ANNUAL REPORT
2022/23

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 2022/23
16 Company Profile
22 Management Report
32 Corporate Governance
58 Compensation Report
74 Consolidated Financial Statements
110	Statutory Financial Statements of
KLINGELNBERG AG
130 Alternative Performance Measures
134 Financial Calendar

KLINGELNBERG GROUP
To our Shareholders

Dear Shareholders,
The KLINGELNBERG Group has weathered the 2022/23 financial year very successfully – despite
considerable external challenges. The Company was able to improve on key performance indicators
significantly. Worth highlighting are the year-on-year increase in sales, which almost doubled to
EUR 309,0 million, another record order intake of EUR 300,4 million, and not least, the massive risein profits to operating result (EBIT) of EUR 23,8 million.
The crises of recent years are definitely behind us. As forecasted, your Company has benefited
disproportionately from its realignment efforts. KLINGELNBERG has not only achieved a lot in
absolute terms, but also in comparison with the competition. KLINGELNBERG’s clear strategic
positioning, innovative products, cost efficiency, and tight management have helped to position
the Company as a global market leader in key growth markets.
Particularly remarkable is the growth of our global wind energy business, which KLINGELNBERG
has continuously expanded despite the pandemic, economic downturns, and geopoliticaltensions. Also, in the automotive sector, particularly in the transformation to electromobility, yourCompany made important decisions at an early stage and developed new products for this rapidly
growing segment just as early as it did successfully. This success is already reflected in our strong
order intake and sales figures. The future-oriented areas of electromobility and wind power
today account for a significant share of our sales and order intake. We expect this development tocontinue dynamically.
Today, the Company is in a stronger position than ever before. Having been disproportionately
battered in recent years – due to multiple crises and adverse events – it is gratifying to see that thepositive development of our Company is also increasingly being rewarded by the capital market.
The performance of the KLINGELNBERG share is stable on the upside. This is ultimately the resultof hard and skilled work. For this, we would like to thank all employees, managing staff, andmembers of the Executive Board in the name of the Board of Directors.
At KLINGELNBERG, we know we cannot take these successes for granted. The heavily burdened
economic environment continues to present major challenges. In particular, the tensions between
China on one side and Europe and the US on the other are impacting procurement markets andsupply chains. The Company must – and will – also be able to deal with rising prices and persistent
inflation.
Dear shareholders, thank you for your patience and perseverance over the past years. We know it
was not always easy to be a shareholder of your Company, but the figures now show that it wasright to hold on to the Company. This will also be reflected in our dividend policy. We also want tothank our suppliers and customers for their ongoing support and trusting cooperation.

03

KLINGELNBERG GROUP
To our Shareholders

For the 2023/24 financial year, we are planning sales at the capacity limit at roughly the same level
as the past financial year due to the continued pleasingly high order backlog and order intake. For
our EBIT margin, however, we expect another increase in the 2023/24 financial year.
We confidently look to the future and are convinced that the new financial year will be anotheroutstanding year for your Company.

Sincerely yours,

Dr. Jörg Wolle
Chairman of the Board of Directors
Zürich, 16 June 2023

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 309,0 million (+94,8%)

 Net profit amounted to EUR 20,8 million

 Order intake rose by EUR 31,5 million(+11,7%) to EUR 300,4 million

 Equity ratio at 44,5%
 Dividend of CHF 0,40 per share Highest net sales and order intake in Company’s history
 EBIT amounted to EUR +23,8 million,
an increase of EUR 39,5 million
Group key figures
2022/232021/22

ChangeNet sales from goods and services

309,0

158,6

150,4

Order intake

300,4

268,9

31,5

Order backlog

259,6

268,0

-8,4

Operating result (EBIT)

23,8

-15,7

39,5

Net profit / loss

20,8

-21,7

42,5

Basic earnings per share (in EUR)

2,35

-2,45

4,80

Diluted earnings per share (in EUR)

2,35

-2,45

4,80

Operating result as % of net sales from goods and services

7,7%(9,9%)

17,6%

Net profit / loss as % of net sales from goods and services

6,7%(13,7%)

20,4%

Cash flow from operating activities

15,7

-54,5

70,2

Investments

18,3

11,6

6,7

Free cash flow

-1,9

-55,6

53,7

Employees (FTE)

1.229

1.183

46

31.03.2023

31.03.2022

Change

284,4

273,6

10,8

Net debt

41,8

40,1

1,7

Total equity

126,6

104,7

21,9

Equity ratio

44,5%

38,3%

6,2%

EUR million

EUR million
Total liabilities and equity

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
150,0

309,0

278,2
212,1

100,0
50,0
0,0

2018/192019/20

158,7

158,6

2020/212021/22

265,2

100,0

194,5

215,5

2022/23

0,0

2018/192019/20

2020/212022/23

1.145

1.183

1.229

2020/212021/222022/23

Employees (FTE), full time equivalents

350,0

1.600

300,0

1.400
1.200
1.000

200,0

800

150,0

268,0

100,0

0,0

118,2

100,7

2018/192019/20

259,6

600

1.310

1.251

2018/192019/20

400

157,7

200
2020/212021/222022/23

0

Personnel expense, in EUR million

Other operating expense*, in EUR million

120,0

50,0

100,0

40,0

80,0

30,0

60,0
101,2

110,6
83,7

40,0

95,9

100,1

20,0

38,7

37,7

2018/192019/20

2020/21* 2018/19 adjusted, without IPO costs

2021/222022/23

0,0

45,2

46,3

2021/222022/23

26,2

10,0

20,0
0,0

300,4

2021/22

Order backlog, in EUR million

50,0

268,9

50,0

250,0

08

150,0

2018/192019/20

2020/21KLINGELNBERG GROUP
At a Glance

Operating result (EBIT)*, in EUR million

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

40,0

15,0

30,0

10,0

20,0
10,0

31,1

23,8

11,2

7,7

0,0

0,0
-18,8

-10,0

-11,6

-5,0

-15,7

-8,9

-7,3

2019/20

2020/21

-9,9

-10,0

-20,0
-30,0

5,0

2018/192019/20

2020/212021/222022/23-15,0

2018/192021/222022/23

Share price, from 01 April 2021 – 31 March 2023

30,00
25,00
20,00
15,00

10,00
5,00
0,00

* 2018/19 adjusted, without IPO costs

09

Highlights 2022/23

KLINGELNBERG GROUP
Highlights

Special Projects:

New KLINGELNBERG assembly hall officially inaugurated in Hückeswagen-Winterhagen

View into the new assembly hall covering a total area of 8.000 m2.

After less than a year of construction, the new assembly hall with connected logistics center on the company premises of KLINGELNBERG GmbH in Hückeswagen-Winterhagen was
officially inaugurated at the end of 2022. Covering a total area of 8.000 m2 and located at
Gustav-Adolf-Klingelnberg-Straße 1, the new facility is where KLINGELNBERG is now building
large gear manufacturing machines in particular, which are destined for use in the wind powerindustry, among other sectors. New office workspaces with a dedicated canteen were also built
and ready in early 2023.
The challenging project set on a tight time line was completed in just ten months. The groundbreaking ceremony took place in December 2021. Two months later, the concrete columns were
installed, followed by the roof trusses in April. Thanks to modern building and plant engineering practices, optimal operating conditions were created: the shops are fully air-conditioned andequipped with two bridge cranes – one with a 25-ton working load limit and one with a 40-ton
working load limit – and 10 wall-mounted traveling cranes, each with a 3,5-ton working load limit.
This means that even the most sensitive and heaviest machines can be assembled there. From theplanning and realization phases onward, energy efficiency and environmental protection were a
key focus. The hall is built to meet the climate-efficiency requirements according to KfW 55 – aclimate standard that is not particularly common for industrial buildings at present.
The machine hall officially commenced operations at the end of 2022, with the start of assembly of the HÖFLER Cylindrical Gear Grinding Machines RAPID 1600 and HÖFLER Cylindrical Gear
Grinding Machines VIPER 500. The RAPID-series HÖFLER Cylindrical Gear Grinding Machine is specialized for workpieces up to 8 m in diameter and 100 t. The HÖFLER Cylindrical Gear Grinding
Machine VIPER 500 is designed for component diameters up to 500 mm and is therefore ideal forsmall to medium lot sizes. With its extensive machine portfolio covering a range of requirements,
KLINGELNBERG meets the needs of just about every sector and industry.

11

KLINGELNBERG GROUP
Highlights

Product Highlights:

KLINGELNBERG solutions for electromobility
The electrification of the automobile has brought about a fundamental change in the design andquality requirements for motor vehicle drive trains. The transmissions have far fewer gear ratios
and thus fewer gears on the one hand, yet at the same time the quality requirements have increased significantly. There are two main reasons for this. First, electric vehicles do not have aninternal combustion engine, which provides a blanketing effect for noise in the vehicle and masks
many other noises – including gear noise. Second, electric vehicles use recuperation for energy recovery, where the transmission must suddenly withstand torques on par with normal forward operation of the vehicle when coasting. In sum, the production tolerances for gears are significantly
narrower, and noise behavior becomes a major quality criterion.
KLINGELNBERG has upgraded its production system and product portfolio to respond to these
new requirements imposed by electromobility. The HÖFLER Cylindrical Gear Grinding Speed Viper
Machine is optimized for large-scale gear grinding operations with extremely stringent accuracy
and noise requirements. Noise requirements for gears are nothing new, in fact. That is why, indeveloping the HÖFLER Cylindrical Gear Roll Testing Machine R 300, KLINGELNBERG was able toapply its knowledge of torsional acceleration testing for right-angle gearboxes in the bevel gearworld to the world of cylindrical gears for electromobility. This enables fast and efficient torsional
acceleration testing of gears – up to 100% if necessary. And rounding off the portfolio is precision
metrology, which measures the extremely high accuracies comparatively quickly while also predicting noise characteristics using a software application.
Connecting these three systems to form the Closed Loop helps gear and transmission manufacturers meet stringent quality requirements in their factories located around the world that are
subject to a broad range of local conditions. This is achieved through a clever integration of thephysical and digital world.

KLINGELNBERG Closed Loop System

12KLINGELNBERG GROUP
Highlights

Trade Fairs:

KLINGELNBERG took part in a number of international trade shows
KLINGELNBERG again took part in a number of international trade shows in 2022/23 financial
year, including shows in Germany, USA, Japan and India. The exhibits featured the HÖFLER Cylindrical Gear Grinding Machine Speed Viper, the KLINGELNBERG Precision Measuring Center P 40
and the newly developed HÖFLER Cylindrical Gear Roll Testing Machine R 300, among others.
KLINGELNBERG also launched its own GEAR Seminar series in China and Turkey during thesame time period. With events for industry professionals provided free of charge under the
GEAR Seminar brand, KLINGELNBERG offers knowledge forums covering all aspects of gear technology. During the popular live events, KLINGELNBERG experts bring their customers up-to-date
on current technologies, trending topics and innovations in Bevel Gear technology, Cylindrical
Gear technology and Measuring technology.

Control 2022, Stuttgart, Germany
03.05.-06.05.2022

AMB 2022, Stuttgart, Germany
13.09.-17.09.2022

IMTS 2022, Chicago, USA
12.09.-17.09.2022

13

KLINGELNBERG GROUP
Highlights

Trade Fairs:

JIMTOF 2022, Tokyo, Japan
08.11.-13.11.2022

IMTEX 2023, Bangalore, India
19.01.-25.01.2023

GEAR Seminar China – Digital Event
21.09.-24.11.2022

GEAR Seminar, Istanbul, Turkey
04.11.-05.11.2022

14

KLINGELNBERG GROUP
Highlights

Anniversaries:

KLINGELNBERG Italy and France Subsidiaries celebrate 90 years combined
In 2022, the KLINGELNBERG Group was celebrating not one, but two, company anniversaries. The
Italian subsidiary KLINGELNBERG Italiana S.R.L., founded in 1962, was celebrating its 60th year,
while the French company KLINGELNBERG France S.A.S., founded in 1992, was marking its 30th
year. Both operations are wholly owned subsidiaries of KLINGELNBERG AG, headquartered in
Zürich, Switzerland.

60 Years of KLINGELNBERG in Italy
KLINGELNBERG has had operations abroad since the 1950s. The founding of its Italian operation in 1962 laid the groundwork for offering customers and partners consultations and services
in-country and in the local language. The Company is located in Cernusco sul Naviglio, near themetropolitan city of Milan.

30 Years of KLINGELNBERG in France
France also has cause for celebration – 30 years in its case. Since 1992, customers have been able torely on support directly in their home country of France. The offices of the French operation arelocated in Saint Germain-en-Laye, located approximately 25 km from Paris.

