Koenig & Bauer AG (notes according to the German Commercial Code)

The annual financial statements of Koenig & Bauer AG were prepared in accordance with the provisions of the German Commercial Code (HGB).

As a holding company Koenig & Bauer AG does not conduct any operating business of its own but performs central and strategic functions for the Group. Central functions performed for the Koenig & Bauer Group include compliance/auditing, controlling, corporate development, innovation promotion, investor relations, corporate responsibility, accounting, purchasing, IT, corporate accounting, patent and licensing, human resources, legal and insurance, tax and central marketing/corporate communications. In addition, Koenig & Bauer AG provides IT hardware and operates the computer centre for Group tasks and grants licences and brand rights to the subsidiaries. The number of employees on the reporting date, 31 December 2022, excluding apprentices, was 423 (2021: 384).

In addition to income from the services recharged to the operating Group companies and the fees for the use of licences and brand rights, Koenig & Bauer AG’s business performance depends on the dividend income and profit transfers received from the subsidiaries and, hence, their business performance. The direct and indirect investments held by Koenig & Bauer AG are shown in a list in the notes to the consolidated financial statements. The economic environment in which Koenig & Bauer AG operates is essentially the same as the Group’s as described in detail in the business report.

At €98.9m, revenue was slightly above the previous year’s figure of €94.8m and chiefly comprised income from transfer pricing for shared services provided by Koenig & Bauer AG for the operating Group companies and fees for the utilisation of licences and brand rights as well as land and buildings. The slight decline in gross profit is mainly due to increased production costs, mainly for building costs and shared services. On a year-on-year basis, they increased by €5.6m to €–70.3m (previous year: €–64.7m). The gross margin thus contracted to 28.9%, down from 31.8% in the previous year. General administrative expenses rose slightly by €2.5m to €28.0m (2021: €25.5m). The other operating income of €2.3m (2021: €6.8m) mainly reflects the reversal of provisions. The other operating expenses of €11.5m (2021: €6.2m) primarily result from the absorption of Group transfer payments. On balance, this resulted in operating earnings of €-8.6m, compared with €5.2m in the previous year.

Net investment income consists of dividend distributions (2022: €6.1m; 2021: €19.6m), income from profit transfers (2022: €16.8m; 2021: €10.9m), impairments of financial assets (2022: €–10.6m, 2021: €–0.0m) and writeups (2022: €7.9m; 2021: €8.6m) and loss absorption expenses (2022: €2.4m; 2021: €22.7m) from subsidiaries. It climbed by €1.4m to €17.8m as of 31 December 2022 (2021: €16.4m).

Finance expense came to €11.3m (previous year: €8.8m) primarily as a result of higher income from investments and interest. Net interest expense fell slightly to €–6.5m as of 31 December 2022 (previous year: €–7.6m). Tax expense stood at €0.1m (2021: €2.4m). On balance, this resulted in net profit for the year of €2.6m (2021: €11.3m). Together with the retained profit of €35.2m and the allocation of €36.5m to other retained earnings, the unappropriated surplus stands at €1.3m. The previous year’s figure of €35.2m had been mainly influenced by profit carried forward of €29.5m.

The Management Board and the Supervisory Board acting in accordance with section 58 of the German Stock Corporation Act have passed a resolution to retain an amount of €36.5m. The Management Board acting with the Supervisory Board’s approval proposes that the unappropriated surplus of €1.3m be retained.

Assets and finances
As of 31 December 2022, Koenig & Bauer AG’s total assets stood at €741.2m, up from €658.2m in the previous year. Non-current assets increased by a total of €20.2m to €549.5m (31 December 2021: €529.3m). This increase resulted mainly from the capitalisation of the customising expenses for our SAP ERP system. Shares in financial assets in associates increased as a result of the acquisition of 49% of the shares in Koenig & Bauer Celmacch. As of the reporting date, financial assets were valued at €423.3m, up from €408.4m in the previous year. The increase in intangible assets from €43.7m to €53.8m due to the capitalisation of the aforementioned IT projects was accompanied by a decline in property, plant and equipment from €77.2m to €72.4m as a result of higher depreciation and amortisation. The increase in current assets from €126.9m to €189.4m was mainly due to higher receivables from affiliated companies. They include receivables under loans to affiliated companies of €25.0m (31 December 2021: €22.9m), receivables from offsetting cash flows of €58.5m (31 December 2021: €41.0m) as well as trade receivables of €19.1m (31 December 2021: €13.0m). In addition, cash in hand and at banks rose from €35.6m to €64.2m.

At the end of 2022, equity amounted to €309.1m (31 December 2021: €306.5m). This translates into an equity ratio of 41.7% relative to the increased total assets (31 December 2021: 46.6%). Provisions rose slightly from €108.6m in the previous year to €110.6m. The pension provisions of €77.1m and the tax provisions were lower. On the other hand, other provisions increased slightly to €32.1m. All told, liabilities climbed from €242.1m to €320.7m as of 31 December 2022. Liabilities to banks increased from €115.9m to €186.2m mainly due to the utilisation of the syndicated loan. Trade payables, liabilities to affiliated companies and other liabilities also increased year-on-year.

Risk report
Koenig & Bauer AG is exposed to the risks of its subsidiaries. The extent of such exposure depends on the size of its share in the respective company. Reference should be made to the Group’s risk report on pages 35ff for further information. In addition, strain may arise from the contingent liabilities in existence between Koenig & Bauer AG and its subsidiaries.

Koenig & Bauer AG’s future economic performance is closely linked to the Group’s operating performance. The opportunities report on page 45f and the forecast on page 48ff provide information on our prospects and plans for operating business.

Financial and non-financial performance indicators and, hence, a forecast of these in accordance with DRS 20, play a subordinate role for Koenig & Bauer AG as a single entity. However, this does not prejudice compliance with the requirements of company law.