Novem Group S.A.

Novem Group S.A. 222100KIY63U7PV8N251 2024-03-31 222100KIY63U7PV8N251 2023-03-31 222100KIY63U7PV8N251 2022-04-01 2023-03-31 222100KIY63U7PV8N251 2023-03-31 222100KIY63U7PV8N251 2022-03-31 222100KIY63U7PV8N251 2022-03-31 ifrs-full:CapitalReserveMember 222100KIY63U7PV8N251 2022-03-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:CapitalReserveMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:RetainedEarningsMember 222100KIY63U7PV8N251 2022-03-31 ifrs-full:RetainedEarningsMember 222100KIY63U7PV8N251 2022-03-31 ifrs-full:IssuedCapitalMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:IssuedCapitalMember 222100KIY63U7PV8N251 2022-04-01 2023-03-31 ifrs-full:CapitalReserveMember 222100KIY63U7PV8N251 2022-04-01 2023-03-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 222100KIY63U7PV8N251 2023-04-01 2024-03-31 ifrs-full:CapitalReserveMember 222100KIY63U7PV8N251 2023-04-01 2024-03-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 222100KIY63U7PV8N251 2023-04-01 2024-03-31 ifrs-full:RetainedEarningsMember 222100KIY63U7PV8N251 2022-04-01 2023-03-31 ifrs-full:RetainedEarningsMember 222100KIY63U7PV8N251 2022-04-01 2023-03-31 ifrs-full:IssuedCapitalMember 222100KIY63U7PV8N251 2023-04-01 2024-03-31 ifrs-full:IssuedCapitalMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:CapitalReserveMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 222100KIY63U7PV8N251 2024-03-31 ifrs-full:CapitalReserveMember 222100KIY63U7PV8N251 2024-03-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 222100KIY63U7PV8N251 2024-03-31 ifrs-full:RetainedEarningsMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:RetainedEarningsMember 222100KIY63U7PV8N251 2023-03-31 ifrs-full:IssuedCapitalMember 222100KIY63U7PV8N251 2024-03-31 ifrs-full:IssuedCapitalMember 222100KIY63U7PV8N251 2023-04-01 2024-03-31 iso4217:EUR iso4217:EUR xbrli:shares xbrli:pure iso4217:EUR xbrli:shares NOVEM ANNUAL REPORT 2023/24 Established in 1947 4,887 12 employees worldwide locations worldwide NOVEM AT A GLANCE The Novem Group operates from the German town of Vorbach and is the world leader in high-quality trim elements and decorative function elements in car interiors. The customers include all major premium carmakers worldwide. They appreciate the innovative technology, exclusivity and exquisite design of Novem’s products. NOVEM ANNUAL REPORT 2023/24 2 GLOBAL LEADER IN HIGH-END CAR INTERIORS We build perfect decorative trim elements for the best cars in the world. Vision NOVEM ANNUAL REPORT 2023/24 3 OUR LOCATIONS Germany Vorbach Eschenbach Luxembourg Czech Republic China USA Contern Pilsen Langfang Atlanta Cottondale Detroit Italy Slovenia Bergamo Žalec Mexico Querétaro Honduras Tegucigalpa Americas Europe Asia 1,780 employees 2,434 employees 673 employees NOVEM ANNUAL REPORT 2023/24 4 KEY RESULTS In accordance with the European Securities and Markets Authority (ESMA) guide- lines on Alternative Performance Measures (APMs), the Group provides a deﬁni- tion, the rationale for use and a reconciliation of APMs used. The Group uses the APMs shown in the following table. The deﬁnitions and required disclosures of all APMs are provided in the glossary of this Annual Report. All mentioned APMs are used to track the Group’s operating performance. It is neither required by nor presented in accordance with IFRS. It is also not a measure of ﬁnancial performance under IFRS and should not be considered as an alternative to other indicators of operating performance, cash ﬂow or any other measure of performance derived in accordance with IFRS. in € million FY 2022/23 FY 2023/24 Income statement Revenue 700.3 635.5 Adj. EBIT 81.7 69.1 Adj. EBIT margin (%) 11.7% 10.9% Adj. EBITDA 114.2 102.0 Adj. EBITDA margin (%) 16.3% 16.1% Cash ﬂow Capital expenditure 17.9 16.1 Capital expenditure as % of revenue 2.6% 2.5% Free cash ﬂow 84.5 53.8 in € million 31 Mar 23 31 Mar 24 Balance sheet Trade working capital 53.3 50.5 Total working capital 124.0 132.7 Net ﬁnancial debt 123.0 164.9 Net leverage (x Adj. EBITDA) 1.1x 1.6x NOVEM ANNUAL REPORT 2023/24 5 ABOUT THIS REPORT Novem Group publishes both ﬁnancial and non‑ﬁnancial informa- tion in its Annual Report 2023/24. The ﬁnancial year of Novem Group S.A. ends on 31 March and therefore covers the period from 1 April 2023 to 31 March 2024. This Annual Report includes a Non‑ﬁnancial Report in accordance with the Non‑Financial Reporting Directive (NFRD), Luxembourg Law and with reference to the Global Reporting Initiative (GRI) Standards. The consolidated ﬁnancial statements of Novem Group S.A. and the stand‑alone ﬁnancial statements of Novem Group S.A. were audited by KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG). EDITORIAL NOTE The report is only available in English and solely pub- lished in digital form. All references to people such as employees, shareholders, etc. in this report apply equally to all identities. NOVEM ANNUAL REPORT 2023/24 6 TABLE OF CONTENTS CONTENTS 1 TO OUR SHAREHOLDERS 4 CONSOLIDATED FINANCIAL STATEMENTS Letter from the CEOꢀ ꢀ9 Report of the Supervisory Boardꢀ ꢀ11 Consolidated statement of comprehensive incomeꢀ ꢀ64 Novem and the capital marketꢀ ꢀ13 Consolidated statement of ﬁnancial positionꢀ ꢀ65 Consolidated statement of cash ﬂowsꢀ ꢀ66 1 Consolidated statement of changes in equityꢀ ꢀ67 2 NON-FINANCIAL REPORT Notes to consolidated ﬁnancial statementsꢀ ꢀ68 TO OUR SHAREHOLDERS Responsibility statementꢀ ꢀ116 Organisationꢀ ꢀ16 Setup and organisation of the Management Boardꢀ ꢀ117 2 Complianceꢀ ꢀ21 Independent auditor’s reportꢀ ꢀ118 Supply chainꢀ ꢀ24 NON-FINANCIAL Employees and societyꢀ ꢀ26 REPORT 5 ANNUAL ACCOUNTS Energy and emissionsꢀ ꢀ30 3 Balance sheetꢀ ꢀ123 GROUP 3 GROUP MANAGEMENT REPORT Proﬁt and loss accountꢀ ꢀ124 MANAGEMENT REPORT Notes to the annual accountsꢀ ꢀ125 4 Corporate structure and business activitiesꢀ ꢀ34 Responsibility statementꢀ ꢀ134 Key eventsꢀ ꢀ35 Independent auditor’s reportꢀ ꢀ135 Business and general environmentꢀ ꢀ37 CONSOLIDATED FINANCIAL Financial performanceꢀ ꢀ39 STATEMENTS 6 ADDITIONAL INFORMATION Financial positionꢀ ꢀ43 5 Cash ﬂowsꢀ ꢀ46 Segment reportingꢀ ꢀ47 Financial calendarꢀ ꢀ140 ANNUAL Stand‑alone results of operations and ﬁnancial position of Contactꢀ ꢀ140 ACCOUNTS Novem Group S.A.ꢀ ꢀ48 Imprintꢀ ꢀ140 6 Risks and opportunitiesꢀ ꢀ49 Glossaryꢀ ꢀ141 Corporate governance statementꢀ ꢀ58 Disclaimerꢀ ꢀ143 ADDITIONAL Subsequent eventsꢀ ꢀ61 INFORMATION Outlookꢀ ꢀ62 NOVEM ANNUAL REPORT 2023/24 7 Burned wood open pore 1 To our shareholders LETTER FROM THE CEO CONTENTS Ladies and gentlemen, In the present time of transition in the entire automotive industry, we have focused above all on identifying the best possible answers to the economic challenges for Novem. Even though market conditions remain challenging in the short term, we see good prospects for the future of Novem. This is based on a solid order intake indicating positive business development in 1 the medium term and the acquisition of new customers such as Avatr and Tesla. Reﬂecting the trend towards shorter development cycles, various platforms for which Novem has been newly nominated will start production TO OUR within a reasonable period of time. SHAREHOLDERS 2 Starting the year at a robust margin despite the diﬃcult market environment, we saw continued unfavourable trading conditions accompanied by softer demand over the course of the year. Although the ongoing geopolitical and NON-FINANCIAL economic uncertainties remain challenging, we assume that most of these REPORT conditions are temporary and are seeing small signs of an easing of the 3 economic situation. In contrast to the previous year, when positive currency effects played into our hands, we experienced the opposite, which, together with a number of other factors, meant that we were unable to achieve growth GROUP for the year as a whole. Against this backdrop, we are particularly grateful MANAGEMENT for the commitment of our employees. Thanks to their dedication, Novem REPORT stands on a stable foundation from which we are facing up to the adverse 4 conditions, remaining patient as well as vigilant and utilising our resilience. We maintain our focus on acquiring new customers and expanding our busi- CONSOLIDATED ness with premium brands. As an enhancement to our customer portfolio, FINANCIAL we have succeeded in winning Avatr, Kia and Tesla as new customers, which STATEMENTS marks a milestone in strengthening the Group’s position in all regions. Our 5 local tech centre in Langfang, an independent engineering hub for custom- ers in the Asian market, was key to gaining Avatr as a new Chinese premium customer and thus also consolidating our good reputation in Asia. In this ANNUAL way, our successful China strategy opens up excellent prospects for further ACCOUNTS acquisitions, growth and close cooperation with our customers there. 6 Looking at Europe and Americas, we can report a remarkable business success. For the facelift of the Tesla Model Y, we were not only nominated ADDITIONAL for the aluminium and carbon interior design but also for a matching key INFORMATION Markus Wittmann NOVEM ANNUAL REPORT 2023/24 9 Chief Executive Oﬃcer CONTENTS exterior part. This is the aluminium tailgate for which As the production of climate-neutral cars is the clear cost structure and taking reasonable measures to Novem offers the certainty of getting the best out of the goal for all those involved, we are contributing our safeguard our business model, including the closure material. The decision in favour of Novem was made at share by achieving climate neutrality in Germany by of the Italy plant and personnel adjustments in Europe. a strategic level, as we can draw on sound know-how in 2025, in Europe by 2030 and globally by 2035. More Going forward, we uphold our mid-term guidance of the processing of aluminium. After all, it shows recogni- than ever, we want to fulﬁl our responsibility within our 5–6% revenue growth p.a. and an Adj. EBIT margin tion of our extensive expertise and excellent knowledge supply chains and therefore take great care to ensure of 14–15%. of materials. We use familiar technologies and transfer that our suppliers meet high environmental, social and 1 our many years of experience from interior to exterior sustainability standards. On behalf of the Management Board and our employ- design. Production will start in 2025. ees, I would like to thank you all for your support in Following our ﬁrst FSC® certiﬁcation Preferred by the ﬁnancial year 2023/24. We value you as loyal TO OUR For us, sustainability is a fundamental attitude we act Nature, which we received for our site in Langfang, we shareholders who stand by the Novem Group. I am SHAREHOLDERS on at all levels for the beneﬁt of the environment, as are planning to carry out such certiﬁcation for our site convinced that we are ideally positioned to face the 2 well as for the beneﬁt of our employees, our customers in Pilsen in the ﬁnancial year 2024/25. The certiﬁcation tasks ahead and to meet current challenges. I am there- and our suppliers. As a global corporate citizen, we con- states that we meet the requirements of the FSC stand- fore looking forward with great enthusiasm to working sider ourselves responsible for the society and environ- ard with the Chain of Custody and Controlled Wood together and exchanging ideas in the new ﬁnancial year NON-FINANCIAL ment in which we operate. Ensuring the health of our System. One of the areas our research is currently with Novem’s best interests in mind. REPORT staff and consistently complying with workplace safety focussing on is bio-based solutions in which renew- 3 standards worldwide is important to us and is crucial able raw materials replace fossil-based ingredients. In Kind regards, to Novem’s success. Since we began the process of this way, we are making a further active contribution ISO 45001 occupational health and safety certiﬁcation to environmental protection while keeping our eye on GROUP in March 2022, this has been successfully completed top quality. MANAGEMENT for the German sites, Langfang (China), Pilsen (Czech REPORT Republic), Querétaro (Mexico) and Žalec (Slovenia). To Considering the overall situation, we assess Novem’s 4 achieve greater sustainability, we are progressing as future business prospects with cautious optimism. Markus Wittmann planned towards our aim of greenhouse gas neutrality. We are managing the challenges by improving our Chief Executive Oﬃcer CONSOLIDATED FINANCIAL STATEMENTS 5 “ Our strategic direction is proving to be right, and we have a solid and resilient foundation on which we will ANNUAL ACCOUNTS further build for the future.ꢀ” 6 — Markus Wittmann (CEO) ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 10 REPORT OF THE SUPERVISORY BOARD CONTENTS Dear shareholders, The ﬁnancial year ending 31 March 2024 was still affected by several geopolitical uncertainties and their direct and indirect effects on the automotive industry. Worldwide economic uncertainties still tense the 1 supply chains. Novem had to cope with market weaknesses and the ongoing volatile call‑offs by OEMs at a signiﬁcantly lower level. It was the Company’s aim to stabilise the ability to act economically and TO OUR improve costs as much as possible. SHAREHOLDERS 2 In the ﬁnancial year ending 31 March 2024, the Supervisory Board of Novem Group S.A. diligently fulﬁlled its duties in accordance with the statutory requirements and the Company’s Articles of Association. NON-FINANCIAL The Supervisory Board consistently provided counsel and continuously REPORT monitored the work of the Management Board in terms of strategic 3 and operational decisions as well as governance topics and compli- ance. Actions of the Management Board were approved by the Super- visory Board as mandated by the Articles of Association following GROUP a thorough review. In the ﬁnancial year ending 31 March 2024, the MANAGEMENT Supervisory Board consisted of Dr. Stephan Kessel (Chairman), Mark REPORT Wilhelms (Deputy Chairman), Natalie C. Hayday, Florian Schick and 4 Philipp Struth. The Supervisory Board held a total of seven meetings and made one CONSOLIDATED circular resolution during the ﬁnancial year ending 31 March 2024. In FINANCIAL two of seven of the Supervisory Board meetings, all members were STATEMENTS present, while the majority of the members were present in person. 5 In the meetings, the Management Board regularly provided compre- hensive updates to the Supervisory Board on the Group’s status and performance, including opportunities and risks, its market position, ANNUAL business trajectory as well as relevant ﬁnancial data. The discussions ACCOUNTS were founded on detailed reports, both verbal and written, regularly 6 presented by the Management Board. Moreover, the Management Dr. Stephan Kessel Board and the Supervisory Board upheld frequent communication also Chairman of the Supervisory Board outside of the regular meetings to exchange crucial group-related infor- ADDITIONAL mation. This close collaboration also included strategy discussions as INFORMATION NOVEM ANNUAL REPORT 2023/24 11 CONTENTS well as information on organisational development. As the Second Shareholders’ Rights Directive (SRD II, Direc- On behalf of the Supervisory Board, I would like to thank Frank Schmitt’s mandate ended on 24 August 2023, tive (EU) 2017/828). The Remuneration and Nomination the Management Board of Novem Group S.A. for their the Supervisory Board appointed Maria Eichinger as Committee held four meetings via conference calls. All continued excellent performance throughout the last a member of the Management Board effective as of 1 members attended all meetings of the Remuneration ﬁnancial year and their ongoing open and eﬃcient coop- September 2023. After Günter Brenner stepped down and Nomination Committee. eration, regardless of the personnel changes. I would as CEO of the Company and member of the Manage- also like to extend my appreciation to all employees ment Board on 30 September 2023, Markus Wittmann The Supervisory Board examined the Company’s annual for their loyalty and support towards the Company’s 1 was appointed as a member of the Management Board accounts, the consolidated ﬁnancial statements and success during demanding times and, last but not least, effective from 1 October 2024 by the Supervisory Board the Group Management Report for the ﬁnancial year our shareholders for their continuous support. in the course of the succession planning. ending 31 March 2024. Representatives of the audi- TO OUR tor KPMG attended the meetings of the Audit and Risk Luxembourg, 17 June 2024 SHAREHOLDERS During the reporting period, the Audit and Risk Com- Committee on 25 May 2023, 22 June 2023, 8 February On behalf of the Supervisory Board of Novem Group S.A. 2 mittee consisted of Mark Wilhelms (Chairman), Dr. 2024 and 22 May 2024, at which the ﬁnancial state- Stephan Kessel and Natalie C. Hayday. Signiﬁcant ments were examined. The representatives of the Yours sincerely, questions related to auditing, accounting, risk manage- auditor delivered detailed reports on their ﬁndings, NON-FINANCIAL ment, compliance and internal control systems were accompanied by a written presentation and were on REPORT especially reviewed by the Audit and Risk Committee. It hand to offer further explanations and opinions. The 3 monitored the effectiveness of the internal control sys- Supervisory Board did not raise objections to the Com- tem, the risk management system, the internal audit- pany’s annual accounts or to the consolidated ﬁnancial Dr. Stephan Kessel ing system and the compliance management system. statements drawn up by the Management Board for the Chairman of the Supervisory Board GROUP The Audit and Risk Committee discussed the quarterly ﬁnancial year ending 31 March 2024 and to the audi- MANAGEMENT reports, the relationship with investors as well as the tors’ presentation. Additionally, the Supervisory Board REPORT audit assignment to KPMG Luxembourg, including the approved the Non‑ﬁnancial Report of Novem Group S.A. 4 focus areas of the audit. In the ﬁnancial year ending 31 March 2024, the Committee held ﬁve meetings. All The Supervisory Board agreed to the proposal of the members were present at all of the ﬁve meetings. All Management Board, recommended by the Audit and CONSOLIDATED meetings were held via conference calls. Risk Committee, and approved the Company’s annual FINANCIAL accounts and the consolidated ﬁnancial statements for STATEMENTS In the reporting period, the Remuneration and Nomina- the ﬁnancial year 2023/24. The auditor issued unquali- 5 tion Committee was composed of Dr. Stephan Kessel ﬁed audit opinions on 17 June 2024. (Chairman), Mark Wilhelms and Natalie C. Hayday. The Committee discussed all remuneration and nomination- During the ﬁnancial year ending 31 March 2024, there ANNUAL related topics. It prepared the Remuneration Report in were no conﬂicts of interest between the members of ACCOUNTS accordance with the Luxembourg Law of 1 August 2020, the Supervisory Board and the Company. 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 12 NOVEM AND THE CAPITAL MARKET CONTENTS Stock market consecutive year of loss with a decline of -11.2%. The index showed a modest recovery over the ﬁrst three Expectations in the run-up to the stock market year months of 2024. 2023 were not overly optimistic. Although the year began with continued elevated inﬂation rates and During 2023, production disruptions due to semi- fears of recession, it got off to a surprisingly good start, conductor shortages became less frequent, and the predominantly carried by technology stocks. However, automotive sector seems to have found its new normal 1 this was quickly clouded again in March by a minor on this topic. Nevertheless, other challenges, such as banking crisis that wiped out one of the best-known wage inﬂation, the shift to electric vehicles and the Red European banks and some smaller US banks. The Sea crisis keep the industry on its toes. TO OUR Federal Reserve System (Fed) announced four interest SHAREHOLDERS rate hikes in the US up until July 2023 and held rates During the reporting period (1 April 2023 to 31 March 2 steady for the rest of the year after ﬁrst signs of nor- 2024), the broad MSCI World Index recorded a sig- malising inﬂation rates emerged. The European Central niﬁcant increase of 22.6%. With a surge of 28.1%, the Bank (ECB) pursued a similar approach by raising the S&P500 even topped this performance. A glance at NON-FINANCIAL interest rate six times up to September and keeping it Europe shows that the EURO STOXX 50 also developed REPORT stable since then. Statements by the Fed and ECB in favourably with a growth of 17.9%. In Germany, the blue 3 conjunction with easing inﬂation rates and stabilising chips in the DAX rose by 18.4%, clearly outperform- economic data fuelled expectations of interest rate ing small caps. The corresponding SDAX recorded a cuts in the near future. This ultimately triggered a rally, comparatively lower but nevertheless solid increase GROUP particularly towards the end of 2023, making it a pros- of 8.5%. Looking at our benchmark index, the DAX- MANAGEMENT perous year on the stock market, albeit characterised subsector Auto Parts & Equipment posted a moder- REPORT by a great deal of turbulence and volatility. As 2024 gets ate plus of 2.5% and thus demonstrated an apparent 4 underway, the euphoria seems to continue with several underperformance. major indices trading at or close to their all-time highs after the ﬁrst quarter of the calendar year. CONSOLIDATED Stock performance FINANCIAL While equities in the US and Europe have performed STATEMENTS very well over the course of 2023, the picture in China On 3 April 2023, Novem started its ﬁnancial year 5 was rather the opposite. Although all signs pointed to 2023/24 at a share price of €9.86. After a few weeks a ﬂourishing 2023 following the end of the strict zero‑ of a sideways development, the share marked its high Covid policy, China’s economy has not recovered as at €11.30 on 11 August 2023. This was followed by ANNUAL strongly as many investors had hoped due to a string of declining share prices, which ultimately led to the low ACCOUNTS problems. Probably the biggest concern was the severe for the ﬁnancial year and an all‑time low of €5.20 on 20 6 crisis in the property sector, which worsened towards March 2024. The stock closed the ﬁnancial year with a Dr. Johannes Burtscher the end of the year. This also weighed on the stock slight recovery at €5.70 on 28 March 2024. Chief Financial Oﬃcer market and led to the MSCI China marking its third ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 13 CONTENTS Annual General Meeting payment for the ﬁnancial year 2023/24 at the Annual and Frankfurt, facilitating one‑on‑one interactions with General Meeting on 22 August 2024. The decision is existing shareholders and potential investors. Novem’s Annual General Meeting (AGM) was held on merely based on the overall economic uncertainties 24 August 2023, at which 92.4% of the voting share and poor market development. Furthermore, this will Recognising the paramount importance of actively capital was represented. The AGM approved all items help in coping with the current volatile and still diﬃcult listening to stakeholders and valuing their input, the IR on the agenda by a large majority, including the Remu- trading environment, which only allows for a limited team has identiﬁed the persistently low trading volume neration Report, KPMG as the independent auditor and visibility. as a key challenge. Despite the need for patience in 1 the dividend distribution. For the ﬁnancial year 2022/23, bolstering trading activity, efforts to address this issue Novem paid a dividend of €1.15 (PY: €0.40) per share. will continue. To this end, ODDO BHF was appointed as Investor Relations activities The amount comprised an ordinary dividend of €0.40 the second designated sponsor alongside mwb fair- TO OUR per share and a special dividend of €0.75 per share. A trade. Novem is particularly eager to invite investors SHAREHOLDERS strong free cash ﬂow and low net leverage ratio for the Given the constantly shifting market landscape, it was and analysts to its central oﬃce to provide a ﬁrst‑hand 2 ﬁnancial year 2022/23 paved the way for this special essential for the Investor Relations (IR) team to uphold impression of the products and production processes, dividend and shares Novem’s success with its share- a continuous, transparent dialogue with capital mar- thereby rendering its business model and potential holders even beyond the targeted payout ratio. With a ket stakeholders. This involved numerous one-on-one more tangible. NON-FINANCIAL total distribution of €49.5 million, this corresponded to meetings and conference calls alongside the regular REPORT 99.0% of the net income. quarterly investor and analyst conferences to foster 3 even treatment, timely disclosure of information and SHARE DATA sustained engagement. Furthermore, the team con- Dividend as of 31 March 2024 ducted three roadshows – two digitally and one in GROUP Frankfurt – to establish lasting contacts and increase MANAGEMENT In agreement with the Supervisory Board, the Manage- market visibility for the share. Additionally, Novem REPORT ment Board will propose the suspension of the dividend participated in three conferences in London, Munich • Ticker symbol: NVM 4 • ISIN: LU2356314745 • WKN: A3CSWZ CONSOLIDATED “ Despite facing tough market conditions, FINANCIAL • Frankfurt Stock Exchange STATEMENTS • Market segment: Prime Standard 5 Novem once again managed to deliver • Number of shares: 43,030,303 • Dematerialised shares with no nominal value a solid ﬁnancial performance.ꢀ” ANNUAL • Market capitalisation: €245,272,727 ACCOUNTS • Highest price FY 2023/24: €11.30 — Dr. Johannes Burtscher (CFO) 6 • Lowest price FY 2023/24: €5.20 • Closing price: €5.70 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 14 Fabrics made of recycled yarn 2 Non‑ﬁnancial Report ORGANISATION DEMONSTRATING FUNCTIONALITY AND SUSTAINABILITY CONTENTS Business model Companies of the Novem Group As a prime example at the Novem Interior World, the new Cocoon illustrates our so- Novem was founded in 1947 and can look back on • Novem Group S.A. phistication in the interaction of technology decades of success. Over the years, we have grown • Novem Group GmbH and material for decorative interior com- continuously, tapped into new markets and diversiﬁed • Novem Beteiligungs GmbH ponents. With many years of experience our product and material portfolio. Novem is the global • Novem Deutschland GmbH in developing premium trim elements, the market leader for high‑quality trim parts such as centre • Novem Car Interior Design GmbH Cocoon stands for a comfortable place for 1 consoles, beltlines or dashboards as well as decora- • Novem Car Interior Design Vorbach GmbH passengers where future innovations can be tive functional elements in car interiors. In 2023/24, • Novem Car Interior Design Metalltechnologie GmbH explored in the smallest space. Sustainable we delivered around 22.4 million trim elements for a • Novem Car Interior Design S.p.A. Bergamo materials such as bamboo, cork and paper TO OUR wide range of vehicles, with a key focus on the pre- • Novem Car Interior Design k.s. meet hidden morphing buttons and wire- SHAREHOLDERS mium car segment. Our customer base is continuously • Novem Car Interior Design d.o.o. less charging solutions. A camera-assisted 2 expanding and includes the world’s leading premium • Novem Car Interior Design, Inc. display that reacts to its surroundings com- car manufacturers. • Novem Car Interior Design Mexico S.A. de C.V. pletes showcasing the trends in car interiors. • Novem Car Interior Design S. de R.L. NON-FINANCIAL Novem Group S.A. has been listed on the Frankfurt • Novem Car Interiors (China) Co., Ltd. REPORT Stock Exchange since 19 July 2021. 3 Economic stability and capacity for Novem locations worldwide transformation GROUP MANAGEMENT • Europe: 2,434 employees | Czech Republic, Ger- The automotive industry is undergoing a fundamental REPORT many, Italy, Luxembourg, Slovenia transformation. Electriﬁcation, autonomation and digi- 4 • Americas: 1,780 employees | Honduras, Mexico, talisation are changing the way vehicles are designed, USA manufactured and used. Along with these develop- • Asia: 673 employees | China ments, the concept of the vehicle interior is also chang- CONSOLIDATED ing. New surfaces and spaces are emerging, presenting FINANCIAL From our central oﬃce in Vorbach in Bavaria, Germany, an opportunity to redesign the interior. Furthermore, the STATEMENTS we manage our global network of production, logis- rise of autonomous driving is adding an experiential Cocoon uniting expertise in technologies 5 tics and sales locations. The parent company Novem dimension to this space, prompting consumers to have and materials Group S.A. is located in Contern, Luxembourg. We cur- ever higher expectations of functionality and comfort. rently have 12 locations in Europe, Americas and Asia ANNUAL and employ 4,887 people worldwide. Our international Being the global industry leader, Novem wants to Sustainability plays a central role here: with renew- ACCOUNTS presence helps us to be close to our customers and to actively shape this change. We are responding to the able and recycled raw materials as well as a design 6 distribute our products worldwide. transformation of the industry with targeted invest- for circularity, we reduce our ecological footprint and ments to prepare our employees and our locations create sustainable values for our customers. For for the challenges ahead and to drive forward the example, we are researching alternative materials ADDITIONAL development of new technologies and innovation. such as bio‑based synthetics, water‑based lacquers INFORMATION NOVEM ANNUAL REPORT 2023/24 16 CONTENTS Product safety and quality and one-material concepts. We are also developing After Novem disclosed a part of its business activities new designs that cater to our customers’ increasing as eligible in ﬁnancial year 2021/22 in accordance with demands for functionality, sustainability and quality. the widespread interpretation of the EU taxonomy for Our products are not safety-relevant components in Our spirit of research is reﬂected in the large number automotive suppliers at the time, the EU Commission the vehicle. Nevertheless, we are committed to high of patents held by Novem. updated the regulations on the EU taxonomy. For ﬁnan- standards of quality and safety along the entire value cial year 2023/24, all of Novem’s business activities had chain – from planning and manufacturing to the deliv- A solid economic foundation enables us to make invest- been reassessed regarding the latest developments of ery to our customers. We aspire to the highest quality 1 ments that secure our future viability as a company. In the EU taxonomy. and, therefore, use high-end materials and modern the ﬁnancial year 2023/24, the Novem Group achieved production processes. At all its locations, Novem has sales of €635.5 million (PY: €700.3 million). Even so the newly added activity 3.18 Manufacture of a Quality Management System certiﬁed in conformity TO OUR automotive and mobility components in the amend- with IATF 16949 in place. This is how we consistently SHAREHOLDERS ments of the Delegated Regulation (EU) 2021/2139 improve our processes and ensure that our products 2 Addressing the EU taxonomy suggested a reasonable ﬁt to Novem’s business port- are in compliance with the high quality standards. folio, the analyses showed that interior or trim com- In accordance with the European Non‑Financial Report- ponents are not essential for delivering and improving All safety and quality aspects are controlled by Central NON-FINANCIAL ing Directive (NFRD), companies are required to include the environmental performance of the vehicle and Quality Management, which deﬁnes the guidelines REPORT taxonomy disclosures in their non‑ﬁnancial reporting therefore not an exact match to the deﬁnition of the applicable to all locations in the Group. Each location 3 as of 2021. This also applies to Novem. The EU taxon- above-mentioned activity. has a dedicated Quality Manager who is responsible omy is a classiﬁcation system for economic activities for implementing all central regulations. aimed at achieving the goals of the Paris Agreement by Besides the assessment of Novem’s main business GROUP means of transparency in the capital market. activities, the analysis in ﬁnancial year 2023/24 showed In line with our commitment to quality, we craft many of MANAGEMENT that no other material investments made fall under the our products to a relatively high degree by hand, adding REPORT The taxonomy regulation with its corresponding del- EU taxonomy either. The only taxonomy relevant activ- a unique exclusivity. By combining different materials 4 egated acts sets threshold values for economic activi- ity at Novem relates to operational expenditures for the such as wood, aluminium, carbon and premium syn- ties. An economic activity contributes substantially vehicle ﬂeet. Nevertheless, the expenses incurred in the thetics and by using renewable raw materials such as to the achievement of one environmental objective ﬁnancial year do not account for a signiﬁcant propor - ﬂax (linen) and bamboo, we create highly individual, CONSOLIDATED (taxonomy alignment) if the threshold values, so called tion of total expenses and are therefore not reported innovative products. In addition, at our Novem Interior FINANCIAL technical screening criteria, for this environmental separately. Further information on turnover, opex and World design centre, we work on ideas for new and STATEMENTS objective are met, none of the other ﬁve environmental capex can be found in chapter Consolidated ﬁnancial sustainable surfaces. 5 objectives is negatively affected by the economic activ- statements of the Annual Report. ity (Do No Signiﬁcant Harm (DNSH)) and the minimum safeguards are met. This year, companies are required Novem proactively addresses sustainability regulation. ANNUAL to report the extent of taxonomy eligibility and align- Therefore, Novem is well prepared to fulﬁl the require- ACCOUNTS ment on the two climate-related objectives and eligibil- ments in the areas of taxes, anti-corruption, fair com- 6 ity on the other four environmental objectives. petition, and human rights. Novem has implemented the German Supply Chain Act (Lieferkettensorgfalts- pﬂichtengesetz (LkSG)). ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 17 CONTENTS Sustainability management Sustainability organisation of the Novem Group Embracing social, environmental and sustainable economic responsibility will empower Novem and the Sustainability entire automobile industry to move forward into the Board Executive Board future. The benchmark for this at Novem is provided by of the Novem Group customer goals and consumer aspirations, alongside 1 signiﬁcant social developments. Responsibility for sustainability The strategic responsibility for sustainability at Novem TO OUR lies with the Executive Board, which heads the Sustain- SHAREHOLDERS ability Board of the Novem Group. This body, compris- 2 ing representatives from the central divisions, decides Legal and Human Quality on the strategic direction in matters of sustainability. Purchasing Compliance Resources Management To achieve this goal, it maintains ongoing exchange NON-FINANCIAL with the relevant specialist departments and receives REPORT monthly updates from all departments regarding Coordination Responsibility for 3 sustainability-relevant matters. Responsibility for Responsibility for of group-wide social and environ- compliance employee concerns sustainability mental standards in activities the supply chain Various departments manage the sustainability agenda GROUP for our operational activities: the EHS and Sustainability MANAGEMENT team, which is part of Central Quality Management, is REPORT responsible for coordinating global activities on the 4 topics of environment, health and safety. The Human Resources department deals with all the concerns and EHS and Sustainability requirements that affect the employees. Compliance CONSOLIDATED with social and environmental standards in the supply Operational controlling of sustainability and coordination FINANCIAL chain is the responsibility of Purchasing. STATEMENTS of sustainability activities of the Group 5 ANNUAL reports on aspects relating to sustainability ACCOUNTS 6 EHS coordination of the plants ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 18 CONTENTS Integration of stakeholders Suppliers and partners: supplier portal, membership of • Lüdenscheid Plastics Institute (Kunststoff-Institut various networks, trade fairs and exhibitions Lüdenscheid) As a globally active enterprise, we are in constant • Partner Circle of the University of Applied Sciences dialogue with numerous stakeholder groups. These Politics: associations, direct communication with local (OTH) Amberg-Weiden include our existing and potential employees, custom- representatives • Partner Duale Hochschule Gera-Eisenach ers and consumers, suppliers and partners, as well as policymakers and members of the general public. Press and media: reports, website, press releases, 1 Determination of material sustainability topics We keep our employees constantly informed about all social media important developments in the Group. We also seek close cooperation with customers, consumers and Investors and analysts: investor relations website, In 2020, we conducted an analysis to identify material TO OUR our suppliers and partners. Besides using digital and publications, capital market presentations, confer- topics in the area of sustainability. In this context, we SHAREHOLDERS analogue media to facilitate communication, we also ences, investor relations newsletter, roadshows, calls evaluated a total of 13 topics in terms of their impact 2 take the opportunity to meet stakeholders in person at and meetings on people and the environment (inside-out perspective), events such as trade fairs, exhibitions and conferences. taking into account the views of our stakeholders. We We maintain an ongoing discourse with politicians and Memberships and partnerships (selection) extended this analysis in 2021 to include the perspec- NON-FINANCIAL business leaders, particularly through our member- tive of business relevance (outside‑in perspective). For REPORT ships in various associations and initiatives. In addition, • German Association of the Automotive Industry this purpose, we conducted an online survey among 3 we promote direct communication at local level. (Verband der Automobilindustrie (VDA)) managers who are familiar with sustainability issues at • Association of the Wood Industry and Plastics Novem. We combined the results of these two analyses Our formats for dialogue with stakeholders Processing Bavaria/Thuringia (Verband der Holz‑ to obtain an initial assessment of the material topics. GROUP wirtschaft und Kunststoffverarbeitung Bayern/ MANAGEMENT Employees: employee newspaper inside, intranet Thüringen e.V.) In the concluding phase, the results underwent discus- REPORT NovemNET, Family Day, Open Day, website, social • BF/M Research Centre on Business Management sion, validation and partial adjustment by the managers 4 media, employee portal for Questions of Medium‑sized Companies (BF/M involved. This led to the identiﬁcation of eight topics Betriebswirtschaftliches Forschungszentrum für that can be classiﬁed as material both with regard Applicants: cooperation with universities (e.g. OTH Fragen der Mittelständischen Wirtschaft e.V. (BF/M to our impact on the environment and society and in CONSOLIDATED Amberg-Weiden, University of Bayreuth), Code of Bayreuth)) terms of their relevance to our business. These topics FINANCIAL Conduct, job advertisements, website, social media, • Federal Association for Supply Chain Manage- were validated by management again at the beginning STATEMENTS regional career fairs at institutes of higher education ment, Procurement and Logistics (Bundesverband of 2024. 5 or as organised by supra-regional associations Materialwirtschaft, Einkauf und Logistik e.V. (BME)) • Plastics Information Europe (Kunststoff Informa- Customers and consumers: brochures, website, com- tion Verlagsgesellschaft mbH) ANNUAL pany presentations, corporate videos, roadshows • German-speaking SAP User Group (Deutschspra- ACCOUNTS (attendance or digital), personal customer appoint- chige SAP Anwendergruppe e.V. (DSAG)) 6 ments, dispatch of design samples and catalogues, • VOICE – Federal Association of IT Users (VOICE – trade fairs and exhibitions (e.g. with other suppliers Bundesverband der IT-Anwender e.V.) or partners), presentations at international specialist • ISELED (Intelligent Smart Embedded LED) Alliance ADDITIONAL conferences • Driving Vision News (DVN) INFORMATION NOVEM ANNUAL REPORT 2023/24 19 CONTENTS Material non-ﬁnancial topics Non-ﬁnancial aspects Material non-ﬁnancial topics Chapter according to the Non-Financial Reporting Directive (NFRD) High‑quality Products and 1 Customer Satisfaction Business model Business model Economic Stability Transformation Capability TO OUR Combating corruption and Compliance Responsible corporate governance SHAREHOLDERS bribery 2 Procurement and Supply Chain Supplier management and sustainable procurement Human rights Management Human rights Supplier management and sustainable procurement Decent Working Conditions and Employee matters NON-FINANCIAL Human Rights Employees and society Social issues REPORT Occupational Health and Safety Employees and society Employee matters 3 Energy and Emissions Climate protection Environmental concerns GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 20 COMPLIANCE CONTENTS Responsible corporate governance the principles deﬁned therein. Any breach or violation Elements of the Novem Code of Conduct of those principles can be reported by internal or exter- Value-based action is the foundation for our global nal persons via our web-based whistleblower system, • Compliance with applicable laws on a local, national business activities. Responsibility is one of our four which can be used to submit reports anonymously and international level core values. This entails assuming responsibility for and in encrypted form. These are then examined by • General principles of conduct the impact of our business and always considering the Corporate Legal and Compliance department and, • Working conditions and human rights our stakeholders’ expectations. Conscious and ethi- where necessary, result in corrective measures being • Dealings with business partners and third parties 1 cally correct behaviour towards employees, colleagues, taken in close coordination with the specialist units and • Competition and corruption business partners, society and the environment is the management under strict conﬁdentiality. We are • Protection of property integral to Novem’s system of values. Each and every not aware of any violations of the Code of Conduct • Data privacy and data security TO OUR individual is required to act responsibly, fairly and in principles in this reporting year. • Protection of the environment SHAREHOLDERS accordance with the rules. • Communication and ﬁnancial responsibility 2 The foundation of our own corporate actions and collaborations with suppliers and partners lies in our The foundation of our actions Compliance commitment to universally valid human rights and rec- NON-FINANCIAL ognised social standards. Therefore, the Code of Con- REPORT Being a global player and a partner of leading automo- duct and our Declaration of principle on the German Conduct in accordance with integrity and statutory 3 tive manufacturers in the premium segment, we are Supply Chain Act (LkSG) reﬂect the principles relating legislation forms the basis for our business operations. subject to many different statutory regulations and the to human rights and decent working conditions in In our Code of Conduct, we have clearly formulated high standards prevailing in the automobile industry. accordance with the United Nations Charter of Human the ground rules for this behaviour. Novem upholds GROUP We are committed to complying with the regulations Rights and the International Labour Organisation Dec- fair and undistorted competition involving compliance MANAGEMENT in place, and we take responsibility for our actions. Our laration on Fundamental Principles and Rights at Work. with the relevant competition and antitrust regulations. REPORT Quality Management has been certiﬁed in conformity Furthermore, the Code of Conduct adopts the content Each employee at Novem is responsible for acting in 4 with IATF 16949. This international standard based on of various national regulations on conﬂict minerals accordance with these principles. Our employees are EN ISO 9001 combines existing general requirements as its guideline for a responsible procurement policy. supported and advised by the relevant supervisors. for Quality Management Systems in the automobile The protection of the environment is likewise part of CONSOLIDATED industry. our Code of Conduct and our Declaration of principle The Corporate Legal and Compliance department at FINANCIAL on the German Supply Chain Act. As a result of the Novem, which reports directly to the Management STATEMENTS In our Code of Conduct, we have deﬁned how we live up recent changes, our entire value chain is committed to Board, manages the issue of compliance. Compliance 5 to our responsibility throughout the Group. This docu- ensuring compliance with all environmental regulations management provides support for adherence to ethi- ment deﬁnes essential statutory regulations, ethical and further measures for continuous improvement of cal conduct in conformity with statutory regulations in principles, values and ideals, as well as internal and environmental and energy eﬃciency. the course of routine day-to-day business and also ANNUAL external guidelines for integrity of conduct. It applies ensures integrity at organisational level. For this pur- ACCOUNTS equally to all the employees, management staff and pose, compliance management works closely with the 6 executive managers working at the Novem Group, as specialist departments and operational business units. well as to the supervisory boards elected at the individ- Furthermore, local compliance partners are available ual companies. We also expect our business partners, to provide advice at all locations throughout the world. ADDITIONAL suppliers and sub-suppliers to act in accordance with Employees and external business partners alike can INFORMATION NOVEM ANNUAL REPORT 2023/24 21 CONTENTS report any breaches or infringements of these princi- in line with the growth of the Group, for example by tax authorities in various jurisdictions. Information is ples by telephone, email or via the web-based whistle- integrating sustainability aspects. This involves ana- regularly exchanged with the responsible local and blower system on our website www.novem.com. lysing matters such as transitory risks resulting from national tax authorities. Within the Group, we con- new statutory legislation and regulations on climate stantly identify and assess tax risks on the basis of Our Compliance Policy provides our employees with protection, such as the introduction of a CO2 tax or management and controlling systems. The Vice Presi- concrete guidelines for acting in harmony with the a ban on diesel vehicles in large cities. We also take dent Accounting and Tax reports to the Management rules and regulations. This document can be accessed technological innovations into account. From today’s Board and Supervisory Board committees on important 1 at any time on the intranet. In the reporting year, we perspective, there are no ESG-related (Environmental, tax issues and projects on a monthly basis. If complex provided further training on the content of the Code of Social, Governance) risks or opportunities associated decisions must be made, expert reports and opinions Conduct, on the issue of anti-bribery, on competition with Novem’s own business activities, business rela- are obtained from outside the company. The area of TO OUR and antitrust law as well as on IT, information security tionships or products and services that could have corporate taxes is subject to a complex, fast-moving SHAREHOLDERS and data privacy, each with high participation rates of a signiﬁcant negative impact on the non‑ﬁnancial and highly regulated framework that requires constant 2 well beyond 90%. These trainings help to sensitise our aspects in accordance with the NFRD. To keep track, monitoring. On the one hand, this requires the area to employees on how to deal with partners and suppliers we use the EcoVadis IQ application, which is integrated be backed up by educated and trained personnel and, while behaving with integrity and in compliance with into our Supplier Quality Management system. We also on the other hand, eﬃcient and effective processes are NON-FINANCIAL the law. We continue to provide all relevant employees work with this tool for the ESG risk assessment for our needed, which must be further enhanced and strength- REPORT with annual training on these topics. We are not aware own business area as well as the downstream value ened through system-oriented checks. 3 of any incidence of corruption in the reporting year. chain, among other things, to fulﬁl the obligations of At regular intervals, we conduct workshops with the the German Supply Chain Act. Data protection and information security specialised departments to provide ongoing training GROUP on selected compliance-relevant topics. MANAGEMENT Taxes Ensuring the protection of data and maintaining the REPORT As a matter of principle, we record potential corruption conﬁdentiality of information are ﬁxed components of 4 risks as part of our compliance risk management and Operating globally, we have to deal with a wide range our corporate principles. We consistently comply with assess them based on probability and damage con- of complex tax regulations in the countries we oper- the relevant laws and regulations on data protection sequences. In the reporting year, we also conducted ate in. The Novem Group and its companies have whenever we collect, store, process or transfer per- CONSOLIDATED compliance risk workshops and analyses at all loca- both unrestricted and restricted tax liability in various sonal data and information. FINANCIAL tions worldwide. The insights gained from these work- countries. Complying with the applicable tax laws and STATEMENTS shops are incorporated into the group-wide compliance meeting the associated tax obligations is part of our The protection of conﬁdential and secret data is abso- 5 management system. fundamental principles. lutely essential, particularly in cooperation with our business partners. When we exchange conﬁdential The Management Board at Novem is responsible for information with customers and suppliers of Novem, ANNUAL Risk management compliance with tax obligations. Based on the alloca- we conclude appropriate non-disclosure agreements ACCOUNTS tion of business activity, this responsibility is part of to protect the secrecy of this information. To live up 6 Novem deals with any and all risks that may exist or the remit of the Vice President Accounting and Tax. to its responsibility, Novem has a dedicated IT and arise from and for its business activities as part of its Continuous communication and consultation take information security team that is made up of repre- central risk management in the Controlling department. place with all stakeholder groups that have an inter- sentatives from IT Security and Compliance. We have ADDITIONAL We aim to continuously improve this risk management est in this matter. Novem is regularly audited by the also established a central notiﬁcation oﬃce at Novem INFORMATION NOVEM ANNUAL REPORT 2023/24 22 CONTENTS for IT issues and malfunctions relevant to security. The Novem Group is also supported by an external Data Protection Oﬃcer. To safeguard the necessary IT and information security, Novem has established a certiﬁed information security management system in accordance with the TISAX 1 Standard (Trusted Information Security Assessment Exchange). This is based on the DIN EN ISO 27001 standard. In this context, we have implemented and TO OUR tested technical and organisational measures. These SHAREHOLDERS are reviewed, improved and renewed continuously. In 2 the ﬁnancial year 2023/24, we successfully carried out the planned certiﬁcation of Eschenbach (Ger- many), Pilsen (Czech Republic) and Žalec (Slovenia) in NON-FINANCIAL conformity with TISAX. The recertiﬁcation of Vorbach REPORT (Germany) has been started in January 2024 and is 3 intended to be completed during the ﬁnancial year 2024/25. In addition, we also continue to internally assess all plants and locations regarding IT and infor- GROUP mation security. MANAGEMENT REPORT Every employee has an obligation to deal responsibly 4 with personal data in compliance with applicable statu- tory regulations and safeguarding conﬁdential informa- tion.Tofacilitatethis, wehavesummarisedallprovisions CONSOLIDATED under data protection legislation and regulations on IT FINANCIAL and information security in relevant guidelines. Regular STATEMENTS online training sessions are conducted to provide our 5 employees with information on the topics of data pro- tection, IT and information security. In the reporting year, well beyond 90% of employees with PC workstations at ANNUAL the European locations took part in online training on ACCOUNTS data protection. Furthermore, a continuously running 6 phishing simulation was implemented in Germany to raise awareness for cyber security. A global roll-out is foreseen for the ﬁnancial year 2024/25. