Annual Report (ESEF) • Apr 15, 2024
Preview not available for this file type.
Download Source File549300W82KU6CIGQP6892023-01-012023-12-31iso4217:EUR549300W82KU6CIGQP6892022-01-012022-12-31iso4217:EURxbrli:shares549300W82KU6CIGQP6892023-12-31xbrli:shares549300W82KU6CIGQP6892022-12-31549300W82KU6CIGQP6892021-12-31ifrs-full:IssuedCapitalMember549300W82KU6CIGQP6892021-12-31ifrs-full:OtherReservesMember549300W82KU6CIGQP6892021-12-31ifrs-full:RetainedEarningsMember549300W82KU6CIGQP6892021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300W82KU6CIGQP6892021-12-31ifrs-full:NoncontrollingInterestsMember549300W82KU6CIGQP6892021-12-31549300W82KU6CIGQP6892022-01-012022-12-31ifrs-full:RetainedEarningsMember549300W82KU6CIGQP6892022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember549300W82KU6CIGQP6892022-01-012022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300W82KU6CIGQP6892022-01-012022-12-31ifrs-full:OtherReservesMember549300W82KU6CIGQP6892022-01-012022-12-31ifrs-full:IssuedCapitalMember549300W82KU6CIGQP6892022-12-31ifrs-full:IssuedCapitalMember549300W82KU6CIGQP6892022-12-31ifrs-full:OtherReservesMember549300W82KU6CIGQP6892022-12-31ifrs-full:RetainedEarningsMember549300W82KU6CIGQP6892022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300W82KU6CIGQP6892022-12-31ifrs-full:NoncontrollingInterestsMember549300W82KU6CIGQP6892023-01-012023-12-31ifrs-full:RetainedEarningsMember549300W82KU6CIGQP6892023-01-012023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300W82KU6CIGQP6892023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember549300W82KU6CIGQP6892023-01-012023-12-31ifrs-full:OtherReservesMember549300W82KU6CIGQP6892023-01-012023-12-31ifrs-full:IssuedCapitalMember549300W82KU6CIGQP6892023-12-31ifrs-full:IssuedCapitalMember549300W82KU6CIGQP6892023-12-31ifrs-full:OtherReservesMember549300W82KU6CIGQP6892023-12-31ifrs-full:RetainedEarningsMember549300W82KU6CIGQP6892023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300W82KU6CIGQP6892023-12-31ifrs-full:NoncontrollingInterestsMember 2023 Annual and Sustainability Report Highlights 2023 ................................................................................................1 Cavotec in brief .................................................................................................2 CEO’s message ................................................................................................4 Market drivers ....................................................................................................6 Our business model ........................................................................................8 Strategic priorities .............................................................................................9 Financial performance ................................................................................. 12 Offering and introduction to the segments ............................................. 14 Segment Ports & Maritime .......................................................................... 16 Segment Industry .......................................................................................... 20 Sustainability report ...................................................................................... 24 Remuneration report ..................................................................................... 38 Corporate governance report ..................................................................... 46 Board of Directors ............................................................................... 52 Cavotec Management Team ............................................................. 54 Consolidated financial statements ............................................................ 56 Risk management ......................................................................................... 82 Statutory financial statements .................................................................... 92 Financial definitions ................................................................................... 101 The share ...................................................................................................... 102 Shareholder information ........................................................................... 104 Cavotec’s history in brief .......................................................................... 105 HIGHLIGHTS 2023 | Improved financial performance and key business wins Through clear strategic priorities, Cavotec has improved its financial position and performance during 2023. Cavotec has also won several important contracts with both new and existing customers. Key events in 2023 EUR 000s 2023 2022 2021 2020 • Order valued at EUR 6.65 million Revenue 180,734 147,849 115,794 115,342 from one of the world’s largest Order backlog 123,562 147,207 98,893 57,773 shipping companies for shore EBIT 7,227 (4,506) (747) 37 power systems EBIT margin 4.0% -3.0% -0.6% 0.0% • Long-term service agreement Net profit/(loss) for the period 180 (3,170) (1,211) (2,973) signed with COSCO Group Basic and diluted earnings per share, EUR 0.002 (0.034) (0.013) (0.031) • Order signed for mooring units Operating cash flow 1,933 (5,485) 8,654 15,501 with North American seaway Net debt (18,638) (30,328) (19,630) (15,264) operator worth EUR 6.4 million Leverage ratio 1.29x 12.5x 3.20x 0.98x • Directed new issue of shares of SEK 165 million • Joakim Wahlquist appointed new CFO Revenue, EUR million EBIT, EUR million 200 8 180 6 Key events after the end of 2023 160 140 4 • Two-year service agreement 120 2 signed with APM Terminals at Port 100 0 80 of Tanger 60 (2) 40 • Shore power retrofit order signed (4) 20 with major European shipping line 0 (6) worth USD 5.7 million 2020 2021 2022 2023 2020 2021 2022 2023 • Three-year service agreement signed for shore power systems in a large North American port Operating cash flow, EUR million 20 • The world’s first ultra-fast 3 MW 15 charging system for battery- powered heavy-duty vehicles in 10 service at a site in Australia 5 0 (5) (10) 2020 2021 2022 2023 Annual and Sustainability Report 2023 | Cavotec 1 | CAVOTEC IN BRIEF Cavotec in brief Cavotec is a leading cleantech company that designs and delivers connection and electrification solutions to enable the decarbonisation of ports and industrial applications. Backed by close to 50 years of What 180.7 experience, our systems ensure safe, We connect the future. Revenue, EUR million efficient and sustainable operations for a wide variety of customers and Why applications worldwide. Our offering We want to contribute to a world that includes automated mooring, shore power, is cleaner, safer and more efficient 7.2 motorised reels, crane electrification and by providing innovative connection EBIT, EUR million charging solutions. solutions for ships, ports, and industrial equipment today. We enable our customers to optimise 123.6 productivity, minimise risk to personnel How Order backlog, EUR million and equipment, and reduce environmental We thrive by shaping future impact. Our unique technologies and expectations in the areas in which engineering expertise combined with a we are active. Our credibility derives 80+ worldwide service offering maximise our from our expertise and dedication Number of countries customers’ profitability and sustainability. to innovation and world-class where Cavotec’s systems In this way, we help their businesses operations. Our success rests on our are installed grow and accelerate progress towards a core values: Integrity, Accountability, sustainable future. Performance, and Teamwork. 664 Employees 2 Cavotec | Annual and Sustainability Report 2023 What Why How AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec33 | CEO’S MESSAGE Creating a solid base for profitable growth Our clear strategic priorities and change program have proven effective and our financial results and position have improved significantly in 2023. We have also made key business wins with important contracts globally. Although the macroeconomic situation remains uncertain, there is strong demand for our electrification solutions driven by national regulations and the need to reduce emissions. The growth of 22.2% in 2023 to EUR world’s emissions of greenhouse gases, 180.7 million and the turnaround of to reduce noise in ports and cruise EBIT to EUR 7.2 million from -4.5 million terminals and to improve customers’ clearly show that we are on the right operational efficiency. track with the transformation of Cavotec. We work with clear strategic priorities In 2023, we announced a few in six areas with comprehensive customers wins that prove our leading change programs. We turn over position in, among other things, basically all stones in the group and automatic vacuum mooring and shore improve routines and processes. The power. We signed a contract worth performance in 2023 show that we have EUR 6.65 million with one of the come a long way but we are far from world’s largest shipping lines to supply done. shore power equipment to newbuild container ships. At the end of the One of the externally more visible year, we announced an order with an efforts in 2023 is the review of the existing North American customer for order backlog with the goal of securing an additional six vacuum mooring units profitable growth. The decline of 16.1% to be installed at locks in a seaway to EUR 123.6 million reflects both a system. The order is valued to EUR normalisation of the order backlog and 6.5 million. We kicked off 2024 by an extraordinary high order intake in announcing a contract worth USD 5.7 2022. We strongly believe the review million to retrofit vessels with shore is a key strategic move and a driver power solutions for a major European for continued improved profitability shipping line. going forward. Some other driving factors for the improved profitability are Attractive service offering the increased volumes along with the Yet another of our changes in 2023 determined work to increase production includes the decision to increase the efficiency, enhance our sales processes focus on our service offering, which has and sharpen our service offering. In already paid off. We have announced 2023, the Ports & Maritime segment a long-term service agreement with was the most successful with these new COSCO Group, one of the world’s ways of working, but we expect also the largest shipping companies. Based Industry segment to make significant on the new agreement, we provide progress in this area going forward. maintenance for more than 60 ocean- “ We ended 2023 with high going vessels equipped with our shore business activity and Strong interest in our solutions power systems. In 2024, we have so important contracts that We meet a steady stream of customer far announced a two-year service give us a good basis for profitable growth.” inquiries and strong interest in our agreement with APM Terminals at Port electrification solutions and service of Tanger. We will be servicing our 45 David Pagels, offering. The demand is driven by the vacuum mooring master units and 31 CEO increasingly urgent need to reduce the power units installed at the port. In 4 Cavotec | Annual and Sustainability Report 2023 CEO’S MESSAGE | this way, the customer’s operational minutes. This technological advance we have and the commitment that I efficiency is significantly improved paves the way for the electrification see everywhere in Cavotec. Although and the performance of the products of heavy-duty vehicles and greatly the macroeconomic situation remains is optimised. A special contract is reduced emissions in critical industries uncertain, we meet a continued strong the announced three-year service worldwide. interest from both existing and new agreement signed for shore power customers for our leading electrification systems in a large North American port. Strengthened financial position solutions. I am confident that Cavotec Here we will assist in the plug in and It is gratifying to see how our improved will continue to be a key player in plug out procedures for vessels which profitability and financial management the transition to a more sustainable, will contribute to improved operational have led to a significantly improved emission-free world also in the coming efficiency in the port. cash flow and strengthened financial years. position. Operating cash flow increased Another strategically important area for to EUR 1.9 million from EUR -5.5 million us that we will increase our focus on and net debt decreased from EUR 30.3 in 2024 is product development since million to EUR 18.6 during 2023. Our we are determined to continue being a strengthened financial position means world-leading player in electrification. A that our financing costs will be lower good example of our leadership is our going forward. ultra-fast 3MW charger – the world’s David Pagels first and most powerful – which is in full Outlook CEO operation at a mining site in Australia. We ended 2023 with high business Developed by the Industry segment activity and important contracts that during 2023, it is now included in a give us a good basis for profitable solution that charges a prototype 240- growth. Perhaps the most important ton electric haul truck in just 30 thing for us in 2024 is the momentum Annual and Sustainability Report 2023 | Cavotec 5 | MARKET DRIVERS Global market trends create new opportunities for us We have gained deep insights into our market and its driving forces due to our close to 50 years of experience and long-term customer relationships. On a day-to-day basis, this is about being able to understand, anticipate and adapt to the changing needs and behaviours of our market. This in turn enables us to deepen existing customer relationships, win new customers and continue to strengthen our market position. Climate Electrification Noise pollution The climate is the most important issue A critical part of efforts to fullfil the Awareness is increasing globally of our time. In order to reach the goals Paris Agreement is electrification and about problems associated with noise of the Paris Agreement, it is required the transition to fossil-free energy. pollution both on land and in the that all industries and businesses The electrification of processes that seas. Noise pollution affects many contribute by reducing their emissions. have until now been performed with people on a daily basis and can The shipping sector accounted for fossil fuels is ongoing throughout cause health problems such as high 2.89% of global greenhouse gas many sectors, not least in shipping blood pressure, heart disease, and emissions in 2018 according to the and mining. Electrification not only stress. Today we also know that noise International Maritime Organization. contributes to the decarbonisation, it pollution can affect animals on land When we look at the mining sector, it can also generate substantial energy and in the seas. is responsible for between 4 and 7% of savings due to greater efficiency and the world’s greenhouse gas emissions enhance air quality. For many sectors, it is important to according to an article published by reduce noise in the workplace to McKinsey & Co in 2020. The electrification of vessels, cranes improve the health of employees and other industrial equipment and increase attractiveness as an The urgency of reducing carbon are central parts of Cavotec’s employer. Here, Cavotec contributes emissions is increasingly a priority offering. Shipping companies and through its products and solutions for a growing number of industries, shipyards, for example, are becoming that improve the sound environments including the shipping and mining increasingly interested in the shore in ports and mines, for example. sectors. This means that interest in power solutions that enable ships to Cavotec’s products and services switch off the diesel generators increases because they reduce at berth. customers´ carbon footprint and help them contribute to reaching the Paris Agreement. 6 Cavotec | Annual and Sustainability Report 2023 MARKET DRIVERS | Safety Global trade Regulation Occupational injuries and work- Global trade means that many In many parts of the world, demands related ill health are high on the different raw materials and products on the industry to reduce its negative sustainability agenda of many are transported over great distances climate and environmental impact companies today. Many companies in the world. About 90% of global are increasing. Requirements are have zero visions when it comes to trade is today seaborne according being made by international bodies occupational injuries and invest in to the International Maritime such as the International Maritime equipment and processes that reduce Organization. Efficient and well- Organization and supranational risks to employees. performing value chains are central authorities such as the EU. Demands to the functioning of global trading are also increasing from local For Cavotec, safe products and systems. authorities that want to lower diesel solutions that improve the workplace emissions and noise levels in and environment have always been an End-users of Cavotec’s solutions are around port areas, for example. important driving force and key central to the efficient functioning Stakeholders such as investors and competitive advantage. By automating of global trade and they require lenders are also pushing companies previously manual processes, such as constant service support to maintain to become more sustainable. mooring, the risk of injury to sailors efficiency and delivery reliability. and dock workers is significantly Cavotec is therefore a core part of Increased regulations drive demand reduced. its customers´ value chains, which is for Cavotec’s products and services. an important reason for the long and For Cavotec, this creates increased close customer relationships. opportunities to reach new customers and strengthen its market position in sectors that are critical for industry and society. Annual and Sustainability Report 2023 | Cavotec 7 | OUR BUSINESS MODEL We target the global need to decarbonise Worldwide, the need to reduce greenhouse gas emissions grow. With our solutions and services, emissions in port, mines and other industrial sites are reduced while workplaces become safer. Key resources Our value proposition Customers Skilled employees We provide safe and efficient Ports and port operators electrification solutions and Global reach Shipbuilder and shipping services that decarbonise ports, companies 49 years of experience and vessels and heavy-duty vehicles. innovation Mining operators Manufactures of mining machinery and mobile cranes With close to 50 years of experience Within Ports & Maritime, a significant purchase maintenance service and spare and innovation, we have established proportion of sales are large projects such parts directly from us. ourselves as a preferred supplier and as electrically powered vacuum mooring service provider to leading companies systems and motorised reels for container Several of our products represent a small in above all the marine and mining cranes. Sales of reels take place through value of the final product, but they are industries. By enabling the electrification OEMs that install Cavotec’s products critical components of the operation. of ships, port equipment, and mining in port cranes, for example. The end Downtime can create substantial cost, machinery, we support our customers to customers, typically ports and shipping so customers and end customers are reduce greenhouse gas emissions and companies, provide OEMs with product meticulous in their specifications, and also noise pollution. The need to reduce and system specifications. value service excellence. the environmental impact is driven from several different stakeholders, including For Industry, mining machinery OEMs Global supply organisation supranational bodies and local authorities. account for the majority of revenue. Sales Assembly of our products takes place in Our solutions also contribute to increasing mainly comprise of critical components in plants, often located in the same region the safety of professional groups such as larger volumes. as the customers. Through our service sailors, dock workers and miners. organization and its local presence, we are Critical solutions for our customers geographically close to our customers. Customers in critical infrastructure Our business is characterised by close, We provide our solutions through our two long-term customer relationships. Our most important resource is our over business segments: Ports & Maritime and Because part of our sales are to OEMs, it 600 employees worldwide and their Industry. Our services organisation provide is important that we also maintain close collective experience. Together with our maintenance, controls, spare parts and relationships with the end customers, customers and partners, we constantly repairs to extend equipment lifespan. since they define the specifications. The develop our offering and create new end customers may also be those who innovative solutions. 8 Cavotec | Annual and Sustainability Report 2023 STRATEGIC PRIORITIES | Clear strategic priorities for profitable growth Our overall goal is profitable growth. Cavotec is in a transformation phase in which clear strategic priorities are being applied to create the necessary conditions to achieve profitable growth. The implementation of these strategic priorities began in 2021 and we have made significant progress in our transformation journey. Our strategic priorities • Customers and go-to-market Comprehensive Foundation for • Operational excellence • Cost control change programs value creation • Culture and values • Innovation • People To reach our overall goal, we must customers’ customers who, through their competitive suppliers, while increasing our execute on each one of our strategic specifications, ensure that our leading overall capacity. priorities because they are interdependent. products become part of their orders. We only have satisfied customers if Cost control we have motivated employees and Among the changes we have implemented Cost control does not only relate to efficient processes. We can only achieve are better processes for pricing and monitoring costs. It is a way of thinking that operational excellence if we have good clear responsibilities for following up on encompasses our ways of working and cost control. Without innovation as a customer projects. our supplier and customer relationships. It behaviour, we cannot change processes is about what resources we should have, and constantly improve our offer. Our Operational excellence when and where they should be applied. culture and values must embrace change We must continuously improve and the will to work towards our overall effectiveness and efficiency throughout To improve cost control throughout the goal of profitable growth. the organisation and value chain. This is organization, we have introduced cost done by smart use of new technologies, optimisation and sourcing cost reduction Customer focus platforms and capabilities that drive programs along with the renegotiation of With a strong customer focus, we strive productivity in combination with new contracts during 2023. to always create value not only for us and routines and processes that improve our our customers, but also for our customers’ ways of working. Culture and values customers. In this way, we strengthen and Our success rests on culture and ensure long-term and close customer An example of operational excellence is core values. Cavotec’s culture must relationships. With a large installed base our new assembly facility in India which will be characterised by openness and a worldwide, we have significant potential service the significant local Indian market. common desire to reach a shared goal, for upselling, not least of our services With this new unit, we are leveraging while working as a unified company. Our offering. At the same time, we have India’s robust manufacturing capabilities core values of integrity, accountability, dialogues with new customers and the and cost-effective resources including performance and teamwork lay the Annual and Sustainability Report 2023 | Cavotec 9 | STRATEGIC PRIORITIES Financial targets Adopted by the Board of Directors in February 2020. Sales growth To achieve annual organic revenue growth of at least 5% from 2020, in +5% addition to possible acquisitions. Outcome 2020 2021 2022 2023 0.0% +0.4% +27.7% +22.2% EBIT margin +10% To reach an annual adjusted EBIT margin of more than 10% within two years and more than 12% within five years. Outcome 2020 2021 2022 2023 0.0% -0.6% -3.0% 4.0% Dividend policy The target is to distribute dividends of approximately 30-50% of net 30-50% profits over a business cycle. Any dividend proposal will be based on financial position, investment needs, acquisitions and liquidity position. Outcome No dividend has been paid for the years 2020-2022. The Board of Directors proposes to the Annual General Meeting 2024 that no dividend be paid for the 2023 financial year. foundation for how we act towards each are to succeed, we must all be innovative, motivating environment is clearly defined other and the world around us. dare to question existing routines and be roles and responsibilities linked to open to new ideas and ways of working. measurable goals and follow-up, as well Innovation as constant learning that develops and Innovation is about solving our customers People stimulates us. future needs and challenges. Through our Our employees are Cavotec’s most technical leadership, we create competitive important asset and motivated employees advantages and strengthen our position are a prerequisite for us to succeed in both with existing and potential customers. creating profitable growth. With a strong For Cavotec, innovation also has a broader employer brand, we create the conditions meaning and it is about having a mindset to retain, develop and recruit the industry’s that characterises everything we do. If we best talents. One step in creating a 10 Cavotec | Annual and Sustainability Report 2023 AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec1111 | FINANCIAL PERFORMANCE Steady financial performance 2023 Cavotec has steadily improved its financial performance and position during 2023. Revenue and order backlog 69.8 million (53.0). In Europe and Middle million (47.8) which constitutes 26.5% Revenue increased 22.2% to EUR East revenue increased 7.0% to EUR 88.0 (32.3%) of revenue. Operating expenses 180.7 million (147.8) where currency million (82.2). was unchanged from 2022 and amounted effects had a negative impact of -3.0%. to EUR 19.3 million (19.3), which The strong growth is mainly driven The order backlog decreased -16.1% constitutes 10.7% (13.0%) of revenue. by deliveries in the Ports & Maritime to EUR 123.6 million (147.2) as a segment related to shore power consequence of the strategic focus Gross operating result solutions on container vessels. Most of on profitable growth. This approach, Gross operating result increased 783% the orders for shore power solutions for introduced in 2023, resulted in a to EUR 14.4 million (1.6) and constitutes new-built container vessels were signed normalisation of the order backlog while 8.0% (1.1%) of revenue. in 2022 and follow ship building activity there is a continuous steady stream of running also into 2024. Demand for reels customer inquiries and strong interest in Depreciation and amortisation in the Industry segment and the services Cavotec’s electrification solutions and Depreciation and amortisation including operations also contributed to the overall service offering. depreciation of right-of-use of leased growth. asset and impairment losses increased Costs and operating expenses 16.9% to EUR 7.2 (6.1) million. In the regions, growth was especially Cost of materials increased 25.1% to strong in North America increasing 81.6% EUR 101.2 million (80.9) and constitutes EBIT (operating result) to EUR 23.0 million (12.7), and in Asia 56.0% (54.7%) of revenue. Employee EBIT improved to EUR 7.2 million (-4.5) Pacific where revenue grew 31.8% to EUR benefit costs increased 0.2% to EUR 47.9 and the EBIT margin increased 7.0 Revenue EUR million Net result and earnings per share 60 3 0.04 0.02 50 1 0 40 (1) (0.02) 30 (3) (0.04) 20 (5) (0.06) 10 (7) (0.08) 0 (9) (0.10) 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Net result, EUR million Earnings per share, EUR • • EBIT and EBIT margin Operating cash flow, EUR million 5 14 6 12 4 4 10 3 8 2 6 2 4 0 1 2 (2) 0 0 -2 (4) (1) -4 (2) -6 (6) 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 EBIT, EUR million EBIT margin, % • • 12 Cavotec | Annual and Sustainability Report 2023 FINANCIAL PERFORMANCE | percentage points to 4.0% (-3.0%). (20.9%) of earnings before tax. Tax paid million (8.2). Investing activities was 2022 The EBIT improvement is mainly a was EUR 0.5 million (6.2) million, which impacted by the divestment of the airport consequence of increased volumes as equates to 23.7% (22.3%) of earnings division. well as the successful work in the Ports & before taxes. Maritime segment to focus on profitable Financial position growth in the order backlog. Profit for the year and earnings per Net debt decreased to EUR 18.6 million share from EUR 30.3 million at 31 December Financial income Profit for the year increased to EUR 0.2 2022. The leverage ratio (measured as Interest income amounted to EUR million (-14.7). Earnings per share, basic debt-to-equity) improved in the quarter 0.018 million (0.108). Interest expenses and diluted, improved to EUR 0.002 to 1.29x from 12.5 during the year. The increased to EUR 3.5 million (1.4) (-0.156). equity/assets ratio increased from 26.2% impacted by higher interest rates. at 31 December 2022 to 36.0% at the Cash flow end of 2023. Cash and cash equivalents Result before income tax Cash flow before changes in working increased to EUR 15.1 million (9.6). The result before income tax improved to capital improved to EUR 10.4 million EUR 3.8 million (0.3). (5.8). Working capital increased with EUR Employees 8.5 million (-0.03). Operating cash flow At the end of the year, Cavotec had 664 Taxes increased to EUR 1.9 million (-5.5) due (640) full-time equivalent employees. Income taxes amounted to EUR 3.6 to improved profitability during the year. million (2.9). which represents 26.4% Investing activities amounted to EUR -1.5 Net debt, EUR million 30,000 25,000 20,000 15,000 10,000 5,000 0 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Leverage ratio, times 14 12 10 8 6 4 2 0 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Annual and Sustainability Report 2023 | Cavotec 13 | OFFERING AND INTRODUCTION TO THE SEGMENTS An attractive offering in electrification With our extensive experience and comprehensive range of innovative technologies we help customers to connect and electrify port operations and other critical industrial applications. Our offering ranges from turnkey solutions and systems integration to volume products. With our services offering, we help customers to extend the lifecycle of A leading cleantech offering our systems and reduce operating costs. Our services organization offer support around the world and around the clock. Ports & Maritime Industry Crane electrification and cranes Crane electrification Cranes We power cranes with a wide range of Shore power Mining and tunnelling equipment systems such as high-speed motorised Automated mooring Industrial applications cable reels for fiber optics, liquids or Charging solutions electricity. The offering also includes cable protection and power connection systems. Our systems have a proven track-record in the harshest of environments and under Services extreme mechanical stress. Our crane Service agreements solutions are used in ports and terminals, Inspections and repairs extraction applications, lifting, and material Spare parts handling. Refurbishment Training Shore power We provide a comprehensive range of shore power connection and charging solutions for ports, conventional ships, and e-vessels. Shore power is the only solution that cut emissions at berth to zero. Shore power solutions enable the connection of ships in port to onshore 14 Cavotec | Annual and Sustainability Report OFFERING AND INTRODUCTION TO THE SEGMENTS | Our two segments We report two segments: Ports & Maritime and Industry. Services activities are reported in the 63% 37% 78% 22% respective segment in which they are of total revenue of total EBITDA carried out. Ports & Maritime Industry power supply, allowing ships’ diesel Mining and tunnelling equipment Charging solutions generators to be switched off. Our mining and tunnelling systems Our connection solutions optimise the enable the connection, electrification charging of a variety of mobile equipment Automated mooring and automation of mobile mining and such as electric and hybrid vehicles, ® Our MoorMaster vacuum automated tunnelling equipment. These include trucks, AGVs and ships. We provide mooring system replaces conventional Human Operator Interface systems, manual and automatic connection mooring lines with automated vacuum motorised cables and hose reels, spring systems that withstand challenging port pads that moor and release vessels in reels, junction boxes, power connectors environments and ensure operational seconds at the push of a button. With and industrial controllers such as chairs safety. more than 1.3 million successful moorings and joysticks. completed since its introduction in the late Our Megawatt Charging System (MCS) 90s, MoorMaster is the world’s only widely Industrial applications provides up to 4.5 MW charging power used automated mooring technology. It is We provide solutions and products with a single MCS connector. The system in use with a wide variety of vessels and for a wide variety of processing and significantly reduces charging time and applications, including 400 metre-long transportation applications such as maximises uptime compared to existing container ships and bulk carriers. Mooring automotive, power plants, steel and combined charging systems. MCS can sequences takes less than a minute and aluminium, wind and solar energy. be used to charge all kinds of heavy- the release phase is even quicker. The Cavotec has extensive experience of duty vehicles, such as agriculture and system reduces emissions during the providing customised solutions for the construction vehicles, large mining trucks mooring process by more than 90% and safe and efficient transmission of energy, and e-vessels. enables vessel overhang. MoorMaster’s signals and data, as well as liquid and advanced control system minimises vessel gaseous media. motion along the berth, increasing the efficiency of loading and unloading. Annual and Sustainability Report | Cavotec 15 Our segments | SEGMENT PORTS & MARITIME We significantly improve the environment for ports worldwide Our Ports & Maritime segment provides world-leading solutions for ports, ships and other marine applications. With our unique systems for automated mooring, shore power, crane electrification, and connection and charging systems, we significantly