Annual Integrated Report 2022
Full focus on the energy transition
Allowing operator and robot's smooth collaboration
Safety brakes in robotics have two primary tasks: 1. hold a
robot in place and 2. dynamically stop and hold position in
the event of power loss. Our brakes help ensure safe and
smooth robot operations 24/7.
Ensuring optimal use of wind energy
Integrated into the azimuth drive of a wind turbine, our
electromagnetic brakes hold the nacelle into the wind,
optimizing energy capture.
Boosting driving experience and brand identity
Our AVAS compliant internal and external sound solutions
help create a better driving experience and feature
SoundDesigner software that allows manufacturers to
create a unique, brand-specific vehicle sound.
Flexible and safe X-ray operation
Mobile C-arms, based on X-ray technology, can be used
flexibly in various ORs within a clinic. Our brakes selectively
lock and release the vertical motion of a C-arm, ensuring
patient safety at all times.
Securing passenger safety and comfort
Our products for suspension systems guarantee the highest
level of passenger safety and comfort in tomorrow’s
vehicles, under different driving and road conditions.
HOW OUR PRODUCTS IMPACT EVERYDAY LIFE
Transporting heavy loads safely
Our electromagnetic brakes stop electric-driven warehouse
vehicles promptly in emergency situations, keeping staff
safe and material in pristine condition.
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Supporting emission-free industrial heating processes
Our inductive heating systems provide manufacturers a
precise, green, and future-proof solution for a wide variety
of industrial heating processes.
Ensuring passenger safety during dialysis treatment
Meeting very strict standards to ensure patient safety, our
Power Pinch Valve clamps the blood flow precisely, reliably,
and quickly with a very high clamping force of 42 Newton.
It is also suitable for inexpensive PVC tubing.
Providing smooth and sustainable mobility
Electronics and controllers help vehicles use less energy
without sacrificing comfort. Our ECU controllers ensure
seamless interaction between electronics and mechanics,
enabling a pleasant, energy-efficient mobility experience.
Improving intralogistics operations and cost-efciency
In intralogistics, our advanced solenoid assemblies help
implement fast and precise package assignments,
redirections & holding and stopping operations. It improves
operational and energy efficiency and reduced costs.
Preventing waste of water in public washrooms
Our electromagnetic switching and proportional valves for
touchless faucets in public washrooms ensure good
hygiene, reliable activation and the lowest possible water
consumption.
Operating heavy-duty construction equipment safely
Our brakes for cranes feature very fast switching times, a
robust design with IP66 sealing and high emergency stop
energy to keep them from rolling or catching momentum
down the runway on a construction site.
HOW OUR PRODUCTS IMPACT EVERYDAY LIFE
3
Annual Integrated Report 2022
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
This document is the PDF version of the 2022 Annual Integrated Report of Kendrion N.V. and has been prepared for ease of use.
The European Single Electronic Format (ESEF) reporting package is available on the company’s website at www.kendrion.com.
In case of discrepancies or ambiguities between this PDF version and the ESEF reporting package, the latter prevails.
2 How our products impact everyday life
5 Profile
6 Organization
7 Preface Joep van Beurden, CEO
9 Facts and figures
11 World map
12 Strategy and financial objectives
16 Enabling energy transition
22 Share and shareholder information
25 Members of the Executive Board
26 Report of the Executive Board
26 Industrial activities
29 Automotive activities
32 Kendrion China, Kelly Tuo
34 Financial review
37 Sustainability
62 People & Culture
70 Outlook
72 Risk management
80 Corporate Governance Report
86 Members of the Supervisory Board
88 Preface Frits van Hout,
Chairman of the Supervisory Board
89 Report of the Supervisory Board
95 Remuneration Report
110 Financial statements
189 Other information
189 Provisions in the Articles of Association
governing the appropriation of profit
190 Independent auditor’s report financial statements
202 Limited assurance report non-financial information
205 Five-year summary
206 Principal subsidiaries
208 Glossary – definitions of non IFRS financial
measures
210 Reconciliation of non IFRS financial measures
213 About the Sustainability Report
CONTENTS
PHOTOGRAPHY
AND IMAGES
Wessel de Groot Fotografie
Kendrion N.V.
Shutterstock
iStock
A digital version of this Report
is available on the websites
www.kendrion.com and
annualreport.kendrion.com
along with other publications
such as press releases.
Annual Integrated Report 2022
4
Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsContents
PROFILE
Kendrion designs, manufacturers and delivers
intelligent actuators that help advance the global
push towards electrification and sustainable
energy.
Today, these compact, smart actuators are used in wind
turbines, robots, factory automation, electric vehicles, energy
distribution, and industrial heating processes, where they
support OEM customers around the world to transition to safer
and cleaner forms of energy.
As a technology pioneer and innovator, building on a foundation
of over 100 years of experience, we are driven by a desire to
explore creative solutions to the engineering challenges of
tomorrow. Our modular product design approach and agile way
of working enable us to create complex products and
customized systems that save our customers time and costs
and has made Kendrion the trusted partner of some of the
world’s market leaders in the industrial and automotive
segments.
We actively and consciously source, manufacture, and conduct
our business. Sustainable business practices are integrated in
our processes and embedded in our culture.
Rooted in Germany, headquartered in the Netherlands, and
listed on the Amsterdam stock exchange, our footprint extends
across Europe to the Americas and Asia.
Enabling energy transition
Precision. Safety. Motion.
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ORGANIZATION
AUTOMOTIVE CORE AUTOMOTIVE E
Focus on the production of
existing valve, actuation and
control technologies for
combustion engine commercial
and passenger car vehicles.
Focus on the development and
marketing of advanced smart
actuator and control technologies
for electric and autonomous
driving vehicles.
INDUSTRIAL AUTOMOTIVE
INDUSTRIAL
BRAKES
We are full-line provider of
electromagnetic brakes for
electromotors in industrial end
markets.
INDUSTRIAL
ACTUATORS AND CONTROLS
We focus on customized solutions
for industrial applications based
on electromagnetic actuators,
control technology and fluid
technology.
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PREFACE
Full focus on the energy transition
Looking back, 2022 was another challenging year. Russia’s
invasion of Ukraine compounded the difficulties caused by the
COVID pandemic that dominated 2020 and 2021. Yet while
supply chain volatility, soaring energy costs and inflation
continued to affect businesses around the world, we
nonetheless delivered strong results. I am proud of our
performance, and of the progress we have made towards our
ambitious financial targets for 2025. We are only at the
beginning of the broad energy transition to cleaner forms of
energy, and Kendrion is well positioned to make full use of the
opportunities this presents to our Business Groups and in
China.
I would like to commend everyone within Kendrion for their
relentless efforts, their continuous push for better results and
their flexible, positive approach to the challenges that impacted
not only their work at Kendrion, but also their private lives.
Extraordinary results in a volatile market
We started 2022 with optimism, ready to get back to ‘business
as usual’. However, reality turned out differently: volatile market
conditions continued to affect our operations in all Business
Groups and geographical areas. Bridging the gap between
unpredictable demand patterns and continuing raw material
and semiconductor shortages was both a major concern and a
priority; it required enormous flexibility in our resource and
production planning. In the automotive industry, the number of
passenger cars produced globally remained at 2021 levels.
In Europe however, production was 7% lower than in 2021.
Following the increases in raw material costs, we raised our
product prices, but the unavoidable time lag pressured our
margins temporarily.
In this difficult business environment, our Group increased
revenue by 12% to EUR 519.3 million compared to 2021.
In Industrial, we grew by a strong 19% from EUR 231.5 million
to EUR 276.5 million in 2022, fueled by demand for actuators
related to electrification such as our industrial brakes. Organic
revenue in Industrial is now 26% higher than pre-COVID.
It makes up 53% of Group revenue. In Automotive, our revenue
grew by 4%, as the predicted growth of the passenger car
market did not materialize.
Towards a leading role in enabling cleaner energy
All our Business Groups focus on delivering smart actuator
products that support the broad energy transition away from
oil, natural gas, and coal, towards cleaner forms of energy.
In Automotive we focus on actuators for sound, suspension,
and sensor cleaning, three products specifically aimed at
Autonomous, Connected, Electrified and Shared vehicles, or
ACES. In Industrial Brakes, we benefit from the fast-growing
market for electromotors. As most of our brakes are sold as
part of an electromotor, IB’s business is directly related to the
flourishing market for electrified solutions. This includes areas
such as intralogistics (AGVs and electric forklift trucks, and
Joep van Beurden,
CEO
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more), robotics and wind power. Our Industrial Actuators and
Controls (IAC) Business Group product portfolio includes
modular, electrified induction heating systems to replace
traditional heating solutions that use gas or oil, circuit brakers
for electricity distribution systems, and a safety actuator for
nuclear power facilities.
Securing profitable growth
Our confidence in these opportunities is reflected in two key
strategic initiatives we took in 2022: the new Automotive ‘E’
organization, and our new factory in China.
To ensure even more focus on the ACES, our Automotive
Group will operate in two distinct organizations: Automotive
‘Core’ and Automotive ‘E’. Core will focus on existing
technologies for vehicles with an internal combustion engine
(ICE), while E will concentrate on opportunities within the
transition towards Autonomous, Connected, Electrified and
Shared (ACES) mobility.
I expect that the new structure will increase the efficiency and
cash generation of our existing combustion engine business,
strengthen our innovation, and support the development of
strategically relevant products such as AVAS sound systems,
active suspension, and sensor cleaning. In fact, we’re already
seeing the results, with a significant first order for one of our
sensor cleaning products.
In addition, our new state-of-the-art factory in China will enable
us to better serve our Chinese customers. The 28.000 m²
facility will be the largest in the Kendrion Group. Based on our
project pipeline and the many opportunities we are pursuing in
China; we expect to reach maximum capacity by around 2027.
We anticipate starting production in the first half of 2023.
Outlook
As we move into 2023, the economic outlook remains
uncertain, as inflation and a potential recession in Europe and
the US continues to impact global economic activity. At the
same time, the reopening of China could potentially have a
positive effect.
The global transition towards cleaner forms of
energy – electrical power, green hydrogen, and nuclear
power – presents Kendrion with a growing list of
opportunities.
Looking beyond the short-term uncertainty however, the global
transition towards cleaner forms of energy – electrical power,
green hydrogen, and nuclear power – presents Kendrion with a
growing list of opportunities. We are well positioned to make
use of this trend, which we expect to create substantial
business opportunities for many years to come.
We will continue to prioritize our growth initiatives towards the
energy transition to help us deliver on our 2025 financial
targets: 5% average organic growth between 2019 and 2025,
an EBITDA of at least 15% in 2025 and an ROI of at least 25%
in 2025.
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PREFACE
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to reconciliation of non-IFRS information, starting on page 210.
2
Invested capital excluding intangibles arising from acquisitions.
3
Not meaningful.
Revenue
(EUR million)
12%
519.3
2021 464.0
Profit for
the period
(EUR million)
NM
3
-46.3
2021 14.4
Normalized
1
EBITDA
(EUR million)
3%
57.4
2021 55.8
Dividends
(proposed)
(EUR million)
5%
10.8
2021 10.3
ROI
1,2
(in %)
0.5%
15.6%
2021 15.6%
FACTS AND FIGURES
Net cash flows from
operating activities
(EUR million)
36%
37.9
2021 27.8
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Total number
of employees
by gender
(in % F vs M)
47/53
2021 48/52
Total number of
employees (FTE)
(at 31 December)
0.9%
2,753
2021 2,728
Illness rate
(in %)
14.9%
5.4%
2021 4.7%
Accidents
(per 1,000 FTE)
29.3%
6.5
2021 9.2
Relative energy
consumption (in
tonnes kWh/million
added value)
15.2%
147.2
2021 173.5
Relative CO
2
emission
(in tonnes kWh/
million added value)
14.0%
24.8
2021 28.8
Number of
CSR supplier
audits
11.5%
29
2021 26
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Please refer to the section ‘About the sustainability report’ on pages 213-214 of this Annual Integrated Report for reporting periods, definitions,
scope and limited assurance review.
FACTS AND FIGURES
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
WORLD MAPWORLD MAP
Revenue (in EUR million) segmented by customer location
FTE segmented by region
76.2
15%
Kendrion
business
location
1
Including other countries with revenue of EUR 2.8 million.
88.4
17%
354.7
68%
43% 57%
336
46% 54%
2,169
57% 43%
248
EUROPE
THE AMERICAS
ASIA
1
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STRATEGIC INTENT
AUTOMOTIVE
CHINA
INDUSTRIAL
BRAKES
CHINA
ACTUATORS
AND
CONTROLS
CHINA
THE KENDRION WAY
STRATEGY AND FINANCIAL OBJECTIVES
As the geopolitical turbulence, supply chain volatility, soaring
energy costs and inflation affected businesses around the
world, Kendrion kept its focus on realizing sustainable growth,
driven by the broad and accelerating energy transition towards
electrification and other forms of clean energy. In 2022,
despite all the volatility, we grew our revenue by 12% to
EUR 519.3 million, protected our margins by passing on
increased raw material prices to our customers, and realized a
healthy normalized EBITDA and profit. We almost completed
the construction of our new factory in Suzhou’s Industrial Park
in China, and – to address the changing environment in the
automotive market – split up our automotive franchise into two
distinct organizations: Automotive ‘Core’ and Automotive ‘E’.
Both will have full P&L responsibility and separate key
performance indicators.
We anticipate that the split of the Kendrion Automotive Group
will enable us to put even more focus on an Automotive
segment with significant potential for growth: Autonomous,
Connected, Electrified, Shared passenger cars, or ‘ACES’.
The new factory in Suzhou provides us with the capacity to
accommodate our existing project pipeline and allows us to
capitalize on the many commercial opportunities we are
pursuing in Automotive E, Industrial Brakes and Industrial
Actuators and Controls.
Throughout 2022, we remained focused on opportunities,
which has resulted in a solid financial performance, and another
firm step forward towards our 2025 financial targets, despite an
unpredictable and complex economic and business
environment.
Towards a leading role in enabling cleaner energy
Our strategy
Kendrion focuses its resources and capital on areas that are
driven by the powerful, accelerating global push towards
clean energy. This offers significant opportunities for
sustainable, profitable growth. These include:
■ Industrial Brakes: wind power, robotics & automation, and
intra-logistics.
■ Industrial Actuators and Controls: electricity distribution,
control technology, industrial locks, nuclear power, and
inductive heating.
■ Automotive ‘E’: sound systems, smart suspension valves
and sensor cleaning systems that help enable
Autonomous, Connected, Electric and Shared mobility, or
‘ACES’.
■ China: remarkable opportunities in a range of industrial
and automotive applications, also focused on enabling
the energy transition and in line with the market segments
mentioned above.
We are confident we can meet our financial target of 5%
organic growth per year between 2019 and 2025 with an
EBITDA of at least 15% and an ROI of at least 25%, based
on the progress we made in 2021 and 2022, and the product
pipeline development in all growth areas.
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The priority of Industrial Actuators and Controls (IAC) continues to be realizing better than
Group average profitability and cash flow, enabling us to invest in selected sustainable
growth opportunities. The broad, global transition towards cleaner forms of energy
provides many opportunities for IAC products, including our inductive heating system for
industrial processes, safety valves for nuclear power plants, and solenoids for high voltage
circuit breakers and industrial locks. Consistent with Group strategy, IAC is investing in
these opportunities.
STRATEGY AND FINANCIAL OBJECTIVES
Industrial Brakes
Kendrion is a leading player in the markets for permanent magnet brakes and spring-
applied brakes. As the brakes from both technology types are closely integrated with
an electromotor, the accelerating transition towards electrification offers Industrial Brakes
(IB) a sizeable opportunity in a fast-growing market. IB’s full range of high-quality products
is sold across the globe, from Europe to China, the US, and India.
In 2022, like in 2021, we achieved strong growth in almost all the segments IB serves.
Firstly, the ongoing automation of global industrial manufacturing processes is advancing
the adoption of industrial and collaborative robots across industries. Secondly,
investments in green energy are accelerating around the world, increasing the demand for
wind turbines. And finally, in the internal logistics sector, warehouses for e-commerce and
other delivery services are increasingly being automated, accelerating the need for
automated guided vehicles (AGVs) and electric forklift trucks.
Industrial Actuators and Controls
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The automotive industry is going through a fundamental disruption driven by four mutually
reinforcing trends: Autonomous driving, Connected vehicles, Electrification of the
powertrain and Shared mobility, or ‘ACES’. Kendrion expects that, on aggregate, ACES
will increase the actuator content per car and drive above-average growth. Recent market
research indicates that the market for electrified passenger cars is projected to grow by
40% on average per year over the next five years. We believe that we are well positioned
to benefit from this trend.
Our innovative product platforms are specifically targeted at ACES. They include systems
and components for active suspension, Acoustic Vehicle Alerting Systems (AVAS) for
electric vehicles, and a turnkey sensor cleaning solution. The transition to electrified and
smarter vehicles is accelerating. As a response, we have created a specific unit
responsible for the development, marketing, and sales of ACES-related products:
Automotive ‘E’. This decision is in line with our strategy to focus on products that enable
the transition towards cleaner forms of energy. Automotive E invests in innovative products
relevant to ACES, close customer liaison and business development, program
management and profitable growth.
Automotive ‘Core’ is responsible for Kendrion’s Automotive business related to existing
applications for combustion engine cars and commercial vehicles. Automotive Core
focuses on operational excellence, lean production, cost efficiency, profitability and
cashflow.
Automotive
China
Over the past few years, Kendrion has significantly increased its revenue in China. The
project pipeline indicates that growth will continue over the coming years, and the Chinese
market offers significant opportunity for more sustainable growth. To accommodate this
growth, we are building a new 28,000 m
2
production facility at the renowned Suzhou
Industrial Park (SIP). It is close to completion and will allow us to more than double our
production capacity and revenue. We expect that our Suzhou and Shanghai operations
will be integrated in the new building in the first half of 2023.
Since the energy transition is a global phenomenon, the sustainable growth opportunities in
China are like those in Europe and the US. In 2022, Kendrion China again added
significantly to its project pipeline, despite lower-than-expected economic activity due to
China’s strict ‘zero-COVID’ policy. The plant’s pipeline is expected to drive the continuation
of above average growth over the coming years.
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STRATEGY AND FINANCIAL OBJECTIVES
Contents Profile Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsStrategy
Financial targets
In 2022, demand for our products increased significantly in all
Business Groups. At the same time, the difficult high inflationary
economic environment continued, and we experienced
significant volatility in demand and in our supply chains in all
segments. The automotive passenger car market continued to
be hit by semiconductor and other material shortages. Despite
all this, 2022 revenue increased by 12% from EUR 464.0 million
to EUR 519.3 million in 2022. Our 2022 normalized EBITDA
2
was EUR 57.4 million, 3% above 2021 (EUR 55.8 million).
Return on investment
1,2
came to 15.6% (2021: 15.6%).
ACTUAL
16%
ACTUAL
8%
TARGET 2025
25%
TARGET 2019-2025
5%
ACTUAL
11%
TARGET 2025
15%
ACTUAL
50%
TARGET
35-50%
Return on
investment
1, 2
Average
organic growth
EBITDA margin
2
Dividend pay-out
STRATEGY AND FINANCIAL OBJECTIVES
Based on the opportunities we have identified, our project
pipeline and our strong organic growth over 2021 and 2022,
we are on our way to meet our four ambitious medium-term
financial objectives for 2025 as outlined at our Capital Markets
Day on 10 September 2020:
■ Average organic growth of 5% between 2019 and 2025
■ Return on investment of at least 25% by 2025
1
■ EBITDA margin of at least 15% by 2025
2
■ Dividend pay-out: 35-50% of normalized net profit before
amortization
2
1
Invested capital excluding intangibles arising from acquisitions.
2
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 210.
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ENABLING ENERGY TRANSITION
Kendrion focuses on sustainable growth,
by developing intelligent actuators that
help drive the global transition towards
electrification and other forms of clean
energy. Whether for wind power,
autonomous vehicles, factory process
efficiencies, or optimized industrial heating
processes, our smart, compact, and
connected actuators are helping our OEM
customers to migrate to safe and clean
forms of energy.
In 2022, we continued to invest in cutting-
edge technologies that help advance the
next generation of Autonomous,
Connected, Electrified and Shared (ACES)
vehicles and the deployment of renewable
energy sources. We also fine-tuned our
product platforms, our organization, and
our proposition in promising markets such
as wind energy and nuclear power, so that
we can increase our market share in these
areas.
Our modular R&D approach gives us a
great competitive advantage. We create
customized products quickly and in high
volumes – without recurring R&D
investments – and can respond quickly to
changing demands and product
opportunities.
Products
and potential
in the energy
transition
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Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsProfile Strategy
Our permanent magnet brake will be part
of an electric brake system, acting as a
holding brake.
‘Braking’ into the Chinese
Automotive market
The automotive global market for commercial
vehicles is forecast to grow at a considerable rate,
with Asia Pacific as the largest market. Our
permanent magnet brake, combined with our
overall expertise in the Automotive sector, puts us
in an excellent position to capture the many
opportunities. We have already begun working on a
significant first application with an international
brake system developer, for various vehicle
manufacturers active in the Chinese market.
Double win
The project is a double win. On the one hand, it is
helping us break into the Automotive sector with an
industrial product. On the other, it is a great entry into
the Chinese market: the fastest growing, and most
extensive electric commercial vehicle market in the
world.
Our permanent magnet brake will be part of an electric
brake system for buses and trucks, acting as a holding
brake. It is a mature product that is already proven in a
range of industrial applications worldwide and required
some minor modifications only.
What we will focus on in 2023
Thanks to smooth and fast collaboration between our
German and Chinese teams we will deliver the first
samples for road testing shortly and expect to begin
start-of-production (SOP) by Q4 2023. The brakes will
be manufactured in the new factory we are building in
the prestigious Suzhou Industrial Park, which should
be ready for production by Q2 2023.
Huge market potential
The Chinese market offers huge opportunity: there are
approximately 4-5 million commercial electric vehicles
in China, and CAGR is estimated at 5-10%. Each of
those vehicles will have an electric brake system
requiring four brakes, which offers enormous potential
for our permanent magnet brake. With no current
Chinese competitor, we could become market leader
quickly, as our expertise in both the industrial and
automotive sectors gives us a head start. For this
project alone, we could potentially achieve an annual
volume of up to 200,000 units – a major step towards
a significant and profitable revenue stream.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Our sound designer creates a unique auditory
experience for the ever-increasing number of
electric vehicles.
Supporting the change towards clean, electric
mobility, with increased passenger comfort and
safety, is a strategic focus for Kendrion. By
reorganizing our Automotive Business Group in
2022, we are freeing up more resources to boost
innovations in suspension, sensor cleaning and
sound. Our new organization, ‘Automotive E’, will
focus on opportunities within Autonomous,
Connected, Electrified and Shared mobility (ACES).
This move puts us in an even better position to benefit
from car manufacturers’ desire to create a unique
auditory experience for the ever-increasing number of
electric vehicles (EVs). Our ‘Phantone’ platform delivers
all they need to build an intelligent sound system that
not only meets AVAS safety regulations but is also
unique to their brand and offers an outstanding
auditory experience.
What we did in 2022
In electric vehicles, fewer speakers and wires means
less weight, fewer costs, and reduced fire hazard. In
2022, we developed a one-box sound solution for
Fisker Inc, an American electric vehicle (EV) company
Sound evolution: our soundscaping
innovations move forward
known for its iconic vehicle designs. The box is built on
the ‘Phantone’ platform and combines a speaker and
sound software in a very compact housing. It has been
fully tested throughout 2022 and will be delivered in
Q1 2023.
We also increased our engagement with start-ups who
are designing incredible software-driven vehicles such
as autonomous electric shuttles. In addition to the
flexible ‘Phantone’ platform, our experience makes us
a valuable partner for these companies which often
have little knowledge of AVAS regulations and sound
software.
Our focus for 2023 and beyond
As software-only solutions help reduce the risk of fire,
we’re looking into designing software-only solutions
that can be hooked up directly to the car’s infotainment
system. Further ahead, we’ll also explore more
intelligent sound distribution; for example, emitting
sound only where needed. We’re excited about helping
drive this ‘soundscaping’ trend and are confident we
can create a powerful niche for ourselves.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Our INTORQ BFK470 spring-applied brake is
designed to handle frost, heat, salt, sand,
and extreme temperature conditions.
Ambitious zero-emission goals and energy security
are causing the global wind energy industry to
skyrocket. Globally, wind turbine installations are
set to rise from 100 Giga Watt in 2020 to 400 Giga
Watt in 2030
*
. As the only supplier in the market to
offer electromagnetic brakes built on both spring-
applied and permanent magnet technologies for
wind turbine blades and nacelles, this market
upsurge brings great opportunities for Kendrion.
Component standardization and localization
The global wind turbine industry is divided into four
regions: Europe, India, China, and North America.
The market is dominated by 10 to 15 global
manufacturers who are currently all experiencing
supply chain disruptions. Specifically, those who
source and manufacture locally and abroad, are being
impacted by rising energy prices and inflation.
In this challenging environment, there’s an urgent need
for larger wind turbines with greater-surface blades,
and more offshore applications. To overcome the
supply and cost hurdles to build these, manufacturers
Beyond the ‘standard’ for wind
turbine electromagnetic brakes
are increasingly turning to standardized, locally
produced components that offer a long lifetime under
tough conditions and demand little maintenance.
A powerful proposition
Kendrion has been active in the wind energy industry
for years and is well-positioned to support
manufactures around the globe. Tens of thousands of
our brakes are already installed in wind parks
worldwide, and with factories in the EU, India, China,
and the US, we can provide locally customized, high-
quality brakes, with reliable production times. Our
brakes have a 20-year lifespan; and can be adapted
for extreme weather conditions and temperatures.
In 2022, we served more global customers, and we
expect to continue this trend in 2023. Our INTORQ
BFK470 spring-applied brake – designed to handle
frost, heat, salt, sand, and extreme temperature
conditions – perfectly meets the challenges of both
onshore and offshore installations in this growing,
stable, solid market.
*
According to the Global Wind Power Council
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Besides a shock resistance up to 300 g in all axes,
our new compact door lock offers a lifetime of
100,000 switching cycles.
Ready-to-use door locks meet
needs of booming commercial
market
Increased safety and security concerns are driving
the booming commercial door lock market.
Kendrion’s own line of universal, compact, ready-
to-use and competitively priced door locks puts us
in an excellent position. With our latest addition –
the shock resistant Compact Door Lock, we can
also fill the void left by international players in the
market for lockers.
Kendrion-owned products, available for mass
production
Our commercial door lock line is the result of 15 years’
experience with customer-specific products. As we
own all the design patents, we can produce large
quantities, for any application, at a very competitive
price. Our complete, ready-to-use door locks help our
customers saving time to source and then assemble
the single components. All our locks are tested
extensively and meet the relevant industry standards.
New shock-resistant Compact Door Lock fills a void
in the compact lock market
Our new Compact Door Lock is ideal for applications
such as parcel pick-up stations, lockers and vending
machines for food and non-food items. Besides a
shock resistance up to 300 g in all axes, it also offers a
lifetime of 100,000 switching cycles. The modular
design enables customer-specific adjustments, while
an optional Bluetooth or RFID receiver provides keyless
(smart) entry.
Until recently, the market for smaller locks, especially
for lockers, was dominated by a small number of
international manufacturers. However, since the
pandemic and geopolitical tensions, they have been
struggling to deliver reliably and at competitive prices.
With the new shock-resistant Compact Door Lock, we
have a big opportunity to step into this void. We will
introduce the lock at the Parcel+Post Expo 2023 in
October in Amsterdam.
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ENABLING ENERGY TRANSITION
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Safety valves – driven by our electromagnets –
play a critical role in controlling the steam
pressure in nuclear power plants.
Electromagnets for the growing
nuclear energy sector
The world is embracing nuclear power as part of
the sustainable energy transition. Currently, 60 new
reactors are under construction worldwide, and
many more are being upgraded. Safety valves –
driven by our electromagnets – play a critical role
in controlling the steam pressure in the plants. As
demand for nuclear power has risen, so has the
market for our electromagnets. We saw the impact
clearly in 2022, as our sales in Europe increased,
and we entered the promising US market.
What our customers need
Electromagnets are used to drive the safety valves,
opening, and closing them as needed. Kendrion first
began developing custom electromagnets for this
sector in the 1980s.
Today, our valve manufacturer customers are under
pressure to deliver valves that offer a guaranteed long
lifetime and meet the strictest safety standards.
How we deliver
We work closely with the worldwide players in
engineering for power plant technology and have
proven to be a partner with the technical competence
and flexibility to help them fulfill these requirements.
In fact, we are one of the few companies with detailed
in-house expertise on this demanding application. Our
lifting magnets perfectly match their specific
applications, offer a guaranteed lifetime of up to 40
years, and are manufactured, tested, and documented
according to RCC-E standards. The stringent RCC-E
standards describe the rules for the design and
construction of electrical equipment for pressurized
water reactors.
A promising future
In 2022, we developed various bespoke magnet
designs for customers across Europe, and in 2023, we
expect our turnover for this product to increase by at
least 50%.
In 2021, in the US market, we started working with IMI
Critical USA on custom actuators for existing plants
being upgraded. IMI presented us with a ‘Critical
Supplier’ award for our outstanding quality and
collaboration. Asia, on the other hand, is an emerging
market for new power plant technology. Nuclear power
is now also considered a clean and sustainable source
of energy, and we’re excited about the worldwide
opportunities this brings us.
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Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
SHARE AND SHAREHOLDER INFORMATION
Movements in the number of outstanding shares
Shares entitled
to dividend
Shares owned
by Kendrion
Total number of
issued shares
At 1 January 2022 14,841,072 93,663 14,934,735
Issued shares (share dividend) 179,886 – 179,886
Granted shares (share plan) 5,347 (5,347) –
At 31 December 2022
15,026,305 88,316 15,114,621
Other information
EUR, unless otherwise stated 2022 2021 2020
Number of shares x 1,000 at 31 December 15,115 14,935 14,934
Market capitalization at 31 December (EUR million) 234.3 314.4 247.9
Highest share price in the financial year 22.40 24.65 21.35
Lowest share price in the financial year 13.02 16.90 8.63
Share price on 31 December 15.50 21.05 16.60
Average daily ordinary share volume 7,022 14,129 24,203
Profit per share (3.09) 0.97 0.29
Normalized net profit before amortization per share
1
1.44 1.39 0.79
Major shareholders as at 31 December 2022
2
Interest in % Date of report
Teslin Participaties Coöperatief U.A. 15.14 At 14 June 2019
Kempen Capital Management N.V. 10.07 At 26 May 2020
FIL Limited 6.29 At 8 April 2022
Invesco Limited 5.42 At 15 May 2020
Cross Options Beheer B.V. 5.37 At 8 May 2017
T. Rowe Price Group, Inc. 3.92 At 19 April 2022
Add Value Fund NV 3.22 At 13 July 2022
T. Rowe Price International Funds, Inc. 3.15 At 19 April 2022
Midlin N.V. 3.08 At 11 December 2020
Total
55.66
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 210.
2
On the basis of the information in the register of the AFM and listed on the website at www.afm.nl.
Share capital
The authorized share capital of Kendrion N.V. as at
31December 2022 amounts to EUR 80,000,000 and is divided
into 40,000,000 ordinary shares with a nominal value of
EUR 2.00 each. At year-end 2022, the total number of ordinary
shares issued was 15,114,621. There is one class of ordinary
shares and no depositary receipts for shares have been issued.
Kendrion’s ordinary shares are listed on NYSE Euronext
Amsterdam Small Cap Index (AScX).
Movements in the share price
from 3 January 2022 to 30 December 2022
Kendrion N.V. share
AEX
ASCX
AMX
Index
30 December 20223 January 2022
-40
-10
-20
-30
0
10
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Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
Treasury shares
As at 31 December 2022, Kendrion N.V. holds 88,316 ordinary
shares in its own capital, representing 0.6% of the total issued
share capital. The ordinary shares held by Kendrion N.V. in its
own capital are non-voting, do not have any dividend
entitlement, and are held in treasury for payment of future stock
dividends and share-based incentive plans. This means that as
per year-end 2022, 15,026,305 ordinary shares hold voting
rights and dividend entitlement.
SHARE AND SHAREHOLDER INFORMATION
In principle, Kendrion offers shareholders an opportunity to opt
for dividends in cash or in the form of ordinary shares in
Kendrion N.V.’s capital.
Kendrion will propose a dividend of EUR 0.72 per share,
representing a payment of dividend of 50% of normalized net
profit before amortization for 2022 at the Annual General
Meeting of Shareholders on 17 April 2023. The total amount of
dividend is EUR 10.8 million. It will be proposed that payment
of the dividend be made in cash, or at the option of
shareholders, in the form of ordinary shares charged to the
share premium reserve with any remaining fraction being settled
in cash.
Major shareholders
Any person holding or acquiring an interest of 3% or more in a
Dutch publicly listed company is bound, based on the Financial
Supervision Act (Wet op het Financieel Toezicht), to disclose
such a holding to the Dutch Authority for the Financial Markets
(AFM). The disclosure is recorded in the register of the AFM and
listed on the website at www.afm.nl/en.
Participation
Kendrion maintains a share-based incentive plan for its senior
management and certain key employees.
Effective as of 2019, members of the Management Team are
eligible for a grant of conditional performance shares and
effective as of 2021 participation in the share-based incentive
Dividend policy
Kendrion endeavours to realize an attractive return for
shareholders supported by a suitable dividend policy. In view of
safeguarding a healthy financial position, consideration is also
given to the amount of profit to be retained to support the
company’s medium and long-term strategic plans and to
maintaining a solvency ratio of at least 35%. Kendrion strives to
distribute dividends representing between 35% and 50% of its
normalized net profit before amortization.
On 8 September 2022, Kendrion held the Capital
Markets Day for the analysts, investors, and
shareholders communities.
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SHARE AND SHAREHOLDER INFORMATION
through 2021), 28,113 conditional performance were granted.
Of the 28,113 conditional performance shares granted to the
Management Team, a total of 25,160 shares have vested.
In 2022, conditional performance shares have been granted to
the members of the Executive Board pursuant to the Executive
Board long-term incentive plan. More information about
(conditional performance) shares granted to the members of
the Executive Board is set out on page 104. A comprehensive
description of the long-term incentive plan is included in the
‘Remuneration Report’ section on pages 105-106.
program has been extended to members of Kendrion's senior
leadership team. In 2022, 25,918 conditional performance
shares were granted to the Management Team and the
leadership team under the applicable long-term incentive plans.
The conditional performance shares granted will vest upon
achievement of performance measured over a three-year
period. The actual number of shares that will be allocated upon
expiry of the three-year vesting period is subject to the
realization of predefined performance criteria. Under the 2020
(performance period 2020 through 2022) long-term incentive
plan for the Management Team (i.e. performance period 2019
Analysts
The following stock exchange analysts actively monitor the Kendrion share:
Berenberg Axel Stasse
Degroof Petercam Frank Claassen
ING Bank Tijs Hollestelle
The Idea-Driven Equities Analyses Company Maarten Verbeek
Edison Group Johan van den Hooven
Kepler Cheuvreux Tim Ehlers
Financial calendar
Tuesday, 28 February 2023 Publication annual results 2022
Wednesday, 8 March 2023 Record date General Meeting of Shareholders
Monday, 17 April 2023 General Meeting of Shareholders
Wednesday, 19 April 2023 Ex-dividend date
Thursday, 20 April 2023 Dividend record date
Friday, 21 April - Monday, 8 May 2023, 3pm Dividend election period (stock and/or cash)
Tuesday, 9 May 2023 Determination stock dividend exchange ratio
Tuesday, 9 May 2023 Publication first quarter results 2023
Thursday, 11 May 2023 Cash dividend made payable and delivery stock dividend
Wednesday, 23 August 2023 Publication half-year results 2023
Tuesday, 7 November 2023 Publication third quarter results 2023
Regulations to prevent insider trading
Kendrion has regulations covering securities transactions by
members of the Executive Board, members of the Supervisory
Board, members of the Management Team and other
designated employees. The Insider Trading Code is published
on the corporate website at www.kendrion.com.
The Insider Trading Code is intended to ensure the avoidance
of insider trading or the appearance thereof, and any mixing of
business and private interests.
Investor relations
Kendrion attaches great importance to appropriate
communications with financial stakeholders such as investors,
debt capital providers and analysts, providing them with good
insights into recent developments. Transparency is intended to
lead to healthy pricing, and to support liquidity.
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MEMBERS OF THE EXECUTIVE BOARD
J. H. Hemmen
Position Chief Financial Officer
Year of birth 1973
Nationality Dutch
Joined Kendrion 1 June 2005
Appointment to position 1 July 2019 (EGM 7 June 2019)
J.A.J. van Beurden
Position Chief Executive Officer
Year of birth 1960
Nationality Dutch
Appointment to position 1 December 2015
Second term 1 December 2019 – 1 December 2023 (AGM 8 April 2019)
Member of the Supervisory Board and Chairman of the Nomination
and Remuneration Committee of Adyen N.V.
Member of the Supervisory Board and Chairman of the Audit
Committee of the University of Twente
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OUR PRODUCTS ARE USED IN
Energy generation and distribution
Food and beverage machinery
Industrial automation
Intralogistics
Medical equipment
Robotics
Textile machinery
Wind power
OUR CUSTOMERS INCLUDE
ASML
Collins Aerospace
Eaton Corporation
Euchner
Fresenius
Jiangxi Special Motors
Lenze
Oerlikon
Schindler
Siemens
TOTAL INDUSTRIAL REVENUE
(in EUR)
276.5 million
2021 231.5 million
Industrial activities
Europe
71%
Asia and
Rest of the world
21%
The Americas
8%
INDUSTRIAL ACTUATORS AND CONTROLS
Customized solutions for industrial applications
based on electromagnetic actuators, control
technology and uid technology.
INDUSTRIAL BRAKES
Full-line provider of electromagnetic brakes for
electromotors in industrial end markets.
Kendrion locations with regional revenue breakdown
26
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Prole
Kendrion’s industrial activities focus on developing and
manufacturing electromagnetic brakes, actuators, and control
units for a wide range of industrial applications, including wind
turbines, robots, automated guided vehicles, energy
distribution, medical equipment and inductive heating.
These activities are carried out in two Business Groups:
Industrial Brakes (IB) and Industrial Actuators and Controls
(IAC). IB specializes in the development and manufacture of
electromagnetic brakes for electromotors used in various
industrial end markets. IAC focuses on the development and
production of customized electromagnetic actuator technology,
gas and fluid control valves, and control technology.
Application expertise and engineering skills are our main
differentiators; they enable us to design high-performance
products of unparalleled quality. Our Industrial Business Groups
have R&Dt centers and production facilities in Germany,
Romania, China, the US and India. Products are marketed via
their own sales organization with locations in Germany, Austria,
Sweden, China, India and the US. A worldwide sales
distribution network is dedicated to standard and application-
specific components. Industrial employs 1,346 FTE of which
112 in R&D.
Market and market position
IB serves several global markets that we expect will offer above
average opportunities for growth: industrial automation,
robotics, wind power and intralogistics. The growth
opportunities in these markets are driven by the industry-wide
energy transformation, which has increased global demand for
electromotors and for IB’s wide range of braking solutions.
Kendrion is one of the leaders in the global industrial brake
market and the only industrial brake company with a leading
position in both spring-applied and permanent magnet brake
technology.
IAC serves many end markets including machine automation,
energy distribution, medical equipment, access control and
industrial appliances. Like IB, IAC is active in niches that offer
significant growth opportunities driven by the global energy
transformation, such as inductive heating of industrial
processes, energy distribution, and valves for nuclear power
plants.
Our Industrial Business Groups compete in a market with
predominantly mid-sized companies with a regional focus.
The main regional market for our Industrial activities continues
to be Germany, with its advanced and globally leading
mechanical engineering and automation industries, followed by
China. Other key markets are the US, the Benelux, Switzerland,
Austria, Italy, and Sweden.
Enabling the energy transition
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Developments in 2022
Kendrion’s Industrial activities generated a revenue of
EUR 276.5 million in 2022 (2021: EUR 231.5 million).
Both Industrial groups recorded double digit growth numbers
for the second consecutive year as they continued to benefit
from beneficial trends towards renewable energy, electrification,
and industrial automation. Despite continuing global supply
chain shortages and sharply increasing prices for raw materials
and energy throughout the year, the industrial groups were
able to capitalize on the growth momentum and posted the
strongest normalized EBITDA
1
on record with EUR 47.5 million
and a normalized EBITDA margin
1
of 17.2% (FY 2021: 16.8%).
Throughout the year, IB was able to further add new revenue to
its long-term revenue pipeline with existing and new customers
in the areas of wind power, intralogistics, and robotics. Based
on a study of IB’s most important existing markets and several
emerging markets, IB is confident that it will be able to continue
to outperform global industrial production. Existing markets for
IB include electromotors, wind power, robotics, and
intralogistics, while fast growing emerging markets include
collaborative robots and automated guided vehicles. To
accommodate existing and anticipated future growth IB has
invested in both human and capital resources. Besides adding
31 direct FTE to increase daily production of brakes, IB added
25 indirect FTE predominantly in sales and R&D. In addition, IB
started to implement a capital investment project to significantly
increase production capacity for the permanent magnet
production lines in Villingen, Germany, and continued to invest
in the further localization of production capabilities of both
spring applied and permanent magnet brakes in China.
Both Industrial groups recorded double digit growth
numbers for the second consecutive year as they
continued to benefit from beneficial trends towards
renewable energy, electrification, and industrial automation.
A newly implemented CRM tool and a new state-of-the-art
product lifecycle software application will further help IB’s sales
and R&D organizations to fully capitalize on the high number of
growth opportunities for its core technology.
During 2022, IAC completed the integration of 3T into
its existing control technology activities. 3T contributed
positively in 2022 and besides posting revenue of
EUR 12.2 million and strong profitability, it won several new
customer contracts, contributed to the software and electronic
capabilities of IAC, and supported Automotive by hiring 6 highly
skilled Automotive-dedicated software and electronics
developers. In addition to completing the integration of 3T, IAC
continued to benefit from its strategy to target selective niche
markets that offer above-average profitability and growth. IAC
won several new projects for its locking and inductive heating
technologies for industrial equipment, solenoids and control
technology for intralogistics and highly specialized flow control
valves for the medical industry. In some end markets where IAC
offers products that support the global energy transition, the
business group benefited from a continued strong momentum
for existing technologies including safety switches for energy
distribution and safety valves for nuclear power plants.
1
Non-IFRS financial measure. For the definition and reconciliation of
the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 210.
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Innovative solutions for passenger cars and
commercial vehicles focused on advanced valve
technology, smart actuation and control technology
to enable the transformation to Autonomous,
Connected, Electric and Shared (ACES) mobility.
OUR PRODUCTS ARE USED IN
Active suspension systems
Fuel systems
Mobile hydraulics
Acoustic vehicle alerting systems
Thermal management
Sensor cleaning systems
Transmission systems
OUR CUSTOMERS INCLUDE
Continental
Daimler Group
Danfoss
FCA
Ford
Great Wall Motors
Hyundai Kia
KYB
Marelli
ThyssenKrupp Bilstein
Volkswagen Group
ZF Friedrichshafen
TOTAL AUTOMOTIVE REVENUE
(in EUR)
242.8 million
2021 232.5 million
The Americas
27%
Europe
65%
Asia and
Rest of the world
8%
Automotive activities
Kendrion locations with regional revenue breakdown
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Prole
The Kendrion Automotive Group (KAG) develops,
manufactures, and markets innovative, high-quality
electromagnetic actuators and control units for customers in
the automotive industry worldwide. Customers include major
OEMs and Tier 1 suppliers in the global markets for passenger
cars, commercial vehicles, and off-highway vehicles.
