ANNUAL REPORT
2023/24

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 2023/24
16 Company Profile
22 Management Report
32 Corporate Governance
58 Compensation Report
76 Sustainability Report
118 Consolidated Financial Statements
154	Statutory Financial Statements of
KLINGELNBERG AG
174 Alternative Performance Measures
178 Financial Calendar

KLINGELNBERG GROUP
To our Shareholders

Dear Shareholders,After your Company, the KLINGELNBERG Group, had already performed extremely well in thepast financial year, KLINGELNBERG was able to stay on this course in the 2023/24 financial year
without any cutbacks. Despite considerable geopolitical pressure and the noticeable effects ofinflation, cost increases, and other factors on the global economy, KLINGELNBERG managed to
win a large number of new orders, increase its market share, and secure its margin. The Company
achieved a new all-time high for order intake, EBIT rose again, and the order backlog increased
by a further 3,0%. Sales were only slightly down on the previous financial year due to delays inshipments caused by external factors beyond the Company’s control.
A few figures show just how successful KLINGELNBERG was in the financial year under review:
At around EUR 311,4 million, order intake exceeded the previous financial year’s record figure by
a further EUR 11,0 million. EBIT rose once again to around EUR 25,1 million. The order backlog
reached a consistently high level of around EUR 267,5 million.
But it is not just about the absolute figures recorded. The strategic positioning is right, the products
are world-class, and the market success proves that KLINGELNBERG made many right decisions.
The slowdown in order intake at many European mechanical engineering companies has not had
any noticeable effect on KLINGELNBERG to date.
In particular, the early strategic decision to commit to the growth of global wind energy ispaying off impressively for KLINGELNBERG today. KLINGELNBERG scored well in this area
worldwide, particularly in Asia. The Company also set an early course in the automotive sector
and the transformation to electromobility and was able to win significant orders. KLINGELNBERG
successfully expanded its position further in the areas of e-mobility and renewable energies. At
the same time, we benefited disproportionately from the steadily increasing quality requirements
in e-mobility. Currently, a slowdown in the transition to e-mobility is evident in some automotive
markets, particularly in the US and Europe. It remains to be seen how this transition will actuallycontinue. One thing is sure: KLINGELNBERG supplies the right machines for both technologies –modern combustion engines, which are far less harmful to the environment, and electric-powered
vehicles.
In this context, we would like to mention that the KLINGELNBERG Group is also publishing its
first Sustainability Report as part of this Annual Report, which reflects the Group’s ongoingcommitment to promoting positive economic, environmental, and social impacts. In the coming
years, KLINGELNBERG will continue to strive to expand its leading role in the gear industry by
developing innovative solutions that are not only economically viable but also environmentallyfriendly and socially responsible. KLINGELNBERG’s already strong internationalization continued
in the 2023/24 financial year. KLINGELNBERG is successfully operating in markets such as India,

03

KLINGELNBERG GROUP
To our Shareholders

China, and North America. KLINGELNBERG generated 55,5% of its sales in Asia and a further 31,1%
in the EMEA region.
Last financial year, we reported here that the Company was stronger than probably ever before.
The figures reported for the 2023/24 financial year confirmed this strength – even though themarkets and the geopolitical situation have certainly not provided the Company with a tailwind.
Our success is, therefore, anything but a matter of course. All successes – those of the past andthose to come – must be earned through hard work. For this hard work, we would like to take thisopportunity to thank all employees, managers, and members of the Executive Committee. We
would also like to take this opportunity to thank our shareholders for another year of loyalty toyour Company.
Even though the overall geopolitical and economic situation shows no signs of improvement, we
remain confident about the current financial year.
To ensure that our shareholders also benefit from all these positive developments, the Boardof Directors will propose to the Annual General Meeting that the dividend be increased from
CHF 0,40 per share in the previous year to CHF 0,50 per share.
Despite all prevailing macroeconomic uncertainties, we expect a slight increase in sales for the2024/25 financial year.
We expect the EBIT margin to remain above 8,0%, as in the 2023/24 financial year.

Sincerely yours,

Dr. Jörg Wolle
Chairman of the Board of Directors
Zürich, 20 June 2024

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 303,5 million (-1,8%)
� Order intake increased by EUR 11,0 million(+3,7%) to EUR 311,4 million
� Highest order intake in the Company’s
history for the third time in a row

� EBIT amounted to EUR +25,1 million,
an increase of EUR 1,3 million
� Net profit of EUR 17,2 million
� Equity ratio at 47,5%
� Dividend of CHF 0,50 per share (+25,0%)Group key figures
2023/242022/23

ChangeNet sales from goods and services

303,5

309,0

-5,5

Order intake

311,4

300,4

11,0

Order backlog

267,5

259,6

7,9

Operating result (EBIT)

25,1

23,8

1,3

Net profit

17,2

20,8

-3,6

Basic earnings per share (in EUR)

1,95

2,35

-0,40

Diluted earnings per share (in EUR)

1,95

2,35

-0,40

Operating result as % of net sales from goods and services

8,3%

7,7%

0,6%

Net profit as % of net sales from goods and services

5,7%

6,7%

(1,0%)Cash flow from operating activities

23,5

15,7

7,8

Investments in tangible fixed and intangible assets

8,3

18,3

-10,0

Free cash flow

16,2

-1,9

18,1

Employees (FTE)

1.313

1.229

84

31.03.2024

31.03.2023

ChangeTotal liabilities and equity

296,1

284,4

11,7

Net debt

27,3

41,8

-14,5

Total equity

140,8

126,6

14,2

Equity ratio

47,5%

44,5%

3,0%

EUR million

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

350,0

350,0

300,0

300,0

250,0

250,0
200,0

200,0
309,0

150,0
100,0

212,1

50,0
0,0

2019/20

158,7

158,6

2020/212021/22

303,5

100,0

194,5

215,5

2022/232023/24

0,0

2019/20

2020/212021/22

Order backlog, in EUR million

Employees (FTE), full time equivalents

350,0

1.600

300,0

1.400

2022/232023/24

1.000
800

150,0

268,0

100,0

0,0

311,4

1.200

200,0

50,0

300,4

268,9

50,0

250,0

100,7
2019/20

259,6

267,5

600

1.251

1.145

1.183

1.229

1.313

2020/212021/222022/232023/24

400

157,7

200
2020/212021/222022/232023/240

2019/20

Personnel expense, in EUR million

Other operating expense, in EUR million

120,0

50,0

100,0

40,0

80,0
60,0

30,0
110,6
83,7

40,0

95,9

100,1

114,4

0,0

20,0

37,7

2019/20

2020/212021/222022/232023/24

0,0

45,2

46,3

44,5

2021/222022/232023/24

26,2

10,0

20,0

08

150,0

2019/20

2020/21KLINGELNBERG GROUP
At a Glance

Operating result (EBIT), in EUR million

Operating result as % of net sales from goods and services

30,0

10,0

25,0
20,0

5,0

15,0

23,8

10,0

25,1

0,0
-10,0

-18,8

-11,6

8,3

2022/232023/24

0,0

5,0
-5,0

7,7

-5,0

-8,9

-7,3

-9,9

-15,7
-10,0

-15,0
-20,0
-25,0

2019/20

2020/212021/222022/232023/24-15,0

2019/20

2020/212021/2230
Share price, from 01 April 2022 – 31 March 2024

25

20

15

10

5

09

Highlights 2023/24

KLINGELNBERG GROUP
Highlights

Trade Fairs:

Innovate Manufacturing at the EMO Hanover, Germany
Under the banner “Innovate Manufacturing”, industry leaders once again came together at
the EMO trade fair in Hanover, Germany from 18 to 23 September 2023. The EMO is the world’s
leading trade fair for production technology, providing full-spectrum coverage of the sector.
KLINGELNBERG was also represented with a booth. For the first time, KLINGELNBERG offered interested trade show visitors live presentations in a short-seminar format on the subjects of aviation, wind energy, and automotive applications. Digital solutions for smart production were alsopart of the lecture series. At scheduled times, the team of experts gave 20-minute presentations
followed by discussions in German and English directly at the trade show booth in the Company’s
own Gear Campus.

11

KLINGELNBERG GROUP
Highlights

KLINGELNBERG was also present at the following trade fairs:

CIMT, Beijing, China
10.04.–15.04.2023

Control, Stuttgart, Germany
09.05.–12.05.2023

MTA Vietnam,
Ho Chi Minh City, Vietnam
04.07.–07.07.2023

ITM (Industrial Transformation
MEXICO), León, Mexico
04.10.–06.10.2023

MPT (Motion + Power Technology
Expo), Detroit, USA
17.10.–19.10.2023

12

KLINGELNBERG GROUP
Highlights

MTA Indonesia, Jakarta, Indonesia
06.12.–09.12.2023

GEAR Seminars:
Under the patronage of Dr. Christof Gorgels, Vice President Technology and Innovation, the popular GEAR Seminar series took place again in 2023. KLINGELNBERG hosted three series of seminars
at different locations in 2023.
The American subsidiary KLINGELNBERG America, Inc. kicked things off by organizing a seriesof lectures held during the Motion + Power Technology Expo trade show in Detroit from 17 to
19 October 2023. Gear Seminar China, which took place from 04 to 08 December 2023 in the cities
of Guilin, Chongqing, and Changzhou, was also a great success. The subsidiary KLINGELNBERG India Pvt. Ltd. concluded the event, with the Gear Seminar scheduled from 11 to 15 December 2023.
The agenda again included many interesting topics relating to Bevel Gear Technology, Measuring
Technology, and Cylindrical Gear Technology.

Gear Seminar America
17.10.–19.10.2023

Gear Seminar China
04.12.–08.12.2023

Gear Seminar India
11.12.–15.12.2023

13

KLINGELNBERG GROUP
Highlights

Local Events:“Nacht der Unternehmen”: a look behind the scenes at KLINGELNBERG at its
location in Hückeswagen, Germany
17 companies in all took part in this year’s “Nacht der Unternehmen” open house event in Hückeswagen, located in Germany’s Oberbergischer Kreis region. The event took place from 3:00 p.m. to
10:00 p.m. on 12 May 2023. The “Nacht der Unternehmen” brings employers and target groups
together every four years and supports the marketing efforts and business development of thecastle town of Hückeswagen. The aim of the event was to give visitors insight into the day-to-day
production activities ofa machine manufacturer
with operations aroundthe globe.
Thisfinancial
year,
KLINGELNBERG opened
its doors to all interested
visitors – both at its longestablishedproduction
site on Peterstrasse in
Hückeswagen, Germany
and at its newly built assembly hall, located on Gustav-Adolf-Klingelnberg-Straße in Hückeswagen-Winterhagen, Germany. Since late 2022, KLINGELNBERG has been using the facility to build large gear manufacturingmachines, whose primary application is in the wind power industry. The event was also a good
opportunity for KLINGELNBERG employees to show their families around their workplace. The
guests were guided in small groups through the machine building and instrumentation areas,
where they learned interesting facts about gear technology and its history. KLINGELNBERG counted over 1.000 guests at each site by the end of the event.

14

KLINGELNBERG GROUP
Highlights

Anniversaries:

25 Years of KLINGELNBERG America, Inc.
The third largest subsidiary of KLINGELNBERG AG after Germany and India, KLINGELNBERG
America, Inc., was founded on 27 January 1999. In early 2024, it marked its 25th anniversary.
KLINGELNBERG America, Inc. has its headquarters in Saline, a city in the US state of Michigan.

15

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,
for both 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.

17

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 measurement18

 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 in the cylindrical gearprocess chain. The production steps in the pro­cesschain include process design, grinding, deburring,measuring and quality control. HÖFLER Cylindrical
Gear Machines stand out not just because of theiradvanced hardware; the Company’s own Gear Production software also makes a key contribution to
the successful execution of each step.
The software guarantees convenient machining ofeven the most complex topographies and ensures maximum efficiency in daily use. Only in thisway is concentrated knowledge of state-of-the-art machining strategies and process sequences
placed right in the user’s hands. And with its numerous options, Gear Production plays an activerole in achieving productivity gains.

KLINGELNBERG Drive Technology
Back in 1923, KLINGELNBERG was the first company in the world to begin made-to-order productionof bevel gears using the continuous hobbing method at its site in Hückeswagen, Germany. A highlevel of innovation and close partnershipwith customers and suppliers has constituted a tried-and-tested success model
ever since. In 2008, the Drive Technology
segment was moved from the originalplant 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 – using state-of-the-art
methods.

19

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.

20n 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 Hückeswagen-Winterhagen,Germany.
n Assumption of core business of Höfler Maschinenbau GmbH in Ettlingen,Germany.

2018 til today
NEW MARKETSn After just ten months of
construction, the newassembly hall covering a
total area of 8.000 square
meters was officiallyinaugurated in Hückeswagen-Winterhagen at
the end of 2022.
n Conquering new markets
through further development of optical metrology and developmentof innovative solutions
for e-mobility and wind
power.
n KLINGELNBERG wins Bestof Industry Award 2018and 2020 as well as theGerman Innovation
Award 2021.
21

Management Report

2

3

4

5

6

 Bevel Gear Measurement

2 Cylindrical Gear Measurement

3 Coordinate, Form and Position Measurement

4 Roughness Measurement

5 Optical Measurement

6 Contour Measurement

KLINGELNBERG GROUPManagement Report

Segments and markets
Against a backdrop of great uncertainty regarding the world economic environment, the global
economy only expanded at a moderate pace in 2023 but proved to be quite robust overall in theface of the many different challenges. Lower energy prices than in the previous year and an increase in purchasing power that had declined due to inflation in most countries had a stabilizing
effect. At the same time, the persistently high interest rate level had a dampening effect on international economic growth. Despite this challenging environment, the KLINGELNBERG Group once
again proved resilient and was able to achieve new record results.
Due to the long-prevailing zero-COVID policy in China, the Chinese economy only expanded moderately in 2023 with a 5,2% increase in gross domestic product – overall below the pre-pandemic
growth trend. A dampening effect came from the crisis in the real estate sector, which also unsettled private households and curbed private consumption. By contrast, the US economy grew
surprisingly well, thanks not only to private households’ readiness to spend, but also to rising corporate investment and exports. Exports rose much stronger than imports by the end of 2023,
meaning that net exports also made a noticeable contribution to the growth in overall economic
production. The US recorded a 2,5% increase in economic output for 2023 in total. Germany failed
to see an overall economic recovery last year. Real economic activity even declined by 0,3% in the
final quarter of 2023. Despite high order backlogs in the industrial sector, the weakening figures
for new business could not be compensated for, resulting in a downward trend in industrial production at the turn of the year.
Overall, the global economy was still exposed to major geopolitical risks at the start of 2024. An
end to Russia’s war against Ukraine is not yet in sight and conflicts in the Middle East also have thepotential to severely disrupt global trade and the associated value chains – with all resulting risks
for the further economic cycle. Despite these diverse global challenges, the KLINGELNBERG Group
once again succeeded in achieving high levels of sales and order intake in the 2023/24 financial
year. Compared to the same period last financial year, net sales fell slightly by EUR 5,5 million to
EUR 303,5 million. Order intake increased by EUR 11,0 million compared to the previous financial
year setting another record with a total value of EUR 311,4 million. The basis for this was provided
by a healthy mix driven by the wind energy, electromobility and general mechanical engineeringand gear manufacturing sectors.
Around 55,5% of all sales were generated in the Asia-Pacific region and a further 31,1% in the
EMEA region.

23

KLINGELNBERG GROUPManagement Report

Bevel Gear segment:
The Bevel Gear segment generated net sales of EUR 89,1 million at the end of the 2023/24 financial year – a year-on-year decline in sales of EUR 22,2 million (-19,9%). This is, in particular, attributable to the delayed delivery of customer machines due to the flooding of July 2021, which contributed to a significant increase in sales in the same period of the previous financial year.
At the end of the 2023/24 financial year, order intake totaled EUR 87,5 million, which is around
EUR 4,1 million higher than in the same period of the previous financial year. The KLINGELNBERG
Group’s broad product range combined with a diversified customer portfolio proved to be key to
the Company’s success. Although the majority of incoming orders in this segment resulted fromorders from the global automotive and commercial vehicle industry, the Company’s diversified
customer base contributed to the fact that the decline in demand for bevel gear machines in theautomotive industry triggered by electromobility was offset by industrial applications.
In addition to this, the investment rationale of car manufacturers against the backdrop of changing drive concepts continued to evolve. While Asia continued to focus increasingly on electromobility, a trend towards hybrid vehicles emerged in the US and Europe, giving new impetus to thebevel gear business. The G 35 Dual-Spindle Grinding Machine also enabled the Company to participate in the upturn in the aviation industry with various bevel gear grinding projects.

Cylindrical Gear segment:
The Cylindrical Gear segment recorded an increase in net sales of EUR 2,7 million to a total ofEUR 95,7 million in the 2023/24 financial year. The Asian market, particularly China and India, once
again proved to be the driving force behind the segment’s success. In Europe, on the other hand,the HÖFLER Grinding and Testing Cell consisting of a Speed Viper 300 and an R 300 Gear Roll Testing Machine was successfully launched on the market. This new milestone for gear grinding andgear testing combined in a production cell once again demonstrated the KLINGELNBERG Group’s
ongoing innovative strength and shows the potential for further growth in the field of electromobility. KLINGELNBERG also confirmed its position as an established solution provider for large
machines for wind power applications (Rapid 4000 and Rapid 6000) and was able to meet market
demand in the 2023/24 financial year by implementing the highest quality requirements.
The very positive trend in order intake in the first half of the 2023/24 financial year continued
in the second half of the financial year. Compared to the previous financial year, growth ofEUR 6,3 million to a total of EUR 111,0 million was achieved, setting another record in this segment.
The spectrum of incoming orders was made up of a healthy mix of the wind energy, general mechanical engineering, gear manufacturing and electromobility sectors. The Cylindrical Gear segment is entering the new 2024/25 financial year with an order backlog of EUR 134,3 million andcontinues to develop into a strong revenue driver for the KLINGELNBERG Group.

24KLINGELNBERG GROUPManagement Report

Measuring Centers segment:
The Measuring Centers segment was also able to build on the strong performance of the firsthalf of the financial year and significantly increased both sales and order intake compared to
the 2022/23 financial year and, as a result, even achieved another record high in order intake.
Starting from net sales of EUR 84,7 million in the previous financial year, this figure jumped by
EUR 13,9 million to EUR 98,6 million, while order intake was able to surpass the previous financial
year’s very high level by a further EUR 7,8 million to a total of EUR 96,8 million.
The cross-industry technology leadership of KLINGELNBERG Measuring Centers proved to be amajor guarantor of success. While sales of large measuring centers to wind turbine gearbox manufacturers declined slightly due to the strong wave of investments in the previous financial year,
significant growth in industrial gearboxes compensated for this effect. Also in the electromobility
sector, we were able to build on the previous financial year’s growth.
Following the great success of the newly developed P 125 and P 152 in the 2022/23 financial year,
the market acceptance of these products could be further consolidated. The medium range of the
KLINGELNBERG Measuring Centers portfolio benefited from its cross-industry potential of use in
the automotive and commercial vehicle industry, in electromobility, in aviation as well as in general mechanical engineering and gear manufacturing. With the sale of the first P 200 Measuring
Centers, another new development was successfully launched on the market, confirming the ongoing innovative potential of this segment. The measurement capacities required for wind power
projects already realized and still being planned, as well as the differentiated development ofdrive concepts in the field of electromobility and hybrid vehicles, mean that demand for measuring devices is expected to further increase.

Drive Technology segment:
The Drive Technology segment closed the 2023/24 financial year with net sales of EUR 17,2 million,
up EUR 2,1 million on the previous financial year. However, due to the temporarily weak global
growth momentum, order intake fell significantly by EUR 5,8 million over the previous financial
year to a total of EUR 13,4 million.
However, after years of significant investment cuts in the marine sector (especially tugs and special
ships), signs are pointing towards expansion, something that had already become apparent in theorder books of the Drive Technology segment in the previous financial year and was now realized
in net sales in the 2023/24 financial year. Despite a sluggish global economy, the consolidated andhighly liquid mining market promises future catch-up potential in this segment’s order books. The
reasons for this can be found in the growing importance of rare raw materials in the electrification of mobility, heating, and semiconductors sectors as part of global climate and digitalization
policies.

25

KLINGELNBERG GROUPManagement Report

Research and development
In the 2023/24 financial year, KLINGELNBERG could record a series of further developments andinnovations that offer additional sales and earnings potential or open up market opportunities
for the Company in the future.
The world is changing at a rapid pace. The topics of electromobility and climate protection are
more relevant today than ever before. As a result, in recent years KLINGELNBERG has worked continuously with many of its customers to analyze the challenges presented by renewable energies,
such as electromobility and wind energy, and incorporate them into the Company’s development
process. The high standards regarding the noise behavior of gears in electric cars are a key aspectthat has come to light based on numerous discussions. This has led to new products and advancesin existing products that are designed to manufacture application-specific, high-quality gears ona cost-effective basis, now and in the future.
The highest profile addition to the KLINGELNBERG portfolio is the HÖFLER Roll Testing Machine
R 300 for roll testing of gears. The HÖFLER Cylindrical Gear Roll Testing Machine R 300 provides
a reliable way to determine the contribution of a manufactured gear to gearbox noise. Due tothe short measuring time, it can be easily integrated into any manufacturing process and enables
100% quality control of the gears produced. The R 300 is designed for all roll testing processes
that are relevant for evaluating the running behavior and noise behavior of gears. Depending on
its equipment, the R 300 enables testing of gears and shafts, a particularly important factor forcomponents from an electric vehicle drivetrain system (eDrive). For testing the eDrive intermediate shaft, KLINGELNBERG offers a process for roll testing both gears on the shaft in one test cycle.
This saves time for a second loading and unloading and for re-tooling the machine and reduces
test costs.
The introduction of hybrid metrology with optical pitch measurement has significantly reduced
measurement times. It is now possible to perform optical pitch measurement on almost all surfaces using the white light sensor technology (HISPEED OPTOSCAN) developed by KLINGELNBERG
and partners, along with other innovative measuring strategies. All KLINGELNBERG Precision
Measuring Centers in the P 26 to P 65 series can be optionally retrofitted with the optical sensor(HISPEED OPTOSCAN). For new machines, the “Ready for Optic” option is also available, providing
a factory-installed setup for subsequent retrofitting. Through the systematic use of the standardized Gear Data Exchange (GDE) interface when importing and exporting data and measurement
results, KLINGELNBERG has set a higher standard in Metrology 4.0 in the area of measurement
results diagnostics and networking of production machines and metrology – a system called the
Closed Loop.
SmartTooling is now SmartFactory, enabling the management of all assets in production. SmartFactory gives users an overview of sites and consumption data at all times, and not just for26

KLINGELNBERG GROUPManagement Report

KLINGELNBERG machines. Mobile devices support a wide range of operations with extreme ease.
For KLINGELNBERG processing machines in particular, KLINGELNBERG offers new evaluation andinput options with Smart Process Control, enabling optimal and efficient control of the production process.
The ratio of research and development expenses increased by 0,6 percentage points compared tothe previous financial year and totaled 8,6% in the 2023/24 financial year. The increase is mainly
due to higher expenditures on research and development. R&D expenditures of EUR 26,2 million
underline the importance of product development for the KLINGELNBERG Group.

