Report of the Supervisory Board of KION GROUP AG

Dear shareholders,

For the KION Group, the 2024 financial year was characterized by a challenging market and competitive environment. A large number of external factors and challenges had a negative impact on macroeconomic development. Nevertheless, the KION Group achieved strong results last year and significantly improved its profitability compared with the previous year. This was made possible by the tireless efforts of the employees and the newly formed Executive Board team, for which I would like to thank them all – also on behalf of all the other members of the Supervisory Board.

The 2025 financial year will also remain challenging, as the economic environment is currently expected to remain difficult. The Executive Board has therefore initiated a comprehensive efficiency program that will support the transformation that has already begun and will show clear results over the coming financial years. In line with the sustainable strategy that has been adopted, this program should help to ensure that the KION Group can continue to offer its customers the best products in the future.

The Supervisory Board advised and supported the Executive Board at all times in its management and strategic development and fully performed the tasks and duties incumbent upon it in accordance with the law, the Company’s articles of association and the rules of procedure.

Focus of the Supervisory Board’s work

At the total of six ordinary and one extraordinary Supervisory Board meetings held in the year under review, the Supervisory Board thoroughly discussed all matters of relevance to the Company and satisfied itself that the Company was being run lawfully, purposefully, and properly. In addition, two resolutions were adopted in writing. Although individual Supervisory Board members were occasionally unable to participate in meetings of the Supervisory Board, they were mostly still able to vote as required using a written voting form.

The Supervisory Board’s work in the reporting period particularly focused on the Playing to Win corporate strategy, which was developed by the Executive Board and replaces the existing KION 2027 strategy, and the Company’s related sustainability strategy. In addition to analysis of strategic topics during Supervisory Board meetings, the Executive Board presented the new corporate strategy to the members of the Supervisory Board during a multi-day workshop, at which it conducted a thorough and extensive discussion of this strategy with the Supervisory Board.

The Supervisory Board regularly obtained information about the Company’s business performance at all its meetings and advised the Executive Board on its deliberations, in particular on its initiatives to increase efficiency.

During a number of meetings in 2024, the Supervisory Board discussed sustainability matters of significance to the Company, including the plans for reaching the so called net zero target. Developments in relation to occupational health, safety, and the environment were presented to the Supervisory Board on a regular basis. The Supervisory Board was involved in every key step of the realization of these fundamental initiatives for the future of the Company.

The ordinary meetings of the Supervisory Board in 2024 were also used to address its regular schedule of topics.

At the ordinary meeting on February 28, 2024, this included approval and adoption of the separate financial statements of KION GROUP AG for 2023, examination of the proposal for the appropriation of profit, approval of the consolidated financial statements of KION GROUP AG for 2023, determination of target achievement for the Executive Board members’ variable remuneration, the adoption of resolutions on the 2023 financial reporting and non-financial reporting and on the 2023 remuneration report, and the adoption of resolutions on the new Executive Board remuneration system and on the preparations for the 2024 Annual General Meeting.

Topics of relevance to the Annual General Meeting and personnel matters relating to the Executive Board were also on the agenda at the Supervisory Board’s ordinary meeting held on the day of the Annual General Meeting on May 29, 2024.

At its meeting on June 27, 2024, the Supervisory Board dealt extensively with reporting on compliance matters (including data protection), the status of the Company-wide transformation and digitalization project ‘Business Transformation’, and personnel matters relating to the Executive Board.

At its ordinary meeting on September 26, 2024, the Supervisory Board held in-depth discussions on the reports received on the CTO organization, financing, and sustainability. In addition, it discussed the ongoing initiative of the Executive Board for cost savings. At its strategy meeting, which was also held on September 26, 2024, the Supervisory Board devoted its attention to the future Playing to Win corporate strategy, the resulting financial impact, and the plan for implementing the strategy. The Supervisory Board also deliberated on the strategic significance of the Company-wide transformation and digitalization project ‘Business Transformation’ (already reported on in previous years) and on the progress with its implementation.

At the final ordinary meeting of the reporting year, held on December 18, 2024, the agenda included the Supervisory Board’s examination of the budget planning for 2025, various corporate governance matters (including the 2024 declaration of conformity), a discussion of the results of the review of the Supervisory Board’s efficiency, personnel matters relating to the Company, and the setting of the 2025 targets for the Executive Board’s variable remuneration.