improve the environment in ports and terminals worldwide. Our systems are in use all over the world one of the world’s largest shipping lines and we provide services to customers to supply shore power equipment for new- around the clock. Customers include build container ships. The total value of ship owners and operators, ports and the announced order is EUR 6.65 million, terminals, port equipment manufacturers, with deliveries running from late 2023 to shipyards, and major contractors. Among early 2025. The order is for our PowerFit our customers are ABB, DP World, and a units, which are complete containerised number of ports across the world including solutions for the high-voltage connection Hong Kong, Los Angeles and Shanghai. of vessels to shoreside electricity. The PowerFit units enable dramatic reductions Our competitive advantages of local air and noise pollution at ports, Our main competitive advantages are our minimising the vessels’ environmental high quality, technical ability and broad impact. The contract further strengthens service offering. Our customers never our leading position in the decarbonisation compromise on safety, which is often a of the maritime industry. reason for them to choose Cavotec as the preferred supplier. We also announced a long-term service agreement with COSCO Group, one of Key business progress in 2023 the world’s largest shipping companies. We announced a repeat order, signed with We will provide preventive maintenance “ Our focus is to continue improving the environment in the world’s ports while also working on our internal efficiency.” Patrick Mares, President, Ports & Maritime 16 Cavotec | Annual and Sustainability Report 2023 SEGMENT PORTS & MARITIME | AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec1717 | SEGMENT PORTS & MARITIME for more than 60 ocean-going vessels, effects had a negative impact of -2.7%. equipped with our shore power systems. The strong growth was mainly driven The agreement strengthens Cavotec’s by deliveries of shore power solutions presence in Asia. for new-built container vessels as well as cruise terminals. Most of the orders Sales by At the end of the year, we announced for shore power solutions for new-built geography an order for mooring units signed with container vessels were signed in 2022 MEUR a North American seaway operator. and follow ship building activitity running The order is worth USD 5.7 million and also into 2024. The development was further improves our position in the North driven by growth of 111.6% in North American market. America to EUR 18.2 million (8.6) and in Asia Pacific of 30.0% to EUR 50.7 million SEGMENT PORTS & MARITIME Key events after the end of 2023 (39.0). Revenue in Europe and Middle Asia Pacific, 50.7 EUR million In the first quarter of 2024, we announced East grew 12.6% to EUR 45.7 million Europe and Middle East, 45.7 EUR million key business wins such as a two-year (40.6). North America, 18.2 EUR million service agreement with APM Terminals MedPort Tangier, a shore power retrofit The order backlog decreased -14.6% to order with a major European shipping EUR 99.8 million (116.9). line worth USD 5.7 million, and a three- year service agreement for shore power EBITDA improved significantly to EUR systems in a large North American port. 11.2 million (-2.4) and the EBITDA margin increased 12.5 percentage points to Performance in 2023 9.8% (-2.7%) thanks to the focus on the Revenue increased 29.9% to EUR 114.7 strategic priorities and increased volumes million (88.3). Currency exchange during the year. 18 Cavotec | Annual and Sustainability Report 2023 CASE STUDIES SEGMENT PORTS & MARITIME | MoorMaster automated mooring expands capacity at busy Medport Tangier APM Terminals MedPort Tangier in reducing emissions, and enabling faster Morocco is one of the busiest container vessel turnarounds. It is estimated that terminals in Africa. Recently, the port the MoorMaster units will reduce ship wanted to simultaneously expand capacity emissions during berthing in MedPort to better service increasing traffic volumes Tangier by more than 90% compared to and reduce emissions and noise at the conventional mooring due to reduced use terminal. The port operator chose to of tugs and ship engines. ® install Cavotec’s MoorMaster automated vacuum mooring system and increase The units will also create major its quay length from 1,200 to 2,000 productivity gains at the busy Moroccan metres. By using all-electric or hybrid terminal. Once vessels are moored, terminal equipment, automated mooring the MoorMaster units’ active hydraulics key to reach those targets sooner rather technology and other systems, the port significantly reduce vessel motion, than later. MoorMaster provides that has successfully expanded its capacity thereby positively impacting terminal efficiency by helping MedPort Tangier to and improved the environment at the port crane moves per hour. As a result of both expand its capacity and to reach its in terms of reduced emissions and noise. improved efficiency, average vessel call environmental goals. We are very proud times are expected to be reduced by an to support the port in their transformation Cavotec is supplying the port with average of two hours in addition to the into a modern transshipment hub in the MoorMaster units installed all along the saving of one hour due to faster mooring Mediterranean”, says Vikesh Dhanpat, 800 metre extension, the last of which are and release times. Global Product Manager at Cavotec. due to enter service at the beginning of 2024. The remotely controlled MoorMaster “As we see the maritime industry target units allow vessels to moor in seconds, ambitious sustainability goals and move ensuring better safety, significantly towards cleaner future, efficiency is the Cavotec’s MoorMaster and shore power enter service in Stockholm Sweden’s first MoorMaster NxG vacuum which recently won the Ferry Shipping mooring system officially entered service Summit’s Ro/Pax of the Year award, and in September 2023, paving the way that operates the Kapellskär – Långnäs for significant safety, operational and – Naantali (Finland) route. The system sustainability gains. The system, at Port moors and releases the vessel in less of Kapellskär, part of Ports of Stockholm, than 30 and 15 seconds, respectively. is now being used with Finnlines’ new- build Ro/Pax passenger and freight “The vacuum technology improves vessel, Finnsirius. sustainability by providing a safer working environment and reduced MoorMaster eliminates the need for environmental impact,” says Johan hazardous mooring lines with automated Wallén, Chief Commercial Officer at Ports customers all over the world. Ports of vacuum pads that moor and release of Stockholm. Stockholm first provided onshore power vessels in seconds at the push of a connection for vessels in the 1980s and button. The system is in use at a wide Using MoorMaster enables ships engines’ all of its ports are now equipped with variety of applications all over the world to be shut off sooner after arrival in shore power connection facilities. including container handling, ferry, and port, resulting in significant fuel savings bulk terminals. and reduced NOx and CO emissions Now installed together at Kapellskär, this 2 and noise reductions – benefits that are joint MoorMaster NxG and PowerReach MoorMaster NxG has already entered increased further with connection to shore application provides an example of how service at a number of sites, but the power using Cavotec’s PowerReach ports and shipping lines are able to make Kapellskär application is the first of its solution, which has also been installed at their operations safer, more efficient and kind in Sweden. the Kapellskär berth. more sustainable. The system at Kapellskär is being Cavotec provides shore- and ship-based used to moor the brand-new Finnsirius, shore power connection systems for Annual and Sustainability Report 2023 | Cavotec 19 | SEGMENT INDUSTRY We improve our customers’ operations Our Industry segment offers solutions that drive productivity and contribute to the customers’ operational efficiency, safety and electrification. Our solutions include motorised cable and hose reels, Human Operator Interface systems, Radio Remote Controls, power connectors, slip rings and spring driven cables and hose reels. We support customers in a wide variety of the customers’ improvement work. It gives industrial sectors, such as cranes, energy, us a unique position and creates long-term processing and transportation, surface relationships that are strengthened by our and underground mining, and tunnelling. broad service offering. Mining and construction are the largest customer segments. We have worked Key business progress 2023 closely during long time with leading Our world’s first ultra-fast Megawatt OEMs in the mining and construction Charging System (MCS) was sectors such as Caterpillar, Epiroc, commissioned by a mining site in Sandvik and ThyssenKrupp. Australia and in full service in the beginning of 2024. We launched the Our competitive advantages MCS, which provides up to 4.5 MW of Our ability to understand end customer power from a single connector, in October needs and present solutions to help them 2022. At the site in Australia, our MCS is improve their operations is undoubtedly our charging a prototype 240-tonne electric main competitive advantage. With our long haul truck in just 30 minutes. The MCS experience and knowledge of technical significantly reduces the charging time solutions in tough environments such as and is a major industrial breakthrough. mines and tunnels, we can actively drive “ We will continue to create value for our customers and at the same time focus on our internal efficiency to improve profitability.” Simone Sguizzardi, President, Industry 20 Cavotec | Annual and Sustainability Report 2023 SEGMENT INDUSTRY | AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec2121 | SEGMENT INDUSTRY Sales by geography Performance 2023 MEUR Revenue increased 10.8% to EUR 66.0 The order backlog decreased -21.6% to million (59.6). Currency effects had a EUR 23.8 million (30.3). negative impact of -3.3%. The revenue increase was mainly driven by good EBITDA amounted to EUR 3.2 million SEGMENT INDUSTRY demand for reels. Growth in North (4.0) and the EBITDA margin decreased Europe and Middle East, 42.2 EUR million America amounted to 17.6% to EUR 4.8 -2.0 percentage points to 4.8% (6.8%), Asia Pacific, 19.1 EUR million million (4.0) and in Asia Pacific to 36.7% negatively impacted by a high proportion North America, 4.8 EUR million to EUR 19.1 million (14.0). Revenue in of larger projects with lower margins. Europe and Middle East grew 1.5% to EUR 42.2 million (41.6). 22 Cavotec | Annual and Sustainability Report 2023 CASE STUDIES SEGMENT INDUSTRY | World’s most powerful charging system reduces emissions in mines The global mining industry is increasingly MCS consists of Cavotec’s ultra-fast, 3 switching to electric solutions to reduce MW charger, high voltage transformer, emissions. One of the challenges for the power electronics, MCS connector, cable, sector is to find charging systems for inlet, and several cooling systems that new electric heavy-duty vehicles. Cavotec maintain the systems’ continuous and has worked closely with customers in the stable performance. mining market for many years, so it made sense for us to take on the challenge. “Our world-leading charging system After two years of development work, in shows that we lead the technological 2023, we delivered the most powerful development,” says Simone Sguizzardi, industrial charging system ever made for President of Cavotec’s Industry Division. one of the largest iron ore producers in “We create value for our customers the world. by electrifying their operations and contributing to reduced emissions and Our megawatt charging system (MCS) better working environments.” provides a solution that charges a prototype 240-tonne electric haul truck in just 30 minutes. The MCS enables the customer to substantially minimise environmental impact as part of its journey towards zero emissions at the end of the decade. New smart reel improves safety in underground mines Safety is paramount in the mining industry. customer, a new smart motorised cable “The new smart reel is a prime example The challenge is to find solutions that reel to improve the safety and productivity of our continuous efforts to meet improve safety and maximise efficiency. of the company’s underground mining our customers’ needs for safety and Through its long-term collaborations with operations. efficiency,” says Benny Törnroos, Regional customers in the mining sector, Cavotec Sales Director at Cavotec. “Through has extensive experience of developing The smart reels monitor applications’ our extensive industry expertise and solutions that achieve these two aims. In critical data such as temperature and technical know-how, we create value for 2023, Cavotec developed in cooperation usage patterns. This gives Epiroc better our customers and strengthen our market with Epiroc, a leading productivity and operational visibility, allowing them to position.” sustainability partner for the mining and improve safety and increase efficiency and construction industries and a long-term productivity. Annual and Sustainability Report 2023 | Cavotec 23 | SUSTAINABILITY REPORT Sustainability drives our business Sustainability is close to our hearts and is the basis of our business. The increasing focus on sustainability in society and not least the rapidly increasing awareness of decarbonisation of society drives our business. The climate issue and the importance of decarbonisation are also what motivate us in our daily work. Sustainability is not only about taking platform. With this online data collection Sustainability Reporting Standards. An advantage of opportunities, but also about system, we will improve the quality of data important part of the work is to improve identifying and addressing negative risks as well as the analysis and follow-up of our the processes for internal control as well and impacts throughout our value chain. performance. as reporting to the Cavotec Management We started structured sustainability work in Team and the Board of Directors. In 2021 and have further intensified the work In 2023, we also continued the work 2024, we will also focus on setting in 2023. During 2023, we have, among with our double materiality analysis. We targets for key performance indicators other things, set up a system for more started work on identifying measures within our prioritised sustainability areas efficient and safer data collection with the that we will have to take in 2024 to environment and climate, our people and help of external resources and an online become compliant with the new European business ethics. ABOUT THE SUSTAINABILITY REPORT The sustainability report covers the financial year 1 January 2023–31 December 2023 for Cavotec SA, company registration number CHE-440.276.616, registered in Lugano, Switzerland. The report covers all subsidiaries that are consolidated in the financial statements, note 3. For questions about how Cavotec works with sustainability, or the sustainability report, please contact [email protected]. Scope of data collection Collected data has been expanded in 2023 regarding energy use and water. From 2023, data for energy use covers all units in Cavotec. HR data has for all three years 2021-2023 been collected from all units, comprising 100% of all FTEs. In 2023, data was expanded to encompass In 2023, data was expanded to encompass Data for energy use also Dubai, France, Malaysia, Netherlands, also Dubai, Finland, France, India, Malaysia, In 2021, data for energy use covered eight Singapore, Switzerland and the US, Netherlands, Singapore, Switzerland and facilities in seven countries: Australia, comprising 100% of all FTEs. the US, comprising 96% of all FTEs. New China, Finland, Germany (two facilities), Zealand is the only facility not included. India, Italy and New Zealand, comprising Data for water 77% of all FTEs. In 2022, data for water covered seven facilities in six countries: Australia, China, In 2022, data was expanded to encompass Germany (two facilities), Italy, Norway and also Norway and Sweden, comprising 88% Sweden, comprising 78% of all FTEs. of all FTEs. 2424CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | Our value chain By understanding our value chain, we get increased insights about potential negative and positive impacts. With that knowledge, we can reduce negative impact and take advantage of the opportunities. For us, the main opportunity is about creating better products and processes together with our suppliers and customers that will accelerate the decarbonisation of society. Raw material Refining Processing of Customers End-users producers input goods Metalworking OEMs and Dock workers Metals Products made of integrators Electronics Assembly Sailors metal and rubber Solvents components Port operators Service Machine operators Electronics Crude petroleum Synthetic rubber Ship operators in mines products Sales Ship builders Support functions Mining operators Mining vehicles Distribution channels Recycling In 2021, we increased our insights about and carpentries in the processing of input Refining our value chain by a simplified life cycle goods, which impact environmental aspects The raw materials are refined in various analysis (LCA) on four product families: such as emissions of greenhouse gases, processes to become sub-components Azipod, MoorMaster, Motorised Cable energy use, waste disposal and water for the inputs Cavotec purchases. These Reels, and Alternative Maritime Power consumption. processes are, for example, casting, (AMP). The analysis was made internally compression moulding, welding and cutting. and developed in accordance with ISO Upstream Several actors can work with the same input 14040-14044:2021 on Environmental Raw material producers before it has reached the stage where it can Management: Life Cycle Assessment Cavotec’s products include metals and be included in Cavotec’s products. (LCA). As part of the analysis, we identified alloys such as steel and aluminum as key activities in the value chain with most well as rubber. In the processes, various Processing of input goods significant negative impacts on water, solvents and chemicals are used to produce Cavotec has approximately 2,100 suppliers air emissions, soil contamination, noise the material. Steel is one of the primary which deliver input goods for the assembly emissions, and hazardous and non- materials used in the products, which has a of Cavotec’s products and other services. hazardous wastes. In summary, the analysis considerable environmental impact due to The majority of the suppliers are based in showed that we have the most significant the extraction of iron ore and production China, Germany and Italy. environmental impact in our upstream value of steel. chain with special emphasis on foundries Annual and Sustainability Report | Cavotec 25 | SUSTAINABILITY REPORT Cavotec’s operations Assembly Sales Cavotec has six assembly and production Cavotec has sales offices in Australia, China, units, one each in China, India, Italy, New Finland, Great Britain, India, Hong Kong, Zealand and two in Germany. The assembly Norway, Singapore, Sweden, United Arab Employees units serve their respective regional Emirates and the US. in total 664 markets. The Indian facility will be officially inaugurated in 2024. Support functions The support functions are local, regional and Service at group level. The support functions include The service organisation supports customers finance, HR, IT, procurement and legal. EMPLOYEES BY FUNCTION through inspections, maintenance as well as Cavotec also has an Innovation Center in the Production, 187 sales and installation of spare parts. Cavotec Netherlands. Engineering, 114 has service centers with repair shops in Service, 97 Sales, 76 China, Italy, Norway, Singapore and the US. Sourcing, 48 Parts of the service organisation are based Finance, 47 at the customers’ premises. Management, IT, HR, Marketing and communication, Legal, 95 Employees by region Downstream Customers Distribution channels Cavotec has over 3,100 active customers Throughout the value chain, vessels and across the globe. Some products are mostly trucks are used for transport. Flights are only EMPLOYEES BY REGION sold to OEMs and integrators. The main exceptionally used for smaller components. Europe, 401 end customer groups are port operators, Asia, 182 shipbuilders, producers of mining machinery Recycling Oceania, 52 North America, 27 and mining operators. Cavotec’s products Waste materials of metals, plastics and Middle East, 2 are often critical where they are used and rubber are reused throughout the value downtime is associated with high costs for chain. Cavotec’s products, and the products the customer and/or end customer. The where Cavotec’s solutions are included as a products therefore represent a high added component, often have long-life time. When value for customers and/or end customers. the products in which Cavotec’s products are included, reach the end of their life cycle, End-users they are remanufactured or recycled. Revenue by The end-users of Cavotec’s products are region, MEUR mainly sailors, dock workers and machine operators in mines. REVENUE BY REGION Europe and Middle East and Africa, 88.0 EUR million Asia Pacific, 69.8 EUR million North America, 23.0 EUR million All data refer to financial year 2023. Employee data refer to FTEs at 31 December 2023. 2626CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | Stakeholder dialogues Cavotec is daily in dialogues with its stakeholders in many parts of the organization. The stakeholders deemed to have the greatest influence on us are employees, customers, suppliers, investors and lenders. Our stakeholders’ views and questions have in common that the climate issue form the basis of our materiality analysis and energy use, fair and safe working and how we prioritise and work with conditions and business ethics are at the sustainability issues. The stakeholders top of the agenda. STAKEHOLDER DIALOGUES Stakeholder How the engagement Purpose Key sustainability How the outcome is taken is organized topics discussed into account by Cavotec Employees Performance and career To create conditions for Health and safety. Diversity Climate change and the development reviews, high employee motivation and inclusion. Development own workforce are two workplace meetings, through, among other of skills and capacity. of Cavotec’s material employee surveys, internal things, safe workplaces and Reduction of Cavotec’s sustainability matters. training, intranet. Interaction fair working conditions. carbon footprint from its with union representatives. operations and products. Customers Business meetings To demonstrate the Cavotec’s ability Cavotec’s business model and customer surveys. products’ capacity to to contribute to the and strategy is based on Customer events and electrify customers’ electrification of customers’ the products’ capacity to trainings. Customer operations and reduce operations and reduce their electrify operations and service contacts. Requests emissions of greenhouse emissions of greenhouse reduce emissions as well for quotations and gases, and improve gases, and improve their as their contribution to safer procurements. working environments at working environment. working environments. the customers. To secure long-term relationships through service agreements. To ensure Cavotec’s ability to comply with customers’ Codes of Conduct for suppliers. Suppliers Business meetings and To create conditions for on- Logistics and transportations. Business conduct including suppliers’ customer time high-quality deliveries. Cavotec’s Code of Conduct payment practices is one surveys. Events and To ensure the suppliers’ for suppliers. of Cavotec’s material trainings arranged by ability to comply with sustainability matters. suppliers. Customer Cavotec’s Code of Conduct service contacts. Requests for suppliers. for quotations and procurements. Investors, analysts, potential CEO and CFO in meetings To create the conditions for How Cavotec’s offering Cavotec’s goal is to report investors and lenders with shareholders, potential continued financing and contributes to electrification according to the European investors and lenders. value creation. and reduced emissions. Sustainability Reporting Presentations at investor Cavotec’s efforts to reduce Standards. meetings and seminars, its own emissions, secure often arranged by banks. fair working conditions and respect human rights. Annual and Sustainability Report | Cavotec 27 | SUSTAINABILITY REPORT Materiality analysis Our materiality analysis shows that our prioritised sustainability areas are the environment and climate, our people and business ethics. The materiality analysis was made in demands, use of natural resources, lack Our people 2021 and based on dialogues with of skilled labour, emissions of greenhouse Our employees are the foundation for our stakeholders, our risk assessment, and gases and effluents to soil, water and air. ability to deliver safe, high quality, and an impact model. The analysis followed energy efficient products and solutions. a proven process in line with industry The results of the analysis and Therefore, Cavotec needs to be a great best practice and international reporting assessments were compiled in a place to work that prioritise the health and frameworks, as well as incorporating a materiality pyramid. The priority areas were safety of our employees, diversity and dual materiality perspective. In the dual summarized under the main headings: inclusion, and development of skills as materiality perspective, the financial, legal environment and climate, our people and well as attracting new talent. and operational impacts on Cavotec were business ethics. also included. Business ethics Our prioritised sustainability areas To be a trusted partner for customers that Risk assessment want safe and energy efficient solutions, A sustainability risk assessment was part Environment and climate Cavotec needs to be a responsible of the materiality analysis and was also Cavotec has through its operations business partner by upholding highest made in 2021. It covered sustainability a negative impact on environment possible business ethics and fight risks throughout our operations and our and climate which we aim to reduce. corruption. supply chain. Risks were assessed based At the same time, we contribute on probability and the potential impact on to the sustainability transition and Cavotec. At that point in time, the main decarbonisation of society through our risks included: inability to capitalise on products and systems. With our offer, we sustainability due to limited sustainability also contribute to increased safety for our knowledge and increasing investor customers’ employees. MATERIALITY PYRAMID E Reducing carbon footprint of our operations and products S G Product quality and safety Focus Attract and retain employees by Employee health and safety developing skills and capacity Management of natural resources, use of materials, waste and hazardous substances Develop Sustainability in sourcing and supply chain Upholding business ethics and combat- processes (human rights, labour rights, envi- ing corruption ronment and anti-corruption Diversity and inclusion Water and wastewater management Biodiversity and ecosystem impact Data and IT security Responsible tax management Monitor & manage 2828CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | Governance Sustainability and the sustainability work cover all parts of the Group and involve all employees and the Board of Directors as well as suppliers. The highest governing body responsible employees including Board members in other things, respect for human rights and for sustainability is the Board of Directors. the Group, individuals or businesses that fair labour practices, health and safety, The Board is responsible for evaluation, work on behalf of any Cavotec company environment, business ethics as well strategy, risk control and goal setting and suppliers. reporting requirements. It is applicable in the area of sustainability. The CEO is to all suppliers including their corporate responsible for execution of the strategy, The Group’s policies are communicated bodies, employees, representatives, follow-up and measures as well as to employees through the intranet and it subcontractors and sales partners. The risk management. The CEO delegates is the responsibility of each manager to Code shall be signed by the supplier, responsibility for specific areas to people ensure that all employees have received whereby it commits to adopt and comply in the Cavotec Management Team. The information about and are aware of the with the Code. CFO is responsible for sustainability policies. The managers must also ensure issues related to climate, environment that consultants, Directors and others and business ethics. The Chief Legal & working on behalf of Cavotec are aware Human Resources Officer is responsible of the policies. The managers must also for compliance and HR. ensure that the suppliers have signed the Policies within the area of Supplier Code of Conduct. The Code of sustainability Sustainability data is collected once a year, Conduct is also available on Cavotec’s • Anti-Fraud Policy evaluated by the Cavotec Management website cavotec.com. • Anti-Bribery and Corruption Policy Team and reported to the Board together • Code of Conduct with action plans if deemed necessary. Management systems and • Environmental and Sustainability certifications Policy The composition of the Board and An element of the Group’s continuous • Gifts and Entertainment Policy Cavotec Management Team including the improvement work is the use of • Supplier Code of Conduct respective experiences are described in management systems. By the end of • Tax Policy the corporate governance report. 