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KLINGELNBERG GROUPManagement Report

Segments and markets
Starting from the effects of the corona pandemic and the impression of high energy prices triggered by the war in the Ukraine, the tightened monetary policy in the wake of noticeable inflationary pressure slowed down the recovery of the global economy. In this environment of diverse
macroeconomic challenges throughout the 2022/23 financial year, the ­KLINGELNBERG Group wasstill able to give proof of its resilience and recorded new record figures for order intake and net
sales.
Due to China’s long-prevailing zero-Covid policy and subsequent waves of infections, the disruptions in the Chinese economy were largely responsible for the decrease in international trade anddeclining global industrial production towards the end of the year. Coupled with high energy
prices and a significantly tightened monetary policy, the growth in global production had slowed
down by the end of 2022 in accordance with these factors. For the year as a whole, global production increased by 3,2%, but for the final quarter it was only 1,8% higher than a year earlier. In
Germany, the growth rate of gross domestic product (GDP) in 2022 was 1,8%. Continuing supply
difficulties for intermediate products, severe turbulence with extreme price spikes on the energy
markets and a shortage of labor reduced production capacities and prevented a more vigorous
expansion of GDP.
After the post-pandemic upswing in the 2021/22 financial year was severely impaired by theflood disaster at KLINGELNBERG’s site in Hückeswagen, the KLINGELNBERG Group managed toemerge from this crisis strong and resilient already in the 2022/23 financial year. Compared to thesame period of the previous financial year, net sales increased significantly by EUR 150,4 million to
EUR 309,0 million. The 94,8% increase was due both to the absence of flood-related production
restrictions and to the significantly high order backlog at the end of the 2021/22 financial year. Allsegments reported significant increases in sales and order intake. Thanks to strong impetus fromthe wind energy, mining, and electromobility sectors, both key figures showed new record highs.
Order intake significantly increased year-on-year by EUR 31,5 million to EUR 300,4 million.
Around 51,7% of all sales were generated in the Asia-Pacific region, and a further 31,2% in the
EMEA region.

Bevel Gear segment:
The Bevel Gear segment achieved net sales of EUR 111,3 million at the end of the 2022/23 financial
year, an increase of EUR 51,8 million (87,1%) compared to the previous financial year. On the one
hand, the successful management of the flood disaster from the previous financial year contributed to this significant jump in sales. On the other hand, the post-pandemic upward forces werestrong enough to avert the feared stalling of global production despite high energy prices and tocontribute to a revival of the Bevel Gear business. Noticeable sales momentum for Bevel Gear ma-

23

KLINGELNBERG GROUPManagement Reportchines continued to emerge from the automotive and commercial vehicle industries. In addition,
projects in the aviation sector could be secured.
At the end of the financial year, order intake was slightly down on the previous financial year
(EUR 74,1 million) at EUR 71,6 million. The main reason for the drop in order intake were shifts in
automakers’ investment plans in response to changes in drive concepts. Nevertheless, the Bevel
Gear segment stood its ground within these structural dynamics and continued to win orders fromglobally operating suppliers to the automotive and commercial vehicle industries. In particular,
the development of the Dual-Spindle Grinding Machine G 35 enabled the Company to participate
in the recovery of the aerospace industry and to maintain a stable order intake.

Cylindrical Gear segment:
With an impressive increase in net sales by EUR 51,7 million to EUR 93,1 million, the Cylindrical Gearsegment generated growth of 125,3% compared to the same period of the previous financial year.
The Cylindrical Gear segment had thus also successfully overcome the effects of the flood. Following a very positive development in the first half of the financial year, demand for Cylindrical Gearmachines continued in the second half. In addition to orders received from the wind energy, mining, as well as general mechanical and gear engineering sectors, order intake in the electromobility sector further increased. Compared to the previous financial year, order intake recorded a significant increase of EUR 26,3 million to a total of EUR 104,6 million. Thus, the Cylindrical Gear segment had once again achieved a record in the order book and had developed into a strong sales
driver of the KLINGELNBERG Group due to a healthy mix of customers from different industries.
The Speed Viper series in combination with the newly developed Cylindrical Gear Roll Testing Machine R 300 met with strong interest on the market, so that further growth can be expected in thefield of electromobility. The efforts to replace fossil fuels with renewable energies was reflected
in a large number of wind energy projects. This means that a growing market for medium-sized
Rapid machines can also be expected in the future. The Asian market, in particular China, remains
the driving force in this respect.

Measuring Centers segment:
The Measuring Centers segment had also successfully coped with the flood event and recorded
net sales of EUR 84,7 million. This represents an increase of EUR 39,8 million or 88,7%. In addition,
the record order intake of EUR 84,7 million from the previous financial year was exceeded by afurther EUR 4,3 million and the Company set a new record by achieving EUR 89,0 million. Supported by the high innovation potential of KLINGELNBERG Measuring Centers and consolidated,
global market positions in the areas of electromobility and wind power, the Company recorded
the highest order volume of Measuring Centers within a single financial year in the history of the
KLINGELNBERG Group.

24KLINGELNBERG GROUPManagement Report

The newly developed Measuring Centers P 125 and P 152 have been very positively received by
the market and have established themselves as successful players in this segment. While the­KLINGELNBERG Group successfully positioned itself in the electromobility market with the P 26
/ P 40 series including optical measurement technology and successfully capitalized on the comprehensive transformation in the automotive industry, the new Measuring Center P 152 set new
standards in the wind power and non-automotive (industrial applications) sectors and benefited
from the international efforts to replace fossil fuels with renewable energies such as wind power.
Required measuring capacities for both already realized and still planned wind power projects
lead to the expectation of a continued increased demand for Measuring Centers of these series.

Drive Technology segment:
The Drive Technology segment concluded the 2022/23 financial year with net sales of
EUR 15,1 million, up EUR 5,9 million on the previous financial year. Order intake increased significantly to EUR 19,2 million at the end of the financial year, up 22,1% on the previous financial year.
Due to the massive expansion of offshore activities for diversified gas production in the wake of
the Ukraine conflict, demand for rudder thruster propellers featuring bevel gears from the Drive
Technology segment significantly increased.
In the mining markets, increasing demand for bevel gears in the mill gearboxes sector emerged in
the 2022/23 financial year after years of drastic investment cutbacks. The background to this was
the need for raw materials for the switch to electric drive technology necessitated by the energy
transition. For bevel gears in the large diameter range, Drive Technology had a manufacturing
advantage over market competitors thanks to its highly productive C 300 Gear Cutting Machines.
Thanks to the circular arc gear cutting processes implemented in the past, the Drive Technology
segment was able to supply replacements for individual bevel gears in master gear quality. Thiswas crucial for the further penetration of the mining market segment.

Research and development
In the 2022/23 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.
Compact and tailored to the needs of the automotive industry, the Precision Measuring Center
P 26 has always been extremely popular among customers. Its 25-year success story was built on
a foundation of new measurement and evaluation methods, the implementation of innovative
measuring systems, and uniform quality and reliability. The well-established combination of tactile metrology (3D NANOSCAN) and optical metrology (HISPEED OPTOSCAN) for measuring Cylindrical Gears is now available for this model series as well. The Precision Measuring Center P 26

25

KLINGELNBERG GROUPManagement Reportin particular has become a fixture on the shop floor. Therefore, it is very important that not only
new measurement strategies, but also the temperature compensation for hybrid metrology could
be integrated. Now there is a clear line of sight to achieving even greater reductions in measuring
time in the shop-floor environment.
Due to the worldwide expansion of wind energy production, the demand for large components
is experiencing tremendous growth in the gear sector. A logical consequence of this is the targeted introduction of high-volume processes in large-gear manufacturing. The KLINGELNBERG
Precision Measuring Center P 152, designed for gears with a maximum outside diameter up to
1.520 mm and weighing up to 8.000 kg, offers an innovative solution here. This extremely flexible
machine requires no foundation and can be placed on an integrated vibration isolation platform
if required. The development of the newest member of the P series family was successfully completed in 2022, and delivery of the first machine will take place at the beginning of the 2023/24 financial year.
Having access to all five roll testing methods puts customers in the ideal position – even better
when combined with the KLINGELNBERG production cell. Consisting of the Cylindrical Gear Grinding Machine Speed Viper, the CompactLoader, and the integrated Cylindrical Gear Roll Testing
Machine R 300, the KLINGELNBERG production cell is the solution for the manufacture and 100%
quality testing of high-precision gears for the electric drive train. With the optionally available
R 300 production monitor, users always have a documented overview of the current key quality
indicators in their operations. The production cell can be equipped with all machine models in the
Speed Viper series – from the Speed Viper 80² (dual spindle) to the Speed Viper 300. Whatever
the setup, the 100% quality inspection is always carried out with the HÖFLER Cylindrical Gear Roll
Testing Machine R 300.
The ratio of research and development expenses to net sales decreased by 6,4 percentage points
compared to the previous financial year and totaled 8,0% in the 2022/23 financial year. The decline
was mainly due to the significant increase in net sales of 94,8%. R&D expenditures of EUR 24,7 million underline the importance of product development for the KLINGELNBERG Group.

Gross profit
In the 2022/23 financial year, the KLINGELNBERG Group achieved the highest net sales fromgoods and services in the Company’s history at EUR 309,0 million, EUR 150,4 million above theprevious financial year’s figure and EUR 30,8 million above the previous record net sales fromgoods and services recorded in the 2018/19 financial year. This significant increase was due bothto the flood-related interruption of operations at KLINGELNBERG’s central site in Hückeswagen
in the previous financial year and the persistently high order backlog at the end of the 2021/22 financial year. The change in inventory of finished and unfinished goods as well as unbilled goods
and services amounted to EUR -18,8 million in the 2022/23 financial year (previous financial year:

26

KLINGELNBERG GROUPManagement Report

EUR +41,0 million). The main reasons for the reduction in change in inventory were the absence ofthe flood-related delays in the delivery of customer machines and improved material availability.
However, inventories were still well above pre-flood levels. The combination of net sales and thechange in inventory resulted in an increase in total operating performance of EUR 90,5 million to
EUR 290,1 million.
Driven by sales, material expense increased at a lower rate than total operating performance dueto the reduction in inventories and the absence of material damage that occurred as a result of theflooding in the previous financial year and amounted to EUR 125,8 million, EUR 15,3 million higher
than in the previous financial year. The materials ratio decreased by 12,0 percentage points yearon-year to 43,4% at the end of the financial year. Thus, gross profit amounted to EUR 164,3 million
and was EUR 75,2 million higher than in the same period of the previous financial year.

Personnel expense and employees
Personnel expense amounted to EUR 100,1 million at the end of the financial year, up EUR 4,2 million
on the previous financial year. Wages and salaries including social security contributions increased
by EUR 6,0 million, mainly due to the increase in the number of employees. By contrast, the expensefor employee benefits decreased by EUR 2,7 million. The primary reason for this was a reversal of
the pension provision at KLINGELNBERG GmbH due to interest-related factors.
Due to the significant increase in total operating performance the personnel expense ratio
decreased from 48,0% in the 2021/22 financial year to 34,5%. As at 31 March 2023, theKLINGELNBERG Group employed 1.229 employees (FTE), 46 more than in the previous financial
year.

Other operating expense
At the end of the financial year, other operating expense amounted to EUR 46,3 million, up
EUR 1,1 million on the previous financial year. Although the flood damages decreased by
EUR 9,7 million, performance-related costs (amongst others freight costs, travel expenses, commission expenses) increased significantly. The other operating expense ratio was 15,9% at the endof the financial year, significantly under the prior-year level (-6,8 percentage points).

Other operating income
Other operating income amounted to EUR 9,5 million at the end of the financial year,
down EUR 30,7 million on the previous financial year. The decrease, in each case relating
to ­KLINGELNBERG GmbH, was mainly due to the lower flood-related insurance payments(­EUR 15,5 million) and the reduction in reconstruction aid from the Federal State of “NordrheinWestfalen”/Germany from EUR 20,0 million in the previous financial year to EUR 5,6 million.

27

KLINGELNBERG GROUPManagement Report

Operating result
After the post-pandemic upturn in the previous financial year was severely slowed down by theflood disaster on 14 July 2021, the KLINGELNBERG Group once again impressively managed toemerge stronger from a crisis. The operating result (EBIT) increased significantly by EUR 39,5 million
compared to the previous financial year and amounted to EUR +23,8 million at the end of the2022/23 financial year. Both the highest order intake in the Company’s history and the still very
high order backlog provide a positive outlook for the future.
The operating result as % of net sales from goods and services in the 2022/23 financial year was+7,7%, an increase of 17,6 percentage points compared with the previous financial year. The basic
earnings per share amounted to EUR +2,35.

Financial result
The KLINGELNBERG Group reported a financial result of EUR -2,3 million in the 2022/23 financial
year. This loss resulted on the one hand from the exchange rate result in the accounts, which wasincurred 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 reports the Group figures in Euro, the Euro transactions of the KLINGELNBERG AG haveto be converted twice. On the other hand, higher bank interest rates impacted the financial result.