KAG focuses on advanced valve technology, smart actuation,
and control technology specifically designed to enable the
transformation towards Autonomous, Connected, Electric
and Shared mobility, or “ACES”. Applications enabling this
transformation include sound systems (AVAS), active
suspension valves, and sensor cleaning valve blocks. These
currently make up approximately one third of the KAG revenue
and Kendrion expects this percentage to grow significantly
over the next few years. Other KAG applications include
transmission systems and fuel systems for passenger cars,
hydraulic solenoids for agricultural equipment, and thermal
management systems for commercial vehicles.
KAG has a global presence with R&D centers and
manufacturing facilities in Germany, Rumania, Czech Republic,
the US, and China. Products are developed and designed to
meet customers’ specific needs, placing great emphasis on
performance, quality, and reliability. KAG employs 1,407 FTE
of which 137 FTE in R&D.
Accelerated transformation
Market and market position
The accelerating electrification in automotive, and the rise of
electric and autonomous vehicles, are expected to significantly
transform the overall automotive market. The pace at which
internal combustion engine cars are being replaced by battery
electric vehicles around the globe is outpacing most analyst
projections. Several countries and car manufacturers have
announced to phase out internal combustion engine cars
completely by 2035. Based on market analyst studies, the
market for battery electric vehicles is expected to grow at an
average annual rate of 40% per year between 2018 and 2027.
The market for Kendrion’s sound system (AVAS) platform will
grow as legislation across the globe requires electric cars to
emit a sound below a certain speed. The market for high-end
suspension systems is expected to continue its fast-paced
growth as more heavy electric vehicles are being equipped with
active and air suspension systems. In a few years, also sensor
cleaning applications are expected to become more common
as cars will become increasingly more autonomous and
dependent on sensors.
KAG competes in a market with several mid-sized competitors,
mainly based in Germany. Europe continues to be Kendrion’s
largest automotive market, with most revenue generated with
large German car manufacturers and Tier 1 automotive
suppliers. Kendrion’s market position in China has improved
further thanks to Kendrion China winning several new projects
with both local and global brands over the last few years.
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Developments in 2022
KAG’s revenue came in at EUR 242.8 million (2021:
EUR 232.5 million). Although Automotive revenue is gradually
recovering from the historically low level in the first COVID-19-
year 2020, the volumes of cars produced are still significantly
below the pre-pandemic 2018 and 2019 levels. The number of
cars produced globally in 2022 is estimated at 82 million,
compared with 89 million in 2019. In Europe, Kendrion’s largest
market, 15.7 million cars were produced in 2022 compared
with 21 million in 2019. Underlying reasons for the low
production levels were the continuing supply chain shortages
and the disruption caused by Russia’s invasion of Ukraine.
While car manufacturers have been able to sustain profitability
levels by focusing on production of cars that generate the
highest margins, component and system suppliers worldwide
have been confronted with shrinking volumes. Sharply
increasing prices for energy, wages and raw materials and high
order volatility have put further pressure on automotive
component suppliers’ results. At the same time, the industry
requires significant investments in the development of new
technologies for electric, connected and autonomous driving
cars. To address the challenges posed by the automotive
industry, Kendrion has split the Automotive Business Group into
two distinct organizations: Automotive ‘Core’ and Automotive
‘E’. While Automotive Core focuses on extracting the highest
value from existing technologies for combustion engine cars
and commercial vehicles, Automotive E focuses on the
development and marketing of new product technologies that
enable future mobility. The current pillars of the Automotive E
portfolio are acoustic vehicle alerting systems, valves and
electronic control units for suspension systems and valves and
control units for sensor cleaning. In 2021, the Automotive E
portfolio represented 26% of total Automotive Group revenue,
but this percentage is expected to increase rapidly in the
coming years.
The split involved a structural redesign, reallocation of
resources, the creation of separate financials and the
development of distinct key performance indicators. Core and
E became fully operational at the end of 2022. As part of the
reorganization, KAG was able to further streamline its costs,
saving EUR 4 million per year starting Q1 2023. KAG also
finalized the closure of its manufacturing facility in Austria, with
the final production lines relocated to Rumania and Germany in
the summer of 2022. The footprint optimization has led to
EUR 4 million annual savings starting in Q4 2022.
KAG added a further EUR 305 million (2021: EUR 305 million)
in lifetime revenue to its long-term order book, indicating
a positive book-to-bill of 1,26 times 2022 revenue. More than
EUR 200 million project wins relate to Automotive E (2021:
EUR 180 million) products, with the remainder existing mainly of
product lifetime extensions in Automotive Core. New business
nominations were won in all three Automotive E technology
segments, with the majority in suspension applications. Another
year with a significant positive book-to-bill in Automotive E has
increased our confidence that, despite the challenges in the
automotive industry, the technology platforms that Automotive
has invested in in recent years have the capacity to put the
Automotive Group back on a trajectory of sustainable and
profitable growth.
To address the challenges posed by the automotive
industry, Kendrion has split the Automotive Business
Group into two distinct organizations: Automotive ‘Core’
and Automotive ‘E’.
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With the opening of our new state-of-the-art factory in China,
we are further strengthening our growth strategy. The
28.000 m
2
facility will be the biggest yet in the Kendrion Group,
allowing us to serve our Chinese customers better, faster, and
at more competitive prices, while increasing our foothold and
share in the market. The factory is expected to meet growth
demands until at least 2027, and longer if we include phase 2.
A vast market with many opportunities
The Chinese market offers us substantial potential. Since its
founding in 2005, Kendrion China has grown exponentially.
Kendrion China’s share of group revenue has increased from
less than 4% in 2015 to 10% in 2022 with revenue of around
EUR 50 million. Our confidence in our ability to continue this
growth is reflected in our ambitious target for 2025: to double
this revenue to EUR 100 million.
In industrial, we expect to double our current turnover. For the
next five years, we particularly see room for growth in wind
power, elevator and escalator, robotics, forklift, electrical motor,
crane, hoist and AGV applications. To better meet the needs of
local Chinese customers, the factory will focus on expanding its
R&D capabilities in industrial brakes and industrial actuators
and controls.
New factory in China: investing in our future success
In automotive, the global market for commercial vehicles is
forecast to grow at a considerable rate, with Asia Pacific as the
largest market. With our new Automotive ‘E’ organization, we
can dedicate more resources to game-changing automotive
technologies – including sound design, sensor cleaning and
active damping.
We also see great opportunities for cross-selling. We’re already
working with an international brake system manufacturer to use
an industrial product – the permanent magnet brake – in
commercial vehicles destined for the Chinese market.
Smart factory meets local needs
With the brand-new smart factory we can increase local
manufacturing, which delivers greater supply chain security as
well as lower costs for raw materials, labor, and production.
The factory will boast a capacity 10 times that of our first
Suzhou factory, but it will also deliver cost efficiencies. By
bringing the two current plants together in one location, we
realize savings by centralizing product lines, automation costs
and functions.
Telly Kuo
President Kendrion Asia
The 28.000 m
2
facility will be the biggest yet in the
Kendrion Group, allowing us to serve our Chinese
customers better, faster, and at more competitive prices.
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KENDRION CHINA
The location – Suzhou Industrial Park (SIP) – is a strategic
choice. SIP is one of China’s most popular investment
locations, placing us amongst the other advanced, foreign
manufacturing companies in the automotive and industrial
sectors, including several Fortune 500 companies.
A two-phased approach
We are building the factory in two phases. Phase I includes the
construction of the offices, warehouses and a first production
area, totaling 28,000 m
2
. This part of the factory should be up
and running by Q2 2023.
If the growth we anticipate is realized, we will move on to Phase
II in 2025, which will make another 12,500 m
2
ready by 2026.
The increased production and turnover of the new factory will
support our business growth up to 2030, and there is further
room for expansion within a 10km radius. All Kendrion
automotive and industrial products will be manufactured in the
new plant, which will be ‘home’ to some 300 employees.
The new state-of-the-art factory will be fitted with the
most advanced technologies, including artificial
intelligence, robotics, and smart warehouse logistics.
Smart and sustainable
The new state-of-the-art factory will be fitted with the most
advanced technologies, including artificial intelligence, robotics,
and smart warehouse logistics. To give some examples: 70% of
the warehouse will be a fully automated, 22-meter-high area,
and solar panels on the roofs will provide 550 Kwh energy. In
addition, we will recycle water for the industrial brake washers,
and inspire employees to use electric cars by providing EV
charging stations. Other sustainable initiatives are being
explored.
Powerful differentiators
Competing in the Chinese market is a challenge for EU- and
US-based companies, which generally export products
engineered at higher labor and production costs in their home
countries. The new factory allows us to design, customize and
manufacture our products locally and at local cost, yet with
German-quality engineering. As we extend our reach into China
and ramp up production, we will expand our R&D department
and start designing products specifically for the Chinese
market.
Telly Kuo
President Kendrion Asia
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KENDRION CHINA
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
FINANCIAL REVIEW
Overall, an organic growth of 8% was realized in 2022.
Higher average sales prices to offset the inflationary pressure
on materials, energy and transport costs had a positive effect
on group revenue (+5%). Despite challenging market
circumstances with soaring inflation, supply chain shortages
and Covid lockdowns in China, our Industrial activities
continued their strong performance. Industrial revenue came in
at EUR 276.5 million, an increase of 19%. Excluding currency
translation and the contribution of 3T, Industrial revenue
increased by 14%. Our Automotive activities continue to be
affected by low global and more specifically, low European
car production. Automotive revenue increased by 4% to
EUR 242.8 million, of which 2% was caused by currency
translation.
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Key figures
2022 2021
EUR million Reported Adjustments Normalized Reported Adjustments Normalized
Revenue
519.3 – 519.3 464.0 0.4 463.6
Other income 0.5 0.5 0.0 0.2 – 0.2
Total revenue and other income 519.8 0.5 519.3 464.2 0.4 463.8
Changes in inventories of nished goods and work in progress 1.8 – 1.8 (3.5) – (3.5)
Raw materials and subcontracted work 268.7 – 268.7 241.9 0.4 241.5
Staff costs 153.6 5.3 148.3 138.1 1.4 136.7
Other operating expenses 102.3 59.2 43.1 36.0 2.7 33.3
EBITDA
1
(6.6) (64.0) 57.4 51.7 (4.1) 55.8
Depreciation and amortization 28.0 – 28.0 27.8 – 27.8
Finance income and expense and share loss of an associate 5.1 0.7 4.4 3.8 (0.0) 3.8
Income tax expense 6.6 (0.2) 6.8 5.7 (0.8) 6.5
Profit for the period (46.3) (64.5) 18.2 14.4 (3.3) 17.7
Amortization after tax 3.5 – 3.5 2.9 – 2.9
Profit for the period before amortization
1
(42.8) (64.5) 21.7 17.3 (3.3) 20.6
Cash flows
Cash ow from operations
37.9 3.0 40.9 27.8 4.6 32.4
Cash ow from investing activities (37.9) 0.1 (37.8) (48.8) 19.9 (28.9)
Free cash flow
1
0.0 3.1 3.1 (21.0) 24.5 3.5
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation of non-IFRS information, starting on page 210.
Group performance
Kendrion realized EUR 519.3 million revenue in 2022, an
increase of EUR 55.3 million or 12% compared to the previous
year. The full year revenue contribution of 3T, acquired in
September 2021, added 2% to group revenue compared to
2021. Currency translation increased revenue by 2%,
predominantly caused by the stronger average USD and CNY.
Profit for the period ended at a loss of EUR 46.3 million
(FY 2021: EUR 14.4 million profit) and was significantly affected
by a EUR 58.5 million impairment of goodwill and other
acquisition related intangibles and tax assets in the newly
established business unit Automotive Core. The impairment is
the result of the fundamental shift in the automotive industry
which is expected to phase out the combustion engine in the
next 10 to 15 years. This phase out will impact future revenues
of Automotive Core, which focuses on the production and
marketing of existing technologies for combustion engine
vehicles.
For a meaningful analysis of the underlying financial
performance of the group, Kendrion presents certain
performance measures on a normalized basis. The normalized
performance measures exclude costs and benefits that are
generated outside the ordinary course of business and include
restructuring charges, asset impairments and other items of an
incidental nature. Definitions and a detailed reconciliation of
these alternative performance measures to the closest
applicable IFRS performance measures can be found on
pages 210-212 of this annual integrated report. Normalized
EBITDA
1
in 2022 came in at EUR 57.4 million compared with
EUR 55.8 million in the previous year. Normalized EBITDA
as a percentage of revenue ended at 11.1% (2021: 12.0%).
The higher sales prices to offset the cost inflation decreased
normalized EBITDA as a percentage of revenue by 55 basis
points. Costs for raw materials and subcontracted work
increased by EUR 27.2 million, or 11%, in line with the
increased group revenue. Changes in inventory of finished
goods and work in progress increased by EUR 5.3 million as
the group sold off a higher portion of its inventories towards
the end of 2022. Total staff and other operating expenses,
excluding costs that are normalized from the results, increased
by EUR 21.4 million, or 13%. The full year effect of 3T increased
staff and other operating expenses by 4% (EUR 8.2 million) and
currency translation increased costs by 2%. Normalized interest
charges
1
increased by EUR 0.7 million to EUR 4.3 million
because of higher average loans and borrowings and
increasing market interest rates
1
. The normalized effective tax
rate ended at 27.4% (2021: 26.8%) and was largely a reflection
of the average tax rates in the jurisdictions Kendrion operates
in. Normalized profit before amortization
1
ended at
EUR 21.7 million, (2021: EUR 20.6 million). In 2022 the group
incurred in total EUR 64.7 million costs and benefits that were
generated outside the normal course of business. The after
tax amount was EUR 64.5 million. In addition to the
EUR 57.3 million impairment of goodwill and other intangibles
and EUR 1.2 million write down of tax assets related to
Automotive Core, the costs mainly related to restructuring and
reorganization costs in the Automotive Group and China.
Net cash flows from operating activities increased by
EUR 10.1 million to EUR 37.9 million, mainly as a result from
a better performance on receivables and inventory. Cash flows
from investing activities came in at negative EUR 37.9 million
compared to negative EUR 48.8 million in the previous year.
The largest investment – EUR 15 million – related to the
construction of the new manufacturing facility at China’s
Suzhou Industrial Park. Other investments mainly related to
new production lines in the Industrial and Automotive activities.
Investments in 2021 included EUR 19.9 million related to the
acquisition of 3T and the sale of associate Newton CFV. Cash
flows in 2022 included EUR 3.1 million cash items related
to costs that have been normalized from the results, mainly
for restructurings in the Automotive activities. Overall
normalized free cash flow
1
ended at EUR 3.1 million (2021:
EUR 3.5 million).
Total net debt
1
ended at EUR 140.3 million, an increase of
EUR 9.7 million compared to 31 December 2021. Free cash
flow was more than offset by EUR 3.3 million payments of lease
liabilities and EUR 7.1 million dividends paid. Total invested
capital per 31 December 2022 ended at EUR 213.3 million
(31 December 2021: EUR 196.7 million) when excluding
goodwill and other intangibles arising on acquisitions. Invested
capital was EUR 217.8 million when excluding items that have
been normalized. The construction of the new facility in China
was the largest contributor to the increased invested capital.
Return on invested capital
1
ended at 15.6% (2021: 15.6%).
Liquidity position
Kendrion’s liquidity position exists of freely available
cash balances and undrawn facilities. Cash balances on
31 December 2022 amounted to EUR 37.8 million (2021:
EUR 18.6 million). In addition, Kendrion had EUR 20.4 million
(2021: EUR 39.8 million) available under undrawn credit
facilities. Kendrion’s main credit facility is a EUR 102.5 million
facility agreement with HSBC Bank and ING Bank. The facility
agreement runs until 26 April 2025 and includes two one-year
extension options. Certain covenants apply including a
maximum leverage ratio of 3.25, with a possible temporary
spike up to 3.75 under certain conditions. Kendrion’s leverage
ratio
1
based on the definitions in the facility agreement as per
31 December 2022 was 2.4 (31 December 2021: 2.3).
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 210.
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Research & Development
EUR 32.4 million (2021: EUR 32.6 million) costs for R&D are
included in the operating expenses, of which EUR 21.6 million
(2021: EUR 20.9 million) staff costs. An amount of
EUR 3.0 million in R&D expenses (2021: EUR 1.1 million) has
been capitalized as R&D on the balance sheet. Costs for R&D
as a percentage of revenue came to 6.2% (2021: 7.0%). 3T’s
R&D costs are excluded as these relate to services directly
generating external revenue. Kendrion Group employed 249
FTE R&D employees. R&D activities primarily focused on
modifying existing electromagnetic brake technology for growth
markets such as AGVs and surgical robots, developing safety
control units for collaborative robots and AGVs, inductive
heating technology for industrial processes, the AVAS sound
platform and customer specific applications, a suspension
valve platform, customer-specific applications for active and air
suspension and a platform for sensor cleaning technology.
Developments per segment
The Industrial activities generated EUR 276.5 million (2021:
EUR 231.5 million) of revenue in 2022, representing 53% of
group revenue. The organic revenue increase, excluding
currency translation and the effect of the acquisition of 3T, was
14%. The average increase in sales prices to offset inflationary
pressure on costs added 5% to the Industrial revenue.
Profit before finance expenses was EUR 40.5 million (2021:
EUR 30.7 million). Normalized EBITDA
1
increased by 22% to
EUR 47.5 million (2021: EUR 39.0 million). Normalized EBITDA
as a percentage of revenue increased by 40 basis points to
17.2%. Normalized EBITDA in the Industrial groups excludes
a total amount of EUR 0.6 million in costs and benefits (2021:
EUR 1.6 million) that are that are generated outside the ordinary
course of business of the Industrial activities. These costs
include restructuring, and impairment charges related to the
planned relocation of existing facilities to the new manufacturing
facility at Suzhou Industrial Park. The benefit relates to a book
profit on the sale of an office and warehouse building of the
former Industrial Brake sales office in the UK.
Both Industrial business groups benefited from strong
momentum in the demand for solutions contributing to the
electrification and automation of industrial processes. Revenue
in Industrial Brakes increased by 19% to EUR 151.2 million
(2021: EUR 127.5 million). When excluding currency translation
effects, organic revenue growth in IB was 16%. Revenue in
Industrial Actuators and Controls increased by 21% to
EUR 125.3 million (2021: EUR 104.0 million). Revenue growth
excluding 3T and currency translation in IAC was 11%.
The Kendrion Automotive Group (KAG) realized 4% revenue
growth, resulting in its revenue increasing to EUR 242.8 million
(2021: EUR 232.5 million) and accounting for 47% of group
revenue. Currency translation caused 2% revenue growth, and
the effect of increased average sales prices to offset inflationary
pressure on costs was 5%. During 2022 the automotive
industry continued to face supply chain constraints which
affected European car production specifically. Analysts estimate
that 15.7 million cars have been produced in Europe,
compared to 15.9 million in 2021 and still far away from the
pre-pandemic level of 21.2 million in 2019. Profit before finance
costs ended at EUR -75.1 million (2021: EUR -6.8 million).
The Automotive Group realized normalized EBITDA
1
of
EUR 9.9 million (2021: EUR 16.8 million). Normalized EBITDA
as a percentage of revenue dropped to 4.1% (2021: 7.2%).
Normalized EBITDA in the Automotive Group excludes
EUR 63.4 million costs that are generated outside the ordinary
course of business and mainly relate to the impairment of
goodwill and other intangibles in Automotive Core and
restructuring charges in the Automotive Group in 2022.
As announced during the capital markets day in September,
the Automotive Group has been split into two separate units –
Automotive Core and Automotive E – with Core focusing on
the production of existing technologies for combustion engine
vehicles and E focusing on the development of new
technologies for electric and autonomous vehicles. The split
became effective at the end of 2022. On a pro forma basis
the revenue of Automotive Core came in at EUR 179.5 million
(2021: EUR 175.7 million) in 2022 while Automotive E achieved
a revenue of EUR 63.3 million (2021: EUR 56.8 million). Pro
forma Automotive E revenue in 2022 included EUR 2.1 million
(2021: EUR 3.8 million) direct revenue from engineering
activities.
Management statement
In accordance with article 5:25c of the Financial Supervision
Act (Wet op het Financieel Toezicht), the Executive Board
confirms, to the best of its knowledge, that: (i) the consolidated
financial statements give a true and fair view of the assets,
liabilities, financial position, and profit and loss of Kendrion N.V.
and its consolidated companies; (ii) the Annual Integrated
Report gives a true and fair view of the position as at
31 December 2022 and the developments during the financial
year of Kendrion N.V. and its group of companies included in
the consolidated financial statements; and (iii) the Annual
Integrated Report describes the main risks Kendrion is facing.
The members of the Executive Board have signed the
consolidated financial statements to comply with its statutory
obligation pursuant to article 2:101, paragraph 2 of the Dutch
Civil Code and article 5:25c of the Financial Supervision Act.
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 210.
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VALUE CREATION
Natural
Capital
Social
and Human
Capital
Responsible
Business
Conduct
CONCRETE, MEASURABLE AND TIME-BOUND TARGETS
Climate change is one of the greatest challenges
of our time and is transforming our society at
increasing speed. We are taking action to help
reduce the negative impact of climate change.
We are minimizing our environmental impact and
are addressing other sustainability and social
issues. By increasing energy efficiency and using
renewable energy, reducing emissions,
developing sustainable products, and providing
healthy, safe, and high-quality workplaces, we
show our commitment to making a meaningful
contribution to a sustainable future. Developing
and executing a sustainability strategy with
ambitious goals takes commitment, time, and
money. The extent to which meaningful
contributions can be made is subject to an
unequivocal approach throughout the supply
chain of the industry in which we operate. We
feel supported by our customers, suppliers, and
other business relations who have inspired and
pushed the sustainability transformation, and we
are committed to accelerating and scaling up our
and our supply chain partners’ efforts.
Sustainability
Sustainable contributions
Introduction
Sustainability is a core value of Kendrion and we are committed
to minimizing our environmental impact and promoting social
well-being. Our sustainable growth strategy is directed at
further adapting our product portfolio to the accelerating
electrification and renewable energy trends.
We are dedicated to reducing the impact of our operations by
increasing energy efficiency and use of renewable energy for
our manufacturing processes and facilities. We have reduced
the relative CO
2
emissions from energy from our production
facilities by 60% compared with 2015 and are finding ways to
further replace fossil fuels with renewable energy sources.
Our new 28,000 m
2
manufacturing facility at the renowned
Suzhou Industrial Park (SIP) in China – which is expected to be
ready in 2023 – will be outfitted with solar panels. With these
solar panels, we expect to generate approximately 550,000
KwH of solar energy per year. We preserve a high-quality, safe,
and inclusive work environment for our employees. We maintain
transparency in our supply chain, and our suppliers and other
business partners must commit to our environmental and social
standards. We will also continue to engage with our
stakeholders to gain a better understanding of their reasonable
expectations in relation to the environment in which we operate,
including market developments and cultural dynamics.
Kendrion’s global sustainability program forms an integral part
of our strategic plan and our short- and longer-term objectives.
Our ambition to continuously improve our sustainability
performance required cultural and organizational changes. Our
sustainability ambitions are appropriately aligned with our
organizational set-up where decision makers are empowered
and held accountable for prioritizing and fundamentally
enhancing our sustainability performance. Sustainability
objectives are cascaded to our Business Groups and made an
explicit component of Kendrion’s performance-based
remuneration schemes. Personal targets set for senior
management include sustainability criteria. The short-term and
long-term variable remuneration of the Executive Board also
include sustainability performance criteria (e.g., energy
efficiency and reduction of CO
2
emissions) and social
performance criteria (e.g., diversity, company culture, leadership
development). Reference is made to the Remuneration Report
on pages 95-96 for detailed information on the application of
the Remuneration Policy for the Executive Board and the actual
performance in 2022 against the predefined performance criteria.
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With the society’s increasing sustainability demands and the
resulting legislative initiatives, we are encouraged to further
sharpen and strengthen our sustainability ambitions and
strategy. We made good progress on the development of our
third 5-year sustainability strategy for the period 2024-2028.
We are dedicated to accelerating our sustainability ambitions
with our 2024-2028 sustainability program which we expect to
announce in 2024.
Stakeholder dialogue
Our business operations and products have an impact on the
environment. The actions and expectations of our stakeholders
influence the way in which we develop, implement, and execute
our strategy to realize long-term value. We engage in an open
and ongoing dialogue with our stakeholders about sustainability
themes to deepen our insights into their needs and
expectations. This regular engagement helps us continuously
improve and innovate our global sustainability program, not
only in design but also in management and execution. In
engaging with our stakeholders, we aim to build trust, identify
trends, and address critical issues, including the implications of
climate change for our business operations and products as
well as the impact of our operations on the environment and
society. The dialogue with our stakeholders helps us assess our
environmental risk profile and establish what mitigation plans
are required or expected from Kendrion to make a meaningful
contribution to a sustainable future. Moreover, by engaging in a
dialogue, we provide transparency in our plans and actions to
reduce the negative impact of climate change and to address
other related challenges and social issues. When developing
strategies and mitigation plans, we always consider input
provided by our stakeholders.
Our key stakeholder groups include customers, suppliers,
employees, shareholders, local communities, technical
universities and institutions of higher technical education. For
each group, Kendrion’s stakeholder engagement varies and
includes formal and informal channels that are being used with
varying degrees of regularity. Our key stakeholder groups are
described on pages 59-60 of this Annual Integrated Report.
Key themes addressed during our stakeholder dialogues in
2022 included:
■ Environmental impact and climate change:
decarbonization and energy efficiency, and renewables and
waste management;
■ Supply chain management: raw material sourcing and
environmental and social standards in the supply chain;
■ Sustainable production and product portfolio
contributing to climate mitigation and adaptation objectives;
■ Social impact: labor practices, community engagement
and human rights;
■ Governance: executive remuneration and risk
management.
While our stakeholder dialogue is part of regular engagement
and communications with our customers, suppliers,
shareholders, and employees, we also run a structured
in-depth stakeholder engagement process at regular intervals.
The most recent in-depth stakeholder engagement process
was carried out in 2020. The stakeholder engagement process
included a structured sustainability survey among internal and
external stakeholders and separate sustainability sessions with
certain stakeholder groups. In addition to the regular and
ongoing dialogues, we anticipate performing a structured
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stakeholder engagement process consistent with our
established formats in 2023, with a view to meeting
stakeholders’ reasonable needs to discuss topical themes
relevant to various aspects of sustainability. The outcome of the
stakeholder engagement process we intend to carry out in
2023 will be used for the finalization of Kendrion's third 5-year
sustainability program that we expect to launch in 2024.
Materiality analysis and materiality matrix
For a focused strategic approach, aimed at a healthy balance
between stakeholder expectations and business aspirations,
we identify and assess the material topics that are most
relevant to Kendrion’s activities. To this end, Kendrion uses a
materiality analysis to gain insight into the relevance and
importance of topics for both Kendrion and our stakeholder
groups. Although material topics may remain the same over
time, their relevance for internal and external stakeholders may
vary and is subject to change.
Kendrion commissioned the performance of a materiality
assessment in 2020. Together with a specialized consultancy
firm, we developed a tailored approach to assess materiality
and the results of internal and external stakeholder
consultation.
The 2020 materiality assessment did not reveal significant
movements in the ranking of individual themes compared to the
assessment of 2018. The outcome of the 2018 and 2020
assessments is a refined number of material themes structured
in a materiality matrix around Kendrion’s three pillars of value
creation that form the basis of the global sustainability program:
Natural Capital, Social and Human Capital and Responsible
Business Conduct.
Materiality matrix
SIGNIFICANCE TO STAKEHOLDERS
SIGNIFICANCE TO KENDRION
Water management
Customer engagement
Energy management & emissions
Community involvement
Material & waste
management
Customer privacy &
data security
Economic performance
Responsible & innovative products
Business
ethics & Integrity
Employee development
Inclusive workplace
Strategic partnerships & co creation
Responsible procurement
Human rights
Employee health & safety
Natural capital Social and human capital Responsible business conduct
The above materiality matrix shows an enhanced classification
and organization of material themes with a view to maintaining
continued focus on those themes where Kendrion can have
the most impact.
Kendrion’s materiality matrix shows the material topics along
two axes: significance to stakeholders and significance to
Kendrion.
The outcome of the 2018 and 2020 materiality analyses formed
important input for Kendrion’s sustainability program and the
2019-2023 target framework as well as the further
development and execution thereof. We will prepare a new
materiality assessment in support of the development of a
sustainability target framework for Kendrion’s third 5-year
sustainability plan for the period 2024-2028, which we intend to
launch in 2024.
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2019-2023 TARGET FRAMEWORK
Please refer to the section ‘About the sustainability report’ on pages 213-214 of this Annual Integrated Report for reporting
periods, definitions, scope and limited assurance review.
While this Annual Integrated Report generally covers topics in
the above materiality matrix, under Kendrion’s second 5-year
sustainability plan covering 2019-2023, Kendrion has not set
measurable sustainability targets for each material topic.
Kendrion reports against the 2019-2023 target framework and
related commitments.
Recurring annual improvement
of health & safety figures
number of accidents per 1,000 FTE,
lost time injury rate per 1,000 FTE,
group-wide illness rate
The establishment of a
Global Diversity Committee,
responsible for advancing diversity
The implementation of a global
company culture campaign
Rewarding 10 community
investment initiatives per year
through Together@Kendrion
Maintain a responsible
product portfolio
Products that Keep you Safe, Products
that Reduce Climate Impact and Products
that Improve Health
Sustainable sourcing
Sourcing only from approved suppliers
and conducting at least 25 implementation
audits annually
Continuous improvement
and strengthening of
the Global Legal Compliance
and Governance Framework
to secure responsible business conduct
Natural Capital
Social and Human Capital
Responsible Business Conduct
15%
Relative reduction
of energy
consumption
Implementation of the waste
management hierarchy
in global waste management practices
15%
Relative reduction
of CO
2
emission
Kendrion reports only on the most relevant material topics.
The most relevant material topics are economic performance,
anti-corruption, energy efficiency, carbon emissions, occupational
health and safety, training and education, non-discrimination, and
equal opportunities. Kendrion reports according to the GRI
reference claims, which are described on pages 213-214 in the
section ‘About the Sustainability Report’.
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Please refer to the section 'About the sustainability report' on pages 213-214 of this Annual Integrated Report for reporting periods, definitions, scope and limited assurance review.
2022 ACTUAL
TARGET 2023
15.2%
15%
Relative reduction of
energy consumption
PROGRESS
16.82%
Relative reduction
of CO
2
emission
2022 ACTUAL
TARGET 2023
15%
PROGRESS
29.94%
14.0%
REALIZED IN 2022
Waste management
4% increase total waste
Recycling rate decreased
from 83% to 74%
Distribution hazardous waste (8.7%)
and non-hazardous waste (91.3%)
REALIZED IN 2022
Enhanced focus on the development
of sustainable products and
expansion of relevant capabilities
Reduction relative CO
2
emissions
from energy by production plants
by 60% compared to 2015
Completed review on
decarbonization strategies
and mitigation plans
Energy efciency, renewable energy and
CO
2
emissions
Sustainability objective 2019-2023 target framework:
15% relative reduction of energy consumption and CO
2
emissions by the end of 2023
Climate change imposes a fundamental threat to the world. We
are taking action to reduce the impact of our business
operations on the environment. We consistently strive to
increase energy efficiency and use of renewable energy and to
reduce emissions of CO
2
in the development and manufacture
of our products. Reducing our environmental impact is a key
objective and we have implemented several initiatives to reduce
our carbon footprint and increase energy efficiency, including
the transition to renewable energy sources and the
implementation of enhanced waste management practices.
Strategically relevant and sustainable
opportunities
We act in accordance with the increasing sustainability
demands of society and our stakeholders to reduce the impact
of our business operations on the environment by focusing on
the development of sustainable products. With our product
portfolio we contribute to a sustainable future; our products
help meet the increasing demand for clean energy and the
accelerating development of electrification of industrial
processes and mobility. These key trends in electrification
particularly drive demand for our products in wind power,
automated warehouses, inductive heating technology and
electric vehicles that support the transition from fossil fuel
enabled processes to electrical solutions.
Our Business Groups Industrial Brakes (IB) and Industrial
Actuators and Controls (IAC) benefit from these developments
and their strategic plans are directed at these market segments
2019-2023 TARGET FRAMEWORK
NATURAL CAPITAL
The Natural Capital pillar focuses on reducing the
negative impacts of climate change by increasing
energy efficiency and use of renewable energy,
reducing CO
2
emissions, and strengthening
waste management practices.
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accordingly. With the addition of 3T – a Netherlands-based
developer of electronics and embedded systems – we have
expanded our electronics development capabilities significantly,
and enhanced our ability to deliver high quality smart actuators
for electrified and autonomous vehicles. The 3T acquisition also
strengthened IAC’s control technology activities.
The accelerating energy transformation due to climate change
significantly impacts the industries we operate in. Sustainable
products and technologies are seen as the default choice
by a growing number of people, and thus offer significant
commercial potential. Our smart actuation technology aligns
with the increasing demand for products that support the broad
energy transition from fossil energy towards cleaner forms
of energy. IB capitalizes on this transition in segments such as
wind power, intralogistics, and robotics. IAC responds to the
increasing demand for sustainable products and technologies
with its electrified induction heating systems that replace
traditional gas and oil heating solutions, its circuit brakers for
electricity distribution and its safety actuators for nuclear power
facilities.
Energy consumption
2022 2021
Δ %
2022 / 2021
Power kWh 24,113,379 24,610,300 -2.0%
Fuel oil kWh 403,740 614,130 -34.3%
Natural gas kWh 10,147,307 13,132,173 -22.7%
34,664,426 38,356,603 -9.6%
Energy consumption per EUR million added value 2022 2021
Δ %
2022 / 2021
Power kWh 102,381 111,344 -8.0%
Fuel oil kWh 1,714 2,778 -38.3%
Natural gas kWh 43,084 59,414 -27.5%
147,179 173,536 -15.2%
Energy consumption 2022 2021
Δ %
2022 / 2021
Absolute consumption, kWh 34,664,426 38,356,603 -9.6%
Relative consumption, kWh / million EUR added value 147,179 173,536 -15.2%
CO
2
emissions
2
2022 2021
Δ %
2022 / 2021
Absolute emissions, tonnes 5,833 6,368 -8.4%
Relative emissions, tonnes / million EUR added value 24.8 28.8 -14.0%
1
Please refer to the section ‘About the sustainability report’ on pages 213-214 of this Annual Integrated Report for reporting
periods, definitions, scope and limited assurance review.
2
Scope 1 and 2 of the Greenhouse Gas Protocol.
Energy and Emissions
1
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With the smart actuation technology of the Automotive Group,
we help facilitate Autonomous, Connected, Electric and Shared
mobility (or ‘ACES’). As these developments come with an
increasing demand for software and electronics to control our
actuators and the safety and comfort of electric vehicles, 3T’s
software and electronics development capabilities are a welcome
and excellent expansion of our existing competences and
experiences. The 2022 split of the Automotive Group into two
distinct organizations – Automotive Core and Automotive E –
will give us the strategic agility needed to remain part of and
contribute to the accelerating transformation the automotive
industry is going through. The split strengthens Kendrion’s
ability to benefit from the move towards automotive electrification
and clean energy and presents a well-considered and though-
out path towards the future of new forms of sustainable mobility.
Decarbonization strategies
Under our 2019-2023 sustainability target framework we
committed to a 15% relative reduction of energy consumption
and CO
2
emissions by the end of 2023. The degree of realizing
meaningful reductions was pushed to the forefront in the
original design of the five-year energy and CO
2
reduction
roadmap. The roadmap has subsequently been subject to
annual reviews to ensure continued effectiveness of measures
implemented and to allow for possible adjustments to the initial
approach as the public and political debate about climate
change progressed. In 2021, we hired a consultancy firm to
perform a comprehensive assessment and provide us with an
outside-in perspective on our decarbonization plans. Following
through on the recommendations made by this firm, we have
developed concrete and validated decarbonization
propositions. These have largely been implemented in 2022 in
support of the realization of our 2019-2023 sustainability target
framework and the subsequent development of an ambitious
sustainability target framework for the period 2024 to 2028.
The review that is required to develop an ambitious
sustainability target framework for the period beyond 2023 will
continue, and we will announce our new 5-year sustainability
program for the period 2024 to 2028 – which will include an
updated decarbonization strategy – in the course of 2024.
In our effort to reduce our carbon footprint we have
implemented several measures. These include the transition to
renewable energy sources, and the implementation of a variety
of energy-efficient practices – specifically in our production
facilities. We expect to generate an estimated 550,000 KwH of
renewable energy per year with the solar panels to be installed
on our new 28,000 m
2
manufacturing facility in China, and will
continue to further invest in the procurement of renewable
energy.
Developing and executing a sustainability strategy with
ambitious goals involves transformation time and costs, and the
extent to which meaningful contributions can be made is
subject to an unequivocal approach throughout the supply
chain of the industry in which we operate. We are actively
engaging with customers and suppliers that are equally
dedicated to address climate change challenges. We aim to
develop collaborations that further advance emission reduction
efforts throughout the supply chains of which we are part.
Sustainability rating and environmental
certication
For many years now, Kendrion has been actively engaged in
reducing its environmental impact. Kendrion applies an
environmental reporting system that tracks the CO
2
emissions
and energy consumption of all the production plants. Kendrion
has consistently improved its production processes with the
overall objective to reduce the environmental footprint of the
production plants.
Kendrion’s EcoVadis sustainability rating put us in the top 22%
of rated manufacturing companies and illustrates our long-
standing commitment to making meaningful contributions.
The global certification ISO 50001 Energy Management System
supports the production plants in their efforts to use energy
more efficiently by developing and maintaining an energy
management system. Kendrion’s environmental management
systems are in accordance with ISO 14001. ISO 14001
Environmental Management Systems specify requirements for
an environmental management system to enhance
environmental performance. Kendrion’s largest production
plants are ISO 50001 certified and ISO 14001 certified.
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Waste management: waste disposal and
recycling
We focus on on the development and implementation of waste
reduction and waste use. Our efforts are structured according
to the long-recognized hierarchy of management of waste, in
the following order of preference: prevention, reuse, recycling,
other recovery and (landfill) disposal.
TAKING RESPONSIBILITY
Prevention
Reuse
Recycling
Other recovery
Disposal
WASTE MANAGEMENT HIERARCHY
Kendrion’s ISO 14001 certified manufacturing facilities maintain
records of their production and processing of all waste and
work with certified waste processing companies when required
by local regulation. New waste reduction measures must be
implemented each year as part of the ISO 14001 certification
process.
We maintain a solid centralized waste data collection process
with uniform waste data collection sheets and waste registers
using standardized and consistent definitions. The
standardization of internal reporting and control processes
enable comprehensive reviews of the different categories of
waste generated by the Kendrion manufacturing facilities as
well as differences in local waste management practices that
are driven by – for example – variances in production processes
or regulatory requirements.
The outcome of the most recent waste data analysis shows a
slight increase of total waste compared to the prior year and
the overall recycling rate decreased from 83% to 74%.
The distribution of hazardous waste (8.7%, prior year 9%) and
non-hazardous waste (91.9%, prior year 91%) slightly shifted.
The top-three of hazardous and non-hazardous materials
remained unchanged, with cooling fluid, solvent, old oil, and
packaging of hazardous substances comprising the top-three
of hazardous materials and iron and steel, commercial waste
and cardboard dominating the top-three of non-hazardous
materials.
Following our earlier engagement with a specialized
consultancy firm we expanded our horizon with respect to
waste management. The comprehensive analysis carried out by
the external specialist covered a review of key characteristics of
our manufacturing processes and the various categories of
waste reported through the uniform data collection sheets and
waste registers. The outcome of the analysis enhanced our
insights and has – among others – been used to develop
uniform waste standards. The degree of compliance of a
manufacturing location with our newly developed waste
standards is assessed annually by means of an internal rating
and verification system. The implementation of new waste
standards and the related rating and verification system enable
us to closely monitor each manufacturing location. The uniform
waste standards will be reviewed regularly to ensure they
continue meeting current practices and expectations. Our
dedicated waste management task force comprising waste
management and quality professionals of all Business Groups
will continue its analysis to ascertain the feasibility of indicators
and monitoring parameters in the following areas: zero landfill
waste, recycling – specifically recycling of Critical Raw Materials
(CRMs) – and waste per unit sale (kg). With our current waste
management practices – and the envisaged improvements
thereof – we reduce our environmental impact and promote a
more sustainable future. It is contemplated that our new
sustainability target framework for the period 2024 to 2028 will
include specified waste management targets. We intend to
launch our new sustainability program in 2024.
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SOCIAL AND HUMAN CAPITAL
The Social and Human Capital pillar concerns
the preservation of the health and safety of our
employees by providing a high-quality and safe
work environment and maintaining a culture
consistent with the norms and values underlying
The Kendrion Way and our Code of Conduct.
Diversity, fair labor practices and recognition of
human rights are other material themes of the
Social and Human Capital pillar.
Sustainability objective 2019-2023 target framework:
recurring annual improvement of health and safety figures
Health and Safety
We provide a high-quality and safe work environment where the
norms and values underlying The Kendrion Way, and our Code
of Conduct are acknowledged and respected. Health and
safety have the highest priority in every aspect of Kendrion’s
operations. We apply the most stringent quality and health and
safety standards to protect our people from potential risks that
may occur in the workplace and to reduce the risk of accidents
and injuries. Kendrion’s employees receive periodic safety
training, including training in proper use of machinery, protective
equipment, handling of substances, emergency procedures,
and other safe work practices. In addition, safety inspections
are carried out at regular intervals. The health and safety of
employees are a crucial aspect of any manufacturing operation
and essential to the successful conduct of our business.
The Kendrion Health Task Force monitors our global health and
safety figures and coordinates the implementation of structural
improvement measures in all our facilities.
Day-to-day responsibility for health and safety is concentrated
within the Business Groups in which health and safety are
managed systematically and in a standardized manner with clear
rules and procedures based on recognized industry standards
and best practices that are laid down in Health, Safety &
Environmental (HSE) policies. Each production plant further
implements initiatives to enhance its HSE standards depending
on plant-specific needs, production lines and technologies. HSE
audits are performed to assess implementation and compliance
with HSE policies at regular intervals. All employees are required
to adhere to local health and safety procedures and practices,
and participate in training programs. Specific and measurable
performance targets for Kendrion’s business units and local
management include health and safety metrics, which are
determined by the number of accidents per 1,000 FTE, Lost
Time Injury (LTI) rates and illness rates.
2022 TARGET
Diversity@Kendrion
47 nationalities,
9 countries,
47% female workforce
2022 ACTUAL
707
2022 ACTUAL
6.5
2022 ACTUAL
5.4%
9.2
2022 TARGET
4.7%
Illness rate
2022 TARGET
509
Accidents
(per 1,000 FTE)
Lost Time Injuries
(in days)
Please refer to the section 'About the sustainability report' on pages 213-214 of this Annual Integrated Report for reporting periods, definitions, scope and limited assurance review.
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Notwithstanding the discontinuation of many governmental
measures prevailing during the peak of the COVID pandemic,
the persistent application of hygiene protocols and strict
operating procedures, remained topical and has been added to
the high health and safety standards we maintain.