Gross profit
In the 2023/24 financial year, the KLINGELNBERG Group generated net sales from goods and services of EUR 303,5 million, exceeding the EUR 300 million mark for the second time in a row and
EUR 5,5 million below the previous financial year.
The change in inventory of finished and unfinished goods as well as unbilled goods and services amounted to EUR +2,3 million in the financial year under review (previous financial
year: EUR -18,8 million). Overall, there was an increase in total operating performance of
EUR 15,7 million compared to the 2022/23 financial year to EUR 305,8 million.
In line with the higher total operating performance, material expense increased by EUR 5,0 million
compared to the previous financial year totaling EUR 130,7 million. The materials ratio fell by
0,6 percentage points compared to the previous financial year and closed at 42,8% at the end of
the 2023/24 financial year. Gross profit thus amounted to EUR 175,0 million, up EUR 10,7 million
on the previous financial year.

Personnel expense and employees
Personnel expense amounted to EUR 114,4 million at the end of the 2023/24 financial year, up
EUR 14,2 million on the previous financial year. Payroll costs including social benefits rose by
EUR 12,3 million, which was mainly due to the increase in the number of employees (+84 FTEs)
and the 5,2% increase in pay rates at KLINGELNBERG GmbH following collective bargaining. In
addition, the reorganization collective agreement concluded at the Hückeswagen production site
due to the flooding in 2021 was terminated prematurely on 01 May 2023. Expenses for employee
pension plans also increased by EUR 4,0 million. The main reason for this was an interest-related
reversal of pension provisions at KLINGELNBERG GmbH in the previous financial year. By contrast,
other personnel expenses decreased by EUR 2,1 million, which was due to lower external personnel
costs (also at KLINGELNBERG GmbH).

27

KLINGELNBERG GROUPManagement Report

The personnel expense ratio also rose from 34,5% in the 2022/23 financial year to 37,4% dueto the shift in the product mix towards the Cylindrical Gear segment. As at 31 March 2024, theKLINGELNBERG Group had 1.313 employees (FTE), 84 employees more than in the previous
financial year.

Other operating expense
At the end of the 2023/24 financial year, other operating expense amounted to EUR 44,5 million,
down EUR 1,8 million and therefore significantly lower than in the previous financial year. The decrease was mainly due to lower costs for incoming and outgoing freight.
Correspondingly, the other operating expense ratio was 14,6% at the end of the 2023/24 financial
year and was thus lower than the previous financial year’s level (-1,4 percentage points).

Other operating income
Other operating income amounted to EUR 13,0 million at the end of the 2023/24 financial year,
up EUR 3,5 million on the previous financial year. The main reason for this was the higher income
from flood-related payments (EUR 3,4 million).

Operating result
After the post-pandemic upturn two years ago was severely slowed down by the flood disasteron 14 July 2021, the KLINGELNBERG Group once again impressively managed to emerge stronger from a crisis in the previous financial year. Following the improvement in the operating result (EBIT) of EUR 39,5 million in the previous financial year compared to the year before, theKLINGELNBERG Group continued this positive trend in the 2023/24 financial year and achieved an
operating result (EBIT) of EUR 25,1 million – an improvement of EUR 1,3 million (+5,4 %) comparedto the previous financial year. The highest order intake in the Company’s history for the third timein a row in the 2023/24 financial year and an increased and therefore persistently very high orderbacklog provide a positive outlook for the future.
The operating result as a percentage of net sales from goods and services for the 2023/24 financial year was +8,3%, an increase of 0,6 percentage points on the previous financial year. The basic
earnings per share amounted to EUR +1,95.

Financial result
The KLINGELNBERG Group reported a financial result of EUR -2,5 million in the 2023/24 financial
year. This loss resulted on the one hand from higher bank interest, which had an impact on thefinancial result. On the other hand, the exchange rate result in the accounts, which was incurred
mainly by the KLINGELNBERG AG. The KLINGELNBERG AG conducts most of its business in euros,
while the accounts of KLINGELNBERG AG are kept in Swiss francs. Because the holding company

28

KLINGELNBERG GROUPManagement Reportreports the Group figures in euros, the euro transactions of the KLINGELNBERG AG must be converted twice.

Balance sheet
The balance sheet total of the KLINGELNBERG Group increased by EUR 11,7 million compared to
the figure recorded on 31 March 2023 and amounted to EUR 296,1 million as at 31 March 2024.
While non-current assets at EUR 75,7 million remained almost at the previous financial year’s level(EUR 76,0 million), current assets increased by EUR 12,0 million and amounted to EUR 220,4 million
as at 31 March 2024. Receivables from goods and services increased by EUR 8,8 million and cash
and cash equivalents by EUR 7,8 million compared to the 2022/23 financial year.
Total liabilities decreased by EUR 2,5 million (-1,6%) compared to 31 March 2023 and amounted to
EUR 155,4 million as at 31 March 2024. While current liabilities increased by EUR 1,8 million, noncurrent (long-term) liabilities fell significantly by EUR 4,2 million, partly due to a repayment subsidy from “KfW” (EUR 2,6 million) for the assembly hall of KLINGELNBERG GmbH, which went into
operation in the previous financial year. Net debt decreased significantly by EUR 14,5 million andamounted to EUR 27,3 million at the end of the 2023/24 financial year.
Equity increased by EUR 14,2 million (+11,3%) compared to the financial year ending 31 March2023 and amounted to EUR 140,8 million as at 31 March 2024. The net profit for the period increased equity by EUR 17,2 million, while the dividend payment reduced equity by EUR 3,7 million.
The equity ratio increased by 3,0 percentage points to 47,5% compared to 31 March 2023. The
KLINGELNBERG Group has thus further strengthened its sound financial position in the 2023/24 financial year.

Cash flow statement
Cash flow from operating activities increased by EUR 7,8 million compared to the previous financial year to EUR 23,5 million. The net profit of EUR 17,2 million particularly contributed to this positive cash flow.
Outflows for investment in tangible fixed assets amounted to EUR 8,1 million. This included eight
investments in machinery for the Hückeswagen site in Germany. Cash flow from investing activities totaled EUR -7,3 million and was therefore EUR 10,3 million higher than in the previous financial year.
Cash flow from financing activities amounted to EUR -7,8 million. Both current and non-current
financial liabilities decreased compared to the 2022/23 financial year. Additionally, a dividend of
EUR 3,7 million was distributed.
Overall, there was a net change in cash of EUR 7,8 million.

29

KLINGELNBERG GROUPManagement Report

Financial risk management
In 2018, KLINGELNBERG established a holistic risk management system to identify, evaluate andmanage 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 risks: The 2023 calendar year was characterized by significantly lower growth
momentum in the global economy and the dampening effects of geopolitical tensions and crises, which are still ongoing.
 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 risks
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 risks
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.

30

KLINGELNBERG GROUPManagement Report

Operational risks
 Supply chain: Supply bottlenecks can lead to delays in the delivery of products and services.
 Natural disasters: Potential physical risks include floods, storms, and heat waves that can leadto disruption of production.

Outlook
The weak performance of the global economy and industry, coupled with high interest rates andenergy prices, is weighing on the readiness to invest. On top of this comes the high level of uncertainty due to geopolitical risks and the upcoming US elections in November this year. According to
the latest forecast from Oxford Economics, the global economy remains weak with growth of just
2,3% in the current year. Although the economic indicators are still at a low level, they are showing a slight reversal in the trend.
Despite all prevailing macroeconomic uncertainties, we expect a slight increase in sales for the2024/25 financial year. We expect the EBIT margin to remain above 8,0%, as in the 2023/24 financial year.

31

Corporate Governance
33

Introduction

33

Group structure

34

Shareholders

35

Capital38

Board of Directors

50	The Group Executive
Management
52

Compensation, shares and loans

53

Shareholders’ participation rights

55	Changes of control anddefense measures
55

Auditors

56

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 2024. 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://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 12 subsidiaries in 10 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 2024 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”), theChief Operations Officer (hereinafter the “COO”) and the Chief Sales Officer (hereinafter the“CSO”). The EM is supervised by the BoD and its Committees.

33

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 2024 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 2023/24 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 2024:

Date

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

DirectShareholder

Position

19 December 2023

KLINGELNBERG AG

Jan Klingelnberg1

JK Invest AG

48,58%

6,57%

5,74001%

26 January 2022

KLINGELNBERG AG

Janus Henderson Group plc- The European Smaller Companies Trust- Janus Henderson
Horizon Fund- Janus Henderson
UK & Europe Funds

20 November 2021

KLINGELNBERG AG

J. Safra Sarasin Investmentfonds AG

Saraselect07 November 2019

KLINGELNBERG AGUBS Fund Management(Switzerland) AG

3,14%

29 June 2018

KLINGELNBERG AG

Arndt Klingelnberg

4,86%

1Please refer to Note 5.9 to the Statutory Financial Statements

34

KLINGELNBERG GROUP
Corporate GovernanceNotifications made in 2023/24 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 2024, the Company held no treasury shares.

3.2

Cross-shareholdings

As at 31 March 2024, the Company does not have any cross-shareholdings exceeding 5 percent of
the holdings of capital or voting rights on both sides.

4

Capital

4.1

Share capital

As at 31 March 2024, 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 2024, 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 into share register, seealso Note 4.6 below) each share entitles to one vote (Art. 11 of the Articles).
https://klingelnberg.com/fileadmin/Investors/Statuten_Articles_of_Association_Klingelnberg.pdf

4.2

Authorized and conditional capital

4.2.1 Authorized share capital
The possibility of a capital increase by way of authorized capital expired on 09 June 2020.

35

KLINGELNBERG GROUP
Corporate Governance4.2.2 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://klingelnberg.com/fileadmin/Investors/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:
31.03.2024

31.03.2023

31.03.2022

31.03.2021

Ordinary capital (in CHF)

44.200.000

44.200.000

44.200.000

44.200.000

Share capital in units

8.840.000

8.840.000

8.840.000

8.840.000

Conditional capital (in CHF)

2.228.200

2.228.200

2.228.200

2.228.200

Conditional capital in units

445.640445.640445.640445.640

There have been no changes in the capital structure since 31 March 2021. The conditional sharecapital divided into 445.640 registered shares, which was created on 09 June 2018 to improve theCompany’s financial flexibility for financing, acquisitions and other purposes, 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.

36

KLINGELNBERG GROUP
Corporate Governance

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.
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://klingelnberg.com/fileadmin/Investors/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).

37

KLINGELNBERG GROUP
Corporate Governance4.6.2 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://klingelnberg.com/fileadmin/Investors/Statuten_Articles_of_Association_Klingelnberg.pdf

4.6.4	Blackout-Periods
Employees who have or may have insider knowledge must acknowledge the regulations of theinsider trading directive of the Company and are as well affected by the Company’s trading blackout periods. The Company has implemented two fixed trading blackout periods. The first trading blackout period usually begins at the end of the financial year (31 March) and ends with the
day after publication of the annual report. The second trading blackout period starts usually on
30 September and ends with the day after publication of the half-year results. Furthermore, theCompany may also declare extraordinary trading blackout periods as required. In the 2023/24 financial year, no extraordinary trading blackout periods were declared by the Company.

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 of 19 August 2020). At the 2023 Annual General Meeting the Chief Executive Officer of the Company, Mr. Jan Klingelnberg, was elected to the Board of
Directors and performs the position of the CEO since then as Delegate of the Board of Directors.
No further 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 2023/24 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.

38

KLINGELNBERG GROUP
Corporate Governance

5.2

Other activities and vested interests

Except as disclosed in the biographies of the members of the BoD and in Note 5.5 of the Compensation Report, 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.
For a detailed summary of all additional activities of the members of the BoD please refer to Note
5.5 of the Compensation Report.

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://klingelnberg.com/fileadmin/Investors/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.

39

KLINGELNBERG GROUP
Corporate Governance

5.5

Elections and terms of officeAccording to Art. 6 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 minimum of four
members.
https://klingelnberg.com/fileadmin/Investors/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:

40

Name

Position

Committee
MembershipYear of Appointment

Dr. Jörg Wolle

Chairman

NCC (Chairman)

2018

Jan Klingelnberg

Member-2023

Dr. Hans-Martin Schneeberger

MemberNCC

2007

Prof. Dr. Michael Hilb

MemberAC

2018

Philipp Buhofer

Member

NCC

2022

Kalina Scott

MemberAC (Chairwoman)

2022

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 and is a member of the Board of
Directors of Kuehne Holding AG. He has also been a member of the Board of Directors of OLAM
Group Ltd. in Singapore since September 2019. Dr. Jörg Wolle was Chairman of DKSH Holding Ltd.
from 2017 to March 2019 and President and CEO of DKSH from June 2002 to March 2017. Previously, he was President and CEO of Siber Hegner Holding Ltd. from early 2000. Dr. Wolle obtained his
PhD in engineering in 1987 from the University of Technology in Chemnitz, Germany. He graduated from the Senior Executive Program at Stanford Business School, USA.

Jan Klingelnberg
is a BoD member and Swiss citizen born in 1971. Jan Klingelnberg has been a member of the Boardof Directors of KLINGELNBERG AG since 2023. Furthermore, he has been Chief Executive Officerof the Group since 2004 and continued to perform this position as Delegate of the Board of Directors since 2023. Mr. Klingelnberg has also been a member of the Supervisory Board of INDUS Holding AG since 2023. From 2002 to 2004, he was Director of the Cylindrical Gears business unit of
KLINGELNBERG GmbH, Germany. Between 2000 and 2002, Mr. Klingelnberg held various positions at ZF Passau GmbH in Brazil and the USA. Prior to that, he was manager for strategic planning at SMS Demag AG in Germany. Since 2008, Mr. Klingelnberg has also been a member of theManaging Board of the VDMA for machine tools and production systems, a trade association for
the industrial sector in which the Company is active. Mr. Klingelnberg holds a degree in industrial
management from Carnegie Mellon University in Pittsburgh, USA.

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 served for more than 20 years as a Swiss delegate to CECIMO, the European Machine Tool
Builders Association in Brussels. Dr. Hans-Martin Schneeberger obtained a PhD from the Krannert
Business School at Purdue University USA in 1984 and was Tenure-Track Assistant Professor at theRoss Business School at the University of Michigan from 1984 to 1985.

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KLINGELNBERG GROUP
Corporate GovernanceProf. 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 of DBP Holding Ltd. and serves on the boards of Sigvaris
Holding Ltd., the Board Foundation and the Foundation for Value Creation. From 2010 to 2018, 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 Commercefrom 2001 until 2003. He is a titular professor at the University of Fribourg, Switzerland and holds
a PhD and an MSc in Management from the University of St. Gallen. He was a visiting fellow at
Harvard University and INSEAD and completed several executive education programs.

Philipp Buhofer
is a BoD member and Swiss citizen born in 1959. Mr. Buhofer studied Business Administration at
the HWV Lucerne. After working for several years in procurement management at Metro International in Europe and Asia, he joined EPA AG in 1987, where he held various management positionsin procurement and sales. From 1997, he was a member and later Chairman as well as Delegate of
the Board of Directors of EPA AG until its transfer to COOP in 2003. Today, in addition to his activities at DAX Holding AG, he is active on the boards of several industrial companies, including as
Chairman of the Board of Directors of Cham Group AG (OTC) as well as a member of the Board of
Directors of the listed Kardex Holding AG and Schaffner Holding AG.

Kalina Scottis a BoD member and a Swiss citizen born in 1974. She is a seasoned professional with over 26 yearsof broad experience in finance, ranging from operational finance to mergers & acquisitions andcapital markets. Ms. Scott is Chief Financial Officer of Ascom Holding AG since 2024. From 2019
to 2023 she was Chief Financial Officer of Duagon AG, a Swiss-based supplier for communication,
computing and control technology. Prior to that, from 2017, she was a Chief Financial Officer of
Polyphor AG (today Spexis). Ms. Scott started her career at UBS in 1997, focusing on structured
finance and credit risk management, followed by leading roles in UBS’s investment banking in
Zürich and London, covering leveraged finance as well as mergers & acquisitions. From 2006 until
2008 Ms. Scott worked as Director of Corporate Finance at KPMG AG, Zürich, followed by a position as Managing Director for Bank am Bellevue. Ms. Scott holds a degree in Business Administration and has completed the Advanced Management Program at Harvard Business School.

5.7	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 chariman and members of the NCC by
the AGM, the BoD organizes itself.

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KLINGELNBERG GROUP
Corporate GovernanceIn 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):https://klingelnberg.com/fileadmin/Investors/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://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://klingelnberg.com/fileadmin/Investors/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
Kalina Scott 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://klingelnberg.com/en/investors/corporate-governance/regulations-of-the-company
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
and 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: r eview 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;

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KLINGELNBERG GROUP
Corporate Governance review and assess the performance of the statutory auditor; r eview 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;
 r eview 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;
 review 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;
 r eview, 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; ssess whether the risk management established by the EM addresses all relevant risks and awhether 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.

5.7.3 Nomination and Compensation Committee
As required by Swiss law the members of the NCC are elected by the AGM. As at 31 March 2024,
the members of the NCC include Dr. Jörg Wolle, Philipp Buhofer 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.

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KLINGELNBERG GROUP
Corporate GovernancePursuant 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://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: reparing and periodically reviewing the Group’s compensation policy and principles and peri podically reviewing their implementation as well as submission of related proposals and recommendations to the BoD; s ubmitting 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; s ubmitting 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;
 s ubmitting 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; 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;

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KLINGELNBERG GROUP
Corporate Governance 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.

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KLINGELNBERG GROUP
Corporate Governance5.7.4 Working methods of the Board of Directors and its committees
Within the 2023/24 financial year the BoD held four meetings. The following table shows the individual members’ attendance at BoD and Committee meetings and the average length of meetings:
Name

BoD

AC

Dr. Jörg Wolle

4

Jan Klingelnberg (from 22 August 2023)

3

Dr. Hans-Martin Schneeberger

4Roger Baillod (until 22 August 2023)

1

1

Prof. Dr. Michael Hilb

4

4Philipp Buhofer

4

Kalina Scott

4

4

Average meeting duration

02:24

01:50

NCC
3

3

3

00:40

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, the CSO and the COO. Meetings are

47

KLINGELNBERG GROUP
Corporate Governancealso attended by the Corporate Secretary. The BoD consults external experts when necessary inconnection with specific topics.
All four meetings of the BoD were attended by all members of the EM. The three meetings of the
NCC in the reporting period were held in the presence of the CEO with regards to his requests. Allfour meetings of the AC in the reporting period were attended by the CEO and the CFO, whereas
the Head of Finance attended three meetings of the Audit Committee and two meetings werealso attended by the auditors of the Company.

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://klingelnberg.com/fileadmin/Investors/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://klingelnberg.com/fileadmin/Investors/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; (xii) the non-transferable and inalienable duties and powers

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KLINGELNBERG GROUP
Corporate Governanceof 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; and (xiii) the passing ofresolutions on other matters which, under mandatory law, are assigned to the Board of Directors
for resolution or which are submitted to the Board of Directors for resolution.
In 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 1,0 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 CSO, the COO, and the Head of Controlling. They ensure continuous monitoringof the risks. Risk status reports are regularly submitted to the AC and, after discussion with andassessment by the AC to the BoD of the Company for review. For information about risks pleaserefer to the Management Report.

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KLINGELNBERG GROUP
Corporate Governance

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.
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, the CSO 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.

50

KLINGELNBERG GROUP
Corporate Governance

As at 31 March 2024, the members of the EM include:
Jan Klingelnberg
CEO and a Swiss citizen born 1971. Before he became CEO in 2004, Jan Klingelnberg was the director of the business unit cylindrical gears of KLINGELNBERG GmbH, Germany as of 2002. Between
2000 and 2002, he held various roles for ZF Passau GmbH in Brazil and the US and, before that,worked as manager corporate strategy planning at SMS Demag AG in Germany. Jan Klingelnberg
has been a member of the managing board of the VDMA (German Engineering Industry Association) since 2008 and a member of the Supervisory Board of INDUS Holding AG since 2023. Mr.
Klingelnberg was elected as a member of the Board of Directors of KLINGELNBERG AG by the Annual General Meeting in August 2023 and has since performed his function as CEO as Delegate of
the Board of Directors. Jan 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 has 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.

Philipp Kannengießer
COO and a German citizen born in 1973. Mr. Kannengießer became COO of the KLINGELNBERG
Group in 2022. Previously, between 2016 and 2022, he was COO of Rothenberger AG.
Mr. Kannengießer launched his career in 2000 at SMS Group GmbH, where he started out as amember of corporate staff working in international consultancy. Still with the SMS Group GmbH,between 2003 and 2012, he was CFO at SMS Elotherm GmbH and between 2013 and 2016, CFO at
SMS Concast AG. Philipp Kannengießer holds a degree in Business Administration from the University of Münster, Germany.

Prasad Kizhakel
CSO and an Indian citizen born in 1969. Mr. Kizhakel has been the CSO of the Group since 2021, after having been the Managing Director of KLINGELNBERG India Pvt. Ltd., since 2012. Mr. Kizhakel
has been successfully handling various functions and different task profiles for KLINGELNBERG AG
since 1998. Previously he worked in the Auto Planning division of Tata Motors in India between
1995 and 1998. Mr. Kizhakel started his career at Larsen & Toubro Ltd., in India, where he supported the Heavy Engineering Unit. Mr. Kizhakel holds a degree in Mechanical Engineering from the
National Institute of Technology – Jaipur, India and completed a Finance Course for Senior Managers at the London Business School.

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KLINGELNBERG GROUP
Corporate Governance

6.2

Other activities and functions

Except as disclosed in the biographies of the members of the EM and in Note 5.5 of the Compensation Report, 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. For a detailed summary of all additional activities of the members of the EM please refer
to Note 5.5 of the Compensation Report.

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://klingelnberg.com/fileadmin/Investors/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.

52

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://klingelnberg.com/fileadmin/Investors/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
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: (i) the cases listed inArt. 704 para. 1 CO and in Art. 18 and Art. 64 of the Swiss Federal Merger Act on Merger, Demerger, Transformation and Transfer of Assets [Bundesgesetz über Fusion, Spaltung, Umwandlung und

53

KLINGELNBERG GROUP
Corporate Governance

Vermögensübertragung (Fusionsgesetz, FusG)] of 01 July 2004, as amended; (ii) the easement or
abolition of the restriction of the transferability of the registered shares; (iii) the amendment orcancellation 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 five 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://klingelnberg.com/fileadmin/Investors/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 representing at least 0,5% of the share capital or the votes may request that an item beplaced on the agenda or that proposals for items be included in the notice convening the General
Meeting. 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 be in 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.

