Kendrion N.V. · EURONEXT:KENDR
Kendrion — Shareholder Meeting (April 2024)
88 slides from Kendrion's shareholder meeting presentation, Apr 15, 2024
Slide 1: General Meeting of Shareholders 2024
Q4 AND FULL-YEAR GENERAL RESULTS MEETING OF 2023 SHAREHOLDERS KENDRION N.V. Amsterdam, 28 February 2024 15 APRIL 2024
Slide 2: Agenda item 1: Opening and notifications
GENERAL MEETING OF SHAREHOLDERS Agenda item 1 ▪ Opening and notifications
Slide 3: Agenda item 2.a: Reports of the Executive and Supervisory Boards
GENERAL MEETING OF SHAREHOLDERS Agenda item 2.a ▪ Report by the Executive Board and report of the Supervisory Board for the financial year 2023 (for discussion)
Slide 4: Joep van Beurden, CEO; Jeroen Hemmen, CFO
JOEP VAN BEURDEN, CEO JEROEN HEMMEN, CFO
Slide 5: Cautionary note regarding forward looking statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS Certain statements contained in this presentation constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the Company's share of new and existing markets, general
Slide 6: Agenda
AGENDA 1. Overview 2. Strategic update 3. Financial review and dividend proposal 4. Outlook 5. Q&A 6
Slide 7: Facts & Figures - 2023
FACTS & FIGURES - 2023 Employees over 2,600 Revenue 70% € 518.5 million Europe 16% 14% Industrial Share of 49.5% America Asia revenue Automotive 50.5% Kendrion business location Source: Kendrion Annual Integrated Report 20237
Slide 8: Kendrion China Factory
KENDRION CHINA FACTORY Suzhou Industrial Park 8
Slide 9: 2. Strategic update
KENDRION PRECISION. SAFETY. MOTION.
Slide 10: Kendrion to become pure play industrial company
KENDRION TO BECOME PURE PLAY INDUSTRIAL COMPANY ▪ Automotive industry requires substantial investments in R&D and capex, while offering lower margins compared to industrial markets ▪ Limited growth available in US and Europe for an Automotive Tier 1-2 of Kendrion’s scale ▪ Industrial focus allows re
Slide 11: Indicative revenue mix impact
INDICATIVE REVENUE MIX IMPACT Kendrion pre-transaction Kendrion post-transaction Automotive divested: IB IAC addition 40% 25% 17% IB 42% Reported Pro-forma Revenue mix Revenue mix FY2023 FY2023 IAC today 25% IAC today Sound & Electronics 41% 8% Automotive China 2% KENDRION company presentation 11
Slide 12: Activities included in the transaction
ACTIVITIES INCLUDED IN THE TRANSACTION Prostějov Shelby Markdorf Malente Villingen Sibiu Total Facility overview Facility Ownership Ownership Ownership Kendrion Kendrion Lease will ownership will transfer will transfer will transfer owned owned transfer Production 5,243m2 15,000m2 4,180m2 4,800m2 6,
Slide 13: Remaining activities to be integrated in IAC (1)
REMAINING ACTIVITIES TO BE INTEGRATED IN IAC (1) Automotive Electronics Sound China Revenue (2023) EUR 9.5 M EUR 22.3 M EUR 20.0 M Existing contracts Fully honoured Fully honoured Fully honoured Continued investment with Future R&D investments industrial-level profitability No new investments No new
Slide 14: Remaining activities to be integrated in IAC (2)
REMAINING ACTIVITIES TO BE INTEGRATED IN IAC (2) Actuators/solenoids ▪ Locks and solenoids, mainly for medical devices and appliances ▪ Locking solutions - frontrunner in electrification of warehouse and machinery automation ▪ Actuators for circuit breakers and fire protection ▪ Automotive Sound act
