipment sector in the second half of the year. On the one hand, inquiries from the automotive andcommercial vehicle sectors drove the development of this segment. On the other hand, opportunities arose from the Green Deal and the climate protection goals of the advanced economies. Dueto the increasing expansion of wind power, an increase in demand for large measuring centers(P 150 – P 350) was recorded in the order books. In addition to increased impulses from wind power,
application areas in the field of optical measurement technology were further developed, whichsignificantly reduced the measurement time and further advanced innovation in this segment.

Drive Technology segment:
The Drive Technology segment ended the 2020/21 financial year with net sales of EUR 8,9 million and therefore EUR 4,7 million below the previous year. This decline of 34,5% resulted fromthe pandemic-related slump in order intake at the beginning of the financial year. In the last twomonths of the financial year order intake picked up significantly and has since remained at theprevious year’s level.
Due to the coronavirus pandemic, the shipbuilding sector experienced a drastic decline in production and investment backlogs worldwide. In the course of the year, however, increasing sales
dynamics were recorded from the mining sector. After the mining sector fared better in the 2020
calendar year than feared at the beginning of the pandemic, the friendly economic climate also
continued in the first months of 2021.

Research and development
In the past financial year, KLINGELNBERG could record a series of further developments and innovations that offer additional sales and earnings potential or open up market opportunities forthe company in the future.
At the core of every Industry 4.0 production environment are high-quality manufacturing technologies with innovative and reliable digital solutions that ensure efficient production processes

26

KLINGELNBERG GROUPManagement Reportand adherence to the highest quality requirements even in challenging times. KLINGELNBERG increasingly integrates digital solutions, networks production and measuring machines in a Closed
Loop production system that also includes the upstream and downstream processes as well as thesecondary processes. The portfolio includes, for example, a digital tool management system, tools
for comprehensive process documentation, and data interfaces that support edge computing.
What is already state of the art in the Bevel Gear segment is now also conquering the world of
cylindrical gears: automated (correction) processes applied within a Closed Loop environment
ensure a major plus in safety and productivity – also in the production of cylindrical drive components. Machines such as the HÖFLER Speed Viper and the HÖFLER VIPER 500 Cylindrical Gear
Grinding Machines are setting clear performance benchmarks in this respect.
The ‘G’ versions of the KLINGELNBERG Precision Measuring Centers are specially designed to support the production process of rotationally symmetrical components. KLINGELNBERG pursues theapproach of carrying out various measuring processes in a single operation as a complete measurement (“Done-in-One”). A KLINGELNBERG Precision Measuring Center can measure dimensions, shape, contour, and surface roughness in the shortest possible time and in a single, automated work cycle. Besides lower investment costs, this also results in savings in process costs. In addition, KLINGELNBERG Precision Measuring Centers guarantee the required measuring accuracy
even when they are used directly in production. Not only does this save on air-conditioning costs,
but the measuring center can also be directly integrated into the production process. As a result,
there is no need to set up several different machines, saving valuable production floor space. Withthe ‘G’ versions of the Precision Measuring Centers, KLINGELNBERG thus makes a significant contribution to reducing quality costs and increasing the productivity and the output of the production facilities.
Furthermore, KLINGELNBERG has further developed optical measurement and launched its own
light sensor system whose sensor technology is ideally suited for measurements in the sub-micrometer range. This makes it possible to replace tactile graduation measurement with an opticalone and thus significantly reduce the measuring time in serial or high-volume measurement.
Finally, the increasing global trend towards automation with electric drive concepts calls for completely new technical solutions for torque transmission through transmission components. The
spiral worm drive, whose potential is currently being explored by the experts at KLINGELNBERG,
offers a very exciting alternative to the conventional worm gear.
The ratio of research and development expenses increased by 1,6 percentage points comparedto the previous year and totaled 13,3% in the 2020/21 financial year. R&D expenditures of
EUR 21,1 million underline the importance of product development for the KLINGELNBERG Group.

27

KLINGELNBERG GROUPManagement Report

Efficiency Enhancement Program
In October 2019, an Efficiency Enhancement Program was announced to streamline key areas,
strengthen sales, and consolidate locations with the aim of reducing costs.
Production at the Györ site in Hungary has already been discontinued in the 2020 calendar year,
and the local subsidiary is currently in the process of liquidation. This led to improved capacity utilization at the Hückeswagen production facilities, which suffered from a pandemic-related decline
in orders in the past financial year.
In addition, 93 jobs have already been cut at the Ettlingen site in Germany. In the meantime, assembly at the Ettlingen site is continuing, as due to the positive order situation – especially with orders from the wind energy sector – any available area is currently needed for the assembly of large
cylindrical gear machines. The Efficiency Enhancement Program can therefore only be finalized
once the already announced construction of a new modern assembly hall at the Hückeswagen sitein Germany has been completed.
Thanks to the Efficiency Enhancement Program and compared to the 2019/20 financial year,
EUR 5,9 million operating cost could be saved, of which EUR 5,2 million relate to personnel expenses.

Gross profit
A net sales decline of EUR 53,4 million and lower changes in inventory of EUR 16,4 million compared to the previous year led to a decrease in total operating performance of EUR 69,8 million.
The decline in sales affected all segments. Changes in inventory decreased mainly due to the pandemic-related reduction in production compared to the previous year.
Driven by the reduced total operating performance, the material expense fell by EUR 38,6 million.
Mainly due to the decrease in changes in inventory and the non-recurrence of the special writedown of EUR 3,4 million from the Efficiency Enhancement Program in the previous year, the materials ratio of the KLINGELNBERG Group fell by 6,7 percentage points to 34,0%.

Personnel expense and employees
Personnel expense amounted to EUR 83,7 million at the end of the financial year, down
EUR 26,9 million on the previous year. The decrease is due, among other things, to the provision
booked in the previous year for the Efficiency Enhancement Program (EUR 8,6 million), shorttime work (EUR 6,4 million), the aforementioned personnel cost savings as part of the Efficiency
Enhancement Program (EUR 5,2 million) and a reduction in costs for overtime and shift premiums(EUR 2,4 million). The personnel expense ratio increased to 54,8% from 49,7% in the 2019/20
financial year due to the stronger decline in total operating performance compared to personnel

28

KLINGELNBERG GROUPManagement Report

expenses. The KLINGELNBERG Group had 1.145 employees (FTE) as at 31 March 2021 – 106
employees less than in the previous year.

Other operating expense
At EUR 26,2 million, other operating expense for the past financial year were more than
EUR 11,5 million (-30,5%) lower than in the previous year. Due to strict cost management, theKLINGELNBERG Group was able to significantly reduce other operating expense. In addition, as a result of the pandemic, the reduction resulted, for example, from lower travel costs (EUR -3,2 million),canceled trade fair appearances and other reduced marketing costs (EUR -1,4 million) as well as
lower freight charges (EUR -1,3 million).
The other operating expense ratio was 17,1% at the end of the financial year and was thus almost
at the previous year’s level (+0,2 percentage points).

Other operating income
Other operating income decreased by EUR 1,0 million compared to the previous financial year.
Among other things, this is due to the capitalization of a lower number of rental and demonstration machines at KLINGELNBERG GmbH.

Operating result
Just as the end of the 2019/20 financial year, the 2020/21 financial year of the KLINGELNBERG Groupwas characterized by the economic burdens imposed by the global COVID-19 pandemic. Due toits clear course – implementation of protective measures against the coronavirus, preservationof liquidity, strict cost management and implementation of the Efficiency Enhancement Program – and a positive development of order intake, mainly as a result of a wave of investment inlarge machines from China, the KLINGELNBERG Group substantially mitigated the negative effects and recovered significantly compared to the previous year. The operating result (EBIT) of the
KLINGELNBERG Group improved significantly by EUR 7,2 million compared to the previous year
and amounted to EUR -11,6 million at the end of the 2020/21 financial year.
The operating result as a percentage of net sales from goods and services for the past financial
year was -7,3%, an improvement of 1,6 percentage points on the previous year. The basic earnings
per share amounted to EUR -0,82 (as at 31 March 2020: EUR -2,87).

Financial result
The KLINGELNBERG Group reported a financial result of EUR +2,2 million in the 2020/21 financial
year. The profit resulted mainly from the exchange rate result in the accounts, which was incurred
mainly by KLINGELNBERG AG. The holding company reports the Group figures in Euro, while theaccounts of KLINGELNBERG AG are kept in Swiss francs.

29

KLINGELNBERG GROUPManagement Report

Balance sheet
The balance sheet total of the KLINGELNBERG Group decreased by EUR 28,0 million compared to
the figure recorded on 31 March 2020 and amounted to EUR 216,9 million as at 31 March 2021.
While non-current assets remained at the previous year’s level of EUR 63,1 million, current assets
declined by EUR 27,9 million (-15,3%) and amounted to EUR 153,9 million as at 31 March 2021. The
decrease was mainly due to lower cash and cash equivalents (EUR -16,2 million) and inventories(EUR -8,5 million).
Total liabilities decreased by EUR 16,9 million (-14,9%) compared to 31 March 2020 and amounted
to EUR 96,4 million as at 31 March 2021. The decrease resulted from significantly lower financial liabilities and the utilization of provisions, which mainly related to the restructuring in Ettlingen. Net debt decreased by EUR 6,8 million and amounted to EUR -15,5 million at the end of the2020/21 financial year.
Equity decreased by EUR 11,1 million (-8,4%) to EUR 120,5 million compared to the end of the priorfinancial year as at 31 March 2020. This decrease is mainly due to the net loss for the year and currency translation differences. The equity ratio increased by 1,9 percentage points to 55,6% compared to 31 March 2020.
In summary, it can be stated that despite the challenging economic situation, theKLINGELNBERG Group again had a stable financial position in the 2020/21 financial year.

Cash flow statement
Cash flow from operating activities increased by EUR 9,8 million to EUR 7,6 million compared to
the 2019/20 financial year. Among others the net loss improved by EUR 18,1 million compared tothe previous financial year.
Due to the difficult economic situation in recent months caused by the pandemic, cash optimization was in focus. Additionally our Chinese joint venture distributed a dividend of EUR 1,7 million.
All this led to an improvement in cash flow from investing activities of EUR 4,0 million.
Cash flow from financing activities decreased by EUR 38,5 million compared to the 2019/20 financial year. While short-term financial liabilities increased by EUR 25,3 million in the previous financial year, they decreased by EUR 21,9 million in the financial year 2020/21.
In total, the net change in cash amounts to EUR -16,2 million.

Financial risk management
In 2018, KLINGELNBERG established a holistic risk management system to identify, evaluate and30

KLINGELNBERG GROUPManagement Reportmanage business risk. For further information about this system, please refer to Note 5.7.7 of the
Corporate Governance Report. KLINGELNBERG has to deal with a variety of financial risks as described in the following.

Market risks
Business cycle risk: The economy is currently expected to recover in the 2021 calendar year.
However, recovery is supported by a fragile scaffolding. Uncertainty, therefore, prevails as to
how the pandemic will develop from here. While restrictions in connection with the coronavirus are expected to be lifted by the end of the third quarter of 2021, setbacks are also possible.
For example, there may be bottlenecks in the supply of vaccines and tests. In addition, there isa threat of setbacks due to the emergence of new virus mutations. All this jeopardizes further
economic recovery.
Currency risks: KLINGELNBERG’s primary exposure to currency risks relates to the CHF, USD, andJPY, and arises in the context of business transactions from the translation of the disclosed assets and liabilities. Typically, KLINGELNBERG uses foreign exchange forwards or currency options to hedge against USD and JPY currency risks in connection with current machinery transactions affecting open and, in some cases, expected production and purchase orders
Interest rate risks: Short-term bank account balances are subject to market fluctuations. Thesebalances are not hedged. KLINGELNBERG has no long-term interest-bearing assets. Most of thelong-term financial liabilities bear fixed interest rates. The short-term bank debt is not hedged.
Sales risks: An increase in the intensity of competition can lead to a decrease in sales and profitability.

Credit risk
Credit risks affect cash and cash equivalents, account balances with financial institutions and receivables from goods and services. KLINGELNBERG’s long-standing business relationships withwell-known customers limit its overall credit risk. KLINGELNBERG does not expect significant losses on receivables from goods and services, and we do not believe that there are any concentration
risks. Receivables that cannot be recovered in full are impaired.

Liquidity risk
Liquidity risk arises when KLINGELNBERG cannot meet its financial obligations. Diligent liquidity
risk management requires sufficient available liquid funds as well as having financing options inplace in the form of approved credit facilities for appropriate amounts with multiple banks. We
are reacting to the current coronavirus pandemic with regularly updated cash planning that takes
various scenarios into account.

31KLINGELNBERG GROUPManagement Report

Outlook
The German Machine Tool Builders’ Association (Verein Deutscher Werkzeugmaschinenfabriken,
VDW) expects global demand for machine tools to grow by 15% in 2021 and 8% in 2022. This positive trend is in line with our expectations. Thus, the order backlog increased by EUR 57,0 million to
EUR 157,7 million in the 2020/21 financial year.
Driven by this increasing demand and due to the high order backlog, we expect a significant increase in sales and a positive EBIT in the upper single-digit million range for the 2021/22 financial
year.

32

KLINGELNBERG GROUPManagement Report

33Corporate Governance
35

Introduction

35

Group structure

36

Shareholders

37

Capital40

Board of Directors

52	The Group Executive
Management
54

Compensation, shares and loans

55

Shareholders’ participation rights

57	Changes of control anddefense measures
57

Auditors

58

Information policyKLINGELNBERG GROUP
Corporate Governance1

Introduction

This report describes the principles of corporate governance for the KLINGELNBERG Group (hereinafter also the “Group”) and provides background information on the Group’s Executive Management (hereinafter also the “EM”) and the Board of Directors (hereinafter also the “BoD”) as at
31 March 2021. The report contains the information that is stipulated by the Directive on Information relating to Corporate Governance of SIX Swiss Exchange AG.
The Articles of Association (hereinafter the “Articles”) of KLINGELNBERG AG (hereinafter also the“Company”) can be accessed on the corporate governance section of the Company’s website at:https://www.klingelnberg.com/en/investors/corporate-governance/articles-of-association/
For clarity and transparency, the Compensation Report is presented as a separate chapter of theAnnual Report.

2

Group structure

2.1

Operational group structure

Headquartered in Zürich, Switzerland, KLINGELNBERG AG is the parent company of the
KLINGELNBERG Group with 14 subsidiaries in 11 countries and a network of independent distributors serving additional markets.
The KLINGELNBERG Group has effective oversight and efficient management structures at all levels. The operational Group structure as at 31 March 2021 is as follows:
The Company’s BoD acting collectively has the ultimate responsibility for the conduct of businessof the Company and for delivering sustainable shareholder and stakeholder value. The BoD sets
the Company’s strategic objectives, ensures that the necessary financial and human resources arein place to meet the Company’s objectives, and supervises and controls the management of theCompany. The BoD also has two committees: the Audit Committee (hereinafter the “Audit Committee” or “AC”) and a Nomination and Compensation Committee (hereinafter the “Nomination
and Compensation Committee” or “NCC”) (together the “Committees”).
In accordance with and subject to Swiss law, the Articles and the Organizational Regulations, theBoD has delegated the Executive Management of the Company’s business to the EM, which isheaded by the Chief Executive Officer (hereinafter the “CEO”) pursuant to the Organizational
Regulations. The EM comprises: the CEO, the Chief Financial Officer (hereinafter the “CFO”) andthe Chief Operations Officer (hereinafter the “COO”). The EM is supervised by the BoD and its
Committees. On 04 March 2020, the Board of Directors has decided to reflect the increased importance of sales in management and has appointed Mr. Prasad Kizhakel as Chief Sales Officer (CSO).
Due to the corona pandemic and related restrictions, Mr. Kizhakel could not take up this positionin 2020. Therefore, the Board of Directors postponed his admission to the EM as the Chief Sales
Officer to 01 April 2021.

35

KLINGELNBERG GROUP
Corporate Governance

2.2

Listed companies

KLINGELNBERG AG, the ultimate parent company of the KLINGELNBERG Group, is listed on the SIX
Swiss Exchange. Apart from KLINGELNBERG AG, no other company belonging to the consolidated
KLINGELNBERG Group is listed on any stock exchange.
Registered officeBinzmühlestrasse 171, 8050 Zürich, Switzerland

Listed on

SIX Swiss Exchange

VALOR number

42046226

ISIN

CH0420462266

VALOR symbol

KLIN

Nominal share value

CHF 5

2.3

Non-listed companies

A list of the subsidiaries of the KLINGELNBERG Group as at 31 March 2021 can be found in Note 2.3
to the Consolidated Financial Statements.

3

Shareholders

3.1

Significant shareholders

According to the disclosure notifications received by the Company during 2020/21 and publishedby the Company via the electronic publishing platform on SIX Swiss Exchange, the following shareholders had holdings of 3 percent or more of the Company’s voting rights as at 31 March 2021:
Date

IssuerBeneficial owner / persons
that can exercise the voting
rights at their own discretion

17 December 2020

KLINGELNBERG AG

Henderson Global Investors Limited

5,00%

12 August 2020

KLINGELNBERG AG

Credit Suisse Funds AG

3,22%

20 June 2020

KLINGELNBERG AG

J Safra Sarasin Investmentfonds AG

3,02%

07 November 2019

KLINGELNBERG AGUBS Fund Management(Switzerland) AG

3,14%

29 June 2018

KLINGELNBERG AG

Jan Klingelnberg
Diether Klingelnberg 1

29 June 2018

KLINGELNBERG AG

Arndt Klingelnberg

1 Jointly registered as a Group due to an agreement on exercising of voting rights.

36

DirectShareholder

KLINGELNBERG
Luxemburg A.G.

Position

48,62%
4,86%

KLINGELNBERG GROUP
Corporate GovernanceNotifications made in 2020/21 in accordance with Art. 120 et seqq. of the Financial Market Infrastructure Act (“FMIA”) [Finanzmarktinfrastrukturgesetz, FinfraG] can be accessed using the following link:
https://www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html

As regards to the value of the percentage of voting rights shown, it should be noted that any
changes in the percentage of voting rights between the notifiable threshold values are not subject to disclosure requirements.
As at 31 March 2021, the Company held no treasury shares.

3.2

Cross-shareholdings

As at the 31 March 2021, the Company does not have any cross-shareholdings exceeding 5 percentof the holdings of capital or voting rights on both sides.

4

Capital

4.1

Share capital

As at 31 March 2021, the ordinary share capital of KLINGELNBERG AG as registered with the Register of Commerce of the Canton of Zürich amounts to CHF 44.200.000 fully paid up and divided
into 8.840.000 registered shares with a par value of CHF 5 each.
As at 31 March 2021, the Company has not issued any participation certificates or profit sharing
certificates, nor has it issued any preference shares within the meaning of Art. 654 et seq. of the
Swiss Code of Obligations (hereinafter also “CO”) [Schweizerisches Obligationenrecht, OR].
Subject to the provisions of Art. 5 of the Articles (provisions regarding entry in share register, seealso Note 4.6 below) each share entitles to one vote (Art. 11 of the Articles).
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

4.2

Authorized and conditional capital

4.2.1 Authorized share capital
According to Art. 3B of the Articles, the Board of Directors was authorized to increase the sharecapital at any time until 09 June 2020 by a maximum amount of CHF 4.456.400 by issuing a maximum of 891.280 fully paid-in registered shares with a nominal value of CHF 5 each. As this authorization expired at the end of 09 June 2020, there is no longer any authorized capital available fora capital increase as at 31 March 2021.