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KLINGELNBERG GROUP
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://klingelnberg.com/fileadmin/Investors/Statuten_Articles_of_Association_Klingelnberg.pdf
The duty to submit a public takeover offer pursuant to Art. 135 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 22 August 2023. 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 2023/24 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 2023/24 financial year, PricewaterhouseCoopers AG invoiced the Company for EUR 303.781
in global audit fees.
Additional Fees:
In the 2023/24 financial year, PricewaterhouseCoopers AG invoiced the Company for EUR 10.765
in additional services. The additional fees included consultancy fees in the areas of direct and indirect taxes, transfer prices, customs duties, and subsidies.

55

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 2023/24 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, executive compensation, and sustainability. 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 for the first half of each financial year within three months after the 30 September
balance sheet date. The published Financial Half-Year Statements and annual Consolidated Financial Statements comply with the requirements of Swiss company law, the listing rules of SIX Swiss
Exchange and the Swiss GAAP FER.
The Company’s Annual Report and Financial Half-Year Statements are distributed pursuant to therules and regulations of the SIX Swiss Exchange and are announced via press releases and investor
conferences in person or via telephone.
The Group reports in accordance with the disclosure requirements of Art. 124 FMIA and the ad hoc

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KLINGELNBERG GROUP
Corporate Governancepublication requirements of Art. 53 of the listing rules of SIX Swiss Exchange. Ad-hoc announcements may be viewed at https://klingelnberg.com/en/investors/news andhttps://klingelnberg.com/en/investors/ad-hoc-notices 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://klingelnberg.com
On the KLINGELNBERG website https://klingelnberg.com/en/investors/financial-newsletter
it is possible to subscribe to news alerts about the KLINGELNBERG Group via e-mail.

57Compensation Report
59

Introduction

59	Compensation policy/
guiding principles
60

Organization and competences

64

Compensation components

67	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 Obligationsin accordance with Art. 734a et sqq. 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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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), the Chief Sales Officer (CSO) 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 or by using conditional share capital. The maximum total amount of the granted longterm variable compensation is limited to 100% of the base remuneration. Compensation may be
paid by the Company 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:

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KLINGELNBERG GROUP
Compensation Report reparation and periodic review of the Company’s compensation policy and principles, and pperformance 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: s ubmission 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; s ubmission of proposals to the BoD regarding the mandate or employment agreements withthe members of the BoD and the EM; s ubmission 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; r eview of the draft Compensation Report prepared by the EM and submission of the Compensation Report to the BoD for approval;
 issue 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; identification 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;

61

KLINGELNBERG GROUP
Compensation Report ssessment of candidates proposed by the Chief Executive Officer for other positions in the EM aand submission of proposals to the Board regarding the appointment of such persons; c ommunication 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://klingelnberg.com/en/investors/corporate-governance/regulations-of-the-company

The current members of the NCC are Dr. Jörg Wolle, Dr. Hans-Martin Schneeberger, and Philipp
Buhofer. 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 Boards of 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 2023/24 financial year, three 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. 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.

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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 2024 to the 2025 AGM is provided in the invitation to the 2024 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, the CSO and the COO also in the form of the LTIP.
Further information regarding the planned total compensation of the EM for the subsequent
financial year is provided in the invitation to the 2024 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.

64

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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. In the future, the BoD may extend participation in the LTIP to further
key employees of the Group, excluding Non-Executive Board Members.
Each 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 theGroup. 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.

65

KLINGELNBERG GROUP
Compensation Report

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.
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 rightto 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.

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KLINGELNBERG GROUP
Compensation Report5	Compensation for financial year under review
As the Company is listed, it must comply with the obligations of the Swiss CO (Code of Obligations- Schweizerisches Obligationenrecht - “OR”), which include the publication of an annual compensation report. In this context, the compensation of the BoD and EM for the 2023/24 financial year
is disclosed herewith.

5.1

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

The AGM of 22 August 2023 voted for a maximum compensation of the BoD in the amount of
CHF 700.000 until the end of the next AGM.
Within the 2023/24 financial year the compensation of the members of the BoD 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.
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
financial year. No compensations, loans, or credits were paid to related persons.
The following table shows the compensation in the 2023/24 financial year:
Committee Membership
Nomination &Compensation

Fixed basefee

Fixed fees formemberships incommittee/roles

Employersocial security
payments 3

Chair

Chair

180.000,00

20.000,00

12.621,65

Jan Klingelnberg(from 22 August 2023)



35.000,00

not applicable

2.256,75

Dr. Hans-Martin
Schneeberger

60.000,00

10.000,00

4.241,60

Roger Baillod(until 22 August 2023)



Chair

23.833,35

7.944,45

2.446,90

Prof. Dr. Michael Hilb



60.000,00

10.000,00

5.670,00

Philipp Buhofer

60.000,00

10.000,00

5.670,00

Kalina Scott

60.000,00

16.000,00

4.435,55

478.833,35

73.944,45

37.342,45

CHF
Dr. Jörg Wolle

Board
Membership

Compensation in cash, CHF

Total

Audit


Chair 4

3 These values include value added tax and the employer contribution for social security.
4 Chair from 22 August 2023.

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Compensation Report

The following table shows the compensation in the 2022/23 financial year:
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

11.910,20



5.000,00

not applicable

not applicable

Dr. Hans-Martin
Schneeberger

60.000,00

10.000,00

3.458,65

Hans-Georg Härter
(until 23 August 2022)

25.000,00

not applicable

not applicable

Board
Membership

Nomination &Compensation

Chair

Diether Klingelnberg(until 23 August 2022)

CHF
Dr. Jörg Wolle

Audit

Roger Baillod



Chair

60.000,00

20.000,00

6.160,00

Prof. Dr. Michael Hilb



60.000,00

10.000,00

5.390,00

Philipp Buhofer(from 23 August 2022)

35.000,00

5.833,35

3.144,15

Kalina Scott(from 23 August 2022)

35.000,00

5.833,35

3.103,80

460.000,00

71.666,70

33.166,80

Total




3 These values include value added tax and the employer contribution for social security.

5.2

Compensation of the members of the Executive Management (audited)

The AGM of 23 August 2022 voted for a maximum compensation of the EM in the amount of
EUR 4.500.000 for the 2023/24 financial year.
The Company has no outstanding loan or guarantee commitments to members of the EM or related parties. No compensations, loans, or credits that were not at market conditions – were paid
to related persons.

68KLINGELNBERG GROUP
Compensation Report

The following table shows the compensation of the financial year ended 31 March 2024:
CHF 5

EM

of which Jan Klingelnberg, CEO

Base compensation

1.476.320,16

500.004,00

STIP

1.168.490,34

255.713,00

LTIP 6510.000,00

not applicable

Other compensation 7174.022,29

94.075,52

Employer social security

183.842,53

71.568,90

3.512.675,32

921.361,428

Total

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

(EUR 1/CHF 0,97675).
6 This value represents not the current LTIP value paid out to the EM but the LTI-Amount allocated for later calculation of

the LTI paid out in fact. Fair value PSU CHF 16,10, date of grant 01 April 2023 number of PSUs granted: 10.559
7 Fringe benefits of all EM members and consultancy fees for consultation of subsidiaries by CEO.

8 This amount does not include remuneration as a member of the Board of Directors disclosed under Note 5.1 above.

The following table shows the compensation of the financial year ended 31 March 2023:
CHF 5

EM

of which Jan Klingelnberg, CEO

1.392.925,30

500.004,00

STIP

657.599,53

175.910,00

LTIP 6340.000,00

not applicable

Other compensation 7345.196,33

95.869,78

Employer social security

130.079,21

64.466,15

2.865.800,37

836.249,93

Base compensation

Total

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

(EUR 1/CHF 0,99735).
6 This value represents not the current LTIP value paid out to the EM but the LTI-Amount allocated for later calculation of

the LTI paid out in fact. Fair value PSU CHF 15,80, date of grant 01 April 2022 number of PSUs granted: 10.756
7 Fringe benefits of all EM members and consultancy fees for consultation of subsidiaries by CEO.

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Compensation Report

5.3

Share ownership information [CO 734d]

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.

5.5	External Mandates (according to 734e of the Swiss code of Obligations)of members of the Board of Directors and the Executive Management(audited)
Members of the Board of Directors and the Executive Management have the following externalmandates:

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Compensation Report

Board of Directors

Company

Function

Dr. Jörg Wolle

Mandates in listed companies
Kühne + Nagel International AG, Switzerland

Chair of the Board

Mandates in non-listed companies and organizations
Olam Group Ltd. Singapore
Kühne-Stiftung, Switzerland
Temasek Holdings, Singapore
Ariesco Ltd., Switzerland

Member of the Board
Member of the Board of Trustees
Member of the European Advisory Panel
Member of the Board

Mandates in listed companies
INDUS Holding AG, Germany

Member of the Supervisory Board

Jan Klingelnberg

Mandates in non-listed companies and organizations
Verband Deutscher Maschinen- und Anlagenbau (VDMA),
Germany

Member of the Managing Board

Mandates in listed companies
Kardex Holding AG, Switzerland

Member of the Board

Mandates in non-listed companies and organizations
Cham Group AG, Switzerland
ADUR Management AG, Switzerland
Lokremise AG, Switzerland
DAX Holding AG, Switzerland
BURU Holding AG, Switzerland

President of the Board
Member of the Board
President of the Board
President of the Board
Member of the Board

Kalina Scott

Mandates in listed companies
Ascom Holding AG, Switzerland

Chief Financial Officer

Prof. Michael Hilb

Mandates in non-listed companies and organizations
DBP Holding AG, Switzerland
Sigvaris Holding AG, Switzerland
Kuhn Back & Gastro AG, Switzerland
Board Foundation, Switzerland
Foundation for Value Creation, Switzerland
Foundation for Aviation Competence, Switzerland
Institute for Systematic Management andPublic Governance, Switzerland
European Confederation of Directors’ Associations, Belgium
International Corporate Governance Network, England
Global Network of Director Institutes
Innosuisse (Swiss Innovation Agency), Switzerland

Philipp Buhofer

Member of the Board
Member of the Board
Member of the Board
Chair of the Board
Vice-Chair of the Board
Vice-Chair of the Board
Member of the Board
Member of the Board
Member Global GovernanceCommittee Member Policy
Committee Expert

Dr. Hans-Martin
Schneeberger

Mandates in non-listed companies and organizations
Schneeberger Holding AG, Switzerland

Chairman of the Board

Executive Management

Company

Function

Christoph Küster

Mandates in non-listed companies and organizations
HDI Global SE, Germany

Member of the Advisory Board

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Compensation Report

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the compensation report 2023/2024

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Compensation Report

Report of the statutory auditor
to the General Meeting of Klingelnberg AG
ZurichReport on the audit of the compensation report
OpinionWe have audited the compensation report of Klingelnberg AG (the Company) for the year ended 31 March 2024. The
audit was limited to the information pursuant to article 734a-734f CO in the tables marked 'audited' on pages 67 to 71 of
the compensation report.
In our opinion, the information pursuant to article 734a-734f CO in the compensation report (pages 59 to 71) complies
with Swiss law and the Company’s articles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the compensation report' section of our report. We are independent of the Company 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 accordancewith these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information includedin the annual report, but does not include the tables marked 'audited' in the compensation report, the consolidated financial statements, the financial statements and our auditor’s reports thereon.
Our opinion on the compensation report does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the compensation report, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the audited financial information in the compensation report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard.
Board of Directors' responsibilities for the compensation report
The Board of Directors is responsible for the preparation of a compensation report 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 a compensation report that is free from material misstatement, whether due tofraud or error. It is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s responsibilities for the audit of the compensation report
Our objectives are to obtain reasonable assurance about whether the information pursuant to article 734a-734f CO isfree 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 SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud orPricewaterhouseCoopers AG, Birchstrasse 160, Postfach, 8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, 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.

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error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of this compensation report.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:• Identify and assess the risks of material misstatement in the compensation report, whether due to fraud or error, de-sign and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, orthe override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made.

We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
PricewaterhouseCoopers AG

Patrick Balkanyi

Regina Spälti

Licensed audit expert
Auditor in charge

Licensed audit expert

Zürich, 19 June 2024

3 Klingelnberg AG | Report of the statutory auditor to the General Meeting74

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Compensation Report75Sustainability Report
77

Foreword

78

About this report

79

Business model

82	Sustainability approachand governance94

Environmental matters

99

Social issues

100 Employee-related issues
106 Respect for human rights
108 Technology and innovation
110

AppendicesKLINGELNBERG GROUP
Sustainability Report1

Foreword

The KLINGELNBERG Group (hereinafter also “KLINGELNBERG” or the “Group”), hereby presents
its first Sustainability Report which reflects the Group’s ongoing commitment to promoting positive economic, environmental and social impacts, while reaffirming its commitment to respecting
human rights.
In the coming years, KLINGELNBERG will continuously strive to expand its leading role in thegear industry by developing innovative solutions that are not only economically profitable, butalso environmentally friendly and socially responsible. The Group aims to have a positive impact
on the economy, the environment and society through its activities and business relationships.
KLINGELNBERG strives to minimize negative impacts and at the same time make positive contributions that go beyond their immediate business interests.
The Group focuses on selected priorities to guide them on their path to enhanced sustainability
in their business activities. These priorities underline KLINGELNBERG’s commitment to taking aleading role in its sector. The Group keeps a close eye on the global economic, social and politicaldevelopments affecting its industry and strives to actively shape solutions to these challenges andmake a positive impact.
Over the past few years, KLINGELNBERG has experienced significant events, faced successes andchallenges that have influenced its path to sustainability and helped shape its future ambitions.
KLINGELNBERG is proud of what it has achieved, but is also aware that there is always room for
improvement. This report provides an insight into KLINGELNBERG’s results and shows the areas inwhich the Group wants to further advance.
Looking ahead to next year and the subsequent three to five years, KLINGELNBERG is certainly
facing significant challenges. The Group’s goals and objectives are ambitious but achievable andinclude both the continuous improvement of its operational efficiency and the pursuit of a moresustainable and fairer world.
Finally, KLINGELNBERG would like to thank its customers, employees, partners and all other stakeholders, whose commitment and support are essential to achieving its goals. Together, we are on
the cusp of a more sustainable future characterized by innovation, responsibility and shared values.

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About this report

The KLINGELNBERG Group is an international group world leading in the development, manufacturing and sale of gear machines. KLINGELNBERG AG, headquartered in Zürich, Switzerland,
together with its 12 subsidiaries in 10 countries make up the KLINGELNBERG Group. The Group operates engineering and manufacturing facilities in Switzerland and Germany and ensures a global
presence with regional sales offices and service centers.

2.1

Scope of the report

This Sustainability Report covers all fully consolidated and controlled subsidiaries of the
KLINGELNBERG Group as listed in the Annual Report (please refer to the Consolidated Financial
Statements). The joint venture with DKSH, which is accounted at equity, is not included in thisreport. If disclosures relate only to individual parts of the organization, this is indicated in the report. The KLINGELNBERG Corporation (holding of KLINGELNBERG America, Inc.) and KLA Real Estate, LLC (real estate company of KLINGELNBERG America, Inc.) are not represented within quantitative Key Performance Indicators (hereinafter also “KPI”) disclosed in the sections “Results frompursued concepts” because, due to their holding company structure, they do not engage in any
operational activities.

2.2

Reporting period

The reporting period for this Sustainability Report is in line with the financial reporting period(from 01 April to 31 March) of KLINGELNBERG.
This is the first Sustainability Report provided by KLINGELNBERG. The Sustainability Report will be
updated and published on an annual basis from this year forward.

2.3

Restatements of information

As this is the first Sustainability Report published by KLINGELNBERG, no restatements from previous periods were made.

2.4

External assurance

No external assurance was obtained on the Sustainability Report.

2.5

Reporting framework

As KLINGELNBERG falls under the scope of Art. 964a Swiss Code of Obligations (hereinafter also“CO”), it is required to prepare a report in accordance with Art. 964b on non-financial matterseach year, with 2023/24 financial year as the first year. Please refer to the Swiss CO Index for a summary about the alignment of this Sustainability Report with the requirements of Art. 964b of the78KLINGELNBERG GROUP
Sustainability Report

Swiss CO. In addition, the report has been prepared with reference to the Global Reporting Initiative (GRI) Standards (please refer to GRI Index).
Besides the new requirements on transparency on non-financial matters, the Ordinance on Due
Diligence and Transparency in relation to minerals and metals from Conflict-Affected Areas andChild Labor (DDTrO) entered into force in January 2022. In 2023, the assessment of imported volumes of minerals and metals containing tin, tantalum, tungsten, or gold (so-called 3TG) did not
identify any relevant import above the amounts mentioned in the Swiss CO Ordinance. Hence,no additional due diligence in relation to minerals and metals from Conflict-Affected Areas is required according to the Swiss CO Art. 964j. In terms of child labor, there were no indications ofreasonable suspicion of child labor in the production/delivery of the Group’s products or services
according to KLINGELNBERG’s assessment conducted in 2023.

2.6

Reporting outlook

The new Corporate Sustainability Reporting Directive (CSRD) will apply to the KLINGELNBERG
GmbH in Germany from 2025/26 financial year which is why KLINGELNBERG plans to publish a
CSRD Group Sustainability Statement as of 2025/26 financial year. The Group will then apply theEuropean Sustainability Reporting Standards (ESRS). As a consequence of the CSRD, the EU Taxonomy duties and reporting requirements will also be applicable for KLINGELNBERG.

2.7

Forward-looking statements

Certain statements and illustrations contained in the Sustainability Report 2023/24 are forwardlooking (including objectives, targets, plans, and trends). These statements can be identified using
the words “aim”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “project”, “outlook”, “forecast”, and other expressions that indicate future events and trends. Forward-looking statements
are based on the current beliefs and expectations of KLINGELNBERG regarding future events andare subject to significant known and unknown risks and uncertainties. These statements are notguarantees of future performance or developments. Further, actual results or other developments
may differ materially from the expectations expressed in the forward-looking statements. Any
forward-looking statement speaks only as of the date of such statement. KLINGELNBERG does notundertake any obligation to publicly update any forward-looking statement, whether because of
new information, future events or otherwise.

3

Business model

KLINGELNBERG is one of the world’s leading companies in developing and manufacturing machines for Bevel Gear, Cylindrical Gear, and Precision Measuring Centers for axially symmetricalcomponents and gearing. The Group also manufactures spiral bevel gears to customer specifications, with ultimate precision using in-house technology.

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KLINGELNBERG operates engineering and manufacturing facilities in Switzerland and Germany
and ensures a global presence with regional sales offices and service centers.
KLINGELNBERG’s gear cutting machines and measuring centers are used in a wide range of industries, including automotive, commercial vehicle, aerospace, wind power, mining and power generation, robotics, and shipbuilding.
KLINGELNBERG’s range of products, solutions, and services is aimed at the high-end and premium
segments of these industries, particularly in the automotive industry, which tends to be less affected by economic conditions and trends, as technical precision and quality are among the main
determining factors. In recent years, the Group has been able to expand the transformation of its
business model towards electric mobility and has achieved a great deal of success.
To remain at the forefront of gear technology, KLINGELNBERG fosters an environment that supports, promotes, encourages and effectively manages continuous innovation through targeted
research and development (hereinafter also “R&D”) efforts. The Group’s output was and is therefore influenced by its investments in research and development.
KLINGELNBERG has structured its research and development organization so that each of the segments – Bevel Gears, Cylindrical Gears, and Measuring Centers – has its own dedicated R&D team.
By conducting research and development within each of these segments, a strategic and focused
approach, considering the characteristic differences of each business segment’s products andfields of application, can be ensured. R&D initiatives are guided and inspired by the latest technological developments and challenging customer requirements. The strategy for each segment isdefined by a three-year R&D roadmap, which is critically reviewed twice a year. These roadmaps
cover a mixture of technology, machine hardware, tools, retrofits/overhauls, and software topics.

3.1

Raw materials, parts and components

KLINGELNBERG’s material procurement includes raw materials, parts and components that arepurchased for the production and assembly of machining centers, measuring centers and otherproducts. From one year to the next, the mix of raw materials may vary due to several factors,
including changes in inventory levels and product mix during a given year, which is highly dependent on the expectations of potential customer orders and the nature of customer orders.
The procurement strategy for raw materials, parts and components depends on market prices
and the type and complexity of the part or component in question. As a rule, internally sourced
products are those that fall within the scope of KLINGELNBERG’s processing expertise. The Group
therefore regularly sources certain mechanical drawing-based parts, drive technology, electricalcomponents and other sub-assemblies from third-party suppliers. In addition, the Group purchas-80

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Sustainability Report

es certain raw materials for manufacturing processes, including cast iron, cast aluminum, cast mineral and oxyfuel-cut steel.
While KLINGELNBERG’s main production and assembly facilities are located in Germany, a global
presence of international subsidiaries with regional sales offices and service centers in Germany,
Switzerland, France, Italy, Spain, Japan, India, China, Brazil, the USA and Mexico is maintained.
The flow of parts in the KLINGELNBERG Group can be visualized as follows:
Flow Parts

Suppliers
Production

Gear Technology

Precision Measuring
Centers

Drive Technology

R&D, Service
Application
Machine-Software

R&D, Service
Application
Machine-Software

Application
Sales
Production

Assembly
Shipping

Sales
Production
Supply Chain Management

Subsidiaries

Agents / Dealers

Digital Unit
Marketing
Finance / Controlling / HR / Risk management / Compliance

Customers

The Group’s primary outputs are high-precision machining centers that are specifically designed
to meet the demanding production requirements of its customers, as well as the comprehensive,
worldwide service for the same. These machines enable the Group’s customers to achieve their
manufacturing goals with maximum efficiency and precision, which is crucial in modern manufacturing environments. KLINGELNBERG’s range of services complements its product line and includes customer service, maintenance and support to ensure a long service life and maximum performance of the machines.
KLINGELNBERG’s production processes result in by-products and waste, including emissions, which
the Group seeks to reduce through continuous process improvements and the use of clean technologies. It is KLINGELNBERG’s aim to reduce the environmental impact of its activities and, where
possible, feed waste materials back into the production cycle or recycle them as an alternative.
The impact of KLINGELNBERG’s business activities on internal stakeholders is complex. The
Group’s investments in an inclusive and appreciative corporate culture result in increased employee satisfaction. This, along with many other aspects, contributes to the good reputation of
KLINGELNBERG. Financial benefits manifest themselves in increased income and cash flows, which81

KLINGELNBERG GROUP
Sustainability Reportin turn enable reinvestment in research and development and in the optimization of the Group’s
production processes.
Outside the Company, the business activities and outputs contribute to increasing customer satisfaction and brand loyalty. This is the result of KLINGELNBERG’s unwavering commitment to quality
and customer service. In addition, the Group strives to promote positive social and environmental
effects, for example by strengthening local vocational training and promoting sustainable practices in its supply chain. The Group’s activities thus contribute to the creation of values that go far
beyond the financial aspect and are intended to improve the quality of life for society as a whole.