Balance sheet
The balance sheet total of the KLINGELNBERG Group increased by EUR 10,8 million compared tothe previous financial year ending on 31 March 2022 and amounted to EUR 284,4 million as at
31 March 2023. While non-current assets increased by EUR 16,9 million (+28,5%) to EUR 76,0 million,
partly due to the new assembly hall of KLINGELNBERG GmbH in Hückeswagen that went into
operation, current assets decreased by EUR 6,0 million and amounted to EUR 208,4 million
as at 31 March 2023. Although receivables from goods and services increased significantly by
EUR 30,6 million as a result of the large number of customer machines delivered at the end of the2022/23 financial year, inventories fell significantly by EUR 15,4 million for the same reason. In addition, other short-term receivables decreased by EUR 22,8 million mainly due to payments by theFederal State of “Nordrhein-Westfalen”/Germany for “Reconstruction NRW on the occasion ofdamage caused by heavy rain and flooding in July 2021”.
Total liabilities decreased by EUR 11,0 million (-6,5%) compared to 31 March 2022 and amounted to EUR 157,8 million as at 31 March 2023. While long-term financial liabilities increased
by EUR 10,8 million due to the financing of the new assembly hall in Hückeswagen, current liabilities decreased by a total of EUR 18,8 million. Among others, short-term financial liabilities(EUR -8,1 million) and payables from goods and services (EUR -6,3 million) recorded declines. Net debt
increased by EUR 1,7 million and amounted to EUR 41,8 million at the end of the 2022/23 financial year.

28

KLINGELNBERG GROUPManagement Report

Equity increased by EUR 21,9 million (+20,9%) compared to 31 March 2022 and amounted to
EUR 126,6 million as at 31 March 2023. This increase was mainly due to the positive annual resultof the KLINGELNBERG Group. Compared with 31 March 2022 the equity ratio increased by 6,2 percentage points to 44,5%. The KLINGELNBERG Group has thus further strengthened its solid financial position in the 2022/23 financial year.

Cash flow statement
The cash flow from operating activities increased by EUR 70,2 million to EUR 15,7 million comparedto the 2021/22 financial year. The main reason for this was the absence of flood damage or floodrelated production restrictions. Among others, net profit increased by EUR 42,5 million.
Outflows for investment in tangible fixed assets amounted to EUR 18,0 million in the 2022/23 financial year. The largest single investment was the new assembly hall in Hückeswagen, Germany,
which was already inaugurated. The cash flow from investing activities amounted to a total of
EUR -17,6 million and was thus EUR 16,5 million lower than in the previous financial year.
Current and non-current financial liabilities were in total 5,5% above the previous financial year’slevel, cash flow from financing activities amounted to EUR 2,6 million. As financial liabilities increased significantly in the previous financial year, the cash flow from financing activities decreased by EUR 38,2 million.
In total, the net change in cash amounted to EUR 1,0 million.

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 Russian war of aggression against Ukraine dampened growth in all regions, drove inflation and intensified shortages in individual markets. One of KLINGELNBERG’s
measures to counter this risk is regional diversification.
 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.

29KLINGELNBERG GROUPManagement Report 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.

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 war in the Ukraine is still ongoing and is weighing on economic development. According toOxford Economics, global gross domestic product is expected to grow by 1,7% in 2023. With gas
prices falling again and a comparatively mild winter, Europe is weathering the energy crisis better
than feared, and the US economy is also proving somewhat more stable than expected. Overall,the impression of a weak global economy in the current year 2023 remains.
We expect sales in the 2023/24 financial year to remain at around the same level as in the 2022/23 financial year due to the continued pleasingly high order backlog. EBIT margin in the 2023/24 financial year is expected to be above that of the 2022/23 financial year.

30

KLINGELNBERG GROUPManagement Report

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 2023. 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. A revision of the Articles in accordance with the new law will be proposed to the
AGM.

2Group 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 2023 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 2023 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 2022/23 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 2023:

Date

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

DirectShareholder

Position

30 November 2022

KLINGELNBERG AG

Jan Klingelnberg*

KLINGELNBERG
Luxemburg A.G.

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%*Please refer to Note 5.9 to the Statutory Financial Statements

34

KLINGELNBERG GROUP
Corporate GovernanceNotifications made in 2022/23 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 2023, the Company held no treasury shares.

3.2

Cross-shareholdings

As at 31 March 2023, 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 2023, 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 2023, 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 in accordance with Art. 3B of the Articles.
More information on the authorized capital can be found in Art. 3B of the Articles at:https://klingelnberg.com/fileadmin/Investors/Statuten_Articles_of_Association_Klingelnberg.pdf

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:
31.03.2023

31.03.2022

31.03.2021

31.03.2020

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

Authorized capital (in CHF)

0

0

0

4.456.400

Authorized capital in units

0

0

0

891.280

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.

36

KLINGELNBERG GROUP
Corporate Governance

4.4

Share buyback program

KLINGELNBERG has no ongoing share buyback program.

4.5

Convertible bonds and options

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

4.6

Limitations on transferability and nominee registration

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

37KLINGELNBERG GROUP
Corporate Governance4.6.1 Admissibility of nominee registrations
The BoD has the right to conclude agreements with nominees concerning their disclosure requirements. In special cases, the Company may approve exceptions to the above restrictions. More information can be found in Art. 5 of the Articles (see link in Note 4.6 above).

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

4.6.3	Procedure and conditions for easement or abolition of the restriction oftransferability
A resolution of the General Meeting passed by at least two thirds of the represented share votes
and the absolute majority of the nominal value of the represented shares is required for the easement or abolition of the restriction of the transferability of the registered shares (Art. 12 para. 2
lit. 2 of the Articles).
https://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 2022/23 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). No member of the BoD holds an
Executive Management position with KLINGELNBERG AG or any of its subsidiaries or has held sucha position in the past three years.

38KLINGELNBERG GROUP
Corporate GovernanceIn the 2022/23 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.

5.2

Other activities and vested interests

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

5.3

Mandates outside KLINGELNBERG AG

The Articles stipulate that no member of the BoD may hold more than five additional mandates
as a member of the Board of Directors, other top management or administrative body in listedcompanies and no more than ten mandates as a member of the Board of Directors, other top management or administrative body of legal entities that do not meet the abovementioned criteria.
In addition to the mandates permitted as described above, each Member of the BoD may have up
to ten mandates in the top management or administrative bodies of legal entities that must be
registered in a commercial register and that serve exclusively as entities for the private administration and management of real estate and other assets of the respective member of the BoD orsuch member’s relatives. With respect to the additional activities, mandates in companies that areunder uniform control or the same beneficial ownership are deemed to be one mandate.
For further details, in particular regarding mandates which are not subject to the abovementioned
limitations please see Art. 23 of the Articles available at:https://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 para. 2 lit. 2 of the Articles of KLINGELNBERG AG the Annual General Meeting(hereinafter also the “AGM”) has the non-transferable powers to elect and recall the members of
the BoD, the Chairman of the BoD, the members of the NCC, the Auditors and the independent
proxy. Art. 15 of the Articles of KLINGELNBERG AG states that the BoD must consist of a minimumof four members.
https://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

Dr. Hans-Martin Schneeberger

Member

NCC

2007

Philipp Buhofer

Member

NCC

2022

Roger Baillod

MemberAC (Chairman)

2018

Prof. Dr. Michael Hilb

MemberAC

2018

Kalina Scott

MemberAC

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 SiberHegner 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.

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 is the Past-President of 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 The Ross Business Schoolat The University of Michigan from 1984 to 1985.

Roger Baillod
is a BoD member and Swiss citizen born in 1958. He has been a member of the BoD of the Company
since June 2018. Mr. Baillod has been a professional director and management consultant since2017. He has served as a member of the Board of Directors since 2013, since 2021 as Chairman of
the Board of Directors and Chairman of the Remuneration and Nomination Committee and before
that as Chairman of the Audit and Risk Management Committee of BKW AG from 2013 to 2021,
as member of the Board of Directors and Vice-Chairman of Ed. Geistlich Söhne AG, as member ofthe Board of Directors and Chairman of the AC of Rieter Holding AG since 2016. He is president ofa pension fund commission and member of the board of trustees of the Joh. Jacob Rieter-Stiftung.
He was a member of the Board of Migros-Genossenschafts-Bund from 2008 to 2020 and was the
Chairman of its AC from 2012 to 2018 as well as member of the NCC from 2018 to 2020. Between
1996 and 2016, Roger Baillod was the Chief Financial Officer and a member of the group management of Bucher Industries AG. Between 1993 and 1996, he was member of the Executive Board of41

KLINGELNBERG GROUP
Corporate Governance

two industrial companies. Mr. Baillod started his career as an auditor and consultant at ATAG Ernst& Young AG in Zürich from 1984 until 1993. Mr. Baillod holds a degree in Business Economics andis a Certified Public Accountant.

Prof. Dr. Michael Hilb
is a BoD member and Swiss citizen born in 1977. He has been a member of the BoD of the Company since June 2018. Prof. Hilb is founder 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 Swiss citizen born in 1974. She is a seasoned professional with 25 years ofbroad experience in finance, ranging from operational finance to mergers & acquisitions and capital markets. Kalina Scott is since 2019 Chief Financial Officer of duagon AG, a Swiss-based supplierfor communication, computing and control technology for regulated critical applications in therailway and medical electronics markets with approximately 600 employees worldwide. Prior tothat, from 2017, she was a Chief Financial Officer of Polyphor AG, a biotech company listed on the
SIX Swiss Exchange. Ms. Scott’s background is in Investment Banking, where she started her career
at UBS in 1997, focusing on structured finance and credit risk management, followed by leadingroles in UBS’s investment banking in Zurich and London, covering leveraged finance as well as
mergers & acquisitions. From 2006 until 2008 Ms. Scott worked as Director of Corporate Financeat KPMG Zurich, followed by a position as Managing Director for Bank am Bellevue. Ms. Scottholds a degree in Business Administration.

42

KLINGELNBERG GROUP
Corporate Governance5.7	Structure of the internal organization - Allocation of tasks within the
Board of Directors
Except for the election of the Chairman of the BoD and the chariman and members of the NCC by
the AGM, the BoD organizes itself.
In case the office of the Chairman of the BoD is vacant, the BoD shall appoint a substitute thatmust be a member of the BoD for the period until the conclusion of the next AGM. In case of avacancy on the NCC, the NCC shall appoint a substitute for the period until the conclusion of thenext AGM (Art. 17, last paragraph of the Articles):
https://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
Roger Baillod, Prof. Dr. Michael Hilb and Kalina Scott. The organization, detailed responsibilities
and reporting duties of the AC are stipulated in its Regulations. The Regulations of the Audit Committee can be accessed on the corporate governance section of the Company´s website at:https://klingelnberg.com/fileadmin/Investors/Statuten_Articles_of_Association_Klingelnberg.pdf
Meetings of the AC are held as often as required, but at least three times a year, or upon requestof its members.

43

KLINGELNBERG GROUP
Corporate Governance

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; 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.

44KLINGELNBERG GROUP
Corporate Governance5.7.3 Nomination and Compensation Committee
As required by Swiss law the members of the NCC are elected by the AGM. As at 31 March 2023,
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.
Pursuant to the Organizational Regulations and the Regulations of the NCC, a majority of themembers of the NCC should be independent as defined in the Swiss Code of Best Practice for Corporate Governance and a majority of the members of the NCC, including its chairperson, should be
experienced in the areas of succession planning, performance evaluation as well as the nominationand compensation of members of Boards of Directors and Executive Management boards. The
Regulations of the NCC can be accessed on the corporate governance section of the Company´swebsite at:https://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;

45

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

46

KLINGELNBERG GROUP
Corporate Governance5.7.4 Working methods of the Board of Directors and its committees
Within the 2022/23 financial year the BoD held five meetings. The following table shows the individual members’ attendance at BoD and Committee meetings and the average length of meetings:
Name

BoD

AC

NCC

Dr. Jörg Wolle

54Diether Klingelnberg (until 23 August 2022)

2

2

Dr. Hans-Martin Schneeberger

5

4

Hans-Georg Härter (until 23 August 2022)

2

Roger Baillod

44Prof. Dr. Michael Hilb

3

4

Philipp Buhofer (from 23 August 2022)

3

Kalina Scott (from 23 August 2022)

3

3

Average meeting duration

02:12

02:12

2

00:30

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

47

KLINGELNBERG GROUP
Corporate Governance

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 arealso attended by the Corporate Secretary. The BoD consults external experts when necessary inconnection with specific topics.
All five meetings of the BoD were attended by the CEO and the CFO, the COO and the CSO attended four of the meetings in the reporting period. The four meetings of the NCC in the reporting
period were held in the presence of the CEO with regards to his requests. All four meetings of the
AC in the reporting period were attended by the CEO and the CFO, whereas the Head of Financeattended three meetings of the Audit Committee and two meetings were also attended by theauditors 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 as

48

KLINGELNBERG GROUP
Corporate Governancewell as the respective amendments to the Articles of Association; (xi) the examination of compliance with the legal requirements regarding the appointment, election and professional qualifications of the Company’s auditors; and (xii) the non-transferable and inalienable duties and powersof the Board of Directors pursuant to the Swiss Federal Merger Act on Merger, Demerger, Transformation and Transfer of Assets [Bundesgesetz über Fusion, Spaltung, Umwandlung und Vermögensübertragung (Fusionsgesetz, FusG)] of 01 July 2004, as amended.
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 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.