37

KLINGELNBERG GROUP
Corporate GovernanceMore information on the authorized capital can be found in Art. 3B of the Articles at:https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

4.2.2 Conditional capital
The General Meeting of 09 June 2018 approved the creation of conditional capital divided into
445.640 shares with a par value of CHF 5 per share to improve the Company’s financial flexibility
for financing, acquisitions, and other purposes. The conditional capital amounts to CHF 2.228.200,
which equates to 5,04% of the existing share capital.
More information on the conditional share capital can be found in Art. 3A of the Articles available
at:https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

4.2.3 Options
KLINGELNBERG AG has not granted any options.

4.2.4 Convertible bonds
KLINGELNBERG AG has not issued any convertible bonds.

4.3

Changes in capital

The capital of the Company was as follows:
31.03.2021

31.03.2020

31.03.2019

31.03.2018

Ordinary capital (in CHF)

44.200.000

44.200.000

44.200.000

42.000.000

Share capital in units

8.840.000

8.840.000

8.840.000

42.000

Authorized capital (in CHF)

0

4.456.400

4.456.400

0Authorized capital in units

0891.280891.2800Conditional capital (in CHF)

2.228.200

2.228.200

2.228.200

0Conditional capital in units

445.640445.640445.6400

Except for the authorized capital, that expired on 09 June 2020, there have been no changes incapital since the IPO on 20 June 2018. In preparation of the offering, an extraordinary shareholders’ meeting of the Company held on 09 June 2018 resolved, among other things, to (i) split eachof the existing registered shares of the Company in the amount of 42.000 with a nominal value of
CHF 1.000 into 200 shares with a nominal value of CHF 5 each (then amounting to 8.400.000 fully

38

KLINGELNBERG GROUP
Corporate Governancepaid-up shares), (ii) increase the Company’s share capital by up to CHF 2.564.000 through the issuance of up to 512.800 registered new shares with a nominal value of CHF 5 each (whereby the
final number of new shares amounted to 440.000 shares according to the supplement to the Offering Memorandum of the Company dated 19 June 2018), (iii) create conditional share capital in
the amount of CHF 2.228.200, (iv) create authorized share capital in the amount of CHF 4.456.400
and (v) further amend and restate the Articles.
The conditional share capital divided into 445.640 registered shares, which was created on
09 June 2018 to improve the Company’s financial flexibility for financing, acquisitions and otherpurposes, has not yet been used.

4.4

Share buyback program

KLINGELNBERG has no ongoing share buyback program.

4.5

Convertible bonds and options

As outlined above, KLINGELNBERG has not issued any convertible bonds or options.

4.6

Limitations on transferability and nominee registration

The Company maintains a share register. Any person who acquires shares may submit an application to be registered in the share register as a shareholder with voting rights, provided such person expressly declares that he or she has acquired and holds such shares in his/her own name andfor his/her own account. Entry into the share register with voting rights may be refused based on
the grounds set forth in Art. 5 of the Articles described below under “Nominees”. If the Company
does not refuse to register the acquirer as shareholder with voting rights within 20 calendar days
upon receipt of the application, the acquirer is deemed to be a shareholder with voting rights.
According to Art. 5 of the Articles, any person who does not expressly state in his/her application
to the Company that the relevant shares were acquired for his/her own account (any such person,a “Nominee”) may be entered in the share register as a shareholder with voting rights without further inquiry up to a maximum of 3,0 percent of the share capital outstanding at that time. Above
this limit, shares held by Nominees shall be entered into the share register with voting rights only
if the Nominee in question discloses the names, addresses and shareholdings of the persons forwhose account he or she is holding 0,5 percent or more of the share capital outstanding at thetime and provided that the disclosure requirement stipulated in the FMIA is complied with. The
BoD has the right to conclude agreements with Nominees concerning their disclosure requirements. Subject to Art. 652b para. 3 CO, the abovementioned limit of registration also applies tothe subscription for or acquisition of registered shares by exercising pre-emptive, option or convertible rights arising from shares or any other securities issued by the Company or third parties.
Legal entities, partnerships, other associations or joint ownership arrangements that are linked in
the form described in Art. 5 of the Articles are considered one shareholder or nominee.

39

KLINGELNBERG GROUP
Corporate Governance

Until an acquirer becomes a shareholder with voting rights for the shares in accordance with Art. 5of the Articles, she/he may neither exercise the voting rights connected with the shares nor rights
associated with the voting rights.
Details regarding legal entities or individuals acting in concert can be found in Art. 5 of the Articles available at:https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

4.6.1 Admissibility of nominee registrations
The BoD has the right to conclude agreements with nominees concerning their disclosure requirements. In special cases, the Company may approve exceptions to the above restrictions. More information can be found in Art. 5 of the Articles (see link in Note 4.6 above).

4.6.2 Exceptions granted in the year under review
No exceptions under Art. 5 of the Articles were granted by the BoD during the reporting period.

4.6.3	Procedure and conditions for easement or abolition of the restriction oftransferability
A resolution of the General Meeting passed by at least two thirds of the represented share votes
and the absolute majority of the nominal value of the represented shares is required for the easement or abolition of the restriction of the transferability of the registered shares (Art. 12 para. 2
lit. 2 of the Articles).
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

5

Board of Directors

5.1

Introduction

The BoD of KLINGELNBERG AG sets the overall direction and supervises the management (see Art.
716a para. 1 of the Swiss Code of Obligations). Its organization is reflected in the Organizational
Regulations (“Organisationsreglement” as at June 2018). No member of the BoD holds an Executive Management position with KLINGELNBERG AG or any of its subsidiaries or has held such a
position in the past three years.
In the 2020/21 financial year there were no significant business relations between a member ofthe BoD and KLINGELNBERG AG or one of its subsidiaries. For a list of other related party transactions, please refer to Note 6.2 of the consolidated financial statements.

40

KLINGELNBERG GROUP
Corporate Governance

5.2

Other activities and vested interests

Except as disclosed in the biographies of the members of the BoD, no member of the BoD holds
a position in a governing or supervisory body of any significant private or public sector organization, institution or foundation, a permanent management or consultancy position with an important interest group, or any public or political office.

5.3

Mandates outside KLINGELNBERG AG

The Articles stipulate that no member of the BoD may hold more than five additional mandates
as a member of the Board of Directors, other top management or administrative body in listedcompanies and no more than ten mandates as a member of the Board of Directors, other top management or administrative body of legal entities that do not meet the abovementioned criteria.
In addition to the mandates permitted as described above, each Member of the BoD may have up
to ten mandates in the top management or administrative bodies of legal entities that must be
registered in a commercial register and that serve exclusively as entities for the private administration and management of real estate and other assets of the respective member of the BoD orsuch member’s relatives. With respect to the additional activities, mandates in companies that areunder uniform control or the same beneficial ownership are deemed to be one mandate.
For further details, in particular regarding mandates which are not subject to the abovementioned
limitations please see Art. 23 of the Articles available at:https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
All Members of the Board adhere to the aforementioned rules.

5.4

Board of Directors’ competences and evaluation

The NCC/BoD evaluates current and prospective members of the EM according to their skills andexperience to ensure that the Executive Management has an appropriate mix of relevant skills andexperience.
The NCC/BoD identifies and evaluates prospective candidates for the BoD to ensure an appropriate mix of relevant skills and experience is represented in the BoD. Both, the BoD and its Committees perform an annual self-assessment of their work.

41

KLINGELNBERG GROUP
Corporate Governance

5.5

Elections and terms of officeAccording to Art. 6 para. 2 lit. 2 of the Articles of KLINGELNBERG AG the Annual General Meeting(hereinafter also the “AGM”) has the non-transferable powers to elect and recall the members of
the BoD, the Chairman of the BoD, the members of the NCC, the Auditors and the independent
proxy. Art. 15 of the Articles of KLINGELNBERG AG states that the BoD must consist of a minimumof four members.
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
All elections are made for a term of one year. In this context, a year means the period between two
consecutive AGMs or, if a member is elected at an Extraordinary Shareholders’ Meeting between
the Extraordinary Shareholders’ Meeting and the following AGM. Re-election is permitted. According to Art. 11 of the Articles, members of the BoD and the NCC are elected individually. Thereis no limit on the term in office.

5.6

Members of the BoD

The following chart provides an overview of the current members of the BoD:

42

Name

Position

Committee
MembershipYear of Appointment

Dr. Jörg Wolle

Chairman

NCC (Chairman)

2018

Diether Klingelnberg

MemberNCC

1991

Dr. Hans-Martin Schneeberger

MemberNCC

2007

Hans-Georg Härter

Member–2008

Roger Baillod

MemberAC (Chairman)

2018

Prof. Dr. Michael Hilb

MemberAC

2018

KLINGELNBERG GROUP
Corporate Governance

Dr. Jörg Wolle
is the Chairman of the BoD and a Swiss and German citizen born in 1957. He has been serving as
Chairman of the Company’s BoD since June 2018. Dr. Wolle has also served as Chairman of theBoard of Directors of Kuehne + Nagel International AG since 2016. He is a member of the Board of
Directors of Kuehne Holding AG as well as a member of the Board of Trustees of the Kuehne Foundation, Switzerland. He has also been a member of the Board of Directors of OLAM International
Ltd. in Singapore since September 2019. Dr. Jörg Wolle was Chairman of DKSH Holding Ltd. from2017 to March 2019 and President and CEO of DKSH from June 2002 to March 2017. Previously, he
was President and CEO of SiberHegner Holding Ltd. from early 2000. Dr. Wolle obtained his PhD inengineering in 1987 from the University of Technology in Chemnitz, Germany. He graduated fromthe Senior Executive Program at Stanford Business School, USA.

Diether Klingelnberg
is a BoD member and German citizen born in 1944. Mr. Klingelnberg has been a member of theBoard of Directors of the Company since 1991 and has acted as its Chairman between 1991 and2018. He became CEO of the Group in 1969 and held the position until being succeeded by Jan
Klingelnberg in 2004. In addition, he was the Managing Director of MF GmbH between 2002 and2013. Mr. Klingelnberg was President of the German Engineering Association (VDMA) between
2001 and 2004, and Vice President of the Federation of German Industries (BDI) between 2003
and 2006. Since 2019 he has been Managing Director of Aarpharma GmbH & Co. He holds a degree in Business and Engineering from the Technical University of Darmstadt, Germany.

Dr. Hans-Martin Schneeberger
is a BoD member and Swiss citizen born in 1955. Dr. Schneeberger has been a member of the Boardof Directors of the Company since 2007. Dr. Hans-Martin Schneeberger currently serves as Chairman of the Board of Directors of Schneeberger Holding AG since 2003, having been CEO between
1993 and 2018 and Managing Director and Head of Marketing and Sales between 1988 and 1993.
From 1985 until 1988, he was an account and project manager with a European-based management consulting firm. Since 2006, he has served on the Board of Unitectra AG, an organization fortechnology transfer, between 2014 and 2018 as its Chairman. Between 2010 and 2012, Dr. HansMartin Schneeberger was a member of the Board of Swissmem, the association of Swiss companies in the mechanical and electrical engineering industries and related technology-oriented
sectors, and he currently is the President of CECIMO, the European Machine Tool Builders Association in Brussels. Dr. Hans-Martin Schneeberger obtained a PhD from the Krannert Business Schoolat Purdue University USA in 1984 and was Tenure-Track Assistant Professor at The Ross Business
School at The University of Michigan from 1984 to 1985.

43

KLINGELNBERG GROUP
Corporate GovernanceHans-Georg Härter
is a BoD member and German citizen born in 1945. Mr. Härter has been a member of the BoD of
the Company since 2008. Hans-Georg Härter currently serves as member of the Board of Directorsof Walterscheid SE in Amsterdam (since 2019) and as a member of the European Advisory Board
of BainCapital (since 2016). Previously, Hans-Georg Härter served as Chairman of the Supervisory
Committee of Knorr-Bremse AG (between 2016 and 2018), as member of the Board of Directorsof Saurer Jintan (between 2013 and 2018), as member of the Board of Directors and the Strategic
Committee of Faurecia S.A. (between 2012 and 2019) and as Chairman of the Board of Directorsof Deutz AG (between 2013 and 2018). He was also a member of the Board of Directors of ZF
Friedrichshafen AG from 2006 until 2012 and the CEO between 2007 and 2012. Between 2002 and2006, Hans-Georg Härter was the CEO of ZF Sachs AG. Between 1994 and 2001, he was the CEO of
ZF Passau GmbH as well as a member of the Executive Committee of ZF Friedrichshafen AG. Before
that, he held various roles in the ZF group since 1973. Mr. Härter holds a degree in engineeringfrom Meersburg Academy in Germany.

Roger Baillod
is a BoD member and Swiss citizen born in 1958. He has been a member of the BoD of the Company since June 2018. Mr. Baillod has been a professional director and management consultant
since 2017. He was a member of the Board of Migros-Genossenschafts-Bund from 2008 to 2020
and was the Chairman of its AC from 2012 to 2018 as well as member of the NCC from 2018 to2020. He has served as a member of the Board of Directors and Chairman of the Audit and Risk
Management Committee of BKW AG since 2013, as member of the Board of Directors and Chairman of the AC of Rieter Holding AG since 2016. He is president of a pension fund commission
and member of the Board of Trustees of the Joh. Jacob Rieter-Stiftung. Between 1996 and 2016,
Roger Baillod was the Chief Financial Officer and a member of the Group management of Bucher
Industries AG. Between 1993 and 1996 he was member of the Executive Board of two industrial
companies. Mr. Baillod started his career as an auditor and consultant at ATAG Ernst & Young AG
in Zürich from 1984 until 1993. Mr. Baillod holds a degree in Business Economics and is a Certified
Public Accountant.

Prof. Dr. Michael Hilb
is a BoD member and Swiss citizen born in 1977. He has been a member of the BoD of the Company
since June 2018. Prof. Hilb is founder and CEO of DBP Holding Ltd., and serves on the Boards ofSigvaris Holding Ltd., the Board Foundation and the Foundation for Value Creation. From 2010 to2018, he was with DKSH, most recently as Vice President Group Strategy and Digital Business. Before that, he was Project Manager with Roland Berger from 2005 until 2010 and with Holcim Commerce from 2001 until 2003. He is a titular professor at the University of Fribourg, Switzerland andholds a PhD and an MSc in Management from the University of St. Gallen. He was a fellow at Harvard University and INSEAD and completed executive education programs at HBS, IMD and INSEAD.

44

KLINGELNBERG GROUP
Corporate Governance5.7	Structure of the internal organization – Allocation of tasks within the
Board of Directors
Except for the election of the Chairman of the BoD and the chairman and members of the NCC by
the AGM, the BoD organizes itself.
In case the office of the Chairman of the BoD is vacant, the BoD shall appoint a substitute thatmust be a member of the BoD for the period until the conclusion of the next AGM. In case of avacancy on the NCC, the NCC shall appoint a substitute for the period until the conclusion of thenext AGM (Art. 17, last paragraph of the Articles):
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
In accordance with the Regulations of the AC, the BoD appoints the members of the AC on an annual basis until the next AGM convenes. The Regulations of the Audit Committee can be accessedon the corporate governance section of the Company´s website at:https://www.klingelnberg.com/en/investors/corporate-governance/regulations-of-the-company/

5.7.1 Tasks and areas of responsibility of the Board of Directors’ committees
The BoD may delegate the preparation and execution of its decisions to committees or individual
members. The duties and authorities of the committees are defined in the Articles (Art. 19, NCC
only), the Organizational Regulations and the Committee Regulations of the BoD:
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
The committees usually meet before the BoD meetings and regularly report to the BoD on theiractivities and findings. The overall responsibility for duties delegated to the committees remains
with the BoD. The period of office of all committee members is one year. Re-election is possible.

5.7.2 Audit Committee
The Audit Committee consists of two or more members of the BoD who are appointed by the BoD.
The term of office of the members of the Audit Committee is one year ending upon conclusion of
the subsequent AGM. Re-election is possible. The current members of the Audit Committee are
Roger Baillod and Prof. Dr. Michael Hilb. The organization, detailed responsibilities and reporting
duties of the AC are stipulated in its Regulations. The Regulations of the Audit Committee can beaccessed on the corporate governance section of the Company´s website at:https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
Meetings of the AC are held as often as required, but at least three times a year, or upon requestof its members.
The AC assists the BoD in fulfilling its supervisory responsibilities with respect to the accounting

45

KLINGELNBERG GROUP
Corporate Governanceand financial reporting, the internal control system, and the statutory auditors of the Company.
According to the AC Regulations, the AC’s responsibilities include but are not limited to:review and assess the plans and the scope of the external audit, review the reports of the statutory auditors, discuss their content with the statutory auditors and the EM, and supervise theimplementation of the recommendations issued by the statutory auditors;
review and assess the performance of the statutory auditor;
review and assess the qualifications and effectiveness of the statutory auditors in consultation
with the EM and make recommendations to the BoD regarding proposals to the AGM for theappointment or removal of the statutory auditors;
review and assess on an annual basis the independence of the statutory auditor and the compatibility of advisory mandates, if any, with their role as statutory auditors;
approve, based upon the proposal of the CFO, the budget for auditing fees;review the annual and interim statutory and consolidated financial statements and discussthese with the EM and statutory auditor prior to making a proposal to the BoD with respect tothese annual and interim statutory and consolidated financial statements;
review, in cooperation with the statutory auditor and the EM, whether the accounting processes and the financial control mechanism of the Company and the Group are appropriate interms of the size and complexity of the Group;review the effectiveness of the internal control system and assess on an ongoing basis theGroup’s compliance with applicable laws and regulations;assess whether the risk management established by the EM addresses all relevant risks andwhether the appropriate measures have been implemented;
assess the effectiveness of the Group’s compliance systems.
The BoD may entrust the AC with additional duties in financial matters. In discharging its responsibilities, the AC has unrestricted and direct access to all relevant information in relation to theCompany and the Group. The AC ensures that it is informed by the statutory auditors on a regularbasis. The AC is required to report its activities to the BoD on a regular basis and make recommendations and propose appropriate measures to the BoD.