5S methodology
Due to a continued focus on the safety of the production
processes, Kendrion achieved good safety results across its
production plants. Some of our production plants apply the 5S
methodology, which aims to continuously improve workplace
safety and working conditions. These plants apply a systematic
process to optimize their production lines and periodically
perform 5S audits to verify compliance with the methodology.
We undertake to consistently comply
with the applicable occupational health
and safety regulations at all our
locations and, in addition, set our own
standards for improving occupational
safety. Our health and safety procedures contribute to the
advancement of selected UN Sustainable Development Goals
(SDGs), towards SDG 3 (Good health and well-being) and SDG
8 (Decent work and economic growth).
Promoting and maintaining a culture consistent with the norms
and values underlying The Kendrion Way and our Code of
Conduct are key to enabling long-term employment. The
Kendrion Way forms the solid foundation of our strategy that is
symbolically captured in the Kendrion ‘strategic house’. Our
culture and the underlying values underpin all the work we do
and contribute to creating an open and inclusive atmosphere.
Our Code of Conduct provides further guidance about our
cultural norms and values, the value ‘integrity’ in particular.
Reference is made to pages 64-65 (People and Culture) for
more information on The Kendrion Way and our Code of
Conduct.
Fair labor practices and human rights
Preserving the health and safety of our employees coincides
with our acknowledgement and endorsement of fair labor
practices and human rights as described in the Ten Principles
of the United Nations Global Compact. Acknowledging and
respecting fair labor practices and human rights are an
essential component of conveying and practicing sustainable
business standards. We do not tolerate any form of forced or
involuntary labor and respect children’s rights to education and
development. We consider ourselves a responsible corporate
citizen. We take responsibility for the living
conditions and career opportunities at our
locations and maintain strong ties to the
communities in which we operate. Intercultural
understanding and respect, fair working
conditions, career development, (gender) diversity
and employee representation are some of the focal points of
our corporate citizenship initiatives. These are also areas in
which we aim to contribute to the advancement of selected UN
Sustainable Development Goals (SDGs), towards SDG 5
(Gender equality) and SDG 8 (Decent work and economic
growth).
Our commitment to endorse fair labor practices and respect
human rights is recorded in our Fair Labor and Human Rights
Policy. This policy contains global standards and principles that
are applicable across all Kendrion business operations.
With an international workforce and facilities across three
continents, we take a specific interest in promoting respect and
tolerance for different cultures, beliefs, and other characteristics
such as religion and gender. We have recorded the value of
equal opportunities and equal treatment in our Code of
Conduct. We develop education projects that facilitate young
people’s first experience with the labor market and career
development. Because the demand for Science, Technology,
Engineering and Mathematics (STEM) skills within Kendrion is
high these projects also aim to encourage young talented
(female) students to take an interest in STEM related studies.
The Circle of Trust
Workplace well-being is an important part of Kendrion’s culture
as it relates to all aspects of our employees’ working life at
Kendrion. Promoting cohesion – within a professional
community where all employees feel welcome and respected,
regardless of their background or position – enables
engagement, innovation, and performance. We have made a
concerted effort to prioritize the well-being of our employees
through a variety of initiatives.
Realizing social change for female employees in society,
particularly in the workforce, is a topical theme. Overall, social
change for female employees is a multifaceted topic that
requires consistent effort not only from employers but also from
their employees. Building on our employee wellbeing program
we introduced The Circle of Trust which gives female
employees of Kendrion access to a trusted and confidential
support line backed by honorable and brave female colleagues.
The key objective of The Circle of Trust is to contribute to a safe
and ethical working environment and to encourage female
empowerment and well-being. By listening and engaging with
female employees through a trusted and confidential support
line, we provide a sense of community for female employees
and further social progress for female employees.
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RESPONSIBLE BUSINESS CONDUCT
The Responsible Business Conduct pillar
focuses on business conduct and integrity,
accountability, and transparency. Material themes
for the Responsible Business Conduct pillar
include sustainable sourcing and ethical
behavior.
Sustainable sourcing
We are consistently looking for ways to increase efficiency and
transparency in our supply chain and ensure we source our
materials in an environmentally friendly and socially viable
manner. Our understanding of sustainability and our pursuit of
long-term sustainability goals are not limited to achieving
energy efficiencies and reducing our carbon footprint. Our
sustainability commitments and efforts are directed at other
parts of the value chain as well. In our supply chain we do our
utmost to maintain a high level of transparency, and we are
dedicated to further enhancing the current level of transparency.
At Kendrion, sustainable sourcing represents our objective to
work with suppliers that act responsibly and with integrity.
Kendrion selects suppliers based on various criteria, including
sustainability criteria, and requires suppliers to sign and adhere
to the Kendrion Supplier Code of Conduct. Our Supplier Code
of Conduct includes specific requirements relevant to the
recognition of human rights, commitments to a safe working
environment, environmental protection, and responsible
business practices.
Kendrion operates as part of a supply chain with a central
focus on product development and manufacturing processes.
Kendrion and other parties forming part of the supply chain are
collectively responsible for maintaining the quality and
sustainability of the products in the supply chain. All parties
forming part of the supply chain play a role in addressing major
issues that affect the supply chain. Kendrion intends to play a
meaningful role in the supply chain in which it is active. To
achieve meaningful results, it is of great importance that
Kendrion continues to engage in dialogue with its suppliers and
continues to consider performance with respect to sustainability
in its supplier selection and assessment.
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The sourcing of certain minerals such as tantalum, tin,
tungsten, and gold (i.e. ‘conflict minerals’) has been linked to
human rights abuses or widespread violence. We perform
inquiries into our supply chain to confirm that materials supplied
are conflict-free and that suppliers are not aware of non-
compliance in their supplier base. We do not source any
tantalum, tin, tungsten, or gold. We request our suppliers to
complete a conflict mineral reporting template or similar
material statement to evidence compliance. We also expect our
suppliers to adhere to the principles and standards included in
our Supplier Code of Conduct, which also contains restrictions
on the use of conflict minerals.
Permanent magnets are used in some of Kendrion’s products.
The volumes we use are limited. However, we cannot avoid the
use of permanent magnets altogether, as their use increases
product functionality and certain product specifications, such
as torque in industrial brakes. One category of permanent
magnets contains several rare earth metals. The mining and
refining of rare earth metals is energy intensive. Kendrion strives
to use as little of these permanent magnets as technically
feasible.
Our facilities are supported by an extensive supplier network.
Frequently used materials are steel, aluminum, copper, and
plastics. In many cases, semi-finished products are purchased
based on specifications of Kendrion’s customers. Kendrion
used 1,811 tons of copper (best estimate) in the manufacture
of its products in 2022 (2021: 1,761).
Supplier Code of Conduct and audits
We are committed to ensuring that our responsible sourcing
standards, compliance with laws and regulations, as well as
environmental and social standards, are maintained along our
supply chain. To minimize compliance, environmental and social
risks in our supply chain, we apply a standardized due diligence
process, including completion of (material) compliance
statements and use of other checks and validations. New
suppliers are also required to adhere to the principles and
standards of our Supplier Code of Conduct, which explicitly
includes Kendrion’s right to carry out an audit at the supplier’s
site to verify compliance with the standards and principles of
our Supplier Code of Conduct.
Kendrion conducts audits to review whether suppliers comply
with the standards and principles of the Supplier Code of
Conduct. Supplier audits are internal audits performed by
Kendrion employees based on an internal procedure that
prescribes the collection of corporate responsibility
documentation of the relevant supplier in the case the supplier
is ISO certified, and the use of standardized self-assessment
questionnaires in the case the supplier is not ISO-certified.
Audits that reveal that a supplier does not meet the
requirements of the Supplier Code of Conduct are followed by
a meeting to ask the supplier to prepare a remediation plan.
Failure to adequately follow up the remediation plan may result
in the termination of the relationship with the relevant supplier.
The results of the 29 (2021: 26) supplier audits conducted in
2022 have been encouraging as most suppliers followed
through on our audit procedures. As in 2021, none of our
suppliers failed to fulfil the recommended requirements for
compliance with the Supplier Code of Conduct. However, there
was a limited number of suppliers where we had to follow up
to clarify their responses.
Through the approach and initiatives set out above, Kendrion
actively encourages its suppliers to take responsibility in
addressing issues that affect the supply chain.
Ethical behavior
Kendrion believes it is important that all our activities are
conducted with integrity and transparency. To this end,
Kendrion fosters a culture in which shared norms, universal
ethical values and behaviors are the standard. These shared
norms, ethical values and expected behaviors are laid down in
a set of internal policies and procedures. In addition to setting
norms, values and expected behaviors, Kendrion’s policies and
procedures are aimed at ensuring compliance with applicable
laws and regulations.
Key internal policies and procedures include Code of Conduct,
Anti-Bribery and Anti-Corruption Policy, Speak-up procedure,
Fair Labor and Human Rights Policy, Competition Compliance
Manual, Insider Trading Code, Data Protection Governance
Guidelines, Personal Data Breach Reporting Procedure,
Supplier Code of Conduct and related internal policies and
procedures.
Sales &
Distribution
Industrial
markets
Automotive
markets
Manufacturing/
Assembly
Sourcing parts
& materials
(machined
parts, copper,
steel, aluminium,
plastics)
Design &
Engineering
R&D
Simplified supply chain overview Kendrion:
Customers
(Tier 1/OEM and
after markets)
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Our Code of Conduct builds on the values of The Kendrion
Way, and the value ‘integrity’ in particular. The Code of Conduct
is about bringing together over 2,708 people with 47 different
nationalities from multiple Kendrion locations around the globe
that operate under The Kendrion Way and together form the
Kendrion brand. The Code of Conduct provides unity and sets
guidance for business decisions and principles of ethical
behavior. It is about taking the right decisions in our everyday
business lives. We expect all our employees to do what is
ethically right and legal, and not only live by and respect the
principles set forth in the Code of Conduct, but also convey the
message underlying the Code of Conduct. Education, training
and concrete examples of expected behaviors, dilemmas and
actions are key to ensuring continued compliance with our
values.
Kendrion does not tolerate bribery or any form of corruption.
Bribery may involve the offering, promising, or giving of
payments or other benefits to any person (including
government officials or public officials) to improperly influence a
business outcome, but it also means accepting payment or
benefits offered to improperly influence a business outcome.
Integrity of financial reporting is also a key principle. The
Kendrion Anti-Bribery and Anti-Corruption Policy specifically
addresses these matters.
Kendrion considers it essential that every employee
understands, complies with, and conveys the shared norms
and universal ethical values and behaviors as laid down in the
internal policies and procedures. Our policies and procedures
are fundamental to ensuring responsible business conduct. It is
the responsibility of senior management to lead by example
and to ensure that all Kendrion employees are aware of and
behave in accordance with the spirit and the letter of Kendrion’s
policies and procedures.
As part of the development of a new sustainability program for
the period 2024-2028 – we will consider and work towards
building key performance indicators related to business ethics
and integrity.
Monitoring and accountability
As we require all employees to understand and sign off on and
comply with the Code of Conduct – the Code of Conduct is
part of every employee’s onboarding process. To ensure
continued awareness of the values underlying the Code of
Conduct and the relevance of continued compliance – a new
online training program will be introduced. This online training
specifically addresses matters such as corruption, bribery,
conflicts of interest etc. Subsequent to the implementation of
the new online compliance training program in 2023 – Kendrion
will launch a refresher compliance training at regular intervals.
We monitor compliance with the Code of Conduct – and other
applicable internal policies – in all operating companies through
quarterly internal reporting procedures that operating
companies are subject to. Reports submitted are – to the
extent required and appropriate – discussed among the
Executive Board and the responsible Business Group Director
and Business Group management team during quarterly
business reviews.
Speak-up line
We encourage our employees who have a concern about a
(suspected) violation of our Code of Conduct or any related
policy – to speak-up and express their concerns. Our Speak-up
procedure provides guidance on how to raise concerns and the
way in which reported concerns are handled. Our reporting
procedure includes a global Speak-up line managed by an
external party through which employees who feel
uncomfortable raising their concerns with their direct manager,
higher management, or their HR manager, can speak-up and
raise their concerns anonymously. The Speak-up line offers
phone and web-based reporting and is available to our
employees twenty-four hours, seven days a week. Reports of
potential or suspected misconduct or other issues can be
made by employees in their native language. In 2022, six
reports were made through the Speak-up line. These reports
were assessed by the Compliance Committee and, where
appropriate, further investigated or advised upon.
Violation of the Code of Conduct may lead to sanctions,
including termination of employment. None of the six reports
made through the Speak-up line in 2022 resulted in a dismissal
of employees.
The Speak-up line is also accessible to external stakeholders of
Kendrion that wish to make a report and raise their concerns
about a(n) (alleged) breach of the Code of Conduct or related
policies. The Speak-up procedure and the contact details of
our Speak-up line are also published on our corporate website.
Taxes
Our tax policy is based on the core values embedded in the
Code of Conduct and aligned with our strategy and the notion
of responsible business conduct.
Taxable profits are recognized in jurisdictions in which value is
created, in accordance with the applicable tax regulations and
standards, including the OECD Guidelines for Multinational
Enterprises and local transfer-pricing and other applicable tax
regulations. Kendrion does not seek to establish aggressive
tax-driven structures that are not compliant with the letter and
spirit of applicable tax regulations. This means that Kendrion
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does not pursue any aggressive tax planning or establishment
of entities in tax haven jurisdictions solely for tax optimization
purposes and without commercial substance. Reference is
made to pages 84-85 (Corporate Governance Report) for more
information about our tax policy.
Sustainable development goals
Kendrion aims to contribute to the advancement of several
selected SDGs.
Kendrion previously conducted a review of where it can best
contribute to the advancement of SDGs. This involved careful
consideration of all SDGs, while taking dialogues with
stakeholders into account. The outcome of the materiality
assessment performed in 2020, which also included a
sustainability survey, required nor justified substantive
amendments to Kendrion’s prior determination that SDGs 3
(Good health and well-being), 12 (Responsible consumption
and production) and 13 (Climate action) are areas where
Kendrion can achieve the biggest and most positive impact.
Kendrion will continue developing best practices and standards
– and where appropriate qualitative and quantitative targets –
that support the advancement of the selected SDGs.
SDG 3 – Good health and well-being
Kendrion has strong HSE policies within its
organization and each production plant implements
tailored initiatives to further enhance their HSE standards
depending on plant-specific needs, production lines and
SDG 12 – Responsible consumption and
production
In all its production processes, Kendrion is
committed to minimizing waste and disposing of waste in an
environmentally responsible manner. Kendrion’s largest
production plants are ISO 14001 certified. As part of the ISO
14001 certification process, new waste reduction measures
technologies. Through Kendrion’s Responsible Product
Portfolio (which includes Products that Improve Health,
Products that Reduce Climate Impact and Products that Keep
you Safe), Kendrion contributes the advancement of healthier
lives and improvement of well-being for all.
must be implemented every year. Through the implementation
of a waste management hierarchy in harmonized waste
management practices, Kendrion is committed to contributing
to the advancement of sustainable production patterns.
SDG 13 – Climate action
Kendrion has established strategies and plans to
increase energy efficiency, use renewable energy and
reduce CO
2
emissions. Concrete and measurable targets
support these strategies and plans. To mitigate the effects of
climate change, Kendrion focuses resources on the
development of sustainable products and the improvement of
manufacturing processes. Kendrion contributes to creating a
sustainable future as many products in our product portfolio
help meet the increasing demand for clean energy and facilitate
the accelerating development of electrification of industrial
processes. These key trends in electrification particularly drive
the demand for Kendrion’s products in wind power, automated
warehouses, and inductive heating technology supporting the
transition for certain oil and/or gas enabled industrial processes
to electrical solutions. Kendrion’s smart actuation technology
supports the transition to sustainable mobility (i.e. Autonomous,
Connected, Electric and Shared driving). Kendrion’s largest
production plants maintain energy management systems in
accordance with ISO 50001.
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Disclosures pursuant to the EU Taxonomy
Regulation
*
With the EU Taxonomy Regulation
*
(the ‘EU Taxonomy
Regulation’), a statutory framework has been introduced
pursuant to which sustainable economic activities are classified.
We are confident that the classification and earmarking of
sustainable economic activities will make a positive contribution
towards increasing transparency and thereby comparability of
the extent to which companies are pursuing sustainable
economic activities within the meaning of the EU Taxonomy
Regulation. Whilst we support the strengthening of the
regulatory framework and the transparency it creates regarding
sustainable economic activities – it must be acknowledged that
in the early stages of implementation of the EU Taxonomy
Regulation (and the ancillary regulations thereto) certain
ambiguities and uncertainties remain with respect to the
interpretation and scope of the newly introduced disclosure
requirements. Moreover, the disclosure requirements assume
an unequivocal approach and effortless collaboration
throughout the supply chains of the industries we operate in.
Naturally – one’s place in the supply chain impacts the extent to
which a party can exercise decisive influence, which is relevant
with respect to certain mandatory disclosure requirements
under the EU Taxonomy Regulation. We feel supported by our
customers, suppliers and other business relations who have
inspired and taken a constructive approach towards
sustainability while at the same time recognizing the different
levels of complexity depending on our and our supply chain
partners’ position within the relevant supply chain.
Pursuant to the EU Taxonomy Regulation, Kendrion is subject
to mandatory disclosures of its economic activities in terms of
revenue, capital expenditures and operational expenditures, in
each case to the extent these financial performance indicators
are linked to eligible and aligned economic activities within the
meaning of the EU Taxonomy Regulation and the Delegated
Acts issued thereunder. Relevant to the period under review,
two out of six environmental objectives have been defined by
the European Commission by means of Delegated Acts:
climate change mitigation and climate change adaptation.
Mandatory disclosures pursuant to the EU Taxonomy will over
time be extended to include the remaining four environmental
objectives: sustainable use and protection of water and marine
resources; transition to a circular economy; pollution prevention
and control; and protection and restoration of biodiversity and
ecosystems.
An economic activity is considered eligible under the EU
Taxonomy Regulation if such activity is in scope of the
Delegated Acts to the EU Taxonomy Regulation and considered
likely to substantially contribute to one of the six environmental
objectives, i.e. (i) climate change mitigation; (ii) climate change
adaptation; (iii) sustainable use and protection of water and
marine resources; (iv) transition to a circular economy; (v)
pollution prevention and control; and (vi) protection and
restoration of biodiversity and ecosystems. Whether an
economic activity taxonomy eligible or not does not define the
(un)sustainability of that activity. Being taxonomy eligible is
exclusively an indication that a certain economic activity is
considered to make a substantial contribution to one of the six
environmental objectives defined under the EU Taxonomy
Regulation.
Taxonomy alignment of an economic activity goes beyond
eligibility. Taxonomy aligned means that an economic activity
complies with the requirements enumerated specifically for this
activity – as the economic activity:
■ substantially contributes to one or more of the
environmental objectives under the EU Taxonomy
Regulation by meeting the relevant technical screening
criteria under the applicable Delegated Acts to the EU
Taxonomy Regulation;
■ does not cause any significant harm to the other
environmental objectives, by meeting the applicable ‘Do no
Significant Harm’ criteria under the Delegated Acts to the
EU Taxonomy Regulation;
■ is carried out in compliance with the minimum social and
governance safeguards.
Only when an economic activity is compliant with the
abovementioned conditions, criteria, and the relevant minimum
safeguards is the activity considered to be taxonomy aligned.
*
Regulation (EU) 2020/852
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Eligible activities
We carried out an analysis of our activities to identify activities
that correspond to the activities included in the taxonomy
Delegated Acts covering climate change mitigation and climate
change adaptation. The assessment and determination of
Kendrion’s taxonomy eligible activities is based on current
insights and best judgement in the absence of certain data that
is not yet in full obtainable through existing reporting systems.
The implementation of certain changes to existing reporting
systems are anticipated with a view to continue meeting
applicable statutory disclosure requirements.
Our assessment led to the identification of the following eligible
activities falling within the scope of the two published climate
objectives, i.e. climate change mitigation and climate change
adaptation.
Eligible activity Description
3.1 Manufacture of renewable
energy technology
Electromagnetic brakes for
wind power turbines
3.3 Manufacture of low carbon
technologies for transport
Components and
subsystems for electric
vehicles
3.6 Manufacture of other low
carbon technologies
Components and
subsystems for inductive
heating
7.1 Construction of new
buildings
Construction new China
factory (28,000 m
2
)
Consistent with current guidance, where taxonomy eligible
economic activities could cover both the 'climate change
mitigation' and the 'climate change adaptation' environmental
objective, economic activities have been allocated to the EU
taxonomy environmental objective 'climate change mitigation'
as the contribution to 'climate change adaptation' is considered
less significant.
Electromagnetic brakes for wind power turbines
Kendrion has been active in the wind energy industry for years
and is well-positioned to support manufactures of wind
turbines. Tens of thousands of Kendrion’s brakes are installed in
wind parks worldwide and with factories in the EU, China, India
and the US, Kendrion can provide locally customized, high-
quality brakes. In 2022, Kendrion served more global
customers and it is expected to continue this trend in 2023.
Components and subsystems for electric vehicles
Supporting the change towards clean, electric mobility, with
increased passenger comfort and safety is a strategic focus
area of Kendrion. In Automotive Kendrion focuses on actuators
for sound, suspension, and sensor cleaning, three products
specifically aimed at Autonomous, Connected, Electrified and
Shared, or abbreviated ACES vehicles. This includes
subsystems and components for active suspension, Acoustic
Vehicle Alerting Systems (AVAS) for electric vehicles, and a
turnkey sensor cleaning solution.
Components and subsystems for inductive heating
Kendrion’s Industrial Actuators and Controls Business Group
product portfolio includes modular, electrified heating systems
to replace traditional heating solutions that use gas or oil.
Construction 28,000 m
2
China factory
Our new 28,000 m
2
manufacturing facility at the renowned
Suzhou Industrial Park (SIP) in China will be outfitted with solar
panels. With these solar panels, we expect to generate
approximately 557,000 KwH of solar energy per year.
Assessment of aligned activities
We carried out an assessment of the technical screening
criteria for identified eligible activities based on an analysis of
the relevant product propositions. The assessment involved
Kendrion’s sustainability expert task force as well as business
controllers and managers from different function areas who are
responsible for or are otherwise overseeing the development,
manufacture, or sale of eligible product activities.
Taking account of Kendrion’s position in the supply chain, it is
currently not feasible to determine or control the entire life span
of the product that is linked to a eligible economic activity.
Therefore, meeting the relevant circular economy condition
is currently not achievable.
Minimum safeguards
The minimum safeguards consist of criteria relating to human
rights and responsible business conduct – particularly in the
areas of anti-bribery and anti-corruption – fair competition and
taxation. Kendrion respects the OECD Guidelines for
Multinational Enterprises and the UN Guiding Principles on
Business and Human Rights – as such principles are also
recorded in various policies, including Kendrion’s Fair Labor and
Human Rights Policy, Anti-bribery and anti-corruption Policy,
tax policy, Code of Conduct, Supplier Code of Conduct and
Competition Compliance Manual. Kendrion’s Compliance
Committee evaluates and monitors implementation of and
compliance with applicable procedures and policies. Kendrion
is a member of the UN Global Compact and supports the Ten
Principles of the UN Global Compact in each of the four areas:
human rights, labor, environment, anti-corruption). The policies
and procedures in place reflect the UN Global Compact
principles and our membership to the UN Global Compact is a
confirmation of our commitment and sustainability ambitions.
Human Rights
Kendrion suppliers are required to adhere to Kendrion’s
Supplier Code of Conduct – which includes the recognition of
human rights. We have in place a supplier audit procedure
pursuant to which compliance with Kendrion’s Supplier Code of
Conduct is assessed. Kendrion is committed to further develop
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and strengthen its supplier audit process – which will be part
of Kendrion’s new sustainability program for the period 2024-
2028 that is expected to be announced in 2024. We also
launched an updated Fair Labor and Human Rights Policy
which contains global standards and principles endorsing fair
labor practices and respect for human rights.
Anti-corruption and anti-bribery
Kendrion takes a zero-tolerance approach to bribery and
corruption. Our commitment to prevent corruption has been
recorded in Kendrion’s Anti-bribery and anti-corruption policy
as well as our Code of Conduct.
Taxation
Our sustainability commitments, our company values as
embedded in the Code of Conduct and The Kendrion Way, also
form the foundation of our approach to taxation. Kendrion’s tax
policy is based on the values laid down in the Code of Conduct
and aligned with Kendrion’s strategy and rationale underlying
the value creation pillar Responsible Business Conduct, which
is part of Kendrion’s current global sustainability program.
Fair competition
We support the principle of free enterprise and unrestricted
competition as a basis for conducting business and we adhere
to the applicable competition laws and regulations. Our
Competition Compliance Manual provides guidance and
principles on fair competition.
Kendrion’s Responsible Product Portfolio
Aside from our efforts relevant to the requirements imposed
pursuant to the EU Taxonomy Regulation, we continue our
focus on the expansion of our Responsible Product Portfolio,
which includes the category ‘Products that reduce climate
impact’ – i.e. products that contribute to or otherwise support
the energy transition. We systematically take account of the
different aspects of sustainable product development with a
view to enhancing Kendrion’s environmentally sustainable
economic activities, whilst recognizing that we are part of an
extensive chain of links that together comprise the supply chain
of the industries in which we operate. Our Responsible Product
Portfolio also covers the categories: ‘Products that keep you
safe’ and ‘Products that improve health’. The product
roadmaps of our Business Groups are directed at all three
categories of the responsible product portfolio. The visual on
page 56 provides a summary overview of the products included
in our Responsible Product Portfolio.
Financial performance indicators
The figures reported below relate to the consolidated
companies included in Kendrion’s consolidated financial
statements.
Revenue
As per 31 December 2022, the total revenue used for the
calculation of the taxonomy revenue performance indicator
amounts to EUR 519.3 million and corresponds to the group
revenue as included in the consolidated financial statements.
Our consolidated revenue can be reconciled to our
consolidated financial statements, cf. income statement
on page 182 of this Annual Integrated Report.
Kendrion’s taxonomy eligible revenue amounts to
EUR 43.5 million representing close to 8.4% of total revenue
for 2022 and corresponds to revenue generated by the
manufacturing and sale of electromagnetic brakes for wind
power turbines, components and subsystems for electric
vehicles and components and subsystems for inductive
heating.
Although of the total 2022 revenue we cannot report
taxonomy aligned revenue due to insufficiencies relevant
to certain process steps – we would have expected that
the 2022 revenue generated by the manufacturing and sale
of electromagnetic brakes for wind power turbines would
have qualified as taxonomy aligned revenue absent such
insufficiencies relevant to certain process steps. We are
committed to improving our processes and reporting systems
with a view to enable us to report taxonomy aligned revenue.
Capital expenditures
Total capital expenditure consists of all additions to tangible and
intangible fixed assets during the financial year, before
depreciation, amortization, and any other re-measurements.
Additions resulting from business combinations are also
included, with the exception of goodwill. Our total capital
expenditure can be reconciled to our consolidated financial
statements, notes 1 and 2 of the financial statements in this
Annual Integrated Report. Taxonomy eligible capital expenditure
includes capital expenditure directly related to the taxonomy
eligible economic activities, including the construction of an
energy efficient building in China.
As per 31 December 2022, the total amount of capital
expenditures used for the calculation of the taxonomy capital
expenditure performance indicator amounts to
EUR 39.0 million.
As per 31 December 2022, taxonomy eligible capital
expenditures amount to EUR 20.4 million and relate to
investments in development and manufacture of components
and subsystems for electric vehicles as well as investments
relevant to the construction of the new manufacturing facility in
China. The amount of taxonomy eligible capital expenditures
does not qualify as taxonomy aligned.
Operating expenditures
Total operational expenditures consist of direct non capitalized
costs related to research and development, repair and
maintenance and any other direct expenditure relating to
the day-to-day servicing of assets of property, plant and
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equipment. This includes research and development
expenditure recognized as an expense during the reporting
period in our income statement, as referred to in note 26 of
the financial statements in this Annual Integrated Report.
Maintenance and repair and other direct expenditures relating
to the day-to-day servicing of assets of property, plant and
equipment were determined based on expenses that are
recorded as repair and maintenance and housing costs,
including in different line items as other operating expenses in
note 26 of the financial statements in this Annual Integrated
Report.
As per 31 December 2022, the total amount of operating
expenditures used for the calculation of the taxonomy
operating expenditures performance indicator amounts to
EUR 38.8 million.
Substantial Contribution
Criteria
DNSH criteria
REVENUE
Economic activities Codes
Absolute
revenue in
mio €
Proportion
of revenue
Climate
change
mitigation
Climate
change
adaption
Climate
change
mitigation
Climate
change
adaption
Water and
marine
resources
Circular
economy
Pollution
Biodiversity
and
ecosystem
Minimum
safeguards
Category
(enabling
activity)
A. Taxonomy eligible activities
A.1 Environmentally sustainable activities (Taxonomy aligned)
Manufacture of renewable energy technologies 3.1 – % – – Y Y Y Y Y Y Y Enabling
Manufacture of low carbon technologies for transport 3.3 – % – – Y Y Y N Y Y Y Enabling
Manufacture of other low carbon technologies 3.6 – % – – Y Y Y N Y Y Y Enabling
A.2 Taxonomy Eligible, non-aligned Taxonomy activities
Manufacture of renewable energy technologies 3.1 11.7 2.3%
Manufacture of low carbon technologies for transport 3.3 24.0 4.6%
Manufacture of other low carbon technologies 3.6 7.8 1.5%
Total A.1+ A.2 43.5 8.4%
B. Taxonomy-non-eligible-activities
Revenue 475.8 91.6%
Total (A+B) 519.3 100%
As per 31 December 2022, taxonomy eligible operating
expenditures amount to EUR 3.5 million and relate to costs
relevant to development and manufacturing of components
and subsystems for electric vehicles as well as costs relevant
to the development and manufacturing of components and
subsystems for inductive heating. The amount of taxonomy
eligible operating expenditures does not qualify as taxonomy
aligned.
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Substantial Contribution
Criteria
DNSH criteria
CAPEX
Economic activities Codes
Absolute
Capex in
mio €
Proportion
of Revenue
Climate
change
mitigation
Climate
change
adaption
Climate
change
mitigation
Climate
change
adaption
Water and
marine
resources
Circular
economy
Pollution
Biodiversity
and
ecosystem
Minimum
safeguards
Category
A. Taxonomy Eligible activities
A.1 Environmentally sustainable activities (Taxonomy aligned)
Manufacture of low carbon technologies for transport 3.3 – 0% 0% 0% Y Y Y N Y Y Y Enabling
Construction of new buildings 7.1 – 0% 0% 0% N Y N N Y Y Y Enabling
A.2 Taxonomy Eligible but not environmentally sustainable
(non - Taxonomy aligned activities)
Manufacture of low carbon technologies for transport 3.3 5.4 14%
Construction of new buildings 7.1 15.0 38%
Total A.1+ A.2 20.4 52%
B. Taxonomy-non-eligible-activities
CapEx of Taxonomy non-eligible-activities 18.6 48%
Total Capex (A+B) 39.0 100%
Substantial Contribution
Criteria
DNSH criteria
OPEX
Economic activities Codes
Absolute
Opex in mio
€
Proportion
of Revenue
Climate
change
mitigation
Climate
change
adaption
Climate
change
mitigation
Climate
change
adaption
Water and
marine
resources
Circular
economy
Pollution
Biodiversity
and
ecosystem
Minimum
safeguards
Category
A. Taxonomy Eligible activities
A.1 Environmentally sustainable activities (Taxonomy aligned)
Manufacture of low carbon technologies for transport 3.3 – 0% 0% 0% Y Y Y N Y Y Y Enabling
Manufacture of other low carbon technologies 3.6 – 0% 0% 0% Y Y Y N Y Y Y Enabling
A.2 Taxonomy Eligible but not environmentally sustainable
(non - Taxonomy aligned activities)
Manufacture of low carbon technologies for transport 3.3 2.8 7%
Manufacture of other low carbon technologies 3.6 0.7 2%
Total A.1+ A.2 3.5 9%
B. Taxonomy-non-eligible-activities
Opex of Taxonomy non-eligible-activities 35.2 91%
Total Opex (A+B) 38.7 100%
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Products that keep you safe • Products that keep you healthy • Products that reduce climate impact
Products that keep you safe Products that keep you healthy Products that reduce climate impact
Environmentally sustainable economic activities
INDUSTRIAL BRAKES
WINDPOWER AND AUTOMATED WAREHOUSES
INDUSTRIAL ACTUATORS
AND CONTROLS
INDUCTIVE HEATING AND ENERGY DISTRIBUTION
AUTOMOTIVE
ELECTRIC VEHICLES
0 10 20 30 40 50 60
RESPONSIBLE PRODUCT PORTFOLIO | 45% OF GROUP REVENUE |
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Reporting principles and external verication
Being transparent and accountable is fundamental to the way
in which Kendrion operates. Our approach to reporting
enhances discipline to our sustainability and responsible
business practices. It ensures that we align our activities with
our strategic objectives and business values. Our sustainability
reporting shows whether our activities and initiatives meet our
2019 to 2023 sustainability target framework. The scope of
Kendrion’s non-financial reporting is based on the information
requirements of our key stakeholder groups. To ensure that
Kendrion meets the information requirements of its
stakeholders, Kendrion performs materiality analyses at regular
intervals. The most recent materiality analysis was carried out in
2020 as further described on page 39 of this Annual Integrated
Report.
Kendrion adheres to a solid validation and reporting process
supported by an appropriate control framework to safeguard
the quality and accuracy of the collected non-financial data.
Selected sustainability performance targets are subject to a
limited assurance review by Deloitte Accountants B.V. Please
refer to pages 202-204 of this Annual Integrated Report for
reporting periods, definitions, scope, and limited assurance
review.
Kendrion’s Executive Board expresses its continued support for
the UN Global Compact and Kendrion’s ongoing commitment
to the initiative. This Annual Integrated Report provides
a description of actions that Kendrion has taken and the
measures Kendrion intends to take to implement the Ten
Principles of the UN Global Compact in each of the four areas
(human rights, labor, environment, anti-corruption).
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Increase renewable energy Reduce emissions Sustainable sourcing Gender diversity Health and safety
Accelerating ambitions beyond 2023
Progressing on sustainability
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Stakeholders
Local communities
Kendrion is making a positive
contribution to the reduction of social
and economic gaps. Kendrion
appreciates the importance of
maintaining constructive and
appropriate contacts with local
communities and authorities.
Suppliers
Kendrion is consistently looking for
ways to increase transparency in the
supply chain and expects its suppliers
to adhere to the standards of the
Kendrion Supplier Code of Conduct and
follows a consistent approach towards
the performance of supplier audits to
verify compliance. These efforts
contribute to a continuous improvement
in compliance with the Supplier Code of
Conduct.
Customers
Kendrion’s customer base comprises
industrial companies that use our
components to manufacture a range of
industrial applications as well as Tier 1
suppliers and OEMs in the automotive
sector. Kendrion’s customers are
increasingly implementing sustainability
requirements for their suppliers.
Kendrion focuses on consistent
compliance with these requirements.
Technical universities and
institutions of higher
technical education
Active engagement with students is key
to understanding their views and
observations on sustainability and forms
a valuable platform for the exchange of
knowledge and experiences. Dialogues
with students are often inspirational and
stimulate the formulation of innovative
sustainability goals and ambitions,
including our ambition to encourage
young talented female students to take
an interest in Science, Technology,
Engineering and Mathematics (STEM)
related studies. These dialogues also
raise awareness among students about
sustainability and its importance.
Employees
Our talented and highly skilled
employees play a crucial role in the way
in which Kendrion operates its business.
Kendrion fosters a culture that
empowers its employees to reach their
full potential and to achieve the best
results. As reflected in ‘The Kendrion
Way’ and the Code of Conduct we
create an open and inclusive culture to
recruit, motivate and retain a highly
diverse workforce that reflects the
communities in which we operate. An
engaged and committed workforce
contributes to the achievement of
Kendrion’s financial and non-financial
targets.
Shareholders
The endorsement of sustainable
development and addressing
environmental, social and governance
(ESG) related issues is becoming
increasingly important for Kendrion’s
shareholders. Kendrion engages with its
major shareholders and financiers, not
only concerning Kendrion’s global
sustainability program and its material
topics and objectives, but also with
respect to the ESG policies and
activities of its major shareholders and
financiers. Kendrion provides adequate
transparency towards its shareholders
and financiers about climate change
and reducing the negative impact of
climate change and addressing other
social issues, strategy and financial
performance.
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Local communities
Communication resources and channels
Local meetings, Kendrion websites, open days
Engagement with local communities takes place at regular intervals
Topics discussed
Communities’ participations and investments
Relevance to Kendrion’s global sustainability program
Community connection, involvement and participation
Suppliers
Communication resources and channels
Supplier Code of Conduct, supplier sustainability and quality audits,
Kendrion websites, supplier and contract meetings
Engagement with suppliers takes place at regular intervals
Topics discussed
Quality of products and services, Kendrion’s global sustainability
program and objectives, management of supply chain risks (e.g.
material shortages) and joint pursuit of improvements in the supply
chain, responsible business conduct, Supplier Code of Conduct,
waste, energy, water use, use of rare earth materials, conict minerals
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
supplier’s perspective (incl. the improvement of transparency in the
supply chain), further insight into supplier needs and expectations,
sharing experiences and best practices, continuous improvement
and development of sustainability contributions
Customers
Communication resources and channels
Customer and sales meetings, Kendrion websites, contract
meetings, press releases
Engagement with customers takes place at regular intervals
Topics discussed
Quality of products and services, Kendrion’s global sustainability
program and objectives, customer satisfaction, waste, energy, water
use, use of rare earth materials, conict minerals, responsible
business conduct, ISO and IATF certication
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
customer’s perspective, further insight into customer needs and
expectations, sharing experiences and best practices, continuous
improvement, and development of sustainability contribution
Technical universities and
institutions of higher technical
education
Communication resources and channels
Presence at fairs, organization of student events, projects and
internships engagement with universities, schools and institutes
takes place at regular intervals
Topics discussed
Kendrion’s global sustainability program and objectives (incl.
advancement of gender diversity), also with a view to creating
awareness and stressing the importance and relevance of
sustainability
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability of new
generation and raise awareness
Employees
Communication resources and channels
Works Council meetings, meetings with employee representatives,
employee satisfaction and culture surveys, workshops, training
courses, intranet, internal personnel magazine, e-mail newsletters,
feedback meetings, staff and townhall meetings
Engagement with employees takes place on a daily basis
Topics discussed
Kendrion’s global sustainability program and objectives, particularly
regarding health and safety, employability, training and development,
employee satisfaction and company culture, responsible business
conduct, compliance and ethical behavior
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
employee’s perspective, further insight into employees’ capabilities
and motivations, strengthening business sustainability culture,
enhancing employee commitment, participation, and awareness
Shareholders
Communication resources and channels
General Meeting of Shareholders, analyst and investor meetings,
conferences, Capital Markets Day, press releases, Kendrion’s
corporate website
Engagement with shareholders takes place at least on a quarterly
basis
Topics discussed
Kendrion’s global sustainability program and objectives
Relevance to Kendrion’s global sustainability program
Obtain views and observations concerning sustainability from the
investor’s perspective (incl. climate change and reducing the
negative impact of climate change and addressing other social
issues), further insight into shareholders needs and expectations,
sharing experiences and best practices, continuous improvement,
and development of sustainability contributions
The table below describes the communication resources and channels per stakeholder and their relevance to Kendrion’s global sustainability program.
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Value creation model
1
Normalized for costs and benefits outside the normal course of business. The bridge from reported to normalized figures can be found on page 210.
Value creation model
Business output
Revenue
EBITDA
1
519.3 mln
57.4 mln
46.3 mln
€
€
€
OUTPUT
Relative decrease of energy
consumption compared
to 2021
Relative decrease
of CO
2
emissions
compared to 2021
14.0%
15.2%
Natural Capital
Number of CSR
supplier audits
29
Responsible Business Conduct
Accidents
6.5 accidents per 1,000 FTE
707 LTI (days)
Illness rate
5.4%
Social and Human Capital
ENTERPRISE
RISK
MANAGEMENT
GLOBAL
LEGAL
COMPLIANCE
AND
GOVERNANCE
FRAMEWORK
REDUCED
CLIMATE IMPACT
INCREASED SAFETY
AND MOBILITY
INCREASED
COMFORT
IMPROVED
HEALTH
OUTCOME
Total loans and borrowings
Net cash from operations
Shareholders equity
37.9 mln
175.0 mln
175.0 mln
€
€
€
Financial capital
Power
Fuel oil
Natural gas
Copper
24,113,379 kWh
403,740 kWh
10,147,307 kWh
1,811 tons
Natural capital
Solutions and products
> 10,000
Manufactured capital
2,753
Human capital
FTEs
INPUT
Prot for
the period -/-
STRATEGIC INTENT
AUTOMOTIVE
CHINA
INDUSTRIAL
BRAKES
CHINA
ACTUATORS
AND
CONTROLS
CHINA
THE KENDRION WAY
ADDED VALUE
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2,753
Total number of
employees in FTEs
at 31 December
(number FTE)
2021 2,728
1,404
Direct employees
(number FTE)
2021 1,385
1,135
Indirect employees
(number FTE)
2021 1,127
214
Temporary
employees
(number FTE)
2021 216
2,708
Total number of
employees
at 31 December
2021 2,659
1,267
Women employed
(number)
2021 1,267
1,441
Men employed
(number)
2021 1,392
People & Culture
Please refer to the section ‘About the sustainability report’ on pages 213-214 of this Annual Integrated Report for reporting periods, denitions, scope and limited assurance review.
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470
Employees with
a fixed-term
contract
(number)
2021 411
22
Overall employee
turnover rate
(%)
2021 18
42
Average age of
all employees
2021 43
10
Average number of
years’ service
2021 11
5.4
Illness rate
¹
(%)
2021 4.7
53.0
Wage costs per FTE
(EUR 1,000)
2021 50.5
0.5
Training costs
(as a % of wage
costs)
2021 0.3
¹
Please refer to the section ‘About the sustainability report’ on pages 213-214 of this Annual Integrated Report for reporting periods, denitions, scope and limited assurance review.
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Our people and culture
At Kendrion, we maintain a culture and environment that
empowers everyone to reach their full potential. Focusing on
human capital drives our performance and activates alignment
with our corporate norms and values. We empower our people
to put their ideas into practice and to increase their
engagement and performance in a safe and high-quality work
environment. The continued development of our employees is
necessary to create long-term value for our customers and
other stakeholders. We are committed to becoming the
industry’s employer of choice. To achieve that we maintain a
high-performance culture. By fostering an open, positive, and
inclusive atmosphere we aim to recruit and retain a talented
and diverse workforce that reflects the communities in which
we operate. Employee engagement and development are key
priorities. We offer a variety of training and development
opportunities that enable our employees to grow and advance
in their roles.
The Kendrion Way and Code of Conduct
Kendrion’s strategy for realizing long-term value creation is
symbolically captured in our strategic house that provides
direction and uniformity within a clear structure. Creating long-
term sustainable value with a lean and focused organization
and providing a safe and high-quality work environment for our
employees are key to our strategy. The foundation of our
strategic house is our culture, since no building is stable
without a strong foundation, regardless of the strength of its
building blocks. Our culture and its underlying values underpin
all the work we do. Key values exemplifying our culture are
portrayed in The Kendrion Way: ‘A global team of actuator
specialists, with courage to act, curiosity to learn from
successes and mistakes, confidence to share, and open to
feedback’. The objective of defining The Kendrion Way is to
give our employees clear guidance as to ‘’how we do things” at
our company, irrespective of location, level of responsibility or
functional role. The Kendrion Way provides a universal
approach towards realizing our ambitions and is the foundation
on which we build Kendrion’s future.