4

Sustainability approach and governance

4.1

Sustainability approach

Being aware of its responsibility towards the environment, society, and stakeholders,
KLINGELNBERG started developing a sustainability approach to establish a foundation for sustainability management. The Group’s sustainability journey is guided by a comprehensive materiality
assessment which systematically identifies and prioritizes the key environmental, social, and governance (ESG) issues pertinent to the Group’s business and stakeholders. This analysis considers
the impact of KLINGELNBERG’s operations on society and the environment, as well as the potential risks and opportunities for the Group itself (please refer to “Double Materiality Assessment”).
With this insight, KLINGELNBERG is empowered to advance its sustainability approach in the future, considering both the Group’s major impacts and the urgent challenges and opportunities
KLINGELNBERG faces.
KLINGELNBERG’s sustainability approach will be built upon the following action areas that haveemerged from the materiality assessment, thus significantly shaping the direction of the Group’s
sustainability management:
Environmental matters
As a manufacturing company, KLINGELNBERG is acutely aware of its special obligation to sustainable and environmentally friendly business development. KLINGELNBERG is therefore committed
to responsible environmental stewardship and promotes resource-efficient, climate-friendly, andenvironmentally conscious behavior across all its locations.

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Sustainability ReportSocial issues
The safety and compliance of KLINGELNBERG’s products are integral to the quality standards upheld by the Group. Ensuring product safety is crucial for maintaining customer trust and strengthening the long-term reputation of KLINGELNBERG.
Employee-related issues
KLINGELNBERG’s employees are its most important asset. KLINGELNBERG is committed to an inclusive corporate culture that promotes diversity, ensures equal opportunities and supports thewell-being of its employees in the workplace.
Respect for human rights
As a globally operating group of companies with far-reaching international ties, KLINGELNBERG
and all its affiliated companies believe to have a special responsibility to work towards improving
the human rights situation and are therefore committed to environmentally and socially responsible corporate governance.
Technology and innovation
KLINGELNBERG strives towards continuous innovation to advance sustainable technologies andsolutions. Investing in research and development, the Company endeavors to develop environmentally friendly products and services that help overcome ecological challenges and shape asustainable future.
Looking ahead, KLINGELNBERG is committed to further integrating sustainability into the Company’s corporate culture and operations. In 2023, the Group progressed its sustainability approachand fine-tuned its ambitions. Further details about its goals and the actions the Group has undertaken to support, are available in the corresponding focus area sections.

4.2

Sustainability governance

Combining the success of a business with a sense of responsibility for people, society, and the environment requires good corporate governance. KLINGELNBERG’s policies and practices focus on
business integrity, accountability, fairness, and transparency. In line with the Code of Conduct,
KLINGELNBERG strives for loyal, trusting and non-discriminatory relationships with its customers,
suppliers, employees, and the local communities in which it operates.
To achieve these goals and ensure the sustainability of the Group’s actions, KLINGELNBERG alsouses process-oriented management systems in various areas of the business.

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This guarantees a high level of compliance and continuous improvement and ensures that the
products and services the Group offers and the way it works comply with applicable laws andregulations.
The Board of Directors (BoD) of KLINGELNBERG is responsible for the non-delegable overall management of the Company and the control and supervision of the Executive Committee (EC). In doing so, the Audit Committee of the BoD leads the strategic direction of the Company in the areaof sustainability and assumes overall responsibility for the management of sustainability activities.
To ensure a targeted sustainability management approach, the Audit Committee has developed aschedule with a clear allocation of responsibilities.
Responsibility for sustainability management and the corresponding reporting duties was assigned to the Chief Financial Officer (CFO). The Audit Committee of the BoD is responsible foroverseeing ESG activities. The Audit Committee meets regularly to review the ongoing alignmentand control of the processes for managing the Company’s sustainability performance.
In addition, an expert group for sustainability management was established in early 2023 andtasked with preparing the new Code of Conduct, which today contains all ESG-based commitments, thereby laying the foundation of KLINGELNBERG’s future sustainability approach. In addition, this group of experts has the task of continuously determining the legal requirements inthe area of sustainability reporting and implementing them accordingly. Overall responsibility forsustainability reporting lies with the CFO. The Sustainability Report is approved by the BoD, signed
off by the Chairman of the Board of Directors and approved by the body responsible for approving
the annual financial statements.
The expert group for sustainability management and reporting will continue to oversee and develop sustainability management and reporting for KLINGELNBERG in the future.

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2023

2024

2025

Board ofDirectors

Issuing the mandate todevelop a new Code of
Conduct to cover ESG
topics and prepare a
Sustainability Report

Approval of the new
Code of Conduct;
specification of therequirements for the
Sustainability Report

Monitoring theimplementation of thereporting; approval of
the first Sustainability
ReportMonitoring of thelegal requirements;
monitoring theimplementation ofsustainability
reporting

Development of a new
Code of Conduct withextensivecommitments in
ESG-related areas;measures to prepare
the Sustainability
ReportFinalization andsubmission of the new
Code of Conduct for
approval;
approval of theconcept for the first
Sustainability Report

Monitoring thecompletion of the first
Sustainability Report;
submission to theBoard of Directors forapproval

Adaptation of theconcept to theregulatoryenvironment;
approval of theconcept for annual
reporting

Preparation of aconcept for the first
Sustainability Report;collection of
information and data

Further developmentof sustainability
approach andmanagement of
impacts, risks, andopportunities (IROs);
preparation of thereport; reporting anddata
collection also by
subsidiaries

Management of IROs;
annual preparation ofa Sustainability Reportin accordance withregulatory
requirements

Sustainability
Management2022

Executive
Committee

KLINGELNBERG’s four-year plan including respective responsibilities for ESG management looks
as follows:

Draft of a new Code of
Conduct anddevelopment of thereporting framework

4.2.1 Policy commitments
It is KLINGELNBERG’s mission to ensure responsible business conduct not only for the Group’s own
business operations but throughout the whole supply chain. As such the Group has instated a
Code of Conduct for the business and for suppliers. Furthermore, the guideline for conflict-free
raw materials was implemented. The Group’s statement on conflict minerals as part of its purchasing policy, as well as the KLINGELNBERG’s Code of Conduct and the Supplier Code of Conduct, andthe declaration on respect for human rights are available online. Furthermore, the compliancepolicy was modified in 2023.
In the area of environment and safety, KLINGELNBERG has implemented the Quality Assurance,
Environmental Protection and Work Safety Policy which is available online on the Company’s website to inform customers, suppliers, interested public, officials, associations as well as staff members about KLINGELNBERG’s goals in that regard.

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Concerns regarding potential misconducts can be reported anonymously through the whistleblowing system which is available on the Company’s website.

4.2.2 Stakeholder engagement
It is important to KLINGELNBERG to inform its stakeholders and communicate with them as their
feedback helps the Group meet their expectations and supports the journey to improving sustainable development practices. In terms of sustainability, the below listed stakeholder groups
were identified considering stakeholders that are affected by KLINGELNBERG’s business activities as well as users of its sustainability information. Communication and engagement take placethrough different channels, and KLINGELNBERG aims to further expand these channels with sustainability-specific information and engagement.
Stakeholder group

Engagement and communication (selection)

Local communities

Annual reporting, press releases, regular exchange, sponsoring of local events,
exchange with local politicians, exchange with other local companies

Employees

Press releases, KLINTERNA (internal employee magazine), staff meetings, noticeboards, MS TEAMS channels, newsletters, workshops, company healthmanagement, performance reviews

Workforce in the value chain

Annual reporting, press releases, partnership-based development programs

Suppliers

Annual reporting, press releases, supplier audits

Civil society

Annual reporting, press releases

Investors and shareholders

Annual reporting, press releases, general meeting, investor relations,roadshows, conferences

Banks and other business
partners

Annual reporting, press releases, general meeting, regular exchange

Competitors

Annual reporting, press releases

Customers

Annual reporting, press releases, GEARS inline (trade magazine for customers),
audits, questionnaires, training centers, trade fairs, gear seminars

4.2.3 Membership associations
Shaping a sustainable future requires the cooperation and commitment of a range of stakeholders – in business, civil society, and the public sector.
KLINGELNBERG does not regard association memberships as a mere formality, but much more as
strategic alliances through which the Group can intensify its commitment to environmental protection, social responsibility, and good corporate governance.

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These partnerships reflect KLINGELNBERG’s efforts to go beyond industry standards and create
genuine added value for its stakeholders and for society as a whole.
It is the Group’s conviction that by participating in networks and acting in concert with others, it
can step up the transformation towards a more sustainable future. Through KLINGELNBERG’s association memberships, KLINGELNBERG asserts its commitment to driving this transformation forward and working with other organizations to bring about change for the better. KLINGELNBERG’s
most important partnerships are listed below:
� VDMA (Association of German Mechanical and Plant Engineering)� VDI (Association of German Engineers)
� VDW (German Machine Tool Builders’ Association)
� IHK (Chamber of Industry and Commerce)� Blue Competence (The sustainability initiative of the mechanical and plant engineering industry)� Innovation Hub Bergisches RheinLand e.V.
� Arbeitgeberverband (Employers’ association)
� Südwestmetall (employers’ association in the metal and electrical engineering industry)� FVA (Drive Technology Research Association)
� WZL Getriebekreis (Laboratory for Machine Tools and Production Engineering (WZL) of RWTH
Aachen University)

4.3

Double materiality assessment

In 2023, for the first time, a structured and comprehensive approach has been taken to identify
and assess material impacts, risks and opportunities in the field of environmental, social and governance. The results of the assessment will serve as a basis to further develop KLINGELNBERG’s
sustainability approach.
The double materiality assessment carried out is a due diligence and risks assessment process inwhich the Group’s potential and actual impacts, risks and opportunities related to sustainability
matters were identified and assessed for their materiality. This process involved assessing sustainability related impacts that KLINGELNBERG has or could have on people and the environment in
the short-, medium- and long- term (impact materiality) along its value chain. Additionally, theshort-, medium- and long- term financial risks and opportunities for KLINGELNBERG associatedwith sustainability matters were assessed (financial materiality).

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The following process, in line with the requirements of the adopted version of the European Sustainability Reporting Standards (ESRS) from July 2023, was followed:
Double Materiality Process

Identification of potential
material ESG topics

Identification andAssessment of impacts

Validation and approval

Create a long-list of potential ESG topics,
considering the company context

Identification of the actual andpotential impacts, risks andopportunities along the value chain
related to sustainability matters

Development of materiality matrix
and validation with internal
experts and stakeholders

Assessment and determinationof materiality of impacts,
risks and opportunities

Approval of results- Activities and business relationships- Understanding of the stakeholders- Topics in reporting
frameworks, mainly ESRS- O ther contextual information(e.g. Peer benchmarking)- Impact materiality assessment

Identification and preparation of respective disclosures- Financial materiality assessment

In line with the requirements set forth in the ESRS, actual and potential, negative and positive impacts as well as risks and opportunities related to the identified long-list of sustainability matterswere determined and assessed according to their severity, respectively financial magnitude andlikelihood.
Based on the resulting materiality of the sustainability matters, topics were mapped in a materiality matrix and internally validated. Internal experts from different specialist areas were consulted
throughout the process in order to consider and incorporate the expectations and views of theinternal and external stakeholders with whom they are in dialog.
The process has been carried out in preparation for future reporting under the Corporate Sustainability Reporting Directive (CSRD), which KLINGELNBERG aims for from 2025/26 financial
year onwards. For the current reporting period in accordance with Art. 964b of the Swiss CO,
KLINGELNBERG considers the topics that are material in terms of the Group’s impact on the environment and people and in terms of their impact on KLINGELNBERG’s business to be material forreporting.

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The following materiality matrix, in which the matters are presented according to their financial
relevance and impact, was created based on the assessment carried out.
Double Materiality Matrix

Important
Not Material

Impact Materiality

Significant

Critical- Climate change
mitigation- Water- Working conditions (VC)

- Resource inflow- Other work-related rights (VC)
- Working conditions (OW)

- Pollution of water- Waste- Impacts on the extent andcondition of ecosystems- Resource outflow- Personal safety of end-users- Equal treatment and opportunities for all (OW)- Technology and innovation- Marine resources- Protection of whistleblowers- Substances of very high concern- Pollution of soil
- Pollution of air- Microplastics- Other work-related rights (OW)- Information-related impacts for
consumers and/or end-users- Corruption and bribery- Substances of concern- Equal treatment and opportunities for all (VC)- Management of relationships with suppliers- Corporate culture

Not Material- Energy- Climate change
adaption

ImportantSignificant

CriticalFinancial Materiality
Swiss CO relevant topics

ESRS relevant topics

VC: Value chain

OW: Own workforce

For the purpose of the 2023/24 financial year sustainability reporting under the Swiss CO, thetopics were clustered and transferred into the coherent material topics for KLINGELNBERG as outlined in the table below. The following material topics form the basis for this Sustainability Report.

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Sustainability matter according toArt. 964b Swiss CO

Environmental matters (CO2 inparticular)

Topic assessed as material

Clustering of the material topics

Climate change mitigation

Climate change

EnergyEnergyResource inflow
Resource outflow

Social matters

Employee-related issues

Personal safety of end-users
Working conditions (ownworkforce)

Resource management
Product safety
Labor relations and working
conditions
Health and safety

Equal treatment and opportunities
for all

People development

Respect for human rights

Other work-related rights (value
chain)

Responsible supply chain

Other

Technology and innovation

Technology and innovation

As this was the first ever materiality analysis carried out, KLINGELNBERG is still in the process offully integrating all material topics into its sustainability approach, meaning that the developmentof concepts and Key Performance Indicators as stipulated by Art. 964b of the Swiss CO is an ongoing process. The Group is confident that the presented Sustainability Report already provides
a comprehensive overview on the topics that are integral to its sustainability approach and how
KLINGELNBERG manages them.
More information on the relevant disclosures according to the Art. 946b Swiss CO can be found in
the Swiss CO Index.
With regards to the sustainability matter “combating corruption” as referred to in the Swiss CO,
no topics were identified that meet the thresholds of being material from an impact and financial perspective. As such, it was decided to not specifically address these matters in the Sustainability Report, although they are still deemed important as part of the Group’s understanding of
responsible governance. Therefore, measures are implemented to prevent negative impacts andpotential financial risks for KLINGELNBERG related to the topic, including the Code of Conduct
for the business and the Supplier Code of Conduct which explicitly highlight the prohibition ofcorruption. Concerns regarding potential misconducts can be reported anonymously through thewhistleblowing system.
In accordance with Art. 964b Swiss CO, the main risks in connection with non-financial mattersshould be disclosed, including the management of these risks. The following risks were identified
by KLINGELNBERG:

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Sustainability
matter as per
Swiss COMaterial
topic

EnergyClimatechangeEnvironmental
matters

Resource
management

Impacts on the
non-financial topic

Financial risks andopportunities

Management of risks
and impacts• Operational risks:Availability of energy
and volatility ofrelated costs• Risk management:
Developing energy
efficiency programs andexpanding the use ofrenewable energies• Opportunities
management:
Developing productsthat enable customers
to use renewableenergies, e.g. windpower

• Emissions ofgreenhouse gases
along the value chain• Contribution to GHG
reducing customer
industries (e.g.
e-mobility)• Physical risks:
Production and supply
chain disruptions• Regulatory andtransitional risks:
Stricter environmental
regulations• Operational
opportunities: Newmarket potential• Risk management:
Analyze CO2 footprint
and set reduction
targets; invest in
CO2-neutral
technologies• Opportunities
management: Opening
up new markets byoffering low-carbon
products and services,e.g. in the field of
e-mobility• Impact on theavailability of limited
natural resources
through higher use of
non-renewable
resources for
production• Positive impact
regarding the
deployment of
resources throughlongevity of products• Operational risks:
Production downtime/delivery delay due tomaterial shortages andincreased costs ofmaterials• Regulatory andtransitional risks:
Stricter environmental
regulations• Legal risks: Fines due
to failing to meetstricter regulations• Operational
opportunities:
Opportunities throughcircular design• Risk management:
Strengthening thecircular economy byrecycling and reusingmaterials• Opportunities
management:
Development oflong-lasting products
and services to promotesustainability andincrease customer
loyalty• Impact on availabilityof limited natural
resources throughconsumption of
non-renewable energy

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Sustainability
matter as per
Swiss COSocial issues

Material
topic

Product
safetyLabor
relations andworking
conditions

Employeerelated issues

Peopledevelopment

Health andsafety92

Impacts on the
non-financial topic

Financial risks andopportunities

Management of risks
and impacts• Potential impacts on
the health and safetyof people on customerside• Legal andoperational risks:
Litigations due toinjury and healthissues caused by
KLINGELNBERG’s
products because theycannot ensure all users
being fully compliant
with productinstructions• Reputational
opportunities:
Increased positive
reputation, customer
satisfaction and trust
due to high productsafety• Risk management:
Strict quality controls
and safety tests for
products; intensify
customer
communication andtraining on correct
product use• Opportunities
management:
Strengthen trust
through high security
standards and use themas a selling point• Operational risks:
Loss of employees andproductivity throughinadequate working
conditions• Risk management:
Ensure fairness in theorganization of workand continuously
improve working
conditions• Opportunities
management:
Strengthen employer
brand throughexemplary work culture• Operational risks:
Difficulty in securingknow-how due tocontinuous
development of own
workforce• Risk management:
Provide further training
and development
opportunities for
employees in order toretain know-how within
the company• Opportunities
management: Promotea culture of innovationby continuously
encouraging employee
development• Legal, regulatory andreputational risks:
Sanctions andpotential labor or
product boycotts due
to insufficient healthand safety measures• Risk management:
Ensure safety standards
in the workplace andoffer preventive healthprograms• Opportunities
management: Increase
productivity andemployee satisfaction
through a healthy
working environment• Improvement of
employees' living andeconomic conditions
due to offering asecure employment,social protection, andbenefits• Further developmentof employees knowhow and increasing
their satisfaction• Impact on the healthand safety of own
employees

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Sustainability
matter as per
Swiss CORespect forhuman rights

Other
companyspecific topics

Material
topic

Responsible
supply chain

Technology
andinnovation

Impacts on the
non-financial topic

Financial risks andopportunities

Management of risks
and impacts• Potential impacts on
workers in the value
chain• Legal sanctions,
reputational damage,and potential labor or
product boycotts due
to insufficient (healthand safety) measures
for workers in the
supply chain (childlabor, forced laboretc.)• Legal andreputational risks if
the Company does notadequately address
ethical concerns – Lossof license to operate /loss of suppliers etc.

• Risk management:
Introduction of strict
policies and regular
audits of suppliers toensure observance ofhuman rights• Opportunities
management:
Differentiation in themarket bydemonstrating an
ethically responsible
supply chain• Operational
opportunities: Moreefficient, resourcesaving production
could lead to increased
demand and resulting
revenue• Risk management:
Investment in researchand development tosecure market
leadership in efficientand precise
technologies• Opportunities
management: Market
development by
providing innovative
solutions that help
customers achieve theirsustainability goals• Impact throughenabling energy- andresource-efficient
products andproduction processes

In line with the Swiss ordinance for reporting on climate issues, climate related risks and opportunities are planned to be assessed and disclosed following the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations for the 2024/25 financial year reporting period.

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5

Environmental matters

KLINGELNBERG is committed to an environmentally responsible approach promoting the efficientuse of resources and fostering climate friendly and eco-conscious behavior at all its locations. As amanufacturing company, the Group is aware of its responsibility for sustainable and environmentally sound business development.
As climate change progresses and environmental pollution increases, environmental protection
is becoming ever more important for companies and organizations worldwide. KLINGELNBERG
is aware of its responsibility to not only be economically successful, but also make a positive contribution to preserving the environment and the quality of life for future generations. An environmental management system helps the Group to achieve this. The KLINGELNBERG GmbH, thelargest company within the KLINGELNBERG Group, has been operating a successfully certified environmental management system according to ISO 14001 for several years.
In this section of the Sustainability Report, an overview is provided of the following material topics: energy, climate change, and resource management.

5.1

EnergyAs part of KLINGELNBERG’s efforts towards sustainability and environmental protection, particular importance is attached to the responsible use of energy. Ensuring a reliable energy supply is
crucial for KLINGELNBERG to ensure the continuity of its operational processes. To achieve this,the Group invests in the development and use of environmentally friendly technologies.

5.1.1 Ambitions
� KLINGELNBERG aims to have implemented a certified energy management system according
to ISO 50001 at its largest production sites by the end of the 2024/25 financial year.
� KLINGELNBERG aims to increase the consumption of renewable electricity year on year.

5.1.2 Concept and measures
The Group is constantly working on improving its energy efficiency. This includes optimizing production processes, implementing energy-efficient technologies and training employees in the
conscious use of energy.
KLINGELNBERG is convinced that the design of its workplaces and production processes have a
direct influence on its energy consumption. Efficient work processes and environmentally friendly
technologies can help to reduce energy consumption. Through continuous monitoring and improvement process, not least in production and assembly, the Group tries to continuously identify
and exploit energy-saving potentials.

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In the past, several energy audits have been completed at the main production site in Germany
leading to the implementation of specific measures. In the future, a certified energy management
system according to ISO 50001 at KLINGELNBERG’s main production sites should help identify further measures for improvement. The energy consumption of the locations is recorded, regularly
reviewed and presented below.

5.1.3 Results from pursued concepts
KLINGELNBERG collects Key Performance Indicators to measure the effectiveness of the measurestaken and the progress in terms of the set ambitions regarding energy.
The following KPIs represent KLINGELNBERG’s performance during the last two financial years.
With a similar order situation in the past two financial years, energy consumption has slightly decreased. Continuous efforts are being made to save energy.
Energy consumption within the organization

Unit

2023/242022/23%

Electricity

MWh10.21010.584(3,5%)

Heat

MWh

11.04712.687(12,9%)

Fuel

MWh

2.307

2.417

(4,6%)

Total energy consumption

MWh23.56425.688(8,3%)

MWh
Energy /EUR
million
TOP

77,1

88,5

(13,0%)

Energy intensity (based on total
operating performance (TOP))

5.2

Climate change

Climate change is one of the greatest challenges of our time and requires companies in all sectors
to rethink and act in the interests of sustainability. As a leading mechanical engineering company,
it is KLINGELNBERG’s responsibility to contribute to the fight against climate change and at thesame time develop innovative solutions for a sustainable future.
Climate change is no longer an abstract threat, but a reality that is already evident today in theform of extreme weather events, rising temperatures, and changing environmental conditions.
KLINGELNBERG is also confronted with transitory risks related to climate change.
The KLINGELNBERG Group is committed to actively participating in efforts to mitigate climatechange. By producing machines for the wind power and e-mobility sectors, among others,
KLINGELNBERG helps to accelerate the transition to renewable energies and low-emission mo-

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Sustainability Reportbility. The Group’s products make it possible to reduce the carbon footprint and make a positive
contribution to climate protection.