46

KLINGELNBERG GROUP
Corporate Governance5.7.3 Nomination and Compensation Committee
As required by Swiss law the members of the NCC are elected by the AGM. As at 31 March 2021,
the members of the NCC include Dr. Jörg Wolle, Diether Klingelnberg and Dr. Hans-Martin Schneeberger. The organization, detailed responsibilities, and reporting duties of the NCC are stipulated
in its Regulations and the Articles of Association.
Meetings of the NCC are held as often as required, but at least twice a year, or upon request of its
members.
Pursuant to the Organizational Regulations and the Regulations of the NCC, a majority of themembers of the NCC should be independent as defined in the Swiss Code of Best Practice for Corporate Governance and a majority of the members of the NCC, including its chairperson, should be
experienced in the areas of succession planning, performance evaluation as well as the nominationand compensation of members of Boards of Directors and Executive Management boards. The
Regulations of the NCC can be accessed on the corporate governance section of the Company´swebsite at:https://www.klingelnberg.com/en/investors/corporate-governance/regulations-of-the-company/
The NCC supports the BoD in the discharge of its duties in the field of personnel and compensation policies. The NCC’s responsibilities include, but are not limited to:preparing and periodically reviewing the Group’s compensation policy and principles and periodically reviewing their implementation as well as submission of related proposals and recommendations to the BoD;
submitting proposals to the BoD regarding the approval by the AGM of the maximum aggregate compensation for the members of the BoD as well as the maximum aggregate compensation of the members of the EM;submitting proposals to the BoD regarding the determination of the individual compensationof the Chairman and the other members of the Board as well as of the CEO and, based upon a
proposal of the CEO, the other members of the EM, in each case within the limits of the respective maximum amounts approved by the AGM;
submitting proposals to the BoD regarding the determination of compensation-related performance metrics and targets for the EM and assessing the performance of the members of the
EM on an annual basis;submitting proposals to the Board regarding the mandate or employment agreements withthe members of the BoD and the EM;

47

KLINGELNBERG GROUP
Corporate Governancesubmitting proposals to the BoD regarding the approval of, and any amendments to, compensation plans and other compensation regulations and regarding the persons eligible for participation in compensation plans as well as assessing such compensation plans on a regular basis
and submitting proposals to the BoD in connection with this;reviewing the Compensation Report prepared by the EM and submitting the Compensation
Report to the BoD for approval;
making recommendations on Board composition and balance, setting criteria for the assessment of the independence of BoD members as well as submitting proposals to the BoD regarding the criteria to be applied for the selection of the Chairman, other members of the Boardand its committees as well as for the nomination of candidates for positions in the EM;
identifying and assessing candidates for membership in the BoD and for the position of CEO
and submitting proposals to the BoD regarding the appointment and removal of the CEO;assessing candidates proposed by the CEO for other positions in the EM and submitting proposals to the BoD regarding the appointment of such persons;informing the BoD at least annually on succession and contingency plans in relation to themembers of the EM and other key employees;
reviewing the acceptance of mandates outside the Group by members of the BoD or the EM;supporting and advising the BoD in matters of corporate governance.
The BoD may entrust the NCC with additional duties in related matters. The NCC is required toreport its activities to the BoD on a regular basis and to make recommendations and propose appropriate measures to the BoD.

48

KLINGELNBERG GROUP
Corporate Governance5.7.4 Working methods of the Board of Directors and its committees
Within the 2020/21 financial year the BoD held six meetings. The following table shows the individual members’ attendance at BoD and Committee meetings and the average length of meetings:
Name

BoD

AC

NCC

Dr. Jörg Wolle

64Diether Klingelnberg

3

1

Dr. Hans-Martin Schneeberger

64Hans-Georg Härter

6

Roger Baillod

64Prof. Dr. Michael Hilb

5

4

Average meeting duration

02:10

02:25

00:30

Urgent business matters were discussed in conference calls. In addition to formal meetings at
which minutes were taken, members of the BoD or of the Committees also met informally for other issues and discussions that required additional time, such as preparations for formal meetings.
According to the Organizational Regulations, the BoD convenes at the invitation of the Chairman
at least four times each year, or whenever a member or the CEO requests a meeting of the BoD indicating the reasons in writing. The Chairman or, if he is not available, another member of the BoD
shall preside BoD meetings. Meetings of the BoD may be held in person, by telephone or videoconference, or similar means of live communication.
BoD resolutions may also be passed in writing by way of circular resolution, provided that no member of the BoD requests oral deliberation. In such cases, the Organizational Regulations requirethat the text of the resolution be provided to all members of the Board and that the majority ofthe members cast a vote and approve the matter.
The BoD is quorate to validly pass resolutions when a majority of its members is present. The Board
passes resolutions by the majority of the votes cast. In case of a tie, the Chairman (but not anyother member acting as chairman) has the casting vote.
The BoD works closely with the EM. In general, the meetings of the BoD and its Committees arealso attended by the CEO and – as appropriate – by the CFO and the COO. Meetings are also attended by the Corporate Secretary. The BoD consults external experts when necessary in connection with specific topics.

49

KLINGELNBERG GROUP
Corporate GovernanceAll six meetings of the BoD were attended by the CEO and the CFO in the reporting period. The
COO attended five meetings of the BoD. The four meetings of the NCC in the reporting period
were held in the presence of the CEO with regards to his requests. All four meetings of the AC
in the reporting period were attended by the CFO, three of the meetings were attended by the
CEO and the Head of Finance as well and two meetings were also attended by the auditors of theCompany.

5.7.5 Areas of responsibility
The BoD is entrusted with the ultimate direction of the Company and its subsidiaries and has ultimate responsibility for the business and affairs of the Company and its subsidiaries. Such responsibilities include the duty to carefully select, properly instruct and supervise the persons entrustedwith the Company’s management. It represents the Company towards third parties and attends toall matters that have not been delegated to or reserved for another corporate body of the Company by law, the Articles, the Organizational Regulations or by other internal regulations.
In accordance with Art. 16 of the Articles(https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf)
the BoD may delegate the Executive Management of the Company in full or in part.
Its non-transferable and irrevocable duties are set out in the Swiss CO (Code of Obligations - Schweizerisches Obligationenrecht - “OR”) and Art. 17 of the Articles(https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf),
they include: (i) the ultimate direction of the Company and the power to issue the necessary directives; (ii) determining the organization of the Company; (iii) the organization of its accounting, its
internal control system (ICS), its financial control and its financial planning as well as the performance of a risk assessment; (iv) the appointment and removal of the persons entrusted with the
Executive Management and representation of the Company, as well as the determination of theirsignatory power; (v) the ultimate supervision of the persons entrusted with the management of
the Company, in particular with respect to their compliance with the law, the Articles of Association, regulations and directives; (vi) the preparation of financial reports and the AGM, including
the implementation of the resolutions adopted by the AGM; (vii) the preparation of the Compensation Report; (viii) the notification of the judge in case of over-indebtedness; (ix) the passing ofresolutions regarding the subsequent payment of capital with respect to non-fully paid-in sharesand the respective amendments of Articles of Association; (x) the passing of resolutions concerning an increase of the share capital and regarding the preparation of capital increase reports aswell as the respective amendments to the Articles of Association; (xi) the examination of compliance with the legal requirements regarding the appointment, election and professional qualifications of the Company’s auditors; and (xii) the non-transferable and inalienable duties and powersof the Board of Directors pursuant to the Swiss Federal Merger Act on Merger, Demerger, Transformation and Transfer of Assets [Bundesgesetz über Fusion, Spaltung, Umwandlung und Vermögensübertragung (Fusionsgesetz, FusG)] of 01 July 2004, as amended.

50

KLINGELNBERG GROUP
Corporate GovernanceIn addition, Swiss law and the Organizational Regulations reserve the Board’s powers, inter alia,(i) to approve the annual budget of the Company and the Group as well as any budget overrunof EUR 1 million or more per financial year, (ii) to approve certain major transactions exceeding
specified thresholds, (iii) to appoint and remove the CEO and the other members of the EM of theCompany and (iv) to adopt or amend the Company’s compensation and benefits strategy upon
proposal by the NCC.

5.7.6 Information and controlling instruments for supervising the EM
The EM reports to the BoD and its Committees periodically every month with detailed written
overviews. It informs the BoD of the status of business matters and financial results, presents relevant strategic initiatives as well as major business transactions. The BoD and the EM discuss theCompany’s strategy and the long-term financial plan. Committees receive information in the formof group reports relevant to their needs.
Conference calls are held as required between BoD members and the CEO and/or CFO. Furthermore, each member of the BoD may request information on all matters concerning the Company.

5.7.7 Risk and complianceTo identify and manage its risks, the KLINGELNBERG Group has implemented a holistic risk management system to identify and assess strategic, operational, financial, legal and compliance risks
related to its activities. The risk management directive has been rolled out throughout the entire
Group. A risk management software helps to analyze the impact of individual risks on the budget
by using Monte-Carlo simulations. Furthermore, the top risks are determined by using sensitivity
analysis.
The risks identified by the risk owners in the different business units and administrative departments, are summarized in a Group wide risk map. The risk map contains the probability of occurrence and possible extent of damage. The risks are assessed in detail by the Risk Management
Board and measures are defined to reduce the risk. The members of the Risk Management Board
are the CFO, the COO, and the Head of Controlling. They ensure continuous monitoring of therisks. Risk status reports are regularly submitted to the AC and, after discussion with and assessment by the AC to the BoD of the Company for review. For information about risks please refer tothe Management Report.
The Head of Finance assumes responsibility for the internal control system (ICS) for financial reporting risks. The AC and the BoD receive updates on compliance with the ICS guidelines.
The AC approves the annual audit plan of the auditors and ensures that the relevant Group companies are adequately reviewed according to their risk scoring.

51

KLINGELNBERG GROUP
Corporate Governance

The Group Compliance Program supports KLINGELNBERG’s core values of ethical behavior andunquestionable integrity. Compliance is overseen by both the CFO and the Head of Legal. If applicable, compliance reports are given to the AC as well as to the BoD. The Head of Legal reports to
the Chairman of the BoD regarding compliance issues.

6

The Group Executive Management

6.1

Members of the Group Executive Management

The BoD has delegated the operative management to the EM headed by the CEO, subject to theduties and powers reserved to the Board by Swiss law, the Articles, and the Organizational Regulations. The EM is responsible for implementing and achieving the Company’s corporate objectives
and for the management and control of all Group companies. The EM is supervised by the BoD and
its Committees.
The EM is responsible for the business of the Company and the preparation, implementation andmonitoring of the strategic roadmap and the preparation, implementation and delivery of the annual plan and budget. The EM also prepares for and executes decisions made by the BoD. The EM
is chaired by the CEO and comprises the CFO and the COO.
Pursuant to the Organizational Regulations and the Regulations of the NCC, the CEO is appointed
and removed by the BoD via a motion by the NCC. The other members of the EM are appointed
and removed by the BoD via a motion by the CEO and the NCC. All members of the EM are evaluated on an annual basis by the NCC.

52

KLINGELNBERG GROUP
Corporate Governance

As at 31 March 2021, the members of the EM include:
Jan Klingelnberg
CEO and a Swiss citizen born 1971. Mr. Klingelnberg has been the CEO of the Group since 2004. From2002 until 2004, he was the Director of the Cylindrical Gears business unit of KLINGELNBERG GmbH,Germany. Between 2000 and 2002, Mr. Klingelnberg held various roles at ZF Passau GmbH in Brazil
and in the US. Before that, he was a manager for corporate strategy planning at SMS Demag AG
in Germany. Since 2008, Mr. Klingelnberg has also been a member of the Managing Board of the
VDMA for machine tools and production systems, a trade association for the industrial sector inwhich the Company is active. Mr. Klingelnberg holds a degree in industrial management from
Carnegie Mellon University in Pittsburgh, USA.

Christoph Küster
CFO and a German citizen born in 1974. Mr. Küster has been the CFO of the Group since 2015, after
having been a Managing Director of KLINGELNBERG GmbH, Germany, since 2014. He serves as amember of the Advisory Council of HDI Global. From 2003 until 2013 he occupied various positions
in finance and controlling at Salzgitter Group in Germany. Mr. Küster had started his career in 1995
at V+M Tubes in Germany, where he stayed until he left for university studies in 1998. Mr. Küster
holds a degree in business administration from Heinrich Heine University, Düsseldorf, Germany.

Martin Boelter
COO and a German citizen born in 1961. Mr. Boelter has been the COO of the KLINGELNBERG
Group since 2015. From 2010 until 2015, he was COO and Managing Director at Sterling SIHI groupand between 2007 and 2009 he worked as Managing Director for the production of turning
machines at Gildemeister AG, Germany (today: DMG Mori) and from 2005 until 2007 as overall
production manager at INDEX group in Germany. Mr. Boelter started his career at Heidelberger
Druckmaschinen AG, Germany, in 1989 where he rose to Head of Operations of a business unit by
the time of his departure in 2005. Mr. Boelter holds a degree in mechanical engineering from theTechnical University of München, Germany.

53

KLINGELNBERG GROUP
Corporate Governance

6.2

Other activities and functions

Except as disclosed in the biographies of the members of the EM, no member of the EM holds any
position in a governing or supervisory body of any important private or public sector organization, institution or foundation; none holds any permanent management or consulting position
with an important interest group or any public or political office.

6.3

Mandates outside KLINGELNBERG AG

The Articles limit the number of functions in superior management or administrative bodies oflegal units other than the Company or its subsidiaries that members of the EM are allowed to holdat one time.
Pursuant to Art. 23 of the Articles, members of the EM may hold up to two mandates in publicly
traded companies and, in addition, up to three mandates in other legal entities, subject to the approval of the BoD.
In addition, each member of the EM may have up to ten mandates in the superior management
or administrative bodies of legal entities obliged to register themselves in a Swiss commercial register or a foreign equivalent, which exclusively serve as entities for the private administration andmanagement of real estate and other assets of the respective member of the EM. For further details, in particular regarding mandates which are not subject to the abovementioned limitations
please see Art. 23 of the Articles available at:https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
All members of the EM adhere to the aforementioned limitations.

6.4

Management contracts

The BoD and the EM conduct business directly and have not delegated any management tasks tocompanies outside the Group.

7

Compensation, shares and loans

All details of compensation, shareholdings and loans are listed in the Compensation Report.

54

KLINGELNBERG GROUP
Corporate Governance8

Shareholders’ participation rights

8.1

Voting rights restrictions

Except for the limitation on voting rights described under Note 4.6 et seqq. which concern the
Company’s share register and Nominees there are no other restrictions to voting rights in place.
For rules regarding registration in the Company’s share register and Nominees please see Art. 5of the Articles
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
and the detailed explanations under Note 4.6. As outlined above, no exceptions to the abovelisted rules were granted during the reporting period.

8.2

Rules on participation in the AGM

In AGMs, each share carries one vote and each shareholder has equal rights, including equal voting rights. Such voting rights and rights associated therewith are only exercisable with respect tothose shares for which a shareholder (or a usufructuary, as applicable) has been recorded in theshare register with voting rights until a specific qualifying day designated by the BoD. According
to the Articles, acquirers of shares will be recorded in the share register as shareholders with theright to vote, subject to certain conditions and restrictions (Note 4.6 and 8.1).
Each shareholder may personally participate in the AGM and cast his/her vote(s) or be represented
by a proxy appointed in writing. According to Art. 11 of the Articles, such proxy needs not be ashareholder. Each shareholder also has the possibility to be represented by independent proxy.

8.3

Independent Proxy and electronic voting

The AGM elects the Independent Proxy with the right of substitution. His/her term of office always terminates at the conclusion of the next AGM. Re-election is possible. Should the Company
have no Independent Proxy, the BoD shall appoint a substitute for the period until the conclusionof the next AGM. Shareholders may issue their power of attorney and instructions to the Independent Proxy by post or electronically.

8.4

Statutory quorums

According to Art. 11 of the Articles, to the extent that neither the law nor the Articles provide otherwise, the AGM passes its resolutions and carries out its elections with the absolute majority ofthe votes cast, whereby abstentions, empty votes and invalid votes will not be taken into accountfor the calculation of the required majority. According to Art. 12 of the Articles a resolution of theGeneral Meeting passed by at least two thirds of the represented share votes and the absolute majority of the nominal value of the represented shares is required for: (i) the cases listed in Art. 704
para. 1 CO and in Art. 18 and Art. 64 of the Federal Act on Merger, Demerger, Transformation and55

KLINGELNBERG GROUP
Corporate GovernanceTransfer of Assets (Merger Act) dated 03 October 2003; (ii) the easement or abolition of the restriction of the transferability of the registered shares; (iii) the amendment or cancellation of Art.
31 (opting-out); and (iv) any change to Art. 12 of the Articles.

8.5

Convening the AGM

The ordinary AGM shall be held annually within six months after the close of the financial year.
The BoD determines the time and location of the AGM. The AGM is convened by the BoD or, if necessary, by the Company’s statutory auditors. Extraordinary shareholders’ meetings may be held
when deemed necessary by the BoD or the Company’s auditors. Liquidators may also call a shareholders’ meeting. Extraordinary Shareholders’ Meetings shall be called as often as necessary, inparticular, in all cases required by law. Extraordinary General Meetings shall be convened by the
BoD within two months if shareholders representing at least ten percent of the share capital request such meeting in writing, setting forth the items to be discussed and the proposals to be decided upon (Art. 7 of the Articles).
An AGM is convened by publishing a notice of such meeting in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt, SHAB) at least 20 calendar days before the date of themeeting. Registered shareholders may be invited by letter and/or e-mail. Such publication and letters of invitation must indicate the date, time and place of the meeting, the items on the agenda,
the wording of any motions proposed by the BoD or by shareholders who have requested the convention of a shareholders’ meeting or the inclusion of an item on the meeting’s agenda.
For details regarding the form of notice please see Art. 8 of the Articles:
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

8.6

AgendaAccording to Art. 9 of the Articles, the BoD shall state the items on the agenda. Registered shareholders with voting rights individually or jointly representing at least shares with a nominal valueof CHF 1.000.000 may demand that items be put on the agenda. Such demands have to be submitted to the Chairman of the BoD at least 45 calendar days before the date of the AGM and shall bein writing, specifying the item and the proposals.

8.7

Entry in the share register

Only shareholders who are registered in the share register as shareholders with voting rights at a
specific qualifying date (record date) designated by the BoD are entitled to attend an AGM and to
exercise their voting rights.

56

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Corporate Governance

9	Changes of control and defense measures
9.1

Duty to make an offer

Art. 31 of the Articles contains the following provision regarding opting-out:
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf
The duty to submit a public takeover offer pursuant to Art. 135 of the Federal Act on Financial
Market Infrastructures and Market Conduct in Securities and Derivatives Trading of 19 June 2015
(FMIA) shall be excluded in accordance with Art. 125 para. 2 FMIA

9.2

Change of control clauses

In case of a change of control the BoD shall determine the consequences regarding the bonus
plans of the EM (subject to the approval of the AGM, where applicable). For further provisions see
Note 4.3 of the Compensation Report.

10		Auditors
10.1		Duration of mandate and term of office of the auditor-in-charge
PricewaterhouseCoopers AG (hereinafter “PwC”) was elected auditor of KLINGELNBERG AG and
the KLINGELNBERG Group at the AGM on 19 August 2020. PwC has served as auditor for the existing auditing mandate since the 2009/10 financial year. The lead auditor of PwC responsible for
KLINGELNBERG changed in the 2016/17 financial year. The lead auditor is rotated after the maximum statutory period of seven years (for companies with registered office in Switzerland).

10.2

Fees

Auditing Fees:
For the financial year 2020/21, PricewaterhouseCoopers AG invoiced the Company for EUR 274.792
in global audit fees.
Additional Fees:
In the financial year 2020/21, PricewaterhouseCoopers AG invoiced the Company for EUR 52.192 inadditional services. The additional fees were mainly invoiced for worldwide general and projectspecific tax consultancy services.

57

KLINGELNBERG GROUP
Corporate Governance10.3 Information instruments pertaining to the external audit
The AC assesses the professional qualification, independence, and expertise of the auditors (seeduties of the AC above in Note 5.7.2).
Prior to the audit, the auditors agree the proposed audit scope and approach, staffing and fees
for the audit with the AC.
The external auditors report their comprehensive findings in a detailed report to the BoD. The
findings are discussed in detail with the CFO and the AC. In the 2020/21 financial year, the external
auditors attended two out of the four AC meetings.
The AC reviews the performance, compensation, and independence of the external auditors on aregular basis. The AC reports its findings to the BoD.
Additional services or consulting assignments are delegated to the auditors only if they are permitted by law and the auditor’s code of independence. PwC monitors its independence throughout the year and annually confirms its independence to the AC.