2023, Cavotec had three certifications • Whistleblower Policy covering ISO 9001 Quality Management Policies Systems and ISO 14001 Environmental All sustainability-related Group policies Management Systems. The facility in are revised when deemed necessary Shanghai, China, became ISO 9001 and and adopted by the Board of Directors. ISO 14001 certified in 2021. The facility in The Code of Conduct forms the basis of Milan, Italy, became ISO 14001 certified Cavotec’s operations, with the purpose in 2022. No management systems are the of ensuring protection of human rights, result of legal requirements. promotion of fair employment conditions, safe working conditions, responsible Supplier Code of Conduct management of environmental issues, The Supplier Code of Conduct sets out the and high ethical standards. The Code of basis of Cavotec’s responsible sourcing Conduct summarises the internal policy approach and defines the minimum documents related to business ethics, standards that suppliers must respect quality as well as social and environmental when doing business with Cavotec. The performance. The Code applies to all Supplier Code of Conduct covers, among Annual and Sustainability Report | Cavotec 29 | SUSTAINABILITY REPORT Environmental and climate impact Climate change is one of the major challenges facing the world today and we are determined to play our role in climate change mitigation and adaptation. Questions regarding water stewardship and circularity are also high on our agenda. Our main environmental impacts include all units. In 2021, data for energy use been corrected in this year’s sustainability energy consumption and resulting covered eight facilities in seven countries: report where stationary combustion greenhouse gas emissions, natural Australia, China, Finland, Germany (two energy is included in fuels. resources use in our products, waste facilities), India, Italy and New Zealand, generation, and interactions with water. comprising 77% of all FTEs. In 2022, Energy use We are committed to limit the negative data was expanded to encompass also We are taking action to reduce our environmental impacts from our opera- Norway and Sweden, comprising 88% of climate impact from energy use by tions, our supply chain, and our products all FTEs. In 2023, data was expanded to improving the energy efficiency. In our and services, which is expressed in our encompass also Dubai, France, Malaysia, largest facility in Italy, we have invested in Environmental and Sustainability Policy. Netherlands, Singapore, Switzerland and geothermal energy, and there is a photo- We apply the precautionary principle to the US, comprising 100% of all FTEs. voltaic system on the roof that covers situations where harm may be done to the approximately 22% of the facility’s total environment or human health, following Data collected for fuel includes all energy consumption. In 2023, 31% (36%) legislation and international initiatives. company cars the years 2022-2023, but of Cavotec’s electricity consumption only for part of the car fleet in 2021. In came from renewable energy and 180 Scope of data collection previous sustainability reports, energy (166) MWh was sold back to the grid. In 2023, data has been expanded regard- from stationary combustion has been ing energy use and data now covers classified as district heating. This has ENERGY CONSUMPTION MWh 2021 2022 2023 Fuels including gas, petrol and diesel 1,418 1,467 1,441 Electricity 2,356 2,489 2,032 – of which non-renewable 1,448 1,594 1,400 – of which renewable 908 895 631 Renewable energy share of total consumption 39% 36% 31% District heating 128 125 122 Total energy consumption 3,902 4,081 3,595 Energy consumption, kWh/net sales 0.03370 0.02760 0.01989 ENERGY PRODUCED, CONSUMED AND SOLD MWh 2021 2022 2023 Total energy produced 291 310 2,689 Total energy produced 291 310 2,689 – of which geothermal for heating and cooling – – 2,389 – of which photovoltaic for electricity 291 310 300 Total energy produced and consumed 261 274 2,635 – of which geothermal for heating and cooling – – 2,389 – of which photovoltaic for electricity 261 274 246 Total energy produced and sold 98 166 180 – of which renewable 30 36 54 – of which non-renewable 68 130 126 3030CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | GHG emissions Sustainability Reporting Standards, in accordance with the GHG Protocol, We want to contribute to mitigation and we will start work on screening Scope using emission factors from DEFRA adaptation of climate change not only by 3 emissions in 2024. Pending the (2023) for Scope 1 and DEFRA (2022) providing solutions that have potential mapping of Scope 3 emissions, we only for Scope 2. The calculation covers benefits but also in our own operations. report Scope 1 and 2. Scope 1 is direct carbon dioxide (CO₂), methane (CH₄), Energy use is the primary contributor to emissions and includes emissions from nitrous oxide (N₂O), hydrofluorocarbons greenhouse house emissions from our company cars and heating. Scope 2 is (HFCs), perfluorocarbons (PCFs), own operations. indirect energy related emissions from sulphur hexafluoride (SF₆) and nitrogen electricity and district heating. Scope 3 trifluoride (NF₃). As part of the preparations to report is indirect emissions in the value chain. according to the new European Greenhouse gases have been calculated GHG EMISSIONS CO e ton 2021 2022 2023 2 Scope 1 243 233 286 Scope 2 976 1,025 842 Total Scope 1-2 1,219 1,258 1,128 Total Scope 1-2/net sales, kg 0.0105 0.0085 0.0060 Scope 3 331 338 202 Total Scope 1-3 1,550 1,596 1,330 Total Scope 1-3/net sales, kg 0.0134 0.0108 0.0074 Water management energy for the Italian site utilises water Netherlands, Singapore, Switzerland and We acknowledge that fresh water is a which is controlled regularly and follows the US, comprising 96% of all FTEs. New scarce resource, and we aim to foster all legal requirements. Zealand is the only facility not included. responsible water stewardship in all our facilities by monitoring water use and In 2022, data for water covered seven We have not reported any water ensure water effluents is treated correctly. facilities in six countries: Australia, China, consumption 2021-2023, i.e. water Germany (two facilities), Italy, Norway and consumed so that it is no longer available For our own operations, the primary use Sweden, comprising 78% of all FTEs. for use by the ecosystem or local of water is for sanitary purposes and In 2023, data was expanded to encompass community. drinking water. However, the geothermal also Dubai, Finland, France, India, Malaysia, WATER USAGE AND DISCHARGE Megaliters 2021 2022 2023 Water usage 2.50 2.51 4.23 Water discharge 2.50 2.51 4.23 Water usage/net sales, liters 0.0215 0.0170 0.0234 Water discharge/net sales, liters 0.0215 0.0170 0.0234 Waste management Collaboration for circularity and to the extraction of iron ore and production We generate waste on our facilities reduced use of resources of steel. We are keeping an eye on the from packaging of parts from suppliers To be successful in establishing circularity development of steel produced without the and general waste from the offices. We and reduced need for virgin raw materials, use of fossil fuels and will review suppliers’ acknowledge the need for a transition to we have to collaborate with our suppliers. processes for minimising environmental a circular economy and minimise waste. For example, steel is one of the primary impact at the time of mining. materials used in our products, which has a considerable environmental impact due Annual and Sustainability Report | Cavotec 31 | SUSTAINABILITY REPORT Caring for our people Attracting skilled, open, and curious people is fundamental to an engineering company like Cavotec. For close to 50 years we have pioneered innovative solutions and are determined to continuing to create value. With global presence, we can reap the benefits of our different cultures, and create a learning organisation with motivated employees. Cavotec is a global company with We comply with international, national membership or employee representation operations in 18 countries and have and industry-related laws, guidelines and any other characteristic protected therefore created a model where the HR and collective agreements relating to by local law, as applicable. In 2023, two organisation is embedded in all local working conditions, working hours and cases of discrimination were reported in operations. The directions are given by the compensation. We respect and promote the organisation. Both cases have been Group and relayed in the regions by HR fairness, and the right of each employee investigated and remedied. business partners who support leaders to a safe working environment where all locally. HR is furthermore supported by employees are treated with dignity and Our corporate values finance and administrative functions at respect. Employees with comparable Our success rests on our core values: each location, who are responsible for the qualifications, experience and performance Integrity, Accountability, Performance, day-to-day implementation and upholding will receive equal pay for equal work with and Teamwork. We are committed to of our HR practices and processes. respect to those performing similar tasks developing and maintaining a workplace under similar working conditions and where our employees can learn and At the end of 2023, 181 of our employees similar output. The different backgrounds, develop with the respect and support were covered by collective agreements, experiences and opinions of our employees of their colleagues and managers. which constitutes 27% of the total enrich our expertise and drive innovation Our open, non-hierarchical working number of FTEs. Over 94% of temporary and growth. environment encourages the free employees are permanent employees exchange of ideas and mutual respect and 98% are full-time employees. Women Non-discrimination and equal value between individuals that underpin are underrepresented and make up only Our Code of Conduct strictly prohibits our unique capabilities as a leading 18% of the total number of FTEs. At direct and indirect forms of discrimination engineering group. Regardless of where year-end, Cavotec had four FTEs who are and harassment of any kind. This includes, they work, we want our people to feel not employees (consultants, interns or but is not limited to, discrimination based safe and develop a sense of belonging volunteers). on age, ethical and cultural background, that will fuel our success in being a gender, religion, sexual identity, disability, leader in decarbonising maritime and Everything we do at Cavotec rests on race, colour, political opinion, social origin, industrial activities around the globe. respect for human rights and labour rights. social status, indigenous status, union EMPLOYMENT BY CONTRACT, TYPE AND GENDER FTEs at 31 December 2021 2022 2023 Women/men Total Women/men Total Women/men Total Permanent, women/men 109/444 553 103/459 562 111/516 627 Temporary, women/men 8/42 50 9/60 69 7/30 37 Full-time, women/men 112/485 597 109/518 627 112/541 653 Part-time, women/men 5/1 6 3/1 4 6/5 11 Total FTEs, women/men 117/486603 112/519 631 118/546 664 Percentage women/men of total FTEs 19%/81% 100% 18%/82% 100% 18%/82% 100% 3232CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | EMPLOYEES BY REGION AND CONTRACT FTEs at 31 December 2021 2022 2023 Permanent/temporary Total Permanent/temporary Total Permanent/temporary Total Asia 111/6 117 129/39 168 159/23 182 Europe 368/43 401 361/29 390 390/11 401 North America 28/1 29 28/0 28 27/0 27 Middle East 6/- 6 2/0 2 2/0 2 Oceania 50/-50 42/1 43 49/3 52 Total 553/50 603 562/69 631 627/37 664 EMPLOYEES BY FUNCTION AND AGE FTEs at 31 December, % of total 2021 2022 2023 Age <30/ Age <30/ Age <30/ Women/men 30-50/>50 Women/men 30-50/>50 Women/men 30-50/>50 Cavotec Management Team 13%/87% 0%/26%/74% 14%/86% 0%/43%/67% 14%/86% 0%/43%/57% Division Management Teams and Group functions 23%/77% 10%/80%/10% 19%/81% 0%/67%/33% 15%/85% 0%/70%/30% Employees 19%/81% 6%/76%/18% 18%/82% 10%/65%/25% 18%/82% 8%/66%/25% Total 19%/81% 6%/77%/17% 18%/82% 10%/64%/26% 18%/82% 8%/66%/26% Employer attraction For Cavotec to remain innovative and competitive, we need to attract, develop, and retain top-talents. We believe that our purpose of bringing high-quality solutions that drive the sustainability transition of our customers, both regarding safety and decarbonisation, can attract talented engineers that wants to make a difference. We believe that the key to retain our employees is to focus on health and safety, to be a responsible employer, and to offer development programs. NEW EMPLOYEES HIRES AND EMPLOYEE TURNOVER 2021 2022 2023 New employee Employee New employee Employee New employee Employee hires/ turnover/ hires/ turnover/ hires/ turnover/ % of total % of total % of total % of total % of total % of total Women 26/4% 20/3% 37/6% 38/6% 33/22% 28/4% Men 96/16% 37/6% 171/27% 142/23% 116/78% 88/14% Age <30 7/1% 5/1% 52/8% 33/5% 34/23% 18/3% Age 30-50 104/17% 48/8% 128/20% 110/17% 98/66% 74/12% Age >50 10/2% 4/1% 28/4% 37/6% 17/11% 24/4% Asia 42/7% 16/3% 97/15% 62/10% 52/35% 22/3% Europe 66/11% 30/5% 99/16% 104/16% 72/48% 74/12% North America 3/0.5% 6/1% 6/1% 2/0% 4/3% 8/1% Middle East 0/0% 0/0% 0/0% 1/0% 0/0% 0/0% Oceania 10/2% 5/1% 6/1% 11/2% 21/14% 12/2% Total 121/20% 57/9% 208/33% 180/29% 149/100% 116/18% PERFORMANCE REVIEWS 2021 2022 2023 Women/men Total Women/men Total Women/men Total Cavotec Management Team 100%/100% 100% 100%/100% 100% 100%/100% 100% Division Management Teams and Group functions 100%/100% 100% 100%/100% 100% 100%/100% 100% Employees 78%/79% 79% 73%/79% 78% 83%/84% 93% Total 80%/80% 80% 74%/81% 79% 85%/84% 84% Annual and Sustainability Report | Cavotec 33 | SUSTAINABILITY REPORT Occupational health and safety Given our global presence and varied informed when a corrective action has Cavotec is committed to provide a safe operations, we are tailoring our been implemented and proven efficient. and healthy working environment for all occupational health and safety routines to In addition to weekly safety rounds, our employees. We integrate health and suit each Cavotec site. Safety walks are the Italian site engage in a regionally safety in the management of our business conducted at each operation center on a promoted “Work-health Program” that to prevent accidents and to protect regular basis. When safety improvements encourages health initiatives. Following people at work, with a vision of zero work- are identified during these walks, the progress of the Italian facility, we are related accidents. employees are invited to record safety working to implement efficient measures improvements and share them. at our other sites in all our countries Overall, our operations do not imply high of operation, ensuring state of the art safety risks. In general, our operations It is our ambition to certify all assembly occupational health and safety across the handle smaller cuts and other incidents and production facilities to ISO 45001 organisation. that can be treated on site using bandaid. or similar standard and follow equivalent We have a robust set of procedures and procedures at all other operations. In 2023, we had 0 (0) non-fatal or fatal standards to reinforce a strong health and injury arising out of or in the course safety culture across the organisation. We Cavotec’s largest unit is the Italian one of work such as amputation of a limb, review any shortcomings in health and with 167 FTEs. The Italian facility is laceration, fracture, hernia, burns, loss safety management, learn from experience ISO 45001 certified and procedures of consciousness, and paralysis, among to improve our performance. We such as weekly safety walk are carried others. Cavotec has not gathered continuously assess the operational health out. If a health and safety hazard is information about injuries in 2023 which and safety aspects of our operations, identified during a weekly safety walk, relate to for example minor burns, falls processes, and services, and act upon appropriate corrective actions are taken, and smaller cuts. safety improvements and incidents in by for example creating a work group. accordance with our escalation procedure. Each issue is recorded, and the staff is OCCUPATIONAL INJURIES FTEs 2021 2022 2023 Number of Rate in Number of Rate in Number of Rate in employees/ relation to employees/ relation to employees/ relation to number of total worked number of total worked number of total worked non-employees hours non-employees hours non-employees hours Fatalities due to work related injury 0/0 -/- 0/0 -/- 0/0 -/- High consequences injury 0/0 -/- 0/0 -/- 0/0 -/- Recordable injury 5/0 0.1/- 1/0 0/- N/A N/A The rate is based on 200,000 worked hours. 3434CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | Business ethics To be the business partner of choice for customers and suppliers, we must uphold high business ethics. For us, business ethics is also about being a good citizen and having a responsible tax management. The Code of Conduct sets the standard cavotec.com. When using the whistleblower Tax management for how Cavotec conducts its business, function, employees can be anonymous Tax matters are discussed with the Audit ethically and in accordance with applicable and whistleblowers are protected against Committee and governed by our Tax laws and regulations. The Code of Conduct retaliation. Policy. Cavotec’s approach is to improve is supported by our Anti-Bribery Policy, tax efficiency by using tax credit initiatives our Anti-Fraud Policy and our Gifts and In 2023, no reports were filed through the offered in the different countries where we Entertainment Policy. whistleblower function. operate. We have a zero-tolerance policy towards Data and information security Cavotec and its subsidiaries pay tax in all forms of corruption. In order to build In today’s digital world a responsible the countries where value is generated capacity and knowledge of corruption business needs to reduce risks related to in accordance with local tax laws and and fraudulent behaviour, all our new cyber security and data privacy. Information regulations. Cavotec does not engage in employees receive training on our internal is a valuable asset to Cavotec and exercise aggressive or artificial transactions whose policies when joining Cavotec, as well as a care when handling, receiving and storing sole or main purpose is to create a tax complete policy package. The onboarding sensitive information from customers, advantage. If there is more than one way training is supplemented by additional stakeholders and suppliers. Further, we to structure a transaction, Cavotec may trainings covering issues such as anti-trust respect the privacy of all individuals and to optimise its tax situation by choosing and anti-bribery, which is done on a bi- the confidentiality of any personal data that the option that achieves the Group’s annual and/or on-demand basis. It is the Cavotec holds about them. We commit commercial objectives with the lowest tax responsibility of each employee to read, to continuously improve our data and expense. understand and comply with the policies. information security and to proactively reduce risks. Through our Code of Conduct, Cavotec’s tax declarations must be We are committed to combating all forms our employees are informed on how to submitted on time and comply with relevant of corruption and acting professionally handle data and information. Any data tax laws and regulations. Any material and fairly in all our business activities and breaches are reported and appropriately errors or omissions that are discovered relationships, wherever we operate. How escalated. In 2023, no losses of customer in tax declarations must immediately be we manage anti-bribery and corruption data or other personal data were reported. reported to the relevant tax authorities. is governed by internal policies, and we evaluate all potential business expansions from a bribery and corruption perspective, where we conduct a third-party due diligence when high risks are identified. It is the responsibility of all those working with us to prevent, detect and report any kind of corruption, bribery, or other forms of unethical business conduct. In 2023, there has not been any legal actions regarding corruption, anti-competitive behaviour or violations of anti-trust and monopoly legislation. Whistleblower function Our whistleblower function is only available internally. We have the intention to set up at whistleblower function which is available externally through our website Annual and Sustainability Report | Cavotec 35 | SUSTAINABILITY REPORT Taxes must be paid when due. Tax inquiries conducting business with Cavotec, but also subcontractors and sales partners. It and audits by the authorities must be the expression of values which are shared shall be signed by the supplier, whereby answered openly and honestly and in a throughout Cavotec, its various businesses it commits to adopt and comply with the timely manner. All Group companies must and affiliates and that we encourage our Code of Conduct. have an updated transfer pricing policy that suppliers to adhere to. follows OECD guidelines. Cavotec has not yet collected data about Our Supplier Code of Conduct covers, the number of direct suppliers that has Suppliers among other things, respect for human signed the Supplier Code of Conduct. Our Supplier Code of Conduct sets out rights and fair labour practices, health and the basis of our responsible sourcing safety, environment, business ethics as well approach. It defines not only the reporting requirements. It is applicable to nonnegotiable minimum standards that all our suppliers including their corporate we ask our suppliers to respect when bodies, employees, representatives, Our contribution to the UN SDGs Through our offer and operations, we contribute to the UN Sustainable Development Goals. Cavotec most clearly contributes to five of the 17 UN Sustainable Development Goals. Target 7.2 means that by Target 8.2 means that workers’ Target 9.4 means that the year 2030, the share rights must be protected and infrastructure and industries of renewable energy in the safe and secure working envi- must be upgraded and global energy mix must have ronments must be promoted modernised by 2030 to increased significantly. We for all workers. Through, for make them sustainable, contribute to this develop- example, our automatic moor- with increased resource use ment by, for example, installing shore power ing solutions, we contribute to improving working efficiency and greater introduction of clean connections in vessels and electrifying cable conditions for sailors and dock workers. Another and environmentally friendly technologies and reels. In this way, we increase the opportunity example is the use of shore power solutions, industrial processes. We contribute to the target for our customers and our customers’ custom- which contributes to improved working condi- by retrofitting and equipping vessels and cranes ers to use renewable energy. tions thanks to reduced noise and diesel fumes. with electrical solutions that significantly reduce greenhouse gas emissions. Through our charg- ing solutions, we make it possible for the mining industry, among other things, to use electricity driven, heavy-duty trucks in its operations. Target 11.6 means that the Target 16.5 means that cities’ negative environmental corruption and bribery in all impact per capita must be its forms must be significantly reduced by 2030 at the lat- reduced. We contribute to the est with special attention to goal by having zero tolerance air quality and municipal and for corruption and bribery in all other waste management. We contribute to the parts of our value chain. goal through our solutions that make the air cleaner and reduce noise in ports and terminals. In this way, urban environments are improved all over the world thanks to our solutions. 3636CavoteCavotecc||AnnualAnnualandandSustainabilitySustainabilityReporReportt2023 SUSTAINABILITY REPORT | AnnualAnnualandSustainabilityandSustainabilityReporReport2023t||CavotecCavotec3737 | REMUNERATION REPORT Remuneration report 2023 A. REMUNERATION GOVERNANCE is subject to approval by the general last maximum aggregate remuneration AND PRINCIPLES meeting of shareholders upon proposal amount approved. by the Board. In addition, certain 1. Shareholder engagement matters relating to remuneration must be Starting from the FY2024, following The articles 734 et seq. CO of the Swiss governed by the Company’s articles of an assessment by the Company of its Code of Obligations (“CO”) – which, as of association, including the details of such organization (and in particular the internal 1. January 2023 and with respect to the votes on remuneration and the principles decision-making process), the Company financial year (“FY”) 2023, have replaced governing remuneration. Cavotec’s will formally consider not only the CEO to the previous applicable Ordinance Against articles of association (the “Articles of form part of the Cavotec’s management Excessive Compensation at Public Association”) include these matters team, but also additional members working Corporations (VegüV) – require listed regarding remuneration in Articles 16a et for the management team of Cavotec who companies incorporated in Switzerland to sec. and can be viewed online at: http:// have substantial decision-making power publish a remuneration report. ir.cavotec.com -> Corporate Governance (the “Management Team”). For this Cavotec SA (the “Company” or -> Articles of Association. reason, the Remuneration Report starting “Cavotec”) is a Swiss incorporated from the FY2024 (AGM 2025) will provide company but listed on Nasdaq Stockholm, The key provisions of the Articles of additional information not only related to Sweden. The corporate governance Association are summarized below: the CEO, but also to the Management of Cavotec is therefore based on both • Votes on remuneration (Article 16b): Team in accordance with the above- Swiss and Swedish rules and regulations, Every year, the Company’s annual mentioned extended definition. To reflect including the CO and the Swedish Code general meeting (the “AGM”) votes this assessment, the Board will propose of Corporate Governance (Sw. Svensk separately and bindingly on the to the 2024 AGM to update the Articles of kod för bolagsstyrning). maximum aggregate remuneration of Association (in particular the 16a et sec.) the Board for the term of office until accordingly. This remuneration report (the the next AGM and on the maximum “Remuneration Report”) for the FY2023 aggregate remuneration of the CEO Any reference to “Management” has been prepared in accordance with (fixed and variable components) for the respectively “Management Team” in this articles 734 et seq. CO and describes, subsequent FY. Remuneration Report for the FY2023 and inter alia, Cavotec’s compensation system • Loans and credits (Article 16j): Loans limited for the FYs up to and including and philosophy, and provides details of and credits may not be granted to FY2023, refers to the CEO only. the remuneration paid to the Company’s members of the Board or the CEO. board of directors (the “Board”) and to • Additional amount for a newly appointed In line with the above, and in particular the Company’s chief executive officer (the CEO (Article 16c): If the maximum the above-described assessment of the “CEO”) in 2023. aggregate remuneration already Company regarding its Management approved by the AGM is not sufficient Team, the Board will submit three Under the CO, the maximum aggregate to cover the remuneration for a newly separate remunerations related proposals remuneration for the members of the appointed CEO, the Company may pay for shareholder approval at the 2024 AGM Board and of the management team an additional amount up to 100% of the as illustrated in Table 1: TABLE 1: REMUNERATION-RELATED SHAREHOLDER APPROVALS Object Action at 2024 AGM 2024 2025 2026 Remuneration report 2023 approval of the 2023 remuneration report Board remuneration 2024 approval Board remuneration for AGM 2024 to AGM 2025 (term of office) Management Team approval of the Management Team remuneration 2024 remuneration for FY2024, taking into consideration the maximum aggregate * Only for this year in the 2024 AGM remuneration amount of EUR 2,200,000 for the CEO for FY2024 that has already been approved by the 2023 AGM Management Team approval of the Management Team remuneration 2025 remuneration for FY2025 Beginning AGM Beginning AGM Beginning AGM of the FY May of the FY May of the FY May Jan 01 Jan 01 Jan 01 38 Cavotec | Annual and Sustainability Report 2023 REMUNERATION REPORT | • This Remuneration Report for the 2. Governance on remuneration • Reviewing the terms of the employment FY2023 (consultative vote). matters arrangements with the CEO and other • The maximum aggregate remuneration The decision authority on remuneration members of senior management so amount for the Board for the term of matters is summarized in Table 2. as to develop consistent group-wide office from 2024 AGM to 2025 AGM employment practices subject to (binding vote). The current members of Cavotec’s regional differences. • The maximum aggregate remuneration remuneration committee (the • Reviewing of and making proposals to amount for the Management Team (as “Remuneration Committee”) are the Board on the remuneration of the defined above) for the FY2024 that Keith Svendsen, Patrik Tigerschiöld and members of the Board, the CEO and started January 1, 2024, and that will end Peter Nilsson (the latter as chairman; other members of senior management. on December 31, 2024 (binding vote), the “Chairman of the Remuneration • Reviewing the terms of the Company’s taking into consideration the maximum Committee”). short- and long-term incentive plans. aggregate remuneration amount of EUR • Submission of a draft of the 2,200,000 for the CEO for the FY2024 Members of the Remuneration Committee Remuneration Report to the Board. business year that has already been are elected annually and individually by approved by the 2023 AGM. the shareholders at the respective AGM. Details on Remuneration Committee’s • The maximum aggregate remuneration The Chairman of the Remuneration members and their meeting attendance amount for the Management Team (as Committee reports to the full Board after are provided in Cavotec’s Corporate defined above) for the (next) FY2025 each Remuneration Committee’s meeting. Governance Report on page 46. starting January 1, 2025, and that will The minutes of the meetings are made end December 31, 2025 (binding vote). available to the members of the Board. The 4. Remuneration principles CEO and Cavotec’s chief human resources Cavotec’s remuneration programs are With respect to the FY2022 and FY2023 officer (CHRO) attend the Remuneration designed to recognize and reward the following was implemented: Committee’s meetings in an advisory performance, enabling the organization • At the 2022 AGM held on June 2, 2022, function but are excluded from certain to attract, motivate and retain talented shareholders approved (i) a maximum discussions. The Remuneration Committee employees who drive performance to aggregate amount of EUR 0.5 million may decide to consult an external advisor ensure both sustained growth and value for the remuneration for the Board on specific remuneration matters. creation. for the term of office from 2022 AGM to 2023 AGM; and (ii) a maximum 3. Activities of the Remuneration The compensation of the Management aggregate amount of EUR 2,900,000 Committee during FY 2023 Team and Board members is reviewed for the remuneration for the CEO for the The Remuneration Committee meets as on an annual basis to ensure continued FY2023 started January 1, 2023, and often as business requires but at least alignment with the Cavotec’s group’s (the that ended on December 31, 2023. once per year. “Group”) strategy and market practice. • At the 2023 AGM held on June 1, 2023, shareholders approved (i) a maximum The Remuneration Committee held five B. REMUNERATION SYSTEM aggregate amount of EUR 0.5 million meetings in FY2023. for the remuneration for the Board 1. Remuneration system of the Board for the term of office from 2023 AGM The Remuneration Committee has the To ensure its independence in fulfilling its to 2024 AGM; and (ii) a maximum following duties and competences: supervisory duties, the remuneration of aggregate amount of EUR 2,200,000 • Reviewing and advising the Board on the Board is fixed and does not contain for the remuneration for the CEO for the the terms of appointment of the CEO. any variable component. FY2024 year started January 1, 2024, • Reviewing working environments and and ending December 31, 2024. succession planning for the CEO and The chairman of the Board receives a other members of senior management. fixed annual base fee of EUR 95,000. TABLE 2: GOVERNANCE ON REMUNERATION MATTERS Remuneration CEO Committee Board AGM Remuneration principles (Articles of Association) Recommends Proposes Approves Remuneration report Recommends Proposes Approves Remuneration principles and system for the Board and the CEORecommends Review Approves Remuneration principles and system for the Management TeamProposes Review Review Approves (as of FY2024) Maximum aggregate amount of the remuneration for the Board membersProposes Review Approves Maximum aggregate amount of the remuneration of the CEO ProposesRecommends Approves Maximum aggregate amount of the remuneration of the Management TeamProposes Review Recommends Approves Annual and Sustainability Report 2023 | Cavotec 39 | REMUNERATION REPORT The chairman of the Board is not entitled For the FY2023 as part of this The base salary is paid out to the to being compensated for assuming Remuneration Report 2023, only the Management Team in twelve equal additional committee responsibilities. remuneration of the CEO is summarized in monthly cash instalments. Table 4. Any reference to “Management” Other members of the Board receive a or “Management Team” in this b) Pension benefits fixed annual base fee and fixed fees for Remuneration Report for the FY2023 and The purpose of pension benefits is to membership in Board’s committees. limited for the FYs up to and including provide security for employees and their FY2023 refers thus to the CEO only. dependents in the event of retirement, The amounts of the base fee and sickness, inability to work and death. committee membership fees, as illustrated Starting from the FY2024, the aggregate The Management Team’s members in Table 3, reflect the responsibility and remuneration of the Management Team participate in the social insurance and time requirement inherent to the respective (as defined above), including the CEO, pension plans in the countries where their function. will be accordingly reflected as part of employment contracts were entered into. the Remuneration Report for the FY2024 The plans vary according to local market The base fee and committee membership et sec. practice and legislation; at a minimum fees are paid 100% in cash. they reflect the statutory requirements of a) Base salary the respective countries. In line with local 2. Remuneration system of the Base salary is the fixed remuneration paid employment practice for Swiss employees, Management Team to employees for carrying out their role. Management Team’s members under The remuneration elements for the It is designed to be attractive and market Swiss employment contracts are Management Team consist of four competitive and is established considering covered by the Company’s compulsory components: the following factors: occupational pension scheme. a) salary • scope and responsibilities of the role, b) pension as well as qualifications and experience c) Other benefits c) other benefits required to perform the role, market In addition, Cavotec aims to provide d) performance-based non-equity cash value of the role in the location in which competitive employee benefits. Benefits compensation (“STIP”) Cavotec competes for talent; are considered from a global perspective, e) performance-based equity-based • skills and expertise of the individual in while appropriately reflecting differing incentives (“LTIP”) the role. local market practice and employment TABLE 3: REMUNERATION SYSTEM OF THE BOARD FOR ONE TERM OF OFFICE, IN EUR (GROSS AMOUNT) Base fee Committee fee Chair Member Patrick Tigerschiöld (Chairman)95,000 Audit Committee 10,000 5,000 Member35,000 Remuneration Committee 10,000 5,000 TABLE 4: REMUNERATION SYSTEM OF THE CEO Fixed Pay Variable Pay Base Salary Pension & other benefits Short-term incentive plan (STIP) Long-term incentive plan (LTIP) Purpose Attract and retain Risk protection, Market Focus on the delivery of the year’s Focus on the long-term success competitiveness commitments of the Group and align with shareholders’ interests Performance period – – 1 year 3 years Key drivers Role, responsibility, Legal requirements & Group, Division and personal Group long-term performance experience market practice performance (if relevant) Reward instrument Cash Pension, insurance plans Cash Performance shares and cash KPIs – – Revenues, EBIT, Cash flow EPS (65%), Relative TSR (35%) Target incentive – – 80% of base salary for the CEO, 60% of base salary for the CEO, 40% of base salary for CMT 40% of base salary for CMT members members Payout range – – 0–100% of target amount for each 0-100% of number of granted PS KPI for each KPI Impact of share price – – – Yes on payout value 40 Cavotec | Annual and Sustainability Report 2023 REMUNERATION REPORT | conditions. For the Management Team’s framework called 2023-2025 LTIP (“2023- C. EMPLOYMENT CONDITIONS members, benefits may include local 2025 LTIP”). The members of the Management market benefits such as transportation Team are employed under contracts of allowances, health cover, etc. The The LTIP is a three-year performance unlimited duration with a notice period monetary value of these remuneration share-based incentive plan. The 2023- up to a maximum of twelve months. elements as disclosed in the remuneration 2025 LTIP rewards the long-term Employment contracts for the members Table 4 is based on the actual amount performance between Jan 1, 2023, and of the Management Team include non- paid as well as the best estimate for the Dec 31 2025 (performance period). competition agreements not exceeding a amounts yet to be paid. Its purpose is to foster long-term value period of twelve months following the end creation for the Group by providing the of employment. d) Short-Term Incentive Plan Management Team and other eligible key (performance based non-equity cash managers with the possibility: D. REMUNERATION AWARDED TO compensation or STIP) • to become shareholders or to increase MEMBERS OF GOVERNING BODIES The short-term incentive plan (STIP) is the their shareholding in the Company; cash-based element of the variable pay • to participate in the future long-term 1. Base for inter alia the Management Team. Its success of Cavotec; and The section below is in line with Swiss objective is to: • to further align the long-term interests of law and specifically with art. 734a et • encourage performance and motivates the plan participants with those of the seq. CO which require disclosure of the beneficiaries to work together for shareholders. remuneration paid (directly or indirectly) to the sustainable success of the Group; members of the Board and Management • enable the alignment of objectives The Management Team, i.e. including Team (which, for the FYs up to and throughout the Company. the CEO, and a selected number of including FY2023, is limited to the CEO). senior managers are eligible for the. For the Remuneration Report covering The current STIP framework was The 2 LTIP grants performance shares the FY2023, the remuneration paid to introduced in 2018 to provide a simple, to the participants at the beginning of members of the Board and to the CEO is fair and transparent approach. the period as a percentage of the base shown separately. salary. The individual grants under the Plan participants at Group’s and division’s LTIP are determined based on the role Starting from the Remuneration Report level are incentivized based on the and responsibilities, taking into account for the FY2024, the following will apply: achievement of financial performance external market levels. (i) the remuneration paid to members targets, which are determined by the Board of the Board will be shown as a whole at the beginning of each financial year. The Awards under the LTIP are a contingent and separately for each member; (ii) the performance targets are defined in line entitlement to receive Cavotec shares at remuneration paid to the Management with the year’s commitments to contribute the end of the three-year performance Team will be shown in aggregate, while the to the long-term strategy. They are aligned period (vesting), provided certain highest-paid member of the Management with business priorities, with the aim of performance targets are achieved and Team will be shown separately. achieving sustainable profitability. subject to continuous employment. Remuneration paid directly or indirectly to former members of the Board or the These targets represent commercially The number of shares that will vest at the Management Team in connection with their sensitive information and are therefore not end of the performance period depends former activity as a member of a corporate disclosed. on the performance of two indicators: body of the Company will also be included. • 35% of the award is linked to the Total Pay-outs under the STIP are calculated Shareholder Return (“TSR”) measured 2. Remuneration awarded to the Board based on the achievement level of the over three years relative to the OMX for the term between 1 June 2023 and respective performance targets, with 100% Nordic Industry – Industrial Index; and 4 June 2024 (Audited) achievement resulting in 100% pay-out. • 65% of the award is linked to the The remuneration awarded to the Board For each financial performance target, Earnings per Share (“EPS”). members for the term between the AGM there is a minimum threshold performance 2023 (1 June 2023) and the AGM 2024 levels, below which there is no pay-out. In case the performance does not reach (4 June 2024) is summarized in Table 5. certain pre-determined thresholds, no e) Long-Term Incentive Plan performance shares will vest under the Compensation paid to the Board (performance based equity-based LT IP. members for non-compete arrangements incentives or “LTIP”) (art. 734a para. 2 no. 10 CO) as well as The previously equity based long term EPS targets represent commercially permitted joining bonuses (art. 734a para. incentive plan framework in place, so called sensitive information and are therefore not 2 no. 5 CO) or any other remuneration as 2021-2023 LTIP, has expired in FY2023. disclosed. per art. 734a para. 2 CO, if any, are also In 2023, the Board established a new summarized in Table 5. equity based long term incentive plan Annual and Sustainability Report 2023 | Cavotec 41 | REMUNERATION REPORT 3. Remuneration awarded to the CEO 4. Loans granted to members of the F. RECONCILIATION OF AGM for FY 2023 (Audited) Board or the CEO REMUNERATION RESOLUTIONS For FY 2023, the CEO has been awarded In accordance with Article 16j of the For the term from the 2023 AGM to the base salary, variable remuneration, Articles of Association, the Company does 2024 AGM, the 2023 AGM approved a pension, and other benefits, in line with not grant loans or extend credit to the maximum aggregate remuneration amount the remuneration system. members of the Board and to the CEO. for the Board of EUR 0.5 million (covering all pay, pension contribution, social charges, The remuneration of the CEO is E. REMUNERATION TO FORMER etc.). Table 7 shows the reconciliation summarized in Table 6. MEMBERS OF GOVERNING BODIES between the remuneration that has been/will During the term of 1 June 2023 until 4 be paid/granted for the respective term of Compensation paid to the CEO for non- June 2024, no payments were made to office and the maximum aggregate amount compete arrangements (art. 734a para. former members of the Board or related approved by the shareholders. 