5.2.1 Ambitions
In line with Switzerland’s goal to achieve Net Zero greenhouse gas (hereinafter also “GHG”) emissions by 2050, KLINGELNBERG also aims to reduce its corporate carbon footprint and contributeto the achievement of Switzerland’s climate target. Having conducted its first-ever assessment of
CO2 emissions at the group level, the next step is to undertake a detailed analysis of GHG emissions
and calculate a specific reduction pathway, ultimately defining a targeted GHG emissions reduction goal.

5.2.2 Concept and measures
In the 2023/24 financial year, the Group has decided to start analyzing and monitoring the effects
of its business activities on the climate more closely. The result of this analysis is summarized in a
so-called corporate carbon footprint. In general, this term refers to all greenhouse gas emissions
caused directly or indirectly by a company’s activities. For this purpose, various scopes that define
the sources of these emissions can be taken into account.
For KLINGELNBERG’s first carbon footprint, the focus was set on Scope 1 and Scope 2 emissions
as a starting point. Scope 1 includes direct emissions caused by the combustion of fuels or other processes within KLINGELNBERG’s own facilities. Scope 2, on the other hand, refers to indirect emissions caused by the generation of externally sourced electricity, steam, or heat used by
KLINGELNBERG.
By focusing on these two scopes, initial insights into KLINGELNBERG’s direct and indirect impact
on the climate could be gained. This analysis forms the basis for future measures to reduce theGroup’s carbon footprint and foster sustainable business practices.
In the coming years, KLINGELNBERG will gradually expand the corporate carbon footprint to also
include Scope 3 emissions. This will ensure that the upstream and downstream value creation process – and therefore the Group’s overall footprint – will be considered.

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5.2.3 Results from pursued concepts
The following figures represent the development of KLINGELNBERG’s corporate carbon footprintfor Scope 1 and 2 over the last two financial years. The slight decrease compared to the previous
financial year can be attributed to a somewhat lower energy consumption and minor improvements in the electricity mix (CO2-reduced power generation).
GHG Emissions

Unit

2023/242022/23%

Scope 1 Emissionst CO2e

3.015

3.308

(8,9%)

Scope 2 Emissionst CO2e

4.856

5.048

(3,8%)

Total Scope 1 and 2 Emissionst CO2e

7.871

8.356

(5,8%)GHG Emissions intensity (per total operating
performance (TOP)t CO2e /EUR
million
TOP

25,7

28,8

(10,6%)

5.3

Resource management

The minimal use of resources for the manufacture of machining and measuring centers at
KLINGELNBERG is prioritized from both an environmental and economic point of view. The mostcommonly used resources are ferrous materials such as cast iron and steel. The challenge here isthat these materials also guarantee the stability of the machines and measuring devices, which isimportant for the quality and cost-effectiveness of the processes. Therefore, a balance must always be struck following the principle: as much as necessary but as little as possible.

5.3.1 Ambitions
� KLINGELNBERG aims to ensure the availability of spare parts for at least ten years by using standard components.
� KLINGELNBERG’s objective is to ensure machines have a long life cycle while also enhancing theavailability of retrofit options.

5.3.2 Concept and measures
Modern calculation methods are important tools for reducing the use of resources. The finite element method (FEM) for calculating static strength and rigidity is a tried and tested method that
KLINGELNBERG has been using for a long time. By using more refined methods, even better results can be achieved. In recent years, KLINGELNBERG has also systematically built-up expertisein the field of measuring and simulating the dynamic behavior of machining and measuring centers. It is important to continuously refine the simulation models using real measurements on machines. This allows KLINGELNBERG to use only the required level of rigidity and therefore only therequired amount of resources for constructing its machines.  

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Another important aspect is the most efficient use of resources. To this end, the service life of
KLINGELNBERG’s machining and measuring centers is key. In addition to the wear of mechanicalcomponents such as guides, bearings and ball screws, the electronics of modern machines often
determine their service life. If a central component of the control system is no longer offered on
the market and no replacement component is available, the machine can no longer be operated.
To avoid this, KLINGELNBERG pursues a multi-stage approach.
Firstly, KLINGELNBERG’s aim is to ensure the availability of spare parts for at least 10 years by using
standard components. This already achieves an excellent utilization of the resources used. If themachines are operated 24/7 in large-scale production, the end of their service life is reached after
around 10 years. However, many machines are not operated in such intense production environments and can have a much longer service life. This is why KLINGELNBERG has developed a large
number of retrofits in recent years that follow precisely this approach. Depending on the task,mechanical as well as electrical and electronic components are modernized to extend the service
life of a machine to 15 to 20 years. In many cases, the service life of KLINGELNBERG’s measuring
centers even exceeds 20 years.
In terms of an efficient use of resources, enabling a long service life for a machine is definitely thebest way to go. In most cases, it is not possible to cut the resources used by 50% without unduly
restricting functionality. However, with appropriate retrofit packages, the service life can easily be
doubled or more than doubled. What’s more: The vast majority of machines can be recycled. Cast
iron and steel materials, for example, can be remelted and processed into new cast iron and steel
materials without any loss of quality.

5.3.3 Results from pursued concepts
With retrofits and upgrades provided to its customers, KLINGELNBERG can prolong the service lifeof the machines in use. Since the introduction of retrofits and upgrades to the market, the numberof marketed solutions was constantly high. The high number in the 2022/23 financial year is due
to a single order of more than 100 retrofits.
Retrofits
Number of retrofits and upgrades marketed

98

Unit

2023/242022/23%

Number200

288(30,6%)KLINGELNBERG GROUP
Sustainability Report6Social issues

The KLINGELNBERG Group develops and sells machines and software solutions for the production
and quality control of gears. Machining systems can pose a risk to people. On the one hand, it isimportant to consider the risk of injury. On the other hand, consideration must also be given to ergonomics during operation to prevent long-term physical or psychological damage. During development, KLINGELNBERG attaches great importance to ensuring that its machines are ergonomicand easy to operate. At the same time, however, any risk to human health must be excluded as far
as possible given the current state of the art.
The topic product safety has been identified as the material around social matters; therefore thissection of the Sustainability Report focuses on the reporting of this material topic.

6.1

Product safety

The safety and conformity of KLINGELNBERG’s products is part of the Group’s quality standards.
KLINGELNBERG’s products meet all legal safety requirements as well as any other applicable requirements such as the EU Regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) and the EU Directive on the Restriction of the Use of Certain Hazardous
Substances in Electrical and Electronic Equipment (RoHS).

6.1.1 Ambitions
� KLINGELNBERG is committed to consistently delivering safe products to its customers and end
users.
� KLINGELNBERG aims to ensure that all products fully comply with applicable legal regulations
and standards.
� KLINGELNBERG’s objective is to have zero security incidents. To achieve this, each machine undergoes a comprehensive safety inspection, covering typically 100 checkpoints, depending on
the complexity and size of the machine.

6.1.2 Concept and measures
Conformity with applicable legal regulations and standards is constantly monitored as part of
KLINGELNBERG’s product development process. A key component of this is the knowledge of theapplicable rules by every single R&D employee. Various tools are used to support employees in designing safe machines. The processes in place are part of our quality management system certified
according to ISO 9001 and VDA 6, part 4.
Each machine prototype is audited by the machine safety department before delivery and compliance with the applicable regulations is checked. At the same time, a detailed risk analysis is conducted. Risks are assessed and weighted according to the expected severity of the hazard and the99

KLINGELNBERG GROUP
Sustainability Reportprobability of occurrence. The results of this assessment are then used to define and track measures.
Another important component of product safety is the observation of incidents in the field. For
this purpose, KLINGELNBERG has a process in place in which both accidents and observed hazards
are reported back by the departments involved, primarily by the service department. This feedback is examined in detail internally, evaluated and incorporated into the risk assessment process.
Measures are then defined again using the updated risk assessment to eliminate hazards or reduce them to an acceptable level.
As part of KLINGELNBERG’s safety strategy, training its customers how to safely use its machines
is essential. The Group trains the production and maintenance teams of its customers in how tosafely use the machines and which regular maintenance steps need to be taken in order to ensure
a maximum of machine and operator safety.

6.1.3 Results from pursued concepts
KLINGELNBERG’s products not only comply with all legal safety requirements but also with anyother relevant requirements. Additionally, the machine safety department conducts audits on eachmachine prototype before delivery to ensure compliance with applicable regulations. In 2023, theGroup began improving the product safety data reporting processes. KLINGELNBERG started implementing a new reporting system and launching uniform definitions, which all KLINGELNBERG
entities will be required to use in the future. Therefore, the Group is not yet externally reporting
product safety figures for the current reporting period or prior financial years. KLINGELNBERG
aims to report these figures in future reporting.

7

Employee-related issues

KLINGELNBERG aims to offer its employees an attractive workplace environment where safety,
health, and employee satisfaction are prioritized. Furthermore, KLINGELNBERG strives to support
its employees to develop their skills and competencies, creating added value for both them andthe Company.
This section of the report covers the material topics of labor relations and working conditions, personnel development, and health & safety.

7.1

Labor relations and working conditions

As part of KLINGELNBERG’s ongoing commitment to responsible corporate governance, the Group
places special emphasis on labor relations and working conditions within the Company. Ensuring

100KLINGELNBERG GROUP
Sustainability Reporta fair and conducive workplace environment is integral to the Group’s sustainability efforts andreflects KLINGELNBERG’s dedication to the well-being of its employees.

7.1.1 Ambitions
� KLINGELNBERG aims to promote satisfactory working conditions in all its sites by offering a
range of social protection programs, benefits, flexible working hour models, and measures topromote work-life balance to all its employees.
� KLINGELNBERG aims to sustain a balanced gender diversity in its workforce.

7.1.2 Concept and measures
Compliance with all relevant labor law regulations, including regulations on working hours andcollective agreements, is mandatory among the entire KLINGELNBERG Group. The Group’s remuneration is aligned with market standards and binding collective agreements. The connection
between employment and labor relations intertwines closely with both national and local legal
frameworks. As such, topics like collective bargaining agreements are mainly dealt with by local
human resources departments.
Collective agreements provide a foundation for fair working conditions in terms of pay and working hours. They are possible in all KLINGELNBERG companies in accordance with national legislation, and most employees in the KLINGELNBERG Group benefit from the advantages of a collective agreement. Organizing employees is possible at all locations. For example, at KLINGELNBERG
in Germany, many employees are organized in the “IG Metall- und Elektroindustrie” (Metal andElectrical Industry Union). With this aspect, KLINGELNBERG aims to fulfill its responsibility andcontribute to further strengthening employee satisfaction and commitment.
KLINGELNBERG’s commitment to a healthy work-life balance not only contributes to the satisfaction and productivity of its employees but also to the long-term sustainability of the Company.
Therefore, the Group adheres to the legal requirements regarding maximum working hours, andour employees are given appropriate vacation to recover. KLINGELNBERG makes sure that all employees take the vacation to which they are entitled, as the overall quality of work and job satisfaction are linked to a good balance between work and employees’ lives outside of work. These
measures are supported by the implementation of a benefits program, which offers for example
bike leasing, employee discounts, and pension schemes.
Within human resources KLINGELNBERG intends to focus its attention on the interests and needs of
its employees. The Group therefore encourages dialog with its employees, because KLINGELNBERG
is convinced that good working relationships are fostered through dialog between managers andemployees. Furthermore, KLINGELNBERG is confident that an open dialog and the opportunity tocontribute ideas also encourages the development of innovative approaches and products.

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KLINGELNBERG’s opportunities for exchange include, for example a monthly direct exchange withthe management over lunch as well as regular events such as the Company Night (open houseday), summer and Christmas events.
In KLINGELNBERG’s understanding, a good management culture creates loyalty, reduces fluctuation, promotes dialog, and leads to constant innovation. KLINGELNBERG has therefore focusedon establishing a sustainable management culture as part of an interdisciplinary management
workshop. This was defined in joint guidelines on leadership and cooperation and implemented
through subsequent management workshops and the reintroduction of employee performance
reviews. The joint guidelines establish essential pillars as part of the KLINGELNBERG corporate culture, which are cooperation, leadership, communication and development.
KLINGELNBERG strives to provide an inclusive and supportive workplace that is free from harassment or discrimination and gives employees the opportunity to thrive and experience personal
well-being. There were no reported incidents of discrimination, including harassment in the last
two financial years.

7.1.3 Results from pursued concepts
The following KPIs represent the Group’s employee structure during the last two financial years. In
terms of percentage of women in top management, top management is defined as direct reports
within the KLINGELNBERG GmbH and general managers of the subsidiaries.

Germany
Employee structure

Switzerland

Rest of the world

2023/242022/232023/242022/232023/242022/232023/242022/23

Number of permanent
employees (FTE)

960

920

46

50

206

192

1.212

1.162

Number of temporary
employees (FTE)

100

67

0

0

1

0

101

67

Total number of
employees (FTE)

1.060

987

46

50

207

192

1.313

1.229

- thereof female

128

121

17

14

39

35

184

169

- thereof male

932

866

29

36

169

157

1.130

1.059

9,7%

10,0%

Percentage of women in
top management

102

Total

Rate of employee
turnover

5,1%

6,6%

15,9%

8,0%

2,2%

4,1%

7,7%

6,2%

Average age of
employees

43

44

47

47

46

46

45

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7.2

People development

KLINGELNBERG’s investment in the development of its employees is a central component of theGroup’s sustainable business strategy, aiming to nurture talent and enable long-term career success.

7.2.1 Ambitions
� KLINGELNBERG’s goal is to successfully implement a talent program by the end of the 2024/25 financial year, to identify, to develop, and retain highly skilled employees. Through this program,the Group aims to strengthen talent management within the Company, foster the individual
growth of its employees, and build a talented and dedicated workforce pool to achieve its objectives in the long term.
� KLINGELNBERG aims to increase the average number of training hours per employee within
the next few years.
� KLINGELNBERG is pursuing the goal of significantly increasing the number of employee appraisals in the coming years.

7.2.2 Concept and measures
KLINGELNBERG invests in the continuous training of its employees, communicates appreciation in
the context of their cooperation and management culture, and offers development opportunities
at various career levels.
The development of skills is managed centrally by the human resource department in collaboration with management staff.
As mentioned in the previous section, regular employee performance reviews were reintroduced
based on the defined joint guidelines in leadership and cooperation. The Group aims to ensurethat every employee has a meeting with their manager at least once a year. The content of thesemeetings is mutual feedback, feedback on the application of the cooperation guidelines, as wellas identification of training needs and development opportunities.
KLINGELNBERG’s planned talent program aims to identify, nurture, and retain highly skilled employees, ensuring a sustainable future for the Group. The group-wide program will be implemented starting in the second half of the 2024/25 financial year. As KLINGELNBERG is convinced that
this contributes to employee satisfaction and helps to retain qualified specialists in the long term
and attract new specialists.
By investing in the training of young people as part of KLINGELNBERG’s apprenticeship program,the Group assumes social responsibility for the professional socialization and development of103

KLINGELNBERG GROUP
Sustainability Reportyoung people. In this way, KLINGELNBERG also tries to counteract the shortage of skilled workers
and ensure the availability of trained personnel.

7.2.3 Results from pursued concepts
The following KPIs represent the Group’s performance in terms of the commitment towards investment in the development of our people.

Germany
People development

Switzerland

Rest of the world

Total

2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23

Number of apprentices

59

46

0

0

0

0

59

46

- thereof female

9

9

0

0

0

0

9

9

- thereof male

50

37

0

0

0

0

50

37

Average number of training
hours per employee

8

7

1

1

14

9

8

5

20,4%

18,4%

30,2%

30,1%

50,0%

27,0%

33,5%

25,2%

Proportion of employees with
employee feedback discussion

7.3

Health and safety

KLINGELNBERG takes its responsibility for the health and safety of its employees very seriously.
Compliance with the legal requirements for occupational safety and plant safety is a prerequisite
for the business activities and an integral part of KLINGELNBERG’s corporate objectives.

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7.3.1 Ambitions
� KLINGELNBERG strives for an ongoing promotion of a secure work environment, actively mitigating safety risks in pursuit of its vision of eliminating work-related injuries altogether.
� KLINGELNBERG’s aim is to broaden the scope of its occupational health and safety management system in the coming years.

7.3.2 Concept and measures
KLINGELNBERG operates an occupational health and safety management system designed to ensure a safe and healthy working environment. Comprehensive measures are taken to identify risks,
implement preventive measures and offer appropriate training. Although the Group’s occupational health and safety management is not externally certified, KLINGELNBERG is determined tocontinuously improve its standards and ensure the health and safety of its employees.
The occupational health and safety management system operated by KLINGELNBERG is based on
legal requirements, recognized standards or guidelines and covers the majority of employees.
Principles regarding best possible work safety and health protection are part of the Quality Assurance, Environmental Protection and Work Safety Policy available on the Company’s website.
Furthermore, a health care concept was internally established. As part of KLINGELNBERG’s occupational health and safety management system, all employees receive yearly training in occupational safety and accident prevention according to their assigned activities/workplace. Each site is
responsible for training its employees on health and safety topics to support site-specific needs.
Through the Supplier Code of Conduct, KLINGELNBERG also anticipates that its suppliers will ensure a safe and healthy workplace for their own employees.
KLINGELNBERG always strives to promote healthy behavior and create a healthy working environment for its employees, in which everyone can perform at their best while maintaining their physical and mental health, from the office to the shop floor. Ergonomic workstations are an integral
part when it comes to the health of its employees in the workplace. KLINGELNBERG’s investment
in ergonomic workspaces not only demonstrates its commitment to the well-being of its employees but also contributes to the sustainability of the Group by reducing injuries and increasing efficiency.

7.3.3 Results from pursued concepts
The number, respectively the rate of recordable work-related accidents within the Group serve asa relevant KPI in relation to health and safety within the workforce. The recordable work-related
accidents remained on a similarly low level for the last two financial years.

105KLINGELNBERG GROUP
Sustainability Report

Germany
Health and safety
Number of recordable
work-related accidents
Number of hours
workedRate of recordable
work-related accidents(accidents / 1.000.000
working hours)

8

Switzerland

Rest of the world

Total

2023/242022/232023/242022/232023/242022/232023/242022/23

21

22

0

0

1

1

22

23

1.514.980 1.510.023

77.20078.234424.526

0

0

2

14

15

398.685 2.016.706 1.986.942

3

11

12

Respect for human rights

Regarding human rights, KLINGELNBERG identified responsible supply chain as material topic.
Hence, this section focuses on the reporting of this material topic.
KLINGELNBERG’s Code of Conduct provides the ethical and value-based foundation for its responsible conduct regarding human rights. With this code, KLINGELNBERG has committed itself to follow ethical values and principles. The Group firmly believes that integrity and honesty as well as
respect for human dignity, as set out in the principles of the United Nations’ Universal Declarationof Human Rights, the European Convention for the Protection of Human Rights and Fundamental
Freedoms, the OECD Guidelines for Multinational Enterprises and the core labor standards of theInternational Labour Organization (ILO) as well as the United Nations Guiding Principles on Business and Human Rights, are the foundation of every business activity.

8.1

Responsible supply chain

KLINGELNBERG promotes responsible and sustainable procurement and considers compliancewith the principles of ecological, social and ethical behavior within its supply chain an obligation.
This commitment is an integral part of the Group’s Code of Conduct and is recognized by all employees of the KLINGELNBERG Group.

8.1.1 Ambitions
� KLINGELNBERG’s goal is to ensure zero confirmed cases of human rights violations within bothits supply chain and its own operations.
� KLINGELNBERG’s goal is to achieve a continuous increase in the rate of confirmed Supplier
Code of Conduct agreements.
� KLINGELNBERG strives to promptly investigate all whistleblowing incidents as they arise andtake necessary actions accordingly.

106

KLINGELNBERG GROUP
Sustainability Report

8.1.2 Concept and measures
KLINGELNBERG GmbH, the largest company in the KLINGELNBERG Group with over 1.000 employees, has been subject to the provisions of the Act on Corporate Due Diligence Obligationsin Supply Chains (Supply Chain Due Diligence Act / Lieferkettensorgfaltspflichtengesetz, LkSG)
since 01 January 2024. In order to meet the resulting requirements, KLINGELNBERG has underpinned its focus on responsible and sustainable procurement with a separate Policy Statement
on Respect for Human Rights and Environmental Protection in accordance with the Supply Chain
Due Diligence Act. In addition, KLINGELNBERG has committed its direct suppliers to the Code of
Conduct for Suppliers, thereby ensuring responsible and sustainable procurement. This document
also includes the commitment of KLINGELNBERG’s suppliers not to source raw materials from areas of conflict and high risk that contribute to human rights violations, corruption, the financing
of armed groups or similar negative effects.
With these commitments by way of the Policy Statement on the Supply Chain and the commitmentof suppliers by way of the Code of Conduct for Suppliers, KLINGELNBERG’s aim is to continuously
reduce risks relating to human rights and the environment and to further increase transparency inthe supply chain. With the “Policy for Risk Analysis in accordance with the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, „LkSG“) of the KLINGELNBERG Group”, the Company has established an effective risk management system with regard to the environmental andhuman rights due diligence obligations under the Supply Chain Due Diligence Act and has alreadybegun to analyze the risks in its supply chain. This policy requires KLINGELNBERG to carry out anappropriate risk analysis in order to determine the risks relating to human rights and the environment in its own business area, in the business area of KLINGELNBERG’s direct suppliers and – in theevent of substantiated knowledge of possible violations or constellations for the purpose of evading the law – also in the business area of indirect suppliers. Each internal process, external supplieror service provider is subjected to a structured risk analysis and rated by risk potential. Based on
this, measures are taken to ensure compliance with human rights within the supply chain.
Going forward, the results of the risk analysis will be communicated annually to the management
and supervisory bodies. KLINGELNBERG’s Human Rights Officer is responsible for monitoring theimplementation of all measures in accordance with the Supply Chain Due Diligence Act in collaboration with the head of the purchasing department. To draw attention to grievances at suppliers,
human rights violations or non-compliance with environmental regulations, KLINGELNBERG has
set up a global whistleblower system that also allows third parties to report possible violations,even anonymously.

8.1.3 Results from pursued concepts
As KLINGELNBERG has only been subject to the requirements of the Supply Chain Due Diligence
Act since 01 January 2024, its risk management system regarding environmental and human rights

107

KLINGELNBERG GROUP
Sustainability Reportdue diligence obligations under said law was only established in 2024. Therefore, the Group’s first
Sustainability Report cannot yet be based on the results of its risk analysis. KLINGELNBERG’s firstreport in accordance with the Supply Chain Due Diligence Act must be submitted to the competent authority no later than four months after the end of the 2024/25 financial year.
This is also the first year in which certain indicators are presented as part of the Group’s sustainability reporting. For these reasons, this year’s indicators serve as the basis for KLINGELNBERG’slong-term objective to establish and maintain a responsible supply chain.
The following table shows the regional distribution of suppliers with a turnover of more than
EUR 50.000 annual revenue. The majority of suppliers are based in Germany and Europe. Since
01 January 2024, 48,4% of suppliers with more than EUR 50.000 annual revenue have confirmed
the Supplier Code of Conduct.
2023/24
Unit

Germany

EuropeRest of
World

Total

Number of suppliers by region >EUR 50.000

Number

271

26

25

322

Relative number of total
suppliers by region > EUR 50.000

%

84,2%

8,1%

7,7%

100,0%

Supplier basis2022/23
Supplier basis
Number of suppliers by region >50.000 €Unit

Germany

EuropeRest of
World

Total

Number

261

28

22

311

%

83,9%

9,0%

7,1%

100,0%

Relative number of total
suppliers by region > 50.000 €9Technology and innovation

KLINGELNBERG offers its customers machining centers for the production and coordinate measuring centers for the quality inspection of gears. This offer is complemented by a wide range of software solutions for product design and efficiency improvements in production. KLINGELNBERG
has become an established technology leader in this highly demanding technical environment.
Research and development is a key strategic component in maintaining and expanding technological leadership. KLINGELNBERG also promotes technology transfer to share knowledge andexperience with other organizations and work on solutions jointly.