11

Information policy

The KLINGELNBERG Group pursues an open and active information policy. The Company complies
with its obligations under the rules of the SIX Swiss Exchange, including the requirements on thedissemination of material and price-sensitive information.
The Group publishes an annual report that provides audited consolidated financial statements,
audited financial statement and information about the Company including the business results,
strategy, products and services, corporate governance, and executive compensation. The Annual
Report is published within four months after the 31 March balance sheet date. The annual results
are also summarized in the form of a press release. In addition, the Company releases results forthe first half of each year within three months after the 30 September balance sheet date. The
published half-year and annual consolidated financial statement comply with the requirements ofSwiss company law, the listing rules of SIX Swiss Exchange and the Swiss GAAP FER.
The Company’s Annual Report and half year report are distributed pursuant to the rules and regulations of the SIX Swiss Exchange and are announced via press releases and investor conferencesin person or via telephone.
The Group reports in accordance with the disclosure requirements of Art. 124 FMIA and the ad hoc
publication requirements of Art. 53 of the listing rules of SIX Swiss Exchange. Ad-hoc announce-58

KLINGELNBERG GROUP
Corporate Governancements may be viewed at https://www.klingelnberg.com/en/investors/news at the same time as
notification to SIX Swiss Exchange and for two years thereafter.
All publications are made available to all shareholders, the media, and the stock exchange at thesame time. All shareholders entered in the share register automatically receive an invitation to the
AGM and a copy of the Annual Report of KLINGELNBERG AG on request. Notices to shareholders
are made via publications in the Swiss Official Gazette of Commerce [Schweizerisches Handelsamtsblatt, SHAB].
KLINGELNBERG Group uses a news service that delivers finance-related press releases to interested stakeholders.
The website of the KLINGELNBERG Group contains information on the Company`s results and thefinancial calendar as well as current investor presentations: https://www.klingelnberg.com
On the KLINGELNBERG website https://www.klingelnberg.com/en/investors/financial-newsletter
it is possible to subscribe to news alerts about the KLINGELNBERG Group via e-mail.

59Compensation Report
61

Introduction

61	Compensation policy/
guiding principles
62

Organization and competences

66

Compensation components

69	Compensation for financial
year under review

KLINGELNBERG GROUP
Compensation Report

1

Introduction

This Compensation Report provides a summary of the compensation structure and the compensation paid to the Executive Management (EM) and the Board of Directors (BoD).
This Compensation Report contains all information required under the Swiss Code of Obligations, the Ordinance Against Excessive Compensation (Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften, VegüV) and the SIX Exchange Regulations. The
KLINGELNBERG Group has also observed the Swiss Code of Best Practice issued by economiesuisse,
the umbrella organisation for Swiss business sector.

2	Compensation policy/guiding principles
The KLINGELNBERG Group’s compensation approach is based on the following principles:reward employees for their contribution to the successful
development of the KLINGELNBERG Group;motivate and retain qualified and talented professionals;
be attractive in order to recruit professionals in the future; and	strive to ensure that both employee and shareholder interests are aligned in a sustainable manner.
Pursuant to Art. 25 of the Articles of Association of KLINGELNBERG AG, the members of the BoD
receive a fixed base fee and fixed fees for memberships in committees or for roles of the BoD, subject to and within the limits of the aggregate maximum amounts approved by the Annual General
Meeting (AGM). BoD compensation can be awarded in cash or shares. Mandate agreements withmembers of the BoD have a fixed term until the conclusion of the next AGM (i.e. one year).
The total compensation for members of the EM consists of a fixed compensation component anda variable compensation (Art. 26 of the Articles of Association). The fixed compensation comprises
the base compensation and additional compensation elements (pension, benefits in kind, etc.). Allelements of the fixed compensation are settled in cash. The variable compensation consists of ashort-term variable compensation in cash as well as a long-term variable compensation that canbe settled in cash or in the form of shares or a combination of both. The maximum annual compensation for members of the EM is subject to approval by the AGM.
The base compensation of the EM ensures a regular and predictable salary paid out in cash inregular installments. The salary level is based on the scope and complexity of the position, market
standards (comparable industry, geographical scope) and benchmarks (sales), and the individual’s
profile in terms of experience and skills. Salary progression depends primarily on the individual’s
performance, and also considers market developments and the economic environment.

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Compensation Report

The short-term variable compensation in cash (Short Term Incentive Plan, STIP) depends on thefinancial result of the KLINGELNBERG Group as well as the achievement of certain individual targets. Such targets are set in advance by the BoD upon recommendation by the NCC, typically for a one-year performance period, which generally corresponds with the financial year of
KLINGELNBERG AG (the “Company”). The individual targets are determined for each member ofthe EM, taking into account his/her position, responsibilities, and tasks, as well as market conditions. These individual targets include, amongst others, implementation of extraordinary projects,
sales, purchase prices and incoming orders. This determination process occurs prior to the startof the one-year performance period and is performed by the BoD upon recommendation of theNCC, to the extent decision-making power has been delegated. The maximum total amount of
the short-term variable compensation is limited to 130% of the participant’s base compensation.
The long-term variable compensation in the form of a Long-Term Incentive Plan (LTIP) for the
Chief Financial Officer (CFO) and the Chief Operating Officer (COO) takes into account the sustainable long-term performance of the KLINGELNBERG Group. The CEO does not participate in
the LTIP as he is already a main shareholder of the Company. Upon recommendation by the NCC,
the BoD defines the design of the LTIP as well as the grant to be made to eligible employees. The
long-term incentive plan provides for a number of Performance Share Units (“PSU”) annually. The
allocated PSUs are deferred over a planning period of three financial years. The PSUs are thus
vested at the end of the third financial year after allocation (i.e. on 31 March). The calculation of
the long-term incentives payed out depends on the share price and the EBIT of the Group. The
Company may procure any required shares or other securities through purchases in the market orby using conditional share capital. The maximum total amount of the granted long-term variable
compensation is limited to 100% of the base remuneration. Compensation may be paid by theCompany or companies controlled by it.

3

Organization and competences

According to the Organizational Regulation of KLINGELNBERG AG, one of the currently two permanent committees of the BoD is the Nomination and Compensation Committee (NCC). The members of the NCC are nominated by the BoD and individually elected on an annual basis by the AGM.
Art. 19 of the Articles of Association determines that the NCC shall consist of two or more members of the BoD. As required by Swiss Law, the term of office of the members of the NCC shall be
one year and shall end at the conclusion of the next AGM. Re-election is possible. The NCC constitutes itself and has the following main duties based on the Articles of Association with regards tocompensation matters:

62

KLINGELNBERG GROUP
Compensation Reportpreparation and periodic review of the Company’s compensation policy and principles, andperformance criteria related to compensation, periodic review of their implementation, as wellas submission of proposals and recommendations to the BoD;
proposals to the BoD regarding the determination of compensation-related targets for the EM;proposals to the BoD regarding the approval of the individual compensation of all members of
the BoD; proposals
to the BoD regarding the individual maximum compensation (fixed and variable) as
well as further terms of employment of the members of the EM.
The main duty of the NCC is to support the BoD in the area of personnel and compensation policy.
The NCC has its own regulations that have been approved by the BoD (NCC Regulation) and thatprovide for further duties such as:submission of proposals to the BoD regarding the approval by the AGM of the maximum aggregate compensation for the members of the BoD until the next AGM as well as the maximum
aggregate compensation of the members of the EM for the then-next following financial year;assessment of the performance of the members of the EM on an annual basis;submission of proposals to the BoD regarding the mandate or employment agreements withthe members of the BoD and the EM;submission of proposals to the BoD regarding the approval of, and any amendments to, compensation plans and other compensation regulations, persons eligible for participation in compensation plans, as well as assessment of such compensation plans;review of the draft Compensation Report prepared by the EM and submission of the Compensation Report to the BoD for approval;
issue of recommendations on BoD composition and balance, establishment of criteria for theassessment of the independence of BoD members, submission of proposals to the BoD regarding the criteria to be applied for the selection of the Chairman, other members of the BoD and
its committees as well as for the nomination of candidates for positions in the EM;
identification and assessment of candidates for membership in the BoD and for the positionof Chief Executive Officer and submission of proposals to the BoD regarding the appointment
and removal of the Chief Executive Officer;

63

KLINGELNBERG GROUP
Compensation Reportassessment of candidates proposed by the Chief Executive Officer for other positions in the EM
and submission of proposals to the Board regarding the appointment of such persons;communication with the BoD at least annually on succession and contingency plans in relation
to the members of the EM and other key employees;
review of the acceptance of mandates outside the Group by members of the Board or the EM.
The Regulations of the Company can be accessed on the corporate governance section of theCompany’s website at:https://www.klingelnberg.com/en/investors/corporate-governance/regulations-of-the-company

The current members of the NCC are Dr. Jörg Wolle, Diether Klingelnberg and Dr. Hans-Martin
Schneeberger. The members of the NCC have suitable experience in the areas of succession planning, performance evaluation as well as the nomination and compensation of members of Boardsof Directors. Pursuant to the Organizational Regulations and NCC Regulation meetings of the NCC
are held as often as required but always at least twice a year. In the financial year 2020/21, four
NCC meetings were held (Note 5.7.4 of the Corporate Governance Report).
Recommendations regarding compensation for the EM and the BoD must comply with theCompany´s regulations and must be approved by the BoD (and ultimately by the AGM). In any voteon the compensation to be determined for a particular member of the BoD, the Board member
concerned must observe the relevant general withdrawal/abstention procedures. The EM does
not participate in the determination of its own compensation. The CEO is, however, consulted on
the compensation proposed for the other members of the EM.
The NCC utilizes independent external consultants when required. External consultants are generally used to benchmark compensation and assist in the design of compensation plans. The criterion used for benchmarking essentially is the long-term financial development of the Group.
At the AGM, the BoD submits to the shareholders the maximum amount of compensation of the
BoD and the EM for binding approval. The voting mechanism set forth by the Articles of Association provides for approval of the following items by the AGM:
the maximum compensation of the BoD for the term of office until the next AGM;
the maximum compensation of the EM (fixed and variable components) that may be paid or
allocated in the subsequent financial year.
https://www.klingelnberg.com/storage/Investoren/Statuten_Articles_of_Association_Klingelnberg.pdf

64KLINGELNBERG GROUP
Compensation Report

The following table illustrates the organization and competencies regarding the compensation of
the EM and the BoD:
Proposed

Approved

Ultimate
Approval- of BoD, annually from AGM to AGM

NCC

BoD2

AGM

- of EM, annually for subsequent financial year

NCC

BoD2

AGM

Decisions on maximum compensation

2 Approval for submission to AGM and subsequent submission to AGM.

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Compensation Report

4Compensation components

4.1

General description of compensation components/architecture

As described in Note 2 above (with references to the Articles of Association), the members of the
BoD are paid a fixed base fee. The maximum annual compensation of the Board is approved by
the AGM. The compensation of the members of the BoD is subject to Swiss mandatory employee
and employer social security contributions (Old-Age and Survivors Insurance/Unemployment Insurance) or VAT, depending on the individual situation.
Further information regarding the planned total compensation of the BoD for the period fromthe 2021 to the 2022 AGM is provided in the invitation to the 2021 AGM and is also subject to the
Say on Pay (SoP) vote.
The members of the EM receive fixed compensation as well as variable compensation in the formof the STIP and the CFO and the COO also in the form of an LTIP.
Further information regarding the planned total compensation of the EM for the subsequent
financial year is provided in the invitation to the 2021 AGM and is also subject to SoP vote.
As outlined in Note 2 above, the STIP is paid out in cash only and depends on the achievement of
personal targets as well as on the achievement of the financial results of the Group (% of the earnings before taxes (EBT)). For the EM, annual percentages of the EBT achievement are defined forthe determination of the amounts to be paid out under the STIP, taking into account the achievement of the personal targets.
Individual target achievement is typically measured over a one-year performance period, which
generally corresponds with the financial year of the Company and taking into account the relevant member’s position, responsibilities and tasks as well as market conditions, i.e. the economic
environment for mechanical engineering companies. The maximum total amount of the shortterm variable compensation is limited at 130% of the participant’s base compensation.
The aim of the STIP is to ensure participation of the EM in the respective results of the financial
year on the one hand via a certain percentage of the respective EBT and on the other hand via annual individual targets that are selected based on relevant targets of the KLINGELNBERG Groupto ensure that the fulfilment of those targets supports the achievement of the Group’s overallaims and targets. Individual targets are chosen in alignment with the Company’s general overallaims and business targets and focus on the most relevant areas of development of the Company.
As described above, payments are not made in full unless targets of the individuals are fully met.

66

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Compensation Report

The above-mentioned individual targets are generally considered sensitive information. Disclosing those targets would allow confidential insight into the strategy of the KLINGELNBERG Groupand therefore create a competitive disadvantage to the KLINGELNBERG Group. Consequently,
such targets are not communicated at the time they are set but their achievement or non-achievement will be commented on in connection with the overall target achievement.
Individual targets are carefully chosen on an annual basis and in alignment with the Company’s
most relevant projects and targets in line with the Company’s ambitious plans. Setting three tofour demanding and ambitious targets helps the Company to deliver best-in-class performance.
As outlined in Note 2 above, the LTIP may be awarded in cash, shares or a combination of both. The
Company may procure any required shares or other securities through purchases in the market (ifpossible) or by using conditional share capital. The maximum total amount of the granted longterm variable compensation is limited at 100% of the participant’s base compensation.
The LTIP shall take account of the sustainable long-term performance of the Group. The BoD determines the detailed conditions of the LTIP. The LTIP was designed in cooperation with an external consultant, a leading independent firm with experience in the areas of compensation andvalue-based management. The original long-term incentive agreement with the CFO and the COO
already demonstrated a long-term-view, the amendments made upon IPO are intended to reinforce and encourage this. In the future, the BoD may extend participation in the LTIP to further key
employees of the Group, excluding Non-Executive Board Members.
The LTIP participant is granted a number of Performance Share Units (PSUs) on an annual basis.
The number of PSUs to be granted is calculated as follows: amount granted to the relevant participant under the LTIP divided by the volume-weighted average price of the shares for the last 20
trading days before the end of the financial year of the Company preceding the financial year forwhich the grant is made. The amount granted to each participant will be determined on an annual basis and at the discretion of the BoD before the start of the relevant LTIP period. The grantamount is limited to an amount equal to 100% of the participant’s base compensation for the
relevant financial year. The PSUs are granted to each participant on the first day of the relevant
financial year.
The LTIP period is three years and the PSUs vest on a cliff basis, i.e. the PSUs granted at the startof a three-year period vest on the last day of the third financial year after the award was granted.
The vesting of the PSUs is calculated as follows: number of PSUs multiplied by the volume-weighted average price of the shares for the last 20 trading days before the end of the financial year atwhich the PSUs have vested multiplied by an LTI factor. This LTI factor is determined by the BoD,
who applies the LTI factor table that is calculated for each plan before the start of the respective
LTIP period and takes into account the long-term operating and share-price performance of the67

KLINGELNBERG GROUP
Compensation Report

Group. The vesting is approved by the BoD and may be settled in cash or shares or in a combinationof cash and shares at its discretion.
In general, all unvested PSUs will be forfeited in the event of a participant’s termination of employment. However, if a participant has not given cause for the termination of the employment,
the BoD may approve an accelerated vesting of unvested PSUs on a pro rata basis, but no participant may claim rights to such a vesting.
The first regular grant of PSUs under the LTIP was granted on 01 April 2019, with a vesting at theend of the financial year of the Company ending on 31 March 2022. As a transitional arrangementin the context of the IPO and in order to guarantee a fair transition from the pre-IPO long-term
incentive plan, the current members of the EM (excluding the CEO) have been granted a numberof PSUs determined by the BoD, which have been vested at the end of the financial year of theCompany ending on 31 March 2021, subject to and in accordance with the principles set out above.
Due to the general economic situation, the BoD decided for the financial year 2020/21, with theconsent of the EM, to refrain from granting PSUs under the LTIP for this period.
Further details with respect to the LTI targets, such as the applied LTI factor table, are consideredsensitive information. As in the case of the STIP targets, disclosing those targets would allow confidential insight into the strategy of the KLINGELNBERG Group and therefore create a competitive
disadvantage to the KLINGELNBERG Group. Please refer to the compensation table of the EM withrespect to the number of PSUs granted.

4.2

Loans/credits to the BoD/EM members

Art. 28 of the Articles of Association stipulates that the Company shall refrain from granting loans,credits, pension benefits (other than in the context of occupational pension) or securities in favorof the members of the BoD or the EM. Therefore, no loans and credits were granted to or are still
outstanding with current and former members of the BoD, the EM, or their related parties.

4.3

Change of control clauses

Upon a change of control, it is at the discretion of the BoD to decide the effects on compensation.
It may decide in particular that payments under the STIP and the LTIP shall be made prematurely,that individual targets are amended or assessed as achieved despite non-achievement, or that certain parameters under both plans are altered.

4.4

Information on notice periods

According to Art. 24 of the Articles of Association, mandate agreements of the members of the
BoD have a fixed term expiring at the conclusion of the next AGM. The Company reserves the right68

KLINGELNBERG GROUP
Compensation Report

to early termination or removal from office. The Articles of Association further provide that theemployment agreements of the members of the EM shall in principle be concluded for an indefinite period.
With respect to employment agreements entered into for an indefinite period, the maximum notice period shall not exceed 12 months. If the BoD considers a fixed term appropriate, such fixed
term shall not exceed one year. All individual agreements with the BoD and the EM comply withthe aforementioned rules.
The Company may enter into non-compete agreements with members of the BoD and the EM
for an agreed period of time after termination of employment to the extent that is justified froma business perspective. Pursuant to Art. 24 of the Articles of Association, the consideration paid
for a non-compete undertaking must not exceed the average total annual compensation of suchmember during the last three years.

5	Compensation for financial year under review
As the Company is listed, it must comply with the obligations of the VegüV, which include the publication of an annual compensation report. In this context, the compensation of the BoD and EM
for the 2020/21 financial year is disclosed herewith.

5.1

Compensation of the members of the Board of Directors (audited)

The AGM of 19 August 2020 voted for a maximum compensation of the BoD in the amount of
CHF 700.000 until the end of the next AGM.
Within the financial year 2020/21 the compensation of the members of the BoD – with the exception of Diether Klingelnberg – comprised a fixed fee in the amount of CHF 60.000 per annum or
CHF 180.000 per annum in the case of the Chairman, plus an additional amount of CHF 10.000 per
annum for membership in a committee or CHF 20.000 per annum for the chairman of a committee. No change from the previous year.
The Company has no outstanding loan or guarantee commitments to members of the Board of
Directors or related parties. No severance payments have been made in the financial and previous
year. No compensations, loans, or credits were paid to related persons.

