20ANNUAL REPORT

23

Our product portfolio for sustainable mobility

Battery technology

ElringKlinger has been a series producer of battery technology components since as early as 2011. In addition, the company produces complete battery modules on the basis of various cell formats. Combining these with other products, such as cell housings, ElringKlinger is able to develop and mass- produce end-to-end battery systems.

Fuel cell

ElringKlinger has been playing an active role in the field of fuel cell technology for the last 20 years and counting. EKPO Fuel Cell Technologies (EKPO), the enterprise operated in partnership with Plastic Omnium, is

a leader in the development and large-scale production of fuel cell components and stacks for carbon-neutral mobility. EKPO's stacks and components are used in cars, light commercial vehicles, trucks, buses, and rail and marine applications as well as in off-highway systems and electrolyzers.

Electric drive units

As strategic partners, ElringKlinger and hofer powertrain develop and produce highly efficient electric drive units (EDU). The spectrum ranges from component solutions for large-scale production to applications in the high-end sports car and luxury segment.

Lightweighting for all types of drive system

Lightweight construction is a key technology for the automotive industry. Our innovative products are designed to improve the efficiency and range of e-mobility solutions, while also reducing the fuel consumption and CO2 emissions of vehicles equipped with combustion engines. The highly integrated components are based on fully recyclable materials.

Classic forms of mobility

The portfolio of ElringKlinger's long-standing business units is aimed at ensuring greater efficiency in fuel consumption. Thus, products within this area help to cut back greenhouse gas emissions. The Group also applies its expertise gained in this field to its range of e-mobility products. After all, electric vehicles also require seals and shielding parts - or solutions based on the relevant skills.

ElringKlinger

Selected products for the mobility of the future

FUEL CELL STACK

The cell stack of the PEM fuel cell (Proton Exchange Membrane Fuel Cell) consists, among other things, of numerous bipolar plates and seals as well as the bracing system; it forms the heart of fuel cell technology.

COCKPIT CROSS-CAR BEAM

Innovative lightweight structural component with the highest level of functional integration; it supports elements such as the instrument panel, steering column, airbags, and other equipment.

ELECTRIC DRIVE

UNIT (EDU)

The core element of the electric drive train, consisting of power electronics, transmission, and electric motor.

CELL CONTACTING SYSTEM

This key component takes over the current conduction as well as voltage and temperature monitoring.

BATTERY SYSTEM

ElringKlinger battery modules and systems can be used in a wide variety of applications thanks to their modular set-up and various cell formats.

FRONT-END

MODULE CARRIER

The lightweight

structural component

in a hybrid design

accommodates ele-

ments such as the

radiator, headlights,

air intake, radar

systems, and other

components.

ROTOR AND STATOR

In the electric motor, the rotor

and stator ensure efficient opera-

tion thanks to their high packing

density. A specially developed

three-stage manufacturing pro-

cess reduces the punching strokes

while using thinner sheets to

achieve the necessary package

height.

BIPOLAR PLATE

The metal bipolar plates ensure, among other things, the separation of the media and their distribution in the cell stack as well as the transmission of the electric current.

UNDERBODY

PROTECTION

Thermoplastic under- ride protection systems with maximum impact resistance using high- strength continuous fibers in a sandwich design. High thermal and electrical insulation as well as many other functional integration features.

2 Contents

Contents

01

02

TO OUR SHAREHOLDERS

COMBINED MANAGEMENT REPORT

OF ELRINGKLINGER AG AND THE

ELRINGKLINGER GROUP

  1. The Management Board
  1. Letter to Shareholders

8

Report by the Supervisory Board

62

Overview of ElringKlinger's

12

ElringKlinger and the

Activities and Structure

Capital Markets

65

Internal Control System

16

Compensation Report

67

Research and Development

29

Corporate Governance

72

Macroeconomic Conditions and

29

Sustainability Report

Business Environment

30

Combined Non-Financial Report

74

Significant Events

76

Sales and Earnings Performance

83

Financial Position

86

Cash Flows

90

Financial Performance, Net Assets, and

Cash Flows of ElringKlinger AG

96

Report on Opportunities and Risks

112

Disclosures pursuant to Section 289a

and Section 315a HGB

114

Corporate Governance Statement

114

Combined Non-Financial Report

114

Report on Expected Developments

ElringKlinger AG Annual Report 2023

03

CONSOLIDATED FINANCIAL STATEMENTS

  1. Group Income Statement
  2. Group Statement of Comprehensive Income
  3. Group Statement of Financial Position

128 Group Statement of Changes in Equity

  1. Group Statement of Cash Flows
  1. Notes to the Consolidated Financial Statements

202 Audit Opinion

  1. Responsibility Statement
  2. Glossary

218 Imprint

Contents 3

What does the new management team stand for and what does it mean for the future of ElringKlinger? We accompany the three Management Board members, find out how the trio works, and shed light on the five success factors at the heart of the company's goals for 2030.

Read the full report in » Triple « in the latest 2024 issue of » pulse « magazine.