We are committed to maintaining the highest standards of
conduct in all our business activities. Our Code of Conduct is
intended to further develop and implement our corporate
norms and values, in particular ‘integrity’. The Code of Conduct
sets guidance for our business decisions. It provides principles
of ethical business behavior and is an essential part of our
culture. The Code of Conduct contains obvious and universal
standards and expected behaviors for all employees and helps
to create a safe and respectful environment for everyone. We
are dedicated to maintaining a positive and inclusive work
environment, and do not tolerate any form of discrimination,
harassment, or misconduct. We are committed to conducting
our business in a transparent and responsible manner and will
continue to review and update our Code of Conduct to ensure
that our norms and values remain relevant and effective. The
Code of Conduct can be found on the corporate website at
www.kendrion.com.
Increasing awareness, education, training, and providing
concrete examples of expected behaviors, dilemmas and
actions are key to promoting and preserving our culture.
We are Kendrion
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Supported by dedicated value teams, managers are expected
to increase awareness and to support their team members in
their value journey and to help them understand what each
value means for them, their team, and the organization. A mix
of interactive trainings and learning platforms is available to help
our employees live and breathe the values of The Kendrion Way
and the Code of Conduct.
Talent attraction, employee engagement,
and succession management
A diverse, talented, and ambitious workforce is key to the
successful execution of our strategy.
Talent attraction
The market for talent is increasingly competitive. We
consistently invest in talent attraction and employer brand
strategies to recruit new talent. We have implemented a
comprehensive recruitment strategy that includes targeted
advertising, networking events, and partnerships with technical
universities and institutions of higher technical education. In our
recruitment strategy we take a global approach. Digital
innovation contributed to our running of several targeted
marketing campaigns on social media platforms. Our global
approach and marketing campaigns enabled us to reach wider
pools of talent. Our recruitment team has also created a
positive candidate experience with a positive response. Our
career website enables candidates to find information about
vacancies across the globe and the countries in which we
operate.
Attracting and selecting early career professionals is particularly
important. In addition to maintaining good relations with
technical universities and institutions of higher technical
education, our offices are located at attractive and inspiring
locations such as the High Tech Campus in Eindhoven, the
Netherlands, or the renowned Suzhou Industrial Park (SIP) in
China. Furthermore, we provide employee development
opportunities, an international exchange program, flexible work
arrangements, and a strong company culture. These efforts
have contributed to a reduction in turnover and an increase in
employee satisfaction.
In addition to remote and hybrid working models,
we continue to provide a safe space to collaborate
and exchange expertise in our offices.
In a historically male dominated industry, we strive to attract
talented females, including early career professionals through
our renowned apprenticeship and trainee program. We have
established an informal partnership with the Hochschule
Furtwangen University (HFU) in Germany and provide guest
lectures about managing diversity within Kendrion as part of the
module Intercultural Management offered by the HFU. Through
our active engagement with students and exchange of
experiences and views, we seek to encourage and inspire
students to pursue a STEM (Science, Technology, Engineering
and Math) career path, and thereby contribute to our ambition
to attract talent to our industry.
Employee engagement
Being recognized as a safe, inspiring, and high-quality place to
work requires active engagement with our employees and
following-up on employee insights. This is becoming ever more
important in a market where it is challenging to attract talent,
more specifically specialists in areas such as software and
electronics, and where the ways of working have changed over
the past years. Understanding the expectations of our
employees in a changing work environment is key as it impacts
the way in which we execute our strategy and engage with our
customers, suppliers, and other business relations. We support
flexibility, enabling workstyles that contribute to the
performance and job satisfaction of our employees. In addition
to remote and hybrid working models, we continue to provide a
safe space to collaborate and exchange expertise in our offices.
A healthy balance between flexible workstyles and availability
and accessibility of safe workplaces around the Kendrion globe
are important for the wellbeing of our employees. We feel that
we have found that balance.
We offer our employees the opportunity to work on exciting
tasks and innovative projects. Another essential component of
Kendrion’s efforts to maintain an engaged and committed
workforce is the availability of a wide range of measures and
tools aimed at nurturing a healthy, safe, and sustainable
workplace culture, including annual ‘Health Days’, medical
check-ups, sports opportunities, and other events. A healthy
work-life balance is also important to create and maintain
employee satisfaction and engagement. We enable employees
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to balance their personal lives with Kendrion’s dynamic and
performance-driven work environment.
Where the COVID pandemic dominated these past few years,
2022 has been marked by geopolitical instabilities that have
had an enormous impact on the global economic environment.
A pandemic and a geopolitical situation that remains difficult
and unpredictable, paying sufficient attention to our employees’
mental health has become increasingly important. Some of our
locations offer employees a consultation with a psychologist at
their request. Increasing mental health awareness and showing
respect and acceptance contributes to removing potential
barriers for employees to seek help when struggling with mental
health issues.
The opportunity to give and receive feedback is imperative for
maintaining an engaged and committed workforce. This is why
we conduct a Kendrion-wide employee satisfaction and culture
survey at regular intervals. Our 2022 employee survey revealed
– among other things – that our employees feel a strong
connection with Kendrion as employer and that they feel valued
and appreciated. More specifically, recognition and
opportunities for growth and development received positive
satisfaction levels. Moreover, the employee survey confirmed
the capacity and willingness of our employees to thrive in a
period of change and to go the extra mile to contribute to the
success of Kendrion. Immediate managers are one of the key
contributors towards a positive employee experience. At the
same time, employees expect more support and
communication around changes affecting the organization or
their work.
We are committed to prioritizing employee engagement and are
confident that this will lead to increased productivity, job
satisfaction, and overall success in the execution of our
strategy.
The Circle of Trust
Workplace well-being is an important part of our culture as
it relates to all aspects of our employees’ working life at
Kendrion. Promoting cohesion, within a professional
community where all employees feel welcome and
respected, regardless of their background or position,
enables engagement, innovation, and performance. We
have made a concerted effort to prioritize the well-being of
our employees through a variety of initiatives.
Realizing social change for female employees in society,
particularly in the workforce, is a topical theme. Overall, social
change for female employees is a multifaceted topic that
requires consistent effort not only from employers but also from
their employees. To build on our employee wellbeing program
we introduced The Circle of Trust that gives female employees
of Kendrion access to a trusted and confidential support line
backed by honorable and brave female colleagues. The key
objective of The Circle of Trust is to contribute to a safe and
ethical working environment and to encourage female
empowerment and well-being. By listening and engaging with
female employees through a trusted and confidential support
line, we provide a sense of community for female employees
and further social progress for female employees.
The Kendrion Way, our Code of Conduct and Speak-Up
procedure outline our company values and commitments and
how to report concerns. An official record of our norms and
values, and a confidential reporting procedure through our
Speak-Up line remain critical. With The Circle of Trust we have
created an additional space where female employees feel
comfortable talking about their experiences and concerns with
like-minded women, and where structural solutions to realize
social change for female employees can be initiated. We are
confident that The Circle of Trust will advance social change for
female employees within our organization.
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Enabling career development
By constantly investing in the career development of our
employees we support them to grow and advance in their
roles, and at the same time increase our employee satisfaction
and retention. Investing in our employees is essential to create
long-term value, and we provide our employees with the tools,
resources, and opportunities to achieve their career goals.
We have implemented a variety of initiatives to enable career
development within Kendrion and offer a broad spectrum of
learning and development tools and opportunities. Fostering a
culture of trust and recognition as reflected in The Kendrion
Way and our Code of Conduct is an important contributor. Our
‘Learn and Share’ The Kendrion Way team is responsible for
several learning and development programs directed at the
advancement of relevant skill sets and leadership capabilities.
One of the learning and development tools we use is the
e-learning platform Goodhabitz. Goodhabitz offers employees a
wide variety of courses on topics from personal strength to
inspirational leadership, health, and well-being.
We focus on maintaining a culture where our employees feel
supported and empowered to take ownership of their own
career development. The role and responsibility of senior
management is key to creating and maintaining an inspiring
learning environment that stimulates innovation and
development. Leadership and personal development will always
be themes of importance. Developing personal leadership,
building internal knowledge networks, and encouraging
innovation and agility are important values in our management
programs and development initiatives.
We respect the principle of equal opportunities for career
development, regardless of background, nationality, ethnicity,
religion, age or gender. To maximize the potential of our
employees and to meet their development needs, we support
the principle of internal mobility and aim to fill vacancies with
qualified internal candidates. Internal moves are considered
beneficial to the development of our people - providing them
with new and challenging opportunities and experiences, while
retaining knowledge within the organization. Moreover, our
culture in which sharing of ideas, knowledge and expertise and
training on the job are encouraged, contributes positively to the
development of our employees.
We encourage internal promotion and the advancement of
young talent to management roles in our business. The
Kendrion High Potential program is our global learning and
development program that provides our young talents with the
potential for management roles access to various modules of
learning such as Finance, Conflict management and Teamwork.
The High Potential program offers development opportunities
that are aligned with business and individual needs including
strengthening personal competencies. Additional modules are
added as deemed appropriate, e.g., sustainability, diversity and
inclusion, strategy, and conceptual skills. In 2022 a new group
of talented and ambitious employees enrolled in the next edition
of the three-year High Potential program.
Our efforts have resulted in an engaged and motivated
workforce. We are proud of our culture; employees are
assessed and valued on their merits and have the confidence
to take on new roles and responsibilities within the company
that meet their expectations, talent, and ambitions. We are
committed to continuing our efforts to ensure that our
employees receive the tools and resources they need to reach
their full potential.
Succession management
To ensure continued growth and success for Kendrion we have
implemented a comprehensive succession management plan.
This plan includes identifying successors for critical positions
and monitoring their development to ensure that they are ready
for a leadership role at the right time in the future.
Training and development programs are also designed to
prepare our talented employees to take on leadership roles in
the future. As part of our Kendrion High Potential program, we
have implemented a mentoring program to provide guidance
and support for our high-potential employees. These efforts
help us create and maintain a healthy pipeline of upcoming
leaders within our organization.
Our talent management and succession-planning tool identifies
and facilitates the monitoring and review of our employees.
More specifically, the tool enables a structured development of
our employees, including our current and future leaders who
have the talent and potential to take on a new role in the future.
The tool also helps us conduct performance reviews
consistently by providing clear and structured insights into
employee development. Our tool includes a competency
framework that defines how we expect our employees to fulfil
the tasks and responsibilities in line with their job role. Together
with the skills required for a certain job role, the competency
framework forms the basis of our performance reviews and
determines the requirements for future positions. The
competency framework is updated as appropriate to increase
effectiveness and improve the performance review process. It
helps our managers and employees to better determine career
paths and the corresponding training and development needs.
With our talent management and succession-planning tool we
create an environment for our employees to grow, perform and
succeed in their careers.
Compensation and benefits
Kendrion offers compensation and benefits schemes that are in
line with industry standards and local practices to attract,
select, recruit, and retain talent. Our compensation and benefits
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schemes are designed to create transparency and fairness in
the structure of both fixed and variable remuneration, while
offering a competitive package with appropriate upside
potential, linked to performance. Kendrion’s compensation
schemes include performance-based compensation and share-
based compensation for eligible employees. These programs
aim to ensure fair and attractive compensation and to
encourage employees to work to Kendrion’s long-term benefit.
Diversity
Diversity is crucial to create a fair and inclusive
society. It promotes equal opportunities and helps
break down barriers of prejudice and unconscious
bias. Diversity in the workplace increases creativity, innovation
and productivity, and contributes to well-informed decision
making. Diverse and inclusive organizations become more
attractive employers, increasing their ability to attract and retain
talent.
Talent, ambition, and commitment are key to realizing our
strategy. We provide an environment where all employees have
equal opportunity to develop and contribute to the realization of
our strategy, regardless of their age, background, gender,
nationality, ethnicity, religion or any other (protected)
characteristic. Diverse and inclusive teams make our
organization more agile, creative and innovative. Enabling a
diverse workforce – in terms of gender, nationality, and
background (i.e. education, (work) experience), age, etc. –
gives us access to a larger talent pool. Having the right mix of
people in the right jobs, with the right capabilities, encourages
better decision-making and helps us grow our business.
As part of the Social Capital and Human Capital value creation
pillar of our global sustainability program, we are committed to
creating and maintaining a diverse workforce, where all
Following the completion in 2021 of a global and
comprehensive gender diversity data analysis across our
Business Groups, we developed specific numerical gender
diversity targets that will be part of our sustainability program
beyond 2023. The identified gender diversity targets will involve
an improvement requirement of female FTE within our Business
Groups of 25% combined with a minimum threshold
requirement of 33%, to be achieved over multiple years. Further
qualifications and conditions relevant to the introduction of
these numerical gender diversity targets will be part of our new
5-year sustainability program that we anticipate launching in
2024 for the period 2024 – 2028.
The introduction of certain changes to our recruitment process,
the recruitment from diverse candidate pools, the provision of
unconscious bias training sessions and the establishment of a
so-called employee resource group such as The Circle of Trust,
are among the actions that we initiated to promote diversity and
employees feel welcome and respected. We drive diversity
across the employee lifecycle. The employee lifecycle is used to
unravel and address these aspects and the complexity around
(gender) diversity, especially for a company like Kendrion where
the demand for technical and Science, Technology, Engineering
and Mathematics (STEM) skills is high.
Key priorities of our strategic diversity framework include:
■ Recruitment of diverse employees – Ensure that our
recruitment process is free of bias, and clearly signals our
interest in a diverse group of candidates; support
applications from a diverse group of candidates; and
underline these expectations to our recruitment teams;
■ Developing and maintaining a solid pipeline of a
diverse group of talent;
■ Retention and promotion of talents of diverse
backgrounds, nationalities, gender etc. – covering
various aspects, from reward, recognition or benefits to
work allocation, performance management or career
development;
■ Advancement into management roles – preserving an
environment that allows for a diverse group of talents to
grow into management roles, technical roles, and other
leadership roles.
While our focus remains on a broad definition of diversity, our
strategic approach is directed at the improvement of gender
balance specifically in management roles, technical roles, and
other leadership position. Through building engagement around
gender equality amongst managers and other (senior)
employees, developing concrete actions and initiatives and
providing insight into possible barriers, we aim to increase
gender diversity across the organization until it is sustainably
gender balanced. Moreover, consistent communication and
promotion of gender diversity, as well as prioritizing diversity in
our strategy are essential to advancing diversity within our
organization.
EMPLOYEE LIFECYCLE
DIVERSITY MATTERS
RECRUITMENT
counteract
existing barriers
RETENTION
reward,
recognition
& benefits
ADVANCEMENT
INTO
MANAGEMENT
ROLES
it drives performance & innovative results
INTENT ALIGNED WITH ACTION
Management awareness, commitment and behaviour
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increase the representation of female employees in our
Business Groups and our Leadership Team. Giving consistent
attention to challenges that female employees may face has
helped us improve the overall workplace culture.
Kendrion is a signatory of the German Charta der Vielfalt
(Diversity Charter). The Charta der Vielfalt promotes the
recognition, appreciation, and integration of diversity in
business culture, and is supported by the German
Commissioner of the Federal Government for Migration,
Refugees and Integration.
Kendrion’s workforce comprises 47 nationalities (2021: 39)
employed in 9 countries (2021: 10); and 47% of our workforce
is female (2021: 48%). We have a healthy balance of
backgrounds, nationalities, and gender across the organization
as a whole.
While we are proud of the progress we have made, we
recognize that there is still work to be done. We are committed
to continue to promote diversity and inclusion within Kendrion
and will be implementing additional initiatives to further our
efforts.
Fair labor practices and human rights
Respecting human rights is fundamental to a sustainable
society and an essential component of promoting sustainable
business practices across our organization and in our dealings
with our customers, suppliers, and other business partners.
Kendrion acknowledges and endorses the human rights of all
people as described in the Ten Principles of the United Nations
Global Compact. We acknowledge and respect children’s rights
to education and development and the applicable minimum
employment age and related conditions consistent with
applicable statutory requirements. Kendrion does not tolerate
any form of forced or involuntary labor. We strive to apply the
UN Guiding Principles on Business and Human Rights. Our
commitment to endorse fair labor practices and to respect
human rights is recorded in our Fair Labor and Human Rights
Policy. Our Fair Labor and Human Rights Policy contains global
standards and principles that are applicable across all Kendrion
business operations. No material human rights or labor issues
were raised in relation to our activities in 2022.
We expect our suppliers to recognize human rights and to
ensure that they are not involved in human rights violation or
abuses. Our suppliers are required to confirm and acknowledge
their compliance with the standards and principles of
sustainable sourcing – which include the recognition of human
rights – by signing the Kendrion Code of Conduct for Suppliers.
The Kendrion Code of Conduct for Suppliers can be found on
the corporate website at www.kendrion.com.
Employee representation
Fair labor practices and human rights are essential for ensuring
that our employees are treated respectfully. This includes the
offering of fair wages and a safe working environment and
protecting our employees from discrimination and harassment.
Fair labor practices and human rights are
essential for ensuring that our employees are
treated respectfully.
It also means providing our employees with the right to form
unions and engage in collective bargaining. Kendrion respects
freedom of association and the right to collective bargaining.
Works councils and employee representatives have been
appointed at Kendrion’s largest operating companies in
Germany as well as Kendrion’s operating companies in the
Netherlands, Romania and Austria. The respective works
councils and employee representatives are involved in a wide
range of employment, health & safety and social issues, in
accordance with local labor legislation. Through regular
meetings and consistent communication, our employees are
given the opportunity to raise questions and provide valuable
input. We believe that this constructive interaction with our
works councils and employee representatives leads to a more
engaged and satisfied workforce, and improved productivity
and morale. We are appreciative of our dedicated works
councils and employee representatives who put considerable
effort into ensuring that the needs and questions of our
employees are voiced and addressed.
Approximately 67.4% (2021: 72.4%) of all Kendrion employees
are represented by these works councils and employee
representatives. Approximately 62.4% (2021: 66.9%) of the
employment contracts in Germany are governed by or follow
the collective bargaining agreements for the metal industry.
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Outlook
At the beginning of 2022, no one could have guessed just how
tough the economic and political circumstances would
become. The initial optimism that worldwide vaccination
programs would enable a more normal business environment
proved to be premature. The Russian invasion of Ukraine on
24 February triggered an energy crisis in Europe, high inflation
rates and broad supply chain and demand volatility across the
globe.
Against this backdrop, Kendrion navigated the unpredictable
market conditions well with good results. Kendrion develops and
manufactures actuator products that help advance the global
push towards electrification and clean energy. Our balanced,
diverse product portfolio supports this transition, without being
overly dependent on any specific vertical or market segment.
Our products include brakes for wind power, robotics,
automated warehouses, sound actuators, suspension and
sensor cleaning products for electrical vehicles; and inductive
heating technology that supports the switch from oil and gas to
electrical solutions in industrial applications. In all our Business
Groups, and in China, the broad push towards electrification has
determined our product development decisions over the past
couple of years and will continue to do so.
This focus on energy transition is a key factor in our M&A
decisions. The acquisition of INTORQ in 2020 has substantially
strengthened our position in the industrial brakes market. As
our industrial brakes are sold in tandem with an electromotor,
the accelerating energy transition towards electrification
provides us with considerable opportunities in a flourishing
market. In 2021 and 2022 this has resulted in substantial
growth of our Industrial Brakes business.
The acquisition of Dutch electronics and embedded systems
developer 3T in September 2021 offers significant growth
potential for our Industrial business. 3T’s expertise perfectly
complements the control technology activities of our Industrial
Actuators and Controls (IAC) Business Group. It also
strengthens our software and electronics development
capabilities, which will benefit our Automotive Group, and
specifically the newly created Automotive ‘E’ organization,
where software and electronics form a substantial part of our
products for sound actuation and sensor cleaning.
We are well positioned to continue the growth shown in 2021
and 2022. To accommodate anticipated growth in China, we
have almost completed the construction of a 28,000 m
2
Accelerating energy transition
We have leading positions in segments like wind power, robotics
& automation, forklift trucks, AGVs and more and expect to
benefit from strong and long-lasting underlying growth trends.
manufacturing facility at Suzhou’s Industrial Park, a premier
location for technology and advanced manufacturing
companies. We expect to move Kendrion’s operations in
Suzhou and Shanghai into the new building in the first half of
2023. We have also made significant progress upgrading our
IT infrastructure and continued to build our culture of global,
seamless cooperation: ‘The Kendrion Way’.
As we enter 2023, in Industrial Brakes, we expect to benefit
from the global push towards electrification, driving demand for
our products in wind power, robotics & automation, forklift
trucks, AGVs and more. We have leading positions in all these
segments and expect to benefit from strong and long-lasting
underlying growth trends. In China, our new manufacturing
facility will accommodate our large and growing project
pipeline. IAC will continue to focus on strong cash generation
and on investing in a growing list of opportunities in segments
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like inductive heating for industrial processes, energy
distribution, control technology, nuclear power, and industrial
locks.
The broad disruption of the automotive industry continues.
To further increase our focus on electrified vehicles, we split our
automotive franchise into two distinct organizations: Automotive
‘Core’ and Automotive ‘E’, both with full P&L responsibility and
with separate KPIs. The proliferation of Autonomous,
Connected, Electric, and Shared (ACES) vehicles, in
combination with the ongoing push for greater safety and
comfort, presents the automotive industry and Kendrion with
substantial growth opportunities. Automotive E is fully
dedicated to that opportunity. Our innovative product platforms
include systems and components for active suspension,
Acoustic Vehicle Alerting Systems (AVAS) for electric vehicles,
and a turnkey sensor cleaning solution. Automotive Core is
responsible for Kendrion’s automotive business related to the
combustion engine, focusing on operational excellence, lean
production, cost efficiency, profitability and cashflow.
The economic outlook for 2023 remains uncertain. As the war
in Ukraine continues, many economists predict a recession in
both Europe and the US. The economic effect of the sudden
reopening of China is unclear. On the one hand, it is expected
to trigger a rebound in growth in China that will positively affect
the global economy. On the other hand, the resulting increase
in demand for energy and raw materials could potentially further
increase inflation, compelling US and EU central banks to keep
increasing interest rates, with a negative effect.
In short, we expect the unpredictability of our markets in 2023
to remain. However, in view of our revenue and project pipeline
growth over 2021 and 2022, and the opportunities in the
accelerating global transition towards electrical power, fuel cells
and nuclear power, we remain confident about our 2025 goals.
We are positive that our strong position in the growth markets
of Industrial Brakes, selected segments of IAC, Automotive and
China will help deliver our medium-term financial targets of 5%
organic growth between 2019 and 2025, an EBITDA of at least
15% in 2025 and a ROI of at least 25% in 2025.
To further increase our focus on electrified vehicles, we split
our automotive franchise into two distinct organizations:
Automotive ‘Core’ and Automotive ‘E’.
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Effective risk management
Effective risk management is key to executing Kendrion’s
strategy, achieving long-term value for Kendrion’s stakeholders,
protecting the company’s reputation and good corporate
governance. Kendrion promotes entrepreneurship and
empowers management to exercise their discretionary powers
as appropriate. Kendrion’s risk management is not intended to
eliminate all risks since exposure to risk is unavoidable in doing
business. Kendrion actively conveys the need to maintain a
healthy balance between entrepreneurial spirit and risk
awareness. We adopt an approach to business risks that is
consistent with our risk appetite and that minimizes the
probability of adverse events and the impact of such events,
while remaining competitive in an ever-developing business
environment. The Executive Board emphasizes that risk
management and control systems can neither offer an absolute
guarantee that the company’s objectives will be achieved nor
entirely prevent material errors, loss, fraud, or violations of laws
or regulations.
Risk management framework
Risk management is fully integrated in Kendrion’s business
practices and extends to all areas such as culture,
policymaking, processes, duties, influencing conduct and all
other aspects of doing business. Kendrion’s approach to risk
management is part of its control environment and consists of
two main complementary elements: a top-down strategic view
of risk at the enterprise level and a bottom-up view of risk at the
operational level. The approach to risk management interacts
with all relevant elements in the control environment, both on
Risk management
the enterprise as well as on the operational level. With this
consistent approach, Kendrion’s risk management and control
framework fosters a culture of risk awareness across the
organization by identifying risks in a systematized manner and
defining appropriate controls aimed at the mitigation and
management of these risks in line with Kendrion’s risk appetite.
The Executive Board is responsible for maintaining a
comprehensive risk management and internal control system
aligned with the risks associated with Kendrion’s strategy and
activities, and for regularly reviewing and supervising its
effectiveness. In addition to maintaining a risk management and
internal control system, the Executive Board is responsible for
ensuring that such system is embedded in Kendrion’s business
practices.
Kendrion’s risk management function, headed by the Internal
Audit and Risk Manager, provides guidance and support to the
Executive Board. This includes driving risk awareness across
the Kendrion organization and leading reviews of operational
CONTROL ENVIRONMENT
Annual corporate
risk management
cycle
Code of conduct
Speak-up procedure
Corporate policies
Internal audit
I
d
e
n
t
i
f
y
A
s
s
e
s
s
M
o
n
i
t
o
r
M
i
t
i
g
a
t
e
Local entity
risk management
process
OPERATIONAL
LEVEL
Periodic business reviews
Planning & Control cycle
Local policies and procedures
I
d
e
n
t
i
f
y
A
s
s
e
s
s
M
o
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ENTERPRISE
LEVEL
Project risk
management
process
Certicates
Quarterly
reporting
Risk
owners
Corporate
top 10
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processes and effectiveness of the risk management and
control system. In 2022, the risk management function has
sustained its contribution to the organization through the
facilitation of risk management activities and by proactively
supporting the identification, evaluation and mitigation of risks.
The Executive Board conducts an annual risk assessment and
considers if adjustments to the risk management and internal
control system are required, as conditions and market
circumstances change. In 2022, the risk assessment was
extended with a section specifically focused on fraud risks that
are relevant for Kendrion. The result of the annual risk
assessment is discussed within Kendrion’s Management Team
and shared and discussed with the Supervisory Board. To
strengthen risk management and oversight, risk owners are
assigned to the top-10 risks identified, and each risk owner is
responsible for preparing and updating mitigation plans. On a
quarterly basis, risk owners report to the Executive Board on
mitigation progress and risk development. This report is also
shared and discussed with the Audit Committee.
At the operational level, Kendrion’s plants hold internationally
recognized certifications designed to assess and improve their
processes. They have a responsibility to put internal controls
and procedures in place and to verify their effectiveness by
testing them at regular intervals. Local management is
expected to be fully aware of the operational risks and the
necessity of internal controls and procedures.
Risk appetite
K
endrion’s risk management framework balances risk and
opportunity and unambiguously describes the Executive
Board’s appetite for risk. The Executive Board and the
Management Team periodically review and discuss Kendrion’s
approach to risk management, as Kendrion’s risk appetite may
change over time reflecting developments in society,
geopolitics, the competitive and customer landscape as well as
changes within Kendrion.
Kendrion’s risk appetite provides an indicative bandwidth that
guides the organization during its decision-making process.
RISK AREA RISK APPETITE TARGET
Risk averse Risk taking
Strategic
Operational
Financial & reporting
Compliance
Entrepreneurial
Innovative
Punctual
Sincere
This bandwidth is defined for each of the following risk areas;
Strategic, Operational, Financial & Financial reporting and (Tax)
Compliance. The width of the bandwidth and the position on
the risk spectrum (from risk averse to risk taking) differs for
each of the risk areas. The above visual shows that Kendrion is
risk averse when it comes to compliance risk exposure,
whereas the bandwidth for strategic risks is much broader and
allows for a higher degree of risk-taking in pursuit of the
strategic objectives.
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Risk overview
Risk area Risk name Risk description
Strategic
Market disruption/decline Continued long-term recession in the automotive and/or industrial market.
Unsuccessful long-term strategy or unsuccessful
implementation of long-term strategy
The strategy does not deliver the expected results (e.g. growth, profit, market share) or focus on the right
products and product portfolio — also based on megatrends — to serve clients in the future, leading to a
decline in market share and financial performance.
Unable to attract and retain qualified personnel Inability to attract and retain qualified people by being unresponsive to relevant employee satisfaction drivers
(e.g. modern, diverse and inclusive working environment, competitive compensation) may lead to increased
stress on existing personnel, absence or loss of key knowledge, or capacity issues.
Operational Sourcing issues and/or purchase price increases Risk of instability in the supply chain (affecting sourcing of raw materials, services, energy) and/or significant
increase of purchase prices could lead to business interruptions and additional costs.
Uncertainties of (global) socio-economic and political
conditions
Inability to respond to volatile socio-economic and political conditions may lead to difficulties in managing
business operations (e.g. planning and forecasting) and declined business performance.
Significant order volume fluctuation/decline or project
cancelation
Increase in the volatility of customer orders, with larger deviations in quantities and cancellations of projects
altogether.
Financial & reporting Cost increases or efficiency losses are not transferred
to the customer
Cost increases for raw materials, energy or wages or efficiency losses caused by volatile order volumes are not
passed on to the customer.
Customer-related risk Customer actions (pressure on price) or issues (insolvency) impacting profit margins, asset values (impairment)
and/or cash flow.
Compliance Unfavorable changes in laws & regulations Unfavorable changes in the applicable laws and regulations (e.g. labor protections, trade barriers,
environmental restrictions etc.), may lead to additional costs, less flexibility or loss of revenues.
Employee health and safety Inability to manage a healthy working environment (e.g. hygiene protocols) and employee safety may lead to
incidents, loss of productivity, demotivation or absence.
In addition to the selected key risks described in the table
above, Kendrion distinctively recognizes risks related to climate
change, tax compliance, and fraud. Each of the risk areas and
the associated key risks will be addressed in more detail.
Strategic risks
Market disruption/decline
Kendrion operates in a competitive market that is exposed to
economic changes, geopolitical developments, societal
changes as well as industry disruption, including the
accelerating transformation from a predominantly hardware-
based automobile to a software-centric electronic device on
wheels. Market disruption, saturation (e.g., possible Peak Car
in EU and USA) or decline, could pressure Kendrion’s financial
results and the company’s ability to achieve its strategic goals.
Kendrion will continue its development efforts to address
markets that offer sustainable above average growth, by
offering a tailored product portfolio focused on megatrends
such as industrial and automotive electrification and
automation. This is supported by maintaining a lean and flexible
organization that can swiftly adjust to the economic tides and
market trends. This flexibility not only relates to working with
temporary staff and focusing on the reduction of variable
operating expenses, but also includes the ability to
communicate up-to-date financial information efficiently to
decision-makers throughout the organization, make justifiable
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insourcing and outsourcing decisions, adjust supplier contracts,
implement performance-dependent employee benefits, work
with flexible hour contracts and use opportunities to reduce
working hours in specific countries. The composition of the
group with about 50% automotive activities and 50% industrial
activities reduces Kendrion’s exposure to a market disruption or
decline in one of these markets.
Unsuccessful strategy or unsuccessful implementation of
long-term strategy
In the current volatile environment, there is always the risk that
a company's long-term strategy will not deliver the expected
results, such as growth, profit, or an increase in market share
(within the expected timeframe). This risk can also arise if the
long-term strategy is not successfully implemented, for
example if the company does not focus on the right products
or product portfolio or does not adequately consider
megatrends or its clients’ needs. If the long-term strategy is not
successful or not implemented effectively, it can lead to a
decline in market share and financial performance for the
company. Kendrion is aware of the importance to plan and
execute strategic changes carefully, and to be prepared to
adapt to changing circumstances. There is an in-depth annual
strategic review process, involving senior management of the
company, to assess Kendrion’s performance compared to its
multi-year strategy. This includes quarterly meetings to review
progress of individual business groups on operational targets
and strategic projects. In these meetings, any relevant changes
in the environment are considered and monitored to ensure
timely adjustments of strategic projects or to consider
alternative solutions.
Unable to attract and retain qualified personnel
The market for talent is increasingly competitive, especially
pertaining to the key skills, expertise, and capabilities we need.
Inability to attract and retain qualified employees may lead to
high dependency on existing personnel and loss of knowledge.
Kendrion’s required know-how is highly specific and often
requires on-the-job training. A lack of skilled employees could
impede the achievement of Kendrion’s strategic objectives.
Kendrion strives to be recognized as a safe, inspiring, and high-
quality place to work. Besides offering competitive benefit
packages and securing good and safe labor conditions in all
locations, Kendrion offers flexible work styles that contribute to
the performance and job satisfaction of employees. By
investing in succession planning (e.g. through a training
program for high potentials), various in-house training programs
and apprentice programs, Kendrion intends to encourage
ambition and give employees the possibility to work on exciting
tasks and innovative projects. Kendrion conducts
companywide employee satisfaction and culture surveys at
regular intervals enabling people to give and receive feedback.
So that Kendrion can attract early career professionals it
maintains good relations with technical universities and
institutions of higher technical education. In addition, Kendrion
makes sure that offices are located at attractive and inspiring
locations.
Operational risks
Sourcing issues and/or purchase price increases
Kendrion is dependent on a continuous supply of (raw)
materials for its plants to operate and to be able to meet
customer demands and expectations. The supply chain of (raw)
materials can be disrupted in many ways, from issues during
transport, to a bankrupt supplier, or scarcity of certain
materials. Suppliers can also be faced with increased demand
for their products or increasing raw material prices, resulting in
increases in purchase prices for Kendrion’s raw materials.
Kendrion actively endeavors to increase the number of
alternative sources for its most important (raw) materials, while
always making sure that (raw) materials are purchased from
reputable suppliers. Quantities are generally secured via
advance capacity confirmations and regular financial quick
checks are performed to assess the solvency of suppliers.
Suppliers that are critical to Kendrion’s supply chain have been
identified and are actively monitored to secure continuity of the
supply chain. Kendrion predominantly uses local supply chains
for local production and revenue, and when certain materials
have a single supplier, contingency measures are discussed
(e.g. insourcing when possible, active periodic monitoring of
critical suppliers) to ensure the exposure is within Kendrion’s
risk appetite and swift action is possible when required. In case
disruptions in the supply chain do occur, the customers
affected by this disruption will be informed immediately and
solutions will be discussed.
Uncertainties of (global) socio-economic and political
conditions
Uncertain economic and political conditions could be
detrimental to Kendrion’s financial results and the company’s
ability to achieve its strategic goals. Volatile economic and
political conditions may lead to difficulties in managing business
operations (e.g. planning and forecasting) and declined
business performance.
Kendrion ensures a healthy level of flexibility by working with a
layer of temporary staff and focusing on the reduction of
variable operating expenses as soon as a situation so requires.
This also includes the ability to communicate up-to-date
financial information efficiently to decision-makers throughout
the organization, make justifiable insourcing and outsourcing
decisions, adjust supplier contracts, implement performance-
dependent employee benefits, work with flexible hour contracts
and reduce working hours in specific countries.
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Significant order volume fluctuation/decline or project
cancelation
External events such as a pandemic, an economic downturn,
supply chain disruptions or changes in regulations or
preferences, including the sustainability transformation, can
cause certain customers to experience a structural decline in
the demand for their products. This could cause a similar
decline in their order volumes or even the cancellation of
projects altogether. Also, persisting shortages in the supply of
raw materials to our customers may increase the risk for
customer orders to be adjusted due to lack of certain
components, resulting in ad-hoc and unpredictable
adjustments to order levels. In turn, this could result in
significant and short-term fluctuations in demand, requiring
short-term plant capacity adjustments, and consequently,
additional costs for underused plant capacity or an increase in
production backlog due to insufficient production capacity.
Order volatility could also result in increased inventory levels
either because orders are cancelled, or to ensure that increased
demand can be fulfilled.
Kendrion focuses on strengthening relationships with
customers and engages constructively with them to actively
monitor developments and changes to order volumes and
timing where possible. Kendrion undertakes to negotiate
contractual terms that ensure that sales prices per product
increase when volumes are reduced, and that investments
(e.g., development, tools, and equipment) are reimbursed if
contracts are cancelled or predicted volumes are not achieved.
However, this will not be sufficient to offset all the expenses
incurred or compensate for revenue loss. Demand levels are
closely monitored to timely detect overcapacity and production
capacity and purchase volumes are adjusted accordingly to
mitigate the impact on profit and working capital. Kendrion
continuously adapts its production and supply chain planning
to movements in day-to-day orders, and the roll-out of
predictive planning tools have enabled an increased flexibility in
production while maintaining a high level of efficiency.
Financial & reporting risks
As a globally operating, publicly listed company, Kendrion must
comply with financial reporting requirements. Material
misstatements in reporting could affect Kendrion’s reputation
and/or stock market value. Kendrion reports to the market on a
quarterly basis, and reports financial figures based on IFRS
standards. With the risk appetite for this risk area being on the
adverse side of the spectrum, Kendrion has several controls in
place that help to contain risk exposure within acceptable
boundaries.
It is critical that all operating entities report to the same
standards and deliver the same quality of reporting, in line with
applicable accounting and reporting principles. There are local
planning and control cycles that provide financial and non-
financial information to the group based on standardized
reporting formats on a weekly, monthly, or annual basis, based
on a group reporting manual (last updated in 2022).
To protect the integrity and accuracy of reported information
without having to rely on manual controls, it is important that
effective general IT controls are in place, such as proper
segregation of duties, access control for important systems,
and source data protection through proportionate change
control procedures for all accounting and reporting systems
and their key infrastructure. Where Kendrion would mitigate
sub-optimal general IT controls in previous years by performing
additional manual controls, in recent years these manual
controls have gradually shifted to automated IT controls
through continuous improvement actions, also based on
recommendations by the external auditor over the past years.
Kendrion will continue to improve its general IT controls, with a
focus on increased control automation, while balancing
available resources against improvement benefits.
On a quarterly basis, all responsible officers provide a letter of
representation confirming the correct and complete reporting of
financial and non-financial information and the absence of
material violations of applicable laws, rules, and regulations,
along with internal policies such as the Kendrion Code of
Conduct. This also includes continuous monitoring of
upcoming changes in accounting and/or reporting standards,
laws and regulations, and periodic discussions with responsible
finance leaders and senior management within the business
units.
Apart from the key financial & reporting risk mentioned above,
Kendrion also recognizes financial & reporting risks related to
debt financing, credit exposure and interest and exchange rate
fluctuations (refer to pages @@-@@ and following of the
financial statements for an outline of Kendrion’s financial market
risks and the policy for mitigating those risks or their impact).
Kendrion has proportionate mitigating measures in place for
these risks, which are monitored on different levels within the
company.
Cost increases or efficiency losses are not transferred
to the customer
Kendrion’s gross margin can be negatively impacted by
increased prices of raw materials, energy and labor, or
efficiency losses through low and volatile order volumes, if
these effects cannot be transferred to customers in a timely
manner.
Kendrion aims to minimize the financial impact of price
fluctuations for those materials that are most relevant. The most
important (raw) materials for Kendrion are machined steel parts,
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raw steel, copper and permanent magnets. Where feasible,
Kendrion includes raw material price clauses in its long-term
customer contracts that provide for a sales price adjustment
when the actual average raw material price over a certain
timeframe deviates from a predetermined base price. Short-
term agreements generally provide for price surcharges,
allowing the sales price to be adjusted based on the prevailing
market prices for logistics, raw materials, or energy. When
customers reduce their orders below previously agreed levels,
additional costs are charged to these customers to offset
inefficiencies.
Customer-related risk
Key and other customers that represent a significant part of
Kendrion’s revenue may demand more favorable terms for their
business. This may manifest itself in the form of renegotiations
on price or other adverse changes to contractual conditions,
such as extended payment terms. This may impact margins
and/or cash flow. If customers become insolvent, this could
involve writing off outstanding invoices and stock and
equipment becoming obsolete, resulting in losses.
Kendrion aims to maintain and protect its contractual position
and reject unreasonable changes to existing terms, while
valuing and preserving business relations. By consistently
delivering qualitative products according to customer
expectations against a competitive proposition, Kendrion aims
to satisfy its customers while also remaining profitable. Through
conducting credit reviews of significant customers, enforcing
customer credit limits, and prepayment requirements for new
customers, Kendrion aims to limit the exposure to customer
insolvency to an acceptable level.
Compliance risks
Kendrion commits to conducting business in accordance with
its Code of Conduct and the values underlying the Code of
Conduct, applicable laws, and regulations, including
employment laws, data protection laws and regulations,
accounting standards, tax laws, health and safety regulations,
as well as governance and statutory filing requirements,
applicable in the countries in which it operates. Senior
management is responsible for raising awareness of, and
applying, applicable laws and regulations.
Global and local policies are developed and maintained to
support compliance. Kendrion’s global policies include a range
of procedures and policies that must be applied when
conducting business, including a Code of Conduct, Insider
Trading Code, Speak-up procedure, etc. Kendrion’s Code of
Conduct builds on the values of The Kendrion Way, an inspiring
motto at the heart of the Kendrion organization. The Code of
Conduct provides a set of principles and expectations that
guide the behavior of everyone within Kendrion. Guidance and
training are provided to Kendrion employees to help them
recognize compliance dilemmas and raise actual or suspected
misconduct or irregularities following Kendrion’s Speak-up
procedure.
For more information about The Kendrion Way see pages
64-65 of this Annual Integrated Report.
Compliance with Kendrion’s internal policies and procedures,
as well as local laws and regulations is also reviewed by
Kendrion’s internal audit function. The Global Internal Audit and
Risk Manager is responsible for the design and execution of the
annual audit plan to assess the adequacy of Kendrion’s internal
control systems. The Global Internal Audit and Risk Manager
reports to the Executive Board with direct and independent
access to the Audit Committee and external auditor. Audit
results are reported to the Executive Board and the essence of
the results are reported to, and discussed with, the Audit
Committee and external auditors on a regular basis. The results
of the audits conducted in 2022 were discussed with local
management and any control deficiencies have been
addressed.
Unfavorable changes in laws & regulations
Kendrion operates in various jurisdictions and is committed to
complying with all applicable laws, rules and regulations.
Unfavorable changes in applicable laws and regulations (e.g.
labor protections, trade barriers, environmental restrictions
etc.), may lead to additional costs, less flexibility or revenue
loss.
Kendrion proactively monitors developments in the legal and
regulatory landscape through newsletters, seminars, and
appropriate software and tools (e.g. sanction monitoring,
contract management etc.). Through regular meetings,
workshops, and (online) trainings, responsible employees are
informed about the latest (changes in) laws and regulations, to
enable them to identify and successfully respond to risks in
their own context. Kendrion is also able to engage external
specialists to ensure appropriate treatment of risks that extend
beyond the scope of the responsible employees.
Employee health and safety
For Kendrion, the health and safety of its employees is
paramount. Inability to manage a healthy working environment
(e.g. hygiene protocols) and ensure employee safety may lead
to incidents such as the spread of illness or injury. If employees
do not feel welcome and safe in the workplace, it can lead to
demotivation, lower morale, or absence, resulting in loss of or
decrease in productivity and an increase in employee turnover.
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Kendrion promotes health and safety standards for all its
employees through all available communication channels (e.g.
billboards, intranet, newsletters, etc.). Personal health is
encouraged via several local initiatives (e.g. sports, fruit
baskets, health days) and cooperation with clinics provide
support with mental health issues. Managers are trained to
identify health issues, and first responders’ training is available
to employees interested in learning how to perform first aid.
Employee absence is monitored on a monthly basis as an
indicator of employee health development. By doing so on a
monthly basis, Kendrion is able to adapt to changing
circumstances and implement additional measures when
appropriate.