Slide 15: IAC - 3T
IAC - 3T FY2023 ▪ Strong revenue growth in 2023 of 23% ▪ More growth in the pipeline: ability to recruit Software and Electronics engineers the gating factor ▪ New office in Drachten, the Netherlands officially open on April 11, 2024 (initially 3 engineers) Key market segments High complex machinery
Slide 16: Industrial Brakes
INDUSTRIAL BRAKES FY 2023 Short term ▪ Sudden, severe market slowdown in H2 2023 ▪ 2021 plus 21%, ▪ 2022 plus 19% ▪ H1 2023 + 1% ▪ H2 2023 –30% ▪ Deployment of Kurzarbeit to protect short term profitability while maintaining growth capacity ▪ Drastic reduction of inventory levels Longer term ▪ Overh
Slide 17: Progressing on sustainability
PROGRESSING ON SUSTAINABILITY Concluding 2019-2023 target framework Target Achieved 2023 Accelerating ambitions beyond 2023 Relative reduction of energy consumption 15% 15.3% Relative reduction of CO2 emission 15% 22.9% 17
Slide 18: Outlines 2024-2028 ESG plan
OUTLINES 2024-2028 ESG PLAN • Achieve a further 70% reduction in CO2 emissions • Establish reporting frameworks for Scope 1, 2 & 3 reporting Natural Capital • Implement gender a diversity ambition at Business Group level for indirect staff, aiming for a 25% improvement over time with a minimum thres
Slide 19: Reduction CO2 emissions
REDUCTION CO2 EMISSIONS CO2 emission in tons 14000 Energy consumption in CO2 emission in 12000 Year Reduction % kWh tons 10000 2015 39.968.632 12.321 Baseline 8000 2018 36.607.830 7.322 40,6% 6000 2023 34.255.036 6.231 14,9% Target 2028 4000 2028 Estimate 10.276.511 Estimate 1.869 Target 70% 2000 0
Slide 20: Preliminary overview – Scope 1, 2, 3
PRELIMINARY OVERVIEW – SCOPE 1, 2, 3 20
Slide 21: Gender diversity 2023
GENDER DIVERSITY 2023 Kendrion total Indirect staff Top-50 Men Women Men Women Men Women 2023 54% 46% 69% 31% 81% 19% 2028 Ambition 67% 33% 67% 33% Kendrion total Indirect staff Top-50 19% 31% Men Men Men 46% 54% Women Women Women 69% 81% 21
Slide 22: Sustainable sourcing
SUSTAINABLE SOURCING Responsible Business Conduct • Enhance supplier selection and screening • Transitioning from basic risk assessment to integrating ESG metrics into sourcing process • All key suppliers invited to fill out a questionnaire covering the main areas that determine the degree of sustai
Slide 23: EcoVadis sustainability rating 2024
ECOVADIS SUSTAINABILITY RATING 2024 Kendrion top 15% of rated companies Year-over-year improvement • 2023: top 19% of rated companies (61/100) • 2022: top 22% of rated companies (58/100) 23
Slide 24: 3. Financial review and dividend proposal
3. Financial review and dividend proposal
Slide 25: Financial highlights
FINANCIAL HIGHLIGHTS FY 2023 Key figures - full year FY 2023 FY 2022 delta ▪ Stable revenue for the year, with 1% increase at constant exchange rates Revenue 518,5 519,3 0% Normalized EBITDA 1) 53,1 57,4 -7% Normalised EBITA 1) 29,5 34,1 -13% ▪ Higher average sales prices contribute 4,5% to revenue
Slide 26: Cash flow and net debt
CASH FLOW AND NET DEBT ▪ Normalized net cash from operations of EUR 40.5 million (2022: EUR 40,9 million), include EUR 6,1 million higher payments for tax and interest ▪ EUR 11,3 million normalized free cash for the year (FY 2022: EUR 3.1 million) ▪ Normalized free cash excluding the China building
Slide 27: Repositioning will lower Kendrion's EBITDA by EUR ~11M