49

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 2023, the members of the EM include:
Jan Klingelnberg
CEO and a Swiss citizen born 1971. Mr. Klingelnberg has been the CEO of the Group since 2004. From2002 until 2004, he was the Director of the Cylindrical Gears business unit of KLINGELNBERG GmbH,Germany. Between 2000 and 2002, Mr. Klingelnberg held various roles at ZF Passau GmbH in Brazil
and in the US. Before that, he was a manager for corporate strategy planning at SMS Demag AG
in Germany. Since 2008, Mr. Klingelnberg has also been a member of the Managing Board of the
VDMA for machine tools and production systems, a trade association for the industrial sector inwhich the Company is active. Mr. Klingelnberg holds a degree in Industrial Management from
Carnegie Mellon University in Pittsburgh, USA.

Christoph Küster
CFO and a German citizen born in 1974. Mr. Küster has been the CFO of the Group since 2015, after
having been a Managing Director of KLINGELNBERG GmbH, Germany, since 2014. He serves as amember of the Advisory Council of HDI Global. From 2003 until 2013 he occupied various positions
in finance and controlling at Salzgitter Group in Germany. Mr. Küster 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. From 2016 until 2022, he served as Executive Board CFO / COO of Rothenberger
AG. He launched his career in 2000 at SMS Group GmbH, where he started out as a member ofcorporate staff working in international consultancy. Still with the SMS Group, between 2003 and2012, 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.

51

KLINGELNBERG GROUP
Corporate Governance

6.2

Other activities and functions

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

6.3

Mandates outside KLINGELNBERG AG

The Articles limit the number of functions in superior management or administrative bodies oflegal units other than the Company or its subsidiaries that members of the EM are allowed to holdat one time.
Pursuant to Art. 23 of the Articles, members of the EM may hold up to two mandates in publicly
traded companies and, in addition, up to three mandates in other legal entities, subject to the approval of the BoD.
In addition, each member of the EM may have up to ten mandates in the superior management
or administrative bodies of legal entities obliged to register themselves in a Swiss commercial register or a foreign equivalent, which exclusively serve as entities for the private administration andmanagement of real estate and other assets of the respective member of the EM. For further details, in particular regarding mandates which are not subject to the abovementioned limitations
please see Art. 23 of the Articles available at:https://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 theGeneral Meeting passed by at least two thirds of the represented share votes and the absolute majority of the nominal value of the represented shares is required for: (i) the cases listed in Art. 704
para. 1 CO and in Art. 18 and Art. 64 of the Federal Act on Merger, Demerger, Transformation andTransfer of Assets (Merger Act) dated 03 October 2003; (ii) the easement or abolition of the re-53

KLINGELNBERG GROUP
Corporate Governancestriction of the transferability of the registered shares; (iii) the amendment or cancellation of Art.
31 (opting-out); and (iv) any change to Art. 12 of the Articles.

8.5

Convening the AGM

The ordinary AGM shall be held annually within six months after the close of the financial year.
The BoD determines the time and location of the AGM. The AGM is convened by the BoD or, if necessary, by the Company’s statutory auditors. Extraordinary shareholders’ meetings may be held
when deemed necessary by the BoD or the Company’s auditors. Liquidators may also call a shareholders’ meeting. Extraordinary Shareholders’ Meetings shall be called as often as necessary, inparticular, in all cases required by law. Extraordinary General Meetings shall be convened by the
BoD within two months if shareholders representing at least ten percent of the share capital request such meeting in writing, setting forth the items to be discussed and the proposals to be decided upon (Art. 7 of the Articles).
An AGM is convened by publishing a notice of such meeting in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt, SHAB) at least 20 calendar days before the date of themeeting. Registered shareholders may be invited by letter and/or e-mail. Such publication and letters of invitation must indicate the date, time and place of the meeting, the items on the agenda,
the wording of any motions proposed by the BoD or by shareholders who have requested the convention of a shareholders’ meeting or the inclusion of an item on the meeting’s agenda.
For details regarding the form of notice please see Art. 8 of the Articles:
https://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 with voting rights individually or jointly representing at least shares with a nominal valueof CHF 1.000.000 may demand that items be put on the agenda. Such demands have to be submitted to the Chairman of the BoD at least 45 calendar days before the date of the AGM and shall bein writing, specifying the item and the proposals.

8.7

Entry in the share register

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

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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 of the Federal Act on Financial
Market Infrastructures and Market Conduct in Securities and Derivatives Trading of 19 June 2015
(FMIA) shall be excluded in accordance with Art. 125 para. 2 FMIA.

9.2

Change of control clauses

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

10		Auditors
10.1		Duration of mandate and term of office of the auditor-in-charge
PricewaterhouseCoopers AG (hereinafter “PwC”) was elected auditor of KLINGELNBERG AG and
the KLINGELNBERG Group at the AGM on 23 August 2022. PwC has served as auditor for the existing auditing mandate since the 2009/10 financial year. The lead auditor of PwC responsible for
KLINGELNBERG changed in the 2016/17 financial year. The lead auditor is rotated after the maximum statutory period of seven years (for companies with registered office in Switzerland).

10.2

Fees

Auditing Fees:
For the 2022/23 financial year, PricewaterhouseCoopers AG invoiced the Company for EUR 292.091
in global audit fees.
Additional Fees:
In the 2022/23 financial year, PricewaterhouseCoopers AG invoiced the Company for EUR 40.466
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 2022/23 financial year, the external
auditors attended two out of the four AC meetings.
The AC reviews the performance, compensation, and independence of the external auditors on aregular basis. The AC reports its findings to the BoD.
Additional services or consulting assignments are delegated to the auditors only if they are permitted by law and the auditor’s code of independence. PwC monitors its independence throughout the year and annually confirms its independence to the AC.

11

Information policy

The KLINGELNBERG Group pursues an open and active information policy. The Company complies
with its obligations under the rules of the SIX Swiss Exchange, including the requirements on thedissemination of material and price-sensitive information.
The Group publishes an annual report that provides audited consolidated financial statements,
audited financial statement and information about the Company including the business results,
strategy, products and services, corporate governance, and executive compensation. The Annual
Report is published within four months after the 31 March balance sheet date. The annual results
are also summarized in the form of a press release. In addition, the Company releases results forthe first half of each financial year within three months after the 30 September balance sheet
date. The published half-year and annual consolidated financial statement 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
publication requirements of Art. 53 of the listing rules of SIX Swiss Exchange. Ad-hoc announce-

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KLINGELNBERG GROUP
Corporate Governancements 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 Obligations
and the SIX Exchange Regulations. The KLINGELNBERG Group has also observed the Swiss Code ofBest 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;

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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 2022/23 financial year, four NCC
meetings were held (Note 5.7.4 of the Corporate Governance Report).
Recommendations regarding compensation for the EM and the BoD must comply with theCompany´s regulations and must be approved by the BoD (and ultimately by the AGM). In any voteon the compensation to be determined for a particular member of the BoD, the Board member
concerned must observe the relevant general withdrawal/abstention procedures. The EM does
not participate in the determination of its own compensation. The CEO is, however, consulted on
the compensation proposed for the other members of the EM.
The NCC utilizes independent external consultants when required. External consultants are generally used to benchmark compensation and assist in the design of compensation plans. The criterion used for benchmarking essentially is the long-term financial development of the Group.
At the AGM, the BoD submits to the shareholders the maximum amount of compensation of the
BoD and the EM for binding approval. The voting mechanism set forth by the Articles of Association provides for approval of the following items by the AGM: the maximum compensation of the BoD for the term of office until the next AGM; the maximum compensation of the EM (fixed and variable components) that may be paid or
allocated in the subsequent financial year.
https://klingelnberg.com/fileadmin/Investors/Statuten_Articles_of_Association_Klingelnberg.pdf

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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 2023 to the 2024 AGM is provided in the invitation to the 2023 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 an LTIP.
Further information regarding the planned total compensation of the EM for the subsequent
financial year is provided in the invitation to the 2023 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.
Due to the severe flooding of the production facilities at the Hückeswagen site in July 2021 andthe associated massive economic losses, the CEO, CFO and CSO waived their rights to compensation for the achievement of individual targets under the STIP for the 2022/23 financial year. The
EBT target is not included in the waiver.
As outlined in Note 2 above, the LTIP may be awarded in cash, shares or a combination of both. The
Company may procure any required shares or other securities through purchases in the market (ifpossible) or by using conditional share capital. The maximum total amount of the granted longterm variable compensation is limited at 100% of the participant’s base compensation.
The LTIP shall take account of the sustainable long-term performance of the Group. The BoD determines the detailed conditions of the LTIP. The LTIP was designed in cooperation with an external consultant, a leading independent firm with experience in the areas of compensation andvalue-based management. The original long-term incentive agreement with the CFO, the CSO andthe COO already demonstrated a long-term-view, the amendments made upon IPO are intended
to reinforce and encourage this. In the future, the BoD may extend participation in the LTIP to further key employees of the Group, excluding Non-Executive Board Members.
The LTIP participant is granted a number of Performance Share Units (PSUs) on an annual basis.
The number of PSUs to be granted is calculated as follows: amount granted to the relevant participant under the LTIP divided by the volume-weighted average price of the shares for the last 20
trading days before the end of the financial year of the Company preceding the financial year forwhich the grant is made. The amount granted to each participant will be determined on an annual basis and at the discretion of the BoD before the start of the relevant LTIP period. The grantamount is limited to an amount equal to 100% of the participant’s base compensation for the
relevant financial year. The PSUs are granted to each participant on the first day of the relevant
financial year.
The LTIP period is three years and the PSUs vest on a cliff basis, i.e. the PSUs granted at the startof a three-year period vest on the last day of the third financial year after the award was granted.

65

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Compensation Report

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.
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.

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Compensation Report

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

5	Compensation for financial year under review
As the Company is listed, it must comply with the obligations of the VegüV, which include the publication of an annual compensation report. In this context, the compensation of the BoD and EM
for the 2022/23 financial year is disclosed herewith.

5.1

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

The AGM of 23 August 2022 voted for a maximum compensation of the BoD in the amount of
CHF 700.000 until the end of the next AGM.
Within the 2022/23 financial year the compensation of the members of the BoD – with the exception of Diether Klingelnberg – comprised a fixed fee in the amount of CHF 60.000 per annum or
CHF 180.000 per annum in the case of the Chairman, plus an additional amount of CHF 10.000
per annum for membership in a committee or CHF 20.000 per annum for the chairman of a committee. In the 2021/22 financial year the BoD waived half of their fixed compensation due to theflood.
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.

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Compensation Report

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

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

Nomination &Compensation

Chair

Diether Klingelnberg(until 23 August 2022)

CHF
Dr. Jörg Wolle

Audit




Total

The following table shows the compensation in the 2021/22 financial year:
Committee Membership

CHF
Dr. Jörg Wolle

Board
Membership

Audit

Nomination &Compensation

Compensation in cash, CHF

Fixed base fee

Fixed fees formemberships incommittee/roles

Employersocial security
payments 3

Chair

Chair

90.000,00

20.000,00

6.866,05

Diether Klingelnberg

12.000,00

not applicable

not applicable

Dr. Hans-Martin
Schneeberger

30.000,00

10.000,00

1.517,55

Hans-Georg Härter



30.000,00

not applicable

not applicable

Roger Baillod



Chair

30.000,00

20.000,00

3.850,00

Prof. Dr. Michael Hilb



30.000,00

10.000,00

3.080,00

222.000,00

60.000,00

15.313,60

Total

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

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Compensation Report

5.2

Compensation of the members of the Executive Management (audited)

The AGM of 24 August 2021 voted for a maximum compensation of the EM in the amount of
EUR 4.500.000 for the 2022/23 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.
The following table shows the compensation of the financial year ended 31 March 2023:
CHF 4

EM

of which Jan Klingelnberg, CEO

1.392.925,30

500.004,00

STIP

657.599,53

175.910,00

LTIP 5340.000,00

not applicable

Other compensation 6345.196,33

95.869,78

Employer social security

130.079,21

64.466,15

2.865.800,37

836.249,93

Base compensation

Total

The following table shows the compensation of the financial year ended 31 March 2022:
CHF 4

EM

of which Jan Klingelnberg, CEO

1.371.352,30

500.004,00

STIP

0,00

0,00

LTIP 5510.000,00

not applicable

Other compensation 6

192.487,61

97.623,76

Employer social security

198.833,80

56.393,05

2.272.673,71

654.020,81

Base compensation

Total

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

(as at 31 March 2023: EUR 1/CHF 0,99735 and as at 31 March 2022: EUR 1/CHF 1,02610).
5 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.
2022/23 financial year: Fair value PSU CHF 15,80, date of grant 01 April 2022, number of PSUs granted: 10.756
2021/22 financial year: Fair value PSU CHF 22,34, date of grant 01 April 2021, number of PSUs granted: 7.610
6 Fringe benefits of all EM members and consultancy fees for consultation of subsidiaries by CEO. For the current financial
year, this amount includes as well an extraordinary settlement payment to a former member of the Executive Board due
to local legal requirements.