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 23 SUPPLY CHAIN CONTENTS Supplier management and sustainable some countries. The share of local sourcing amounted Code of Conduct and the Declaration of principle on procurement to 41%. For auxiliary and process materials, the ﬁgure the German Supply Chain Act. Given this context, we improved by six percentage points to 72% (PY: 66%). expect our suppliers to have an energy management Given the wide variety of materials we use, our value system in place, implement the EU Chemicals Regula- chain is highly diverse. Consequently, it becomes tion (REACH), conﬁrm the exclusion of conﬂict minerals Guidelines for procurement imperative for us to build stable, trusting and long- and use reusable packaging. term relationships with our partners. This is the basis 1 for purchasing materials that meet our demanding The Novem Code of Conduct as well as the Declara- Environmental and social standards quality requirements. Close partnerships also enable tion of principle on the German Supply Chain Act deﬁne us to swiftly adapt to changing and more stringent basic requirements that we apply to cooperation with TO OUR requirements. our suppliers, such as the prohibition of child labour, The Novem supplier network spans multiple countries, SHAREHOLDERS respect for human rights, commitment to freedom each with varying environmental and social require- 2 of association and compliance with environmental ments. Naturally, we always comply with national The supply chain at Novem regulations. In the reporting year, we were not aware legislation in these areas. Wherever our internal rules of any infringements of these requirements throughout transcend the relevant statutory regulations, we apply NON-FINANCIAL Novem maintains a global network of around 423 sup- the Novem supplier network. In the course of supplier our higher standards. We have established the social REPORT pliers for the procurement of production materials, management, we review compliance with the Code of and environmental requirements applicable to our 3 including both small family businesses and large Conduct and our Declaration of principle on the Ger- suppliers in the group-wide Novem procurement condi- corporations. During the reporting year, we purchased man Supply Chain Act on a random basis. Suspected tions, the Supplier Manual, the Declaration of principle goods valued at €284 million for production. The larg- breaches can be reported to our Central Compliance on the German Supply Chain Act and the Code of Con- GROUP est product groups in terms of sales include untreated, Management either by internal personnel or by exter - duct. Every year, all Novem employees undergo training MANAGEMENT galvanised and painted plastic parts, electrical com- nal parties. Business partners, suppliers and third on the Code of Conduct, encompassing human rights REPORT ponents, surface materials, granules, speaker grilles, parties can also submit reports via our web-based within our value chain. 4 aluminium sheets and veneers. These account for whistleblower system. If infringements of the Code around 85% of the total procurement volume. of Conduct and/or the Declaration of principle on the Novem requires all new suppliers of series materials German Supply Chain Act are substantiated, Novem to conﬁrm compliance with the Code of Conduct and CONSOLIDATED Purchasing at Novem is handled centrally on the basis insists on immediate compliance and reserves the right the Supplier Manual. In line with these requirements, FINANCIAL of product groups. Moreover, local Purchasing depart- to impose sanctions as appropriate (e.g. new business new suppliers can only be integrated into the system STATEMENTS ments assist in procuring goods. The procurement on hold), including the possibility of terminating the if they have made a commitment to compliance with 5 strategy at Novem provides for sourcing the necessary business relationship. the Code of Conduct. Environmental management is materials for series production from national suppliers also an important aspect when selecting new suppliers. wherever possible. This approach minimises the risk of In our Supplier Manual, we describe concrete, group- Certiﬁcation of speciﬁc suppliers in conformity with ANNUAL delivery bottlenecks, avoids long transportation routes wide standards for the relationships with our suppliers. ISO 14001 and ISO 50001 has therefore been deﬁned ACCOUNTS and supports the local economy. However, the high These include quality, environmental and health protec- as an objective. Each year, relevant suppliers are deter- 6 requirements placed on our products by our custom - tion and compliance with the principles set out in our mined based on an assessment of the manufacturing ers mean that this is only feasible to a certain extent in processes for the supplied products. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 24 CONTENTS The certiﬁcation is included in the annual supplier assessment. Currently, 88% of the largest suppliers of series materials in terms of purchasing volume com- ply with the ISO 14001 standard, and 57% comply with the ISO 50001 standard. Failure on the part of a sup- plier to comply with this requirement has a negative impact on the supplier assessment in accordance with 1 IATF 16949. Since ﬁnancial year 2021/22, the evalua- tion of suppliers of relevant product groups additionally considers whether they have implemented a certiﬁed TO OUR occupational health and safety management system SHAREHOLDERS in place in accordance with the ISO 45001 standard. 2 In ﬁnancial year 2023/24, we successfully continued to evaluate our suppliers by EcoVadis IQ platform. Sup- NON-FINANCIAL pliers accounting for 96% (PY: 74%) of annual turnover REPORT were assessed in this reporting period. We have, there- 3 fore, exceeded our target of evaluating suppliers that account for at least 90% of revenue by June 2024. The Corporate Social Responsibility (CSR) assessment is GROUP incorporated into the general supplier assessment. MANAGEMENT REPORT As required by the German Supply Chain Act, we have 4 incorporated the EcoVadis IQ tool into our risk-based approach. We consider the risk of human rights viola- tions in our supply chains to be very low, given that CONSOLIDATED most of our suppliers are well-established, globally FINANCIAL recognised and certiﬁed companies within the auto- STATEMENTS motive industry. 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 25 EMPLOYEES AND SOCIETY CONTENTS Decent working conditions Dialogue and communication included in the HR goals on a management level to increase the focus on this ﬁgure and to ensure we pay Our employees, with their knowledge, their motivation more attention to the reasons why employees decide Our common purpose also includes our commitment and their commitment, constitute our most valuable to leave. This information is gained through exit inter- to collective freedom of association. We therefore pro- asset. Ensuring the health and safety of our employees views and analysis with superiors. Where recommend- mote close cooperation with employee representatives is our top priority, as outlined in our corporate policy. At able, we also use a tool that allows us to detect the risk at various levels. The consideration of employee inter- Novem, we offer all our employees a working environ- of employees leaving the company at an early stage. ests is anchored in our Code of Conduct and applies 1 ment characterised by fairness and trust, regardless The ﬁndings are used to deﬁne further measures to equally at all locations. During the reporting period, of their location. Our overarching personnel strategy is avoid undesired ﬂuctuation. there were no business locations where the right to therefore based on the universally applicable corporate freedom of association and collective bargaining was TO OUR values of the Novem Group: Responsibility, Excellence, infringed or put at risk. SHAREHOLDERS Employees by region and gender at the Novem Innovation and Commitment. 2 Group Depending on country and location, the form of direct Our Code of Conduct deﬁnes our way of working and indirect participation of employees at Novem together across all locations. To safeguard the stand- varies. In Germany, the Works Constitution Act regu- FY FY FY NON-FINANCIAL ards and principles for personnel work in the interests lates the corporate co-determination of employees. 2021/22 2022/23 2023/24 REPORT of the Group, human resources at Novem are managed We also cooperate on the basis of mutual trust with Europe 3 both by the central oﬃce and decentrally so that all the individual local works councils at each location. Total 2,969 2,893 2,434 employees can be offered the best possible support The economic situation of the business is regularly Female 44% 44% 43% and development at a local level. Every employee has discussed on the Economics Committee. Potential GROUP a deﬁned local contact to whom they can turn with changes for the workforce are always discussed with Male 56% 56% 57% MANAGEMENT their issues and concerns. We promote international the works council. We inform our employees in good REPORT Americas communication through a regular worldwide HR Con- time of any operational changes that may impact them Total 1,842 1,807 1,780 4 ference, which took place in 2023 and is planned again by posting notiﬁcations on the bulletin board and on our Female 44% 46% 47% for 2025. intranet NovemNET. In the case of time-limited collec- Male 56% 54% 53% tive bargaining agreements and company agreements, CONSOLIDATED At our locations across the world, a total of 4,887 Asia we approach the respective contractual party in good FINANCIAL people were employed at the end of the ﬁnancial year time to initiate the conclusion of new agreements as STATEMENTS Total 729 788 673 2023/24. During this period, we were able to recruit a necessary. Female 35% 36% 37% 5 total of 872 new employees. Male 65% 64% 63% We are also committed to cooperating with employee Total worldwide 5,540 5,488 4,887 The undesired ﬂuctuation rate among employees was representatives at our international locations, for exam- ANNUAL around 3.8% for the central oﬃce in the reporting year ple, with the local unions in Bergamo (Italy), Querétaro ACCOUNTS (PY: 3.5%). To keep this ﬂuctuation at a low level, we (Mexico) and Žalec (Slovenia). Our approach is char- 6 are increasing our efforts to develop up-and-coming acterised by mutual respect and trust, and we strive to junior staff and are focusing our human resources ﬁnd solutions to issues and challenges that take appro- work on further training for managers. Furthermore, priate account of the interests of all parties involved. ADDITIONAL the undesired ﬂuctuation rate in the central oﬃce was INFORMATION NOVEM ANNUAL REPORT 2023/24 26 CONTENTS Health and safety Attractive employer Number of employees on parental leave We offer our employees a working environment that We safeguard the health and safety of our employees FY FY FY also acknowledges their performance through ﬁnancial 2021/22 2022/23 2023/24 through a comprehensive health and safety manage- rewards. We provide performance-based compensa- ment system. The topics of workplace safety and Employees in 1,329 1,271 1,146 tion systems worldwide by means of bonus systems Germany health protection within the Novem Group are man- that we have established in the individual countries. In aged by the central EHS Team, seamlessly integrated On parental leave 1 Germany, around 90% of all employees are remuner- into Central Quality Management. Additionally, each Female 14 31 34 ated under collective bargaining agreements. In addi- site has an EHS Oﬃcer responsible for implementing Male 40 36 29 tion, there are non-payscale components that take the central objectives and goals. TO OUR Total 54 67 63 account of the individual operational circumstances SHAREHOLDERS in the various departments. Novem has deﬁned multilocational processes in the 2 Given our attractive conditions, our goal is to retain our guideline for health and safety in order to comply with Additional beneﬁts round off our compensation pack- staff while also attracting new talents. This is increas- statutory requirements for health and safety. We have age. In Germany, we offer to contribute to an additional ingly important in view of the current labour market introduced a certiﬁed occupational health and safety NON-FINANCIAL pension plan for our employees. Furthermore, we offer challenges: demographic change and the associated system in conformity with ISO 45001 in the ﬁnancial REPORT them capital‑forming beneﬁts under the collective bar- shortage of skilled workers are having an impact on year 2022/23. In 2023, the German locations in Vor- 3 gaining agreement. In addition, we provide a corporate Novem – especially when it comes to ﬁlling vacant bach and Eschenbach as well as the production sites beneﬁts program and ﬁtness network membership in positions. It is becoming particularly diﬃcult to ﬁnd in Langfang (China), Querétaro (Mexico) and Žalec Germany. We acknowledge the changing needs of our specialists, especially in the ﬁelds of engineering and (Slovenia) were successively certiﬁed. The certiﬁcation GROUP employees and support a healthy work-life balance IT. In 2022, we started using Instagram with an HR of the production site in Pilsen (Czech Republic) was MANAGEMENT for combining career ambitions and familial responsi- focus as a pilot project to address new talents under successfully completed at the beginning of 2024. REPORT bilities. We therefore support ﬂexible working models these conditions. This has now been implemented as a 4 and offer individual solutions in consultation with our regular communication channel. The account provides Safety in the workplace employees. insights into working at Novem, the beneﬁts we offer our employees and our understanding of teamwork. On CONSOLIDATED Likewise, at our international locations, we provide the one hand, this is a platform to show and remind our We are committed to complying with the legal require- FINANCIAL our employees with remuneration packages that fre- own employees of what Novem provides. On the other ments for health and safety. Furthermore, we want to STATEMENTS quently extend beyond the local statutory regulations. hand, this allows us to reach younger target groups bet - contribute to improving systems and take appropriate 5 For example, Novem enables numerous employees in ter, such as trainees, participants in dual study degree action to prevent accidents from occurring. At Novem, Mexico and Honduras to obtain health and life insur- programmes and career starters. From September our emphasis lies in correctly handling hazardous sub- ance. Novem also offers employees in these two coun- 2022 until the end of ﬁnancial year 2023/24, we created stances such as paints, coatings and ﬁnishes. ANNUAL tries ﬁnancial beneﬁts such as vacation and Christmas 175 posts and gained more than 710 followers. ACCOUNTS bonuses in addition to the statutory requirements. Our risk assessment process is the basis for haz- 6 ard- and accident-free work. Holistically designed, it covers all the key steps: hazards are determined, the level of risk is assessed and protective measures are ADDITIONAL deﬁned on this basis. The method is strictly regulated INFORMATION NOVEM ANNUAL REPORT 2023/24 27 CONTENTS Health promotion and takes national, international and Novem‑speciﬁc We ensure that all third-party subcontractors can requirements into account. This ensures an overall view operate with maximum safety at Novem sites. A leaf- of the workplace while at the same time guaranteeing let provides them with details regarding all relevant Apart from prioritising workplace safety, we also the highest possible level of safety. It can, therefore, plant‑speciﬁc regulations, along with instructions on actively promote the health of our employees. As a be applied to all Novem locations and is correspond- workplace and plant safety, ﬁre prevention and envi- central component, our integrated Company Health- ingly implemented everywhere. We regularly review ronmental protection. Simultaneously, we expect our care Management (CHM) goes beyond the statutory and update risk assessments, for example, when new suppliers to adhere to all statutory and country‑speciﬁc requirements and includes numerous measures for 1 work resources are introduced, when new workplace regulations as well as plant‑speciﬁc rules at Novem. basic medical care and preventive health care. conditions arise, in response to accidents or to evalu- ate existing protective measures. In 2023, the pilot project lunch break in motion took TO OUR Indicators for health and safety at the Novem place from fall to Christmas in Vorbach. Interested SHAREHOLDERS Group We consistently involve all our employees in workplace colleagues were able to spend their lunch break once 2 safety topics. Employees must immediately inform a week doing various ﬁtness exercises under profes- their supervisors of work-related risks or hazardous sional guidance. A continuation of this activity is being per 1 million hours FY FY FY worked 2021/22 2022/23 2023/24 situations. As part of the occupational safety commit- planned. NON-FINANCIAL tee meetings held on a quarterly basis at our German Number of occupa- REPORT tional accidents with 72 77 76 locations, we provide an opportunity for employee and All Novem employees have access to an occupational a period of absence 3 employer representatives to discuss current issues health service. Each of our locations has its own LTIF (Lost Time Injury relating to health and safety. Similar meetings are also company doctor, who carries out all functions under 6.8 7.0 7.4 Frequency) held at our international locations. the workplace safety laws and participates in tours of Number of fatal oc- GROUP inspection to assess ergonomic conditions. The loca- 0 0 0 MANAGEMENT cupational accidents We regularly provide our employees with training on tions of Querétaro (Mexico) and Tegucigalpa (Hondu- REPORT occupational safety matters, using digital training ras) have a medical service that also provides basic 4 methods and practical instruction sessions at relevant medical care. At the German sites and many locations potential hazard points. The training sessions are pre- abroad, several vaccinations are also offered directly pared and carried out by the relevant EHS departments, on-site by the occupational healthcare service. CONSOLIDATED partly in cooperation with the specialist departments. FINANCIAL Our employees in administration at the Group’s central STATEMENTS oﬃce receive annual safety brieﬁngs. 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 28 CONTENTS Equal opportunity and diversity Commitment to society We are also committed to enthusing young women for technical vocations and study courses, for example, in Our Code of Conduct deﬁnes principles for a working wood technology or mechanical engineering. As part of Novem sees itself as a global corporate citizen and environment that promotes diversity and guarantees this initiative, Novem participated in Girls’ Day in 2023 therefore as part of society. Consequently, we also equal opportunities and equal treatment, regardless and will take part again in 2024. We can also report a want to shoulder responsibility beyond the bounda- of ethnic background, skin colour, gender, disability, balanced gender ratio among the participants in our ries of our Group and play our part to ensure that the beliefs, religion, nationality, sexual orientation or social dual study degree programmes. communities at our locations continue to develop 1 origin. sustainably in the future. We make our contribution to Inclusion also plays an important role at Novem. Dur- a sustainable society above all in the form of cash and The Novem Group is opposed to all forms of discrimi- ing the year under review, we exceeded the statutory in-kind donations, but we are also actively involved with TO OUR nation. Every superior is urged to be the ﬁrst point of quota in Germany for employing people with disabili- the communities we operate in. The volume of dona- SHAREHOLDERS contact for possible cases of discrimination. Internal ties by around 46% (PY: 20%). We employ people with tions and sponsorship for the ﬁnancial year 2023/24 2 and external notiﬁcations and infringements can also disabilities at our plant and thus promote their social amounted to approximately €36,000. In accordance be reported in conﬁdence using the whistleblower participation. with our business principles, all activities were evalu- reporting system on the company website or by email ated and approved by the Management Board. NON-FINANCIAL to Corporate Legal and Compliance. In addition, any REPORT affected employee can consult the relevant works Our donations and sponsoring focus on the promo- 3 council. No cases of discrimination became known at tion of local and regional facilities, associations and Novem in the reporting year 2023/24. organisations at the individual sites where the Group is located. We see it as our mission to strengthen GROUP We support the principle of equal opportunities and social, cultural and community life. The donations are MANAGEMENT equal treatment. Our employees receive the same typically carried out as ﬁnancial payments. We support REPORT remuneration for equivalent work, irrespective of gen- hospitals and public organisations in the local com- 4 der. Across the world in 2023/24, the proportion of munities such as kindergartens, elementary schools, women on the highest level of management at Novem, ﬁre brigades and football clubs. We also supported a which reports directly to the Management Board, was reforesting project near Eschenbach. CONSOLIDATED around 25% (PY: 25%). The share of women on the FINANCIAL Management Board was 25% and on the Supervisory STATEMENTS Board 20% at the end of 2023/24. 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 29 ENERGY AND EMISSIONS CONTENTS Climate protection Energy consumption The respective EHS coordinator reports the environ- mental impacts to the respective plant manager and Our corporate policy deﬁnes environmental protec- the central EHS manager on a regular basis. We also As a manufacturing company, the various stages in our tion, energy-saving and careful use of resources as actively monitor ESG-related risks and opportunities production processes consume a considerable amount being integral to our identity. For us, optimising energy and furthermore all relevant regulatory environmental of energy. The majority of this energy is used for sur- usage while minimising greenhouse gas emissions is risks that impact our business. We monitor interna- face manufacturing, injection moulding, pressing and essential. tional and national environmental legislation as well milling operations, primarily sourced from electricity 1 as customer‑speciﬁc requirements, for example, along and natural gas. Group-wide responsibility for environmental concerns with other regulations in order to preclude possible vio- lies with the EHS Team, which is part of the central lations (Sustainability organisation of Novem). Our German locations in Vorbach and Eschenbach TO OUR Quality Management department. Each location also as well as the production site in Žalec (Slovenia) are SHAREHOLDERS has one or more EHS managers responsible for imple- certiﬁed in conformity with the energy management 2 menting and monitoring central regulations and site- standard ISO 50001. Novem also has an energy audit speciﬁc measures. They are appointed by the facility system at the European site Pilsen (Czech Republic) management and in agreement with central EHS at the that complies with ISO 16247. NON-FINANCIAL Novem Group. The central EHS department, in coop- REPORT eration with the Management Board, sets group-wide In cooperation with the EHS coordinators at the plants, 3 targets each year, on the basis of which the Novem our central energy manager constantly reviews our locations deﬁne their own environmental targets and overall energy consumption and the associated sav- action plans. ings potential. For this purpose, we use an external GROUP energy data recording system at our sites in Vorbach, MANAGEMENT All Novem production sites worldwide have certiﬁed Eschenbach and Žalec. In accordance with federal REPORT environmental management systems in conformity regulations, our site in Querétaro (Mexico) uses the 4 with ISO 14001. This also extends to identiﬁcation of Schneider metering system. potential negative impacts. To record these throughout the individual stages, we have carried out a mandatory When any new infrastructure is put in place or the man- CONSOLIDATED impact assessment at all our sites every year since ufacturing process is upgraded, modern and eﬃcient FINANCIAL 2009 in order to derive appropriate group-wide targets technology is a top priority. This includes, for example, STATEMENTS and measures. For each individual category of relevant the installation of energy‑eﬃcient heating systems, 5 environmental impact, including for example waste, air-heating pumps and LED lighting. We implemented water and emissions, the severity and probability of numerous of these measures in the ﬁnancial year occurrence are assessed along with the applicable 2023/24. ANNUAL legal framework. ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 30 CONTENTS Energy consumption within the Novem Group assessments, reduction potentials are to be identiﬁed by energy source and measures for reducing emissions are to be out- lined. Our aim is to obtain the Climate Neutral Company label for the German sites by 2025. in kWh FY 2021/22 FY 2022/23 FY 2023/24 Consumption of non-renewable fuels (oil and gas) 28,904,293 29,226,510 25,485,119 In the reporting year, we recorded a signiﬁcant reduc- Electricity, heat and cooling energy and steam purchased for tion in our Scope 1 and Scope 2 emissions compared 116,629,474 116,770,473 110,412,711 consumption, individually (electricity and district heating) 1 to the previous reporting year. In Scope 1, this was Total energy consumption 145,533,767 145,996,983 135,897,830 primarily due to lower production volumes and favour- able weather conditions reducing the need for heating TO OUR agents. Furthermore, a lower quantity of refrigerants SHAREHOLDERS Energy intensity at the Novem Group since 2019. We record all the relevant climate gases1 was required in the ﬁnancial year 2023/24. The reduc- 2 to determine CO2 equivalent values. This calculation tion in Scope 2 emissions reﬂects our efforts to is based on the requirements of the Greenhouse Gas decrease electricity consumption and at the same time FY 2021/22 FY 2022/23 FY 2023/24 (GHG) Protocol. A distinction is drawn here between improve the quality of the energy mix used. Since the NON-FINANCIAL direct (Scope 1), indirect (Scope 2) and other indirect beginning of 2024, our site in Langfang (China) has Total consump- REPORT 145,533,767 145,996,983 135,897,830 tion (in kWh) greenhouse gas emissions (Scope 3). Scope 1 emis- covered its entire electricity demand from renewable 3 sions at Novem arise, for example, from the combus- sources via a Green Power Purchase Agreement (PPA). Produced 28,562,299 29,037,179 24,326,075 parts tion of fuels at our sites and from the fuel consumption of our company car ﬂeet. The overwhelming proportion Our efforts are intended to meet the increasing require- Energy inten- GROUP sity ratio (kWh/ 5.1 5.0 5.6 of Scope 1 emissions at our own production facilities ments of our customers that we expect in the future. MANAGEMENT component) is due to the use of natural gas and heating oil. Our In light of this, Novem is permanently evaluating sev- REPORT Scope 2 emissions are attributable to energy produc- eral opportunities to effectively reduce its emissions. 4 tion at our electricity suppliers. The other indirect This may involve transitioning our heating system to Greenhouse gas emissions emissions – in the category of Scope 3 – are due to renewable energy and installing photovoltaic power activities in the supply chain related to activities such plants. Additionally, we intend to offset greenhouse gas CONSOLIDATED As a result of energy consumption at our production as the production of raw materials or the manufacture emissions by supporting regional and supra-regional FINANCIAL facilities, we generate greenhouse gas emissions. of intermediate products. Currently, we systematically environmental projects. During the reporting period, we STATEMENTS Emissions are also produced within our value chain in record only Scope 1 and Scope 2 emissions from our began and are continuing to explore the international 5 the course of our upstream and downstream activities. prioritised emission sources. Since 2022/23, we have environmental and green power project landscape to By continuously reducing and offsetting our emissions, started recording deﬁned Scope 3 emissions from identify suitable collaboration opportunities. we aim to reach greenhouse gas neutrality in our Ger- the German sites in Vorbach and Eschenbach with ANNUAL man sites by 2025, in our European sites by 2030 and an external partner to gain a more comprehensive ACCOUNTS worldwide by 2035. understanding of our Scope 3 emissions. Based on 6 the results of the above-mentioned carbon footprint To determine our annual emissions, we have been using an environmental footprint software from Sphera 1 These include CO2, CH4, N2O, HFCs, PFCs, SF6, NF3 and all other ADDITIONAL volatile compounds from their chemical constituents. INFORMATION NOVEM ANNUAL REPORT 2023/24 31 CONTENTS Scope 1 – Direct GHG emissions at the Novem Group in tonnes of CO2 equivalent FY 2021/22 FY 2022/23 FY 2023/24 Natural gas 5,484 5,652 4,972 Heating oil 2,193 2,162 1,831 LPG 391 272 221 1 Refrigerants 577 2,018 852 Fuels (company car ﬂeet) incl. ﬂights 1,159 1,456 1,347 TO OUR Total Scope 1 emissions 9,803 11,559 9,224 SHAREHOLDERS 2 Scope 2 – Indirect GHG emissions at the Novem Group NON-FINANCIAL in tonnes of CO2 equivalent FY 2021/22 FY 2022/23 FY 2023/24 REPORT Power1 63,762 67,269 56,305 3 Total Scope 2 emissions 63,762 67,269 56,305 1 The market‑based method was applied for this calculation; value for FY 2023/24 by location‑based method: 52,117 t CO2 equivalent. GROUP MANAGEMENT REPORT Scope 1 & 2 – GHG emission intensity at the Novem Group 4 FY 2021/22 FY 2022/23 FY 2023/24 Total GHG emissions (in t CO2 equivalent) 73,565 78,828 65,529 CONSOLIDATED FINANCIAL Produced parts 28,562,299 29,037,179 24,326,075 STATEMENTS GHG emission intensity (t CO2 equivalent/component) 0.00258 0.00271 0.00269 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 32 Aluminium brushed 3 Group Management Report CORPORATE STRUCTURE AND BUSINESS ACTIVITIES CONTENTS Novem Group S.A., Luxembourg, hereafter also referred For more than 70 years, the Group has successfully Using novel materials such as rattan, linen or ﬁbreglass, to as the “Company”, is a public limited liability com- used wood as raw material, which has helped the the Group creates a new atmosphere in the vehicle inte- pany (Société Anonyme) incorporated in Luxembourg Group become the world leader in ﬁne woods through rior. In combination with light, this is how the Group’s and governed by Luxembourg Law. The Company’s high quality and natural processing. With the help of trendsetting designs are created. registered oﬃce is at 19, rue Edmond Reuter, 5326 new technologies, material combinations and surface Contern, Luxembourg. ﬁnishes, there is a steady and consistent reﬁnement The special material properties not only directly inﬂu- of the processing of this raw material. Trims made of ence the design and atmosphere of the interior, but are 1 Novem Group S.A. is the parent of the Novem Group veneers are synonymous with exclusivity, as the natural also speciﬁcally selected according to the criteria of including its subsidiaries (hereinafter referred as growth and individual grain of the wood as raw material sustainability, reduced weight and economy. “Novem” or the “Group”). To ensure and maintain prox- are unique. TO OUR imity to customers, the Group has a global presence Due to expert knowledge in handling different materials, SHAREHOLDERS with 12 locations in China, Czech Republic, Germany, The processing of lightweight metal aluminium is the Group is able to meet customer requirements at the 2 Honduras, Italy, Luxembourg, Mexico, Slovenia and carried out through production processes that pre- desired level, as in the past. In order to continuously USA. The ﬁnancial year of the Group is a 12‑month serve the feel of this material. The trims are printed, evolve further in terms of interior design, the Group period from 1 April until 31 March of the following year. painted, brushed, polished, galvanised or anodised always uses materials in an innovative manner. This is NON-FINANCIAL using advanced processes. This creates surfaces that also underlined by the certiﬁcation of the Group plants REPORT The Group did not purchase any own shares in the convey a feeling of sporty elegance and modernity in according to IATF 16949 as well as DIN EN ISO 14001 3 ﬁnancial year ended 31 March 2024 and did not hold the vehicle interior. and DIN EN ISO 50001. This ensures environmentally any own shares at that time. friendly production for the customer, combined with Carbon is seen as the material of the future. Due to its up‑to‑date quality and environmental requirements. GROUP As the global market leader in high-end interiors, the lightweight, it is particularly suitable for fast, dynamic MANAGEMENT Group operates as a developer, supplier and system and energy‑eﬃcient driving. Furthermore, as a mate- REPORT supplier for trim parts and decorative functional ele- rial made of carbon ﬁbres, carbon entails the attrib- 4 ments in vehicle interiors. The products combine utes of impact resistance and temperature resistance. valuable raw materials with the latest technology and Through high quality lacquering, priming and polishing processing. The customers include all major premium processes, its premium ﬁnishing creates special 3D CONSOLIDATED carmakers worldwide. The Group has an extensive effects giving an impression of depth. FINANCIAL exclusive product portfolio of instrument panels, STATEMENTS impact-resistant trim parts in the centre console, door Premium synthetics enable versatile design and pro- 5 trims, beltlines and decorative functional elements in cessing options. A variety of optical effects can be the car interior. Premium materials are used to ensure achieved through creative processing techniques. Mod- high quality standards. The surfaces are versatile, ern injection moulding processes such as 2K technol- ANNUAL ranging from ﬁne woods, aluminium and carbon to ogy ensure excellent proﬁling and customer‑oriented ACCOUNTS premium synthetics or leather, and present a different adjustment. 6 feel depending on the selection. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 34 KEY EVENTS CONTENTS Novem’s third year as a listed company was character- A noticeable reluctance of buyers led to a decline technology while allowing independence from external ised by demanding market conditions and continued in demand and thus weaker call-offs, which directly partners. Furthermore, the design centre Novem Inte- headwinds. The Group had to cope with persistently impacted the Group’s annual sales. In addition, the rior World in Vorbach has welcomed a new addition volatile call-offs, weaker demand in the automotive automotive industry is grappling with the transition in the form of the Cocoon. The Cocoon showcases sector and inﬂationary pressure. to electric vehicles and the current poor demand for the fusion of technology and material, envisioning a these, partly due to the cancellation of subsidies in potential future mobile biosphere. Following the Covid‑19 pandemic, the continued war in some European countries. Beyond this, call-offs 1 Ukraine has severely impacted the automotive market, remained volatile causing ongoing ineﬃciencies in The acquisition of new customers, such as Kia from especially in Europe. Further geopolitical turmoil was managing personnel and production utilisation. In Korea and Avatr from China, also supported the strong added when Hamas launched an attack on Israel in response to these developments and to improve the order intake. Apart from that, Novem also won back TO OUR October 2023, triggering an escalation of the Israeli- cost structure, savings measures included the closure Tesla as a customer and was named supplier for the SHAREHOLDERS Palestinian conﬂict and a war in Gaza. In this context, of the production facility in Bergamo (Italy) and per- Model Y in Europe and Americas with SOP in 2025. 2 anti-Israeli Houthi militants began attacking container sonnel adjustments in Germany. To further support Alongside the nomination for the respective alumin- ships in the Red Sea, hampering trade in the area. the cost base, it was essential for Novem to demand ium and carbon interior design, Novem also secured Consequently, this led to the majority of cargo ships compensation from customers and pass on some of a matching key exterior component. The acquisition NON-FINANCIAL avoiding the region and taking longer alternative routes the inﬂation‑related additional costs for materials and of the aluminium tailgate marks Novem’s entry into REPORT via the Cape of Good Hope. National and global trade wages to the OEMs. the premium exterior trim market. Since familiar tech- 3 barriers, partly caused by political decisions, required nologies are used, Novem can tap into its expertise in increased efforts to maintain stable supply chains. Close collaboration between Sales, Concept engineer- handling and processing aluminium for this ﬁrst‑time These circumstances have led to longer delivery times ing and Design enabled the Group to achieve a sub- project. GROUP and higher transportation costs as well as lower avail- stantial volume of incoming orders in the ﬁnancial year MANAGEMENT ability of primary products and thus to safety stocks. 2023/24 relating to platforms with SOP spread over During the ﬁnancial year 2023/24, all Novem Group REPORT the next three ﬁnancial years. The key was the holistic plants underwent successful recertiﬁcation for the IATF 4 Amid the Eurozone’s most rapid interest rate hiking approach between all three functions and understand- 16949 certiﬁcate (International Automotive Task Force). cycle in history, the ﬁxed interest rate of 4.5% published ing customer needs to provide competitive solutions. A The IATF summarises various quality management by the ECB in September 2023 reached a record high. highlight of this collaboration was the world’s ﬁrst wire- systems. Holding up‑to‑date certiﬁcates is impera- CONSOLIDATED This also marked the last interest increase by the ECB less charging solution with a wooden décor, which has tive for securing contracts with automotive industry FINANCIAL in the current rate hike due to declining inﬂation rates. already been brought to series production for an Asian customers. STATEMENTS A decrease in prime rates of especially ECB and Fed is OEM. In addition, further milestones in the integration 5 expected but diﬃcult to forecast due to a core inﬂation of light were achieved. For another customer, Novem As an automotive supplier, another important accredi- rate in the European Union above the target value and developed a decorative wooden element with a large tation for Novem is the TISAX certiﬁcation, which has strong economic development in the US. This uncer- number of backlit symbols spanning the entire surface, been successfully completed for Eschenbach, Pilsen ANNUAL tainty ultimately led to one of the lowest volatilities in where only a thin installation space was available. As and Žalec. This certiﬁcate proves that Novem’s infor- ACCOUNTS the US Dollar to Euro in the last 50 years. In compari- lighting and its integration become increasingly impor- mation security standards and baselines are also 6 son, the Mexican Peso strengthened its position due tant for trim parts, Novem has further strengthened implemented in all plants abroad. In January 2024, the to Mexico’s economic stability paired with a high and its expertise in this ﬁeld and established its ﬁrst in‑ recertiﬁcation for Vorbach was initiated as part of a stable prime interest rate, which led to the strongest house light simulation. This enables signiﬁcantly faster regular process. ADDITIONAL Mexican Peso to Euro and US Dollar since 2015. digital processing of OEM enquiries including lighting INFORMATION NOVEM ANNUAL REPORT 2023/24 35 CONTENTS Since the changeover to SAP S/4HANA is planned for Novem has also received recertiﬁcation for the FSC the coming ﬁnancial year 2024/25, several upstream certiﬁcate (Forest Stewardship Council®) in China. projects are necessary. During the ﬁnancial year and The process guarantees that only exclusively certiﬁed as part of these preparations, the SAP authorisation veneers from controlled cultivation areas are used in concept was redesigned so that permissions will be the entire production sequence for speciﬁc custom- assigned on a departmental and role basis and no ers. Environmental aspects within supply chains are longer according to individual demands. This change becoming increasingly important and require com- 1 signiﬁcantly reduces the operational impact and panies to change processes and integrate them into increases transparency. Furthermore, another three existing workﬂows due to legal and customer require- preliminary projects were implemented as planned. ments. In order to be more sustainable and prepare TO OUR The introduction of the Customer Vendor Integration for agreed-upon changes to REACH legislation in the SHAREHOLDERS in June 2023 was followed by the migration to the New coming years, Novem has already started working with 2 General Ledger in August 2023 and the implementa- the respective suppliers to develop certain alternative tion of SAP BW/4HANA in December 2023. From an surface treatment materials. Besides that, Novem has accounting perspective, the New General Ledger successfully implemented the sustainability rating and NON-FINANCIAL ensures a parallel and simpliﬁed presentation of IFRS tracking of suppliers using the Ecovadis platform. By REPORT and the respective country‑speciﬁc accounting regula- the end of the current ﬁnancial year 2023/24, 96% of 3 tions. Overall, the SAP S/4HANA project is progressing series suppliers had been registered and rated. The according to plan. achieved rating will be part of the annual supplier evalu- ation in order to measure future developments. GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 36 BUSINESS AND GENERAL ENVIRONMENT CONTENTS World economy Inﬂation declined slightly, partly due to the interest Global light vehicle production in 2023 amounted to rate hikes, which signiﬁcantly slowed the rise in prices 90.8 million and increased by 10.2% compared to the The global economy in 2023 was inﬂuenced by a large worldwide. Another reason for the fall in inﬂation is the prior calendar year.1 number of different factors like the release of signiﬁ- easing of the energy markets. The average inﬂation cant economic and inﬂation data, interest rate hikes rate worldwide was around 8.1% in 2023, after 8.7% in Germany recorded an increase of 7.3% in new car reg- by the world’s leading central banks, the suspension of 2022 compared to the previous year. Consumer prices istrations compared to the previous year, which was the US debt ceiling, the ongoing Ukraine war and the in Germany increased by 5.9% in 2023 compared to inﬂuenced by the weaker result in December 2023. 1 escalation of the conﬂict in Israel‑Gaza/Middle East. 7.9% in 2022. Looking at registrations in Europe, battery-electric vehi- Despite the many negative factors, the ﬁnancial mar- cles (BEV) became the third most popular choice for kets in many regions of the world performed positively. Nevertheless, the global gross domestic product (GDP) buyers in 2023 with a 14.6% market share. As a result, TO OUR increased by 3.1% in 2023 compared to the previous battery-electric drives replaced diesel, which remained SHAREHOLDERS The attacks on container ships by the Houthis in the Red calendar year. GDP grew by 0.5% in the Eurozone, 2.0% stable at 13.6%. Petrol cars are still leading with 35.3%, 2 Sea since November 2023 have forced some shipping in Japan, 2.4% in the USA and 5.4% in China. while hybrid-electric vehicles took second place with a companies to act and reroute their container ships via 25.8% market share. the longer alternative route around the Cape of Good In Germany, the GDP decreased by 0.3% compared NON-FINANCIAL Hope. This consequently impacted global logistics and to the previous year. As a result, Germany technically At the same time, sales of electric vehicles in Germany REPORT the energy market due to longer shipping times and slipped into a recession last year. Sharply increased are expected to decline for the ﬁrst time in eight years, 3 higher transportation costs. The shorter and therefore prices at all levels of the economy have slowed the primarily due to cuts in subsidies in December 2023. At very essential trade route through the Red Sea, which German economy. The recovery from the deep slump in this point, the coalition government temporarily discon- runs between Africa and Asia to Europe, accounts for GDP of the Covid-19 year 2020 could not be continued. tinued subsidies for electric cars one year earlier than GROUP a high percentage of global sea trade. planned. In Germany, 523,300 BEVs were sold in 2023 MANAGEMENT and therefore far behind China, the frontrunner with 6.3 REPORT Automotive markets In 2023, inﬂation remained a key topic. The major million vehicles. The USA ranks second with 1.1 million 4 central banks, the European Central Bank (ECB) and BEVs sold in 2023. the Federal Reserve System (Fed), responded to the The calendar year 2023 was very positive for the sharp rise in inﬂation by raising key interest rates to a European automotive market. In 2023, car sales were In China, the largest sales market in the automotive CONSOLIDATED high level by historical standards. Due to the positive consistently positive and often recorded double-digit industry, domestic electric car manufacturers are FINANCIAL development of the aforementioned measure, interest growth. The only decline of -3.3% compared to 2022 becoming increasingly established and can offer their STATEMENTS rate cuts are already being discussed. The sharp rise in was recorded in December 2023. This decrease was cars at lower prices and additional discounts on their 5 interest rates has primarily combated high consumer due to the relatively high output ﬁgures of December local market also due to government subsidies. These prices and thereby also dampened demand. If interest 2022. In 2023, the EU car market closed with a solid harmed the sales ﬁgures of traditional European car rates rise, consumers, companies and the economy growth of 13.6% compared to 2022, reaching a total brands, whose cars are priced higher in comparison. ANNUAL will have to spend more on loans or borrow less money. volume of 18.0 million produced units. As a result, the European carmakers are losing market ACCOUNTS As a result, growth would slow down or even decline. share in China. In the meantime, the Chinese automo- 6 This increases the risk of high unemployment, ﬁnancial The automotive industry and in particular the volume bile manufacturer BYD has announced the construction crises and the economy slipping into recession. market saw a catch-up effect in 2023 after several of an electric car factory in Europe, which is expected stops of production lines and a lack of components, ADDITIONAL particularly in the semiconductor sector, in 2022. 1 According to GlobalData as per April 2024 INFORMATION NOVEM ANNUAL REPORT 2023/24 37 CONTENTS to be in operation after 2026. BYD has already replaced quarter of 2023, the inﬂation rate has already fallen to Volkswagen as the largest car manufacturer in China in 2.9% in January 2024 and 2.5% in February. This may the ﬁrst quarter of 2023. In total, more than 29 million be due to the passing on of higher producer prices and vehicles were produced in China in 2023. wages, which could increase the core inﬂation rate or keep it at the same stable level. For the current calendar year 2024, the German Asso- ciation of the Automotive Industry (VDA) is forecasting The German government now only expects a minimal 1 a decline in sales of -1.0% for Germany, while sales in increase in GDP of 0.1%. Last autumn, it still forecasted Europe are expected to rise by 4.0%, in the USA by 2.0% 1.3%. High interest rates and inﬂation as well as an and in China by 1.0%. overall weak global economy have led to German GDP TO OUR falling by -0.3% in 2023. A stronger economic perfor- SHAREHOLDERS mance of 1.4% is forecast for 2024. 2 Forecast for global economic development 2023/2024 The IMF forecasts that Germany’s GDP will grow by 0.1% in 2024, while global trade is expected to grow by NON-FINANCIAL The global economy will grow slower for the third time 2.8% this year and 3.2% in 2025. In the Eurozone, GDP REPORT in a row because of major uncertainties for 2024, such is expected to grow by 0.7% in 2024 and 1.5% in 2025. 