108

KLINGELNBERG GROUP
Sustainability Report

9.1

Development and patents

Within the development process relevant technologies and the potential to develop marketableproducts from said technologies, are identified. These can be completely new products and new
options for products as well as further developments of existing products and options.  
KLINGELNBERG’s patent strategy is a key component of its development activities. The aim is toprotect new innovative product ideas as far as possible from being copied by competitors.   

9.1.1 Ambitions
� KLINGELNBERG’s goal is to safeguard new innovative product ideas from being replicated bycompetitors to the greatest extent possible.
� KLINGELNBERG strives to continuously expand the Group-wide product portfolio with cuttingedge energy-saving and resource-conserving solutions, driven by the successful integration ofsustainability principles into every stage of the product development process.

9.1.2 Concept and measures
To protect new innovative product ideas, two main approaches are used. On the one hand, developments are consistently checked for ideas worthy of protection and the corresponding property
rights are then obtained for these. On the other hand, there is a low barrier to entry with a simple
idea generation process where every employee can have possible further developments or innovations checked internally for their worthiness of protection. Both approaches regularly result in
intellectual property rights to secure KLINGELNBERG’s technological leadership.
The number of intellectual property rights applied for is an important indicator of the Group’s
innovative strength. Behind every patent is an innovative idea. Its implementation contributes to
KLINGELNBERG’s technological leadership. Within the KLINGELNBERG Group the number of patent families is monitored.
Each patent family consists of at least one, but often several, submissions of the same patent to
the patent offices of different countries. To this end, each intellectual property right applied foris assessed to determine in which countries it would make a significant contribution to safeguarding the KLINGELNBERG Group’s innovations. This assessment also includes a cost-benefit analysis.

9.1.3 Results from pursued concepts
The submission of patents is an important measure to protect knowledge and products developed
within the Company.

109

KLINGELNBERG GROUP
Sustainability Report

The number of patent families submitted doubled compared to the previous financial year, which
KLINGELNBERG deems a reasonable achievement as part of its R&D efforts.
Patents
New patent families submitted to patent offices

10

Unit

2023/242022/23

Number16

8

Appendices10.1 Swiss CO index
The table below shows the disclosures reported in accordance with the requirements of Art. 964bof the Swiss Code of Obligations (Swiss CO).
General requirements
Topic

Location in Sustainability Report

Materiality assessment

4.3 Double materiality assessment

Business model

3 Business model

Concepts/policies (incl. due diligence
applied), measures

Outlined in the respective topic chapters
4 Sustainability approach and governance

Risks related to non-financial
matters

4.3 Double materiality assessment: Table outlining KLINGELNBERG's mainmaterial impacts, risks and opportunities

References to national, European orinternational regulations

2 About this report
10.2 GRI index

Coverage of subsidiaries

2 About this report
10.2 GRI index

Environmental matters

110

Topic

Location in
Sustainability Report

KPIs

Energy5.1 Energy

GRI 302-1: Energy consumption
within the organization
GRI 302-3: Energy intensity ratio

Climate change

5.2 Climate change

GRI 305-1: Direct (Scope 1) GHG
emissions
GRI 305-2: Energy indirect (Scope2) GHG emissions
GRI 305-4: GHG emissions intensity

Resource management

5.3 Resource management

Number of retrofits and upgrades
marketedKLINGELNBERG GROUP
Sustainability ReportSocial issues
Topic

Location in
Sustainability Report

KPIs

Product safety

6.1 Product safetyn/aLocation in
Sustainability Report

KPIs

7.1 Labor relations and working
conditions

GRI 2-7: Number of total
employees, by gender and byregionGRI 401-1: New employee hires andemployee turnover
GRI 405-1: Diversity of governancebodies and employees

People development

7.2 People development

GRI 404-1: Average hours of
training per year per employee
GRI 404-3: Percentage of
employees receiving regularperformance and careerdevelopment reviews
Number of apprentices

Health and safety

7.3 Health and safety

GRI 403-9: Work-related injuries

Location in
Sustainability Report

KPIs

8.1 Responsible supply chain

GRI 204-1: Proportion of spendingon local suppliers
Percentage of Code of Conduct for
suppliers signed

Topic

Location in
Sustainability Report

KPIs

Technology and innovation

9 Technology and innovation

New patent families submitted tothe patent offices

Employee-related issues
Topic

Labor relations and working
conditions

Respect for human rights
Topic

Responsible supply chain

Entity specific topic

111

KLINGELNBERG GROUP
Sustainability Report

10.2 GRI index
GRI Standard/ Other source

Disclosure

Location in reportStatement of use
KLINGELNBERG has reported the information cited in the GRI content index with reference to the GRI Standards
GRI used: GRI 1: Foundation 2021
General disclosures

GRI 2: General disclosures112

2-1 Organizational details

Sustainability Report:
2 About this report

2-2 Entities included in theorganization’s sustainability
reporting

Sustainability Report:
2.1 Scope of the report

2-3 Reporting period, frequency
and contact point

Sustainability Report:
2.2 Reporting period

2-4 Restatements of information

Sustainability Report:
2.3 Restatements of information

2-5 External assurance

Sustainability Report:
2.4 External assurance

2-6 Activities, value chain andother business relationships

Sustainability Report:
3 Business model

2-7 Employees

Sustainability Report:
7.1 Labor relations and working
conditions

2-8 Workers who are not
employees

Sustainability Report:
7.1 Labor relations and working
conditions

2-9 Governance structure andcomposition

Corporate Governance Report:
5.7 Structure of the internalorganization - Allocation of tasks
within the Board of Directors

2-10 Nomination and selection of
the highest governance body

Corporate Governance Report:
5.4 Board of Directors’competences and evaluation
5.7.3 Nomination andCompensation Committee

2-11 Chair of the highest
governance body

Corporate Governance Report:
5.7 Structure of the internalorganization - Allocation of tasks
within the Board of Directors

2-12 Role of the highest
governance body in overseeing themanagement of impacts

Sustainability Report:
4.2 Sustainability governanceKLINGELNBERG GROUP
Sustainability ReportGRI Standard/ Other source

Disclosure

Location in reportStatement of use
KLINGELNBERG has reported the information cited in the GRI content index with reference to the GRI Standards
GRI used: GRI 1: Foundation 2021

GRI 2: General disclosures

2-13 Delegation of responsibility
for managing impacts

Sustainability Report:
4.2 Sustainability governance

2-14 Role of the highest
governance body in sustainability
reporting

Sustainability Report:
4.2 Sustainability governance

2-15 Conflicts of interest

Corporate Governance Report:
6.2 Other activities and functions

2-16 Communication of criticalconcerns

Sustainability Report:
4.2.1 Policy commitments

2-17 Collective knowledge of thehighest governance body

Omission of disclosure on the
grounds that the information isunavailable.

2-18 Evaluation of the performanceof the highest governance bodyCompensation Report:
3 Organization and competences

2-19 Remuneration policies

Compensation Report:
4.1 General description ofcompensation components/
architecture

2-20 Process to determine
remuneration

Compensation Report:
4.1 General description ofcompensation components/
architecture

2-21 Annual total compensation
ratio

Omission of disclosure on the
grounds that the information isunavailable.

2-22 Statement on sustainable
development strategy

Sustainability Report:
1 Foreword

113

KLINGELNBERG GROUP
Sustainability ReportGRI Standard/ Other source

Disclosure

Location in reportStatement of use
KLINGELNBERG has reported the information cited in the GRI content index with reference to the GRI Standards
GRI used: GRI 1: Foundation 2021

GRI 2: General disclosures

GRI Standard/ Other source

2-23 Policy commitments

Sustainability Report:
4.2.1 Policy commitments

2-24 Embedding policy
commitments

Sustainability Report:
4.2.1 Policy commitments

2-25 Processes to remediate
negative impacts

Sustainability Report:
4.2.1 Policy commitments

2-26 Mechanisms for seeking
advice and raising concerns

Sustainability Report:
4.2.1 Policy commitments

2-27 Compliance with laws andregulations

Corporate Governance Report:
5.7.7 Risk and compliance2-28 Membership associations

Sustainability Report:
4.2.3 Membership associations

2-29 Approach to stakeholder
engagement

Sustainability Report:
4.2.3 Membership associations

2-30 Collective bargaining
agreements

Sustainability Report:
5.1.2 Concept and measures

Disclosure

Location in report

3-1 Process to determine material
topicsSustainability Report:
4.3 Double materiality assessment

3-2 List of material topics

Sustainability Report:
4.3 Double materiality assessment

3-3 Management of material topics

Sustainability Report:
5.1 Energy

302-1 Energy consumption within
the organization

Sustainability Report:
5.1.3 Results from the pursued
concepts

302-2 Energy intensity ratio

Sustainability Report:
5.1.3 Results from the pursued
concepts

Material topics

GRI 3: Material topics

EnergyGRI 3: Material topics

GRI 302-1: Energy 2016

114

KLINGELNBERG GROUP
Sustainability ReportGRI Standard/ Other source

Disclosure

Location in report

3-3 Management of material topics

Sustainability Report:
5.2 Climate change

305-1 Direct (Scope 1) GHG
emissionsSustainability Report:
5.2.3 Results from the pursued
concepts

305-2 Energy indirect (Scope 2)
GHG emissions

Sustainability Report:
5.2.3 Results from the pursued
concepts

305-4 GHG emissions intensity

Sustainability Report:
5.2.3 Results from the pursued
concepts

GRI 3: Material topics

3-3 Management of material topics

Sustainability Report:
5.3 Resource management

Self-developed KPIs

Number of retrofits and upgrades
marketed

Sustainability Report:
5.3.3 Results from the pursued
concepts

3-3 Management of material topics

Sustainability Report:
6.1 Product safety

GRI 3: Material topics

3-3 Management of material topics

Sustainability Report:
7.1 Labor relations and working
conditions

GRI 401: Employment 2016

401-1 New employee hires andemployee turnover

Sustainability Report:
7.1.3 Results from the pursued
concepts

GRI 405: Diversity and Equal
Opportunity 2016405-1 Diversity of governancebodies and employees

Sustainability Report:
7.1.3 Results from the pursued
concepts

3-3 Management of material topics

Sustainability Report:
7.2 People development

Climate change
GRI 3: Material topics

GRI 305: Emissions 2016

Resource management

Product safety
GRI 3: Material topics

Labor relations and working conditions

People development
GRI 3: Material topics

115

KLINGELNBERG GROUP
Sustainability ReportGRI Standard/ Other source

Disclosure

Location in report404-1 Average hours of training
per year per employee

Sustainability Report:
7.2.3 Results from the pursued
concepts

404-3 Percentage of employees
receiving regular performance andcareer development reviews

Sustainability Report:
7.2.3 Results from the pursued
concepts

GRI 3: Material topics

3-3 Management of material topics

Sustainability Report:
7.3 Health and safety

GRI 403: Occupational health andsafety 2018403-9 Work-related injuries

Sustainability Report:
7.3.3 Results from the pursued
concepts

GRI 3: Material topics

3-3 Management of material topics

Sustainability Report:
8.1 Responsible supply chain

GRI 204: Procurement practices 2016

204-1 Proportion of spending on
local suppliers

Sustainability Report:
8.1.3 Results from the pursued
concepts

Self-developed KPIs

Percentage of Code of Conduct for
Suppliers signed

Sustainability Report:
8.1.3 Results from the pursued
concepts

GRI 3: Material topics

3-3 Management of material topics

Sustainability Report:
9 Technology and innovation

Self-developed KPIs

New patent families submitted tothe patent offices

Sustainability Report:
9.1.3 Results from the pursued
concepts

GRI 404: Training and education
2016

Health and safety

Responsible supply chain

Technology and innovation

116

KLINGELNBERG GROUP
Sustainability Report117Consolidated Financial
Statements
119

Consolidated balance sheet

121 Consolidated income statement
122 Consolidated cash flow statement
123	Consolidated statementof changes in equity
124	Notes to the consolidated
financial statements
124		

General information

124		

Accounting principles

133		Changes in the scopeof consolidation
133	Substantial informationon the consolidatedbalance sheet items

144		Substantial information on
the consolidated income
statement items
147		

Additional information

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated balance sheet
Note

31.03.2024

31.03.2023

Cash and cash equivalents

4.11

16.506

8.718

Receivables from goods and services

4.1

79.90471.147

Derivative financial instruments

4.2

15

134

Other short-term receivables

4.3

6.619

8.363

Inventories

4.4

114.415

117.588

2.937

2.465

220.396

208.415

EUR 000
AssetsCurrent assets

Prepayments and accrued income
Total current assets

Non-current assets
Tangible fixed assets

4.5

58.79358.733Loans and other receivables

4.6

0

134

Investments in joint ventures

4.7

2.325

1.333

Deferred tax assets

4.8

12.85813.749Other financial assets

4.9

1.148

1.348

Intangible assets

4.10

604

732

Total non-current assets

75.72876.029Total assets

296.124

284.444

The enclosed notes are part of the consolidated financial statements.

119

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated balance sheet
Note

31.03.2024

31.03.2023

Short-term financial liabilities

4.11

30.39231.964

Payables from goods and services

4.12

18.91027.573

Derivative financial instruments

4.2

15

78

Other short-term liabilities

4.13

55.36446.925

Accrued liabilities and deferred income

4.14

17.64315.164

Short-term provisions

4.15

5.859

4.720

128.183

126.424

EUR 000
Liabilities
Current liabilities

Total current liabilities

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

4.11

13.39618.516

Deferred tax liabilities

4.15

1.548

1.329

Long-term provisions

4.15

12.245

11.56627.18931.411

155.372

157.835

Total non-current (long-term) liabilities
Total liabilities

EquityShare capital

4.16

28.63928.639

Capital reserves

4.16

41.28343.134Retained earnings

70.83054.836

Total equity

140.752

126.609

Total liabilities and equity

296.124

284.444

The enclosed notes are part of the consolidated financial statements.

120

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated income statementNote2023/242022/23

Net sales from goods and services

5.1/6.2

303.497308.961

Other operating income

5.2/6.2

13.023

9.547

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

5.3

2.292

-18.844

Material expense

6.2-130.748-125.790

Personnel expense

5.4-114.350-100.114

5.5/6.2-44.499-46.260

Depreciation on tangible fixed assets

4.5-4.865-3.956

Amortization on intangible assets

4.10

-275

-367

Share of result from joint ventures

4.7

992

613

25.06723.790-2.512-2.33022.55521.460-5.350-705

17.20520.755

EUR 000

Other operating expense

Operating result
Financial result

5.6/6.2

Profit before income taxes
Income taxes

5.7

Net profit

Earnings per share
EUR
Basic earnings per share

5.8

1,95

2,35

Diluted earnings per share

5.8

1,95

2,35

2.2

30.20728.113

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

121

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated cash flow statement
2023/242022/23

17.20520.755

4.5/4.10

5.140

4.323

4.15

2.037

-3.712

Net profit / loss from the disposal of tangible
fixed assets and intangible assets

4.5/4.10-71

138

Change in receivables from goods and services

4.1-8.747-29.304

Change in inventories

4.4

2.837

16.156

4.3/4.8

2.306

18.693

Share of profits from the application of the equity method

4.7

-992

-613

Change in payables from goods and services

4.12-8.775-5.857

4.13/4.14

10.887-5.033

1.659

157

23.48615.703

EUR 000

Note

Net profit
Depreciation/amortization of
tangible fixed assets and intangible assets
Change in provisions (including deferred taxes)

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

Change in other short-term liabilities andaccrued liabilities and deferred income
Other non-cash items
Cash flow from operating activities

Inflows from investment in financial assets(including loans, participations, securities, etc.)

4.7

334

584

Outflows for investment in financial assets(including loans, participations, securities, etc.)

4.9

0

-410

Outflows for investment in tangible fixed assets

4.5-8.135-18.048

Inflows from the sale of tangible fixed assets

4.5

637

561

Outflows for investment in intangible assets

4.10

-151

-270

Inflows from the sale of intangible assets

4.10

0

3

-7.315-17.580

Cash flow from investing activities

The enclosed notes are part of the consolidated financial statements.

122

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated cash flow statement
Note

EUR 000
Dividend payments

2023/242022/23-3.7010Change in short-term financial liabilities

4.11-1.567-8.134

Change in long-term financial liabilities

4.11-2.51210.722-7.7802.588

Currency translation effects

-603

287

Net change in cash

7.788

998

Opening balance of cash and cash equivalents at 01.04.

8.718

7.720

Closing balance of cash and cash equivalents at 31.03.

16.5068.718

Net change in cash

7.788

998

Cash flow from financing activities

Consolidated statement of changes in equity
Retained earnings
Otherretainedearnings

Cumulative
foreigncurrency
differences

Total
retainedearnings

Total
equitySharecapitalCapitalreserves

Goodwill
offset withequity28.63943.134-20.51740.95412.51332.950104.723

Currency translation differences

0

0

0

0

918

918

918

Net result from cash flow hedges

0

0

0

213

0

213

213

Net profit

0

0

0

20.755020.75520.755

Balance as at 31.03./01.04.2023

28.63943.134-20.51761.92213.43154.836

126.609

Currency translation differences

0

0

0

0

688

688

688

Net result from cash flow hedges

0

0

0

-48

0

-48

-48

Dividends

0-1.8510-1.8510-1.851-3.701

Net profit

0

0

0

17.205017.20517.20528.63941.283-20.51777.22814.11970.830140.752

EUR 000
Balance as at 01.04.2022

Balance as at 31.03.2024

Note

The enclosed notes are part of the consolidated financial statements.

123

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 public limited company under Swiss law, incorporated and registered in
Zürich, Switzerland. The shares of KLINGELNBERG AG are listed in Switzerland under the Swiss Reporting Standard of SIX Swiss Exchange.
The Consolidated Financial Statements as at and for the year ended 31 March 2024 were authorized for release by the Board of Directors on 19 June 2024 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 had been prepared in accordance with Swiss GAAP FER and gave 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
were prepared applying the principle of historical cost accounting, with the exceptions of derivative financial instruments, which were measured at fair value. The preparation of the Consolidated Financial Statements requires the management to make estimates and assumptions. If in the
future such 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 inwhich the change 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.

124

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Consolidated Financial Statements

2.3

Scope and principles of consolidation

The Consolidated Financial Statements of KLINGELNBERG Group included KLINGELNBERG AG, aswell as all entities as at 31 March of the current financial year for which the parent company held,
directly or indirectly, the majority of the voting rights or had the power to govern their operating
and financial policies in any other way. Consolidation ends when control by the parent company
ceases.
Capital consolidation was based on the purchase method. Companies acquired by the Group were
included in the Consolidated Financial Statements from the date of obtaining control. The net assets acquired were revalued at fair value at the acquisition date, using uniform Group accounting
principles. Companies sold were excluded from the scope of consolidation as at the date on which
control ceased, 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 were eliminated.
Investments in joint ventures in which KLINGELNBERG Group exercised joint control together witha joint venture partner (e.g., with 50% voting rights) were recognized using the equity method.
The financial statements of the Group companies were prepared using the same accounting and valuation methods and on the same balance sheet date as the parent company’s financial statements.
The KLINGELNBERG Group had no minority interests.

125

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

Capital31.03.2024

31.03.2023

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 (Japan) Ltd., Yokohama, Japan

JPY

50.000.000

100%

100%

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

MXN

500.000

100%

100%

KLINGELNBERG America, Inc., Saline, USA

USD

200

100%

100%

The KLINGELNBERG Corporation, Cincinnati, Ohio, USA

USD

254

100%

100%

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%

DKSH KLINGELNBERG Service Ltd., Shanghai, China *CNY

5.393.815

50%

50%

*	Joint venture consolidated at equity

2.4

Business combinations

Assets and liabilities acquired were revalued at fair value at the acquisition date. Any unrecognized intangible assets were not separated and identified and therefore allocated to goodwill.
Goodwill was calculated as the difference between the purchase price (incl. transaction costs) andthe revalued net assets. The positive or negative goodwill resulting from business combinations
was offset against equity at the date of acquisition. At the disposal of the Company, the goodwill
previously offset in equity was transferred to the income statement. The consequences of thetheoretical capitalization and amortization of goodwill are explained in Note 4.10.

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.

126

KLINGELNBERG GROUP
Consolidated Financial Statements

As a globally operating Group, KLINGELNBERG managed its activities based on a business unit
approach on one side and on the optimization of synergies on the other. The reporting system
reflected this structure, and the activities of KLINGELNBERG Group were 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 definitionof 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 affect
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 were prepared in their respective functional currencies and translated into Euros as follows: Assets and liabilities were converted at the year-end exchange rate Income and expense were converted using the average exchange rate of the reporting year The conversion differences arising through the translation of the balance sheet items had no effect on the income statement and were recognized in the equity as cumulative foreign currency
differences. When a subsidiary with a foreign currency was de-consolidated, the accumulated
conversion differences recognized in the equity were reclassified to the income statement

127

KLINGELNBERG GROUP
Consolidated Financial Statements

Foreign currency transactions in Group companies
Foreign currency effects on intragroup equity-like loans, which were a significant part of the Company’s net investments in foreign subsidiaries, were recognized in equity as cumulative foreign
currency differences until the disposal of the net investment. From this point in time, the foreign
currency differences were recognized in the income statement as a profit or loss on the sale ofinvestments.
Transactions in foreign currencies were converted at the average exchange rate of the month of
the transaction. Exchange rate differences arising from financial transactions were recorded in theincome statement. All monetary assets and liabilities in a foreign currency were converted at theexchange rate as at the balance sheet date and the resulting gains/losses were recognized in theincome statement.
The table below outlines the main exchange rates used in the preparation of the Company’s Consolidated Financial Statements as at and for the years ended 31 March 2024 and 31 March 2023.

Year-end exchange rate

Average exchange rate

31.03.2024

31.03.2023

2023/242022/23

CHF/EUR

0,97675

0,99735

0,96106

0,99433

USD/EUR

1,07845

1,08705

1,08492

1,04173

JPY/EUR

163,23960

144,93090

156,74816

140,91568

2.7

Cash and cash equivalents

Cash and cash equivalents were measured at nominal value and comprised cash on hand, deposits
in bank 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 were measured at nominal value less any value adjustments for doubtful accounts.
Value adjustments were established for cases where the Group faces a risk of not collecting theoutstanding amount.