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5.3

Share ownership information [CO 663c]

Please see Note 5.9 of the Statutory Financial Statement.

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

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Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the compensation report 2022/2023

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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 2023. The
audit was limited to the information on remuneration, loans and advances pursuant to Art. 14 to 16 of the Ordinanceagainst Excessive Remuneration in Listed Companies Limited by Shares (Ordinance) in the tables marked 'audited' on
pages 67 to 69 of the compensation report.
In our opinion, the information on remuneration, loans and advances in the accompanying compensation report (pages
59 to 70 complies with Swiss law and article 14 to 16 of the Ordinance.
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. The Board of Directors 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 on remuneration, loans and advances
pursuant to article 14 to 16 of the Ordinance is free from material misstatement, whether due to fraud or error, and to

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.

72

KLINGELNBERG GROUP
Compensation Reportissue 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 error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this compensation report.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment 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 AGBlaženka Kovács-Vujević

Regina Spälti

Licensed audit expert
Auditor in charge

Licensed audit expert

Zürich, 15 June 2023

3 Klingelnberg AG | Report of the statutory auditor to the General Meeting73

Consolidated Financial
Statements
75

Consolidated balance sheet

77

Consolidated income statement

78

Consolidated cash flow statement

79	Consolidated statementof changes in equity
80	Notes to the consolidated
financial statements
80		

General information81		

Accounting principles

89		Changes in the scopeof consolidation89	Substantial informationon the consolidatedbalance sheet items

100		Substantial information on
the consolidated income
statement items
103		

Additional information

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated balance sheet
EUR 000

Note

31.03.2023

31.03.2022

8.718

7.720

AssetsCurrent assets
Cash and cash equivalents
Receivables from goods and services

4.1

71.14740.557

Derivative financial instruments

4.2

134

38

Other short-term receivables

4.3

8.363

31.157

Inventories

4.4

117.588133.025

2.465

1.916

208.415214.413

Prepayments and accrued income
Total current assets

Non-current assets
Tangible fixed assets

4.5

58.73345.993Loans and other receivables

4.6

134

0

Investments in joint ventures

4.7

1.333

1.304

Deferred tax assets

4.8

13.7499.948

Other financial assets

4.9

1.348

1.072

Intangible assets

4.10

732

832

76.02959.149284.444273.562

Total non-current assets
Total assets

The enclosed notes are part of the consolidated financial statements.

75

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated balance sheet
Note

31.03.2023

31.03.2022

Short-term financial liabilities

4.11

31.96440.091

Payables from goods and services

4.12

27.57333.844

Derivative financial instruments

4.2

78

378

Other short-term liabilities

4.13

46.92553.324

Accrued liabilities and deferred income

4.14

15.16412.136

Short-term provisions

4.15

4.720

5.443

126.424

145.216

EUR 000
Liabilities
Current liabilities

Total current liabilities

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

4.11

18.516

7.740

Deferred tax liabilities

4.15

1.329

1.114

Long-term provisions

4.15

11.56614.769Total non-current (long-term) liabilities

31.41123.623

Total liabilities

157.835

168.839

EquityShare capital

4.16

28.63928.639

Capital reserves

4.16

43.13443.134Retained earnings

54.83632.950Total equity

126.609104.723

Total liabilities and equity

284.444273.562

The enclosed notes are part of the consolidated financial statements.

76

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated income statementNote2022/232021/22Net sales from goods and services

5.1/6.2

308.961

158.608

Other operating income

5.2/6.2

9.547

40.284

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

5.3-18.84440.965Material expense

6.2-125.790-110.479

Personnel expense

5.4-100.114-95.851

Depreciation on tangible fixed assets

4.5-3.956-4.144

Amortization on intangible assets

4.10

-367

-419

5.5/6.2-46.260-45.232

4.7

613

593

23.790-15.675-2.330-3.99321.460-19.668-705-2.00920.755-21.677

EUR 000

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

5.6/6.2

Profit / loss before income taxes
Income taxes

5.7

Net profit / loss

Earnings per share
EUR
Basic earnings per share

5.8

2,35

-2,45

Diluted earnings per share

5.8

2,35

-2,45

2.2

28.113-11.112Additional information - non-GAAP measures
EUR 000
EBITDAThe enclosed notes are part of the consolidated financial statements.

77

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated cash flow statement
2022/232021/2220.755-21.677

4.5/4.10

4.323

4.563

4.15

-3.712-2.274

4.5/4.10138928

Change in receivables from goods and services

4.1-29.304

2.507

Change in inventories

4.4

16.156-52.5124.3/4.8

18.693-25.111

Share of profits from the application of the equity method

4.7

-613

-593

Change in payables from goods and services

4.12-5.85719.177

4.13/4.14-5.03314.747157

5.708

15.703-54.537

EUR 000

Note

Net profit / loss
Depreciation/amortization of
tangible fixed assets and intangible assets
Change in provisions (including deferred taxes)
Loss from the disposal of tangible
fixed assets and intangible assets

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

584

842

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

4.9

-410

0

Outflows for investment in tangible fixed assets

4.5-18.048-11.441

Inflows from the sale of tangible fixed assets

4.5

561

9.644

Outflows for investment in intangible assets

4.10

-270

-134

Inflows from the sale of intangible assets

4.10

3

0

-17.580-1.089Cash flow from investing activities

Change in short-term financial liabilities

4.11-8.13434.751

Change in long-term financial liabilities

4.11

10.722

6.036

2.588

40.787

Currency translation effects

287

-18

Net change in cash

998

-14.857

Opening balance of cash and cash equivalents at 01.04.

7.720

22.577

Closing balance of cash and cash equivalents at 31.03.

8.718

7.720

Net change in cash

998

-14.857

Cash flow from financing activities

The enclosed notes are part of the consolidated financial statements.

78

KLINGELNBERG GROUP
Consolidated Financial Statements

Consolidated statement of changes in equity
Retained earnings
Otherretainedearnings

Cumulative
foreigncurrency
differences

Total
retainedearnings

Total
equitySharecapitalCapitalreserves

Goodwill
offset withequity28.63943.134-20.51762.7746.497

48.754120.527

Currency translation differences

0

0

0

0

6.016

6.016

6.016

Net result from cash flow hedges

0

0

0

-143

0

-143

-143

Loss

0

0

0

-21.6770-21.677-21.677

Balance as at 31.03./01.04.2022

28.63943.134-20.51740.95412.51332.950104.723

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

20.755020.75520.75528.63943.134-20.51761.92213.43154.836

126.609

EUR 000
Balance as at 01.04.2021

Balance as at 31.03.2023

Note

The enclosed notes are part of the consolidated financial statements.

79

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 2023 were authorized for release by the Board of Directors on 15 June 2023 and are subject to approval by the Annual General Meeting.
Flood disaster:On the evening of 14 July 2021, as a result of persistent heavy rain, particularly in the west
and southwest of the Federal Republic of Germany, the Hückeswagen site at Peterstrasse of­KLINGELNBERG GmbH was flooded in large parts by high water.
This damage burdened the 2021/22 annual result by EUR 64,1 million. Of this, the loss from theinterruption of operation amounted to EUR 39,5 million based on gross profit, the change in inventory of finished and unfinished goods as well as unbilled goods and services due to scrapping
amounted to EUR 5,9 million. In addition, material expense increased by EUR 8,5 million due toscrapping and rework. Cleaning costs for the entire site and equipment led to increased otheroperating expense of EUR 10,2 million. By contrast, the other operating income included reimbursements from insurance of EUR 15,8 million, as well as a subsidy from the Federal State of“­Nordrhein-Westfalen”/Germany EUR 20,0 millon.
The flood-related settlement of claims with the Federal State of “­Nordrhein-Westfalen”/Germany
have not yet been finally concluded. In the current financial year, income of EUR 5,6 million (Federal State of “­Nordrhein-Westfalen”/Germany), insurance reimbursements of EUR 0,3 million andother operating expenses of EUR 0,5 million are included.

80

KLINGELNBERG GROUP
Consolidated Financial Statements

2

Accounting principles

2.1

Basis for the preparation of the financial statements

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

2.2

Definition of alternative performance measures

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

2.3

Scope and principles of consolidation

The consolidated financial statements of KLINGELNBERG Group include KLINGELNBERG AG, aswell as all entities as at 31 March of the current financial year for which the parent company holds,
directly or indirectly, the majority of the voting rights or has the power to govern their operating
and financial policies in any other way. Consolidation ends when control by the parent company
ceases.
Capital consolidation is based on the purchase method. Companies acquired by the Group areincluded in the consolidated financial statements from the date of obtaining control. The net assets acquired are revalued at fair value at the acquisition date, using uniform Group accounting
principles. Companies sold are excluded from the scope of consolidation as at the date on which
control ceases, with any gain or loss recognized in the income statement.
All intragroup balances and transactions including accounts receivable, accounts payable, income,expenses, and any unrealized gains and losses resulting from transactions between Group companies are eliminated.

81

KLINGELNBERG GROUP
Consolidated Financial Statements

Investments in joint ventures in which KLINGELNBERG Group exercises joint control together witha joint venture partner (e.g., with 50% voting rights) are recognized using the equity method.
The financial statements of the Group companies are prepared using the same accounting and valuation methods and on the same balance sheet date as the parent company’s financial statements.
The KLINGELNBERG Group has no minority interests.
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

Capital31.03.2023

31.03.2022

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

82

KLINGELNBERG GROUP
Consolidated Financial Statements

2.4

Business combinations

Assets and liabilities acquired are revalued at fair value at the acquisition date. Any unrecognizedintangible assets are not separated and identified and therefore allocated to goodwill. Goodwill
is calculated as the difference between the purchase price (incl. transaction costs) and the revalued net assets. The positive or negative goodwill resulting from business combinations is offset
against equity at the date of acquisition. At the disposal of the Company, the goodwill previously
offset in equity is transferred to the income statement. The consequences of the theoretical capitalization 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.
As a globally operating Group, KLINGELNBERG manages its activities based on a business unit
approach on one side and on the optimization of synergies on the other. The reporting system
reflects this structure, and the activities of KLINGELNBERG Group are split between four main
business units:Bevel Gear
Cylindrical Gear
Measuring Centers
Drive Technology

Disclosing operating results by business unit would lead to competitive disadvantages in terms of
the profitability and distribution margins as well as the cost calculations. The KLINGELNBERG Groupwould be the only company in the industry showing detailed profitability information at business
unit level. Most of the relevant competitors are privately held companies that do not have to follow
international disclosure requirements and, therefore, do not publish any detailed financial information. Some other competitors are large, international corporations, which apply a broader 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.

83KLINGELNBERG GROUP
Consolidated Financial Statements

2.6

Conversion of foreign currency items and transactions

Translation of financial statements to be consolidated
In light of the significant share of the business operations taking place in Germany, the consolidated financial statements of KLINGELNBERG Group are presented in Euros (EUR). The financial
statements of Group companies are prepared in their respective functional currencies and translated into Euros as follows: Assets and liabilities are converted at the year-end exchange rate Income and expense are converted using the average exchange rate of the reporting year The conversion differences arising through the translation of the balance sheet items have noeffect on the income statement and are recognized in the equity as cumulative foreign currency differences. When a subsidiary with a foreign currency is de-consolidated, the accumulated
conversion differences recognized in the equity are reclassified to the income statement
Foreign currency transactions in Group companies
Foreign currency effects on intragroup equity-like loans, which are a significant part of the Company’s net investments in foreign subsidiaries, are recognized in equity as cumulative foreign currency differences until the disposal of the net investment. From this point in time, the foreign
currency differences are recognized in the income statement as a profit or loss on the sale of investments.
Transactions in foreign currencies are converted at the average exchange rate of the month of
the transaction. Exchange rate differences arising from financial transactions are recorded in theincome statement. All monetary assets and liabilities in a foreign currency are converted at theexchange rate as at the balance sheet date and the resulting gains/losses are recognized in theincome statement.
The table below outlines the main exchange rates used in the preparation of our consolidated financial statements as at and for the years ended 31 March 2023 and 31 March 2022.