4 To our Shareholders

The Management Board of ElringKlinger AG

The Management Board of ElringKlinger AG

ElringKlinger AG Annual Report 2023

To our Shareholders 5

The Management Board of ElringKlinger AG

from left to right

Dirk Willers

CSO

Thomas Jessulat

CHAIRMAN OF THE

MANAGEMENT BOARD

Reiner Drews

COO

elringklinger.com > Company > Management Board

ElringKlinger AG Annual Report 2023

6 To our Shareholders Letter to Shareholders

Letter to Shareholders

ElringKlinger is in the midst of a transformation. Our core business relating to the long-standing units within the Group remains strong. The associated products have been tried and tested for decades, which includes continuous optimization and refinement. Alongside the state-of-the-art cylinder head gaskets featured in this portfolio, our cam covers and elastomer gaskets are prime examples of our efforts in this field. The Group generates the majority of its annual revenue with products used in internal combustion engines. This business model provides the financial resources needed to drive the Group's transformation process. ElringKlinger is an acknowledged partner when it comes to developing efficient product solutions tailored to every facet of the optimized combustion engine.

At the same time, we have made a point of gradually evolving our expertise over the past decades. Our focus was and remains on the growth areas of electromobility and the hydrogen economy. We have developed a broad product portfolio centered around battery, drive system, fuel cell, and electrolyzer applications. The financial year just ended saw us secure a number of orders. This includes, for example,

a high-volume nomination by the BMW Group for its "New Class" series. Customers have also nominated us in the Metal Forming & Assembly Technology business unit, which to date has mainly been producing punched and formed parts as well as shielding systems. Among them, for example, are a global Tier 1 supplier with a nomination for battery housings and a global battery manufacturer with one for battery housing components. Furthermore, in the second half of the financial year under review, series production commenced for an order placed by a global battery manufacturer covering a total volume in the mid triple-digit million euro range. Nominations such as these confirm that the strategic direction we have taken is the right one. Not only when it comes to providing a compelling product proposition but also

in our efforts to tap into new customer groups. ElringKlinger is an established partner for the drive technologies of the future.

Alongside the nominations received over the course of the year, ElringKlinger's business performance as a whole proved thoroughly successful despite difficult market conditions. Group revenue reached a level of EUR 1.85 billion which corresponds to organic growth of 4.6%. Recording an adjusted EBIT margin of 5.4%, we once again boosted the Group's profitability and, at EUR 36.7 million, achieved year-on-year growth in operating free cash flow. As a result, we were able to further reduce net financial liabilities and lower our net debt-to-EBITDA ratio to 1.6. Based on this solid foundation, we, the Management Board, together with the Supervisory Board, are proposing to you, our valued shareholders, a dividend payment of EUR 0.15, unchanged from the previous year. It is this proposal that will be presented to the Annual General Meeting, thus reflecting our belief that shareholders should benefit appropriately from the company's successful performance.

For my Management Board colleagues Reiner Drews and Dirk Willers and myself, the above-mentioned financial metrics represent the starting point in our efforts to advance the Group in the coming years. In this context, our primary mission is to continue the successful transformation of ElringKlinger. This clearly defined strategic focus includes reviewing the Group's portfolio to ensure that it is fit for the future. We will analyze exactly which of our product groups can be considered promising, and we will focus our full attention on these activities. After all, focus has always been one of ElringKlinger's key strengths.

ElringKlinger AG Annual Report 2023

To our Shareholders 7

Letter to Shareholders

Looking ahead, ElringKlinger has committed itself to a strategic concept, referred to as SHAPE30, which, as the name suggests, will assist us in our efforts to further shape the Group. It provides the basis for guiding ElringKlinger toward a successful future. The first step is product transformation. Taking a consistent approach, we will continue to build on the milestones we have already achieved with the ambition of pursuing our successful path of transformation. Our long-standing business is very well positioned within the market. Following the ramp-up of series production associated with high-volume orders in the field of new drive technologies, we will be able to cover our costs to a greater extent on the back of higher revenues, thus emerging from the current start-up phase. Against this backdrop, the overall profitability of the Original Equipment segment looks set to improve in the medium term. In the Aftermarket segment, meanwhile, our growth strategy is already taking effect, particularly in the regions of North and South America as well as China. Indeed, our positioning in this segment is very solid overall. The Engineered Plastics segment is making its contribution to diversifying the Group. In this area, we can draw on a successful track record not only in the automotive industry but also in market segments such as medical technology and mechanical engineering.

Alongside product transformation, the aspect of sustainability plays a key role. We are committed to gearing the Group toward sustainability, the ultimate goal being to pass on a world that is viable for future generations. We plan to be carbon-neutral in net terms worldwide by 2030 and are integrating not only environmental considerations into our activities but also social and ethical aspects. The latter includes, above all, sound corporate governance. The future will also bring a raft of new statutory requirements

in the area of sustainability, for which we are already making the necessary preparations.

At the same time, it is essential that we take a determined approach to advancing digitalization. This creates added value for both our customers and the Group. We are also keen to leverage further potential through process and performance excellence.