2 no. 10 CO) as well as permitted joining parties. bonuses (art. 734a para. 2 no. 5 CO) or The CEO’s maximum aggregate any other remuneration as per art. 734a remuneration amount for FY2024, i.e. for para. 2 CO, if any, are also summarized in the term started January 1, 2024, and Table 6. ending December 31, 2024, approved by TABLE 5: REMUNERATION AWARDED TO THE BOARD Remuneration for FY 2023, Social Security in EUR Qualification Board fees Contributions Pension Total 2023 Total 2022 Niklas Edling Independent Director 40,000 1,400 2,120 43,520 43,520 Annette Kumlien Independent Director 45,000 1,575 2,385 48,960 48,960 Erik Lautmann Independent Director – – – – 48,096 Peter Nilsson Independent Director 45,000 1,575 2,385 48,960 – Keith Svendsen Independent Director 40,000 1,400 2,120 43,520 43,520 Patrik Tigerschiöld Director (Chairman) 95,000 3,325 5,035 103,360 103,360 Total remuneration 288,320 287,456 Remuneration for FY 2023, Social Security in CHF Qualification Board fees Contributions Pension Total 2023 Total 2022 Niklas Edling Independent Director 38,872 1,361 2,060 42,293 43,725 Annette Kumlien Independent Director 43,731 1,531 2,318 47,579 49,191 Erik Lautmann Independent Director – – – – 48,323 Peter Nilsson Independent Director 43,731 1,531 2,318 47,579 – Keith Svendsen Independent Director 38,872 1,361 2,060 42,293 43,725 Patrik Tigerschiöld Director (Chairman) 92’321 3’231 4’893 100’445 103,847 Total remuneration 280,189 288,810 CHF/EUR exchange rate 0.9717973 TABLE 6: REMUNERATION OF THE CEO Social Security, Short-term Long-term Insurance Amounts for FY 2023 Incentive Incentive Benefits in and Pension (1) (2) (3) (4) in EUR Base Salary Plan Plan kind Contributions Total 2023 Total 2022 David Pagels 481,238 127,236 – 3,689 364,823 976,986 550,093 Social Security, Short-term Long-term Insurance Amounts for FY 2023 Incentive Incentive Benefits in and Pension (1) (2) (3) (4) in CHF Base Salary Plan Plan kind Contributions Total 2023 Total 2022 David Pagels 467,666 123,648 – 3,585 354,534 949,433 552,683 CHF/EUR exchange rate 0.9717973 (1) As the objectives of the 2023 STIP were achieved, there is payout in 2024 for FY 2023. (2) As the objectives of the 2021-2023 LTIP were not achieved, no shares to vest in 2024. (3) Allowances (Child, school fees, health insurance and transportation, non-competition agreements). (4) Pension contribution to the CEO has been made both in form of cash and defined contribution payments. 42 Cavotec | Annual and Sustainability Report 2023 REMUNERATION REPORT | the 2023 AGM, is EUR 2.2 million (covering function of the members concerned (see J. NON-MARKET STANDARD fixed and variable pay, pension contribution, art. 734d CO), are described in Table 9. REMUNERATION OR LOANS GRANTED social charges, etc.). Table 8 shows the TO CLOSELY ASSOCIATED PERSONS reconciliation between the remuneration H. EXTERNAL MANDATES No non-market standard remuneration that has been/will be paid to the CEO for The external mandates of each current has been granted by Cavotec to persons FY2024 and the maximum aggregate Board’s member and of the CEO (see art. closely associated to members of the amount approved by the shareholders. 734e CO) are described in Table 10. Board or the CEO. G. PARTICIPATION RIGHTS AND I. LOANS With respect to the FY2023, no loans OPTIONS With respect to the FY2023, no loans or credit facilities (still outstanding in The participation rights and options or credit facilities (still outstanding in FY2023) granted by Cavotec to the Board on such rights of each current Board’s FY2023) granted by Cavotec to the members, or the CEO exist. member and of the CEO, including their Board members, the CEO, former Board close associates, as well as the name and members or the former CEO, exist. TABLE 7: REMUNERATION APPROVED AND PAID/GRANTED FOR THE MEMBERS OF THE BOARD Total remuneration granted Maximum aggregate Status (paid/payable) in EUR amount approved in EUR AGM 2022 to AGM 2023 287,456 500,000 Approved (2022 AGM) AGM 2023 to AGM 2024 288,320 500,000 Approved (2023 AGM) 2024 AGM to 2025 AGM – 500,000 Proposed (2024 AGM) TABLE 8: REMUNERATION APPROVED AND PAID/GRANTED FOR THE CEO AND THE MANAGEMENT TEAM (AS OF FY2024) Total remuneration granted Maximum aggregate Status (paid/payable) in EUR amount approved in EUR FY 2022 2,984,689 2,900,000 CEO Approved (2021 AGM) FY 2023 949,433 2,200,000 CEO Approved (2022 AGM) FY 2024 – 2,200,000 CEO approved (2023 AGM) FY 2024 – 2,800,000 CMT (without CEO) Proposed (2024 AGM) TABLE 9: PARTICIPATION RIGHTS AND OPTIONS TABLE 10: EXTERNAL MANDATES The remuneration report must also include the participation rights in the Company According to art. 734e CO, it is required that activities of the board members as and options on such rights of each current member of the board of directors and well as the executive management in comparable positions in undertakings with the executive board, including the members’ close associates, as well as the name an economic purpose (“external mandates”) are disclosed in the compensation and function of the members concerned (art. 734d CO). report. The details must include the name of the relevant member, the name of the undertaking and the function exercised. We suggest including this information in a table and distinguishing between mandates in listed and in non-listed companies Participation Option on (see art. 15b of the articles of association) as well as other relevant mandates. Also rights participations right note that while the articles of association do not limit mandates in e.g. companies Niklas Edling 83,599 – which are controlled by Cavotec, such mandates must still be diclosed in the remuneration report. Please note that the provision on external mandates in art. Annette Kumlien 75,000 – 15b of the articles of association should be amended to include all members of the Peter Nilsson 212,180 – management team (and not only the board members and the CEO). Keith Svendsen – – Patrick Tigerschiöld: Chairman of Bure Equity AB, Mycronic AB, SNS Center for Patrik Tigerschiöld (Chairman) 1,598,000 – Business and Policy Studies, and Yubico AB. Member of the Board of Ovzon AB. Fellow of the Royal Swedish Academy of Engineering Sciences (IVA). David Pagels (CEO) 750,000 1,500,000 Total remuneration 2,718,779 1,500,000 Nicklas Edling: CEO at ScandiNova Systems AB, member of the Board of HMS Networks AB. Annette Kumlien: COO Intrum AB and member of the Board of Dirac Research AB. Keith Svendsen: CEO of APM Terminals, member of the Executive Leadership Team at A.P. Moller-Maersk, director of Through Transport Mutual Insurance Association Limited, independent provider of mutual insurance and related risk management services to the international transport and logistics industry. Peter Nilsson: Chairman of the Board of Lindab Group, Nilfisk A/S and Deputy Chairman of Creaspac AB. David Pagels: No other current assignment. Annual and Sustainability Report 2023 | Cavotec 43 Report of the statutory auditor to the General Meeting of Cavotec SA Lugano Report on the audit of the remuneration report Opinion We have audited the remuneration report of Cavotec SA (the Company) for the year ended 31 December 2023. The au- dit was limited to the information pursuant to article 734a-734f CO on pages 42 and 43 of the remuneration report. In our opinion, the information pursuant to article 734a-734f CO in the remuneration report (pages 42 and 43) complies with Swiss law and the Company’s articles of incorporation. Basis for opinion We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the remuneration report' section of our report. We are independent of the Company in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the tables marked 'audited' in the remuneration report, the consolidated financial statements, the financial statements and our auditor’s reports thereon. Our opinion on the remuneration report does not cover the other information and we do not express any form of assur- ance conclusion thereon. In connection with our audit of the remuneration report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the audited financial information in the remuneration report, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based o n the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Board of Directors' responsibilities for the remuneration report The Board of Directors is responsible for the preparation of a remuneration report in accordance with the provisions of Swiss law and the Company's articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of a remuneration report that is free from material misstatement, whether due to fraud or error. It is also responsible for designing the remuneration system and defining individual remuneration packages. Auditor’s responsibilities for the audit of the remuneration report Our objectives are to obtain reasonable assurance about whether the information pursuant to article 734a-734f CO is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and SA-CH will always detect a material misstatement when it exists. PricewaterhouseCoopers SA, Piazza Indipendenza 1, casella postale, 6901 Lugano, Switzerland Telefono: +41 58 792 65 00, www.pwc.ch PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. 44 Cavotec | Annual and Sustainability Report 2023 Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this remuneration report. Report of the statutory auditor As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgement and maintain profes- to the General Meeting of Cavotec SA sional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement in the remuneration report, whether due to fraud or error, de- Lugano sign and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropri- ate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher Report on the audit of the remuneration report than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Opinion Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri- ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's in- We have audited the remuneration report of Cavotec SA (the Company) for the year ended 31 December 2023. The au- ternal control. dit was limited to the information pursuant to article 734a-734f CO on pages 42 and 43 of the remuneration report. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and re- In our opinion, the information pursuant to article 734a-734f CO in the remuneration report (pages 42 and 43) complies lated disclosures made. with Swiss law and the Company’s articles of incorporation. We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that Basis for opinion we identify during our audit. We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant remuneration report' section of our report. We are independent of the Company in accordance with the provisions of ethical requirements regarding independence and communicate with them all relationships and other matters that may Swiss law and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safe- accordance with these requirements. guards applied. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. PricewaterhouseCoopers SA Other information The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the tables marked 'audited' in the remuneration report, the consolidated financial statements, the financial statements and our auditor’s reports thereon. Thomas Wallmer Laura Cazzaniga Our opinion on the remuneration report does not cover the other information and we do not express any form of assur- Licensed audit expert Licensed audit expert ance conclusion thereon. Auditor in charge In connection with our audit of the remuneration report, our responsibility is to read the other information and, in doing Lugano, 11 April 2024 so, consider whether the other information is materially inconsistent with the audited financial information in the remuneration report, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based o n the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Board of Directors' responsibilities for the remuneration report The Board of Directors is responsible for the preparation of a remuneration report in accordance with the provisions of Swiss law and the Company's articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of a remuneration report that is free from material misstatement, whether due to fraud or error. It is also responsible for designing the remuneration system and defining individual remuneration packages. Auditor’s responsibilities for the audit of the remuneration report Our objectives are to obtain reasonable assurance about whether the information pursuant to article 734a-734f CO is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and SA-CH will always detect a material misstatement when it exists. PricewaterhouseCoopers SA, Piazza Indipendenza 1, casella postale, 6901 Lugano, Switzerland Telefono: +41 58 792 65 00, www.pwc.ch Cavotec SA | Report of the statutory auditor to the General Meeting PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. Annual and Sustainability Report 2023 | Cavotec 45 | CORPORATE GOVERNANCE REPORT Corporate governance report 2023 Since Cavotec SA (“Cavotec” or the alternative solutions are described and information and material will be available “Company”) is a Swiss company listed the reasons therefore are explained in the in English only. This is in accordance with on Nasdaq Stockholm, the corporate corporate governance report (according to an exemption granted by the Swedish governance of Cavotec is based on the so-called “comply or explain principle”). Financial Supervisory Authority. The Swiss and Swedish rules and regulations, Deviations that the Company is aware of minutes of shareholders’ meetings, and such as the Swiss Code of Obligations have, as far as possible, been explained the election results with details of exact (the “CO”) and the Swedish Code of in the Company’s corporate governance percentage of votes for and against Corporate Governance (Sw. Svensk kod report. containing the resolutions and the election för bolagsstyrning) (the “Code”). This results with details of the exact percentage corporate governance report reflects SHAREHOLDERS’ MEETINGS of votes for and against, will be published the changes occurred with the Swiss General on the Company’s website within 15 days corporate law reform that came into force Shareholders’ rights to resolve on company following the general meeting. on 1 January 2023. matters are exercised at shareholders’ meetings. An ordinary shareholders’ Right to attend shareholders’ THE SWEDISH CODE OF CORPORATE meeting is to be held yearly within meetings GOVERNANCE six months following the close of the All shareholders who are registered Swedish companies with shares admitted business year. It is called by the Board of directly in Euroclear Sweden’s and SIX to trading on a regulated market in Sweden, Directors or, if necessary, by the auditors. SIS’s share registers on the record including Nasdaq Stockholm, are subject Extraordinary shareholders’ meetings date, as applicable, and who notify the to the Code. The Code is a codification may be called by the Board of Directors, Company of their intention to attend the of best practices for Swedish listed the liquidators or the auditors as often as shareholders’ meeting at the latest by the companies based on Swedish practices necessary to safeguard the interests of date specified in the convening letter, shall and circumstances. Cavotec has decided the Company. Shareholders’ meetings are be entitled to attend the shareholders’ to apply the Code, however, the Company held at the domicile of the Company or at meeting and vote according to the is not obliged to comply with every rule in such other place in Switzerland and abroad number of shares they hold. Shareholders the Code as the Code itself provides for the as the Board of Directors shall determine. may attend shareholders’ meetings in possibility to deviate from the rules, provided The shareholders’ meetings, deviating person or through a proxy. The Board of that any such deviations and the chosen from the Code, will be held in English and Directors may provide that shareholders CAVOTEC CORPORATE GOVERNANCE STRUCTURE Shareholders (*) Nomination Committee Auditors Chairman of the Board Remuneration Committee Audit Committee Board of Directors CEO Articles of Association ( ) Cavotec Management Team * To follow the rules that apply to Code of Conduct Swiss companies, the Board of Chief Financial Officer Directors has decided that the Internal Regulations Nomination Committee shall President, Ports & Maritime be established by the Board Group Policies President, Industry of Directors. The composition President, Services of the Nomination Committee Chief Legal & Human Resources Officer shall, however, be in line with the Swedish Corporate Governance Senior VP Global Operations Code. 46 Cavotec | Annual and Sustainability Report 2023 CORPORATE GOVERNANCE REPORT | who are not present at the place of the convened by the Board of Directors, External auditor shareholders’ meeting may exercise their provided they together hold at least 0.5 per The Audit Committee and the Board of rights by electronic means. Shareholders cent of the share capital or of the votes. Directors are responsible for presenting may usually register for shareholders’ proposals on the appointment of the meetings in several different ways, which Stating the purpose of the meeting and auditors to the Annual General Meeting are described in the Notice of meeting the agenda to be submitted, one or more and are also responsible for resolving (the “Notice of Meeting”). shareholders representing at least five per on the remuneration to the auditor and cent of the share capital may request the any issues on resignation or dismissal of Notice of shareholders’ meetings and Board of Directors, in writing to call an the auditor. This constitutes a deviation shareholder initiatives extraordinary shareholders’ meeting. In from the Code that prescribes that the The Notice of Meeting is given by means such case, the Board of Directors must call Nomination Committee is responsible of a publication in the Swiss Commercial a shareholders’ meeting within two weeks. for presenting proposals to the Annual Gazette or by letter to the shareholders of General Meeting on the election and record as well as through a press release. Nomination Process remuneration of the external auditor. In Between the day of the publication or The process for the nomination of Board accordance with Swiss law, the Board the mailing of the notice and the day of members for Cavotec is construed in of Directors has decided that the Audit the meeting there must be a time period light of the Code, while still respecting Committee shall propose the auditors of not less than 20 calendar days. The Swiss laws and regulations applicable to the Board of Directors, which in turn notice of the shareholders’ meeting must to a Swiss company. The ultimate goal shall present its proposals to the Annual indicate in particular the agenda items to has been to adopt a Nomination Process General Meeting. For the purpose of its be discussed, the motions of the Board of that is open and transparent to all election by the Annual General Meeting Directors together with a short explanation, shareholders and stakeholders. 2024, the Audit Committee has proposed and, if applicable, the shareholders’ to the Board of Directors to appoint motions together with a short explanation. In October 2023 the Committee began PricewaterhouseCoopers SA, Lugano, as The notice will also be published on preparing a proposal for the Board of the independent auditor of the Company the Company’s website. At the time of Directors to be submitted to the Annual for the business year 2024. Thomas the notice, the Company may publish in General Meeting 2024. Wallmer is the auditor in charge. Svenska Dagbladet an announcement with information that the notice has been issued. The proposal of the Nomination THE BOARD OF DIRECTORS Committee will be published in the The members of the Board of Directors Shareholders may request that items invitation to the Annual General Meeting. are elected by the shareholders’ meeting be placed on the agenda of a meeting for the period until the end of the next BUDGET 2024 APPROVAL DEC JAN Q422 REPORT Q323 REPORT NOV FEB Q4 Q1 OCT MAR Board of Directors’ Work Calendar 2023 SEP APR ANNUAL REPORT Q123 REPORT Q3Q2 AUG MAY JUL JUN Q223 REPORT ANNUAL GENERAL MEETING Annual and Sustainability Report 2023 | Cavotec 47 | CORPORATE GOVERNANCE REPORT ordinary shareholders’ meeting. The Board the Articles of Association or the Internal h) preparing the remuneration report. of Directors constitutes itself, as set out Regulations. in the Articles of Association, but by law By Swiss law, the Board of Directors the Chairman of the Board of Directors is By Swiss law, the Board of Directors has also has in particular the following elected by the shareholders’ meeting. in particular the following non-transferable non-transferable responsibilities: (i) and inalienable duties: decision pursuant to art. 653e CO The members of the Nomination a) the overall management of the (preparation of the capital increase Committee and the Audit Committee, company and issuing the required report); (ii) decisions in connection with as well as the respective Chairmen, are directives; capital increases pursuant to art. 652g, elected from and by the Board members. b) to determine the Company’s 653g, 653i (acknowledgement of capital The Remuneration Committee is elected organization; increase); (iii) decision pursuant to art. by the shareholders’ meeting and its c) organising the accounting, financial 653o (acknowledgement of capital Chairman is elected by the Board, as control and financial planning systems reduction); (iv) decisions pursuant to further described below in relation to the as required for management of the art. 634b I CO (require outstanding description of each committee. company; contributions on shares not fully paid d) appointing and dismissing persons in); (v) to monitor the solvency of the The Board of Directors is entrusted with entrusted with managing and company and to take all actions within the overall management of the Company, representing the company; the meaning of art. 725, 725a and as well as with the supervision and e) overall supervision of the persons 725b; and (vi) specific resolutions control of the management. The Board of entrusted with managing the company, pursuant to the Swiss Merger Act. Directors is the ultimate executive body in particular with regard to compliance of the Company and shall determine the with the law, articles of association, The Board of Directors held seven principles of the business strategy and operational regulations and directives; ordinary Board meetings and four policies. f) compiling the annual report, extraordinary Board meetings for Cavotec preparing for the general meeting in 2023. In addition, 1 Board resolutions The Board of Directors shall exercise its and implementing its resolutions, have been deliberated by circular function as required by law, the Articles including interim published reports resolution (without a Board meeting). of Association and the Board of Directors’ and determination of the accounting Internal Regulations. The Board shall standard; BOARD COMMITTEES be authorised to pass resolutions on g) filing an application for a debt The Board of Directors currently has all matters that are not reserved to the restructuring moratorium and notifying three Board committees, the Nomination general meeting of shareholders or to the court in the event that the company Committee,the Audit Committeeand other executive bodies by applicable law, is overindebted; the Remuneration Committee. The BOARD AND COMMITTEE MEETINGS IN CAVOTEC IN 2023 Board Audit Remuneration Nomination Held Held (ordinary and (including via extraordinary) Attended Held Attended Held Attended circular resolution) Attended Henrik Blomquist 3 3 Fabio Cannavale 3 1 Peer Colleen 3 3 Niklas Edling 11 11 8 8 Thomas Ehlin 3 3 Keith Svedsen 11 10 5 5 Annette Kumlien 11 11 8 8 Erik Lautmann 11 5 5 2 Peter Nilsson 11 4 5 3 Patrik Tigerschiöld 11 11 8 6 5 5 3 3 48 Cavotec | Annual and Sustainability Report 2023 CORPORATE GOVERNANCE REPORT | Remuneration Committee has been the Board of Directors has decided that Ehlin (representing The Fourth Swedish elected by the shareholders’ meeting,in the Nomination Committee shall be National Pension Fund – AP4), Fabio accordance with Swiss law (in particular established by the Board of Directors. The Cannavale, who represents Nomina SA the CO that - as of 1 January 2023 - has composition of the Nomination Committee and Patrik Tigerschiöld (Chairman of implemented the previous regulation shall however be in line with the Code. Cavotec’s Board of Directors). set by the Minder Ordinance). The composition and tasks of the Board’s The Nomination Committee shall ensure Audit Committee Committees are regulated in the Board that the Company has a formal and The objective of the Audit Committee of Directors’ Internal Regulations. transparent method for the nomination is to assist the Board of Directors in The composition and tasks of the and appointment of Board members. The discharging its responsibilities relative Remuneration Committee are regulated objectives of the Nomination Committee to financial reporting and regulatory in the Articles of Association as well are to regularly review and, when compliance. The Audit Committee also as in the Board of Directors’ Internal appropriate, recommend changes to the presents proposals on the election and Regulations. Below is a brief description of composition of the Board of Directors remuneration of the auditors to the Board the Committees as per the current Internal to ensure that the Company has, and of Directors, which in turn present its Regulations (which are continuously maintains, the right composition of the proposals to the Annual General Meeting reviewed and if deemed appropriate by members of the Board of Directorsto for the election. Members of the Audit the Board of Directors amended). The effectively govern and provide guidance Committee shall exclusively comprise of shareholder can request to the Board of to business, and identify and recommend members of the Board appointed by the Directors to issue information in writing or to the Board of Directors individuals for Board in accordance with the Code. The electronically concerning the organisation nomination as members of the Board and Audit Committee will comprise of not less of the business management. its Committees (taking into account such than three members with a majority to factors as it deems appropriate, including be Independent Directors of the Board. Nomination Committee experience, qualifications, judgment One member must have a financial or The Nomination Committee shall be a and the ability to work with other Board accounting background. committee established by the Board members). of Directors of the Company. This is in The Audit Committee of Cavotec is line with Swiss law but will constitute a From October 2023, the Nomination involved in a wide range of activities deviation from the Code that prescribes Committee members are Henrik Blomquist including, inter alia, the review of all that the Nomination Committee shall be (representing Bure Equity AB), Per quarterly, half - yearly and annual financial determined by the shareholders. To follow Colleen, who represents TomEnterprise statements prior to their approval by the the rules that apply to Swiss companies Private AB (Thomas von Koch), Thomas Board and release to the public. The Annual and Sustainability Report 2023 | Cavotec 49 | CORPORATE GOVERNANCE REPORT Committee has periodic contact with consistent group employment practices commercial developments, as well as new the auditors, PricewaterhouseCoopers, subject to regional differences; acquisitions in line with targets set by the through the PwC engagement partner 4. Reviewing of and making proposals Cavotec’s Board of Directors. responsible for the Audit and through the to the Board of Directors on the principal engagement manager, to review remuneration of the members of the Cavotec’s operational structure is any unusual matters and the effect of new Board of Directors and of the Chief reasonably flat in order to ensure that the accounting pronouncements. As a matter Executive Officer; Group’s operations and decision-making of policy, the Audit Committee meets with 5. Reviewing the terms of the Company’s processes are efficient and responsive. the PwC engagement partner without the short and long term incentive plans; Strategic, Group-related operations are the presence of Management at least once 6. Submission of a draft of the responsibility of the CEO with the support every year. Further, the Committee reviews remuneration report to the Board of of the CMT. All material decisions within the annual audit plan, as prepared by the Directors. the day-to-day operations of the Company auditors, including the adequacy of the are taken by the CEO. scopes of the audits proposed for the The Remuneration Committee and the principal locations and the proposed audit Board of Directors are thus together REMUNERATION AND INCENTIVE fees. The engagement of the auditors responsible for presenting proposals PLANS for non-audit services of significance to the Annual General Meeting on the Please refer to the Remuneration report on is approved in advance by the Audit remuneration of the members of the Board page 38. Committee. of Directors and of the Chief Executive Officer. This constitutes a deviation INTERNAL CONTROL SYSTEM (ICS) At least once every year Management from the Code that prescribes that the The internal control function has been gives a presentation to the Audit Nomination Committee is responsible embedded in the finance organisation. Committee on the risk profile of the Group for presenting proposals to the Annual This task is performed by Group Finance, and on the procedures in place for the General Meeting on the fees and other that together with the local entity’s finance management of Risk. Risks related to the remuneration to the Board members. department and the Legal Compliance potential impairment of assets and the officer is responsible for ensuring that the related provisions required for financial The current members of the Remuneration necessary controls are performed along exposures are reviewed and discussed Committee in Cavotec are Peter Nilsson with adequate monitoring. with Management at least once a year, (Chairman), Keith Svendsen and Patrik normally in conjunction with the third Tigerschiöld. Internal controls comprise the control of quarter closing. the Company’s and Group’s organisation, In accordance with Art. 698 para 3 and procedures and remedial measures. The The Audit Committee of Cavotec met eight 733 CO and with the Internal Regulations, objective is to ensure reliable and correct times in 2023. the Nomination Committee proposes to financial reporting, and to ensure that elect the following Board members to be the Company’s and Group’s financial The current members of the Audit part of the Remuneration Committee for reports are prepared in accordance with Committee are Annette Kumlien the year 2024/2025: Keith Svendsen, law and applicable accounting standards (Chairwoman), Patrik Tigerschiöld and Patrik Tigerschiöld and Peter Nilsson. and that other requirements are complied Niklas Edling. with. The internal control system is also The Remuneration Committee of Cavotec intended to monitor compliance with Remuneration Committee met five times in 2023. the Company’s and Group’s policies, The main purpose of the Remuneration principles and instructions. In addition, Committee is to act as remuneration Cavotec Management Team – CMT the control system monitors security for committee pursuant to Swiss law against The CMT is selected by the CEO and as the Company assets and monitors that excessive compensation with respect to of December 31, 2023 consists of six the Company’s resources are exploited listed corporations. The Remuneration members (excluding the CEO), combining in a cost-effective and adequate manner. Committee has in particular the following Cavotec’s senior operational and Internal control also involves following duties and responsibilities: corporate functions. up on the implemented information and 1. Reviewing and advising the Board of business system, and risk analysis. Directors on the terms of appointment The CMT fulfils the Group Management of the CEO; role – empowered by the CEO – and 2. Reviewing working environments and ensures efficient implementation of succession planning for members of strategic decisions into Cavotec’s global the Management; organisation and leads local management 3. Reviewing the terms of the employment on key operational issues. The CEO, arrangements with members of the defines and implements operational Management, as well as to develop strategy, policies, technical and 50 Cavotec | Annual and Sustainability Report 2023 AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec5151 | BOARD OF DIRECTORS Board of Directors Patrik Tigerschiöld Niklas Edling Chairman of the Board Member of the Board Born 1964 Born 1963 Member since 2014, Chairman since 2018 Member since 2019 Citizenship: Swedish Citizenship: Swedish Patrik Tigerschiöld holds an M.Sc. in Niklas Edling holds an M.Sc. in Business and Economics. Since 2013, Mechanical Engineering from the he has been Chairman of Bure Equity AB, KTH Royal Institute of Technology in (a role he also held between 2004 and Stockholm and a B.Sc. in Economics 2009), following his tenure as President and Business Administration from the and CEO of the company. He is also Stockholm School of Economics. In chairman of Bury Equity AB, Mycronic addition to being on the Cavotec board, AB, SNS Center for Business and Policy Niklas is also CEO of ScandiNova Studies, and Yubico AB, as well as a Systems AB, a global leader in pulsed member of the Board of Ovzon AB. Patrik power solutions for applications is also a Fellow of the Royal Swedish in medtech, industry and science. Academy of Engineering Sciences (IVA). Previously, Niklas was SVP Corporate Development and Deputy CEO at electronics production solutions provider Mycronic, where he also served as SVP Operations. He is also a board member of HMS Networks AB. Patrik Tigerschiöld, together with his family, Niklas Edling holds 83,599 shares in holds 1,598,000 shares in Cavotec. Cavotec. 