128

KLINGELNBERG GROUP
Consolidated Financial Statements

2.9

Derivative financial instruments

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

2.10 Inventories
Inventories were measured at the lower of acquisition and manufacturing cost and net realizablevalue. Acquisition cost was measured net of cash discounts. Manufacturing cost included direct labor and 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 was lower than the book value or if inventories had a low
turnover rate, the necessary value adjustments were recognized.

2.11 Tangible fixed assets
Tangible fixed assets were measured at acquisition cost excluding any borrowing costs less accumulated depreciation and impairment. Depreciation was recognized on a straight-line basis overthe following 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 were not depreciated until completion.
Expenditures on maintaining and repairing tangible fixed assets were charged to the income
statement. Capital expenditures for existing tangible fixed assets were capitalized if classified asvalue-adding and depreciated over the remaining useful life.

129

KLINGELNBERG GROUP
Consolidated Financial Statements

2.12

Loans and other receivables, other financial assets

Loans and other receivables as well as other financial assets were measured at nominal value lessany value adjustments required.

2.13 Investments in joint ventures
Investments in joint ventures were recognized using the equity method.

2.14 Taxes
Current and deferred taxes were accrued for all tax obligations, irrespective of their due date. Current income taxes were calculated on the taxable profit for the financial year. Deferred taxes were
calculated by applying the balance sheet method for any temporary difference between the carrying
amount and the tax basis of assets and liabilities. For that calculation, the current tax rates applicablein each jurisdiction were used while already identified future changes in the tax rates were taken into
consideration.
Deferred tax assets for tax loss carry-forwards were recognized to the extent that it is probablethat they can be offset against future taxable profits.
Deferred taxes were calculated on the basis of the tax rates applicable in each country.
Current and deferred tax assets and liabilities were offset if they concern the same taxable entity
or group of entities and tax jurisdiction and if the Group had a legally enforceable right to offset
current tax assets and liabilities.
No deferred tax was provided for temporary differences on investments in subsidiaries where thetiming of the reversal of the temporary difference was controlled by the Group and it was notprobable that the temporary difference will be reversed in the foreseeable future.

2.15 Intangible assets
Acquired intangible assets were measured at acquisition costs less accumulated amortization andimpairment. Intangible assets were 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 were recognized
as a cost in the income statement in the financial year in which they occurred.
Goodwill from the acquisition of consolidated entities was offset with equity at the date of acquisition.

130

KLINGELNBERG GROUP
Consolidated Financial Statements

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) were subject to an
impairment test at each balance sheet date. If there was any indication of impairment, a detailed
test was performed immediately. If the carrying amount exceeded the recoverable amount (higher of fair value less cost to sell and value in use), an impairment loss was recognized in the income
statement. If, subsequently, an increase in the asset’s value can be demonstrated, the impairment
charge was reversed (no reversal for goodwill impairments) accordingly via the operating result.
As the goodwill was already offset with equity at the date of the acquisition, an impairment of the
goodwill did not affect the income statement but led to a disclosure in the notes only.

2.17 Financial liabilities
Financial liabilities were measured at nominal values.

2.18 Payables from goods and services and other liabilities
Payables from goods and services and other liabilities were measured at nominal values.

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

2.20 Revenue recognition
Revenue was recognized when the principal risks and rewards of ownership were transferred tothe customer, the amount of the proceeds could be reliably determined and when it was sufficiently probable that the economic benefits from the sale will flow to the Group.
Revenues were stated at the fair value of the consideration entitled to be received. This was 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 were assessed at each balance
sheet date and were disclosed in the notes to the financial statements. A provision was recorded if
the relevant conditions were met.

131

KLINGELNBERG GROUP
Consolidated Financial Statements

2.22 Leases
Leases in which a significant portion of the risks and rewards of ownership were transferred fromthe lessor to the lessee were classified as finance leases. The leased assets were carried at cost nothigher than the minimum lease payments and depreciated along with other tangible fixed assets.
The corresponding leasing obligations were shown as liabilities. Leasing payments were allocatedaccordingly 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 were retained by thelessor were classified as operating leases. Payments made under operating leases were charged to
profit or loss on a straight-line basis over the period of the lease.

2.23 Share-based payments
Share-based payments were 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. For further information refer to Note 4.1of the Compensation Report.

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

132

KLINGELNBERG GROUP
Consolidated Financial Statements

3	Changes in the scope of consolidation
There were no changes to the scope of consolidation in this financial year.

4 	Substantial information on the consolidated balance sheet items
4.1

Receivables from goods and services
31.03.2024

31.03.2023

Receivables from third parties

79.86771.002

Receivables from joint ventures

193

306

0

0

-156

-161

79.90471.147- not due and due up to 90 days

78.46668.946- overdue more than 90 days

1.438

2.201

EUR 000

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

Receivables increased due to higher deliveries in the last quarter of the 2023/24 financial year.

4.2

Derivative financial instruments
31.03.2024

EUR 000
Basic value:

31.03.2023

Asset

Liability

PurposeAsset

Liability

Purpose

Foreign exchange

15

15

Hedging

134

78

Hedging

Total

15

15

134

78

4.3

Other short-term receivables

This position included receivables from subsidies (flood disaster July 2021) of EUR 0,0 million (asat 31 March 2023: EUR 3,4 million), taxes of EUR 2,4 million (as at 31 March 2023: EUR 2,0 million),
Corona aid in the amount of EUR 1,1 million (as at 31 March 2023: EUR 1,1 million), income under
the Research Allowances Act (FZulG) of EUR 0,8 million (as at 31 March 2023: EUR 0) and prepayments to suppliers of EUR 0,9 million (as at 31 March 2023: EUR 0,6 million). The value adjustments
for the financial year under review amounted to EUR 0,2 million as in the previous financial year.

133

KLINGELNBERG GROUP
Consolidated Financial Statements

4.4

Inventories
31.03.2024

31.03.2023

Finished products

10.041

7.846

Work in progress

65.23666.728Acquired parts

51.24455.325308

188

126.829130.087

Value adjustments-12.414-12.499

Inventories

114.415

117.588

EUR 000

Supplies

4.5

Tangible fixed assets
2023/24

Other assets

Tangible fixed
assets underconstruction

Total

40.72722.701150

123.735-1.952

2.896

3.432

1.301

5.677

-11

-1.243-892-16-2.162

-405

107

-38

-1

-337

66

0

64

-130

0

Gross value as at 31.03.

57.85542.48725.2671.304

126.913

Accumulated depreciation
as at 01.04.

14.70832.38117.913065.002

Depreciation

1.642

1.312

1.911

0

4.865

-9

-702

-886

0

-1.597

Foreign currency effects

-206

97

-41

0

-150

Accumulated depreciation
as at 31.03.

16.13533.08818.897068.120Net carrying amountas at 01.04.

45.449

8.346

4.788

150

58.733

Net carrying amountas at 31.03.

41.720

9.399

6.370

1.304

58.793

Land andbuildings

Machines andequipment

Gross value as at 01.04.

60.157

Additions
Disposals

EUR 000
Acquisition cost

Foreign currency effects
Reclassifications

Disposals

Regarding the assembly hall in Hückeswagen/Germany, completed at the end of 2022, the approved repayment subsidy of the GEB NWG program totaling EUR 2,6 million was deducted fromthe additions and at the same time reduced the KfW loan (Note 4.11).

134

KLINGELNBERG GROUP
Consolidated Financial Statements

Other fixed assets related to tools, office equipment including hardware, office furniture and vehicles.
2022/23

Other assets

Tangible fixed
assets underconstruction

Total

41.15623.4578.965

113.227

12.653

3.048

1.757

47

17.5050-4.130-2.505-205-6.840Foreign currency effects

-216

69

-10

0

-157

Reclassifications

8.071

584

2

-8.6570Gross value as at 31.03.

60.15740.72722.701150

123.735

Accumulated depreciation
as at 01.04.

13.59234.80618.836067.234

Depreciation

1.240

1.166

1.550

0

3.956

0

-3.678-2.4660-6.144Foreign currency effects

-124

87

-7

0

-44

Accumulated depreciation
as at 31.03.

14.70832.38117.913065.002

Net carrying amountas at 01.04.

26.057

6.350

4.621

8.965

45.993

Net carrying amountas at 31.03.

45.449

8.346

4.788

150

58.733

Land andbuildings

Machines andequipment

Gross value as at 01.04.

39.649Additions
Disposals

EUR 000
Acquisition cost

Disposals

4.6

Loans and other receivables

In the current financial year there were no loans and other receivables. In the previous financial
year, this position mainly included accounts receivables from customers with a payment term longer than one year.

4.7

Investments in joint ventures

The share of the result from joint ventures amounted to EUR 1,0 million (as at 31 March 2023:
EUR 0,6 million).

135

KLINGELNBERG GROUP
Consolidated Financial Statements

4.8

Deferred tax assets

In the financial year under review the deferred tax assets mainly resulted from divergent valuations of pension provisions as well as provisions for partial retirement obligations, service anniversaries, and provisions for warranties. Deferred taxes were calculated based on the tax rates applicable in each country. The average applied tax rate was 25,66% (previous financial year 26,84%).
In the current financial year, this also included taxes from loss carryforwards of around­EUR 0,9 million , which results in deferred taxes capitalized of EUR 8,5 million (as at 31 March 2023:
EUR 9,4 million).
EUR 000
Tax loss carryforwards as at 31.03.2024

Capitalized

Not capitalized

Total

No expiry

24.53533.72258.257

Total losses carried forward

24.53533.72258.257

Capitalized

Not capitalized

Total

No expiry

29.48438.06067.544

Total losses carried forward

29.48438.06067.544

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

Tax loss carryforwards as at 31.03.2023

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

4.9

0
8.536

0
9.393

Other financial assets

In the financial year under review, this item mainly comprised of an insolvency-protected life insurance policy to cover pension liabilities in connection with part-time phased retirement obligationsin the amount of EUR 1,0 million (as at 31 March 2023: EUR 1,2 million). The amount was calculated
in accordance with the local legal requirements of the company that recognizes these assets.

136

KLINGELNBERG GROUP
Consolidated Financial Statements

4.10 Intangible assets
2023/242022/23

SoftwareOther
intangible
assets

Total

SoftwareOther
intangible
assets

Total

8.225

362

8.587

8.098

352

8.450

78

72

150

270

0

270

-807

-368

-1.175

-171

0

-171

Foreign currency effects

31

12

43

28

10

38

Gross value as at 31.03.

7.527

78

7.605

8.225

362

8.587

Accumulated amortization
as at 01.04.

7.500

355

7.855

7.273

345

7.618

Amortization

275

0

275

367

0

367

Disposals and derecognitions

-805

-368

-1.173

-168

0

-168

31

13

44

28

10

38

7.001

0

7.001

7.500

355

7.855

Net carrying amountas at 01.04.

725

7

732

825

7

832

Net carrying amountas at 31.03.

526

78

604

725

7

732

EUR 000
Acquisition cost
Gross value as at 01.04.
Additions
Disposals and derecognitions

Foreign currency effects
Accumulated amortization
as at 31.03.

137

KLINGELNBERG GROUP
Consolidated Financial Statements

A theoretical capitalization of goodwill would have the following effects on the consolidated
financial statements.
2023/242022/23

Gross value as at 01.04.

20.51720.517Gross value as at 31.03.

20.51720.517

Accumulated amortization at 01.04.

18.17717.603540

574

18.71718.177

1.800

2.340

140.752

126.609

1.800

2.340

142.552

128.949

17.20520.755-540-574

16.66520.181

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 profit
Theoretical amortization of goodwill
Theoretical net profit

138

KLINGELNBERG GROUP
Consolidated Financial Statements

4.11 Financial liabilities
31.03.2024

31.03.2023

Short-term financial liabilities

30.39231.964Long-term financial liabilities

13.39618.516

Total financial liabilities

43.78850.480- EUR

43.39849.985

- USD

390

495

- 2 to 5 years

9.948

10.059- > 5 years

3.448

8.457

Average interest rate

3,59%

1,97%

Unused credit facilities

31.63922.373Carrying amount of property

41.72045.449- thereof pledged

20.60020.600- thereof used

15.53719.859EUR 000

Thereof in:

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

The long-term financial liabilities decreased due to repayment subsidy from the “GEB NWG” program of EUR 2,6 million dated 28 April 2023. The repayment subsidy reduced the “KfW” loan
and at the same time this amount was credited to the acquisition cost of the assembly hall in
Hückeswagen/Germany as outlined in Note 4.5.
Additionally, the long-term financial liabilities were further reduced with the positive cash flows
resulting from operating activities.

139

KLINGELNBERG GROUP
Consolidated Financial Statements

4.12

Payables from goods and services
31.03.2024

31.03.2023- with third parties

18.25126.814- with joint ventures

519

381

- with other related parties

140

378

18.91027.57318.90127.485

988

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

The reduction of payables from goods and services was mainly due to the fact that
KLINGELNBERG GmbH had been settling its payments with a discount again since April 2023.

4.13 Other short-term liabilities
This position contained mainly advance payments from customers amounting to EUR 48,0 million (as at 31 March 2023: EUR 41,3 million) and taxes and social insurance withholdings of
EUR 4,5 million (as at 31 March 2023: EUR 3,5 million).

4.14 Accrued liabilities and deferred income
This item mainly included liabilities from personnel accruals (vacation, Christmas bonus, overtime,
performance bonus) EUR 9,4 million (as at 31 March 2023: EUR 8,5 million), outstanding invoices for
products sold (assembly, training, freight) EUR 5,3 million (as at 31 March 2023: EUR 4,4 million) andincome for subsequent years EUR 1,4 million (as at 31 March 2023: EUR 0,9 million).

140

KLINGELNBERG GROUP
Consolidated Financial Statements

4.15 Provisions
2023/24

Other
provisions

Total
provisions
excl. deferredtax

Deferred tax

8.987

3.989

16.286

1.329

2.575

914

651

4.140

346

Utilization of provisions-1.350-509-218-2.0770

Release of provision
recognized in the income
statement

-110

0

-91

-201

-142

Foreign currency effects

3

0

-47

-44

15

Carrying amount as at
31.03.

4.428

9.392

4.284

18.104

1.548

of which, short-term

3.612

509

1.738

5.859

0

of which, long-term

816

8.883

2.546

12.245

1.548

Deferred tax

Provision forwarranties

Provision forpension benefit
obligation

Carrying amount as at
01.04.

3.310

Creation of provisions

EUR 000

2022/23

Provision forwarranties

Provision forpension benefit
obligation

Provision
efficiency
enhancement

Other
provisions

Total
provisions
excl. deferred
tax

Carrying amount as at
01.04.

2.648

12.548

1.253

3.763

20.212

1.114

Creation of provisions

2.703

0

0

556

3.259

316

Utilization of provisions-1.783

-492

-946

-300

-3.5210

Release of provision
recognized in the income
statement-260-3.069-307-3-3.639-114

Foreign currency effects

2

0

0

-27

-25

13

Carrying amount as at
31.03.

3.310

8.987

0

3.989

16.286

1.329

of which, short-term

2.576

492

0

1.652

4.720

0

of which, long-term

734

8.495

0

2.337

11.566

1.329

EUR 000

141KLINGELNBERG GROUP
Consolidated Financial Statements

The valuation of provisions in all categories was based on latest available data (e.g., claims thathave occurred or been reported) or on the experience of recent years and management estimates.
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 theperiod, respectively

31.03.2024

31.03.2024

31.03.2023

Pension funds
without deficit or
surplus (1)

0

0

0

0

Pension funds
without own assets(2)0-9.392-8.987Total

0-9.392-8.987

Contributions
concerning
the businessperiodPension benefit
expense as part ofpersonnel expense

2023/242022/23

-463

-463

-418

-405

-509*

-914

3.069

-405

-972

-1.3772.651*	Pension payments according to pension plan in the current financial year.

(1) The Swiss entity was affiliated to a collective pension plan where the surplus/deficit could not
be determined on the basis of the individual contract but it could be stated that based on the audited figures of the pension fund as at 31 December 2023 the coverage of the collective plan asa whole amounted to 111,1% (as at 31.12.2022 the audited figures: 106,6%). The technical interest rate used amounted to 2,00% (prior year: 2,00%). The underlying mortality table remained
unchanged (BVG 2020 GT). Furthermore, there was a supplementary pension plan, which did not
bear risk due to full insurance as part of a collective insurance contract.
(2) The economic obligation from pension funds without own funds contained primarily the obligation from employee benefit plans in Germany. The discount rate used in the calculation was 3,55%(2022/23: 4,05%). A provision for pension benefit obligation at the level of the economic obligation
had been recorded. Pension benefit expense as part of the personnel expense included the increase
and decrease of provisions recorded in the income statement including changes of discount rates. The
increase compared to the prior financial year was mainly due to the decrease of the discount rate.

142

KLINGELNBERG GROUP
Consolidated Financial Statements

Other provisions
Other provisions included, among others, fire prevention measures of EUR 0,3 million (as at
31 March 2023: EUR 0,4 million), part-time phased retirement obligations of EUR 2,4 m­ illion (as at
31 March 2023: EUR 2,4 million) and for long service awards EUR 0,4 million (as at 31 March 2023:
EUR 0,4 million).
Due to parameters influencing the value of the PSU, the provision for the LTIP in the financial year
under review amounted to EUR 0,4 million (as at 31 March 2023: EUR 0,1 million). For further information refer to Note 4.1 of the Compensation Report.

4.16 Share capital and capital reserves
Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2024 and the prior year was 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 2020 has been available since 20 May 2021.
According to the certificate, CHF 55.280.826,50 were recognized by the Swiss tax authorities. The
certification did not include the reduction of the paid dividend in 2023/24 financial year. Considering this dividend (CHF 1,77 million), CHF 53.512.826,50 can be distributed tax-free in the future.
The statutory or legal reserves that may not be distributed are amounting to CHF 22.100.000.

143

KLINGELNBERG GROUP
Consolidated Financial Statements

5	Substantial information on the consolidated income statement items
5.1

Net sales from goods and services
2023/24

EUR 000
Service location
Segments

Germany

Switzerland

Japan

USA

Rest ofthe world

Total

Bevel Gear

29.78334.113

4.420

8.495

12.30789.118Cylindrical Gear

64.15016.312

4.812

6.350

4.105

95.729Measuring Centers75.683

3.227

4.946

8.194

6.593

98.643

Drive Technology

17.177

0

0

0

37

17.214

Other

796

0

184

0

1.813

2.793

Total

187.589

53.65214.362

23.03924.855303.4972022/23

EUR 000
Service location
Segments

Germany

Switzerland

Japan

USA

Rest ofthe world

Total

Bevel Gear

29.48951.2775.923

13.44611.165111.300

Cylindrical Gear

68.208

4.724

3.524

12.2984.300

93.054

Measuring Centers65.658

3.439

5.514

5.153

4.957

84.721

Drive Technology

15.033

0

0

0

35

15.068

Other

2.852

0

148

0

1.818

4.818

Total

181.240

59.44015.10930.89722.275308.961For explanations regarding the segment reporting refer to Note 2.5.

5.2

Other operating income

The other operating income increased from EUR 9,5 million to EUR 13,0 million mainly because ofhigher income from flood-related payments (EUR 3,4 million).

144

KLINGELNBERG GROUP
Consolidated Financial Statements

5.3	Change in inventory of finished and unfinished goods as well as unbilledgoods and services
The increase in finished goods and unfinished goods as well as unbilled goods and services (Note 4.4)
in the 2023/24 financial year amounted to EUR 2,3 million (previous financial year: EUR -18,8 million). Overall, this resulted in an increase in total operating performance of EUR 15,7 million.

5.4

Personnel expense

Personnel expense amounted to EUR 114,4 million at the end of the current financial year,
up EUR 14,2 million on the previous financial year. Wages and salaries including social benefits rose by EUR 12,3 million, which was mainly due to the increase in the number of employees(+84 FTEs) and the 5,2% tariff increase at KLINGELNBERG GmbH, as well as the early termination of the collective restructuring agreement due to the flooding (July 2021) on 01 May 2023.
Furthermore, expenses for employee benefits increased by EUR 4,0 million due to the interestrelated reversal of the previous financial year (refer to Note 4.15). At the same time, other personnel expense decreased by EUR 2,1 million, which was due to lower external personnel costs at
KLINGELNBERG GmbH.

5.5

Other operating expense

In the financial year under review other operating expense decreased by EUR 1,8 million mainly incurred by lower freight costs (EUR 1,9 million).
In the financial year under review the largest positions of other operating expense werefreight (EUR 7,1 million), travel and representation costs (EUR 6,7 million), maintenance expense(EUR 3,9 million), rent expense (EUR 3,2 million) and other administrative expenses (EUR 3,2 million).

145

KLINGELNBERG GROUP
Consolidated Financial Statements

5.6

Financial result
2023/242022/23

Interest expense (-)-1.830-1.222Financial expense-1.830-1.222

Interest income (+)

387

180

Financial income

387

180

Currency translation difference and hedging expense-11.957-14.868- Thereof unrealized-10.526-12.528

Currency gains

10.88813.580- Thereof unrealized

9.286

10.967

Foreign currency loss

-1.069-1.288Financial result-2.512-2.330

EUR 000

The interest costs for short-term financial liabilities increased due to the rise in market interest
rates.
The negative foreign currency result was mainly due to the currency fluctuations of the CHF and
USD against the EUR (Note 2.6).

5.7

Income taxes
2023/242022/23

Current tax expense-4.250-4.324

Deferred tax expense-1.1003.619

Tax expense recognized on the income statement-5.350-705

EUR 000

The average applied tax rate for the Group was 25,66% (as at 31 March 2023: 26,84%) and was
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 were calculated based on the
tax rates applicable in each country.
As in the last financial year, local changes in income tax rates had no significant impact on theeffective income tax rate. The change in the effective income tax rate resulted from the varying
profit situations of individual Group companies at different local tax rates.

146

KLINGELNBERG GROUP
Consolidated Financial Statements

The other effects were EUR 0,5 million (as at 31 March 2023: EUR 0,9 million) mainly derived from
non-taxable transactions. In particular, the distribution of profits between the companies as well
as tax additions in accordance with local legislation.
2023/242022/23

Profit before taxes

22.55521.460

Average applied tax rate

25,66%

26,84%

Expected income tax expense

5.788

5.760

Effect of non-recognition of tax losses in current year

-898

-5.955

Other effects

460

900

5.350

705

23,72%

3,29%

EUR 000

Effective income tax expense
Effective income tax rate

5.8

Earnings per share

Basic earnings-per-share amounts were 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

2023/242022/23

Net profit

17.20520.7558.840.000

8.840.000

Basic earnings per share (EUR)

1,95

2,35

Diluted earnings per share (EUR)

1,95

2,35

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 had an obligation to meet the expense of adjustments to the pensions of the retired employees of KLINGELNBERG Söhne GmbH & Co. Kommanditgesellschaft. In the financial year under review, the payments amounted to EUR 0,1 million (as at 31 March 2023: EUR 0) and was recognized in personnel expense.