REPOSITIONING WILL LOWER KENDRION’S EBITDA BY EUR ~11M Indicative EBITDA impact based on FY 2023 ▪ Transaction values the sold Automotive (Amounts in EUR millions) activities at an Enterprise Value of Implied EV / EBITDA EUR 65M 5.9x ▪ The assets included in the transaction scope have a combined rep
Slide 28: Significant improvement of financial profile
SIGNIFICANT IMPROVEMENT OF FINANCIAL PROFILE Key financials Kendrion ▪ The transaction will structurally improve Kendrion’s margin profile FY 2023 FY 2023 Metric (EUR M) Reported Pro-forma ▪ Overhead resources to be aligned with remaining activities. Together with the discontinuation of Sound produc
Slide 29: Industrial
INDUSTRIAL IAC IB Industrial ▪ 6% organic revenue decrease fully caused by HY2 downturn in IB markets Industrial - full year FY 23 FY 22 FY 23 FY 22 FY 23 FY 22 Revenue 127,5 125,3 129,0 151,2 256,5 276,5 Normalized EBITDA 36,1 47,5 ▪ Slight improvement in added value margin driven by mix effects 1)
Slide 30: Automotive
AUTOMOTIVE E Core Automotive ▪ 72% higher normalized EBITDA cause by sales price increases and cost Automotive - full year FY 23 FY 22 FY 23 FY 22 FY 23 FY 22 reductions Revenue 72,5 63,3 189,5 179,5 262,0 242,8 Normalized EBITDA -6,6 23,6 17,0 9,9 Normalized EBITDA as a % of revenue 1) NM 12,5% 6,5
Slide 31: Dividend and cash return
DIVIDEND AND CASH RETURN 2017 2018 2019 2020 2021 2022 2023 ▪ Kendrion strives to distribute annual dividend between 35% and Actual Actual Actual actual actual actual proposal 50% of normalized net profit before amortization, giving Dividend per share 0,87 0,87 - 0,40 0,69 0,72 0,45 Pay-out 50% 52%
Slide 32: 4. Outlook
KENDRION PRECISION. SAFETY. MOTION. 4. Outlook
Slide 33: Kendrion strategic house
KENDRION STRATEGIC HOUSE 2023 STRATEGIC INTENT AUTO BRAKES IAC ‘E’ ‘Core’ Growth Cash engine Growth Cash cow ROBOTS CONTROLS 'ACES' WINDPOWER ENERGY LOGISTICS TRANSPORT CHINA CHINA Growth CHINA KENDRION GLOBAL ORGANIZATION 33
Slide 34: Kendrion organization - 2023
KENDRION ORGANIZATION - 2023 Executive Board Group HR Group IT General Counsel BG Manager MD Automotive President BG Manager MD Automotive E Industrial Actuators Core Kendrion Asia Industrial Brakes and Controls 34
Slide 35: Kendrion strategic house – post close
KENDRION STRATEGIC HOUSE – POST CLOSE STRATEGIC INTENT AUTO IB IAC ROBOTS ACTUATORS WINDPOWER CONTROL TECH LOGISTICS VALVES FLUID CONTROL CHINA CHINA CHINA KENDRION GLOBAL ORGANIZATION 35
Slide 36: Kendrion organization per Jan 1, 2025
KENDRION ORGANIZATION Per Jan 1, 2025 Executive Board General Counsel Group IT BU Manager President BU Manager Industrial Kendrion Asia Industrial Brakes Actuators and Controls 36
Slide 37: Thank you
THANK YOU 37
Slide 38: Questions & answers
Questions & answers
Slide 39: Agenda item 2.b: Corporate governance
GENERAL MEETING OF SHAREHOLDERS Agenda item 2.b ▪ Main items corporate governance structure and compliance with the corporate governance code in 2023 (for discussion) ▪ Corporate governance report on pages 83 – 87 of the 2023 annual report 39
Slide 40: Questions & answers
Questions & answers
Slide 41: Agenda item 3.a: Adoption of 2023 financial statements
GENERAL MEETING OF SHAREHOLDERS Agenda item 3.a ▪ Adoption of the 2023 financial statements (for resolution) 41
Slide 42: Toelichting controlerend accountant op de jaarrekening 2023
