Risk Management

Changes in the underlying conditions of our business and the continuous technological evolution of our products, solutions and services create a lot of opportunities for the DENIOS Group – but also risks. In this section, we will take a look at the most important of these risks and opportunities from a global perspective for the four production sites included in the scope of this report.

In line with our ISO 9001 certification, our Quality Management department regularly conducts a dedicated and integrated risk analysis together with our Managing Directors in Bad Oeynhausen. This risk analysis is used as an aid when making strategic decisions, as it allows us to identify risks and their potential causes and analyse them based on their probability of occurrence and potential for damage. In addition to this, the team defines risk management measures and re-evaluates the risk once these measures have been implemented.

The risk analysis conducted at our French site groups risks into three categories: internal, external and environmental impacts. These risks are evaluated accordingly and documented, together with their consequences and counter-measures. There is no classification of the intensity of the consequences these risks could have. The analysis and documentation are carried out using the same procedures as at our German site. Like our colleagues at the other companies, we restrict ourselves to focusing on the more important risks and the counter-measures we are going to implement against them (or have already done so). There were minimal changes in our existing risks during the reporting period.

The DENIOS Czech Republic risks assessment follows the same structure as that used in Germany. The site classes two risks as 'high'. One is the war situation in Ukraine and the associated problematic procurement of materials (incomplete deliveries), and the other is the sustainable supply of electricity and gas.

Risk assessment and analysis at DENIOS Italy is based on a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. This SWOT analysis documents external and internal factors. As such, the methods used to record, assess and document measures in Italy are different from those employed at our other sites. Our Italian colleagues do no classify the intensity of potential risks. There were a few changes in Italy during the reporting period.

We also see the loss of knowledge in 2022 and 2023 as an administrative risk with a high risk, a possible probability of occurrence and potential for critical damage. Termination of contracts, parental leave, early retirement, standard retirement and death can all lead to a loss of important expertise.

We are reducing this risk by setting up a knowledge management tool to be integrated into our intranet. The development of this platform is still in progress.

In addition, we have identified the procurement of non-environmentally-compatible materials and non-energy-efficient engines and drives as a high risk in 2022 as well. DENIOS Germany is working on the supplier side to counteract this risk. During the course of the introduction of our ISO 50001 certification for energy management, our suppliers were notified that those who offered more efficient or environmentally compatible products would be given priority in cases where more than one supplier was tied for price. In addition to this, our Purchasing, Development and Calculation staff are being given specific training to improve their specialist knowledge in the fields of energy efficiency, environmental compatibility and sustainability. These measures have reduced the risk here to a medium level

In 2023, another strategic threat was identified as a high risk. The shortage of skilled workers meant that we were unable to fill important positions in Production in 2022, which had an impact on the following year. We are trying to become more visible in the market through our Employer Branding campaign and to strengthen our employees' loyalty to the company.

One of the factors DENIOS France sees as a risk is air-pollutant emissions such as those produced by its vehicle fleet and production activities. Many effective measures have already been introduced to reduce the risk in this area. These include modernising the vehicle fleet, retrofitting the coating booths and switching to lower-emissions production processes.

Employee motivation and absences due to accidents at work are also classified as risks. Measures have already been taken in this area, too, such as by introducing a 'safety single document', implementing the 5S method and forming an internal committee to review the working environment. The PEOPLE@DENIOS initiative and our Employer Branding campaign are designed to strengthen our employees' loyalty to the company.

Due to the demand for environmentally friendly and sustainable energy sources, the company sees a risk in Procurement in the Czech Republic. There is concern that environmentally friendly materials are not being purchased and that energy-inefficient machines and equipment are being used. With gas and electricity, the challenge is to find a retailer who offers both within the price range. All of this could ultimately lead to higher product prices. To counteract these risks, supplier audits are being conducted and contracts concluded with energy suppliers with a fixed price for approximately one year.

The purchase of materials is identified as yet another risk. For one thing, incorrect or faulty working methods have been indicated that result in a lack of material, thereby causing orders to be postponed. To counter this, input checks are being conducted and an '8D' report introduced in order to support employees. However, the war in Ukraine is another complicating factor, as some deliveries are incomplete.

DENIOS Italy considers its consulting concepts and the marketing of high-quality products to be its strengths. The flexibility to respond to and implement customer requests at any time is particularly appreciated by Italian customers. Thanks to its unique REI120 certification, DENIOS Italy is further expanding its market share. The use of laser technology is another of this Group company's strengths.

At the same time, however, laser technology is also a risk, as it could increase production costs. As the room systems are already quite expensive, the risk potential here is classified as high. However, there is a possibility of optimising the costs, which is being examined with support from Germany.

Global warming is bringing about an increase in awareness of environmental protection and conservation issues around the world.

This is resulting in a lot of new legislation, which is driving environmental protection and occupational health and safety at the company even further than before. In addition to existing markets, the global market also still has many new markets to offer with potential for environmental technology, as the legislation on environmental protection and occupational health and safety in these countries is still being expanded on. Further increases in awareness amongst government authorities and potential customers will be a guarantee for the DENIOS mission in the future. The breadth and depth of our product range can work to our advantage here.

In addition to this, the increase in environmental awareness amongst the general population presents us with an opportunity to position our company as an attractive employer, thus better covering our need for skilled labour in the future. To this end, we also use our employer branding campaign.

Thanks to the consistent application of our innovation strategy, DENIOS can strengthen the position it has held for many years as a global market leader and manufacturer of high-quality products for commercial environmental protection and occupational health and safety. This has been confirmed by applications for patents and other protective rights, as well as the numerous certifications we and tests we arrange to be conducted by bodies such as the Deutsches Institut für Bautechnik (DIBt), TÜV and DEKRA. However, our state of constant evolution is reflected not just in our products and solutions, but also in our internal production and digitalisation processes.

As a developer and manufacturer, DENIOS is able to react to changes in legislation at any time and implement new requirements at short notice. To this end, we are continuously monitoring the market through the lens of legal regulations.

Across the world, our customers value us as a reliable partner and problem-solver due to our comprehensive expertise and range of services. In addition to key account management services that provide professional consultation for our biggest clients, we are adding to our range of consulting services with a new, on-site consultation initiative that includes a requirement analysis, conducted directly on the customer's own premises. Our in-house and field Sales teams are also benefiting from digital assistance in the form of tools such as the DENIOS variant configurator for efficient room system planning. In addition to this, our wide range of sales channels offers great opportunities, as it generates a continuous increase in the amount of contact customers have with DENIOS. Some of this contact comes in the form of personal consultation. Having a presence in a total of 25 locations means we are in close proximity to our customers and can utilise synergy within our Group.