52 Cavotec | Annual and Sustainability Report 2023 BOARD OF DIRECTORS | Annette Kumlien Peter Nilsson Keith Svendsen Member of the Board Member of the Board Member of the Board Born 1965 Born 1962 Born 1973 Member since 2019 Member since 2023 Member since 2021 Citizenship: Swedish Citizenship: Swedish Citizenship: Danish Annette Kumlien holds a Bachelor Peter Nilsson holds an M.Sc. in Business Keith Svendsen graduated as a Master of Business Administration from the and Economics from the Stockholm Mariner from Fanoe Navigation College, Stockholm School of Economics. School of Economics. in Denmark, and has an Executive MBA Alongside her Cavotec role, she holds He is chairman of Lindab Group, Nilfisk from the London Business School in the position as COO Intrum AB and is a A/S and deputy chairman of Creaspac the UK. Alongside his Cavotec role, member of the Board of Dirac Research AB. He was previously, among others, he currently serves as CEO of APM AB. Previously Annette has worked as chairman of Adapteo AB and Unilode AG, Terminals, one of the largest port terminal GVP/CFO at Munters Group AB, CFO/ deputy chairman of Cramo OYJ and CEO operators in the world. He is also director COO at Diaverum and CFO in Höganäs of Sanitec AB and Duni AB. of a number of entities associated with AB and Pergo AB. A.P. Moller-Maersk and a member of the Executive Leadership Team at A.P. Moller- Maersk. Additionally, he is the Director of Through Transport Mutual Insurance Association Limited, independent provider of mutual insurance and related risk management services to the international transport and logistics industry. Previously, Keith has also been COO of APM Terminals and before that Head of Operational Execution for the Maersk Group’s Ocean Shipping business. Annette Kumlien holds 75,000 shares in Peter Nilsson holds 212,180 shares in Keith Svendsen does not hold any shares Cavotec. Cavotec through his company Poleved in Cavotec. Industrial Performance AB. Annual and Sustainability Report 2023 | Cavotec 53 | CAVOTEC MANAGEMENT TEAM Cavotec Management Team David Pagels Joakim Wahlquist Patrick Mares CEO Chief Financial Officer President, Ports & Maritime Born 1968 Born 1977 Born 1962 Citizenship: Swedish Citizenship: Swedish Citizenship: Belgian David Pagels holds an Executive Joakim Wahlquist holds Patrick Mares holds a master’s MBA from Stockholm School of a M.Sc. in Business degree in Engineering from the Economics, a M.Sc in Mechanical Administration from Linköping University of Leuven, Belgium. Engineering from University of University and an Executive Prior to joining Cavotec, he Luleå and a B.Sc in Mechanical Education from Stockholm served as Vice-President Engineering from University of School of Economics. Prior to EMEA at Harsco Rail. Prior to Växjö in Sweden. Prior to joining joining Cavotec, he has held this, he was Vice-President of Cavotec, he served as CEO of several senior management Sales & Business Development Dellner Couplers, Head of Global positions such as Managing at GKN Land Systems, Sourcing at Xylem Europe GmbH, Director Financial Services President EMEIA at Ingersoll and Director Strategic Sourcing at Russia at Scania, CFO Russia Rand Security Technologies, Bombardier Transportation. and Central Asia at Scania and and held various leadership CFO Hong Kong at Scania. positions at General Electric. David Pagels holds 750,000 Joakim Wahlquist holds 75,000 Patrick Mares holds 18,950 shares in Cavotec and shares in Cavotec and 150,000 shares in Cavotec. 1,500,000 call options issued call options issued by Bure by Bure Equity AB. Equity AB. 54 Cavotec | Annual and Sustainability Report 2023 CAVOTEC MANAGEMENT TEAM | Simone Sguizzardi Patrick Baudin Jörgen Ohlsson Vanessa Tisci President, Industry President, Services Senior Vice President, Chief Legal & Human Global Operations Resources Officer Born 1974 Born 1971 Born 1970 Born 1982 Citizenships: Italian and German Citizenships: Canadian and French Citizenship: Swedish Citizenship: Italian Simone Sguizzardi holds an Patrick Baudin holds a MBA Jörgen Ohlsson holds Vanessa attended the Executive MBA from the Hult in International Finance from a Master’s Degree in universities of Bologna and International Business School HEC School of Management in Mechanical Engineering from Milan in Italy and holds a in London (UK), and a degree Paris (France) and a Bachelor Linné university (Sweden). Master’s Degree in law from in Commerce and Economic in Engineering from McGill Prior to joining Cavotec, Stanford Law School (UK). History from the University of University in Montreal (Canada). he served as Production Previously, Vanessa was the Bologna (Italy). Prior to joining Prior to joining Cavotec he served Director for the Xylem site Head of Legal at SCP Group, Cavotec, Simone was Director as President of General Electric in Emmaboda, Sweden. and prior to that she worked of Western Europe at UTA Renewable Energy Canada. He He has also held senior as Senior International Edenred, and Export Director at has also held several senior positions such as Strategic Counsel for Walgreens Boots Mapco GmbH. positions in ALSTOM such as Sourcing within Ericsson and Alliance. Vanessa is a New vice president of the Generator in production and sourcing York-qualified attorney and Product Line for ALSTOM Thermal within Bombardier. has worked for major US law Service in Switzerland and firms as a corporate lawyer. ALSTOM Power Service in France. Simone Sguizzardi does not Patrick Baudin holds 10,000 Jörgen Ohlsson holds 625 Vanessa Tisci does not hold hold any shares in Cavotec. shares in Cavotec. shares in Cavotec. any shares in Cavotec. Annual and Sustainability Report 2023 | Cavotec 55 Consolidated Financial Statements This report is dated 11 April 2024 and is signed on behalf of the Board and of the Management of Cavotec SA by Patrik Tigerschiöld David Pagels Chairman Chief Executive Officer Please note that all reported amounts are in euro. 56 Cavotec | Annual and Sustainability Report 2023 CONSOLIDATED FINANCIAL STATEMENTS | Statement of Comprehensive Income Cavotec SA & Subsidiaries EUR 000s Notes 2023 2022 Revenue from sales of goods and services 5 180,734 147 ,849 Other income 6 2 ,076 1 ,776 Cost of materials (101 ,219) (80,911) Employee benefit costs 7 (47 ,895) (47 ,807) Operating expenses 8 (19,292) (19,276) Gross Operating Result 14,404 1,631 Depreciation and amortisation 16,17 (2,782) (2,906) Depreciation of right-of-use of leased asset 16 (3,311) (3,222) Impairment losses 9,17 (1 ,084) (9) Operating Result 7 ,227 (4,506) Interest income 10 18 108 Interest expenses 10 (3,471) (1 ,354) Currency exchange differences - net 10 (1 6) 5,471 Other financial item 5 – Profit /(Loss) before income tax 3,763 (281) Income taxes 11,19 (3,583) (2,890) Profit /(Loss) for the period, continued operations 180 (3 ,170) Profit /(Loss) for the period, discontinued operations 38 – (11,522) Profit /(Loss) for the period 180 (14 ,692) Other comprehensive income: Remeasurements of post employment benefit obligations continued operations 27 (99) 507 Remeasurements of post employment benefit obligations discontinued operations 27 – 193 Items that will not be reclassified to profit or loss (99) 700 Currency translation differences continued operations (1 ,836) (8,364) Currency translation differences discontinued operations – (155) Items that may be subsequently reclassified to profit/(loss) (1,836) (8,519) Other comprehensive income/(loss) for the year, net of tax (1,935) (7 ,819) Total comprehensive income/(loss) for the year (1,755) (22 ,540) Total comprehensive income/(loss) attributable to: Equity holders of the Group (1 ,755) (22,511) Non-controlling interest – (29) Total (1,755) (22 ,540) Profit/(Loss) attributed to: Equity holders of the Group continued operations 180 (3,170) Equity holders of the Group discontinued operations – (11,522) Total 180 (14 ,692) Basic and diluted earnings per share from continued operations attributed to the equity holders of the Group (EUR/Share) 30 0.002 (0.034) Basic and diluted earnings per share from discontinued operations attributed to the equity holders of the Group (EUR/Share) 30–(0.122) Basic and diluted earnings per share attributed to the equity holders of the Group (EUR/Share) 30 0.002 (0.156) Weighted Average number of shares 104,103,112 94,243,200 The notes on pages 61–86 are an integral part of these Consolidated Financial Statements. Annual and Sustainability Report 2023 | Cavotec 57 | CONSOLIDATED FINANCIAL STATEMENTS Balance Sheet Cavotec SA & Subsidiaries Assets EUR 000s Notes 31 December 2023 31 December 2022 Current assets Cash and cash equivalents 15,056 9,625 Trade receivables 12 27 ,942 33,315 Contract assets 5,12 2,862 1 ,171 Tax assets 13 4,718 6,399 Other current receivables 14 4,949 6 ,256 Inventories 15 37 ,429 43,002 Assets held for sale 9,38 1 ,814 2 ,320 Total current assets 94,770 102,088 Non-current assets Property, plant and equipment 16 5,414 5,941 Right-of-use of leased assets 16 11 ,529 13,213 Intangible assets 17 37 ,315 38,920 Non-current financial assets 18 68 106 Deferred tax assets 19 6,897 6,201 Other non-current receivables 20 1 ,231 1 ,215 Total non-current assets 62,454 65,597 Total assets 157 ,224 167 ,685 Equity and Liabilities EUR 000s Current liabilities Current financial liabilities 21 – (4,914) Current lease liabilities 16 (2,527) (2 ,687) Trade payables 22 (26,004) (36,126) Contract liabilities 5,22 (19,268) (28,125) Tax liabilities 23 (5,111) (3,101) Provision for risk and charges, current 26 (2,171) (2 ,032) Other current liabilities 24 (11,320) (11 ,906) Total current liabilities (66,401) (88,891) Non-current liabilities Non-current financial liabilities 21 (21 ,468) (21 ,172) Non-current lease liabilities 16 (9,167) (10,353) Deferred tax liabilities 25 (1 ,251) (1 ,100) Other non-current liabilities (1 2) (461) Provision for risk and charges, non-current 26 (1,794) (1 ,357) Employee benefit obligation 27 (569) (501) Total non-current liabilities (34,261) (34,944) Total liabilities (100,662) (123,835) Equity Share Capital (54,130) (45,288) Reserves 29 (55,323) (51 ,633) Retained earnings 52,891 53,071 Equity attributable to owners of the parent 28 (56,562) (43,850) Non-controlling interests – – Total equity (56,562) (43,850) Total equity and liabilities (157 ,224) (167 ,685) The notes on pages 61–86 are an integral part of these Consolidated Financial Statements. 58 Cavotec | Annual and Sustainability Report 2023 CONSOLIDATED FINANCIAL STATEMENTS | Statement of Changes in Equity Cavotec SA & Subsidiaries Equity related Share Retained to owners Non-controlling Total EUR 000s Notes Capital Reserves earnings of the parent interest Equity Balance as at 1 January 2022 (100,169) (4,833) 38,379 (66,623) (29) (66,652) (Profit) / Loss for the period – – 14,692 14,692 29 14,721 Currency translation differences – 8,519 – 8,519 – 8,519 Remeasurements of post employment benefit obligations 27 – (700) – (700) – (700) Total comprehensive income and expenses – 7 ,819 14 ,692 22,511 29 22,540 Employees share scheme – 262 – 262 – 262 Share Premium Reserve 29 54,881 (54,881) – – – – Transactions with shareholders 54,881 (54 ,619) – 262 – 262 Balance as at 31 December 2022 (45,288) (51,633) 53 ,071 (43,850) – (43,850) Balance as at 1 January 2023 (45,288) (51 ,633) 53,071 (43,850) – (43,850) (Profit) / Loss for the period – – (180) (180) – (180) Currency translation differences – 1 ,836 – 1 ,836 – 1 ,836 Remeasurements of post employment benefit obligations 27 – 99 – 99 – 99 Total comprehensive income and expenses – 1,935 (180) 1,755 – 1,755 Employees share scheme – 58 – 58 – 58 Capital increase (8,843) – – (8,843) – (8,843) Share Premium Reserve 29 – (5,683) – (5,683) – (5,683) Transactions with shareholders (8,843) (5 ,625) – (14,467) – (14,467) Balance as at 31 December 2023 (54,130) (55 ,323) 52,891 (56,562) – (56 ,562) The line related to Employees share scheme shows the accrual for LTIP plans. The notes on pages 61–86 are an integral part of these Consolidated Financial Statements. Annual and Sustainability Report 2023 | Cavotec 59 | CONSOLIDATED FINANCIAL STATEMENTS Statement of Cash Flows Cavotec SA & Subsidiaries EUR 000s Notes 2023 2022 Profit /(Loss) for the year 180 (14,692) Loss from discontinued operations, net of income taxes – (11 ,522) Adjustments for: Net interest expenses 3,453 1 ,246 Current taxes 11 4,221 2,709 Depreciation and amortisation 16,17 2,782 2,906 Depreciation of right -of-use of leased assets 16 3,311 3,222 Impairment losses 9,17 1 ,084 9 Deferred tax (638) 181 Provision for risks and charges 69 (827) Capital gain or loss on assets (20) – Other items not involving cash flows (454) (4,907) Interest paid (3,057) (945) Taxes paid (529) (6,225) 10,222 (2 ,631) Cash flow before change in working capital 10,402 (5,802) Impact of changes in working capital Inventories 5,451 (12,960) Trade receivables and contract assets 4 ,381 (8,784) Other current receivables 1 ,306 (2,613) Trade payables and contract liabilities (18,979) 23,161 Other current liabilities (628) 1 ,513 Impact of changes involving working capital (8,469) 317 Net cash inflow /(outflow) from operating activities continued operations 1,933 (5,485) Net cash inflow /(outflow) from operating activities discontinued operations – (15,508) Net cash inflow /(outflow) from operating activities 1,933 (20,993) Financing activities Increase in equity capital 14,526 – Net changes loans and borrowings 21 (4,696) 12,257 Repayment of lease liabilities 16 (3,156) (3,073) Net cash inflow /(outflow) from financing activities continued operations 6,674 9,184 Net cash inflow /(outflow) from financing activities discontinued operations – (907) Net cash inflow /(outflow) from financing activities 6 ,674 8,277 Investing activities Investments in property, plant and equipment (911) (1 ,183) Investments in intangible assets 17 (624) (1 ,399) Decrease of non current financial asset 38 (50) Disposal of assets 16 29 1 ,142 Net cash inflow/(outflow) from investing activities continued operations (1 ,468) (1,490) Net cash inflow /(outflow) from investing activities discontinued operations – 9,679 Net cash inflow /(outflow) from investing activities (1,468) 8,189 Cash at the beginning of the year 9,625 12,230 Cash flow for the year continued operations 7 ,137 2,209 Cash flow for the year discontinued operations – (6,736) Cash flow for the year 7 ,137 (4,527) Currency exchange differences (1 ,706) 1 ,922 Cash at the end of the year 15,056 9,625 The notes on pages 61–86 are an integral part of these Consolidated Financial Statements. 60 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | Notes to the Financial Statements NOTE 1. GENERAL INFORMATION Cavotec is a leading cleantech company that designs and delivers connection and electrification solutions to enable the decarbonization of ports and industrial applications worldwide. Backed by more than 40 years of experience, our systems ensure safe, efficient, and sustainable operations for a wide variety of customers and applications worldwide . We thrive by shaping future expectations in the areas we are active in. Our credibility comes from our application expertise, dedication to innovation and world class operations. Our success rests on the core values we live by: Integrity, Accountability, Performance and Teamwork. Cavotec’s personnel, located in some 20 countries around the world, represent many cultures and provide customers with local support, backed by the Group’s global network of engineering expertise. Cavotec SA is the ultimate Parent company of the Cavotec Group, its registered office is Corso Elvezia 16, CH-6900 Lugano, Switzerland. Cavotec SA shares are listed on Nasdaq Stockholm, Sweden. These Financial Statements were approved by the Board of Directors on 11 April 2024. The report is subject to approval by the Annual General Meeting on 4 June 2024. NOTE 2. BASIS OF PREPARATION The consolidated Financial Statements of the Cavotec Group are prepared in accordance with IFRS accounting standards as issued by the IASB. Historical Cost Convention These Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through P&L. Adoption of new and revised standards and application of new accounting policies The following standards are effective from 1 January 2023. The adoption of the amendments has had no impact on the Group’s consolidated financial position or performance of the Group as per management analysis performed: • Amendments to IAS 8 – Definition of Accounting Estimates • Amendments to IAS 1 – Disclosure of Accounting Policies • Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the group. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. Critical accounting estimates The preparation of the Financial Statements in conformity with IFRS accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in note 4 . NOTE 3. SUMMARY OF MATERIAL ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the Financial Statements are set out below. These policies have been consistently applied to all the periods presented, namely, 31 December 2023 and 2022. FOREIGN CURRENCY TRANSLATION (i) Functional and presentation currency Items included in the Financial Statements are measured using the currency of the primary economic environment in which the related entity operates (‘the functional currency’). The Financial Statements are presented in Euros, which is the Group’s presentation currency and Company’s functional currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit or Loss, except when recognised in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. (iii) Foreign operations The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities for each Balance Sheet presented are translated at the closing rate at the date of that Balance Sheet. Income and expenses for each Income Statement position are translated at average exchange rates of that period, unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions. Resulting exchange differences related to currency translation adjustment are recognised in other comprehensive income and accumulated as a separate component of equity. The Consolidated Statements of Cash Flow are translated at average exchange rates during the period, whereas cash and cash equivalents are translated at the spot exchange rate at the end of the reporting period. Annual and Sustainability Report 2023 | Cavotec 61 | NOTES TO THE FINANCIAL STATEMENTS Exchange differences arising from the translation of any net investment in foreign operations and borrowings designated as quasi-equity loans are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the Statement of Comprehensive Income, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. CONSOLIDATION (i) Subsidiaries Subsidiaries are all entities over which the group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and could affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The Group uses the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Contingent consideration is valued based on the probability that the consideration will be paid and changes in the fair value are recognised in profit or loss. Acquisition-related costs are expensed. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the Statement of Comprehensive Income. Inter-company transactions, balances, and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. (ii) Transactions with non-controlling interest The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners. (iii) Scope of Consolidation The consolidated Financial Statements include the statements as of 31 December 2023 of the companies included in the scope of consolidation, which have been prepared in accordance with IFRS accounting standards adopted by the Group. Below is a list of companies consolidated on a line-by-line basis and the respective shares held either directly or indirectly by Cavotec SA: Name Registered office Type of Business Controlled through % Group ownership Direct Indirect Cavotec (Swiss) SA Switzerland Services Cavotec SA 100% Cavotec Australia Pty Ltd Australia Sales company Cavotec Group Holdings NV 100% Cavotec Cleantech Malaysia SDN. BHD. Malaysia Sales company Cavotec (Swiss) SA 100% Cavotec Germany GmbH Germany Centre of Excellence Cavotec Group Holdings NV 100% Cavotec Finland OY Finland Sales company Cavotec Group Holdings NV 100% Cavotec France RMS SA France Sales company Cavotec Group Holdings NV 100% Cavotec Group Holdings NV The Netherlands Holding Cavotec MoorMaster Ltd 100% Cavotec Hong Kong Ltd China Sales company Cavotec Group Holdings NV 100% Cavotec India Ltd India Sales company Cavotec Group Holdings NV 100% Cavotec International Ltd United Kingdom Services/Sales company Cavotec Group Holdings NV 100% Cavotec Micro-control AS Norway Centre of Excellence Cavotec Group Holdings NV 100% Cavotec FZE U.A.E. Sales company Cavotec Group Holdings NV 100% Cavotec MoorMaster Ltd New Zealand Engineering Cavotec SA 100% Cavotec Nederland BV The Netherlands Sales company Cavotec Group Holdings NV 100% Cavotec Realty Germany BV The Netherlands Services Ipalco BV 100% Cavotec Realty Norway AS Norway Services Ipalco BV 100% Cavotec Russia OOO (in liquidation) Russia Sales company Cavotec Group Holdings NV 100% Cavotec SA Switzerland Holding - – Cavotec Shanghai Ltd China Centre of Excellence Cavotec Group Holdings NV 100% Cavotec Singapore Pte Ltd Singapore Sales company Cavotec Group Holdings NV 100% Cavotec Specimas SpA Italy Centre of Excellence Cavotec Group Holdings NV 100% Cavotec Sverige AB Sweden Sales company Cavotec Group Holdings NV 100% Cavotec USA Inc. United States of America Sales company Cavotec SA 100% Ipalco BV The Netherlands Holding/Services Cavotec Group Holdings NV 100% During FY2023 the following changes to the Group Structure applied: • Cavotec South Africa Pte Ltd and Cavotec Realty France SCI have been liquidated • Cavotec International Ltd extended its operation to include sales SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker (CODM), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors . 62 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | NON-CURRENT ASSETS HELD FOR SALE Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sales transaction rather than through continuing use. For this to be the case, the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such assets and its sale must be highly probable. Non-current assets classified as held for sale are measured at the lower of their carrying amounts and fair values less costs to sell. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortised. PROPERTY, PLANT AND EQUIPMENT All property, plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred. The classes of property plant and equipment are land and buildings, plant and equipment and fixtures and fittings. Land is not depreciated. Depreciation of property, plant and equipment is calculated using a straight-line method so as to expense the cost of the assets over their useful lives. The rates are as follows: Years Industrial buildings 25 Building improvements 5 Plant and machinery 5 to 10 Laboratory equipment and miscellaneous tools 5 Furniture and office machines 5 Motor vehicles 5 Computer hardware 3 Capital work in progress is not depreciated until commissioned. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit or Loss. Leasehold improvements are depreciated over the lease term, or their estimated useful life, if shorter . LEASES Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in-substance fixed payments), less any lease incentives receivable • variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date • amounts expected to be payable by the group under residual value guarantees • the exercise price of a purchase option if the group is reasonably certain to exercise that option, and • payments of penalties for terminating the lease, if the lease term reflects the group exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security, and conditions. Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability • any lease payments made at or before the commencement date less any lease incentives received • any initial direct costs, and • restoration costs. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture. INTANGIBLE ASSETS ( i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired business/associate at the date of acquisition. Goodwill on acquisitions of businesses is included in intangible assets. Goodwill is not amortised. Instead, goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold . Annual and Sustainability Report 2023 | Cavotec 63 | NOTES TO THE FINANCIAL STATEMENTS For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. (ii) Research and development Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technical feasibility and its costs can be measured reliably. It must also be probable that the intangible asset will generate future economic benefits and that it is clearly identifiable and allocable to a specific product. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour, and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets at cost and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life, which varies from three to five years . (iii) Patents Patents acquired in a business combination are recognised at fair value at acquisition date. Patents are amortised on a straight-line basis over the period over which they are valid (not exceeding 20 years) or their estimated useful life if shorter. INVENTORIES Inventories are measured at the lower of acquisition cost, at weighted average cost, or manufacturing cost and net realisable value. Manufacturing costs comprise all costs that are directly attributable to the manufacturing process, such as direct material and labour, direct engineering, production and tooling and other non-recurring costs and production related overheads, (based on normal operating capacity and normal consumption of material, labour, and other production costs), including depreciation charges. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated variable costs necessary to make the sale. Provisions are made for inventories with a lower market value, or which are slow-moving. If it becomes apparent that such inventory can be reused, provisions are reversed with inventory being revalued up to the lower of its net realisable value or original cost. Unsaleable inventory is fully written off. IMPAIRMENT OF NON-FINANCIAL ASSETS Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets that have an indefinite useful life including goodwill, are not subject to amortisation and are tested annually for impairment irrespective of whether any circumstances identifying a possible impairment have been identified. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose s of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). FINANCIAL INSTRUMENTS Classification and measurement of financial assets and financial liabilities IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, FVOCI and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15. For a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group. The Group classifies its financial assets as at amortised cost only if both of the following criteria are met: • the asset is held within a business model whose objective is to collect the contractual cash flows, and • the contractual terms give rise to cash flows that are solely payments of principal and interest Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified, or impaired. The Group’s financial assets at amortised cost includes trade receivables, contract assets under IFRS 15, other receivables and cash and cash equivalents . 64 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when: • The rights to receive cash flows from the asset have expired Or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset Impairment of financial assets Further disclosures relating to impairment of financial assets are also provided in the Risk Management on page 82. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The group considers the credit risk of financial assets to be significantly increased (stage 3) when contractual payments are 90 days overdue. The group assesses those assets on an individual basis. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows . Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss as loans and borrowings and payables. All financial liabilities are recognised initially at fair value and, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts. The Group has not designated any financial liability as at fair value through profit or loss. Loans and borrowings This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. Following a modification or renegotiation that does not result in de-recognition, the Group recognise any modification gain or loss immediately in profit or loss. Any gain or loss is determined by recalculating the gross carrying amount of the financial asset by discounting the new contractual cash flows using the original effective interest rate. This category generally applies to interest-bearing loans and borrowings. For more information, refer to Note 21. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short term, highly liquid investments with original maturities of three months or less (from the acquisition date of the investments) that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. BORROWINGS Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of liabilities for at least 12 months after the Balance Sheet date. Fees paid on the establishment of an undrawn loan facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility. BORROWING COSTS Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. PROVISIONS Provisions are recognised when the Group has a legal or constructive obligation because of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. The amount recognised is the best estimate of the cost required to settle the present obligation at the Balance Sheet date. If the effect of the time value of money is material, the provision is determined by discounting the expected future cash flows at a rate that reflects the current market assessments of the time value of money and the risks specific to the liability . Annual and Sustainability Report 2023 | Cavotec 65 | NOTES TO THE FINANCIAL STATEMENTS Provisions for warranties are recognised at the time the products are sold based on the estimated cost using historical data for level of repairs and replacements. Provisions for onerous contracts are recognised when the expected economic benefits to be derived from a contract are lower than the cost of meeting the obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract . REVENUE RECOGNITION Cavotec is an engineering group that designs and manufactures automated connection and electrification systems for ports and industrial applications worldwide. Revenue is measured based on the consideration expected to be entitled to base on the contract with a customer. The Group recognises revenue when it transfers control over a good or service to a customer. Revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of value added taxes, goods and service tax (GST), rebates and discounts. The Group offers multiple element arrangements to meet its customers’ needs. These arrangements may involve the delivery of multiple products and/or performance of services (such as installation, commissioning, and training) and the delivery and/or performance may occur at different points in time or over different periods. The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. Deliverables of such multiple element arrangements are evaluated to estimate the selling price that reflects at inception the Group’s best estimate of what the selling price would be if the elements were sold on a stand-alone basis. Such arrangements generally include industry-specific performance and termination provisions, such as in the event of substantial delays or non-delivery. The company has defined the following revenue streams to meet the revenue recognition requirements as listed in IFRS 15: (i) Integrated Systems Long Term Contracts with high level of customisation based on the request of the customer for a complete set of Port solutions. When no alternative use and right to payment are confirmed, revenue is recognised over time. Revenue from Integrated Systems is therefore recognised over time on a cost-to-cost method, i.e. based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. The directors consider that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under IFRS 15. (ii) Individual Products The customer receives detailed listing of products description with related prices; they are not customized, and they do not include engineering or installation, or if any it represents a minimal portion of the total order. Revenues is recognised at a point in time based on incoterms. (iii) Maintenance and installation Service contract for periodic maintenance or field services and installation. The Group provides installation services that are either sold separately or bundled together with the sale of equipment to a customer. The installation services can be obtained from other providers and do not significantly customise or modify the equipment. Contracts for bundled sales of equipment and installation services are comprised of two performance obligations because the promises to transfer equipment and provide installation services are capable of being distinct and separately identifiable. Accordingly, the Group allocates the transaction price based on the relative stand-alone selling prices of the equipment and installation services. The Group recognises revenue from services over time, using an input method to measure progress towards complete satisfaction of the service, because the customer simultaneously receives and consumes the benefits provided by the Group. Contract balances Contract assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Trade receivables A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Contract liabilities A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract. Cost to obtain a contract The Group pays sales commission to its employees for some contract that they obtain for bundled sales of equipment and installation services. The Group has elected to apply the optional practical expedient for costs to obtain a contract which allows the Group to immediately expense sales commissions (included under employee benefits and part of cost of sales) because the amortisation period of the asset that the Group otherwise would have used is one year or less . VALUE ADDED TAX (VAT) AND GOODS AND SERVICES TAX (GST) The statement of comprehensive income has been prepared so that all components are stated exclusive of VAT or GST. All items in the Balance Sheet are also stated net of VAT or GST, except for receivables and payables, which include VAT or GST invoiced . 66 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | EMPLOYEE BENEFITS Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. (i) Pension obligations A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity and the Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Cavotec (Swiss) SA operate a pension scheme via the employee benefits foundation and are affiliated with the Swiss Life Collective BVG Foundation based in Zurich. All benefits in accordance with the regulations are reinsured in their entirety with Swiss Life Ltd within the framework of the corresponding contract and determined by actuarial calculations. These schemes are defined benefit plans due to the fact that Cavotec can be requested to pay restructuring contributions in the case of a shortfall. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. The liability recognised in the Balance Sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. (ii) Share-based payments The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity . DIVIDENDS AND OTHER DISTRIBUTIONS Distributions to the shareholders are recognised as a liability in the Group’s Financial Statements in the period in which they are approved by the Annual General Meeting. TREASURY SHARES Treasury shares are deducted from consolidated equity at the acquisition value. Differences between this amount and the amount received for disposing of treasury shares are recorded in consolidated retained earnings. INCOME TAX The income tax expense for the period is the tax payable on the current years taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit and loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Uncertain tax positions are measured either at the most likely outcome or at the expected value, depending on which method better predicts the resolution of the uncertainty. Thereby detection risk is not considered. Current and deferred tax balances attributable to amounts recognised directly in equity or in OCI are also recognised directly in equity or in OCI respectively. Annual and Sustainability Report 2023 | Cavotec 67 | NOTES TO THE FINANCIAL STATEMENTS NOTE 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the related actual results. Critical accounting policies estimates and assumptions in the period relate to the valuation of deferred tax assets, the estimation of the outcome of legal proceeding, assets held for sale, and the assumptions used in the goodwill impairment test. As of the Balance Sheet dates the Group has no other significant estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the foreseeable future. DEFERRED TAXES Deferred tax assets are recognised for temporary differences between the carrying amounts for financial reporting purposes of assets and liabilities and the amounts used for taxation purposes and for tax loss carry-forwards. The Group records deferred tax assets based upon management’s estimates of future taxable profit in different tax jurisdictions. The estimations of the recoverability of deferred tax assets on losses carried forward are based on business plans and include the taxable profits that are more probable than not until the expire of tax losses, this results in lower estimates for years in the distant future. The actual results may differ from these estimates, due to changes in the business climate and changes in tax legislation or by variances from the business plans used on the models. See notes 19 and 25 for additional information. LEGAL PROCEEDINGS The Group recognises a liability when it has an obligation from a past event involving the transfer of economic benefits and when a reasonable estimate can be made of what the transfer might be. The Group reviews outstanding legal cases regularly to assess the need for provisions in the Financial Statements. These reviews consider the factors of the specific case through the use of outside legal counsel and advisors when necessary. To the extent that management’s assessment of the factors considered are not reflected in subsequent developments, the Financial Statements could be affected. ASSETS HELD FOR SALE Cavotec reclassified the assets and liabilities pertaining to activities held for sale in accordance with IFRS 5. In distinguishing between the assets and liabilities pertaining to continuing operations and those pertaining to discontinued operations all assets and liabilities exclusively pertaining to one Business Unit were allocated to that Business Unit. In all other cases a critical assessment was conducted as to whether it could be reasonably expected that the asset or liability concerned would be transferred in a disposal. The allocation made may have to be adjusted when the disposals are realised. In the Consolidated Statements of Income and of Cash Flows, discontinued operations are reported separately from continuing operations; prior periods are presented on a comparable basis. The disclosures in the notes to the consolidated financial statements outside Note 38 relate to continuing operations or assets and liabilities not held for disposal. Judgements made in relation to the classification of the Airport division as held for sale, include the identification of the disposal group, the presentation of its results as discontinued operations, the estimation of fair value less cost of disposal and the allocation of the impairment loss to the specific assets. GOODWILL IMPAIRMENT TEST The Group allocates the goodwill to the cash-generating units (CGU’s) identified and reported according to the table below. Net book value Translation Acquisitions Net book value EUR 000s as of 01/01/2023 differences and other and dispositions Impairment as of 31/12/2023 Ports & Maritime 23,282 -70 – – 23,212 Industry 6,918 1 – – 6,919 Total 30,200 -69 – – 30,131 The recoverable amount of the CGUs is determined by reference to the value in use of each CGU, based on discounted estimates of the future cash flows, which were projected for the next five years based on past experiences, actual orders received, budgets, strategic plan, and management’s best estimate about future developments and market assumptions. The impairment model has been prepared based on the Strategic Plan to focus on cleantech solutions. The value in use is mainly driven by the terminal value, which is influenced by the terminal growth rate and discount rate. The growth rates are related to industry specific trends with the support of external macroeconomic sources of data and an assessment as to the ability of the Company to take advantage of these market developments considering orders received, commercial negotiations currently in place and future expectations. The following table presents the assumptions used to determine the value in use for impairment test purposes: Terminal growth rate WACC 2023 2022 2023 2022 Ports & Maritime 2.00% 2.00% 12.31% 11.80% Industry 1.50% 1.50% 11.70% 11.19% The pre-tax weighted average cost of capital used for impairment test purposes are slightly different in the CGUs because of the different risks in those markets. Ports & Maritime goodwill As at the date of the impairment test, no impairment of goodwill resulted. The recoverable amount exceeded the net carrying amount by EUR 38.6 million. In the prior year, the difference amounted to EUR 61.8 million. The following changes in material assumptions would lead to a situation where the value in use would equate to the net carrying amount . 68 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | 2023 2022 Assumptions Sensitivity Assumptions Sensitivity Average annual revenue growth until 2028 (2027) with Gross margin unchanged compared to business plan 6.5% -3.7% 8.2% -1.2% Normalized Gross Margin 32.2% 30.1% 32.3% 27.6% WACC pre-tax 12.3% 17.1% 11.8% 21.8% Industry goodwill The impairment tests for goodwill did not lead to any need for impairment in the current financial year. The recoverable amount exceeded the net carrying amount by EUR 32.0 million. In the prior year, the difference amounted to EUR 59.0 million. The following changes in material assumptions would lead to a situation where the value in use would equate to the net carrying amount. 2023 2022 Assumptions Sensitivity Assumptions Sensitivity Average annual revenue growth until 2028 with Gross margin unchanged compared to business plan 8.7% 5.6% 10.4% -2.1% Normalized Gross Margin 30.6% 27.4% 33.7% 27.6% WACC pre-tax 11.7% 20.8% 11.2% 30.5% NOTE 5. REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of revenue from contracts with customers The group derives revenue from the transfer of goods and services over time and at a point in time in the following Divisions and geographical regions. Year ended 31 December 2023 EUR 000s Ports & Maritime Industry Total Revenue from external customer Timing of revenue recognition At a point in time 110,712 66,045 176,757 Over time 3,976 - 3,976 Total 114,688 66,045 180,734 Year ended 31 December 2022 EUR 000s Ports & Maritime Industry Total Revenue from external customer Timing of revenue recognition At a point in time 85,855 59,590 145,445 Over time 2,404 – 2,404 Total 88,259 59,590 147,849 Year ended 31 December 2023 EUR 000s AMER EMEA APAC Total Ports & Maritime 18,239 45,726 50,723 114,688 Industry 4,751 42,228 19,067 66,045 Total 22,990 87,954 69,790 180,734 Year ended 31 December 2022 EUR 000s AMER EMEA APAC Total Ports & Maritime 8,621 40,616 39,022 88,259 Industry 4,040 41,602 13,948 59,590 Total 12,661 82,218 52,970 147,849 Assets and liabilities related to contract with customers The group has recognised the following assets and liabilities related to contracts with customers: EUR 000s 31 Dec, 2023 31 Dec, 2022 Current Assets/Liabilities Contract Assets 2,862 1,171 Contract Liabilities (19,268) (28,125) Total (16,406) (26,954) The movement in contract liabilities year over year of EUR 8.9 million is entirely due to received advances from customers. These advance payments are recognized as liabilities until the related revenue is recognized. Annual and Sustainability Report 2023 | Cavotec 69 | NOTES TO THE FINANCIAL STATEMENTS NOTE 6. OTHER INCOME EUR 000s 2023 2022 Carriage, insurance and freight 1,042 1,085 Exchange gains and losses (812) (388) Other miscellaneous income 1,845 1,079 Total continued operations 2,076 1,776 Total discontinued operations – 783 Total 2,076 2,559 Other miscellaneous income includes EUR 0.5 million of releases of bad debt provision from previous years. NOTE 7. EMPLOYEE BENEFIT COSTS EUR 000s 2023 2022 Salaries and wages (36,584) (37,737) Social security contributions (6,547) (5,830) Other employee benefits (4,764) (4,240) Total continued operations (47,895) (47,807) Total discontinued operations – (11,331) Total (47,895) (59,138) 1 The number of full-time equivalent employees was 664 (2022: 640). The Group has two Long-Term Incentive Plans (“LTIP”) for selected employees of the Group running in parallel. More information on the plans can be found in the Remuneration report (page 38). (1) Number of full-time equivalent employees including externals . NOTE 8. OPERATING EXPENSES EUR 000s 2023 2022 Transportation expenses (933) (996) External services (6,986) (6,771) Travelling expenses (2,724) (2,394) General expenses (5,969) (5,525) Utility expenses (1,027) (1,233) Credit losses (191) (1,052) Warranty costs (1,462) (1,305) Total continued operations (19,292) (19,276) Total discontinued operations – (5,816) Total (19,292) (25,093) NOTE 9. ASSETS HELD FOR SALE Assets held for sale as at 31 December 2023 that are carried over from 2020 are the Trondheim building (Norway) for a total amount of EUR 1.8 million. In December 2023 Cavotec has signed an agreement for the sale of the building with effective date 29 February 2024. As the building was accounted as Assets held for sale with a book value of EUR 2.2 million in 2023, the Company recognized a write down of EUR 0.4 million already in 2023. NOTE 10. NET FINANCIAL COSTS EUR 000s 2023 2022 Interest income 18 108 Interest expense (3,117) (1,026) Amortisation of issuance costs (354) (328) Interest expenses – net continued operations (3,453) (1,246) Interest expenses – net discontinued operations – (579) Interest expenses – net (3,453) (1,825) Currency exchange difference – net continued operations (16) 5,471 Currency exchange difference – net discontinued operations – 1,851 Currency exchange difference – net (16) 7,322 Total continued operations (3,470) 4,225 Total discontinued operations – 1,272 Total (3,470) 5,497 Interest expense includes EUR 2.3 million mainly arising from the credit facility agreement between Cavotec Group Holdings and Credit Suisse. The reduction in currency exchange differences primarily derives from the closure of the SEB bank cash-pooling system. 70 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | NOTE 11. INCOME TAXES EUR 000s 2023 2022 Current tax (4,109) (2,564) Deferred tax 638 (181) Other taxes (112) (145) Total continued operations (3,583) (2,890) Total discontinued operations - (1,531) Total (3,583) (4,421) The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows: EUR 000s 2023 2022 Tax on consolidated pre-tax income at group rate 20.4% 766 21.7% 2,232 Tax effect of loss-making subsidiaries for which no DTA is recognized (3,480) (7,213) Tax effect of non-taxable income included in profit before tax 1,278 1,157 Tax on non-deductible expenses (2,147) (410) Write down of previously recognised DTAs – (198) Utilisation of previously unrecognised DTA – 11 Total (3,583) (4,421) The Group operates in many jurisdictions where statutory tax rates vary from 0% to 35.0%. The weighted average applicable tax rate was 20.4% (21.7%). NOTE 12. TRADE RECEIVABLES AND CONTRACT ASSETS EUR 000s 31 Dec, 2023 31 Dec, 2022 Trade receivables 30,178 36,251 Provision for doubtful debts (see page 82 Risk Management) (2,236) (2,936) Contract assets 2,862 1,171 Total 30,803 34,486 The movement of the provision for doubtful debts is summarised below: Opening balance (2,936) (3,485) Provision recorded in the year (911) (759) Provision used in the year 927 1,143 Provision reversed not used in the year 611 213 Currency exchange difference 73 (48) Closing balance (2,236) (2,936) Contract assets include EUR 2.9 million (2022: 1.2 million) of unbilled work in progress in relation to long term contract revenue recognised under percentage of completion. Please refer to note 5. NOTE 13. TAX ASSETS EUR 000s 31 Dec, 2023 31 Dec, 2022 Tax assets 385 2,465 VAT recoverable 4,333 3,934 Total 4,718 6,399 NOTE 14. OTHER CURRENT RECEIVABLES EUR 000s 31 Dec, 2023 31 Dec, 2022 Deposits 183 200 Prepayments 3,905 4,556 Other receivables 861 1,500 Total 4,949 6,256 NOTE 15. INVENTORIES EUR 000s 31 Dec, 2023 31 Dec, 2022 Raw materials 20,202 22,856 Finished goods 20,123 22,919 Provision for slow moving inventories (2,896) (2,773) Total 37,429 43,002 Annual and Sustainability Report 2023 | Cavotec 71 | NOTES TO THE FINANCIAL STATEMENTS The movement of the provision for slow moving inventories is summarised below: EUR 000s 2023 2022 Opening balance (2,773) (2,982) Provision used during the year 923 388 Provision recorded in the year (1,097) (313) Provision reversed not used in the year – 192 Currency exchange difference 51 (58) Closing balance (2,896) (2,773) NOTE 16. PROPERTY, PLANT AND EQUIPMENT EUR 000s Land & buildings Plant & equipment Fixtures & fittings Total Year ended 31 December 2022 Opening net book value 2,282 4,148 996 7,426 Additions – 981 202 1,183 Disposals – (177) 8 (169) Depreciation (23) (1,897) (506) (2,426) Currency exchange differences (36) (158) 121 (73) Closing net book value 2,223 2,897 821 5,941 At 31 December 2022 Cost 3,913 19,256 4,550 27,719 Accumulated depreciation (1,690) (16,359) (3,729) (21,778) Net book amount 2,223 2,897 821 5,941 Year ended 31 December 2023 Opening net book value 2,223 2,897 821 5,941 Additions 10 797 104 911 Disposals (5) – (3) (8) Depreciation (143) (994) (249) (1,386) Currency exchange differences – (39) (5) (44) Closing net book value 2,085 2,661 668 5,414 At 31 December 2023 Cost 3,863 19,773 4,618 28,254 Accumulated depreciation (1,778) (17,112) (3,950) (22,840) Net book amount 2,085 2,661 668 5,414 LEASES Amounts recognised in the balance sheet The Balance Sheet shows the following amounts relating to leases: EUR 000s 31 Dec, 2023 31 Dec, 2022 Right of use Land & building 11,283 12,967 Plant & equipment 182 128 Fixtures & fittings 64 118 Total right of use 11,529 13,213 EUR 000s 31 Dec, 2023 31 Dec, 2022 Lease liabilities Current (2,527) (2,687) Total (2,527) (2,687) Non current (9,167) (10,353) Total (9,167) (10,353) Amounts recognised in the income statement The statement of profit or loss shows the following amounts relating to leases: EUR 000s 31 Dec, 2023 31 Dec, 2022 Depreciation charge of Right of Use assets Land & building (3,169) (3,074) Plant & equipment (100) (98) Fixtures & fittings (42) (49) Total depreciation charge of right of use assets (3,311) (3,222) Interest expenses (363) (394) 72 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | The following table summarizes the movements of the right-of-use assets: 31 Dec, 2023 31 Dec, 2022 Right of use assets at January 1 13,213 14,394 Additions 454 – Lease contract terminations (172) – Depreciation charge (3,311) (3,222) Currency translation effects 1,345 2,041 Total right of use assets at December 31 11,529 13,213 NOTE 17. INTANGIBLE ASSETS EUR 000s Goodwill Patents & trademarks R&D and other Total Year ended 31 December 2022 Opening net book value 30,242 132 7,814 38,188 Additions – – 1,399 1,399 Disposals – – 31 31 Amortisation – (20) (598) (618) Currency exchange differences (42) (1) (35) (78) Closing net book value 30,200 111 8,610 38,920 At 31 December 2022 Cost 30,200 6,530 12,885 49,615 Accumulated amortisation – (6,419) (4,275) (10,695) Net book amount 30,200 111 8,610 38,920 Year ended 31 December 2023 Opening net book value 30,200 111 8,610 38,920 Additions – 4 620 624 Impairment – – (612) (612) Amortisation – (15) (1,384) (1,398) Currency exchange differences (69) (6) (146) (221) Closing net book value 30,131 96 7,088 37,315 At 31 December 2023 Cost 30,131 6,515 11,464 48,110 Accumulated amortisation – (6,419) (4,376) (10,795) Net book amount 30,131 96 7,088 37,315 For more details on goodwill impairment testing please refer to note 4. NOTE 18. NON-CURRENT FINANCIAL ASSETS EUR 000s 31 Dec, 2023 31 Dec, 2022 Financial receivables 68 69 Financial assets at fair value through PL – 37 Total 68 106 NOTE 19. DEFERRED TAX ASSETS EUR 000s 31 Dec, 2023 31 Dec, 2022 Deferred tax assets to be recovered within 12 months 1,853 1,642 Deferred tax assets to be recovered after more than 12 months 5,044 4,559 Total 6,897 6,201 EUR 000s 31 Dec, 2023 31 Dec, 2022 Provisions for warranty, doubtful accounts and others 1,209 1,056 Losses carried forward 3,054 2,612 Inventory 1,918 1,542 PPE and intangible assets 3 29 Accrued expenses not currently deductible 35 466 Others temporary differences 678 497 Total 6,897 6,201 The deferred tax assets arose as a consequence of the recognition of temporary differences on provisions relative to doubtful accounts, slow moving inventories and warranties, which are not tax deductible currently and become deductible for tax purposes when utilised, as well as to tax losses. The deferred tax assets, include an amount of EUR 3.1 million related to carried-forward tax losses. These are the result of the losses over the last financial years following the disposal of the Airports business. They relates to the one-off cost and will not recur in the future. The Group has concluded that the deferred tax assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets. The Group did not recognise deferred income tax assets on losses carried forward of EUR 208 million (2022: EUR 199 million). The losses carried forward expire after 7 years in Switzerland and amount to EUR 75.6 million of which EUR 23.9 million expire within one year and EUR 51.7 million expire within two to five years. The remaining part is related to US where, since the implementation of the new tax reform, losses carried forward accumulated until 2017 still expire in 20 years, while starting from 2018, they never expire but they will only be offsetable up to 80% . Annual and Sustainability Report 2023 | Cavotec 73 | NOTES TO THE FINANCIAL STATEMENTS NOTE 20. OTHER NON-CURRENT RECEIVABLES Other non-current receivables includes deposits for Cavotec Italy building and machinery EUR 0.9 million (2022: EUR 0.8 million). NOTE 21. LOANS AND BORROWINGS EUR 000s 2023 2022 Other current financial liabilities – (4,914) Credit facility non-current portion (22,000) (22,000) Other non-current financial liabilities – – Unamortised issuance costs 532 828 Total (21,468) (26,086) In June 2020, Cavotec secured long-term financing by signing a five years agreement with Credit Suisse and others to provide a EUR 40 million single currency term and multicurrency revolving credit facility. Syndication costs and upfront fees of EUR 1.437 million were paid during FY 2020 and will be amortized over the extended duration of the facility. EUR 000s 2023 2022 Bank overdrafts – 2.00% Short term debt – 2.82% Long term debt 9.47% 8.15% Interest bearing liabilities 9.47% 7.13% The average cost of the interest bearing liabilities for FY2023 was higher compared to the previous year mainly due to the increase of the interbank interest rates utilised as base rates for our long term debt interest calculation. NOTE 22. TRADE PAYABLES EUR 000s 2023 2022 Trade payables (26,004) (36,126) Contract liabilities (19,268) (28,125) Total (45,272) (64,251) For more details on contract liabilities refer to note 5. NOTE 23. TAX LIABILITIES EUR 000s 2023 2022 Tax liabilities (3,649) (1,672) VAT payable (1,462) (1,429) Total (5,111) (3,101) NOTE 24. OTHER CURRENT LIABILITIES EUR 000s 2023 2022 Employee entitlements (6,162) (6,304) Accrued expenses and other (5,158) (5,602) Total (11,320) (11,906) Employee entitlements include mainly accrued wages and salaries, holidays and other personnel liabilities. NOTE 25. DEFERRED TAX LIABILITIES EUR 000s 2023 2022 Deferred tax liabilities to be released within 12 months (208) (51) Deferred tax liabilities to be released after more than 12 months (1,043) (1,049) Total (1,251) (1,100) EUR 000s 2023 2022 PPE and intangible assets (493) (503) Untaxed reserves (549) (546) Other (209) (51) Total (1,251) (1,100) For more details, please refer to note19. 74 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | NOTE 26. PROVISION FOR RISKS AND CHARGES EUR 000s 2023 2022 Provision for risk and charges, current (2,171) (2,032) Provision for risk and charges, non-current (1,794) (1,357) Total (3,965) (3,389) Reversed EUR 000s Jan 1, 2023 Recorded Used not used Exchange diff Dec 31, 2023 Provision for warranty (2,892) (910) 186 306 9 (3,299) Provision for taxation – (300) – – – (300) Other provisions (497) (62) – 185 8 (366) Total (3,389) (1,272) 186 491 17 (3,965) The warranty provision reflects historic experience of the cost to repair or replace defective products, as well as certain information regarding product failure experienced during production, installation or testing of products. The provision for taxation is built for expected results of ongoing tax inspections. Other provisions recorded are mainly related to penalties. NOTE 27. PENSION PLAN The Group operates defined benefit pension plans in Switzerland, Italy and Middle East. Cavotec (Swiss) SA is affiliated to the Swiss Life Collective BVG Foundation based in Zurich. This pension solution fully also reinsures the risks of disability, death, and longevity. Swiss Life invests the vested pension capital and provides a 100% capital and interest guarantee. Certain features of Swiss pension plans required by law preclude the plans being categorised as defined contribution plans. In Italy, the provisions for benefits upon termination of employment, accrued for employee retirement, are determined using actuarial techniques and regulated by the Italian Civil Code. The benefit is paid upon retirement as a lump sum, the amount of which corresponds to the total of the provisions accrued during the employees’ service period based on payroll costs as revalued until retirement. In U.A.E., the Service Gratuity Plan is a defined benefit plan. Benefits under these plans are paid upon termination of employment and consist of payments based on seniority. 2023 2022 EUR 000s Switzerland Italy U.A.E. Total Total Present value of defined benefit obligation (DBO) (1,665) – – (1,665) (2,747) Fair value of plan assets 1,368 – – 1,368 2,616 Deficit of funded plans (297) – – (297) (131) Present value of unfunded obligations – (215) (57) (272) (370) Liability in the Balance Sheet (297) (215) (57) (569) (501) Total as reported in the balance sheet (297) (215) (57) (569) (501) In addition, the Group has liabilities from defined contribution plan for an amount of EUR 0.91 million. The movement in the defined benefit obligation over the year is as follows: 2023 2022 EUR 000s Switzerland Italy U.A.E. Total Total At 1 January (2,747) (322) (48) (3,117) (4,858) Service cost: – Current service cost (169) – (9) (178) (231) – Past service cost – – – – 144 Interest expenses (64) (12) – (76) (14) Cash flow: – Benefit payments from plan assets 1,627 – – 1,627 579 – Benefit payments from employer – 125 – 125 99 – Participant contributions (154) – – (154) (196) – Insurance premium for risk benefits 22 – – 22 23 Other significant event: – Increase (decrease) due to effect of any business combinations / divestitures / transfers – – – – 936 Remeasurements: – Effect of changes in demographic assumptions 2 – – 2 – – Effect of changes in financial assumptions (100) (2) – (102) 517 – Effect of experience adjustments 32 (4) – 28 33 Exchange differences (115) – – (115) (151) At 31 December (1,665) (215) (57) (1,937) (3,117) Annual and Sustainability Report 2023 | Cavotec 75 | NOTES TO THE FINANCIAL STATEMENTS The movement in the fair value of plan assets over the year is as follows: 2023 2022 EUR 000s Switzerland Italy U.A.E. Total Total At 1 January 2,616 – – 2,616 2,681 Interest Income 65 – – 65 8 Cash flow: – Employer contributions 154 125 – 279 295 – Participant contributions 154 – – 154 196 – Benefit payments to plan (1,627) – – (1,627) (579) – Benefit payments from employer – (125) – (125) (99) – Administrative expenses paid from plan assets (14) – – (14) (14) – Insurance premium for risk benefits (22) – – (22) (23) Remeasurements: – Return on plan assets (excluding interest income) (56) – – (56) 23 Exchange differences 99 – – 99 128 At 31 December 1,368 – – 1,368 2,616 The amount recognised in the income statement and other comprehensive income are as follows: 2023 2022 EUR 000s Switzerland Italy U.A.E. Total Total Service cost: – Current service cost 169 – 9 178 231 – Past service cost – – – – (144) Total Service cost 169 – 9 178 87 Net interest cost: – Interest expense on DBO 64 12 – 76 14 – Interest (income) on plan assets 65 – – 65 (8) Total net interest cost 129 12 – 141 6 Administrative expenses and/or taxes (not reserved within DBO) 14 – – 14 14 Defined benefit cost included in the Income Statement from continued operations 312 12 9 333 107 Effect of changes in demographic assumptions (3) – – (3) – Effect of changes in financial assumptions 100 2 – 102 (517) Effect of experience adjustments (32) 4 – (28) (33) Return on plan assets (excluding interest income) 56 – – 56 (23) Exchange Differences – – – – – Effect of deferred taxes (27) – – (27) 97 Total remeasurements included in Other Comprehensive Income from continued operations 94 6 – 100 (476) The Group expects to pay EUR 0.1 million in contribution to defined benefit plans in 2023 concerning the amount to be paid in 2024 (EUR 0.1 million was the expectation in 2022 concerning the amount to be paid in 2023). The principal actuarial assumptions were as follows: 2023 2022 Switzerland Italy U.A.E. Switzerland Italy U.A.E. Discount rate 1.40% 3.80% n/a 2.40% 0.80% n/a Salary increases 1.30% n/a n/a 1.50% n/a n/a Inflation 1.10% 2.50% n/a 1.30% 1.70% n/a The principal demographic assumptions were as follows: 2023 2022 Switzerland Italy U.A.E. Switzerland Italy U.A.E. Life expectancy BVG 2020 GT n/a n/a BVG 2020 GT n/a n/a normal normal In accordance (maximum) In accordance (maximum) with current retirement with current retirement Retirement age 65 Italian legislation age of 60 M65/F64 Italian legislation age of 60 60% pension / 60% pension / Benefit at retirement 40% lump sum n/a – 40% lump sum n/a – Voluntary turnover – 8.2% n/a – – n/a Involuntary turnover (including death and disability) – 1.8% n/a – – n/a 76 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | The following table presents a sensitivity analysis showing how the defined benefit obligation would have been affected by changes in the relevant actuarial assumption that were reasonably possible at the balance sheet date. This sensitivity applies to the defined benefit obligation only, and not to the net defined benefit pension liability in its entirety, the measurement of which is driven by several factors including, in addition to the assumptions below, the fair value of plan assets. 