KENDRION N.V. TOELICHTING CONTROLEREND ACCOUNTANT OP DE JAARREKENING 2023 ▪ 15 april 2024
Slide 43: Samenvatting accountantscontrole
SAMENVATTING Jaarrekeningen bestuursverslag ACCOUNTANTS • Goedkeurende controleverklaring bij de jaarrekening, getekend op 28 februari 2024 • Rapport met beperkte mate van zekerheid ten aanzien van sustainability informatie (pagina 38 tot CONTROLE 64 van de jaarrekening) Kernpunten van controle • IT
Slide 44: Materialiteit
MATERIALITEIT Materialiteit: • Materialiteit is gebaseerd op zowel winst voor belasting als EBITDA • Materialiteit voor de jaarrekening als geheel is bepaald op EUR 1.1 miljoen • Voor de onderliggende componenten is een lagere materialiteit gebruikt, welke niet hoger is geweest dan EUR 577 duizend •
Slide 45: Groepscontrole
GROEPSCONTROLE Communication and oversight over components auditors • Alle entiteiten zijn gecontroleerd door Deloitte Member firms • Het groepsteam heeft instructies gestuurd naar alle betrokken Deloitte member firms • Er hebben op periodieke basis (online) meetings plaatsgevonden ten aanzien van d
Slide 46: Interne beheersing en de IT omgeving
INTERNE Interne beheersing BEHEERSING EN • Evaluatie van de opzet en het bestaan van relevante interne beheersingsmaatregelen (incl. tone at the top) DE IT • Bevindingen op de interne beheersing zijn gerapporteerd aan het management en de Audit Commissie als onderdeel van onze management letter OMGE
Slide 47: Kernpunten van de controle
KERNPUNTEN General IT VAN DE We hebben onder andere de volgende werkzaamheden verricht: CONTROLE • Het beoordelen van de relevante general IT controls, processen en procedures • IT specialisten ingeschakeld die ons hebben geholpen bij het testen van de general IT controls Waardering van verliezen in
Slide 48: Specialisten in de controle
SPECIALISTEN Specialisten in de controle IN DE Wij hebben specialisten gebruikt in een aantal gebieden van de controle: CONTROLE Onderwerp Kernpunten in controle? Belastingen Ja* IT audit Ja Fraude risico’s Nee Goodwill waardering Nee Pensioenen (in bepaalde landen) Nee Sustainability informatie Nee
Slide 49: Compliance met wet- en regelgeving
COMPLIANCE Compliance met wet- en regelgeving MET WET- EN • Verkrijgen van voldoende en geschikte controle-informatie omtrent het naleven van wet- en regelgeving die van directe REGELGEVING invloed is op de financiële overzichten • Alert op indicaties van (vermoedens) van niet-naleving van wet- en r
Slide 50: Fraude risico's
FRAUDE Algemeen RISICO’S • Wet- en regelgeving vereist dat de accountant in haar controle aandacht heeft voor fraude Welke procedures hebben wij uitgevoerd bij Kendrion NV ten aanzien van fraude en management override? • Beoordeling opzet en implementatie van relevante interne beheersingsmaatregelen
Slide 51: ESG rapportage
ESG Beperkte zekerheid ten aanzien van Kendrion’s sustainability informatie RAPPORTAGE • Rapport met beperkte zekerheid ten aanzien van een vijftal KPIs: • Energie verbruik en CO2 uitstoot • Ongelukken en hiermee samenhangende verlies van aantal werkbare uren • Ziekteverzuim • Aantal audits uitgevoe
Slide 52: Vooruitkijken controle boekjaar 2024
VOORUITKIJKEN CONTROLE Controle boekjaar 2024 BOEKJAAR 2024 • Mazars neemt de rol van externe accountant over met ingang van het boekjaar 2024.