3 as high interest rates, global crises, geopolitical ten- sions, many new elections and low investment. The short-term outlook remains challenging, and the conﬂict in the Middle East and Ukraine could further GROUP Inﬂation in the US fell to 3.1% in January, although exacerbate the situation. This escalation could again MANAGEMENT experts had forecast a fall to 2.9%. The inﬂation trend lead to a rise in energy prices, which in turn could have REPORT is important for the US Federal Reserve’s future inter - an impact on global economic output and inﬂation. 4 est rate decisions. Due to the weakening of inﬂation, Falling inﬂation is a glimmer of hope, and the resulting interest rate cuts were already under discussion, but rise in real incomes is likely to be the strongest driver with the weaker development of the decline in inﬂation, of this year’s economy. However, it should be noted CONSOLIDATED these cuts could be postponed. However, higher inter- that political and economic crises are causing supply FINANCIAL est rates hit poorer countries particularly hard. Higher chains to falter, resulting in supply bottlenecks. STATEMENTS costs for loans can turn them into a debt crisis. 5 Climate change and the rapid development of artiﬁcial The overall inﬂation rate for the year 2023 was 8.1%. intelligence will increasingly take centre stage in the For 2024, the International Monetary Fund (IMF) coming years. ANNUAL experts forecast an overall inﬂation rate of 7.5% and ACCOUNTS 4.8% for 2025. The inﬂation rate in Germany for 2024 Most economies, whether industrialised nations or 6 is expected to be 2.3%, well below the rate in 2023 but developing countries, will continue to grow more slowly higher than the ECB’s 2.0% target. After 8.2% in the ﬁrst than before the Covid-19 pandemic. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 38 FINANCIAL PERFORMANCE CONTENTS in € million FY 2022/23 FY 2023/24 Change % change Revenue 700.3 635.5 -64.8 -9.3% Increase or decrease in ﬁnished goods and work in process -7.5 -15.4 -7.9 >100.0% Total operating performance 692.8 620.1 -72.7 -10.5% Other operating income 25.8 18.9 -6.9 -26.8% Cost of materials -354.7 -303.3 51.4 -14.5% 1 Personnel expenses -168.6 -173.2 -4.6 2.7% Depreciation, amortisation and impairment -32.5 -33.7 -1.2 3.7% Other operating expenses -82.4 -69.5 12.9 -15.7% TO OUR SHAREHOLDERS Operating result (EBIT) 80.5 59.3 -21.1 -26.3% Finance income 3.6 7.4 3.8 >100.0% 2 Finance costs -13.1 -19.9 -6.9 52.4% Financial result -9.5 -12.6 -3.0 31.9% NON-FINANCIAL Income taxes -15.7 -13.1 2.7 -17.0% REPORT Deferred taxes -5.2 1.1 6.3 <-100.0% 3 Income tax result -20.9 -12.0 9.0 -42.8% Proﬁt for the period attributable to the shareholders 50.0 34.8 -15.2 -30.4% GROUP MANAGEMENT Differences from currency translation 0.2 -1.6 -1.8 <-100.0% REPORT Items that may subsequently be reclassiﬁed to consolidated proﬁt or loss 0.2 -1.6 -1.8 <-100.0% 4 Actuarial gains and losses from pensions and similar obligations (before taxes) 8.6 -1.6 -10.1 <-100.0% Taxes on actuarial gains and losses from pensions and similar obligations -2.2 0.5 2.7 <-100.0% Items that will not subsequently be reclassiﬁed to consolidated proﬁt or loss 6.3 -1.1 -7.4 <-100.0% CONSOLIDATED FINANCIAL Other comprehensive income/loss, net of tax 6.6 -2.7 -9.2 <-100.0% STATEMENTS Total comprehensive income/loss for the period attributable to the shareholders 56.6 32.1 -24.4 -43.2% 5 Earnings per share attributable to the equity holders of the parent (in €) basic 1.16 0.81 -0.35 -30.4% ANNUAL diluted 1.16 0.81 -0.35 -30.4% ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 39 CONTENTS Revenue Change in ﬁnished goods and work in performance, personnel expenses increased by 3.6 process percentage points year‑on‑year to 27.9% this year (PY: Total revenue of €635.5 million in the ﬁnancial year 24.3%). Personnel costs were negatively affected by 2023/24 decreased by €‑64.8 million or ‑9.3% compared Change of ﬁnished goods and work in process ineﬃciencies due to the weak customer call‑offs. to last year. Based on prior year (constant) exchange decreased by €-7.9 million (>100%) from €-7.5 million rates, revenue would have been higher by 2.1%. This in the ﬁnancial year 2022/23 to €‑15.4 million in the Depreciation, amortisation and impairment currency impact was primarily inﬂuenced by the weak ﬁnancial year 2023/24 driven by lower ﬁnished goods 1 US Dollar and Chinese Renminbi. On a segmental basis, (€-4.0 million), work in process (€-2.3 million) as well revenue in 2023/24 was generated in Europe (€287.0 as lower tooling inventories (€‑1.3 million) and proﬁt in Novem reported depreciation, amortisation and impair- million), followed by Americas (€271.9 million) and Asia stock elimination (€-0.3 million). ment of €‑33.7 million in ﬁnancial year 2023/24, a slight TO OUR (€76.6 million). increase of 3.7% or €‑1.2 million compared to ﬁnancial SHAREHOLDERS year 2022/23. The increase was primarily attributable 2 Other operating income to higher accelerated depreciation (€-0.7 million) as Revenue development well as higher depreciation on machinery (€-0.5 million). Other income decreased by €-6.9 million from €25.8 mil- NON-FINANCIAL lion last year to €18.9 million in ﬁnancial year 2023/24. in € million FY 2022/23 FY 2023/24 % change REPORT Other operating expenses The deviation mainly resulted from less currency trans- Revenue Series 618.2 553.1 -10.5% 3 lation gains of €-4.3 million, lower income from other Revenue Tooling 82.1 82.5 0.5% periods of €-2.4 million as well as lower other income Other operating expenses declined from €-82.4 million Revenue 700.3 635.5 -9.3% of €-1.6 million, partly compensated by higher income in ﬁnancial year 2022/23 by €12.9 million to €‑69.5 GROUP from the release of accruals of €1.4 million. million in ﬁnancial year 2023/24. This decrease mainly MANAGEMENT resulted from lower order-related expenses, foreign REPORT Revenue Series currency translation losses and loss allowances on 4 Cost of materials receivables as well as lower legal and advisory fees. Revenue Series recorded at €553.1 million in the cur- rent ﬁnancial year, ‑10.5% below last year (PY: €618.2 Cost of materials decreased from €-354.7 million in CONSOLIDATED Finance income and costs million). Revenue Series generated 87.0% of total rev- ﬁnancial year 2022/23 to €‑303.3 million in ﬁnancial FINANCIAL enue and remained the key pillar of the business. year 2023/24, resulting in a year‑on‑year change of STATEMENTS -14.5%. The cost of materials to output (total operat- The ﬁnancial result amounted to €‑12.6 million for 5 ing performance) ratio decreased by -2.3 percentage ﬁnancial year 2023/24, compared to last year’s amount Revenue Tooling points to 48.9% in ﬁnancial year 2023/24 (PY: 51.2%). of €-9.5 million. ANNUAL Revenue Tooling contributed €82.5 million to total Finance income increased from €3.6 million in ﬁnancial ACCOUNTS Personnel expenses revenue in the ﬁnancial year 2023/24 (PY: €82.1 mil- year 2022/23 by €3.8 million to €7.4 million in current 6 lion). This led to a year-on-year increase of €0.4 mil- ﬁnancial year. The positive deviation was predomi- lion (+0.5%), predominantly due to a different project Personnel expenses amounted to €-173.2 million in nantly attributable to currency translation effects and phasing. ﬁnancial year 2023/24, up €‑4.6 million or 2.7% com- interest income. ADDITIONAL pared to last year. As a percentage of total operating INFORMATION NOVEM ANNUAL REPORT 2023/24 40 CONTENTS Finance costs in ﬁnancial year 2023/24 recorded at €‑19.9 million (PY: €‑13.1 million), an increase of €‑6.9 million or 52.4%. Higher interest rates increased ﬁnance costs in the current ﬁnancial year, while lower foreign currency exchange effects compared to previous year impacted the result positively. 1 Income tax result TO OUR Income tax result in ﬁnancial year 2022/23 in the SHAREHOLDERS amount of €-20.9 million decreased by €9.0 million 2 to €‑12.0 million in ﬁnancial year 2023/24 (‑42.8%). Both income taxes (€-13.1 million) as well as deferred taxes (€1.1 million) decreased in current ﬁnancial year NON-FINANCIAL 2023/24 compared to prior year. REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 41 CONTENTS Adjustments Adj. EBIT in € million FY 2022/23 FY 2023/24 Change % change Revenue 700.3 635.5 -64.8 -9.3% Adj. EBIT represents the operating result adjusted EBIT 80.5 59.3 -21.1 -26.3% for exceptional non-recurring items. As such, Novem 1 EBIT margin 11.5% 9.3% adjusts certain one-off effects to better show the underlying operating performance of the Group. The Restructuring - 8.9 8.9 - adjustments made follow a pre‑deﬁned and transpar- Covid-19 costs 0.3 - -0.3 -100.0% TO OUR ent approach and form part of the regular monthly SHAREHOLDERS Others 0.9 0.8 -0.1 -10.9% closing and reporting routines. 2 Exceptional items 1.3 0.8 -0.4 -34.5% Discontinued operations - - - - Adjustments Adjustments 1.3 9.7 8.4 >100.0% NON-FINANCIAL REPORT Adj. EBIT 81.7 69.1 -12.7 -15.5% Adjustments in the ﬁnancial year 2023/24 were sig- Adj. EBIT margin 11.7% 10.9% 3 niﬁcantly higher than last year by €8.4 million and contained €5.3 million restructuring costs in connec- Depreciation and amortisation 32.5 33.0 0.5 1.5% tion with the plant closure in Bergamo, €3.6 million Adj. EBITDA 114.2 102.0 -12.2 -10.7% GROUP restructuring costs relating to plant Vorbach, €0.5 mil- Adj. EBITDA margin 16.3% 16.1% MANAGEMENT lion project costs and €0.3 million Others. REPORT 4 The Adj. EBIT margin of 10.9% for the ﬁnancial year 2023/24 recorded ‑0.8 percentage points below prior year’s ﬁgure of 11.7%. Therefore, the Adj. EBITDA CONSOLIDATED margin of 16.1% was also behind the 16.3% margin of FINANCIAL previous year. STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 42 FINANCIAL POSITION CONTENTS Assets Equity and liabilities in € million 31 Mar 23 31 Mar 24 Change % change in € million 31 Mar 23 31 Mar 24 Change % change Share capital 0.4 0.4 0.0 0.0% Intangible assets 2.4 2.8 0.4 16.8% Capital reserves 539.6 539.6 0.0 0.0% Property, plant and equipment 185.1 193.9 8.8 4.7% Retained earnings/accumulated 1 Trade receivables 46.3 49.8 3.5 7.5% -443.4 -459.2 -15.8 3.6% losses Other non-current assets 10.3 13.1 2.8 27.6% Currency translation reserve 10.6 9.1 -1.6 -14.7% Deferred tax assets 8.3 10.6 2.3 27.1% TO OUR Total equity 107.3 89.9 -17.4 -16.2% SHAREHOLDERS Total non-current assets 252.5 270.2 17.7 7.0% Pensions and similiar obligations 27.0 28.7 1.7 6.3% 2 Inventories 116.3 99.4 -16.9 -14.5% Other provisions 1.4 2.3 0.9 66.3% Trade receivables 47.5 41.3 -6.2 -13.0% Financial liabilities 248.2 248.8 0.5 0.2% Other receivables 38.0 30.0 -8.0 -21.1% Trade payables - 0.0 0.0 - NON-FINANCIAL Other liabilities 33.3 55.6 22.4 67.2% REPORT Other current assets 18.2 19.6 1.4 7.6% Deferred tax liabilities 0.6 1.4 0.7 >100.0% Cash and cash equivalents 165.5 141.5 -24.0 -14.5% 3 Total non-current liabilities 310.6 336.8 26.2 8.4% Total current assets 385.5 331.9 -53.6 -13.9% Tax liabilities 19.1 7.6 -11.5 -60.2% Assets 638.0 602.1 -35.9 -5.6% GROUP Other provisions 46.7 38.9 -7.8 -16.8% MANAGEMENT Financial liabilities 1.2 1.2 0.0 1.2% REPORT Trade payables 60.6 45.4 -15.1 -25.0% 4 Other liabilities 92.7 82.4 -10.3 -11.1% Total current liabilities 220.2 175.5 -44.7 -20.3% CONSOLIDATED Equity and liabilities 638.0 602.1 -35.9 -5.6% FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 43 CONTENTS Total assets Working capital generated in the ﬁnancial year 2023/24 (€34.8 million). Currency translation differences to Euro decreased by Total assets amounted to €602.1 million as of 31 March €‑1.6 million (‑14.7% y/y). in € million 31 Mar 23 31 Mar 24 % change 2024, a decrease of €-35.9 million or -5.6% compared Inventories 64.1 56.2 -12.3% to the end of the last ﬁnancial year 2022/23 (31 March Trade Non-current liabilities 43.7 35.1 -19.7% 2023: €638.0 million). receivables Trade payables -54.5 -40.2 -26.3% 1 Non-current liabilities increased from €310.6 million as Trade working Non-current assets 53.3 51.1 -4.0% of 31 March 2023 by 8.4% to €336.8 million as of 31 capital March 2024. This was largely driven by the aforemen- TO OUR Tooling net 55.5 67.3 21.2% Non-current assets increased from €252.5 million as tioned renewal of existing lease contracts. SHAREHOLDERS Contract assets 15.3 14.9 -2.2% of 31 March 2023 by 7.0% to €270.2 million as of 31 2 Total working March 2024. This movement was mainly attributable 124.0 133.3 7.5% capital Net ﬁnancial debt to an increase in property, plant and equipment by €8.8 million or 4.7% due to the renewal of existing lease NON-FINANCIAL contracts, higher tooling amortisation trade receivables Total working capital amounted to €133.3 million as REPORT in € million 31 Mar 23 31 Mar 24 % change of €3.5 million and the recognition of development con- of 31 March 2024 and, therefore, 7.5% higher than as Liabilities to 3 tributions for won platforms during the ﬁnancial year of 31 March 2023. The increase was mainly due to a 249.4 249.9 0.2% banks 2023/24. higher tooling net position and lower trade payables, Liabilities from with an offsetting effect in trade receivables. The - 0.1 - derivatives (-) GROUP largest changes in tooling net related to a decrease in MANAGEMENT Lease liabilities 39.1 56.5 44.6% Current assets the tooling-related deferred income position of €13.0 REPORT Gross ﬁnancial million due to project closures as well as a rise in 288.5 306.4 6.2% debt 4 Current assets decreased to €331.9 million compared tooling receivables of €4.7 million, positively affected Cash and cash to the previous balance sheet date (€385.5 million), by a decrease in tooling inventories by €-11.5 million. -165.5 -141.5 -14.5% equivalents down €-53.6 million or -13.9%. This change primarily Consequently, total working capital in % of LTM revenue Net ﬁnancial debt 123.0 164.9 34.1% CONSOLIDATED stemmed from a lower cash position (€-24.0 million) increased by 3.3 percentage points to 21.0% (31 March FINANCIAL due to the dividend payment of €49.5 million distributed 2023: 17.7%). STATEMENTS in August 2023 and lower inventories (€-16.9 million). Gross ﬁnancial debt stood at €306.4 million as of 31 5 Further drivers were lower other receivables (€‑8.0 mil- March 2024 and thus saw an increase of €17.9 million, Equity lion), resulting from lower VAT receivables, and lower mostly due to the increase in lease liabilities of €17.4 trade receivables (€-6.2 million). Through non-recourse million. Cash and cash equivalents decreased by €‑24.0 ANNUAL factoring, Novem sold €44.3 million trade receivables As of 31 March 2024, the equity position dropped million compared to the end of the last ﬁnancial year ACCOUNTS as of 31 March 2024, falling below the volume of €54.1 from €107.3 million at the end of the last ﬁnancial year 2022/23, mainly driven by the dividend payment. Both 6 million as of 31 March 2023 by €-9.8 million. 2022/23 to €89.9 million, attributable to the dividend effects are accountable for the unfavourable increase payment of €49.5 million, which was offset by the proﬁt in the net ﬁnancial debt of €41.9 million. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 44 CONTENTS Net leverage in € million 31 Mar 23 31 Mar 24 Net ﬁnancial debt 123.0 164.9 LTM Adj. EBITDA 114.2 102.0 Net leverage ratio 1.1x 1.6x 1 The net leverage ratio is deﬁned as net ﬁnancial debt divided by Adj. EBITDA for the last 12 months. The ratio TO OUR rose from 1.1x Adj. EBITDA at the end of the ﬁnancial SHAREHOLDERS year 2022/23 to 1.6x Adj. EBITDA as of 31 March 2024 2 due to the adverse development of both key indicators net ﬁnancial debt and LTM Adj. EBITDA. NON-FINANCIAL REPORT Current liabilities 3 Current liabilities amounted to €175.5 million as of 31 March 2024, down -20.3% or €-44.7 million compared to GROUP the end of the last ﬁnancial year 2022/23. The decrease MANAGEMENT primarily resulted from lower trade payables of €-15.1 REPORT million, followed by lower tax liabilities of €-11.5 million 4 or -60.2% and lower other liabilities of €-10.3 million due to tooling project closures resulting in revenue recogni- tion of received advanced payments. CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 45 CASH FLOWS CONTENTS in € million FY 2022/23 FY 2023/24 Change % change Cash ﬂow from operating activities 98.3 63.8 -34.6 -35.1% Cash ﬂow from investing activities -13.8 -10.0 3.8 -27.3% Cash ﬂow from ﬁnancing activities -35.5 -77.8 -42.2 >100.0% Net increase (+)/decrease (-) in cash and cash equivalents 49.0 -24.0 -73.0 <-100.0% Effect of exchange rate ﬂuctuations on cash and cash equivalents -0.5 0.0 0.5 <-100.0% 1 Cash and cash equivalents at the beginning of the reporting period 117.0 165.5 48.5 41.5% Cash and cash equivalents at the end of the reporting period 165.5 141.5 -24.0 -14.5% TO OUR SHAREHOLDERS 2 Cash ﬂow from operating activities Cash ﬂow from ﬁnancing activities Cash ﬂow from operating activities fell from €98.3 mil- Cash out‑ﬂow for ﬁnancing activities showed the larg- NON-FINANCIAL lion by €‑34.6 million to €63.8 million in ﬁnancial year est deviation and increased by €-42.2 million to €-77.8 REPORT 2023/24. The development resulted from a decline in million in the ﬁnancial year 2023/24. The underlying 3 proﬁt of €‑15.2 million as well as a decrease in provi- reasons include the elevated interest rate level of the sions of €-21.1 million and other liabilities of €-18.4 ﬁnancing structure due to the raised base rate, resulting million compared to the same reporting period last in an increase in interest paid of €-8.4 million, along GROUP year. In addition, taxes paid increased by €-15.8 mil- with the effect of the dividend distribution of €-32.3 MANAGEMENT lion. This was partially offset by favourable changes of million. REPORT €13.8 million in other assets and €11.6 million in trade 4 receivables. CONSOLIDATED Cash ﬂow from investing activities FINANCIAL STATEMENTS Cash out‑ﬂow for investing activities reached €‑10.0 5 million in the ﬁnancial year 2023/24 (PY: €‑13.8 million). The main changes related to higher interest received of €2.5 million and lower investments made in the amount ANNUAL of €1.8 million. This was counterbalanced by previous ACCOUNTS year’s positive effect from the sale of the production 6 premises in Kulmbach. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 46 SEGMENT REPORTING CONTENTS Europe Americas Asia External revenue in Europe decreased signiﬁcantly America’s external revenue increased from €264.1 mil- External revenue in Asia reduced by -25.9% or €-26.7 from €332.9 million in the last ﬁnancial year 2022/23 lion last year to €271.9 million this year and exceeded million from €103.3 million in ﬁnancial year 2022/23 to €287.0 million in 2023/24, a decline to prior year by prior year by 3.0% or €7.8 million. The currency transla- to €76.6 million this ﬁnancial year 2023/24. The effect -13.8% or €-45.9 million. tion impact amounted to €-7.1 million. of currency translation totalled €-6.0 million. 1 In ﬁnancial year 2023/24, Europe accounted for 45.2% Americas contributed 42.8% of total revenue in the Revenue from Asia equalled 12.0% of total revenue in of total revenue (PY: 47.5%). ﬁnancial year 2023/24 (PY: 37.7%). the ﬁnancial year 2023/24 (PY: 14.7%). TO OUR Adj. EBIT in ﬁnancial year 2023/24 reduced to €5.8 mil- Adj. EBIT in the region Americas came in at €56.2 mil- Adj. EBIT in Asia amounted to €7.1 million in the cur- SHAREHOLDERS lion, ‑74.8% short of prior year (PY: €23.1 million). As a lion in 2023/24 and was therefore 27.1% higher com- rent ﬁnancial year 2023/24, which shows a decline of 2 result, the Adj. EBIT margin also declined to 1.8% from pared to previous year (PY: €44.2 million). Therefore, ‑51.1% year‑on‑year (PY: €14.5 million). The Adj. EBIT 6.0% last year. the Adj. EBIT margin increased to 16.6% from 13.0% margin decreased from 11.8% last year to 7.7%. previous year. NON-FINANCIAL Weak customer call‑offs caused operational ineﬃcien- The decrease in Asia was attributable to lower rev- REPORT cies in the region Europe. An unfavourable product mix The region Americas beneﬁtted from the release of enue Series stemming from the phase-out of larger 3 impacted the bottom line, although customer com- accruals, buoyant revenue from SUV platforms as well platforms and slower ramp-up of the new Chinese pensation payments partially alleviated the negative as improvements in freight expenses and input costs. programs, which was partially offset by strong Tool- deviation. ing business. GROUP MANAGEMENT REPORT 4 in € million FY 2022/23 FY 2023/24 % change in € million FY 2022/23 FY 2023/24 % change in € million FY 2022/23 FY 2023/24 % change External revenue 332.9 287.0 -13.8% External revenue 264.1 271.9 3.0% External revenue 103.3 76.6 -25.9% Revenue between Revenue between Revenue between 51.5 44.4 -13.7% 74.8 66.5 -11.0% 18.7 15.6 -16.5% CONSOLIDATED segments segments segments FINANCIAL STATEMENTS Total revenue 384.4 331.5 -13.8% Total revenue 338.9 338.4 -0.1% Total revenue 122.0 92.2 -24.4% Adj. EBIT 23.1 5.8 -74.8% Adj. EBIT 44.2 56.2 27.1% Adj. EBIT 14.5 7.1 -51.1% 5 Adj. EBIT margin 6.0% 1.8% Adj. EBIT margin 13.0% 16.6% Adj. EBIT margin 11.8% 7.7% ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 47 STAND-ALONE RESULTS OF OPERATIONS AND FINANCIAL POSITION OF NOVEM GROUP S.A. CONTENTS Financial position In accordance with the provisions of article 1720-1 (3) of the Law of 10 August 1915 in relation to commercial companies, the Company opted to present one annual Total assets and total liabilities amounted to €928.6 report including the consolidated management report million each (31 March 2023: €933.6 million). 1 and the management report on the annual accounts as one annual report only. For the stand‑alone annual Fixed assets essentially comprised shares in aﬃliated accounts of Novem Group S.A., please refer to chapter undertakings, which remained unchanged at €674.2 TO OUR Annual accounts. million (31 March 2023: €674.2 million) and a share- SHAREHOLDERS holder loan with a principal amount of €250.0 million 2 (31 March 2023: €250.0 million). Results of operations Current assets amounted to €2.3 million (31 March NON-FINANCIAL The Company’s other income amounted to €2.6 million 2023: €6.4 million) and included mainly the incorpo- REPORT (PY: €1.6 million) and resulted from services that are rated intercompany loan as part of the reﬁnancing, 3 provided to other Novem Group entities based on the receivables from the service agreement, receivables service agreement. from the tax authorities and the Company’s cash position. GROUP The external charges of €1.1 million (PY: €1.0 million) MANAGEMENT included mainly advisory, insurance and audit fees and The Company’s capital and reserves decreased to REPORT to a smaller amount of legal fees. €673.7 million (31 March 2023: €681.8 million). 4 The income from participating interests of €40.0 The amounts owed to credit institutions carried €250.0 million (PY: €18.0 million) derived from the dividend million (31 March 2023: €250.0 million). In the course CONSOLIDATED distribution. of the private placement and stock exchange listing FINANCIAL in ﬁnancial year 2021/22, Novem Group S.A. entered STATEMENTS The interest income of €15.8 million (PY: €6.6 million) into a facilities agreement comprising a term loan with 5 derived from an intercompany loan to another Novem a principal amount of €250.0 million and an undrawn Group entity. The total interest expenses of €13.3 mil- revolving credit facility of €60.0 million. As part of lion (PY: €6.4 million) occurred from interest expenses the replacement of the former bond of Novem Group ANNUAL and fees to banks in loan-related terms. The increase GmbH, the principal amount was transferred with ACCOUNTS resulted from higher total interest rates during the the incorporation of a shareholder loan from Novem 6 ﬁnancial year. Group S.A. to Novem Group GmbH. The proﬁt for the ﬁnancial year 2023/24 amounted to ADDITIONAL €41.4 million (PY: €16.2 million). INFORMATION NOVEM ANNUAL REPORT 2023/24 48 RISKS AND OPPORTUNITIES CONTENTS Risk and opportunity management and eﬃciency of the system are continuously adapted followed at all times or effectively detect and prevent to new circumstances to provide a holistic picture of violations of the applicable laws by one or more of Within its global footprint, Novem is exposed to dynamic the situation at all times. the employees, consultants, agents or partners. As a conditions and thus faces several opportunities and result, Novem could be subject to penalties and mate- risks. These include political and sector‑speciﬁc risks, rial adverse consequences on the business, ﬁnancial Legal risks the risk of ensuring appropriate liquidity, currency risks, condition or results of operations if the Group failed to ﬁnancial risks, business process risks, research and prevent any such violations. 1 development risks, litigation risks, loss of know-how The Group’s companies are and could become involved and IT risks. Realising any of these risks could have in legal, administrative and arbitration proceedings. Members of governing bodies, employees, author- a material and adverse effect on business, ﬁnancial These proceedings or potential proceedings could ised representatives or agents may intentionally or TO OUR condition and results of operations. Sustainable suc- involve, in particular in the United States, substantial unintentionally violate applicable laws and internal SHAREHOLDERS cess is ensured through active risk management and claims for damages or other payments. Based on a standards and procedures, in particular in relation to 2 the ability to correctly anticipate market trends and judgment or a settlement agreement, Novem could anti-corruption, money-laundering, anti-trust and sanc- developments. Operational management is respon- be obligated to pay substantial damages. The litiga- tions compliance, as well as compliance with laws sible for identifying and exploiting opportunities. The tion costs and those of third parties could also be and regulations regarding sales practices, products NON-FINANCIAL aim is to identify opportunities in a timely manner and signiﬁcant. and services, environment, ﬁnance, employment and REPORT to take appropriate measures to utilise them. Novem general corporate and criminal law. However, there can 3 states in its long-term strategy the high relevance of Doing business on a worldwide basis requires Novem be no certainty that the internal controls, procedures, identifying risks and opportunities arising from opera- to comply with the laws and regulations of various compliance systems and risk management systems tions at an early stage, assessing them appropriately jurisdictions. The international operations are subject will be able to identify such violations, ensure that GROUP and mitigating them by speciﬁc measures. Compliance to applicable anti-corruption laws and regulations and they are reported in a timely manner, evaluate them MANAGEMENT with economic, social and environmental standards is economic sanctions programs. Such programs may correctly or take the appropriate countermeasures and REPORT deeply rooted in the corporate philosophy. The Man- restrict business dealings with certain sanctioned that they will be adequate for an enterprise of Novem’s 4 agement Board makes use of various tools and control countries. As a result of doing business in foreign scale and complexity. systems to prevent and, in case of the occurrence of an countries, Novem is exposed to a risk of violating anti- event, minimise the impact on the Group. Amongst the corruption laws and sanctions regulations applicable There can further be no certainty that any countermeas- CONSOLIDATED key components are continuous and detailed internal in those countries where Novem, partners or agents ures Novem implements will be appropriate to reduce FINANCIAL reporting and controlling processes as a focus of risk operate. Worldwide operations increase the risk of vio- the corresponding business risks effectively, that STATEMENTS management, which aim to identify risks to assets, lations of anti-corruption laws or similar laws. Some breaches of law, regulations or internal controls have 5 income or liquidity as early as possible and to take of the countries in which Novem operates still lack a not occurred in the past or that their discovery would appropriate and effective steps to manage risks and developed legal system with high standards regarding not result in signiﬁcant liability or reputational dam- seize opportunities. By monitoring the market and all anti-corruption and similar laws and are perceived to age for the Group. Moreover, in light of continuously ANNUAL stakeholders, continuous optimisation and adaptation have high levels of corruption. evolving legal and regulatory requirements and internal ACCOUNTS to current challenges are guaranteed. Novem’s busi- developments such as corporate reorganisations, there 6 ness opportunities and risks are recorded, analysed While there are policies and procedures in place that can be no certainty that the risk management systems, and evaluated through active multi-tiered planning, are designed to promote compliance with applicable internal controls and compliance systems and related information and control processes. The effectiveness anti-corruption laws and sanctions, there can be no governance structures will adequately identify and ADDITIONAL assurance that the policies and procedures will be address all relevant requirements. INFORMATION NOVEM ANNUAL REPORT 2023/24 49 CONTENTS Financial risks Novem has to comply with different regulatory regimes Even if Novem enters into certain further hedging across the world that change frequently and are con- arrangements in the future, there can be no assurance tinuously evolving and becoming more stringent, in Novem operates worldwide and is therefore exposed that hedging will be available on commercially reason- particular with respect to environmental regulations, to ﬁnancial risks arising from exchange rate changes. able terms. In addition, if the Group were to use any chemicals and hazardous materials, as well as health The primary exposure is to the Euro to US Dollar, US hedging transactions in the future in the form of deriva- and safety regulations. This also applies to air, water Dollar to Mexican Peso and Euro to Chinese Renminbi tive ﬁnancial instruments, such transactions may result and soil pollution regulations and to waste legislation exchange rates. Currency exchange ﬂuctuations could in mark-to-market losses. 1 and regulation, all of which have recently become more cause losses if assets denominated in currencies with stringent through new laws. a falling exchange rate lose value, while at the same Liquidity and credit risks time liabilities denominated in currencies with a ris- TO OUR Moreover, Novem globally faces increasing require- ing exchange rate appreciate. In addition, ﬂuctuations SHAREHOLDERS ments regarding matters of corporate responsibility in foreign exchange rates could increase or reduce Working capital requirements can vary, depending 2 management and transparency, not only with respect ﬂuctuations in the prices of materials, since Novem in part on the level, variability and timing of custom- to expectations from internal stakeholders, customers, purchases some of the raw materials with foreign ers’ vehicle production, the number of new platform investors and the general public but also concerning currencies. As a result of these factors, ﬂuctuations in launches and the payment terms with customers and NON-FINANCIAL legal requirements. exchange rates and, in particular, a signiﬁcant apprecia- suppliers. Liquidity could also be adversely impacted REPORT tion of the Euro against other major currencies could if suppliers were to suspend normal trade credit terms 3 In addition, for the manufacturing facilities and opera- affect the results of operations. and require payment in advance or on delivery. If the tions, Novem requires various permits and has to available cash ﬂows from operating activities are not comply with the requirements speciﬁed therein. In the External and internal transactions involving the deliv- suﬃcient to fund ongoing cash needs, Novem would GROUP past, adjusting to new requirements has necessitated ery of products and services to and/or by third parties be required to look to cash balances and availability MANAGEMENT signiﬁcant investments and the Group assumes that result in cash in‑ﬂows and out‑ﬂows, denominated in for borrowings, including under the senior facilities REPORT further signiﬁcant investments in this regard will be currencies other than the Euro or the functional cur- agreement dated 18 June 2021, to satisfy those needs. 4 required in the future. rency of the respective subsidiary dealing with such There can be no assurance that Novem, its suppliers cash ﬂow. To the extent that cash out‑ﬂows are not or customers will continue to have access to these or The vehicle approval process (homologation) and the offset by cash in‑ﬂows resulting from operational other sources of liquidity. This may increase the risk CONSOLIDATED implementation of increasingly stringent emission and business in such currency, the remaining net foreign that the Group cannot produce products or will have FINANCIAL consumption regulations are becoming increasingly currency exposure is not neutralised. to pay higher input prices, which may not be recovered STATEMENTS complex and time-consuming and may vary by country. in selling prices. 5 While the Group hedges a portion of the exposure to Furthermore, any additional requirements restricting the exchange rate of the Euro to the US Dollar, Novem Novem’s suppliers typically seek to obtain credit insur- or limiting car traﬃc with an aim at reducing green- currently does not hedge all foreign exchange risks. ance for deliveries of raw materials and components ANNUAL house gas or other emissions could lead to a mate- In addition, a number of the consolidated companies to Novem. If, for any reason, the suppliers were not ACCOUNTS rial decrease in car sales and consequently adversely report in currencies other than the Euro, which requires able to obtain such credit insurance, or not at com- 6 affect demand for the Group’s products and services. Novem to convert the respective ﬁnancial information mercial terms, they may not be able to offer the same into Euro when preparing the consolidated ﬁnancial payment terms that the Group has historically received, statements. which could signiﬁcantly increase working capital ADDITIONAL requirements. INFORMATION NOVEM ANNUAL REPORT 2023/24 50 CONTENTS Any signiﬁcant change in the needs for or the avail- ﬁnancial result and earnings. The Group constantly that ongoing and/or future tax audits may lead to an ability of working capital ﬁnancing or credit insurance monitors the ﬁnancial markets in order to identify additional tax expense and/or payment, which may be may have a material adverse effect on liquidity. To potential impacts in a timely manner and to determine accompanied by potential double taxation, penalties or strengthen the working capital structure, Novem any need for action. interest on tax payments and may, therefore, negatively practices a silent and non-recourse factoring program impact Novem’s ﬁnancial performance, ﬁnancial posi- with a limit of €65 million. In case of liquidity short- tion and cash ﬂow. Tax risks ages, Novem possesses further facilities of €77 million. 1 Thereof €13 million are linked to an unused uncommit- Regarding the global minimum taxation, it is important ted credit line for Novem Car Interiors (China) Co., Ltd. Novem is subject to taxation in, and to the tax laws and to note that under Luxembourg Law, a minimum tax regulations of, multiple jurisdictions as a result of the rate of 15% for multinational companies with an annual TO OUR international scope of the operations and corporate and revenue exceeding €750 million is being introduced to SHAREHOLDERS Interest rate risks ﬁnancing structure. Thus, the effective tax rate varies prevent proﬁt shifting to low tax jurisdictions (Pillar 2). 2 in each jurisdiction where Novem conducts business. Novem, which operates internationally and whose rev- Novem faces moderate interest rate risks, which mainly Changes in the mix of earnings between jurisdictions enue is close to the threshold, could be impacted by derive from obligations based on reference interest with lower tax rates and those with higher tax rates this regulation in the future when reaching a revenue NON-FINANCIAL rates. Such variable interests affect the factoring pro- could have a material adverse effect on proﬁtability, level of over €750 million, potentially leading to an REPORT gram as well as the senior facility agreement. The two similar to a rise in tax rates in individual jurisdictions. increased tax burden. 3 decisive reference interest rates are the 3-month Euri- bor relating to factoring fees for EUR-receivables and In addition, the tax authorities in any applicable juris- Tax risks are identiﬁed, regularly monitored and interest expenses for the senior facility agreement and diction may disagree with the positions Novem has assessed by the Tax department and necessary meas- GROUP the SOFR, which represents the base rate for factoring taken or intends to take regarding the tax treatment ures are taken. MANAGEMENT fees resulting from USD-receivables. The continued or characterisation of any transactions, including the REPORT interest rate hike by the European Central Bank in 2023 tax treatment or characterisation of indebtedness 4 Customs risks and opportunities led to a material increase in ﬁnancial expenses aris- or the deduction of interest expenses. Some Novem ing from the senior facility agreement. Nevertheless, subsidiaries have loss carryforwards and/or interest a further 10% increase in both reference rates from carryforwards as a result of applying the statutory The sales volume of Novem’s products and services CONSOLIDATED today would have no material impact regarding the interest ceiling rules that limit the deduction of net depends upon the general global economic situation. FINANCIAL senior facility agreement and the factoring program. interest expenses for tax purposes. The absence of tax- Particular risks to the economic environment, inter- STATEMENTS able proﬁts or relevant interest expenses could limit the national trade and demand for the Group’s products 5 The interest rate risk regarding pension obligations beneﬁt of such carryforwards. The Group could also may arise from growing protectionist sentiment in key is also moderate as their share of total assets is less fail, whether inadvertently or through reasons beyond markets and the introduction of further tariff and non- than 5%. its control, to comply with tax laws and regulations, tariff barriers or similar measures due to increasing ANNUAL which could result in unfavourable tax treatment. protectionist tendencies. ACCOUNTS 6 Financial market opportunities Novem could accrue unanticipated tax expenses in Since the beginning of 2018, the previous US admin- relation to previous tax assessment periods which istration announced a series of potential measures Favourable developments in interest rates and have not yet been subject to a tax audit or are cur- relating to international trade that, individually or in ADDITIONAL exchange rates can have a positive impact on Novem’s rently subject to a tax audit. It cannot be ruled out aggregate, could have a material adverse impact on the INFORMATION NOVEM ANNUAL REPORT 2023/24 51 CONTENTS global economy, international trade or the automotive extreme weather events, global pandemics and disrup- parts and components needed to manufacture cars industry. The US administration enacted a number of tions to the energy supply can lead to problems such and other vehicles. An example of this is the war in measures aimed at restricting the access of Chinese as a shortage of cargo space, extreme delays and Ukraine, where all these disruptions became apparent. companies to the US market. Therefore, they began to ﬂuctuations in delivery times and customs clearance, impose tariffs on certain products originating in China, among others. This poses the risk of price increases, Despite various trade barriers and unpredictable events, including a 25% tariff on automotive trim parts and a the normalisation of which can be unpredictable. The such as the Russia-Ukraine war, the implementation of 7.5% on imports of aluminium. The Chinese government EU announced a series of potential measures relat- new free trade agreements between the EU and other 1 retaliated by imposing tariffs on several US products. ing to international trade and the automotive industry. third countries (such as Canada, Japan, Vietnam and Even though the United States and China entered into EUDR (EU Deforestation Regulation) and CBAM (Car- Singapore in the past years) and efforts to build new an Economic and Trade Agreement in January 2020 as bon Border Adjustment Mechanism) are only two of trade relations could reduce existing tariff barriers as TO OUR a ﬁrst step, the trade conﬂict between the two countries these actions that should lead to a more sustainable, well as non-tariff measures. Novem also counters SHAREHOLDERS has not been resolved until today. But the agreement green and fair supply chain. As a result, rising prices these risks by constantly monitoring the markets, 2 in January 2022 on the import of steel and aluminium and higher duties not only for transportation but also focusing on the less affected market segments as products from the EU into the US within the frame- for gas and other purchased materials can negatively well as adapting the global supply chains to changing work of a tariff quota and the resulting elimination of affect overall market demand and therefore Novem’s customs and foreign trade conditions. NON-FINANCIAL additional tariffs will enable a positive development for results of operations. REPORT international trade between the EU and the US and is a Research and development risks and 3 ﬁrst effort towards minimising trade barriers. In addition, the increase in regional or international opportunities trade barriers, including anti-dumping tariffs and the Also, the replacement of the North American Free withdrawal of countries from bilateral and multilateral GROUP Trade Agreement (NAFTA) with the new United States‑ trade agreements could have a negative impact on Future success depends on the ability to anticipate MANAGEMENT Mexico-Canada Agreement (USMCA) in 2020, which the global economic environment and can thus lead market trends as well as technological changes and REPORT includes more stringent rules of origin provisions (e.g. to lower demand for the Group’s products. The automo- to develop and bring new and improved products to the 4 increase of regional value content) and requirements tive industry supply chain has developed over decades market in a timely manner. The automotive market, in for a minimum percentage of manufacturing being and relies on existing trade arrangements to provide particular, is characterised by progressive development made with labour above a certain minimum wage for cross-border supplies of raw materials, automotive towards more driver and passenger comfort features, CONSOLIDATED could result in higher prices for vehicles, which could, parts and other components. digital user experience and assistance systems. FINANCIAL in turn, harm the demand for vehicles and thereby STATEMENTS indirectly Novem’s products. Novem has substantial Extreme risks from acts of war can no longer be ruled There can be no assurance that Novem will be suc- 5 operations in Mexico, currently supplying customers out in the future and may also inﬂuence Novem’s cessful in developing new products or systems or in located in the United States under a preferred tariff sys- further development. This could lead to a tightening bringing them to market in a timely manner or at all. tem. The imposition of additional import restrictions, of export controls, political and economic sanctions Further, it cannot be guaranteed that products or tech- ANNUAL non‑tariff trade barriers and/or tariffs could adversely against countries as well as entities and massive bar- nologies developed by others will not render offerings ACCOUNTS affect the ability to supply customers in the United riers to importing and exporting goods. Also, the supply obsolete or non-competitive or that customers will not 6 States or elsewhere. In addition, the results of opera - of strategic raw materials could be restricted and thus substitute the Group’s products with competing prod- tions could also be affected by retaliatory measures become more expensive. The termination of existing ucts. Additionally, there is no certainty that the market from Europe, China or other countries imposing tariffs trade agreements could signiﬁcantly disrupt supply will accept Novem’s innovations, that competitors will ADDITIONAL on the United States. Natural disasters, climate-related chains and lead to immediate shortages of crucial not be able to produce non-patented products more INFORMATION NOVEM ANNUAL REPORT 2023/24 52 CONTENTS inexpensively from other sources or that the Group for innovations. Therefore, the maturity level of our the future continue to engage, in highly competitive will be able to adjust its cost structure in the event of offerings must increase signiﬁcantly. If there is a shift strategies, such as predatory pricing or mergers and contraction of demand. Should Novem fail to develop away from the use of materials or technologies in which acquisitions, to gain market share. While Novem cur- appropriate strategies as a response to these or other Novem invests, the costs may not be fully recovered, rently has a strong market position in the market for market trends and should fail to enhance existing prod- including, for example, the costs and expenses incurred premium decorative interior trim elements, if consoli- ucts, develop new products or keep pace with develop- in connection with the development of or investment in dation continues in the automotive components sec- ing market trends or technology, growth opportunities such material or technology. Novem may be placed at a tor, the Group may have to compete against growing 1 could be lost or the Group could lose the opportunity competitive disadvantage if other materials or technolo- competitors who beneﬁt from increased economies of to win new platforms from existing customers. Fur- gies emerge as industry-leading. One of the most impor- scale or are part of large integrated groups and who thermore, if Novem devotes resources to the pursuit of tant future challenges is sustainability, where OEMs may have greater ﬁnancial and other resources or a TO OUR new technologies and products that fail to be accepted already demand a high degree of recycled raw materi- broader global footprint. Such competitors may also SHAREHOLDERS in the marketplace or that fail to achieve high process als and a precise action plan towards CO2-neutrality. be less margin-sensitive than Novem and attempt to 2 robustness, all or part of these engineering and devel- The focus on sustainability of the business is seen as increase their market share through pricing below cost. opment expenses may be lost. essential for the long-term success of the Group. In addition, suppliers that do not currently compete with Novem could expand their product portfolios to include NON-FINANCIAL A trend to highly integrated products on the OEM side, Additionally, private users increasingly use modes of products that are in direct competition. Changes in the REPORT including mechanical and electronic components, can transportation other than the private automobile, espe- product focus of larger suppliers could also result in 3 lead to a trend where only full system suppliers will cially in connection with growing urbanisation and car such suppliers establishing relationships with custom- be Tier‑1 suppliers. Novem’s business requires a high sharing. The increased use of car sharing concepts ers that reduce or entirely replace Novem’s business level of technical expertise for the design, develop- and new city-based car rental schemes could reduce with those customers. Given the Group’s strong market GROUP ment and manufacturing of products. Novem invests dependency on private automobiles and demand for position, OEMs have in the past awarded and may in MANAGEMENT in technology, new materials and innovation, which customised premium vehicles. On the other hand, the the future award certain platforms to competitors to REPORT the Group believes will be critical to long-term growth. trend towards shared mobility can lead to a need for diversify their supplier portfolio, which has resulted 4 Furthermore, it needs to continually adapt its exper- more premium interiors as a differentiation method for or may result in the loss of nominations in the future tise in response to technological innovations, industry mobility providers. and which may limit the potential for future growth of standards and customer requirements or preferences. Novem’s market share. CONSOLIDATED FINANCIAL Customer and market risks and The ability to anticipate changes in technology and The ﬁnancial condition of customers is affected by STATEMENTS opportunities market trends and to successfully develop and intro- the sales of their vehicles, which may be impacted by 5 duce new and enhanced products or manufacturing several factors, including general economic conditions. processes on a timely basis will be a signiﬁcant factor Novem’s products are highly competitive in terms of In particular, purchases of the customers’ products in the ability to remain competitive. New technologies, price, quality, delivery performance, innovation, product may be limited by their customers’ inability to obtain ANNUAL materials or changes in industry and customer require- design, engineering capability and service. They face adequate ﬁnancing for such purchases or by decreas- ACCOUNTS ments may render one or more of the current offerings signiﬁcant competition in all regions within each major ing customer demand for light vehicles in general. 