Tax compliance risks
In line with the overall risk averse appetite for compliance risks,
Kendrion also specifically reiterates this risk averse appetite for
tax compliance and associated risks. Tax risks originate from
local tax rules and regulations as well as from international
regulatory frameworks. Tax risks include transfer pricing risks
on intercompany cross-border deliveries of goods and services,
tax risks related to acquisitions and divestments, tax losses,
taxes carried forward, permanent establishments and potential
changes in tax law. This may result in financial impacts in the
form of increased tax expenses and payments, tax
adjustments, accrued interest, fines, litigation against
Kendrion’s management, and damaging Kendrion’s reputation
with the (local) authorities and its stakeholders.
The Group Finance & Control department is in charge of
establishing and overseeing group wide tax policies. Potential
risks are periodically monitored and assessed based on the
likelihood of occurrence and its potential impact on local and
groupwide financial tax results. For the most important tax
jurisdictions periodic meetings are held with external tax
specialists to assess the tax position, tax risks and to the
extend applicable, any impact of potential changes in tax laws
and legislation. Kendrion actively seeks to reduce tax risks by
involving external tax advisors when specialist knowledge is
required and (local) authorities when interpretations of tax
requirements can have an evident impact.
Climate change
Society, shareholders, and other stakeholders are increasingly
aware of environmental challenges and the impact of climate
change. They demand sustainable operations, solutions, and
products. The socioeconomic impact of climate change and
the adoption of new regulations and the enforcement of
initiatives to reduce global warming and other impacts of
climate change, provide Kendrion with challenges and
opportunities related to its existing and future product portfolio.
In addition, a higher frequency of extreme weather conditions
increases the likelihood of natural disasters, which may, from
time to time, disrupt supply chains, production, delivery times
and the availability of raw materials. Significant material price
increases caused by persistent material shortages and
implementation of government actions to mitigate climate
change, such as carbon tax, will negatively affect future
operating costs.
The product portfolio of Kendrion’s Industrial Business Groups
is expected to benefit from the global trend towards
electrification of industrial processes that decrease the use of
fossil fuels and greenhouse gas emissions. The automotive
industry is transforming based on four reinforcing trends
towards Autonomous, Connected, Electric and Shared (or
ACES) mobility, leading to cleaner, safer and more comfortable
forms of transportation. To advance these trends, the
automotive industry requires new actuator technologies that will
replace existing technologies developed for internal combustion
engines of passenger cars and commercial vehicles. Kendrion
has been transitioning and will continue to transition its product
portfolio towards these new technologies. To the extent the
existing Automotive product portfolio relates to combustion
engine vehicles, it is expected that the revenue derived from
these technologies will gradually decrease over the next 10 to
15 years in line with the phase out of the combustion engine as
mandated by various legislative initiatives around the globe. On
balance we expect our Automotive revenue to benefit from this
transformation.
Kendrion is committed to reducing its contribution to climate
change by reducing the carbon footprint of its operations
through using renewable energy, decreasing energy
consumption, decreasing waste from production and increasing
recycling rates of materials. Kendrion is equally committed to
continuing to invest in a responsible product portfolio by
developing products that help advance our industrial and
automotive customers’ ambitions and objectives to reduce
emissions and climate impact.
Fraud
With its global footprint, Kendrion is exposed to a wide range of
fraudulent activities. Given Kendrion’s activities as an industrial
production company, the most important fraud risks are
identified in the supply chain (kickbacks, shop in shop, bribery,
false invoices), inventory and asset management (theft,
manipulation), administrative processes (fraudulent payments,
falsified records) and cyberattacks. Fraud in this context can
result in a wide range of losses, ranging from negligible financial
loss through petty theft of (office) materials to significant
financial losses, damage to the organization's reputation, and a
loss of customer trust when legal penalties in strict anti-fraud
regimes are involved. Fraud risks are explicitly included in the
annual corporate risk assessment as a separate category, to
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ensure active monitoring of fraud risk development, and
continuously create awareness for fraud risks amongst (senior)
management.
Kendrion has measures in place to significantly reduce its
exposure to fraud. An important cornerstone of these measures
is the restriction of access (both physical and digital) to only
those areas that individuals require to perform their day-to-day
activities, and segregation of duties (SoD) so that important
checks and balances are not combined within the same
person. Both the user access and SoD are reviewed on an
annual basis and adjusted to be in line with the risk appetite if
situations change. A significant number of general IT controls
around user access and SoD have been implemented.
However, to date, a few deficiencies in the design and
effectiveness of the controls do exist. To the extent deficiencies
in the IT controls do exist, Kendrion has additional controls in
place that also detect and prevent fraud, such as but not
limited to variance and margin analysis and comprehensive
reviews on key master data changes. At the same time,
Kendrion continues to address and improve the design and
effectiveness of the IT controls.
On top of the foundation of access management and SoD,
Kendrion also implemented an authorization matrix to clearly
define the responsibilities and authorization limits for each
function within the company. This ensures that the right
employees are involved when information is processed or
decisions are made with a certain level of (fraud) risk. Every
employee within the company is informed about Kendrion’s
Code of Conduct (CoC) when they join Kendrion, and the CoC
specifically addresses the most common forms of fraud and the
expected employee behavior concerning these topics. On an
annual basis the CoC (or specific topics thereof) are refreshed
for all employees through different forms of communication
(e.g. posters, video’s, e-learning, workshops, etc.)
In control statement
Based on the approach described above, the Executive Board
is of the opinion that, to the best of its knowledge:
■ the Report of the Executive Board provides sufficient
insights into any failings in the effectiveness of the risk
management and internal control systems;
■ the risk management and internal control systems provide
reasonable assurance that the financial reporting, including
tax, does not contain any material inaccuracies;
■ based on the current state of affairs, it is justified that the
financial reporting is prepared on a going concern basis;
and the Report of the Executive Board states those material
risks and uncertainties that are relevant to the expectation
of Kendrion’s continuity for the period of twelve months
after the date of the Report of the Executive Board.
Properly designed and implemented risk management and
internal control systems significantly reduce, but cannot fully
eliminate, the possibility of human errors, poor judgement,
deliberate circumvention of controls, fraud or infringements of
laws, rules or regulations, or the occurrence of unforeseeable
circumstances. Another factor considered within risk
management is that efforts related to risk management and
internal control systems should be balanced against the costs
of implementation and maintenance.
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Kendrion’s governance framework is based on the statutory
requirements applicable to public limited liability companies in
the Netherlands, including the principles of the Dutch Corporate
Governance Code prevailing for the year under review (the
‘Code’)
*
and Kendrion’s articles of association as lastly
amended on 25 June 2020. The core topics of the Code are
addressed in the various sections of this Annual Integrated
Report. For example, diversity in the Supervisory Board, the
Executive Board and the Management Team is addressed in
this Corporate Governance Report on pages 82-83
‘The Kendrion Way’ is described in the section ‘Sustainability’
on pages 45-46 and in the section ‘People & Culture’ on
pages 64-65. The articles of association together with ancillary
policies such as the Supervisory Board regulations and the
Supervisory Board committee regulations provide a framework
for the affairs and governance of Kendrion, including a sound
and transparent system of checks and balances. For the
articles of association, the Supervisory Board regulations,
the Supervisory Board committee regulations and additional
information about Corporate Governance at Kendrion, please
visit the corporate website at www.kendrion.com.
Kendrion N.V.
Kendrion N.V. is a public limited liability company incorporated
under the laws of the Netherlands, with its corporate seat in
Amsterdam, the Netherlands. For details regarding Kendrion
N.V.’s share capital, reference is made to the section ‘Share
and shareholder information’ on pages 22-24.
Kendrion N.V., as the ultimate parent company, holds all the
shares of Kendrion Finance B.V., a private limited liability
company incorporated under the laws of the Netherlands, with
its corporate seat in Zeist, the Netherlands.
Kendrion Finance B.V., directly or indirectly, holds the shares in
all Kendrion’s operating companies. All operating companies
are, directly or indirectly, wholly owned subsidiaries. Kendrion
N.V. is not subject to the large company structure regime and
no works council having jurisdiction over Kendrion N.V. has
been established nor is there a statutory requirement to
establish such a works council. Reference is made to the
section People & Culture on page 69 for information about
works councils and employee representation established at
certain Kendrion operating companies.
Two-tier governance structure
The Executive Board, consisting of the CEO and the CFO, is
entrusted with the management of Kendrion, under supervision
of the Supervisory Board. Members of the Executive Board and
the Supervisory Board are appointed and dismissed by the
General Meeting of Shareholders. The General Meeting of
Shareholders can amend the articles of association if and as
proposed by the Executive Board, with the prior approval of the
Supervisory Board. The decision to amend the articles of
association requires an absolute majority of the votes cast at
the General Meeting of Shareholders.
Executive Board
The Executive Board is responsible for the management and
the continuity of Kendrion and Kendrion’s long-term value
creation strategy, objectives, results, and policy, including the
responsibility for defining strategies and plans conducive to the
goal of the Paris Agreement to limit global warming.
The Executive Board is accountable to the Supervisory Board
and the General Meeting of Shareholders. Important resolutions
of the Executive Board require the approval of the Supervisory
Board.
With due regard to the requirement under Kendrion’s articles of
association that the Executive Board must consist of at least
two members, the Supervisory Board determines the number
of members of the Executive Board.
The General Meeting of Shareholders appoints the members of
the Executive Board upon nomination of the Supervisory Board.
In compliance with provision 2.2.1 of the Code, all members of
the Executive Board are appointed for a maximum term of four
years and may be reappointed for a term of not more than four
years at a time. The diversity objectives as described in
Kendrion’s diversity policy for the Executive Board will be
considered when selecting persons for appointment as
member of the Executive Board. The diversity policy can be
found on the corporate website at www.kendrion.com. Other
than upon a proposal of the Supervisory Board, the members
of the Executive Board are dismissed by the General Meeting of
Shareholders by a resolution adopted by an absolute majority
representing at least one-third of the issued share capital.
The members of the Executive Board satisfy the statutory
requirements concerning the number of supervisory or non-
executive functions that they can have with large enterprises.
The composition of the Executive Board and information about
its members is provided on page 25.
Corporate Governance Report
*
The Code prevailing for the year under review (i.e. as adopted on 8 December 2016) was revised on 20 December 2022. The revised Corporate Governance Code
will enter into force on 1 January 2023 and can be found on the website of the Corporate Governance Code Monitoring Committee at www.mccg.nl
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A member of the Executive Board does not participate in the
deliberation and decision-making process concerning any
subject in which a member of the Executive Board has a
personal interest that conflicts with the interests of Kendrion.
A member of the Executive Board shall immediately report a
conflict of interest to the Chairman of the Supervisory Board.
Decisions to enter into transactions in which there are conflicts
of interest with a member of the Executive Board require the
approval of the Supervisory Board. There were no transactions
in which there was a conflict of interest with a member of the
Executive Board in 2022. Kendrion does not grant loans or
guarantees to Executive Board members.
Management Team
The Management Team consists of the CEO, the CFO, and
several executives with clear accountability to deliver on all
components of the strategic plan. The Business Group
Directors of Automotive E, Automotive Core, Industrial Brakes,
Industrial Actuators and Controls, and the Kendrion President
Asia are represented on the Management Team. In addition,
functional focus areas such as Information Technology, People,
Sustainability and Compliance, are covered in the Management
Team through Kendrion’s CIO, HR Director, and General
Counsel.
The Executive Board decides the number of members of the
Management Team in consultation with the Supervisory Board.
The members of the Management Team who are not Executive
Board members are appointed and dismissed by the Executive
Board, subject to consultation with the Supervisory Board. The
diversity objectives as described in Kendrion’s diversity policy
for the Management Team will be considered when selecting
persons for appointment as member of the Management Team.
The Management Team meets frequently and those members
of the Management Team who are not also members of the
Executive Board are regularly invited to attend Supervisory
Board meetings.
The members of the Executive Board, together with the other
members of the Management Team, conducted an annual
review of their individual performance and the performance of
the Management Team as a collective, including the dynamics
of and the relationship among the members of the
Management Team and the Executive Board as well as the
interaction with the Supervisory Board. Special consideration
was given to the 2022 strategic and operational spearheads,
including the execution of the existing roadmap aimed at the
reduction of Kendrion’s energy consumption and CO
2
emissions
and the extension of environmentally sustainable activities, the
development of an ambitious roadmap conducive to the
objective of the Paris Agreement and the establishment of the
separate Automotive organizations Core and E each with their
distinct KPIs, as well as the related reorganization of the
relevant functional departments, particularly the Automotive
R&D organization. Other spearheads addressed included
Business Group and regional specific themes such as the
continued pursuit of business opportunities related to the
transition from fossil fuels to cleaner forms of energy such as
wind power, robotics and automation for Industrial Brakes, the
further integration and harmonization of processes of the
embedded software and electronics developer 3T in Industrial
Actuators and Controls, and the continued scaling of the China
organization, with specific emphasis on the localization of the
supply chain and R&D function. In addition to reviewing past
performance, the Management Team considered the 2023
strategic and operational spearheads. Outside the presence of
the other members of the Management Team, the Executive
Board evaluates the functioning of the Management Team and
its members and discusses the conclusions that must be
attached to the evaluation, also in view of succession planning
and the composition of the Management Team taken as a
whole. The Supervisory Board considers the functioning of the
Management Team and its members, taking account of the
feedback and recommendations of the Executive Board.
Supervisory Board
The Supervisory Board supervises and advises the Executive
Board on the performance of its tasks and duties and
supervises the overall development and performance of
Kendrion. In discharging its role, the Supervisory Board is
guided by the interests of Kendrion and its stakeholders and
focuses on – among other things – the effectiveness of
Kendrion’s risk management and internal control systems and
the integrity and quality of the financial reporting.
The Supervisory Board is composed in such a way that its
members can operate critically and independently of each
other, the Executive Board, the Management Team, and any
other particular interests. Each of the Supervisory Board
members has the necessary expertise, experience, and
background to perform his or her tasks and duties and its
composition is consistent with the ‘Profile outline’ for the
Supervisory Board and the diversity objectives described
in Kendrion’s diversity policy for the Supervisory Board.
Both the ‘Profile outline’ and the diversity policy for the
Supervisory Board can be found on the corporate website
at www.kendrion.com.
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The Supervisory Board consists of four members. All members
of the Supervisory Board are independent within the meaning
of the Code. The members of the Supervisory Board satisfy the
statutory requirements concerning the number of supervisory or
non-executive functions that they can have with large
enterprises. The composition of the Supervisory Board is
consistent with the statutory requirements pursuant to the
Dutch Gender Balance Act which took effect on 1 January
2022.
The General Meeting of Shareholders appoints the members of
the Supervisory Board on the recommendation of the
Supervisory Board for a period of four years. The Supervisory
Board elects a Chairman from amongst its members.
The Chairman chairs the meetings of the Supervisory Board
and ensures the proper functioning of the Supervisory Board
and its committees. The Chairman of the Supervisory Board
also ensures that the Supervisory Board has proper contact
with the Executive Board, the Management Team, and the
General Meeting of Shareholders. Furthermore, the Chairman of
the Supervisory Board maintains regular contact with the CEO
concerning matters relating to the responsibilities of the
Supervisory Board. Similarly, the Chair of the Audit Committee
maintains regular contact with the CFO concerning matters
relating to the responsibilities of the Audit Committee.
The members of the Supervisory Board step down by rotation
pursuant to a schedule adopted by the Supervisory Board.
Members of the Supervisory Board whose term of office expires
can be reappointed. For any reappointment account is taken of
the manner in which the person concerned performed his or
her duties as a member of the Supervisory Board, the diversity
objectives as described in Kendrion’s diversity policy for the
Supervisory Board, and best practice provision 2.2.2 of the
Code regarding appointment and reappointment periods. Each
member of the Supervisory Board can be dismissed by the
General Meeting of Shareholders.
New members of the Supervisory Board follow an introduction
program to get sufficiently acquainted with Kendrion, its
business activities as well as relevant internal procedures and
processes necessary for the discharge of their duties as
members of the Supervisory Board.
Regular meetings of the Supervisory Board are usually attended
by the Executive Board and at regular intervals by members of
the Management Team. In addition, the Supervisory Board
regularly holds meetings without the Executive Board members
present. The Company Secretary supports the Supervisory
Board. The Company Secretary ensures that correct
procedures are followed and that the statutory obligations and
obligations under the articles of association are complied with.
Furthermore, the Company Secretary facilitates the provision of
information between the Executive Board and the Supervisory
Board and supports the Chairman of the Supervisory Board in
the organization of the affairs of the Supervisory Board.
The Supervisory Board has established two committees: the
Audit Committee and the HR Committee (combining
remuneration committee and selection and appointment
committee). The committees of the Supervisory Board are
responsible for preparing the decision-making of the
Supervisory Board. The tasks and procedures of the
committees of the Supervisory Board are set out in their
regulations, which can be found on the corporate website at
www.kendrion.com. The composition of the Supervisory Board,
its committees and information about the Supervisory Board
members is provided on pages 86-87 of this Annual Integrated
Report.
The Supervisory Board annually evaluates its own functioning,
the functioning of the Supervisory Board committees, and that
of the individual Supervisory Board members. The outcome of
the evaluation is discussed among the members of the
Supervisory Board and the Chairman subsequently informs the
Executive Board as appropriate. For further information
regarding the annual evaluation of the Supervisory Board,
reference is made to the Report of the Supervisory Board on
pages 91-92 of this Annual Integrated Report.
The members of the Supervisory Board do not receive any
shares and rights to acquire shares in Kendrion as
remuneration. The Supervisory Board members do not hold
any shares in Kendrion, except for the Chairman of the
Supervisory Board who holds 7,300 shares. Kendrion does not
grant loans or guarantees to Supervisory Board members.
Pursuant to the Supervisory Board regulations, a member of
the Supervisory Board may not participate in the deliberation
and decision-making process concerning any subject in which
a member of the Supervisory Board has a personal interest that
conflicts with the interests of Kendrion. There were no
transactions in which there was a conflict of interest with a
member of the Supervisory Board in 2022.
Diversity within the Executive Board,
Management Team, and Supervisory Board
Kendrion values a diverse workforce both across the Kendrion
organization as a whole and at the level of the Executive Board,
the Management Team, and the Supervisory Board. Under the
value creation pillar ‘Social and Human Capital’ that forms part
of Kendrion’s sustainability program, the further advancement
of diversity across the organization is a priority. Based on the
strategic diversity framework that was developed in 2021,
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ambitious diversity targets have been developed for each of
Kendrion’s Business Groups. The outlines of Kendrion’s
strategic diversity framework and related targets for Kendrion’s
Business Groups are described in the section ‘People &
Culture’ on pages 68-69.
A diverse range of competences and skills and a variety of
backgrounds within the Executive Board, the Management
Team and the Supervisory Board contribute to effective
decision-making and consequently long-term value creation.
Kendrion considers diversity aspects of gender, nationality, and
background (education, (work) experience) most relevant for
Kendrion and its business. Based on the diversity aspects
considered, Kendrion is also committed to progressing diversity
in the Executive Board, the Management Team and the
Supervisory Board.
Pursuant to Kendrion’s diversity policy for the Supervisory
Board, at least 30% of the Supervisory Board shall consist of
women, and at least 30% shall consist of men. The Supervisory
Board consists of two female members and two male
members, and with this the current composition is in line with
the 30% gender diversity target.
Consistent with the statutory requirements that were introduced
in January 2022, gender diversity targets for the Executive
Board and the Management Team have been identified.
Kendrion is dedicated to changing the composition of the
Executive Board and Management Team such that over time at
least 30% of the Executive Board, respectively, the
Management Team, shall consist of women, and at least 30%
shall consist of men. There were no recent additions to the
Executive Board or the Management Team. The Executive
Board currently consists of two men and the Management
Team* consists of 25% women and 75% men, thereby the
identified gender diversity targets for the Executive Board and
the Management Board have not yet been reached.
Kendrion is globally active and has therefore also determined
targets in terms of nationality. The diversity policy determines
that in the Management Team at least two regions where
Kendrion is active shall be represented. Kendrion meets this
nationality diversity objective for the Management Team. For the
Supervisory Board and the Executive Board, maintaining
appropriate nationality diversity is the objective. In the
Supervisory Board one member has the German nationality, i.e.
the jurisdiction where Kendrion maintains an important part of
its operations.
Moreover, Kendrion’s diversity policy includes a background
diversity objective. Pursuant to the abovementioned policy, at
least one member of the Executive Board and at least three
members of the Management Team shall have experience in
international industrial or automotive business or an industry
adjacent thereto. For the background diversity objective for the
Supervisory Board reference is made to the Supervisory Board
‘Profile outline’ that is published on Kendrion’s corporate
website. The composition of the Executive Board, the
Management Team and the Supervisory Board meet the
respective background diversity objectives.
The composition of the Supervisory Board is diverse,
experienced, and knowledgeable and reflects a balanced
participation of two female members and two male members.
The Executive Board comprises qualified, knowledgeable, and
experienced members. The Management Team comprises a
healthy mix of skills, nationalities, ages, backgrounds, and other
relevant factors.
The diversity objectives as described in Kendrion’s diversity
policy will be explicitly considered – in addition to functional
requirements, quality, expertise, and experience – when
selecting persons for (re)appointment as member of the
Supervisory Board and Executive Board and filling vacancies
within the Management Team, respectively. If external
recruitment consultants are engaged, Kendrion provides search
instructions in line with the diversity principles underlying the
diversity policy. Kendrion’s diversity policy can be found on the
corporate website at www.kendrion.com.
General Meeting of Shareholders
At least once a year, Kendrion convenes a shareholder meeting.
Meetings are convened by the Executive Board and/or
Supervisory Board. Meetings can also be convened at the
request of shareholders jointly representing at least 10% of
Kendrion’s issued share capital if authorized by the competent
Dutch court. Shareholders who hold at least 3% of the issued
share capital have the right to propose an item for inclusion on
the agenda. Kendrion will in principle include the item on the
agenda if it has received the substantiated proposal clearly
stating the item to be discussed, or a draft resolution, in writing,
at least 60 days prior to the meeting date. Each shareholder is
entitled to attend shareholder meetings in person or be
represented by written proxy and exercise voting rights in
accordance with the provisions of the articles of association.
Each outstanding share entitles the holder to one vote.
Resolutions are adopted by absolute majority of the votes cast,
unless the articles of association or applicable law provide
otherwise.
*
Excluding the Executive Board.
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Shareholders representing 69.47% (2021: 70.12%) of the total
number of shares entitled to vote were represented at the
General Meeting of Shareholders held on 11 April 2022.
For more information about the authority of the General Meeting
of Shareholders and the articles of association, please visit the
corporate website at www.kendrion.com.
Special provisions relating to shares
Unless indicated otherwise, there are no restrictions on the
transfer of shares, the exercise of voting rights or the term for
exercising those rights, and there are no special controlling
rights attached to shares. On 11 April 2022, the General
Meeting of Shareholders granted the Executive Board the
authority to: (i) issue shares or grant rights to acquire shares
and restrict or exclude pre-emptive rights in relation to the issue
of shares or the granting of rights to acquire shares; and (ii)
acquire shares in Kendrion N.V. within the limits prescribed by
the articles of association and the applicable statutory
provisions, in each case for a period of 18 months from the
date of the General Meeting of Shareholders (i.e. until 11
October 2023) and subject to the prior approval of the
Supervisory Board.
Auditor
Before being presented to the General Meeting of Shareholders
for adoption, the annual financial statements as prepared by
the Executive Board must be audited by an external certified
public auditor. The General Meeting of Shareholders has the
authority to appoint the auditor. On 12 April 2021, the General
Meeting of Shareholders reappointed Deloitte Accountants B.V.
for a third and final period of four years (i.e. for the 2021 to
2024 financial years). The General Meeting of Shareholders
may put questions to the external auditor with respect to the
external auditor’s opinion on the financial statements. The
external auditor shall therefore attend and be entitled to
address the General Meeting of Shareholders.
Kendrion has an internal audit function that operates under the
responsibility of the Executive Board, with reporting lines to the
CFO and the Audit Committee of the Supervisory Board. The
role of the internal audit function is to assess the design and
the operation of the internal risk management and control
systems. In line with the Code, the Executive Board and the
Audit Committee of the Supervisory Board are involved in the
preparation and approval of the internal audit plan. The annual
internal audit plan will be submitted to the Executive Board and
the Supervisory Board for approval. Internal audit reports are
discussed with the Executive Board and with the Audit
Committee, and the external auditor is informed accordingly.
For the management statement of the Executive Board which is
required pursuant to article 5:25c of the Financial Supervision
Act (Wet op het Financieel Toezicht), reference is made to the
‘Report of the Executive Board’ on page 36.
Agreements in the meaning of the Decree for
the implementation of article 10 of the
Takeover Directive (Besluit artikel 10
overnamerichtlijn)
The credit facilities of Kendrion N.V. include a change of control
provision. An early repayment obligation is triggered if a party
acquires more than half of Kendrion’s issued share capital or
voting rights.
Corporate Governance statement
This Corporate Governance Report and the section ‘Share and
shareholder information’ on pages 23-25 include the information
referred to in the Decree for the implementation of article 10 of
the Takeover Directive. In addition, this Corporate Governance
Report, in combination with the section ‘Risk management’
on pages 72-79 and Report of the Supervisory Board on
pages 89-94, should be regarded as the Corporate Governance
Statement required pursuant to the Decree on the contents of
the management report (Besluit inhoud bestuursverslag).
Relevant documents on corporate website
■ Articles of association
■ Supervisory Board regulations and committee regulations
■ Diversity policy for the Supervisory Board, Executive Board
and Management Team
■ ‘Profile outline’ for the Supervisory Board
■ Insider Trading Code
■ Policy on bilateral contacts with shareholders
■ Code of conduct
■ Speak-up procedure
Taxes
Kendrion’s tax policy is based on the core values embedded in
Kendrion’s Code of Conduct and aligned with Kendrion’s
strategy and the rationale underlying the value creation pillar
‘Responsible Business Conduct’, which is part of Kendrion’s
global sustainability program.
Taxable profits are recognized in jurisdictions in which value is
created, in accordance with the applicable tax regulations and
standards, including the OECD Guidelines for Multinational
Enterprises and local transfer-pricing and other applicable tax
regulations. Tax is not limited to corporate income tax but also
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includes VAT, wage withholding tax, social security
contributions, dividend withholding tax, real estate tax and any
other taxes that are payable by Kendrion in the relevant
jurisdictions. Kendrion does not seek to establish aggressive
tax-driven structures that are not compliant with the letter or
spirit of applicable tax regulations. This means that Kendrion
does not pursue any aggressive tax planning or has entities
established in tax haven jurisdictions solely for tax optimization
purposes and without commercial substance.
Kendrion provides adequate transparency towards tax
authorities and builds and maintains a professional relationship
with the tax authorities. If and when appropriate, tax authorities
are consulted in advance on certain material transactions or
business restructuring in order, for instance, to ascertain
compliance with the applicable tax regulations. Kendrion makes
tax-related disclosures in accordance with the applicable
statutory regulations and applicable reporting requirements and
standards, such as IFRS.
Key controls are in place to identify, monitor and address
(potential) tax risks with a view to mitigating and avoiding these
risks. Accredited tax advisors are consulted and involved in the
review and preparation of material corporate income tax
returns, if appropriate. Tax compliance is part of Kendrion’s
internal audit plan and material tax risks and topics, including
Kendrion’s tax policy, are reported to and discussed in the
Audit Committee.
Kendrion takes responsibility and shows prudence with regard
to corporate tax obligations. The effective tax rate of Kendrion
or any of its affiliates is not a key performance indicator for
Kendrion’s finance and tax department nor do individual bonus
schemes contain effective tax rate performance targets.
Information about the reconciliation of the effective tax rate can
be found on page 177 of this Annual Integrated Report.
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F.J. van Hout (Chairman), male, 1960
Chairman
J.T.M. van der Meijs, female, 1966
Chair Audit Committee
Nationality Dutch Dutch
International expertise Yes Yes
Date of first appointment 12 April 2021 31 October 2016
Term of office 2021-2025 2019-2023 (2
nd
term)
Current number of SB positions 5 5
Shares in Kendrion 7,300 No
Professional experience Semiconductors Finance
Additional positions
Former positions
Chairman of the Investment Committee of the DeepTech Fonds (Dutch
Ministry of Economic Affairs and InvestNL); Vice-Chairman of the
Supervisory Board, Aixtron SE; Member of the Supervisory Board,
Bambi Belt Holding BV; Member of the Supervisory Board, Stichting
PhotonDelta; Member of the Supervisory Board, Smart Photonics BV;
Member of the Board of Management of the Stichting Continuïteit BESI
Executive Vice President and Member of the Board of Management,
ASML; Chief Strategy Officer, Chief Program Officer, Chief Marketing
Officer and other various functions in management, ASML; CEO,
Beyeler Group; Chief Technology Officer, Datacolor
Member of the Supervisory Board, Koole Terminals;
Member of the Board of Directors, Pharming Group;
Member of the Board of Directors, Grundfos;
Member of the Board of Directors, V. Group
Treasurer and Board Member, NDL (Nederland Distributieland);
CFO, Royal Schiphol Group; Non-executive Director, Groupe AdP
(Aéroports de Paris); Non-executive Director, Brisbane Airport
Corporation PtY Ltd; VP Finance Global Capital Projects and other
international senior management functions, Royal Dutch Shell
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MEMBERS OF THE SUPERVISORY BOARD
M.J.G. Mestrom, female, 1961
Chair HR Committee
E. Doll, male, 1959
Audit Committee
Nationality Dutch German
International expertise Yes Yes
Date of first appointment 11 April 2016 24 June 2020
Term of office 2020-2024 (2
nd
term) 2020-2024
Current number of SB positions 1 4
Shares in Kendrion No No
Professional experience HR/organizational design/transformation Automotive, plastics, industrial, medical, chemical
Additional positions
Former positions
Chief Human Resources Officer at Brenntag SE
Head of Global Human Resources, at Siegwerk Druckfarben Group;
Senior Global Human Resources positions
Vice Chairman of Supervisory Board, WITTE Automotive GmbH
Non-Executive Director, Aeristech Ltd.;
Member of Advisory Board, Magment GmbH
Vice Chairman of the Executive Board, Röchling Group;
President & CEO, Röchling Automotive SE;
EVP, Plastic Omnium Auto Exterior;
Managing Director, Plastic Omnium GmbH;
General Manager, Johnson Controls GmbH;
Business Manager, BASF SE
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Geopolitical tensions, supply chain disruptions, inflation, the
energy crisis: never have market conditions been so
unpredictable and complex. Yet, by keeping a strong focus on
opportunities rather than problems, Kendrion management and
their teams delivered outstanding financial and commercial
results.
Focus on opportunities delivers strong results
deliver great potential in the transition to electric, driverless
mobility around the world.
In addition, with 3T’s software and electronics development
capabilities, we are placed better than ever to deliver high-
quality, smart actuators for autonomous vehicles, as well as
industrial products. With this expertise in-house, we are no
longer dependent on electronics suppliers.
Shift to localized supply chains
The growing geopolitical tensions have made our markets very
sensitive to trade restrictions. As a result, our customers are
rethinking their supply chains and moving to a more local
approach. With factories in China, India, the US, and Europe,
we can provide locally customized, high-quality products, with
reliable production times, at competitive prices. We anticipate
this will strengthen our position in these regions, and globally.
In conclusion
On behalf of the Supervisory Board, I want to express our
appreciation for how everyone within Kendrion stepped up to
the challenges of these past years. Rather than look at all the
things that went ‘wrong’, they took charge and sought out
opportunities and ways to be (even) more efficient. I’m truly
impressed with how everyone remained positive, rallying
together to take on another year of uncertainty as a true team.
I also want to thank our customers, suppliers and shareholders
for their flexibility and trust. As a result of everyone’s steadfast
commitment, we are wrapping up this year with outstanding
results, and looking to 2023 with confidence.
Frits van Hout
Chairman of the Supervisory Board
Profit(ability) margins and growth
When faced with so many challenges, you can either batten
down the hatches or you can shift up a gear: which is exactly
what Kendrion management and their teams across the globe
did this year. And the results are inspiring. Amidst continued
supply chain disruptions, inflation, and the energy crisis, we
realized more than half a billion EUR in turnover, and a
normalized EBITDA
*
of EUR 57.4 million. This is extraordinary
and could not have been achieved without close collaboration
and respect between Kendrion colleagues worldwide, our
customers, and our suppliers.
While this result is impressive, it does not fully reflect our profit
potential in my view. We need healthy profitability margins to be
able to invest in our future. However, the challenges mentioned
earlier significantly impacted both our revenues and our
expenses. Now that our Automotive OEM customers’
businesses are recovering, we see room for correcting prices
and bringing our internal costs back within certain limits. Both
should help us restore our profitability margins.
Advancing our energy transition strategy
The transition to cleaner forms of energy offers many
opportunities, in our industrial as well as our automotive
markets. We continue to see solid growth and profitability in our
industrial business, because of the accelerating transition to
renewable energy world-wide. Our Automotive business
experienced another tough year, but with the new ‘Automotive
E’ organization, we aim to build a powerful innovation niche.
Our suspension, sensor cleaning and sound platform products
*
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to
Reconciliation of non-IFRS information, starting on page 210.
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PREFACE
The Supervisory Board provides oversight,
evaluates progress and performance, maintains
a sound and transparent system of checks and
balances, and advises the Executive Board when
appropriate. To this end, the Supervisory Board
weighs long-term value creation and the interests
of the company and its stakeholders.
This Report of the Supervisory Board sets out the way in which
the Supervisory Board fulfilled its duties and responsibilities in
2022.
Performance in 2022
With the Russian invasion of Ukraine, geopolitical tensions
dominated the year 2022, leaving its impact on society. The
difficult geopolitical situation also affected businesses and
supply chains as it triggered production and delivery
disruptions. For many manufacturing sectors 2021 was a year
defined by unprecedented raw material and other shortages
causing operational disturbances and demand volatility and this
unpredictability and volatility continued in 2022. The high
inflation and energy crisis added to the already challenging
trading environment. Despite these demanding circumstances,
management continued prioritizing actions to address short-
term production and delivery challenges, whilst at the same
time pursuing sustainable long-term growth opportunities.
Investments needed to capitalize on Kendrion’s substantial
growth opportunities also continued, with the construction of
our new production facility in Suzhou’s Industrial Park.
The persistent geopolitical instabilities underline the increasing
importance of local supply chains. Over the past years, we
have consistently invested in local capabilities and supply
chains, to support our growth ambitions in China, but also with
respect to our other production locations in the US, Europe,
and India.
The transition towards clean energy offers significant growth
opportunities for our three Business Groups. Our Business
Groups Industrial Brakes and Industrial Actuators and Controls
are well positioned to take advantage of the energy transition.
In wind power, automated warehouses and factory automation
demand for our products has increased, and we see great
opportunities for our induction heating systems that replace gas
and oil heating solutions, circuit brakers for electricity
distribution and safety actuators for nuclear power facilities.
The automotive industry is transitioning to new forms of
sustainable mobility – including the shift from combustion
engine vehicles to hybrid and fully electric vehicles. The latter is
greatly supported by various legislative initiatives across the
world. Our Automotive Group responds to this evolving market
and is well positioned to contribute to the advancement of
sustainable mobility solutions through its smart actuation
technology that enables Autonomous, Connected, Electric, and
Shared (or ACES) mobility. With 3T we significantly expanded
our software and electronics development capabilities. The
expansion of our capabilities along with our years of experience
in designing and manufacturing intelligent actuators, further
enhanced our ability to deliver high-quality smart actuators for
electrified and autonomous vehicles. The split of the Automotive
Group into two distinct organizations Automotive Core and
Automotive E effective as per 31 December 2022, reflects our
strategic agility that is needed to remain part of and contribute
to the accelerating automotive transformation. Automotive Core
will focus on existing technologies for vehicles with an internal
combustion engine – whereas Automotive E will pursue growth
opportunities that the transition towards new forms of
sustainable mobility offers. The new organizational set-up is
anticipated to increase efficiencies and further strengthen our
innovation capacity that supports the development of
sustainable products including AVAS sound systems, active
suspension, and sensor cleaning. Designing and manufacturing
these kinds of sustainable products exemplifies our sincere
commitment to combating climate change.
For many years, Kendrion has been actively engaged in
reducing its environmental impact. We have reduced the
relative CO
2
emissions from energy by our production facilities
by 60% compared to 2015. The EcoVadis sustainability rating
puts Kendrion in the top 22% of rated manufacturing
companies and illustrates its long-standing commitment to
making meaningful contributions. With the increasing
sustainability demands of society and the resulting legislative
initiatives, we are encouraged to further sharpen and
strengthen our sustainability ambitions and strategy. Kendrion
made good progress on the development of its third 5-year
sustainability strategy for the period 2024-2028. We are
dedicated to accelerating our sustainability ambitions with our
new 2024-2028 sustainability program which we expect to
announce in 2024.
The consistent pursuit of sustainable growth opportunities has
led to the achievement of respectable financial results amid
challenging circumstances and geopolitical instabilities that
affected many businesses and industries. These results could
not have been achieved without collaboration between
Kendrion colleagues around the world and strong partnerships
with our customers and suppliers. Despite the positive
coverage, we should remain focused on realizing healthy profit
margins, which will enable Kendrion to continue investing in
long-term sustainable opportunities. The Supervisory Board is
confident that this responsibility is in trusted hands with the
Executive Board and senior management.
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REPORT OF THE SUPERVISORY BOARD
Focus points in 2022
In coordination with the Executive Board, the Supervisory
Board previously determined certain focus areas for 2022. The
Supervisory Board placed special emphasis on the following
predetermined points in 2022:
Advancing the development of a sustainability program
for the period 2024 to 2028
Kendrion has been actively engaged in reducing its
environmental impact and promoting social responsibility for
many years. During the past period Kendrion furthermore
prioritized the development of an ambitious new sustainability
program for the period 2024 to 2028. The development
process involved the performance of a thorough analysis of
current practices, establishment of improvement areas, review
of possible ambitious sustainability targets, and the
development of a roadmap for the implementation of measures.
The development of a new sustainability program is an
important step to keep up with the accelerating sustainability
transformation and the fight against climate change and global
warming. Reducing greenhouse gas emissions, phasing out of
fossil fuels, and switching to renewable energy sources are
necessary to reduce companies’ environmental impact. In 2021
a specialized consultancy firm carried out a comprehensive
assessment and provided Kendrion with an outside-in
perspective on its decarbonization efforts. The outcome of the
extensive review and the recommendations made at the time
also provide the foundation for the advancement of
decarbonization plans under Kendrion’s 2024-2028
sustainability program. Anticipated reduction measures include
the further replacement of fossil fuels with renewable energy
sources, and the implementation of additional energy-efficient
practices. The solar panels at the new manufacturing facility in
China are expected to produce an estimated 550,000 KwH of
REPORT OF THE SUPERVISORY BOARD
solar energy per year. Further investments in renewable energy
and additional decarbonization measures are contemplated as
part of the 2024-2028 sustainability program – as they currently
remain subject to further review.
The development of an ambitious new sustainability program
not only contributes to a more sustainable future but also offers
opportunities to strengthen Kendrion’s competitive advantage.
Sustainable products and technologies are seen as the default
choice by a growing number of companies and therefore offer
significant commercial potential. Kendrion’s smart actuation
technology aligns with the increasing demand for products that
support the energy transition. With its Responsible Product
Portfolio – i.e. covering Products that Improve Health, Products
that Reduce Climate Impact and Products that Keep you Safe
– Kendrion contributes to the advancement of healthier lives
and the improvement of well-being for all. Kendrion will
continue to prioritize the development of its Responsible
Product Portfolio as part of the new 2024-2028 sustainability
program.
As also highlighted during the Capital Markets Day in
September 2022, other key themes of the new sustainability
program include sustainable sourcing, diversity, and health and
safety. The new program will be Kendrion’s third 5-year
sustainability program and will be announced in 2024.
The Supervisory Board is positive about the outlines of the new
2024-2028 sustainability program and expects that it will meet
the reasonable expectations of Kendrion’s stakeholders.
Remaining analyses required to complete the program before
its introduction in 2024 will be carried out in 2023.
Accelerating transition to a future-proof organization
For the transition to a future-proof organization, a strategic
approach has been adopted that considers internal structures
and practices as well as external factors. A key external
circumstance that is considered, is the change in the
automotive industry to new forms of sustainable, de-carbonized
mobility. The shift from combustion engine vehicles to hybrid
and fully electric vehicles is greatly supported by legislative
initiatives and with its years of experience in designing intelligent
actuators, the Automotive Group is well-positioned to address
the evolving demands.
The split of the Automotive Group per the end of 2022 into two
distinct organizations – Automotive Core and Automotive E –
reflects the strategic agility that is needed to remain part of and
contribute to the accelerating automotive transformation.
Automotive Core will focus on existing technologies for vehicles
with an internal combustion engine, while Automotive E will
pursue growth opportunities offered by the transition towards
new forms of sustainable mobility. This new organizational
set-up is anticipated to increase efficiencies and further
strengthen our innovation capacity supportive to the
development of sustainable products including AVAS sound
systems, active suspension, and sensor cleaning.
The Supervisory Board fully supports the split of the Automotive
Group and the establishment of Automotive Core and E.
The split strengthens Kendrion’s ability to benefit from the move
towards automotive electrification and clean energy, and
presents a well-considered and thought-out path towards the
future of new forms of sustainable mobility.
Progress on the achievement of the medium- to long-
term 2025 financial objectives
The geopolitical tensions prevailing in 2022 have caused the
continuation of market unpredictability and volatility following
the outbreak of the COVID pandemic in March 2020. Whereas
the unprecedented supply chain challenges triggered by the
pandemic in 2020 predominantly concerned raw material and
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other shortages, the high inflation and energy crisis added
significantly to the already challenging trading environment.
These demanding circumstances did not distract management
from setting the right priorities and continuing its pursuit of
sustainable long-term growth opportunities. The completion of
the split of the Automotive Group and the progress made on
the construction of the new 28.000 m
2
manufacturing facility in
China have been important strategic decisions that support the
continued pursuit of these growth opportunities. The financial
results realized amid challenging circumstances and geopolitical
instabilities are remarkable, and the Supervisory Board is
satisfied with the way in which the Executive Board and senior
management managed production and delivery challenges,
whilst at the same time pursuing sustainable long-term growth
opportunities. Without prejudice to the good performance and
the progress made during the year under review, the
Supervisory Board expects continued attention from the
Executive Board on the realization of healthy profit margins to
enable continued investments in long-term sustainable growth
opportunities.
Although the economic outlook remains uncertain with a
potential recession in Europe and the US affecting global
economies, the Supervisory Board is confident that the
Executive Board and senior management continue to properly
prioritize the pursuit of sustainable growth opportunities in
support of the realization of the 2025 financial objectives.
REPORT OF THE SUPERVISORY BOARD
Focus points for 2023
The Supervisory Board has defined the following attention
points for 2023:
■ Finalization of the 2024-2028 sustainability program to
allow for announcement in 2024.
■ Completion of the new China manufacturing facility and
successful transfer of the Shanghai and Suzhou production
activities to the new facility.
■ Sustainable advancement of Kendrion’s automotive
business position through further strategic alignment of
Automotive Core and E.
Meetings and attendance
The Supervisory Board held nine meetings in 2022. All of these
were regular, scheduled meetings.