The extraordinary meeting of the Supervisory Board held on May 2, 2024 dealt with personnel matters relating to the Executive Board.

By way of written resolutions, the Supervisory Board decided on personnel matters relating to the Supervisory Board and on transactions requiring its consent.

Collaboration between Supervisory Board and Executive Board

In the reporting year, the Supervisory Board continued to fulfill the tasks and responsibilities imposed on it by the law, the Company’s articles of association, and the German Corporate Governance Code (GCGC) with dedication and diligence.

The Supervisory Board worked tirelessly to oversee and monitor the Executive Board and advise it on how to manage the Company.

The Executive Board provided the Supervisory Board with regular written and oral reports on the Company’s economic position and on material business transactions, both during meetings and between meetings.

As in previous years, the Supervisory Board – in addition to the areas of focus mentioned above – discussed numerous other issues and transactions requiring consent and made necessary decisions. It was always fully involved in major decisions affecting the Company from an early stage. All members of the Supervisory Board had the opportunity to examine the documents, reports, and proposed resolutions that were presented in the full meetings or in the committees and to analyze and discuss them in detail.

Between meetings of the Supervisory Board and between those of its committees, the chairmen of the Supervisory Board and Audit Committee remained in close contact at all times with the Chief Executive Officer and Chief Financial Officer. There were also regular discussions between the chairman of the Audit Committee and those responsible for internal audit and corporate compliance in the Company.

Work of the committees

Five standing committees support the Supervisory Board’s work and prepare resolutions to be adopted by the full Supervisory Board so that it can perform its tasks with the necessary degree of care and efficiency: the Mediation Committee pursuant to section 27 (3) of the German Codetermination Act (MitbestG), the Executive Committee, the Audit Committee, the Nomination Committee, and the Remuneration Committee.

The Executive Committee held four ordinary meetings in the year under review. One member was unable to take part in one of the meetings, but otherwise all members of the Executive Committee participated in all of its meetings. In 2024, the Executive Committee mainly focused on preparations for the full Supervisory Board meetings, on the Company’s financial position and financial performance, and on personnel and organizational matters relating to the Executive Board.

The Audit Committee, which is also the committee responsible for all sustainability and ESG-related matters, held five ordinary meetings and one extraordinary meeting in 2024. All members of the Audit Committee participated in all of its meetings. The meetings focused on the KION Group’s business performance and financial planning, on the Company’s risk situation, on matters related to the audit, its quality control, and the independence of the auditor, on the audit of the separate and consolidated financial statements of KION GROUP AG, on the quarterly financial statements, and on sustainability matters. It also addressed financial and non-financial reporting and the compliance and internal audit reports. Particular attention was paid to matters relating to the KION Group’s internal control and risk management system. The committee satisfied itself that there were no conflicts of interest in respect of the auditor. Supervisory Board resolutions required in this regard were prepared by the Audit Committee and reported to the Supervisory Board. The auditor reported regularly to the Audit Committee on its audit work and findings. The Audit Committee regularly held discussions without the Executive Board.

The Remuneration Committee, which held three ordinary meetings in 2024, discussed the new Executive Board remuneration system, including its implementation in the Executive Board members’ service contracts, the setting and achievement of targets for the Executive Board members’ variable remuneration, and the 2023 remuneration report. One member was unable to take part in one of the meetings, but otherwise all members of the Remuneration Committee participated in all of its ordinary meetings.

The Nomination Committee convened for three extraordinary meetings in 2024, in which all of its members took part. The committee dealt with the succession planning for shareholder representatives on the Supervisory Board whose term of office is due to finish at the end of the next Annual General Meeting. It also held discussions with potential successors.

There was no need for the Mediation Committee to meet in 2024.

The Supervisory Board meetings included regular reports on the work of the committees. Details of the committees’ members are provided in the corporate governance statement.

Summary of the nature of, and members’ participation in, the meetings of the Supervisory Board and its committees

Because of the diverse composition of the Supervisory Board and its committees, some of which have members from outside Germany, all meetings of both the Supervisory Board and its committees were held in a hybrid format with a combination of attendance in person and video conferencing. The members of the Supervisory Board and its committees based in Germany routinely attended in person with only a few exceptions; the members of the Supervisory Board based in China predominantly used video conferencing to participate.