Year-end exchange rate

84

Average exchange rate

31.03.2023

31.03.2022

2022/232021/22

CHF/EUR

0,99735

1,026100,99433

1,06805

USD/EUR

1,08705

1,10955

1,04173

1,16277

JPY/EUR

144,93090

135,01560

140,91568

130,54847

KLINGELNBERG GROUP
Consolidated Financial Statements

2.7

Cash and cash equivalents

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

2.8

Receivables from goods and services and other short-term receivables

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

2.9

Derivative financial instruments

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

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

2.11 Tangible fixed assets
Tangible fixed assets are measured at acquisition cost excluding any borrowing costs less accumulated depreciation and impairment. Depreciation is recognized on a straight-line basis over thefollowing estimated useful life of the asset:
 Land: No depreciation
 Buildings: 40 years Machines and equipment: 10 years
 Other tangible fixed assets: 3 to 10 years

85

KLINGELNBERG GROUP
Consolidated Financial Statements

Assets under construction are not depreciated until completion.
Expenditures on maintaining and repairing tangible fixed assets are charged to the income statement. Capital expenditures for existing tangible fixed assets are capitalized if classified as valueadding and depreciated over the remaining useful life.

2.12

Loans and other receivables, other financial assets

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

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

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

2.15 Intangible assets
Acquired intangible assets are measured at acquisition cost less accumulated amortization and impairment. Intangible assets are amortized on a straight-line basis over their useful life as follows: Software: 3 to 5 years
 Licenses: 3 to 10 years

86KLINGELNBERG GROUP
Consolidated Financial Statements

Internally generated intangible assets including research and development costs are recognized
as a cost in the income statement in the financial year in which they occurred.
Goodwill from the acquisition of consolidated entities is offset with equity at the date of acquisition.
Goodwill is theoretically amortized on a straight-line basis over a useful life of 7 to 15 years.

2.16 Impairment of assets
Assets (especially tangible fixed assets, intangible assets and financial assets) are subject to an impairment test at each balance sheet date. If there is any indication of impairment, a detailed test
is performed immediately. If the carrying amount exceeds the recoverable amount (higher of fairvalue less cost to sell and value in use), an impairment loss is recognized in the income statement.
If, subsequently, an increase in the asset’s value can be demonstrated, the impairment charge isreversed (no reversal for goodwill impairments) accordingly via the operating result.
As the goodwill is already offset with equity at the date of the acquisition, an impairment of the
goodwill does not affect the income statement but leads to a disclosure in the notes only.

2.17 Financial liabilities
Financial liabilities are measured at nominal values.

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

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

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

87

KLINGELNBERG GROUP
Consolidated Financial Statements

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

2.22 Leases
Leases in which a significant portion of the risks and rewards of ownership are transferred fromthe lessor to the lessee are classified as finance leases. The leased assets are carried at cost nothigher than the minimum lease payments and depreciated along with other tangible fixed assets.
The corresponding leasing obligations are shown as liabilities. Leasing payments are allocated accordingly as either capital repayments or interest expenses presented in the financial result. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases are charged to profit orloss on a straight-line basis over the period of the lease.

2.23 Share-based payments
Share-based payments are treated as a cash-settled plan. Provisions must be recognized as an expense over the vesting period. The fair value of the liability must be determined at each balance
sheet date and the provision adjusted to this fair value. For further information refer to Note 4.1of the Compensation Report.

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

88

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.
The closure and liquidation of KLINGELNBERG Hungaria Kft., which was launched as part of the Efficiency Enhancement Program in 2019/20, was successfully completed in the previous financial year.

4 	Substantial information on the consolidated balance sheet items
4.1

Receivables from goods and services
31.03.2023

31.03.2022

Receivables from third parties

71.00240.545

Receivables from joint ventures

306

125

0

45

-161

-158

71.14740.557- not due and due up to 90 days

68.94640.088- overdue more than 90 days

2.201

469

EUR 000

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

4.2

Derivative financial instruments
31.03.2023

EUR 000
Basic value:

31.03.2022

Asset

Liability

PurposeAsset

Liability

Purpose

Foreign exchange

134

78

Hedging38

378

Hedging

Total

134

78

38

378

4.3

Other short-term receivables

This position includes the claim against the Federal State of “Nordrhein-Westfalen”/Germany for“Reconstruction NRW on the occasion of damage caused by heavy rain and flooding in July 2021
(Wiederaufbau NRW anlässlich von Schäden durch Starkregen und Hochwasser im Juli 2021)” of
EUR 3,4 million (as at 31 March 2022: EUR 20,0 million), for further details refer to Note 1. Furthermore taxes of EUR 2,0 million (as at 31 March 2022: EUR 7,9 million), Corona aid in the amount of
EUR 1,1 million (as at 31 March 2022: EUR 0,9 million), and prepayments to suppliers of EUR 0,6 million as in the previous financial year. The value adjustments for the financial year under review
amounted to EUR 0,2 million (as at 31 March 2022: EUR 0).

89

KLINGELNBERG GROUP
Consolidated Financial Statements

4.4

Inventories
31.03.2023

31.03.2022

Finished products

7.846

8.165

Work in progress

66.72883.272Acquired parts

55.32554.13018883130.087

145.650

Value adjustments-12.499-12.625

Inventories

117.588133.025

EUR 000

Supplies

The main reason for the reduction in inventories was the absence of the flood-related delay in thedelivery of customer machines that had occurred in the previous financial year and improved material availability. However, inventories were still well above pre-flood levels.

4.5

Tangible fixed assets
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

90

KLINGELNBERG GROUP
Consolidated Financial Statements

The new assembly hall in Hückeswagen/Germany (EUR 20,7 million) was completed by the end of2022. Other fixed assets relate to tools, office equipment including hardware, office furniture andvehicles.
2021/22

Other assets

Tangible fixed
assets underconstruction

Total

48.45324.584

1.097

123.424

490

861

1.758

8.332

11.4410-10.514-8.389-3.1350-22.038

0

-9

231

177

1

400

-2.167

2.559

0

73

-465

0

Gross value as at 31.03.

039.64941.15623.4578.965

113.227

Accumulated depreciation
as at 01.04.

0

15.13139.29519.824074.250Depreciation

0

1.323

1.319

1.502

0

4.144

Disposals

0-2.814-6.009-2.6510-11.474

Foreign currency effects

0

-48

201

161

0

314

Accumulated depreciation
as at 31.03.

013.59234.80618.836067.234

Net carrying amountas at 01.04.

2.167

31.992

9.158

4.760

1.097

49.174

Net carrying amountas at 31.03.

026.057

6.350

4.621

8.965

45.993

Undeveloped
property

Land andbuildings

Machines andequipment

2.167

47.123

Additions0

Disposals
Foreign currency effects

EUR 000
Acquisition cost
Gross value as at 01.04.

Reclassifications

4.6

Loans and other receivables

This position mainly includes accounts receivables from customers with a payment term longer
than one year.

4.7

Investments in joint ventures

In the 2022/23 financial year our Chinese joint venture distributed a dividend in the amount of
EUR 0,6 million (as at 31 March 2022: EUR 0,8 million). The share of the result from joint ventures
amounts to EUR 0,6 million (as at 31 March 2022: EUR 0,6 million).

91

KLINGELNBERG GROUP
Consolidated Financial Statements

4.8

Deferred tax assets

In the financial year under review the deferred tax assets mainly result from divergent valuationsof pension provisions as well as provisions for partial retirement obligations, service anniversaries,
and provisions for warranties. Deferred taxes are calculated based on the tax rates applicable ineach country. The average applied tax rate is 26,84% (previous financial year 33,33%).
In the current financial year, this also includes taxes from loss carryforwards of around E­ UR 9,4 million(as at 31 March 2022: EUR 4,4 million). The difference of EUR 5,0 million results from the updated
forecast of loss offsetting in subsequent years.
EUR 000
Tax loss carryforwards as at 31.03.2023

Capitalized

Not capitalized

Total

No expiry

29.48438.06067.544

Total losses carried forward

29.48438.06067.544

Capitalized

Not capitalized

Total

No expiry

13.32155.01468.335

Expiry up to 7 years

1.350

1.705

3.055

Total losses carried forward

14.67156.71971.390Potential tax effect on non-capitalized losses
carried forward
Deferred taxes capitalized

Tax loss carryforwards as at 31.03.2022

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

4.9

0
9.393

0
4.447

Other financial assets

In the financial year under review, this item mainly comprises of an insolvency-protected life insurance policy to cover pension liabilities in connection with part-time phased retirement obligationsin the amount of EUR 1,2 million (as at 31 March 2022: EUR 0,9 million). The amount is calculated inaccordance with the local legal requirements of the company that recognizes these assets.

92

KLINGELNBERG GROUP
Consolidated Financial Statements

4.10 Intangible assets
2022/232021/22

SoftwareOther
intangible
assets

Total

SoftwareOther
intangible
assets

Total

8.098

352

8.450

8.025

327

8.352

Additions

270

0

270

134

0

134

Disposals and derecognitions

-171

0

-171

-137

0

-137

Foreign currency effects

28

10

38

76

25

101

Reclassifications

0

0

0

0

0

0

Gross value as at 31.03.

8.225

362

8.587

8.098

352

8.450

Accumulated amortization
as at 01.04.

7.273

345

7.618

6.907

320

7.227

Amortization

367

0

367

419

0

419

Disposals and derecognitions

-168

0

-168

-128

0

-128

28

10

38

75

25

100

7.500

355

7.855

7.273

345

7.618

Net carrying amountas at 01.04.

825

7

832

1.118

7

1.125

Net carrying amountas at 31.03.

725

7

732

825

7

832

EUR 000
Acquisition cost
Gross value as at 01.04.

Foreign currency effects
Accumulated amortization
as at 31.03.

93

KLINGELNBERG GROUP
Consolidated Financial Statements

A theoretical capitalization of goodwill would have the following effects on the consolidated
financial statements.
2022/232021/22

Gross value as at 01.04.

20.51720.517Gross value as at 31.03.

20.51720.517

Accumulated amortization at 01.04.

17.60316.962574

641

18.17717.603

2.340

2.914

126.609104.723

2.340

2.914

128.949

107.637

20.755-21.677

-574

-641

20.181-22.318

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 / loss
Theoretical amortization of goodwill
Theoretical net profit / loss

94

KLINGELNBERG GROUP
Consolidated Financial Statements

4.11 Financial liabilities
31.03.2023

31.03.2022

Short-term financial liabilities

31.96440.091Long-term financial liabilities

18.516

7.740

Total financial liabilities

50.48047.831- EUR

49.98547.190

- USD

495

585

- JPY

0

56

- 2 to 5 years

10.0595.165- > 5 years

8.457

2.575

Average interest rate

1,97%

1,09%

Unused credit facilities

22.37333.747

Carrying amount of property

45.44926.057- thereof pledged

20.60021.155- thereof used

19.8599.223

EUR 000

Thereof in:

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

While long-term financial liabilities increased by EUR 10,8 million due to the financing of the newassembly hall in Hückeswagen, short-term financial liabilities decreased overall by EUR 8,1 million
due to the positive cash flow from operating activities.

95

KLINGELNBERG GROUP
Consolidated Financial Statements

4.12

Payables from goods and services
31.03.2023

31.03.2022- with third parties

26.81432.769- with joint ventures

381

151

- with other related parties

378

924

27.57333.84427.48533.77388

71

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

4.13 Other short-term liabilities
This position contains mainly advance payments from customers amounting to EUR 41,3 million(as at 31 March 2022: EUR 43,1 million) and taxes and social insurance withholdings of EUR 3,5 million(as at 31 March 2022: EUR 7,9 million).

4.14 Accrued liabilities and deferred income
This item mainly includes liabilities from personnel accruals (vacation, Christmas bonus, overtime,
performance bonus) EUR 8,5 million (as at 31 March 2022: EUR 7,7 million), outstanding invoices for
products sold (assembly, training, freight) EUR 4,4 million (as at 31 March 2022: EUR 2,1 million) andincome for subsequent years EUR 0,9 million (as at 31 March 2022: EUR 0,9 million).

96

KLINGELNBERG GROUP
Consolidated Financial Statements

4.15 Provisions
2022/23

Other
provisions

Total
provisions
excl. deferredtax

Deferred tax

1.253

3.763

20.212

1.114

0

0

556

3.259

316

-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

Deferred tax

Provision forwarranties

Provision forpension benefit
obligation

Provision
efficiency
enhancement

Carrying amount as at
01.04.

2.648

12.548Creation of provisions

2.703

Utilization of provisions

EUR 000

2021/22

Provision forwarranties

Provision forpension benefit
obligation

Provision
efficiency
enhancement

Other
provisions

Total
provisions
excl. deferred
tax

Carrying amount as at
01.04.