Slide 53: Deloitte notice
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate
Slide 54: Questions & answers
Questions & answers
Slide 55: Agenda item 3.b: Dividend over financial year 2023
GENERAL MEETING OF SHAREHOLDERS Agenda item 3.b ▪ Dividend over financial year 2023 (for resolution) ▪ Optional dividend ▪ Ex-dividend date: 17 April 2024 ▪ Record date: 18 April 2024 ▪ Determination conversion price: 7 May 2024 ▪ Volume-weighted average price: 29, 30 April 2024 and 2, 3 and 6 May 2
Slide 56: Questions & answers
Questions & answers
Slide 57: Agenda item 4.a: Discharge of Executive Board
GENERAL MEETING OF SHAREHOLDERS Agenda item 4.a ▪ Discharge of the members of the Executive Board (for resolution) 57
Slide 58: Questions & answers
Questions & answers
Slide 59: Agenda item 4.b: Discharge of Supervisory Board
GENERAL MEETING OF SHAREHOLDERS Agenda item 4.b ▪ Discharge of the members of the Supervisory Board (for resolution) 59
Slide 60: Questions & answers
Questions & answers
Slide 61: Agenda item: Remuneration report 2023
GENERAL MEETING OF SHAREHOLDERS Agenda item 5 ▪ Remuneration report 2023 (for advice) ▪ Advisory vote by shareholders ▪ Last update of Remuneration Policy approved in 2023 ▪ Remuneration report on pages 96 – 112 of the 2023 annual report 61
Slide 62: Executive Board: 2023 annual base salary
EXECUTIVE BOARD 2023 ANNUAL BASE SALARY CEO EUR 553,333 (gross) CFO EUR 342,500 (gross) 62
Slide 63: Executive Board: pay-out 2023 short-term incentive (financial)
EXECUTIVE BOARD PAY-OUT 2023 SHORT-TERM INCENTIVE (financial performance criteria) Pay-out Pay-out as % of 2023 base salary CEO EUR 70,384 (gross) 12.72% CFO EUR 29,123 (gross) 8.50% 63
Slide 64: Executive Board: pay-out 2023 short-term incentive (non-financial)
EXECUTIVE BOARD PAY-OUT 2023 SHORT-TERM INCENTIVE (non-financial performance criteria) Pay-out Pay-out as % of 2023 base salary CEO EUR 199,200 (gross) 36% CFO EUR 82,425 (gross) 24.06% 64
Slide 65: Executive Board: total pay-out 2023 short-term incentive
EXECUTIVE BOARD TOTAL PAY-OUT 2023 SHORT-TERM INCENTIVE Pay-out Pay-out as % of 2023 base salary CEO EUR 269,584 (gross) 48.72% CFO EUR 111,548 (gross) 32.57% 65
Slide 66: Executive Board: 2023 long-term incentive
EXECUTIVE BOARD 2023 LONG-TERM INCENTIVE # Conditional performance Target amount Average share price shares Q4 2022 CEO 22,030 EUR 332,000 EUR 15.07 CFO 11,363 EUR 171,250 66
Slide 67: Executive Board: performance 2021 long-term incentive
EXECUTIVE BOARD PERFORMANCE 2021 LONG-TERM INCENTIVE (performance period 2021-2023) # Vested shares CEO 4,049 CFO 1,906 67
Slide 68: Supervisory Board remuneration
SUPERVISORY BOARD ANNUAL BASE FEE AND COMMITTEE FEE 2023 REMUNERATION Annual base fee Van Hout EUR 65,000 (Chairman) Chairman EUR 59,000 Slijkhuis EUR 36,750 Member EUR 41,800 (Current Chair Audit Committee) Van der Meijs EUR 16,333 Committee fee (Chair Audit Committee) Chair Audit Committee/HR EUR
Slide 69: Questions & answers
Questions & answers
Slide 70: Agenda item: Share ownership guideline adjustment