2023 2022 Switzerland Italy U.A.E. Switzerland Italy U.A.E. Discount rate +0.50% (1,608) (203) – (2,668) (781) – Discount rate -0.50% (1,725) (227) – (2,839) (847) – NOTE 28. SHARE CAPITAL The table below set forth the changes occurred in the Share capital of the Group. EUR 000s No of ordinary shares (Fully paid) Share capital Balance at 31 December 2022 94,243,200 (45,288) Balance at 31 December 2023 106,696,030 (54,130) NOTE 29. OTHER RESERVES EUR 000s 2023 2022 Currency translation reserves 19,544 17,707 Share premium reserve (74,814) (69,131) Actuarial reserve (10) (10) Reserve for LTIP (132) (189) Revaluation reserve 89 (10) Total (55,323) (51,633) The share premium reserve was created following the Contribution Agreement dated 3 October 2011 between Cavotec SA and the former shareholders of Cavotec MSL and increased in 2018 in connection with the Rights issue. In June 2022, AGM adopted the Board of Directors’ proposal to reduce the current share capital of CHF 120,631,296 by CHF 54,661,056 to CHF 65,970,240 by way of reducing the nominal value of the registered shares from CHF 1.28 by CHF 0.58 to CHF 0.70 and to allocate the nominal value reduction amount to the share premium reserve, which is increased from CHF 19,018,227 to CHF 73,679,283. In March 2023, an extraordinary general meeting approved the board’s proposal to increase the company’s nominal share capital. The board subsequently implemented the increase of the Company’s share capital in the amount of CHF 8,716,981.00, from the current share capital of CHF 65,970,240.00 to CHF 74,687,221.00, through the issuance of 12,452,830 new shares of the Company. The shares were placed at a price of SEK 13.25 per share, consequently raising proceeds of approximately SEK 165 million before transaction costs. This capital increase also contributed to the increase in the share premium reserve. The currency translation reserve comprises all foreign exchange differences arising from the translation of the Financial Statements of foreign operations into Euro. NOTE 30. EARNINGS PER SHARE Both the basic and diluted earnings per share are calculated using the net results attributable to shareholders of Cavotec SA & Subsidiaries as the numerator. EUR 000s 2023 2022 Profit /(Loss) for the year continued operations 180 (3,170) Profit /(Loss) for the year discontinued operations – (11,522) Profit /(Loss) for the year 180 (14,692) Attributable to: Equity holders of the Group continued operations 180 (3,170) Equity holders of the Group discontinued operations – (11,522) Total 180 (14,692) Weighted-average number of shares outstanding 104,103,112 94,243,200 Basic and diluted earnings per share from continued operations attributed to the equity holders of the Group 0.002 (0.034) Basic and diluted earnings per share from discontinued operations attributed to the equity holders of the Group – (0.122) Basic and diluted earnings per share attributed to the equity holders of the Group 0.002 (0.156) Annual and Sustainability Report 2023 | Cavotec 77 | NOTES TO THE FINANCIAL STATEMENTS NOTE 31. SEGMENT INFORMATION Operating segments have been determined based on the Group Management structure in place and on the management information and used by the CODM to make strategic decisions. In 2022 Cavotec completed the divestment of its Airports business. As a result of the divestment process, from 1 January 2023, the Group has changed the organizational structure and reporting to the CODM. The Segment information presented in this report reflects these changes, the comparatives are restated in line with the revised segments. The two new operating segments are: • Ports & Maritime – development, manufacture and service of innovative automation and electrification technologies for the global ports and maritime sectors. • Industry – development, manufacture and service of electrification and radio control products for industrial applications, such as cranes, energy, processing and transportation, mining, and tunnelling. Other information that is not reportable has been combined and disclosed within “Other reconciling items” which mainly include not allocated head office costs. Information by operating segment for the year ended 31 December, 2023 for each operating segment is summarized below: Year ended 31 December, 2023 Other reconciling EUR 000s Ports & Maritime Industry items Total Revenue from sales of goods and services 114,688 66,045 – 180,734 Other income 1,048 1,028 – 2,076 Operating expenses before depreciation and amortization (101,237) (61,903) (5,266) (168,406) Gross Operating Result 14,499 5,171 (5,266) 14,404 Information by operating segment for the year ended 31 December, 2022 for each operating segment is summarized below: Year ended 31 December, 2022 Other reconciling EUR 000s Ports & Maritime Industry items Total Revenue from sales of goods and services 88,259 59,590 – 147,849 Other income 830 946 – 1,776 Operating expenses before depreciation and amortization (89,026) (54,294) (4,673) (147,994) Gross Operating Result 61 6,243 (4,673) 1,631 The CODM assesses the performance of the operating segments based on gross operating result EBITDA. A reconciliation of gross operating result to profit before income tax is provided as follows: Ports & Maritime Ports & Maritime EUR 000s 2023 2022 Gross operating result for operating segments 11,228 (2,728) Goodwill impairment & other operational write – downs (927) (358) Depreciation (2,749) (3,397) Amortisation (978) (215) Financial (costs)/income – net (2,152) 3,924 Other financial items (9) (12) Profit/(Loss) before income tax 4,413 (2,786) Industry Industry EUR 000s 2023 2022 Gross operating result for operating segments 3,177 4,359 Goodwill impairment & other operational write – downs (156) 349 Depreciation (1,944) (2,169) Amortisation (421) (349) Financial (costs)/income – net (1,318) 301 Other financial items 14 12 Profit/(Loss) before income tax (648) 2,503 Third party revenues for each operating segment analysed by significant geographical segment is summarised below: Year ended 31 December 2023 EUR 000s AMER EMEA APAC Total Ports & Maritime 18,239 45,726 50,723 114,688 Industry 4,751 42,228 19,067 66,045 Total 22,990 87,954 69,790 180,734 Year ended 31 December 2022 EUR 000s AMER EMEA APAC Total Ports & Maritime 8,621 40,616 39,022 88,259 Industry 4,040 41,602 13,948 59,590 Total 12,661 82,218 52,970 147,849 The consolidated revenues of the Group are generated principally outside of Switzerland, where the company is domiciled, and operations in Switzerland are relatively insignificant. Due to the nature of the business, no single country represents a significant percentage of Group revenues. 78 Cavotec | Annual and Sustainability Report 2023 NOTES TO THE FINANCIAL STATEMENTS | NOTE 32. RELATED PARTY DISCLOSURE Cavotec SA is the legal parent of the Group. Details of Cavotec SA subsidiaries can be found in note 3. The Group’s key management personnel comprises the Chief Executive Officer and the members of Cavotec Management Team (CMT). Their total remuneration, including salary and other short term benefits, amounted to a total of EUR 3.4 million (2022: 5.7 million). The total compensation also includes compensation to CMT members’ related parties. To ensure its independence in fulfilling its supervisory duties, the remuneration of the Board of Directors is fixed and does not contain any variable component. The remuneration elements for the Management Team consist of four components: salary, pension, other benefits, performance-based non-equity cash compensation (“STIP”) and performance-based equity-based incentives (“LTIP”). The short-term incentive plan STIP is the cash-based element of the variable pay for inter alia the Management Team. The LTIP is a three-year performance share-based incentive plan. Its purpose is to foster long-term value creation for the Group by providing the Management Team and other eligible key managers Year ended 31 December 2023 Short-term Post-employment Other long-term Termination Share-based Total EUR 000s employee benefits benefits benefits benefit payment Chief Executive Officer 612 367 – – 25 1,004 Cavotec Management Team 2,044 357 – – 43 2,444 Board of Directors 265 23 – – - 288 Total remuneration 2,921 747 – – 68 3,736 Year ended 31 December 2022 Short-term Post-employment Other long-term Termination Share-based Total EUR 000s employee benefits benefits benefits benefit payment Chief Executive Officer 1,285 442 - 1,234 61 3,022 Cavotec Management Team 2,331 219 - 60 47 2,657 Board of Directors 265 22 - - - 287 Total remuneration 3,881 683 - 1,294 108 5,966 In FY2022 there were no transactions with related parties controlled or influenced by Board members. NOTE 33. REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditors of the entity, its related practices and non-related audit firms. EUR 000s 2023 2022 Audit services PricewaterhouseCoopers 808 584 Other audit firms 93 130 Total 901 714 Other services performed by audit firms: Taxation PricewaterhouseCoopers 132 103 Other audit firms – 4 Total 132 107 Other services: PricewaterhouseCoopers 35 2,363 Other audit firms – 6 Total 35 2,369 Total 167 2,476 NOTE 34. LEGAL RISKS As a global company with a diverse business portfolio, the Group is exposed to numerous legal risks, particularly in the areas of product liability, competition, and tax assessments. The outcome of any current or future proceedings cannot be predicted. It is therefore possible that legal or regulatory judgments or future settlements could give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could significantly affect our revenues and earnings. Annual and Sustainability Report 2023 | Cavotec 79 | NOTES TO THE FINANCIAL STATEMENTS NOTE 35. CONTINGENCIES EUR 000s 2023 2022 Advance payments and Performance bonds 4,800 1,722 Financial guarantees 100 100 Other guarantees 7,224 10,215 Total 12,124 12,592 The items listed under Contingencies are mainly warranty bonds (under “other guarantees”), performance and advance payment bonds. On the total of contingencies EUR 2.2 million will expire within one year. There isn’t any expectation to have any significant cash outflow from the outstanding bonds. NOTE 36. COMMITMENTS The following table details the commitments associated with Cavotec SA & Subsidiaries. EUR 000s 2023 2022 Capital commitments Within one year 313 21 Later than one, not later than two years 101 12 Later than two, not later than five years 30 3 Total 444 36 NOTE 37. SECURITIES AND COLLATERALS As at 31 December 2023, as last year, there were no real estate related to loans. NOTE 38. DISCONTINUED OPERATIONS The completion of the sale of airports occurred 29 July 2022. In December 2022, Income and expenses of the activities have been reclassified to Discontinued operations in the consolidated income statement. All assets and liabilities of the discontinued business have been taken out of Cavotec group balance sheet, resulting in 2022 in a final loss on the divestment of EUR 2.6 million. Income Statement Airports Airports EUR 000s 2023 2022 Revenue from sales of goods and services – 18,895 Other income – 783 Expenses – (26,867) CTA – (155) Loss on the spin off – (2,646) Loss from discontinued operations before income taxes – (9,991) Income taxes – (1,531) Loss from discontinued operations – (11,522) NOTE 39. SUBSEQUENT EVENTS SANCTIONS TOWARDS RUSSIA The group has a very limited exposure to the region considering that the subsidiary in Russia is in liquidation and there is no project ongoing in the region. The Group is carefully monitoring the evolution of the situation, having a specific focus on the sanctions, that have been and will be imposed. RUSSIA LIQUIDATION The liquidation notice to the creditors was published on 24 January 2024. Starting from 24 March 2024, the liquidator will establish the preliminary liquidation balance sheet. 80 Cavotec | Annual and Sustainability Report 2023 AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec8181 | RISK MANAGEMENT Risk management The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Board sets the policy for the Group’s centralised treasury operation and its activities are subject to a set of controls commensurate with the magnitude of the borrowings and investments and Group wide exposures under its management. The Group treasury’s primary role is to manage liquidity, funding, investments and counterparty credit risk arising with financial institutions. It also manages the Group’s market risk exposures, including risks arising from volatility in currency and interest rates. The treasury function is not a profit centre and the objective is to manage risk at optimum cost. The financial risk is managed at the Group and regional level through a series of policies and procedures set and reviewed by the CFO. The Group treasury applies these policies together with the Presidents of the Divisions and the local finance managers. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analyses in the case of interest rate risk and currency risk while ageing analyses of receivables is used to assess credit risk. MARKET RISK Currency risk Generally, the Group offers customers the option of paying in local currencies through our global sales organisation. As a result, the Group is continu- ously exposed to currency risks in accounts receivables denominated in foreign currency and in future sales to foreign customers. This issue of inter- national pricing is under constant attention at the highest levels of management. As the Group trades across many countries, purchasing and selling in various currencies, there is a natural hedge within the Group’s overall activities. The exchange rates listed here below are used to prepare the Financial Statements. Currency Average rate 2023 Year end rate 2023 AED 3.97 4.06 ARS 316.50 891.85 AUD 1.63 1.63 BRL 5.40 5.36 BHD 0.41 0.42 CAD 1.46 1.46 CHF 0.97 0.93 DKK 7.45 7.45 EUR 1.00 1.00 GBP 0.87 0.87 HKD 8.46 8.63 INR 89.30 91.90 KRW 1412.88 1433.66 NOK 11.42 11.24 NZD 1.76 1.75 QAR 3.94 4.03 RMB 7.66 7.85 RUB 87.72 115.48 SEK 11.48 11.10 SGD 1.45 1.46 USD 1.08 1.11 ZAR 19.96 20.35 At 31 December 2023, had the Euro weakened/strengthened by 10 per cent against foreign currencies to which the Group is exposed, with all other variables held constant, profit for the year and equity would have been EUR 218 thousands higher/lower (2022: 110 thousands). This is mainly a result of foreign exchange gains/losses on translation of financial assets and liabilities denominated in currencies other than the Euro and in respect of opera- tions in non-Euro jurisdictions for financial assets and liabilities not in their local currency. A sensitivity of 10 per cent has been selected as this is considered reasonable given the current level of exchange rates and the volatility observed both on an historical basis and market expectations for future moves. In order to assess the potential impact on the Income Statement assets and liabilities in the same currency used by the relevant entity in its reporting were excluded from the sensitivity analysis. 2023 2022 EUR 000s EUR -10% EUR +10% EUR -10% EUR +10% Receivables 1,226 (1,226) 338 (338) Payables (1,523) 1,523 (558) 558 Financial assets 633 (633) 110 (110) Financial liabilities – – – – Total increase / (decrease) 336 (336) (110) 110 82 Cavotec | Annual and Sustainability Report 2023 RISK MANAGEMENT | The carrying amounts of the Group’s trade receivables, trade payables and contract liabilities are held in the following currencies: 2023 2022 Trade payables and Trade payables and EUR 000s Receivables contract liabilities Receivables contract liabilities EUR 15,679 (30,046) 21,784 (42,943) USD 4,781 (7,182) 5,735 (4,872) RMB 2,566 (5,638) 1,742 (10,608) AED – (25) 462 (343) GBP 713 (51) 80 (240) SEK 798 (317) 452 (710) NOK 1,282 (124) 766 (951) AUD 1,713 (878) 1,493 (755) CHF – (282) – (2,333) INR 372 (629) 739 (374) RUB – – – (8) BHD – – 62 (114) Other 38 (100) – – Total 27,942 (45,272) 33,315 (64,251) Financial assets and financial liabilities held at year end are held in the following currencies (data include lease liabilities): 2023 2022 EUR 000s Financial Assets Financial Liabilities Financial Assets Financial Liabilities EUR 8,798 (21,468) 4,397 (25,485) USD 1,308 – 2,078 – RMB 1,547 – 449 – AED 37 – 316 – GBP 429 – 215 – SEK 270 – 158 – NOK 66 – 374 – AUD 1,119 – 783 – CHF 74 – 57 (601) HKD 21 – 12 – INR 1,087 – – – RUB – – 315 – Other 369 – 577 – Total 15,124 (21,468) 9,731 (26,086) Interest rate risk Interest rate risk management is aimed at balancing the structure of the debt, minimising borrowing costs over time and limiting the volatility of results. The Group is party to fixed interest rate loan agreements in the normal course of business in order to eliminate the exposure to increases in interest rates in the future. The amount of floating rate debt is the main factor that could impact the Statement of Comprehensive Income in the event of an increase in market rates. At 31 December, 2023 100% of the debt was floating rate (2022: 93%). A fluctuation of 1% in interest rates would have in absolute terms an impact of EUR 220 thousands in the profit and loss statement. Fair value estimation Financial assets and liabilities recorded at fair value in the Consolidated Financial Statements are categorised based upon the level of judgement associated with the inputs used to measure their fair value. There are three hierarchical levels, based on an increasing amount of subjectivity associated with the inputs to derive fair valuation for these assets and liabilities, which are as follows: • Level 1: Determination of fair value based on quoted prices (unadjusted) for identical assets or liabilities in active markets • Level 2: Determination of fair value based on inputs other than the quoted prices of Level 1 but which are directly or indirectly observable • Level 3: Determination of fair value based on valuation models with inputs for the asset or liability that are not based on observable market data Annual and Sustainability Report 2023 | Cavotec 83 | RISK MANAGEMENT The following tables present the Group’s assets and liabilities measured at fair value by valuation method at 31 December 2023 and at 31 December 2022: 2023 EUR 000s Level 1 Level 2 Level 3 Total Assets Assets held for sale 1,814–– 1,814 Total assets1,814 ––1,814 Liabilities – – – – Non-current trading derivatives – – – – Total liabilities – – – – 2022 EUR 000s Level 1 Level 2 Level 3 Total Assets Non-current financial assets – – 37 37 Assets held for sale – – 2,320 2,320 Total assets – – 2,357 2,357 Liabilities Non-current trading derivatives – – – – Total liabilities – – – – Assets held for sale as at 31 December 2023 that are carried over from 2020 are the Trondheim building (Norway) for a total amount of EUR 1.8 million. The building was accounted as assets held for sale with a book value of EUR 2.3 million in December 2022, but as in December 2023 Cavotec has signed an agreement for the sale of the building the amount has been adjusted to the market value. Please refer to note 9 and 38 for more disclosure on the reclassification of assets held for sale that are measured at the lower of carrying value and fair value less cost to sell. CREDIT RISK Credit risk arises from cash and cash equivalents, deposits with banks, as well as credit exposures to customers, including outstanding receivables and committed transactions and it is managed on a Group basis. A fundamental tenet of the Group’s policy of managing credit risk is customer selectivity. The Group has many customers in its various geographies and therefore there is no concentration of credit. The Group’s largest customers are prominent international companies and, while none of these represent a material percentage of total sales, outstanding receivables from these are regularly monitored and contained within reasonable limits. Large value sales are authorised by the Presidents of the Divisions, the CFO or the CEO, and require customers to pay a deposit or pay in advance. The Group has a credit policy which is used to manage this credit exposure. The Group requires that provisions for doubtful debts are recorded not only to cover exposure relative to specific accounts in difficulty but also for accounts receivables balances which are past due for periods in excess of normal trading terms. EUR 000s 2023 Expected Credit Loss % Expected Credit Loss Not yet due 24,046 (60) 0.25% Overdue up to 30 days 4,634 (19) 0.42% Overdue up to 30 and 60 days 1,087 (12) 1.08% Overdue up to 60 and 90 days 943 (13) 1.38% Overdue up to 90 and 120 days 189 (3) 1.69% Overdue up to 120 and 150 days 39 (38) 97.02% Overdue more than 150 days 2,103 (2,092) 99.49% Total 33,040 (2,237) In the category “Not yet due”, EUR 2.9 million (2022: 1.2 million) are under contract assets. At 31 December, 2023 EUR 2.2 million (2022: EUR 2.9 million) have been provisioned according to the percentages of expected credit loss shown in the table. 84 Cavotec | Annual and Sustainability Report 2023 RISK MANAGEMENT | EUR 000s 2022 Expected Credit Loss % Expected Credit Loss Not yet due 22,776 (65) 0.30% Overdue up to 30 days 6,198 (35) 0.56% Overdue up to 30 and 60 days 2,632 (58) 2.20% Overdue up to 60 and 90 days 1,258 (28) 2.20% Overdue up to 90 and 120 days 938 (24) 2.58% Overdue up to 120 and 150 days 438 (216) 48.51% Overdue more than 150 days 3,182 (2,510) 78.79% Total 37,421 (2,936) NET DEBT Net Debt is defined as financial liabilities (excluding lease liabilities) minus cash and cash equivalents and current financial assets. EUR 000s 2023 2022 Cash and cash equivalents 15,056 9,625 Short-term debt – (4,914) Long-term debt (22,000) (22,000) Total (6,944) (17,289) Note that long-term debt excludes issuance costs. See note 21. Cash and cash Short-term Long-term Lease Net EUR 000’s equivalents debt debt Liabilities position Opening balance Jan 1, 2022 12,230 (4,124) (10,277) (14,275) (16,424) Cash flows (4,527) (790) (11,723) 3,073 – Currency exchange differences 1,922 – – (1,838) – Other non-cash movements – – – – – Closing balance Dec 31, 2022 9,625 (4,914) (22,000) (13,040) (30,328) Cash and cash Short-term Long-term Lease Net EUR 000’s equivalents debt debt Liabilities position Opening balance Jan 1, 2023 9,625 (4,914) (22,000) (13,040) (30,328) Cash flows 7,075 4,696 – 3,516– Currency exchange differences (1,644) – – (1,810)– Other non-cash movements – 218 – (360)– Closing balance Dec 31, 2023 15,056 – (22,000) (11,694) (18,638) LIQUIDITY RISK Liquidity risk is managed by the Group treasury, which ensures adequate coverage of cash needs by entering into short, medium and long-term financial instruments to support operational and other funding requirements. The Board reviews and approves the maximum long-term funding of the Group and on an on-going basis considers any related matters on at least an annual basis. Short- and medium-term requirements are regularly reviewed and managed by the centralised treasury operation within the parameters set by the Board. The Group’s liquidity and funding management process includes projecting cash flows and considering the level of liquid assets in relation thereto, monitoring Balance Sheet liquidity and maintaining a diverse range of funding sources and back-up facilities. The Board reviews Group forecasts, including cash flow forecasts, on a quarterly basis. The Group treasury collects cash forecasts from group companies more frequently to assess the short and medium-term Group’s requirements. Group treasury works closely with the local finance managers and divisions in order to identify and monitor relevant cash items with the goal to assure a promptly collection of receivables. These assessments ensure the Group responds to possible future cash constraints in a timely manner. Operating finance requirements of group companies are managed by the Group treasury, which is also responsible for investing liquid surplus assets not immediately required by operating companies. In June 2020, Cavotec secured long-term financing by signing a five years agreement with Credit Suisse and others to provide a EUR 40 million single currency term and multicurrency revolving credit facility. The syndicated loan facility bears interest for each interest period at a rate per annum equal to EURIBOR plus a variable margin which will be adjusted every quarter to reflect any changes in the ratio of net debt (including lease liabilities) to consolidated adjusted EBITDA as determined on a rolling basis. The loans are subject to certain restrictive covenants, including, but not limited to, additional borrowing, certain financial ratios, limitations on acquisitions and disposals of assets. If the financial covenants are not met and their breach is not remedied within a certain period or the lenders do not waive the covenants, there may grounds for termination under the conditions of the credit facility. As of December 31, 2023, the Group’s total available credit facilities, which related to the above mentioned syndicated loan facility agreement and to other credit facilities with local banks, amounted to EUR 40 million, of which EUR 26.3 million was utilized (2022: 34.9 million). In the EUR 26.3 million, EUR 4.3 million are related to bank guarantees that are not included in the balance sheet statements; for more information please see note 35 of the consolidated financial statements. The table below analyses the Group’s financial liabilities, excluding trade payables, into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date against the cash and cash equivalent balances. As of December 31, 2023, the Group has insurance guarantees facilities amount of EUR 14.9 million of which EUR 2.2 million was utilized. Annual and Sustainability Report 2023 | Cavotec 85 | RISK MANAGEMENT 2023 EUR 000s Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Long-term debt (2,084) (23,042) – – Lease liabilities (3,142) (4,364) (3,462) (1,603) Trade Payables (26,004) – – – Other Payables (11,320) – – – Total (42,550) (27,406) (3,462) (1,603) Cash and cash equivalents 15,056 – – – The long term debt includes the maturity analysis based on the contractual undiscounted cashflow. The interests are included using an average interest rate of 9.47%. Later than five years Lease liabilities include the lease agreement of 12 years signed in 2016 by Cavotec Specimas SpA for the lease of the warehouse located in Nova Milanese (Italy). Cavotec SA has provided to Cavotec Specimas SpA’s landlord, a parent guarantee to banks of EUR 6,370 thousands regarding this leasing agreement. 2022 EUR 000s Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Bank overdrafts and short-term debt (4,914) – – – Long-term debt (1,569) (24,353) – – Lease liabilities (2,987) (4,257) (2,937) (2,859) Trade Payables (36,126) – – – Other Payables (11,906) – – – Total (57,502) (28,610) (2,937) (2,859) Cash and cash equivalents 9,625 – – – 2023 Credit facilities Total credit Syndicated facility Syndicated facility EUR 000s Total credit facilities facilities utilisation utilisation (loan) utilisation (guarantees) Non-current financial liabilities 40,000 26,275 22,000 4,275 Total 40,000 26,275 22,000 4,275 2022 Credit facilities Total credit Syndicated facility Syndicated facility EUR 000s Total credit facilities facilities utilisation utilisation (loan) utilisation (guarantees) Current financial liabilities 5,355 4,914 – – Non-current financial liabilities 40,000 30,030 22,000 8,030 Total 45,355 34,944 22,000 8,030 In the syndicated facility utilization, EUR 22.0 million are utilized as loans and EUR 4.3 million are utilized as standby letter of credits and guarantees. The Group does not have collateral or credit enhancements that would influence its credit exposure. The maximum exposure to credit risk is the carrying amount of each class of financial asset. CAPITAL RISK MANAGEMENT The Group and the Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure that reduces the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of its debt to equity ratio calculated by comparing senior Net Debt to Total equity. In monitoring the level of indebtedness, on-going attention is given by management to the level of net debt, leverage ratio and assets to equity ratio calculated in accordance to the Groups financing facility. The ratios at 31 December 2023 and 31 December 2022 (both including the impact of IFRS 16) were as follows: EUR 000s 2023 2022 Total interest bearing liabilities (33,694) (39,954) Cash and cash equivalents 15,056 9,625 Net debt (18,638) (30,328) Senior net debt (18,638) (30,328) Total equity (56,562)(43,850) Senior net debt/equity ratio33.0%69.2% Equity/asset ratio36.0%26.2% Leverage ratio 1.29x12.50x The Group has to comply to the following financial covenants: The Leverage Ratio (Net Senior Debt on the last day of that relevant period to adjusted EBITDA in respect of that relevant period) and The Equity Ratio. The Leverage Ratio for the Group (on a consolidated basis) shall amount to a maximum of 4.00x for the testing period ending on 31 December 2023 and 3.5x for each testing period ending thereafter, according to the Amendment Agreement dated June 2023. The Equity Ratio for the Group (on a consolidated basis) shall amount to a minimum of 30% for each testing period ending in 2023 and 32.5% for each testing period ending thereafter, according to the Amendment Agreement dated 9 March 2023. 86 Cavotec | Annual and Sustainability Report 2023 Report of the statutory auditor to the General Meeting of Cavotec SA Lugano Report on the audit of the consolidated financial statements Opinion We have audited the consolidated financial statements of Cavotec SA and its subsidiaries (the Group), which comprise the statement of comprehensive income for the year ended 31 December 2023, the balance sheet as at 31 December 2023, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the fi- nancial statements, including material accounting policy information. In our opinion, the consolidated financial statements (pages 57 to 86) give a true and fair view of the consolidated financial position of the Group as at 31 December 2023 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards and comply with Swiss law. Basis for opinion We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the consolidated financial statements' section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsi- bilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach Overview Overall Group materiality: EUR 1.5 million We concluded full scope audit work at 15 reporting units in 14 countries. Our audit scope addressed ove r 96% of the Group’s revenue. In addition, review procedures were performed on a further 7 reporting units in 6 countries, repre- senting a further 4% of the Group’s revenue. As key audit matter the following area of focus has been identified: Goodwill impairment test: Ports & Maritime and Industry PricewaterhouseCoopers SA, Piazza Indipendenza 1, casella postale, 6901 Lugano, Switzerland Telefono: +41 58 792 65 00, www.pwc.ch PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. Annual and Sustainability Report 2023 | Cavotec 87 Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influ- ence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. Overall Group materiality EUR 1.5 million Benchmark applied Total revenues Rationale for the materiality bench- We chose total revenue as the benchmark for determining materiality. This ba- mark applied sis takes into account the development and volatility of the business activities and is a generally accepted benchmark for materiality considerations. We agreed with the Audit Committee that we would report to them misstatements above EUR 75'000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. Audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consoli- dated financial statements as a whole, taking into account the structure of the Group, the accounting processes and con- trols, and the industry in which the Group operates. The Group is primarily structured into two business units “Ports and Maritime” and "Industry". The Group financial state- ments are a consolidation of 24 reporting units, comprising the Group's operating businesses and centralised functions. In establishing the overall approach to the Group audit, we determined the type of work to be performed by us, as the Group engagement team, by component auditors from PwC network firms and by component auditors from other firms operating under our instructions. We concluded full scope audit work at 15 reporting units in 14 countries. In addition, review procedures were performed on a further 7 reporting units in 6 countries. The Group’s consolidation, financial statement disclosures and goodwill are audited by the Group engagement team. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Goodwill impairment test: Ports & Maritime and Industry Key audit matter How our audit addressed the key audit matter Refer to page 68 (Note 4 Critical accounting estimates We evaluated Group management’s assumptions as de- and judgments). scribed on page 68 (Note 4) of the financial statements and discussed these with the Audit Committee and The goodwill impairment assessment for Ports & Maritime responsible management. and Industry is considered as a key audit matter due to the size of the goodwill balance (EUR 30.1 million as of 31 De- We evaluated Group management’s assumptions and we cember 2023 and EUR 30.2 million as of 31 December challenged management on the inclusion of all appropriate 2022) as well as the considerable judgement required by assets and liabilities in the cash-generating units. Group management in making their assessment on the im- pairment test. In relation to the value in use, we performed the following: Cavotec SA | Report of the statutory auditor to the General Meeting 88 Cavotec | Annual and Sustainability Report 2023 Materiality The goodwill impairment test depends on the estimation of We compared Group management’s expectations of reve- future cash flows. Judgement is required to determine the nue growth and gross profit margins, included in the five- The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assumptions relating to the future business results and the year plan included in the impairment model, with the com- assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due discount rate applied to the forecasted cash flows. pany’s budget, forecasts and the projects in the pipeline. to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influ- ence the economic decisions of users taken on the basis of the consolidated financial statements. We evaluated Group management’s assumptions of long- term growth rates, by comparing them with economic and Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall industry forecasts. We also evaluated, with the support of Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with our PwC valuation team, certain management’s valuation qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit parameters, specific to the model. procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. We applied professional skepticism when reviewing the forecasts for the market units by stress testing key as- Overall Group materiality EUR 1.5 million sumptio ns, assessing the impact on the sensitivity analysis, and understanding the degree to which assumptions would Benchmark applied Total revenues need to move before impairment would be triggered. Rationale for the materiality bench- We chose total revenue as the benchmark for determining materiality. This ba- The procedure performed provided a sufficient basis to mark applied sis takes into account the development and volatility of the business activities conclude on the approach of goodwill impairment assess- and is a generally accepted benchmark for materiality considerations. ment. We agreed with the Audit Committee that we would report to them misstatements above EUR 75'000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. Other information The Board of Directors is responsible for the other information. The other information comprises the information included Audit scope in the annual report, but does not include the financial statements, the consolidated financial statements, the remunera- We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consoli- tion report and our auditor’s reports thereon. dated financial statements as a whole, taking into account the structure of the Group, the accounting processes and con- trols, and the industry in which the Group operates. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. The Group is primarily structured into two business units “Ports and Maritime” and "Industry". The Group financial state- ments are a consolidation of 24 reporting units, comprising the Group's operating businesses and centralised functions. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information In establishing the overall approach to the Group audit, we determined the type of work to be performed by us, as the and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial state- Group engagement team, by component auditors from PwC network firms and by component auditors from other firms ments, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. operating under our instructions. We concluded full scope audit work at 15 reporting units in 14 countries. In addition, review procedures were performed on a further 7 reporting units in 6 countries. The Group’s consolidation, financial If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we statement disclosures and goodwill are audited by the Group engagement team. are required to report that fact. We have nothing to report in this regard. Key audit matters Board of Directors' responsibilities for the consolidated financial statements Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair consolidated financial statements of the current period. These matters were addressed in the context of our audit of the view in accordance with IFRS Accounting Standards and the provisions of Swiss law, and for such internal control as the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free opinion on these matters. from material misstatement, whether due to fraud or error. Goodwill impairment test: Ports & Maritime and Industry In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern Key audit matter How our audit addressed the key audit matter basis of accounting unless the Board of Directors either intends to liquidat e the Group or to cease operations, or has no realistic alternative but to do so. Refer to page 68 (Note 4 Critical accounting estimates We evaluated Group management’s assumptions as de- and judgments). scribed on page 68 (Note 4) of the financial statements and discussed these with the Audit Committee and Auditor’s responsibilities for the audit of the consolidated financial statements The goodwill impairment assessment for Ports & Maritime responsible management. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are and Industry is considered as a key audit matter due to the free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. size of the goodwill balance (EUR 30.1 million as of 31 De- We evaluated Group management’s assumptions and we Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with cember 2023 and EUR 30.2 million as of 31 December challenged management on the inclusion of all appropriate Swiss law, ISAs and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from 2022) as well as the considerable judgement required by assets and liabilities in the cash-generating units. fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influ- Group management in making their assessment on the im- ence the economic decisions of users taken on the basis of these consolidated financial statements. pairment test. In relation to the value in use, we performed the following: Cavotec SA | Report of the statutory auditor to the General Meeting Cavotec SA | Report of the statutory auditor to the General Meeting Annual and Sustainability Report 2023 | Cavotec 89 A further description of our responsibilities for the audit of the consolidated financial statements is located on EXPERT- suisse's website: http://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report. Report on other legal and regulatory requirements In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control sys- tem that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the consoli- dated financial statements. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers SA Thomas Wallmer Laura Cazzaniga Licensed audit expert Licensed audit expert Auditor in charge Lugano, 11 April 2024 Cavotec SA | Report of the statutory auditor to the General Meeting 90 Cavotec | Annual and Sustainability Report 2023 A further description of our responsibilities for the audit of the consolidated financial statements is located on EXPERT- suisse's website: http://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report. Report on other legal and regulatory requirements In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control sys- tem that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the consoli- dated financial statements. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers SA Thomas Wallmer Laura Cazzaniga Licensed audit expert Licensed audit expert Auditor in charge Lugano, 11 April 2024 Cavotec SA | Report of the statutory auditor to the General Meeting AnnualAnnualandandSustainabilitySustainabilityReporReportt20232023||CavotecCavotec9191 Statutory Financial Statements Please note that all reported amounts are in CHF. 92 Cavotec | Annual and Sustainability Report 2023 STATUTORY FINANCIAL STATEMENTS | Income statement Cavotec SA CHF Notes 2023 2022 Net proceeds of services 2,288,504 1,182,735 Other Income – 3,793,541 Staff cost (233,395) (1,586,305) Transportation expenses (68) – External services (1,766,962) (6,989,588) Travelling expenses (42,142) (25,721) General expenses (513,378) (412,778) Depreciation fixed assets (89,848) – Operating result (357,289) (4,038,116) Finance costs – net (1,717,629) (320,477) Foreign exchange – net (1,830,486) (1,001,448) Translation differences(3,652,038) (4,375,185) Profit / (Loss) before taxes (7,557,443) (9,735,226) Income taxes (11,556) (23,971) Profit / (Loss) for the year (7,568,999)(9,759,197) Balance Sheet Cavotec SA Assets CHF Notes 2023 2022 Current assets Cash and cash equivalents 140,416 163,014 Other short-term receivables 3,171,673 7,990,192 from third parties 47,881 214,404 from group companies 3,123,792 7,775,788 Accrued income and prepaid expenses 13,095 38,897 Total current assets 3,325,184 8,192,103 Non-current assets Intangible assets 171,227 – Financial assets 62,936 66,926 Investments in subsidiary companies 3 86,455,757 91,936,268 Total non-current assets 86,689,921 92,003,194 Total assets 90,015,104 100,195,297 Liabilities CHF Notes 2023 2022 Short-term liabilities Other short-term liabilities (5,027,332) (11,632,319) to third parties (185,930) (2,802,713) to group companies (4,841,403) (8,829,606) Short-term interest-bearing liabilities 7 – (3,973,765) Accruals and deferred income (402,684) (1,744,582) Other liabilities (183,149) – Total short-term liabilities (5,613,165) (17,350,666) Long-term interest bearing liabilities 7 (34,183,041) (41,402,193) Unrealized exchange gain (2,797,223) (902,200) Other Long-term liabilities (132,878) (200,132) Total long-term liabilities (37,113,143) (42,504,525) Total liabilities (42,726,308)(59,855,191) Equity CHF Notes 2023 2022 Share capital 4 (74,687,221) (65,970,240) Share premium reserve (79,479,992) (73,679,283) Loss brought forward 99,309,417 89,550,220 Result for the period 7,568,9999,759,197 Total equity (47,288,797)(40,340,106) Total equity and liabilities (90,015,104) (100,195,297) Annual and Sustainability Report 2023 | Cavotec 93 | NOTES TO STATUTORY FINANCIAL STATEMENTS Notes to Statutory Financial Statements NOTE 1. GENERAL Cavotec SA (the ”Company”) is the ultimate parent company of the Cavotec Group. Cavotec is a leading cleantech company that designs and delivers connection and electrification solutions to enable the decarbonization of ports and industrial applications worldwide. Backed by more than 40 years of experience, our systems ensure safe, efficient, and sustainable operations for a wide variety of customers and applications worldwide. We thrive by shaping future expectations in the areas we are active in. Our credibility comes from our application expertise, dedication to innovation and world class operations. Our success rests on the core values we live by: Integrity, Accountability, Per- formance and Team Work. We thrive by shaping future expectations in the areas we are active in. Our credibility comes from our application expertise, dedication to innovation and world class operations. Our success rests on the core values we live by: Integrity, Accountability, Performance and Team Work. Cavotec’s personnel represent a large number of cultures and provide customers with local support, backed by the Group’s global network of engineering expertise. Cavotec SA, the Parent company, is a limited liability company incorporated and domiciled in Switzerland and listed on Nasdaq Stockholm Mid Cap. The Consolidated Financial Statements are of overriding importance for the purpose of the economic and financial assessment of the Company. The unconsolidated Statutory Financial Statements of the Company are prepared in accordance with Swiss law, the Code of Obligations (SCO), and serve as complementary information to the Consolidated Financial Statements. NOTE 2. ACCOUNTING PRINCIPLES APPLIED IN THE PREPARATION OF THE FINANCIAL STATEMENTS Exchange rate differences – The Company keeps its accounting records in Euro and translates them into Swiss Francs (CHF) for statutory reporting purposes. The Euro Statutory Financial Statements have been translated into Swiss Francs as follows: Assets and liabilities closing rate Own shares and shareholders’ equity historical rate Income and expenses average rate Impairment charges spot rate Translation gains are deferred and translation losses are included in the determination of net income. Current assets and liabilities – Current assets and liabilities are recorded at cost less adjustments for impairment of value. Financial assets – Financial assets are recorded at acquisition cost less adjustments for impairment of value. Treasury shares – Treasury shares are recognised at acquisition cost and deducted from shareholders’ equity at the time of acquisition. In case of resale, the gain or loss is allocated or charged to equity. Revenue from sale of goods and services – Revenue from services is recorded as at invoicing. Once the service has been rendered it is invoiced, at the latest at the end of each quarter. NOTE 3. INVESTMENT IN SUBSIDIARY COMPANIES Ownership interest Ownership interest Share Capital Share Capital Company name Purpose Domicile 2023 2022 Curr. 2023 2022 Cavotec (Swiss) SA Service company Switzerland 100% 100% CHF 200,000 200,000 Holding & Cavotec MoorMaster Ltd engineering New Zealand 100% 100% NZD 196,164,928 196,164,928 Cavotec USA Inc Sales company USA 100% 100% USD 68,000,000 68,000,000 Cavotec India Private Ltd Sales company India 0% 0% INR 46,000 46,000 NOTE 4. SHAREHOLDERS’ EQUITY The share capital as of 31 December 2023 is divided into 106,696,030 shares at a part value CHF 0.70 each. Legal Reserve Prior Year Total Share Premium Retained Result for Shareholder’s CHF Share Capital Reserve Earnings the period Treasurysharesequity Opening balance at January 1, 2022 120,631,296 – 19,018,227 (44,142,721) (45,407,500) 50,099,302 Purchase of Treasury shares – – – – – – Sales of Treasury shares – – – – – – Reduction share capital (54,661,056) – – – – (54,661,056) Increase Share reserve – – 54,661,056 – – 54,661,056 Result of the period – – – – (9,759,197) (9,759,197) Allocation prior year result – – – (45,407,500) 45,407,500 – Balance at December 31, 2022 65,970,240 – 73,679,283 (89,550,220) (9,759,197) 40,340,106 Opening balance at January 1, 2023 65,970,240 73,679,283 (89,550,220) (9,759,197) 40,340,106 Purchase of Treasury shares – – – – – – Sales of Treasury shares – – – – – – Increase share capital 8,716,981 – – – – 8,716,981 Increase share reserve – – 5,800,709 – – 5,800,709 Result of the period – – – – (7,568,999) (7,568,999) Allocation prior year result – – – (9,759,197) 9,759,197 – Balance at December 31, 2023 74,687,221 – 74,479,992 (99,309,417) (7,568,999) 47,288,796 94 Cavotec | Annual and Sustainability Report 2023 NOTES TO STATUTORY FINANCIAL STATEMENTS | During year 2023 the Board of Directors of Cavotec SA has resolved the implementation of a new Long Term Incentive Plan (“LTIP”) program 2023- 2025 in addition to the LTIP 2021-2023 and LTIP 2022-2024 for certain key employees to increase and enhance its ability to recruit, retain and motivate employees and to encourage personal long term ownership of Cavotec SA shares among the participants. The short-term incentive plan (STIP) is an annual non-equity cash compensation and is the cash-based element of the variable remuneration for senior executives, while the long-term incentive plan (LTIP) is aimed to create a managing shareholder culture by allowing selected key employees of the Group to become shareholders of Cavotec SA. Further information is in the Remuneration Report on page 38. Share capital as of December 31, 2023 No of registered sharesPar value (CHF) Total (CHF) Issued shares 106,696,030 CHF 0.70 CHF 74,687,221 Contingent shares 942,430 CHF 0.70 CHF 659,701 Authorised shares 9,424,320 CHF 0.70 CHF 6,597,024 On March 13, 2023, the Board of Directors proposes to increase the company’s share capital by a maximum nominal amount of CHF 9,895,536.00 with a maximum number of the new registered shares to be issued 14,136,480 with a par value of CHF 0.70. On March 17, 2023, a meeting of the board of directors was held where it was decided for a capital increase of CHF 8,716,981 from nominal 65,970,240.00 to nominal CHF 74,687,221.00, through issuance of 12,452,830 fully paid-in registered shares with a par value of CHF 0.70 each. The Board of directors was authorized to increase the share capital in an amount not to exceed CHF 6,597,024.00 through the issuance of up to 9,424,320 share with a par value of 0.70 CHF per share by not later than June 2, 2024. NOTE 5. SIGNIFICANT SHAREHOLDERS The end of the year and based on the available information, five main shareholders are: Year ended 31 December 2023 Number % Bure Equity AB Financial institution 37,554,921 35.3% TomEnterprise Private AB (Thomas von Koch) Investment Fund 18,666,109 17.5% Fabio Cannavale Individual investor 7,583,008 7.1% Fjärde AP-fonden Investment Fund 6,793,710 6.4% Nordea Fonder Investment Fund 4,635,626 4.4% Fondita Fund Management Investment Fund 2,000,000 1.9% Total 77,233,374 72.5% Year ended 31 December 2022 Number % Bure Equity AB Financial institution 33,321,619 35.4% Thomas von Koch Individual investor 11,203,289 11.9% Fabio Cannavale (Nomina SA) Individual investor 7,901,857 8.4% Fjärde AP-Fonder Investment Fund 6,000,465 6.4% Nordea Fonder Investment Fund 5,049,421 5.4% Total 63,476,651 67.5% NOTE 6. SHARE OWNERSHIP – BOARD OF DIRECTORS AND CAVOTEC MANAGEMENT TEAM Based on publicly available information, the ownership by members of the Board and Cavotec Management Team is as follow: Shareholders as of 31 December 2023 Number % Patrik Tigerschiöld (Anna Kirtap AB & familly) Chairman 1,598,000 1.50% David Pagels CEO 750,000 0.70% Niklas Edling Board member 83,599 0.08% Annette Kumlien Board member 75,000 0.07% Patrick Mares CMT member 18,950 0.02% Peter Nilsson Board member – – Keith Svendsen Board member – – Total 2,525,549 2.4% Annual and Sustainability Report 2023 | Cavotec 95 | NOTES TO STATUTORY FINANCIAL STATEMENTS NOTE 7. SHORT-TERM AND LONG-TERM INTEREST BEARING LIABILITIES In June 2020 Cavotec SA secured long-term financing by signing an agreement with Credit Suisse, Banca dello Stato del Cantone Ticino and Privat Debt Fund SA to provide a EUR 40 Million single currency term and multicurrency revolving credit facility, and portion utilized as of 31 December 2023 has been classified as long term. CHF 31 December 2023 31 December 2022 Bank overdraft – 1,063,976 Short-term interest bearing liabilities to other group companies – – Short-term interest bearing liabilities to Corner – 2,909,789 Total short-term interest bearing liabilities – 3,973,765 Long-term interest bearing liabilities Credit Suisse 20,372,000 21,663,400 Long-term interest bearing liabilities to other group companies 13,811,041 19,738,793 Total long-term interest bearing liabilities 34,183,041 41,402,193 CHF 31 December 2023 31 December 2022 Less than 1 year – 3,973,765 1 to 5 years 34,183,041 37,428,428 More than 5 years – – NOTE 8. GUARANTEES AND COMMITMENTS The following table provides quantitative data regarding the Company’s third-party guarantees. CHF 31 December 2023 31 December 2022 Advance payment bonds 97,196102,659 Performance bond689,403 1,030,170 Parent guarantee6,360,981 7,578,216 Total 7,147,5808,711,045 Cavotec SA carries joint liability in respect of the federal tax authorities for value added tax liabilities of its Swiss subsidiary, furthermore Cavotec SA is a guarantor for the existing EUR 40 million syndicated credit facility. NOTE 9. RISK ASSESSMENT DISCLOSURE Cavotec SA, as the ultimate parent company of Cavotec Group, is fully integrated into the Company internal risk assessment process. The Company-wide internal risk assessment process consists of regular reporting to the Board of Directors of Cavotec SA on identified risks and management’s reaction to them. The procedures and actions to identify the risks, and where appropriate remediate, are performed by specific corporate functions as well as by the operating companies of the Group. It also adopted and deployed Group-wide the Internal Control System (“ICS”). The internal control function has been embedded in the finance organisation. This task is performed by Group Finance, that together with the local entity’s finance department and the Legal Compliance officer is responsible for ensuring that the necessary controls are performed along with adequate monitoring. Internal controls comprise the control of the Company’s and Group’s organisation, procedures and remedial measures. The objective is to ensure reliable and correct financial reporting, and to ensure that the Company’s and Group’s financial reports are prepared in accordance with law and applicable accounting standards and that other requirements are complied with. The internal control system is also intended to monitor compliance with the Company’s and Group’s policies, principles and instructions. In addition, the control system monitors security for the Company assets and monitors that the Company’s resources are exploited in a cost-effective and adequate manner. Internal control also involves following up on the implemented information and business system, and risk analysis. Financial risks management is described in more detail in the Risk Management note of the Consolidated Financial Statements. 96 Cavotec | Annual and Sustainability Report 2023 NOTES TO STATUTORY FINANCIAL STATEMENTS | NOTE 10. RELATED PARTY TRANSACTIONS As of 31 December 2023, the company has granted no loans, advances, borrowings or guarantees in favor of member of the Board of Directors and members of the Cavotec Management Team or parties closely related to such persons. NOTE 11. LEGAL RISKS As a global company with a diverse business portfolio, the Group is exposed to numerous legal risks, particularly in the areas of product liability, competition and tax assessments. The outcome of any current or future proceedings cannot be predicted. It is therefore possible that legal or regulatory judgments or future settlements could give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could significantly affect our revenues and earnings. NOTE 12. FULL TIME EQUIVALENTS The number of full-time equivalents, as well as the previous year, did not exceed 10 on an annual average basis. NOTE 13. SUBSEQUENT EVENTS No significant subsequent events occurred. CAVOTEC SA Proposed carry forward of the accumulated losses CHF 31 December 2023 31 December 2022 Profit/(Losses) brought forward(99,309,417)(89,550,220) Profit/(Losses) for the year (7,568,999)(9,759,197) Total losses (106,878,419)(99,309,417) Appropriation to general statutory reserves (retained earnings)–– Appropriation to other reserves–– Proposed balance to be carried forward (106,878,419)(99,309,417) The Board of Directors’ proposal to the Annual General Meeting is that no dividend is to be paid for the 2023 financial year. Annual and Sustainability Report 2023 | Cavotec 97 Report of the statutory auditor to the General Meeting of Cavotec SA Lugano Report on the audit of the financial statements Opinion We have audited the financial statements of Cavotec SA (the Company), which comprise the income statement for the year ended 31 December 2023, the balance sheet as at 31 December 2023 and notes to the statutory financial state- ments, including a summary of significant accounting policies. In our opinion, the financial statements (pages 93 to 97) comply with Swiss law and the Company’s articles of incorpo- ration. Basis for opinion We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the financial statements' section of our report. We are independent of the Company in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach Overview Overall materiality: CHF 0.9 mio We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into ac- count the structure of the Company, the accounting processes and controls, and the industry in which the Company operates. As key audit matter the following area of focus has been identified: Investments valuation in subsidiary companies Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or PricewaterhouseCoopers SA, Piazza Indipendenza 1, casella postale, 6901 Lugano, Switzerland Telefono: +41 58 792 65 00, www.pwc.ch PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity. 98 Cavotec | Annual and Sustainability Report 2023 error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative consider- ations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole. Overall materiality CHF 0.9 mio Benchmark applied Total assets Rationale for the materiality bench- We chose total assets as the benchmark because, in our view, it is the relevant mark applied benchmark for a holding company that mainly holds investments, and it is a generally accepted benchmark. We agreed with the Audit Committee that we would report to them misstatements above CHF 70'000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. Audit scope We designed our audit by determining materiality and assessing the risks of material misstatement in the financial state- ments. In particular, we considered where subjective judgements were made; for example, in respect of significant ac- counting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the fi- nancial statements of the current period. These matters were addressed in the context of our audit of the financial state- ments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Investments valuation in subsidiary companies Key audit matter How our audit addressed the key audit matter At 31 December 2023, the carrying value of the company's We have tested management's assessment of the recover- investments amounts to CHF 86.5 million (2022: CHF 91.9 ability of investments as follows: million). • We compared the carrying amounts of the investments The principal considerations for our determination that the against the underlying net assets. valuation of investments in subsidiary companies is a key audit matter are the significant amount of the investments • We compared the market capitalization of Cavotec SA as in the balance sheet and the judgement involved in the im- at 31 December 2023 with the equity of the Company. pairment assessment. The procedure performed provided a sufficient basis to conclude on the approach of investments valuation in sub- sidiary companies. Other information The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements, the consolidated financial statements, the remunera- tion report and our auditor’s reports thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assur- ance conclusion thereon. Cavotec SA | Report of the statutory auditor to the General Meeting Annual and Sustainability Report 2023 | Cavotec 99 In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge ob- tained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Board of Directors' responsibilities for the financial statements The Board of Directors is responsible for the preparation of financial statements in accordance with the provisions of Swiss law and the Company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the Company's ability to con- tinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from ma- terial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic de- cisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on EXPERTsuisse's web- site: http://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report. Report on other legal and regulatory requirements In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm the existence of an internal control sys- tem that has been designed, pursuant to the instructions of the Board of Directors, for the preparation of the financial statements. We further confirm that the proposed carry forward of the accumulated losses complies with Swiss law and the Com- pany’s articles of incorporation. We recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers SA Thomas Wallmer Laura Cazzaniga Licensed audit expert Licensed audit expert Auditor in charge Lugano, 11 April 2024 Cavotec SA | Report of the statutory auditor to the General Meeting 100 Cavotec | Annual and Sustainability Report 2023 FINANCIAL DEFINITIONS | Financial definitions Financial figures Operating figures Dividend yield: Dividend as a percentage Adjusted EBIT: EBIT excluding Non- Number of employees at year-end: of the market price. Recurring items. Including insourced staff and temporary employees. Dividend per share (DPS): Dividend for Adjusted EBITDA: EBITDA excluding the period divided by the total number of Non-Recurring items. Operating cash flow: EBITDA excluding shares outstanding. non-cash items, capital expenditures, Average capital employed: Total assets divested PPE and changes in working Earnings per share: Profit/loss less current liabilities calculated on their capital, but excluding cash flow pertaining attributable to equity holders of the Group average of quarterly values for the period. to restructuring. divided by the average number of shares for the period. Average number of employees: Operating margin: Operating result Average number of employees during the after depreciation and amortisation as a Equity/asset ratio: Total equity as a year based on hours worked. Does not percentage of the period’s revenue from percentage of total assets. include consultancy staff. sales of goods. FY: Full Year. EBIT: Operating result excluding net Operating result: EBIT as stated in the interest and income tax. income statement. Leverage ratio: Senior net debt divided by operating result before depreciation EBITDA: Operating result excluding PPE: Property, plant and equipment. and amortisation, adjusted for non- depreciation and amortisation of PPE recurring items. and intangible assets, net interest and Profit before income tax margin: Profit/ income tax. loss before income tax as a percentage of LTM : Last Twelve Months. the period’s revenue from sales of goods. EBITDA margin: EBITDA excluding Net debt: Borrowings plus other financial profit from participations in joint venture/ Return on average capital employed liabilities, less cash and cash equivalents associated companies as a percentage of (ROACE): Net operating profit after tax and current financial investments. net sales. (rolling 12 months) divided by average capital employed. Net debt/equity ratio: Net debt as a Gross operating margin: Operating percentage of total equity. result before depreciation and amortisation as a percentage of the Return on equity (ROE): Net profit after period’s revenue from sales of goods. tax (rolling 12 months) divided by total equity less minority interests calculated on Interest coverage: Operating result, the average of quarterly values. adjusted for non-recurring items divided by net interest expenses. Senior net debt: All interest bearing indebtedness that is not subordinated, Net debt/EBITDA: Net debt divided by minus liquid assets. EBITDA. Total equity: Shareholders’ equity Non-Recurring Items: any material items including minority interests. which represent gains or losses arising from: restructuring of the activities of an entity and reversal of any provisions for the costs of restructuring as defined under IFRS, disposal of non-current assets, disposal of assets associated with discontinued operations, extraordinary provisions and litigation. Annual and Sustainability Report 2023 | Cavotec 101 | THE SHARE The share 2023 Successful new issue of shares The Cavotec share is listed on Nasdaq The share and share capital The Cavotec share Stockholm since 2011 in the mid- Each share in Cavotec carries one ISIN code: CH0136071542 cap segment. The company made vote and all shares have equal right to Ticker: CCC a successful directed issue of new dividend. The number of shares and votes shares during the year that raised is 106,696,030 and each share has a par approximately SEK 165 million (about value of CHF 0.70. The share capital is EUR 15.0 million). The closing price CHF 74,687,221. All of Cavotec’s shares Analyst on the last trading day of the year was are denominated in SEK. Cavotec is followed by the analyst listed SEK 14.4 which translates to a market below. Publicly available analyst reports capitalisation of SEK 1.5 billion. On 22 February 2023, Cavotec carried on Cavotec are available on www. out a directed new issue of 12,452,830 introduce.se/foretag/cavotec/start/. For In 2023, a total of 14.4 million shares shares at a subscription price of SEK further information, please contact the were traded of which 53.5% on Nasdaq 13.25 per share, entailing raising analyst below. Stockholm. The daily average was in proceeds of approximately SEK 165 total 14,433 shares and on Nasdaq million (about EUR 15.0 million). The Firm Stockholm 13,660 shares. The share purpose of the share issue was to ABG Sundal Collier (sponsored price increased 6.7% in 2023. Nasdaq increase financial flexibility to support research) Stockholm, as measured by the OMXS the company to execute on its strong Analyst PI index, increased 15.5% in 2023. The order book, growth plans and in addition Karl Bokvist highest closing price SEK 15.85 was strengthen the company’s financial [email protected] paid on 7 December and the lowest price position by reducing net debt. The share Phone: +46 8 566 286 00 SEK 11.95 was paid on 13 March. The issue entailed a dilution of approximately market capitalisation was SEK 1,536 11.7% of the number of shares and million on the last trading day of the year. votes in Cavotec. Shareholders Dividend policy and dividend On 31 December 2023, Cavotec had Cavotec’s target is to distribute 2,019 known shareholders. Most of dividends of approximately 30-50% of the holdings, 76.6%, are in Sweden, net profits over a business cycle. Any Owners followed by Switzerland with 7.1%. Of pay-out decision will be based on the per country the known shareholders, the largest type company’s financial position, investment of ownership is institutional investors needs, acquisitions and liquidity and asset managers holding 64.9% of position. the shares, while private individuals hold 17.8%. The Board of Directors proposes to Sweden, 76.6% the Annual General Meeting 2024 Switzerland, 7.1% Bure Equity is the single largest that no dividend be paid for the 2023 Finland, 6.2% Germany, 0.3% shareholder with 35.2% of the share financial year. Other, 9.7% capital and votes. CAVOTEC’S TEN LARGEST SHAREHOLDERS 31 DECEMBER 2023 Owner No. of shares Capital and votes Bure Equity 37,554,921 35.20% Thomas von Koch 18,666,109 17.49% Fabio Cannavale 7,583,008 7.11% Owners Fjärde AP-fonden (The Fourth Swedish National Pension Fund) 6,793,710 6.37% per type Nordea Funds 4,635,626 4.34% Fondita Fund Management 2,000,000 1.87% Patrik Tigerschiöld with family 1,598,000 1.70% SEB Funds 1,238,245 1.16% Eric Isaac 1,234,382 1.16% Investment and asset managers, 35.3% Fredrik Palmstierna 1,216,064 1.14% Other institutional owners, 20.8% Private individuals, 17.8% Total ten largest owners 82,520,065 77.54% Fund companies, 8.8% Others 24,175,965 22.46% Unknown, 17.3% Total 106,696,030 100.00% 102 Cavotec | Annual and Sustainability Report 2023 Innehavsstorlek Aktier Kapital Röster Antal kända ägare Andel av kända ägare 1 - 500 153396 0,14% 0,14% 1341 66,42% 501 - 1 000 155034 0,15% 0,15% 194 9,61% 1 001 - 5 000 703444 0,66% 0,66% 289 14,31% 5 001 - 10 000 538456 0,51% 0,51% 68 3,37% 10 001 - 20 000 544435 0,51% 0,51% 35 1,73% 20 001 - 94508659 88,80% 88,80% 92 4,56% Okänd innehavsstorlek 10092606 9,24% 9,24% 0 0,00% Totalt 106696030 100,00% 100,00% 2019 100,00% THE SHARE | OWNERSHIP DISTRIBUTION BY SHAREHOLDING 31 DECEMBER 2023 Holding size Capital and votes Shares No. known owners Share of known owners 1-500 0.14% 153.396 1,341 66.42% 501-1,000 0.15% 155.034 194 9.61% 1,001-5,000 0.66% 703.444 289 14.31% 5,001-10,000 0.51% 538.456 68 3.37% 10,001-20,000 0.51% 544.435 35 1.73% 20,001- 88.80% 94.508.659 92 4.56% Unknown 9.24% 10.092.606 0 0.00% Total 100.00% 106.696.030 2,019 100.00% DEVELOPMENT OF THE SHARE CAPITAL Description Date Shares Share capital (CHF) Listing on Nasdaq Stockholm 19 October 2011 71,625,472 110,665,691 Reduction share capital 4 May 2012 71,625,472 109,237,747 Reduction share capital 23 April 2013 71,625,472 105,667,886 Reduction share capital 23 April 2014 71,625,472 102,098,025 Increase share capital 19 September 2014 78,764,272 112,306,480 Reduction share capital 22 April 2015 78,764,272 108,379,680 Reduction share capital 22 April 2016 78,764,272 106,023,600 Reduction share capital 29 March 2017 78,764,272 102,096,800 Rights issue 4 January 2019 94,471,472 120,631,296 Reduction share capital 2 June 2022 94,471,472 65,970,240 New issue 22 February 2023 106,696,030 74,687,221 Total outstanding shares 106,696,030 74,687,221 SHARE PRICE DEVELOPMENT AND VOLUME ON NASDAQ STOCKHOLM 2023 SEK NO OF SHARES 18 1400000 16 1200000 14 1000000 12 800000 10 8 600000 6 400000 4 200000 2 0 0 3 0/12/2022 30/01/2023 28/02/2023 31/03/2023 30/04/2023 31/05/2023 30/06/2023 31/07/2023 31/08/2023 30/09/2023 31/10/2023 30/11/2023 Closing price OMXS PI Total volume Closing price OMXS PI Total volume Annual and Sustainability Report 2023 | Cavotec 103 | SHAREHOLDER INFORMATION Shareholder information Financial calendar 26 April 2024 First quarter report 25 July 2024 Second quarter report 8 November 2024 Third quarter report 21 February 2025 Fourth quarter and year-end report 2024 Week beginning 31 March 2025 Annual Report and Sustainability Report 2024 IR contact Joakim Wahlquist, CFO Phone +41 91 911 4010 Email [email protected] 2024 Annual General Meeting The Annual General Meeting 2024 will take place on 4 June 2024 in Lugano, Switzerland. Financial information Cavotec’s annual report and quarterly reports are published in English. They are available for download at https://ir.cavotec.com/financial-reports Cavotec SA Corso Elvezia 16 CH-6900 Lugano Switzerland +41 91 911 4010 [email protected] cavotec.com 104 Cavotec | Annual and Sustainability Report 2023 CAVOTEC’S HISTORY IN BRIEF | Cavotec’s history in brief 1974 Specimas AB is registered in Sweden as a sales agent for Italian Specimas SpA. 1976 Specimas AB is renamed Cavotec AB. 1984 Cavotec acquires Specimas SpA. 1997 2008 2021 Acquisition of Alfo Apparatebau in Acquisition of Dabico Group in the US and New strategy launched to focus on Germany. UK, Meyerinck in Germany and Gantrex cleantech for ports and industrial operations. applications. Opens a sales company in Singapore. 2011 2022 1999 Sales offices opened in Spain and Brazil. Divestment of the airport’s division. Acquisition of Metool in Australia and RMS Enrouleurs in France. Acquisition of INET Group in the US. Opens a sales company in Denmark. Listing on Nasdaq Stockholm. 2023 Focus on the transformation of Cavotec to build a stronger company and grow 2002 2017 profitably. Acquisition of Gantrex Group in Canada, Cavotec confirms its leadership in South Africa and the US. automated mooring and charging for electric ferries with the first connection of a battery powered vessel in Finland. 2004 Acquisition of Fladung in Germany and 2018 Micro-control in Norway. Opening of new production facility in Milan, Italy. Launch of services offering. 2007 Merger with the British company Mooring Systems through a reverse acquisition in a share for share transaction. 2020 Listing on the New Zealand Stock Launch of MoorMaster NxG, the next Exchange. generation of automated vacuum mooring. Head office moves to Switzerland. Annual and Sustainability Report 2023 | Cavotec 105 Design: Cavotec Corporate Marketing & Communications Photos: Cavotec’s archive and iStockPhoto.com Board and management’s images by Pär Olsson For more information visit cavotec.com Cavotec SA is listed on Nasdaq Stockholm 106 Cavotec | Annual and Sustainability Report 2023 “ Our clear strategic priorities and change program have proven effective and our financial results and position have improved significantly in 2023.” David Pagels, CEO cavotec.com April 2024 – X2EN – ANREP – 23
Have a question? We'll get back to you promptly.