2.697

13.385

2.597

3.699

22.378

1.222

Creation of provisions

2.167

0

8

521

2.696

30

Utilization of provisions-1.817

-469

-516

-378

-3.1800

Release of provision
recognized in the income
statement

-427

-368

-836

-84

-1.715-182

Foreign currency effects

28

0

0

5

33

44

Carrying amount as at
31.03.

2.648

12.548

1.253

3.763

20.212

1.114

of which, short-term

2.173

469

1.253

1.548

5.443

0

of which, long-term

475

12.07902.215

14.7691.114

EUR 000

The valuation of provisions in all categories is based on latest available data (e.g., claims that haveoccurred or been reported) or on the experience of recent years and management estimates.

97

KLINGELNBERG GROUP
Consolidated Financial Statements

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

31.03.2023

31.03.2023

31.03.2022

Pension funds without
deficit or surplus (1)

0

0

0

0

Pension funds without
own assets (2)0-8.987-12.548Total

0-8.987-12.548

Contributions
concerning
the businessperiodPension benefit
expense as part ofpersonnel expense

2022/232021/22

-418

-418

-374

3.561

-492*

3.069

368

3.561

-910

2.651

-6

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

(1) The Swiss entity is affiliated to a collective pension plan where the surplus/deficit cannot be
determined on the basis of the individual contract but it can be stated that based on the audited
figures of the pension fund as at 31 December 2022 the coverage of the collective plan as a wholeamounts to 106,6% (as at 31.12.2021 the audited figures: 123,2%). The technical interest rate usedamounted to 2,00% (prior year: 1,75%). The underlying mortality table remained unchanged (BVG
2020 GT). Furthermore, there is a supplementary pension plan, which does not bear risk due to fullinsurance as part of a collective insurance contract.
(2) The economic obligation from pension funds without own funds contains primarily the obligation from employee benefit plans in Germany. The discount rate used in the calculation was 4,05%(2021/22: 1,31%). A provision for pension benefit obligation at the level of the economic obligation
has been recorded. Pension benefit expense as part of the personnel expense includes the increase
and 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.
Provision Efficiency Enhancement
The Efficiency Enhancement Program launched in 2019/20 financial year was completed in the financial year under review. EUR 0,9 million of the provisions were utilized and EUR 0,3 million werereleased.

98

KLINGELNBERG GROUP
Consolidated Financial Statements

Other provisions
Other provisions include, among others, fire prevention measures of EUR 0,4 million (as at
31 March 2022: EUR 0,4 million), part-time phased retirement obligations of EUR 2,4 m­ illion (as at
31 March 2022: EUR 2,2 million) and for long service awards EUR 0,4 million (as at 31 March 2022:
EUR 0,5 million).
Due to parameters influencing the value of the PSU, the provision for the LTIP in the financial year
under review amounts to EUR 0,1 million (as at 31 March 2022: EUR 0). 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 2023 and the prior year is composed of 8.840.000
registered shares with a nominal value of CHF 5 each.
Capital reserves
The certification of the capital reserves as at 31 March 2019 has been available since 03 April 2020.
According to the certificate, CHF 64.120.826,50 were recognized by the Swiss tax authorities. The
certification including the reduction for the paid dividend in 2019/20 is approved by the Swiss tax
authorities as at 20 May 2021. Considering this dividend (CHF 8,84 million), CHF 55.280.826,50 canbe distributed tax-free in the future.

99

KLINGELNBERG GROUP
Consolidated Financial Statements

5	Substantial information on the consolidated income statement items
5.1

Net sales from goods and services
2022/23

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

59.44015.10930.89722.275308.9612021/22

EUR 000
Service location
Segments

Germany

Switzerland

Japan

USA

Rest ofthe world

Total

Bevel Gear

19.33023.076

1.437

9.221

6.418

59.482

Cylindrical Gear

26.703

2.593

1.983

5.702

4.326

41.307

Measuring Centers28.774

3.188

3.116

5.620

4.205

44.903

Drive Technology

9.115

0

0

0

58

9.173

Other

1.757

0

63

0

1.923

3.743

Total

85.67928.857

6.599

20.54316.930158.608

For explanations regarding the segment reporting refer to Note 2.5.

5.2

Other operating income

The other operating income decreased from EUR 40,3 million to EUR 9,5 million mainly because oflower income from flood-related insurance payments (EUR 15,5 million), reduction in reconstruction aid from the Federal State of “Nordrhein-Westfalen”/Germany (EUR 14,4 million), government financial aid for the Corona pandemic (EUR 1,4 million), and higher capitalized goods on
own account (EUR 1,3 million).

100KLINGELNBERG GROUP
Consolidated Financial Statements

In the 2022/23 financial year the other operating income consisted mainly of flood-related
government aid (EUR 5,6 million), for further information refer to Note 1. Furthermore included were capitalized work on own account (EUR 1,5 million), and income from insurance claims­(EUR 0,5 million).

5.3	Change in inventory of finished and unfinished goods as well as unbilledgoods and services
The main reasons for the reduction in change in inventory by EUR 59,8 million to EUR -18,8 million
were the absence of the flood-related delays in the delivery of customer machines and improved
material availability (Note 4.4).

5.4

Personnel expense

Personnel expenses amounted to EUR 100,1 million at the end of the financial year, up EUR 4,2 million
on the previous financial year. Wages and salaries including social security contributions increased
by EUR 6,0 million, mainly due to the increase in the number of employees. Expenses for employee
benefits, on the other hand, decreased by EUR 2,7 million. The primary reason for this was a reversal of the pension provision at KLINGELNBERG GmbH due to interest-related factors (refer toNote 4.15).

5.5

Other operating expense

In the financial year under review other operating expense increased by EUR 1,1 million mainly incurred by higher freight costs (EUR 3,8 million), higher marketing, travel and representation expense (EUR 2,4 million), which where partially offset by reduced costs (EUR 9,7 million) from theflood damages ­(refer to Note 1).
In the financial year under review the largest positions of other operating expense were freight(EUR 9,0 million), travel and representation costs (EUR 5,2 million), rent expense (EUR 4,0 million),and other administrative expenses (EUR 3,7 million).

101

KLINGELNBERG GROUP
Consolidated Financial Statements

5.6

Financial result
2022/232021/22

Interest expense (-)-1.222-620

Financial expense-1.222-620

Interest income (+)

180

157

Financial income

180

157

Currency translation difference and hedging expense-14.868-8.667

Currency gains

13.5805.137

Foreign currency loss

-1.288-3.530Financial result-2.330-3.993

EUR 000

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

5.7

Income taxes
2022/232021/22

Current tax expense-4.324-2.034

Deferred tax expense

3.619

25

Tax expense recognized on the income statement-705-2.009EUR 000

The average applied tax rate for the Group is 26,84% (as at 31 March 2022: 33,33%) and is calculated based on the local tax rates of each local company weighted in proportion to the local company’s earnings before tax in the financial year. Deferred taxes are calculated based on the tax
rates applicable in each country.
As in the last financial year, local changes in income tax rates had no significant impact on the effective income tax rate. The change in the effective income tax rate results from the varying profit
situations of individual Group companies at different local tax rates.

102

KLINGELNBERG GROUP
Consolidated Financial Statements

The other effects are of EUR 0,7 million (as at 31 March 2022: EUR 2,0 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.
2022/232021/22

Profit / loss before taxes

21.460-19.668

Average applied tax rate

26,84%

33,33%

Expected income tax expense

5.760-6.555

Effect of non-recognition of tax losses in current year

-5.955

6.594

Other effects

900

1.970

Effective income tax expense

705

2.009

3,29%

(10,21%)

EUR 000

Effective income tax rate

5.8

Earnings per share

Basic earnings-per-share amounts are calculated by dividing net loss/profit for the year attributable to ordinary equity holders of the parent company by the average number of ordinary shares
outstanding during the year.
2022/232021/2220.755-21.677

8.840.000

8.840.000

Basic earnings per share (EUR)

2,35

-2,45

Diluted earnings per share (EUR)

2,35

-2,45

EUR 000
Net profit / loss
Average number of outstanding shares

6

Additional information

6.1

Off-balance-sheet transactions

According to the takeover agreement of KLINGELNBERG GmbH/KLINGELNBERG Söhne GmbH& Co. Kommanditgesellschaft, KLINGELNBERG GmbH has an obligation to meet the expenseof adjustments to the pensions of the retired employees of KLINGELNBERG Söhne GmbH & Co.
Kommanditgesellschaft. In the financial year under review, the payments and reductions balance each other out (as at 31 March 2022: payment of EUR 0,1 million and was recognized inpersonnel expense).

103

KLINGELNBERG GROUP
Consolidated Financial Statements

Obligations due to operating leases – KLINGELNBERG Group as the lessee:
31.03.2023

31.03.2022

Up to 1 year

3.555

3.695

1 to 5 years

6.986

7.533

0

1.316

10.541

12.544

EUR 000

More than 5 years
Total obligations from operating leasingThis relates mainly to the leasing of buildings used for operational purposes, motor vehicle andmachine leasing, and office equipment leasing (rental).
No significant new rental or leasing contracts were concluded, so that the obligation will be reduced over the remaining term.

6.2

Transactions with related parties
2022/232021/22

1.603

1.916

28

166

-4.415-3.704

Other operating expense

-221

-49

Financial result

-49

-18

-3.054-1.689EUR 000
Net sales from goods and services
Other operating income
Material expense

Total

Transactions with related parties include transactions with shareholders, joint ventures, and otherrelated parties. The conditions do 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 15 June 2023. On this date, the financial statements were authorized for release by the Board of Directors.

104

KLINGELNBERG GROUP
Consolidated Financial Statements

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the consolidated financial statements
2022/2023

105

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 2023, 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 principles.
In our opinion, the consolidated financial statements (pages 75 to 104) give a true and fair view of the consolidated financial position of the Group as at 31 March 2023 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 concluded full scope audit work at two reporting units in two countries andaudit of specific accounts in one country. Our audit scope addressed over 85%
of the Group’s revenue.
As key audit 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
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106

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 Meeting107

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 2022/2023 total net
sales from goods and services of EUR 309.0 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 yearend to be a key audit matter because of the complexity involved when assessing and adhering to the contractuallyagreed incoterms as well as due to usual 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 Group’s accounting principles in note
2.20 and to note 5.1 ‘Net sales from goods and services’ regarding the segment split.

–

We identified transactions occurring close to the balance sheet date and for the months of March 2023 andApril 2023, tested, on a sample basis, whether revenue
was appropriately recognized in the period in which therisk and reward of ownership was transferred. For thesame 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.

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 the consolidated financial statements, which give a true andfair view in accordance with Swiss GAAP FER and the provisions of Swiss law, and for such internal control as theBoard of Directors determines is necessary to enable the preparation of consolidated financial statements that are freefrom 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
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.

4 Klingelnberg AG | Report of the statutory auditor to the General Meeting108

KLINGELNBERG GROUP
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 paragraph 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists
which has been designed for the preparation of the consolidated financial statements according to the instructions of theBoard of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AGBlaženka Kovács-Vujević

Regina Spälti

Licensed audit expert
Auditor in charge

Licensed audit expert

Zürich, 15 June 2023

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

Statutory Financial Statementsof KLINGELNBERG AG
111

Statutory balance sheet

113

Statutory income statement

114

Notes to the financial statements

114		

General information

114

Accounting principles

116		Substantial information on
the balance sheet items
119		Substantial information on
the income statement items
120		

Additional information

123 Appropriation of retained earnings

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory balance sheet
CHF

Note

31.03.2023

31.03.2022

234.323

28.57514.596.414

7.265.285

2.477.006

389.305

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

3.1

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

3.2

2.193.769

1.438.114

Other short-term receivables from group companies

3.3

61.386.796

77.829.147

Inventories

3.4

3.165.980

5.563.196

242.462279.750

84.296.750

92.793.372

532.820566.346100.585.622

90.618.122

2.410

7.663

Total non-current assets

101.120.852

91.192.131

Total assets

185.417.602

183.985.503

Prepayments and accrued income
Total current assets

Non-current assets
Tangible fixed assets
Investments
Intangible assets

3.5

111

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory balance sheet
Note

31.03.2023

31.03.2022

Short-term financial liabilities to third parties

3.6

44

41

Short-term financial liabilities to group companies

3.3

25.188.702

27.961.849

Payables from goods and services to third parties

3.7

1.097.429

1.768.653

Payables from goods and services to group companies

3.3

13.175.914

7.918.733

68.235173.747

CHF
Liabilities
Current liabilities

Derivative financial instruments
Other short-term liabilities to third parties

3.8

8.546.783

11.072.433

Other short-term liabilities to group companies

3.9

522.020726.0443.965.069

5.268.538

Short-term provisions

104.015

162.115

Total current liabilities

52.668.211

55.052.153

Long-term provisions

392.200

219.300

Total non-current (long-term) liabilities

392.200

219.300

53.060.411

55.271.453

2.10/3.10

44.200.000

44.200.000

3.11

55.531.150

55.531.150- thereof reserves from capital contributions

55.531.150

55.531.150

Statutory retained earnings

32.626.041

28.982.900- thereof amount brought forward from the previous year

28.982.900

30.708.306

3.643.141-1.725.406

Total equity

132.357.191

128.714.050

Total liabilities and equity

185.417.602

183.985.503

Accrued liabilities and deferred income

Non-current (long-term) liabilities

Total liabilities

EquityShare capital
Statutory capital reserves- thereof net profit / loss

112

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Statutory income statement
CHF

Note

Net sales from goods and services

2022/232021/2267.430.432

32.341.280

Other operating income

4.1

1.087.007

2.136.879

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

4.2-2.403.265

3.767.568

Material expense

4.2-47.110.094-27.422.980

Personnel expense

4.3-8.220.558-7.336.151

Depreciation on tangible fixed assets-96.658-116.161

Amortization on intangible assets-8.528-6.630-10.350.492-6.721.299

327.844-3.357.494

3.332.269

1.831.795

3.660.113-1.525.699-16.972-199.707

3.643.141-1.725.406

Other operating expense

4.4

Operating result
Financial result

4.5

Profit / loss before income taxes
Income taxes
Net profit / loss

4.6

113

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 reports its consolidated financial statements based on the recognized standard (Swiss GAAP FER). In accordance with the legal provisions, it has decided not to provide noteson the audit fees, a cash flow statement or a report on the business situation.

