un:iversal

Metamor[e]phosis

Summary Annual Report 2023

Metamor[e]phosis

Content

  • 03 The packaging of the future

  • 04 Metamor[e]phosis

  • 18 Letter to the shareholders

  • 22 Spotlight

  • 24 Supervisory Board report

  • 26 Corporate governance & compliance

  • 28 Non-financial Group report

  • 30 The key figures at a glance

  • 32 Products and services

  • 36 Koenig & Bauer shares

  • 38 And what comes next?

  • 40 Combined management report

  • 42 Group balance sheet

  • 43 Group income statement, statment of comprehensive Group income

  • 44 Group cash flow statement

  • 45 Financial dates

Metamor[e]phosis

Annual Report 2023

The Packaging of the Future

What will the packaging of the future look like? Just like the front cover of this year's annual report - a vision created by the 'imag-ination' of AI? Will packaging might even, just like smartphones, become a smart companion that accompanies us in our daily lives with as-yet inconceivable features? Today more than ever, packaging already protects our products, promotes brands, and drives innova-tion. We will be excited to see how packaging continues to evolve. But one thing is already certain: however things develop, Koenig & Bauer will continue to keep its finger on the pulse of the latest trends and offer the right solutions to suit all requirements and applications - as a universal provider that offers individually tailored products and technologies. You will find out how we managed to do this in the 2023 financial year on the following pages.

Metamor[e]phosis

In the last annual report, we focused on the mor[e] in metamor[e]phosis and looked at how Koenig & Bauer has continued to evolve over a history stretching back more than 200 years, focusing very specifically on the 2022 financial year. This time, we are going a little beyond this and also taking one step back. Welcome to the meta level!

But what does 'meta' actually mean, what image does this conjure up in your mind? Meta is a topic that everyone's talking about - not least because of the social media company of the same name that continues to grow and expand. And we encounter 'meta' in many places. For example, in the form of metaphors, which are linguistic expressions whose original meaning is applied to different contexts. Or as metadata, which is structured data that contains information about aspects of other data. Metaphysics deals with everything that defines the natural world we can perceive with our senses. And we are of course familiar with metamorphosis, which is the transforma-tion from a current state into the fundamentally (pre-)determined, fully de-veloped form. Meta is a space, sometimes meaning something hidden and in some cases meaning something superior. Each methodology is based on a view 'from above', detached from the process itself, in order to achieve a defined objective [metá from Greek (μέτα, μετά) in the middle, between, with, after, behind + hodós from Greek (òδός) way].

The moment when we decided to go beyond mere printing with Exceeding Print and incorporate sustainability, digitalisation and modularity into our corporate strategy was also when we took the first step on the path to the meta level. It is one of many steps and our path will not be straight by any means. This is because developments - including those that are method-ically planned and controlled - are subject to external dynamics beyond our control. Koenig & Bauer's development from a traditional printing press

manufacturer into an agile tech company is already starting to bear fruit, yet it is more important than ever to stay focused on the big objective.

Wars, social and economic uncertainties, the aftermath of the COVID pan-demic, fluctuations in the international currency market, the challenges posed by climate change, the growing possibilities that artificial intelligence offers and the risks associated with this, etc. - the list of challenges facing society and businesses is long and seems to be growing longer by the day. Global developments do not currently provide the most stable foundation and yet they also demand agile, effective solutions that can be implement-ed quickly. How do we want to continue to work in the future, and how can we achieve this? How can we link printing to the digitalised world? We are living through a period of change, with some people even calling it a new epoch. Many things are impossible to predict, and this is precisely why it is so important to be bold, to explore different paths and to dare to seize new opportunities with an open mind. Adaptability has been a hallmark of our company from day one, and there have been numerous occasions when this attribute has proven its worth - including, or especially in, tough times.

Just as 'meta' simultaneously describes something superior and something inherent - that is to say, something universal, in our company's recent past we have embraced Exceeding Print and ventured into previously unknown areas of business that have not only opened completely new doors for us, but have also boosted our core business by providing new ideas. What we can say today with absolute certainty is that in 2021 the Exceeding Print strategy was based on the notion that, both today and in the future, printing needs to be sustainable, digital and modular to succeed.