All meetings of the Supervisory Board were attended by the
Executive Board, and at times by members of the Management
Team. In addition, meetings were held without the Executive
Board and without the Management Team prior to each
regularly scheduled Supervisory Board meeting. The
attendance percentage for regular, scheduled Supervisory
Board meetings in 2022 was 100% (2021: 100%).
In addition, the Chairman of the Supervisory Board and the
Chair of the Audit Committee held monthly meetings with the
CEO and CFO, respectively. The Supervisory Board also
focused on direct interaction with the Management Team and
other senior management. This included presentations in the
areas of responsibility and one-on-one meetings between the
Chairman of the Supervisory Board and members of the
Management Team.
The agenda for the Supervisory Board meetings covered the
2022 focus items described on pages 90-91 and other
recurring topics that are annually addressed, including
operational and financial performance, progress against the
strategic plan and the principal risks associated with the
operation, progress and the achievement of milestones of
special projects, fraud and risk management and internal
control system, governance and compliance and the General
Meeting of Shareholders.
The external auditor attended the meeting of the Supervisory
Board in February 2022 during which the full-year figures for
2021 and the auditor’s report were discussed.
Evaluation
The Supervisory Board continued to invest in its own training
during the year and received updates on governance and
compliance. Once a year, the Supervisory Board carries out a
self-assessment, including an assessment of the Supervisory
Board committees and the individual Supervisory Board
members. During a Supervisory Board meeting without the
Executive Board members present, the Supervisory Board
deliberated on its own performance. Aspects considered
included team dynamics, competences, and market
knowledge. In addition, performance was assessed based on
a structured questionnaire that was completed by the members
of the Supervisory Board and the Executive Board. The
questionnaire addressed items such as: composition and
expertise of the Supervisory Board, dynamics within and
functioning of the Supervisory Board and its committees,
functioning of individual members of the Supervisory Board,
dynamics between the Supervisory Board and the Executive
Board and tasks and responsibilities of the Supervisory Board.
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The Supervisory Board performs the annual assessment with
the support of an external consultant at regular intervals and it
is intended to retain an external consultant for the annual
evaluation in 2023.
The outcome of the evaluation confirmed a good and
constructive relationship between the Supervisory Board and
the Executive Board. The Supervisory Board members take
appropriate responsibility and are valued for their dedication,
expertise, and ongoing commitment. The Supervisory Board
members are aware of the different roles and responsibilities
between the Supervisory Board and the Executive Board and
are keen to secure them.
In Supervisory Board-only meetings, the members assess the
functioning of the Executive Board and the individual members.
With the CEO and the CFO, the Supervisory Board discussed
performance and last year’s KPIs, strategic and operational
spearheads for 2022, and personal development.
REPORT OF THE SUPERVISORY BOARD
Composition
The Supervisory Board consists of four members:
Frits van Hout (Chairman), Jabine van der Meijs (Chair
of the Audit Committee), Marion Mestrom (Chair of the
HR Committee) and Erwin Doll.
The Supervisory Board operates independently of the Executive
Board, the Management Team, any other participating interests,
and each other. Each of the Supervisory Board members has
the necessary expertise, experience, and background to carry
out his or her tasks and responsibilities. All members of the
Supervisory Board are independent within the meaning of the
Dutch Corporate Governance Code. The members of the
Supervisory Board satisfy the statutory requirements
concerning the number of supervisory or non-executive
functions that they can have with large enterprises. The
composition of the Supervisory Board is in line with the
Supervisory Board profile as drawn up by the Supervisory
Board and the diversity objectives described in the Diversity
Policy for the Supervisory Board. Both the Supervisory Board
profile and the Diversity Policy can be found on the corporate
website at www.kendrion.com.
The composition of the Supervisory Board reflects a balanced
gender participation of two men and two women.
Committees of the Supervisory Board
To perform in an efficient manner, the Supervisory Board has
established two committees: the Audit Committee and the
HR Committee. The primary task of the committees of the
Supervisory Board is to advise and facilitate the Supervisory
Board with respect to its responsibilities and to prepare
decision-making by the Supervisory Board. The committees
of the Supervisory Board have their own regulations, which
include a detailed description of the committee’s tasks and
responsibilities.
Audit Committee
The Audit Committee uses its knowledge and expertise to
advise on and prepare Supervisory Board’s decision-making,
particularly concerning matters relating to Kendrion’s financing,
financial statements, the integrity and quality of financial and
non-financial reporting, the effectiveness of risk management
and internal controls, and the approach and operation of the
internal audit function and internal audit program.
The Audit Committee consists of Jabine van der Meijs (Chair)
and Erwin Doll.
The Audit Committee held four meetings in 2022. Attendance
during 2022 was 100% (2021: 100%). The CFO and the
Internal Audit and Risk Manager attended all meetings.
The external auditor Deloitte Accountants B.V. attended the
meetings of the Audit Committee during which the full-year
financial statements for 2021, the half-year financial statements
for 2022 and the management letter were discussed. The Audit
Committee met with the external auditor without the CFO and
the Chair of the Audit Committee held recurring meetings with
the Internal Audit and Risk Manager.
In line with the increasing environmental awareness of society
and the progressing political debate, new laws and regulations
have been enacted to reduce the negative impacts of climate
change. The EU taxonomy is a classification system,
establishing a list of environmentally sustainable economic
activities and related disclosure requirements. In addition,
existing non-financial reporting standards will be revised.
Accurate and informative sustainability reporting requires
changes to existing reporting processes and data collection.
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The Audit Committee informed itself of relevant developments
and in addition to regular updates provided by management
during the Audit Committee meetings, the members of the
Audit Committee attended a specially convened expert session
about ESG reporting developments.
The Audit Committee monitored and reviewed regular topics
such as: the quarterly financial results, the half-year and full-
year financial statements, the auditor’s report, maintenance and
effectiveness of the risk management framework and internal
control system, the internal audit plan and key findings of
internal audits performed, the external audit plan, transfer
pricing, tax policy, treasury policy, the group insurance program,
the speak-up procedure, legal and compliance, the annual
evaluation of the external auditor and the annual evaluation of
the approach and operation of the internal audit function and
the internal audit program.
Regular updates were provided on the maintenance and
effectiveness of the risk management framework and internal
control system relating to strategic, financial, operational, tax
control and compliance matters. Kendrion monitors its internal
controls through a systematic approach, which is supported by
a solid risk management framework and the internal audit
program.
The Audit Committee also discussed tax and treasury matters,
including Kendrion’s policies relating to transfer pricing. With
respect to tax, the Audit Committee also monitored and
discussed the status of pending tax audits, including the status
of the ongoing German tax audits.
In addition to the above, the Audit Committee monitored
progress on the execution of the 2020-2025 IT strategic
framework, including a comprehensive session about
information security and information security management.
REPORT OF THE SUPERVISORY BOARD
Deloitte Accountants B.V. was reappointed as external auditor
by the General Meeting of Shareholders on 12 April 2021 for
a final term of four years up to and including the financial year
2024. The Audit Committee monitored both the external
auditor’s performance and the effectiveness of the external
audit process and its independence. The Audit Committee
approved the 2022 external audit plan, including scope and
materiality applied. Reviews and discussions were held on the
findings of the external auditor in its management letter and the
actions taken to address the recommendations and
observations made by the external auditor. Also based on the
outcome of the assessment of Deloitte’s performance as well
as the advice of the Executive Board, the Audit Committee
advised the Supervisory Board regarding the reappointment of
Deloitte as external auditor.
HR Committee
The HR Committee consists of Marion Mestrom (Chair) and
Frits van Hout. The HR Committee held two meetings, with an
attendance rate of 100% (2022: 100%). The CEO attended
both meetings. In addition to the scheduled meetings, the HR
Committee had several informal meetings with and without the
members of the Executive Board being present.
Succession planning
In view of the expiration of Mrs. Jabine van der Meijs’ second
term in 2023, the Chair of the HR Committee commenced the
search to find a new member for the Supervisory Board.
The Supervisory Board and the Executive Board express their
deep appreciation to Jabine van der Meijs for her significant
and invaluable contribution to Kendrion as she provided
thoughtful guidance and oversight throughout her membership
and as Chair of the Audit Committee.
Performance management
The HR Committee considered and prepared the performance
reviews of the members of the Executive Board for discussion
in the Supervisory Board. The outcome of the performance
reviews process was discussed in a Supervisory Board-only
meeting.
Variable remuneration
The HR Committee agreed the financial and non-financial
performance criteria for the short-term and long-term variable
remuneration of the Executive Board and reviewed progress on
these performance criteria.
The Executive Board provided the HR Committee with
information on the main components of the remuneration
structure applying to members of the Management Team
who are not members of the Executive Board. The variable
remuneration of the Management Team is aligned to the
structure of the Executive Board variable remuneration.
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Financial statements and auditor’s opinion
The 2022 financial statements included in this Annual
Integrated Report have been audited and Deloitte Accountants
B.V. has issued an unqualified opinion. These were discussed
with the Supervisory Board, the Audit Committee in the
presence of the external auditor, and the Executive Board.
The Supervisory Board is of the opinion that the 2022 financial
statements meet all requirements for transparency and
correctness. Therefore, the Supervisory Board recommends
that the General Meeting of Shareholders to be held on
17 April 2023 adopt the 2022 financial statements and the
appropriation of net income.
This Annual Integrated Report furthermore contains a limited
assurance report of Deloitte Accountants B.V. on selected
sustainability performance targets.
Prot appropriation
Kendrion realized a net profit of EUR 46.3 millon negative in
2022. Normalized net profit before amortization
1
of intangibles
amounted to EUR 21.7 million.
The Supervisory Board approved the proposal of the Executive
Board to pay out 50% of normalized net profit before
amortization as dividend.
The members of the Supervisory Board have signed the 2022
financial statements to comply with their statutory obligation
pursuant to article 2:101, paragraph 2, of the Dutch Civil Code.
REPORT OF THE SUPERVISORY BOARD
Concluding remarks
The Supervisory Board is satisfied with the increased focus on
business resilience and flexibility and has confidence in the
organization’s ability to respond to changing market conditions
and customer demands going forward. We thank the Executive
Board, the Management Team and the entire Kendrion staff for
their flexibility, loyalty, and commitment to perform throughout
what has been a particularly challenging year. The Supervisory
Board is also pleased that the dialogue with our customers
about new business continued and has been successful. Last
but not least, we want to thank our shareholders for their
ongoing trust and support.
Supervisory Board
Frits van Hout, Chairman
Jabine van der Meijs
Marion Mestrom
Erwin Doll
28 February 2023
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation
of non-IFRS information, starting on page 210.
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REMUNERATION REPORT
Introduction
This Remuneration Report describes the application of the
Remuneration Policy for the Executive Board and the actual
performance in 2022 against the predefined performance
criteria. In addition, the Remuneration report provides an
overview of the remuneration of the Supervisory Board in 2022.
Performance in 2022
With the Russian invasion of Ukraine, geopolitical tensions
dominated the year 2022. The high inflation and energy crisis
added to the already challenging trading environment. Despite
these demanding circumstances, management continued
prioritizing actions to deal with short-term production and
delivery challenges, whilst at the same time pursuing
sustainable long-term growth opportunities.
The transition towards clean energy offers significant growth
opportunities for each of Kendrion’s Business Groups.
The Business Groups Industrial Brakes and Industrial Actuators
and Controls are well positioned to take advantage of the
energy transition. In wind power, automated warehouses and
factory automation, demand for Kendrion’s products has
increased. Moreover, opportunities have been identified for
Kendrion’s induction heating systems that replace gas and oil
heating solutions, circuit brakers for electricity distribution and
safety actuators for nuclear power facilities.
The split of the Automotive Group into two distinct
organizations Automotive Core and Automotive E effective
as per 31 December 2022, reflects Kendrion’s strategic agility
that is needed to contribute to the accelerating automotive
transformation. Automotive E will pursue growth opportunities
that the transition towards new forms of sustainable mobility
offers and Automotive Core will focus on existing technologies
for vehicles with an internal combustion engine. The new
organizational set-up is anticipated to increase efficiencies and
further strengthen innovation capacity that supports the
development of sustainable products. Designing and
manufacturing these kinds of sustainable products exemplifies
Kendrion’s commitment to combating climate change.
Kendrion has reduced the relative CO
2
emissions from
energy by its production facilities by 60% compared to 2015.
The EcoVadis sustainability rating puts Kendrion in the top 22%
of rated manufacturing companies. The Executive Board is
encouraged to further sharpen and strengthen Kendrion’s
sustainability ambitions and strategy and made good progress
on the development of its sustainability strategy for the period
2024 to 2028. The new sustainability strategy is expected to
be announced in 2024.
The consistent pursuit of sustainable growth opportunities
has led to the achievement of respectable financial results
amid challenging circumstances and geopolitical instabilities
that affected many businesses and industries. In 2022,
revenue grew by 12% from EUR 464.0 million in 2021 to
EUR 519.3 million, margin was protected by passing on price
increases to customers and strong normalized EBITDA and
profit were realized. The 2022 normalized EBITDA
1
was
EUR 57.4 million and the 2022 return on investment came
2
to 15.6% (2021: 15.6%). Despite the positive coverage,
the Executive Board will remain focused on realizing healthy
profit margins, which is expected to enable Kendrion to
continue investing in long-term sustainable opportunities.
By reference to the sustainable opportunities identified, the
existing project pipeline and the strong organic growth realized
during the years 2021 and 2022, the Executive Board remains
confident that it is on the right track to meet the medium-term
financial objectives for 2025.
Remuneration Policy Executive Board
The Remuneration Policy for the Executive Board has been
developed by the Supervisory Board and adopted by the
General Meeting of Shareholders in June 2020.
The Remuneration Policy is evaluated at least once every four
years by the Supervisory Board, and unless otherwise resolved
by the General Meeting of Shareholders, the Remuneration
Policy adopted by the General Meeting of Shareholders in June
2020 applies to the Executive Board members’ remuneration
granted in the years 2020 up to and including 2023,
irrespective whether pay-outs and vesting of performance
shares become due, occur or are made after 2023.
The HR Committee will continue to keep the Supervisory Board
informed about relevant market and legislative developments to
support the periodic evaluation of the Remuneration Policy and
related decision-making. For more information about Kendrion’s
Remuneration Policy, please visit the corporate website at
www.kendrion.com.
1
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measures, refer to reconciliation of non-IFRS information, starting on page 210.
2
Invested capital excluding intangibles arising from acquisitions.
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Remuneration in line with median level relative
to reference group
The Remuneration Policy serves to recruit and retain diverse,
qualified and experienced executives to deliver Kendrion’s long-
term value creation strategy. In addition, the Remuneration
Policy aims to further enhance the link between pay and
performance and align the interests of the members
of the Executive Board with the shareholders’ and other
stakeholders’ interests and focus on the sustainable delivery of
high performance over the long-term by stimulating share
ownership whilst adhering to the applicable standards
of good corporate governance.
Taking account of Kendrion’s size (in terms of revenues,
average market capitalization, total assets, and number of FTE),
its industrial market position, geographical scope and labor
market competition, the companies included in the AScX Index
on Euronext Amsterdam are defined as reference group.
Financial services, real estate and movies and entertainment
companies are excluded from the reference group. Within the
defined reference group, Kendrion is positioned around the
median in terms of the average of the abovementioned
parameters revenues, average market capitalization, total
assets and number of FTE. The remuneration structure of
the Executive Board is set at around the median level relative to
the reference group.
The Remuneration Policy does not contain variable incentives
that may be detrimental to the responsibilities of the Executive
Board in defining and achieving Kendrion’s long-term value
creation strategy.
Temporary deviations
In exceptional circumstances, the Supervisory Board can
decide to temporarily deviate from the Remuneration Policy for
members of the Executive Board. Exceptional circumstances
mean circumstances in which a deviation is considered
necessary to serve long-term interests and sustainability of
Kendrion or to otherwise ensure its viability. Depending on the
exceptional circumstances, the Supervisory Board can resolve
to deviate from any or all the four remuneration components
included in the Remuneration Policy for the members of the
Executive Board.
When considering a temporary deviation from the
Remuneration Policy, the Supervisory Board shall consider
Kendrion’s long-term value creation strategy, ongoing business
and operational requirements as well as the financial situation of
Kendrion. In addition, the deviation considered should be
assessed considering the principles of reasonableness and
fairness.
Upon having resolved a temporary deviation from the
Remuneration Policy, the Supervisory Board will (i) cancel and
withdraw all deviations from the Remuneration Policy prior to
the first annual General Meeting of Shareholders following the
effective date of the deviation; or (ii) propose the necessary
amendments to the Remuneration Policy for adoption during
the first annual General Meeting of Shareholders following
the effective date of the deviation.
Deviations from the Remuneration Policy will be reported in
Kendrion’s remuneration policy.
The Supervisory Board did not decide upon a temporary
deviation from the Remuneration Policy for the members
of the Executive Board in 2022.
Remuneration components
The Remuneration Policy for members of the Executive Board
consists of four components: a fixed base salary, a short-term
variable remuneration, a long-term variable remuneration and
other benefits such as a pension scheme and a car allowance
or lease budget.
The sum of the fixed base salary, the short-term variable
remuneration and the long-term variable remuneration for
members of the Executive Board are considered appropriate in
relation to: (i) the identity, the purpose, and values of Kendrion,
(ii) the pay-ratios within Kendrion, (iii) the international context in
which Kendrion operates and (iv) views of relevant stakeholder
groups.
The variable remuneration components are subject to
a maximum value determined in advance in accordance with
the Remuneration Policy. The Supervisory Board will carry out
scenario analyses to assess that the pay-out level of variable
remuneration components appropriately reflect performance.
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Base salary
Members of the Executive Board receive a base salary, the
amount of which is set at around the median level relative to the
abovementioned reference group
*
. The fixed base salary levels
can be adjusted to be decided upon by the Supervisory Board,
based on general market movement and inflation figures.
In addition to the above, any increase of the annual fixed base
salary up to the median level relative to the abovementioned
reference group, can be decided upon by the Supervisory
Board and will not be regarded as an amendment to the
Remuneration Policy.
Following the annual performance review of the CFO Jeroen
Hemmen in January 2022, the Supervisory Board resolved to
increase the annual fixed base salary of the CFO with 7.8%
effective as of 1 January 2022. The Supervisory Board –
upon the recommendation of the HR Committee –
considered the salary increase justified and appropriate by
reference to the CFO’s performance and the commitments
made relevant to the gradual increase of the annual fixed
base salary upon the CFO’s appointment in 2019. With
the 7.8% increase, the 2022 annual fixed base salary of
CFO Jeroen Hemmen remained around – and not
*
On April 2019, the General Meeting of Shareholders reappointed J.A.J. van Beurden
as CEO and member of the Executive Board for a four-year period commencing on
1 December 2019 and ending on 1 December 2023. The fixed annual gross base salary that has
become effective as of 1 December 2019 amounts to EUR 550,000, which amount is not subject to
indexation during the second four-year term. The reappointment resolution does not also encompass a
change to the Executive Board Remuneration Policy as adopted by the General Meeting of Shareholders
in June 2020.
1
Effective until 1 December 2019.
2
Effective as of 1 December 2019 (i.e. the commencement date of the CEO’s second term).
3
The sum of EUR 462,591.25 (i.e. 11/12th of EUR 504,645) and EUR 45,833.33
(i.e. 1/12th of EUR 550,000).
4
Voluntary salary reduction of 15% during April through July 2020 inclusive and voluntary salary
reduction of 10% for the month August 2020 in view of COVID-19 prompted cost measures.
5
Effective as of 1 July 2019 (i.e. the effective date of appointment to the Executive Board).
exceeding – the relevant market median consistent with the
applicable Remuneration Policy.
2022 annual gross base salary
CEO (J.A.J. van Beurden) EUR 550,000
CFO (J.H. Hemmen) EUR 335,000
The table below provides an overview of the development of
the annual gross base salary levels of the members of the
Executive Board during previous financial years.
2022 annual
gross base salary
2021 annual
gross base salary
2020 annual
gross base salary
2019 annual
gross base salary
2018 annual
gross base salary
2017 annual
gross base salary
2016 annual
gross base salary
CEO (J.A.J. van Beurden) EUR 550,000 EUR 550,000 EUR 550,000 EUR 504,645
1
EUR 490,900 EUR 474,300 EUR 465,000
EUR 550,000
2
EUR 517,916.67 (actual)
4
EUR 508,424.58
3
(actual)
CFO (J.H. Hemmen) EUR 335,000 EUR 310,788 EUR 270,250 EUR 235,000
5
EUR 254,485.41 (actual)
4
EUR 117,500 (actual)
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Short-term variable remuneration
The short-term is payable in cash, the amount of which is
based on the achievement of predetermined, specific and
measurable financial and non-financial driven performance
criteria.
The overview below describes the key elements of the short-
term variable remuneration as recorded in the Remuneration
Policy for the Executive Board.
CEO
The short-term variable remuneration ranges from 0%
to 60% of the annual fixed gross base salary of the
CEO, with 40% being the target amount
CFO
The short-term variable remuneration ranges from 0%
to 52.5% of the annual fixed gross base salary of the
CFO, with 35% being the target amount
As part of the reappointment of Joep van Beurden as CEO for
a second four-year term, the General Meeting of Shareholders
resolved on 8 April 2019 that the short-term variable
remuneration of Joep van Beurden ranges from 0% to 90% of
the annual fixed gross base salary of Joep van Beurden, with
60% being the target amount. The reappointment resolution
does not also encompass a change to the Executive Board
Remuneration Policy (including the information in the table
above) as adopted by the General Meeting of Shareholders in
June 2020.
Performance criteria
The performance criteria for the short-term variable
remuneration are based on Kendrion’s strategic intent to
continuously grow revenue and profitability in a sustainable way.
The performance criteria for the short-term variable
remuneration include financial and non-financial criteria. The
financial driven performance criteria determine 60% of the
short-term variable remuneration and reflect the financial
priorities of Kendrion. The remaining 40% of the short-term
variable remuneration is determined by non-financially driven
performance criteria and reflect sustainability ambitions and
other priorities directly linked to Kendrion’s strategic intent.
Financial performance criteria
■ The financial driven performance criteria determine 60% of
the short-term variable remuneration.
■ Each year the Supervisory Board selects at least three
financial driven performance criteria from the list below with
a view to incentivize delivery of financial priorities that
support Kendrion’s strategic and operational spearheads.
■ The Supervisory Board may allocate different weight
percentages to the different financial performance criteria it
selects for a particular year, provided a minimum weight of
10% shall apply to a financial performance criterion.
■ Financial performance criteria
1
■ Net profit
■ Return on sales (ROS)
■ Return on investment (ROI)
■ Organic growth
■ Free cash flow
■ Revenue
■ EBITA
■ EBITDA
■ The performance incentive zone (threshold, target and
maximum) for each financial performance criterion will be
determined in advance by the Supervisory Board. No pay-
out will be made for below threshold performance. In the
case of performance equal to the threshold performance of
the relevant performance criterion, the pay-out of the short-
term incentive will be equal to 50% of the relevant target
amount. A linear curve will be applied to calculate the pay-
out between threshold performance and maximum
performance.
Non-financial performance criteria
■ The non-financial performance criteria determine 40% of
the short-term variable remuneration.
■ Each year the Supervisory Board selects a certain number
of non-financial performance criteria derived from the
strategic and operational spearheads for the respective
performance year, which will in any event include
performance criteria in the area of sustainability
(i.e., environmental, social and/or governance criteria).
■ Achievement of each individual non-financial performance
criterion will be measured by applying a binary scoring
model. The amount of the pay-out for the achievement of
non-financial performance criteria depends on the number
of non-financial performance criteria achieved.
■ A predefined step curve will be applied to calculate the pay-
out between the achievement of the minimum threshold
number of selected non-financial performance criteria and
achievement of all selected non-financial performance
criteria. No pay-out will be made for below threshold
performance.
1
In each case excluding items that are generated outside the ordinary course of business and the amortization of intangibles arising on acquisitions or similar corporate events.
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Investment
Members of the Executive Board must invest at least 20% of
the net amount of the pay-out of the short-term remuneration
earned until the required ownership level has been reached as
prescribed under Kendrion’s ‘Share ownership guideline’ of the
Remuneration Policy.
2022 short-term variable remuneration
Within the framework of the Executive Board Remuneration
Policy, the Supervisory Board takes an informed decision
relevant to the variable remuneration of the members of the
Executive Board. For the determination of the financial and
non-financial performance criteria of the 2022 short-term
incentive, the Supervisory Board considered – amongst others
– the 2022 focus items as previously defined by the Supervisory
Board; the increasing awareness and demands of regulators,
society and our stakeholders to reducing the negative impacts
of climate change, the volatile economic climate and trading
environment and disruptive market trends; and the importance
of long-term value creation through continued investments in
sustainable growth areas. The 2022 focus items of the
Supervisory Board included the advancement of the
development of a new sustainability program for the period
2024 to 2028, accelerating the transition to a future proof
organization, and progressing the achievement of the medium
to long-term 2025 financial objectives. The Supervisory Board
reported on the progression made and the key points of
attention relevant to the 2022 focus items in the Report of the
Supervisory Board that can be found on pages 89-94 of this
Annual Integrated Report.
For the 2022 short-term variable remuneration, the Supervisory
Board followed the recommendations of the HR Committee
and selected four financial performance criteria, a non-financial
performance criterion in the area of sustainability and other
non-financial performance criteria that are linked to the
Supervisory Board’s 2022 focus items and Kendrion’s strategic
plan and operational spearheads, including the sustainable
growth areas identified therein. The 2022 financial and non-
financial performance criteria reflect the collective responsibility
of the members of the Executive Board and make no distinction
between the applicable performance criteria for the CEO and
CFO.
In 2022, the following short-term incentive target amounts
applied to the members of the Executive Board:
2022 short-term incentive
target amount
CEO (J.A.J. van Beurden) EUR 330,000 (i.e. 60% of
the annual gross base salary
of EUR 550,000)
CFO (J.H. Hemmen) EUR 117,250 (i.e. 35% of
the annual gross base salary
of EUR 335,000)
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For the performance year 2022, the short-term incentive
performance criteria are allocated as follows:
Short-term remuneration as percentage
of annual gross base salary in 2022
Performance
criterion
Weight Minimum At target Maximum
Financial performance criteria (60%)
ROI 15% 0 CEO 9% 13.5%
CFO 5.25% 7.88%
ROS 15% 0 CEO 9% 13.5%
CFO 5.25% 7.88%
EBITDA 10% 0 CEO 6% 9%
CFO 3.5% 5.25%
Free cash flow 20% 0 CEO 12% 18%
CFO 7% 10.5%
Non-financial performance criteria (40%)
0 CEO 24% 36%
CFO 14% 21%
TOTAL 100% 0 CEO 60% 90%
CFO 35% 52.5%
2022 short-term financial performance criteria
In 2022, the actual performance against the financial
performance criteria was as follows:
2022 short-term incentive performance on financial performance criteria
Financial performance criterion
Pay-out as % of short-term
incentive target amount
Pay-out as % of annual gross base salary
Pay-out in EUR (gross)
CEO (J.A.J. van Beurden) CFO (J.H. Hemmen) CEO (J.A.J. van Beurden) CFO (J.H. Hemmen)
ROI 64.5% 5.8% 3.4% EUR 31,913 EUR 11,339
ROS 64.3% 5.8% 3.4% EUR 31,830 EUR 11,309
EBITDA 80.6% 4.8% 2.8% EUR 26,597 EUR 9,450
Free cash flow 68.3% 8.2% 4.8% EUR 45,098 EUR 16,025
TOTAL 24.6% 14.4% EUR 135,438 EUR 48,123
2022 short-term non-financial performance criteria
The non-financial performance criteria for the 2022 short-term
incentive recognize the collective responsibility of the Executive
Board and are aligned to the Supervisory Board’s 2022 focus
items and Kendrion’s strategic and operational spearheads.
The table below provides a summarized description of the
non-financial performance criteria.
Summarized description 2022 non-nancial performance criteria
Sustainability Accelerate implementation existing measures and develop roadmap with additional measures aimed at reduction of energy consumption and
CO
2
emissions
Optimization organizational set-up Review and adjust organizational set-up to better leverage Kendrion global assets and capabilities
Working capital Improvement working capital as percentage of revenue on quarterly basis
Automotive R&D and Finance organization Reorganize global R&D organization (including Sound & Electronics to further enhance focus on growing ACES platform) and restructure Finance
organization
Consistent with the Remuneration Policy, achievement of an
individual non-financial performance criterion will be measured
by applying a binary scoring model where a non-financial
performance criterion can either be achieved or not achieved.
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The amount of the pay-out for the non-performance criteria
depends on the number of non-financial performance criteria
achieved. The following step curve is applicable for the 2022
non-financial performance criteria.
Number of non-nancial
performance criteria achieved
Short-term
incentive pay-out
% of target amount
All 4 non-financial performance criteria achieved 150%
3 out of the 4 non-financial performance criteria achieved 100%
2 out of the 4 non-financial performance criteria achieved 50%
1 out of the 4 non-financial performance criteria achieved 0%
0 out of the 4 non-financial performance criteria achieved 0%
Throughout the year, the Supervisory Board reviewed progress
against the non-financial performance criteria and received
detailed updates about relevant developments and actions
taken. During the December 2022 Supervisory Board meeting,
the Executive Board provided a comprehensive overview of the
progress made and achievements realized. Managing and
dealing with the challenging trading conditions with high
inflation and the energy crisis whilst at the same time pursuing
sustainable long-term growth opportunities, accelerating the
transition to a future proof organization, the increasing
awareness and demands of regulators, society, and our
stakeholders to reducing the negative impacts of climate
change have been important themes considered and discussed
extensively among the Supervisory Board and Executive Board.
With the rapid adjustment of standing practices and the
development of longer-term measures in response to the
changing economic landscape, Kendrion convincingly
demonstrated its organizational agility and resilience. The
achievements realized with the consistent focus on reducing
the impact of climate change through the continued investment
in the development and expansion of Kendrion’s responsible
and sustainable product portfolio, the advancement of
decarbonization strategies and mitigation plans and the
development of new practices supportive to the increasing
non-financial disclosure requirements, have been encouraging.
The fundamental reorganization of the Automotive Group per
the end of 2022 into two distinct organizations Automotive E
and Core reflects the strategic agility that is required to remain
part of the accelerating transformation to new forms of
sustainable, de-carbonized mobility. The R&D organization has
been fully aligned to the new set-up of the Automotive Group
and relevant capabilities have accordingly been allocated to
Automotive E and Core, respectively. The Finance organization
has been restructured and centralized – which is not only
supportive to the split of the Automotive Group but also to the
new ESG/sustainability reporting and disclosure requirements.
Through targeted actions and measures, working capital as a
percentage of revenue improved and healthy levels were
generally maintained throughout the quarters. However, the
impact of the high inflation and the effects thereof on the value
of inventory during the year has left its mark. Without taking the
position that no progress was made, the Supervisory Board
considers that the degree of improvement realized, does not
justify ‘achievement’ within the binary scoring model where a
non-financial criterion can either be achieved or not achieved
(i.e. no linear scoring applies).
The Supervisory Board will continue monitoring progress in
the above-mentioned areas. Reference is made to the Report
of the Supervisory Board on pages 90-91 that further
substantiates performance and achievements realized in 2022
and the focus areas for 2023.
During the annual performance reviews, specific attention was
paid to the individual performance and development of the
members of the Executive Board against the non-financial
performance criteria as well as key competencies such as
(change) leadership and organizational alignment and strategic
business orientation.
Based on the comprehensive review of the performance of
the members of the Executive Board, the Supervisory Board
resolved that the members of the Executive Board realized
three out of the four non-financial performance criteria.
Consistent with the step-up curve, the score on the non-
financial performance criteria results in a pay-out of 100% of
the short-term target amount representing: 24% of the CEO’s
annual gross base salary of EUR 550,000 and 14% of the
CFO’s annual gross base salary of EUR 335,000. This resulted
in a pay-out of EUR 132,000 for the CEO and EUR 46,900 for
the CFO.
2022 pay-out short term incentive
Overall performance resulted in the following pay-out of the
short-term incentive in 2022:
Total pay-out 2022 short-term incentive Pay-out as % of annual gross base salary
CEO (J.A.J. van Beurden) EUR 267,438 (gross)
(i.e. sum of EUR 135,438 and EUR 132,000)
48.62% of the gross annual base salary of EUR 550,000
CFO (J.H. Hemmen) EUR 95,023 (gross)
(i.e. sum of EUR 48,123 and EUR 46,900)
28.36% of the gross annual base salary of EUR 335,000
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The table below provides an overview of the development of the pay-out under the applicable short-term incentive scheme
of the members of the Executive Board during previous financial years.
Short-term incentive 2021 2020 2019 2018 2017
*
2016
*
CEO (J.A.J. van Beurden) EUR 429,000 (gross) EUR 358,600 (gross) EUR 191,282.90 (gross) EUR 117,816 (gross) EUR 170,748 (gross) based on
90% achievement of 2017
performance criteria, representing
36% of gross annual base salary
(i.e. 36% of EUR 474,300), one-
third paid in cash and two-thirds
awarded conditionally in shares.
EUR 180,420 (gross) based on
97% achievement of 2016
performance criteria, representing
38.80% of the gross annual base
salary (i.e. 38.80% of EUR
465,000), one-third paid in cash
and two-thirds awarded
conditionally in shares.
CFO (J.H. Hemmen) EUR 141,408.80 (gross) EUR 102,965 (gross) EUR 37,012.50 (gross) Not applicable – effective date of appointment to the Executive Board 1 July 2019
*
The short-term incentive scheme for the years 2016 and 2017 is subject to the terms of the then applicable remuneration policy.
Long-term variable remuneration
The long-term variable remuneration component incentivizes
members of the Executive Board to focus on long-term
sustainable value for shareholders and other stakeholders;
it thereby serves to align the interests of the members of the
Executive Board with the long-term interests of shareholders
and other stakeholder groups.
The members of the Executive Board annually receive
conditional performance shares. The conditional performance
shares will vest upon achievement of performance measured
over a period of three years following the grant date and are
restricted by a holding period for another two years after
vesting.
The size of the award is defined as a percentage of the annual
fixed gross base salary of the relevant Executive Board member
as per the grant date, where the actual grant is determined by
this percentage and the average share price of the last quarter
of the year immediately preceding the year of the grant date.
The target value at grant date is as follows:
CEO 55% of the annual fixed gross base salary of the CEO
as per the grant date
CFO 50% of the annual fixed gross base salary of the CFO
as per the grant date
The maximum opportunity for the long-term variable
remuneration shall not exceed 150% of the target value.
As part of the reappointment of Joep van Beurden as CEO for
a second four-year term, the General Meeting of Shareholders
resolved on 8 April 2019 that the long-term variable
remuneration of Joep van Beurden ranges from 0% to 90% of
the annual fixed gross base salary of Joep van Beurden, with
60% being the target amount. The reappointment resolution
does not also encompass a change to the Executive Board
Remuneration Policy (including the information in the table
above) as adopted by the General Meeting of Shareholders in
June 2020.
Performance measure
In order to support Kendrion’s strategic intent, the vesting
percentage of the performance shares is conditional upon the
achievement of performance measured as:
Weight Performance measure
40% Relative total shareholder return (relative TSR)
40% Basic earnings per share (EPS)
20% Sustainability (i.e. environmental, social and/or
governance)
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Relative TSR
To determine achievement of this performance measure, the relative TSR is measured, which means share price movements,
including dividends and assuming dividends are reinvested. The TSR performance of Kendrion is measured against the
performance of twelve selected TSR peer companies included in the table below.
TSR Performance Peer Group
# Company Activity HQ Listed
1. Schneider Electric SE Energy management / automation FR Paris
2. Eaton Corporation plc Actuators, valves, brakes, hydraulics etc. for industrial and automotive IR New York
3. Sensata Technologies
Holding NV Sensors and controls for automotive, commercial vehicles and industrial US New York
4. Aalberts Industries NV Industrial fragmented NL Amsterdam
5. Emerson Electric Co Industrial automation US New York
6. Continental AG Automotive GE Frankfurt
7. Schaeffler AG Automotive GE Frankfurt
8. TKH Group NV Industrial NL Amsterdam
9. Wabco Holdings Inc Commercial vehicles part supplier BE New York
10. Borg Warner Inc Automotive, commercial vehicles US New York
11. SKF AB Bearings, seals, mechanical transmission SW Stockholm
12. Phoenix Mecano AG Electronic components, actuators CH Zurich
13.
*
Grammer AG Seating automotive commercial vehicles GE Frankfurt
14.
*
Regal Beloit Electric motors FR Paris
15.
*
IMI Plc Fluid control UK London
*
Companies 13, 14 and 15 will be used as replacement companies in the case of delisting or other corporate events in respect of any
of the selected TSR peer companies during the relevant performance period.
The position of Kendrion in the TSR performance peer group, after three years, determines the score for this measure in
accordance with the following performance incentive zone:
Ranking 13 12 11 10 9 8 7 6 5 4 3 2 1
Vesting 0% 0% 0% 0% 0% 50% 75% 100% 100% 125% 150% 150% 150%
The position of Kendrion in the ranking defines the vesting for this part of the conditional grant of shares. The calculation to
determine Kendrion’s ranking shall be conducted by an external independent and reputable specialized firm.
EPS
EPS is disclosed in Kendrion’s consolidated financial statements
and is calculated by dividing the profit or loss attributable to
shareholders of Kendrion by the weighted average number of
shares outstanding during the relevant period, excluding ordinary
shares purchased by Kendrion and held as treasury shares.
Earnings are adjusted for changes in accounting principles
during the performance period. The Supervisory Board sets the
performance incentive zone (threshold, target and maximum)
annually by reference to the mid-term plan as approved by the
Supervisory Board in the year of the grant date. Given that these
targets are considered commercially sensitive, EPS targets and
the achieved performance are disclosed in the Annual Integrated
Report after the relevant performance period.
The following performance incentive zone will be used to define
the vesting for this part of the conditional grant of shares:
< Threshold Target Maximum
EPS 0 100% 150%
The vesting is linear between threshold performance and on
target performance and between on-target performance and
maximum performance.
Sustainability
The Supervisory Board will annually set a sustainability target
that is aligned with Kendrion’s sustainability ambitions as
reflected in the sustainability target framework.
The following performance incentive zone will be used to define
the vesting for this part of the conditional grant of shares:
< Threshold Target Maximum
Sustainability 0 100% 150%
The vesting is linear between threshold performance and on
target performance and between on-target performance and
maximum performance.
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2022 long-term variable remuneration
Consistent with the applicable Remuneration Policy as adopted by the General Meeting Shareholders, the members of the
Executive Board were granted conditional performance shares as described in the table below.
2022 annual
gross base salary
Target amount
Average share
price Q4 2021
Conditional
performance shares
Expiry vesting period
Expiry holding
period
CEO (J.A.J. van Beurden) EUR 550,000 EUR 330,000 (i.e. 60% of EUR 550,000) EUR 20.44 16,144 Expiry performance period 2022-2024 End of 2026
CFO (J.H. Hemmen) EUR 335,000 EUR 167,500 (i.e. 50% of EUR 335,000) EUR 20.44 8,194 Expiry performance period 2022-2024 End of 2026
In accordance with the applicable Remuneration Policy, the vesting percentage of the performance shares is conditional upon the
achievement of performance measured as relative TSR, EPS and a non-financial measure in the area of sustainability. The
sustainability performance criteria for the 2022 long-term incentive are related to the development of strategies supportive to the
gradual increase of economic activities that align with the EU Taxonomy and the proportionate realization of diversity targets.
2020 long-term variable remuneration
Pursuant to the 2020 long-term incentive scheme, 16,533 conditional performance shares have been granted to Joep van Beurden
and 6,769 conditional performance shares have been granted to Jeroen Hemmen. The number of conditional performance shares
has been calculated as follows:
2020 annual
gross base salary
Target amount
Average share
price Q4 2019
Conditional
performance shares
CEO (J.A.J. van Beurden) EUR 550,000 EUR 330,000 (i.e. 60% of EUR 550,000) EUR 19.96 16,533
CFO (J.H. Hemmen) EUR 270,250 EUR 135,125 (i.e. 50% of 270,250) EUR 19.96 6,769
Consistent with the applicable Remuneration Policy, the vesting percentage of the performance shares is conditional upon the
achievement (during the performance period 2020-2022) of performance measured as:
Weight Performance measure
40% Relative total shareholder return (relative TSR)
40% Basic earnings per share (EPS)
20% Sustainability (i.e. environmental, social and/or governance)
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A summary description of the performance measure in the area
of sustainability for the performance period 2020-2022 has
been included in the table below.
Summary description sustainability performance measure – 2020-2022
Achievement of measures in line with five-year
roadmap containing energy efficiency and emission
mitigation measures as part of the 2019-2023
sustainability target framework
■ On target performance (i.e. 100% vesting): achievement 3/5
th
of five-year
roadmap
■ Max. performance (i.e. 150% vesting): achievement of five-year roadmap
■ Min. threshold performance (i.e. 0% vesting): achievement less than 3/5
th
of five-year roadmap
compared with 2018 has been achieved. Since 2015 a relative
reduction of CO
2
emissions – mostly from energy by production
plants – of 60% has been achieved. Through the accelerated
investment in and implementation of reduction measures, both
the energy efficiency and CO
2
emission target have been
achieved a year ahead of the expiry of the 2019-2023
sustainability target framework. The accelerated investment and
implementation of mitigation measures justify maximum
performance under the 2020 long-term incentive scheme for
the sustainability performance measure and thereby results in
150% vesting of 20% of the target-value. For Joep van
Beurden 4,959 performance shares have vested and for Jeroen
Hemmen 2,031 performance shares have vested for the
achievement of the sustainability performance measure.
This means that a total number of 16,465 (i.e. the sum of
3,306, 8,200 and 4,959) shares have vested for Joep van
Beurden and a total number of 6,740 (i.e. the sum of 1,353,
3,356 and 2,031) shares have vested for Jeroen Hemmen.
The vested shares remain subject to a holding period until the
end of 2024.
In accordance with the long-term incentive plan, Joep van
Beurden and Jeroen Hemmen will be entitled to accrued
dividend for each of the 16,465 and 6,740, respectively, vested
shares. Accrued dividend will – in accordance with the long-
term incentive plan – be paid in cash.
Development long-term incentive
The table below provides an overview of the development of
the conditional share awards under the long-term incentive
scheme for the members of the Executive Board during
previous financial years. The table also specifies the expiry
of vesting periods and holding periods for conditional shares
awarded.
Vesting is linear between min. threshold performance and
on-target performance and between on-target performance
and max. performance.
TSR and EPS
When measuring the relative TSR (i.e., share price movements,
including dividends assuming dividends are reinvested), the
position of Kendrion in the predefined TSR performance peer
group is eight. The eighth position results in a 50% vesting of
40% of the target value under the 2020 long-term incentive
scheme. For the calculation of the relative TSR position, the
external firm performing the calculation, assumed the
reinvestment of cash dividend in fixed-income securities and
the reinvestment of stock dividend in the relevant share itself.
For Joep van Beurden 3,306 performance shares have vested
and for Jeroen Hemmen 1,353 performance shares have
vested for the achievement of the eighth position in the TSR
ranking.
Based on the EPS performance incentive zones determined by
the Supervisory Board by reference to the 2020 mid-term plan,
the actual 2022 EPS exceeds the on-target performance but
falls below the maximum performance of the 2022 EPS as
included in the 2020 mid-term plan. Vesting is linear between
on-target performance and maximum performance. The 2022
EPS performance achieved justifies a 124% vesting of 40% of
the target value under the 2020 long-term incentive scheme.