2

Accounting principles

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

2.1

Foreign currency translation

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

2.2

Cash and cash equivalents

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

2.3

Receivables from goods and services from third parties

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

2.4

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

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

114

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

2.5

Inventories

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

2.6

Tangible fixed assets

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

10 years
3 to 10 years

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

2.8

Revenue recognition

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

2.9

Accrued expenses

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

115

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

2.10 Share capital
The paid-in capital of KLINGELNBERG AG as at 31 March 2023 is 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

31.03.2023

31.03.2022

Receivables from goods and services (gross)17.984.289

9.078.828

10.025

2.857

Value adjustments-3.397.900-1.816.400

Receivables from goods and services

14.596.414

7.265.285

14.550.643

7.265.075

45.771

210

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 includes refunds from VAT declarations from Germany and Switzerland in theamount of CHF 1,6 million (as at 31 March 2022: CHF 1,0 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 decreased from CHF 77,8 million to CHF 61,4­million
in the 2022/23 financial year, in particular due to the payment of CHF 10,0 million into the capital reserves of KLINGELNBERG GmbH. As a result, the investment increased by the same amount.
The loan given by KLINGELNBERG (Japan) Ltd. in the previous financial year was repaid on time. The
loan from KLINGELNBERG America Inc. was repaid including the cash pool account. ­KLINGELNBERG
America Inc. is now using the existing cash pool account to settle future machine invoices.
At the same time, trade payables to KLINGELNBERG GmbH increased from CHF 7,5 million to
CHF 11,9 million.

116

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

3.4

Inventories
31.03.2023

31.03.2022

Work in progress

3.223.453

5.626.718

Value adjustments-57.473-63.5223.165.980

5.563.196

CHF

Inventories

3.5		Investments
As at 31 March 2023, KLINGELNBERG AG held the following investments:
Share of capital andvoting rights

Company, head office

Currency

Capital31.03.2023

31.03.2022

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

Additional as at 31. March 2023:
In the 2022/23 financial year, KLINGELNBERG AG made an additional payment into the capital reserve of KLINGELNBERG GmbH of EUR 10,0 million.

3.6

Short-term financial liabilities to third parties

As at 31 March 2023 the existing line of credit was, as in the previous financial year, unused.

117

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

3.7

Payables from goods and services to third parties
31.03.2023

31.03.2022

Payables from goods and services

987.0221.690.341

Payables from joint ventures

110.40778.312

1.097.429

1.768.653

1.090.732

1.765.557

6.697

3.096

CHF

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

3.8

Other short-term liabilities to third parties

Other short-term liabilities include advance payments from customers, salaries and wages, commissions and taxes/social-insurance withholdings. The advance payments received decreased from
CHF 10,7 million to CHF 8,1 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 2023 is composed of 8.840.000 registeredshares with a nominal value of CHF 5 each (no changes to the previous financial year).

3.11

Statutory capital reserves

As at 31 March 2023, the Company had CHF 55,5 million (no changes to the previous financialyear) of reserves from capital contributions, of which CHF 55,3 million has been recognizedas such by the Swiss tax authorities (further details Note 4.16 of the Consolidated Financial
Statements).

118

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

4	Substantial information on the income statement items
4.1

Other operating income

In the 2022/23 financial year, this position includes income of back charges about CHF 1,1 million(as at 31 March 2022: 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 increase in sales, the cost of materials increased accordingly from CHF 27,4 million to
CHF 47,1 million, while the materials ratio decreased from 75,9% to 72,4%.

4.3

Personnel expense

The change compared with the previous financial year is 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.
 The Board of Directors and the Executive Management waived in the prior financial year partsof their right of compensation because of the flood disaster. Reference is made to section 5 of
the Compensation Report.
 The increased number of employees (FTEs) from 46 to 50.

4.4

Other operating expense

Other operating expenses include in particular rent expense, legal and consulting fees, travel andrepresentation expense, freight charges, commissions, patent cost, capital tax and other expenses.
The increase is mainly due to the increase in sales, which causes an increase of general valuation
allowances by CHF 1,6 ­million, commissions (CHF 1,1 million), freight costs (CHF 0,6 million) andtravel cost (CHF 0,3 million).

119

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

4.5

Financial result

CHF

2022/232021/22

Interest expense (-)-621.738-258.235

Interest income (+)

2.232.196

1.493.540

Financial income

1.610.458

1.235.305

Currency translation difference and hedging expense-11.950.808-7.744.271

Currency gains

11.163.635

4.346.620

Foreign currency loss

-787.173-3.397.651

Investment income

2.508.984

3.994.141

Financial result

3.332.269

1.831.795

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

4.6

Income taxes

The tax expense includes withholding tax and tax on profits. In the current financial year, the loss
carryforward was taken into account to reduce the current taxes. Furthermore, the item includes
tax refunds from previous years of CHF 0,2 million.
Capital tax is 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).

120

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

5.2

Lease liabilities

Operating leases apply mainly to vehicles and building rents.
31.03.2023

31.03.2022

Up to 1 year

1.402.756

1.423.755

1 to 5 years

5.447.075

5.429.218

01.350.000

6.849.831

8.202.973

CHF

More than 5 years
Total operating lease liabilities

5.3

Pension fund obligations

As at 31 March 2023, as well as at the end of the previous financial year, there are no liabilities to theoccupational pension fund due.

5.4

Increase of hidden reserves

During the period under review, hidden reserves increased by CHF 1,6 million (prior financial year:
CHF -0,9 million), due to the general value adjustments to be booked because of the increase inreceivables from goods and services from third parties (Note 3.1).

5.5

Guarantees

KLINGELNBERG AG, as the parent company, has taken over joint liability for different subsidiaries
and their bank contracts. The contracts are concluded in EUR, JPY and CHF. The conversion into
CHF is made at the closing rate.
31.03.2023

31.03.2022

Guarantees and pledges to group companies in favor of third parties

87.62692.843

Guaranteed maximum amount87.62692.843

Thereof utilized

63.19459.744

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.

121

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
31.03.2023

31.03.2022

Jan Klingelnberg, CEO

20.0000Christoph Küster, CFO

1.000

1.000

Philipp Kannengießer, COO (from April 2022)

2.000

n/a

Martin Boelter, COO (EM until March 2022)

n/a

2.000

224.414195.730

Diether Klingelnberg, Member of the Board of Directors (BoD until August 2022)

n/a

20.000Hans-Georg Härter, Member of the Board of Directors (BoD until August 2022)

n/a

430

Roger Baillod, Member of the Board of Directors

1.500

1.500

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

1.000

1.000

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

4.294.349 shares are held by KLINGELNBERG Luxemburg A.G. The shares of this Company are directly and indirectly held by Jan and Diether Klingelnberg till 15 October 2022 (section 3.1 of the
Corporate Governance report). Due to the death of Mr. Diether Klingelnberg on 15 October 2022,
Mr. Jan Klingelnberg holds these shares alone. In the previous financial year, 4.000 shares were
jointly registered as a group due to an agreement with KLINGELNBERG Luxemburg A.G. on exercising of voting rights.

5.10 Events after the balance sheet dateNo significant events occurred after the balance sheet date. Events after the balance sheet datewere considered until 15 June 2023. On this date, the financial statements were authorized for release by the Board of Directors.

122

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

31.03.2023

31.03.2022

Amount brought forward from prior year

28.982.900

30.708.306

3.643.141-1.725.406

Statutory retained earnings

32.626.041

28.982.900

Distribution-1.768.000

0

To be carried forward

30.858.041

28.982.900

Net profit / loss

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

31.03.2023

31.03.2022

Capital contribution reserves

55.531.150

55.531.150

Withholding tax free distribution-1.768.000

0

To be carried forward

53.763.150

55.531.150

The Board of Directors will propose to the Annual General Meeting on 22 August 2023 to pay out
a dividend of CHF 0,40 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, no dividend per registered share was paid out according to the decision of the Annual Shareholders’ Meeting on 23 August 2022.

123

KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

Klingelnberg AG
ZurichReport of the statutory auditor
to the General Meetingon the financial statements 2022/2023

124

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 2023, the Statutory income statement and notes to the financial statements for the year thenended, including a summary of significant accounting principles.
In our opinion, the accompanying financial statements (pages 111 to 123) 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 500'000
We tailored the scope of our audit in order to perform sufficient work to enable
us to provide an opinion on the financial statements as a whole, taking into 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.

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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 500'000

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 25'000 identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we considered where subjective judgements were made; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including among other mattersconsideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
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 2023. We consider the valuation of investments in subsidiaries to be a key audit matter
due to the significance of the balance (54.2% 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 Meeting126

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 results withManagement’s prior period forecasts in order to assess 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 2022/2023 total net
sales from goods and services of CHF 67.4 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 the balance sheet date and for the months of March 2022
and April 2022 tested, on a sample basis, whether
revenue was appropriately recognized in the period inwhich the risk and reward of ownership were transferred. For the same sample, we assessed whether
the contractually agreed incoterms were in agreementwith 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.

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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 the financial statements in accordance with the provisions of
Swiss law and the Company’s articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due tofraud or error.
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 paragraph 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists
which has been designed for the preparation of the financial statements according to the instructions of the Board of Directors.
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 AGBlaženka Kovács-Vujević

Regina Spälti

Licensed audit expert
Auditor in charge

Licensed audit expert

Zürich, 15 June 2023

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

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KLINGELNBERG GROUP
Statutory Financial Statements of KLINGELNBERG AG

129

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.
2022/232021/22(1) Operating result

23.790-15.675(2) Depreciation on tangible fixed assets-3.956-4.144-367-419

28.113-11.112

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

2022/232021/2223.790-15.675131

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

2022/232021/22(1) Net sales from goods and services

308.961

158.608(2) Change in inventory of finished and unfinished goods as well as unbilledgoods and services-18.84440.965

Total operating performance (1) + (2)290.117199.573

Gross Profit:
Gross profit is the sum of total operating performance and material expense.
EUR 000

2022/232021/22(1) Total operating performance

290.117199.573(2) Material expense-125.790-110.479

Gross profit (1) + (2)164.32789.094

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

2022/232021/22(1) Total operating performance

290.117199.573(2) Material expense-125.790-110.479

43,4%

55,4%

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

2022/232021/22(1) Total operating performance

290.117199.573(2) Personnel expense-100.114-95.851

34,5%

48,0%

Personnel expense ratio (-2) / (1)132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

2022/232021/22(1) Total operating performance

290.117199.573(2) Other operating expense-46.260-45.232

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

15,9%

22,7%

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

2022/232021/22(1) Net sales from goods and services

308.961

158.608(2) Research and development expenses-24.736-22.788

8,0%

14,4%

Ratio of research and development expenses (-2) / (1)Net Debt:
The sum of financial liabilities (long- and short-term) less cash and cash equivalents.
31.03.2023

31.03.2022(1) Short-term financial liabilities

31.96440.091(2) Long-term financial liabilities

18.5167.740(3) Cash and cash equivalents

8.718

7.720

Net debt (1) + (2) - (3)41.76240.11131.03.2023

31.03.2022(1) Cash flow from operating activities

15.703-54.537(2) Cash flow from investing activities-17.580-1.089

Free cash flow (1) + (2)-1.877-55.626

EUR 000

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

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Financial Calendar

KLINGELNBERG GROUP
Financial Calendar

Dates in the coming financial year

16.06.2023	Publication of figures for the financial year ending
31 March 2023

22.08.2023

Annual General Meeting 2022/23

17.11.2023	Publication of results for the half-year ending
30 September 2023

135

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