We can achieve this because we look at the value chain in its entirety and spare no effort when it comes to ensuring a complete circular economy

in which all processes are connected. Instead of focusing exclusively on our business, our machines, we try to keep everything in mind - from the requirements of the brand owners, suppliers and different printing technol-ogies as well as substrates, to the end customers and returning products to the cycle by implementing recycling measures. We combine all the essen-tial areas and with an export ratio of over 80 percent we see ourselves as a global player - un:iversal.

This is why this annual report contains a practical application case for each pillar of our Exceeding Print strategy. The compostable packaging will deliv-er a lasting benefit to the environment, and the forget-me-not in the little pack of flower seeds will put a smile on your face. All you need to do is dampen the substrate tray, sow the seeds and keep them moist. As proof of concept, you can also bury the compostable pack-aging in the soil. To bridge the gap to the digital world, in addition to topic-specific content outlining the progress made on digitalisation at Koenig & Bauer, you can once again access the whole of this year's annual report online. And just as modularity is defining and driving the (further) development of our prod-ucts, this annual report - from the front cover to the last full stop - shows that the whole, the universal cycle, is more than the sum of its parts and that everything really is connected.

Metamor[e]phosis through Sustainability

Metamor[e]phosis through Sustainability

… because sustainability is the meta-topic of the future.

In order to meet the increasing demands of cli-mate protection and make our own active con-tribution to it, we have championed the Green Energy project. The aim is not just to reduce our dependence on fossil fuels, but also to achieve our sustainability goals. By 2025, we are aim-ing to reduce CO2 emissions (Scope 1 and 2) in our production plants by 75 per cent compared to the reference year of 2019. Green Energy provides a package of measures that we want to implement in order to optimise our energy demand and supply. These include energy-ef-ficiency measures such as measures to reduce and optimise the amount of energy required in production.

To make sure this transformation is also sustainable, we particularly need to expand our supply of energy from renewable sources. This means we need to use solar energy and oth-er green energy sources and storage systems. At some of our sites, huge progress has already been made when it comes to sustainability: for example, the Mödling site is aiming to achieve car-bon neutrality by as early as 2028.

What's more, a major measure has already been implemented at the company's head-quarters in Würzburg. By modernising our

foundry smelting operations, we have achieved significant cost savings while increasing our earnings. This optimisation will result in annu-al electricity savings of roughly 3,200 MWh in the smelting process and the recovery of waste heat, which will enable us to reduce our gas consumption significantly. In ad-dition, we will save a third of the water consumed annually at the Würzburg site, which is a major benefit at a time when water is in short supply.

We are currently in the third sustainabil-ity wave - the most effective so far.

The causes are obvious: the ever-in-creasing pace of climate change and the increasing amount of global waste pose a huge chal-lenge for the whole world. This is why sustainability is the central, un:iversal topic of today and the future - and this for the printing and packaging indus-try as well. As a printing press manufacturer and a provider of digital solutions and servic-es, we experience first-hand the concerns of printers (our customers) in relation to climate developments. How will the legis-lation evolve? Which investments make sense; which are unavoidable? How can they ensure their produc-tion remains stable during this period

Metamor[e]phosis through Sustainability

characterised by crises? Unfortunately, there is no all-encompassing solution, but we do at least do everything we can to use innovative ap-proaches to support our customers.

For example, digital printing from Koenig & Bau-er - with the RotaJET, the VariJET and also with Kammann - using water-based inks offers a particularly sustainable option. Demand-based production can help reduce waste and resource consumption throughout the entire life cycle of the print product. Digital solutions such as our VisuEnergy X energy management system enable customers to reduce their production costs and work more efficiently, which in turn can contribute to climate protection.

The downstream side, where the products are used, contributes more than 90 percent to Koe-nig & Bauer's Scope 3 footprint. This is why re-ducing the energy consumption of the products by increasing their energy efficiency, expanding digital services for optimum press capacity uti-lisation, and making customers aware of the switch to green electricity is a high priority.

We recognise visionary leaders from the print-ing industry who display outstanding sustaina-bility activities with our specially created Green Dot Award.

Metamor[e]phosis through Digitalisation

Metamor[e]phosis through Digitalisation

… because digitalisation means making the analogue world meta.

Digitalisation - with all its opportunities and risks, its limitations and options - is becoming increasingly important in almost all areas of life. This certainly became evident with the re-lease of AI-based tools such as ChatGPT, which gives everyone the opportunity to make use of artificial intelligence - as we did to produce the image on the cover of this annual report. We have long been focusing on how to make the transition from the analogue printing industry to the digital world. Since the start of 2022, a specially established digital unit has been ex-ploring how we and our customers can benefit from digital, data-based solutions.