For Joep van Beurden 8,200 performance shares have vested
and for Jeroen Hemmen 3,356 performance shares have
vested for the 2022 EPS performance achieved.
Sustainability – ve-year energy and
CO
2
roadmap
The five-year roadmap containing energy efficiency and
emission mitigation measures that has been developed as part
of the 2019-2023 sustainability target framework aims to
achieve a 15% relative reduction of energy consumption and
CO
2
emission by the end of 2023. The five-year roadmap was
designed in 2019 after extensive review and recommendations
by different specialists. The roadmap contains a significant
number of measures that particularly enable the manufacturing
facilities to realize energy efficiencies and CO
2
reductions.
As per the end of 2022 a relative reduction of energy
consumption of 16.82% has been achieved compared with
2018, and a relative reduction of CO
2
emission of 29.94%
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Pension arrangement and other benets
Members of the Executive Board participate in the defined
contribution pension scheme. Kendrion N.V. will pay: (i) the cost
of contributions for participation in the defined contribution
scheme; (ii) the risk premium for the surviving dependents’
pension (nabestaandenpensioen) and (iii) the cost of
contributions for participation in the occupational disability
insurance (including WIA excedentverzekering) (collectively the
“Pension and Disability Insurance Contribution”). In addition,
members of the Executive Board are entitled to an annual gross
allowance to compensate for the loss of accrual of pension
benefits because of the Dutch Wage Tax Act, provided that the
sum of the Pension and Disability Insurance Contribution and
such annual allowance shall annually not exceed an amount of
EUR 75,000. This amount may be adjusted based on market
developments.
No schemes have been agreed for the voluntary early
retirement of members of the Executive Board.
Kendrion maintains a car lease policy for members of the
Executive Board. The lease budget (including fuel) is EUR 2,000
per month. Alternatively, members of the Executive Board are
entitled to a monthly gross car allowance of EUR 2,000.
In addition, Kendrion pays a monthly expense allowance to
members of the Executive Board of up to EUR 450, to cover
costs that are not suitable for individual reimbursement.
The amount of the car allowance and the expense allowance
are not included as a basis for calculation of the Pension and
Disability Insurance Contribution, or any other (variable)
remuneration or allowance, severance amount or benefit.
Kendrion has arranged for a directors’ and officers’ liability
insurance. The costs for this insurance are for the account of
Kendrion.
The Executive Board participates in the defined contribution
plan of Kendrion. The pension contribution in 2022 was
EUR 75,000 (2021: EUR 75,000) for the CEO and
EUR 69,954 (2021: EUR 65,972) for the CFO. In 2022
Kendrion provided the CFO with a car allowance in the monthly
gross amount of EUR 2,000.
Long-term incentive
2021
number
of shares
Expiry
vesting
period
holding
period
2020
number
of shares
Expiry
vesting
period
holding
period
2019
number
of shares
Expiry
vesting
period
holding
period
2018
number
of shares
Expiry
vesting
period
holding
period
2017
number
of shares*
Expiry
vesting
period
holding
period
2016
number
of shares*
Expiry
vesting
period
holding
period
CEO (J.A.J. van Beurden) 20,245 End of
2023
End of
2025
16,533 End of
2022
End of
2024
11,559 End of
2021
End of
2023
6,960 End of
2020
End of
2022
3,383 End of
2019
End of
2021
3,970 End of
2018
End of
2020
CFO (J.H. Hemmen) 9,533 End of
2023
End of
2025
6,769 End of
2022
End of
2024
2,409 End of
2021
End of
2023
Not applicable – effective date of appointment to the Executive Board 1 July 2019
*
The long-term incentive scheme for the years 2016 and 2017 is subject to the terms of the then applicable remuneration policy.
Share ownership guideline
An objective of the Remuneration Policy is increase alignment
with the interests of shareholders by encouraging share
ownership. Kendrion applies a share ownership guideline for
members of the Executive Board of 100% of the annual fixed
gross base salary for the CEO and 50% of the annual fixed
gross base salary for the CFO. This shareholding must be
gradually built up with performance shares earned under the
long-term incentive, although it is permitted to sell shares to
finance taxes due at the date of vesting of the performance
shares, and by purchasing shares with at least 20% of the net
amount of the pay-out of the short-term incentive.
Policy in case of change of control
Unvested performance shares awarded shall be deemed
vested as per the date of the change of control assuming on
target performance, subject to: (i) pro rating to reflect the
proportion of the normal performance period that has elapsed
as per the date of the change of control, and (ii) the
discretionary authority of the Supervisory Board to determine
otherwise, should such deemed vesting of performance shares
result in unreasonable or unequitable remuneration.
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statementsReport of the Executive Board
107
Annual Integrated Report 2022
Adjustment and claw back
The Supervisory Board is authorized to adjust the amount
of the short-term and long-term variable remuneration to an
appropriate level should payment thereof result in unreasonable
or unequitable remuneration. In addition, a so-called claw-back
provision applies by which the Supervisory Board has the
authority to recover in whole or in part short-term and long-
term variable remuneration awarded to members of the
Executive Board should it transpire that such variable
remuneration was unjustifiably awarded based on incorrect
information.
Other key elements
Term and termination
Management agreements with members of the Executive
Board are entered for a definite period of four years.
The management agreement may be terminated with due
observance of a notice period of six months. Kendrion is
entitled to terminate the management agreement with
immediate effect for cause (i.e., seriously culpable or negligent
behavior on the part of the Executive Board member).
Termination fee
In the event of termination of the management agreement on
Kendrion’s initiative, the termination fee for members of the
Executive Board shall not exceed 100% of the annual fixed
gross base salary (i.e. excluding short-term and long-term
incentive and other elements such as pension contributions).
The members of the Executive Board are not entitled to
a termination fee if the contract is terminated for cause
(i.e. seriously culpable or negligent behavior on the part of
the Executive Board member) or if the contract is terminated
at the initiative of the Executive Board member.
Pay ratio
The Executive Board to employee pay-ratio is approximately 15
(2021: 15). This pay ratio is based on the average of the 2022
Executive Board remuneration including pensions and other
expenses and the average wage costs per FTE in 2022 as
disclosed on pages 62-63 of this Annual Integrated Report.
Remuneration Policy Supervisory Board
Objectives
The remuneration policy of the Supervisory Board serves to
recruit and retain diverse, qualified and experienced members
to supervise the manner in which the Executive Board
implements Kendrion’s long-term value creation strategy.
Considering the nature of the supervisory responsibilities of the
Supervisory Board, the remuneration is not linked to Kendrion’s
performance, and therefore includes a fixed component only.
In line with good corporate governance, Supervisory Board
members will not receive a share-based incentive.
The remuneration of the Supervisory Board shall be as
described in the table below. The base fee and committee fee
levels in the table below are the same as determined by the
General Meeting of Shareholders on 11 April 2022.
Base fee
Chairman Supervisory Board EUR 59,000
Member Supervisory Board EUR 41,800
Committee fee
Chair Audit Committee EUR 7,200
Member Audit Committee EUR 6,000
Chair HR Committee EUR 7,200
Member HR Committee EUR 6,000
Expenses
All reasonable and documented expenses incurred by the
Supervisory Board members in the course of performing their
duties are reimbursed.
Benefits and loans
Members of the Supervisory Board are not eligible to participate
in any benefits scheme offered by Kendrion to its employees,
nor shall Kendrion provide loans.
The aggregate amount of the remuneration of the
Supervisory Board members in 2022 was EUR 210,800 (2021:
EUR 172,000). The table below gives a breakdown of the
remuneration in 2022 per Supervisory Board member.
Supervisory Board member 2022
F.J. van Hout (Chairman) EUR 65,000
M.J.G. Mestrom EUR 49,000
J.T.M. van der Meijs EUR 49,000
E.M. Doll EUR 47,800
Total
EUR 210,800
Advisory vote remuneration report 2021
The remuneration report 2021 has been discussed with the
shareholders and put to the General Meeting of Shareholders
for an advisory vote during the annual General Meeting of
Shareholders held on 11 April 2022. Of the votes cast, 99.96%
voted in favor of the 2021 remuneration report. Supported by
this advisory vote, the Executive Board and the Supervisory
Board considered that no substantive changes are needed
relevant to the application of the Remuneration Policy.
The voting results of the General Meeting of Shareholders held
on 11 April 2022 can be found on the corporate website at
www.kendrion.com.
REMUNERATION REPORT
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
108
Annual Integrated Report 2022
Taking account of the content of this 2022 Remuneration
Report, it is determined that the aggregate amount of
remuneration awarded is in line with the Remuneration
Policy and contributes to the performance of Kendrion and
the execution of its long-term value creation strategy.
This 2022 Remuneration Report will be discussed with
shareholders and put to the General Meeting of Shareholders
for an advisory vote during the upcoming annual General
Meeting of Shareholders to be held on 17 April 2023.
Remuneration components 2022
(in EUR) CEO % CFO %
Base salary 550,000 48% 335,000 53%
Short term incentive 267,438 23% 95,023 15%
Long term incentive 255,208 22% 104,470 17%
Pension contribution 75,000 7% 69,954 11%
Other 5,400 0% 27,600 4%
Total compensation
1,153,046 100% 632,047 100%
REMUNERATION REPORT
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
109
Annual Integrated Report 2022
Executive Board remuneration comparative
1
EUR Thousand 2022 2021 2020 2019 2018 2017 2016
J.A.J. van Beurden, CEO 1,153.0 1,118.0 984.2 853.5 768.4 737.8 645.4
J.H. Hemmen, CFO 632.0 565.8 450.4 189.4
Remuneration of former
Executive Board members
F.J. Sonnemans, CFO 689.0 662.6 533.3
Pay ratio 15 15 18 14 12 13 13
Company performance
Revenue (EUR million) 519.3 464.0 396.4 412.4 448.6 461.8 443.4
Normalized EBITA (EUR million)
3
57.4 55.8 44.6 43.8 58.5 60.0 51.4
Normalized EBITA margin
3
11.1% 12.0% 11.3% 10.6% 13.0% 13.0% 11.6%
1
Based on settled short-term and long-term benefits, refer to note 30 of the financial statements for detailed disclosure.
2
Restated to include 2016 long-term incentive.
3
Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to reconciliation of non-IFRS
information, starting on page 210.
2 2
Supervisory Board remuneration comparative
2022 2021
2020 (excl. fee
reduction)
2019 2018 2017 2016
Base fee
Chairman Supervisory Board EUR 59,000 EUR 45,000 EUR 45,000 EUR 45,000 EUR 45,000 EUR 45,000 EUR 40,000
Member Supervisory Board EUR 41,800 EUR 35,000 EUR 35,000 EUR 35,000 EUR 35,000 EUR 35,000 EUR 30,000
Committee fee
Chair Committee EUR 7,200 EUR 6,000 EUR 6,000 EUR 6,000 EUR 6,000 EUR 6,000 EUR 5,000
Member Committee EUR 6,000 EUR 5,000 EUR 5,000 EUR 5,000 EUR 5,000 EUR 5,000 EUR 5,000
Total Supervisory Board remuneration EUR 210,800 EUR 172,000 EUR 172,000 EUR 172,000 EUR 172,000 EUR 172,000 EUR 150,000
REMUNERATION REPORT
Contents Profile Strategy Report of the Executive Board Outlook Report of the Supervisory Board Financial statements
FINANCIAL STATEMENTS - CONTENTS
111 Consolidated statement of financial position
at 31 December
112 Consolidated statement of profit and loss and
other comprehensive income
113 Consolidated statement of changes in equity
115 Consolidated statement of cash flows
116 Notes to the consolidated financial statements
139 Property, plant and equipment
142 Intangible assets
146 Other investments, including derivatives
146 Deferred tax assets and liabilities
149 Contract costs
149 Inventories
149 Trade and other receivables
150 Cash and cash equivalents
150 Assets classified as held for sale
150 Capital and reserves
152 Earnings per share
154 Loans and borrowings
156 Employee benefits
160 Share-based payments
160 Provisions
161 Contract liabilities
161 Trade and other payables
161 Financial instruments
171 Leases
171 Capital commitments
171 Contingent assets and liabilities
172 Operating segments
174 Business combinations and acquisitions
of non-controlling interests
175 Other income
175 Staff costs
176 Other operating expenses
176 Net finance costs
177 Income tax
177 Reconciliation of effective tax rate
177 Related parties
180 Other notes
180 Post-balance sheet events
181 Company balance sheet at 31 December
182 Company income statement
183 Notes to the company financial statements
183 General
183 Principles of valuation of assets and liabilities
and determination of results
183 Financial fixed assets
183 Receivables
184 Equity
185 Current liabilities
185 Financial instruments
185 Other income
186 Staff costs
186 Profit appropriation
186 Commitments not appearing on the balance sheet
187 Post-balance sheet events
187 Fees to the auditor
187 Remuneration of and share ownership
by the Executive Board and Supervisory Board
FINANCIAL STATEMENTS
Annual Integrated Report 2022
110
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
Note EUR million 2022 2021
Equity and liabilities
10, 11 Equity
Share capital 30.2 29.9
Share premium 38.4 45.8
Reserves 152.7 132.9
Retained earnings (46.3 ) 14.4
Total equity
1
Liabilities
12 Loans and borrowings 166.6 136.4
13 Employee benefits 10.7 14.0
4 Deferred tax liabilities 17.5 17.7
15 Provisions 0.7 0.9
Total non-current liabilities
8 Bank overdraft 3.1 6.1
12 Loans and borrowings 8.4 6.7
15 Provisions 1.3 1.2
Current tax liabilities 10.3 6.0
16 Contract liabilities 4.7 4.5
17 Trade and other payables 78.3 74.3
Total current liabilities
Total liabilities
Total equity and liabilities
Note EUR million 2022 2021
Assets
Non-current assets
1
Property, plant and equipment 131.6 121.9
2 Intangible assets 126.5 183.4
3 Other investments, including
derivatives 0.4 0.4
4 Deferred tax assets 19.7 18.3
5 Contract costs 0.3 0.5
Total non-current assets
Current assets
6 Inventories 85.1 79.7
Current tax assets 2.8 2.7
7 Trade and other receivables 70.5 65.3
8 Cash and cash equivalents 37.8 18.6
9 Assets classified as held for sale 1.9 –
Total current assets
Total assets
1
Equity is attributable to owners of the company as non-controlling interests are not applicable.
FINANCIAL STATEMENTS
Annual Integrated Report 2022
111
Home
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
CONSOLIDATED
STATEMENT OF
FINANCIAL POSITION
1
This item will never be reclassified to profit or loss.
2
These items may be reclassified to profit or loss.
3
All profits are attributable to owners of the company as non-controlling interests are not applicable.
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Note EUR million 2022 2021
Other comprehensive income
4 Remeasurements of defined benefit plans
1
Foreign currency translation differences for
foreign operations
2
18
Net change in fair value of cash flow hedges,
net of income tax
2
Other comprehensive income for the period,
net of income tax
Total comprehensive income for the period
3
(41.4 ) 22.8
11 Basic earnings per share (EUR),
based on weighted average (3.09 ) 0.97
11 Basic earnings per share (EUR),
based on weighted average (diluted) (3.05 ) 0.97
Note EUR million 2022 2021
22 Revenue 519.3 464.0
24 Other income 0.5 0.2
Total revenue and other income
Changes in inventories of finished goods and work
in progress 1.8 (3.5 )
Raw materials and subcontracted work 268.7 241.9
25 Staff costs 153.6 138.1
Depreciation and amortization 28.0 27.8
1,2 Impairments of fixed assets 58.7 3.5
26 Other operating expenses 43.6 32.5
Result before net finance costs
(34.6 ) 23.9
27 Finance income 0.0 0.0
27 Finance expense (5.1 ) (3.7 )
Share profit or loss of an associate – (0.1 )
Profit before income tax
(39.7 ) 20.1
28, 29 Income tax expense (6.6 ) (5.7 )
Profit for the period
(46.3 ) 14.4
Home
Consolidated
statement of
financial position
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
CONSOLIDATED STATEMENT
OF PROFIT AND LOSS AND
OTHER COMPREHENSIVE
INCOME
FINANCIAL STATEMENTS
Annual Integrated Report 2022
112
Home
Consolidated
statement of
financial position
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Note
EUR million
Share
capital
Share
premium
Translation
reserve
Hedge
reserve
Reserve for
own shares
Other
reserves
Retained
earnings
Total
equity
Balance at 1 January 2021 29.9 51.7 (0.2 ) 0.1 (3.4 ) 121.0 4.3 203.4
Total comprehensive income for the period
Profit or loss – – – – – – 14.4 14.4
Other comprehensive income
13 Remeasurements of defined benefit plans – – – – – 0.5 – 0.5
Foreign currency translation differences
for foreign operations – – 7.8 – – – – 7.8
10 Net change in fair value of cash flow hedges,
net of income tax – – – 0.1 – – – 0.1
Other comprehensive income for the period,
net of income tax
Total comprehensive income for the period
Transactions with owners, recorded
directly in equity
Contributions by and distributions to owners
10 Issue of ordinary shares 0.0 0.0 – – – – – 0.0
Own shares issued – – – – 1.4 0.2 – 1.6
Share-based payment transactions – – – – 0.1 1.0 – 1.1
10 Dividends to equity holders – (5.9 ) – – – – – (5.9 )
10 Appropriation of retained earnings – – – – – 4.3 (4.3 ) –
Balance at 31 December 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
CONSOLIDATED
STATEMENT OF
CHANGES IN EQUITY
FINANCIAL STATEMENTS
Annual Integrated Report 2022
113
Note
EUR million
Share
capital
Share
premium
Translation
reserve
Hedge
reserve
Reserve for
own shares
Other
reserves
Retained
earnings
Total
equity
Balance at 1 January 2022 29.9 45.8 7.6 0.2 (1.9 ) 127.0 14.4 223.0
Total comprehensive income for the period
Profit or loss – – – – – – (46.3 ) (46.3 )
Other comprehensive income
13 Remeasurements of defined benefit plans – – – – – 1.5 – 1.5
Foreign currency translation differences
for foreign operations – – 1.8 – – – – 1.8
10 Net change in fair value of cash flow hedges,
net of income tax – – – 1.6 – – – 1.6
Other comprehensive income for the period,
net of income tax
Total comprehensive income for the period
Transactions with owners, recorded
directly in equity
Contributions by and distributions to owners
10 Issue of ordinary shares 0.3 2.8 – – – – – 3.1
Share-based payment transactions – – – – 0.1 0.4 – 0.5
10 Dividends to equity holders – (10.2 ) – – – – – (10.2 )
10 Appropriation of retained earnings – – – – – 14.4 (14.4 ) –
Balance at 31 December 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
114
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
CONSOLIDATED
STATEMENT OF
CHANGES IN EQUITY
Note EUR million 2022 2021
Cash flows from operating activities
Profit for the period (46.3 ) 14.4
Adjustments for:
27 Net finance costs 5.1 3.7
Share profit or loss of an associate – 0.1
28 Income tax expense 6.6 5.7
1, 2 Depreciation of property, plant and equipment and
software 23.3 23.9
2 Amortization of other intangible assets 4.7 3.9
1, 2
Impairments of fixed assets 58.7 3.5
3 Profit on disposal of associate – (0.6 )
Share-based payments 0.5 1.2
Change in trade and other receivables (3.2 ) (7.1 )
Change in inventories (5.0 ) (15.2 )
Change in trade and other payables 3.1 5.9
Change in provisions (0.5 ) (1.2 )
Change in contract liabilities 0.2 (1.0 )
Interest paid (4.1 ) (3.2 )
Interest received 0.0 0.0
Tax paid (5.2 ) (6.2 )
Net cash flows from operating activities
Note EUR million 2022 2021
Cash flows from investing activities
2 Acquisition of subsidiaries – (23.2 )
3 Proceeds from disposal of associate – 3.3
1 Investments in property, plant and equipment (32.0 ) (23.7 )
1 Disinvestments of property, plant and equipment 0.2 0.7
2 Investments in intangible fixed assets (5.7 ) (6.3 )
2 Disinvestments of intangible fixed assets 0.0 0.2
3 (Dis)investments of other investments (0.4 ) 0.2
Net cash from investing activities
(37.9 ) (48.8 )
Cash flows from financing activities
12 Payment of lease liabilities (3.3 ) (3.4 )
12 Proceeds from borrowings (non current) 30.8 32.4
12 Proceeds from/repayments of borrowings (current) 1.7 (0.8 )
10 Dividends paid (7.1 ) (4.3 )
Net cash from financing activities
Change in cash and cash equivalents 22.1 2.9
8 Cash and cash equivalents at 1 January 12.5 8.5
Effect of exchange rate fluctuations on cash held 0.1 1.1
8 Cash and cash equivalents at 31 December 34.7 12.5
FINANCIAL STATEMENTS
Annual Integrated Report 2022
115
CONSOLIDATED STATEMENT OF CASH FLOWS
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
CONSOLIDATED
STATEMENT
OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reporting entity
Basis of preparation
(a)
(b)
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
FINANCIAL STATEMENTS
Annual Integrated Report 2022
116
(a)
(i)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
117
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(ii)
(iii)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
118
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(b)
(i)
(ii)
(c)
(i)
(ii)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
119
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
120
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
121
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(d)
(i)
(ii)
(iii)
(iv)
(v)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
122
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(e)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
123
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
124
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
125
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(f)
(g)
(i)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
126
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(ii)
(iii)
(iv)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
127
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(h)
(i)
(ii)
(iii)
(i)
(i)
(ii)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
128
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
129
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(vi)
(j)
(k)
(l)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
130
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
131
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(m)
(i)
(ii)
(n)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
132
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(o)
(p)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
133
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(q)
(r)
(i)
(ii)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
134
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
135
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(s)
(i)
(ii)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
136
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(iii)
(iv)
(v)
(vi)
(vii)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
137
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(viii)
(ix)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
138
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
(t)
1
FINANCIAL STATEMENTS
Annual Integrated Report 2022
139
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
140
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
141
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
2
FINANCIAL STATEMENTS
Annual Integrated Report 2022
142
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
143
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
144
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
145
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
3
4
FINANCIAL STATEMENTS
Annual Integrated Report 2022
146
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
147
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
148
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
5
6
7
FINANCIAL STATEMENTS
Annual Integrated Report 2022
149
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
8
9
10
FINANCIAL STATEMENTS
Annual Integrated Report 2022
150
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
151
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
11
FINANCIAL STATEMENTS
Annual Integrated Report 2022
152
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
153
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
12
FINANCIAL STATEMENTS
Annual Integrated Report 2022
154
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
155
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
13
FINANCIAL STATEMENTS
Annual Integrated Report 2022
156
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
157
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
158
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
159
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
14
15
FINANCIAL STATEMENTS
Annual Integrated Report 2022
160
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
16
17
18
FINANCIAL STATEMENTS
Annual Integrated Report 2022
161
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
162
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
163
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
164
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
165
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
166
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
167
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
168
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
169
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
170
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
19
20
21
FINANCIAL STATEMENTS
Annual Integrated Report 2022
171
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
22
FINANCIAL STATEMENTS
Annual Integrated Report 2022
172
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
173
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
23
FINANCIAL STATEMENTS
Annual Integrated Report 2022
174
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
24
25
FINANCIAL STATEMENTS
Annual Integrated Report 2022
175
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
26
27
FINANCIAL STATEMENTS
Annual Integrated Report 2022
176
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
30
FINANCIAL STATEMENTS
Annual Integrated Report 2022
177
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
178
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FINANCIAL STATEMENTS
Annual Integrated Report 2022
179
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
31
32
FINANCIAL STATEMENTS
Annual Integrated Report 2022
180
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
NOTES TO THE
CONSOLIDATED FINANCIAL
STATEMENTS
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Note EUR million 2022 2021
Fixed assets
Property, plant and equipment 0.6 0.7
Intangible assets 0.0 0.1
Other investments, including derivatives 0.2 0.3
1.3 Financial fixed assets 221.2 259.5
Total non-current assets
222.0 260.6
Current assets
1.4 Receivables 1.0 0.5
Cash and cash equivalents 0.0 0.0
Total current assets
1.0 0.5
Total assets
223.0 261.1
1.5 Equity
Share capital 30.2 29.9
Share premium 38.4 45.8
Legal reserves 19.0 13.6
Other reserves 133.7 119.3
Retained earnings (46.3) 14.4
Total equity
175.0 223.0
1.6 Current liabilities
Loans and borrowings 46.3 36.3
Payables 1.7 1.8
Total current liabilities
48.0 38.1
Total equity and liabilities
223.0 261.1
COMPANY BALANCE SHEET AT 31 DECEMBER
(before profit appropriation)
FINANCIAL STATEMENTS
Annual Integrated Report 2022
181
Notes to the
consolidated financial
statements
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
income
statement
Company
balance
sheet
COMPANY INCOME STATEMENT
Note EUR million 2022 2021
Revenue – –
1.8 Other income 5.4 5.4
Total revenue and other income
5.4 5.4
1.9 Staff costs 5.0 4.6
Depreciation and amortization 0.1 0.1
Other operating expenses 1.8 1.3
Result before net finance costs
(1.5) (0.6)
Finance income – 0.1
Finance expense (1.6) (1.4)
Profit before income tax
(3.1) (1.9)
Income tax expense (1.1) 0.1
Profit for the period
(4.2) (1.8)
Share in results of Group companies after tax (42.1) 16.2
1.10 Net profit (46.3) 14.4
FINANCIAL STATEMENTS
Annual Integrated Report 2022
182
Notes to the
consolidated financial
statements
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Notes to the company financial statements
General
The Company financial statements are part of the 2022 financial statements of Kendrion N.V. (the ‘Company’). The Company is registered
at the Chamber of Commerce in The Netherlands under number: 30113646.
Principles of valuation of assets and liabilities and determination of results
In selecting the principles employed in the company financial statements for the valuation of assets and liabilities and determination of results,
Kendrion N.V. has made use of the option provided by Section 362, subsection 8, of Book 2 of the Netherlands Civil Code. Consequently,
the principles employed in the Company financial statements of Kendrion N.V. for the valuation of assets and liabilities and determination of results
(the ‘accounting policies’) are identical to those employed in the consolidated EU-IFRS financial statements. Interests in entities in which Kendrion N.V.
has significant influence are measured using the equity method. The consolidated EU-IFRS financial statements have been prepared in accordance
with the standards adopted by the International Accounting Standards Board as endorsed for use in the European Union (hereinafter referred to as
‘EU-IFRS’). These policies are discussed in notes a – r.
Financial fixed assets
EUR million
Interest in Group
companies
Loans to Group
companies
Deferred tax Total 2022 Total 2021
Carrying amount at 1 January 257.4 – 2.1 259.5 234.9
Results of Group companies (42.1) – – (42.1) 16.2
Movements in deferred tax assets – – (1.0) (1.0) 0.0
Foreign currency translation differences for foreign operations 1.8 – – 1.8 7.8
Other movements 3.0 – – 3.0 0.6
Carrying amount at 31 December
220.1 – 1.1 221.2 259.5
Receivables
EUR million 2022 2021
Receivables from Group companies 0.6 0.2
Prepayments and accrued income 0.4 0.3
1.0 0.5
All receivables are due within one year.
1
1.1
1.2
1.3
1.4
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
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Notes to the
consolidated financial
statements
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Company
balance
sheet
Company
income
statement
NOTES TO THE
COMPANY FINANCIAL
STATEMENTS
Equity
EUR million
Share
capital
Share
premium
Translation
reserve
Hedge
reserve
Reserve for
participations
Reserve for
own shares
Other
reserves
Retained
earnings
Total 2022 Total 2021
Balance at 1 January 29.9 45.8 7.6 0.2 5.8 (1.9) 121.2 14.4 223.0 203.4
Appropriation of retained earnings – – – – – – 14.4 (14.4) – –
Foreign currency translation differences
for foreign operations – – 1.8 – – – – – 1.8 7.8
Net change in fair value of cash flow hedges,
net of income tax – – – 1.6 – – – – 1.6 0.1
Issue of ordinary shares 0.3 2.8 – – – – – – 3.1 0.0
Own shares issued – – – – – – – – – 1.6
Share-based payment transactions – – – – – 0.1 0.4 – 0.5 1.1
Dividends to equity holders – (10.2) – – – – – – (10.2) (5.9)
Other – – – – 2.0 – (0.5) – 1.5 –
Total recognized income and expenses – – – – – – – (46.3) (46.3) 14.4
Balance at 31 December
30.2 38.4 9.4 1.8 7.8 (1.8) 135.5 (46.3) 175.0 223.0
Share capital
The authorized capital of the Company amounts to EUR 80 million, divided into 40 million ordinary shares of EUR 2.00, of which 15,114,621 ordinary
shares have been issued (2021: 14,934,735).
Share premium
The share premium represents revenue from shares issued at more than their nominal value (issued above par). The issued and paid share capital,
including share premium, is fiscally recognized capital.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of subsidiaries outside
the euro zone. Gains and losses relating to the translation risk are recognized in equity. The build-up of the cumulative figure commenced
on 1 January 2004.
Hedge reserve
The hedge reserve comprises the effective share of the cumulative net movement in the fair value of cash-flow hedging instruments relating
to hedged transactions that have not yet been executed.
1.5
1.5.1
1.5.2
1.5.3
1.5.4
FINANCIAL STATEMENTS
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184
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Company
balance
sheet
Company
income
statement
NOTES TO THE
COMPANY FINANCIAL
STATEMENTS
Notes to the
consolidated financial
statements
Statutory reserve for participations
This reserve pertains to participating interests that are accounted for according to the equity accounting method. The reserve represents the difference
between the participating interests’ retained profit and direct changes in equity, as determined on the basis of the Company’s accounting policies, and
the share thereof that the Company may distribute. It is shown as the share in the undistributed results of the subsidiaries since they were first valued
using the equity method. The amount of any dividend – from these subsidiaries – to which there is an entitlement on adoption of the financial statements
is deducted from this reserve.
Reserve for own shares
The reserve for the Company’s own shares comprises the cost of the Company shares that are held by the Company for the remuneration package for
the Executive Board. At 31 December 2022, the Company held 88,316 of its own shares (2021: 93,663).
Other reserves
Other reserves are all the reserves other than those shown separately and comprise primarily the cumulative, undistributed profits from previous financial
years.
Retained earnings
In 2022, the full result for 2021 was included in other reserves. Retained earnings consequently consist solely of the result for 2022.
Current liabilities
EUR million 2022 2021
Debts to Group companies 45.8 35.7
Lease liability 0.5 0.6
Trade payables 0.7 0.5
Other payables and accrued expenses 1.0 1.3
48.0 38.1
Financial instruments
See note 17 to the consolidated financial statements for details on financial instruments.
Other income
EUR million 2022 2021
Management fee 5.4 5.4
Other – –
5.4 5.4
1.5.5
1.5.6
1.5.7
1.5.8
1.6
1.7
1.8
FINANCIAL STATEMENTS
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Company
balance
sheet
Company
income
statement
NOTES TO THE
COMPANY FINANCIAL
STATEMENTS
Notes to the
consolidated financial
statements
Staff costs
EUR million 2022 2021
Wages and salaries 4.1 3.8
Social security charge 0.2 0.2
Pension costs 0.5 0.4
Other costs of personnel 0.2 0.2
5.0 4.6
Total number of employees and temporary workers at 31 December (FTE) 18 16
The Company has only defined contribution plans for its employees.
Profit appropriation
Appropriation of net profit
EUR million 2022 2021
Net profit (46.3) 14.4
The Executive Board has decided, with the approval of the Supervisory Board, that the net profit of EUR -46.3 million will be added to the other
reserves.
Commitments not appearing on the balance sheet
Joint and several liability and guarantees
The Company and its Group companies have issued guarantees mainly in the context of the financing by financial institutions.
The Company has issued declarations of joint and several liability, as referred to in Section 403 of Book 2 of the Netherlands Civil Code, for:
■ Combattant Holding B.V., Zeist;
■ Kendrion Finance B.V., Zeist;
■ Twente Technology Solutions B.V., Enschede;
■ 3T B.V., Enschede.
Kendrion N.V. has a guarantee which relates to the rent of the office in Amsterdam totalling to EUR 0.0 million.
Fiscal unity
The Company and its Dutch subsidiaries excluding Landfort II B.V.,Twente Technology B.V. and 3T B.V. form a tax group for corporation tax purposes.
A request has been submitted to the Dutch tax authorities to include Kendrion Marketing B.V. to the fiscal unity per October 1, 2022. According to the
standard terms, each of the companies is jointly and severally liable for corporation tax payable by all the members of the fiscal unity.
1.9
1.10
1.11
1.11.1
1.11.2
FINANCIAL STATEMENTS
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Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Company
balance
sheet
Company
income
statement
NOTES TO THE
COMPANY FINANCIAL
STATEMENTS
Notes to the
consolidated financial
statements
Post-balance sheet events
There were no post-balance sheet events that have to be taken into account in the consolidated financial statements for the year ended
31 December 2022.
Remuneration of and share ownership by the Executive Board and Supervisory Board
Remuneration of the Executive Board
The remuneration of current Executive Board members charged to the Company and Group companies, including pension expenses as referred to in
Section 383, subsection 1, of Book 2 of the Netherlands Civil Code, amounted to EUR 1,785,000 (2021: EUR 1,897,300). This remuneration is as
follows:
2022 2021
EUR thousand J.A.J. van Beurden J. H. Hemmen Total J.A.J. van Beurden J. H. Hemmen Total
Fixed remuneration 550.0 335.0 885 550.0 310.8 860.8
Short-term variable remuneration 267.4 95.0 362 429.0 141.4 570.4
Long-term variable remuneration 255.2 104.5 360 190.9 81.3 272.2
Total remuneration
1,073 534 1,607 1,169.9 533.5 1,703.4
Pension and other expenses 80 98 178 90.4 103.5 193.9
1,153 632 1,785 1,260.3 637.0 1,897.3
1.12
1.13
1.14
FINANCIAL STATEMENTS
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187
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Company
balance
sheet
Company
income
statement
NOTES TO THE
COMPANY FINANCIAL
STATEMENTS
Notes to the
consolidated financial
statements
The 2022 short-term variable remuneration will be paid in cash after income tax.
For more information on the long-term variable remuneration see pages 178-179.
Remuneration of the Supervisory Board
The total remuneration of current and former Supervisory Board members in 2022 amounts to EUR 211 thousand (2021: EUR 172 thousand).
This remuneration is as follows:
EUR thousand 2022 2021
Supervisory Board Members:
H. ten Hove (stepped down as from 1 April 2021) – 12
F. van Hout (appointed as of 1 April 2021) 65 38
M.J.G. Mestrom 49 41
J.T.M. van der Meijs 49 41
E. M. Doll 48 40
211 172
No loans, advances or related guarantees have been given to the Executive Board or Supervisory Board members.
Share ownership by the Executive Board and the Supervisory Board
31 December 2022 31 December 2021
Executive Board J.A.J. van Beurden 36,867 34,556
J.H. Hemmen 4,090 3,609
Supervisory Board F. van Hout 7,300 –
Amsterdam, February 28, 2023
Executive Board Supervisory Board
J.A.J. van Beurden F. van Hout
J.H. Hemmen M.J.G. Mestrom
J.T.M. van der Meijs
E.M. Doll
FINANCIAL STATEMENTS
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188
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Company
balance
sheet
Company
income
statement
NOTES TO THE
COMPANY FINANCIAL
STATEMENTS
Notes to the
consolidated financial
statements
Provisions in the Articles of Association governing the appropriation of profit
Under article 35.1 and 35.2 of the Articles of Association of the Company, the Executive Board shall, with the approval of the Supervisory Board,
determine which part of the profits is added to the reserves. The profit remaining after transfer to the reserves is available to the General Meeting of
Shareholders. The Company can only make payments to the shareholders and other parties entitled to the distributable profit insofar as the
shareholders’ equity exceeds the paid-up and called-up part of the capital plus the statutory reserves and exceeds the amounts resulting from
the distribution test, performed by the Executive Board at the date of each dividend payment.
OTHER INFORMATION
Annual Integrated Report 2022
189
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Independent auditor’s report
To the shareholders and the Supervisory Board of Kendrion N.V.
Report on the audit of the financial statements 2022 included in the annual report
Our opinion
We have audited the financial statements 2022 of Kendrion N.V., based in Amsterdam. The financial statements comprise the consolidated financial
statements and the company financial statements.
In our opinion:
■ The accompanying consolidated financial statements give a true and fair view of the financial position of Kendrion N.V. as at December 31, 2022,
and of its result and its cash flows for 2022 in accordance with International Financial Reporting Standards as adopted by the European Union
(EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code;
■ The accompanying company financial statements give a true and fair view of the financial position of Kendrion N.V. as at December 31, 2022, and
of its result for 2022 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
1. The consolidated statement of financial position as at December 31, 2022.
2. The following statements for 2022: the consolidated statement of financial position, the consolidated statement of profit and loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows.
3. The notes comprising a summary of the significant accounting policies and other explanatory information.
The company financial statements comprise:
1. The company balance sheet as at December 31, 2022.
2. The company profit and loss account for 2022.
3. The notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are
further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.
We are independent of Kendrion N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities,
the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-
opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations
in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
Annual Integrated Report 2022
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OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following
information in support of our opinion was addressed in this context, and we do not provide a separate opinion or conclusion on these matters.
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole at EUR 1,500,000 (2021: EUR 1,500,000).
The materiality is consistently based on 7.5% of profit before tax. The impact of the impairment charge relating to the goodwill of Automotive Core and
restructuring charges as a result of split of the Automotive Group into Automotive Core and Automotive E have not been included in the basis for the
determination of the materiality because of its incidental nature. We have also taken into account misstatements and/or possible misstatements that in
our opinion are material for the users of the financial statements for qualitative reasons. We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.
Component audits are performed using materiality levels determined by the judgement of the group audit team, considering materiality for
the consolidated financial statements as a whole and the reporting structure of the group. Component materiality did not exceed EUR 787,500.
We agreed with the Supervisory Board that misstatements in excess of EUR 75,000, which are identified during the audit, would be reported to them,
as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
Kendrion N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements
of Kendrion N.V.
In establishing the overall group audit strategy and plan, we determined the type of work that needed to be performed at the components by the group
engagement team and by the auditors of the components. We directed and supervised the work of our component auditors as part of the group audit.
Our group audit mainly focused on significant group entities in terms of size and financial interest, significant risk or where complex activities are present.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain
sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the consolidated financial statements.
With the lifting of the majority of the COVID-19 related travel restrictions we were able to perform several site visits in which we spoke to local
management and our component teams. For the components we didn’t visit we had extensive contact both with our component auditors throughout
the year and attended meeetings with local management.
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OTHER INFORMATIONOTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Audit approach fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding
of the entity and its environment and the components of the system of internal control, including the risk assessment process and management’s
process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well
as the outcomes.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as among others
the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation and, where considered
appropriate, tested the operating effectiveness, of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and
bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due fraud is present. In line with last two years
we involved forensic specialists who performed these procedures in close co-operation with us.
We performed, amongst others, the following specific procedures together with our component auditors:
■ We incorporated elements of unpredictability in our audit. We also considered the outcome of our audit procedures and evaluated whether any
findings were indicative of fraud or non-compliance;
■ We considered available information and made enquiries with management, those charged with governance and with others within the company,
including but not limited to, e.g. General Counsel, Global Internal Audit & Risk Manager, Compliance Officer and Controllers;
■ We tested the appropriateness of journal entires recorded in the general ledger and other adjustments made in the preparation of the financial
statements;
■ Our Forensic Specialists were involved in the oversight of several components and were present during a number of file reviews, which are selected
based on complexity, risk and/or size;
■ We evaluated whether the selection and application of accounting policies by the group, particularly those related to subjective measurements and
complex transactions, may be indicative of fraudulent financial reporting;
■ We evaluated whether the judgments and decisions made by management in making the accounting estimates included in the financial statements
indicate a possible bias that may represent a risk of material misstatement due to fraud. Management insights, estimates and assumptions that
might have a major impact on the financial statements are disclosed in notes to the consolidated financial statements. We performed a retrospective
review of management judgments and assumptions related to significant accounting estimates reflected in prior year financial statements.
Impairment testing of intangible and fixed assets is a significant area to our audit as the determination whether these assets are not carried at more
than their recoverable amounts is subject to significant management judgment. Reference is made to the section ‘Our key audit matters’.
This did not lead to indications for fraud potentially resulting in material misstatements.
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OTHER INFORMATIONOTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Audit approach compliance with laws and regulations
We assessed the laws and regulations relevant to the Company through discussion with relevant employees (like Chief Financial Officer, General and
Legal Counsel and Global Internal Audit & Risk Manager), discussion with component teams, reading minutes and reports of internal audit and obtained
lawyers letters. We involved our forensic specialists in this evaluation.
As a result of our risk assessment procedures, and while realizing that the effects from non-compliance could considerably vary, we considered the
following laws and regulations: adherence to (corporate) tax law and financial reporting regulations, the requirements under the International Financial
Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code with a direct effect on the financial
statements as an integrated part of our audit procedures, to the extent material for the related financial statements.
We obtained sufficient appropriate audit evidence regarding provisions of those laws and regulations generally recognized to have a direct effect
on the financial statements.
Apart from these, Kendrion N.V. is subject to other laws and regulations where the consequences of non-compliance could have a material effect on
amounts and/or disclosures in the financial statements, for instance, through imposing fines or litigation. Our procedures are more limited with respect
to these laws and regulations that do not have a direct effect on the determination of the amounts and disclosures in the financial statements.
Compliance with these laws and regulations may be fundamental to the operating aspects of the business, to Kendrion N.V.’s ability to continue its
business, or to avoid material penalties (e.g., compliance with the terms of operating licenses and permits or compliance with environmental regulations)
and therefore non-compliance with such laws and regulations may have a material effect on the financial statements. Our responsibility is limited to
undertaking specified audit procedures to help identify non-compliance with those loaws and regulations that may have a material effect on the financial
statements. Our procedures are limited to (i) inquiry of management, the Supervisory Board, the Executive Board and others within Kendrion N.V. as to
whether Kendrion N.V. is in compliance with such laws and regulations and (ii) inspeciting correspondence, if any, with the relevant licensing or
regulatory authorities to help identify non-compliance with those laws and regulations that mau have a material effect on the financial statements.
Naturally, we remained alert to indications of (suspected) non-compliance throughout the audit. In addition to the aforementioned we used a specific
artificial intelligence solution which automatically analyzes worldwide news about Kendrion.
Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and regulations have been
disclosed to us.
Audit approach going concern
Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will
continue its operations for the foreseeable future, defined as until December 31, 2023. The Executive Board is of the opinion that, based on the current
state of affairs, it is justified that the financial statements are prepared on a going concern basis.
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OTHER INFORMATIONOTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We have evaluated management’s assessment of the Company’s ability to continue as a going concern. In evaluating management’s assessment,
we considered whether management’s assessment includes all relevant information of which we are aware as a result of the audit.
We have evaluated the Company’s going concern assessment and performed (amongst others) the following procedures:
■ Analyzing and discussing cash flow, profit and other relevant forecasts with management;
■ Analyzing and discussing the entity’s latest available internal reportings;
■ Reading the terms of debt covenants and determining whether any have been breached;
■ Reading minutes of those charged with governance and relevant committees for reference to financing difficulties;
■ Inquiring of the entity’s Legal Counsel regarding the existence of litigation and claims and the reasonableness of management’s assessments
of their outcome and the estimate of their financial implications;
■ Performing audit procedures regarding subsequent events to identify those that either mitigate or otherwise affect the entity’s ability to continue
as a going concern;
■ Obtaining and reviewing reports of regulatory actions;
■ Determining the adequacy of support for any planned disposals of assets in so for relevant for the going concern;
■ Discussion with component auditors about facts and circumstances which might be relevant for the going concern assessment at group level;
■ Analyzing the Company’s assessment on the impact of the current market developments (i.e. supply chain constraints, semiconductor shortages,
demand volatility and increasing raw material prices);
■ Analyze the impact of the impairment with respect to the CGU Automotive Core.