6 obsolete, excessively costly or otherwise unmarket- product category. able. Another factor that poses challenges is the trend The Group may not fully or accurately assess the cred- towards reduced development times. Especially EV Some of Novem’s competitors, in particular in the itworthiness of customers. In particular, the ﬁnancial ADDITIONAL companies and Asian OEMs reduce the time to market Asian market, have in the past engaged, and may in condition of and demand for Novem’s products from INFORMATION NOVEM ANNUAL REPORT 2023/24 53 CONTENTS OEM customers have been and continue to be affected could also materially impact the ﬁnancial position and does not actively hedge against the risk of rising prices by the consequences of the Covid‑19 pandemic and results of operations. of raw materials or energy. Contracts with customers the Russia‑Ukraine war. Signiﬁcantly lower global pro- do not include pass-through mechanisms regarding duction levels, tightened liquidity and increased cost Market‑speciﬁc opportunities primarily relate to con- inﬂationary price increases on raw materials or energy of capital have in the past combined to cause ﬁnancial sumer spending trends concerning the automotive prices and if Novem is not able to compensate for such distress amongst many OEMs and other customers as industry. The trend for interior design is to view the car price increases or undertake cost-saving measures well as suppliers in the automotive industry and could more as a wellness oasis on wheels. Interior design elsewhere in operations, they could have a material 1 have a similar impact in the future. and details set standards and decisively inﬂuence adverse impact on the ﬁnancial results. consumer behaviour. Novem’s objective is to stabilise Although Novem supplies products to almost all lead- and maintain its attained growth and to generate future TO OUR Logistics risks ing premium OEMs, the Group depends on certain large proﬁtable growth. Management pays close attention to SHAREHOLDERS customers for a signiﬁcant proportion of revenue. In how the automotive market responds to developments 2 the ﬁnancial year 2023/24, the three largest customers in consumer conﬁdence. The Group’s product and ser- Complex supply and delivery chains make logistics represented approximately 71% of revenue. The loss vice range put Novem in a good position to beneﬁt from processes in Novem’s industry very vulnerable to dis- of all or a substantial portion of the revenue with any expected future trends. Its global presence allows it to ruptions. Conﬂicts, such as those currently unfolding NON-FINANCIAL large-volume customers could have a material adverse shift activities in markets in order to realise its cost- in the Red Sea, complicate and delay this exchange of REPORT impact on Novem’s business, ﬁnancial condition and cutting potential and further enhance its proximity to goods. As a result, Novem has experienced temporary 3 results of operations. This risk could also materialise the customer. decreases in orders from customers due to supply if the content per vehicle awarded to Novem were to chain disruptions in the past and expects this to con- decrease or if a lower amount of content per vehicle tinue in the future. Material and supplier risks GROUP than expected is awarded. While Novem has generally MANAGEMENT beneﬁtted from increasing content per vehicle in the In general, supply chain disruptions may result from REPORT past, there have also been platforms with decreasing Prices of certain raw materials and the energy the many reasons, including closures of supplier facili- 4 content per vehicle. Group relies on are linked to commodity markets and ties or critical manufacturing facilities due to strikes, thus subject to ﬂuctuation. The primary raw materials mechanical breakdowns, electrical outages, ﬁre and In addition, the market for premium vehicles is signiﬁ- and components used in the products are chrome and explosions, as well as logistical complications resulting CONSOLIDATED cantly consolidated with a limited number of premium plastic parts, wood, aluminium, granulates, glue and from weather or other natural disasters, mechanical FINANCIAL OEMs primarily based in Europe. The amount of busi- synthetic materials. The prices of such raw materials failures, border controls, health checks and delayed STATEMENTS ness with Asia-based OEMs generally lags that of the have ﬂuctuated signiﬁcantly in recent years. Compared customs processing or due to limitation of travel in 5 largest customers in Europe, partly due to the existing to the increases in the last two years, prices have bot- logistics caused by the Covid-19 or another pandemic. relationships between these Asian OEMs and their tomed out and began to reduce. In addition, Novem preferred suppliers. uses large amounts of energy in the manufacturing In recent years, Novem has broadened its supplier base ANNUAL process, the price of which is also subject to signiﬁ- to include new suppliers in local markets, particularly ACCOUNTS Consolidation amongst customers could result in an cant volatility. Such volatility in the prices of these com- in the United States, Mexico, Canada and Asia, who 6 increasingly concentrated client base of large custom- modities could increase the costs of manufacturing have not yet proven their ability to consistently meet ers, which could, among others, increase the bargaining products. In addition, supply shortages or delays in the the Group’s requirements. The lack of even a small power of current and future customers. Mergers of cus- delivery of raw materials, components or energy can single subcomponent or raw material necessary to ADDITIONAL tomers with entities that are not Novem’s customers also result in increased manufacturing costs. Novem manufacture one of the products, for whatever reason, INFORMATION NOVEM ANNUAL REPORT 2023/24 54 CONTENTS could force Novem to cease production, possibly for personnel, could have a material adverse effect on the students) as of 31 March 2024. The labour force in a prolonged period. Similarly, a potential quality issue Group’s market position. Due to intense competition the automotive industry, including Novem’s, is highly could force Novem to halt deliveries while validating the within the industry, there is a risk of losing qualiﬁed unionised, especially in Europe and Mexico. Over the products. Even where products are ready to be shipped employees to competitors or being unable to ﬁnd a suf- past several years, the Group’s industry and the indus- or have been shipped, delays may arise before they ﬁcient number of appropriate new employees. Consid- tries in which Novem’s customers operate have experi- reach the customer. If Novem ceases timely deliveries, erable expertise could be lost or access thereto gained enced strikes, lockouts or refusals to work. Although in the Group has to absorb its own costs for identifying by competitors. the recent past the Group has not experienced, and at 1 and solving the cause of the problem, as well as expedi- present is not experiencing any major labour disputes, tiously producing and shipping replacement products. There is no assurance that the Group will be successful the relationships with employees and unions at vari- in retaining its executives and employees in key posi- ous locations could deteriorate in the future and the TO OUR If Novem is unable to deliver products to the custom- tions or in attracting new employees with correspond- Group could experience strikes, further unionisation SHAREHOLDERS ers on time, the customers may be forced to cease ing qualiﬁcations. Although Novem tries to retain the efforts or other types of conﬂicts with labour unions 2 production and may seek to recoup losses, which could commitment of qualiﬁed executives and key employ- or employees. Refusals to work or work downtime be signiﬁcant. Thus, any supply chain disruption could ees through a trustful individualised leadership rela- experienced by customers or other suppliers could cause the complete shutdown of an assembly line of tion, open-minded, diverse and fault-tolerated culture result in delays, decreased productivity or closures NON-FINANCIAL one of Novem’s customers, which could expose the as well as performance-based remuneration systems, of assembly facilities where the Group’s products are REPORT Group to material claims for compensation. there is a risk that any such individuals will leave the needed for assembly. 3 Group, including as a result of collective bargaining on In addition, the Group is exposed to the risk of lower terms that may be considered below market standard The labour market has also changed. It is becoming order volumes from customers due to a disruption by employees. increasingly challenging to ﬁnd the employees needed GROUP to their supply chain, which is unrelated to Novem’s to ﬁll vacancies. MANAGEMENT products. OEMs continue to be confronted with geopo- The manufacture of many of the Group’s products REPORT litical turmoil, leading to lower production volumes and requires signiﬁcant technical skills and expertise. The Increasing labour costs due to inﬂation in many coun- 4 temporary production suspensions for many OEMs, success of the operations and growth strategy will tries in which the Group operates, such as China, the including some of Novem’s customers. therefore also depend on attracting and retaining skilled Czech Republic, Honduras, Mexico or Slovenia, may and qualiﬁed personnel maintaining high quality stand- erode the proﬁt margins and compromise price com- CONSOLIDATED Rising prices in the supply chain could also be caused ards globally. The labour markets for production staff in petitiveness. Recent wage increases have increased FINANCIAL by the requirements of the German Supply Chain some regions where Novem is active, such as the Czech average wage expenses per employee. Although Novem STATEMENTS Act (LkSG). Republic, Germany, Mexico or Slovenia, are character- undertakes various incentive programs to improve the 5 ised by very low unemployment rates and strong historic productivity of employees, as well as cost-effective employment growth, resulting in intense competition for automation initiatives designed to reduce labour costs, Personnel risks and opportunities qualiﬁed personnel and an increased turnover rate. these measures may be insuﬃcient to offset increases ANNUAL in personnel costs or the Group may be unable to man- ACCOUNTS Novem’s success depends on attracting and retaining The business could be adversely impacted by strikes, age these increases in the future effectively. 6 managing directors, executive oﬃcers, senior manage- labour disputes and natural disasters. ment, key employees and other skilled and unskilled Personnel development and apprenticeship programs personnel. The loss of key employees, including Novem operates a large, global business with 4,887 are a speciﬁc chance to retain a high standard and ADDITIONAL management, directors, executives and other skilled employees (excluding leased workers, interns and knowledge within Novem’s workforce. INFORMATION NOVEM ANNUAL REPORT 2023/24 55 CONTENTS The development of employees is a key issue. This is all considered a necessity or premise for the acceptance of quality requirements could negatively affect the market about giving people the skills to pursue entrepreneurial products by customers and markets. As such, Novem acceptance of the Group’s other products and market goals while simultaneously combining this with the spe- must obtain and maintain the relevant certiﬁcations reputation in various market segments. ciﬁc development aspirations of individual needs. Along- to be nominated as a supplier as well as for an ongo- side the annual employee appraisal interviews, regular ing business relationship. Maintaining such standards, Environmental, health and safety risks feedback talks and development discussions are held which are regularly reviewed by customers, is essential at Novem. As part of their discussions, supervisors and to building long-term customer relationships. 1 their employees identify the necessary areas for action Many of the sites at which Novem operates have been and therefore create individually tailored programmes. As a manufacturer, Novem is subject to product liability used for industrial purposes for many years, leading lawsuits and other proceedings alleging violations of to contamination risks and resulting in site restoration TO OUR Novem believes that the responsibility for independ- due care, violation of warranty obligations (implied obligations. In addition, under federal and state environ- SHAREHOLDERS ent career development is with individual employees. and expressed), treatment errors, safety provisions mental laws and regulations (including state property 2 Supervisors and Human Resources see themselves and claims arising from breaches of contract or ﬁnes transfer laws), the Group could be held responsible as facilitators by making instruments, training courses imposed by government or regulatory authorities. Given for the remediation of off-site areas impacted by its and feedback talks available. These include, amongst the large amounts of products manufactured and dis- sites and operations, natural resource damages and/ NON-FINANCIAL others, development meetings that enable Novem to tributed to a variety of customers in the automotive or third-party claims (e.g. for bodily injury or property REPORT identify employees’ career aspirations and agree on a sector, Novem is from time to time faced with liability damage). Regulatory authorities could assert claims 3 plan of action. Through continuous learning, the Group claims related to actual or potentially deﬁcient charges against Novem as the current or former owner or ten- prepares its employees for future challenges. Thinking of products and may therefore be held liable in cases ant (operator) of the affected sites or as the party that ahead and strengthening the development of individu- of death, bodily injury or damage to property caused caused or contributed to the contamination, for the GROUP als is a key strategy for Novem to shape future talents. by a defective product manufactured by the Group. The investigation or remediation or containment of such MANAGEMENT risks arising from such warranty and product liability soil or groundwater contamination or other environ- REPORT lawsuits, proceedings and other claims are insured up mental media (e.g. surface waters), including related 4 Quality risks and opportunities to levels the Group considers economically reasonable. to Novem’s use of non-owned treatment, storage and Still, the insurance coverage could prove insuﬃcient in disposal sites or order the Group to dispose of or treat As a supplier of premium decorative interior trim prod- individual cases. contaminated soil excavated or water encountered CONSOLIDATED ucts, one of the determining factors for Novem’s cus- in the course of construction. Novem could also be FINANCIAL tomers in purchasing components and systems is the Furthermore, Novem manufactures many products liable to the owners or occupants of sites leased, sites STATEMENTS high quality of products and manufacturing processes. pursuant to customer speciﬁcations and quality the Group sells or other impacted properties. Costs 5 A decrease in the actual or perceived quality of prod- requirements. If the products manufactured and deliv- typically incurred in connection with such claims are ucts and processes could damage Novem’s image and ered do not meet the requirements stipulated by the generally diﬃcult to predict. Also, if any contamination reputation as well as those of the products. In addition, customers at the agreed date of delivery, production were to become a subject of public discussion, there ANNUAL defective products could result in loss of sales, loss of the relevant products is generally discontinued until is a risk that the reputation or relations with customers ACCOUNTS of customers and loss of market acceptance or could the cause of the product defect has been identiﬁed could be harmed. 6 damage the Group’s reputation and market perception. and remedied. Furthermore, Novem’s customers could potentially claim damages for breach of contract, even Greenhouse gas emissions have increasingly become At some locations, certain product certiﬁcations with if the cause of the defect is remedied at a later point the subject of substantial international, national, ADDITIONAL regard to speciﬁcations and quality standards are in time. In addition, failure to perform with respect to regional, state and local attention. Greenhouse gas INFORMATION NOVEM ANNUAL REPORT 2023/24 56 CONTENTS emission laws and regulations have been promulgated The nature of operations subjects Novem to various The risk of computer viruses, cyber-attacks and security in some of the jurisdictions in which Novem operates, statutory and regulatory compliance and litigation risks breaches is further increased as a growing number of and additional greenhouse gas requirements are in vari- under health, safety and employment laws. There can employees work remotely. A signiﬁcant or large‑scale ous stages of development. In addition, the US Environ- be no assurance that there will be no accidents or malfunction or interruption of one or more IT systems mental Protection Agency (EPA) has issued regulations incidents suffered by employees, contractors or other could adversely affect the ability to keep operations limiting greenhouse gas emissions from mobile and third parties on the Group’s sites. If any accidents or running eﬃciently or at all and affect product availabil- stationary sources pursuant to the US Clean Air Act. incidents occur, Novem could be subject to prosecu- ity. Furthermore, it is possible that a malfunction of 1 The ﬁnal Carbon Pollution Standards for new, modiﬁed tion and litigation, which could result in ﬁnes, penalties data security measures or a cyber-attack could enable and reconstructed power plants reﬂect the degree of and other sanctions and could cause damage to the unauthorised persons to access sensitive business or emission limitation achievable through the application reputation. personal data, including information on the Group’s TO OUR of the best system of emission reduction that the EPA intellectual property or business strategy or those of SHAREHOLDERS has determined has been adequately demonstrated for The implementation and maintenance of management customers. Such failure could cause economic loss 2 each type of unit. Novem’s customers may seek price systems for environment, health and safety are required for which Novem could be liable and may expose the reductions to account for their increased costs result- to fulﬁl legal and customer obligations. Ongoing audits Group to governmental investigations, disciplinary ing from greenhouse gas requirements. from third parties must conﬁrm the effectiveness of actions and ﬁnes. A failure of the IT systems could NON-FINANCIAL these systems to validate these certiﬁcates and thus also cause damage to Novem’s reputation, which could REPORT As one of the measures intended to meet national be considered as a supplier. harm the business. 3 climate targets, Germany expanded its national CO2 pricing and trading system to include emissions from More and more partners request to collaborate closely IT risks burning fossil fuels by vehicles. The system entails on online platforms. While this brings more eﬃciency GROUP mandatory emission certiﬁcates that must be acquired to established processes, it also requires strict techni- MANAGEMENT by sellers of fossil fuels and the costs of which are Novem relies heavily on centralised, standardised cal and organisational policies to ensure the security REPORT expected to be passed on to end consumers, i.e. vehicle information technology systems and networks to of data and knowledge. 4 users. The initial price for an emission certiﬁcate has support business processes as well as internal and been set at €45 per ton of CO2 for 2024 and is expected external communications. Any failure in the operation to step up to approximately €55 to €65 per ton of CO2 of these IT systems could result in material adverse CONSOLIDATED in 2026. The new system has already resulted in higher consequences, including disruption of operations, loss FINANCIAL fuel prices in Germany and is expected to have a further of information or an unanticipated increase in costs. STATEMENTS impact in the future, which could in turn have a negative In addition, from time to time, the Group is required to 5 effect on the demand for vehicles in Germany. make investments to maintain and/or upgrade the IT systems and networks and such investments may be Growing pressure to reduce greenhouse gas emissions signiﬁcant. ANNUAL from mobile sources could reduce automobile sales, ACCOUNTS thereby reducing demand for products and ultimately 6 revenue. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 57 CORPORATE GOVERNANCE STATEMENT CONTENTS The Company is a Luxembourg public limited liability applied accordingly to a public limited liability company The internal control systems and risk management company (Société Anonyme) and as such is subject (Société Anonyme) with a two-tier governance system for the establishment of ﬁnancial information are to the corporate governance regime as set forth in under Luxembourg Law. described in the section Risk and opportunity man- particular in the Companies’ Law. agement. According to the Articles of Association, the The Company’s Supervisory Board or its Audit and Management Board must be composed of at least two As the Company’s shares are listed on a regulated mar- Risk Committee arranges for the Company’s external members, whereas the Supervisory Board must be ket, the Company is further subject to the provisions of auditors to inform it and note in the Audit Report if, composed of at least three. The Supervisory Board has 1 the Shareholders’ Rights Law. during the performance of the audit, the external audi- set up the following committees in accordance with tors identify any facts that indicate an inaccuracy in the Articles of Association: the Audit and Risk Com- Being a Luxembourg public limited liability company, adhering to the recommendations in C.10, D.3, D.9 or mittee and the Nomination and Remuneration Com- TO OUR with its shares exclusively listed on a regulated market D.11 of the GCGC, in each case applied accordingly to a mittee. The Audit and Risk Committee is responsible SHAREHOLDERS in Germany, the Company is neither required to adhere public limited liability company (Société Anonyme) with for the consideration and evaluation of the auditing 2 to the Luxembourg corporate governance regime appli- a two-tier governance system under Luxembourg Law. and accounting policies and the Company’s ﬁnancial cable to companies admitted to the regulated market in controls and systems. The Remuneration Committee is Luxembourg nor to the German corporate governance For the avoidance of doubt, the Company is subject responsible for making recommendations to the Super- NON-FINANCIAL regime applying to stock corporations organised in to Luxembourg Law with respect to the accounting visory Board and the Management Board on the terms REPORT Germany. principles relating to its ﬁnancial statements and there- of appointment and the beneﬁts of the members of the 3 fore does not fall within the application of the German Management Board of the Company. Further details The Company has set up its own corporate governance Commercial Code (Handelsgesetzbuch). As a result, on the composition and purpose of these committees structure in order to address its own speciﬁc needs recommendation D.3 of the GCGC was followed by the and the Supervisory Board are described in the sec- GROUP and interests and has, for such purpose, adopted and Company to the extent possible. tion Report of the Supervisory Board as well as in the MANAGEMENT chosen to abide by its own corporate governance rules, section Setup and organisation of the Management REPORT as further described below, rather than to voluntarily By virtue of European and Luxembourg Law, Novem Board regarding the Management Board. The Annual 4 apply either of the Luxembourg or Germany govern- Group is obliged to report on non‑ﬁnancial and diversity General Meeting shall be held at such time as speci- ance regimes, and to set up its corporate governance information relating to it. Novem’s Non‑ﬁnancial Report ﬁed by the Management Board and/or the Supervisory structure. will be published together with this Annual Report, i.e. Board in the convening notice. CONSOLIDATED on 27 June 2024. In accordance with Article 7bis of the FINANCIAL As the German corporate governance code (GCGC) Shareholders’ Rights Law, the Company must further The Management Board and Supervisory Board may STATEMENTS does not apply to the Company, it does not have to draw up a Remuneration Policy for the Supervisory convene extraordinary general meetings as often as 5 issue a declaration of conformity with the GCGC under Board and the Management Board of Novem Group S.A. the Company’s interests so require. An extraordinary section 161 of the German Stock Corporation Act reﬂecting the principles and measurement for the general shareholders’ meeting must be convened upon (Aktiengesetz). remuneration of the members of such boards. The the request of one or more shareholders who together ANNUAL Company must as well publish a Remuneration Report, represent at least one-tenth of the Company’s share ACCOUNTS Solely for purposes of section 4.1.1.1 of the Guide to which will be published separately from this Annual capital. 6 the DAX Equity Indices of STOXX Ltd., the Company Report on the Novem IR website on 19 July 2024. The declares that it does not deviate from recommenda- Remuneration Policy can already be accessed on the Each share entitles the holder to one vote. tions C.10, D.3, D.9 and D.11 of the GCGC, in each case Novem IR website. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 58 CONTENTS The right of a shareholder to participate in a General D) The Articles of Association of the Company do not G) Powers of the Management Board: Meeting and to exercise the voting rights attached to contain any restrictions on voting rights. their shares are determined with respect to the shares • The Company is managed by a Management held by such shareholder on the 14th day before the E) There are no agreements with shareholders which Board under the supervision of the Supervisory General Meeting. are known to the Company and may result in restric- Board. tions on the transfer of securities or voting rights • The Management Board is vested with the Each shareholder can exercise their voting rights in within the meaning of the Transparency Directive. broadest powers to perform or cause to be 1 person, through a proxy holder or in writing (if provided performed any actions necessary or useful in for in the relevant convening notice). F) Rules governing the appointment and replacement connection with the purpose of the Company. of Management Board members and the amend- • All powers not expressly reserved by the Com- TO OUR The information required pursuant to Article 10.1 of ment of the Articles of Association: panies’ Law or by the Articles of Association to SHAREHOLDERS Directive 2004 / 25 / EC on takeover bids which has the General Meeting or the Supervisory Board 2 been implemented by Article 11 of the Takeover Law is • The members of the Management Board are fall within the authority of the Management set forth here below under Disclosure Regarding Article appointed by the Supervisory Board, or in the Board. 11 of the Luxembourg Law on Takeovers of 19 May 2006. case of a vacancy, by way of a decision adopted • Certain measures are subject to the prior NON-FINANCIAL by a majority of the remaining Management approval of the Supervisory Board on the terms REPORT Board members for the period until the next set out in the Articles of Association and the Disclosures pursuant to Article 11 of the 3 Supervisory Board Meeting. Rules of Procedure of the Management Board. Luxembourg Law on Takeovers of 19 May • Management Board members are appointed for • The Management Board may appoint one or 2006 a term not exceeding six years and are eligible several persons, including but not limited to GROUP for re-appointment. members of the Management Board or share- MANAGEMENT • Management Board members may be removed holders, at the exclusion of any member of the REPORT A) For information regarding the structure of capital, at any time with or without cause by the Super- Supervisory Board, who shall have full authority 4 reference is made to section 3.8 of the Consoli- visory Board by a simple majority of the votes. to act on behalf of the Company in all matters dated ﬁnancial statements. • Resolutions to amend the Articles of Association pertaining to the daily management and affairs may be adopted in the manner foreseen by the of the Company. CONSOLIDATED B) The Articles of Association of the Company do not Companies’ Law, i.e. by a majority of two-thirds • The Management Board is also authorised to FINANCIAL contain any restrictions on the transfer of shares of the votes validly cast, without counting the appoint one or several persons, either members STATEMENTS of the Company. abstentions, if the quorum of half of the share of such board or not, at the exclusion of any 5 capital is met. If the quorum requirement of half member of the Supervisory Board, for the pur- C) According to the voting rights notiﬁcations received of the share capital of the Company is not met poses of performing speciﬁc functions at every until 31 March 2024, the following shareholders at the Annual General Meeting, the sharehold- level within the Company. ANNUAL held more than 5% of total voting rights attached to ers may be re-convened to a second General • The Management Board may also appoint com- ACCOUNTS Novem shares: COFRA Holding (indirect: 33,505,583 Meeting. No quorum requirements apply with mittees to which it may delegate some of its 6 voting rights attached to shares or 77.87% of total respect to such second General Meeting and tasks and the members of which may, but do voting rights). the resolutions are adopted by a majority of not have to be members of the Management two-thirds of the votes validly cast, without Board, at the exclusion of any member of the ADDITIONAL counting the abstentions. Supervisory Board. INFORMATION NOVEM ANNUAL REPORT 2023/24 59 CONTENTS • The Management Board is authorised to issue shares in the Company under the Articles of Association, which set the authorised capital of the Company, including the issued share capital at €520,000, represented by 52,000,0000 shares. Such authorisation has been granted for a period of ﬁve years beginning on 30 June 1 2021. During such period the Management Board, with the consent of the Supervisory Board, may issue new shares under the author- TO OUR ised share capital, limit or cancel any preferen- SHAREHOLDERS tial subscription rights. 2 • The Articles of Association of the Company allow for a redemption of shares within the limits of the law, however, there is currently NON-FINANCIAL no buyback authorisation to the Management REPORT Board in place. 3 H) The Company is, given the nature of its business and its ﬁeld of activity, party to agreements which GROUP would take effect, alter or terminate upon a change MANAGEMENT of control of the company following a takeover bid, REPORT as is usual in the sector in which it operates. 4 I) There are no agreements between the Company and its Management Board members or employ- CONSOLIDATED ees providing for compensation if they resign or FINANCIAL are made redundant without valid reason or if their STATEMENTS employment ceases because of a takeover bid. 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 60 SUBSEQUENT EVENTS CONTENTS There were no events or developments that could have materially affected the measurement and presentation of the Group’s assets and liabilities as of 31 March 2024 other than disclosed in note 5.15 of the Consolidated ﬁnancial statements. 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 61 OUTLOOK CONTENTS Albeit to different degrees, challenges such as inﬂation - ary forces, supply chain disruptions and geopolitical tensions persisted during the ﬁnancial year 2023/24, inﬂuencing economic dynamics worldwide. As a result, elevated input costs hindered overall economic growth. As a key industry in Germany, the automotive sector 1 struggles with the transition to electric vehicles and softening demand. In line with this development, recent market data suggests only slight growth in light vehi- TO OUR cle production for 2024/25, taking the aforementioned SHAREHOLDERS stress factors into account. By streamlining the produc- 2 tion footprint and implementing further cost-cutting measures, Novem is adapting to the current market environment and remains vigilant in closely monitoring NON-FINANCIAL further developments. REPORT 3 In the face of ongoing global uncertainties, offering a reliable outlook is not feasible. Short-term market conditions will remain diﬃcult and therefore continue GROUP to put pressure on the Group’s performance. However, MANAGEMENT Novem conﬁrms its mid‑term guidance on the back of REPORT a solid order intake during the ﬁnancial year 2023/24. 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 62 Ash open pore 4 ﬁnancial statements Consolidated CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the ﬁnancial year ended 31 March 2024 CONTENTS in € thousand Note FY 2022/23 FY 2023/24 Revenue 4.1 700,304 635,509 Decrease in ﬁnished goods and work in process -7,491 -15,416 Total operating performance 692,813 620,094 Other operating income 4.2 25,817 18,902 Cost of materials 4.3 -354,689 -303,282 1 Personnel expenses 4.4 -168,645 -173,246 Depreciation, amortisation and impairment 4.5 -32,467 -33,660 TO OUR Other operating expenses 4.6 -82,377 -69,480 SHAREHOLDERS Operating result (EBIT) 80,452 59,327 2 Finance income 4.7 3,555 7,376 Finance costs 4.7 -13,087 -19,947 NON-FINANCIAL Financial result -9,532 -12,571 REPORT Income taxes 4.8 -15,728 -13,053 3 Deferred taxes 4.8 -5,209 1,077 Income tax result -20,937 -11,975 GROUP Proﬁt for the period attributable to the shareholders 49,983 34,781 MANAGEMENT REPORT Differences from currency translation 3.8 224 -1,562 4 Items that may subsequently be reclassiﬁed to consolidated proﬁt or loss 224 -1,562 Actuarial gains and losses from pensions and similar obligations (before taxes) 3.9 8,572 -1,576 CONSOLIDATED Taxes on actuarial gains and losses from pensions and similar obligations -2,229 472 FINANCIAL STATEMENTS Items that will not subsequently be reclassiﬁed to consolidated proﬁt or loss 6,343 -1,103 5 Other comprehensive income/loss, net of tax 6,567 -2,665 Total comprehensive income/loss for the period attributable to the shareholders 56,551 32,116 ANNUAL Earnings per share attributable to the equity holders of the parent (in €) ACCOUNTS basic 4.9 1.16 0.81 6 diluted 4.9 1.16 0.81 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 64 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as of 31 March 2024 CONTENTS Assets Equity and liabilities in € thousand Note 31 Mar 23 31 Mar 24 in € thousand Note 31 Mar 23 31 Mar 24 Intangible assets 3.1 2,429 2,837 Share capital 3.8 430 430 Property, plant and equipment 3.2 185,116 193,907 Capital reserves 3.8 539,594 539,594 1 Trade receivables 3.4 46,329 49,789 Retained earnings/accumulated losses 3.8 -443,414 -459,222 Other non-current assets 3.7 10,276 13,109 Currency translation reserve 3.8 10,646 9,085 Deferred tax assets 4.8 8,332 10,587 Total equity 107,256 89,887 TO OUR SHAREHOLDERS Total non-current assets 252,482 270,230 Pensions and similiar obligations 3.9 27,044 28,738 2 Inventories 3.3 116,306 99,436 Other provisions 3.11 1,373 2,284 Trade receivables 3.4 47,510 41,324 Financial liabilities 3.12 248,220 248,754 Other receivables 3.5 37,999 29,999 Trade payables 3.15 - 8 NON-FINANCIAL REPORT Other current assets 3.7 18,235 19,614 3.13 Other liabilities 3.14 33,273 55,631 Cash and cash equivalents 3.6 165,474 141,514 3 3.16 Total current assets 385,524 331,886 Deferred tax liabilities 4.8 648 1,353 Assets 638,006 602,116 Total non-current liabilities 310,558 336,768 GROUP MANAGEMENT Tax liabilities 3.10 19,056 7,591 REPORT Other provisions 3.11 46,693 38,867 4 Financial liabilities 3.12 1,151 1,165 Trade payables 3.15 60,597 45,447 3.13 CONSOLIDATED FINANCIAL Other liabilities 3.14 92,694 82,390 STATEMENTS 3.16 5 Total current liabilities 220,191 175,461 Equity and liabilities 638,006 602,116 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 65 CONSOLIDATED STATEMENT OF CASH FLOWS for the ﬁnancial year ended 31 March 2024 CONTENTS in € thousand Note FY 2022/23 FY 2023/24 in € thousand Note FY 2022/23 FY 2023/24 Proﬁt for the period 49,983 34,781 Cash paid (-) for subsidies/grants -4 -4 Income tax expense (+)/income (-) 4.8 15,728 13,053 3.13 Cash paid (-) for lease liabilities 5.6 -9,797 -11,370 Financial result (+)/(-) net 4.7 7,126 13,999 5.10 Depreciation, amortisation and impairment (+) 4.5 32,467 33,660 Interest paid (-) 4.7 -8,533 -16,898 Other non-cash expenses (+)/income (-) -9,134 5,110 3.8 1 Dividends paid (-) -17,212 -49,485 5.6 Increase (-)/decrease (+) in inventories 3.3 13,201 18,510 Cash ﬂow from ﬁnancing activities -35,546 -77,757 3.4 Increase (-)/decrease (+) in trade receivables -9,438 2,121 5.2 TO OUR Net increase (+)/decrease (-) in cash and cash 49,000 -23,999 SHAREHOLDERS equivalents Increase (-)/decrease (+) in other assets 3.7 -3,184 10,571 2 Effect of exchange rate ﬂuctuations on cash and Increase (-)/decrease (+) in deferred taxes 4.8 5,245 -1,072 -493 39 cash equivalents Increase (-)/decrease (+) in prepaid expenses/ 3.16 1,921 -2,019 Cash and cash equivalents at the beginning of deferred income 3.6 116,967 165,474 the reporting period NON-FINANCIAL Increase (+)/decrease (-) in provisions 3.11 2,675 -18,419 REPORT Cash and cash equivalents at the end of the 3.6 165,474 141,514 Increase (+)/decrease (-) in trade payables 3.15 -10,048 -14,147 reporting period 3 3.13 Increase (+)/decrease (-) in other liabilities 10,431 -7,962 3.14 Gain (-)/loss (+) on disposals of non-current GROUP 74 75 assets MANAGEMENT REPORT Cash received (+) from/cash paid (-) for 5.6 -8,721 -24,488 income taxes 4 Cash ﬂow from operating activities 98,326 63,773 Cash received (+) from disposals of property, 795 200 plant and equipment CONSOLIDATED FINANCIAL Cash paid (-) for investments in intangible STATEMENTS 3.1 -288 -1,200 assets 5 Cash paid (-) for investments in property, plant 3.2 -17,646 -14,887 and equipment Interest received (+) 4.7 3,361 5,872 ANNUAL Cash ﬂow from investing activities -13,779 -10,015 ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 66 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the ﬁnancial year ended 31 March 2024 CONTENTS Other retained earnings/ Currency Capital accumulated translation in € thousand Note Share capital reserves losses reserve Equity Balance as of 01 Apr 22 430 539,630 -482,826 10,422 67,656 Proﬁt or loss for the year - - 49,983 - 49,983 3.8 1 Other comprehensive income or loss 3.9 - - 6,343 224 6,567 4.8 Comprehensive income or loss for the year - - 56,327 224 56,551 TO OUR Other capital-related transactions - -36 - - -36 SHAREHOLDERS 3.8 2 Dividends - - -17,212 - -17,212 5.6 Reclassiﬁcations - - 298 - 298 Balance as of 31 Mar 23 430 539,594 -443,414 10,646 107,256 NON-FINANCIAL REPORT Balance as of 01 Apr 23 430 539,594 -443,414 10,646 107,256 3 Proﬁt or loss for the year - - 34,781 - 34,781 3.8 Other comprehensive income or loss 3.9 - - -1,103 -1,562 -2,665 GROUP 4.8 MANAGEMENT REPORT Comprehensive income or loss for the year - - 33,677 -1,562 32,116 4 3.8 Dividends - - -49,485 - -49,485 5.6 Balance as of 31 Mar 24 430 539,594 -459,222 9,085 89,887 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 67 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 General information 1.1 Reporting entity Novem Group S.A. was originally formed as a private company (Société à responsabilité limitée) for an unlimited period of time under the laws of Luxembourg on 12 July 2011 pursuant to a deed of incorporation published in the Mémorial, Recueil des Sociétés et Associations C on 28 September 2011, number 2306. At that time, the Company’s legal name was Car Interior Design (Luxembourg) S.à r.l. On 30 June 2021, the extraordinary General Share- holders’ Meeting converted the Company’s corporate form from a private limited liability company (Société à responsabilité limitée) to a public limited liability com- pany ( Société Anonyme ). As a consequence, the shares (parts sociales) were also converted and became actions with no nominal value. The Company’s corpo- rate name was amended to Novem Group S.A. Novem Group S.A. (hereinafter also referred to as the “Company”) is domiciled in Contern , Luxembourg, and is registered in the commercial register of Luxembourg under register ﬁle number B 162.537. The Company’s registered oﬃce is at 19, rue Edmond Reuter, 5326 Contern , Luxembourg. The Group’s principal place of business is Vorbach, Germany . The Company’s ﬁnancial year is from 1 April to 31 March of the following year (12-month period). The consoli- dated ﬁnancial statements include Novem Group S.A. and its subsidiaries (hereinafter also referred to as “Novem” or the “Group”). Novem operates as a developer, supplier and system supplier for trim parts and decorative functional ele- ments in vehicle interiors in the premium sector. The products combine valuable raw materials with the lat- est technology and processing. Typically, the products are used as instrument panels, impact-resistant trim parts in the centre console, door trims, beltlines and decorative functional elements in the car interior. The consolidated ﬁnancial statements were authorised for issue by the Management Board on 17 June 2024. Under Luxembourg Law, the consolidated ﬁnancial statements are approved by the shareholders at their Annual General Meeting. The oﬃcial version of the accounts is the ESEF ver- sion available with the Oﬃcially Appointed Mechanism (OAM) tool. 1.2 Basis of preparation and presentation method These consolidated ﬁnancial statements have been prepared on the basis of historical costs. This excludes derivative ﬁnancial instruments and trade receivables that are sold under factoring agreements. These are measured at fair value through proﬁt or loss. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transac- tion between market participants at the measurement date. The fair value can either be directly observable or otherwise be estimated using a valuation technique. When measuring fair value using a valuation technique, it has to be categorised into one of the following levels depending on the available observable parameters and the signiﬁcance of these parameters for measurement as a whole: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. • Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, or can be derived indirectly from other prices. • Level 3 inputs are unobservable inputs for the asset or liability. The Group recognises reclassiﬁcations between differ- ent levels at the end of the reporting period in which the change occurred. The Group classiﬁes assets and liabilities as current if they are expected to be realised or settled within 12 months after the reporting date. If assets and liabilities have both a current and non-current component, they are broken down into their maturity components and reported as current and non-current assets or liabilities in accordance with their accounting classiﬁcation. These consolidated ﬁnancial statements are presented in Euro, the Company’s functional currency. All amounts are rounded to the nearest thousand Euro unless other- wise indicated. Totals in tables were calculated on the basis of exact ﬁgures and rounded to the nearest thou- sand Euro. For computational reasons, there may be rounding differences to the exact mathematical values in tables and references (monetary units, percentages, etc.). The Group has consistently applied the account- ing and consolidation policies to all periods presented CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 68 in these consolidated ﬁnancial statements. The con- solidated statement of comprehensive income has been prepared using the nature of the expense method. The consolidated ﬁnancial statements as of 31 March 2024 have been prepared in accordance with the Inter- national Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as adopted by the European Union (EU). The term IFRS includes all applicable International Account- ing Standards (IAS) as well as all interpretations and amendments by the International Financial Reporting Standards Interpretations Committee (IFRS IC) – for- merly the International Financial Reporting Interpreta- tions Committee (IFRIC). Novem Group S.A. has prepared the consolidated ﬁnancial statements as of 31 March 2024 on a going concern basis. From the current perspective, there are no risks to the continued existence of the Company. In its assessment, management considered the proﬁt for the last years as well as the strong cash positions. The management also considered the positive cash in‑ﬂow from operating activities. Reference is also made to section 3.6 and section 3.8. 1.3 Effects of new ﬁnancial reporting standards The IASB has issued or revised a number of reporting standards and interpretations that will not become effective until a future date. These new standards and interpretations will not be applied by the Group before they become effective in the EU. The following table shows the new or amended stand- ards, including their effects expected from ﬁrst‑time adoption. If the Group does not expect any effects on the consolidated ﬁnancial statements from ﬁrst‑time adoption, this is due to the fact that the transactions, other events or conditions affected by the new IFRSs do not currently exist within the Group. Potential impact on the Effective date New standards or amendments consolidatedﬁnancial statements Annual periods beginning on Amendments to IAS 1: Classiﬁcation of Liabilities as Current or Negligible or after 1 January 2024 Non-current (with Covenants) Annual periods beginning on Amendments to IFRS 16: Clariﬁcation how a seller‑lessee Negligible or after 1 January 2024 subsequently measures sale and leaseback transactions Annual periods beginning on Amendment to IAS 7 and IFRS 7: Supplier ﬁnance Negligible or after 1 January 2024 arrangements Annual periods beginning on Amendments to IAS 21: The Effects of Changes in Foreign Negligible or after 1 January 20251 Exchange Rates: Lack of Exchangeability Annual periods beginning on IFRS 18 Presentation and Disclosure in Financial Statements: In review or after 1 January 20271 Replacement of IAS 1 Annual periods beginning on IFRS 19 Subsidiaries without Public Accountability: Negligible or after 1 January 20271 Disclosures Deferred indeﬁnitely Amendments to IFRS 10 and IAS 28: Sale or Contribution of Negligible Assets between an Investor and its Associate or Joint Venture 1 EU endorsement still pending CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 69 The Group observed all standards and interpretations adopted by the International Accounting Standards Board (IASB) and the EU that are mandatory as of 1 January 2023. The following table shows the new or amended standards effective in 2023. Applying the new standards has not signiﬁcantly impacted these ﬁnancial statements. Impact on the Effective date New standards or amendments consolidatedﬁnancial statements Annual periods beginning on Amendments to IAS 8: Changes in Accounting Estimates and Negligible or after 1 January 2023 Errors: Deﬁnition of Accounting Estimates Annual periods beginning on Amendments to IAS 1 and IFRS Practice Statement 2: Refer to description or after 1 January 2023 Disclosure of Accounting Policies below Annual periods beginning on IFRS 17 Insurance Contracts: Replacement of IFRS 4 and No impact or after 1 January 2023 Amendments to IFRS 17 Annual periods beginning on Amendments to IAS 12 Income Taxes: Deferred Tax related to Negligible or after 1 January 2023 Assets and Liabilities arising from Single Transaction Annual periods beginning on Amendment to IAS 12 Income Taxes: Pillar 2 model rules No impact or after 1 January 2023 The Group adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from 1 January 2023. Although the amendments did not result in any changes to the accounting policies themselves, they had an impact on the accounting pol- icy information disclosed in the ﬁnancial statements. The amendments require the disclosure of mate- rial instead of signiﬁcant accounting policies. The amendments also provide guidance on the application of materiality in the disclosure of accounting policies, assisting entities to provide useful, entity‑speciﬁc accounting policy information that users need to understand other information in the ﬁnancial state- ments. Management reviewed the accounting policies and updated the information disclosed in Material accounting policies (PY: Accounting policies) in line with the amendments. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 70 1.4 Consolidated entities and basis of consolidation Consolidated entities In addition to Novem Group S.A., the consolidated ﬁnancial statements include all subsidiaries that can be controlled by the Group. According to IFRS 10, a company controls an entity when it has the power over the entity, is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated ﬁnancial statements include Novem Group S.A. as well as 13 international subsidiaries. 1 Entities included in the consolidated ﬁnancial statements according to IFRS that have exercised the exemption clauses under §264 (3) HGB. 2 Plant closed as of December 2023. The entity continues to operate as a buy-sell distributor. Registered oﬃce Ownership interest in % Novem Group GmbH Vorbach, Germany 100 Novem Beteiligungs GmbH1 Vorbach, Germany 100 Novem Car Interior Design GmbH1 Vorbach, Germany 100 Novem Car Interior Design Metalltechnologie GmbH1 Vorbach, Germany 100 Novem Car Interior Design Vorbach GmbH1 Vorbach, Germany 100 Novem Deutschland GmbH Vorbach, Germany 100 Novem Car Interiors (China) Co., Ltd. Langfang, China 100 Novem Car Interior Design k.s. Pilsen, Czech Republic 100 Novem Car Interior Design S.de R.L. Tegucigalpa, Honduras 100 Novem Car Interior Design S.p.A.2 Bergamo, Italy 100 Novem Car Interior Design S.A. de C.V. Querétaro, Mexico 100 Novem Car Interior Design d.o.o. Žalec, Slovenia 100 Novem Car Interior Design Inc. Detroit, USA 100 Basis of consolidation Subsidiaries are entities controlled by Novem Group S.A., Luxembourg. A company controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the Company’s returns. In assessing control, all facts and circumstances are considered. This particularly includes the purpose and structure of the investee. For example, changes to decision-making rights can mean that the relevant activities are no longer directed through voting rights, but instead, other agreements, such as contracts, give another party or parties the current ability to direct the relevant activities. The assessment of control requires the consideration of all facts and circumstances at the discretion of management. If necessary, the ﬁnancial statements of group enti- ties are adapted to the accounting policies of Novem Group S.A. The ﬁnancial statements of the group enti- ties Novem Car Interiors (China) Co., Ltd., China, and Novem Car Interior Design S.A. de C.V., Mexico, whose reporting date is 31 December, are adapted to the par- ent company’s reporting date. The deviating reporting dates compared to the parent company result from the respective national legislation. 1.5 Foreign currency translation The consolidated ﬁnancial statements are prepared in accordance with the functional currency concept. The consolidated ﬁnancial statements are presented in Euros, the parent company’s functional currency. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 71 Transactions in foreign currencies are translated into Euros at the exchange rate applicable on the transac- tion date. In subsequent reporting periods, monetary assets and liabilities denominated in foreign currency are translated at the closing rate. Any resulting gains and losses are recognised in the consolidated state- ment of comprehensive income. Non-monetary assets and liabilities are translated into Euros at the exchange rate applicable on the transaction date. Assets and liabilities of foreign subsidiaries whose functional currency is not the Euro are translated into Euros at the closing rate on each reporting date. Equity items are translated at historical exchange rates. The income statements and statements of cash ﬂows are translated into Euros at the applicable average exchange rates for the period. The resulting foreign currency translation differences are presented in the translation currency reserve in accumulated other com- prehensive income. The Group used the following major exchange rates for currency translation: Currency Closing rate Average rate EUR 1 equals 31 Mar 23 31 Mar 24 2022/23 2023/24 CNY 0.13343 0.13027 0.13958 0.12948 CZK 0.04266 0.03952 0.04118 0.04118 HNL 0.03728 0.03719 0.03895 0.03737 MXN 0.05099 0.05591 0.04892 0.05329 USD 0.91954 0.92498 0.95743 0.92237 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 72 2 Material accounting policies 2.1 Use of judgments and estimates In preparing the ﬁnancial statements in accordance with IFRS, management has made judgments and estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Due to unforeseeable developments beyond the con- trol of management, the actual ﬁgures may differ from these estimates. Estimates and underlying assump- tions are reviewed on an ongoing basis. Revisions to estimates are recognised in accordance with IAS 8 in the period in which they occur and in each subsequent period affected by the revisions. The most important forward-looking assumptions and other major sources of estimation uncertainty on the reporting date that have a signiﬁcant risk of result- ing in a material adjustment to the carrying amounts of assets and liabilities in the next ﬁnancial year are explained below. Measuring the fair value of ﬁnancial instruments If the fair values of ﬁnancial assets and ﬁnancial liabili- ties cannot be measured using quoted prices in active markets, they are determined by applying valuation techniques including the discounted cash ﬂow method. The inputs used in the model are based – to the extent possible – on observable market data. If such data is unavailable, fair value is determined to a considerable extent based on judgment. Judgments concern inputs such as liquidity risk, credit risk and volatility. Changes in the assumptions for these inputs may affect the recognised fair values of ﬁnancial instruments. Please refer to section 5.2 for an overview of the ﬁnancial instruments measured at fair value. Impairment of non-ﬁnancial assets At the end of each reporting period, management assesses whether there is any objective evidence that assets are impaired. Any intangible assets not yet available for use as of the reporting date in the form of capitalised development costs are also tested for impairment annually. Further tests are conducted when there is objective evidence of impairment. Other non- ﬁnancial assets or cash‑generating units are tested for impairment when there is evidence that the carrying amount is not recoverable. The recoverable amount of an asset or a cash-generating unit is the higher of fair value less costs to sell and value in use. The measure- ment of fair value less costs to sell is based on avail- able data from binding sales transactions between independent business partners for similar assets or observable market prices less costs directly attribut- able to the sale of the asset. The discounted cash ﬂow method is used to measure value in use. Cash ﬂows are derived from the budget for the next ﬁve years, which does not include restructuring measures to which the Group has not yet committed and material future invest- ments that will increase the proﬁtability of the tested cash-generating unit. The recoverable amount depends on the discount rate used in the discounted cash ﬂow method as well as the expected future cash in‑ﬂows and the growth rate used for extrapolation purposes. Capitalisation of development costs When capitalising development costs, management’s estimates regarding the technical and economic fea- sibility of the development projects are considered in the recognition decision. This is usually the case when an internal development project has reached a speciﬁc milestone in the existing project management model. Measurement of the capitalised development costs depends on assumptions regarding the amount and period of expected future cash ﬂows as well as discount rates to be applied. For more details, please see section 3.1. Net realisable value of inventories Inventories are stated at the lower of cost and net real- isable value. The measurement of net realisable value requires assumptions by management, particularly on the development of sales prices and costs still to be incurred until sale. Please refer to section 3.3 for further details. Loss allowances on receivables Estimates regarding the amount and necessary scope of loss allowances on receivables sometimes require subjective assessments with regard to the creditwor- thiness of customers. These are therefore subject to the inherent uncertainty of judgment. Please refer to section 3.4 and section 5.4 for further details. Deferred tax assets on tax loss carryforwards Deferred tax assets are recognised for tax loss car- ryforwards to the extent that it is considered likely that the related tax beneﬁts will be realised through future taxable proﬁts based on management’s proﬁt forecasts for the group entities. The determination of deferred tax assets requires signiﬁcant judgment by management with regard to the expected occurrence and amount of future taxable income as well as future tax. Please refer to section 4.8 for further details. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 73 Provisions Signiﬁcant estimates are required in the determination of provisions related to pensions and other obligations, contract losses, warranty costs and legal proceedings. Please refer to section 3.9 and section 3.11 for further details. Determination of the term of leases with extension/ termination options The Group determines the term of its leases based on the non-cancellable period of the lease as well as the periods arising from the option to extend the lease, provided it is reasonably certain that it will exercise this option, or the periods arising from the option to terminate the lease, provided it is reasonably certain that it will not exercise this option. The Group has concluded several leases that include extension and/ or termination options. It exercises judgment in deter- mining whether it is reasonably certain that the option to extend or terminate the lease will or will not be exer- cised. That is, it considers all relevant criteria that cre- ate an economic incentive for it to exercise either the extension or termination option. After the commence- ment date, the Group re-determines the lease term if there is a signiﬁcant event or change in circumstances that is within its control and has an effect on whether or not it will exercise the option to extend or terminate the lease (e.g. major leasehold improvements or material adjustment of the underlying asset). Please refer to section 5.10 for details on potential future lease payments for periods after the date of exercising the extension and termination options that are not taken into account in the lease term. Revenue recognition For the purpose of revenue recognition, it is necessary to identify all distinct performance obligations within a contract with a customer. The assessment of whether a performance obligation is distinct requires judgments by management. Moreover, determining and allocating the transaction price to distinct performance obligations of a contract requires assumptions and estimates by manage- ment. This particularly concerns scenarios in which a stand-alone selling price for a good or service is not directly observable and must therefore be estimated or cases in which the transaction price includes variable components. In addition, management must assess whether there is participation in the development costs of automobile manufacturers in exchange for goods or services transferred by customers to the Group, which is customary in the automotive industry. Should this not be the case, estimates of the future contract volume under the contracts with customers involving such participation are necessary. Furthermore, determining whether a performance obligation is satisﬁed at a point in time or over time also requires management judgment. This particularly concerns the assessment of whether the criteria for recognition of revenue over time are satisﬁed in the individual case. Climate change Increasing expectations from stakeholders require explaining how climate-related matters are considered in preparing the ﬁnancial statements to the extent they are material. Climate change and potential future devel- opments on the entity, including the sustainability of its current business model, are for sure important but not expected to have a signiﬁcant impact on the ﬁnancial reporting judgments and estimates so far, consistent with the assessment that climate change is also not expected to have a signiﬁcant impact on the Group’s going concern assessment nor viability of the Group. There are certainly potential risks (e.g. limitations on car traﬃc with the aim of reducing greenhouse gases potentially affecting the overall demand), but also clear opportunities (e.g. expansion of the product portfolio by bio-based, recycled or upcycled decors) which may change in the future both in terms of materiality and likelihood of occurrence and may have a corresponding impact on judgments and estimates. Still, these have been classiﬁed as not material for this year’s ﬁnancial statements. Any trends and developments are continu- ously monitored and investigated in order to identify any effects on the business model at an early stage. This involves analysing matters such as transitory risks resulting from new statutory legislation and regulations on climate protection, such as the introduction of a CO2 tax or a ban on diesel vehicles in large cities. We also take account of technological innovations. Underlying, the Group actively contributes to reducing the footprint of CO2-neutral production by improving manufacturing processes with modern and eﬃcient technology. Sustainability is also reﬂected in product innovations and concepts, which may potentially even create a competitive advantage for acquiring new projects. Geopolitical and macroeconomic environment The increasingly complex and uncertain macroeco- nomic and geopolitical environment, particularly due to the Ukraine war and the conﬂict in Israel‑Gaza/Mid- dle East, requires continuous and close observation by CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 74 the management. The ongoing attacks by Houthis on numerous commercial ships using the Red Sea route compelled container shipping companies to use alter- native routes. The alternative route around the Cape of Good Hope extended the sea voyage duration and increased costs due to higher bunker consumption, additional port and terminal fees as well as higher labour costs. Thus, the Group faced high inﬂation, increased interest rates and volatile foreign currencies as well as ris- ing concerns about a slowdown in economic growth across signiﬁcant markets compared to prior years. Those trends could impact fair values and carrying amounts of assets and liabilities, amount and timing of results of operations and cash ﬂows of Novem. Estimates and assumptions are generally based on existing knowledge and best information available. The management has regularly reviewed the implica- tions of the changing geopolitical and macro-economic conditions and has not identiﬁed a going concern or signiﬁcant issue, beyond the general scope of impact, on the performance and ﬁnancial position of the Group as of today. Management continues to monitor the cur- rent developments and their potential impact on the Group. 2.2 Intangible assets Purchased intangible assets Intangible assets acquired for valuable consideration are recognised at cost. If they have a ﬁnite useful life, these intangible assets are amortised on a straight-line basis over these useful lives. After initial recognition, intangible assets are recognised at cost less accumu- lated amortisation and any accumulated impairment losses. Amortisation and impairment losses are rec- ognised in proﬁt or loss. Subsequent expenditure is capitalised only when it increases the future economic beneﬁts embodied in the speciﬁc asset it relates to. All other expenses are recognised as expenses in the period in which they are incurred. The useful lives of software and licenses are estimated at two to ﬁve years. Amortisation methods and useful lives are reviewed at each reporting date and adjusted as necessary. Internally generated intangible assets In order to continuously assess the need to capitalise development expenditure, ongoing development pro- jects are monitored at a central level and broken down into multi‑stage project phases. If the requirements according to IAS 38 are fulﬁlled from a particular pro- ject phase, the associated expenditure is capitalised as internally generated intangible assets. Otherwise, the expenses for research and non-capitalised development services are recognised in proﬁt or loss as incurred. Capitalised development expenditure is amortised on a straight-line basis over its useful life of three to seven years. The useful life is determined on the basis of the estimated use of the technologies in line with technical progress or on the basis of the speciﬁc application of the development on current platforms. Amortisation methods and useful lives are reviewed at each report- ing date and adjusted as necessary. Intangible assets from development projects not yet available for use are tested for impairment annually. 2.3 Property, plant and equipment Property, plant and equipment, except from right‑of‑use assets under leases (IFRS 16), are measured at cost less any accumulated depreciation and any accumu- lated impairment losses. To the extent relevant, cost includes the estimated costs of site dismantlement, removal and restoration of the asset. Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their useful lives and is generally recognised in proﬁt or loss. Land is not depreciated. The estimated useful lives of property, plant and equipment for current and comparative periods are as follows: Useful lives of property, plant and equipment Buildings 10 to 33 years Furniture and ﬁxtures, oﬃce equipment 3 to 13 years IT equipment 4 years Leasehold improvements 10 years Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment. These gains and losses are recognised in other operating income or other oper- ating expenses. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 75 The residual values, useful lives and depreciation meth- ods of assets are reviewed at the end of each ﬁnancial year and adjusted as necessary. 2.4 Impairment of assets Non-ﬁnancial assets According to IAS 36, non‑ﬁnancial assets with ﬁnite useful lives are assessed at the end of each reporting period to determine whether there is any indication that an asset may be impaired, e.g. particular events or market developments indicating a possible impair- ment. The carrying amounts of intangible assets with indeﬁnite useful lives as well as intangible assets not yet available for use are tested for impairment at the end of each reporting period. For impairment testing, assets that cannot be individu- ally assessed are grouped into the smallest identiﬁable group of assets generating cash in‑ﬂows through continuing use, which are largely independent of the cash in‑ﬂows from other assets or groups of assets (cash-generating units). Within the Group, the smallest identiﬁable group of assets is usually at the level of individual entities. If any such indication exists, or in cases where annual impairment testing is required, the recoverable amount of the asset is estimated. If the recoverable amount of an asset or corresponding cash-generating unit is less than its carrying amount, an impairment loss is recognised. The resulting difference between the car- rying amount and recoverable amount is recognised as an expense in proﬁt or loss. Measuring recoverable amount The recoverable amount of an asset or a cash-generat- ing unit is the higher of its fair value less costs to sell and its value in use. Value in use is measured by dis- counting the estimated future cash ﬂows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The discount rate is a pre‑tax rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset. For assets to which cash ﬂows cannot be directly allo- cated, the recoverable amount of the cash-generating unit to which the asset belongs is determined. Financial assets The Group mainly recognises allowances for expected credit losses for: • trade receivables measured at amortised cost • contract assets Loss allowances for trade receivables and contract assets are always measured at an amount equal to life- time expected credit losses (ECL). Lifetime expected credit losses are ECL that result from all possible default events over the expected life of a ﬁnancial instrument. The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. To assess whether the credit risk of a ﬁnancial asset since initial recognition has signiﬁcantly increased and to evaluate expected credit losses, the Group consid- ers reasonable and supportable information which is relevant and available without undue cost or effort. This covers both quantitative and qualitative information and analysis which is based on past experience of the Group and in-depth assessments, including forward- looking information. The Group assumes that the credit risk on a ﬁnancial asset has increased signiﬁcantly when it is more than 30 days past due. The Group considers a ﬁnancial asset in default when it is unlikely that the borrower will be able to repay its loan commitment to the Group in full, without the Group having to resort to measures such as sale of collateral (should it exist). Measurement of expected credit losses Expected credit losses are deﬁned as the weighted average of credit losses with the respective risks of a default occurring as the weights. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between all contractual cash ﬂows that are due to an entity in accordance with the contract and all cash ﬂows that the entity expects to receive). Expected credit losses are measured within the Group based on a classiﬁcation of trade receivables and assets by customer, refer to section 5.4 for further details. Presentation of impairment for expected credit losses in the statements of ﬁnancial position and consolidated statement of comprehensive income Impairment losses on trade receivables measured at amortised cost and on ﬁnancial assets are deducted from the gross carrying amount of the assets. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 76 The expected credit losses are presented in other operating expenses of the Consolidated statement of comprehensive income. Impairment The gross carrying amount of a ﬁnancial asset is fully or partially impaired if – according to an appropriate assessment – the Group does not assume that the ﬁnancial asset can be partly or wholly recovered. In this regard, the Group makes an individual assessment as to the point in time and amount of the impairment. 2.5 Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. For all classes of assets in the context of leases, the Group has decided – pursuant to IFRS 16.15 – not to separate non-lease components and instead to recog- nise lease and non-lease components as a single lease component. At the commencement date, the Group recognises a right-of-use asset and a lease liability. The right-of-use asset is initially measured at cost commensurate with the initial measurement of the lease liability, adjusted by the payments made on or before the commencement date plus any initial direct costs and estimated costs for the dismantling or removal of the underlying assets or the restoration of the underlying assets or site where the asset is located, less any received lease incentives. The right‑of‑use asset is subsequently depreciated using the straight-line method from the commence- ment date to the end of the lease term unless the lease transfers ownership of the underlying asset to the Group at the end of the lease term or the cost of the right‑of‑use asset reﬂects that the Group will exercise a purchase option. In that case, the right-of-use asset is depreciated over the useful life of the underlying asset, which is determined in line with the requirements for property, plant and equipment. In addition, the right‑of‑ use asset is continually tested for impairment where necessary and adjusted by speciﬁed remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be read- ily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. To determine its incremental borrowing rate, the Group obtains interest rates from a bank and makes corre- sponding adjustments to account for the lease condi- tions and type of asset. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments resulting from a change in an index or (interest) rate, when there is a change in the Group’s estimate of the amounts expected to be payable under a residual value guar- antee, when the Group changes its assessment of whether it will exercise a purchase, renewal or termi- nation option or when there is a revised in-substance ﬁxed lease payment. The Group presents right-of-use assets for leases in property, plant and equipment and lease liabilities in other ﬁnancial liabilities. Furthermore, the Group has decided not to report right-of-use assets and lease liabilities for leases based on low-value assets as well as for short-term leases pursuant to IFRS 16.6. The Group recognises the lease payments associated with these leases in the Consolidated statement of comprehensive income as other operating expenses on a straight-line basis over the term of the lease. 2.6 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the moving average cost method. Inventories also include tools at Novem as the beneﬁ- cial ownership of tools does not usually lie with Novem. The tools must be presented as inventories under cur- rent assets until they are transferred to the OEM. In accordance with IAS 2.10, the cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. 2.7 Other assets One-off participations in the development costs of auto- mobile manufacturers are recognised as assets by the Group. The exclusive position occupied vis-à-vis busi- ness partners means that these payments are recouped through future serial business and the resulting revenue. Based on these contract conditions, payments are rec- ognised continually as reducing revenue from the start of serial production and the asset is correspondingly CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 77 written down. The write-down is recognised in this regard as the ratio of goods already supplied to the expected total amount of goods to be provided. Furthermore, contract assets are created through the production of customised serial parts, as there is no alternative use for these serial parts. In this regard, a legal claim exists for payment of the work rendered thus far should the customer terminate the contract. Consequently, control over these goods (pursuant to IFRS 15) is transferred over time, which is also why the corresponding revenue is to be recognised over time. If the Group has not yet received consideration in this regard for the transferred goods and at the same time there is no unconditional right to payment, the corre- sponding contract assets are recognised. 2.8 Cash and cash equivalents Cash and cash equivalents mainly include cash and other highly‑liquid ﬁnancial investments with a term of not more than three months. Petty cash and cash in banks are stated at nominal value. 2.9 Financial instruments Deﬁnition of initial recognition A ﬁnancial instrument is any contract that gives rise to a ﬁnancial asset of one entity and a ﬁnancial liability or equity instrument in another entity. Financial instru- ments are recognised as soon as the Group becomes a party to the ﬁnancial instrument contract. A ﬁnancial asset (unless it is a trade receivable without a sig- niﬁcant ﬁnancing component) or ﬁnancial liability is initially measured at fair value. In the case of an item not measured at fair value through proﬁt or loss, trans- action costs are added that are directly attributable to its acquisition or issue. A trade receivable without a signiﬁcant ﬁnancing component is initially measured at the transaction price. Subsequently, ﬁnancial assets and liabilities are measured according to the category to which they are assigned to. Financial assets All purchases and sales of ﬁnancial assets are recog- nised as of the trading day, i.e. on that date upon which the Group is obliged to acquire the assets. Financial assets with a remaining maturity of more than one year are classiﬁed as non‑current. All ﬁnancial assets not classiﬁed as measured at amor- tised cost (FAAC) or ﬁnancial assets measured at fair value through other comprehensive income (FAFVOCI) based on their contractual cash ﬂow characteristics and the business model they are held in are classiﬁed as ﬁnancial assets measured at fair value through proﬁt and loss (FAFVTPL). This includes all derivative ﬁnan- cial assets and trade receivables sold in the context of factoring agreements. The following is applicable for the subsequent meas- urement of ﬁnancial assets and the associated gains and losses: Financial assets at amortised cost are measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses as well as impairment losses are recognised as other operating expenses or income. A gain or loss from derecognition is recognised in proﬁt or loss (in other operating income or other operating expenses). The Group derecognises a ﬁnancial asset when the con- tractual rights to the cash ﬂows from the asset expire, or it transfers the rights to receive the contractual cash ﬂows in a transaction in which substantially all of the risks and rewards of ownership of the ﬁnancial asset are transferred. Assets are also derecognised when the Group neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the transferred asset. In order to recognise incoming payments in a timely fashion, the Group partially sells its trade receiva- bles – mainly from automobile manufacturers and their suppliers – to a bank. Due to Novem’s continuing involvement, the trade receivables are to be derecog- nised except for the amount of the ﬁrst loss guarantee. The so-called Seller Guarantee is a limited default guar- antee under which Novem is liable for up to 2% of the average monthly outstanding trade receivables in the total portfolio. This amount continues to be recognised as an asset and as a liability to banks. Financial liabilities Except for derivative ﬁnancial instruments, the Group measures ﬁnancial liabilities at amortised cost (FLAC) using the effective interest method. Derivative ﬁnancial instruments The Group uses derivative ﬁnancial instruments to hedge currency risks resulting during the course of operations. Derivative products are measured at fair value upon ini- tial recognition. Derivatives are subsequently measured CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 78 at fair value (FLFVPL/FAFVPL). Any changes therein are generally recognised in other operating expenses or other operating income. The Group does not apply hedge accounting according to IFRS 9. 2.10 Other provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obliga- tion, whose amount can be estimated reliably, and it is probable that an out‑ﬂow of economic beneﬁts will be required to settle the obligation (probability of occur- rence is greater than 50%). Warranty obligations may arise on account of statutory stipulations, an agreement or ex-gratia arrangements. Provisions are recognised for expected claims arising from warranty obligations. Utilisation of the provision can be expected in particular if the warranty has not yet expired, if warranty expenditure was incurred in the past or if there are speciﬁc signs of warranty cases. Depending on the facts of the situation, the warranty risk is derived either using individual estimates or empirical values from the past, for which a correspond - ing provision is recognised. The Group does not offer any further warranties beyond this in terms of addi- tional maintenance and services. Thus, the warranties are Assurance Type Warranties, which – in accordance with IAS 37 – are to be recognised and which do not fall within the scope of IFRS 15. Provisions for restructuring expenses are recognised when the Group has set up and communicated a detailed formal plan for restructuring and has no real- istic possibility of withdrawing from these obligations. Should the recognition criteria for provisions not be sat- isﬁed, then a contingent liability is shown in the notes if certain conditions are met. 2.11 Employee beneﬁts There are deﬁned beneﬁt obligations within the Group. Pursuant to IAS 19, pension obligations are measured using the projected unit credit method on the basis of actuarial reports. The present value of beneﬁciaries’ future claims is estimated using actuarial methods on the basis of the beneﬁts earned by staff in the current and preceding periods. The required actuarial calcula- tions are made in the Group by external actuaries. Actuarial gains and losses from measuring the obliga- tion are recognised in other comprehensive income and shown separately in the consolidated statement of comprehensive income. Expenses from the unwinding of discounts on deﬁned beneﬁt obligations as well as interest income (net interest expense) are shown under net ﬁnance income/costs. The service cost is taken into account in personnel expenses, although past service costs are recognised immediately in proﬁt or loss. Payments to deﬁned contribution plans are recognised as an expense when employees have rendered the work entitling them to the beneﬁts. To the extent necessary, these are shown as a liability on the reporting date. 2.12 Proﬁt-sharing rights of members of management The Group established cash-settled share-based pay- ment agreements for members of the Management Board. The Performance Share Plan is granted in annual tranches of virtual shares with a respective performance period of four years. According to IFRS 2, for cash‑settled share‑based payment transactions, the Group has to measure the liability incurred at the fair value of the liability. The fair value of the share-based payments of the Performance Share Plan has been measured at the end of each quar- ter by using a Monte-Carlo-Simulation. Any changes in the liability are recognised in proﬁt or loss. 2.13 Revenue recognition Revenue is recognised for all contracts with customers on the sale of goods or rendering of services according to the ﬁve‑step model speciﬁed under IFRS 15. The model speciﬁes that revenue as of a point in time (or over time) of transfer of control of the goods or services from the entity to the customer is to be rec- ognised in the amount to which the entity is expected to be entitled. The Group usually concludes multiple-element con- tracts with customers which contain more than one performance obligation. In this regard, two or more agreements are generally combined as these are nego- tiated as a package with one single economic purpose. The agreements relate to the sale of trim and function elements, the provision of development services as well as construction of tools necessary for the production of the trim and function elements. Whereas in the case of the agreements for providing development services and the construction of tools, signing of the contract generally satisﬁes the criteria of an agreement pursu- ant to IFRS 15, a contract within the meaning of IFRS 15 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 79 is typically established for agreements for the delivery of serial parts only as of the date of initial delivery of serial parts. In the case of subsequent, later deliveries, this then involves contract modiﬁcations that are to be accounted for separately from the contracts. As part of multiple-element contracts, the Group has identiﬁed the following performance obligations: • the provision of development services and the sale of tools necessary for the production of serial parts • sale of serial parts • with respect to the sale of tools, the Group car- ries out maintenance of these tools, which will be invoiced separately to the OEM Warranty obligations always constitute assurance-type warranties that are recognised according to IAS 37. The transaction price includes the fair value of the received or receivable consideration, taking into account rebates or volume discounts granted in the serial process, which – to the extent necessary – are estimated based on historical experience, as well as an appropriate allocation of one-off payments rendered upfront (e.g. participation in the development work of the OEM). When determining the transaction price, the promised consideration is adjusted for the interest effect of any potentially existing ﬁnancing component. To account for the time value of money (adjustment of promised consideration), the group uses a discount rate that would be reﬂected in a separate ﬁnancing transaction. In subsequent periods, interest income is recognised on an accrual basis using the effective interest method and presented as ﬁnance income. The expected-cost-plus-a-margin approach is used for estimating the stand-alone selling prices as part of allocating the transaction price to the individual performance obligations. For the one‑off payments to be paid by the Group, which grant the Group an exclusive position as sup- plier and which can be recouped through sales from the related agreement. In terms of type of revenue recognition, it is necessary to differentiate between performance obligations that are fulﬁlled over time and those that are fulﬁlled at a point in time. Performance obligations that are satisﬁed at a point in time The Group is commissioned by customers to develop special tools, which are sold to the customer upon completion. In such constellations, the development work and subsequent sale of the tools constitute one single performance obligation. The associated revenue is recognised upon completion and sale of the tool to the customer, i.e. at a point in time. The point in time of revenue recognition from the sale of tools generally corresponds – depending on the respective customer contract and respective order – to the date of delivery or acceptance, as control of the good transfers as of this point in time to the customer and the Group has thus fulﬁlled its contractual perfor- mance obligation. Advance payments received from customers for tools are shown as contract liabilities under other liabilities. Performance obligations that are satisﬁed over time The Group is commissioned by the customer to manu- facture customised serial parts. An asset with no alter- native use generally arises when the serial part is highly customised for a particular customer. Furthermore, in such cases, the Group has an enforceable right to pay- ment for services rendered to date. As a result, revenue for these serial parts is recognised over time and the contract asset for this is recognised, amounting to at least any costs of performance completed to date plus a reasonable proﬁt margin. The payment terms contractually agreed on with all customers (series and tools) are generally between 30 and 90 days. Revenue from service agreements is recognised over time in those periods in which the service is rendered. 2.14 Net ﬁnance income/costs The Group’s ﬁnance income and ﬁnance costs include: • interest income • interest expenses • foreign currency gains and losses • expenses and income from measuring certain ﬁnancial instruments at fair value Interest income and expense are recognised on an accrual basis using the effective interest method. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 80 2.15 Income taxes The tax assessment is generally made at the level of the individual circumstances, taking into account any interactions that may exist. If the recognition of the tax treatment is probable, the current and deferred taxes are recognised on this basis. If, on the other hand, rec- ognition is uncertain (not probable), the most probable amount that would be recognised for tax purposes is used, unless the expected value of different scenarios leads to more meaningful results. Full knowledge of the facts by the tax authorities is always assumed. The assumptions and decisions made are reviewed at each reporting date and, if necessary, adjusted on the basis of new ﬁndings. Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the ﬁnan- cial year, based on the tax rates applicable or shortly to become applicable on the reporting date, and any adjustment to tax payable for prior years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reﬂects uncertainty related to income taxes, if any. Cur- rent tax also includes any tax arising from dividends. Deferred taxes Deferred tax is recognised in respect of temporary dif- ferences between the carrying amounts of assets and liabilities in the statements of ﬁnancial position and the amounts used for taxation purposes. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the associated tax beneﬁts will be realised. Impair- ment losses are reversed if the probability of generating taxable earnings in the future increases. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable proﬁt will allow the deferred tax asset to be recovered. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 81 3 Notes to the consolidated statements of ﬁnancial position 3.1 Intangible assets The development of the Group’s carrying amounts of intangible assets is shown in the following table for ﬁnancial years 2022/23 and 2023/24. Concessions, industrial property rights and similar rights and assets as well as licenses to such rights Advance payments and assets acquired for Internally generated and assets under in € thousand a consideration intangible assets construction Intangible assets Cost As of 01 Apr 22 7,148 2,271 - 9,420 Currency differences - - - - Additions 288 - - 288 Disposals 7 - - 7 Reclassiﬁcations - - - - As of 31 Mar 23 7,430 2,271 - 9,702 As of 01 Apr 23 7,430 2,271 - 9,702 Currency differences -1 - - -1 Additions 566 36 542 1,144 Disposals 1,801 - - 1,801 Reclassiﬁcations 56 - - 56 As of 31 Mar 24 6,249 2,307 542 9,099 Accumulated amortisation As of 01 Apr 22 5,901 420 - 6,320 Currency differences 2 - - 2 Depreciation expenses 682 274 - 957 Disposals 7 - - 7 As of 31 Mar 23 6,579 694 - 7,272 As of 01 Apr 23 6,579 694 - 7,272 Currency differences 1 - - 1 Depreciation expenses 516 274 - 790 Disposals 1,801 - - 1,801 As of 31 Mar 24 5,295 968 - 6,262 Carrying amount As of 31 Mar 23 851 1,577 - 2,430 As of 31 Mar 24 955 1,339 542 2,837 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 82 Additions to intangible assets in the ﬁnancial year 2023/24 amounted to €1,144 thousand compared to €288 thousand in the ﬁnancial year 2022/23. The addi- tions included €542 thousand (PY: €0) from advance payments and assets under construction for the con- version to SAP S/4HANA. Purchased intangible assets Purchased concessions, patents, licenses, trademarks and similar rights and assets mainly concern expenses for third parties in connection with the acquisition of application software. No impairment losses were recognised for purchased intangible assets in the ﬁnancial years 2022/23 and 2023/24. Internally generated intangible assets Research costs and non-capitalisable development costs are expensed as incurred. The development expenses to be capitalised amounted to €1,339 thou- sand (31 March 2023: €1,577 thousand). This largely involves the development in the area of trims with integrated lighting designs, development in electronic components in the trim part and lighting concepts in car interiors as well as the development of sensor elements. The Group differentiates between customer-based and non-customer-based (internal) development work in this regard. Internal development work that can be used across customers is recognised as internally generated intangible assets if the corresponding rec- ognition criteria are met and the assets are amortised over their expected useful life. No impairment losses were recognised for internally generated intangible assets in the ﬁnancial years 2022/23 and 2023/24. The Group recognised €1,098 thousand (31 March 2023: €1,288 thousand) in research and development expenses in the ﬁnancial year 2023/24. Amortisation of capitalised internal development projects amounted to €274 thousand (31 March 2023: €274 thousand). 3.2 Property, plant and equipment in € thousand 31 Mar 23 31 Mar 24 Land, leasehold rights and buildings, including 82,131 97,939 buildings on third-party land Thereof right-of-use 32,757 52,338 assets from leases Technical equipment and 82,135 75,172 machinery Thereof right-of-use - 26 assets from leases Other equipment, operating 13,921 13,289 and oﬃce equipment Thereof right-of-use 6,160 5,543 assets from leases Advance payments and 6,929 7,507 assets under construction Property, plant and 185,116 193,907 equipment Property, plant and equipment include right‑of‑use assets due to the application of IFRS 16 (Leases). Please refer to section 5.10 for additional information on future lease payments. During the ﬁnancial year 2023/24, the Group capitalised €43,431 thousand (31 March 2023: €33,758 thousand) including leasing in property, plant and equipment. The additions included €3,491 thousand (31 March 2023: €4,894 thousand) from advance payments and assets under construction. The depreciation expenses included impairment losses on right-of-use assets relating to buildings amounting to €705 thousand (31 March 2023: €10 thousand) due to existing dismantling obligations for buildings which can be allocated to the regions Europe and Americas. The development of the Group’s carrying amounts of property, plant and equipment is shown in the following table for the ﬁnancial years 2022/23 and 2023/24. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 83 Land, leasehold Advance rights and buildings, Technical Other equipment, payments and including buildings equipment and operating and assets under Property, plant in € thousand on third-party land machinery oﬃce equipment construction and equipment Cost As of 01 Apr 22 146,366 286,370 51,712 7,855 492,303 Currency differences 1,948 -1,481 362 -136 693 Additions 12,357 9,306 7,200 4,894 33,758 Disposals 4,657 5,912 4,759 37 15,365 Reclassiﬁcations 201 4,803 604 -5,608 - As of 31 Mar 23 156,215 293,086 55,118 6,969 511,388 As of 01 Apr 23 156,215 293,086 55,118 6,969 511,388 Currency differences -140 -3,384 -359 -71 -3,954 Additions 26,744 8,295 5,443 2,949 43,431 Disposals 3,845 13,821 5,465 - 23,130 Reclassiﬁcations 310 1,710 48 -2,125 -56 As of 31 Mar 24 179,285 285,885 54,785 7,722 527,678 Accumulated amortisation As of 01 Apr 22 65,569 202,158 39,629 41 307,397 Currency differences 1,160 -1,014 233 -1 378 Depreciation expenses 9,902 15,643 5,965 - 31,510 Thereof impairment losses 10 - - - 10 Disposals 2,547 5,837 4,630 - 13,014 Reclassiﬁcations - - - - - As of 31 Mar 23 74,084 210,950 41,198 40 326,272 As of 01 Apr 23 74,084 210,950 41,198 40 326,272 Currency differences -590 -2,580 -368 1 -3,537 Depreciation expenses 10,737 16,110 6,021 2 32,870 Thereof impairment losses 705 - - 2 707 Disposals 2,886 13,570 5,379 - 21,835 Reclassiﬁcations - -196 25 171 - As of 31 Mar 24 81,346 210,714 41,497 214 333,771 Carrying amount As of 31 Mar 23 82,131 82,135 13,920 6,929 185,116 As of 31 Mar 24 97,939 75,172 13,289 7,507 193,907 3.3 Inventories in € thousand 31 Mar 23 31 Mar 24 Raw materials and 33,409 34,320 consumables Work in process 13,125 10,757 Finished goods and 17,530 11,069 merchandise Tools 50,955 39,471 Advance payments for tools 1,259 3,784 Advance payments for raw 28 35 materials Inventories 116,306 99,436 The majority of inventories consisted of tools as well as raw materials and consumables. Inventories that are expected to be turned over within 12 months amounted to €99,436 thousand (31 March 2023: €116,306 thousand). The write‑downs recog- nised on inventories amounted to €5,272 thousand in the ﬁnancial year 2023/24 (31 March 2023: €7,401 thousand). In the case of write-downs, marketability, age as well as all apparent storage and inventory risks are taken into account. Compared to 31 March 2023, adjustments were made to the model used to deter- mine the respective write‑downs. Firstly, the maximum possible devaluation rate was reduced from 100% to 90% based on a retrospective analysis. Secondly, the previously used general daily grid was replaced by consideration of the individual product life cycle to identify the corresponding devaluation rates. These adjustments lead to a more comprehensible approach and ensure an appropriate true and fair value. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 84 Since there is no alternative use option for the ﬁnished parts on stock as of the reporting date, for which there are also ﬁrm purchase commitments by the OEMs, an adjustment was made to the inventories in the amount of €11,078 thousand (31 March 2023: €12,129 thousand) based on recognition of revenue over time under IFRS 15, together with the recognition of con- tract assets amounting to €12,402 thousand (31 March 2023: €14,124 thousand). 3.4 Trade receivables Trade accounts receivable included the following items: in € thousand 31 Mar 23 31 Mar 24 Trade receivables 95,448 91,449 Expected credit losses on -1,609 -336 trade receivables Trade receivables 93,839 91,113 Non-current 46,329 49,789 Current 47,510 41,324 Trade receivables are mainly receivables from con- tracts with customers. The overall decrease in receivables was primarily driven by a decline of current receivables due to lower business volumes and a decline in demand from OEMs. Contrary to this, the long-term receivables slightly increased due to higher tooling amortisation receivables. Factoring Two of the Group’s subsidiaries, Novem Car Interior Design GmbH and Novem Car Interior Design Inc., par- ticipate in a revolving multi-seller securitisation vehicle for its trade receivables. In conjunction with a factoring agreement, receivables were sold to a bank at a purchase price of €44,313 thousand as of 31 March 2024 (31 March 2023: €54,022 thousand), of which €911 thousand (31 March 2023: €1,046 thousand) representing a limited Seller Guarantee (2% of the average outstanding nominal amount of the European sold receivables). The Seller Guarantee represents the Group’s maximum exposure to any losses in respect of trade receivables previously sold under the factoring program. These receivables were carried at fair value through proﬁt or loss until the date of their disposal. The Group concluded that it does not control, and there- fore should not consolidate, the securitisation vehicle. Taken as a whole, the Group does not have power over the relevant activities of the securitisation vehicle. Expected credit losses Trade receivables are written down in full or in part when there are indications that they are not recoverable. Fur- thermore, in accordance with IFRS 9, expected credit losses for trade receivables which are not measured at fair value through proﬁt or loss are calculated on a portfolio basis (refer here also to section 5.4). For this purpose, Novem groups the receivables by individual customers. The expected default rates for each coun- terparty are provided by an external rating agency. This individual probability of default per customer is applied uniformly throughout the Novem Group. Current external credit information and ratings that reﬂect the prevalent expectations regarding the potential impact of global economic developments were used for the consolidated ﬁnancial statements as of 31 March 2024. An additional adjustment of the valuation allowance was thus not required under this model. The allowances for trade accounts receivables devel- oped as follows: in € thousand FY 2022/23 FY 2023/24 Loss Loss allowance allowance As of 01 Apr 1,115 1,609 Additions 515 75 Reversals -27 -1,350 Used - - Exchange rate effects 6 2 As of 31 Mar 1,609 336 The reversal effect resulted primarily from a change in the external rating provider. The provider’s approach resulted in a more precise rating overall, which led to slightly better probabilities of default, but had a dis- proportionately positive effect on the expected credit losses due to the long-term nature of the correspond- ing tooling receivables. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 85 3.5 Other receivables The Group’s other receivables comprise the following components: in € thousand 31 Mar 23 31 Mar 24 From VAT 33,695 24,954 From employees 539 694 From payroll tax 14 21 From social security - 64 From advance payment 319 524 receivables From ﬁnancial assets - 169 Others 3,432 3,573 Other receivables 37,999 29,999 The majority were receivables from tax authorities. This is the result of regular offsetting and notiﬁcation of paid and received VAT. As of 31 March 2024, the amounts shown in the column Others include income tax receivables in the amount of €2,618 thousand (31 March 2023: €2,459 thousand) and other operating receivables amounting to €955 thousand (31 March 2023: €973 thousand). 3.6 Cash and cash equivalents in € thousand 31 Mar 23 31 Mar 24 Cash on hand 34 38 Cash at banks 165,440 141,476 Cash and cash equivalents 165,474 141,514 Cash and cash equivalents are not subject to any restrictions. The amount corresponds to the value shown in the Consolidated statement of cash ﬂows. Cash and cash equivalents are concentrated at Novem Beteiligungs GmbH, which operates a group-wide cash pooling system. 3.7 Other non-current/current assets in € thousand 31 Mar 23 31 Mar 24 Current Non-current Total Current Non-current Total Prepaid expenses 800 14 814 758 12 770 Miscellaneous other assets 600 351 951 - 362 362 Contract assets 14,669 - 14,669 14,939 - 14,939 Contribution to develop for later supply contracts 2,166 9,911 12,077 3,917 12,735 16,652 Other non-ﬁnancial assets 18,235 10,276 28,511 19,614 13,109 32,723 Other non‑ﬁnancial non‑current assets of €13,109 thousand (31 March 2023: €10,276 thousand) included development contributions for later supply contracts. The presented other non‑ﬁnancial current assets amounting to €19,614 thousand (31 March 2023: €18,235 thousand) mainly included development con- tributions for later supply contracts as well as contract assets, i.e. acquired right to consideration for already satisﬁed performance obligations from contracts with customers as of the reporting date. Contract assets are reclassiﬁed as trade receivables as soon as there is an unconditional right to receive cash, which is obtained upon invoicing the customer for the quantities actu- ally delivered. In this regard, €13,689 thousand were reclassiﬁed in 2023/24 (31 March 2023: €11,783 thou- sand) from contract assets to trade receivables. The expected credit losses on contract assets (refer also to section 5.4), which are shown within other operating expenses, developed as follows on Group level: in € thousand FY 2022/23 FY 2023/24 As of 01 Apr 30 12 Additions 2 3 Reversals -20 -7 Used - - As of 31 Mar 12 8 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 86 3.8 Equity Please refer to the Consolidated statement of changes in equity for detailed information on changes in consoli- dated equity. Overall, the equity position changed from €107,256 thousand at the end of the last ﬁnancial year to €89,887 thousand, which mainly resulted from proﬁt for the year and, on the contrary, from the distribution of the dividend. Share capital As of 31 March 2024, the share capital of the Company amounted to €430 thousand (31 March 2023: €430 thousand) and is divided into 43,030,303 ordinary shares (31 March 2023: 43,030,303 ordinary shares) in a dematerialised form with no nominal value. All ordi- nary shares rank equally with regard to the Company’s residual assets. Each share of the Company represents a par value of €0.01 in the Company’s share capital. All shares are fully paid. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. The authorised capital of the Company is set at €520,000 thousand divided into 52,000,000 shares with no nominal value. The Management Board is author- ised to increase the current issued capital up to the amount of the authorised capital, in whole or in part, from time to time during ﬁve years after IPO. Authorisation for repurchase of own shares On 30 June 2021, the extraordinary General Sharehold- ers’ Meeting of the Company resolved to authorise the Management Board to effect on one or several occa- sions repurchases and disposals of shares on the regulated market on which the Company’s shares are admitted for trading, or by such other means resolved by the Management Board during a period of ﬁve years from the date of the General Shareholders’ Meeting, for a maximum number corresponding to 20% of the ordi- nary shares of the Company, within a price range from a price per share not lower than 10% below the shares’ oﬃcial price reported in the trading session on the day before carrying out each individual transaction; to a price per share no higher than 10% above the shares’ oﬃcial price reported in the trading session on the day before carrying out each individual transaction. During the ﬁnancial year 2023/24, the Company did not buy any of its own shares. Capital reserves The capital reserves amounted to €539,594 thousand as of 31 March 2024 (31 March 2023: €539,594 thou- sand). Directly attributable transaction costs of €1,209 thousand (31 March 2023: €1,209 thousand) were rec- ognised and thus diminished the capital reserves. In this context, deferred tax assets of €187 thousand (31 March 2023: €267 thousand) were recognised. Other retained earnings Retained earnings amounted to €-459,222 thousand as of 31 March 2024 (31 March 2023: €‑443,414 thou- sand). Retained earnings comprise the past undistrib- uted net income and other comprehensive income of the companies included in the consolidated ﬁnancial statements. The negative amount primarily results from a recapitalisation and a related Group re-organi- sation in the ﬁnancial year 2019/20. Difference in equity from currency translation The statements of ﬁnancial position and of total com- prehensive income for all foreign subsidiaries whose functional currency is not the Euro are translated into Euro. The currency translation differences arising are recognised in other comprehensive income and reported in the currency translation reserve in equity; they amounted to €9,085 thousand as of 31 March 2024 (31 March 2023: €10,646 thousand). The change resulted from differences in currency translation of €1,562 thousand (31 March 2023: €224 thousand). Dividend The Management Board, in agreement with the Supervi- sory Board, will propose the suspension of the dividend payment for the ﬁnancial year 2023/24 to the Annual General Meeting on 22 August 2024. The total dividend in prior year amounted to €49,485 thousand and thus corresponded to a payout ratio of 99.0% of the consolidated net proﬁt. It consisted of an ordinary dividend of €0.40 per share as well as a special dividend of €0.75 per share, which resulted in a total dividend of €1.15 per share (ordinary plus special) for the ﬁnancial year 2022/23. 3.9 Employee beneﬁts The Group grants its staff in and outside of Germany pension and other post‑employment beneﬁt enti- tlements, which are either deﬁned‑contribution or deﬁned‑beneﬁt pension plans. In this regard, besides the ongoing contributions, the deﬁned contribution plans do not lead to any further payment obligations. The pension provision for the deﬁned beneﬁt plans is CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 87 generally calculated using the projected unit credit method. Under this projected unit credit method, expected future increases in salaries and pensions are taken into account in addition to the pensions and vested entitlements known as of the reporting date. The present value of the obligation (Deﬁned Beneﬁt Obligation or DBO) is determined by discounting the future expected cash out‑ﬂows using a discount rate that is based on the returns on high‑quality ﬁxed‑rate corporate bonds in the same currency. In doing so, the underlying corporate bonds are used to derive a yield curve and the related discount rate is determined using the term of the future obligations. Deﬁned beneﬁt plans The signiﬁcant deﬁned beneﬁts are in Germany and include staff’s entitlements to retirement beneﬁts in the case of disability or upon reaching retirement age – and also in the event of death in individual cases. The gen- eral commitment speciﬁes payments for a standard basic sum, which rises by a ﬁxed amount for each year of service completed. Furthermore, there are various individual commitments in Germany based on ﬁnal salary. The beneﬁt entitlements applicable to Germany encompassed deﬁned beneﬁt obligations amounting to €26,398 thousand as of 31 March 2024 (31 March 2023: €23,849 thousand) and thus accounted for 91.0% of the total obligation (31 March 2023: 88.0%). There are retirement beneﬁt obligations in Italy, Slovenia and Mexico with entitlement to capital sums based on stat- utory regulations. In addition, employees in Mexico are entitled to a statutory seniority provision termination beneﬁt, which functions in a similar way to the retire- ment indemnity and is also included with an amount of €472 thousand (31 March 2023: €350 thousand). The risks associated with the deﬁned beneﬁt plans essentially include the usual risks of deﬁned beneﬁt pension plans relating to possible changes to the dis- count rate and, to a lesser extent, inﬂation trends and longevity. In order to limit the risks of changing capital market conditions and demographic developments, the most recent general pension plan was closed to new entrants in Germany in 2015. The speciﬁc risks of salary-based obligations within the Group are minimal. The present value of the deﬁned beneﬁt obligations developed as follows: in € thousand FY 2022/23 FY 2023/24 Present value of the beneﬁt 34,871 27,044 obligations on 01 Apr Current service cost 826 812 Past service cost - 94 Interest expense 802 1,131 Employer’s direct beneﬁt -989 -1,813 payments Actuarial gains (‑)/ -8,572 1,576 losses (+) Thereof on account of changes to demographic 1 -129 assumptions Thereof on account of changes to ﬁnancial -8,279 1,710 assumptions Thereof on account of experience-based -294 -5 adjustments Effects of changes in 106 98 foreign exchange rates Present value of the beneﬁt 27,044 28,942 obligations on 31 Mar The employee beneﬁt expense for deﬁned beneﬁt plans recognised in proﬁt or loss consisted of the following items: in € thousand FY 2022/23 FY 2023/24 Current service cost 826 812 Past service cost - 94 Service cost 826 906 Interest expense 802 1,131 Pension and similar obligations expense for 1,628 2,037 beneﬁt plans The past service cost reported in FY 2023/24 is related to an incentivised restructuring plan in Italy that took place over the course of the ﬁnancial year. The pensions and similar obligations provision was as follows: in € thousand FY 2022/23 FY 2023/24 Present value of beneﬁt entitlements from beneﬁt 27,044 28,942 plans Financing status 27,044 28,942 Pension and similar obliga- 27,044 28,942 tions provision on 31 Mar The beneﬁts paid out in the ﬁnancial year 2023/24 amounted to €1,813 thousand (PY: €989 thousand). Payments amounting to €1,231 thousand are expected for 2024/25, which are directly rendered by the employer. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 88 The pensions and similar obligations provision devel - oped as follows: in € thousand FY 2022/23 FY 2023/24 Pension and similar obliga- 34,871 27,044 tions provision on 01 Apr Pension expense 1,628 2,037 Actuarial gains (‑)/losses (+) recognised in other -8,572 1,576 comprehensive income Employer’s direct beneﬁt -989 -1,813 payments Effects of changes in 106 98 foreign exchange rates Pension and similar obliga- 27,044 28,942 tions provision on 31 Mar Actuarial gains and losses are recognised directly in other comprehensive income. They are part of retained earnings and will never be reclassiﬁed to the proﬁt or loss. The actuarial assumptions for calculating the Group’s pension and similar obligations are shown below: 31 Mar 23 31 Mar 24 Discount rate 4.3% 3.9% Salary trend/growth of 2.7% 2.8% pension expectancies Future pension growth 2.2% 2.2% Life expectancy from age 65 (in years) – Obligations in Germany Retiring today (member age 20.8 / 24.2 20.9 / 24.3 65) – male/female Retiring in 20 years (member 23.5 / 26.4 23.6 / 26.5 age 45) – male/female The ﬁnancial assumptions shown above are weighted averages. A discount rate of 3.66% was set for Ger- many (31 March 2023: 4.10%). For the remaining Eurozone countries, i.e. Italy and Slovenia, the discount rates used on 31 March 2024 were 3.65% and 3.55% respectively (31 March 2023: 4.15% and 4.00%). For Mexico, a discount rate of 9.5% was set on 31 March 2024 (31 March 2023: 9.4%). Heubeck’s 2018 G guideline tables were used as the demographic basis for calculations in Germany – the resulting life expectancy ﬁgures are shown above as of 31 March 2024 and 31 March 2023 for comparison. An increase or decrease in the discount rate by 25 basis points would impact the present value of the total ben- eﬁt entitlements as of 31 March 2024 as follows: in € thousand 31 Mar 24 Change in present value of the beneﬁt entitlements if the discount rate were to be 25 basis points -1,028 higher discount rate were to be 25 basis points 1,091 lower A decrease or increase in assumed life expectancy by one year would impact the present value of the ben- eﬁt entitlements in Germany1 as of 31 March 2024 as follows: in € thousand 31 Mar 24 Change in present value of the beneﬁt entitlements if the life expectancy were to be 1 year higher 1,083 life expectancy were to be 1 year lower -1,099 An increase or decrease in the pension progression by 25 basis points would impact the present value of the beneﬁt entitlements as of 31 March 2024 as follows: in € thousand 31 Mar 24 Change in present value of the beneﬁt entitlements if the pension progression were to be 25 basis 774 points higher pension progression were to be 25 basis -740 points lower The weighted average duration of the deﬁned beneﬁt obligations on 31 March 2024 was 15 years (31 March 2023: 15 years). Deﬁned contribution plans The amounts for the Group’s statutory pension insurance are treated as deﬁned contribution plans pursuant to IAS 19. Expenses amounting to €9,956 1 Since changes in life expectancy have no or minimal impact on capital commitments outside of Germany, the beneﬁt entitlements abroad are not taken into account. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 89 thousand were reported in the ﬁnancial year 2023/24 (PY: €10,306 thousand) in Germany, Italy, the Czech Republic, Slovenia, Luxembourg and the US. 3.10 Tax liabilities Income tax in € thousand Current liabilities Change in tax liabilities As of 01 Apr 22 13,805 13,805 Used -2,171 -2,171 Addition 7,412 7,412 Exchange rate difference 10 10 As of 31 Mar 23 19,056 19,056 As of 01 Apr 23 19,056 19,056 Used -21,214 -21,214 Addition 9,748 9,748 Exchange rate difference 1 1 As of 31 Mar 24 7,591 7,591 The Group is subject to income taxes in different juris- dictions. Therefore, key assumptions are necessary to consider the various tax legislations and determine the global income tax liability. The Group might be subject to tax risks attributable to previous tax assessment periods and might be subject to unanticipated tax expenses in relation to previous tax assessment periods that have not yet been subject to a tax audit or are currently subject to a tax audit. It cannot be ruled out that tax authorities may apply a different approach in ongoing and/or future tax audits from the one adopted by the Group, which may lead to an additional tax expense and/or payment, which could have a material and adverse effect on our business, ﬁnancial condition and results of operations. The Group recognises potential risks related to uncer- tain tax positions in accordance with IFRIC 23. 3.11 Other provisions The provisions cover all identiﬁable risks and other uncertain obligations. The provisions are shown in the following in each case broken down into non-current and current provisions. The non‑current provisions developed as follows: Other Obligations from Employee non-current in € thousand sales beneﬁts Other risks provisions As of 01 Apr 22 1,867 1,305 - 3,172 Used -1,600 -105 - -1,705 Reversal - - - - Addition - -67 - -67 Discounting of provision - -27 - -27 Reclassiﬁcation to current provisions - - - - As of 31 Mar 23 267 1,106 - 1,373 As of 01 Apr 23 267 1,106 - 1,373 Used -267 -20 - -287 Reversal - - - - Addition - 243 955 1,198 Discounting of provision - - - - Reclassiﬁcation to current provisions - - - - As of 31 Mar 24 - 1,329 955 2,284 The non-current provisions amounted to €2,284 thou- sand as of 31 March 2024 (31 March 2023: €1,373 thousand) and are expected to fall due between one and ﬁve years. Of this amount, €1,329 thousand (31 March 2023: €1,106 thousand) were fully attributable to provisions in the personnel area. These personnel-related obliga- tions relate to long-service awards, which are calcu- lated using actuarial reports. A further amount of €955 thousand was attributable to provisions for dismantling obligations of buildings. The provisions attributable to the sales area primarily included risks arising from warranty claims. The usage of €267 thousand in the ﬁnancial year 2023/24 was related to a quality claim. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 90 The development of current provisions is set out in the table below: Obligations from Employee Other current in € thousand sales beneﬁts Other risks provisions As of 01 Apr 22 40,241 1,741 5,992 47,974 Used -12,703 -1,267 -3,320 -17,290 Reversal -8,768 -51 -2,263 -11,082 Addition 22,698 1,328 2,816 26,842 Exchange rate difference 128 102 19 249 Reclassiﬁcation from non‑current provisions - - - - As of 31 Mar 23 41,596 1,853 3,244 46,693 As of 01 Apr 23 41,596 1,853 3,244 46,693 Used -2,380 -272 -913 -3,565 Reversal -12,933 -57 -25 -13,015 Addition 7,336 903 466 8,705 Exchange rate difference -27 71 5 49 Reclassiﬁcation from non‑current provisions - - - - As of 31 Mar 24 33,592 2,498 2,777 38,867 Current provisions as of 31 March 2024, which were recognised for uncertain obligations within one year, included in particular provisions from obligations from the personnel and sales areas as well as other risks of €38,867 thousand (31 March 2023: €46,693 thousand). The personnel-related obligations related largely to provisions for partial retirement beneﬁts, severance payments and performance-based obligations. The provisions attributable to the sales area included especially risks arising from warranty claims, price risks and not yet ﬁnalised customer debit notes. Management’s best estimate was used as a basis when measuring warranty provisions. These are esti- mated based on past experience with respect to the Group’s liability. Speciﬁc individual cases are also taken into account. The outstanding customer debit notes recognised in the consolidated ﬁnancial statements relating to price or quantity differences, as well as quality deﬁciencies, were based on assumptions or estimates made on account of ongoing customer negotiations or past experience with customers. The remaining risks primarily involved a number of discernible individual risks and uncertain liabilities that were accounted for at their probable settlement amounts. In 2023, the decision was made to close the production in Bergamo (Italy). The local presence in Italy will remain and continue to operate as a buy-sell distributor. The production of the platforms was transferred to other European locations in order to improve overall plant capacity utilisation. The total amount of the restructur- ing costs amounted to €5,073 thousand. This amount included severance payments for employees, removal and relocation costs. Of this amount, €853 thousand is still unused, which is reﬂected in the employee beneﬁts and other risks of the non-current provisions as of 31 March 2024. At the beginning of 2024, Novem decided to carry out restructuring measures in Vorbach (Germany), which consequently led to employee redundancies. The total amount of the restructuring costs, mainly consisting of severance payments and costs related to a trans- fer company, amounted to €3,552 thousand. As of 31 March 2024, the provisions for employee beneﬁts and other risks contained the not yet utilised provision of €1,587 thousand. It is expected that all current provisions will be used during the course of the following ﬁnancial year. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 91 3.12 Financial liabilities in € thousand 31 Mar 23 31 Mar 24 Current Non-current Total Current Non-current Total Liabilities to banks 1,151 248,220 249,371 1,165 248,754 249,919 Financial liabilities 1,151 248,220 249,371 1,165 248,754 249,919 Total current and non‑current ﬁnancial liabilities amounted to €249,919 thousand as of 31 March 2024 (31 March 2023: €249,371 thousand). In June 2021, a new term loan agreement for €310,000 thousand in total (€250,000 thousand as a term loan and €60,000 thousand as a revolving credit facility) was entered into between Novem Group S.A. and an interna- tional syndicate of banks. Accordingly, the reﬁnancing was implemented as of 23 July 2021 by the drawdown of the term loan of €250,000 thousand and matures in July 2026. After the deduction of transaction costs and pro rata interest incurred, €248,754 thousand (31 March 2023: €248,220 thousand) of the liabilities to banks of €249,919 thousand (31 March 2023: €249,371 thou- sand) related to the utilised term loan. The remaining amount of €1,165 thousand (31 March 2023: €1,151 thousand) mainly resulted from the Seller Guarantee derived from factoring as described in section 3.4. 3.13 Other ﬁnancial liabilities Other ﬁnancial liabilities were composed as follows: in € thousand 31 Mar 23 31 Mar 24 Other current ﬁnancial liabilities Lease liabilities 7,938 7,295 Other non-current ﬁnancial liabilities Lease liabilities 31,143 49,229 Loan (beneﬁts fund) 4 - Other ﬁnancial liabilities 39,085 56,524 The liabilities to leases contained changes due to cash out‑ﬂow of €11,370 thousand in the ﬁnancial year 2023/24 (PY: €9,797 thousand). The increase of the total lease liabilities resulted primarily from contract modiﬁcations to building contracts and current leases as well as from a currency translation effect in the amount of €1,345 thousand. The lease liabilities of €56,524 thousand as of 31 March 2024 (31 March 2023: €39,081 thousand) were largely from leasing land and buildings (refer to section 5.10). 3.14 Other non-ﬁnancial liabilities Other non‑ﬁnancial liabilities break down as follows: in € thousand 31 Mar 23 31 Mar 24 Other current liabilities Employee-related liabilities 7,420 8,753 VAT 5,029 4,739 Other liabilities 4,643 6,581 Contract liabilities 31,562 21,111 Other current liabilities 48,654 41,184 Other non-current liabilities Other liabilities 360 4,377 Other non-current liabilities 360 4,377 Current non‑ﬁnancial liabilities amounted to €41,184 thousand as of 31 March 2024 (31 March 2023: €48,654 thousand). This item included especially contract liabilities in the form of advance payments received for tools, VAT liabilities as well as personnel- related liabilities, which were recognised in the context of social security for social insurance contributions still outstanding. In addition, the OEMs’ development con- tributions are shown under other liabilities. Non‑current non‑ﬁnancial liabilities amounted to €4,377 thousand as of the reporting date (31 March 2023: €360 thousand). These primarily related to the OEMs’ development contributions. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 92 The following table shows the signiﬁcant changes in contract liabilities which always have a duration of less than one year: in € thousand FY 2022/23 FY 2023/24 Revenue recognised in the ﬁnancial year that was inclu- ded in the carrying amount of 8,405 23,454 the contract liabilities at the beginning of the ﬁnancial year Increase in the ﬁnancial year on account of advance pay- 16,867 13,003 ments for tools 3.15 Trade payables Trade payables comprise outstanding obligations from the exchange of the Group’s goods and services. Trade payables amounted to €45,455 thousand on the reporting date (31 March 2023: €60,597 thousand). The decline was mainly caused by the lower business volume, which also led to a reduction in the need for procurement. Moreover, this development was driven by cash ﬂow management and the maturity of liabilities. 3.16 Deferred liabilities/accruals in € thousand 31 Mar 23 31 Mar 24 Personnel-related accruals 12,843 11,887 Outstanding invoices for 20,920 18,630 trade payables Costs related to the year-end audit and annual 1,815 3,280 ﬁnancial statements Other deferred liabilities 2,292 2,140 Deferred liabilities/accruals 37,870 35,937 Non-current 1,767 2,025 Current 36,103 33,912 Accruals are disclosed under other liabilities. Accru- als are liabilities to pay for goods or services already received which have not been paid or invoiced by the supplier. These largely comprised outstanding obligations within the Group from the exchange of goods and services as well as on account of personnel-related accruals, which mainly include matters such as leave not yet taken, Christmas and holiday pay or performance-related salary components. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 93 4 Explanatory notes on the consolidated statement of comprehensive income 4.1 Revenue In the ﬁnancial year 2023/24, Novem generated total revenue of €635,509 thousand (PY: €700,304 thou- sand), which marks a -9.3% decrease compared to last year. The distribution of revenue among the locations is provided in Geographical information in section 5.9. As in previous years, the wood surface area accounted for the largest share of Novem’s success, followed by aluminium and premium synthetics. Revenue can be broken down by the surface areas mentioned below: in € thousand FY 2022/23 FY 2023/24 Wood 520,900 512,467 Aluminium 135,604 87,579 Premium synthetics 43,799 35,463 Revenue 700,304 635,509 Revenue Series developed negatively in the ﬁnancial year 2023/24 and recorded at €553,053 thousand, down by -10.5% compared to the same reporting period last year (PY: €618,226 thousand). Revenue Series gen- erated 87.0% of total revenue (PY: 88.3%) and remained the key pillar of the business. Revenue Tooling, which comprises performance obli- gations for development work and the subsequent sale of tools as well as maintenance activities, contributed €82,456 thousand to total revenue for the ﬁnancial year 2023/24 (PY: €82,077 thousand). This corresponds to a year-on-year increase of 0.5% or €379 thousand. Revenue within the Group can be allocated to business areas as follows: in € thousand FY 2022/23 FY 2023/24 Revenue Series 618,226 553,053 Revenue Tooling 82,077 82,456 Revenue 700,304 635,509 The following breakdown determines the type of revenue recognition, as revenue from Series and maintenance activities are considered to be goods and services trans- ferred over time, while revenue from the development work and subsequent sale of tools must be classiﬁed as goods and services transferred at a point in time. in € thousand FY 2022/23 FY 2023/24 Goods and services 620,775 557,662 transferred over time Goods and services 79,529 77,847 transferred at a point in time Revenue 700,304 635,509 There was also a corresponding adjustment of revenue in the amount of €2,316 thousand (PY: €1,510 thou- sand) on account of current contract terms, whereby, on the start of production (SOP) on some platforms, the revenue recognised is reduced in line with the units delivered and the asset for the development contribu- tions is reversed accordingly. Novem expects that revenue for its delivery obligations not (or only partially) fulﬁlled at the end of the ﬁnancial year will be recognised within a year and therefore applies the practical expedient in IFRS 15.121. 4.2 Other operating income in € thousand FY 2022/23 FY 2023/24 Income from the disposal of property, plant and equip- 13 188 ment and intangible assets Foreign currency translation 9,369 5,034 gains Income from charging out 5,337 2,714 to third parties Other income 11,097 10,966 Other operating income 25,816 18,902 Other operating income decreased in the ﬁnancial year 2023/24 by €‑6,914 thousand from €25,816 thousand to €18,902 thousand year-on-year. Other operating income mainly included €5,034 thousand (PY: €9,369 thousand) currency translation effects as well as €2,714 thousand (PY: €5,337 thousand) income from charging out to third parties. Other income also included €9,387 thousand (PY: €7,985 thousand) income from reversal of provisions, €415 thousand (PY: €2,830 thousand) income from other periods as well as €634 thousand (PY: €282 thousand) insurance reimbursements. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 94 4.3 Cost of materials The cost of materials includes the expenses for raw materials, consumables and purchased goods/ser- vices. For further information on inventories, refer to section 3.3. in € thousand FY 2022/23 FY 2023/24 Cost of raw materials and consumables and of 329,364 281,731 purchased goods Cost of purchased services 25,325 21,551 Cost of materials 354,689 303,282 The reported cost of materials decreased by -14.5% year-on-year. The decline contrasts with a contrac- tion in sales of -9.3%. Hence, the cost of materials to output (total operating performance) ratio decreased slightly to 48.9% (PY: 51.2%). In conjunction with the lower turnover, the cost of materials also diminished, as inventories are at a reduced level in connection with current demand. 4.4 Personnel expenses The high level of vertical integration means personnel expenses in the Group account for a considerable portion of total expenses. The personnel expenses include social security, pension and other beneﬁts. The increase in personnel expenses was due to the closure of the production in Bergamo (Italy) and the restructuring of the German location in Vorbach. The total personnel expenses from severance in Bergamo amounted to €4,357 thousand. The restructuring in Vorbach includes severance expenses and other per- sonnel costs with a value of €2,567 thousand. Management’s compensation as well as those of staff in managerial positions is designed with variable com- ponents in differing proportions. The variable payments are based on fulﬁlling the Group’s revenue and earnings targets as well as on individual objectives. in € thousand FY 2022/23 FY 2023/24 Wages and salaries 140,378 146,505 Social security 26,476 24,833 Pension expense 1,791 1,908 Personnel expenses 168,645 173,246 The personnel expenses ratio (personnel expenses to total operating performance) increased compared to the previous year and equalled 27.9% (PY: 24.3%). The table below sets forth the number of employees (by headcount including headquarters and exclud- ing leased workers, interns and students) the Group employed as of the dates indicated for each of the regions in which the Group operate: 31 Mar 23 31 Mar 24 Europe 2,893 2,434 Americas 1,807 1,780 Asia 788 673 Number of employees 5,488 4,887 4.5 Amortisation, depreciation and impairment losses in € thousand FY 2022/23 FY 2023/24 Intangible assets 957 790 Property, plant and 31,510 32,870 equipment Thereof impairment 10 707 losses Thereof right-of-use 8,982 9,940 assets from leases Amortisation, depreciation 32,467 33,660 and impairment losses Amortisationanddepreciationof€33,660thousandwas recognised in the ﬁnancial year 2023/24 (PY: €32,467 thousand). Of this amount, €707 thousand (PY: €10 thousand) were attributable to impairment losses. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 95 4.6 Other operating expenses Other operating expenses included especially: in € thousand FY 2022/23 FY 2023/24 Order-related expenses 23,714 19,401 Legal and advisory fees 11,051 9,465 Maintenance expenses 9,677 9,574 Personnel-related expenses 6,870 7,500 Leasing and rent expenses 3,247 2,835 Expenses for insurance, 3,644 3,377 feeds and contribution Other services 4,751 5,165 Expenses for environmen- 1,815 1,605 tal protection Expenses from foreign cur- 8,901 4,975 rency translation Expenses relating to other 1,484 816 periods Loss allowance on receiva- 1,269 - bles and contract assets Other expenses 5,953 4,767 Other operating expenses 82,376 69,480 Other operating expenses decreased in the ﬁnancial year 2023/24 by €‑12,896 thousand from €82,376 thou- sand to €69,480 thousand. Other operating expenses mainly included order-related expenses, which mostly consisted of outgoing freight expenses totalling €13,281 thousand (PY: €17,248 thousand). Other services amounting to €5,165 thousand (PY: €4,751 thousand) mainly contained security and cleaning expenses. The remaining expenses amounting to €4,767 thousand (PY: €5,953 thousand) primarily included IT, vehicle and oﬃce material costs. 4.7 Net ﬁnance income/costs The ﬁnancial result amounted to €12,571 thousand in the ﬁnancial year 2023/24 (PY: €9,532 thousand). Finance income in € thousand FY 2022/23 FY 2023/24 Interest income 3,361 5,872 Income from currency 194 1,504 translation Finance income 3,555 7,376 Finance income amounted to €7,376 thousand in the ﬁnancial year 2023/24 (PY: €3,555 thousand) and was largely attributable to interest income from customer tooling of €3,080 thousand (PY: €2,820 thousand) as well as interest income from banks of €2,792 thousand (PY: €541 thousand). This item also included income from foreign currency translation of €1,504 thousand (PY: €194 thousand). Finance costs in € thousand FY 2022/23 FY 2023/24 Interest paid to banks 6,710 13,619 Transaction costs directly attributable to the issue of a 613 595 ﬁnancial liability Interest expense from 829 1,175 discounting of provisions Interest expense arising 546 1,165 from leases Other interest expenses 1,790 3,317 Expenses from currency 2,600 76 translation Finance costs 13,088 19,947 The ﬁnance costs of €19,947 thousand in the ﬁnancial year 2023/24 (PY: €13,088 thousand) mainly arose from interest expenses for banks and other interest expenses. With the exception of the interest expense from the discounting of provisions, interest expenses were calculated using the effective interest method. 4.8 Tax expenses The income tax expense for the ﬁnancial years 2022/23 and 2023/24 can be broken down as follows: in € thousand FY 2022/23 FY 2023/24 Current taxes 13,927 12,688 Current taxes prior years 1,800 364 Deferred taxes 5,209 -1,077 Taxes on income 20,937 11,975 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 96 Deferred taxes totalling €-1,077 thousand can be broken down in €-2,259 thousand from interest car- ryforwards, loss carryforwards and tax credits with an offsetting effect of €1,182 thousand resulting from temporary differences. The Group tax rate remained at 26.9% and is based on a corporation tax rate of 15.0% and a solidarity surcharge of 5.5% on the corporation tax as well as a trade tax rate of 11.1% (PY: 11.1%). Reconciliation of the income taxes in the ﬁnancial years 2022/23 and 2023/24 using a total tax rate of 26.9% (PY: 26.9%) (corporation tax and trade tax of the main country of operations being Germany) to the income tax expense shown in the consolidated statement of comprehensive income was as follows: in € thousand FY 2022/23 FY 2023/24 Proﬁt/loss before tax 70,920 46,756 Weighted average tax rate 26.9% 26.9% (%) Tax expense at average 19,085 12,591 weighted tax rate Causes for additional amounts/shortfalls Non-deductible expenses 1,566 4,040 Tax-exempt income -1,347 -317 Tax income/expense 3,269 728 relating to other periods Tax rate differential -1,873 -3,284 Other effects 238 -1,783 Disclosed expense for 20,937 11,975 income taxes The disclosed income tax expense of €11,975 thousand was lower than the expected income tax expense of €12,591 thousand that resulted from applying the Group tax rate of 26.9% to the Group’s consolidated proﬁt before income tax. The tax impact of non-deductible expenses consisted pri- marily of expenses that are non-deductible in the deter- mination of the taxable proﬁts in Germany and effects resulting from the Mexican maquiladora structure. The tax effect reported as a tax rate differential reﬂects the difference between the Group tax rate of 26.9% rel- evant to the Group and the tax rates applicable to the individual subsidiaries in varying countries. Other effects amounting to €1,783 thousand arose from deferred tax assets in the amount of €1,540 thousand on loss carryforwards in Italy, Slovenia and Luxembourg as well as €243 thousand on tax credits carried forward in Slovenia. Deferred tax claims are only to be reported if it is likely that future taxable income can be offset against tax credits, interest and losses carried forward. In the case of tax credits and losses carried forward, a planning period of four years is used, based on the most recent budget planning of the Group. In Slovenia, tax credits amounted to €1,103 thousand (PY: €2,991 thousand), on which deferred tax assets were capitalised. For the current ﬁnancial year, deferred tax assets were recognised for the interest carryfor- ward of €21,399 thousand (PY: €19,784 thousand). Tax losses carried forward, which can be applied indeﬁ- nitely, in the amount of €8,980 thousand (PY: €10,603 thousand) existed in Italy and Slovenia. Deferred tax assets of €718 thousand (PY: €2,229 thousand) have not been recognised because it is not probable in the short‑term perspective that future taxable proﬁts will be available against which the Group can use the ben- eﬁts therefrom. Deferred tax assets and liabilities resulted from tempo- rary differences in the following items in the statements of ﬁnancial position and are broken down as follows: in € thousand FY 2022/23 FY 2023/24 Property, plant and equipment and 5,935 5,108 intangible assets Receivables and other 620 240 assets Tax interest carryfor- ward, loss carryforward, 4,776 6,765 tax credits Liabilities 232 6,898 Provisions 6,119 5,669 Deferred income tax 17,682 24,680 assets (gross) Offset 9,350 14,093 Deferred income tax 8,332 10,587 assets Property, plant and equipment and 4,643 7,620 intangible assets Receivables and other 3,575 7,032 assets Liabilities 1,131 316 Provisions 650 478 Deferred income tax 9,998 15,446 liabilities (gross) Offset 9,350 14,093 Deferred income tax 648 1,353 liabilities Deferred income tax asset 7,684 9,234 (net) CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 97 In accordance with IAS 12.81(f), deferred taxes on outside basis differences were not recognised in the current year and in the previous year and amounted to €10,446 thousand (PY: €12,641 thousand). No income tax consequences arose from the distribution of divi- dends to the Company’s shareholders. In ﬁnancial year 2023/24, deferred taxes of €‑473 thousand (PY: €2,229 thousand) resulting from deﬁned beneﬁt plans were recognised in other comprehensive income and €0 (PY: €36 thousand) directly in equity. Amounts recognised in other comprehensive income in € thousand FY 2022/23 FY 2023/24 Remeasurements of deﬁned 8,572 -1,576 beneﬁt liability (before taxes) Tax expense -2,229 473 Net of tax 6,343 -1,103 4.9 Earnings per share The earnings per share for the ﬁnancial year ended 31 March 2024 amounted to €0.81 (PY: €1.16). Earnings per share are calculated by dividing the proﬁt for the period attributable to shareholders of the parent by the weighted average numbers of shares issued in the reporting period. FY 2022/23 FY 2023/24 Proﬁt attributable to share- holders of the parent 49,983 34,781 (in € thousand) Number of weighted shares 43,030,303 43,030,303 Earnings per share basic (in €) 1.16 0.81 Earnings per share diluted (in €) 1.16 0.81 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 98 5 Other disclosures 5.1 Working capital Trade working capital is, amongst others, a key per- formance indicator to track the Group’s operating performance. It is neither required by nor presented in accordance with IFRS as adopted by the EU. It is also not a measure of ﬁnancial performance under IFRS as adopted by the EU and should not be considered as an alternative to other indicators of operating perfor- mance, cash ﬂow or any other measure of performance derived in accordance with IFRS as adopted by the EU. The following table shows the amounts of the working capital broken down by balance sheet class position: in € thousand 31 Mar 23 31 Mar 24 Inventories – non-tooling 64,092 56,180 Receivables from third 43,703 35,106 parties Payables to third parties (-) 54,541 40,173 Trade working capital 53,253 51,113 Tooling net 55,492 67,270 Contract assets 15,281 14,947 Working capital 124,026 133,330 The following table shows the reconciliation of the working capital: in € thousand 31 Mar 23 31 Mar 24 Inventories 116,306 99,436 Tools -50,955 -39,471 Advanced payment for -1,259 -3,785 tools Inventories – non-tooling 64,092 56,180 Receivables from third 93,839 91,113 parties Trade receivables > 1 year -46,329 -49,789 Trade receivables tooling -3,807 -6,218 Receivables from third 43,703 35,106 parties Trade payables non-tooling 60,597 45,455 Trade payables and -6,056 -5,282 services tooling Payables to third parties (-) 54,541 40,173 Trade working capital 53,254 51,113 Tooling inventories 50,955 39,471 Current tooling trade 3,807 6,218 receivables Non-current tooling trade 46,329 49,789 receivables Tooling-related trade -6,056 -5,282 payables Advance payment tooling 1,259 3,784 Tooling received advanced -31,562 -21,110 payment current Other provisions -9,241 -5,600 Tooling net 55,491 67,270 Contract asset 15,269 14,939 ECL contract asset < 1 year 12 8 Contract asset 15,281 14,947 Working capital 124,026 133,330 Total working capital amounted to €133,330 thousand as of 31 March 2024 and thus increased compared to 31 March 2023 with €124,026 thousand. The increase of €9,304 thousand was mainly driven by higher tooling trade receivables and other provisions. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 99 5.2 Financial instruments The following table shows the carrying amounts and fair values of the ﬁnancial instruments broken down by balance sheet class and category: in € thousand 31 Mar 23 31 Mar 24 Carrying Carrying Financial assets by classiﬁcation Category amount Fair value amount Fair value Trade receivables FAAC 88,711 88,711 85,798 85,798 Trade receivables within the scope of factoring FAFVTPL 5,128 5,128 5,315 5,315 agreements Seller Guarantee FAFVTPL 1,046 1,046 911 911 Derivatives with positive market values FAFVTPL 600 600 169 169 Cash and cash equivalents FAAC 165,474 165,474 141,514 141,514 Financial liabilities by classiﬁcation Trade payables FLAC 60,597 60,597 45,455 45,455 Liabilities to banks (non-derivative) FLAC 249,3711 251,152 249,8682 252,470 Liabilities to banks (derivative) FLFVTPL - - 50 50 Summary by category FAAC 259,314 260,360 227,312 227,312 FAFVTPL 6,774 6,774 6,395 6,395 FLAC 309,968 309,968 295,323 297,925 FLFVTPL - - 50 50 1 Including the Seller Guarantee in the amount of €1,046 thousand. 2 Including the Seller Guarantee in the amount of €911 thousand. The fair value for liabilities to banks (non-derivative) was calculated by discounted cash ﬂows. The valuation model considers the present value of expected pay- ments, discounted using a risk-adjusted discount rate. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 100 The following table provides an overview of the clas- siﬁcation of ﬁnancial instruments presented above in the fair value hierarchy: 31 Mar 23 31 Mar 24 in € thousand Level 11 Level 22 Level 33 Level 11 Level 22 Level 33 Financial assets Trade receivables within the scope of factoring - 5,128 - - 5,315 - agreements Seller Guarantee - 1,046 - - 911 - Derivatives with positive market values - 600 - - 169 - Financial liabilities Derivative ﬁnancial instruments - - - - 50 - 1 Measurement of fair value based on quoted prices (non‑adjusted) for these or identical instruments on active markets. 2 Measurement of fair value based on inputs that are either directly (i.e. as prices) or indirectly (i.e. derived from prices) observable on active markets. 3 Measurement of fair value based on inputs that do not represent any observable market data. There were no transfers between the different levels of the fair value hierarchy in the ﬁnancial year 2023/24. Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. The following methods and assumptions were used to estimate fair values in the ﬁnancial year: The invoice amount of receivables is used as a reason- able approximation for the fair value of trade receiva- bles in conjunction with factoring agreements. For trade receivables not subject to factoring arrange- ments and for cash and cash equivalents, given their maturity, it is assumed that the carrying amount is a reasonable approximation of fair value due to their predominantly short-term nature. Similarly, for trade payables and other ﬁnancial liabilities, it is assumed that the carrying amount is the fair value. The fair values of the derivative ﬁnancial instruments in the form of forward exchange contracts with banks are determined using the present value method based on market prices. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 101 The following table shows net gains and losses from ﬁnancial instruments by category: Derivatives Fair value Currency with positive Seller in € thousand Interest measurement translation Impairment market values Guarantee FY 2022/23 FAAC 3,361 - 468 1,269 - - FLAC 7,322 - - - - - FLFVTPL - - - - - - FAFVTPL - - - - 6001 1,046 FY 2023/24 FAAC 5,872 - 59 -738 - - FLAC 14,214 - - - - - FLFVTPL - 50 - - - - FAFVTPL - - - - 1692 911 1 In addition to the €600 thousand derivatives with positive market values reported as of 31 March 2023, €7,075 thousand in realised losses were generated during the ﬁnancial year 2022/23. 2 In addition to the €169 thousand derivatives with positive market values reported as of 31 March 2024, €237 thousand in realised proﬁts were generated during the ﬁnancial year 2023/24. Interest income and expense on ﬁnancial assets and liabilities accounted for at amortised cost is included in interest income on ﬁnancial assets and in interest expense on ﬁnancial debt (refer to section 4.7). 5.3 Share-based payments The Management Board members of Novem Group S.A. participate in a long-term incentive (Performance Share Plan) in the form of virtual shares. The Perfor- mance Share Plan is classiﬁed according to IFRS 2 as cash-settled share-based payment. The Performance Share Plan is granted in annual tranches of virtual shares with a respective perfor- mance period of four years. Deviating from this, the per- formance period of the tranche 2021 started on the day of the listing of Novem Group S.A. (IPO) and will end on 31 March 2025. The second tranche (tranche 2022) started at the beginning of ﬁnancial year 2022/23 and will end on 31 March 2026. The third tranche (tranche 2023) started at the beginning of ﬁnancial year 2023/24 and will end on 31 March 2027. The conditionally granted number of virtual shares at the beginning of the performance period is calculated for each tranche by dividing a contractually deﬁned individual target amount by the start share price of the share of Novem Group S.A. (arithmetic mean of the closing prices of the stock during the last 60 trading days prior to the start of the performance period). The ﬁnal number of virtual shares is determined by mul- tiplying the total target achievement by the condition- ally granted number of virtual shares. The total target achievement depends on the target achievement of the two ﬁnancial ﬁgures relative Total Shareholder Return (70% weighting) and EBIT margin (30% weighting). The target achievement of relative Total Shareholder Return and EBIT margin can range between 0% and 150%. In order to determine the payout in cash, the ﬁnal num- ber of virtual shares is multiplied by the end share price of the share of Novem Group S.A. (arithmetic mean of the closing prices of the stock during the last 60 trading days prior to the end of the performance period) plus the sum of the dividends disbursed during the perfor- mance period. The payout is capped at 200% of the contractually deﬁned individual target amount. The ﬁrst tranche of the Performance Share Plan was allocated to Management Board members of Novem Group S.A. for the ﬁnancial year 2021/22 and the num- ber of conditionally granted virtual shares amounted to 40,826, corresponding to a provision of €108 thousand as of 31 March 2024 (31 March 2023: €170 thousand). The second tranche was awarded for the ﬁnancial year 2022/23 comprising 60,384 conditionally granted vir- tual shares, resulting in a provision of €254 thousand as of 31 March 2024 (31 March 2023: €140 thousand). The third tranche was awarded for the ﬁnancial year 2023/24 with a total number of 83,287 conditionally granted virtual shares, corresponding to a provision of €268 thousand as of 31 March 2024 (31 March 2023: €0). CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 102 These provisions have been included in non-current deferred liabilities (refer to section 3.16). In total, the expenses for ﬁnancial year 2023/24 amounted to €319 thousand (PY: €241 thousand). The fair value of the Performance Share Plan to calcu- late expenses and provisions was determined by using a Monte-Carlo-Simulation. The expected volatility has been based on the average of the median volatility of SDAX companies (term-congruent) and the historical volatility of Novem for the period available. The fair value and the inputs used in the assessment of the fair value as of 31 March 2024 were as follows: Valuation as of Tranche Tranche Tranche 31 March 2024 2021 2022 2023 Performance 19 Jul 21 – 1 Apr 22 – 1 Apr 23 – period 31 Mar 25 31 Mar 26 31 Mar 27 Start share price Novem €16.46 €11.25 €9.06 Group S.A. Remaining duration of 1.0 year 2.0 years 3.0 years performance period Expected 41.3% 49.7% 43.1% annual volatility Risk-free annual 3.4% 2.8% 2.5% interest rate Expected target achievement for internal 100% 100% 100% target EBIT margin Fair value per €2.96 €5.27 €5.10 virtual share For comparative purposes, the fair value and inputs used in the assessment of the fair value as of 31 March 2023 were as follows: Valuation as of Tranche Tranche 31 March 2023 2021 2022 Performance period 19 Jul 21 – 1 Apr 22 – 31 Mar 25 31 Mar 26 Start share price €16.46 €11.25 Novem Group S.A. Remaining duration of 2.0 years 3.0 years performance period Expected annual volatility 45.8% 47.6% Risk-free annual interest rate 2.7% 2.5% Expected target achievement for internal target EBIT 100% 100% margin Fair value per virtual share €8.82 €8.85 5.4 Risk reporting Management of ﬁnancial risks The Group is exposed to a wide range of risks and oppor- tunities within the scope of its business activities. Its business operations are focused on seizing opportuni- ties and identifying and controlling the related risks early on. Group-wide risk management aims to identify risks based on operations as early as possible to take appro- priate and effective steps to manage or avoid these risks. The Group is exposed to the following risks in particular: • liquidity risks • credit risk • ﬁnancial market risks (exchange rate risks and interest rate risks) The Group’s management has overall responsibility for establishing and overseeing the Group’s risk manage- ment system. The Finance department is responsible for developing and monitoring the risk management system and reports regularly on these matters to management. The core of risk management is an internal reporting system that continually optimises the monitoring of all business-relevant key data and is adapted to current challenges. In addition, business opportunities and risks are recorded, analysed and evaluated in a multi-tiered planning, information and control process, allowing changes to the business environment and deviations from plan to be recognised early and countermeasures introduced in advance. Additionally, important Alternative Performance Measures (e.g. order intake, revenue, Adj. EBIT, EBITDA, staﬃng level, ﬂuctuation and quality data) are reported monthly and evaluated by management. Liquidity risks Liquidity risk is the risk that the Group will not be able to meet its ﬁnancial obligations as they fall due. Liquid- ity risks arise from current liabilities due to long-term rental agreements, interest and repayments. Funds are largely generated from operations and used to cover ﬁnancing needs. To ensure and monitor liquidity, the Corporate Treasury department permanently tracks, optimises and docu- ments the current cash ﬂows of all entities and has established a rolling 12‑month liquidity planning. The planning takes into account the maturities of ﬁnancial investments and ﬁnancial assets (e.g. receivables and other ﬁnancial assets) as well as expected cash ﬂows from the operating activities. Both the liquidity status (weekly) and the liquidity plan (monthly) are reported to CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 103 management, and if this results in changes in ﬁnancing needs, measures are initiated at an early stage. This approach allows the entire Group’s needs and those of individual group companies to be addressed optimally. The Group ensures compliance with the ﬁnancing require- ments of its operating business and with ﬁnancial obliga- tions by means of cash pooling agreements, intragroup loans and credit lines based on the respective legal and tax regulations. As of 31 March 2024, the Group had a total of €60,000 thousand (31 March 2023: €60,000 thousand) in unused revolving credit facility from the term loan agreement to ensure liquidity. Additionally, the Group possessed a €4,000 thousand credit line drawn in the amount of €3,416 thousand as a guarantee facility. Furthermore, Novem Car Interiors (China) Co., Ltd. had a local unused uncommitted credit line of €13,027 thou- sand (¥100,000 thousand) as of 31 March 2024. The following overview shows the contractually agreed terms of ﬁnancial liabilities, which represent expected future cash out‑ﬂows: Less than one Between one and More than ﬁve Financial in € thousand year ﬁve years years liabilities As of 31 Mar 23 Liabilities to banks (non-derivative) 12,594 274,001 - 286,595 Liabilities to banks (derivative) - - - - Trade payables 60,597 - - 60,597 Lease liabilities 7,938 20,482 10,661 39,081 As of 31 Mar 24 Liabilities to banks (non-derivative) 13,461 263,936 - 277,397 Liabilities to banks (derivative) 50 - - 50 Trade payables 45,447 8 - 45,455 Lease liabilities 7,295 20,514 28,715 56,524 The contractually agreed cash ﬂows related to non‑ derivative banks include a variable interest as well as the repayment amount of the loan. The expected cash ﬂows for derivative liabilities to banks are in the form of forward exchange contracts and incorporate their negative value as of reporting date. Based on the cur- rent state of knowledge, the cash out‑ﬂows presented are not expected to occur signiﬁcantly earlier or to considerably deviate in amount from the values shown in the table. Credit risk Credit risk is the risk of ﬁnancial losses if a customer or counterparty to a ﬁnancial instrument fails to meet its contractual obligations. Credit risk arises mainly from trade receivables, with the maximum credit risk corresponding to the carrying amount of the ﬁnancial assets. Impairment losses are also recorded for con- tract assets. The following tables give information on the carrying amounts of trade receivables and contract assets aris- ing from contracts with customers: in € thousand 31 Mar 23 31 Mar 24 Trade receivables 93,839 91,113 Contract assets 15,281 14,947 Accumulated impairment losses on trade receivables and contract assets were as follows: in € thousand FY 2022/23 FY 2023/24 Trade receivables 1,609 336 Contract assets 12 8 Impairment loss 1,621 344 Trade receivables Credit risk relates in particular to a receivable being repaid late, partially or not at all. The Group uses a number of measures to minimise this risk. As part of receivables management, the Group continuously monitors open positions, conducts maturity analyses and contacts the customer at an early stage if pay- ment delays emerge. The highest priority is placed on monitoring early indicators. On the statements of ﬁnancial position, the residual risk for trade receivables is accounted for by calculating expected credit losses. In general, the Group’s exposure to credit risk is inﬂu- enced mainly by the individual characteristics of each customer. Trade receivables are spread essentially over the major manufacturers in the automotive industry, which, due to solid sector performance in Americas, Europe and Asia, is assessed as representing relatively low default risk for the Group. This assessment is CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 104 based primarily on long-standing business relation- ships with most customers and the ratings of the major rating agencies. Historical default rates for these receivables are extremely low. In the event that one of the three largest customer defaults (currently assessed as unlikely), credit risk arising from open receivables as of 31 March 2024 would be between €3,934 thousand and €19,113 thousand (31 March 2023: €5,688 thou- sand and €14,079 thousand). Expected credit losses for trade receivables recognised at amortised cost are measured based on the lifetime expected credit losses. This involves the receivables being grouped according to the individual customers. For these customers, a one‑year default probability is determined via a credit agency. Expected credit losses per customer are calculated ultimately as the product of the gross carrying amount of the receivable, the customer’s probability of default (maturity-adjusted as required) and an appropriate insolvency ratio. The gross carrying amounts and related probabilities of default of customers for trade receivables measured at amortised cost were as follows: FY 2022/23 FY 2023/24 in € thousand Gross carrying amount Probability of default Gross carrying amount Probability of default 59,8191 < 1% 77,7711 < 1% 1,400 1% < x < 2% 5,682 1% < x < 2% 20,751 2% < x < 5% 5,368 2% < x < 5% 13,478 > 5% 2,628 > 5% Trade receivables 95,448 91,449 1 Thereof trade receivables within the scope of factoring agreements amounting to €5,315 thousand (31 March 2023: €5,128 thousand) were measured at fair value through proﬁt or loss. No expected credit losses were recognised for this portion. Thereof Seller Guarantee within the scope of factoring agreement amounting to €911 thousand (31 March 2023: €1,046 thousand). No expected credit losses were recognised for this portion. Contract assets As of 31 March 2024, contract assets were recognised amounting to €14,947 thousand (31 March 2023: €13,689 thousand). These assets have arisen with the right to consideration acquired from contractual obliga- tions already satisﬁed. Contract assets are reclassiﬁed to trade receivables as soon as an unconditional right to payment arises, which is obtained by invoicing the customer for the quantities actually delivered. Expected credit losses for contract assets are meas- ured using the lifetime expected credit losses. This involves the contract assets being grouped according to the individual customers. For these customers, a one-year default probability is determined via a credit agency. Expected credit losses per customer are cal- culated ultimately as the product of the gross carrying amount of the contract asset, the customer’s probabil- ity of default (maturity‑adjusted as required) and an appropriate insolvency ratio. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 105 The gross carrying amounts and related probabilities of default of customers for contract assets were as follows: FY 2022/23 FY 2023/24 in € thousand Gross carrying amount Probability of default Gross carrying amount Probability of default 10,746 < 1% 13,416 < 1% 1 1% < x < 2% 2 1% < x < 2% 2,792 2% < x < 5% 1,341 2% < x < 5% 150 > 5% - > 5% Contract assets 13,689 14,947 Cash and cash equivalents As of 31 March 2024, the Group had cash and cash equivalents of €141,514 thousand (31 March 2023: €165,474 thousand). Thus, this amount represents the maximum exposure to credit risk in terms of these assets. The cash and cash equivalents are held at banks with Fitch ratings of BBB to AAA. For reasons of materiality, no expected credit losses were recognised for cash and cash equivalents by the Group. Moreover, external ratings indicate that these assets have only low credit risk. Derivatives Derivatives are concluded with banks with a rating from Fitch Ratings of at least BBB+. As of 31 March 2024, derivatives in the form of forward exchange contracts had a positive market value totalling €169 thousand as well as negative market value totalling €50 thousand. In comparison to the prior ﬁnancial year, the market value from derivatives was positive and amounted to €600 thousand. Finance market risks Finance market risks are the risks of changes in market prices, such as exchange rates or interest rates, that affect the Group’s earnings or the value of the ﬁnan- cial instruments it holds. The objective of managing ﬁnance market risks is to manage and control market risk exposure within an acceptable range while optimis- ing income. Exchange rate risk Foreign currency risks arise when Group companies settle transactions in currencies other than their func- tional currency. Through its subsidiaries, the Group has assets and liabilities outside the Eurozone. These assets and liabilities are denominated in local currencies. If the value of net assets is translated into Euro, exchange rate ﬂuctuations from one period to the next result in changes to these net asset values. Accordingly, the Treasury department undertakes actions to minimise the resulting foreign currency risks. The Group mainly has foreign currency exposure to Chinese Renminbi (CNY), Czech Koruna (CZK), Honduran Lempira (HNL), Mexican Peso (MXN) and US Dollar (USD), which arise from trade receivables/payables and from procurement. The Group counters its foreign currency risks through natural hedging, i.e. by raising the purchase volume in the foreign currency area or increasing local produc- tion. To further secure operating activities, the option of group netting foreign currency exposures within the Group is used. A further measure taken is to manage the volume of excess liquidity arising from the respec- tive hedged items in foreign currency based on incre- mental FX spot transactions within a prescribed scope. A sharp appreciation of the Euro against currencies of other exporting countries could, however, negatively impact the Group’s competitiveness. A reasonably possible change in exchange rates would inﬂuence consolidated earnings due to the fair values of the monetary assets and liabilities. The following table is based on the exchange rates determined at the reporting date. It illustrates the effects of appreciation or deprecia- tion of the main currencies to be considered (CNY, CZK, MXN, USD) of +10% or -10% against the respective func- tional currency. The overall result for each currency thus includes effects calculated based on the appreciation or depreciation of the Euro, where the functional currency corresponds to the currency stated in the table. in € thousand 31 Mar 23 31 Mar 24 Changes in foreign +10% -10% +10% -10% exchange rates (gain) CNY -126 122 -106 176 CZK 31 -31 -4 188 MXN -522 522 -769 500 USD 9,170 -10,535 3,757 -2,497 CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 106 To further reduce foreign currency risk from US Dollar exposures, the Group concluded a number of forward exchange contracts with UniCredit and JP Morgan. Using these derivative instruments, the signiﬁcant part of the forecast net foreign currency exposures for the respective next 12 months is hedged in US Dollar. In this case, they are not presented as hedges: instead, the derivatives are measured at fair value through proﬁt or loss. Interest rate risks Net ﬁnance income/costs and ﬁnancial performance can be positively inﬂuenced by favourable interest rate and exchange rate developments. To allow prompt reactions to positive developments, the ﬁnancial mar- kets are monitored continuously. As of 31 March 2024, the Group’s interest-bearing ﬁnancial instruments can be aggregated as follows with regard to the basic structure of the respective interest rate: in € thousand 31 Mar 23 31 Mar 24 Variable rate instruments 250,000 250,000 Financial liabilities Interest rate exposure 250,000 250,000 As of 31 March 2024, ﬁnancial liabilities with ﬁxed rates amounted to zero. Interest rate risk exists for the syndi- cated loan as it is linked to the 3-month Euribor. In view of the declining inﬂation rate and the outlook by the European Central Bank (ECB), it is to be expected that the interest rate will decrease in the next 12 months. Further moderate interest rate risks exist for pension obligations and the factoring program. The factoring program depends on the 3-month Euribor relating to factoring fees for EUR‑receivables and the SOFR, which represents the base rate for factoring fees resulting from USD-receivables. A 1% change in the reference interest rates would have no material impact regarding factoring fees. The interest rate risk regarding our pension obligations is also manageable as their share of total assets only amounts to approximately 5%. 5.5 Capital management The objective of the Novem Group’s capital manage- ment is to ensure the ability to continue as a going con- cern and to maintain a stable capital case to maintain investor, creditor and market conﬁdence. Opportunities to repay and reﬁnance liabilities and ﬁnance future business activities and future investments depend on how the total operating revenue of the Group develops and its ability to obtain suﬃcient liquidity. Due to the business model and the operations on global markets, the Group generates predictable and sustainable cash ﬂows under normal business conditions. The Group therefore manages its capital structure and makes necessary adjustments based on the prevailing busi- ness conditions. The Group has a total of €60,000 thousand in unused revolving credit facility. Additionally, the Group pos- sesses a €4,000 thousand credit line, which was drawn in the amount of €3,416 thousand as a guarantee facil- ity. Furthermore, Novem Car Interiors (China) Co., Ltd. had a local unused uncommitted credit line of €13,027 thousand (¥100,000 thousand) as of 31 March 2024. For monitoring the capital structure, the Group utilises, amongst others, the ratio of net ﬁnancial debt and Adj. EBITDA, which is also used as a covenant in the senior facilities agreement. Regular quarterly monitoring of the ﬁnancial ratios has been implemented. The Group does not expect a breach of this covenant. In order to maintain or adjust the capital structure, the Group may increase or decrease the dividends, issue new shares or return capital to the shareholders, and raise additional or reduce parts of the outstanding debt. 5.6 Consolidated statement of cash ﬂows The statement of cash ﬂows is prepared in accordance with IAS 7 and is broken down into cash ﬂows from operating, investing and ﬁnancing activities. In‑ﬂows and out‑ﬂows from operating activities are presented in accordance with the indirect method and those from investing and ﬁnancing activities by the direct method. Cash held comprises current available funds and cash equivalents less bank liabilities due on demand (cur- rent account liabilities). With proﬁt for the period as the starting point, the non-cash expenses and changes in net working capital are accounted for to calculate cash ﬂows from operating activities. Income tax payments of €24,488 thousand (PY: €8,721 thousand) are also recognised in cash ﬂows from operating activities. Investing activities comprise payments to acquire intangible assets, property, plant and equipment and ﬁnancial assets as well as proceeds from the sale of intangible assets, property, plant and equipment and ﬁnancial assets. Financing activities include the cash paid for lease liabilities and dividends. Interest CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 107 payments of €16,898 thousand (PY: €8,533 thousand) are also reﬂected in cash out‑ﬂows from ﬁnancing activities. The table below shows the details of changes in the Group’s ﬁnancial liabilities, which are classiﬁed in the Group’s consolidated statement of cash ﬂows as cash ﬂows from ﬁnancing activities: Liabilities Lease in € thousand to banks liabilities Dividends As of 01 Apr 22 249,087 34,857 - Changes from ﬁnancing cash 421 -9,797 -17,212 ﬂows Effect of changes in foreign - 152 - exchange rates Other changes 2421 13,869 - As of 31 Mar 23 249,3711 39,081 -17,212 As of 01 Apr 23 249,371 39,081 - Changes from ﬁnancing cash 98 -11,370 -49,485 ﬂows Effect of changes in foreign - -425 - exchange rates Other changes 450 29,238 - As of 31 Mar 24 249,919 56,524 -49,485 1 Adjusted according to IAS 8.42 as the disclosure of the changes was different. 5.7 Operating segments Segment information is provided on the basis of the Group’s internal reporting in order to assess the type and ﬁnancial impact of the Group’s business activities as well as the economic environment in which it oper- ates. Transactions between the operating segments based on transfer prices are determined according to arm’s length conditions typical for the market. The Group is structured into divisions, with business activities organised over the geographical sales regions of Europe, Americas and Asia. The Chief Operation Decision Maker (CODM) makes the assessment. The CODM within the meaning of IFRS 8 is the management of the parent company, as it regu- larly reviews the segments in terms of their proﬁtability and resource allocation using internal management reporting. The management of the parent company evaluates the performance of the operating segments based on a measure for segment earnings (performance indica- tor) designated as Adj. EBIT, as this provides the most relevant information for assessing the earnings of spe- ciﬁc segments in relation to other companies operating in these sectors. Adj. EBIT is EBIT adjusted by management primarily for business transactions of a one-off and non-recurring nature. The accounting policies for segment reporting are based on the IFRSs applied in these consolidated ﬁnancial statements. Segment reporting as determined by management is disclosed for the segments Europe, Americas and Asia. There are no further segments within the Group. Reportable segments Business activities Production, processing and Europe sale of high‑quality trims and decorative functional elements in vehicle interior Production, processing and Americas sale of high‑quality trims and decorative functional elements in vehicle interior Production, processing and Asia sale of high‑quality trims and decorative functional elements in vehicle interior 5.8 Reporting by region The Group is organised and managed at regional level. The three reportable operating segments of the Group are Europe, Americas and Asia. The product portfolio is broadly similar in these three regional segments. in € thousand Europe Americas Asia FY 2022/23 Revenue generated from 332,932 264,091 103,280 third parties FY 2023/24 Revenue generated from 287,039 271,906 76,564 third parties Breakdown of revenue according to Novem company location (i.e. from the invoiced by perspective) CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 108 In the ﬁnancial year 2023/24, between 17.4% and 59.1% (PY: 28.4% and 47.0%) in the three regions were attrib- utable to the respective most signiﬁcant customers. Overall, Novem generated revenue of €203,820 thou- sand (PY: €240,267 thousand) and €190,242 thousand (PY: €233,010 thousand) with two major customers in all segments. Revenue was spread over the individual segments according to surfaces as follows: in € thousand Europe Americas Asia FY 2022/23 Wood 226,558 204,538 89,804 Aluminium 71,347 51,992 12,265 Premium 35,027 7,561 1,211 synthetics FY 2023/24 Wood 205,445 237,786 69,236 Aluminium 49,751 30,530 7,298 Premium 31,843 3,590 30 synthetics Revenue was distributed among the individual seg- ments according to business areas as follows: in € thousand Europe Americas Asia FY 2022/23 Revenue Series 280,485 249,473 88,269 Revenue Tooling 52,447 14,619 15,011 FY 2023/24 Revenue Series 226,884 260,304 65,865 Revenue Tooling 60,154 11,603 10,699 The breakdown of revenue between the individual seg- ments according to the category of revenue recognition was as follows: in € thousand Europe Americas Asia FY 2022/23 Goods and servi- ces transferred 281,786 250,557 88,432 over time Goods and servi- ces transferred at 51,146 13,535 14,848 a point in time FY 2023/24 Goods and servi- ces transferred 229,719 261,892 66,051 over time Goods and servi- ces transferred at 57,320 10,014 10,513 a point in time CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 109 5.9 Reconciliation of information on reportable segments The following table shows further information on the Adj. EBIT performance indicator, which is used to assess the performance of the operating segments: Adjustments Europe Americas Asia in € thousand FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 Restructuring - 8,888 - - - - Covid-19 costs -12 - 59 - 289 - Others 825 647 114 189 - - Exceptional items 813 647 173 189 289 - Discontinued operations - - - - - - Adjustments 813 9,535 173 189 289 - For both ﬁnancial years 2022/23 and 2023/24, the most signiﬁcant effects were related to Europe. The ﬁnancial year 2023/24 contained €8,888 thousand restructuring costs (PY: €0), €140 thousand related to severance payments (PY: €520 thousand), €455 thousand project costs (PY: €295 thousand), €2 thou- sand of accelerated depreciation (PY: €10 thousand), as well as €50 thousand costs caused by the ﬂood in Slovenia. Adjustments in the ﬁnancial year 2023/24 were signiﬁcantly higher than last year, reﬂecting the €5,336 thousand restructuring costs resulting from the plant closure in Bergamo (Italy). Furthermore, €3,552 thousand restructuring costs were incurred at the plant Vorbach, mainly attributable to personnel expenses and costs for a transfer company. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 110 Segment reporting Europe Americas Asia Total segments Other/consolidation Group in € thousand FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 FY 2022/23 FY 2023/24 External revenue 332,932 287,039 264,091 271,906 103,281 76,564 700,304 635,509 - - 700,304 635,509 Revenue between 51,484 44,423 74,775 66,524 18,733 15,646 144,992 126,593 -144,992 -126,593 - - segments Total revenue 384,416 331,462 338,866 338,430 122,014 92,210 845,296 762,102 -144,992 -126,593 700,304 635,509 Adj. EBITDA 38,551 22,016 56,062 67,766 19,571 12,222 114,184 102,004 - - 114,184 102,004 Depreciation and amortisation 15,454 16,192 11,887 11,608 5,116 5,153 32,457 32,953 - - 32,457 32,953 Adj. EBIT 23,097 5,824 44,175 56,158 14,455 7,069 81,727 69,051 - - 81,727 69,051 Adjustments 813 9,535 173 189 289 - 1,275 9,724 - - 1,275 9,724 Operating Result (EBIT) 22,284 -3,711 44,002 55,969 14,166 7,069 80,452 59,327 - - 80,452 59,327 The amounts shown above in the Other/consolida- tion column include the elimination of transactions between the segments and speciﬁc items at group level that relate to the Group as a whole and cannot be allocated to the segments. Within the segment reporting in the three regions of Europe, Americas and Asia and in relation to the recog- nition of contract assets and associated revenue over time according to IFRS 15, €2,405 thousand related to Europe, €8,965 thousand to the Americas region and €1,032 thousand to Asia (PY: €3,422 thousand to Europe, €8,010 thousand to Americas and €2,450 thousand to Asia). CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 111 Geographical information Revenue was spread over the different locations as follows: in € thousand FY 2022/23 FY 2023/24 Czech Republic 204 303 Germany 313,494 276,086 Italy 19,154 10,178 Slovenia 80 472 Europe 332,932 287,039 Honduras 7 1 Mexico 436 368 USA 263,648 271,537 Americas 264,091 271,906 China 103,280 76,564 Asia 103,280 76,564 Total 700,304 635,509 Breakdown of revenue according to Novem company location (i.e. from the invoiced by perspective) The table below provides information on the breakdown of non‑current assets by Novem location: in € thousand FY 2022/23 FY 2023/24 Czech Republic 24,565 21,993 Germany 45,140 38,866 Italy 952 1,041 Luxembourg 124 225 Slovenia 30,316 27,382 Europe 101,097 89,507 Honduras 8,565 7,764 Mexico 37,746 59,854 USA 7,132 6,273 Americas 53,443 73,891 China 33,005 33,346 Asia 33,005 33,346 Total 187,545 196,744 Non-current assets consist of intangible assets and property, plant and equipment. Reconciliation of Adj. EBITDA to earnings before taxes The following table shows the reconciliation of Adj. EBIT to EBIT and to earnings before taxes for the ﬁnancial years 2022/23 and 2023/24: in € thousand FY 2022/23 FY 2023/24 Adj. EBITDA 114,184 102,004 Depreciation and 32,457 32,953 amortisation Adj. EBIT 81,727 69,051 Adjustments 1,275 9,724 EBIT 80,452 59,327 Finance income 3,555 7,376 Finance costs 13,088 19,947 Earnings before taxes 70,919 46,756 Adj. EBIT includes transactions with a one-off and non- recurring nature that occurred in the ordinary course of business. 5.10 Leases In the ordinary business, the Novem Group is the les- see in different leases of land and buildings as well as parts of operating and oﬃce equipment. The lease term for land and buildings is typically between one and 19 years. Leases of technical equipment and machinery generally have a term of three years. Leases of operating and oﬃce equipment usually have a term of between one and 19 years. The Group applied the practical expedient in IFRS 16.6 by not accounting for short-term leases (leases with a lease term of less than CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 112 12 months) and low-value assets (underlying assets <5,000€/$, e.g. printers and copiers) as right‑of‑use assets. For all leases, respective lease term options (e.g. renewal options) are considered. The majority of the current options to extend or terminate the leases can only be exercised by the Novem Group and not by the respective lessor. The future undiscounted lease payments from lease term options not yet exercised amounted to €43,124 thousand. Some leases of land and buildings provide for addi- tional lease payments based on a change in the local price indices. Future cash out‑ﬂow from variable lease payments not incorporated into the measurement of the lease liability amounted to €3,010 thousand (31 March 2023: €2,361 thousand). These mainly related to leases of buildings. There are no leases in which the Novem Group S.A. acts as a lessor. Information on leases in which the Group is the lessee is presented below. Right-of-use assets Amounts recognised in proﬁt and loss and cash ﬂows in € thousand FY 2022/23 FY 2023/24 Interest expense for lease 546 1,165 liabilities Short-term lease expenses 1,771 1,362 Lease expenses for low value assets except short-term 1,180 1,132 leases for low value assets Expense for variable lease payments not included in 296 341 the measurement of lease liabilities Total cash out‑ﬂow for leases 12,817 12,708 As of 31 March 2024, the lease liabilities amounted to €56,524 thousand (31 March 2023: €39,081 thousand). Thereof €7,295 thousand are due within the next ﬁnan- cial year 2024/25. Technical Other equipment, Land and equipment and operating and Right-of-use in € thousand buildings machinery oﬃce equipment assets Depreciation FY 2022/23 5,937 12 3,032 8,982 Additions to right-of-use assets 11,076 - 5,035 16,112 Carrying amount as of 31 Mar 23 32,757 - 6,160 38,917 Depreciation FY 2023/24 6,805 7 3,128 9,940 Additions to right-of-use assets 25,871 33 2,584 28,488 Carrying amount as of 31 Mar 24 52,338 26 5,543 57,907 5.11 Other ﬁnancial liabilities and contingent liabilities There were no signiﬁcant other ﬁnancial obligations occurring after the reporting date. There were only ﬁnancial obligations within the usual range resulting from the purchase commitment of €35,760 thousand on 31 March 2024. The total amount included tool- ing business costs of €26,183 thousand and €9,577 thousand for series business (PY: Tooling €15,620 thousand and Series €13,330 thousand). Contingent liabilities constitute off-balance sheet contingent liabilities recognised for valuation as of the reporting date. The contingent liabilities, including securities and guarantees assumed for third parties, increased to €3,416 thousand on 31 March 2024 (PY: €3,132 thousand). This was mainly due to the guar- antee against the Mexican tax oﬃce of about €3,340 thousand. The amount of the guarantee comprises Mexican VAT, for which the tax authorities rejected an appeal. Furthermore, tax risks are also included in contingent liabilities. The Group might be subject to tax risks attrib- utable to previous tax assessment periods and might be subject to unanticipated tax expenses in relation to previous tax assessment periods, which have not yet been subject to a tax audit or are currently subject to a tax audit. It cannot be ruled out that tax authorities may apply a different approach in ongoing and/or future tax audits from the one adopted by the Group, which may lead to an additional tax expense and/or payment. This could have a material and adverse effect on the busi- ness, ﬁnancial condition and results of operations. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 113 5.12 Related party transactions Holding company The direct holding company of the Group is Rokoko Automotive Holdings (Jersey) Limited , Jersey . During 2023/24, there were no transactions or outstanding balances with Rokoko Automotive Holdings (Jersey) Limited, Jersey. Related parties According to IAS 24, the Group has to disclose speciﬁc information about transactions between the Group and other related parties. Balances and transactions between the Group and its fully consolidated subsidiar- ies, which constitute related parties within the mean- ing of IAS 24, have been eliminated in the course of consolidation and are therefore not commented on in this note. The consolidated ﬁnancial statements do not include any associated companies that are accounted for using the equity method. In the ﬁnancial year 2023/24, no transactions occurred with direct and indirect shareholders. Related party transactions with other companies occurred in ﬁnancial year 2023/24 regarding the purchase of components such as base frames. The related party belongs to the same group of companies pursuant to IAS 24.9b (i). The transaction volume was €144 thousand (PY: €118 thousand). No outstanding balance was recorded as of 31 March 2024 (31 March 2023: €16 thousand). All outstanding balances and transactions with this related party are priced on an arm’s length basis and are to be settled in cash within two months. None of the balances are secured. No guarantees have been given or received. For the remuneration of and other transactions with key management personnel constitute related party transactions pursuant to IAS 24, please refer to sec- tion 5.3, section 5.13 and the Remuneration Report. The Remuneration Report will be published separately from this Annual Report on the Novem IR website on 19 July 2024. 5.13 Remuneration of key management personnel The key management personnel are the members of the Management and Supervisory Board of Novem Group S.A. The total remuneration paid to the Man- agement Board members is calculated as the sum of short‑term beneﬁts and pensions, as well as the fair value of the share‑based Performance Share Plan. For further information regarding the share-based Perfor- mance Share Plan, please refer to section 5.3. The Group is obliged by Luxembourg Law to draw up a Remuneration Policy as well as a Remuneration Report for the members of the Supervisory Board and Management Board of Novem Group S.A. The Remuneration Policy and Remuneration Report are prepared in accordance with Art. 7bis and Art. 7ter of the Luxembourg Law of 24 May 2011 on the exercise of certain rights of shareholders in listed companies, as amended. In the reporting period, the total remuneration of the Management Board, including those members who have left the Company during the ﬁnancial year, was as follows: in € thousand FY 2022/23 FY 2023/24 Short-term employee 2,259 2,055 beneﬁts Share-based payments 241 319 Remuneration 2,500 2,374 The present value of the pension entitlements of the Management Board amounted to €1,907 thousand (31 March 2023: €3,946 thousand). The deﬁned ben- eﬁt obligation of all pension commitments to former members of the Management Board amounted to €2,742 thousand (31 March 2023: €2,352 thousand). The total remuneration paid to the Supervisory Board members, classiﬁed as short‑term beneﬁts, is calcu- lated as the sum of ﬁxed and committee compensation. For this period, the total remuneration for the members of the Supervisory Board amounted to €320 thousand (PY: €320 thousand). CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 114 5.14 Auditors’ fees The following fees for KPMG Audit S.à r.l., Luxembourg, and other member ﬁrms of the KPMG network relate only to services directly connected with the parent company Novem Group S.A. and its subsidiaries: in € thousand FY 2022/23 FY 2023/24 Audit fees 744 838 Thereof: KPMG Audit S.à r.l. 190 238 Other fees 109 61 Thereof: KPMG Audit S.à r.l. - - Fees 853 899 5.15 Subsequent events There were no events or developments that could have materially affected the measurement and presentation of the Group’s assets and liabilities as of 31 March 2024. CONTENTS 1 TO OUR SHAREHOLDERS 2 NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 115 RESPONSIBILITY STATEMENT CONTENTS We, Markus Wittmann (Chief Executive Oﬃcer), Dr. Johannes Burtscher (Chief Financial Oﬃcer), Maria Eichinger (Manager Consolidation) and Mathias Rieger (Director Internal Audit), conﬁrm, to the best of our knowledge, that the consolidated ﬁnancial statements which have been prepared in accordance with the Inter- national Financial Reporting Standards as adopted by 1 the European Union, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt or loss of the Novem Group S.A. and the undertakings included TO OUR in the consolidation taken as a whole and that the SHAREHOLDERS Group Management Report includes a fair review of the 2 development and performance of the business and the position of the Novem Group S.A. and the undertakings included in the consolidation taken as a whole, together NON-FINANCIAL with a description of the principal risks and uncertain- REPORT ties that they face. 3 Luxembourg, 17 June 2024 GROUP Novem Group S.A. MANAGEMENT Management Board REPORT 4 Markus Wittmann Dr. Johannes Burtscher CONSOLIDATED FINANCIAL Maria Eichinger Mathias Rieger STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 116 SETUP AND ORGANISATION OF THE MANAGEMENT BOARD CONTENTS In the ﬁnancial year ending 31 March 2024, the Man- agement Board of Novem Group S.A. diligently fulﬁlled its tasks in accordance with the statutory requirements, the Articles of Association of Novem Group S.A. as well as the Rules of Procedure of the Management Board of the Company, approved by the Management Board and the Supervisory Board on 1 July 2021. It regularly made 1 decisions regarding strategic and operational topics. In the ﬁnancial year ending 31 March 2024, the mem- bers of the Management Board were Günter Brenner TO OUR (Chairman and CEO, until 30 September 2023), Markus SHAREHOLDERS Wittmann (Chairman and CEO, since 1 October 2023), 2 Dr. Johannes Burtscher (CFO), Mathias Rieger (Director Internal Audit), Frank Schmitt (Director Consolidation, until 24 August 2023) and Maria Eichinger (Manager NON-FINANCIAL Consolidation, since 1 September 2023). REPORT 3 The Management Board held in total 14 regular meet- ings during the ﬁnancial year ending 31 March 2024. Five meetings were attended by all of the members GROUP of the Management Board. In the meetings, the Man- MANAGEMENT agement Board regularly discussed the status and REPORT performance of the Group including risks and oppor- 4 tunities, its market position, course of business as well as relevant ﬁnancial data. The discussions were based on regular and extensive reports in verbal and written CONSOLIDATED form presented by the relevant members of the Man- FINANCIAL agement Board. The Management Board maintained STATEMENTS close contact also outside of the regular meetings 5 to exchange all important information related to the Novem Group. This close collaboration also included strategy discussions as well as information on the ANNUAL organisational development. ACCOUNTS 6 During the ﬁnancial year ending 31 March 2024, there were no conﬂicts of interest between the members of the Management Board and the Company. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 117 INDEPENDENT AUDITOR’S REPORT CONTENTS Basis for opinion To the Shareholders of Revenue recognition for Tooling Novem Group S.A. 19, rue Edmond Reuter We conducted our audit in accordance with the EU a) Why the matter was considered to be one of most L - 5326 Contern Regulation N° 537/2014, the Law of 23 July 2016 on signiﬁcant in our audit of the consolidated ﬁnancial Luxembourg the audit profession (the “Law of 23 July 2016”) and statements for the year ended 31 March 2024 with International Standards on Auditing (“ISAs”) as adopted for Luxembourg by the Commission de Sur- As mentioned in notes 2.13 Revenue recognition and 1 REPORT OF THE RÉVISEUR veillance du Secteur Financier (the “CSSF”). Our respon- 4.1. Revenue, the Group’s revenues are generated from D’ENTREPRISES AGRÉÉ sibilities under the EU Regulation N° 537/2014, the Law the sales of serial parts, the provision of development of 23 July 2016 and ISAs as adopted for Luxembourg services and the sale of tools necessary for the produc- TO OUR by the CSSF are further described in the « Responsi- tion of serial parts, whereas the sale of tools amounted to SHAREHOLDERS Report on the audit of the consolidated bilities of “réviseur d’entreprises agréé” for the audit €82.5 million in the ﬁnancial year ended 31 March 2024. 2 ﬁnancial statements of the consolidated ﬁnancial statements » section of our report. We are also independent of the Group in Novem Group S.A. has determined that the develop- accordance with the International Code of Ethics for ment work and subsequent sale of the tools constitute NON-FINANCIAL Opinion Professional Accountants, including International Inde- one single performance obligation. The associated REPORT pendence Standards, issued by the International Ethics revenue is recognised upon completion and transfer 3 We have audited the consolidated ﬁnancial statements Standards Board for Accountants (“IESBA Code”) as of the tool to the customer. An asset is considered to be of Novem Group S.A. and its subsidiaries (the “Group”), adopted for Luxembourg by the CSSF together with the transferred when the customer obtains control of that which comprise the consolidated statement of ﬁnan- ethical requirements that are relevant to our audit of the asset. Novem Group S.A. recognises revenue for Tool- GROUP cial position as at 31 March 2024, and the consolidated consolidated ﬁnancial statements, and have fulﬁlled ing at a point in time, in the amount to which Novem MANAGEMENT statement of comprehensive income, consolidated our other ethical responsibilities under those ethical Group S.A. expects to be entitled. REPORT statement of changes in equity and consolidated requirements. We believe that the audit evidence we 4 statement of cash ﬂows for the year then ended, and have obtained is suﬃcient and appropriate to provide The Management Board has presented the criteria for notes to the consolidated ﬁnancial statements, includ- a basis for our opinion. the recognition of revenue from the sale of Tooling ing material accounting policy information and other in a group-wide accounting policy and implemented CONSOLIDATED explanatory information. speciﬁc recognition and cut‑off procedures. Although FINANCIAL Key audit matters there exist deﬁned criteria in Novem’s process for STATEMENTS In our opinion, the accompanying consolidated ﬁnan- revenue recognition for Tooling, the process includes 5 cial statements give a true and fair view of the consoli- Key audit matters are those matters that, in our profes- manual accounting steps and is complex as control is dated ﬁnancial position of the Group as at 31 March sional judgment, were of most signiﬁcance in our audit transferred without that the customer obtains physical 2024, and its consolidated ﬁnancial performance and of the consolidated ﬁnancial statements of the current possession of the tool. ANNUAL its consolidated cash ﬂows for the year then ended period. These matters were addressed in the context of ACCOUNTS in accordance with IFRS Accounting Standards as the audit of the consolidated ﬁnancial statements as a There is the risk for the consolidated ﬁnancial state- 6 adopted by the European Union. whole, and in forming our opinion thereon, and we do ments that revenue for Tooling is not correctly rec- not provide a separate opinion on these matters. ognised throughout the period and that at year-end such revenues are overstated since the tools were not ADDITIONAL transferred to the customer at year-end. INFORMATION NOVEM ANNUAL REPORT 2023/24 118 CONTENTS b) How the matter was addressed during the audit Our opinion on the consolidated ﬁnancial statements disclosing, as applicable, matters related to going does not cover the other information and we do not concern and using the going concern basis of account- In order to assess whether Tooling revenue is recog- express any form of assurance conclusion thereon. ing unless the Management Board either intends to nised in the correct ﬁnancial year, our audit procedures liquidate the Group or to cease operations, or has no consisted of, but were not limited, to: In connection with our audit of the consolidated ﬁnan- realistic alternative but to do so. cial statements, our responsibility is to read the other • We assessed the design and implementation of information and, in doing so, consider whether the other Those charged with governance are responsible for 1 internal key controls relating to the revenue recogni- information is materially inconsistent with the consoli- overseeing the Group’s ﬁnancial reporting process. tion process in relation to Tooling, and in particular dated ﬁnancial statements or our knowledge obtained the determination and veriﬁcation of the actual in the audit or otherwise appears to be materially mis- TO OUR Responsibilities of the réviseur d’entreprises transfer of control. stated. If, based on the work we have performed, we SHAREHOLDERS agréé for the audit of the consolidated ﬁnancial • We assessed compliance of the group-wide conclude that there is a material misstatement of this 2 statements accounting policy regarding revenue recognition other information, we are required to report this fact. with IFRS 15 and have veriﬁed the correct applica- We have nothing to report in this regard. tion of the latter while recognising revenues. The objectives of our audit are to obtain reasonable NON-FINANCIAL • For a sample of Tooling transactions recorded in assurance about whether the consolidated ﬁnancial REPORT Responsibilities of the Management Board and the general ledger we reconciled those selected statements as a whole are free from material misstate- 3 Those Charged with Governance for the sales records with customer invoices, the underly- ment, whether due to fraud or error, and to issue a report consolidated ﬁnancial statements ing order, the proof of transfer of control and the of the “réviseur d’entreprises agréé” that includes our payments received from customers. opinion. Reasonable assurance is a high level of assur- GROUP • We assessed the adequacy of the Group’s dis- The Management Board is responsible for the prepara- ance, but is not a guarantee that an audit conducted MANAGEMENT closures in respect of the accounting policies on tion and fair presentation of the consolidated ﬁnancial in accordance with the EU Regulation N° 537/2014, REPORT revenue recognition as disclosed in notes 2.13 and statements in accordance with IFRS Accounting Stand- the Law of 23 July 2016 and with ISAs as adopted for 4 4.1. of the consolidated ﬁnancial statements. ards as adopted by the European Union, and for such Luxembourg by the CSSF will always detect a mate- internal control as the Management Board determines rial misstatement when it exists. Misstatements can is necessary to enable the preparation of consolidated arise from fraud or error and are considered material if, CONSOLIDATED Other information ﬁnancial statements that are free from material mis- individually or in the aggregate, they could reasonably FINANCIAL statement, whether due to fraud or error. be expected to inﬂuence the economic decisions of STATEMENTS The Management Board is responsible for the other users taken on the basis of these consolidated ﬁnancial 5 information. The other information comprises the The Management Board is responsible for presenting statements. information stated in the annual report including the and marking up the consolidated ﬁnancial statements Group Management Report and the Corporate Govern- in compliance with the requirements set out in the Our responsibility is to assess whether the consoli- ANNUAL ance Statement but does not include the consolidated Delegated Regulation 2019/815 on European Single dated ﬁnancial statements have been prepared in all ACCOUNTS ﬁnancial statements and our report of the “réviseur Electronic Format (“ESEF Regulation”). material respects with the requirements laid down in 6 d’entreprises agréé” thereon. the ESEF Regulation. In preparing the consolidated ﬁnancial statements, the Management Board is responsible for assessing As part of an audit in accordance with the EU Regula- ADDITIONAL the Group’s ability to continue as a going concern, tion N° 537/2014, the Law of 23 July 2016 and with INFORMATION NOVEM ANNUAL REPORT 2023/24 119 CONTENTS Report on other legal and regulatory ISAs as adopted for Luxembourg by the CSSF, we exer- However, future events or conditions may cause requirements cise professional judgment and maintain professional the Group to cease to continue as a going concern. skepticism throughout the audit. We also: • Evaluate the overall presentation, structure and content of the consolidated ﬁnancial statements, We have been appointed as “réviseur d’entreprises • Identify and assess the risks of material misstate- including the disclosures, and whether the consoli- agréé” by the Shareholders on 24 August 2023 and the ment of the consolidated ﬁnancial statements, dated ﬁnancial statements represent the underlying duration of our uninterrupted engagement, including whether due to fraud or error, design and perform transactions and events in a manner that achieves previous renewals and reappointments, is 2 years. 1 audit procedures responsive to those risks, and fair presentation. obtain audit evidence that is suﬃcient and appropri- • Obtain suﬃcient appropriate audit evidence regard- The Group Management Report is consistent with the ate to provide a basis for our opinion. The risk of not ing the ﬁnancial information of the entities and consolidated ﬁnancial statements and has been pre- TO OUR detecting a material misstatement resulting from business activities within the Group to express an pared in accordance with applicable legal requirements. SHAREHOLDERS fraud is higher than for one resulting from error, opinion on the consolidated ﬁnancial statements. 2 as fraud may involve collusion, forgery, intentional We are responsible for the direction, supervision The Corporate Governance Statement is included in the omissions, misrepresentations, or the override of and performance of the Group audit. We remain Group Management Report. The information required internal control. solely responsible for our audit opinion. by Article 68ter paragraph (1) letters c) and d) of the NON-FINANCIAL • Obtain an understanding of internal control relevant law of 19 December 2002 on the commercial and REPORT to the audit in order to design audit procedures that We communicate with those charged with governance companies register and on the accounting records 3 are appropriate in the circumstances, but not for the regarding, among other matters, the planned scope and annual accounts of undertakings as amended, is purpose of expressing an opinion on the effective- and timing of the audit and signiﬁcant audit ﬁndings, consistent with the consolidated ﬁnancial statements ness of the Group’s internal control. including any signiﬁcant deﬁciencies in internal control and has been prepared in accordance with applicable GROUP • Evaluate the appropriateness of accounting poli- that we identify during our audit. legal requirements. MANAGEMENT cies used and the reasonableness of accounting REPORT estimates and related disclosures made by the We also provide those charged with governance with a We conﬁrm that the audit opinion is consistent with the 4 Management Board. statement that we have complied with relevant ethical additional report to the audit committee or equivalent. • Conclude on the appropriateness of the Manage- requirements regarding independence, and to com- ment Board’s use of the going concern basis of municate with them all relationships and other mat- We conﬁrm that the prohibited non‑audit services CONSOLIDATED accounting and, based on the audit evidence ters that may reasonably be thought to bear on our referred to in the EU Regulation N° 537/2014 were not FINANCIAL obtained, whether a material uncertainty exists independence, and where applicable, actions taken to provided and that we remained independent of the STATEMENTS related to events or conditions that may cast sig- eliminate threats or safeguards applied. Group in conducting the audit. 5 niﬁcant doubt on the Group’s ability to continue as a going concern. If we conclude that a material From the matters communicated with those charged We have checked the compliance of the consolidated uncertainty exists, we are required to draw attention with governance, we determine those matters that ﬁnancial statements of the Group as at 31 March 2024 ANNUAL in our report of the “réviseur d’entreprises agréé” to were of most signiﬁcance in the audit of the consoli - with relevant statutory requirements set out in the ESEF ACCOUNTS the related disclosures in the consolidated ﬁnancial dated ﬁnancial statements of the current period and Regulation that are applicable to consolidated ﬁnancial 6 statements or, if such disclosures are inadequate, are therefore the key audit matters. We describe these statements. to modify our opinion. Our conclusions are based matters in our report unless law or regulation precludes on the audit evidence obtained up to the date of public disclosure about the matter. ADDITIONAL our report of the “réviseur d’entreprises agréé”. INFORMATION NOVEM ANNUAL REPORT 2023/24 120 CONTENTS For the Group it relates to: Luxembourg, 17 June 2024 • Consolidated ﬁnancial statements prepared in a KPMG Audit S.à r.l. valid xHTML format; Cabinet de révision agréé • The XBRL markup of the consolidated ﬁnancial statements using the core taxonomy and the Yves Thorn common rules on markups speciﬁed in the ESEF Partner 1 Regulation as described in Note 1. In our opinion, the consolidated ﬁnancial statements TO OUR of Novem Group S.A. as at 31 March 2024, identiﬁed SHAREHOLDERS as Novem-2024-03-31-en.zip, have been prepared, in all 2 material respects, in compliance with the requirements laid down in the ESEF Regulation. NON-FINANCIAL Our audit report only refers to the consolidated ﬁnan- REPORT cial statements of Novem Group S.A. as at 31 March 3 2024, identiﬁed as Novem-2024-03-31-en.zip, prepared and presented in accordance with the requirements laid down in the ESEF Regulation, which is the only GROUP authoritative version. MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 121 Granite open pore 5 accounts Annual BALANCE SHEET as of 31 March 2024 CONTENTS Assets Capital, reserves and liabilities in € thousand Note 31 Mar 24 31 Mar 23 in € thousand Note 31 Mar 24 31 Mar 23 Formation expenses 3 1,998 2,854 Capital and reserves 7 673,738 681,796 Fixed assets 924,258 924,283 Subscribed capital 430 430 1 Tangible assets 4 98 124 Share premium account 540,803 540,803 Other ﬁxtures and ﬁttings, tools and Reserves 484 484 98 124 equipment Legal reserve 43 43 TO OUR Financial assets 5 924,159 924,159 SHAREHOLDERS Other non-available reserves 441 441 Shares in aﬃliated undertakings 5.1 674,159 674,159 2 Proﬁt or loss brought forward 90,594 123,851 Loans to aﬃliated undertakings 5.2 250,000 250,000 Proﬁt or loss for the ﬁnancial year 41,427 16,228 Current assets 2,321 6,404 Provisions 8 690 519 NON-FINANCIAL Debtors 6 1,957 5,911 REPORT Other provisions 690 519 Amounts owed by aﬃliated undertakings 6.1 1,249 5,478 Creditors 9 254,210 251,290 3 becoming due and payable within one year 1,249 5,478 Amounts owed to credit institutions 9.1 250,203 250,105 Other debtors 6.2 708 433 becoming due and payable within one year 203 105 GROUP becoming due and payable within one year 708 433 becoming due and payable after more than MANAGEMENT 250,000 250,000 Cash at bank and in hand 364 493 REPORT one year Prepayments 62 64 Trade creditors 9.2 33 16 4 Total assets 928,638 933,605 becoming due and payable within one year 33 16 Amounts owed to aﬃliated undertakings 9.3 2,995 1 CONSOLIDATED becoming due and payable within one year 2,995 1 FINANCIAL STATEMENTS Other creditors 9.4 979 1,168 5 Tax authorities 245 355 Social security debts 12 13 Other creditors 722 800 ANNUAL ACCOUNTS becoming due and payable within one year 722 800 Total capital, reserves and liabilities 928,638 933,605 6 The accompanying notes form an integral part of these stand‑alone ﬁnancial statements. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 123 PROFIT AND LOSS ACCOUNT for the ﬁnancial year ended 31 March 2024 CONTENTS in € thousand Note FY 2023/24 FY 2022/23 Other operating income 10 2,589 1,649 Raw materials and consumables and other external expenses -1,158 -1,014 Raw materials and consumables -15 -7 Other external expenses 11 -1,143 -1,007 Staff costs 12 -895 -965 1 Wages and salaries -834 -914 Social security costs -61 -51 TO OUR Value adjustments -942 -955 SHAREHOLDERS in respect of formation expenses and on tangible and intangible ﬁxed assets -942 -955 2 Other operating expenses -403 -373 Income from participating interests 13 40,000 18,000 NON-FINANCIAL derived from aﬃliated undertakings 40,000 18,000 REPORT Other interest receivable and similar income 14 15,784 6,595 3 derived from aﬃliated undertakings 15,784 6,595 Interest payable and similar expenses 15 -13,340 -6,382 GROUP concerning aﬃliated undertakings -37 - MANAGEMENT Other interest and similar expenses -13,303 -6,382 REPORT Tax on proﬁt 16 -222 -2 4 Other taxes 14 -325 Proﬁt for the ﬁnancial year 41,427 16,228 CONSOLIDATED FINANCIAL The accompanying notes form an integral part of these stand‑alone ﬁnancial statements. STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 124 NOTES TO THE ANNUAL ACCOUNTS CONTENTS 1 General has participation or in which it has a direct or indirect and related uncertainties could result in outcomes that interest. The Company may, for its own account as require an adjustment to the carrying amount of assets Novem Group S.A. (the “Company”, formerly Car Interior well as for the account of third parties, carry out any and liabilities affected in future periods. Design (Luxembourg) S.