At a time when data provides a robust busi-ness model, Koenig & Bauer is using the triad of myKyana, Kyana Connect and Kyana Data to set new standards in the print and packag-

ing industry. The mar-ket launch of these three innovations is just one milestone on a comprehensive digital roadmap that aims to improve ma-chine efficiency and the customer experi-ence.

myKyana is the higher-lev-el portal into which all digital solutions from Koenig & Bau-er are pooled. This is where, in future, users will find everything they need to ensure smooth opera-tion of their machines - from service tickets to the management of software

subscriptions and user administration, along with direct purchase options and access to digital ser-vices and products that they subscribed to. It isalso where existing digital solutions will find a new home. myKyana is our customers' gatewayto the extensive digital world that we offer to supplement our innovative printing and packag-ing technologies.

The IIoTgateway Kyana Connect provides thetechnical basis for all data-based products andforms the decisive link between our customers' machines and the Koenig & Bauer cloud. Ma-chine, sensor and job data are pre-processed di-rectly at the source and uploaded to our cloud in a secure and standardised format. This opens up whole new dimensions in data analysis for the users of data-based solutions.

Kyana Data is the first digital product that direct-ly accesses the data provided by Kyana Connect. The production data analysis tool will offer real-time views of key performance indicators in future, as well as uncovering previously hidden potential to improve efficiency in the production process.

The name Kyana will become a byword for the entire digital product portfolio offered by Koenig & Bauer, and stands for our spirit of innovation as a catalyst for digital transformation in our industry.

The three tools are currently in an intensive beta phase during which they are undergoing extensivetesting by selected, strategically important custom-ers. This phase is crucial in order to adapt the prod-ucts to specific needs of the market and to ensure

Metamor[e]phosis through Digitalisation

that they can be rolled out to customers all over the world from spring 2024 on.

As well as focusing on the (further) development of digital solutions for our customers, we as a compa-ny naturally also want to become more digital and fully exploit the associated potential to optimise our processes. Digital solutions are now an indispensa-ble tool, especially when it comes to the transparent configuration of our supply chains, so we can guar-antee reliable procurement and make deliveries on schedule.

In addition, we are directing a keen focus on auto-mating processes in our production facilities - using robotics, artificial intelligence and autonomous, driv-erless transport systems. This will enable us to boost our productivity and, among other benefits, it will help us deal with the increasing shortage of skilled workers.

From the development of digital solutions for our machines and customers to digitalisation at Koe-nig & Bauer itself - we are taking big steps in the right direction. This is not about replacing printing, but making it as smart as possible by adopting digital applications.

Metamor[e]phosis through Modularity

Metamor[e]phosis through Modularity

… because modularity means agility.

10

When we launched our Exceeding Print strategy in the 2021 financial year, it was not apparent at the time how highly relevant the modularity pillar would become in such a short space of time. We originally chose to focus on this topic because the megatrend of individualisation in our industry is resulting in in-creasing complexity, and this demands a higher de-gree of standardisation. The geopolitical events of 2022 and the resulting energy problems, along with disruption to global supply chains, have clearly shown how quickly supposedly stable systems and process-es can start to topple. A global shortage of chips led to bottlenecks in the production of critical compo-nents. This is why it was so important for us to work through these new experiences and initiate measures so we can be even more proactive in responding to unexpected events in future. Making investments to ensure the resilience of our supply chains is essential as the level of global disruption continues to increase. It is becoming apparent that we will have to expectdisruption to supply chains from time to time. In our globalised world, international business relations are an established part of commercial operations. For all the benefits that this brings, developments such as Russia's war of aggression on Ukraine and the Hamas terrorist attack on Israel show how rapidly the world order can change. This does, of course, also have an impact on economic relationships and supply chains.

Group-wide supply chain management, which is re-sponsible for planning and monitoring right along the value chain, is therefore essential. This organisation expediting the following primary tasks:

Identifying and eliminating risks in complex supply chains at an early stage

Ensuring a reliable supply through central purchasing and order management

Devising creative solutions when there is disruption in the market

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KBA - Koenig & Bauer AG published this content on 27 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 March 2024 06:32:03 UTC.