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The following table shows the compensation in the financial year 2020/21:
Committee Membership

Compensation in cash, CHF

Fixed base fee

Fixed fees formemberships incommittee/roles

Employersocial security
payments 3

Chair

180.000,00

20.000,00

14.831,60



12.000,00

not applicable

not applicable

Dr. Hans-Martin
Schneeberger

60.000,00

10.000,00

3.442,70

Hans-Georg Härter



60.000,00

not applicable

not applicable

Roger Baillod



Chair

60.000,00

20.000,00

6.160,00

Prof. Michael Hilb



60.000,00

10.000,00

5.390,00

432.000,00

60.000,00

29.824,30

Nomination &Compensation

Chair

Diether Klingelnberg

CHF
Dr. Jörg Wolle

Board
Membership

Audit

Total

The following table shows the compensation in the financial year 2019/20:
Committee Membership

Compensation in cash, CHF

Fixed base fee

Fixed fees formemberships incommittee/roles

Employersocial security
payments 3

Chair

180.000,00

20.000,00

14.864,75



12.000,00

not applicable

not applicable

Dr. Hans-Martin
Schneeberger

60.000,00

10.000,00

4.225,00

Hans-Georg Härter



60.000,00

not applicable

not applicable

Roger Baillod



Chair

60.000,00

20.000,00

6.160,00

Prof. Michael Hilb



60.000,00

10.000,00

5.390,00

432.000,00

60.000,00

30.639,75

Nomination &Compensation

Chair

Diether Klingelnberg

CHF
Dr. Jörg Wolle

Total

Board
MembershipAudit

3 Any value added tax is treated as the employer contribution for social security.

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5.2

Compensation of the members of the Executive Management (audited)

The AGM of 27 August 2019 voted for a maximum compensation of the EM in the amount of
EUR 4.500.000 for the financial year 2020/21.
The Company has no outstanding loan or guarantee commitments to members of the EM or related parties. No severance payments have been made. No compensations, loans, or credits that were
not at market conditions - were paid to related persons.
The following table shows the compensation of the financial year ended 31 March 2021:
CHF 4

EM

of which Jan Klingelnberg, CEO

Base compensation

1.077.456,19

500.000,00

STIP

261.360,00

40.000,00 7

LTIP 50,00

not applicable

Other compensation 6

184.386,39

104.402,68

Employer social security

135.320,11

54.065,85

1.658.522,69

698.468,53

Total

The following table shows the compensation of the financial year ended 31 March 2020:
CHF 4

EM

of which Jan Klingelnberg, CEO

Base compensation

1.075.152,20

500.000,00

STIP

264.296,00

74.000,00

LTIP 5340.000,00

not applicable

Other compensation 6

179.134,95

100.188,24

Employer social security

147.696,50

78.001,05

2.006.279,65

752.189,29

Total

4 All conversions from EUR to CHF in the above tables have been made at the balance sheet exchange rate

(as at 31 March 2021: EUR 1/CHF 1,10680 and as at 31 March 2020: EUR 1/CHF 1,05721).
5 Financial year 2020/21: Fair value PSU CHF 0, number of PSUs granted: 0 (please refer as well to Note 4.1 above). Finan-cial year 2019/20: Fair value PSU CHF 34,49, date of grant 01 April 2019, number of PSUs granted 9.859.
6 Fringe benefits of all EM members and consultancy fees for consultation of subsidiaries by CEO.
7 Due to the general economic situation Mr. Klingelnberg, as the indirectly largest shareholder, again waived a higher
bonus payment.

71

KLINGELNBERG GROUP
Compensation Report

5.3

Share ownership information [CO 663c]

Please see Note 5.9 of the Statutory Financial Statement.

5.4	Transactions with members of the Board of Directors or the Executive
Management
For information regarding related party transactions with members of the Board of Directors andExecutive Management, see the „Transactions with related parties“ section in Note 6.2 to the Consolidated Financial Statements.

72

KLINGELNBERG GROUP
Compensation Report

Klingelnberg AG
ZurichReport of the statutory auditor to theGeneral Meetingon the remuneration report 2020/2021

73

KLINGELNBERG GROUP
Compensation Report

Report of the statutory auditor
to the General Meeting of Klingelnberg AG
ZurichWe have audited the remuneration report of Klingelnberg AG for the year ended 31 March 2021. The audit was limited to theinformation according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance) contained in the tables in chapters 5.1 and 5.2 on pages 69 to 71 of the remuneration report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordancewith Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14–16 of
the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report withregard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected
depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value
components of remuneration, as well as assessing the overall presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, the remuneration report of Klingelnberg AG for the year ended 31 March 2021 complies with Swiss law andarticles 14–16 of the Ordinance.
PricewaterhouseCoopers AGBlaženka Kovács-Vujević

Regina Spaelti

Audit expert
Auditor in charge

Audit expert

Zurich, 22 June 2021

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, CH-8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, Telefax: +41 58 792 44 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

74

KLINGELNBERG GROUP
Compensation Report75Consolidated Financial
Statements
77

Consolidated balance sheet

78

Consolidated balance sheet

79

Consolidated income statement

80

Consolidated cash flow statement

81	Consolidated statementof changes in equity
82	Notes to the consolidated
financial statements
82		

General information82		

Accounting principles

90		Changes in the scopeof consolidation
91	Substantial informationon the consolidatedbalance sheet items

102		Substantial information on
the consolidated income
statement items
105		

Additional information

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated balance sheet
EUR 000

Note

31.03.2021

31.03.2020

22.57738.744

AssetsCurrent assets
Cash and cash equivalents
Receivables from goods and services

4.1

43.00747.155Derivative financial instruments

4.2

50

20

Other short-term receivables

4.3

6.342

5.667

Inventories

4.4

80.50488.984

1.406

1.208

153.886

181.77849.17451.4901919Prepayments and accrued income
Total current assets

Non-current assets
Tangible fixed assets

4.5

Loans and other receivables
Investments in joint ventures

4.6

1.520

2.620

Deferred tax assets

4.7

10.131

6.381

Other financial assets

4.8

1.086

1.182

Intangible assets

4.9

1.125

1.426

Total non-current assets

63.05563.118

Total assets

216.941244.896

The enclosed notes are part of the consolidated financial statements.

77

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated balance sheet
Note

31.03.2021

31.03.2020

Short-term financial liabilities

4.10

5.343

27.077

Payables from goods and services

4.11

14.67410.760Derivative financial instruments

4.2

120

278

Other short-term liabilities

4.12

38.93526.87112.03712.8377.376

15.79778.48593.620

EUR 000
Liabilities
Current liabilities

Accrued liabilities and deferred income
Short-term provisions

4.13

Total current liabilities

Non-current (long-term) liabilities
Long-term financial liabilities

4.10

1.705

2.983

Deferred tax liabilities

4.13

1.222

1.197

Long-term provisions

4.13

15.00215.527

Total non-current (long-term) liabilities

17.92919.707

Total liabilities

96.414113.327

EquityShare capital

4.14

28.63928.639

Capital reserves

4.14

43.13443.134Retained earnings

48.75459.796

Total equity

120.527131.569

Total liabilities and equity

216.941244.896

The enclosed notes are part of the consolidated financial statements.

78

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated income statement
Note2020/212019/20

5.1/6.2

158.719212.093

Other operating income

6.2

1.850

2.812

Change in inventory of finished and unfinishedgoods as well as unbilled goods and services

5.2-5.84410.629Material expense

6.2-52.000-90.606

Personnel expense

5.3-83.731-110.644

Depreciation on tangible fixed assets

4.5-4.559-5.347

Amortization on intangible assets

4.9

-443

-487

5.4/6.2-26.201-37.722

4.6

647

496

-11.562-18.776

2.211-2.119-9.351-20.895

2.059-4.461-7.292-25.356

EUR 000
Net sales from goods and services

Other operating expense
Share of result from joint ventures
Operating result
Financial result

5.5

Loss before income taxes
Income taxes

5.6

Net loss

Earnings per share
EUR
Basic earnings per share

5.7

-0,82

-2,87

Diluted earnings per share

5.7

-0,82

-2,87

2.2

-6.560-12.942

Additional information - non-GAAP measures
EUR 000
EBITDAThe enclosed notes are part of the consolidated financial statements.

79

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated cash flow statement
2020/212019/20-7.292-25.356

4.5/4.9

5.002

5.834

4.13

-8.921

8.680

4.5/4.9-225

95

Change in receivables from goods and services

4.1

3.351

25.416

Change in inventories

4.4

8.091

-5.657

4.3/4.7-4.961

1.842

Share of profits from the application of the equity method

4.6

-646

-497

Change in payables from goods and services

4.11

3.352

-5.499Change in other short-term liabilities andaccrued liabilities and deferred income

4.12

11.604-6.711Other non-cash items-1.738-369

Cash flow from operating activities

7.617-2.222

EUR 000

Note

Net loss
Depreciation/amortization/write-up of
tangible fixed assets and intangible assets
Change in provisions (including deferred taxes)
Profit/loss from the disposal of tangible
fixed assets and intangible assets

Change in other receivables and prepayments
and accrued income (including deferred tax)

Inflows/outflows for investment in financial assets(including loans, participations, securities, etc.)

4.6

1.782

-55

Outflows for investment in tangible fixed assets

4.5-3.589-5.393

Inflows from the sale of tangible fixed assets

4.5

1.630

1.435

Outflows for investment in intangible assets

4.9

-143

-237

Inflows from the sale of intangible assets

4.9

53

0

-267

-4.2500-8.133

Cash flow from investing activities

Distribution of profits
Change in short-term financial liabilities

4.10-21.853

25.305

Change in long-term financial liabilities

4.10-1.243-1.739-23.09615.433

-421

1.088

Net change in cash

-16.167

10.049Opening balance of cash and cash equivalents at 01.04.

38.74428.695

Closing balance of cash and cash equivalents at 31.03.

22.57738.744

Net change in cash

-16.167

10.049Cash flow from financing activities
Currency translation effects

The enclosed notes are part of the consolidated financial statements.

80

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated statement of changes in equity
Retained earnings
Otherretainedearnings

Cumulative
foreigncurrency
differences

Total
retainedearnings

Total
equitySharecapitalCapitalreserves

Goodwill
offset withequity28.63951.267-20.51795.3578.222

83.062

162.968

Currency translation differences

0

0

0

0

2.016

2.016

2.016

Net result from cash flow hedges

0

0

0

74

0

74

74

Dividends

0-8.13300

00-8.133Net loss

000-25.3560-25.356-25.356

Balance as at 31.03./01.04.2020

28.63943.134-20.51770.07510.23859.796131.569

Currency translation differences

0

0

0

0

-3.741-3.741-3.741

Net result from cash flow hedges

0

0

0

-9

0

-9

-9

Net loss

000-7.2920-7.292-7.29228.63943.134-20.51762.7746.497

48.754120.527

EUR 000
Balance as at 01.04.2019

Balance as at 31.03.2021

Note

The enclosed notes are part of the consolidated financial statements.

81

KLINGELNBERG GROUP
Consolidated Financial Statements

Notes to the consolidated financial statements
1

General information

The KLINGELNBERG Group comprises KLINGELNBERG AG and its consolidated subsidiaries.
KLINGELNBERG AG is a limited company under Swiss law, incorporated and domiciled in Zürich,
Switzerland. The shares of KLINGELNBERG AG are listed in Switzerland in the Swiss ReportingStandard of SIX Swiss Exchange.
The consolidated financial statements as at and for the year ended 31 March 2021 were authorized for release by the Board of Directors on 22 June 2021 and are subject to approval by the Annual General Meeting.

2

Accounting principles

2.1

Basis for the preparation of the financial statements

The consolidated financial statements of KLINGELNBERG Group have been prepared in accordancewith Swiss GAAP FER as a whole and give a true and fair view of the assets, liabilities, earnings andcash flows of KLINGELNBERG Group. In addition, the provisions of the Listing Rules of SIX Swiss
Exchange and Swiss accounting law were complied with. The consolidated financial statements
are prepared applying the principle of historical cost accounting, with the exceptions of derivative
financial instruments, which are measured at fair value. The preparation of the consolidated financial statements requires the management to make estimates and assumptions. If in the futuresuch estimates and assumptions, which are based on the management’s best judgement, change,
the original estimates and assumptions will be modified as appropriate in the year in which thechange occurred.

2.2

Definition of alternative performance measures

EBITDA:
Earnings before interest, income tax, depreciation and amortization (EBITDA) as a subtotal includes the operating result (EBIT) plus depreciation on tangible fixed assets and amortization on
intangible assets.
EBIT:
The operating result (Swiss GAAP FER) excluding non-operating and extraordinary results.

82

KLINGELNBERG GROUP
Consolidated Financial Statements

2.3

Scope and principles of consolidation

The consolidated financial statements of KLINGELNBERG Group include KLINGELNBERG AG, aswell as all entities as at 31 March of the current financial year for which the parent company holds,
directly or indirectly, the majority of the voting rights or has the power to govern their operating
and financial policies in some other way. Consolidation ends when control by the parent company
ceases.
Capital consolidation is based on the purchase method. Companies acquired by the Group areincluded in the consolidated financial statements from the date of obtaining control. The net assets acquired are revalued at fair value at the acquisition date, using uniform Group accounting
principles. Companies sold are excluded from the scope of consolidation as at the date on which
control ceases, with any gain or loss recognized in the income statement.
All intragroup balances and transactions including accounts receivable, accounts payable, income,expenses, and any unrealized gains and losses resulting from transactions between Group companies are eliminated.
Investments in joint ventures in which KLINGELNBERG Group exercises joint control together witha joint venture partner (e.g., with 50% voting rights) are recognized using the equity method.
The financial statements of the Group companies are prepared using the same accounting andvaluation methods and on the same balance sheet date as the parent company’s financial statements.
The KLINGELNBERG Group has no minority interests.

83

KLINGELNBERG GROUP
Consolidated Financial Statements

For a list of consolidated companies and investments see the following table. Any changes to thescope of consolidation are outlined in Note 3.
Share of capital andvoting rights

Company, head office

Currency

Capital31.03.2021

31.03.2020

KLINGELNBERG AG, Zürich, Switzerland

CHF

44.200.000

KLINGELNBERG GmbH, Hückeswagen, Germany

EUR

15.338.755

100%

100%

KLINGELNBERG (France) SAS, Saint Germain en Laye,
FranceEUR

215.000

100%

100%

KLINGELNBERG Imexma SA, Barcelona, Spain

EUR

750.000

100%

100%

KLINGELNBERG Italiana Srl., Milano, Italy

EUR

80.000100%

100%

KLINGELNBERG Hungaria Kft., Györ, Hungary - inliquidation

HUF

12.200.000

100%

100%

KLINGELNBERG (Japan) Ltd., Yokohama, Japan

JPY

50.000.000

100%

100%

KLINGELNBERG Mexico S.A. de C.V., Queretaro, Mexico

MXP

500.000

100%

100%

KLINGELNBERG America Inc., Saline, USA

USD

200

100%

100%

The KLINGELNBERG Corporation, Cincinnati, Ohio, USA

USD

254

100%

100%

HMET Grundstücksverwaltungsgesellschaft mbH,
Hückeswagen, Germany

EUR

25.000merged100%

KLINGELNBERG India Private Ltd., Pune, India

INR

27.700.000

100%

100%

HÖFLER Yantai Service Co., Ltd., China

CNY

748.657

100%

100%

KLINGELNBERG do Brasil, Sao Paulo, Brazil

BRL

3.950.000

100%

100%

KLA Real Estate, LLC., Saline, USA

USD

0

100%

100%

KLINGELNBERG Hungaria Service Kft., Györ, Hungary

HUF

15.000.000

liquidated

100%

DKSH KLINGELNBERG Service Ltd., Shanghai, China *CNY

5.585.020

50%

50%

*	Joint venture consolidated at equity

2.4

Business combinations

Net assets acquired are revalued at fair value at the acquisition date. Any unrecognized intangible
assets are not separated and identified and therefore allocated to goodwill. Goodwill is calculated
as the difference between the purchase price (incl. transaction costs) and the revalued net assets.
The positive or negative goodwill resulting from business combinations is offset against equity at
the date of acquisition. At the disposal of the company, the goodwill previously offset in equity
is transferred to the income statement. The consequences of the theoretical capitalization andamortization of goodwill are explained in Note 4.9.

84

KLINGELNBERG GROUP
Consolidated Financial Statements

2.5

Segment reporting

Notwithstanding the additional recommendations for listed companies (Swiss GAAP FER 31), theBoard of Directors of the KLINGELNBERG Group decided not to publish any detailed segment results in order to protect the interests of its shareholders.
As a globally operating Group, KLINGELNBERG manages its activities based on a business unit
approach on one side and on the optimization of synergies on the other. The reporting system
reflects this structure, and the activities of KLINGELNBERG Group are split between four main
business units:Bevel Gear
Cylindrical Gear
Measuring Centers
Drive Technology
Disclosing operating results by business unit would lead to competitive disadvantages in terms of
the profitability and distribution margins as well as the cost calculations. The KLINGELNBERG Groupwould be the only company in the industry showing detailed profitability information at business
unit level. Most of the relevant competitors are privately held companies that do not have to follow international disclosure requirements and, therefore, do not publish any detailed financial
information. Some other competitors are large, international corporations, which apply a broader
definition of reporting segments where specific data relevant for the core industry is not accessible.
Therefore, the disclosure of business unit operating results would lead to significant competitive
disadvantages for the KLINGELNBERG Group. Moreover, such information would negatively affectin the KLINGELNBERG Group’s negotiating power with various stakeholders such as clients, suppliers, etc. For all these reasons, the KLINGELNBERG Group firmly believes that disclosing operating
results by business units would have a significant negative impact on its overall performance.

2.6

Conversion of foreign currency items and transactions

Translation of financial statements to be consolidated
In light of the significant share of the business operations taking place in Germany, the consolidated financial statements of KLINGELNBERG Group are presented in Euros (EUR). The financial
statements of Group companies are prepared in their respective functional currencies and translated into Euros as follows:Assets and liabilities are converted at the year-end exchange rate
Income and expense are converted using the average exchange rate of the reporting year

85

KLINGELNBERG GROUP
Consolidated Financial Statements

The conversion differences arising through the translation of the balance sheet items have noeffect on the income statement and are recognized in the equity as cumulative foreign currency differences. When a subsidiary with a foreign currency is de-consolidated, the accumulated
conversion differences recognized in the equity are reclassified to the income statement
Foreign currency transactions in Group companies
Foreign currency effects on intragroup equity-like loans, which are a significant part of the company’s net investments in foreign subsidiaries, are recognized in equity as cumulative foreign currency differences until the disposal of the net investment. From this point in time, the foreign
currency differences are recognized in the income statement as a profit or loss on the sale of investments.
Transactions in foreign currencies are converted at the average exchange rate of the month of
the transaction. Exchange rate differences arising from financial transactions are recorded in theincome statement. All monetary assets and liabilities in a foreign currency are converted at theexchange rate as at the balance sheet date and the resulting gains/losses are recognized in theincome statement.
The table below outlines the main exchange rates used in the preparation of our consolidated financial statements as at and for the years ended 31 March 2021 and 31 March 2020.
Year-end exchange rate

Average exchange rate

31.03.2021

31.03.2020

2020/212019/20

CHF/EUR

1,10680

1,05721

1,07614

1,09632

USD/EUR

1,17350

1,09485

1,16701

1,11130

JPY/EUR

129,85950

118,93905

123,67595

120,80723

2.7

Cash and cash equivalents

Cash and cash equivalents are measured at nominal value and comprise cash on hand, deposits inbank accounts and with similar institutions and fixed-term deposits with an original term of up to
90 days.

2.8

Receivables from goods and services and other short-term receivables

Receivables are measured at nominal value less any value adjustments for doubtful accounts. Value adjustments are established for cases where the Group faces a risk of not collecting the outstanding amount.