In parallel, we are determined to evolve ElringKlinger's corporate culture. After all, our employees form the core of the Group. It is therefore all the more important that we continue to offer an appropriate framework that allows team members to perform to the best of their ability. In this context, I would like to thank, also on behalf of my colleagues on the Management Board, all employees around the globe - whether in Japan, South Korea, China, Thailand, Indonesia, or India, whether in South Africa, Brazil, Mexico, the USA, or Canada, whether in the United Kingdom, France, Spain, Italy, Hungary, Romania, Turkey, Switzerland, or Germany - for their tireless efforts. They are our Group's most valuable asset.

ElringKlinger has a strong foundation on which to successfully embark on the next stage of its transfor- mation. We are thoroughly committed to building on this foundation in an effort to increase enterprise value. With its broad and compelling product portfolio, its long-standing business as the backbone for ongoing change, and its strategic positioning, complemented by its sales performance in the field of new drive technologies, ElringKlinger is a transformation success story.

Please see for yourself on the following pages and in our "pulse" magazine.

Dettingen/Erms, March 2024

Thomas Jessulat

Chairman of the Management Board

ElringKlinger AG Annual Report 2023

8 To our Shareholders Report by the Supervisory Board

Report by the Supervisory Board 2023

On the back of a slight year-on-year upturn in revenue, operating profit at ElringKlinger was again encouraging in 2023, thus reflecting the company's robust performance in the financial year just ended. Ongoing conflicts and wars, particularly in Ukraine and the Middle East, had and continue to have a significant impact on the global economy, which manifests itself above all in a considerable degree of uncertainty and volatility. In spite of these circumstances, ElringKlinger was able to take further important steps forward when it came to the process of transitioning to electro- mobility, which included acquiring projects associated with prestigious vehicle manufacturers. As a development partner and supplier to the automotive industry, ElringKlinger's strategic approach of manufacturing sophisticated components and systems for vehicles powered by combustion engines as well as electric drives is proving to be an appropriate route in pursuit of sustained commercial success in the coming years.

In the financial year just ended, the Supervisory Board of ElringKlinger AG again discharged in full the duties incumbent on it according to the law, the Articles of Association, the rules of procedure, and the German Corporate Governance Code. It supervised the Management Board and acted in an advisory capacity with regard to issues of material importance. The Supervisory Board received appropriate monthly reports from the Management Board on key figures, matters of business, and events. In addition, the Chairman of the Supervisory Board and the Chairman of the Management Board (CEO) were in regular and ongoing contact and exchanged information in particular on the economic situation, important business developments, and other significant events. The Chairman of the Supervisory Board informed the other members of the Supervisory Board about significant occurrences. The Chairman of the Supervisory Board and the entire Supervisory Board were therefore able to form a sufficient picture of the business policies, corporate planning, profitability, and situation relating to the company and the Group. In line with statutory requirements, the Supervisory Board was involved in all decision-making processes of material importance. In particular, strategically important decisions were discussed in detail with the Management Board and debated at Supervisory Board meetings. In those cases in which decisions or measures taken by the Management Board required the approval of the Supervisory Board, such approval was obtained accordingly.

The Supervisory Board convened for four scheduled and two extraordinary meetings in the reporting period. At the scheduled meetings, the Management Board regularly provided a detailed overview of business developments, particularly as regards the direction taken by revenue and earnings as well as the cash flows and financial performance of the Group, ElringKlinger AG, and its subsidiaries. The Management Board presented its latest projections together with its evaluation of the economic, market, and competitive situation. In addition, the Management Board supplied regular information on the current risk situation at ElringKlinger and, where necessary, relevant compliance-related issues, sig­ nificant legal disputes, and other matters of fundamental ­importance. The meetings also focused on the Group's strategic direction in light of the ongoing transformation of the vehicle industry. Particular attention was also devoted to the key issues of sustainable positioning of the Group in all areas of business. In dealing with potential risks, the security of IT-supported systems and, in particular, protection against cyber attacks was of essential importance. Another regular item on the agenda was the Audit Committee report furnished by the Chairman of the Audit Committee.

In addition to the agenda items already outlined above, the Supervisory Board dealt with the following topics, among others, at its meetings over the course of the year under review:

On January 23, 2023, the Supervisory Board was informed in detail about current strategic projects as part of an extra­ ordinary meeting. It discussed and resolved the company's target in respect of the proportion of women on the Management Board and approved the Management Board's proposal to hold the Annual General Meeting in a virtual format.

At its scheduled meeting on March 23, 2023, the Supervisory Board focused on the annual financial statements and the combined management report of ElringKlinger AG and the Group as of December 31, 2022, the 2022 annual report, including the Supervisory Board report, the corporate governance report, the compensation report, the combined non-financial report, and the auditor's report compiled by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft. The Supervisory Board adopted the annual financial statements of ElringKlinger AG, endorsed the consolidated financial statements together with the combined management report,

ElringKlinger AG Annual Report 2023

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ElringKlinger AG published this content on 26 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2024 07:51:06 UTC.