GENERAL MEETING OF SHAREHOLDERS Agenda item 6 ▪ Proposed adjustment to share ownership guideline included in Remuneration Policy (for resolution) ▪ Enhance share ownership requirement for the CEO and CFO in Remuneration Policy 70
Slide 71: Proposed amendment – share ownership guideline
EXECUTIVE BOARD PROPOSED AMENDMENT – SHARE OWNERSHIP GUIDELINE Current remuneration policy Proposed change Share ownership CEO: 100% of annual base salary CEO: 200% of annual base salary requirement CFO: 50% of annual base salary CFO: 100% of annual base salary Gradual build-up of • Shares earned un
Slide 72: Questions & answers
Questions & answers
Slide 73: Agenda item 7.a: Reappointment of Mr. E.M. Doll
GENERAL MEETING OF SHAREHOLDERS Agenda item 7.a ▪ Reappointment Mr. E.M. Doll as member of the Supervisory Board (for resolution) ▪ 1st appointment 24 June 2020 ▪ Appointment for a 2nd 4-year term ▪ Profound industrial expertise 73
Slide 74: Questions & answers
Questions & answers
Slide 75: Agenda item 7.b: Appointment of Mrs. M.H.C. Baijens
GENERAL MEETING OF SHAREHOLDERS Agenda item 7.b ▪ Appointment of Mrs. M.H.C. Baijens as member of the Supervisory Board (for resolution) ▪ Strong track record as international HR-executive ▪ Dutch national ▪ Appointment for a 1st 4-year term ▪ Executive Vice President and Chief Human Resource Office
Slide 76: Questions & answers
Questions & answers
Slide 77: Agenda item: Appointment of Mazars as external auditor
GENERAL MEETING OF SHAREHOLDERS Agenda item 8 ▪ Appointment of Mazars Holding N.V. as external auditor of Kendrion N.V. (for resolution) ▪ Early rotation Deloitte Accountants B.V. ▪ Initiation comprehensive tender process: KPMG, EY, BDO and Mazars ▪ Mazars’ offer rated as the most competitive ▪ Appo
Slide 78: Questions & answers
Questions & answers
Slide 79: Agenda item 9.a: Authorization to issue shares
GENERAL MEETING OF SHAREHOLDERS Agenda item 9.a ▪ Authorization to issue shares (for resolution) ▪ Valid for a period of 18 months ▪ Approval by the Supervisory Board ▪ Maximum authorization of 10% of the issued capital 79
Slide 80: Questions & answers
Questions & answers
Slide 81: Agenda item 9.b: Restrict or exclude pre-emptive rights
GENERAL MEETING OF SHAREHOLDERS Agenda item 9.b ▪ Authorization to restrict or exclude pre-emptive rights (for resolution) ▪ Valid for a period of 18 months ▪ Approval by the Supervisory Board ▪ Maximum authorization of 10% of the issued capital 81
Slide 82: Questions & answers
Questions & answers
Slide 83: Agenda item: Authorization to repurchase shares
GENERAL MEETING OF SHAREHOLDERS Agenda item 10 ▪ Authorization to repurchase Kendrion N.V. shares (for resolution) ▪ Valid for a period of 18 months ▪ Maximum of 10% of the issued capital 83
Slide 84: Questions & answers
Questions & answers
Slide 85: Agenda item: Any other business
GENERAL MEETING OF SHAREHOLDERS Agenda item 11 ▪ Any other business 85
Slide 86: Questions & answers
Questions & answers
Slide 87: Agenda item 12: Closing
GENERAL MEETING OF SHAREHOLDERS Agenda item 12 ▪ Closing 87
Slide 88: Thank you
KENDRION | O70 THANK YOU ff | L |