86KLINGELNBERG GROUP
Consolidated Financial Statements

2.9

Derivative financial instruments

The Group uses derivatives mainly to hedge against foreign currency risks. These derivatives areprimarily foreign exchange forwards. Derivatives are recognized initially at acquisition cost andsubsequently valued at fair value. Except for derivatives that are designated as hedging instruments for future cash flows, all changes in the fair values of derivatives are to be recognized in the
result of the period.
Instruments for hedging future cash flows are recognized at fair value. Changes in the fair valueof such cash flow hedges are recorded in equity. Changes in the fair value of hedges recorded inequity are recorded in the period in which the cash flows from the underlying hedged asset arerecognized.

2.10 Inventories
Inventories are measured at the lower of acquisition and manufacturing cost and net realizablevalue. Acquisition cost is measured net of cash discounts. Manufacturing cost includes direct laborand materials used, as well as a commensurate share of the related production overhead costs excluding any borrowing costs.
If the net realizable value of inventories is lower than the book value or if inventories have a low
turnover rate, the necessary value adjustments are recognized.

2.11 Tangible fixed assets
Tangible fixed assets are measured at acquisition cost excluding any borrowing costs less accumulated depreciation and impairment. Depreciation is recognized on a straight-line basis over thefollowing estimated useful life of the asset:
Land: No depreciation
Buildings: 40 years
Machines and equipment: 10 years
Other tangible fixed assets: 3 to 10 years
Assets under construction are not depreciated until completion.
Expenditure on maintaining and repairing tangible fixed assets is charged to the income statement. Capital expenditure for existing tangible fixed assets is capitalized if classified as value-adding and depreciated over the useful life.

2.12

Loans and other receivables, other financial assets

Loans and other receivables as well as other financial assets are measured at nominal value less any
value adjustments required.

87

KLINGELNBERG GROUP
Consolidated Financial Statements

2.13 Investments in joint ventures
Investments are carried at historical cost less required impairments.

2.14 Taxes
Current and deferred taxes are accrued for all tax obligations, irrespective of their due date. Current income taxes are calculated on the taxable profit for the financial year. Deferred taxes are calculated byapplying the balance sheet method for any temporary difference between the carrying amount andthe tax basis of assets and liabilities. For that calculation, the current tax rates applicable in each jurisdiction are used while already identified future changes in the tax rates are taken into consideration.
Deferred tax assets for tax loss carry-forwards are recognized to the extent that it is probable thatthey can be offset against future taxable profits.
Deferred taxes are calculated on the basis of the tax rates applicable in each country.
Current and deferred tax assets and liabilities are offset if they concern the same taxable entity
or group of entities and tax jurisdiction and if the Group has a legally enforceable right to offset
current tax assets and liabilities.
No deferred tax is provided for temporary differences on investments in subsidiaries where thetiming of the reversal of the temporary difference is controlled by the Group and it is not probablethat the temporary difference will be reversed in the foreseeable future.

2.15 Intangible assets
Acquired intangible assets are measured at acquisition cost less accumulated amortization and impairment. Intangible assets are amortized on a straight-line basis over their useful life as follows:Software: 3 to 5 yearsLicenses: 3 to 10 years
Internally generated intangible assets including research and development costs are recognized
as a cost in the income statement in the financial year in which they occurred.
Goodwill from the acquisition of consolidated entities is offset with equity at the date of acquisition.
Goodwill is theoretically amortized on a straight-line basis over a useful life of 7 to 15 years.

2.16 Impairment of assets
Assets (especially tangible fixed assets, intangible assets and financial assets) are subject to an88

KLINGELNBERG GROUP
Consolidated Financial Statements

impairment test at each balance sheet date. If there is any indication of impairment, a detailed test is
performed immediately. If the carrying amount exceeds the recoverable amount (fair value less cost tosell), an impairment loss is recognized in the income statement. If, subsequently, an increase in the asset’svalue can be demonstrated, the impairment charge is reversed accordingly via the operating result.
As the goodwill is already offset with equity at the date of the acquisition, an impairment of the
goodwill does not affect the income statement but leads to a disclosure in the notes only.

2.17 Financial liabilities
Financial liabilities are measured at nominal values.

2.18 Payables from goods and services and other liabilities
Payables from goods and services and other liabilities are measured at nominal value.

2.19 Provisions
Provisions take into account all identifiable and measurable risks from warranties and penalties
for non-performance, expected losses from pending transactions and process risks which management deems likely to occur. Provisions are recognized when the Group has a present legal orconstructive obligation as a result of past events and if it is more likely than not that an outflow
of resources will be required to settle the obligation and the amount has been reliably estimated.

2.20 Revenue recognition
Revenue is recognized when the principal risks and rewards incidental to ownership are transferred to the customer, the amount of the proceeds can be reliably determined and when it is sufficiently probable that the economic benefits from the sale will flow to the Group.
Revenues are stated at the fair value of the consideration entitled to be received. This is after the
deduction of discounts, rebates and credits and before value-added and sales tax.

2.21 Off-balance sheet transactions
Contingent liabilities as well as other non-recognized obligations are assessed at each balance
sheet date and are disclosed in the notes to the financial statements. A provision is recorded if therelevant conditions are met.

2.22 Leases
Leases in which a significant portion of the risks and rewards of ownership are transferred fromthe lessor to the lessee are classified as finance leases. The leased assets are carried at cost nothigher than the minimum lease payments and depreciated along with other tangible fixed assets.

89

KLINGELNBERG GROUP
Consolidated Financial Statements

The corresponding leasing obligations are shown as liabilities.
Leasing payments are allocated accordingly as either capital repayments or interest expenses presented in the financial result.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit
or loss on a straight-line basis over the period of the lease.

2.23 Share-based payments
Share-based payments are treated as a cash-settled plan. Provisions must be recognized as an expense over the vesting period. The fair value of the liability must be determined at each balance
sheet date and the provision adjusted to this fair value.

2.24 Pension benefit obligation
The employee benefit plans of the KLINGELNBERG Group comply with the legislation in force ineach country. Employee benefit plans are mostly institutions and foundations that are legally independent of KLINGELNBERG Group. They are usually financed by both employee and employer
contributions.
The economic impact of the employee benefit plans is assessed each year. Surpluses or deficits
are determined by means of the annual statements of each specific benefit plan, which are based
either on Swiss GAAP FER 26 (Swiss benefit plans) or on the accepted methods in each foreigncountry (foreign plans). An economic benefit is capitalized if it is permitted and intended to use
the surplus to reduce the employee contributions. If employer contribution reserves exist, they arealso capitalized. An economic obligation is recognized as a liability if the conditions for a provision are met. They are reported under “Provision for pension benefit obligation”. Changes in theeconomic benefit or economic obligation, as well as the contributions incurred for the period, arerecognized in “Personnel expense” in the income statement.

3	Changes in the scope of consolidation
The closure of the two Hungarian companies, which was launched as part of the Efficiency Enhancement Program in 2019/20, was successfully completed in the financial year for ­KLINGELNBERG
Hungaria Service Kft. For KLINGELNBERG Hungaria Kft. “v.a.”, this closure is expected in 2021/22,
as there were delays due to various lockdowns of the government.
In the financial year under review, HMET Grundstücksverwaltungsgesellschaft mbH was merged
into KLINGELNBERG GmbH.

90

KLINGELNBERG GROUP
Consolidated Financial Statements

4 	Substantial information on the consolidated balance sheet items
4.1

Receivables from goods and services
31.03.2021

31.03.2020

Receivables from third parties

43.08447.349Receivables from joint ventures

213

265

0

39

-290

-498

43.00747.155- not due and due up to 90 days

40.19142.514- overdue more than 90 days

2.816

4.641

EUR 000

Receivables from other related parties
Value adjustments
Receivables from goods and services
Thereof:

4.2

Derivative financial instruments
31.03.2021

EUR 000
Basic value:

31.03.2020

Asset

Liability

PurposeAsset

Liability

Purpose

Foreign exchange

50

120

Hedging20

278

Hedging

Total

50

120

20

278

4.3

Other short-term receivables

This position includes mainly taxes other than income taxes of EUR 4,6 million (as at 31 March 2020:
EUR 3,9 million) and prepayments to suppliers of EUR 0,8 million (as at 31 March 2020:
EUR 0,4 ­million). There were no value adjustments for the year under review (as at 31 March 2020:
EUR 0,1 million).

91

KLINGELNBERG GROUP
Consolidated Financial Statements

4.4

Inventories
31.03.2021

31.03.2020

Finished products

8.583

10.438Work in progress

41.94845.937

Acquired parts

43.92245.87191102

94.544102.348

Value adjustments-14.040-13.364

Inventories

80.50488.984

EUR 000

Supplies

Inventory levels were reduced in line with the economic situation.

4.5

Tangible fixed assets
2020/21

Other assets

Tangible fixed
assets underconstruction

Total

50.92224.875

1.258

124.703

1.500

934

853

863

4.150

0

-47

-3.334-1.1230-4.504Foreign currency effects

0

-551

-136

-237

-1

-925

Reclassifications

0

740

67

216

-1.0230

2.167

47.12348.45324.584

1.097

123.424

Accumulated depreciation
as at 01.04.

0

14.03839.69019.485073.213

Depreciation

0

1.297

1.655

1.607

0

4.559

Disposals

0-21-1.950-1.0750-3.046

Foreign currency effects

0

-183

-100

-193

0

-476

Accumulated depreciation
as at 31.03.

0

15.13139.29519.824074.250Net carrying amountas at 01.04.

2.167

31.443

11.232

5.390

1.258

51.490Net carrying amountas at 31.03.

2.167

31.992

9.158

4.760

1.097

49.174

Undeveloped
property

Land andbuildings

Machines andequipment

2.167

45.481

Additions0

Disposals

EUR 000
Acquisition cost
Gross value as at 01.04.

Gross value as at 31.03.

92

KLINGELNBERG GROUP
Consolidated Financial Statements

2019/20

Other assets

Tangible fixed
assets underconstruction

Total

51.78423.930172

122.603

785

1.855

1.509

1.244

5.393

0

-99

-2.365-721-70-3.255

Foreign currency effects

0

234

-352

82

-2

-38

Reclassifications

0

11

0

75

-86

0

2.167

45.48150.92224.875

1.258

124.703

Accumulated depreciation
as at 01.04.

012.91538.80318.009069.727

Depreciation

0

1.144

2.260

1.943

0

5.347

Disposals

0-93-1.116-545

0-1.754Foreign currency effects

0

72

-257

78

0

-107

Accumulated depreciation
as at 31.03.

014.03839.69019.485073.213

Net carrying amountas at 01.04.

2.167

31.63512.9815.921

17252.876

Net carrying amountas at 31.03.

2.167

31.443

11.232

5.390

1.258

51.490Undeveloped
property

Land andbuildings

Machines andequipment

2.167

44.550Additions0

Disposals

EUR 000
Acquisition cost
Gross value as at 01.04.

Gross value as at 31.03.

4.6

Investments in joint ventures

In the financial year 2020/21 our Chinese joint venture distributed a dividend in the amount of
EUR 1,7 million (as at 31 March 2020: EUR 0). The share of the result from joint ventures amounts
to EUR 0,6 million (as at 31 March 2020: EUR 0,5 million).

93

KLINGELNBERG GROUP
Consolidated Financial Statements

4.7

Deferred tax assets

In the year under review the deferred tax assets mainly result from divergent valuations of pension provisions as well as provisions for partial retirement obligations, service anniversaries, andprovisions for warranties.
In the current financial year, this also includes taxes from loss carryforwards of around EUR 3,9 million (as at 31 March 2020: EUR 0).
EUR 000
Tax loss carryforwards as at 31.03.2021

Capitalized

Not capitalized

Total

No expiry

12.36635.50147.867

Total losses carried forward

12.36635.50147.867

Capitalized

Not capitalized

Total

No expiry031.86631.866

Total losses carried forward0

31.86631.866

Potential tax effect on non-capitalized
losses carried forward

0

Deferred taxes capitalized

0

Potential tax effect on non-capitalized losses
carried forward
Deferred taxes capitalized

Tax loss carryforwards as at 31.03.2020

4.8

0
3.872

Other financial assets

In the year under review, this item mainly comprises of an insolvency-protected life insurance policy to cover pension liabilities in connection with part-time phased retirement obligations in theamount of EUR 0,9 million (as at 31 March 2020: EUR 1,0 million). The amount is calculated in accordance with the local legal requirements of the company that recognizes these assets.

94

KLINGELNBERG GROUP
Consolidated Financial Statements

4.9

Intangible assets
2020/212019/20

SoftwareOther
intangible
assets

Total

SoftwareOther
intangible
assets

Total

8.105

350

8.455

7.974

324

8.298

Additions

143

0

143

229

8

237

Disposals and derecognitions

-181

0

-181

-154

0

-154

Foreign currency effects

-50

-15

-65

56

18

74

8

-8

0

0

0

0

Gross value as at 31.03.

8.025

327

8.352

8.105

350

8.455

Accumulated amortization
as at 01.04.

6.694

335

7.029

6.277

316

6.593

Amortization

443

0

443

487

0

487

Disposals and derecognitions

-181

0

-181

-125

0

-125

Foreign currency effects

-49

-15

-64

55

19

74

Accumulated amortization
as at 31.03.

6.907

320

7.227

6.694

335

7.029

Net carrying amountas at 01.04.

1.411

15

1.426

1.697

8

1.705

Net carrying amountas at 31.03.

1.118

7

1.125

1.411

15

1.426

EUR 000
Acquisition cost
Gross value as at 01.04.

Reclassifications

95

KLINGELNBERG GROUP
Consolidated Financial Statements

A theoretical capitalization of goodwill would have the following effects on the consolidated
financial statements.
2020/212019/20Gross value as at 01.04.

20.51720.517Gross value as at 31.03.

20.51720.517

Accumulated amortization at 01.04.

16.32115.292641

1.029

16.96216.321

3.555

4.196

120.527131.569

3.555

4.196

124.082

135.765-7.292-25.356-641-1.029-7.933-26.385

EUR 000
Theoretical statement of changes in goodwill
Acquisition cost

Amortization
Accumulated amortization at 31.03.

Theoretical impact on equity
Theoretical net carrying amount at 31.03.
Effect on equity
Equity according to balance sheet
Theoretical net carrying amount goodwill
Theoretical equity incl. net carrying amount of goodwill

Theoretical impact on net income
Effect on income statement
Net loss
Theoretical amortization of goodwill
Theoretical net loss

96

KLINGELNBERG GROUP
Consolidated Financial Statements

4.10 Financial liabilities
31.03.2021

31.03.2020

Short-term financial liabilities

5.343

27.077Long-term financial liabilities

1.705

2.983

Total financial liabilities

7.048

30.060

- EUR

6.288

29.087

- USD

644

784

- JPY

116

189

- 2 to 5 years

1.564

2.689

- > 5 years

141

294

Average interest rate

0,89%

0,92%

Unused credit facilities

49.96328.010Carrying amount of property

34.15933.610- thereof pledged

12.57812.631- thereof used

2.003

3.654

31.03.2021

31.03.2020- with third parties

14.42010.597- with joint ventures

119

151

- with other related parties

135

12

14.67410.76014.64410.18730573

EUR 000

Thereof in:

Thereof with maturity in:Long-term financial liabilities include mortgages secured using mortgage notes

4.11

Payables from goods and services

EUR 000
Payables from goods and services

Payables from goods and services
Thereof:- not due and due up to 90 days
- overdue more than 90 days

97

KLINGELNBERG GROUP
Consolidated Financial Statements

4.12 Other short-term liabilities
This position contains mainly advance payments from customers amounting to EUR 29,5 million (as at
31 March 2020: EUR 15,5 million) and taxes and social insurance withholdings of EUR 7,1 million (as at
31 March 2020: EUR 8,7 million).

4.13 Provisions
2020/21

Other
provisions

Total
provisions
excl. deferredtax

Deferred tax

8.581

4.552

31.324

1.197

968

55

313

2.478

107

-3.103-464-4.534-1.056-9.1570

Release of provision
recognized in the income
statement-587

0-1.505-47-2.139-44

Foreign currency effects

-65

0

0

-63

-128

-38

Carrying amount as at
31.03.

2.697

13.385

2.597

3.699

22.378

1.222

of which, short-term

2.513

464

2.597

1.802

7.376

0

of which, long-term

184

12.9210

1.897

15.002

1.222

Provision forwarranties

Provision forpension benefit
obligation

Provision
efficiency
enhancement

Carrying amount as at
01.04.

5.310

12.881Creation of provisions

1.142

Utilization of provisions

EUR 000

98

KLINGELNBERG GROUP
Consolidated Financial Statements

2019/20

Other
provisions

Total
provisions
excl. deferredtax

Deferred tax

0

3.999

22.138

1.703

1.548

8.581

1.423

15.48162-3.705

-464

0

-666

-4.8350Release of provision
recognized in the income
statement-1.32900-171-1.500-604

Foreign currency effects

73

0

0

-33

40

36

Carrying amount as at
31.03.

5.310

12.881

8.581

4.552

31.324

1.197

of which, short-term

4.522

464

8.581

2.230

15.7970of which, long-term

788

12.4170

2.322

15.527

1.197

Provision forwarranties

Provision forpension benefit
obligation

Provision
efficiency
enhancement

Carrying amount as at
01.04.

6.342

11.797Creation of provisions

3.929

Utilization of provisions

EUR 000

The valuation of provisions in all categories is based on latest available data (e.g., claims that haveoccurred or been reported) or on the experience of recent years and management estimates.
Provisions for warranties
The reduction in the warranty provision is mainly due to the decline in sales.
Provision for pension benefit obligations
EUR 000
Economic
benefit/economic
obligationand pension
benefit expenses

Economical part ofthe organization

Surplus/deficit

Change to prioryear period orrecognized in thecurrent result of
the period,
respectively

31.03.2021

31.03.2021

31.03.2020

Pension funds
without deficit
or surplus (1)

0

0

0

0

Pension funds
without own
assets (2)0-13.385-12.881Total

0-13.385-12.881Contributions
concerning thebusiness period

Pension benefit
expense as part ofpersonnel expense

2020/212019/20

-332

-332

-379

-504

-464*

-968

-1.548-504-796-1.300-1.927*	Pension payments according to pension plan in the current financial year.