à r.l.) was originally formed as commercial, industrial or ﬁnancial activities which may a private company (Société à responsabilité limitée) for be useful or necessary to the accomplishment of its The increasingly complex and uncertain macroeco- an unlimited period of time under the laws of Luxem- purposes or which are related directly or indirectly to nomic and geopolitical environment, particularly due bourg on 12 July 2011 pursuant to a deed of incorpora- its purpose. to the Ukraine war and the conﬂict in Israel‑Gaza/Mid- 1 tion published in the Mémorial, Recueil des Sociétés et dle East, requires continuous and close observation by Associations C on 28 September 2011, number 2306. The Company became listed on 19 July 2021 with its the management. The ongoing attacks by Houthis on shares listed on the Frankfurt stock exchange under numerous commercial ships using the Red Sea route TO OUR In June 2021, the extraordinary General Shareholders’ the ISIN code LU2356314745. led container shipping lines to use alternative routes. SHAREHOLDERS Meeting converted the Company from a private limited The alternative route around the Cape of Good Hope 2 liability company (Société à responsabilité limitée) to The Company’s ﬁnancial year begins on 1 April and increases the sea voyage duration and costs due to a public limited liability company (Société Anonyme). ends on 31 March of each year. higher bunker consumption, additional port and termi- As a consequence, the shares (parts sociales) were nal fees, and higher labour costs. NON-FINANCIAL also converted and became shares with no nominal The Company also prepared consolidated ﬁnan- REPORT value. The Company’s corporate name was amended cial statements in accordance with EU regulation Thus, the Company faces high inﬂation, increased inter- 3 to Novem Group S.A. The Company is registered under 1606/2002, which are available at the registered oﬃce est rates and volatile foreign currencies, with a rising the number B 162.537 in the Luxembourg trade register. of the Company. apprehension of a slowdown in economic growth across signiﬁcant markets compared to prior years. GROUP The Company is managed by a Management Board The Company’s annual accounts are presented in MANAGEMENT under the supervision of a Supervisory Board. Euro (€), the Company’s functional currency. All Management has regularly reviewed the implications REPORT amounts are rounded to the nearest thousand Euro of the changing geopolitical and macroeconomic 4 The Company is formed for an unlimited duration. unless otherwise indicated. Totals in tables were cal- conditions and has not identiﬁed a going concern or a culated on the basis of exact ﬁgures and rounded to signiﬁcant issue, beyond the general scope of impact, The purpose of the Company is the taking of participat- the nearest thousand Euro. For computational reasons, on the performance and ﬁnancial position of the Com- CONSOLIDATED ing interests in whatsoever form in other, either in Lux- there may be rounding differences to the exact math- pany as of today. Management continues to monitor FINANCIAL embourg or foreign companies and the management, ematical values in tables and references (monetary the current developments and their potential impact STATEMENTS control and development of such participating inter- units, percentages, etc.). on the Company. 5 ests. The Company may, in particular, acquire all types of transferable securities, either by way of contribution, The board has made an assessment of the Company’s The oﬃcial version of the accounts is the ESEF ver- subscription, option, purchase or otherwise, as well as ability to continue its activities as a going concern. sion available with the Oﬃcially Appointed Mechanism ANNUAL realise them by sale, transfer, exchange or otherwise. It concluded that, as of the establishment of these (OAM) tool. ACCOUNTS The Company may also acquire and manage all pat- annual accounts, it is reasonable to assume that the 6 ents, trademarks, connected licenses and other rights Company will be able to continue as a going concern. deriving from these patents or complementary thereto. However, market conditions subsequent to year‑end The Company may borrow and grant any assistance, ADDITIONAL loan, advance or guarantee to companies in which it INFORMATION NOVEM ANNUAL REPORT 2023/24 125 CONTENTS 2 Summary of signiﬁcant valuation and Intangible and tangible assets Formation expenses, tangible and ﬁnancial ﬁxed assets accounting policies denominated in currencies other than Euro are trans- lated at the historical exchange rates. Intangible and tangible assets are used for business purposes and are measured at cost less accumulated Basis of preparation Cash at bank denominated in currencies other than value adjustments. Depreciation on intangible and Euro is translated at the exchange rates prevailing at tangible assets is recorded on a straight-line basis in The annual accounts were prepared in accordance with the date of the balance sheet. accordance with its utilisation and based on the useful 1 Luxembourg’s legal and regulatory requirements under life of the asset. The residual value, depreciation meth- the historical cost convention and the going concern Current assets and liabilities denominated in currencies ods and useful life are reviewed annually and adjusted assumption. Accounting policies and valuation rules other than Euro are translated separately respectively if necessary. TO OUR are, besides the ones laid down by the Commercial Law at the lower or at the higher of the value converted at SHAREHOLDERS dated 10 August 1915 as amended and the amended the historical exchange rate or the value determined on Useful life of tangible assets (Other ﬁxtures and ﬁttings, 2 Law of 19 December 2002, determined and applied by the basis of the exchange rates effective at the balance tools and equipment): 5 to 6 years the Management Board. sheet date. Solely the unrealised exchange losses are recorded in the proﬁt and loss account. The exchange NON-FINANCIAL Financial assets From the current perspective, there are no risks to the gains are recorded in the proﬁt and loss account at the REPORT continued existence of Novem Group S.A. and its aﬃli- moment of their realisation. 3 ated companies. Shares in aﬃliated undertakings are stated at acqui- Long-term debts denominated in currencies other than sition cost including the expenses incidental thereto. In preparing the annual accounts in accordance with Euro are translated at the historical exchange rates. Value adjustments are recorded if a reduction in the GROUP Luxembourg Generally Accepted Accounting Principles, value is expected to be permanent. The impairment MANAGEMENT management has made judgements and estimates As a result, realised exchange gains and losses and analysis is done individually for each investment. REPORT that affect the application of accounting policies and unrealised losses are recorded in the proﬁt and loss 4 the reported amounts of assets, liabilities, income and account. Unrealised exchange gains are not recognised. Loans to aﬃliated undertakings are recorded at their expenses. nominal value. Loans are written down to their recover- able amount if there is a durable decrease in value. CONSOLIDATED Formation expenses Due to unforeseeable developments beyond the con- FINANCIAL trol of management, the actual ﬁgures may differ from These value adjustments may not be continued if the STATEMENTS these estimates. Estimates and underlying assump- The position carries expenses arising from the context reasons for which the value adjustments were recog- 5 tions are reviewed on an ongoing basis. of the private placement and stock exchange listing nised have ceased to exist. (capital market transactions) of the Novem Group S.A. relating to the newly issued shares and the reﬁnanc- ANNUAL Foreign currency translation Debtors ing. Formation expenses are measured at cost less ACCOUNTS accumulated value adjustments and are written off on 6 The Company maintains its books and records in Euro. a straight-line basis over a period of 5 years. Current receivables are recorded at their nominal value. The balance sheet and the proﬁt and loss account are They are subject to value adjustments where their expressed in this currency. recovery is compromised. ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 126 CONTENTS 3 Formation expenses These value adjustments may not be continued if the Board. The Performance Share Plan is granted in reasons for which the value adjustments were recog- annual tranches of virtual shares with a respective nised have ceased to exist. performance period of four years. Formation expenses comprised expenses arising from the context of the private placement and stock According to IFRS 2, for cash‑settled share‑based pay- exchange listing of the Novem Group S.A. relating to Cash ment transactions, the Company has to measure the the newly issued shares and the reﬁnancing. liability incurred at the fair value of the liability. The fair 1 Cash at bank and in hand is recorded at its nominal value of the share-based payments of the Performance Formation expenses were written off on a straight‑line value and comprises bank current accounts. Share Plan has been measured at the end of each quar- basis over a period of ﬁve years. ter by using a Monte-Carlo-Simulation. Any changes in TO OUR the liability are recognised in proﬁt or loss. SHAREHOLDERS Provisions in € thousand Total 2 Gross value Creditors Provisions are intended to cover losses or debts, the Balance as of 01 Apr 22 4,247 nature of which is clearly deﬁned and which, at the date Additions - NON-FINANCIAL of the balance sheet, are either likely to be incurred or Debts are recorded at their reimbursement value. REPORT certain to be incurred but uncertain as to their amount Where the amount repayable on account exceeds the Disposals - 3 or the date on which they will arise. amount received, the difference is shown as an asset Balance as of 31 Mar 23 4,247 and is written off over the period of debt. Additions - Provisions may also be created to cover charges that Disposals - GROUP have originated in the ﬁnancial year under review or in MANAGEMENT Dividend income a previous ﬁnancial year, the nature of which is clearly Balance as of 31 Mar 24 4,247 REPORT deﬁned and which, at the date of the balance sheet, 4 Accumulated value adjustments are either likely to be incurred or certain to be incurred Dividend income is recognised at the moment the but uncertain as to their amount or the date on which Company obtains legal entitlement to such income. Balance as of 01 Apr 22 534 they will arise. Additions 859 CONSOLIDATED FINANCIAL Disposals - STATEMENTS Balance as of 31 Mar 23 1,393 Share-based payments 5 Additions 856 The Company accounts for share-based payments in Disposals - accordance with IFRS 2, as permitted under Luxem- Balance as of 31 Mar 24 2,249 ANNUAL burg Law. It adheres to the principle of substance over ACCOUNTS form, ensuring that the economic reality of transactions Net book value 6 is accurately reﬂected in the ﬁnancial statements. Balance as of 31 Mar 23 2,854 Balance as of 31 Mar 24 1,998 The Company established cash-settled share-based ADDITIONAL payment agreements for members of the Management INFORMATION NOVEM ANNUAL REPORT 2023/24 127 CONTENTS 4 Fixed assets The tangible ﬁxed assets comprise oﬃce equipment and vehicles. The Management Board assessed that no value adjustment was required on the Company’s Tangible assets tangible assets as of 31 March 2024. Fixed assets were depreciated on a straight‑line basis 5 Financial assets over a period of up to six years. 1 5.1 Shares in aﬃliated undertakings in € thousand Total TO OUR SHAREHOLDERS Gross value The shares in aﬃliated undertakings of the Company Balance as of 01 Apr 22 26 2 consist of an investment in the Novem Group GmbH. Additions 141 The Company is the sole shareholder of Novem Group Disposals - GmbH (the “Subsidiary”). NON-FINANCIAL Balance as of 31 Mar 23 147 REPORT Percentage of Additions - 3 Subsidiary Registered oﬃce ownership Closing date Disposals - Weiden i.d. Oberpfalz Novem Group GmbH 100% 31 Mar 24 Balance as of 31 Mar 24 147 (Germany) GROUP MANAGEMENT Accumulated value adjustments Result of the last Book value at Book value at REPORT in € thousand Shareholder’s equity ﬁnancial period 31 Mar 23 31 Mar 24 Balance as of 01 Apr 22 4 4 Novem Group GmbH 674,156 21,496 674,159 674,159 Additions 20 Disposals - The Management Board has the opinion that no value €185 thousand (31 March 2023: €35 thousand) was Balance as of 31 Mar 23 24 CONSOLIDATED adjustment was required on the Company’s ﬁnancial calculated on the basis of a 360-day year with months FINANCIAL Additions 25 assets as at 31 March 2024. of actual days. STATEMENTS Disposals - 5 Balance as of 31 Mar 24 49 5.2 Loans to aﬃliated undertakings Net book value ANNUAL As of 31 March 2024, Loans to aﬃliated undertakings ACCOUNTS Balance as of 31 Mar 23 123 existed with Novem Group GmbH. The stated princi- 6 Balance as of 31 Mar 24 98 pal amount is €250,000 thousand (31 March 2023: €250,000 thousand) and matures on 20 July 2026. The accrued interest as of 31 March 2024 amounting to ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 128 CONTENTS 6 Debtors 7 Capital and reserves There were the following changes in equity in ﬁnancial 6.1 Amounts owed by aﬃliated undertakings years 2022/23 and 2023/24: Receivables from aﬃliated companies of €1,249 thousand (31 March 2023: €5,478 thousand) resulted Share 1 premium Special Results Proﬁt for largely from recharge of costs to aﬃliated undertakings Subscribed and similar Legal reserve net brought the ﬁnancial Capital and and accrued interests (refer to section 5.2). in € thousand capital premiums reserve wealth tax forward year reserves TO OUR Balance as of 01 Apr 22 430 540,803 6 143 140,025 1,075 682,483 SHAREHOLDERS Allocation of previous 6.2 Other debtors - - - - 1,075 -1,075 - year’s proﬁt 2 Dividend distributions - - - - -17,212 - -17,212 The amount of €708 thousand (31 March 2023: €433 Allocation to the legal thousand) mainly related to receivables from the tax - - 37 - -37 - - reserve NON-FINANCIAL authorities. REPORT Allocation to the net - - - 298 - - 298 wealth tax reserve 3 Proﬁt for the ﬁnancial - - - - - 16,228 16,228 year Balance as of 31 Mar 23 430 540,803 43 441 123,851 16,228 681,796 GROUP MANAGEMENT REPORT Balance as of 01 Apr 23 430 540,803 43 441 123,851 16,228 681,796 Allocation of previous 4 - - - - 16,228 -16,228 - year’s proﬁt Dividend distributions - - - - -49,485 - -49,485 Proﬁt for the ﬁnancial CONSOLIDATED - - - - - 41,427 41,427 FINANCIAL year STATEMENTS Balance as of 31 Mar 24 430 540,803 43 441 90,594 41,427 673,738 5 Subscribed capital ordinary shares rank equally with regard to the Com- ANNUAL pany’s residual assets. Each share of the Company ACCOUNTS As of 31 March 2024, the share capital of the Company represents a par value of €0.01 in the Company’s 6 amounted to €430 thousand (31 March 2023: €430 share capital. All shares are fully paid. Holders of these thousand) and is divided into 43,030,303 ordinary shares are entitled to dividends as declared from time shares (31 March 2023: 43,030,303 ordinary shares) to time and are entitled to one vote per share at general ADDITIONAL in a dematerialised form with no nominal value. All meetings of the Company. INFORMATION NOVEM ANNUAL REPORT 2023/24 129 CONTENTS Share premium and similar premiums must set up a restricted reserve equal to ﬁve times the thousand (31 March 2023: €128 thousand). The prior amount of the net wealth tax credited. This reserve has ﬁnancial year also contained other provisions amount- As of 31 March 2024, the share premium and simi- to be maintained for a period of ﬁve years following the ing to €81 thousand. lar premiums account of the Company amounted year in which it was created. In case of distribution of to €540,803 thousand (31 March 2023: €540,803 the restricted reserve, the tax credit falls due during the 9 Creditors thousand). year in which it was distributed. 1 Reserve to be Amount in Legal reserve 9.1 Amounts owed to credit institutions NWT of the year created in FS € thousand 2016 2016 10,525 TO OUR In accordance with Luxembourg Law, the Company is In June 2021, a new term loan agreement for €310,000 SHAREHOLDERS 2017 2017 29,375 required to appropriate a minimum of 5% of the net thousand in total (€250,000 thousand as a term loan 2018 2018 32,325 2 proﬁt after tax for the year to a legal reserve until the and €60,000 thousand as a revolving credit facility) 2019 2019 35,425 balance of such reserve is equal to 10% of the issued was entered into between Novem Group S.A. and an share capital. The legal reserve is not available for dis- 2020 2020 46,075 international syndicate of banks. Accordingly, the reﬁ- NON-FINANCIAL tribution to shareholders except upon the dissolution nancing was implemented as of 23 July 2021 by the 2021 2021 26,650 REPORT of the Company. No allocation was made to the legal drawdown of the term loan of €250,000 thousand and 2022 2022 52,475 3 reserve in the current year as the 10% maximum has matures in July 2026. The revolving credit facility of 2023 2023 208,075 already been reached. €60,000 thousand has not been used to date. For the Total 440,925 drawn term facility, the margin range is between 2.0% GROUP and 1.0% per annum, depending on the total net lever- MANAGEMENT Authorised capital age of the Group. Additionally, the respective 3-month REPORT Dividend Euribor is reﬂected in the all‑in rate. 4 The authorised capital of the Company is set at €520,000 thousand divided into 52,000,000 shares with At the Annual General Meeting on 24 August 2023 the The accrued interest as of 31 March 2024 amounting to no nominal value. The Management Board is author- Management Board, in agreement with the Supervisory €203 thousand (31 March 2023: €105 thousand) was CONSOLIDATED ised to increase the current issued capital up to the Board, resolved a total dividend of €1.15 per share (ordi - calculated on the basis of a 360-day year with months FINANCIAL amount of the authorised capital, in whole or in part, nary plus special). The total distribution was €49,485 of actual days. STATEMENTS from time to time during ﬁve years after IPO. thousand. 5 9.2 Trade creditors 8 Provisions Special reserve net wealth tax (NWT) ANNUAL Trade accounts payable amounted to €33 thousand (31 ACCOUNTS In accordance with paragraph 8a of the 16 October Provisions comprised primarily share-based payments March 2023: €16 thousand) and mainly consisted of 6 1934 Law as amended, the Company is entitled to of €629 thousand (31 March 2023: €310 thousand) invoices for insurance and advisory services. reduce the net wealth tax due for the year by an amount (refer to section 18) and provisions for bonuses of €61 which cannot exceed the corporate income tax due for ADDITIONAL the year. In order to avail of the above, the Company INFORMATION NOVEM ANNUAL REPORT 2023/24 130 CONTENTS 17 Related parties 9.3 Amounts owed to aﬃliated undertakings number of employees in the ﬁnancial year 2023/24 was four (PY: four employees), containing two full‑time The liabilities to aﬃliated undertakings amounting to employees (PY: two full‑time employees). Novem Group S.A. is obliged by the European direc- €2,995 thousand (31 March 2023: €1 thousand) mainly tive and Luxembourg Law to draw up a Remuneration comprised cash pooling. Policy for the Supervisory Board as well as the Man- 13 Income from participating interests agement Board. The principles and measurement of the Remuneration Policy for the Management Board 1 9.4 Other creditors The income from participating interests amounting to and Supervisory Board of the Novem Group S.A. are €40,000 thousand (PY: €18,000 thousand) derived from prepared in accordance with Article 7bis of the Luxem- The position of other creditors amounting to €979 the dividend distribution. bourg Law of 24 May 2011 on the exercise of certain TO OUR thousand (31 March 2023: €1,168 thousand) contained rights of shareholders in listed companies. SHAREHOLDERS mainly accruals for outstanding audit fees and not yet 2 14 Other interest receivable and similar paid Supervisory Board compensation. In addition, it In the ﬁnancial years 2023/24 and 2022/23, no transac- income included tax liabilities amounting to €245 thousand (31 tions occurred with direct and indirect shareholders. March 2023: €355 thousand) relating to the ﬁnancial NON-FINANCIAL year. The income from other interest receivable and similar REPORT 18 Share-based payments income derived from aﬃliated undertakings of €15,784 3 thousand (PY: €6,595 thousand) comprised the interest 10 Other operating income from an intercompany loan. The increase originated The Management Board members of Novem Group from higher total interest rates. S.A. participated in a long-term incentive (Performance GROUP The other operating income included reimbursements Share Plan) in the form of virtual shares. The Perfor- MANAGEMENT for management services provided by Novem Group mance Share Plan is classiﬁed according to IFRS 2 as REPORT 15 Interest payable and similar expenses S.A. to other Novem Group companies as well as a cash-settled share-based payment. 4 recharge of costs amounting to €2,589 thousand (PY: €1,649 thousand). The position carried interest payables to banks amount- The Performance Share Plan is granted in annual tranches ing to €13,340 thousand (PY: €6,382 thousand) for the of virtual shares with a respective performance period of CONSOLIDATED incorporated term loan. The increase resulted from four years. Deviating from this, the performance period FINANCIAL 11 Other external expenses higher total interest rates during the ﬁnancial year. of the tranche 2021 started on the day of the listing of STATEMENTS Novem Group S.A. and will end on 31 March 2025. The 5 The amount of €1,143 thousand (PY: €1,007 thousand) second tranche (tranche 2022) started at the beginning 16 Taxation mainly included legal, advisory, insurance and audit of ﬁnancial year 2022/23 and will end on 31 March 2026. fees as well as tax services. The third tranche (tranche 2023) started at the beginning ANNUAL The Company is subject to Luxembourg Company Tax of ﬁnancial year 2023/24 and will end on 31 March 2027. ACCOUNTS Law. For detailed information on special reserve net 6 12 Employees wealth tax, refer to section 7. The conditionally granted number of virtual shares at the beginning of the performance period is calculated The Company employed four employees as of 31 March for each tranche by dividing a contractually deﬁned ADDITIONAL 2024 (31 March 2023: four employees). The average individual target amount by the start share price of the INFORMATION NOVEM ANNUAL REPORT 2023/24 131 CONTENTS share of Novem Group S.A. (arithmetic mean of the virtual shares, corresponding to a provision of €268 For comparative purposes, the fair value and inputs closing prices of the stock during the last 60 trading thousand as of 31 March 2024 (31 March 2023: €0). used in the assessment of the fair value as of 31 March days prior to the start of the performance period). 2023 were as follows: These provisions have been included in other provisions. The ﬁnal number of virtual shares is determined by Valuation as of Tranche Tranche multiplying the total target achievement by the con- In total, the expenses for ﬁnancial year 2023/24 31 March 2023 2021 2022 ditionally granted number of virtual shares. The total amounted to €319 thousand (PY: €241 thousand). 1 19 Jul 21 – 1 Apr 22 – target achievement depends on the target achieve- Performance period 31 Mar 25 31 Mar 26 ment of the two ﬁnancial ﬁgures relative Total Share- The fair value of the Performance Share Plan to calcu- Start share price holder Return (70% weighting) and EBIT margin (30% late expenses and provisions was determined by using €16.46 €11.25 Novem Group S.A. TO OUR weighting). Thereby, the target achievement of relative a Monte-Carlo-Simulation. The expected volatility has SHAREHOLDERS Remaining duration of Total Shareholder Return and EBIT margin can range been based on the average of the median volatility of 2.0 years 3.0 years performance period 2 between 0% and 150%. SDAX companies (term-congruent) and the historical Expected annual volatility 45.8% 47.6% volatility of Novem for the period available. The fair Risk-free annual interest rate 2.7% 2.5% In order to determine the payout in cash, the ﬁnal num- value and inputs used in the assessment of the fair NON-FINANCIAL Expected target achievement ber of virtual shares is multiplied by the end share price value as of 31 March 2024 were as follows: REPORT for internal target EBIT 100% 100% of the share of Novem Group S.A. (arithmetic mean of margin 3 the closing prices of the stock during the last 60 trading Valuation as of Tranche Tranche Tranche Fair value per virtual share €8.82 €8.85 days prior to the end of the performance period) plus 31 March 2024 2021 2022 2023 the sum of the dividends disbursed during the perfor- Performance 19 Jul 21 – 1 Apr 22 – 1 Apr 23 – GROUP mance period. The payout is capped at 200% of the period 31 Mar 25 31 Mar 26 31 Mar 27 MANAGEMENT 19 Commitments, contingencies and contractually deﬁned individual target amount. REPORT Start share pledges price Novem €16.46 €11.25 €9.06 4 Group S.A. The ﬁrst tranche of the Performance Share Plan was allocated to Management Board members of Novem Remaining The Company entered into an English Law governed duration of Group S.A. for ﬁnancial year 2021/22 and the number intercreditor agreement together with some of its 1.0 year 2.0 years 3.0 years performance CONSOLIDATED of conditionally granted virtual shares amounted to subsidiaries and several ﬁnancial institutions, with FINANCIAL period 40,826, resulting in a provision of €108 thousand as the Company as the original borrower of the facilities STATEMENTS Expected of 31 March 2024 (31 March 2023: €170 thousand). 41.3% 49.7% 43.1% agreement and an external bank as the original facil- annual volatility 5 ity agent and security agent. In connection with this Risk-free annual The second tranche was awarded for ﬁnancial year 3.4% 2.8% 2.5% agreement, the Company additionally entered into an interest rate 2022/23 with a total number of 60,384 conditionally account pledge agreement, a share pledge agreement Expected target ANNUAL granted virtual shares, corresponding to a provision of and a security assignment agreement in order to guar- ACCOUNTS achievement €254 thousand as of 31 March 2024 (31 March 2023: antee the underlying nominal amount of the facilities for internal 100% 100% 100% 6 target EBIT €140 thousand). agreement. margin Fair value per The third tranche is awarded for ﬁnancial year 2023/24 Contingent liabilities constitute off-balance-sheet €2.96 €5.27 €5.10 ADDITIONAL virtual share with a total number of 83,287 conditionally granted contingent liabilities recognised in the amount of the INFORMATION NOVEM ANNUAL REPORT 2023/24 132 CONTENTS valuation as of the reporting date. The Group possessed a €4,000 thousand credit line drawn in the amount of €17 thousand (31 March 2023: €17 thousand) as a guarantee facility by the Company. The probability of claims on this guarantee was assessed as low based on past experience. 1 Commitments regarding the rents not yet paid amounted to €75 thousand at the end of the ﬁnancial year (31 March 2023: €0). They related to the leasing TO OUR contract on oﬃce spaces. SHAREHOLDERS 2 20 Subsequent events NON-FINANCIAL There were no events or developments that could have REPORT materially affected the measurement and presentation 3 of the Company’s assets and liabilities as of 31 March 2024. GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 133 RESPONSIBILITY STATEMENT CONTENTS We, Markus Wittmann (Chief Executive Oﬃcer), Dr. Johannes Burtscher (Chief Financial Oﬃcer), Maria Eichinger (Manager Consolidation) and Mathias Rieger (Director Internal Audit), conﬁrm, to the best of our knowledge, that the annual accounts which have been prepared in accordance with the legal require- ments and generally accepted accounting principles 1 applicable in the Grand Duchy of Luxembourg, give a true and fair view of the assets, liabilities, ﬁnancial posi- tion and proﬁt and loss of Novem Group S.A. and that TO OUR the Group Management Report includes a fair review SHAREHOLDERS of the development and performance of the business 2 and the position of Novem Group S.A., together with a description of the principal risks and uncertainties that they face. NON-FINANCIAL REPORT Luxembourg, 17 June 2024 3 Novem Group S.A. Management Board GROUP MANAGEMENT REPORT Markus Wittmann Dr. Johannes Burtscher 4 Maria Eichinger Mathias Rieger CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 134 INDEPENDENT AUDITOR’S REPORT CONTENTS To the Shareholders of du Secteur Financier (the “CSSF”). Our responsibilities Valuation of Shares in aﬃliated undertakings and Novem Group S.A. under the EU Regulation N° 537/2014, the Law of 23 Loans to aﬃliated undertakings 19, rue Edmond Reuter July 2016 and ISAs as adopted for Luxembourg by the L - 5326 Contern CSSF are further described in the « Responsibilities of a) Why the matter was considered to be one of most Luxembourg “réviseur d’entreprises agréé” for the audit of the annual signiﬁcant in our audit of the annual accounts for the accounts » section of our report. We are also independ- year ended 31 March 2024 ent of the Company in accordance with the International 1 REPORT OF THE RÉVISEUR Code of Ethics for Professional Accountants, including Refer to note 2 Summary of signiﬁcant valuation and D’ENTREPRISES AGRÉÉ International Independence Standards, issued by the accounting policies and note 5 Financial assets of the International Ethics Standards Board for Accountants annual accounts. TO OUR (“IESBA Code”) as adopted for Luxembourg by the CSSF SHAREHOLDERS Report on the audit of the annual accounts together with the ethical requirements that are relevant Novem Group S.A. is the ultimate holding entity of a 2 to our audit of the annual accounts, and have fulﬁlled group of entities which are specialised in the supply our other ethical responsibilities under those ethical of trim parts and decorative functional elements of Opinion requirements. We believe that the audit evidence we vehicle interiors in the premium automotive sector. NON-FINANCIAL have obtained is suﬃcient and appropriate to provide REPORT We have audited the annual accounts of Novem Group a basis for our opinion. As a holding entity, the Company holds as at 31 March 3 S.A. (the “Company”), which comprise the balance sheet 2024, a direct investment in Novem Group GmbH and as at 31 March 2024, and the proﬁt and loss account for has granted to it an intercompany loan. As at 31 March Key audit matters the year then ended, and notes to the annual accounts, 2024, the Company’s direct investment amounts to GROUP including a summary of signiﬁcant accounting policies. €674,159 thousand, and is disclosed under Shares MANAGEMENT Key audit matters are those matters that, in our profes- in aﬃliated undertakings, whereas the intercompany REPORT In our opinion, the accompanying annual accounts sional judgment, were of most signiﬁcance in our audit loan amounts to €250,000 thousand and is disclosed 4 give a true and fair view of the ﬁnancial position of the of the annual accounts of the current period. These under Loans to aﬃliated undertakings, both amounts Company as at 31 March 2024, and of the results of its matters were addressed in the context of the audit of representing in aggregate 99% of the total assets. Both operations for the year then ended in accordance with the annual accounts as a whole, and in forming our the Shares in aﬃliated undertakings and the Loans to CONSOLIDATED Luxembourg legal and regulatory requirements relat- opinion thereon, and we do not provide a separate aﬃliated undertakings are recorded at their nominal FINANCIAL ing to the preparation and presentation of the annual opinion on these matters. value including any incidental costs thereto, if any, STATEMENTS accounts. value adjustments if the recoverable amount is durably 5 impaired. Basis for opinion At least annually, the Management Board of the ANNUAL Company evaluates the carrying value of the Shares ACCOUNTS We conducted our audit in accordance with the EU Reg- in aﬃliated undertakings and the Loans to aﬃliated 6 ulation N° 537/2014, the Law of 23 July 2016 on the undertakings. audit profession (the “Law of 23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted The evaluation of the carrying value of the Shares ADDITIONAL for Luxembourg by the Commission de Surveillance in aﬃliated undertakings and the Loans to aﬃliated INFORMATION NOVEM ANNUAL REPORT 2023/24 135 CONTENTS undertakings is considered a key audit matter due to cash ﬂow projections, including the growth rates materially inconsistent with the annual accounts or our their weight of the total assets. In addition, the mar- and the expected margins as well as the net debt knowledge obtained in the audit or otherwise appears to ket capitalisation of Novem has decreased from the as at 31 March 2024. be materially misstated. If, based on the work we have date of the stock listing, this being 19 July 2021, to • Verifying the mathematical accuracy of the DCF performed, we conclude that there is a material mis- the 31 March 2024, leading to an impairment trigger. model. statement of this other information, we are required to In order to assess the potential durable reduction in • Comparing the equity value of the Shares in aﬃliated report this fact. We have nothing to report in this regard. value, the Management Board prepared a valuation of undertakings determined by the Management Board 1 the Novem Group GmbH and its subsidiaries using a through the DCF model with the carrying amount of Responsibilities of the Management Board and Discounted Cash Flow (DCF) model. Certain aspects of the Shares in aﬃliated undertakings as recorded in Those Charged with Governance for the annual the DCF model require signiﬁcant judgement, such as the annual accounts as at 31 March 2024. TO OUR accounts the estimation of the Weighted Average Cost of Capital • Comparing the results from the valuation using SHAREHOLDERS (WACC), the estimated cash ﬂow projections including the DCF model under the income approach with 2 the growth rates and the expected margins. alternative valuation methods, such as the market The Management Board is responsible for the prepa- approach. ration and fair presentation of the annual accounts b) How the matter was addressed during the audit in accordance with Luxembourg legal and regulatory NON-FINANCIAL We also assessed the adequacy of the Company’s requirements relating to the preparation and presen- REPORT Our audit procedures in relation to the assessment of disclosures in respect of the accounting policies on tation of the annual accounts, and for such internal 3 the valuation of the Shares in aﬃliated undertakings and impairment as disclosed in Note 2 and Note 5 to the control as the Management Board determines is neces- the Loans to aﬃliated undertakings performed by Man- annual accounts. sary to enable the preparation of annual accounts that agement Board, consisted of but were not limited to: are free from material misstatement, whether due to GROUP fraud or error. MANAGEMENT Other information • Gaining an understanding of the Management REPORT Board’s process and controls related to the identiﬁ- The Management Board is responsible for presenting 4 cation of impairment indicators and the impairment The Management Board is responsible for the other the annual accounts in compliance with the require- test in relation to the Shares in aﬃliated undertak- information. The other information comprises the ments set out in the Delegated Regulation 2019/815 on ings and Loans to aﬃliated undertakings (ﬁnancial information stated in the annual report including the European Single Electronic Format (“ESEF Regulation”). CONSOLIDATED assets). management report and the Corporate Governance FINANCIAL • Assessing the appropriateness of the valuation Statement but does not include the annual accounts In preparing the annual accounts, the Management STATEMENTS methodology applied by the Management Board and our report of the “réviseur d’entreprises agréé” Board is responsible for assessing the Company’s 5 regarding the valuation of Shares in aﬃliated under- thereon. ability to continue as a going concern, disclosing, as takings and Loans to aﬃliated undertakings. applicable, matters related to going concern and using • Gaining an understanding of the Board of Manage- Our opinion on the annual accounts does not cover the the going concern basis of accounting unless the Man- ANNUAL ment’s process in relation to budgeting and recon- other information and we do not express any form of agement Board either intends to liquidate the Company ACCOUNTS ciling the budget used in the DCF model with the assurance conclusion thereon. or to cease operations, or has no realistic alternative 6 budget approved by the Supervisory Board. but to do so. • Auditing the key parameters of the DCF model In connection with our audit of the annual accounts, applied by the Management Board, such inputs con- our responsibility is to read the other information and, Those charged with governance are responsible for ADDITIONAL sisting among others of the WACC, the estimated in doing so, consider whether the other information is overseeing the Company’s ﬁnancial reporting process. INFORMATION NOVEM ANNUAL REPORT 2023/24 136 CONTENTS Responsibilities of the réviseur d’entreprises misrepresentations, or the override of internal We also provide those charged with governance with a agréé for the audit of the annual accounts control. statement that we have complied with relevant ethical • Obtain an understanding of internal control relevant requirements regarding independence, and to com- The objectives of our audit are to obtain reasonable to the audit in order to design audit procedures that municate with them all relationships and other mat- assurance about whether the annual accounts as a are appropriate in the circumstances, but not for the ters that may reasonably be thought to bear on our whole are free from material misstatement, whether purpose of expressing an opinion on the effective- independence, and where applicable, actions taken to due to fraud or error, and to issue a report of the “révi- ness of the Company’s internal control. eliminate threats or safeguards applied. 1 seur d’entreprises agréé” that includes our opinion. • Evaluate the appropriateness of accounting poli- Reasonable assurance is a high level of assurance, but cies used and the reasonableness of accounting From the matters communicated with those charged is not a guarantee that an audit conducted in accord- estimates and related disclosures made by the with governance, we determine those matters that TO OUR ance with the EU Regulation N° 537/2014, the Law of Management Board. were of most signiﬁcance in the audit of the annual SHAREHOLDERS 23 July 2016 and with ISAs as adopted for Luxembourg • Conclude on the appropriateness of the Manage- accounts of the current period and are therefore the key 2 by the CSSF will always detect a material misstatement ment Board’s use of the going concern basis of audit matters. We describe these matters in our report when it exists. Misstatements can arise from fraud or accounting and, based on the audit evidence unless law or regulation precludes public disclosure error and are considered material if, individually or in obtained, whether a material uncertainty exists about the matter. NON-FINANCIAL the aggregate, they could reasonably be expected to related to events or conditions that may cast sig- REPORT inﬂuence the economic decisions of users taken on niﬁcant doubt on the Company’s ability to continue 3 Report on other legal and regulatory the basis of these annual accounts. as a going concern. If we conclude that a material requirements uncertainty exists, we are required to draw attention Our responsibility is to assess whether the annual in our report of the “réviseur d’entreprises agréé” to GROUP accounts have been prepared in all material respects the related disclosures in the annual accounts or, We have been appointed as “réviseur d’entreprises MANAGEMENT with the requirements laid down in the ESEF Regulation. if such disclosures are inadequate, to modify our agréé” by the Shareholders on 24 August 2023 and the REPORT opinion. Our conclusions are based on the audit duration of our uninterrupted engagement, including 4 As part of an audit in accordance with the EU Regula- evidence obtained up to the date of our report of previous renewals and reappointments, is 2 years. tion N° 537/2014, the Law of 23 July 2016 and with the “réviseur d’entreprises agréé”. However, future ISAs as adopted for Luxembourg by the CSSF, we exer- events or conditions may cause the Company to The management report, which is included on page 48 CONSOLIDATED cise professional judgment and maintain professional cease to continue as a going concern. of the Group Management Report, itself included in the FINANCIAL skepticism throughout the audit. We also: • Evaluate the overall presentation, structure and Novem Annual Report, is consistent with the annual STATEMENTS content of the annual accounts, including the dis- accounts and has been prepared in accordance with 5 • Identify and assess the risks of material misstate- closures, and whether the annual accounts repre- applicable legal requirements. ment of the annual accounts, whether due to fraud sent the underlying transactions and events in a or error, design and perform audit procedures manner that achieves fair presentation. The Corporate Governance Statement is included in the ANNUAL responsive to those risks, and obtain audit evidence Group Management Report. The information required ACCOUNTS that is suﬃcient and appropriate to provide a basis We communicate with those charged with governance by Article 68ter paragraph (1) letters c) and d) of the law 6 for our opinion. The risk of not detecting a mate- regarding, among other matters, the planned scope of 19 December 2002 on the commercial and compa- rial misstatement resulting from fraud is higher and timing of the audit and signiﬁcant audit ﬁndings, nies register and on the accounting records and annual than for one resulting from error, as fraud may including any signiﬁcant deﬁciencies in internal control ADDITIONAL involve collusion, forgery, intentional omissions, that we identify during our audit. INFORMATION NOVEM ANNUAL REPORT 2023/24 137 CONTENTS accounts of undertakings as amended, is consistent Luxembourg, 17 June 2024 with the annual accounts and has been prepared in accordance with applicable legal requirements. KPMG Audit S.à r.l. Cabinet de révision agréé We conﬁrm that the audit opinion is consistent with the additional report to the audit committee or equivalent. Yves Thorn Partner 1 We conﬁrm that the prohibited non‑audit services referred to in the EU Regulation N° 537/2014 were not provided and that we remained independent of the TO OUR Company in conducting the audit. SHAREHOLDERS 2 We have checked the compliance of the annual accounts of the Company as at 31 March 2024 with relevant statutory requirements set out in the ESEF NON-FINANCIAL Regulation that are applicable to annual accounts. REPORT 3 For the Company it relates to: • Annual accounts prepared in a valid xHTML format; GROUP MANAGEMENT In our opinion, the annual accounts of Novem Group S.A. REPORT as at 31 March 2024, identiﬁed as Novem-2024-03- 4 31-en.zip, have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. CONSOLIDATED FINANCIAL Our audit report only refers to the annual accounts of STATEMENTS Novem Group S.A. as at 31 March 2024, identiﬁed as 5 Novem-2024-03-31-en.zip, prepared and presented in accordance with the requirements laid down in the ESEF Regulation, which is the only authoritative version. ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 138 Paper open pore 6 information Additional FINANCIAL CALENDAR CONTACT CONTENTS 14 August 2024 Q1 2024/25 Results Investor Relations [email protected] 22 August 2024 Annual General Meeting 2024 14 November 2024 HY 2024/25 Results IMPRINT 06 February 2025 Q3 2024/25 Results 1 28 May 2025 FY 2024/25 Preliminary Results TO OUR 26 June 2025 Annual Report 2024/25 SHAREHOLDERS Published by 2 All information is constantly updated and available. Novem Group S.A. Please visit the investor section on the Company website: 19, rue Edmond Reuter NON-FINANCIAL www.ir.novem.com 5326 Contern, Luxembourg REPORT www.novem.com 3 Concept and layout GROUP MANAGEMENT Novem Group REPORT 4 Date of publication CONSOLIDATED 27 June 2024 FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 140 GLOSSARY CONTENTS Adj. EBIT is deﬁned as EBIT as adjusted for certain Days payables outstanding (DPO) is deﬁned by divid- Free cash ﬂow is deﬁned as the sum of cash ﬂow from adjustments which management considers to be ing trade payables (as shown in the consolidated state- operating and investing activities. non-recurring in nature, as Novem believes such items ment of ﬁnancial position, but excluding tooling) by net are not reﬂective of the ongoing performance of the costs series incurred in the three months. GlobalData is an independent and exclusively automo- business. tive-focused global forecasting and market intelligence Days sales outstanding (DSO) is deﬁned by dividing service provider. Adj. EBIT margin is deﬁned as Adj. EBIT divided by trade payables (as shown in the consolidated state- 1 revenue. ment of ﬁnancial position, but excluding tooling) by rev- Gross ﬁnancial debt is deﬁned as the sum of liabilities enue generated from the sale of series trim elements to banks, hedging and lease liabilities. Adj. EBITDA is deﬁned as proﬁt for the year before in the last three months. TO OUR income tax result, ﬁnancial result and amortisation, LkSG stands for Lieferkettensorgfaltspﬂichtengesetz. SHAREHOLDERS depreciation and write-downs as adjusted for certain EBIT is deﬁned as proﬁt for the year before income tax 2 adjustments which management considers to be result and ﬁnancial result. Net ﬁnancial debt is deﬁned as gross ﬁnancial debt non-recurring in nature, as Novem believes such items less cash and cash equivalents. are not reﬂective of the ongoing performance of the EBITDA is deﬁned as proﬁt for the year before income NON-FINANCIAL business. tax result, ﬁnancial result and amortisation and Net leverage ratio is deﬁned as the ratio of net ﬁnancial REPORT depreciation. debt to Adj. EBITDA. 3 Adj. EBITDA margin is deﬁned as Adj. EBITDA divided by revenue. ECB stands for European Central Bank. OEM stands for Original Equipment Manufacturer. GROUP Articles of Association means the articles of associa- EOP stands for End of (series) production. Order intake is deﬁned as all offers for goods and ser- MANAGEMENT tion of the Company. vices processed within a certain period of time. REPORT FAAC stands for Financial assets measured at amor- 4 Capital expenditure is deﬁned as the sum of cash paid tised cost. Quality data includes, for example, key ﬁgures such for investments in property, plant and equipment and as scrap and rework rates as well as PPM (parts per cash paid for investments in intangible assets exclud- FAFVTPL stands for Financial assets measured at fair million). CONSOLIDATED ing currency translation effects. value through proﬁt or loss. FINANCIAL Shareholders’ Rights Law is the Luxembourg Law of STATEMENTS Companies’ Law is the Luxembourg Law of 10 August Fed stands for Federal Reserve System. 24 May 2011 on the exercise of certain rights of share- 5 2015 on commercial companies, as amended. holders in listed companies, as amended. FLAC stands for Financial liabilities measured at amor- Days inventory outstanding (DIO) is deﬁned by dividing tised cost. SOP stands for Start of (series) production. ANNUAL inventories (as shown in the consolidated statement ACCOUNTS of ﬁnancial position, but excluding tooling) by revenue FLFVTPL stands for Financial liabilities measured at Staﬃng level is deﬁned as the number of employees 6 generated from the sale of series trim elements in the fair value through proﬁt or loss. working at any one time. last three months. Fluctuation is deﬁned as the number of employees who Takeover Law is the Luxembourg Law on Takeovers ADDITIONAL left the Group per year in relation to the total workforce. of 19 May 2006. INFORMATION NOVEM ANNUAL REPORT 2023/24 141 CONTENTS Total operating performance is deﬁned as the sum of revenue and increase or decrease in ﬁnished goods. Total working capital is deﬁned as the sum of inven- tories, trade receivables and contract assets excluding expected losses less trade payables, tooling received advance payments received and other provisions 1 related to Tooling. Trade working capital is deﬁned as the sum of inven- TO OUR tories non-tooling and trade receivables related to SHAREHOLDERS non-tooling less trade payables related to non-tooling. 2 Transparency Directive is the Directive 2004 / 109 / EC, as amended. NON-FINANCIAL REPORT 3 GROUP MANAGEMENT REPORT 4 CONSOLIDATED FINANCIAL STATEMENTS 5 ANNUAL ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 142 DISCLAIMER CONTENTS Novem Group S.A. (the “Company”) has prepared this Annual Report solely for your information. It should not be treated as giving investment advice. Neither the Company, nor any of its directors, oﬃcers, employees, direct or indirect shareholders and advisors nor any other person shall have any liability whatsoever for any direct or indirect losses arising from any use of 1 this Annual Report. While the Company has taken all reasonable care to ensure that the facts stated in this Annual Report are accurate and that the opinions con- TO OUR tained in it are fair and reasonable, this Annual Report SHAREHOLDERS is selective in nature. Any opinions expressed in this 2 Annual Report are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information NON-FINANCIAL contained in this Annual Report. Where this Annual REPORT Report quotes any information or statistics from 3 any external source, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate. This Annual Report con- GROUP tains forward-looking statements, which involve risks, MANAGEMENT uncertainties and assumptions that could cause actual REPORT results, performance or events to differ materially from 4 those described in, or expressed or implied by, such statements. These statements reﬂect the Company’s current knowledge and its expectations and projections CONSOLIDATED about future events and may be identiﬁed by the con- FINANCIAL text of such statements or words such as “anticipate”, STATEMENTS “believe”, “estimate”, “expect”, “intend”, “plan”, “project” 5 and “target”. No obligation is assumed to update any such statement. Numbers were rounded to one deci- mal. Due to rounding, the numbers presented may not ANNUAL add up precisely to the totals provided. ACCOUNTS 6 ADDITIONAL INFORMATION NOVEM ANNUAL REPORT 2023/24 143 NOVEM ANNUAL REPORT 2023/24

AI Terminal

More from Novem Group S.A.

Talk to a Data Expert