A strategy workshop was held during the year under review. There were also a number of working sessions and telephone and video conference calls for the purpose of providing the members of the Supervisory Board or the relevant committees with advance information. The employee representatives and, where necessary, the shareholder representatives too held separate preliminary discussions to deliberate on the agenda items of the full meetings of the Supervisory Board. In some cases, preparatory discussion took place between individual Supervisory Board or committee members.

The rate of participation for the meetings of the Supervisory Board and its committees stood at around 98 percent in total.

The members of the Executive Board generally participated in the meetings of the Supervisory Board and its committees. However, the Supervisory Board and its committees also met regularly without the Executive Board to discuss individual matters.

Personnel matters relating to the Executive Board

The Executive Board service contract of Dr. Richard Robinson Smith (CEO) has been extended by a further five years with effect from January 1, 2025 and will therefore run until December 31, 2029. The Executive Board service contract of Ching Pong Quek (CTO & President KION ITS Asia Pacific) has been extended by a further five years with effect from July 1, 2025 and will therefore run until June 30, 2030.

Following preparatory work by its Executive Committee, the Supervisory Board closely monitored these personnel matters and discussed them in detail.

Executive Board remuneration and the Executive Board remuneration system

On the basis of resolution recommendations made by the Remuneration Committee and the Supervisory Board, the 2024 Annual General Meeting held on May 29, 2024 adopted a new remuneration system for the Executive Board that applies retrospectively from January 1, 2024. The aim was to make sure that the remuneration system continues to support the Company’s strategic and long-term development to the fullest possible extent. The feedback received from shareholders in recent years was also incorporated, for example by restricting the discretionary elements of the Executive Board’s remuneration.

Also with effect from January 1, 2024, the service contracts of all members of the KION GROUP AG Executive Board were transferred to the new Executive Board remuneration system.

Self-assessment by the Supervisory Board

With support from an external consultant, the Supervisory Board carried out its regular self-assessment in accordance with recommendation D.12 GCGC in the reporting period. The self-assessment found that the Supervisory Board and its committees perform their work effectively. Further information relating to this self-assessment can be found in the ‘corporate governance statement’.

Corporate governance matters handled by the Supervisory Board

In the declaration of conformity pursuant to section 161 of the German Stock Corporation Act (AktG), which was issued on December 16/18, 2024, the Supervisory Board and Executive Board declared that, from the issue of the previous declaration of conformity until December 31, 2023, KION GROUP AG had complied with all the recommendations in the GCGC except recommendation G.10 sentence 2. It also declared that, since January 1, 2024, KION GROUP AG has complied with all recommendations in the GCGC and will also comply with them in the future. The short-term deviation from recommendation G.10 sentence 2 GCGC was due to the former Executive Board remuneration system, which had still formally applied until December 31, 2023 but was updated with effect from January 1, 2024. Following the changes to the Executive Board remuneration system and the transfer of all Executive Board service contracts to the new Executive Board remuneration system with effect from January 1, 2024, this deviation no longer applies. The most recent declaration of conformity and previous versions are permanently available to the public on the KION GROUP AG website at www.kiongroup.com/conformity.

At the start of 2024, the chairman of the Supervisory Board held discussions with investors about the Supervisory Board’s corporate governance matters, primarily the new Executive Board remuneration system.

The Supervisory Board must also review the content of the non-financial Group report, which the Company is obliged to publish in accordance with section 315b of the German Commercial Code (HGB). The Company fulfills this obligation by publishing a voluntary Group sustainability report which also includes the sustainability declaration according to the European Sustainability Reporting Standards (ESRS). The Supervisory Board engaged the Company’s auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, to prepare a voluntary limited assurance review of this report for 2024. After reviewing these reports, the Supervisory Board did not raise any objections.

The Executive Board and Supervisory Board provide a detailed report on corporate governance at KION GROUP AG in the corporate governance statement, which can also be found on the KION GROUP AG website at www.kiongroup.com/en/About-us/Management/. The corporate governance statement also includes information on the objectives for the composition of the Supervisory Board, including its diversity plan and profile of skills and expertise, and reports on progress with achieving them.