Based on the procedure performed we concur with management’s evaluation.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have
communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In prior year, we included the valuation of goodwill, the general IT controls and group audit as separate key audit matters. These are also included
in our 2022 report.
Compared to last year we did not include a key audit matter for the purchase price allocation of the 3T acquisition. The purchase price allocation has
been completed in 2021 and is therefore no longer a key audit matter.
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OTHER INFORMATIONOTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
1. General IT controls
Description
Kendrion has operations in different countries that use one groupwide
Financial IT platform (excl. INTORQ and the 3T entities), which is located
and maintained in Villingen, Germany. In the last couple of years,
management has been in the process of establishing a formal IT control
framework and further enhancing the internal controls surrounding the
overall IT environment. We consider Kendrion’s IT landscape and general
IT controls over financial reporting as our basis for designing audit
procedures that are appropriate for our audit. We have included general IT
controls as a key audit matter because the importance of these controls
on the group’s control environment.
How the key audit matter was addressed in the audit
We have evaluated the Group’s relevant general IT controls, including
standard processes and procedures. Our work consisted of assessing
the main characteristics of the IT infrastructure and applications and
of testing the relevant internal controls related to the infrastructure,
applications and related processes.
IT audit specialists have been deployed to assist us with testing
the group’s general IT controls.
Observation
In 2022 management remediated the observations, as shared by us in
previous years, in relation to the general IT controls. During 2022, next
to design and implementation, we also tested operating effectiveness of
the general IT Controls to determine whether the controls were working
effectively throughout the entire year. Due to identified deficiencies we
were not able to rely on the general IT controls for the audit of 2022.
As a result we applied a substantive audit approach.
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OTHER INFORMATIONOTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
2. Goodwill impairment – Cash Generation Unit Kendrion Automotive Group
Description
Goodwill represents a significant part of the balance sheet and total
equity.
During the capital markets day in September 2022 Kendrion
announced that it would split its Business Group Automotive in two
organizations, being Automotive Core and Automotive E. This split
resulted also in 2 new CGUs, namely Automotive Core and
Automotive E.
Due to the impact on climate change and as a consequence of
various legislative initiatives, the automotive industry is transitioning
from combustion engine vehicles to electric and hybrid vehicles.
This transition results in a deterioration of the financial outlook of
the now standalone Kendrion Automotive Core CGU. The
deteriorated outlook of the separated CGU in combination with an
increase in the WACC due to the increased interest rates has
resulted in the recognition of a significant impairment charge. We
have regarded the impairment charge due to its significance as a
key audit matter.
How the key audit matter was addressed in the audit
Based on our materiality level, the requirements in IFRS and the applicable auditing standards, we have audited the impairment
analysis including the impairment charge of the Kendrion Automotive Core CGU.
Our audit procedures have mainly focused on:
■ Testing design and implementation of management’s process and control around the impairment analysis;
■ Evaluating the impairment model used by the Company and verifying the mathematical accuracy of this model;
■ Obtaining and evaluating independent market research reports and compared the general growth data to Kendrion’s
expectations;
■ Obtaining and evaluating the budget of 2023 and the midterm plan that are approved by the Supervisory Board;
■ Assessment of the key assumptions in the impairment model and discuss the results thereof with the Business Group
management, Executive Board and the Supervisory Board;
■ Assessment of the management estimate in relation to the budget of prior years based on the actual financial results
(back-testing);
■ Assessment of the methodologies, calculated WACC and the long-term growth percentage, using internal valuation
experts;
■ Reconciling the revenue that was already contracted to underlying source documents (like signed contracts) and evaluated
the expected pipeline;
■ The accuracy and completeness of the related disclosures in the annual report;
■ Performing sensitivity analysis based upon different scenarios with respect to the revenue developments, gross margin
and WACC;
■ Assessment of the allocation of the goodwill and other assets from the former Kendrion Automotive CGU to the carrying
amounts of the Core and E CGU.
We have adopted a substantive audit approach and did not rely on internal controls.
Observation
The impairment analysis of Kendrion resulted in impairment charge of EUR 57.1 million. Based on our procedures performed,
we are of the opinion that the assumptions of management are appropriate at this point in time and that the impairment has
been recognized accordingly. Not realizing the assumptions impacts the sensitivity as further analyzed and disclosed by
Kendrion as part of disclosure note [2] in the annual report. We deem the related disclosures in the annual report to be
sufficient.
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Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
3. Group audit
Description
Kendrion is a global organization which operates in 9 countries and has
20 different locations in Europe, the Americas and Asia. They also
acquired companies with complementary technologies like INTORQ in
2020 and 3T in 2021. Almost all revenue and result before net finance
costs are generated outside the Netherlands and are audited by
component auditors of the Deloitte network. The direction and oversight
of the components is a substantial part of the audit of the consolidated
financial statement.
How the key audit matter was addressed in the audit
We have performed the following audit procedures:
■ We performed audit procedures at group level in areas such as
IFRS 16, share-based payments, consolidation, reporting, goodwill
impairment testing and taxation. Specialists were involved, amongst
others, in the areas of information technology, tax and valuation;
■ At group level, we have performed audit procedures regarding
the corporate entities and we also performed audit procedures
on Kendrion (Shelby) Inc;
■ For all other relevant foreign components, the group audit team
provided detailed written instructions. Furthermore, we developed a
plan for overseeing each component audit team based on its relative
significance to the Company and certain other risk characteristics.
This included conference calls with component during all stages
of the audit whereby fraud specialists accompanied the group
engagement team at several preselected components, performing
both remote and onsite file reviews, attending client meetings and
reviewing component audit team deliverables in order to gain
sufficient understanding of the work performed;
■ As part of the interaction with the components we paid specific
attention to the consistent application of the group accounting
policies;
■ As part of our audit of the consolidation, we tested the relevant
controls around the elimination of all intercompany transactions
and positions and performed detailed substantive procedures.
Observation
By performing the procedures mentioned above at group entities,
together with additional procedures at group level, we have been able
to obtain sufficient and appropriate audit evidence about the group’s
financial information to provide an opinion about the consolidated financial
statements.
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statement of
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of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Report on the other information included in the Annual Report
In addition to the financial statements and our auditor’s report thereon, the annual report contain other information.
The other information consists of:
■ Report of the Executive Board;
■ Report of the Supervisory Board;
■ Remuneration Report;
■ Other information as included in the report;
■ Other Information as required by Part 9 of Book 2 of the Dutch Civil Code.
Based on the following procedures performed, we conclude that the other information:
■ Is consistent with the financial statements and does not contain material misstatements;
■ Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise,
we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope
of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.
Management is responsible for the preparation of the other information, including the report of the Executive Board.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the supervisory board as auditor of Kendrion N.V. on April 13, 2015, as of the audit for the year 2015 and have operated
as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit
of public-interest entities.
European Single Electronic Reporting Format (ESEF)
Kendrion N.V. has prepared its annual report in ESEF. The requirements for this are set out in the Commission Delegated Regulation (EU) 2019/815 with
regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
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statement of
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
In our opinion, the annual report, prepared in XHTML-formaat, including the partially marked-up consolidated financial statements, as included in the
reporting package by Kendrion N.V. complies in all material respects with the RTS on ESEF.
Management is responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby
management combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ‘Assurance-opdrachten inzake het voldoen aan de
criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting).
Our examination included amongst others:
■ Obtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package;
■ Identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and designing and
performing further assurance procedures responsive to those risks to provide a basis for our opinion, including:
■ obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance and
the XBRL extension taxonomy files has been prepared in accordance with the technical specifications as included in the RTS on ESEF;
■ Examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups
have been applied and whether these are in accordance with the RTS on ESEF.
Description of responsibilities regarding the Financial Statements
Responsibilities of management and the Supervisory Board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the
Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation
of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern.
Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of
accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the
financial statements.
The Supervisory Board is responsible for overseeing the company’s financial reporting process.
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statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our
audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our
audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with Dutch Standards on
Auditing, ethical requirements and independence requirements. Our audit included among others:
■ Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing
audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
■ Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control;
■ Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
management;
■ Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern;
■ Evaluating the overall presentation, structure and content of the financial statements, including the disclosures;
■ Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect
we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of
the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of
financial information or specific items.
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statement of
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We communicate with the Executive board & the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant findings in internal control that we identified during our audit. In this respect we also submit an
additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-
interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were of most significance in the
audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter
or when, in extremely rare circumstances, not communicating the matter is in the public interest.
Eindhoven, February 28, 2023
Deloitte Accountants B.V. Initial for identification purposes:
B. Beemer
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of profit and loss and other
comprehensive income
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statement of
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statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Home
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statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Limited Assurance Report of the Independent Auditor on Kendrion N.V.’s sustainabilty information
To the Shareholders and Supervisory Board of Kendrion N.V.
Our conclusion
We have reviewed the sustainability information in the accompanying annual report for year 2022 of Kendrion N.V. at Amsterdam. This review is
aimed at obtaining a limited level of assurance.
Based on the review procedures performed nothing has come to our attention that causes us to believe that the sustainability information for year 2022
has not been prepared, in all material respects, in accordance with the reporting criteria as included in the section ‘reporting criteria’.
The sustainability information consists of performance information regarding Energy consumption and CO
2
-emission, Accidents and Lost Time Injuries,
Illness rate and Number of Supplier audits in the sections ‘Facts and Figures’ on page 10 and ‘Sustainability’ on pages 37 – 61 of the 2022 Annual
Report (hereafter: “the KPIs”).
Our limited assurance scope excludes the EU Taxonomy disclosures included in chapter ‘Sustainability’ in the 2022 Annual Report (pages 51-55).
Basis for our conclusion
We have conducted our review of the sustainability information in accordance with Dutch law, including Dutch Standard 3000A ‘Assurance
Engagements other than Audits or Reviews of Historical Financial Information’. Our responsibilities under this standard are further described in
the section ‘Our responsibilities for the review of the sustainability information’ of our report.
We are independent of Kendrion N.V. in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’
(ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence). This includes that we do not perform any activities that
could result in a conflict of interest with our independent assurance engagement. Furthermore we have complied with the ‘Verordening gedrags- en
beroepsregels accountants’ (VGBA, Dutch code of ethics).
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Reporting criteria
The sustainability information needs to be read and understood together with the reporting criteria. Kendrion N.V. is solely responsible for selecting
and applying these reporting criteria, taking into account applicable law and regulations related to reporting.
The reporting criteria used for the preparation of the sustainability information are disclosed in the chapter ‘About the Sustainability Report’ of the 2022
Annual Report, where Kendrion reports according to the GRI reference claim.
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of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable,
measurement techniques and can affect comparability between entities and over time.
Consequently, the sustainability information needs to be read and understood together with the reporting criteria used.
Limitations to the scope of our review
The sustainability information includes prospective information such as ambitions, strategy, plans, expectations and estimates.
The references to external sources or websites in the sustainability information are not part of the sustainability information as reviewed by us.
We therefore do not provide assurance on this information.
Our conclusion is not modified in respect to these matters.
Responsibilities of the Executive Board and the Supervisory Board for the sustainability information
The Executive Board is responsible for the preparation of reliable and adequate sustainability information in accordance with these reporting criteria as
included in the section ‘reporting criteria’, including the identification of stakeholders and the definition of material matters. The Executive Board is also
responsible for selecting and applying the reporting criteria and for determining that these reporting criteria are suitable for the legitimate information
needs of stakeholders, taking into account applicable law and regulations related to reporting. The choices made by the Executive Board regarding
the scope of the sustainability information and the reporting policy are summarised in the ‘About the Sustainability Report’ of the annual report.
Furthermore, the Executive Board is responsible for such internal control as it determines is necessary to enable the preparation of the sustainability
information that is free from material misstatement, whether due to error or fraud.
The Supervisory Board is responsible for overseeing the sustainability reporting process of Kendrion N.V.
Our responsibilities for the review of the sustainability information
Our responsibility is to plan and perform the review engagement in a manner that allows us to obtain sufficient and appropriate assurance evidence
for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in nature and timing from,
and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in review is therefore substantially less than
the assurance obtained in an audit.
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statement of
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Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
We apply the ‘Nadere voorschriften kwaliteitssystemen’ (NVKS, Regulations for Quality management systems) and accordingly maintain a
comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional
standards and other relevant legal and regulatory requirements.
Our review included among others :
■ Performing an analysis of the external environment and obtaining an understanding of relevant sustainability themes and issues, and the
characteristics of Kendrion N.V.;
■ Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the sustainability information.
This includes the evaluation of the results of the stakeholders’ dialogue and the reasonableness of estimates made by the Executive Board;
■ Obtaining through inquiries a general understanding of control environment, processes and information systems relevant to the preparation
of the sustainability information, but did not obtain evidence about their implementation or test their operating effectiveness;
■ Identifying areas of the sustainability information with a higher risk of misleading or unbalanced information or material misstatements, whether due
to fraud or error;
■ Designing and performing further assurance procedures aimed at determining the plausibility of the sustainability information responsive to this risk
analysis. These procedures consisted amongst others of:
– Interviewing management (and/or relevant staff) at corporate (and business/division/cluster/local) level responsible for the sustainability strategy,
policy and results;
– Interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data
in the sustainability information;
– Obtaining assurance evidence that the sustainability information reconciles with underlying records of the Kendrion N.V.;
– Reviewing, on a limited test basis, relevant internal and external documentation;
– Performing an analytical review of the data and trends;
■ Evaluating the overall presentation and content of the sustainability information;
■ Considering whether the sustainability information as a whole, including the disclosures, reflects the purpose of the reporting criteria used.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the review and significant findings that
we identify during our review.
Amsterdam, February 28, 2023
Deloitte Accountants B.V.
B. Beemer
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of profit and loss and other
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statement of
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statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
FIVE-YEAR SUMMARY
KENDRION N.V. CONSOLIDATED
1
Non-IFRS financial measure. For the definition and
reconciliation of the most directly comparable IFRS
measures in 2021 and 2022, refer to reconciliation of non-
IFRS information, starting on page 210. Normalized results
2020 exclude EUR 3.8 million restructuring costs,
EUR 0.6 million acquisition costs and 0.8 million finance
and tax expense related to German tax audit. Normalized
results 2019 exclude EUR 2.9 million restructuring costs,
EUR 1.6 million claim settlement, EUR 1.2 million
acquisition costs, EUR 0.4 million tax from German tax
audit and a EUR 1.9 million net finance expense gain from
currency translation. Normalized results 2018 exclude
restructuring costs of EUR 8.8 million and EUR 2.3 million
tax and finance expense from German tax audit.
2
Excluding accruals and provisions related to items that
have been normalized from the results.
3
Invested capital is property, plant and equipment,
intangible assets, other investments and net working
capital less goodwill and other intangibles related to
acquisitions.
4
Restated due to retrospective correction of understated
elimination of unrealized profit on inventory transactions
between group companies as per 1 January 2020.
EUR million, unless otherwise stated 2022 2021 2020 2019 2018
Results
Revenue 519.3 463.6 396.4 412.4 448.6
Organic growth 8.2% 16.1% (16.7%) (8.1%) (2.9%)
Normalized EBITDA
1
57.4 55.8 44.6 43.8 58.5
Normalized EBITA
1
34.1 31.9 18.9 19.8 35.4
Normalized profit before amortization
1
21.7 20.6 11.7 12.6 24.3
Free cash flow
1
3.1 3.5 31.5 25.5 10.5
Statement of financial position
Total assets 476.6 490.8 429.1 357.1 375.3
Total equity 175.0 223.0 203.4 202.6 182.1
Net debt 140.3 130.6 103.2 47.4 80.5
Net working capital
2
68.5 64.9 41.4 42.9 51.4
Invested capital
2, 3
217.8 205.2 174.4 169.6 179.6
Ratios
EBITDA as a percentage of revenue
1
11.1% 12.0% 11.3% 10.6% 13.0%
Solvency 36.7% 45.4% 47.4% 56.7% 48.5%
Net debt / EBITDA
1
(leverage ratio) 2.4 2.3 2.3 1.1 1.4
Return on Investment (ROI)
1, 2, 3
15.6% 15.6% 10.8% 11.7% 19.7%
Working capital
2
in % of revenue
1
13.2% 14.0% 10.4% 10.4% 11.5%
Dividend paid per share (in EUR) 0.69 0.40 – 0.87 0.87
Number of employees at 31 December (FTE) 2,753 2,728 2,456 2,316 2,465
4
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Notes to the
company financial
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Company
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sheet
Company
income
statement
Industrial
Industrial Actuators and Controls (Robert Lewin) Managing Director
Kendrion (Donaueschingen/Engelswies) GmbH, Donaueschingen, Germany Robert Lewin
Kendrion (China) Co. Ltd, Suzhou, P.R. China Telly Kuo
Kendrion (Mishawaka) LLC, Mishawaka, USA Corey Hurcomb
Kendrion Industrial (Sibiu) S.R.L., Sibiu, Romania Mihai Petculescu
Kendrion (Linz) GmbH, Linz, Austria Christian Edelmaier
Kendrion Kuhnke Automation GmbH, Malente, Germany Robert Lewin
Kendrion Kuhnke (Sweden) AB, Kristianstad, Sweden Niklas Sjöström
3T B.V., Enschede, the Netherlands Norbert Beltman/Michiel Bloemen
Industrial Brakes (Andreas Laschet) Managing Director
Kendrion (Villingen) GmbH, Villingen-Schwenningen, Germany Ralf Wieland
Kendrion (China) Co. Ltd, Suzhou, P.R. China Telly Kuo
Kendrion (Mishawaka) LLC, Mishawaka, USA Corey Hurcomb
Kendrion INTORQ GmbH, Aerzen, Germany Lars Knoke
INTORQ (Shanghai) Co. Ltd, Shanghai, China Telly Kuo
INTORQ US Inc., Atlanta, USA Olaf Detlef
INTORQ India Private Limited, Pune, India Aniket Gujrathi
Automotive (Ralf Wieland / Richard Mijnheer) Managing Director
Kendrion (Villingen) GmbH, Villingen-Schwenningen, Germany Ralf Wieland
Kendrion Kuhnke Automotive GmbH, Malente, Germany Olaf Klinghagen
Kendrion (Markdorf) GmbH, Markdorf, Germany Manfred Schlett
Kendrion Automotive (Sibiu) S.R.L, Sibiu, Romania Andra Boboc
Kendrion (Prostějov) s.r.o, Prostějov, Czech Republic Tomas Soldan
Kendrion (Shelby) Inc., Shelby, USA Ingo Griessmann
Kendrion (China) Co. Ltd, Suzhou, P.R. China Telly Kuo
Kendrion N.V. has, directly or indirectly, a 100% interest in all subsidiaries.
PRINCIPAL SUBSIDIARIES
At 31 December 2022
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Blasio Grundstückverwaltungsgesellschaft mbh & Co Vermietungs KG, Mainz, Germany
Combattant Holding B.V., De Bilt, the Netherlands
Kendrion (Eibiswald) GmbH, Eibiswald, Austria
INTORQ Beteiligungs GmbH, Aerzen, Germany
Kendrion FAS Controls Holding GmbH, Villingen-Schwenningen, Germany
Kendrion Finance B.V., Zeist, the Netherlands
Kendrion Holding Germany GmbH, Markdorf, Germany
Kendrion Holding USA Inc., Indianapolis, USA
Kendrion IP Management GmbH, Malente, Germany
Kendrion Kuhnke GmbH, Malente, Germany
Kendrion Marketing B.V., Zeist, the Netherlands
Kendrion Toluca, SA de CV, Mexicaltzingo, Mexico
Kendrion (UK) Ltd., Bradford, United Kingdom
Landfort I B.V., Zeist, the Netherlands
Landfort II B.V., Zeist, the Netherlands
Ochrea Grundstücksverwaltungsgesellschaft mbh & Co Vermietungs KG, Mainz, Germany
Twente Technology Solutions B.V., Enschede, the Netherlands (in liquidiation)
Kendrion N.V. has, directly or indirectly, a 100% interest in all subsidiaries.
OTHER HOLDING AND DORMANT ENTITIES
At 31 December 2022
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GLOSSARY – DEFINITIONS OF NON IFRS FINANCIAL MEASURES
Added value is a non-IFRS financial measure, which is defined
as total revenue and other income plus changes in inventory
of finished goods and work in progress and subtracted by raw
materials and subcontracted work. Added value is a measure
of the group’s ability to generate a variable profit contribution on
its revenue that is sufficient to absorb the total staff and other
operating expenses. It is an important factor is assessing to
what extent increasing or decreasing revenue volumes will
contribute to the group’s profit.
EBITA is a non IFRS financial measure, which is defined as
profit for the period before income tax expense, finance
income, finance expense, share of profit or loss of an associate
and amortization of other intangible fixed assets. EBITA is a
measure of the group’s ability to realize a positive return on the
group’s operations and continue to provide shareholder returns.
EBITDA is a non IFRS financial measure which is defined
as profit for the period before income tax expense, finance
income, finance expense, share of profit or loss of an associate,
depreciation and amortization. EBITDA is a measure of the
group’s ability to continue to invest in the group’s operations
and provide shareholder returns.
Free cash flow is a non IFRS financial measure that is defined
as cash from operating activities less cash from investing
activities. Free cash flow is a measure of cash flow which is
available for repayment of outstanding interest-bearing debt or
dividend to the shareholders.
Invested capital is a non IFRS financial measure that is defined
as the sum of property plant and equipment, intangible assets,
other fixed assets and net working capital. Invested capital is
a measure to assess the amount of equity and interest-bearing
debt the company has invested in assets and is an important
measure for investors to assess how well a company is using
its financial resources to generate shareholder returns. Invested
capital is a measure widely used by investors and security
analysts to evaluate a group’s profitability relative to other
investment opportunities.
Leverage ratio is a non IFRS financial measure that is defined
as net debt divided by EBITDA. The leverage ratio is a measure
to evaluate the credit worthiness of the group and the ability
of the group to continue to fund its operations with debt.
The leverage ratio is widely used by investors, analysts, lenders
and others to assess the groups credit worthiness in
comparison to other industrial and automotive manufacturing
companies and in relation to the financial covenant agreed in
the group’s financing arrangement which its main lenders.
Net debt is a non IFRS financial measure that is defined as
bank overdraft, current and non-current loans and borrowings
subtracted by cash and cash equivalents. Net debt is a
measure in determining the group’s financial position.
In comparison to the available credit facilities, the total net debt
is an important factor in assessing the group’s liquidity and in
combination which the group’s EBITDA, the net debt is an
important factor in determining the group’s credit worthiness
and ability to fund future investments.
Normalized EBITA is non IFRS financial measures, which is
defined as EBITA before restructuring expense and other
adjustments not related to the group’s normal course of
business including but not limited to gains or losses on
divestitures, transaction costs related to business combinations
and impairments. Normalized EBITA is a measure of the group’s
ability to realize a positive return on the core operations and
continue to provide shareholder returns. We use normalized
EBITA in assessing the effectiveness of business strategies.
In addition to its use by management, we also believe
normalized EBITA is a measure widely used by securities
analysts, investors and others to evaluate financial performance
of the group relative to other industrial and automotive suppliers.
Normalized EBITDA is a non IFRS financial measure which is
defined as EBITDA before restructuring expense and other
adjustments not related to the group’s normal course of
business including but not limited to gains or losses on
divestitures, transaction costs related to business combinations
and impairments. Normalized EBITDA is a measure of the
group’s ability to continue to invest in the operations and provide
shareholder returns based on the core operations. We use
normalized EBITDA in assessing the effectiveness of business
strategies, evaluating and pricing potential acquisitions and as
a factor in management incentive decisions. In addition to its
use by management, we also believe normalized EBITDA is a
measure widely used by securities analysts, investors and others
to evaluate financial performance of the group relative to other
industrial and automotive suppliers.
Normalized effective tax rate is a non IFRS measure that is
defined as reported income tax expenses before adjustments
not related to the group’s normal course of business, including
but not limited to income tax expense on restructuring costs
and impairments, divided by normalized profit before tax which
is defined as profit before tax before adjustments not related to
core operations, including but not limited to restructuring costs
and impairments. Normalized effective tax rate is used to assess
the group’s tax expense in relation to the profit before tax from
its core activities. The normalized effective tax rate is used to
evaluate the effective tax rate relative to previous periods and
other companies.
Normalized free cash flow is a non IFRS financial measure that
is defined as free cash flow before cash flow related to
restructuring expense and other adjustments that are not related
to the group’s core operations, including but not limited to
Annual Integrated Report 2022
208
OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
acquisitions and divestitures. Normalized free cash flow is
a measure of cash flow from the group’s core activities which is
available for repayment of outstanding interest-bearing debt or
dividend to the shareholders. We use normalized free cash flow
as a factor in management incentive decisions. In addition to its
use by management, we also believe normalized free cash flow
is a measure widely used by securities analysts and investors
and others to evaluate the value of the group.
Normalized invested capital is a non IFRS measure that is
defined as invested capital adjusted for items in the statement
of financial position that are considered not to be part of the
group’s normal course of business, including but not limited
to provisions or liabilities related to restructurings. Normalized
invested capital is used to assess the return the company
generates on the amount the company has invested in assets
related to its core operations and is a measure for investors
to assess how well a company is using its financial resources
to generate shareholder returns.
Normalized interest charges is a non IFRS measure that is
defined as financing costs before adjustments not related to
the group’s normal course of business including but not limited
to gains or losses on the recycling of currency translation
results previously recorded in equity upon the liquidation of
a legal entity. Normalized interest charges is used to assess
the amount of net financing costs recognized related to the
core operations of the group. Normalized interest charges is
used to be able to compare interest charges to previous
reporting periods and other companies.
Normalized net profit before amortization is a non IFRS
measure that is defined as profit for the period before
amortization and restructuring expense and other adjustments
not related to the group’s core operations including but not
limited to gains or losses on divestitures, transaction costs
related to business combinations and impairments. Normalized
net profit before amortization is a measure of the group’s ability
to realize a positive return on core operations and continue to
provide shareholder returns when excluding any profit impact
from amortizing intangibles arising from business combinations.
The measure is used by management, investors and security
analysts in order to evaluate the shareholder return relative to
companies that do not include business combinations.
Normalized staff and other operating expense is a non IFRS
measure that is defined as operating expense before
restructuring expense and other adjustments not related to
the group’s normal course of business including but not limited
to gains or losses on divestitures, transaction costs related to
business combinations and impairments. Normalized operating
expense is used to assess the amount of operating expense
recognized related to the core operations of the group.
Normalized operating expense is used to be able to evaluate
expenses to previous reporting periods and other companies.
Normalized working capital is a non IFRS measure that is
defined as working capital adjusted for items in the statement
of financial position that are considered not to be part of the
group’s core operations, including but not limited to provisions
or liabilities related to restructurings. Normalized working capital
is used to assess the amount of cash the company has
invested in short term and non-interest-bearing assets and
liabilities in order to run its core operations.
Organic growth is a non IFRS financial measure that is defined
as revenue in the period under review divided by the revenue
in the previous period, excluding revenue that is attributable
to a business combination in one of both periods and/or
the revenue contribution that attributable to a divestiture in one
of both periods. Organic growth is a measure to which extent
the group has been able to increase its revenue compared to
the previous period on a comparable basis and therefore
excluding the impact from acquisitions. Organic growth is
one of the groups long term financial targets. We use organic
growth in assessing the effectiveness of business strategies.
In addition to its use by management, we also believe organic
growth is a measure widely used by securities analysts,
investors and others to evaluate the success of the company’s
commercial strategies and effectiveness relative to other
industrial and automotive suppliers.
ROI or Return On Invested Capital is a non IFRS financial
measure that is defined as EBITA dividend by the sum of
property plant and equipment, intangible assets, other fixed
assets and net working capital subtracted with the amount
of goodwill and other intangible assets arising from business
combinations. ROIC is a measure that assesses the result from
operations is generated per currency equivalent that the group
has invested in property plant and equipment and other net
assets that are part of the group’s operations. ROIC is an
important factor in assessing relative profitability and used as
a factor in management incentive decisions. Besides the use by
management, we believe ROIC is widely use by investors and
securities analysts to assess the performance of the group in
comparison to other manufacturing companies or alternative
investment propositions.
Solvency is a non IFRS financial measure that is defined as total
equity divided by the sum of total equity and total liabilities.
Solvency is a measure that assesses the portion of the total
assets that is funded by equity. We use solvency as a measure
of financial position and credit worthiness. In addition to its use
by management we believe solvency is a measure widely use
by lenders and analysts to evaluate the credit worthiness of
the group.
Annual Integrated Report 2022
209
OTHER INFORMATION
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
RECONCILIATION OF NON IFRS FINANCIAL MEASURES
Measures related to the statement of profit and loss
Organic growth (revenue)
EUR million - unless stated otherwise 2022 2021
Reported revenue 519.3 464.0
Exclude: revenue from acquired businesses - 3T/TTS (12.2) (3.4)
Exclude: currency effects on revenue and normalizations (9.2) (0.4)
Normalized revenue (excl. M&A and currency effects)
497.9 460.2
Organic growth 8.2% 16.1%
Added value
EUR million 2022 2021
Reported total revenue and other income 519.8 464.2
less: Reported Changes in inventories of finished goods and
work in progress (1.8) 3.5
less: Reported raw materials and subcontracted work (268.7) (241.9)
Added value
249.3 225.8
Added value margin % 48.1% 48.3%
Normalized staff and other operating expenses
EUR million 2022 2021
Reported Staff costs 153.6 138.1
Reported other operating expenses 43.6 32.5
Reported staff and other operating expenses
197.2 170.6
Normalization of restructuring charges (5.9) (1.5 )
Normalization of other (costs) and benefits outside the normal
course of business – 0.8
Normalized staff and other operating expenses
191.3 169.9
Effects of acquired businesses – 3T/TTS (8.2) (2.1)
Currency effects (4.3) –
Normalized staff and other operating expenses
(excl M&A and currency effects)
178.8 167.8
Bridge from EBITDA to normalized net profit before amortization
EUR million 2022 2021
Reported result before net finance costs (34.6) 23.9
Reported depreciation and amortization 28.0 27.8
Reported operating result before depreciation &
amortization (EBITDA)
(6.6) 51.7
less: Depreciation on PP&E (20.9) (21.0)
less: Amortization on non-PPA related intangibles (2.4) (2.9)
Reported operating result before amortization (EBITA)
(29.9) 27.8
Normalization of costs and (benefits) related to:
Restructuring measures - Automotive 5.1 0.4
Restructuring measures - Industrial 0.3 1.1
Impairments Goodwill and other intangibles - Automotive 57.3 –
Impairments PP&E - Automotive 1.0 3.4
Impairments PP&E - Industrial 0.3 –
Other costs / (benefits) outside the normal course of business -
Automotive – (1.2)
Other costs / (benefits) outside the normal course of business -
Industrial – 0.5
Total Normalizations
64.0 4.1
Normalized EBITDA 57.4 55.8
Normalized EBITDA margin % 11.1% 12.0%
Normalized EBITA
34.1 31.9
Normalized EBITA margin % 6.6% 6.9%
Reported amortisation on PPA related intangibles (4.7) (3.9)
Reported net finance costs (5.1) (3.8)
Normalization related to credit facility 0.5 –
Other normalizations of net finance costs 0.2 (0.0)
Normalized profit before income tax
25.0 24.2
Annual Integrated Report 2022
210
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
EUR million 2022 2021
Reported income tax expense (6.6) (5.7)
Normalization related to tax audits 0.5 0.4
Normalization related to deferred income tax adjustment 1.2 –
Impact costs / (benefits) outside the normal course of business
on income tax expense (1.9) (1.2)
Amortization after tax 3.5 2.9
Normalized net profit for the period before amortization
21.7 20.6
Measures related to the Statement of financial position
Invested capital at 31 December
EUR million 2022 2021
Property, plant and equipment 131.6 121.9
Intangible assets 126.5 183.4
Net working capital 65.7 61.7
Other fixed assets 0.7 0.9
Invested capital
324.5 367.9
Goodwill and other intangibles related to acquisitions (111.2) (171.2)
Operating invested capital
213.3 196.7
Impact costs / (benefits) outside the normal course of business
on invested capital 4.5 8.5
Normalized invested capital
217.8 205.2
Net Debt & Leverage ratio
EUR million - unless stated otherwise 2022 2021
Total interest bearing loans 178.1 149.2
less: Cash and cash equivalents (37.8) (18.6)
Net Debt
140.3 130.6
Normalized EBITDA 57.4 55.8
Leverage ratio (Net Debt / Normalized EBITDA)
2.4 2.3
Net working capital at 31 December
EUR million 2022 2021
Inventories 85.1 79.7
Trade and other receivables, tax receivable 75.2 68.0
Less: Trade and other payables, tax payables, current
provisions and assets clasified as held for sale (94.6) (86.0)
Net working capital
65.7 61.7
Impact one-off costs and benefits on working capital 2.8 3.2
Normalized working capital
68.5 64.9
As % of revenue 13.2% 14.0%
Measures related to the Statement of cash flows
Free cash flow
EUR million 2022 2021
Net cash flow from operating activities 37.9 27.8
Net cash flow from investing activities (37.9) (48.8)
Free cash flow
0.0 (21.0)
Normalizations 3.1 24.5
Normalized free cash flow
3.1 3.5
Annual Integrated Report 2022
211
RECONCILIATION OF NON IFRS FINANCIAL MEASURES
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
Ratios
Return on Investment % (ROI)
EUR million - unless stated otherwise 2022 2021
Normalized EBITA 34.1 31.9
Normalized Invested capital 217.8 205.2
Return on Investment % (ROI)
15.6% 15.6%
Solvency
EUR million - unless stated otherwise 2022 2021
Total equity 175.0 223.0
Total assets 476.6 490.8
Solvency %
36.7% 45.4%
Normalized effective tax rate
EUR million - unless stated otherwise 2022 2021
Reported income tax expense (6.6) (5.7)
Normalization related to tax audits 0.5 0.4
Normalization related to deferred income tax adjustment 1.2 –
Impact costs / (benefits) outside the normal course of business
on income tax expense (1.9) (1.2)
Normalized income tax expense
(6.8) (6.5)
Normalized profit before tax 25.0 24.2
Normalized effective tax rate %
27.4% 26.8%
Annual Integrated Report 2022
212
RECONCILIATION OF NON IFRS FINANCIAL MEASURES
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
ABOUT THE SUSTAINABILITY REPORT
The scope of Kendrion’s sustainability or non-financial reporting
is based on the information requirements of our key stakeholder
groups.
In order to ensure that Kendrion meets its information
requirements towards its stakeholders, Kendrion performs a
materiality analysis at regular intervals. Kendrion commissioned
the performance of a materiality assessment in 2020. Together
with a specialized consultancy firm, a tailored approach was
developed to assess materiality and the results of the internal
and external stakeholder consultation. The 2020 materiality
assessment did not reveal significant movements in the ranking
of individual themes compared to the assessment of 2018.
The outcome of the 2018 and 2020 materiality analyses both
formed an important input for Kendrion’s sustainability program
and the 2019-2023 target framework as well as the further
development and execution thereof. In support of the
development of a sustainability target framework for the period
2024-2028, a new materiality assessment will be prepared.
Kendrion selected relevant material themes and topics derived
from Kendrion’s strategic plan, its activities and applicable laws
and regulations. For a description of our materiality analysis,
please refer to pages 39-40 of this Annual Integrated Report.
Kendrion makes use of the Global Reporting Initiative (GRI)
reference claims for most of the general information and
material topics, including: economic performance, anti-
corruption, energy efficiency, emissions to air, occupational
safety and health and non-discrimination and equal
opportunities. This Annual Integrated Report references
Disclosure 201-1 (a) from GRI 201: Economic performance
2016, Disclosure 205-3 from GRI 205: Anti-corruption 2016,
Disclosure 302-1 (a, c, e-g) from GRI 302: Energy 2016,
Disclosure 305-1 (a, d, f-g) from GRI 305: Emissions 2016,
Disclosure 305-2 (a, d, f-g) from GRI 305: Emissions 2016,
Disclosure 403-9 (a, d-g) from GRI 403: Occupational Health
and Safety 2018, Disclosure 405-1 (a-i, b-i) from GRI 405:
Diversity and Equal Opportunities 2016. For the material
themes ‘responsible procurement practices’ and ‘training and
education’, Kendrion has developed its own indicators.
Kendrion’s non-financial reporting includes only data from
entities that are – directly or indirectly – wholly owned by
Kendrion N.V., unless explicitly stated otherwise. Acquisitions
are reported as from the effective date ownership is acquired.
Being transparent and accountable is fundamental to the way
in which Kendrion operates. Kendrion adheres to a solid
validation and reporting process supported by an appropriate
control framework in order to safeguard the quality and
accuracy of data collected. With a view to maintain the quality
and consistency of the data reported, the reporting process
and applicable definitions relevant to all non-financial data
collected and subsequently consolidated, are recorded in an
internal reporting manual which is regularly reviewed and
evaluated (last update 2022). Internal control procedures
safeguarding the quality and accuracy of non-financial data
collected are part of Kendrion’s Risk Management Framework.
Compliance with the internal reporting manual and the internal
control procedures are reviewed by the Global Internal Audit
and Risk Manager.
The sustainability figures and data presented in this Annual
Integrated Report are not always fully comparable with those of
other companies. This may be caused by differences in targets
and definitions applied and the nature and spread of Kendrion’s
activities making comparison with other industrial companies
difficult. Information used was collected from the existing
management and reporting systems. Any estimates or
forecasts included are explicitly referred to as such.
During 2022 Kendrion closed its production location in
Eibiswald (Austria) and moved relevant production equipment
to Villingen (Germany) and Sibiu (Romania). For 2022 the
production location in Eibiswald was still included in the non-
financial reporting, although production in Eibiswald ceased
in the course of Q3 2022.
The non-financial information reported faithfully represents
the outcome of systematic data collection and review.
The reported numbers for energy consumption, absolute and
relative & CO
2
emissions, accidents, lost time injury, illness,
supply chain management as described in the section
‘Sustainability’ on pages 37-61, have been subjected to a
review by the external auditor Deloitte Accountants B.V. The
auditor’s report with limited assurance on selected targets is
included on pages 202-204.
For the reported numbers associated with relative energy
consumption, relative CO
2
emission, accidents per 1,000 FTE,
Lost Time Injuries (LTI), illness rate and audits performed at
direct suppliers, Kendrion used the GRI Standards Specific
Disclosures 302-1, 305-1, 305-2 and 403-2 respectively as
described in the GRI referenced claim mentioned above.
We report on the same indicators as in previous years and
there are no material restatements on the information
accordingly presented in previous years.
Definitions, reporting period and scope
Energy consumption and CO
2
emission
The information on energy consumption is based on the
consumption of Kendrion’s production facilities (electricity,
natural gas, fuel oil) in Germany, the Czech Republic, Austria,
the USA, China, India and Romania. For greenhouse gas
emissions, Kendrion applies the same reporting scope as for
energy consumption, only operational control. In our
calculations we only included CO
2
emissions, other emissions
Annual Integrated Report 2022
213
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement
like CH4, N2O, HFCs, PFCs, SF6 and NF3 are not material for
us and therefore not included. Internal and external transport
under Kendrion’s control is limited, therefore transport
emissions are excluded.
The relative energy consumption and CO
2
emissions are
based on the added value of the relevant production facilities.
The added value is the revenue plus other income, minus the
changes in inventory and work in progress and minus raw
materials and subcontracted work.
The absolute and relative energy consumption and CO
2
emissions are reported for a 12-month period. Where
information is timely available, the absolute and relative energy
consumption and CO
2
emissions are reported for the period
1 January 2022 up to and including 31 December 2022.
Comparative figures for previous years are calculated based
on identical timeframes.
Calculation of the CO
2
emissions is based on the following
conversion factors:
■ Electricity generated from renewable sources: 0
■ Electricity generated from non-renewable sources
(average): 0.391 kg/kWh (2021: 0.416 kg/kWh)
■ Renewable gas for plants with carbon neutral contracts: 0
■ Natural gas for other plants (average): 0.112 kg/kWh
(2021: 0.105 kg/kWh)
■ Fuel oil (average): 0.206 kg/kWh (2021: 0.204 kg/kWh)
Accidents and LTI
Kendrion reports the total number of work-related accidents
during working time or on the way to or from work for its own
employees and independent contractors under supervision of
Kendrion. Only the accidents that the group entity had to report
to an external institution are reported. As of 2017, Kendrion
reports accidents from all group entities that caused an
absence of more than three calendar days, not including the
day of the accident. This definition is based on regulations
applicable in Germany. In addition, Kendrion reports the
absence resulting from work-related accidents. The Lost Time
Injury (LTI) is time (‘scheduled working days’) that could not be
worked (and is thus ‘lost’) as a consequence of an employee
being unable to perform the usual work due to an occupational
accident (‘at work accident’ as well as ‘way-to-work accident’)
or disease. Kendrion makes no difference in whether the
salaries or wages were paid by Kendrion or by an external
institution during that time.
A return to limited duty or alternative work for the same
organization does not count as ‘lost days’. Counting of ‘lost
days’ begins with the first scheduled working day of full
absence (e.g. the day after the accident). A lost day counts as
one full day regardless of whether the employee has a part-time
or a full-time contract. Kendrion does not specify LTI data per
region, worker type or gender as Kendrion considers this
information not relevant to its current operations.
Illness rate
The reported illness rate is based on the total illness hours.
The locations in Shelby and Atlanta reported 0% illness on a
yearly basis since no registration of illness takes place. The total
illness hours with and without wage continuation, cumulative
divided by the total timetable hours, cumulative.
Supplier audits
As mentioned above, for reporting on the number of supplier
audits (i.e. ‘responsible procurement practices’) Kendrion
makes use of its own indicator. The supplier audits are internal
audits by Kendrion employees based on an internal procedure
that prescribes the collection of Corporate Responsibility
documentation (e.g. Code of Conduct, ABC Policy, Whistle-
blower procedure) of the relevant supplier in the case the
supplier is ISO certified and the use of standardized self-
assessment questionnaires in the case the supplier is not ISO
certified.
Kendrion has not selected underlying performance indicators or
GRI indicators for the following topics: ‘non-discrimination and
equal opportunities’, ‘market presence’, ‘responsible material
consumption’, ‘environmental & energy management’, ‘human
rights’, ‘effluents and waste management’, ‘customer privacy
and data security’, ‘anti-competitive behavior’, ‘biodiversity’,
‘responsible local citizenship’, ‘innovation’, ‘customer
relationship and satisfaction’, ‘remuneration policy’ and
‘business ethics’. Following further engagement with Kendrion’s
stakeholders in the course of 2022, Kendrion will consider to
what extent these material themes continue to be relevant to
stakeholders and whether indicators on these topics should be
developed.
Annual Integrated Report 2022
214
ABOUT THE SUSTAINABILITY REPORT
Home
Consolidated
statement of
financial position
Consolidated statement
of profit and loss and other
comprehensive income
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to the
consolidated financial
statements
Notes to the
company financial
statements
Company
balance
sheet
Company
income
statement