99

KLINGELNBERG GROUP
Consolidated Financial Statements(1) The Swiss entity is affiliated to a collective pension plan where the surplus/deficit cannot be
determined on the basis of the individual contract but it can be stated that based on the audited
figures of the pension fund as at 31 December 2020 the coverage of the collective plan as a wholeamounts to 115,6% (as at 31.12.2019 the audited figures: 115,3%). The technical interest rate usedamounted to 1,75% (prior year: 2,0%). The underlying mortality table remained unchanged (BVG
2015 GT). Furthermore, there is a supplementary pension plan, which does not bear risk due to fullinsurance as part of a collective insurance contract.
(2) The economic obligation from pension funds without own funds contains primarily the obligationfrom employee benefit plans in Germany. The discount rate used in the calculation was 1,0% (2019/20:
1,3%). A provision for pension benefit obligation at the level of the economic obligation has been recorded. Pension benefit expense as part of the personnel expense includes the increase and decreaseof provisions recorded in the income statement including changes of discount rates. The increase compared to the prior year was mainly due to the decrease of the discount rate.
Provision Efficiency Enhancement
The Efficiency Enhancement Program launched in the previous year was largely implemented. The
releases of EUR 1,5 million provisions are mainly in the avoidance of dismissal protection suits
through agreement as well as adjustments to the social plan and the transfer company. In addition, due to the new orders in the wind power sector, the final closure was postponed to 30 September 2022. Because of that the provision changed accordingly and remained at EUR 2,6 million
at year-end.
Other provisions
Other provisions include, among others, fire prevention measures of EUR 0,4 million (as at
31 March 2020: EUR 0,4 million), part-time phased retirement obligations of EUR 2,0 ­million (as at
31 March 2020: EUR 2,1 million) and for long service awards EUR 0,4 million (as at 31 March 2020:
EUR 0,3 million).
The first regular grant of PSUs under the LTIP was granted on 01 April 2019, with a vesting at theend of the financial year of the company ending on 31 March 2022. As a transitional arrangementin the context of the IPO and in order to guarantee a fair transition from the pre-IPO long-term
incentive plan, the current members of the EM (excluding the CEO) have been granted a numberof PSUs determined by the BoD, which have been vested at the end of the financial year of thecompany ending on 31 March 2021, subject to and in accordance with the principles set out above.
Due to the general economic situation, the BoD decided for the financial year 2020/21, with theconsent of the EM, to refrain from granting PSUs under the LTIP for this period.
Due to the parameters influencing the value of the PSU, the provision for the LTIP in the year underreview amounts to EUR 0,2 million (as at 31 March 2020: EUR 0,1 million).

100KLINGELNBERG GROUP
Consolidated Financial Statements

4.14 Share capital and capital reserves
Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2021 and the prior year are composed of
8.840.000 registered shares with a nominal value of CHF 5 each.
Capital reserves
The certification of the capital reserves as at 31 March 2019 has been available since 03 April 2020.
According to the certificate, CHF 64.120.826,50 were recognized by the Swiss tax authorities. The
certification including the reduction for the paid dividend in 2019/20 is approved by the Swiss tax
authorities as at 20 May 2021. Considering this dividend (CHF 8,84 million), CHF 55.280.826,50 canbe distributed tax-free in the future.

101

KLINGELNBERG GROUP
Consolidated Financial Statements

5	Substantial information on the consolidated income statement items
5.1

Net sales from goods and services
2020/21

EUR 000
Service location
Segments

Germany

Switzerland

Japan

USA

Rest ofthe world

Total

Bevel Gear

15.73919.874

2.003

7.390

5.346

50.352

Cylindrical Gear

24.946

3.275

5.436

7.835

4.066

45.558

Measuring Centers36.473

1.244

4.176

5.046

3.540

50.479

Drive Technology

8.905

0

0

0

36

8.941

Other

180

0

120

0

3.089

3.389

Total

86.24324.39311.73520.27116.077158.7192019/20

EUR 000
Service location
Segments

Germany

Switzerland

Japan

USA

Rest ofthe world

Total

Bevel Gear

16.20236.9404.812

19.7996.934

84.687

Cylindrical Gear

23.881

5.212

6.501

9.216

4.580

49.390Measuring Centers35.326

2.855

8.716

5.475

4.892

57.264

Drive Technology

13.602

0

0

0

57

13.659

Other

247

0

123

0

6.723

7.093

Total

89.25845.00720.15234.49023.186212.093For explanations regarding the segment reporting refer to Note 2.5.

5.2	Change in inventory of finished and unfinished goods as well as unbilledgoods and services
Due to the pandemic-related reduction in production, changes in inventories decreased by
EUR 16,4 million year-on-year to EUR -5,8 million.

102

KLINGELNBERG GROUP
Consolidated Financial Statements

5.3

Personnel expense

Personnel expense in the financial year 2020/21 are EUR 26,9 million (-24,3%) lower than in the previous year. This development is mainly due to the Efficiency Enhancement Program (EUR 13,8 million), launched in the previous year, as well as short-time work, reduction for overtime and shiftpremiums (EUR 8,8 million). Further details can be found in the Management Report under theheading “Personnel expense and employees”.

5.4

Other operating expense

Other operating expense includes mostly travel expense and representation, freight costs, commission, rent and related costs, warranty provisions, repair and maintenance of tangible fixed assets, andother expenses. The reduction of EUR 11,5 million is mainly due to the pandemic-related reduction
in travel and postponed trade fairs (EUR 4,6 million) and revenue-related costs (EUR 4,2 million).

5.5

Financial result
2020/212019/20

Interest expense (-)

-505

-301

Financial expense

-505

-301

Interest income (+)

214

227

Financial income

214

227

Currency translation difference and hedging expense-3.636-8.913Currency gains

6.138

6.868

Foreign currency gain (loss)

2.502-2.045

Financial result

2.211-2.119EUR 000

The positive foreign currency result is mainly due to the currency fluctuations of the CHF against
the EUR (Note 2.6).

103

KLINGELNBERG GROUP
Consolidated Financial Statements

5.6

Income taxes
2020/212019/20

Current tax expense-1.701-3.235

Deferred tax expense

3.760-1.226

Tax expense recognized on the income statement

2.059-4.461

EUR 000

The average applied tax rate for the Group is 40,80% (as at 31 March 2020: 30,84%) and is calculated based on the local tax rates of each local company weighted in proportion to the local company’s earnings before tax in the financial year. Deferred taxes are calculated based on the tax
rates applicable in each country.
In the last financial year, local changes in income tax rates had no significant impact on the effective income tax rate. The change in the effective income tax rate results from the varying profit
situations of individual Group companies at different local tax rates.
The other effects are of EUR -2,1 million (as at 31 March 2020: EUR 0,2 million) mainly derived from
non-taxable transactions. In particular, the acquisition gain from the merger of HMET Grundstücksverwaltungsgesellschaft mbH into KLINGELNBERG GmbH EUR -0,9 million (as at 31 March
2020: EUR 0) and subsequent tax refunds EUR -0,6 million (as at 31 March 2020: EUR 0) due to subsidy programs as a result of the corona pandemic.
2020/212019/20

Loss before taxes-9.351-20.895

Average applied tax rate

40,80%

30,84%

Expected income tax expense-3.815-6.444

Effect of non-recognition of tax losses in current year

3.872

10.729Other effects-2.116176

Effective income tax expense-2.0594.461

Effective income tax rate

22,02%(21,35%)

EUR 000

104KLINGELNBERG GROUP
Consolidated Financial Statements

5.7

Earnings per share

Basic earnings-per-share amounts are calculated by dividing net loss/profit for the year attributable to ordinary equity holders of the parent company by the average number of ordinary shares
outstanding during the year.
EUR 000

2020/212019/20

Net loss-7.292-25.3568.840.000

8.840.000

Basic earnings per share (EUR)

-0,82

-2,87

Diluted earnings per share (EUR)

-0,82

-2,87

Average number of outstanding shares

6

Additional information

6.1

Off-balance-sheet transactions

According to the takeover agreement of KLINGELNBERG GmbH/KLINGELNBERG Söhne GmbH& Co. Kommanditgesellschaft, KLINGELNBERG GmbH has an obligation to meet the expenseof adjustments to the pensions of the retired employees of KLINGELNBERG Söhne GmbH &Co. Kommanditgesellschaft. In the financial year under review, this resulted in a payment of
EUR 0,1 million (as at 31 March 2020: payment of EUR 0,1 million) and is recognized in personnel
expense.
Obligations due to operating leases – KLINGELNBERG Group as the lessee:
31.03.2021

31.03.2020

up to 1 year

3.747

3.975

1 to 5 years

8.862

11.415More than 5 years

2.439

3.837

Total obligations from operating leasing

15.04819.227

EUR 000

This relates mainly to the leasing of buildings used for operational purposes, motor vehicle andmachine leasing, and office equipment leasing (rental).
No significant new rental or leasing contracts were concluded, so that the obligation will be reduced over the remaining term.

105

KLINGELNBERG GROUP
Consolidated Financial Statements

6.2

Transactions with related parties
2020/212019/20

1.850

1.810

51

45

-2.598-3.267

Other operating expense

-30

-47

Total

-727

-1.459EUR 000
Net sales from goods and services
Other operating income
Material expense

Transactions with related parties include transactions with shareholders, joint ventures, and otherrelated parties.

6.3

Events after the balance sheet dateNo significant events occurred after the balance sheet date. Events after the balance sheet datewere considered until 22 June 2021. On this date, the financial statements were authorized for release by the Board of Directors.

106

KLINGELNBERG GROUP
Consolidated Financial Statements

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the consolidated financial statements
2020/2021

107

KLINGELNBERG GROUP
Consolidated Financial Statements

Report of the statutory auditor
to the General Meeting of Klingelnberg AG
ZurichReport on the audit of the consolidated financial statements
OpinionWe have audited the consolidated financial statements of Klingelnberg AG and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 March 2021 and the consolidated income statement, consolidated cash
flow statement and consolidated statement of changes in equity for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements (pages 77 to 106) give a true and fair view of the consolidated financial position of the Group as at 31 March 2021 and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with Swiss GAAP FER and comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those
provisions and standards are further described in the “Auditor’s responsibilities for the audit of the consolidated financial
statements” section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview

Overall Group materiality: EUR 1'190'000
We concluded full scope audit work at two reporting units in two countries andaudit of specific accounts in one country. Our audit scope addressed over 85%
of the Group’s revenue.
As key audit matters the following areas of focus have been identified:
Revenue recognition of goods and services in the appropriate period

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, CH-8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, Telefax: +41 58 792 44 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

108

KLINGELNBERG GROUP
Consolidated Financial Statements

Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonableassurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due
to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together withqualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial
statements as a whole.
Overall Group materiality

EUR 1'190'000

How we determined it

0.75% of total revenues

Rationale for the materiality benchmark applied

We chose total revenues as the benchmark because, in our view, it is the appropriate benchmark, which the users of the financial statements use to evaluate the financial performance of the Group. It is also a generally accepted
benchmark when profit varies greatly between accounting periods.

We agreed with the Audit Committee that we would report to them misstatements above EUR 59'500 identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
The Group financial statements are a consolidation of 14 reporting units, each of which is considered to be a component. Following our assessment of the risk of material misstatement, we identified one reporting unit in Switzerland and
one in Germany each which, in our view, require a full scope audit due to their size or risk characteristics. Additionally,
we identified one reporting unit in the United States (US) which, in our view, require an audit of specified accounts due totheir size or risk characteristics. The concluded full scope and specified accounts audit work addressed 85% of theGroup’s revenue. The remaining 15% of the Group’s revenue is contributed by smaller reporting units which are deemed
insignificant. Where the audit work was performed by component auditors, we determined the level of involvement
needed to supervise the audit procedures and understand the results relating to significant audit areas. Senior membersof the Group audit team discussed with the component auditor the risks identified, challenged the audit approach in significant risk areas and reviewed the audit documentation. Furthermore, the Group audit team performed analytical procedures to address the smaller reporting units.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

3 Klingelnberg AG | Report of the statutory auditor to the General Meeting109

KLINGELNBERG GROUP
Consolidated Financial Statements

Revenue recognition of goods and services in the appropriate period
Key audit matter

How our audit addressed the key audit matter

Klingelnberg Group recognises revenue from goods andservices in the period in which it transfers the risk and reward of ownership.

We performed the following audit procedures to assess
whether revenue from goods and services was recognisedin the appropriate period:

A significant portion of the revenue is normally recognised
during the second half of the Group’s financial year. We
consider revenue recognition in the appropriate period tobe a key audit matter because of the complexity involved
when assessing and adhering to the contractually agreed
incoterms as well as due to standard intra-year seasonal
trends, which, in our view, increase the risk of material misstatement in revenue recognition in the appropriate period.

– We identified transactions occurring close to the balance
sheet date and for the months of March 2021 and April
2021, tested, on a sample basis, whether revenue was appropriately recognised in the period in which the risk andreward of ownership were transferred. For the same sample, we assessed whether the revenue recognition was appropriate for the contractually agreed incoterms;

Please refer to the company’s accounting principles in note
2.20 and to note 5.1 ‘Net sales from goods and services’
regarding the segment split.

– We enquired with Management regarding controls that
address the risk of recording revenue from goods and services in the wrong period.
We consider the risk of material misstatement in revenue
recognition in the appropriate period to be adequately addressed.

Responsibilities of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fairview in accordance with Swiss GAAP FER and the provisions of Swiss law, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements canarise 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 consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the websiteof EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

4 Klingelnberg AG | Report of the statutory auditor to the General Meeting

110

KLINGELNBERG GROUP
Consolidated Financial Statements

Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists which has been designed for the preparation of consolidated financial statements according to the
instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AGBlaženka Kovács-Vujević

Regina Spaelti

Audit expert
Auditor in charge

Audit expert

Zurich, 22 June 2021

5 Klingelnberg AG | Report of the statutory auditor to the General Meeting111

Statutory Financial Statementsof KLINGELNBERG AG
113

Statutory balance sheet

114

Statutory balance sheet

115

Statutory income statement

116

Notes to the financial statements

116		

General information

116

Accounting principles

118		Substantial information on
the balance sheet items
121		Substantial information on
the income statement items
122		

Additional information

125 Appropriation of retained earnings

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory balance sheet
Note

31.03.2021

31.03.2020

Cash and cash equivalents

3.6

64.04023.281.834

Receivables from goods and services from third parties

3.1

10.775.304

7.862.367

878.285869.064

CHF
AssetsCurrent assets

Receivables from goods and services from group companies
Other short-term receivables from third parties

3.2

2.091.412

1.220.116

Other short-term receivables from group companies

3.3

56.832.597

36.982.495

Inventories

3.4

1.789.579

1.598.845

174.190172.072

72.605.407

71.986.793

618.189

711.172

90.888.122

91.108.731

13.49029.859Total non-current assets

91.519.801

91.849.762

Total assets

164.125.208

163.836.555

Prepayments and accrued income
Total current assets

Non-current assets
Tangible fixed assets
Investments
Intangible assets

3.5

113

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory balance sheet
Note

31.03.2021

31.03.2020

Short-term financial liabilities to third parties

3.6

67

7.292.889

Short-term financial liabilities to group companies

3.3

11.866.888

10.964.911

Payables from goods and services to third parties

3.7

488.317479.473

Payables from goods and services to group companies

3.3

8.715.624

2.179.503

7.616

7.771

CHF
Liabilities
Current liabilities

Derivative financial instruments
Other short-term liabilities to third parties

3.8

6.791.779

3.779.151

Other short-term liabilities to group companies

3.9

0217.386

Accrued liabilities and deferred income

3.10

5.428.659

6.585.838

Short-term provisions

252.781540.097

Total current liabilities

33.551.731

32.047.019

Long-term provisions

134.021606.360

Total non-current (long-term) liabilities

134.021606.360

33.685.752

32.653.379

2.10/3.11

44.200.000

44.200.000

3.12

55.531.150

55.531.150- thereof reserves from capital contributions

55.531.150

55.531.150

Statutory retained earnings

30.708.306

31.452.026- thereof amount brought forward from the previous year

31.452.026

34.326.935- thereof loss

-743.720-2.874.909

Total equity

130.439.456

131.183.176

Total liabilities and equity

164.125.208

163.836.555

Non-current (long-term) liabilities

Total liabilities

EquityShare capital
Statutory capital reserves

114

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory income statement
CHF

Note

Net sales from goods and services
Other operating income

4.1

Change in inventory of finished and unfinishedgoods as well as unbilled goods and services

2020/212019/20

28.640.683

60.948.462

927.585

2.975.871

186.456559.797

Material expense

4.2-21.651.186-47.901.490

Personnel expense

4.3-6.503.368-8.051.103-157.578-238.723-164.877-2.536.353-16.369-16.991-6.917.465-8.021.901-5.656.119-2.282.431

5.016.697-572.172-639.422-2.854.603-104.298-20.306-743.720-2.874.909

Depreciation on tangible fixed assets
Impairment on investments

3.5

Amortization on intangible assets
Other operating expense

4.4

Operating result
Financial result

4.5

Loss before income taxes
Income taxes
Loss

4.6

115

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Notes to the financial statements
1

General information

KLINGELNBERG AG is a limited company under Swiss law and is incorporated and domiciled in
Zürich, Switzerland. These financial statements were prepared according to the provisions of Swissaccounting law (Title 32 of the Swiss Code of Obligations). Where not already prescribed by law,
the significant accounting policies applied are described below.
KLINGELNBERG AG reports its consolidated financial statements based on the recognized standard (Swiss GAAP FER). In accordance with the legal provisions, it has decided not to provide noteson the audit fees, a cash flow statement or a report on the business situation.

2

Accounting principles

KLINGELNBERG AG’s financial statements were prepared in accordance with the provisions oncommercial accounting of the Swiss Code of Obligations. The main accounting principles are described below.

2.1

Foreign currency translation

All assets and liabilities denominated in foreign currencies are translated according to the exchange rates as at the balance sheet date. Income and expenses denominated in foreign currencies and all foreign exchange transactions are translated at the monthly average exchange rates
as at their respective transaction dates. Resulting foreign exchange differences are recognized in
the income statement (financial result).

2.2

Cash and cash equivalents

Cash and cash equivalents include cash and bank balances. These are valued at market value.

2.3

Receivables from goods and services from third parties

Receivables from goods and services are recognized at nominal value. Individual impairment
charges are applied to these items, while a general allowance of 20% (foreign) and 10% (domestic) is applied.

2.4

Other short-term receivables/liabilities from/to group companies

These positions contain euro cash-pool balances within the group. Participants of the euro cashpool are all group companies with a significant transaction volume in Euro. Interest rates are applied at the market rate.

116

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

2.5

Inventories

Inventories are measured at the lower of acquisition or manufacturing cost and net realizablevalue. Production costs comprise all directly attributable material and manufacturing costs as wellas indirect costs incurred to bring the inventories to their present location and get them into theircurrent state. Acquisition and production costs are determined using the weighted average cost
method. Net realizable value is the estimated proceeds from disposal minus estimated costs ofproduction and selling expenses. Value adjustments are applied in cases of unsaleable inventory
and inventory with low turnover rates.

2.6

Tangible fixed assets

Tangible fixed assets are measured at acquisition cost or production cost less accumulated depreciation. Depreciation is recognized on a straight-line basis over the following estimated useful lifeof the asset:
Machines and equipment:
Other tangible fixed assets:

10 years
3 to 10 years

2.7		Investments
Investments in subsidiaries are carried at historical cost less required impairments. An impairment
is considered as soon as the net asset value of all investments falls below total carrying value. In
order to evaluate the amount to be impaired, a recognized valuation method is used. Subsidiaries
are consolidated as a group for valuation purposes due to their high economical and operational
interdependence.

2.8

Revenue recognition

Revenue comprises all proceeds from the sale of the products of KLINGELNBERG AG. Revenue iscalculated on the basis of the services rendered to clients as at the balance sheet date. Revenue isrecognized when the amount of the proceeds can be reliably determined, when it is sufficiently
probable that the economic benefits from the sale will flow to KLINGELNBERG AG and the risk andreward of ownership is transferred.

2.9

Accrued expenses

Provisions are made when a legal or constructive obligation has arisen from past events as at thereporting date, the discharge of funds to fulfill this obligation is probable and a reliable estimateof the amount of the obligation is possible. The amount of the provision depends on the expectedcash outflow to cover the obligation.

117

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

2.10 Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2021 is composed of 8.840.000 registeredshares with a nominal value of CHF 5 each (no changes to the previous year).