147

KLINGELNBERG GROUP
Consolidated Financial Statements

Obligations due to operating leases – KLINGELNBERG Group as the lessee:
31.03.2024

31.03.2023

Up to 1 year

3.243

3.555

1 to 5 years

5.473

6.986

18

0

8.734

10.541

EUR 000

More than 5 years
Total obligations from operating leasingThis related 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.

6.2

Transactions with related parties
2023/242022/23

1.457

1.603

63

28

-5.693-4.415

Other operating expense

-99

-221

Financial result

-10

-49

-4.282-3.054

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

Total

Transactions with related parties included transactions with shareholders, joint ventures, and other related parties. The conditions did not significantly differ from those agreed with third 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 19 June 2024. On this date, the financial statements were authorized for release by the Board of Directors.

148

KLINGELNBERG GROUP
Consolidated Financial Statements

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the consolidated financial statements
2023/2024

149

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 2024, and the consolidated income statement, the consolidated
cash flow statement and the 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 accompanying consolidated financial statements (pages 119 to 148) give a true and fair view of theconsolidated financial position of the Group as at 31 March 2024 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 Standards on Auditing (SA-CH). 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 inaccordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview

Overall Group materiality: EUR 1.5 million
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 andcontrols, and the industry in which the Group operates.
As key audit matter the following area of focus has been identified:
Revenue recognition of goods and services in the appropriate period

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

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, 8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, 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.

150

KLINGELNBERG GROUP
Consolidated Financial Statements

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 1.5 million

Benchmark applied

Net sales from goods and services

Rationale for the materiality benchmark applied

We chose net sales as the benchmark because, in our view, it is the appropriate benchmark, which the users of the financial statements use to evaluate thefinancial 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 kEUR 75 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.
Following our assessment of the risk of material misstatement, we identified one reporting unit in Switzerland and one inGermany 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 which requires an audit of specified accounts due to their size or risk characteristics. The concluded full scope and specified accounts audit work addressed over 85% of the Group’s revenue. The
remaining of the Group’s revenue is contributed by smaller reporting units which are deemed insignificant. Where theaudit 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. Our instructions ensured an appropriate and aconsistent audit was performed by the component auditors. Senior members of the Group audit team discussed with thecomponent auditor the risks identified, challenged the audit approach in significant risk areas and reviewed the audit
documentation as well as the audit reporting. Furthermore, the Group audit team performed analytical procedures to address the smaller reporting units.
Key audit matters
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 Meeting151

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 recognizes net sales from goods andservices in the period in which it transfers the risk and reward of ownership. In the financial year 2023/2024 total net
sales from goods and services of EUR 303.5 million wererecognized.

We performed the following audit procedures to assess
whether net sales from goods and services was recognizedin the appropriate period:

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

–

We identified transactions occurring close to thebalance sheet date and for the months of March2024 and April 2024, tested, on a sample basis,
whether revenue was appropriately recognized in
the period in which the risk and reward of ownership was transferred. For the same sample, we assessed whether the revenue recognition was appropriate for the contractually agreed incoterms.

We consider Management’s approach to recognize revenue in the appropriate period at year-end to be reasonable.

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

Other information
The Board of Directors is responsible for the other information. The other information comprises the information includedin the annual report, but does not include the financial statements, the consolidated financial statements, the remuneration report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard.
Board of Directors' responsibilities for the consolidated financial statements
The Board of Directors is responsible for the preparation of 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 SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or

4 Klingelnberg AG | Report of the statutory auditor to the General Meeting152

KLINGELNBERG GROUP
Consolidated Financial Statements

error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic 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 on EXPERTsuisse's website: http://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report.

Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control system that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the consolidated financial statements.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Patrick Balkanyi

Regina Spälti

Licensed audit expert
Auditor in charge

Licensed audit expert

Zürich, 19 June 2024

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

153

Statutory Financial Statementsof KLINGELNBERG AG
155 Statutory balance sheet
157 Statutory income statement
158 Notes to the financial statements
158		

General information

158		

Accounting principles

160		Substantial information on
the balance sheet items
163		Substantial information on
the income statement items
164		

Additional information

167 Appropriation of retained earnings

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory balance sheet
CHF

Note

31.03.2024

31.03.2023

26.890234.323

AssetsCurrent assets
Cash and cash equivalents
Receivables from goods and services from third parties

3.1

14.038.342

14.596.414

Receivables from goods and services from group companies

3.3

584.289

2.477.006

Other short-term receivables from third parties

3.2

2.546.327

2.193.769

Other short-term receivables from group companies

3.3

68.503.439

61.386.796

Inventories

3.4

2.760.719

3.165.980

231.082242.462

88.691.088

84.296.750

714.769

532.820100.585.622

100.585.622

3.309

2.410

Total non-current assets

101.303.700

101.120.852

Total assets

189.994.788

185.417.602

Prepayments and accrued income
Total current assets

Non-current assets
Tangible fixed assets
Investments
Intangible assets

3.5

155

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory balance sheet
CHF

Note

31.03.2024

31.03.2023

3.6

46

44

24.567.856

25.188.702

1.096.558

1.097.429

13.290.728

13.175.914

068.235

Liabilities
Current liabilities
Short-term financial liabilities to third parties
Short-term financial liabilities to group companies
Payables from goods and services to third parties

3.7

Payables from goods and services to group companies
Derivative financial instruments
Other short-term liabilities to third parties

3.8

10.736.099

8.546.783

Other short-term liabilities to group companies

3.9

1.058.975

522.020

4.222.535

3.965.069

Short-term provisions

200.796104.015

Total current liabilities

55.173.593

52.668.211

Long-term provisions

820.821392.200

Total non-current (long-term) liabilities

820.821392.200

55.994.414

53.060.411

2.10/3.10

44.200.000

44.200.000

3.11

53.763.150

55.531.150- thereof reserves from capital contributions

53.763.150

55.531.150

Statutory retained earnings

36.037.224

32.626.041- thereof amount brought forward from the previous year

30.858.041

28.982.900

5.179.183

3.643.141

Total equity

134.000.374

132.357.191

Total liabilities and equity

189.994.788

185.417.602

Accrued liabilities and deferred income

Non-current (long-term) liabilities

Total liabilities

EquityShare capital
Statutory capital reserves- thereof net profit

156

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory income statement
CHF

Note

Net sales from goods and services

2023/242022/23

58.162.822

67.430.432

Other operating income

4.1

5.136.638

1.087.007

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

4.2-411.310-2.403.265

Material expense

4.2-43.395.501-47.110.094

Personnel expense

4.3-9.196.605-8.220.558-116.653-96.658-1.988-8.528-8.631.389-10.350.492

1.546.014

327.8443.977.589

3.332.269

5.523.603

3.660.113-344.420-16.972

5.179.183

3.643.141

Depreciation on tangible fixed assets
Amortization on intangible assets
Other operating expense

4.4

Operating result
Financial result

4.5

Profit before income taxes
Income taxes
Net profit

4.6

157

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Notes to the financial statements
1

General information

KLINGELNBERG AG is a limited liability company under Swiss law and is incorporated and domiciled in Zürich, Switzerland. These financial statements were prepared according to the provisionsof Swiss accounting law (Title 32 of the Swiss Code of Obligations). Where not already prescribedby law, the significant accounting policies applied are described below.
KLINGELNBERG AG reported its Consolidated Financial Statements based on the recognized standard (Swiss GAAP FER). In accordance with the legal provisions, it had 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 were translated according to the exchange rates as at the balance sheet date. Income and expenses denominated in foreign currencies and all foreign exchange transactions were translated at the monthly average exchange rates
as at their respective transaction dates. Resulting foreign exchange differences were recognizedin the income statement (financial result).

2.2

Cash and cash equivalents

Cash and cash equivalents included cash and bank balances. These were valued at market value.

2.3

Receivables from goods and services from third parties

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

2.4

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

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

158

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

2.5

Inventories

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

2.6

Tangible fixed assets

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

10 years
3 to 10 years

2.7		Investments
Investments in subsidiaries were carried at historical cost less required impairments. An impairment was 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 was used.
Subsidiaries were consolidated as a group for valuation purposes due to their high economical andoperational interdependence.

2.8

Revenue recognition

Revenue comprised all proceeds from the sale of the products of KLINGELNBERG AG. Revenue wascalculated on the basis of the services rendered to clients as at the balance sheet date. Revenue
was recognized when the amount of the proceeds can be reliably determined, when it was sufficiently probable that the economic benefits from the sale will flow to KLINGELNBERG AG and therisk and reward of ownership was transferred.

2.9

Accrued expenses

Provisions were made when a legal or constructive obligation had arisen from past events as at
the reporting date, the discharge of funds to fulfill this obligation was probable and a reliable estimate of the amount of the obligation was possible. The amount of the provision depended on
the expected cash outflow to cover the obligation.

159

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

2.10 Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2024 was composed of 8.840.000 registeredshares with a nominal value of CHF 5 each (no changes to the previous financial year).

3	Substantial information on the balance sheet items
3.1

Receivables from goods and services from third parties

CHF

31.03.2024

31.03.2023

Receivables from goods and services (gross)17.518.346

17.984.289

16.69610.025

Value adjustments-3.496.700-3.397.900

Receivables from goods and services

14.038.342

14.596.414

13.938.740

14.550.643

99.60245.771

Receivables from joint ventures

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 mainly included refunds from VAT declarations from Germany and Switzerland in theamount of CHF 1,9 million (as at 31 March 2023: CHF 1,6 million).

3.3	Other short-term receivables/financial liabilities/payables from goods
and services from/to group companies
The cash pool account of KLINGELNBERG GmbH increased from CHF 61,4 million to CHF 68,5­million
in the 2023/24 financial year.
At the same time, receivables from goods and services decreased from CHF 2,5 million to
CHF 0,6 million.

160

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

3.4

Inventories
31.03.2024

31.03.2023

Work in progress

2.812.143

3.223.453

Value adjustments-51.424-57.473

2.760.719

3.165.980

CHF

Inventories

3.5		Investments
As at 31 March 2024, KLINGELNBERG AG held the following investments:
Share of capital andvoting rights

Company, head office

Currency

Capital31.03.2024

31.03.2023

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 (Japan) Ltd., Yokohama, Japan

JPY

50.000.000

100%

100%

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

MXN

500.000

100%

100%

The KLINGELNBERG Corporation, Cincinnati, Ohio, USA

USD

254

100%

100%

KLINGELNBERG India Private Ltd., Pune, India

INR

27.700.000

100%

100%

KLINGELNBERG do Brasil, Sao Paulo, Brazil

BRL

3.950.000

99%

99%

DKSH KLINGELNBERG Service Ltd., Shanghai, China *CNY

5.393.815

50%

50%

*	Joint venture consolidated at equity

3.6

Short-term financial liabilities to third parties

As at 31 March 2024 the existing line of credit was, as in the previous financial year, unused.

161

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

3.7

Payables from goods and services to third parties
31.03.2024

31.03.2023

Payables from goods and services

896.764987.022

Payables from joint ventures

199.794110.407

1.096.558

1.097.429

1.093.462

1.090.732

3.096

6.697

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 included advance payments from customers, salaries and wages, commissions and taxes/social-insurance withholdings. The advance payments received increased from
CHF 8,1 million to CHF 10,0 million and the provision increased by CHF 0,3 million to CHF 0,5 million. Other liabilities remained at the previous financial year´s level.

3.9

Other short-term liabilities to group companies

As in the previous financial year, these included only down payments received.

3.10 Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2024 was composed of 8.840.000 registered shares with a nominal value of CHF 5 each (no changes to the previous financial year).

3.11

Statutory capital reserves

As at 31 March 2024, the Company had CHF 53,8 million (as at 31 March 2023: CHF 55,5 million)of reserves from capital contributions, of which CHF 53,6 million (as at 31 March 2023:
CHF 55,3 million) had been recognized as such by the Swiss tax authorities. The reduction of
CHF 1,8 million resulted from the distribution in August 2023 (further details Note 4.16 of theConsolidated Financial Statements).

162

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

4	Substantial information on the income statement items
4.1

Other operating income

In the 2023/24 financial year, after lengthy negotiations, an insurance reimbursement of
CHF 3,9 million was obtained from the reinsurance policy of KLINGELNBERG AG for the flood
damage in July 2021 (Hückeswagen/Germany). In addition, this position included income of backcharges about CHF 1,2 million (as at 31 March 2023: CHF 1,1 million).

4.2 Material expense/change in inventory of finished and unfinished goods
as well as unbilled goods and services
Due to the decrease in sales, the cost of materials decreased accordingly from CHF 47,1 million to
CHF 43,4 million, while the materials ratio increased from 72,4% to 75,1%.

4.3

Personnel expense

The change compared with the previous financial year was due to various factors:
 The changed composition and associated changes to the fees of the Board of Directors. Reference is made to Note 5 of the Compensation Report.
 A general wage increase of 2%.

4.4

Other operating expense

Other operating expenses included in particular rent expense, legal and consulting fees, travel andrepresentation expense, freight charges, commissions, patent cost, capital tax and other expenses.
The decrease was mainly due to the general valuation allowances by CHF 1,5 ­million. Other costs
were in line with sales.

163

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

4.5

Financial result

CHF

2023/242022/23

Interest expense (-)-984.979-621.738

Interest income (+)

3.003.120

2.232.196

Financial income

2.018.141

1.610.458

Currency translation difference and hedging expense-8.748.636-11.950.808

Currency gains

8.076.342

11.163.635

Foreign currency loss

-672.294-787.173

Investment income

2.631.743

2.508.984

Financial result

3.977.590

3.332.269

The change in interest expense and interest income was due to the general increase in interest
rates. The floating of the EUR/CHF exchange rate was responsible for the foreign currency loss.
Income from investments related to dividends from subsidiaries.

4.6

Income taxes

In the previous financial year, the tax expense included withholding tax and tax on profits. In thecurrent financial year, the loss carryforward was taken into account to reduce the current taxes.
Furthermore, in the 2023/24 financial year, the item included tax refunds from previous financial
years of CHF 0,2 million.
Capital tax was reported under other operating 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 financial year).

164

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

5.2

Lease liabilities

Operating leases applied mainly to vehicles and building rents.
31.03.2024

31.03.2023

Up to 1 year

1.373.538

1.402.756

1 to 5 years

4.073.538

5.447.075

005.447.076

6.849.831

CHF

More than 5 years
Total operating lease liabilities

5.3

Pension fund obligations

As at 31 March 2024, as well as at the end of the previous financial year, there were no liabilities to theoccupational pension fund due.

5.4

Increase of hidden reserves

During the period under review, hidden reserves increased by CHF 0,1 million (prior financial year:
CHF 1,6 million), in line with the general value adjustments for receivables from goods and services
from third parties (Note 3.1).

5.5

Guarantees

KLINGELNBERG AG, as the parent company, had taken over joint liability for different subsidiaries
and their bank contracts. The contracts were concluded in EUR and CHF. The conversion into CHF
was made at the closing rate.
31.03.2024

31.03.2023

Guarantees and pledges to group companies in favor of third parties

95.26987.626

Guaranteed maximum amount95.26987.626

Thereof utilized

55.89463.194

CHF 000

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

5.7

Significant shareholders

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

165

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
Only shares of the active members of the Board of Directors and Executive Management acting for
KLINGELNBERG Group on the respective year-end date are shown, otherwise this is shown as n/a.
Number of shares
31.03.2024

31.03.2023

Jan Klingelnberg, CEO

20.00020.000Christoph Küster, CFO

1.000

1.000

Philipp Kannengießer, COO

2.000

2.000

224.414224.414

1.500

0

n/a

1.500

1.000

1.000

Dr. Jörg Wolle, Member of the Board of Directors/Chairman
Kalina Scott, Member of the Board of Directors
Roger Baillod, Member of the Board of Directors, (BoD until August 2023)
Prof. Dr. Michael Hilb, Member of the Board of Directors

4.294.349 shares were held by JK Invest AG (before name change: KLINGELNBERG Luxemburg
A.G.) The shares of this Company were directly and indirectly held by Jan Klingelnberg. In the previous financial year, 4.000 shares were jointly registered as a group due to an agreement with JK
Invest AG (before name change: 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 19 June 2024. On this date, the financial statements were authorized for release by the Board of Directors.

166

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

31.03.2024

31.03.2023

Amount brought forward from prior year

30.858.041

28.982.900

5.179.183

3.643.141

Statutory retained earnings

36.037.224

32.626.041

Distribution-2.210.000-1.768.000

To be carried forward

33.827.224

30.858.041

Net profit

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

31.03.2024

31.03.2023

Capital contribution reserves

53.763.150

55.531.150

Withholding tax free distribution-2.210.000-1.768.000

To be carried forward

51.553.150

53.763.150

The Board of Directors will propose to the Annual General Meeting on 20 August 2024 to pay out
a dividend of CHF 0,50 per registered share. The Board of Directors will propose to distribute halfof the dividend from the legal capital reserve and half from the profit carried forward.
In the previous financial year, a dividend of CHF 0,40 per registered share was paid out according
to the decision of the Annual General Meeting on 22 August 2023.

167

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the financial statements 2023/2024

168

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 (the Company), which comprise the Statutory balance
sheet as at 31 March 2024, the Statutory income statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements (pages 155 to 167) 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 Standards on Auditing (SA-CH). 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 Company 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 accordancewith these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview

Overall materiality: CHF 430’000
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 Company, the accounting processes and controls,
and the industry in which the Company 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, 8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, 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.

169

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 430’000

Benchmark applied

Net sales from goods and services

Rationale for the materiality benchmark applied

We chose net sales as the benchmark because, in our view, it is the appropriate benchmark, which the users of the financial statements use to evaluate thefinancial 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 21’500 identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We 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.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements 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.
Valuation of investments in subsidiaries
Key audit matter

How our audit addressed the key audit matter

The balance sheet item ‘Investments’ amounts to CHF
100.6 million as of 31 March 2024. We consider the valuation of investments in subsidiaries to be a key audit matter
due to the significance of the balance (52.9% 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,
we performed the following audit procedures:–

We assessed the appropriateness of Management’s applied valuation approach;–

We challenged Management’s considerations for
applying portfolio valuation;–

We tested the mathematical accuracy of the impairment assessment prepared by Management;

3 Klingelnberg AG | Report of the statutory auditor to the General Meeting170

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

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 considers the aggregation of
the investments in subsidiaries as a group for valuation
purposes to be appropriate.

–

We compared the current year’s business resultswith Management’s prior period forecasts in order
to as-sess in retrospect the accuracy of Management’s forecasting process.

We consider Management’s approach to assess the valuation of investments to be reasonable.

Please refer to the accounting principles for ‘Investments’in note 2.7 as well as the details of investments held innote 3.5.

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

How our audit addressed the key audit matter

Klingelnberg AG recognizes revenue from goods and services in the period in which it transfers the risk and rewardof ownership. In the financial year 2023/2024 total net
sales from goods and services of CHF 58.2 million wererecognized.

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

A significant portion of the revenue is usually recognized
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.
Please refer to the company’s accounting principles in note
2.8.

–

We identified transactions occurring close to thebalance sheet date and for the months of March2023 and April 2023 tested, on a sample basis,
whether revenue was appropriately recognized in
the period in which the risk and reward of ownership were transferred. For the same sample, we
assessed whether the contractually agreed incoterms were in agreement with the revenue recognition;

We consider Management’s approach to recognize revenue in the appropriate period at year-end to be reasonable.

Other information
The Board of Directors is responsible for the other information. The other information comprises the information includedin the annual report, but does not include the financial statements, the consolidated financial statements, the remuneration report and our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard.

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

171

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Board of Directors' responsibilities for the financial statements
The Board of Directors is responsible for the preparation of 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.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basisof accounting unless the Board of Directors either intends to liquidate the Company 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 and
SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered 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 on EXPERTsuisse's website: http://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report.

Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control system that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the financial
statements.
We further confirm that the proposed appropriation of available earnings and the proposed repayment of the legal capitalreserve comply with Swiss law and the Company’s articles of incorporation. We recommend that the financial statements
submitted to you be approved.
PricewaterhouseCoopers AG

Patrick Balkanyi

Regina Spälti

Licensed audit expert
Auditor in charge

Licensed audit expert

Zürich, 19 June 2024

5 Klingelnberg AG | Report of the statutory auditor to the General Meeting172

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

173

Alternative Performance
Measures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.
2023/242022/23(1) Operating result

25.06723.790(2) Depreciation on tangible fixed assets-4.865-3.956-275-367

30.20728.113

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
Operating result

2023/242022/23

25.06723.790175

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

2023/242022/23(1) Net sales from goods and services

303.497308.9612.292-18.844305.789290.117(2) Change in inventory of finished and unfinished goods as well as unbilledgoods and services
Total operating performance (1) + (2)Gross Profit:
Gross profit is the sum of total operating performance and material expense.
EUR 000

2023/242022/23(1) Total operating performance

305.789290.117(2) Material expense-130.748-125.790

Gross profit (1) + (2)175.041

164.327

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

2023/242022/23(1) Total operating performance

305.789290.117(2) Material expense-130.748-125.790

42,8%

43,4%

Materials ratio (-2) / (1)Personnel Expense Ratio:
The personnel expense ratio is derived from the division of personnel expense by total operating
performance.
EUR 000

2023/242022/23(1) Total operating performance

305.789290.117(2) Personnel expense-114.350-100.114

37,4%

34,5%

Personnel expense ratio (-2) / (1)176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

2023/242022/23(1) Total operating performance

305.789290.117(2) Other operating expense-44.499-46.260

Other operating expense ratio (-2) / (1)

14,6%

15,9%

Ratio of Research and Development Expenses:
Research and development expenses divided by net sales from goods and services.
EUR 000

2023/242022/23(1) Net sales from goods and services

303.497308.961(2) Research and development expenses-26.197-24.736

8,6%

8,0%

Ratio of research and development expenses (-2) / (1)Net Debt:
The sum of financial liabilities (long- and short-term) less cash and cash equivalents.
31.03.2024

31.03.2023(1) Short-term financial liabilities

30.39231.964(2) Long-term financial liabilities

13.39618.516(3) Cash and cash equivalents

16.5068.718

Net debt (1) + (2) - (3)27.28241.76231.03.2024

31.03.2023(1) Cash flow from operating activities

23.48615.703(2) Cash flow from investing activities-7.315-17.580

Free cash flow (1) + (2)16.172-1.877

EUR 000

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

177

Financial Calendar

KLINGELNBERG GROUP
Financial Calendar

Dates in the coming financial year

20.06.2024	Publication of figures for the financial year ending
31 March 2024

20.08.2024

Annual General Meeting 2023/24

21.11.2024	Publication of results for the half-year ending
30 September 2024

179

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