The Company supports the members of the Supervisory Board in the performance of their tasks by providing suitable training and development opportunities. New members of the Supervisory Board are given special onboarding information in order to familiarize them with the KION Group and its internal structures and processes. In the reporting period, for example, the Supervisory Board received ESG training that focused on the Corporate Sustainability Reporting Directive (CSRD) and the EU taxonomy.

No conflicts of interest on the Supervisory Board came to light during the year under review.

Relationships with affiliated entities (dependency report)

The Supervisory Board examined the report concerning relationships with affiliated entities (dependency report), which the Executive Board signed off on February 19, 2025. The auditor reviewed this report and issued an auditor’s report. Based on its audit, which it completed on February 19, 2025 without having identified any deficiencies, the auditor issued the following opinion:

‘Based on our audit and assessment in accordance with professional standards, we confirm that

1. the facts in the report are stated accurately;
2. the consideration given by the entity for the transactions specified in the report was not unreasonably high;
3. there are no circumstances in respect of the measures specified in the report that would justify an opinion materially different from the opinion of the Executive Board.’

The dependency report and the auditor’s report about it were distributed to all the members of the Supervisory Board in good time. Both reports were discussed in detail in the presence of the auditor at the Supervisory Board meeting on February 26, 2025, after the auditor had presented its report in person. The Supervisory Board approved the findings of the audit conducted by the independent auditor and, based on the final outcome of its own review, did not raise any objections to the Executive Board’s declaration at the end of the dependency report.

Engagement of the auditor; audit of the separate and consolidated financial statements

The Company’s independent auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, audited the separate financial statements, the consolidated financial statements, and the combined management report for KION GROUP AG and the Group for the year ended December 31, 2024 following its election by the Annual General Meeting on May 29, 2024.

The auditor was also engaged to conduct a voluntary review of the Group sustainability report.

The auditor was appointed by the chairman of the Supervisory Board on November 26, 2024. The key audit matters were discussed and set out accordingly at the Audit Committee’s meeting on October 29, 2024.

The auditor submitted its report relating to the 2024 separate financial statements, consolidated financial statements, and combined management report (including the Group sustainability report) to the members of the Audit Committee and the members of the Supervisory Board, in each case with the required lead time. The Audit Committee and Supervisory Board each discussed the report extensively in the presence of the auditor and, in some cases, without the Executive Board being present. The auditor reported in detail on the main findings of the audit on each occasion.

On February 19, 2025, the auditor issued an unqualified audit opinion for the separate financial statements, consolidated financial statements, and combined management report, which was combined with the Company’s management report, and an unqualified audit confirmation for the Group sustainability report. Having itself scrutinized the Company’s separate financial statements, consolidated financial statements, and combined management report (including the Group sustainability report) for the year ended December 31, 2024, the Supervisory Board – on the basis of a recommendation from the Audit Committee – agreed with the findings of the audit by the auditor after further discussing these findings at its meeting on February 26, 2025 and did not raise any objections. The Supervisory Board approved the Company’s separate financial statements and consolidated financial statements for the year ended December 31, 2024 prepared by the Executive Board, thereby adopting the annual financial statements.

At its meeting on February 26, 2025, the Supervisory Board also discussed and approved the proposal made by the Executive Board that the distributable profit of KION GROUP AG be appropriated for the payment of a dividend of €0.82 per no-par-value share. In doing so, the Supervisory Board took account of the Company’s financial situation and performance, its medium-term financial and capital-expenditure planning, and the interests of the shareholders. The Supervisory Board believes the proposed dividend is appropriate.

Personnel changes on the Supervisory Board of KION GROUP AG

Tan Xuguang stepped down as a member of the Supervisory Board on September 16, 2024. In October 2024, Dr. Shaojun Sun was appointed to the Supervisory Board by the courts for the period up to the end of the Annual General Meeting to be held on May 27, 2025.

The Supervisory Board would like to thank all employees and the members of the Executive Board for their commitment over the past financial year.

This report was discussed thoroughly and in detail at the Supervisory Board meeting on February 26, 2025, when it was adopted.

Hans Peter Ring
Chairman