3	Substantial information on the balance sheet items
3.1

Receivables from goods and services from third parties

CHF

31.03.2021

31.03.2020

Receivables from goods and services (gross)13.440.444

9.781.857

28.760925

036.185

Value adjustments-2.693.900-1.956.600

Receivables from goods and services

10.775.304

7.862.367

10.775.304

7.854.529

0

7.838

Receivables from joint ventures
Receivables from other related parties

Thereof:- not due and due up to 90 days
- overdue more than 90 days

3.2

Other short-term receivables from third parties

The position includes refunds from VAT declarations from Germany and Switzerland in the amountof CHF 1,5 million (as at 31 March 2020: CHF 0,8 million).

3.3	Other short-term receivables/financial liabilities/payables from goods
and services from/to group companies
The bank balance existing at the end of the previous financial year was used for internal financing.
The cash pool account of KLINGELNBERG GmbH increased from CHF 37,0 million to CHF 56,5 million.
At the same time, the trade payables to the KLINGELNBERG GmbH increased from CHF 2,0 million
to CHF 8,4 million due to shipments in March 2021.

118

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

3.4

Inventories

CHF
Work in progress

31.03.2021

31.03.2020

1.859.150

1.672.694

0

16.182

1.859.150

1.688.876-69.571-90.0311.789.579

1.598.845

Acquired parts

Value adjustments
Inventories

3.5		Investments
As at 31 March 2021, KLINGELNBERG AG held the following investments:












KLINGELNBERG GmbH, Hückeswagen, Germany (100%)
KLINGELNBERG Imexma SA, Barcelona, Spain (100%)
KLINGELNBERG France SAS, Saint German-en-Laye, France (100%)
KLINGELNBERG Italiana S.R.L., Milano, Italy (100%)
KLINGELNBERG (Japan) Ltd., Yokohama, Japan (100%)
The KLINGELNBERG Corporation, Cincinnati, Ohio, USA (100%)
KLINGELNBERG Mexico S.A. de C.V., Queretaro, Mexico (100%)
KLINGELNBERG Hungaria Kft. “v.a.”, Györ, Hungary (100%) - in liquidation
KLINGELNBERG India Private Ltd., Pune, India (99,99%)
DKSH KLINGELNBERG Service Ltd., Shanghai, China (joint venture/50%)
KLINGELNBERG do Brasil, Sao Paulo, Brazil (99%)

Additional as at 31. March 2020:
 KLINGELNBERG Hungaria Service Kft., Györ, Hungary (100%); register deletion at 16 July 2020
In the financial year 2019/20, KLINGELNBERG Group has started a Efficiency Enhancement Program. This includes the liquidation of the two Hungarian companies. The liquidation of the
KLINGELNBERG Hungaria Service Kft. was completed in the financial year 2020/21. Due to thevarious governmental lockdowns, caused by the corona pandemic, the formal liquidation under
Hungarian law for KLINGELNBERG Hungaria Kft. “v.a.” is delayed. The company is expected to bedeleted from the register in 2021/22.
The Hungarian entity which is in liquidation process has been assessed separately. This separate
valuation resulted in an additional devaluation of CHF 0,2 million (as at 31. March 2020: CHF 2,5 million) at KLINGELNBERG Hungaria Kft. “v.a.”.

119

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

3.6

Short-term financial liabilities to third parties

As at 31 March 2021 the existing line of credit was unused (as at 31 March 2020: CHF 7,3 million).

3.7

Payables from goods and services to third parties
31.03.2021

31.03.2020

Payables from goods and services

405.124463.404

Payables from joint ventures

83.19316.069488.317479.473487.892475.996

425

3.477

CHF

Payables from goods and services to third parties
Thereof:- not due and due up to 90 days
- overdue more than 90 days

3.8

Other short-term liabilities to third parties

Other short-term liabilities include advance payments from customers, salaries and wages, commissions and taxes/social-insurance withholdings. Due to the increase of the orders, advance payments received increased from CHF 2,8 million to CHF 6,0 million. Other liabilities remained at theprevious year´s level.

3.9

Other short-term liabilities to group companies

In the previous year these included only down payments received.

3.10 Accrued liabilities and deferred income
The position essentially involves a decrease in outstanding invoices for machines billed in theamount of CHF 0,7 million and a decrease of paid tax liabilities of about CHF 0,6 million.

3.11 Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2021 is composed of 8.840.000 registeredshares with a nominal value of CHF 5 each (no changes to the previous year).

3.12

Statutory capital reserves

As at 31 March 2021, the company had CHF 55,5 million (no changes to the previous year) of reserves from capital contributions, of which CHF 55,3 million has been recognized as such by
the Swiss tax authorities (further details Note 4.14 of the Consolidated Financial Statements).

120

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

4	Substantial information on the income statement items
4.1

Other operating income

In the previous year, this position included income from the reversal of general valuation allowances by CHF 2,3 ­million.

4.2

Material expense

Due to the decline in sales, the cost of materials decreased accordingly from CHF 47,9 million to
CHF 21,7 million. The materials ratio was reduced from 77,9% to 75,1%.

4.3

Personnel expense

Short-time working was implemented in the period from April 2020 to November 2020. This resulted in a reduction of personnel expense of CHF 0,7 million in the financial year 2020/21. Furthermore, the number of employees decreased by three.

4.4

Other operating expense

Other operating expenses include in particular rent expense, legal and consulting fees, travel andrepresentation expense, freight charges, commissions, patent cost, capital tax and other expenses.
Due to the persisting corona pandemic, costs were cut in all areas, resulting in an overall reductionof CHF 1,1 million.

121

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

4.5

Financial result

CHF

2020/212019/20

Interest expense (-)-160.725-81.490

Interest income (+)

1.072.523

1.392.357

Financial income

911.798

1.310.867

Currency translation difference and hedging expense-2.122.416-7.383.420

Currency gains

4.348.293

4.582.881

Foreign currency gain (loss)

2.225.877-2.800.539

Investment income

1.879.022

917.500

Financial result

5.016.697-572.172

The floating of the EUR/CHF exchange rate is responsible for the foreign currency gain. Income
from investments relates to dividends from subsidiaries.

4.6

Income taxes

The tax expense includes withholding tax and tax on profits. Capital tax is reported under otheroperating expenses (Note 4.4) in the same way as in the consolidated financial statements.

5Additional information

5.1		Employees
The number of full-time equivalents (FTEs) did not exceed 50 as an annual average (no changes tothe previous year).

122

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

5.2

Lease liabilities

Operating leases apply mainly to vehicles and building rents.
31.03.2021

31.03.2020

Up to 1 year

1.426.505

1.382.375

1 to 5 years

5.500.123

5.461.500

More than 5 years

2.700.000

4.050.000

Total operating lease liabilities

9.626.628

10.893.875

CHF

5.3

Pension fund obligations

As at 31 March 2021, as well as at the end of the previous year, there are no liabilities to the occupational pension fund due.

5.4

Release of hidden reserves

During the period under review, hidden reserves increased by CHF 0,7 million (prior year:
CHF -2,3 million) mainly due to the increase of the allowance of receivables from goods and services(Note 3.1).

5.5

Guarantees

KLINGELNBERG AG, as the parent company, has taken over joint liability for different subsidiaries
and their bank contracts. The contracts are concluded in EUR, JPY and CHF. The conversion into
CHF is made at the closing rate.
31.03.2021

31.03.2020

Guarantees and pledges to group companies in favor of third parties

81.17166.733

Guaranteed maximum amount81.17166.733

Thereof utilized

19.84833.011

CHF 000

5.6		Contingent liabilities
At the end of the year under review, there were no contingent liabilities (no changes to the previous year).

5.7

Significant shareholders

An overview can be found in section 3.1 of the Corporate Governance report.

123

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

5.8

Compensations

Compensations paid to the members of the Board of Directors and the Executive Committee aredisclosed in section 5 of the Compensation Report.

5.9	Shareholdings of members of the Board of Directors and Executive
Management
Number of shares
31.03.2021

31.03.2020

Jan Klingelnberg, CEO

00Christoph Küster, CFO

1.000

1.000

Martin Boelter, COO

2.000

1.000

Dr. Jörg Wolle, Member of the Board of Directors/Chairman

195.730

45.000

Diether Klingelnberg, Member of the Board of Directors

15.00015.000430

430Roger Baillod, Member of the Board of Directors

1.500

0

Prof. Dr. Michael Hilb, Member of the Board of Directors

1.000

0

Hans-Georg Härter, Member of the Board of Directors

4.294.349 shares are held by KLINGELNBERG Luxemburg A.G.. The shares of this company are
directly and indirectly held by Jan and Diether Klingelnberg (section 3.1 of the Corporate Governance report). 4.000 shares of Diether Klingelnberg are jointly registered as a group due to anagreement with KLINGELNBERG Luxemburg A.G. on exercising of voting rights.

5.10 Events after the balance sheet dateNo significant events occurred after the balance sheet date. Events after the balance sheet datewere considered until 22 June 2021. On this date, the financial statements were authorized for release by the Board of Directors.

124

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Appropriation of retained earnings
Proposal by the Board of Directors for the appropriation of retained earnings:
CHF

31.03.2021

31.03.2020

Amount brought forward from prior year

31.452.026

34.326.935-743.720-2.874.909

Statutory retained earnings

30.708.306

31.452.026

To be carried forward

30.708.306

31.452.026

Loss

Proposal of the Board of Directors for the appropriation of legal capital contribution reserves:
CHF

31.03.2021

31.03.2020

Capital contribution reserves

55.531.150

55.531.150

0055.531.150

55.531.150

Withholding tax free distribution
To be carried forward

The Board of Directors will propose to the Annual General Meeting on 24 August 2021 that no dividend will be paid out. In addition, the Board of Directors will propose that the retained earnings
of CHF 30,7 million and capital contribution reserves of CHF 55,5 million will be carried forward.
In the previous year, no dividend per registered share was paid out according to the decision of theAnnual Shareholders’ Meeting of 19 August 2020.

125KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the financial statements 2020/2021

126

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Report of the statutory auditor
to the General Meeting of Klingelnberg AG
ZurichReport on the audit of the financial statements
OpinionWe have audited the financial statements of Klingelnberg AG, which comprise the balance sheet as at 31 March 2021,
income statement and notes for the year then ended, including a summary of significant accounting policies.
In our opinion, the financial statements (pages 113 to 125) as at 31 March 2021 comply with Swiss law and the company’s articles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those
provisions and standards are further described in the “Auditor’s responsibilities for the audit of the financial statements”
section of our report.
We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview

Overall materiality: CHF 280'000
We tailored the scope of our audit in order to perform sufficient work to enable
us to provide an opinion on the financial statements as a whole, taking into account the structure of the entity, the accounting processes and controls, andthe industry in which the entity operates.
As key audit matters the following areas of focus have been identified:
Valuation of investments in subsidiaries
Revenue recognition of goods and services in the appropriate period

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, CH-8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, Telefax: +41 58 792 44 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

127

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonableassurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or
error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overallmateriality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and toevaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole.
Overall materiality

CHF 280'000

How we determined it

1.00% of total revenues

Rationale for the materiality benchmark applied

We chose total revenues as the benchmark because, in our view, it is the appropriate benchmark, which the users of the financial statements use to evaluate the financial performance of the group. It is also a generally accepted
benchmark when profit varies greatly between accounting periods.

We agreed with the Audit Committee that we would report to them misstatements above CHF 14'000 identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we considered where subjective judgements were made; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including among other mattersconsideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. 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.

3 Klingelnberg AG | Report of the statutory auditor to the General Meeting

128

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Valuation of investments in subsidiaries
Key audit matter

How our audit addressed the key audit matter

The balance sheet item ‘Investments’ includes a number ofinvestments in subsidiaries and amounts to CHF 90.9 million as of 31 March 2021. We consider the valuation of investments in subsidiaries to be a key audit matter due tothe significance of the balance (55.4% of total assets). An
impairment of investments in subsidiaries could have a significant impact on the equity of the company.

With regard to the valuation of investments in subsidiaries,
our audit consisted principally of the following procedures:

Investments in subsidiaries are carried at historical costless required impairments. Management considers an impairment as soon as the total net asset value falls below total carrying value. In order to evaluate the amount to be impaired, a recognised valuation method is used.
Due to the high economic and operational interdependenceof subsidiaries, Management deemed the consolidation of
the investments in subsidiaries as a group for valuation
purposes to be appropriate.
Please refer to the accounting principles for ‘Investments’in note 2.7 as well as the details of investments held innote 3.5.

– We assessed the appropriateness of Management’s applied valuation approach (comparison of carrying values
against the respective net asset value);– We challenged Management’s considerations for applying portfolio valuation;– We tested the mathematical accuracy of the impairment
assessment prepared by Management;– We compared the current year’s business results withManagement’s prior period forecasts in order to assess inretrospect the accuracy of Management’s forecasting process.
On the basis of the work performed, we gained sufficientevidence to address the risk of material misstatement of
the valuation of investments in subsidiaries. We consider
the valuation of investments in subsidiaries to be appropriately assessed by Management.

Revenue recognition of goods and services in the appropriate period
Key audit matter

How our audit addressed the key audit matter

Klingelnberg AG recognises revenue from goods and services in the period in which it transfers the risk and rewardof ownership.

We performed the following audit procedures to assess
whether revenue from goods and services was recognisedin the appropriate period:

A significant portion of the revenue is normally recognised
during the second half of the Company’s financial year. We
consider revenue recognition in the appropriate period tobe a key audit matter because of the complexity involved
when assessing and adhering to the contractually agreed
incoterms as well as due to standard intra-year seasonal
trends, which, in our view, increase the risk of material misstatement in revenue recognition in the appropriate period.

– We identified transactions occurring close to the balance
sheet date and for the months of March 2021 and April
2021 tested, on a sample basis, whether revenue was appropriately recognised in the period in which the risk andreward of ownership were transferred. For the same sample, we assessed whether the contractually agreed incoterms were in agreement with the revenue recognition;

Please refer to the company’s accounting principles in note
2.8.

– Furthermore, we enquired with Management regarding
controls that address the risk of recording revenue fromgoods and services in the wrong period.
We consider the risk of material misstatement in revenue
recognition in the appropriate period to be adequately addressed.

Responsibilities of the Board of Directors for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of
Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due tofraud or error.

4 Klingelnberg AG | Report of the statutory auditor to the General Meeting

129

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue asa going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law andSwiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists which has been designed for the preparation of financial statements according to the instructions of
the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s
articles of incorporation. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AGBlaženka Kovács-Vujević

Regina Spaelti

Audit expert
Auditor in charge

Audit expert

Zurich, 22 June 2021

5 Klingelnberg AG | Report of the statutory auditor to the General Meeting130

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

131

Alternative Performance
Measures

Full refurbishment incl. ball screws, bearings,
rails, belts and couplings – restoration of theoriginal production quality
Performance package incl. faster gap finding
and improved contact detection – higher
efficiency and lower tooling costs

BEFORE AND ...

AFTER RETROFIT & REFURBISHMENT

New control cabinet incl. cables, motors,
measuring systems and sensors – high production
reliability and reduced failure probability

Modern machine control – intuitive
touch display and the latest
operating softwareKLINGELNBERG GROUP
Alternative Performance Measures

Alternative Performance Measures
In addition to the key figures defined or specified in the Swiss GAAP FER financial reporting framework, KLINGELNBERG also provides key financial ratios derived from or based on the preparedfinancial statements. These are known as Alternative Performance Measures (APM).
KLINGELNBERG considers these key financial ratios to be important supplemental information
for investors and other readers of the financial reports. The key financial ratios should therefore
be seen as an addition to and not a replacement of the information prepared in accordance with
Swiss GAAP FER.
With regard to the requirements of the SIX Swiss Exchange guidelines on Alternative Performance
Measures (APM), KLINGELNBERG provides an overview of the Alternative Performance Measuresused, their definition and their compilation:

EBITDA:
Earnings before interest, income tax, depreciation and amortization (EBITDA) as a subtotal includes the operating result plus depreciation on tangible fixed assets and amortization on intangible assets.
2020/212019/20(1) Operating result-11.562-18.776(2) Depreciation on tangible fixed assets-4.559-5.347-443-487-6.560-12.942

EUR 000(3) Amortization on intangible assets
EBITDA (1) - (2) - (3)EBIT:
The operating result (Swiss GAAP FER) excluding non-operating and extraordinary results.
EUR 000

2020/212019/20

Operating result-11.562-18.776133

KLINGELNBERG GROUP
Alternative Performance Measures

Total Operating Performance:
Total operating performance is the sum of net sales from goods and services and change in inventory of finished and unfinished goods as well as unbilled goods and services.
EUR 000

2020/212019/20(1) Net sales from goods and services

158.719212.093(2) Change in inventory of finished and unfinished goods as well as unbilledgoods and services-5.84410.629152.875

222.722

Total operating performance (1) + (2)Gross Profit:
Gross profit is the sum of total operating performance and material expense.
EUR 000

2020/212019/20(1) Total operating performance

152.875

222.722(2) Material expense-52.000-90.606

Gross profit (1) + (2)100.875132.116

Materials Ratio:
The materials ratio is derived from the division of material expense by total operating performance.
EUR 000

2020/212019/20(1) Total operating performance

152.875

222.722(2) Material expense-52.000-90.606

Materials ratio (-2) / (1)

34,0%

40,7%

Personnel Expense Ratio:
The personnel expense ratio is derived from the division of personnel expense by total operating
performance.

134

EUR 000

2020/212019/20(1) Total operating performance

152.875

222.722(2) Personnel expense-83.731-110.644

Personnel expense ratio (-2) / (1)

54,8%

49,7%

KLINGELNBERG GROUP
Alternative Performance Measures

Other Operating Expense Ratio:
The other operating expense ratio is derived from the division of other operating expense by total
operating performance.
EUR 000

2020/212019/20(1) Total operating performance

152.875

222.722(2) Other operating expense-26.201-37.722

17,1%

16,9%

Other operating expense ratio (-2) / (1)Ratio of Research and Development Expenses:
Research and development expenses divided by net sales from goods and services.
EUR 000

2020/212019/20(1) Net sales from goods and services

158.719212.093(2) Research and development expenses-21.100-24.908

Ratio of research and development expenses (-2) / (1)

13,3%

11,7%

Net Debt:
The sum of financial liabilities (long- and short-term) less cash and cash equivalents.
31.03.2021

31.03.2020(1) Short-term financial liabilities

5.343

27.077(2) Long-term financial liabilities

1.705

2.983

(3) Cash and cash equivalents

22.57738.744

Net debt (1) + (2) - (3)-15.529-8.68431.03.2021

31.03.2020(1) Cash flow from operating activities

7.617-2.222(2) Cash flow from investing activities-267-4.250Free cash flow (1) + (2)7.350-6.472

EUR 000

Free Cash Flow:
Cash flow from operating activities plus cash flow from investing activities.
EUR 000

135

Financial Calendar

KLINGELNBERG GROUP
Financial Calendar

Dates in the coming financial year

23.06.2021	Publication of figures for the financial year ending
31 March 2021

24.08.2021

Annual General Meeting

17.11.2021	Publication of results for the half-year ending
30 September 2021

137

KLINGELNBERG AG
Binzmühlestrasse 1718050 Zürich, SwitzerlandFon:+41 44 278 7940
Mail: investorrelations@klingelnberg.com
Web: www.klingelnberg.com